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REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CONTINENTAL AIRLINES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 4512 74-2099724
(State or other jurisdiction (Primary standard industrial (I.R.S. employer
of classification code number) identification number)
incorporation or
organization)
2929 ALLEN PARKWAY, SUITE 2010
HOUSTON, TEXAS 77019
(713) 834-2950
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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JEFFERY A. SMISEK, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
CONTINENTAL AIRLINES, INC.
2929 ALLEN PARKWAY, SUITE 2010
HOUSTON, TEXAS 77019
(713) 834-2950
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies of correspondence to:
JOHN K. HOYNS, ESQ.
HUGHES HUBBARD & REED LLP
ONE BATTERY PARK PLAZA
NEW YORK, NEW YORK 10004-1482
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING PRICE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER CERTIFICATE(2) (2) FEE
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Pass Through Certificates, Series
1997-1A................................ $437,876,000 100% $437,876,000
Pass Through Certificates, Series
1997-1B................................ $148,333,000 100% $148,333,000 $214,334
Pass Through Certificates, Series
1997-1C-I.............................. $111,093,000 100% $111,093,000
Pass Through Certificates, Series
1997-1C-II............................. $ 10,000,000 100% $ 10,000,000
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(1) Equals the aggregate principal amount of the securities being registered.
(2) Pursuant to Rule 457(f)(2), the registration fee has been calculated using
the book value of the securities being registered.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION -- DATED MAY 27, 1997
PROSPECTUS
CONTINENTAL AIRLINES, INC.
Offer to Exchange Pass Through Certificates, Series 1997-1,
which have been registered under the Securities Act of 1933, as amended,
for any and all outstanding Pass Through Certificates, Series 1997-1
The Exchange Offer will expire at 5:00 p.m., New York City time, on
[ ], unless extended.
Pass Through Certificates, Series 1997-1 (the "New Certificates"), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which this Prospectus
is a part, are hereby offered, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying letter of transmittal (the "Letter
of Transmittal" and, together with this Prospectus, the "Exchange Offer"), in
exchange for an equal principal amount of outstanding Pass Through Certificates,
Series 1997-1 (the "Old Certificates"), of which $707,302,000 aggregate
principal amount is outstanding as of the date hereof. The New Certificates and
the Old Certificates are collectively referred to herein as the "Certificates".
Any and all Old Certificates that are validly tendered and not withdrawn on
or prior to 5:00 P.M., New York City time, on the date the Exchange Offer
expires, which will be [ ] (30 calendar days following the
commencement of the Exchange Offer) unless the Exchange Offer is extended (such
date, including as extended, the "Expiration Date") will be accepted for
exchange. Tenders of Old Certificates may be withdrawn at any time prior to 5:00
P.M., New York City time, on the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Certificates being tendered
for exchange. However, the Exchange Offer is subject to certain customary
conditions which may be waived by the Company and to the terms of the
Registration Rights Agreement (as defined herein). Old Certificates may be
tendered only in integral multiples of $1,000. See "The Exchange Offer".
The New Certificates will be entitled to the benefits of the same Pass
Through Trust Agreements (as defined herein) which govern the Old Certificates
and will govern the New Certificates. The New Certificates will have terms
identical in all material respects to the Old Certificates except that the New
Certificates will not contain terms with respect to transfer restrictions or
interest rate increases as described herein and the New Certificates will be
available only in book-entry form. See "The Exchange Offer" and "Description of
New Certificates".
Each Certificate represents a fractional undivided interest in one of the
four Continental Airlines 1997-1 Pass Through Trusts (the "Class A Trust", the
"Class B Trust", the "Class C-I Trust" and the "Class C-II Trust", the Class C-I
Trust and the Class C-II Trust being referred to together as the "Class C
Trusts" and all such trusts being referred to collectively as the "Trusts")
formed pursuant to four separate pass through trust agreements (the "Pass
Through Trust Agreements") between Continental Airlines, Inc. ("Continental" or
the "Company") and Wilmington Trust Company (the "Trustee"), as trustee under
each Trust. Pursuant to an intercreditor agreement, (i) the Certificates of the
Class B Trust are subordinated in right of payment to the Certificates of the
Class A Trust and (ii) the Certificates of the Class C Trusts are subordinated
in right of payment to the Certificates of the Class B Trust. Payments of
interest on the Certificates issued by each Trust are supported by two separate
liquidity facilities for the benefit of the holders of
(continued on next page)
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FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PARTICIPANTS IN THE EXCHANGE OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE 34 OF
THIS PROSPECTUS.
PASS THROUGH FINAL EXPECTED
CERTIFICATES PRINCIPAL AMOUNT INTEREST RATE DISTRIBUTION DATE
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1997-1A..................................................... $437,876,000 7.461% April 1, 2015
1997-1B..................................................... $148,333,000 7.461% April 1, 2013
1997-1C-I................................................... $111,093,000 7.420% April 1, 2007
1997-1C-II.................................................. $ 10,000,000 7.420% April 1, 2007
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Total............................................. $707,302,000
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is May , 1997
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(continued from cover page)
such Certificates, such facilities provided initially by ABN AMRO Bank N.V., a
Dutch bank acting through its Chicago branch ("ABN AMRO"), and ING Bank N.V., a
Dutch bank ("ING" and, together with ABN AMRO, the "Liquidity Providers") in an
amount sufficient to pay interest thereon at the applicable interest rate for
such Certificates on up to three successive semiannual distribution dates
(except that the liquidity facilities will not cover interest payable on the
Deposits by the Depositary referred to below).
The Trusts were established for the purpose of acquiring equipment notes
(the "Equipment Notes") expected to be issued in connection with the financing
of the purchase of eight Boeing 757-224 aircraft, eighteen Boeing 737-524
aircraft and four Boeing 737-724 aircraft (collectively, the "Aircraft"), which
are scheduled for delivery during the period March 1997 through February 1998,
with the final delivery for purposes of purchase by the Trusts no later than
March 31, 1998 (or June 30, 1998 under certain circumstances) (the "Delivery
Period"). The Equipment Notes will be issued, at Continental's election, either
(i) on a non-recourse basis by the trustees of separate owner trusts (each, an
"Owner Trustee") in connection with separate leveraged lease transactions, in
which case the applicable Aircraft will be leased to Continental (collectively,
the "Leased Aircraft"), or (ii) on a recourse basis by Continental in connection
with separate secured loan transactions, in which case the applicable Aircraft
will be owned by Continental (collectively, the "Owned Aircraft"). The Equipment
Notes in respect of each Aircraft will be issued in three series (the "Series A
Equipment Notes", the "Series B Equipment Notes" and the "Series C Equipment
Notes"). The Class A Trust, the Class B Trust and the Class C-I Trust (or, if
the Deposits relating to the Class C-I Trust have been fully withdrawn, the
Class II Trust) will purchase the series of Equipment Notes issued with respect
to each Aircraft that has an interest rate equal to the interest rate applicable
to the Certificates issued by such Trust. If any funds remain as Deposits
relating to any Trust at the end of the Delivery Period or, if earlier, upon the
acquisition by the Trusts of the Equipment Notes with respect to all of the
Aircraft (the "Delivery Period Termination Date"), such funds will be withdrawn
by the Escrow Agent and distributed, with accrued and unpaid interest thereon,
to the Certificateholders (as defined herein) of such Trust after at least 20
days' prior notice. In addition, such distribution will include a premium
payable by Continental (i) in the case of the holders of the Certificates issued
by the Class A Trust, the Class B Trust and the Class C-I Trust, equal to the
Deposit Make-Whole Premium (as defined herein) with respect to the aggregate
amount of funds so distributed (excluding accrued interest) and (ii) in the case
of the holders of the Certificates issued by the Class C-II Trust, equal to the
Class C-II Premium (as defined herein) with respect to such aggregate amount.
Since the Deposits relating to the Class C-II Trust will be the last to be
utilized with respect to the purchase of Equipment Notes and the maximum
principal amount of Equipment Notes may not be issued, there is a greater
likelihood that such a distribution will be required with respect to the
Certificates issued by the Class C-II Trust than the Certificates issued by the
other Trusts. Prior to the date of this Prospectus, Equipment Notes with respect
to two Leased Aircraft have been issued.
The cash proceeds of the initial offering of Old Certificates by each Trust
were paid to First Security Bank, N.A., as escrow agent (the "Escrow Agent"),
under an Escrow and Paying Agent Agreement for the benefit of the holders of
Certificates issued by such Trust (each, an "Escrow Agreement"). The Escrow
Agent caused such cash proceeds to be deposited (each, a "Deposit") with Credit
Suisse First Boston, New York branch (the "Depositary"), in accordance with the
Deposit Agreement relating to such Trust (each, a "Deposit Agreement"). Pursuant
to each Deposit Agreement, the Depositary will pay for distribution to the
holders of Certificates issued by each Trust on each semiannual distribution
date an amount equal to interest accrued on the Deposits relating to such Trust
during the applicable interest period at a rate per annum equal to the interest
rate applicable to the Certificates issued by such Trust. Upon each delivery of
an Aircraft during the Delivery Period, the Trustee for the Class A Trust, the
Class B Trust and the Class C-I Trust (or, if the Deposits relating to the Class
C-I Trust have been fully withdrawn, the Class C-II Trust) will cause to be
withdrawn from the Deposits relating to such Trust funds sufficient to purchase
the Equipment Note of the series applicable to such Trust issued with respect to
such Aircraft.
The Equipment Notes issued with respect to each Aircraft will be secured by
a security interest in such Aircraft and, in the case of each Leased Aircraft,
by an assignment of the lease relating thereto, including the right to receive
rentals payable with respect to such Leased Aircraft by Continental. Although
neither the
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Certificates nor the Equipment Notes issued with respect to the Leased Aircraft
are direct obligations of, or guaranteed by, Continental, the amounts
unconditionally payable by Continental for lease of the Leased Aircraft will be
sufficient to pay in full when due all amounts required to be paid on the
Equipment Notes issued with respect to the Leased Aircraft held in the Trusts.
The Equipment Notes issued with respect to the Owned Aircraft will be direct
obligations of Continental.
All of the Equipment Notes held in each Trust will accrue interest at the
applicable rate per annum for the Certificates issued by such Trust, payable on
April 1 and October 1 of each year, commencing on October 1, 1997 or, if later,
the first such date to occur after initial issuance thereof. The Deposits
relating to each Trust accrue interest at the applicable rate per annum for the
Certificates issued by such Trust, payable on April 1 and October 1 of each
year, commencing on October 1, 1997, until the Deposits have been fully
withdrawn. The scheduled payments of interest on the Equipment Notes and on the
Deposits with respect to each Trust, taken together, will be sufficient to pay
an amount equal to accrued interest on the outstanding Certificates issued by
such Trust at the rate per annum applicable thereto. Such interest will be
distributed to Certificateholders of such Trust on each such date, subject, in
the case of interest payments made pursuant to the Equipment Notes, to the
Intercreditor Agreement (as defined herein). See "Description of the New
Certificates -- General" and "-- Payments and Distributions". The New
Certificates will accrue interest at the applicable per annum rate for such
Trust, from the last date on which interest was paid on the Old Certificates
surrendered in exchange therefor. See "The Exchange Offer -- Interest on New
Certificates".
Scheduled principal payments on the Equipment Notes held in each Trust will
be passed through to the Certificateholders of each such Trust on April 1 and
October 1 in certain years, commencing on April 1, 1998. Such Payments will be
made, subject to certain assumptions, in accordance with the principal repayment
schedule set forth below under "Description of the New Certificates -- Pool
Factors", in each case subject to the Intercreditor Agreement.
On the earlier of (i) the first Business Day (as defined herein) after
March 31, 1998 or, if later, the fifth Business Day after the Delivery Period
Termination Date and (ii) the fifth Business Day after the occurrence of a
Triggering Event (as defined herein) (such Business Day, the "Transfer Date"),
each of the Trusts established at the time of the original issuance of the
Certificates (the "Original Trusts") will transfer and assign all of its assets
and rights to a newly-created successor trust with substantially identical terms
(each, a "Successor Trust"). The institution acting as Trustee of each of the
Original Trusts (each, an "Original Trustee") will also act as Trustee of the
corresponding Successor Trust (each, a "New Trustee"), and each New Trustee will
assume the obligations of the Original Trustee under each transaction document
to which such Original Trustee was a party. Upon the effectiveness of such
transfer, assignment and assumption, each of the Original Trusts will be
liquidated and each of the Certificates will represent the same percentage
interest in the Successor Trust as it represented in the Original Trust
immediately prior to such transfer, assignment and assumption. Unless the
context otherwise requires, all references in this Prospectus to the Trusts, the
Trustees, the Pass Through Trust Agreements and similar terms shall be
applicable with respect to the Original Trusts until the effectiveness of such
transfer, assignment and assumption and thereafter shall be applicable with
respect to the Successor Trusts.
Each Class of New Certificates will be represented by one or more permanent
global Certificates in fully registered form, which will be deposited with the
Trustee as custodian for and registered in the name of a nominee of DTC.
Beneficial interests in the permanent global Certificates will be shown on, and
transfers thereof will be effected through, records maintained by DTC and its
participants.
Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission"), as set forth in no-action letters issued to third
parties, including Exxon Capital Holdings Corporation, SEC No-Action Letter
(available April 13, 1989) (the "Exxon Capital Letter"), Morgan Stanley & Co.
Incorporated, SEC No-Action Letter (available June 5, 1991) (the "Morgan Stanley
Letter") and Shearman & Sterling, SEC No-Action Letter (available July 2, 1993)
(the "Shearman & Sterling Letter") (collectively, the "Exchange Offer No-Action
Letters"), the Company believes that the New Certificates issued pursuant to the
Exchange Offer may be offered for resale, resold or otherwise transferred by
holders thereof (other than a broker-dealer who acquires such New Certificates
directly from the Trustee for resale
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pursuant to Rule 144A under the Securities Act or any other available exemption
under the Securities Act or any holder that is an "affiliate" of the Company as
defined under Rule 405 of the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Certificates are acquired in the ordinary course of such holders'
business and such holders are not engaged in, and do not intend to engage in, a
distribution of such New Certificates and have no arrangement with any person to
participate in a distribution of such New Certificates. By tendering the Old
Certificates in exchange for New Certificates, each holder, other than a
broker-dealer, will represent to the Company that: (i) it is not an affiliate of
the Company (as defined under Rule 405 of the Securities Act) nor a
broker-dealer tendering Old Certificates acquired directly from the Company for
its own account; (ii) any New Certificates to be received by it will be acquired
in the ordinary course of its business; and (iii) it is not engaged in, and does
not intend to engage in, a distribution of such New Certificates and has no
arrangement or understanding to participate in a distribution of the New
Certificates. If a holder of Old Certificates is engaged in or intends to engage
in a distribution of the New Certificates or has any arrangement or
understanding with respect to the distribution of the New Certificates to be
acquired pursuant to the Exchange Offer, such holder may not rely on the
applicable interpretations of the staff of the Commission and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. Each broker-dealer that
receives New Certificates for its own account pursuant to the Exchange Offer (a
"Participating Broker-Dealer") must acknowledge that it will deliver a
prospectus in connection with any resale of such New Certificates. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of New Certificates received in
exchange for Old Certificates where such Old Certificates were acquired by such
Participating Broker-Dealer as a result of market-making activities or other
trading activities. Pursuant to the Registration Rights Agreement, the Company
has agreed that starting on the Expiration Date it will make this Prospectus
available to any Participating Broker-Dealer for use in connection with any such
resale. See "Plan of Distribution."
The Company will not receive any proceeds from this offering. The Company
has agreed to pay the expenses of the Exchange Offer. No underwriter is being
utilized in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD CERTIFICATES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES AND BLUE SKY LAWS OF SUCH JURISDICTION.
Prior to the Exchange Offer, there has been no public market for the New
Certificates. If such market were to develop, the New Certificates could trade
at prices that may be higher or lower than their principal amount. Neither
Continental nor any Trust has applied or intends to apply for listing of the New
Certificates on any national securities exchange or otherwise. One or more of
Credit Suisse First Boston, Morgan Stanley & Co. Incorporated, Chase Securities
Inc. and Goldman, Sachs & Co. (the "Initial Purchasers") have previously made a
market in the Old Certificates and Continental has been advised that one or more
of the Initial Purchasers presently intend to make a market in the New
Certificates, as permitted by applicable laws and regulations, after
consummation of the Exchange Offer. None of the Initial Purchasers is obligated,
however, to make a market in the Certificates, and any such market making
activity by an Initial Purchaser may be discontinued at any time without notice
at the sole discretion of such Initial Purchaser. There an be no assurance as to
the liquidity of the public market for the Certificates or that any active
public market for the Certificates will develop or continue. If an active public
market does not develop or continue, the market prices and liquidity of the
Certificates may be adversely affected. See "Risk Factors -- Risk Factors
Relating to the Certificates and the Offering -- Absence of an Established
Market."
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AVAILABLE INFORMATION
Continental is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549; Seven World Trade Center, 13th Floor, New York, New York 10007; and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material may also be obtained from the Public Reference Section
of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of prescribed rates. Such material may also
be accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov. In addition, reports, proxy statements and other
information concerning Continental may be inspected and copied at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
Continental is the successor to Continental Airlines Holdings, Inc.
("Holdings"), which merged with and into Continental on April 27, 1993. Holdings
had also been subject to the informational requirements of the Exchange Act.
This Prospectus constitutes a part of a registration statement on Form S-4
(together with all amendments and exhibits, the "Registration Statement") filed
by Continental with the Commission, through the Electronic Data Gathering,
Analysis and Retrieval System ("EDGAR"), under the Securities Act, with respect
to the New Certificates offered hereby. This Prospectus omits certain of the
information contained in the Registration Statement, and reference is hereby
made to the Registration Statement for further information with respect to
Continental and the securities offered hereby. Although statements concerning
and summaries of certain documents are included herein, reference is made to the
copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. These documents may be inspected without
charge at the office of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies may be obtained at fees and charges
prescribed by the Commission.
REPORTS TO CERTIFICATEHOLDERS
Wilmington Trust Company, in its capacity as Pass Through Trustee under
each of the Trusts and Paying Agent under each Escrow Agreement, will provide
the Certificateholders of each Trust certain periodic reports concerning the
distributions made from such Trust and pursuant to such Escrow Agreement. See
"Description of New Certificates -- Reports to Certificateholders".
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 0-9781) are
hereby incorporated by reference in this Prospectus: (i) Continental's Annual
Report on Form 10-K for the year ended December 31, 1996, (ii) Continental's
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1997 and
(iii) Continental's Current Reports on Form 8-K filed on January 6, March 21 and
April 18, 1997.
All reports and any definitive proxy or information statements filed by
Continental pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated herein by reference, or contained in this Prospectus, shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE TO
ANY PERSON TO WHOM A PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF
SUCH PERSON, FROM CONTINENTAL AIRLINES, INC., 2929 ALLEN PARKWAY, SUITE 2010,
HOUSTON, TEXAS 77019, ATTENTION: SECRETARY, TELEPHONE (713) 834-2950. IN ORDER
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY [ ].
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PROSPECTUS SUMMARY
The following summary information does not purport to be complete and is
qualified in its entirety by the detailed information and financial statements
(including the notes thereto) appearing elsewhere in, or incorporated by
reference in, this Prospectus. Certain capitalized terms used herein are defined
elsewhere in this Prospectus on the pages indicated in the "Index of Terms".
THE COMPANY
Continental Airlines, Inc. is a major United States air carrier engaged in
the business of transporting passengers, cargo and mail. Continental is the
fifth largest United States airline (as measured by revenue passenger miles in
the first four months of 1997) and, together with its wholly owned subsidiary,
Continental Express, Inc. ("Express"), and its 91%-owned subsidiary, Continental
Micronesia, Inc. ("CMI"), each a Delaware corporation, serves 188 airports
worldwide.
The Company operates its route system primarily through domestic hubs at
Newark, Houston Intercontinental and Cleveland, and a Pacific hub on the island
of Guam. Each of Continental's three domestic hubs is located in a large
business and population center, contributing to a high volume of "origin and
destination" traffic. The Guam hub is strategically located to provide service
from Japanese and other Asian cities to popular resort destinations in the
western Pacific. Continental is the primary carrier at each of these hubs,
accounting for 54%, 79%, 53% and 68% of average daily jet departures,
respectively.
Continental directly serves 129 U.S. cities, with additional cities
(principally in the western and southwestern United States) connected to
Continental's route system under agreements with America West Airlines, Inc.
("America West"). Internationally, Continental flies to 59 destinations and
offers additional connecting service through alliances with foreign carriers.
Continental operates 70 weekly departures to 7 European cities and markets
service to 8 other cities through code-sharing agreements. Continental commenced
service from Newark to Dusseldorf, Germany on March 19, 1997, and from Newark to
Lisbon, Portugal on May 1, 1997. Continental plans to add service from Newark to
Vancouver, British Columbia on June 12, 1997, to Birmingham, England on July 1,
1997 and to Sao Paulo and Rio de Janeiro, Brazil on July 10, 1997. In addition,
during 1996 Continental entered into agreements with Air France for a joint
marketing arrangement that will involve service from Newark and Houston to Paris
(scheduled to commence in the third quarter 1997), subject to governmental
approval, and Aeroflot Russian International Airlines ("Aeroflot") for a joint
marketing arrangement that will involve service from Newark to Moscow (scheduled
to commence in the second quarter of 1998), subject to governmental approval.
Also during 1996, Continental entered into an agreement with Alitalia Airlines
("Alitalia") to expand the companies' existing code-share relationship to
include additional flights between the United States and Italy, which is
expected to commence in the second quarter of 1997. In addition, Continental
recently announced the execution of a memorandum of understanding for a
code-share arrangement with Virgin Atlantic Airways Limited ("Virgin") involving
the carriers' Newark/New York-London routes and eight other routes flown by
Virgin between the United Kingdom and the United States. Continental is one of
the leading airlines providing service to Mexico and Central America, serving
more destinations there than any other United States airline. In addition,
Continental flies to four cities in South America. Through its Guam hub,
Continental provides extensive service in the western Pacific, including service
to more Japanese cities than any other United States carrier.
The Company is a Delaware corporation. Its executive offices are located at
2929 Allen Parkway, Suite 2010, Houston, Texas 77019, and its telephone number
is (713) 834-2950.
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THE EXCHANGE OFFER
Registration Rights
Agreement.................. The Old Certificates were issued on March 21, 1997
to the Initial Purchasers. The Initial Purchasers
placed the Old Certificates with institutional
investors. In connection therewith, the Company,
the Depositary, the Trustee under each of the
Trusts, and the Initial Purchasers entered into
the Registration Rights Agreement providing,
among other things, for the Exchange Offer. See
"The Exchange Offer".
The Exchange Offer......... New Certificates are being offered in exchange for
an equal principal amount of Old Certificates. As
of the date hereof, $707,302,000 aggregate
principal amount of Old Certificates are
outstanding. Old Certificates may be tendered
only in integral multiples of $1,000.
Resale of New
Certificates............... Based on interpretations by the staff of the
Commission, as set forth in no-action letters
issued to third parties, including the Exchange
Offer No-Action Letters, the Company believes
that the New Certificates issued pursuant to the
Exchange Offer may be offered for resale, resold
or otherwise transferred by holders thereof
(other than a broker-dealer who acquires such New
Certificates directly from the Trustee for resale
pursuant to Rule 144A under the Securities Act or
any other available exemption under the
Securities Act or any holder that is an
"affiliate" of the Company as defined under Rule
405 of the Securities Act), without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided that
such New Certificates are acquired in the
ordinary course of such holders' business and
such holders are not engaged in, and do not
intend to engage in, a distribution of such New
Certificates and have no arrangement with any
person to participate in a distribution of such
New Certificates. By tendering the Old
Certificates in exchange for New Certificates,
each holder, other than a broker-dealer, will
represent to the Company that: (i) it is not an
affiliate of the Company (as defined under Rule
405 of the Securities Act) nor a broker-dealer
tendering Old Certificates acquired directly from
the Trustee for its own account; (ii) any New
Certificates to be received by it were acquired
in the ordinary course of its business; and (iii)
it is not engaged in, and does not intend to
engage in, a distribution of such New
Certificates and has no arrangement or
understanding to participate in a distribution of
the New Certificates. If a holder of Old
Certificates is engaged in or intends to engage
in a distribution of the New Certificates or has
any arrangement or understanding with respect to
the distribution of the New Certificates to be
acquired pursuant to the Exchange Offer, such
holder may not rely on the applicable
interpretations of the staff of the Commission
and must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any secondary
resale transaction. Each Participating
Broker-Dealer that receives New Certificates for
its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a
prospectus in connection with any resale of such
New Certificates. The Letter of Transmittal
states that by so acknowledging and by delivering
a prospectus, a Participating Broker-Dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended
7
9
or supplemented from time to time, may be used by
a Participating Broker-Dealer in connection with
resales of New Certificates received in exchange
for Old Certificates where such Old Certificates
were acquired by such Participating Broker-Dealer
as a result of market-making activities or other
trading activities. The Company has agreed that,
starting on the Expiration Date and ending on the
close of business 180 days after the Expiration
Date, it will make this Prospectus available to
any Participating Broker-Dealer for use in
connection with any such resale. See "Plan of
Distribution." To comply with the securities laws
of certain jurisdictions, it may be necessary to
qualify for sale or register the New Certificates
prior to offering or selling such New
Certificates. The Company has agreed, pursuant to
the Registration Rights Agreement and subject to
certain specified limitations therein, to
register or qualify the New Certificates for
offer or sale under the securities or "blue sky"
laws of such jurisdictions as may be necessary to
permit the holders of New Certificates to trade
the New Certificates without any restrictions or
limitations under the securities laws of the
several states of the United States.
Consequences of Failure to
Exchange Old
Certificates............. Upon consummation of the Exchange Offer, subject to
certain exceptions, holders of Old Certificates
who do not exchange their Old Certificates for
New Certificates in the Exchange Offer will no
longer be entitled to registration rights and
will not be able to offer or sell their Old
Certificates, unless such Old Certificates are
subsequently registered under the Securities Act
(which, subject to certain limited exceptions,
the Company will have no obligation to do),
except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act
and applicable state securities laws. See "Risk
Factors -- Risk Factors Relating to the
Certificates and the Offering -- Consequences of
Failure to Exchange" and "The Exchange Offer --
Terms of the Exchange Offer".
Expiration Date............ 5:00 p.m., New York City time, on [ ] (30
calendar days following the commencement of the
Exchange Offer), unless the Exchange Offer is
extended, in which case the term "Expiration
Date" means the latest date and time to which the
Exchange Offer is extended.
Interest on the New
Certificates............. The New Certificates will accrue interest at the
applicable per annum rate for such New
Certificates set forth on the cover page of this
Prospectus, from the date on which the Old
Certificates were originally issued.
Conditions to the Exchange
Offer.................... The Exchange Offer is not conditioned upon any
minimum principal amount of Old Certificates
being tendered for exchange. However, the
Exchange Offer is subject to certain customary
conditions, which may be waived by the Company.
See "The Exchange Offer -- Conditions". Except
for the requirements of applicable federal and
state securities laws, there are no federal or
state regulatory requirements to be complied with
or obtained by the Company in connection with the
Exchange Offer.
8
10
Procedures for Tendering
Old Certificates........... Each holder of Old Certificates wishing to accept
the Exchange Offer must complete, sign and date
the Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or
such facsimile, together with the Old
Certificates to be exchanged and any other
required documentation to the Exchange Agent (as
defined herein) at the address set forth herein
or effect a tender of Old Certificates pursuant
to the procedures for book-entry transfer as
provided for herein. See "The Exchange
Offer -- Procedures for Tendering" and "-- Book
Entry Transfer".
Guaranteed Delivery
Procedures............... Holders of Old Certificates who wish to tender
their Old Certificates and whose Old Certificates
are not immediately available or who cannot
deliver their Old Certificates and a properly
completed Letter of Transmittal or any other
documents required by the Letter of Transmittal
to the Exchange Agent prior to the Expiration
Date may tender their Old Certificates according
to the guaranteed delivery procedures set forth
in "The Exchange Offer -- Guaranteed Delivery
Procedures".
Withdrawal Rights.......... Tenders of Old Certificates may be withdrawn at any
time prior to 5:00 p.m., New York City time, on
the Expiration Date. To withdraw a tender of Old
Certificates, a written or facsimile transmission
notice of withdrawal must be received by the
Exchange Agent at its address set forth herein
under "The Exchange Offer -- Exchange Agent"
prior to 5:00 p.m., New York City time, on the
Expiration Date.
Acceptance of Old
Certificates and Delivery
of New Certificates...... Subject to certain conditions, any and all Old
Certificates which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date will be accepted for
exchange. The New Certificates issued pursuant to
the Exchange Offer will be delivered promptly
following the Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer".
Certain Tax
Considerations............. The exchange of New Certificates for Old
Certificates will not be a sale or exchange or
otherwise a taxable event for Federal income tax
purposes. See "Certain Federal Income Tax
Considerations".
Exchange Agent............. Wilmington Trust Company is serving as exchange
agent (the "Exchange Agent") in connection with
the Exchange Offer.
Fees and Expenses.......... All expenses incident to the Company's consummation
of the Exchange Offer and compliance with the
Registration Rights Agreement will be borne by
the Company. See "The Exchange Offer -- Fees and
Expenses".
Use of Proceeds............ There will be no cash proceeds payable to
Continental from the issuance of the New
Certificates pursuant to the Exchange Offer. The
proceeds from the sale of the Old Certificates
issued by each Trust were deposited with the
Depositary on behalf of the Escrow Agent for the
benefit of the Certificateholders of such Trust.
Such proceeds will be used to purchase Equipment
Notes during the Delivery Period issued,
9
11
at Continental's election, either (i) by the
Owner Trustees to finance the purchase of the
Leased Aircraft or (ii) by Continental to finance
the purchase of the Owned Aircraft. Prior to the
date of this Prospectus, two Boeing 757-224
Aircraft have been delivered, and funds were
withdrawn from the Deposits to purchase Equipment
Notes in respect of such Aircraft in the
aggregate principal amount of $74.4 million. See
"Use of Proceeds".
TERMS OF CERTIFICATES
The Exchange Offer relates to the exchange of up to $707,302,000 aggregate
principal amount of Old Certificates for up to an equal aggregate principal
amount of New Certificates. The New Certificates will be entitled to the
benefits of and will be governed by the same Pass Through Trust Agreements that
govern the Old Certificates. The form and terms of the New Certificates are the
same in all material respects as the form and terms of the Old Certificates,
except that the New Certificates do not provide for interest rate increases
relating to failure to implement the Exchange Offer and will not bear legends
restricting transfer. See "Description of New Certificates".
Trusts..................... Each of the Continental Airlines 1997-1A Pass
Through Trust, the Continental Airlines 1997-1B
Pass Through Trust, the Continental Airlines
1997-1C-I Pass Through Trust and the Continental
Airlines 1997-1C-II Pass Through Trust has been
formed pursuant to one of the four separate Pass
Through Trust Agreements that were entered into
between the Company and Wilmington Trust Company,
as trustee under each Trust. Each Trust is a
separate entity. On the Transfer Date, each of
the Original Trusts will transfer and assign all
of its assets and rights to a substantially
identical Successor Trust, and the New Trustee
thereof will assume the obligations of the
related Original Trustee under each transaction
document to which such Original Trustee was a
party. Upon effectiveness of such transfer,
assignment and assumption, each of the Original
Trusts will be liquidated and each of the New
Certificates will represent the same interest in
the Successor Trust as it represented in the
Original Trust immediately prior to such transfer
and assignment.
Certificates Offered....... Pass Through Certificates issued by each Trust,
representing fractional undivided interests in
such Trust. The New Certificates issued by the
Class A Trust, the Class B Trust, the Class C-I
Trust and the Class C-II Trust are referred to
herein as the "Class A Certificates", the "Class
B Certificates", the "Class C-I Certificates",
and the "Class C-II Certificates", respectively,
and the Class C-I Certificates and the Class C-II
Certificates, which are of equal rank under the
Intercreditor Agreement, are referred to herein
collectively as the "Class C Certificates". The
Class C-I Trust and Class C-II Trust will each
acquire Series C Equipment Notes, although the
Deposits relating to the Class C-I Trust will be
utilized for such purpose prior to the Deposits
relating to the Class C-II Trust. Accordingly,
there is a greater likelihood that a special
distribution that will reduce the Pool Balance
for the Class C-II Certificates will be required
than with respect to the Certificates issued by
the other Trusts. See "Description of the Deposit
Agreements -- Unused Deposits".
10
12
Escrow Receipts............ The holders of the Certificates are entitled to
certain rights with respect to the Deposits. Such
rights are evidenced by escrow receipts ("Escrow
Receipts") which are affixed to each Certificate.
Any transfer of a Certificate will have the
effect of transferring the corresponding rights
in the affixed Escrow Receipt. All payments to
the holders of Certificates in respect of the
Deposits and the Escrow Receipts relating to a
Trust (i) will not constitute Trust Property of
such Trust and (ii) will be deemed for all
purposes of this Prospectus to be payments to
such holders of Certificates in their capacity as
holders of Escrow Receipts.
Subordination Agent,
Trustee, Paying Agent and
Loan Trustee............. Wilmington Trust Company acts (i) as subordination
agent under the Intercreditor Agreement (the
"Subordination Agent"), (ii) as Trustee, paying
agent and registrar for the Certificates of each
Trust, (iii) as paying agent on behalf of the
Escrow Agent in respect of each Trust (the
"Paying Agent") and (iv) as Loan Trustee, paying
agent and registrar for each series of Equipment
Notes.
Escrow Agent............... First Security Bank, National Association, acts as
Escrow Agent under each Escrow Agreement.
Depositary................. Credit Suisse First Boston, a bank organized under
the laws of Switzerland, acting through its New
York branch, acts as Depositary under each
Deposit Agreement.
Liquidity Providers........ ABN AMRO Bank N.V., a Dutch bank acting through its
Chicago branch ("ABN AMRO"), and ING Bank N.V., a
Dutch bank ("ING" and, together with ABN AMRO,
the "Liquidity Providers"), have each provided a
separate liquidity facility for the benefit of
the holders of each Class of Certificates.
Trust Property............. The property of each Trust (the "Trust Property")
consists of (i) the rights of such Trust to
acquire Equipment Notes under the Note Purchase
Agreement issued, at Continental's election in
connection with the delivery of each Aircraft
during the Delivery Period, either (a) on a
nonrecourse basis by an Owner Trustee in each
separate leveraged lease transaction with respect
to each Leased Aircraft to finance the purchase
of such Leased Aircraft by the Owner Trustee, in
which case the applicable Leased Aircraft will be
leased to Continental, or (b) on a recourse basis
by Continental in connection with each separate
secured loan transaction with respect to each
Owned Aircraft, if any, to finance the purchase
of such Owned Aircraft by Continental, (ii)
Equipment Notes acquired under the Note Purchase
Agreement (consisting, as of the date of this
Prospectus, of $74.4 million principal amount
issued with respect to two Boeing 757-224
Aircraft in leveraged lease transactions), (iii)
the rights of such Trust under the related Escrow
Agreement (including the right to request the
Escrow Agent to withdraw from the Depositary
funds sufficient to enable such Trust to purchase
Equipment Notes on the delivery of each Aircraft
during the Delivery Period), (iv) the rights of
such Trust under the Intercreditor Agreement
(including all monies receivable in respect of
such rights), (v) all monies receivable under the
Liquidity Facility for such Trust and (vi) funds
from time to time deposited with the
11
13
Trustee in accounts relating to such Trust.
Rights with respect to Deposits or under the
Escrow Agreement relating to a Trust, except for
the right to request withdrawals for the purchase
of Equipment Notes, will not constitute Trust
Property of such Trust. The Equipment Notes with
respect to each Leased Aircraft will be issued in
three series under an Indenture (each, a "Leased
Aircraft Indenture") between the applicable Owner
Trustee and the indenture trustee thereunder (the
"Leased Aircraft Trustee"). The Equipment Notes
with respect to each Owned Aircraft will be
issued in three series under an Indenture (the
"Owned Aircraft Indenture" and, together with the
other Owned Aircraft Indentures and the Leased
Aircraft Indentures, the "Indentures") between
Continental and the indenture trustee thereunder
(the "Owned Aircraft Trustee" and, together with
the other Owned Aircraft Trustees and the Leased
Aircraft Trustees, the "Loan Trustees"). The
Class A Trust, the Class B Trust and the Class
C-I Trust (or, if the Deposits relating to the
Class C-I Trust have been fully withdrawn, the
Class C-II Trust) each will acquire, pursuant to
a certain Note Purchase Agreement (the "Note
Purchase Agreement"), the series of Equipment
Notes issued with respect to each of the Aircraft
having an interest rate equal to the interest
rate applicable to the Certificates issued by
such Trust. The maturity dates of the Equipment
Notes acquired by each Trust will occur on or
before the final expected Regular Distribution
Date applicable to the Certificates issued by
such Trust. Any Deposits relating to a Trust not
used to acquire Equipment Notes by the Delivery
Period Termination Date will be distributed to
the holders of Certificates issued by such Trust,
together with accrued and unpaid interest thereon
and a premium, as a special distribution. See
"Description of the Deposit Agreements -- Unused
Deposits".
12
14
SUMMARY OF TERMS OF CERTIFICATES
CLASS A CLASS B CLASS C-I CLASS C-II
CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
------------ ------------ ------------ ------------
Aggregate Face Amount............. $437,876,000 $148,333,000 $111,093,000 $10,000,000
Loan to Aircraft Value
(cumulative)(1)................. 40.29% 53.93% 64.93% 64.93%
Expected Principal Distribution
Window (in years)............... 1.027-18.027 1.027-16.027 1.027-10.027 1.027-10.027
Expected Initial Average Life (in
years).......................... 12.86 10.03 5.82 5.82
Regular Distribution Dates........ April 1 & October 1 April 1 & October 1 April 1 & October 1 April 1 & October 1
Final Expected Regular
Distribution Date............... April 1, 2015 April 1, 2013 April 1, 2007 April 1, 2007
Final Maturity Date............... October 1, 2016 October 1, 2014 October 1, 2008 October 1, 2008
Minimum Denomination.............. $1,000 $1,000 $1,000 $1,000
Section 1110 Protection(2)........ Yes Yes Yes Yes
Liquidity Facility Coverage(3).... 3 semiannual 3 semiannual 3 semiannual 3 semiannual
interest interest interest interest
payments payments payments payments
Liquidity Facility Amount at April
1, 1998(3)...................... $48,564,521 $16,426,917 $12,155,173 $1,094,144
- ---------------
(1) Determined as of April 1, 1998, the first Regular Distribution Date after
the scheduled Delivery Period Termination Date, assuming that all Aircraft
are delivered prior to such date, that the maximum principal amount of
Equipment Notes is issued with respect to all Aircraft and that the
aggregate appraised Aircraft value is $1,081,740,200 (which assumes
depreciation of 2% of the initial appraised value for Aircraft delivered
before April 1, 1997, although actual depreciation may differ). The
appraised value is only an estimate and reflects certain assumptions. See
"Description of the Aircraft and the Appraisals -- The Appraisals". The
Mandatory Economic Terms require that the initial loan to aircraft value,
based on the foregoing appraisals, for each Aircraft as of its delivery date
be not in excess of 41% in the case of the Series A Equipment Notes, 55% in
the case of Series B Equipment Notes and 69.99%, 66.19% and 66.25% in the
case of the Series C Equipment Notes with respect to the Boeing 757-224
Aircraft, the Boeing 737-524 Aircraft and the Boeing 737-724 Aircraft,
respectively. Because the aggregate principal amount of all of the Equipment
Notes will not exceed the aggregate face amount of the Certificates, the
maximum initial loan to aircraft value for all of the Series C Equipment
Notes will be less than the foregoing maximums, which are applicable to the
Series C Equipment Note or Notes issued with respect to each Aircraft.
(2) The benefits of Section 1110 of the U.S. Bankruptcy Code are available to
the Loan Trustees.
(3) For each Class of Certificates, the initial amount of the Liquidity
Facilities, taken together, will cover three consecutive semiannual interest
payments (without regard to any future payments of principal on such
Certificates), except that the Liquidity Facilities with respect to each
Trust will not cover interest payable by the Depositary on the Deposits
relating to such Trust. The scheduled payments of interest on the Equipment
Notes and on the Deposits relating to a Trust, taken together, will be
sufficient to pay accrued interest on the outstanding Certificates issued by
such Trust at the rates per annum applicable thereto. In aggregate for Class
A, B, C-I and C-II Certificates, the amount of the Liquidity Facilities at
April 1, 1998, the first Regular Distribution Date after the scheduled
Delivery Period Termination Date, assuming that Equipment Notes in the
maximum principal amount with respect to all Aircraft are acquired by the
Trusts and that all interest and principal due on or prior to April 1, 1998
is paid, will be $78,240,755.
13
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EQUIPMENT NOTES AND THE AIRCRAFT
Set forth below is certain information about the Equipment Notes expected
to be held in the Trusts and the Aircraft expected to secure such Equipment
Notes (except in the case of Aircraft 118 and 119, which reflects actual
information about the financings completed in March and May, 1997,
respectively):
MAXIMUM
PRINCIPAL
MANU- AMOUNT OF
AIRCRAFT FACTURER'S AIRCRAFT LATEST EQUIPMENT APPRAISED
TAIL SERIAL DELIVERY EQUIPMENT NOTE NOTES VALUE
AIRCRAFT TYPE NUMBER NUMBER MONTH(1) MATURITY DATE (IN MILLIONS)(2) (IN MILLIONS)(3)
- -------------- -------- ---------- ------------- --------------- ---------------- ----------------
Boeing 757-224 118 27560 March 1997 April 1, 2013 $37.20 $53.72
Boeing 757-224 119 27561 May 1997 April 1, 2013 37.20 53.80
Boeing 757-224 120 27562 June 1997 April 1, 2013 37.60 53.97
Boeing 757-224 121 27563 July 1997 April 1, 2013 37.60 54.05
Boeing 757-224 122 27564 August 1997 April 1, 2013 37.60 54.13
Boeing 757-224 126 28966 December 1997 April 1, 2013 37.60 54.47
Boeing 757-224 123 27565 January 1998 April 1, 2014 37.60 54.55
Boeing 757-224 127 28967 January 1998 April 1, 2014 37.60 54.55
Boeing 737-524 638 28899 July 1997 October 1, 2014 18.40 27.80
Boeing 737-524 639 28900 July 1997 October 1, 2014 18.40 27.80
Boeing 737-524 640 28901 August 1997 October 1, 2014 18.40 27.80
Boeing 737-524 641 28902 August 1997 October 1, 2014 18.40 27.80
Boeing 737-524 642 28903 August 1997 October 1, 2014 18.40 27.80
September
Boeing 737-524 643 28904 1997 October 1, 2014 18.40 27.83
September
Boeing 737-524 644 28905 1997 October 1, 2014 18.40 27.83
Boeing 737-524 645 28906 October 1997 April 1, 2015 18.40 27.93
Boeing 737-524 646 28907 October 1997 April 1, 2015 18.40 27.93
Boeing 737-524 647 28908 November 1997 April 1, 2015 18.40 28.04
Boeing 737-524 648 28909 November 1997 April 1, 2015 18.40 28.04
Boeing 737-524 649 28910 December 1997 April 1, 2015 18.40 28.15
Boeing 737-524 650 28911 December 1997 April 1, 2015 18.40 28.15
Boeing 737-524 651 28912 December 1997 April 1, 2015 18.40 28.15
Boeing 737-524 652 28913 January 1998 April 1, 2015 18.40 28.26
Boeing 737-524 653 28914 January 1998 April 1, 2015 18.40 28.26
Boeing 737-524 654 28915 February 1998 April 1, 2015 18.40 28.36
Boeing 737-524 655 28916 February 1998 April 1, 2015 18.40 28.36
Boeing 737-724 701 28762 January 1998 April 1, 2015 24.40 36.83
Boeing 737-724 702 28763 January 1998 April 1, 2015 24.40 36.83
Boeing 737-724 703 28764 February 1998 April 1, 2015 24.40 36.89
Boeing 737-724 704 28765 February 1998 April 1, 2015 24.40 36.89
- ---------------
(1) Reflects the scheduled delivery months under Continental's purchase
agreement with the manufacturer. Aircraft 118 and 119 have been delivered.
The actual delivery date for the other Aircraft may be subject to delay. See
"Description of the Aircraft and the Appraisals -- Deliveries of Aircraft".
Continental has the option to substitute other Boeing 757-224, 737-524 or
737-724 aircraft in the event that the delivery of any Aircraft is expected
to be delayed for more than 30 days after the month scheduled for delivery
or beyond the Delivery Period Termination Date. See "Description of the
Aircraft and the Appraisals -- Substitute Aircraft".
(2) Except in the case of Aircraft 118 and 119 (which have been delivered),
reflects the initial maximum principal amount as of the date of original
issuance, which principal amount may be less with respect to an Aircraft
depending on the circumstances of the financing of such Aircraft. The
Mandatory Economic Terms require that the maximum aggregate principal amount
of the Equipment Notes issued with respect to all Boeing 757-224 Aircraft
not exceed $300,800,000, all Boeing 737-524 not exceed $331,200,000 and all
Boeing 737-724 Aircraft not exceed $97,600,000. The aggregate principal
amount of all Equipment Notes will not exceed the aggregate face amount of
the Certificates.
(3) The appraised value of each Aircraft set forth above is based upon varying
assumptions and methodologies and reflects the lesser of the average and
median values of such Aircraft as appraised by three independent appraisal
and consulting firms: Aircraft Information Services, Inc. ("AISI" ), BK
Associates, Inc. ("BK") and Morten Beyer and Associates, Inc. ("MBA")
(collectively, the "Appraisers"), determined as of February 25, 1997,
January 8, 1997 and February 21, 1997, respectively, and projected as of the
scheduled delivery month of each Aircraft. An appraisal is only an estimate
of value and should not be relied upon as a measure of realizable value. See
"Risk Factors -- Appraisals and Realizable Value of Aircraft" and
"Description of the Aircraft and the Appraisals".
14
16
LOAN TO AIRCRAFT VALUE RATIOS
The following table sets forth loan to Aircraft value ratios ("LTVs") for
each Class of Certificates as of the April 1 Regular Distribution Dates that
occur after the scheduled Delivery Period Termination Date, assuming that
Equipment Notes of each series in the maximum principal amount for all of the
Aircraft are acquired by the Trusts prior to the Delivery Period Termination
Date. The LTVs for any Class of Certificates as of dates prior to the Delivery
Period Termination Date are not meaningful, since the Trust Property will not
include during such period all of the Equipment Notes expected to be acquired by
the Trusts. See "Description of the New Certificates -- General". The LTVs for
each Class of Certificates were obtained for each such Regular Distribution Date
by dividing (i) the expected Pool Balance of such Class of Certificates together
in each case with the expected Pool Balance of all other Classes of Certificates
senior or equal in right of payment to such Class of Certificates under the
Intercreditor Agreement determined immediately after giving effect to the
distributions expected to be made on such Regular Distribution Date, by (ii) the
assumed value of all of the Aircraft (the "Assumed Aggregate Aircraft Value") on
such Regular Distribution Date based on the assumptions set forth below. The
Pool Balances and resulting LTVs are subject to change if, among other things,
the aggregate principal amount of the Equipment Notes acquired by the Trusts is
less than the maximum permitted by the Mandatory Economic Terms or Equipment
Notes with respect to any Aircraft are purchased by the Trusts in other than the
month currently scheduled for delivery of such Aircraft. See "Description of the
New Certificates -- Pool Factors".
The following table is based on the assumption that the value of each
Aircraft included in the Assumed Aggregate Aircraft Value opposite the initial
Regular Distribution Date included in the table depreciates by approximately 2%
of the initial appraised value per year until the fifteenth year after the year
of delivery of such Aircraft and by approximately 4% of the initial appraised
value per year thereafter. Other rates or methods of depreciation would result
in materially different LTVs and no assurance can be given (i) that the
depreciation rates and method assumed for the purpose of the table are the ones
most likely to occur or (ii) as to the actual future value of any Aircraft.
Although the table is compiled on an aggregate basis, it should be noted that,
since the Equipment Notes are not cross-collateralized with respect to the
Aircraft, the excess proceeds realized from the disposition of any particular
Aircraft would not be available to offset shortfalls on the Equipment Notes
relating to any other Aircraft. Therefore, upon the occurrence of an Indenture
Default, even if the Aircraft as a group could be sold for more than the total
amounts payable in respect of all of the outstanding Equipment Notes, if certain
Aircraft were sold for less than the total amount payable in respect of the
related Equipment Notes, there would not be sufficient proceeds to pay all
Classes of Certificates in full. See "Description of the Equipment Notes -- Loan
to Value Ratios of Equipment Notes" for examples of LTVs for the Equipment Notes
issued in respect of individual Aircraft, which may be more relevant in a
default situation than the aggregate values shown in the following table. Thus,
the table should not be considered a forecast or prediction of expected or
likely LTVs but simply a mathematical calculation based on one set of
assumptions. In addition, the initial appraised value of each Aircraft was based
upon the lesser of the average and the median value of each Aircraft as
appraised by the Appraisers, as of the respective date of their appraisals and
projected as of the scheduled delivery month of each such Aircraft. No assurance
can be given that such value represents the realizable value of any Aircraft.
See "Risk Factors -- Risk Factors Relating to the Certificates and the
Offering -- Appraisal and Realizable Value of Aircraft" and "Description of the
Aircraft and the Appraisals -- The Appraisals".
ASSUMED CLASS A CLASS B CLASS C-I
AGGREGATE CERTIFICATES CLASS A CERTIFICATES CLASS B CERTIFICATES CLASS C-I
AIRCRAFT POOL CERTIFICATES POOL CERTIFICATES POOL CERTIFICATES
DATE VALUE BALANCE LTV BALANCE LTV BALANCE LTV
- ------------- -------------- ------------ ------------ ------------ ------------ ------------ ------------
April 1, 1998 $1,081,740,200 $433,941,121 40.12% $146,780,295 53.68% $109,210,897 64.69%
April 1, 1999 1,060,040,800 427,036,568 40.28 145,584,404 54.02 108,072,170 65.13
April 1, 2000 1,038,341,400 416,653,383 40.13 143,527,813 53.95 102,514,584 64.71
April 1, 2001 1,016,642,000 402,886,044 39.63 141,289,084 53.53 90,828,747 63.27
April 1, 2002 994,942,600 384,428,108 38.64 138,464,875 52.56 68,140,359 60.02
April 1, 2003 973,243,200 374,329,700 38.46 133,628,084 52.19 39,836,687 56.65
April 1, 2004 951,543,800 364,988,151 38.36 123,579,583 51.34 18,573,888 53.47
April 1, 2005 929,844,400 359,033,292 38.61 105,095,450 49.91 3,259,763 50.30
April 1, 2006 908,145,000 353,166,186 38.89 92,337,736 49.06 889,515 49.16
April 1, 2007 886,445,600 337,263,875 38.05 71,117,103 46.07 0 46.07
April 1, 2008 864,746,200 319,150,659 36.91 46,995,379 42.34 0 0.00
April 1, 2009 843,046,800 299,160,594 35.49 27,964,589 38.80 0 0.00
April 1, 2010 821,347,400 253,263,778 30.84 16,086,768 32.79 0 0.00
April 1, 2011 799,648,000 216,030,916 27.02 8,088,596 28.03 0 0.00
April 1, 2012 777,948,600 153,308,257 19.71 336,950 19.75 0 0.00
April 1, 2013 753,019,400 76,215,673 10.12 0 10.12 0 0.00
April 1, 2014 709,620,600 31,167,389 4.39 0 4.39 0 0.00
CLASS C-II
CERTIFICATES CLASS C-II
POOL CERTIFICATES
DATE BALANCE LTV
- ------------- ------------ ------------
April 1, 1998 $9,830,583 64.69%
April 1, 1999 9,728,081 65.13
April 1, 2000 9,227,817 64.71
April 1, 2001 8,175,920 63.27
April 1, 2002 6,133,632 60.02
April 1, 2003 3,585,886 56.65
April 1, 2004 1,671,922 53.47
April 1, 2005 293,426 50.30
April 1, 2006 80,069 49.16
April 1, 2007 0 46.07
April 1, 2008 0 0.00
April 1, 2009 0 0.00
April 1, 2010 0 0.00
April 1, 2011 0 0.00
April 1, 2012 0 0.00
April 1, 2013 0 0.00
April 1, 2014 0 0.00
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CASH FLOW STRUCTURE
Set forth below is a diagram illustrating the structure for the offering of
the Certificates and certain cash flows.
[FLOW CHART]
(1) Each Leased Aircraft will be subject to a separate Lease and the related
Indenture; each Owned Aircraft will be subject to a separate Indenture.
(2) Funds held as Deposits relating to each Trust will be withdrawn to purchase
Equipment Notes on behalf of such Trust from time to time during the
Delivery Period. If any funds remain as Deposits with respect to any Trust
at the Delivery Period Termination Date, such funds will be withdrawn by the
Escrow Agent and distributed to the holders of the Certificates issued by
such Trust, together with accrued and unpaid interest thereon and a premium.
No interest will accrue with respect to the Deposits after they have been
fully withdrawn.
(3) The initial amount of the Liquidity Facilities for each Trust, taken
together, will cover three consecutive semiannual interest payments with
respect to each Trust, except that the Liquidity Facilities will not cover
interest payable by the Depositary on the Deposits relating to such Trust.
The scheduled payments of interest on the Equipment Notes and on the
Deposits relating to a Trust, taken together, will be sufficient to pay an
amount equal to accrued interest on the outstanding Certificates issued by
such Trust at the rate per annum applicable thereto.
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THE NEW CERTIFICATES
Certificates;
Denominations.............. The New Certificates of each Trust will be issued
in a minimum denomination of $1,000 and in
integral multiples thereof. See "Description of
the New Certificates -- General".
Regular Distribution
Dates...................... April 1 and October 1, commencing October 1, 1997.
Special Distribution
Dates...................... Any Business Day on which a Special Payment is to
be distributed.
Record Dates............... The fifteenth day preceding a Regular Distribution
Date or a Special Distribution Date.
Distributions.............. All payments of principal, premium (if any) and
interest received by the Trustee on the Equipment
Notes held in each Trust and all payments of
interest on the Deposits relating to each Trust
will be distributed by the Trustee (in the case
of the Equipment Notes) or by the Paying Agent
(in the case of the Deposits) to the holders of
the Certificates (the "Certificateholders") of
such Trust, subject in the case of payments on
the Equipment Notes to the provisions of the
Intercreditor Agreement. Such payments of
interest are scheduled to be received by the
Trustee of each Trust on April 1 and October 1,
commencing on October 1, 1997. Payments of
principal of the Equipment Notes are scheduled to
be received on April 1 and October 1 in certain
years, commencing April 1, 1998. Payments of
principal, premium (if any) and interest
resulting from the early redemption or purchase
(if any) of the Equipment Notes held in any Trust
will be distributed to the Certificateholders of
such Trust on a Special Distribution Date after
not less than 20 days' notice to such
Certificateholders of such Trust, subject to the
provisions of the Intercreditor Agreement. If any
funds remain as Deposits with respect to any
Trust at the Delivery Period Termination Date,
they will be withdrawn by the Escrow Agent for
such Trust and distributed, with accrued and
unpaid interest thereon, plus a premium payable
by Continental (i) in the case of the holders of
Certificates issued by the Class A Trust, the
Class B Trust and the Class C-I Trust, equal to
the Deposit Make-Whole Premium with respect to
the aggregate amount of funds so distributed
(excluding accrued interest) and (ii) in the case
of the holders of Certificates issued by the
Class C-II Trust, equal to the Class C-II Premium
with respect to such aggregate amount, to the
Certificateholders of such Trust on a Special
Distribution Date after not less than 20 days'
notice to such Certificateholders. Payments in
respect of Deposits will not be subject to the
Intercreditor Agreement. For a discussion of
distributions with respect to unused Deposits
upon the occurrence of a Triggering Event, see
"Description of the Deposit
Agreements -- Distribution Upon Occurrence of
Triggering Event", and for a discussion of
distributions by the Trusts upon an Indenture
Default, see "Description of the New
Certificates -- Indenture Defaults and Certain
Rights Upon an Indenture Default".
Events of Default.......... Events of default under each Pass Through Trust
Agreement (each, a "PTC Event of Default") are
the failure to pay within 10 Business Days of the
due date thereof: (i) the outstanding Pool
Balance of the applicable Class of Certificates
on the Final Maturity Date for such Class or (ii)
interest due on such Certificates on any
distribution date (unless the Subordination Agent
shall have made Interest Drawings
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with respect to the applicable Class of
Certificates, or drawings on the Cash Collateral
Account for such Class of Certificates, in an
aggregate amount sufficient to pay such interest
and shall have distributed such amount to the
Trustee entitled thereto). The Final Maturity
Date for the Class A Certificates is October 1,
2016, for the Class B Certificates is October 1,
2014, for the Class C-I Certificates is October
1, 2008 and for the Class C-II Certificates is
October 1, 2008. Any failure to make expected
principal distributions on any Class of
Certificates on any Regular Distribution Date
(other than the Final Maturity Date) will not
constitute a PTC Event of Default with respect to
such Certificates.
Purchase Rights of
Certificateholders....... Upon the occurrence and during the continuation of
a Triggering Event, (i) the Class B
Certificateholders shall have the right to
purchase all, but not less than all, of the Class
A Certificates and (ii) the Class C
Certificateholders shall have the right to
purchase all, but not less than all, of the Class
A Certificates and the Class B Certificates, in
each case at a purchase price equal to the Pool
Balance of the relevant Class or Classes of
Certificates plus accrued and unpaid interest
thereon to the date of purchase without premium
but including any other amounts due to the
Certificateholders of such Class or Classes.
"Triggering Event" means (x) the occurrence of an
Indenture Default under all Indentures resulting
in a PTC Event of Default with respect to the
most senior Class of Certificates then
outstanding, (y) the acceleration of all of the
outstanding Equipment Notes (provided that during
the Delivery Period the aggregate principal
amount thereof exceeds $280 million) or (z)
certain bankruptcy or insolvency events involving
Continental.
Successor Trusts........... On the Transfer Date, each of the Original Trusts
will transfer and assign all of its assets and
rights to a newly-created, substantially
identical Successor Trust, except that (i) the
Successor Trusts will not have the right to
purchase new Equipment Notes and (ii) Delaware
law will govern the Original Trusts and New York
law will govern the Successor Trusts. The
institution acting as Original Trustee for an
Original Trust will also act as the New Trustee
of the corresponding Successor Trust, and the New
Trustee of each Successor Trust will assume the
obligations of the related Original Trustee under
each transaction document to which such Original
Trustee was a party. Upon effectiveness of such
transfer, assignment and assumption, each of the
Original Trusts will be liquidated and each of
the Certificates will represent the same interest
in the Successor Trust as it represented in the
Original Trust immediately prior to such transfer
and assignment.
Escrow Agreements.......... Each Escrow Agent, each Paying Agent, each Trustee
and the Initial Purchasers have entered into a
separate Escrow Agreement for the benefit of the
Certificateholders of each Trust. Pursuant to
each Escrow Agreement, on the initial issuance
date of the Old Certificates (the "Issuance
Date"), the cash proceeds of the offering of Old
Certificates of each Trust were deposited on
behalf of the Escrow Agent for the benefit of the
holders of such Certificates with the Depositary
as Deposits relating to such Trust. The Escrow
Agent of each Trust has been given irrevocable
instructions (i) to permit the
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20
Trustee of such Trust to cause funds to be
withdrawn from such Deposits on or prior to the
Delivery Period Termination Date for the purpose
of enabling such Trustee to purchase Equipment
Notes on and subject to the terms and conditions
of the Note Purchase Agreement and (ii) to direct
the Depositary to pay interest on the Deposits
accrued in accordance with the Deposit Agreement
to the Paying Agent for distribution to the
Certificateholders of such Trust. See
"Description of the Escrow Agreements".
Deposit Agreements and the
Depositary............... The Escrow Agent with respect to each Trust has
entered into a separate Deposit Agreement with
the Depositary relating to such Trust pursuant to
which the Depositary established separate
accounts into which the proceeds of the sale of
the Old Certificates of such Trust were
deposited, from which the Escrow Agent, upon
request from the Trustee of such Trust, will make
withdrawals and into which such Trustee will make
re-deposits during the Delivery Period. Pursuant
to the Deposit Agreement with respect to each
Trust, on each Regular Distribution Date the
Depositary will pay to the Paying Agent on behalf
of the applicable Escrow Agent, for distribution
to the Certificateholders of such Trust, an
amount equal to interest accrued on the Deposits
relating to such Trust during the relevant
interest period at a rate per annum equal to the
interest rate applicable to the Certificates
issued by such Trust. The interest rates payable
on the Deposits are subject to change under
certain circumstances described in "The Exchange
Offer -- Terms of the Exchange Offer -- General"
to the same extent as the interest rates for the
Equipment Notes. Upon each delivery of an
Aircraft during the Delivery Period, the Trustees
for the Class A Trust, the Class B Trust and the
Class C-I Trust (or, if the Deposits relating to
the Class C-I Trust have been fully withdrawn,
the Class C-II Trust) will request the Escrow
Agent relating to such Trust to withdraw from the
Deposits relating to such Trust funds sufficient
to enable the Trustee of such Trust to purchase
the Equipment Note of the series applicable to
such Trust issued with respect to such Aircraft.
Accrued but unpaid interest on all such Deposits
withdrawn to purchase Equipment Notes will be
paid on the next Regular Distribution Date. Any
portion of any withdrawn Deposit which is not
used to purchase such Equipment Note will be re-
deposited with the Depositary. If any funds
remain as Deposits with respect to any Trust at
the Delivery Period Termination Date, they will
be withdrawn by the Escrow Agent and distributed,
together with accrued and unpaid interest thereon
and a premium payable by Continental, to the
Certificateholders of such Trust. The Deposits
relating to each Trust and interest paid thereon
are not subject to the subordination provisions
of the Intercreditor Agreement and are not
available to pay any other amount in respect of
the Certificates.
Credit Suisse First Boston, New York Branch acts as
the Depositary. Credit Suisse First Boston is a
Swiss bank and is one of the largest banking
institutions in the world, with total
consolidated assets of approximately Sfr 412
billion ($307 billion) and total consolidated
shareholders' equity of approximately Sfr 9.7
billion (U.S. $7.2 billion) in each case as of
December 31, 1996, on a pro forma basis. Credit
Suisse First Boston has long-term unsecured debt
ratings of
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21
Aa3 from Moody's and AA from Standard & Poor's
and short-term unsecured debt ratings of P-1 from
Moody's and A-1+ from Standard & Poor's. See
"Description of the Deposit Agreements --
Depositary".
Unused Deposits............ The Trustees' obligations to purchase the Equipment
Notes issued with respect to each Aircraft are
subject to satisfaction of certain conditions,
and no assurance can be given that all such
conditions will be satisfied. See "Description of
the New Certificates -- Obligation to Purchase
Equipment Notes". All of the Aircraft are
scheduled to be delivered by February 1998,
although the delivery of any Aircraft may be
subject to delay. See "Description of the
Aircraft and the Appraisals -- Deliveries of
Aircraft". The Delivery Period expires on March
31, 1998 (or June 30, 1998 under certain
circumstances discussed in "Description of the
Aircraft and the Appraisals -- Deliveries of
Aircraft"). In addition, depending on the
circumstances of the financing of each Aircraft,
the maximum aggregate principal amount of
Equipment Notes may not be issued. If any funds
remain as Deposits with respect to any Trust at
the Delivery Period Termination Date, they will
be withdrawn by the Escrow Agent for such Trust
and distributed, with accrued and unpaid interest
thereon, plus a premium payable by Continental
(i) in the case of the holders of Certificates
issued by the Class A Trust, the Class B Trust
and the Class C-I Trust, equal to the Deposit
Make-Whole Premium with respect to the aggregate
amount of funds so distributed (excluding accrued
interest) and (ii) in the case of the holders of
Certificates issued by the Class C-II Trust,
equal to the Class C-II Premium with respect to
such aggregate amount, to the Certificateholders
of such Trust after at least 20 days' prior
written notice. See "Description of the Deposit
Agreements -- Unused Deposits".
Obligation to Purchase
Equipment Notes.......... The Trustees are obligated to purchase the
Equipment Notes issued with respect to each
Aircraft during the Delivery Period, subject to
the terms and conditions of the Note Purchase
Agreement. Under the Note Purchase Agreement,
Continental has the option of entering into a
leveraged lease financing or a secured debt
financing with respect to each Aircraft. The Note
Purchase Agreement provides for the relevant
parties to enter into (i) with respect to each
Leased Aircraft, a Participation Agreement, a
Lease and a Leased Aircraft Indenture relating to
the financing of such Leased Aircraft and (ii)
with respect to each Owned Aircraft, a
Participation Agreement and an Owned Aircraft
Indenture relating to the financing of such Owned
Aircraft (any such Participation Agreement, a
"Participation Agreement"). The description of
such agreements in this Prospectus is based on
the forms of such agreements contemplated by the
Note Purchase Agreement. In the case of a Leased
Aircraft, the terms of the agreements actually
entered into may differ from the forms of such
agreements and, consequently, may differ from the
description of such agreements contained in this
Prospectus. However, under the Note Purchase
Agreement, the terms of such agreements are
required to (i) contain the Mandatory Document
Terms and (ii) not vary the Mandatory Economic
Terms. In addition, Continental is obligated (i)
to certify to the Trustees that any such
modifications do not materially and
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adversely affect the Certificateholders and (ii)
to obtain written confirmation from each Rating
Agency that the use of versions of such
agreements modified in any material respect will
not result in a withdrawal, suspension or
downgrading of the rating of any Class of
Certificates. Further, under the Note Purchase
Agreement, it is a condition precedent to the
obligation of each Trustee to purchase the
Equipment Notes related to the financing of an
Aircraft that no Triggering Event shall have
occurred. The Trustees will have no right or
obligation to purchase Equipment Notes after the
Delivery Period Termination Date. See
"Description of the New
Certificates -- Obligation to Purchase Equipment
Notes".
Equipment Notes
(a) Interest............. The Equipment Notes held in each Trust will accrue
interest at the applicable rate per annum for the
Certificates issued by such Trust set forth on
the cover page of this Prospectus, payable on
April 1 and October 1 of each year, commencing on
October 1, 1997, or, if later, the first such
date to occur after initial issuance thereof, and
such interest payments will be passed through to
Certificateholders of such Trust on each such
date until the final distribution date for such
Certificates, in each case, subject to the
Intercreditor Agreement. Interest is calculated
on the basis of a 360-day year consisting of
twelve 30-day months. See "Description of the
Equipment Notes -- Principal and Interest
Payments". The interest rates for the Equipment
Notes are subject to change under certain
circumstances described in "The Exchange
Offer -- Terms of the Exchange Offer -- General".
(b) Principal............ Scheduled principal payments on the Equipment Notes
held in each Trust will be passed through to the
Certificateholders of each such Trust on April 1
and October 1 in certain years, commencing on
October 1, 1997, in each case, subject to the
Intercreditor Agreement. See "Description of the
New Certificates -- Pool Factors" and
"Description of the Equipment Notes -- Principal
and Interest Payments".
(c) Redemption and
Purchase................. (i) The Equipment Notes issued with respect to an
Aircraft will be redeemed in whole upon the
occurrence of an Event of Loss with respect to
such Aircraft if such Aircraft is not replaced by
Continental under the related Lease (in the case
of a Leased Aircraft) or under the related Owned
Aircraft Indenture (in the case of an Owned
Aircraft), in each case at a price equal to the
aggregate unpaid principal thereof, together with
accrued interest thereon to, but not including,
the date of redemption, but without any premium.
(ii) All of the Equipment Notes issued with respect
to any Aircraft may be redeemed prior to maturity
at a price equal to the aggregate unpaid
principal thereof, together with accrued interest
thereon to, but not including, the date of
redemption, plus, if such redemption is made
prior to April 1, 2010 in the case of the Series
A Equipment Notes, April 1, 2007 in the case of
the Series B Equipment Notes and April 1, 2003 in
the case of the Series C Equipment Notes (with
respect to any such Series, its "Premium
Termination Date"), a Make-Whole Premium. See
"Description of the Equipment
Notes -- Redemption" for
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a description of the manner of computing such
Make-Whole Premium and the circumstances under
which the Equipment Notes may be so redeemed.
(iii) If, with respect to a Leased Aircraft, (x)
one or more Lease Events of Default shall have
occurred and be continuing, (y) in the event of a
bankruptcy proceeding involving Continental, (A)
during the Section 1110 Period, the trustee in
such proceeding or Continental refuses to assume
or agree to perform its obligations under the
related Lease or (B) at any time after assuming
or agreeing to perform such obligations, such
trustee or Continental ceases to perform such
obligations such that the stay period applicable
under the U.S. Bankruptcy Code comes to an end or
(z) the Equipment Notes with respect to such
Aircraft have been accelerated or the Leased
Aircraft Trustee with respect to such Equipment
Notes takes action or notifies the applicable
Owner Trustee that it intends to take action to
foreclose the lien of the related Leased Aircraft
Indenture or otherwise commence the exercise of
any significant remedy under such Indenture or
the related Lease, then in each case all, but not
less than all, of the Equipment Notes issued with
respect to such Leased Aircraft may be purchased
by the Owner Trustee or Owner Participant on the
applicable purchase date at a price equal to the
aggregate unpaid principal thereof, together with
accrued interest thereon to, but not including,
the purchase date, but without any premium
(provided that a Make-Whole Premium shall be
payable if such Equipment Notes are to be
purchased pursuant to clause (x) above when a
Lease Event of Default shall have occurred and be
continuing for less than 120 days). Continental,
as owner of the Owned Aircraft, will have no
comparable right under any Owned Aircraft
Indenture to purchase the Equipment Notes under
such circumstances.
(d) Security............. The Equipment Notes issued with respect to each
Aircraft will be secured by a security interest
in such Aircraft and, in the case of each Leased
Aircraft, by an assignment to the related Leased
Aircraft Trustee of certain of the related Owner
Trustee's rights under the Lease with respect to
such Aircraft, including the right to receive
payments of rent thereunder, with certain
exceptions. The Equipment Notes will not be
cross-collateralized and, consequently, the
Equipment Notes issued in respect of any one
Aircraft are not secured by any of the other
Aircraft or the Leases related thereto. There
will not be cross-default provisions in the
Indentures or in the Leases (unless, in the case
of a Lease, otherwise agreed between an Owner
Participant and Continental). Consequently,
events resulting in an Indenture Default under
any particular Indenture may or may not result in
an Indenture Default occurring under any other
Indenture, and a Lease Event of Default under any
particular Lease may or may not constitute a
Lease Event of Default under any other Lease. If
the Equipment Notes issued with respect to one or
more Aircraft are in default and the Equipment
Notes issued with respect to the remaining
Aircraft are not in default, no remedies will be
exercisable under the Indentures with respect to
such remaining Aircraft. See "Description of the
Equipment Notes -- Security" and "-- Indenture
Defaults, Notice and Waiver".
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Although the Equipment Notes issued in respect of
the Leased Aircraft are not obligations of, or
guaranteed by, Continental, the amounts
unconditionally payable by Continental for lease
of the Leased Aircraft will be sufficient to pay
in full when due all scheduled amounts required
to be paid on the Equipment Notes issued in
respect of the Leased Aircraft. The Equipment
Notes issued in respect of the Owned Aircraft
will be direct obligations of Continental. See
"Description of the Equipment Notes -- General".
(e) Section 1110
Protection................. It is a condition to the Trustees' obligation to
purchase Equipment Notes with respect to each
Aircraft that outside counsel to Continental,
which is expected to be Hughes Hubbard & Reed
LLP, provide its opinion to the Trustees that (i)
if such Aircraft is a Leased Aircraft, the Owner
Trustee, as lessor under the Lease for such
Aircraft, and the related Leased Aircraft
Trustee, as assignee of such Owner Trustee's
rights under such Lease pursuant to the related
Leased Aircraft Indenture, will be entitled to
the benefits of Section 1110 of the U.S.
Bankruptcy Code with respect to the airframe and
engines comprising such Aircraft or (ii) if such
Aircraft is an Owned Aircraft, the Owned Aircraft
Trustee will be entitled to the benefits of
Section 1110 of the U.S. Bankruptcy Code with
respect to the airframe and engines comprising
such Aircraft. See "Description of the Equipment
Notes -- Remedies" for a description of such
required opinion and certain assumptions
permitted to be contained therein.
(f) Ranking.............. Series B Equipment Notes issued in respect of any
Aircraft will be subordinated in right of payment
to Series A Equipment Notes issued in respect of
such Aircraft, and Series C Equipment Notes
issued in respect of such Aircraft will be
subordinated in right of payment to such Series B
Equipment Notes. On each Distribution Date, (i)
payments of interest and principal due on Series
A Equipment Notes issued in respect of any
Aircraft will be made prior to payments of
interest and principal due on Series B Equipment
Notes issued in respect of such Aircraft and (ii)
payments of interest and principal due on such
Series B Equipment Notes will be made prior to
payments of interest and principal due on Series
C Equipment Notes issued in respect of such
Aircraft.
(g) Owner Participant.... Continental currently intends to lease all of the
Aircraft. Continental has obtained commitments of
certain companies to act as the owner participant
("Owner Participant") with respect to the
leveraged leases for all of the Aircraft and, in
certain cases, is seeking alternative commitments
on more favorable terms. The existing commitments
are subject to satisfaction of certain conditions
with respect to each Aircraft and, in certain
cases, Continental may elect to terminate such
commitments with respect to certain Aircraft.
Accordingly, Continental may select one or more
other Owner Participants for some or all of such
Aircraft or finance such Aircraft as Owned
Aircraft rather than Leased Aircraft. Each Owner
Participant will have the right to sell, assign
or otherwise transfer its interests as Owner
Participant in any of such leveraged leases,
subject to the terms and conditions of the
relevant Participation Agreement and related
documents. See "Risk Factors -- Risk Factors
Relating to the Certificates and the
Offering -- Owner Participant; Revisions to
Agreements".
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25
Liquidity Facilities....... Each Liquidity Provider and the Subordination Agent
have entered into a separate revolving credit
agreement (each, a "Liquidity Facility") with
respect to each of the Trusts. Under the
Liquidity Facilities with respect to any Trust,
the Liquidity Providers will, if necessary, make
advances ("Interest Drawings") in an aggregate
amount (the "Required Amount") sufficient to pay
interest on the Certificates of such Trust on up
to three successive semiannual Regular
Distribution Dates (without regard to any future
payments of principal on such Certificates) at
the respective interest rates shown on the cover
page of this Prospectus (plus an additional
margin specified by the Registration Rights
Agreement, if applicable) for such Certificates
(the "Stated Interest Rates"), except that the
Liquidity Facilities with respect to each Trust
will not cover interest payable by the Depositary
on the Deposits relating to such Trust. Each of
the two Liquidity Facilities with respect to each
Trust cover 50% (the "Stated Portion") of the
Required Amount for such Trust. The initial
Required Amount under the Liquidity Facilities on
April 1, 1998, the first Regular Distribution
Date after the scheduled Delivery Period
Termination Date, for the Class A Certificates,
the Class B Certificates, the Class C-I
Certificates and the Class C-II Certificates,
assuming that Equipment Notes in the maximum
principal amount with respect to all of the
Aircraft are acquired by the Trusts and that all
interest and principal due on or prior to April
1, 1998 is paid, will be $48,564,521,
$16,426,917, $12,155,173 and $1,094,144,
respectively. Interest Drawings under the
relevant Liquidity Facilities will be made
promptly after any Regular Distribution Date if,
after giving effect to the subordination
provisions of the Intercreditor Agreement, there
are insufficient funds available to the
Subordination Agent to pay interest on any Class
A, B, C-I or C-II Certificates; provided,
however, that on any date the maximum amount
available under a Liquidity Facility with respect
to any Trust to fund any shortfall in interest
due on the Certificates of such Trust will not
exceed an amount equal to the Stated Portion of
the then Required Amount of such Liquidity
Facility less the aggregate amount of each
Interest Drawing outstanding under such Liquidity
Facility at such time (the "Maximum Available
Commitment"). The Liquidity Facilities for any
Class of Certificates do not provide for drawings
thereunder to pay for principal of or premium on
the Certificates of such Class, any interest on
the Certificates of such Class in excess of the
Stated Interest Rates, or principal of or
interest or premium on the Certificates of any
other Class.
Upon each Interest Drawing under any Liquidity
Facility, the Subordination Agent is obligated to
reimburse (to the extent that the Subordination
Agent has available funds therefor) the Liquidity
Provider for the amount of such drawing. Such
reimbursement obligation and any other amounts
owing to the Liquidity Provider under each
Liquidity Facility or certain other agreements
(the "Liquidity Obligations") ranks pari passu
with the Liquidity Obligations relating to all
other Liquidity Facilities and ranks senior to
the Certificates in right of payment. Upon
reimbursement in full of the Interest Drawings,
together with any accrued interest thereon, under
any Liquidity Facility, the Maximum Available
Commitment under such Liquidity Facility will be
reinstated to the Stated Portion of the then
Required
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Amount of such Liquidity Facility; provided that
the amount will not be so reinstated if (i) a
Liquidity Event of Default shall have occurred
and be continuing and (ii) less than 65% of the
aggregate outstanding principal amount of all
Equipment Notes are Performing Equipment Notes.
"Performing Equipment Note" means an Equipment Note
with respect to which no payment default has
occurred and is continuing; provided that in the
event of a bankruptcy proceeding involving
Continental under the U.S. Bankruptcy Code, (i)
any payment default existing during the 60-day
period under Section 1110(a)(1)(A) of the U.S.
Bankruptcy Code (or such longer period as may
apply under Section 1110(b) of the U.S.
Bankruptcy Code) (the "Section 1110 Period")
shall not be taken into consideration, unless
during the Section 1110 Period the trustee in
such proceeding or Continental refuses to assume
or agree to perform its obligations under the
Lease related to such Equipment Note (in the case
of a Leased Aircraft) or under the Owned Aircraft
Indenture related to such Equipment Note (in the
case of an Owned Aircraft), and (ii) any payment
default occurring after the date of the order of
relief in such proceeding shall not be taken into
consideration if such payment default is cured
under Section 1110(a)(1)(B) of the U.S.
Bankruptcy Code before the later of 30 days after
the date of such default or the expiration of the
Section 1110 Period.
If at any time the short-term unsecured debt rating
of any Liquidity Provider issued by either Rating
Agency is lower than the Threshold Rating, each
Liquidity Facility provided by such Liquidity
Provider will be required to be replaced by a
financial institution having such unsecured debt
ratings issued by both Rating Agencies that are
equal to or higher than the Threshold Rating. If
any such Liquidity Facility is not replaced
within 10 days after notice of the downgrading,
such Liquidity Facility will be drawn in full up
to the then Maximum Available Commitment (the
"Downgrade Drawing") and the proceeds will be
deposited into a cash collateral account (the
"Cash Collateral Account") for the related Class
of Certificates and used for the same purposes
and under the same circumstances and subject to
the same conditions as cash payments of Interest
Drawings under such Liquidity Facility would be
used. In addition, the Intercreditor Agreement
provides for the replacement or extension of
either Liquidity Facility for any Class of
Certificates which is scheduled to expire prior
to the date that is fifteen days after the Final
Maturity Date for such Class. If such Liquidity
Facility cannot be so replaced or extended by the
date that is 25 days prior to the then scheduled
expiration date of such Liquidity Facility, such
Liquidity Facility will be drawn in full up to
the then Maximum Available Commitment (the
"Non-Extension Drawing") and the proceeds will be
deposited in the Cash Collateral Account for the
related Class of Certificates and used for the
same purposes and under the same circumstances
and subject to the same conditions as cash
payments of Interest Drawings under such
Liquidity Facility would be used. Each initial
Liquidity Facility is scheduled to expire on the
364th day after the Issuance Date, subject to
annual extensions by mutual agreement.
25
27
Upon receipt by the Subordination Agent of a
Termination Notice with respect to any Liquidity
Facility from the applicable Liquidity Provider
(given as described in "Description of the
Liquidity Facilities -- Liquidity Events of
Default"), the Subordination Agent shall request
a final drawing (the "Final Drawing") under such
Liquidity Facility in an amount equal to the then
Maximum Available Commitment thereunder and shall
hold the proceeds thereof in the Cash Collateral
Account for the related Trust to be used for the
same purposes and under the same circumstances,
and subject to the same conditions, as cash
payments of Interest Drawings under such
Liquidity Facility would be used. All amounts on
deposit in the Cash Collateral Account for any
Trust that are in excess of the Required Amount
will be paid to the Liquidity Providers.
Continental may, at its option, with or without
cause, arrange for a replacement facility to
replace either Liquidity Facility for any Trust,
subject to certain conditions. If such
replacement facility is provided at any time
after a Downgrade Drawing or Non-Extension
Drawing under such Liquidity Facility, the funds
on deposit with respect to such Liquidity
Facility in the Cash Collateral Account for such
Trust will be returned to the Liquidity Provider
being replaced.
Notwithstanding the subordination provisions of the
Intercreditor Agreement, the holders of the
Certificates issued by each Trust will be
entitled to receive and retain the proceeds of
drawings under the Liquidity Facilities for such
Trust. See "Description of the Liquidity
Facilities".
Intercreditor Agreement
(a) Subordination........ The Trustees, the Liquidity Providers and the
Subordination Agent have entered into an
agreement (the "Intercreditor Agreement") which
provides as follows:
(i) All payments made in respect of the Equipment
Notes and certain other payments will be made to
the Subordination Agent, which will distribute
such payments in accordance with the provisions
of paragraphs (ii) and (iii) below.
(ii) On any Regular Distribution Date or Special
Distribution Date (each, a "Distribution Date"),
so long as no Triggering Event shall have
occurred (whether or not continuing), all
payments received by the Subordination Agent in
respect of the Equipment Notes and certain other
payments shall be distributed in the following
order: (1) payment of certain Liquidity
Obligations; (2) payment of Expected
Distributions to the holders of Class A
Certificates; (3) payment of Expected
Distributions to the holders of Class B
Certificates; (4) payment of Expected
Distributions to the holders of Class C
Certificates; and (5) payment of certain fees and
expenses of the Subordination Agent and the
Trustees.
"Expected Distributions" means, with respect to the
Certificates of any Trust on any Distribution
Date (the "Current Distribution Date"), the sum
of (x) accrued and unpaid interest on such
Certificates (excluding interest, if any, payable
with respect to the Deposits relating to such
Trust) and (y) the difference between (A) the
Pool Balance of such Certificates as of the
immediately preceding Distribution Date
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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, upon redemption,
prepayment 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 Intercreditor
Agreement has been paid in full and such payments
have been distributed to the holders of such
Certificates, but without giving effect to any
reduction in the Pool Balance as a result of any
distribution attributable to Deposits.
(iii) Upon the occurrence of a Triggering Event and
at all times thereafter, all payments received by
the Subordination Agent in respect of the
Equipment Notes and certain other payments shall
be distributed in the following order: (1) to the
Subordination Agent, the Trustees and certain
other parties in payment of the Administration
Expenses and to the Liquidity Providers in
payment of the Liquidity Obligations; (2) to the
holders of Class A Certificates in payment of
Adjusted Expected Distributions; (3) to the
holders of Class B Certificates in payment of
Adjusted Expected Distributions; and (4) to the
holders of Class C Certificates in payment of
Adjusted Expected Distributions.
"Adjusted Expected Distributions" means, with
respect to the Certificates of any Trust on any
Distribution Date, the sum of (x) accrued and
unpaid interest on such Certificates (excluding
interest, if any, payable with respect to the
Deposits relating to such Trust) and (y) the
greater of:
(A) the difference between (x) the Pool Balance of
such Certificates as of the immediately
preceding Distribution Date and (y) the Pool
Balance of such Certificates as of the Current
Distribution Date calculated on the basis that
(i) the principal of the Equipment Notes other
than Performing Equipment Notes (the
"Non-Performing Equipment Notes") held in such
Trust has been paid in full and such payments
have been distributed to the holders of such
Certificates, (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 Intercreditor Agreement has
been paid in full and such payments have been
distributed to the holders of such
Certificates, but without giving effect to any
reduction in the Pool Balance as a result of
any distribution attributable to Deposits, and
(B) the amount of the excess, if any, of (i) the
Pool Balance of such Class of Certificates as
of the immediately preceding Distribution Date
(less the amount of the Deposits for such Class
of Certificates as of such preceding
Distribution Date other than any portion of
such Deposits thereafter used to acquire
Equipment Notes pursuant to the Note Purchase
Agreement), over (ii) the Aggregate LTV
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29
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 Expected Distributions
or 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
Expected Distributions or Adjusted Expected
Distributions.
"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 on
such Distribution Date of principal of the
Equipment Notes held by the Trust or Trusts of
such senior Class or Classes.
"LTV Collateral Amount" of any Aircraft for any
Class of Certificates means, as of any
Distribution Date, the lesser of (i) the LTV
Ratio for such Class of Certificates multiplied
by the Appraised Current Market Value of such
Aircraft (or with respect to any such Aircraft
which has suffered an Event of Loss under and as
defined in the relevant Lease, in the case of a
Leased Aircraft, or Indenture, in the case of an
Owned Aircraft, the amount of the insurance
proceeds paid to the related Loan Trustee in
respect thereof to the extent then held by 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
40.36%, for the Class B Certificates 54.03% and
for the Class C Certificates 65.19%.
"Appraised Current Market Value" of any Aircraft
means the lower of the average and the median of
the most recent three Appraisals of such
Aircraft. After a Triggering Event occurs and any
Equipment Note becomes a Non-Performing Equipment
Note, the Subordination Agent shall obtain
Appraisals for the Aircraft (the "LTV
Appraisals") as soon as practicable and
additional LTV Appraisals on or prior to each
anniversary of the date of such initial LTV
Appraisals; provided that if the Controlling
Party reasonably objects to the appraised value
of the Aircraft shown in such LTV Appraisals, the
Controlling Party shall have the right to obtain
or cause to be obtained substitute LTV Appraisals
(including LTV Appraisals based upon physical
inspection of the Aircraft).
(b) Deposits............. Payments in respect of the Deposits are not subject
to the subordination provisions of the
Intercreditor Agreement.
(c) Intercreditor
Rights..................... Pursuant to the Intercreditor Agreement, the
Trustees and the Liquidity Providers have agreed
that, with respect to any Indenture at any given
time, the Loan Trustee will be directed (a) in
taking, or refraining
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30
from taking, any action thereunder or with
respect to the Equipment Notes issued thereunder
by the holders of at least a majority of the
outstanding principal amount of such Equipment
Notes as long as no Indenture Default has
occurred and is continuing thereunder and (b)
subject to certain conditions, in taking, or
refraining from taking, any action thereunder
(including exercising remedies thereunder, such
as acceleration of such Equipment Notes or
foreclosing the lien on the Aircraft securing
such Equipment Notes) by the Controlling Party
insofar as an Indenture Default thereunder has
occurred and is continuing.
"Controlling Party" with respect to any Indenture
means: (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-I Trustee and
the Class C-II Trustee, who have agreed to act
together. See "Description of the New
Certificates -- Indenture Defaults and Certain
Rights Upon an Indenture Default" for a
description of the rights of the
Certificateholders of each Trust to direct the
respective Trustees. Notwithstanding the
foregoing, at any time after 18 months from the
earlier to occur of (x) the date on which the
entire available amount under any Liquidity
Facility shall have been drawn (for any reason
other than a Downgrade Drawing or a Non-Extension
Drawing) and remain unreimbursed and (y) the date
on which all Equipment Notes shall have been
accelerated (provided that prior to the Delivery
Period Termination Date the aggregate principal
amount thereof exceeds $280 million), the
Liquidity Providers with at least two-thirds of
unreimbursed Liquidity Obligations shall have the
right to become the Controlling Party with
respect to such Indenture. For purposes of giving
effect to the foregoing, the Trustees (other than
the Controlling Party) have irrevocably agreed
(and the Certificateholders (other than the
Certificateholders represented by the Controlling
Party) shall be deemed to agree by virtue of
their acquisition of Certificates) to exercise
their voting rights as directed by the
Controlling Party. For a description of certain
limitations on the Controlling Party's rights to
exercise remedies, see "Description of the
Equipment Notes -- Remedies".
"Final Distributions" means, with respect to the
Certificates of any Trust on any Distribution
Date, the sum of (x) accrued and unpaid interest
on such Certificates (excluding interest payable
on the Deposits relating to such Trust) and (y)
the Pool Balance of such Certificates as of the
immediately preceding Distribution Date (less the
amount of the Deposits for such Class of
Certificates as of such preceding Distribution
Date other than any portion of such Deposits
thereafter used to acquire Equipment Notes
pursuant to the Note Purchase Agreement).
(i) Upon the occurrence and during the continuation
of any Indenture Default under any Indenture,
the Controlling Party may accelerate and sell
all (but not less than all) of the Equipment
Notes issued under such Indenture to any
person, subject to the provisions of paragraph
(ii) below. The proceeds of such sale will be
distributed pursuant to the provisions of the
Intercreditor Agreement.
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31
(ii) So long as any Certificates are outstanding,
during nine months after the earlier of (x)
the acceleration of the Equipment Notes under
any Indenture or (y) the bankruptcy or
insolvency of Continental, without the consent
of each Trustee, (a) no Aircraft subject to
the lien of such Indenture or such Equipment
Notes may be sold, if the net proceeds from
such sale would be less than the Minimum Sale
Price for such Aircraft or such Equipment
Notes, and (b) with respect to any Leased
Aircraft, the amount and payment dates of
rentals payable by Continental under the Lease
for such Leased Aircraft may not be adjusted
if, as a result of such adjustment, the
discounted present value of all such rentals
would be less than 75% of the discounted
present value of the rentals payable by
Continental under such Lease before giving
effect to such adjustment, in each case, using
the weighted average interest rate of the
Equipment Notes issued under such Indenture as
the discount rate.
"Minimum Sale Price" means, with respect to any
Aircraft or the Equipment Notes issued in respect
of such Aircraft, at any time, the lesser of (1)
75% of the Appraised Current Market Value of such
Aircraft and (2) the aggregate outstanding
principal amount of such Equipment Notes, plus
accrued and unpaid interest thereon.
Certificates; Book-Entry
Registration............. The New Certificates of each Trust will be
represented by one or more permanent global
Certificates in definitive, fully registered form
and registered in the name of Cede & Co.
("Cede"), as nominee of The Depository Trust
Company ("DTC"). See "Description of the New
Certificates -- Book Entry; Delivery and Form".
Method of Distribution..... The persons in whose names the Certificates are
registered will be treated as the owners of such
Certificates for the purpose of receiving
payments of principal of and interest on such
Certificates, payments under the Escrow
Agreements in respect of Deposits and for all
other purposes whatsoever. Therefore, none of the
Trustees, Continental, the Loan Trustees, the
Liquidity Providers, the Subordination Agent, the
Escrow Agents, the Paying Agents, the Owner
Participants or the Owner Trustees has any direct
responsibility or liability for distributions or
payments to owners of beneficial interests in the
Certificates (the "Certificate Owners").
Distributions by the Trustee and by the Paying
Agent in respect of Certificates registered in
the name of Cede, as nominee of DTC, including
the final distribution of principal with respect
to such Certificates of any Trust, will be made
in same-day funds to DTC. DTC will in turn make
distributions in same-day funds to those
participants in DTC who are credited with
ownership of such Certificates ("DTC
Participants") in amounts proportionate to the
amount of each such DTC Participant's respective
holdings of beneficial interests in such
Certificates. Corresponding payments by the DTC
Participants to beneficial owners of such
Certificates will be the responsibility of such
DTC Participants, and Continental expects that
they will be made in accordance with customary
industry practices. The final distribution with
respect to the Certificates of any Trust will be
made only upon surrender and presentation thereof
to the Trustee of such Trust. See "Description of
the New Certificates--Book-Entry; Delivery and
Form".
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Federal Income Tax
Consequences............. The exchange of New Certificates for Old
Certificates will not be a sale or exchange or
otherwise a taxable event for Federal income tax
purposes.
ERISA Considerations....... In general, employee benefit plans subject to Title
I of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or Section 4975 of
the Internal Revenue Code of 1986, as amended
(the "Code") (or entities which may be deemed to
hold the assets of any such plan) will be
eligible to purchase the Class A Certificates
subject to the circumstances applicable to such
plans. Plans will not be eligible to purchase
Class B or Class C Certificates, except that such
Certificates may be acquired with the assets of
an insurance company general account that may be
deemed to constitute Plan assets if the
conditions of Prohibited Transaction Class
Exemption ("PTCE") 95-60 are satisfied. Holders
of Class B or Class C Certificates that tender
such Old Certificates in exchange for New
Certificates will be deemed to have represented
and warranted that either (i) no Plan assets have
been used to acquire and hold such Certificate or
(ii) the acquisition and holding of such
Certificate is exempt from the prohibited
transaction restrictions of ERISA and Section
4975 of the Code pursuant to PTCE 95-60. See
"ERISA Considerations". Each Plan fiduciary (and
each fiduciary for a governmental or church plan
subject to rules similar to those imposed on
Plans under ERISA) should consult with its legal
advisor concerning an investment in any of the
Certificates.
STANDARD
MOODY'S & POOR'S
------- --------
Rating of the Liquidity Providers: Short Term
ABN AMRO.................................. P-1 A-1+
ING....................................... P-1 A-1+
Threshold Rating: Short Term................................ P-1 A-1+
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SELECTED FINANCIAL DATA
The following selected consolidated financial data for the years ended
December 31, 1996, 1995 and 1994 is derived from the audited consolidated
financial statements of the Company. The consolidated financial data of the
Company for the three months ended March 31, 1997 and 1996 is derived from its
unaudited consolidated financial statements, which include all adjustments
(consisting solely of normal recurring accruals) that the Company considers
necessary for the presentation of the financial position and results of
operations for these periods. Operating results for the three months ended March
31, 1997 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1997. The Company's selected consolidated financial
data should be read in conjunction with, and are qualified in their entirety by
reference to, the consolidated financial statements, including the notes
thereto, incorporated by reference in this Prospectus.
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------ ---------------------------
1997 1996 1996 1995 1994
------- ------- ------ ------ -------
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
(UNAUDITED)
FINANCIAL DATA -- OPERATIONS:
Operating Revenue:
Passenger............................. $1,564 $1,375 $5,871 $5,302 $ 5,036
Cargo, mail and other................. 134 114 489 523 634
------ ------ ------ ------ -------
1,698 1,489 6,360 5,825 5,670
------ ------ ------ ------ -------
Operating Expenses:
Wages, salaries and related costs..... 414 364 1,549 1,432(2) 1,532
Aircraft fuel......................... 229 177 774 681 741
Commissions........................... 138 126 510 489 439
Aircraft rentals...................... 131 124 509 497 433
Maintenance, materials and repairs.... 125 112 461 429 495
Other rentals and landing fees........ 97 84 350 356 392
Depreciation and amortization......... 60 65 254 253 258
Fleet disposition charge.............. -- -- 128(1) -- --
Other................................. 358 317 1,300 1,303 1,391
------ ------ ------ ------ -------
1,552 1,369 5,835 5,440 5,681
------ ------ ------ ------ -------
Operating Income (Loss)................. 146 120 525 385 (11)
------ ------ ------ ------ -------
Nonoperating Income (Expense):
Interest expense...................... (42) (47) (165) (213) (241)
Interest capitalized.................. 6 1 5 6 17
Interest income....................... 13 9 43 31 23
Other, net............................ 1 12 20 101(3) (439)(4)
------ ------ ------ ------ -------
(22) (25) (97) (75) (640)
------ ------ ------ ------ -------
Income (Loss) before Income Taxes,
Minority Interest and Extraordinary
Loss.................................. 124 95 428 310 (651)
Net Income (Loss)....................... $ 74 $ 88 $ 319 $ 224 $ (613)
Earnings (Loss) per Common and Common
Equivalent Share...................... $ 1.13 $ 1.35 $ 4.87 $ 3.60 $(11.88)
====== ====== ====== ====== =======
Earnings (Loss) per Common Share
Assuming Full Dilution................ $ 0.95 $ 1.18 $ 4.11 $ 3.15 $(11.88)
====== ====== ====== ====== =======
(See footnotes on the following page.)
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34
MARCH 31, DECEMBER 31,
1997 1996
--------- ------------
(IN MILLIONS OF DOLLARS)
(UNAUDITED)
FINANCIAL DATA -- BALANCE SHEET:
Assets:
Cash and Cash Equivalents, including
restricted cash and cash equivalents
of $79 and $76, respectively(5)....... $ 927 $1,061
Other Current Assets.................... 647 573
Total Property and Equipment, Net....... 1,754 1,596
Routes, Gates and Slots, Net............ 1,469 1,473
Other Assets, Net....................... 504 503
------ ------
Total Assets.................. $5,301 $5,206
====== ======
Liabilities and Stockholders' Equity:
Current Liabilities..................... $2,160 $2,104
Long-term Debt and Capital Leases....... 1,557 1,624
Deferred Credits and Other Long-term
Liabilities........................... 620 594
Minority Interest....................... 16 15
Continental-Obligated Mandatorily
Redeemable Preferred Securities of
Subsidiary Trust holding solely
Convertible Subordinated
Debentures(6)......................... 242 242
Redeemable Preferred Stock.............. 47 46
Common Stockholders' Equity............. 659 581
------ ------
Total Liabilities and
Stockholders' Equity........ $5,301 $5,206
====== ======
- ---------------
(1) The $128 million fleet disposition charge recorded in 1996 is associated
primarily with the decision to accelerate the replacement of its DC-9-30,
DC-10-10, 727-200, 737-100, and 737-200 aircraft. In connection with its
decision to accelerate the replacement of such aircraft, the Company wrote
down its Stage 2 aircraft inventory, that is not expected to be consumed
through operations, to its estimated fair value and recorded a provision for
costs associated with the return of leased aircraft at the end of their
respective lease terms.
(2) Includes a $20 million cash payment in 1995 by the Company in connection
with a 24-month collective bargaining agreement entered into by the Company
and the Independent Association of Continental Pilots.
(3) Includes a pre-tax gain of $108 million ($30 million after tax) on the
series of transactions by which the Company and its subsidiary, Continental
CRS Interests, Inc., transferred certain assets and liabilities relating to
the computerized reservation business of such subsidiary to a newly-formed
limited liability company and the remaining assets and liabilities were
sold.
(4) Includes a provision of $447 million recorded in 1994 associated with the
planned early retirement of certain aircraft and closed or underutilized
airport and maintenance facilities and other assets.
(5) Restricted cash and cash equivalents agreements relate primarily to workers'
compensation claims and the terms of certain other agreements. In addition,
CMI is required by its loan agreement to maintain certain minimum
consolidated net worth and liquidity levels and is subject to restrictions
on its ability to pay dividends to Continental, which effectively restrict
the amount of cash available to Continental from CMI.
(6) The sole assets of the Trust are Convertible Subordinated Debentures, with
an aggregate principal amount of $250 million, which bear interest at the
rate of 8 1/2% per annum and mature on December 1, 2020. Upon repayment, the
Continental-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust will be mandatorily redeemed.
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RISK FACTORS
Holders of Old Certificates should carefully consider the following risk
factors, as well as other information set forth in this Prospectus, before
tendering their Old Certificates in the Exchange Offer. The risk factors set
forth below (other than "-- Risk Factors Relating to the Certificates and the
Offering -- Consequences of Failure to Exchange") are generally applicable to
the Old Certificates as well as the New Certificates.
RISK FACTORS RELATING TO THE COMPANY
Leverage and Liquidity
Continental has successfully negotiated a variety of agreements to increase
its liquidity. Nevertheless, Continental remains more leveraged and has
significantly less liquidity than certain of its competitors, several of whom
have available lines of credit and/or significant unencumbered assets.
Accordingly, Continental may be less able than certain of its competitors to
withstand a prolonged recession in the airline industry.
As of March 31, 1997, Continental had approximately $1.8 billion (including
current maturities) of long-term debt and capital lease obligations and had
approximately $1.0 billion of minority interest, Continental-obligated
mandatorily redeemable preferred securities of subsidiary trust, redeemable
preferred stock and common stockholders' equity. Common stockholders' equity
reflects the adjustment of the Company's balance sheet and the recording of
assets and liabilities at fair market value as of April 27, 1993 in accordance
with the American Institute of Certified Public Accountants' Statement of
Position 90-7 -- "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" ("SOP 90-7").
During the first and second quarters of 1995, in connection with
negotiations with various lenders and lessors, Continental ceased or reduced
contractually required payments under various agreements, which produced a
significant number of events of default under debt, capital lease and operating
lease agreements. Through agreements reached with the various lenders and
lessors, Continental cured all of these events of default. The last such
agreement was put in place during the fourth quarter of 1995.
As of March 31, 1997, Continental had $927 million of cash and cash
equivalents, including restricted cash and cash equivalents of $79 million.
Continental does not have general lines of credit and has significant encumbered
assets.
For 1997, Continental expects to incur cash expenditures under operating
leases relating to aircraft of approximately $624 million, compared to $568
million for 1996 and approximately $232 million relating to facilities and other
rentals, compared to $210 million in 1996. In addition, Continental has capital
requirements relating to compliance with regulations that are discussed below.
See "-- Risk Factors Relating to the Airline Industry -- Regulatory Matters".
As of March 31, 1997, Continental had firm commitments with The Boeing
Company ("Boeing") to take delivery of a total of 126 jet aircraft during the
years 1997 through 2003 with options for an additional 90 aircraft (exercisable
subject to certain conditions). These new aircraft will replace older, less
efficient Stage 2 aircraft and allow for growth of operations. The estimated
aggregate cost of the Company's firm commitments for Boeing aircraft is
approximately $4.3 billion. The offering of the Old Certificates provides for
the financing by the Company (either through leveraged leases or secured debt
financings) of the debt portion of the acquisition cost of the 30 Aircraft
(including two Aircraft delivered prior to the date of this Prospectus). In
connection therewith, owner participants have committed to approximately $160
million of equity financing underlying 22 of these aircraft (including two
Aircraft delivered prior to the date of this Prospectus). Continental has
additional firm commitments for approximately $1.1 billion of backstop financing
for its Boeing aircraft orders. Continental currently plans on financing the new
Boeing aircraft with enhanced equipment trust certificates or similar financing,
subject to availability and market conditions. However, further financing will
be needed to satisfy Continental's capital commitments for other aircraft and
other aircraft-related expenditures such as spare parts, simulators and related
items (including for Express's new Embraer ("EMB") -145 aircraft described
below). There can be no assurance that sufficient financing will be available
for all aircraft and other capital expenditures not covered by firm financing
commitments. Deliveries
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36
of new Boeing aircraft are expected to increase aircraft rental, depreciation
and interest costs while generating cost savings in the areas of maintenance,
fuel and pilot training. Continental has also entered into agreements or letters
of intent to lease two DC-10-30 aircraft and will take delivery of such aircraft
in May 1997.
In September 1996, Express placed an order for 25 firm EMB-145 50-seat
regional jets, with options for an additional 175 aircraft. Neither Express nor
Continental will have any obligation to take such aircraft that are not financed
by a third party and leased to the Company. However, if the Company fails to
confirm the first tranche of 25 options by August 1997, the rent associated with
the 25 firm aircraft will increase by an aggregate of $33.6 million over the
16-year life of the leases. Express has taken delivery of six of the firm
aircraft through the first quarter of 1997 and will take delivery of the
remaining 19 firm aircraft through the second quarter of 1998. The Company
expects to account for all of these aircraft as operating leases.
In July 1996, CMI consummated a $320 million secured term loan financing
with a group of banks and other financial institutions. The loan is secured by
the stock of CMI and substantially all its unencumbered assets, consisting
primarily of CMI's route authorities, and is guaranteed by Continental and AMI.
The bank financing does not contain any restrictive covenants at the Continental
parent level, and none of the assets of Continental Airlines, Inc. (other than
its stock in AMI) is pledged in connection with the new financing.
As a result of the recent weakness of the yen against the dollar and
increased fuel costs, CMI's operating earnings declined during the past three
quarters as compared to similar periods in the prior year, and are not expected
to improve materially absent a stronger yen or reduced fuel costs. The bank
financing contains significant financial covenants relating to CMI, including
maintenance of a minimum fixed charge coverage ratio, a minimum consolidated net
worth and minimum liquidity, and covenants restricting CMI's leverage, its
incurrence of certain indebtedness and its pledge of assets. The financial
covenants also limit the ability of CMI to pay dividends to Continental. In
January 1997, CMI elected to prepay $25 million of principal amount of its bank
financing rather than use such cash for other purposes. CMI may prepay
additional amounts of its bank financing to remain in compliance with certain
covenants contained in such financing.
In May 1997, Continental entered into a commitment letter with certain
banks that contemplates the establishment of a $500 million credit facility (the
"$500 Million Credit Facility"), of which $275 million principal amount will be
a term loan and $225 million will be a revolving credit facility. The commitment
letter contemplates that the proceeds of the term loan to Continental will be
loaned to AMI, reloaned to CMI and used by CMI to repay its existing secured
term loan described above. The new loan to CMI will be secured by substantially
all of CMI's assets but will not contain any financial covenants relating to CMI
other than covenants restricting CMI's incurrence of certain indebtedness and
pledge of assets. AMI's rights with respect to its loan to CMI and Continental's
rights with respect to its loan to AMI (as well as Continental's stock in AMI)
will be pledged as collateral for Continental's loan under the $500 Million
Credit Facility. In addition, the $500 Million Credit Facility will contain
certain financial covenants applicable to Continental and will prohibit
Continental from granting a security interest on certain of its international
route authorities.
In April 1997 Continental entered into a $160 million revolving credit
facility with a group of banks (the "Predelivery Deposit Revolver") to finance
predelivery deposits with respect to the acquisition of new Boeing 737 and 757
aircraft, which is secured by the purchase agreements with respect to such
aircraft, including the Aircraft.
In February 1997, the Company began construction of a new hangar and
improvements to a cargo facility at the Company's hub at Newark International
Airport which is expected to be completed in the fourth quarter of 1997. The
Company expects to finance these projects, which will cost approximately $25
million, with tax-exempt bonds. In addition, the Company is also planning a
facility expansion at Newark which would require, among other matters,
agreements to be reached with the applicable airport authority.
In March 1997, the Company announced plans to expand its facilities at its
Hopkins International Airport hub in Cleveland. The expansion, which will
include a new jet concourse for the new regional jet service offered by Express,
as well as other facility improvements, is expected to cost approximately $120
million, which the Company expects will be funded principally by the issuance of
a combination of tax-exempt special facilities revenue bonds and general airport
revenue bonds by the City of Cleveland. In
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connection therewith, the Company expects to enter into long-term leases with
the City of Cleveland providing for the Company to make rental payments
sufficient to service the tax-exempt bonds.
In April 1997, the Company announced plans to build a wide-body aircraft
maintenance hangar in Honolulu, Hawaii at an estimated cost of $24 million.
Construction of the hangar, anticipated to be completed by the second quarter of
1998, is expected to be financed by tax-exempt special facilities revenue bonds
issued by the State of Hawaii. In connection therewith, the Company expects to
enter into long-term leases under which rental payments will be sufficient to
service the related bonds.
In April 1997, the City of Houston (the "City") completed the offering of
$190 million aggregate principal amount of tax-exempt special facilities revenue
bonds (the "IAH Bonds") payable solely from rentals paid by Continental under
long-term lease agreements with the City. The IAH Bonds are unconditionally
guaranteed by the Company. The proceeds from the IAH Bonds will be used to
finance the acquisition, construction and installation of certain terminal and
other airport facilities located at Continental's hub at George Bush
Intercontinental Airport in Houston, including a new automated people mover
system linking Terminals B and C and 20 aircraft gates in Terminal B into which
Continental intends to expand its operations. The expansion project is expected
to be completed by the summer of 1999.
In April 1997, Continental redeemed for cash all of the 460,247 outstanding
shares of its Series A 12% Cumulative Preferred Stock held by an affiliate of
Air Canada, a Canadian corporation, for $100 per share plus accrued dividends
thereon. The redemption price, including accrued dividends, totaled $48 million.
Continental's History of Operating Losses
Although Continental recorded net income of $74 million in the first
quarter of 1997, $319 million in 1996 and $224 million in 1995, it had
experienced significant operating losses in the previous eight years. In the
long term, Continental's viability depends on its ability to sustain profitable
results of operations.
Aircraft Fuel
Since fuel costs constitute a significant portion of Continental's
operating costs (approximately 13.3% for the year ended December 31, 1996 and
14.8% for the three months ended March 31, 1997), significant changes in fuel
costs would materially affect the Company's operating results. Jet fuel prices
have increased significantly since December 31, 1995, although such prices have
moderated recently. Fuel prices continue to be susceptible to international
events, and the Company cannot predict near or longer-term fuel prices. The
Company enters into petroleum option contracts to provide some short-term
protection (generally three to six months) against a sharp increase in jet fuel
prices. In the event of a fuel supply shortage resulting from a disruption of
oil imports or otherwise, higher fuel prices or curtailment of scheduled service
could result.
Labor Matters
The Company has recently begun collective bargaining agreement negotiations
with its Continental Airlines and Express pilots whose contracts become
amendable in July 1997 and October 1997, respectively. In addition, the
Company's collective bargaining agreements with its CMI flight attendants and
CMI mechanics and mechanic-related employees became amendable in September 1996
and March 1997, respectively. Negotiations are in progress to amend these two
contracts. The Company believes that mutually acceptable agreements can be
reached with all such employees, although the ultimate outcome of the
negotiations is unknown at this time. The CMI agent-classification employees'
collective bargaining agreement, which became amendable in March 1997, was
ratified and approved in April 1997. The agreement, which becomes amendable in
March 2001, provides for an 8.7% increase in wages over a four-year period.
Certain Tax Matters
The Company's United States federal income tax return for the year ended
December 31, 1996 is expected to reflect net operating loss carryforwards
("NOLs") of $2.3 billion that will expire through 2009 and federal investment
tax credit carry forwards of $45 million that will expire through 2001. For
financial
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reporting purposes, Continental began accruing tax expense on its income
statement during the second quarter of 1996.
The Company had, as of December 31, 1996, deferred tax assets aggregating
$1.3 billion, including $804 million of NOLs. The Company recorded a valuation
allowance of $694 million against such assets as of December 31, 1996.
Realization of a substantial portion of the Company's remaining NOLs will
require the completion by April 27, 1998 of transactions resulting in
recognition of built-in gains for federal income tax purposes. The Company has
consummated several such transactions and currently intends to consummate one or
more additional transactions. If the Company were to determine in the future
that such transactions will not be completed and if future income is not
sufficient to recognize the benefit of previously completed transactions, an
adjustment to the net deferred tax liability of up to $85 million would be
charged to income in the period such determination was made. In the event the
Company recognizes additional tax benefits related to NOLs and investment tax
credit carryforwards attributable to the Company's predecessor, Holdings,
together with its operating subsidiaries, those benefits would be applied to
reduce reorganizational value in excess of amounts allocable to identifiable
assets and other intangibles to zero, and thereafter as an addition to paid-in
capital.
As a result of NOLs, the Company will not pay United States federal income
taxes (other than alternative minimum tax) until it has recorded approximately
an additional $1.1 billion of taxable income following December 31, 1996.
Section 382 of the Internal Revenue Code ("Section 382") imposes limitations on
a corporation's ability to utilize NOLs if it experiences an "ownership change."
In general terms, an ownership change may result from transactions increasing
the ownership of certain stockholders in the stock of a corporation by more than
50 percentage points over a three-year period. In the event that an ownership
change should occur, utilization of Continental's NOLs would be subject to an
annual limitation under Section 382 determined by multiplying the value of the
Company's stock at the time of the ownership change by the applicable long-term
tax-exempt rate (which is 5.64% for May 1997). Unused annual limitation may be
carried over to later years, and the amount of the limitation may under certain
circumstances be increased by the built-in gains in assets held by the Company
at the time of the change that are recognized in the five-year period after the
change. Under current conditions, if an ownership change were to occur,
Continental's annual NOL utilization would be limited to approximately $123
million per year.
Continental Micronesia
Because the majority of CMI's traffic originates in Japan, its results of
operations are substantially affected by the Japanese economy and changes in the
value of the yen as compared to the dollar. Appreciation of the yen against the
dollar during 1994 and 1995 increased CMI's profitability while a decline of the
yen against the dollar in 1996 reduced CMI's profitability. As a result of the
recent weakness of the yen against the dollar and increased fuel costs, CMI's
operating earnings declined during the past three quarters as compared to
similar periods a year ago, and are not expected to improve materially absent a
stronger yen or reduced fuel costs. The $320 million financing consummated by
CMI in July 1996 contains significant financial covenants relating to CMI,
including maintenance of a minimum fixed charge coverage ratio, a minimum
consolidated net worth and minimum liquidity, and covenants restricting CMI's
leverage, its incurrence of certain indebtedness and its pledge of assets. The
financial covenants also limit the ability of CMI to pay dividends to
Continental. In January 1997, CMI elected to prepay $25 million of principal
amount of its bank financing rather than use such cash for other purposes. CMI
may prepay additional amounts of its bank financing to remain in compliance with
certain covenants contained in such financing. Continental has entered into a
commitment letter that contemplates the establishment of a new credit facility
under which CMI's existing bank financing will be repaid and financial covenants
applicable to CMI eliminated. See "-- Risk Factors Relating to the
Company -- Leverage and Liquidity".
To reduce the potential negative impact on CMI's dollar earnings, CMI, from
time to time, purchases average rate options as a hedge against a portion of its
expected net yen cash flow position. Any significant and sustained decrease in
traffic or yields (including due to the value of the yen) to and from Japan
could materially adversely affect Continental's consolidated profitability.
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Principal Stockholder
On November 21, 1996, Air Partners, L.P., a Texas limited partnership and
major stockholder of the Company ("Air Partners"), exercised its right to sell
to the Company, and the Company subsequently purchased, for $50 million,
warrants to purchase 2,614,379 shares of Class B common stock (representing a
portion of the total warrants held by Air Partners) pursuant to an agreement
entered into earlier in 1996 with the Company. As of April 30, 1997, Air
Partners held approximately 9.5% of the common equity interest and 40.7% of the
general voting power of the Company. If all the remaining warrants held by Air
Partners had been exercised on April 30, 1997, approximately 19.6% of the common
equity interest and 52.8% of the general voting power of the Company would have
been held by Air Partners. Various provisions in the Company's Certificate of
Incorporation and Bylaws currently provide Air Partners with the right to elect
one-third of the directors in certain circumstances; these provisions could have
the effect of delaying, deferring or preventing a change in the control of the
Company.
RISK FACTORS RELATING TO THE AIRLINE INDUSTRY
Industry Conditions and Competition
The airline industry is highly competitive and susceptible to price
discounting. The Company has in the past both responded to discounting actions
taken by other carriers and initiated significant discounting actions itself.
Continental's competitors include carriers with substantially greater financial
resources (and in certain cases, lower cost structures), as well as smaller
carriers with low cost structures. Airline profit levels are highly sensitive
to, and during recent years have been severely impacted by, changes in fuel
costs, fare levels (or "average yield") and passenger demand. Passenger demand
and yields have been affected by, among other things, the general state of the
economy, international events and actions taken by carriers with respect to
fares. From 1990 to 1993, these factors contributed to the domestic airline
industry's incurring unprecedented losses. Although fare levels have increased
recently, fuel costs have also increased significantly. In addition, significant
industry-wide discounts could be reimplemented at any time, and the introduction
of broadly available, deeply discounted fares by a major United States airline
would likely result in lower yields for the entire industry and could have a
material adverse effect on the Company's operating results.
The airline industry has consolidated in past years as a result of mergers
and liquidations and may further consolidate in the future. Among other effects,
such consolidation has allowed certain of Continental's major competitors to
expand (in particular) their international operations and increase their market
strength. Furthermore, the emergence in recent years of several new carriers,
typically with low cost structures, has further increased the competitive
pressures on the major United States airlines. In many cases, the new entrants
have initiated or triggered price discounting. Aircraft, skilled labor and gates
at most airports continue to be readily available to start-up carriers.
Competition with new carriers or other low cost competitors on Continental's
routes could negatively impact Continental's operating results.
Regulatory Matters
In the last several years, the United States Federal Aviation
Administration (the "FAA") has issued a number of maintenance directives and
other regulations relating to, among other things, retirement of older aircraft,
security measures, collision avoidance systems, airborne windshear avoidance
systems, noise abatement, commuter aircraft safety and increased inspections and
maintenance procedures to be conducted on older aircraft. The Company expects to
continue incurring expenses for the purpose of complying with the FAA's noise
and aging aircraft regulations. In addition, several airports have recently
sought to increase substantially the rates charged to airlines, and the ability
of airlines to contest such increases has been restricted by federal
legislation, DOT regulations and judicial decisions.
Management believes that the Company benefited in the first quarter of 1996
and 1997 from the expiration of the aviation trust fund tax (the "ticket tax").
The ticket tax was reinstated on March 7, 1997. Management believes that the
ticket tax has a negative impact on the Company, although neither the amount of
such negative impact directly resulting from the imposition of the ticket tax,
nor the benefit realized by its expiration can be precisely determined.
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Additional laws and regulations have been proposed from time to time that
could significantly increase the cost of airline operations by imposing
additional requirements or restrictions on operations. Laws and regulations have
also been considered that would prohibit or restrict the ownership and/or
transfer of airline routes or takeoff and landing slots. Also, the availability
of international routes to United States carriers is regulated by treaties and
related agreements between the United States and foreign governments that are
amendable. Continental cannot predict what laws and regulations may be adopted
or their impact, but there can be no assurance that laws or regulations
currently proposed or enacted in the future will not adversely affect the
Company.
Seasonal Nature of Airline Business
Due to the greater demand for air travel during the summer months, revenue
in the airline industry in the third quarter of the year is generally
significantly greater than revenue in the first quarter of the year and
moderately greater than revenue in the second and fourth quarters of the year
for the majority of air carriers. Continental's results of operations generally
reflect this seasonality, but have also been impacted by numerous other factors
that are not necessarily seasonal, including the extent and nature of
competition from other airlines, fare wars, changing levels of operations, fuel
prices, foreign currency exchange rates and general economic conditions.
RISK FACTORS RELATING TO THE CERTIFICATES AND THE OFFERING
Consequences of Failure to Exchange
Holders of Old Certificates who do not exchange their Old Certificates for
New Certificates pursuant to the Exchange Offer will continue to be subject to
the restrictions on transfer of such Old Certificates as set forth in the legend
thereon as a consequence of the issuance of the Old Certificates pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Old Certificates may not be offered or sold, unless registered
under the Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
laws. The Company does not currently anticipate that it will register the Old
Certificates under the Securities Act. To the extent that Old Certificates are
tendered and accepted in the Exchange Offer, the trading market for untendered
and tendered but unaccepted Old Certificates could be adversely affected.
Appraisals and Realizable Value of Aircraft
Appraisals in respect of the Aircraft (without physical inspection thereof)
have been prepared by AISI, BK and MBA, and such appraisals are based on varying
assumptions and methodologies which differ among the Appraisers. The Appraisers
have delivered letters summarizing their respective reports, copies of which are
annexed to this Prospectus as Appendix II. See "Description of the Aircraft and
the Appraisals -- The Appraisals". The appraised value of each Aircraft, and
accordingly the initial aggregate Aircraft value as referred to herein, is based
upon the lesser of the average and median value of such Aircraft as appraised by
the Appraisers and projected as of the scheduled delivery month of such
Aircraft. Such aggregate appraised values also assume depreciation of
approximately 2% of the initial appraised value for Aircraft delivered more than
one year prior to the scheduled Delivery Period Termination Date (although no
assurance can be given as to the actual market value rate of depreciation, which
may differ from 2% during such period). Appraisals that are based on different
assumptions and methodologies may result in valuations that are materially
different from those contained in the appraisals of the Appraisers. An appraisal
is only an estimate of value, is not indicative of the price at which an
Aircraft may be purchased from the manufacturer and should not in any event be
relied upon as a measure of realizable value; the proceeds realized upon a sale
of any Aircraft may be less than the appraised value thereof. In particular, the
appraisals are estimates of values as of future delivery dates. The value of the
Aircraft in the event of the exercise of remedies under the applicable Indenture
will depend on market and economic conditions, the supply of aircraft, the
availability of buyers, the condition of the Aircraft and other factors.
Accordingly, there can be no assurance that the proceeds realized upon any such
exercise with respect to the Equipment Notes and the Aircraft pursuant to the
applicable Pass Through
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Trust Agreement and the applicable Indenture would be sufficient to satisfy in
full payments due on the Certificates.
Priority of Distributions; Subordination
Pursuant to the Intercreditor Agreement to which the Trustees, the
Subordination Agent and the Liquidity Providers are parties, on each
Distribution Date, so long as no Triggering Event shall have occurred, all
payments in respect of Equipment Notes received by the Subordination Agent will
be distributed in the following order: (1) payment of certain Liquidity
Obligations to the Liquidity Providers; (2) payment of Expected Distributions to
the holders of Class A Certificates; (3) payment of Expected Distributions to
the holders of Class B Certificates; (4) payment of Expected Distributions to
the holders of Class C Certificates; and (5) payment of certain fees and
expenses of the Subordination Agent and the Trustees.
In addition, upon the occurrence of a Triggering Event and at all times
thereafter, all payments received by the Subordination Agent in respect of the
Equipment Notes and certain other payments will be distributed under the
Intercreditor Agreement in the following order: (1) to the Subordination Agent,
the Trustee and certain other parties in payment of the Administration Expenses
and to the Liquidity Providers in payment of the Liquidity Obligations; (2) to
the holders of Class A Certificates in payment of Adjusted Expected
Distributions; (3) to the holders of Class B Certificates in payment of Adjusted
Expected Distributions; and (4) to the holders of Class C Certificates in
payment of Adjusted Expected Distributions.
The priority of distributions after a payment default under any Equipment
Note will have the effect in certain circumstances of requiring the distribution
to more senior Classes of Certificates of payments received in respect of one or
more junior series of Equipment Notes. If this should occur, the interest
accruing on the remaining Equipment Notes would in the aggregate be less than
the interest accruing on the remaining Certificates because such Certificates
include a relatively greater proportion of junior Classes with relatively higher
interest rates. As a result of this possible interest shortfall, the holders of
one or more junior Classes of Certificates may not receive the full amount due
them after a payment default under any Equipment Note even if all Equipment
Notes are eventually paid in full.
Payments in respect of the Deposits are not subject to the subordination
provisions of the Intercreditor Agreement.
Control over Collateral; Sale of Collateral
Pursuant to the Intercreditor Agreement, the Trustees and the Liquidity
Providers have agreed that, with respect to any Indenture at any given time, the
Loan Trustee will be directed (a) in taking, or refraining from taking, any
action thereunder by the holders of at least a majority of the outstanding
principal amount of the Equipment Notes issued thereunder as long as no
Indenture Default has occurred and is continuing thereunder and (b) subject to
certain conditions, in exercising remedies thereunder (including acceleration of
such Equipment Notes or foreclosing the lien on the Aircraft securing such
Equipment Notes) insofar as an Indenture Default has occurred and is continuing
by the Controlling Party. See "Description of the New Certificates -- Indenture
Defaults and Certain Rights Upon an Indenture Default" for a description of the
rights of the Certificateholders of each Trust to direct the respective
Trustees. Notwithstanding the foregoing, at any time after 18 months from the
earlier to occur of (x) the date on which the entire available amount under any
Liquidity Facility shall have been drawn (for any reason other than a Downgrade
Drawing or a Non-Extension Drawing) and remain unreimbursed and (y) the date on
which all Equipment Notes shall have been accelerated (provided that prior to
the Delivery Period Termination Date the aggregate principal amount thereof
exceeds $280 million), the Liquidity Providers with at least two-thirds of the
unreimbursed Liquidity Obligations shall have the right to elect to become the
Controlling Party with respect to such Indenture. For purposes of giving effect
to the foregoing, the Trustees (other than the Controlling Party) shall
irrevocably agree, and the Certificateholders (other than the Certificateholders
represented by the Controlling Party) shall be deemed to agree by virtue of
their purchase of Certificates, to exercise their voting rights as directed by
the Controlling Party. For a description of certain limitations on the
Controlling Party's rights to exercise remedies, see "Description of the
Equipment Notes -- Remedies".
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Upon the occurrence and during the continuation of any Indenture Default
under any Indenture, the Controlling Party may accelerate and, subject to the
provisions described in the last sentence of this paragraph, sell all (but not
less than all) of the Equipment Notes issued under such Indenture to any person.
The market for Equipment Notes at the time of the existence of any Indenture
Default may be very limited, and there can be no assurance as to the price at
which they could be sold. If the Controlling Party sells any such Equipment
Notes for less than their outstanding principal amount, certain
Certificateholders will receive a smaller amount of principal distributions than
anticipated and will not have any claim for the shortfall against Continental,
any Owner Trustee, any Owner Participant or any Trustee. So long as any
Certificates are outstanding, during nine months after the earlier of (x) the
acceleration of the Equipment Notes under any Indenture and (y) the bankruptcy
or insolvency of Continental, without the consent of each Trustee, (a) no
Aircraft subject to the lien of such Indenture or such Equipment Notes may be
sold, if the net proceeds from such sale would be less than the Minimum Sale
Price for such Aircraft or such Equipment Notes, and (b) with respect to any
Leased Aircraft, the amount and payment dates of rentals payable by Continental
under the Lease for such Leased Aircraft may not be adjusted, if, as a result of
such adjustment, the discounted present value of all such rentals would be less
than 75% of the discounted present value of the rentals payable by Continental
under such Lease before giving effect to such adjustment, in each case, using
the weighted average interest rate of the Equipment Notes issued under such
Indenture as the discount rate.
The Equipment Notes are not cross-collateralized and, consequently,
proceeds from the sale of an Aircraft in excess of the amounts due on Equipment
Notes related to such Aircraft will not be available to cover losses, if any, on
any other Equipment Notes.
Owner Participant; Revisions to Agreements
Continental has obtained commitments of certain companies to act as the
Owner Participant with respect to the leveraged leases for all of the Aircraft
and, in certain cases, is seeking alternative commitments on more favorable
terms. The existing commitments are subject to satisfaction of certain
conditions with respect to each Aircraft and, in certain cases, Continental may
elect to terminate such commitments with respect to certain Aircraft.
Accordingly, Continental may select one or more other Owner Participants for
some or all of such Aircraft or finance such Aircraft as Owned Aircraft rather
than Leased Aircraft. Such Owner Participants may request revisions to the forms
of the Participation Agreement, the Lease and the Leased Aircraft Indenture that
are contemplated by the Note Purchase Agreement, so that the terms of such
agreements applicable to any particular Leased Aircraft may differ from the
description of such agreements contained in this Prospectus. However, under the
Note Purchase Agreement, the terms of such agreements are required to (i)
contain the Mandatory Document Terms and (ii) not vary the Mandatory Economic
Terms. In addition, Continental is obligated (i) to certify to the Trustee that
any such modifications do not materially and adversely affect the
Certificateholders and (ii) to obtain written confirmation from each Rating
Agency that the use of versions of such agreements modified in any material
respect will not result in a withdrawal, suspension or downgrading of the rating
of any Class of Certificates. See "Description of the New
Certificates -- Obligation to Purchase Equipment Notes".
Each Owner Participant will have the right to sell, assign or otherwise
transfer its interests as Owner Participant in any of such leveraged leases,
subject to the terms and conditions of the relevant Participation Agreement and
related documents.
Unused Deposits
The Trustees' obligations to purchase the Equipment Notes issued with
respect to each Aircraft are subject to satisfaction of certain conditions at
the time of delivery, as set forth in the Note Purchase Agreement. See
"Description of the New Certificates -- Obligation to Purchase Equipment Notes".
Since the Aircraft are scheduled for delivery from time to time during the
Delivery Period, no assurance can be given that all such conditions will be
satisfied at the time of delivery for each Aircraft. Moreover, since the
Aircraft will be newly manufactured, their delivery as scheduled is subject to
delays in the manufacturing process and to the manufacturer's right to postpone
deliveries under its agreement with Continental. See "Description of the
Aircraft and Appraisals -- Deliveries of Aircraft". Depending on the
circumstances of the financing of
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each Aircraft, the maximum aggregate principal amount of Equipment Notes may not
be issued. In addition, Continental's obligations to Boeing relating to the
ordered aircraft and under the Predelivery Deposit Revolver are secured by
Continental's purchase agreement with Boeing relating to the Aircraft.
Accordingly, if Continental should breach its obligations secured thereby, the
secured parties could exercise remedies and prevent delivery of Aircraft to
Continental. If any funds remain as Deposits with respect to any Trust at the
Delivery Period Termination Date, they will be withdrawn by the Escrow Agent and
distributed, with accrued and unpaid interest thereon, plus a premium payable by
Continental (i) in the case of the holders of the Certificates issued by the
Class A Trust, the Class B Trust and the Class C-I Trust, equal to the Deposit
Make-Whole Premium with respect to the aggregate amount of funds so distributed
(excluding accrued interest) and (ii) in the case of the holders of the
Certificates issued by the Class C-II Trust, equal to the Class C-II Premium
with respect to such aggregate amount, to the Certificateholders of such Trust.
See "Description of the Deposit Agreements -- Unused Deposits".
Special Distributions to Class C-II Certificateholders
The Deposits relating to the Class C-I Trust will be utilized to purchase
Series C Equipment Notes prior to the utilization of Deposits relating to Class
C-II Trust. If any funds remain as Deposits with respect to any Trust at the
Delivery Period Termination Date, they will be withdrawn by the Escrow Agent and
distributed, together with accrued and unpaid interest thereon and a premium, to
the Certificateholders of such Trust. See "--Unused Deposits". As a result,
there is a greater likelihood that a special distribution that will reduce the
Pool Balance of the Class C-II Certificates will be required than with respect
to the other Certificates. In addition, to the extent that the Class C-II Trust
acquires Series C Equipment Notes, such Equipment Notes will relate to fewer
Aircraft than the Equipment Notes held by the other Trusts. Accordingly, if
Continental exercises its rights under a Lease or Owned Aircraft Indenture to
cause the Series C Equipment Notes held by the Class C-II Trust to be redeemed,
such as upon termination of the Lease for obsolescence, refunding of such
Equipment Notes or payment of stipulated loss value upon the occurrence of an
event of loss with respect to the Aircraft that secures such Equipment Notes,
the resulting special distribution with respect to the Class C-II Certificates
will reduce the Pool Balance of the Class C-II Trust by a greater percentage
than the reduction that would be applicable to the other Trusts had such an
event occurred with respect to the same number of Aircraft securing Equipment
Notes held by the other Trusts. See "Description of the Equipment
Notes -- Redemption".
Withholding Tax on Foreign Investors
Because of the possibility that the Original Trusts may be treated for
United States federal income tax purposes as partnerships engaged in U.S. trades
or businesses, tax will be withheld from distributions with respect to the
Original Trusts and the Deposits to foreign persons who are beneficial owners of
Certificates. Each foreign investor, by accepting an interest in a Certificate,
will agree to indemnify the Original Trustee, the Original Trust, and the Paying
Agent against any liability for improper failure to withhold tax. Although
foreign investors can file United States federal income tax returns seeking
refunds of any withheld taxes, there is no assurance that such refund claims
will be successful. Even if such refund claims are successful, the refund
process will result in a delay in the receipt of cash by foreign investors.
Absence of an Established Market
Prior to the Exchange Offer, there has been no public market for the
Certificates and neither Continental nor any Trust intends to apply for listing
of the Certificates on any national securities exchange or otherwise. Certain of
the Initial Purchasers have previously made a market in the Old Certificates and
Continental has been advised by the Initial Purchasers that one or more of them
presently intend to make a market in the New Certificates, as permitted by
applicable laws and regulations, after consummation of the Exchange Offer. None
of the Initial Purchasers is obligated, however, to make a market in the Old
Certificates or the New Certificates, and any such market making activity may be
discontinued at any time without notice at the sole discretion of each Initial
Purchaser. There can be no assurance as to the liquidity of the public market
for the Certificates or that any active public market for the Certificates will
develop or continue. If an active public
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market does not develop or continue, the market price and liquidity of the
Certificates may be adversely affected.
USE OF PROCEEDS
There will be no cash proceeds payable to Continental from the issuance of
the New Certificates pursuant to the Exchange Offer. The proceeds from the sale
of the Old Certificates issued by each Trust were deposited with the Depositary
on behalf of the Escrow Agent for the benefit of the Certificateholders of such
Trust. Such proceeds will be used to purchase Equipment Notes during the
Delivery Period issued, at Continental's election, either (i) by the Owner
Trustees to finance the purchase of the Leased Aircraft or (ii) by Continental
to finance the purchase of the Owned Aircraft. Prior to the date of this
Prospectus, two Boeing 757-224 Aircraft have been delivered, and funds were
withdrawn from the Deposits to purchase Equipment Notes in respect of such
Aircraft in the aggregate principal amount of $74.4 million.
RATIOS OF EARNINGS TO FIXED CHARGES
The following information for the year ended December 31, 1992 and for the
period January 1, 1993 through April 27, 1993 relates to Continental's
predecessor, Holdings. Information for the period April 28, 1993 through
December 31, 1993, for the years ended December 31, 1994, 1995 and 1996 and for
the three months ended March 31, 1996 and 1997 relates to Continental. The
information as to Continental has not been prepared on a consistent basis of
accounting with the information as to Holdings due to Continental's adoption,
effective April 27, 1993, of fresh start reporting in accordance with the
American Institute of Certified Public Accountants' Statement of Position
90-7 -- "Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code" ("SOP 90-7").
For the year ended December 31, 1992, for the periods January 1, 1993
through April 27, 1993 and April 28, 1993 through December 31, 1993 and for the
year ended December 31, 1994, earnings were not sufficient to cover fixed
charges. Additional earnings of $131 million, $979 million, $60 million and $667
million would have been required to achieve ratios of earnings to fixed charges
of 1.0. The ratio of earnings to fixed charges for the years ended December 31,
1995 and December 31, 1996 was 1.53 and 1.81, respectively. The ratio of
earnings to fixed charges for the three months ended March 31, 1996 and March
31, 1997 was 1.70 and 1.88, respectively. For purposes of calculating this
ratio, earnings consist of earnings before taxes, minority interest and
extraordinary items plus interest expense (net of capitalized interest), the
portion of rental expense deemed representative of the interest expense and
amortization of previously capitalized interest. Fixed charges consist of
interest expense and the portion of rental expense representative of interest
expense.
THE EXCHANGE OFFER
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and reference is made to the
provisions of the Registration Rights Agreement, which has been filed as an
exhibit to the Registration Statement and a copy of which is available as set
forth under the heading "Available Information".
TERMS OF THE EXCHANGE OFFER
General
In connection with the issuance of the Old Certificates pursuant to a
Purchase Agreement dated as of March 12, 1997, between the Company, the Trusts,
the Depositary and the Initial Purchasers, the Initial Purchasers and their
respective assignees became entitled to the benefits of the Registration Rights
Agreement.
Under the Registration Rights Agreement, the Company is obligated to use
its best efforts to (i) file the Registration Statement of which this Prospectus
is a part for a registered exchange offer with respect to an
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issue of new certificates identical in all material respects to the Old
Certificates within 120 days after March 21, 1997, the Issuance Date, (ii) cause
the Registration Statement to become effective under the Securities Act within
180 days after the Issuance Date, (iii) cause the Registration Statement to
remain effective until the closing of the Exchange Offer and (iv) consummate the
Exchange Offer within 210 calendar days after the Issuance Date. The Company
will keep the Exchange Offer open for a period of not less than 30 days. The
Exchange Offer being made hereby, if commenced and consummated within the time
periods described in this paragraph, will satisfy those requirements under the
Registration Rights Agreement.
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal (which together constitute the Exchange Offer),
all Old Certificates validly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date will be accepted for exchange. New
Certificates of the same class will be issued in exchange for an equal face
amount of outstanding Old Certificates accepted in the Exchange Offer. Old
Certificates may be tendered only in integral multiples of $1,000. This
Prospectus, together with the Letter of Transmittal, is being sent to all
registered holders as of [ ]. The Exchange Offer is not conditioned
upon any minimum principal amount of Old Certificates being tendered for
exchange. However, the obligation to accept Old Certificates for exchange
pursuant to the Exchange Offer is subject to certain conditions as set forth
herein under "-- Conditions".
Old Certificates shall be deemed to have been accepted as validly tendered
when, as and if the Trustee has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Old Certificates for the purposes of receiving the New Certificates and
delivering New Certificates to such holders.
Based on interpretations by the staff of the Commission, as set forth in
no-action letters issued to third parties, including the Exchange Offer
No-Action Letters, the Company believes that the New Certificates issued
pursuant to the Exchange Offer in exchange for Old Certificates may be offered
for resale, resold or otherwise transferred by holders thereof (other than a
broker-dealer who acquired such Old Certificates directly from the Trustee for
resale pursuant to Rule 144A under the Securities Act or any other available
exemption under the Securities Act or any holder that is an "affiliate" of the
Company as defined under Rule 405 of the Securities Act), without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided that such New Certificates are acquired in the ordinary course of such
holders' business and such holders are not engaged in, and do not intend to
engage in, a distribution of such New Certificates and have no arrangement with
any person participate in a distribution of such New Certificates. By tendering
the Old Certificates in exchange for New Certificates, each holder, other than a
broker-dealer, will represent to the Company that: (i) it is not an affiliate of
the Company (as defined under Rule 405 of the Securities Act) nor a
broker-dealer tendering Old Certificates acquired directly from the Company for
its own account; (ii) any New Certificates to be received by it will be acquired
in the ordinary course of its business; and (iii) it is not engaged in, and does
not intend to engage in, a distribution of such New Certificates and has no
arrangement or understanding to participate in a distribution of the New
Certificates. If a holder of Old Certificates is engaged in or intends to engage
in a distribution of the New Certificates or has any arrangement or
understanding with respect to the distribution of the New Certificates to be
acquired pursuant to the Exchange Offer, such holder may not rely on the
applicable interpretations of the staff of the Commission and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. Each Participating
Broker-Dealer that receives New Certificates for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Certificates. The Letter of Transmittal states that
by so acknowledging and by delivering a prospectus, a Participating
Broker-Dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer in
connection with resales of New Certificates received in exchange for Old
Certificates where such Old Certificates were acquired by such Participating
Broker-Dealer as a result of market-making activities or other trading
activities. The Company has agreed that, starting on the Expiration Date and
ending on the close of business 180 days after the Expiration Date, it will make
this Prospectus available to any Participating Broker-Dealer for use in
connection with any such resale. See "Plan of Distribution."
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In the event that any changes in law or the applicable interpretations of
the staff of the Commission do not permit Continental to effect the Exchange
Offer, if the Registration Statement is not declared effective within 180
calendar days after the Issuance Date under certain circumstances or the
Exchange Offer is not consummated within 210 days after the Issuance Date under
certain other circumstances, at the request of a holder not eligible to
participate in the Exchange Offer or under certain other circumstances described
in the Registration Rights Agreement, Continental will, in lieu of effecting the
registration of the New Certificates pursuant to the Registration Statement and
at no cost to the holders of Old Certificates, (a) as promptly as practicable
file with the Commission a shelf registration statement (the "Shelf Registration
Statement") covering resales of the Old Certificates, (b) use its best efforts
to cause the Shelf Registration Statement to be declared effective under the
Securities Act by the 180th calendar day after the Issuance Date and (c) use its
best efforts to keep effective the Shelf Registration Statement for a period of
two years after its effective date (or for such shorter period as shall end when
all of the Old Certificates covered by the Shelf Registration Statement have
been sold pursuant thereto or may be freely sold pursuant to Rule 144 under the
Securities Act).
In the event that neither the consummation of the Exchange Offer nor the
declaration by the Commission of the Shelf Registration Statement to be
effective (each a "Registration Event") occurs on or prior to the 210th calendar
day following the Issuance Date, the interest rate per annum borne by the
Equipment Notes and Deposits shall be increased by 0.50% from and including such
210th day to but excluding the earlier of (i) the date on which a Registration
Event occurs and (ii) the date on which all of the Certificates otherwise become
transferable by Certificateholders (other than affiliates or former affiliates
of Continental) without further registration under the Securities Act. In the
event that the Shelf Registration Statement ceases to be effective at any time
during the period specified by the Registration Rights Agreement for more than
60 days, whether or not consecutive, during any 12-month period, the interest
rate per annum borne by the Equipment Notes and the Deposits shall be increased
by 0.50% from the 61st day of the applicable 12-month period such Shelf
Registration Statement ceases to be effective until such time as the Shelf
Registration Statement again becomes effective (or, if earlier, the end of such
period specified by the Registration Rights Agreement).
Upon consummation of the Exchange Offer, subject to certain exceptions,
holders of Old Certificates who do not exchange their Old Certificates for New
Certificates in the Exchange Offer will no longer be entitled to registration
rights and will not be able to offer or sell their Old Certificates, unless such
Old Certificates are subsequently registered under the Securities Act (which,
subject to certain limited exceptions, the Company will have no obligation to
do), except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. See "Risk
Factors -- Risk Factors Relating to the Certificates -- Consequences of Failure
to Exchange".
Expiration Date; Extensions; Amendments; Termination
The term "Expiration Date" shall mean [ ] (30 calendar days
following the commencement of the Exchange Offer), unless the Company, in its
sole discretion, extends the Exchange Offer, in which case the term "Expiration
Date" shall mean the latest date to which the Exchange Offer is extended.
Notwithstanding any extension of the Exchange Offer, if the Exchange Offer is
not consummated by October 17, 1997, the interest rate borne by the Equipment
Notes and Deposits is subject to increase. See "-- General".
In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
record holders of Old Certificates an announcement thereof, each prior to 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Such announcement may state that the Company is
extending the Exchange Offer for a specified period of time.
The Company reserves the right (i) to delay acceptance of any Old
Certificates, to extend the Exchange Offer or to terminate the Exchange Offer
and not permit acceptance of Old Certificates not previously accepted if any of
the conditions set forth herein under "-- Conditions" shall have occurred and
shall not have been waived by the Company, by giving oral or written notice of
such delay, extension or termination to the
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Exchange Agent, or (ii) to amend the terms of the Exchange Offer in any manner
deemed by it to be advantageous to the holders of the Old Certificates. Any such
delay in acceptance, extension, termination or amendment will be followed as
promptly as practicable by oral or written notice thereof to the Exchange Agent.
If the Exchange Offer is amended in a manner determined by the Company to
constitute a material change, the Company will promptly disclose such amendment
in a manner reasonably calculated to inform the holders of the Old Certificates
of such amendment.
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, the Company shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
INTEREST ON THE NEW CERTIFICATES
The New Certificates will accrue interest at the applicable per annum rate
for such Trust set forth on the cover page of this Prospectus, from the Issuance
Date. Interest on the New Certificates is payable on April 1 and October 1 of
each year commencing upon the consummation of the Exchange Offer, subject to the
terms of the Intercreditor Agreement.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. In addition, either (i) certificates for such Old
Certificates must be received by the Exchange Agent along with the Letter of
Transmittal, (ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Certificates, if such procedure is available, into
the Exchange Agent's account at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date or
(iii) the holder must comply with the guaranteed delivery procedures described
below. THE METHOD OF DELIVERY OF OLD CERTIFICATES, LETTERS OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD CERTIFICATES
SHOULD BE SENT TO THE COMPANY. Delivery of all documents must be made to the
Exchange Agent at its address set forth below. Holders may also request their
respective brokers, dealers, commercial banks, trust companies or nominees to
effect such tender for such holders.
The tender by a holder of Old Certificates will constitute an agreement
between such holder and the Company in accordance with the terms and subject to
the conditions set forth herein and in the Letter of Transmittal.
Only a holder of Old Certificates may tender such Old Certificates in the
Exchange Offer. The term "holder" with respect to the Exchange Offer means any
person in whose name Old Certificates are registered on the books of the Company
or any other person who has obtained a properly completed bond power from the
registered holder.
Any beneficial owner whose Old Certificates are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial owner wishes to
tender on his own behalf, such beneficial owner must, prior to completing and
executing the Letter of Transmittal and delivering his Old Certificates, either
make appropriate arrangements to register ownership of the Old Certificates in
such owner's name or obtain a properly completed bond power from the registered
holder. The transfer of registered ownership may take considerable time.
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Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by any member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor" institution within the meaning of Rule
17Ad-15 under the Exchange Act (each an "Eligible Institution") unless the Old
Certificates tendered pursuant thereto are tendered (i) by a registered holder
who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Certificates listed therein, such Old Certificates
must be endorsed or accompanied by bond powers and a proxy which authorizes such
person to tender the Old Certificates on behalf of the registered holder, in
each case as the name of the registered holder or holders appears on the Old
Certificates.
If the Letter of Transmittal or any Old Certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must
be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt) and withdrawal of the tendered Old Certificates will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old
Certificates not properly tendered or any Old Certificates the acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the absolute right to waive any irregularities or conditions of
tender as to particular Old Certificates. The Company's interpretation of the
terms and conditions of the Exchange Offer (including the instructions in the
Letter of Transmittal) will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of Old Certificates
must be cured within such time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Old
Certificates, nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Certificates will not be deemed to have been made
until such irregularities have been cured or waived. Any Old Certificates
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
without cost to such holder by the Exchange Agent to the tendering holders of
Old Certificates, unless otherwise provided in the Letter of Transmittal, as
soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion, subject
to the provisions of the Pass Through Trust Agreements, to (i) purchase or make
offers for any Old Certificates that remain outstanding subsequent to the
Expiration Date or, as set forth under "-- Conditions," to terminate the
Exchange Offer in accordance with the terms of the Registration Rights Agreement
and (ii) to the extent permitted by applicable law, purchase Old Certificates in
the open market, in privately negotiated transactions or otherwise. The terms of
any such purchases or offers could differ from the terms of the Exchange Offer.
ACCEPTANCE OF OLD CERTIFICATES FOR EXCHANGE; DELIVERY OF NEW CERTIFICATES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
all Old Certificates properly tendered will be accepted, promptly after the
Expiration Date, and the New Certificates will be issued promptly after
acceptance of the Old Certificates. See "-- Conditions" below. For purposes of
the Exchange Offer, Old Certificates shall be deemed to have been accepted for
exchange when, as and if the Company has given oral or written notice thereof to
the Exchange Agent.
In all cases, issuance of New Certificates for Old Certificates that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Old Certificates
or a timely Book-Entry Confirmation of such Old Certificates into the Exchange
Agent's account at the Book-Entry Transfer Facility, a properly completed and
duly executed Letter of Transmittal and all other required documents. If any
tendered Old Certificates are not accepted for any reason set forth in the
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terms and conditions of the Exchange Offer or if Old Certificates are submitted
for a greater principal amount than the holder desires to exchange, such
unaccepted or nonexchanged Old Certificates will be returned without expense to
the tendering holder thereof (or, in the case of Old Certificates tendered by
book-entry transfer procedures described below, such nonexchanged Old
Certificates will be credited to an account maintained with such Book-Entry
Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Certificates at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Certificates by causing
the Book-Entry Transfer Facility to transfer such Old Certificates into the
Exchange Agent's account at the Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Certificates may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof
with any required signature guarantees and any other required documents must, in
any case, be transmitted to and received by the Exchange Agent at one of the
addresses set forth below under "-- Exchange Agent" on or prior to the
Expiration Date or the guaranteed delivery procedures described below must be
complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Certificates desires to tender such Old
Certificates, and the Old Certificates are not immediately available, or time
will not permit such holder's Old Certificates or other required documents to
reach the Exchange Agent before the Expiration Date, or the procedures for book-
entry transfer cannot be completed on a timely basis, a tender may be effected
if (i) the tender is made through an Eligible Institution, (ii) prior to the
Expiration Date, the Exchange Agent receives from such Eligible Institution a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) and Notice of Guaranteed Delivery, substantially in the form provided
by the Company (by facsimile transmission, mail or hand delivery), setting forth
the name and address of the holder of Old Certificates and the amount of Old
Certificates tendered, stating that the tender is being made thereby and
guaranteeing that within three New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old Certificates, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent and (iii) the certificates for all
physically tendered Old Certificates, in proper form for transfer, or a
Book-Entry Confirmation, as the case may be, and all other documents required by
the Letter of Transmittal are received by the Exchange Agent within three NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL OF TENDERS
Tenders of Old Certificates may be withdrawn at any time prior to 5:00
p.m., New York City time on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date at one of the addresses set forth below under "-- Exchange
Agent". Any such notice of withdrawal must specify the name of the person having
tendered the Old Certificates to be withdrawn, identify the Old Certificates to
be withdrawn (including the principal amount of such Old Certificates) and
(where certificates for Old Certificates have been transmitted) specify the name
in which such Old Certificates are registered, if different from that of the
withdrawing holder. If certificates for Old Certificates have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of such
certificates, the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If Old Certificates have been tendered pursuant to the
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procedure for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Old Certificates and otherwise comply with the
procedures of such facility. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Old Certificates so withdrawn will be deemed not to have been validly tendered
for exchange for purposes of the Exchange Offer. Any Old Certificates which have
been tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder (or, in the case of
Old Certificates tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Certificates will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Certificates) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Certificates may be retendered by
following one of the procedures described under "-- Procedures for Tendering"
and "-- Book-Entry Transfer" above at any time on or prior to the Expiration
Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, Old Certificates will
not be required to be accepted for exchange, nor will New Certificates be issued
in exchange for, any Old Certificates, and the Company may terminate or amend
the Exchange Offer as provided herein before the acceptance of such Old
Certificates, if because of any change in law, or applicable interpretations
thereof by the Commission, the Company determines that it is not permitted to
effect the Exchange Offer, and the Company has no obligation to, and will not
knowingly, permit acceptance of tenders of Old Certificates from affiliates of
the Company (within the meaning of Rule 405 under the Securities Act) or from
any other holder or holders who are not eligible to participate in the Exchange
Offer under applicable law or interpretations thereof by the Commission, or if
the New Certificates to be received by such holder or holders of Old
Certificates in the Exchange Offer, upon receipt, will not be tradable by such
holder without restriction under the Securities Act and the Exchange Act and
without material restrictions under the "blue sky" or securities laws of
substantially all of the states of the United States.
EXCHANGE AGENT
Wilmington Trust Company has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
By Mail or Overnight Delivery: By Hand:
Wilmington Trust Company Wilmington Trust Company
1100 North Market Street 1105 North Market Street, 1st Floor
Wilmington, Delaware 19890-0001 Wilmington, Delaware 19890
Attention: Jill Rylee Attention: Corporate Trust Operations
Facsimile Transmission:
(302) 651-1079
Confirm by Telephone:
(302) 651-8869
Jill Rylee
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitations may be
made by telegraph, telephone, telecopy, electronic mail or in person by officers
and regular employees of the Company.
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The Company will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith. The Company may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them
in forwarding copies of the Prospectus and related documents to the beneficial
owners of the Old Certificates, and in handling or forwarding tenders for
exchange.
The expenses to be incurred in connection with the Exchange Offer will be
paid by the Company, including fees and expenses of the Exchange Agent and
Trustee and accounting, legal, printing and related fees and expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Certificates pursuant to the Exchange Offer. If, however, certificates
representing New Certificates or Old Certificates for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered holder
of the Old Certificates tendered, or if tendered Old Certificates are registered
in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Old Certificates pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
DESCRIPTION OF THE NEW CERTIFICATES
The New Certificates will be issued pursuant to four separate Pass Through
Trust Agreements. The following summary describes certain terms of the
Certificates, the Deposits and the Pass Through Trust Agreements. The summary
does not purport to be complete, and reference is made to all of the provisions
of the Pass Through Trust Agreements, the Deposit Agreements, the Escrow
Agreements and the Intercreditor Agreement, which have been filed as exhibits to
the Registration Statement and copies of which are available as set forth under
the heading "Available Information". Except as otherwise indicated, the
following summary relates to each of the Trusts and the Certificates issued by
each Trust. The terms and conditions governing each of the Trusts are
substantially the same, except as described under "-- Subordination" below and
except that the principal amount and scheduled principal repayments of the
Equipment Notes held by each Trust and the interest rate and maturity date of
the Equipment Notes held by each of the Class A Trust, the Class B Trust and the
Class C Trusts will differ. The references to Sections in parentheses in the
following summary are to the relevant Sections of the Pass Through Trust
Agreements unless otherwise indicated.
GENERAL
The New Certificates of each Trust will be issued in fully registered form
only and will be subject to the provisions described below under "-- Book Entry;
Delivery and Form". (Section 3.01) Each New Certificate will represent a
fractional undivided interest in the Trust created by the Pass Through Trust
Agreement pursuant to which such Certificate is issued. (Section 3.01) The Trust
Property of each Trust consists of (i) the rights of such Trust to acquire
Equipment Notes under the Note Purchase Agreement issued, at Continental's
election in connection with the delivery of each Aircraft during the Delivery
Period, either (a) on a nonrecourse basis by an Owner Trustee in each separate
leveraged lease transaction with respect to each Leased Aircraft to finance the
purchase of such Leased Aircraft by the Owner Trustee, in which case the
applicable Leased Aircraft will be leased to Continental, or (b) on a recourse
basis by Continental in connection with each separate secured loan transaction
with respect to each Owned Aircraft, if any, to finance the purchase of such
Owned Aircraft by Continental, (ii) Equipment Notes acquired under the Note
Purchase Agreement (consisting, as of the date of this Prospectus, of $74.4
million principal amount issued with respect to two Boeing 757-224 Aircraft in
leveraged lease transactions), (iii) the rights of such Trust under the
applicable Escrow Agreement (including the right to request the Escrow Agent to
withdraw from
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the Depositary funds sufficient to enable such Trust to purchase Equipment Notes
on the delivery of each Aircraft during the Delivery Period), (iv) the rights of
such Trust under the Intercreditor Agreement (including all monies receivable in
respect of such rights), (v) all monies receivable under the Liquidity Facility
for such Trust and (vi) funds from time to time deposited with the Trustee in
accounts relating to such Trust. The New Certificates represent pro rata shares
of the Equipment Notes and other property held in the related Trust and will be
issued only in minimum denominations of $1,000 and integral multiples thereof.
(Section 3.01).
On the Transfer Date, each of the Original Trusts will transfer and assign
all of its assets and rights to a substantially identical Successor Trust, and
the New Trustee will assume the obligations of the related Original Trustee
under each transaction document to which such Original Trustee was a party. Upon
the effectiveness of such transfer, assignment and assumption, each of the
Original Trusts will be liquidated and each of the Certificates will represent
the same interest in the Successor Trust as it represented in the Original Trust
immediately prior to such transfer, assignment and assumption. Unless the
context otherwise requires, all references in this Prospectus to the Trusts, the
Trustees, the Pass Through Trust Agreements and similar terms shall be
applicable to the Original Trusts until the effectiveness of such transfer,
assignment and assumption and thereafter shall be applicable with respect to the
Successor Trusts. See "-- Liquidation of Original Trusts".
The Certificates represent interests in the respective Trusts, and all
payments and distributions thereon will be made only from the Trust Property of
the related Trust. (Section 3.11) The Certificates do not represent an interest
in or obligation of Continental, the Trustees, any of the Loan Trustees or Owner
Trustees in their individual capacities, any Owner Participant, or any affiliate
of any thereof.
Pursuant to the Escrow Agreement applicable to each Trust, the
Certificateholders of such Trust as holders of the Escrow Receipts affixed to
each Certificate are entitled to certain rights with respect to the Deposits
relating to such Trust. Accordingly, any transfer of a Certificate will have the
effect of transferring the corresponding rights with respect to the Deposits,
and rights with respect to the Deposits may not be separately transferred by
Certificateholders. Rights with respect to the Deposits and the Escrow Agreement
relating to a Trust, except for the right to request withdrawals for the
purchase of Equipment Notes, do not constitute Trust Property of such Trust.
SUBORDINATION
Pursuant to the Intercreditor Agreement to which the Trustees, the
Subordination Agent and the Liquidity Providers are parties, on each
Distribution Date, so long as no Triggering Event shall have occurred (whether
or not continuing), all payments received by the Subordination Agent in respect
of Equipment Notes and certain other payments will be distributed under the
Intercreditor Agreement in the following order: (1) payment of certain Liquidity
Obligations to the Liquidity Providers; (2) payment of Expected Distributions to
the holders of Class A Certificates; (3) payment of Expected Distributions to
the holders of Class B Certificates; (4) payment of Expected Distributions to
the holders of Class C Certificates; and (5) payment of certain fees and
expenses of the Subordination Agent and the Trustees.
In addition, upon the occurrence of a Triggering Event and at all times
thereafter, all payments received by the Subordination Agent in respect of the
Equipment Notes and certain other payments will be distributed under the
Intercreditor Agreement in the following order: (1) to reimburse the
Subordination Agent, the Trustees and certain other parties for the payment of
the Administration Expenses and to the Liquidity Providers in payment of the
Liquidity Obligations; (2) to the holders of Class A Certificates in payment of
Adjusted Expected Distributions; (3) to the holders of Class B Certificates in
payment of Adjusted Expected Distributions; and (4) to the holders of Class C
Certificates in payment of Adjusted Expected Distributions.
The priority of distributions after a Triggering Event will have the effect
in certain circumstances of requiring the distribution to more senior Classes of
Certificates of payments received in respect of one or more junior series of
Equipment Notes. If this should occur, the interest accruing on the remaining
Equipment Notes would in the aggregate be less than the interest accruing on the
remaining Certificates because such Certificates include a relatively greater
proportion of junior Classes with relatively higher interest rates. As a
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result of such possible interest shortfalls, the holders of one or more junior
Classes of Certificates may not receive the full amount due them after a
Triggering Event even if all Equipment Notes are eventually paid in full.
Payments in respect of the Deposits relating to a Trust are not subject to
the subordination provisions of the Intercreditor Agreement.
PAYMENTS AND DISTRIBUTIONS
Payments of interest on the Deposits with respect to each Trust and
payments of principal, premium (if any) and interest on the Equipment Notes or
with respect to other Trust Property held in each Trust will be distributed by
the Paying Agent (in the case of the Deposits) or by the Trustee (in the case of
Trust Property of such Trust) to Certificateholders of such Trust on the date
receipt of such payment is confirmed, except in the case of certain types of
Special Payments.
The Deposits held with respect to each Trust and the Equipment Notes held
in each Trust will accrue interest at the applicable rate per annum for
Certificates to be issued by such Trust set forth on the cover page of this
Prospectus, payable on April 1 and October 1 of each year, commencing on October
1, 1997 (or, in the case of Equipment Notes issued after such date, commencing
with the first such date to occur after initial issuance thereof). Such interest
payments will be distributed to Certificateholders of such Trust on each such
date until the final Distribution Date for such Trust, subject in the case of
payments on the Equipment Notes to the Intercreditor Agreement. Interest is
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The interest rates for the Deposits and the Equipment Notes are subject to
change under certain circumstances. See "The Exchange Offer -- Terms of the
Exchange Offer -- General". Payments of interest applicable to the Certificates
issued by each of the Trusts are supported by two separate Liquidity Facilities
provided by the Liquidity Providers for the benefit of the holders of such
Certificates in an aggregate amount sufficient to pay interest thereon at the
Stated Interest Rate for such Trust on up to three successive Regular
Distribution Dates (without regard to any future payments of principal on such
Certificates), except that the Liquidity Facilities with respect to such Trust
do not cover interest payable by the Depositary on the Deposits relating to such
Trust. The Liquidity Facilities for any Class of Certificates do not provide for
drawings thereunder to pay for principal of or premium on the Certificates of
such Class, any interest on the Certificates of such Class in excess of the
Stated Interest Rates, or, notwithstanding the subordination provisions of the
Intercreditor Agreement, principal of or interest or premium on the Certificates
of any other Class. Therefore, only the holders of the Certificates to be issued
by a particular Trust will be entitled to receive and retain the proceeds of
drawings under the Liquidity Facilities for such Trust. See "Description of the
Liquidity Facilities".
Payments of principal of the Equipment Notes held in each Trust are
scheduled to be received by the Trustee on April 1 and October 1 in certain
years depending upon the terms of the Equipment Notes held in such Trust,
commencing April 1, 1998. Scheduled payments of interest on the Deposits and of
interest or principal on the Equipment Notes are herein referred to as
"Scheduled Payments", and April 1 and October 1 of each year are herein referred
to as "Regular Distribution Dates". See "Description of the Equipment
Notes -- Principal and Interest Payments". The "Final Maturity Date" for the
Class A Certificates is October 1, 2016, for the Class B Certificates is October
1, 2014 and for the Class C Certificates is October 1, 2008.
The Paying Agent with respect to each Escrow Agreement will distribute on
each Regular Distribution Date to the Certificateholders of the Trust to which
such Escrow Agreement relates all Scheduled Payments received in respect of the
related Deposits, the receipt of which is confirmed by the Paying Agent on such
Regular Distribution Date. The Trustee of each Trust will distribute, subject to
the Intercreditor Agreement, on each Regular Distribution Date to the
Certificateholders of such Trust all Scheduled Payments received in respect of
Equipment Notes held on behalf of such Trust, the receipt of which is confirmed
by the Trustee on such Regular Distribution Date. Each Certificateholder of each
Trust will be entitled to receive a pro rata share of any distribution in
respect of Scheduled Payments of interest on the Deposits relating to such Trust
and, subject to the Intercreditor Agreement, of principal or interest on
Equipment Notes held on behalf of
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such Trust. Each such distribution of Scheduled Payments will be made by the
applicable Paying Agent or Trustee to the Certificateholders of record of the
relevant Trust on the Record Date applicable to such Scheduled Payment subject
to certain exceptions. (Sections 4.01 and 4.02, and Section 2.03 of the Escrow
Agreement) If a Scheduled Payment is not received by the applicable Paying Agent
or Trustee on a Regular Distribution Date but is received within five days
thereafter, it will be distributed to such holders of record on the date
received. If it is received after such five-day period, it will be treated as a
Special Payment and distributed as described below.
Any payment in respect of, or any proceeds of, any Equipment Note or the
Trust Indenture Estate under (and as defined in) each Indenture other than a
Scheduled Payment (each, a "Special Payment") will be scheduled to be
distributed on, in the case of an early redemption or a purchase of the
Equipment Notes relating to one or more Aircraft, the date of such early
redemption or purchase (which shall be a Business Day), and otherwise on the
Business Day specified for distribution of such Special Payment pursuant to a
notice delivered by each Trustee as soon as practicable after the Trustee has
received funds for such Special Payment (each a "Special Distribution Date"),
subject to the Intercreditor Agreement. Any unused Deposits to be distributed
after the Delivery Period Termination Date or the occurrence of a Triggering
Event, together with accrued and unpaid interest thereon and the premium payable
by Continental (each, also a "Special Payment"), will be scheduled to be
distributed on a date 35 days after the Paying Agent has received notice of the
event requiring such distribution (also a "Special Distribution Date") unless
such date is within 10 days before or after a Regular Distribution Date, in
which case such Special Payment shall be made on such Regular Distribution Date.
Each Paying Agent, in the case of the Deposits, and each Trustee, in the case of
Trust Property or the premium payable by Continental in connection with certain
distributions of unused Deposits, will mail a notice to the Certificateholders
of the applicable Trust stating the scheduled Special Distribution Date, the
related Record Date, the amount of the Special Payment and the reason for the
Special Payment. In the case of a redemption or purchase of the Equipment Notes
held in the related Trust or any distribution of unused Deposits after the
Delivery Period Termination Date or the occurrence of a Triggering Event, such
notice will be mailed not less than 20 days prior to the date such Special
Payment is scheduled to be distributed, and in the case of any other Special
Payment, such notice will be mailed as soon as practicable after the Trustee has
confirmed that it has received funds for such Special Payment. (Section 4.02(c)
and Section 2.03 of the Escrow Agreement) Each distribution of a Special
Payment, other than a final distribution, on a Special Distribution Date for any
Trust will be made by the Paying Agent or the Trustee, as applicable, to the
Certificateholders of record of such Trust on the Record Date applicable to such
Special Payment. (Section 4.02(b) and Section 2.03 of the Escrow Agreement) See
"-- Indenture Defaults and Certain Rights Upon an Indenture Default" and
"Description of the Equipment Notes -- Redemption".
Each Pass Through Trust Agreement requires that the Trustee establish and
maintain, for the related Trust and for the benefit of the Certificateholders of
such Trust, one or more accounts (the "Certificate Account") for the deposit of
payments representing Scheduled Payments received by such Trustee. Each Pass
Through Trust Agreement also requires that the Trustee establish and maintain,
for the related Trust and for the benefit of the Certificateholders of such
Trust, one or more accounts (the "Special Payments Account") for the deposit of
payments representing Special Payments received by such Trustee, which shall be
non-interest bearing except in certain circumstances where the Trustee may
invest amounts in such account in certain permitted investments. Pursuant to the
terms of each Pass Through Trust Agreement, the Trustee is required to deposit
any Scheduled Payments relating to the applicable Trust received by it in the
Certificate Account of such Trust and to deposit any Special Payments so
received by it in the Special Payments Account of such Trust. (Section 4.01) All
amounts so deposited will be distributed by the Trustee on a Regular
Distribution Date or a Special Distribution Date, as appropriate. (Section 4.02)
Each Escrow Agreement requires that the Paying Agent establish and
maintain, for the benefit of the Receiptholders, one or more accounts (the
"Paying Agent Account"), which shall be non-interest bearing. Pursuant to the
terms of the Escrow Agreement, the Paying Agent is required to deposit interest
on Deposits relating to such Trust and any unused Deposits withdrawn by the
Escrow Agent in the Paying Agent Account. All amounts so deposited will be
distributed by the Paying Agent on a Regular Distribution Date or Special
Distribution Date, as appropriate.
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The final distribution for each Trust will be made only upon presentation
and surrender of the Certificates for such Trust at the office or agency of the
Trustee specified in the notice given by the Trustee of such final distribution.
The Trustee will mail such notice of the final distribution to the
Certificateholders of such Trust, specifying the date set for such final
distribution and the amount of such distribution. (Section 11.01) See
"-- Termination of the Trusts" below. Distributions in respect of Certificates
issued in global form will be made as described in "-- Book Entry; Delivery and
Form" below.
If any Regular Distribution Date or Special Distribution Date is a
Saturday, Sunday or other day on which commercial banks are authorized or
required to close in New York, New York, Houston, Texas, Wilmington, Delaware,
or Salt Lake City, Utah (any other day being a "Business Day"), distributions
scheduled to be made on such Regular Distribution Date or Special Distribution
Date will be made on the next succeeding Business Day without additional
interest.
POOL FACTORS
The "Pool Balance" for each Trust or for the Certificates issued by any
Trust indicates, as of any date, the original aggregate face amount of the
Certificates of such Trust less the aggregate amount of all payments made in
respect of the Certificates of such Trust or in respect of Deposits relating to
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
Regular Distribution Date or Special Distribution Date shall be computed after
giving effect to any special distribution with respect to unused Deposits,
payment of principal of the Equipment Notes or payment with respect to other
Trust Property held in such Trust and the distribution thereof to be made on
that date. (Section 1.01)
The "Pool Factor" for each Trust as of any Regular Distribution Date or
Special Distribution Date is the quotient (rounded to the seventh decimal place)
computed by dividing (i) the Pool Balance by (ii) the original aggregate face
amount of the Certificates of such Trust. The Pool Factor for each Trust or for
the Certificates issued by any Trust as of any Regular Distribution Date or
Special Distribution Date shall be computed after giving effect to any special
distribution with respect to unused Deposits, payment of principal of the
Equipment Notes or payment with respect to other Trust Property held in such
Trust and the distribution thereof to be made on that date. (Section 1.01) The
Pool Factor for each Trust was 1.0000000 on the Issuance Date, and will decline
as described herein to reflect reductions in the Pool Balance of such Trust. The
amount of a Certificateholder's pro rata share of the Pool Balance of a Trust
can be determined by multiplying the par value of the holder's Certificate of
such Trust by the Pool Factor for such Trust as of the applicable Regular
Distribution Date or Special Distribution Date. Notice of the Pool Factor and
the Pool Balance for each Trust will be mailed to Certificateholders of such
Trust on each Regular Distribution Date and Special Distribution Date. (Section
4.03)
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The Mandatory Economic Terms require that, assuming each Aircraft is
delivered in the month scheduled for its delivery (see "Description of the
Aircraft and the Appraisals -- The Appraisals" for the delivery schedule) and
that Equipment Notes in the maximum principal amount in respect of all of the
Aircraft are purchased by the Trusts, the scheduled aggregate payments of
principal of the Equipment Notes held in each Trust as of each Regular
Distribution Date be as set forth in the applicable column below (the "Assumed
Amortization Schedule"). In addition, assuming that no early redemption or
purchase, or default in the payment of principal, in respect of any Equipment
Notes shall occur, the Pool Factors for each Trust after taking into account
each such Scheduled Payment will be as set forth below:
1997-1C-I
1997-1A TRUST 1997-1B TRUST TRUST
EQUIPMENT 1997-1A EQUIPMENT 1997-1B EQUIPMENT
NOTES TRUST NOTES TRUST NOTES
SCHEDULED EXPECTED SCHEDULED EXPECTED SCHEDULED
PAYMENTS OF POOL PAYMENTS OF POOL PAYMENTS OF
DATE PRINCIPAL FACTOR PRINCIPAL FACTOR PRINCIPAL
---- ------------- --------- ------------- --------- -------------
March 21, 1997 $ 0.00 1.0000000 $ 0.00 1.0000000 $ 0.00
October 1, 1997 0.00 1.0000000 0.00 1.0000000 0.00
April 1, 1998 3,934,879.12 0.9910137 1,552,705.03 0.9895323 1,882,103.25
October 1, 1998 1,681,582.29 0.9871734 66,785.83 0.9890821 0.00
April 1, 1999 5,222,970.99 0.9752454 1,129,105.40 0.9814701 1,138,727.15
October 1, 1999 1,785,140.00 0.9711686 304,080.00 0.9794201 229,980.50
April 1, 2000 8,598,044.60 0.9515328 1,752,510.54 0.9676054 5,327,605.14
October 1, 2000 3,208,002.92 0.9442065 304,080.00 0.9655554 12,443.50
April 1, 2001 10,559,336.19 0.9200916 1,934,649.19 0.9525128 11,673,393.02
October 1, 2001 1,785,140.00 0.9160148 609,560.00 0.9484034 4,845,496.82
April 1, 2002 16,672,796.22 0.8779383 2,214,649.16 0.9334732 17,842,891.27
October 1, 2002 2,613,116.99 0.8719706 859,499.57 0.9276788 7,003,522.61
April 1, 2003 7,485,290.53 0.8548760 3,977,291.36 0.9008655 21,300,149.75
October 1, 2003 1,785,140.00 0.8507992 609,560.00 0.8967561 2,640,287.94
April 1, 2004 7,556,409.30 0.8335423 9,438,941.06 0.8331227 18,622,511.38
October 1, 2004 1,785,140.00 0.8294654 609,560.00 0.8290133 4,873 ,236.58
April 1, 2005 4,169,719.26 0.8199428 17,874,572.95 0.7085102 10,440,888.52
October 1, 2005 1,785,140.00 0.8158660 609,560.00 0.7044008 0.00
April 1, 2006 4,081,965.16 0.8065438 12,148,154.28 0.6225030 2,370,247.10
October 1, 2006 6,009,321.43 0.7928200 4,482,202.42 0.5922858 0.00
April 1, 2007 9,892,990.06 0.7702269 16,738,430.54 0.4794422 889,515.48
October 1, 2007 4,397,087.96 0.7601850 3,826,001.10 0.4536489 0.00
April 1, 2008 13,716,127.67 0.7288608 20,295,722.81 0.3168235 0.00
October 1, 2008 3,671,847.23 0.7204752 400,701.24 0.3141221 0.00
April 1, 2009 16,318,218.06 0.6832085 18,630,088.20 0.1885257 0.00
October 1, 2009 2,445,509.15 0.6776235 2,166,372.54 0.1739210 0.00
April 1, 2010 43,451,307.24 0.5783915 9,711,448.30 0.1084504 0.00
October 1, 2010 185,691.30 0.5779675 0.00 0.1084504 0.00
April 1, 2011 37,047,170.31 0.4933609 7,998,172.64 0.0545300 0.00
October 1, 2011 6,646,530.16 0.4781819 0.00 0.0545300 0.00
April 1, 2012 56,076,129.35 0.3501180 7,751,645.54 0.0022716 0.00
October 1, 2012 0.00 0.3501180 323,595.36 0.0000900 0.00
April 1, 2013 77,092,583.73 0.1740577 13,354.94 0.0000000 0.00
October 1, 2013 1,274,987.73 0.1711459 0.00 0.0000000 0.00
April 1, 2014 43,773,295.63 0.0711786 0.00 0.0000000 0.00
October 1, 2014 10,042,845.35 0.0482432 0.00 0.0000000 0.00
April 1, 2015 21,124,544.06 0.0000000 0.00 0.0000000 0.00
1997-IC-II 1997-IC-II
TRUST TRUST
EQUIPMENT EQUIPMENT
1997-1C-I NOTES NOTES
TRUST SCHEDULED SCHEDULED
EXPECTED PAYMENTS OF PAYMENTS OF
DATE POOL FACTOR PRINCIPAL PRINCIPAL
---- ----------- ------------ -----------
March 21, 1997 1.0000000 $ 0.00 1.0000000
October 1, 1997 1.0000000 0.00 1.0000000
April 1, 1998 0.9830583 169,416.91 0.9830583
October 1, 1998 0.9830583 0.00 0.9830583
April 1, 1999 0.9728081 102,502.15 0.9728081
October 1, 1999 0.9707379 20,701.62 0.9707379
April 1, 2000 0.9227817 479,562.63 0.9227817
October 1, 2000 0.9226697 1,120.10 0.9226697
April 1, 2001 0.8175920 1,050,776.65 0.8175920
October 1, 2001 0.7739754 436,165.81 0.7739754
April 1, 2002 0.6133632 1,606,122.01 0.6133632
October 1, 2002 0.5503212 630,419.79 0.5503212
April 1, 2003 0.3585886 1,917,326.00 0.3585886
October 1, 2003 0.3348222 237,664.65 0.3348222
April 1, 2004 0.1671922 1,676,299.26 0.1671922
October 1, 2004 0.1233260 438,662.79 0.1233260
April 1, 2005 0.0293426 939,833.16 0.0293426
October 1, 2005 0.0293426 0.00 0.0293426
April 1, 2006 0.0080069 213,357.02 0.0080069
October 1, 2006 0.0080069 0.00 0.0080069
April 1, 2007 0.0000000 80,069.44 0.0000000
October 1, 2007 0.0000000 0.00 0.0000000
April 1, 2008 0.0000000 0.00 0.0000000
October 1, 2008 0.0000000 0.00 0.0000000
April 1, 2009 0.0000000 0.00 0.0000000
October 1, 2009 0.0000000 0.00 0.0000000
April 1, 2010 0.0000000 0.00 0.0000000
October 1, 2010 0.0000000 0.00 0.0000000
April 1, 2011 0.0000000 0.00 0.0000000
October 1, 2011 0.0000000 0.00 0.0000000
April 1, 2012 0.0000000 0.00 0.0000000
October 1, 2012 0.0000000 0.00 0.0000000
April 1, 2013 0.0000000 0.00 0.0000000
October 1, 2013 0.0000000 0.00 0.0000000
April 1, 2014 0.0000000 0.00 0.0000000
October 1, 2014 0.0000000 0.00 0.0000000
April 1, 2015 0.0000000 0.00 0.0000000
The final schedule of principal payments and the resulting schedule of Pool
Balances and Pool Factors may change from that set forth above if, among other
things, the aggregate principal amount of the Equipment Notes acquired by the
Trusts is less than the maximum permitted by the Mandatory Economic Terms,
Equipment Notes with respect to any Aircraft are purchased by the Trusts in
other than the month currently scheduled for delivery of such Aircraft or
Equipment Notes as to which the projected LTVs are lower than other Equipment
Notes are not acquired by the Trusts. In addition, the Pool Factor and Pool
Balance of each Trust will be recomputed if there has been an early redemption,
purchase, or a default in the payment of principal or interest in respect of one
or more issues of the Equipment Notes held in a Trust, as described in
"-- Indenture Defaults and Certain Rights Upon an Indenture Default" and
"Description of the Equipment Notes -- Redemption", or a special distribution
attributable to unused Deposits after the Delivery Period Termination Date or
the occurrence of a Triggering Event, as described in "Description of the
Deposit
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Agreements". In the event of (i) any such change in the scheduled repayments or
(ii) any such redemption, purchase, default or special distribution, the Pool
Factors and the Pool Balances of each Trust so affected will be recomputed after
giving effect thereto and notice thereof will be mailed to the
Certificateholders of such Trust promptly after the Delivery Period Termination
Date in the case of clause (i) and promptly after the occurrence of any event
described in clause (ii).
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, the applicable Paying Agent and Trustee will
include with each distribution by it of a Scheduled Payment or Special Payment
to Certificateholders of the related Trust a statement, giving effect to such
distribution to be made on such Distribution Date, setting forth the following
information (per $1,000 aggregate principal amount of Certificate for such
Trust, as to (ii), (iii), (iv) and (v) below):
(i) the aggregate amount of such funds distributed on such
Distribution Date under the Pass Through Trust Agreement and the Escrow
Agreement, indicating the amount allocable to each source;
(ii) the amount of such distribution under the Pass Through Trust
Agreement allocable to principal and the amount allocable to premium
(including any premium paid by Continental with respect to unused
Deposits), if any;
(iii) the amount of such distribution under the Pass Through Trust
Agreement allocable to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
(v) the amount of such distribution under the Escrow Agreement
allocable to unused Deposits (if any); and
(vi) the Pool Balance and the Pool Factor for such Trust. (Section
4.03)
With respect to the Certificates registered in the name of Cede, as nominee
for DTC, on the Record Date prior to each Distribution Date, the applicable
Trustee will request from DTC a securities position listing setting forth the
names of all DTC Participants reflected on DTC's books as holding interests in
the Certificates on such record date. On each Distribution Date, the applicable
Paying Agent and Trustee will mail to each such DTC Participant the statement
described above and will make available additional copies as requested by such
DTC Participant for forwarding to holders of Certificates. (Section 4.03(a))
In addition, after the end of each calendar year, the applicable Trustee
and Paying Agent will furnish to each Certificateholder of each Trust at any
time during the preceding calendar year a report containing the sum of the
amounts determined pursuant to clauses (i), (ii), (iii), (iv) and (v) above with
respect to the Trust for such calendar year or, in the event such person was a
Certificateholder during only a portion of such calendar year, for the
applicable portion of such calendar year, and such other items as are readily
available to such Trustee and which a Certificateholder shall reasonably request
as necessary for the purpose of such Certificateholder's preparation of its U.S.
federal income tax returns. (Section 4.03(b)) With respect to Certificates
registered in the name of Cede, as nominee for DTC, such report and such other
items shall be prepared on the basis of information supplied to the applicable
Trustee by the DTC Participants and shall be delivered by such Trustee to such
DTC Participants to be available for forwarding by such DTC Participants to
Certificate Owners in the manner described above. (Section 4.03(b))
With respect to the Certificates issued in definitive form, the applicable
Paying Agent and Trustee will prepare and deliver the information described
above to each Certificateholder of record of each Trust as the name of such
Certificateholder appears on the records of the registrar of the Certificates.
INDENTURE DEFAULTS AND CERTAIN RIGHTS UPON AN INDENTURE DEFAULT
An event of default under an Indenture (an "Indenture Default") will, with
respect to the Leased Aircraft Indentures, include an event of default under the
related Lease (a "Lease Event of Default"). See "Description of Equipment
Notes-Indenture Default; Notice and Waiver". Since the Equipment Notes issued
under an Indenture may be held in more than one Trust, a continuing Indenture
Default under such Indenture
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would affect the Equipment Notes held by each such Trust. There are no
cross-default provisions in the Indentures or in the Leases (unless, in the case
of a Lease, otherwise agreed between an Owner Participant and Continental).
Consequently, events resulting in an Indenture Default under any particular
Indenture may or may not result in an Indenture Default under any other
Indenture, and a Lease Event of Default under any particular Lease may or may
not constitute a Lease Event of Default under any other Lease. If an Indenture
Default occurs in fewer than all of the Indentures, notwithstanding the
treatment of Equipment Notes issued under any Indenture under which an Indenture
Default has occurred, payments of principal and interest on the Equipment Notes
issued pursuant to Indentures with respect to which an Indenture Default has not
occurred will continue to be distributed to the holders of the Certificates as
originally scheduled, subject to the Intercreditor Agreement. See "Description
of the Intercreditor Agreement -- Priority of Distributions".
With respect to each Leased Aircraft, the applicable Owner Trustee and
Owner Participant will, under the related Leased Aircraft Indenture, have the
right under certain circumstances to cure Indenture Defaults that result from
the occurrence of a Lease Event of Default under the related Lease. If the Owner
Trustee or the Owner Participant exercises any such cure right, the Indenture
Default will be deemed to have been cured.
In the event that the same institution acts as Trustee of multiple Trusts,
in the absence of instructions from the Certificateholders of any such Trust,
such Trustee could be faced with a potential conflict of interest upon an
Indenture Default. In such event, each Trustee has indicated that it would
resign as Trustee of one or all such Trusts, and a successor trustee would be
appointed in accordance with the terms of the applicable Pass Through Trust
Agreement. Wilmington Trust Company is the initial Trustee under each Trust.
Upon the occurrence and continuation of any Indenture Default under any
Indenture, the Controlling Party will direct the Indenture Trustee under such
Indenture in the exercise of remedies thereunder and may accelerate and sell all
(but not less than all) of the Equipment Notes issued under such Indenture to
any person, subject to certain limitations. See "Description of Intercreditor
Agreement-Sale of Equipment Notes and Aircraft". The proceeds of such sale will
be distributed pursuant to the provisions of the Intercreditor Agreement. Any
such proceeds so distributed to any Trustee upon any such sale shall be
deposited in the applicable Special Payments Account and shall be distributed to
the Certificateholders of such Trust on a Special Distribution Date. (Sections
4.01 and 4.02) The market for Equipment Notes at the time of the existence of
any Indenture Default may be very limited and there can be no assurance as to
the price at which they could be sold. If any such Equipment Notes are sold for
less than their outstanding principal amount, certain Certificateholders will
receive a smaller amount of principal distributions than anticipated and will
not have any claim for the shortfall against Continental, any Liquidity
Provider, any Owner Trustee, any Owner Participant or any Trustee.
Any amount, other than Scheduled Payments received on a Regular
Distribution Date, distributed to the Trustee of any Trust by the Subordination
Agent on account of any Equipment Note or Trust Indenture Estate (as defined in
each Indenture) held in such Trust following an Indenture Default under any
Indenture will be deposited in the Special Payments Account for such Trust and
will be distributed to the Certificateholders of such Trust on a Special
Distribution Date. (Sections 4.01 and 4.02) In addition, if, following an
Indenture Default under any Leased Aircraft Indenture relating to a Leased
Aircraft, the applicable Owner Participant or Owner Trustee exercises its option
to redeem or purchase the outstanding Equipment Notes issued under such Leased
Aircraft Indenture, the price paid by such Owner Participant or Owner Trustee
for the Equipment Notes issued under such Leased Aircraft Indenture and
distributed to such Trust by the Subordination Agent will be deposited in the
Special Payments Account for such Trust and will be distributed to the
Certificateholders of such Trust on a Special Distribution Date. (Sections 4.01
and 4.02)
Any funds representing payments received with respect to any defaulted
Equipment Notes, or the proceeds from the sale of any Equipment Notes, held by
the Trustee in the Special Payments Account for such Trust will, to the extent
practicable, be invested and reinvested by such Trustee in certain permitted
investments pending the distribution of such funds on a Special Distribution
Date. (Section 4.04) Such permitted investments are defined as obligations of
the United States or agencies or instrumentalities thereof for the payment of
which the full faith and credit of the United States is pledged and which mature
in not
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more than 60 days or such lesser time as is required for the distribution of any
such funds on a Special Distribution Date. (Section 1.01)
Each Pass Through Trust Agreement provides that the Trustee of the related
Trust will, within 90 days after the occurrence of any default, give to the
Certificateholders of such Trust notice, transmitted by mail, of all uncured or
unwaived defaults with respect to such Trust known to it, provided that, except
in the case of default in a payment of principal, premium, if any, or interest
on any of the Equipment Notes held in such Trust, the applicable Trustee will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of such Certificateholders.
(Section 7.02) The term "default" as used in this paragraph only with respect to
any Trust means the occurrence of an Indenture Default under any Indenture
pursuant to which Equipment Notes held by such Trust were issued, as described
above, except that in determining whether any such Indenture Default has
occurred, any grace period or notice in connection therewith will be
disregarded.
Each Pass Through Trust Agreement contains a provision entitling the
Trustee of the related Trust, subject to the duty of such Trustee during a
default to act with the required standard of care, to be offered reasonable
security or indemnity by the holders of the Certificates of such Trust before
proceeding to exercise any right or power under such Pass Through Trust
Agreement at the request of such Certificateholders. (Section 7.03(e))
Subject to certain qualifications set forth in the Pass Through Trust
Agreements and to the Intercreditor Agreement, the Certificateholders of each
Trust holding Certificates evidencing fractional undivided interests aggregating
not less than a majority in interest in such Trust shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee with respect to such Trust or pursuant to the terms of
the Intercreditor Agreement, or exercising any trust or power conferred on such
Trustee under such Pass Through Trust Agreement or the Intercreditor Agreement,
including any right of such Trustee as Controlling Party under the Intercreditor
Agreement or as holder of the Equipment Note. (Section 6.04)
In certain cases, the holders of the Certificates of a Trust evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Trust may on behalf of the holders of all the Certificates of such Trust
waive any past Indenture Default under any Indenture pursuant to which Equipment
Notes held by such Trust were issued or, if the Trustee of such Trust is the
Controlling Party, may direct the Trustee to instruct the applicable Loan
Trustee to waive any past Indenture Default and thereby annul any direction
given by such holders or Trustee to such Loan Trustee with respect thereto,
except (i) a default in the deposit of any Scheduled Payment or Special Payment
or in the distribution thereof, (ii) a default in payment of the principal,
premium, if any, or interest with respect to any of the Equipment Notes and
(iii) a default in respect of any covenant or provision of the related Pass
Through Trust Agreement that cannot be modified or amended without the consent
of each Certificateholder of such Trust affected thereby. (Section 6.05) Each
Indenture provides that, with certain exceptions, the holders of the majority in
aggregate unpaid principal amount of the Equipment Notes issued thereunder may
on behalf of all such holders waive any past default or Indenture Default
thereunder. Notwithstanding such provisions of the Indentures, pursuant to the
Intercreditor Agreement only the Controlling Party will be entitled to waive any
such past default or Indenture Default.
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
Upon the occurrence and during the continuation of a Triggering Event, with
ten days' written notice to the Trustee and each Certificateholder of the same
Class (i) the Class B Certificateholders will have the right to purchase all,
but not less than all, of the Class A Certificates and (ii) the Class C
Certificateholders will have the right to purchase all, but not less than all,
of the Class A Certificates and the Class B Certificates, in each case at a
purchase price equal to the Pool Balance of the relevant Class or Classes of
Certificates plus accrued and unpaid interest thereon to the date of purchase
without premium but including any other amounts due to the Certificateholders of
such Class or Classes. In each case, if prior to the end of the ten-day period,
any other Certificateholder of the same Class notifies the purchasing
Certificateholder that the other
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Certificateholder wants to participate in such purchase, then such other
Certificateholder may join with the purchasing Certificateholder to purchase the
Certificates pro rata based on the interest in the Trust held by each
Certificateholder. (Section 6.01(b))
PTC EVENT OF DEFAULT
A PTC Event of Default is defined under each Pass Through Trust Agreement
as the failure to pay within 10 Business Days of the due date thereof: (i) the
outstanding Pool Balance of the applicable Class of Certificates on the Final
Maturity Date for such Class or (ii) interest due on such Class of Certificates
on any Distribution Date (unless, in the case of the Class A, B, C-I or C-II
Certificates, the Subordination Agent shall have made Interest Drawings, or
drawings on the Cash Collateral Account for such Class of Certificates, with
respect thereto in an aggregate amount sufficient to pay such interest and shall
have distributed such amount to the Trustee entitled thereto). Any failure to
make expected principal distributions on any Class of Certificates on any
Regular Distribution Date (other than the Final Maturity Date) will not
constitute a PTC Event of Default with respect to such Certificates. A PTC Event
of Default with respect to the most senior outstanding Class of Certificates
resulting from an Indenture Default under all Indentures will constitute a
Triggering Event.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
Continental is prohibited from consolidating with or merging into any other
corporation or transferring substantially all of its assets as an entirety to
any other corporation unless (i) the surviving successor or transferee
corporation shall (a) be a "citizen of the United States" as defined in Title 49
of the United States Code, as amended, relating to aviation (the "Transportation
Code"), (b) be a United States certificated air carrier and (c) expressly assume
all of the obligations of Continental contained in the Pass Through Trust
Agreements, the Note Purchase Agreement, the Indentures, the Participation
Agreements and the Leases; and (ii) Continental shall have delivered a
certificate and an opinion or opinions of counsel indicating that such
transaction complies with such conditions. (Section 5.02) Additionally, after
giving effect to such transaction, no Lease Event of Default, in the case of a
Leased Aircraft, or Indenture Event of Default, in the case of an Owned
Aircraft, shall have occurred and be continuing. (Leases, Section 13.02; Owned
Aircraft Indenture, Section 4.09)
The Pass Through Trust Agreements, the Note Purchase Agreement, the
Indentures, the Participation Agreements and the Leases do not contain any
covenants or provisions which may afford the applicable Trustee or
Certificateholders protection in the event of a highly leveraged transaction,
including transactions effected by management or affiliates, which may or may
not result in a change in control of Continental.
MODIFICATIONS OF THE PASS THROUGH TRUST AGREEMENTS AND CERTAIN OTHER AGREEMENTS
Each Pass Through Trust Agreement contains provisions permitting, at the
request of the Company, the execution of amendments or supplements to such Pass
Through Trust Agreement or, if applicable, to the Deposit Agreements, the Escrow
Agreements, the Intercreditor Agreement, the Note Purchase Agreement, the
Registration Rights Agreement or any Liquidity Facility, without the consent of
the holders of any of the Certificates of such Trust, (i) to evidence the
succession of another corporation to Continental and the assumption by such
corporation of Continental's obligations under such Pass Through Trust
Agreement, the Note Purchase Agreement, the Registration Rights Agreement or any
Liquidity Facility, (ii) to add to the covenants of Continental for the benefit
of holders of such Certificates or to surrender any right or power conferred
upon Continental in such Pass Through Trust Agreement, the Note Purchase
Agreement, the Registration Rights Agreement or any Liquidity Facility, (iii) to
correct or supplement any provision of such Pass Through Trust Agreement, the
Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note
Purchase Agreement, the Registration Rights Agreement or any Liquidity Facility
which may be defective or inconsistent with any other provision in such Pass
Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Note Purchase Agreement, the Registration Rights
Agreement or any Liquidity Facility, as applicable, or to cure any ambiguity,
correct any mistake or to modify any other provisions with respect to matters or
questions arising under such Pass
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Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Note Purchase Agreement, the Registration Rights
Agreement or any Liquidity Facility, provided such action shall not materially
adversely affect the interests of the holders of such Certificates, (iv) to
comply with any requirement of the Commission, any applicable law, rules or
regulations of any exchange or quotation system on which the Certificates are
listed, any regulatory body or the Registration Rights Agreement to effectuate
the Exchange Offer, (v) to add to such Pass Through Trust Agreement such other
provisions as may be expressly permitted by the Trust Indenture Act and (vi) to
provide for a successor Trustee or to add to or change any provision of such
Pass Through Trust Agreement as shall be necessary to facilitate the
administration of the Trust thereunder by more than one Trustee, provided that
in each case, such modification or supplement does not adversely affect the
status of the Trust as a grantor trust under Subpart E, Part I of Subchapter J
of Chapter 1 of Subtitle A of the Code for U.S. federal income tax purposes.
(Section 9.01)
Each Pass Through Trust Agreement also contains provisions permitting the
execution, with the consent of the holders of the Certificates of the related
Trust evidencing fractional undivided interests aggregating not less than a
majority in interest of such Trust, and with the consent of the applicable Owner
Trustee (such consent not to be unreasonably withheld), of amendments or
supplements for the purposes of adding any provisions to or changing or
eliminating any of the provisions of such Pass Through Trust Agreement, the
Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note
Purchase Agreement, the Registration Rights Agreement or any Liquidity Facility
or of modifying the rights and obligations of the Certificateholders, except
that no such amendment or supplement may, without the consent of the holder of
each Certificate so affected thereby, (a) reduce in any manner the amount of, or
delay the timing of, any receipt by the Trustee (or, with respect to the
Deposits, the Certificateholders) of payments with respect to the Deposits, the
Equipment Notes or other Trust Property held in such Trust or distributions in
respect of any Certificate related to such Trust, or change the date or place of
any payment in respect of any Certificate, or make distributions payable in coin
or currency other than that provided for in such Certificates, or impair the
right of any Certificateholder of such Trust to institute suit for the
enforcement of any such payment when due, (b) permit the disposition of any
Equipment Note held in such Trust, except as provided in such Pass Through Trust
Agreement, or otherwise deprive any Certificateholder of the benefit of the
ownership of the applicable Equipment Notes, (c) alter the priority of
distributions specified in the Intercreditor Agreement in a manner adverse to
the Certificateholders, (d) reduce the percentage of the aggregate fractional
undivided interests of the Trust provided for in such Pass Through Trust
Agreement, the consent of the holders of which is required for any such
supplemental trust agreement or for any waiver provided for in such Pass Through
Trust Agreement, (e) modify any of the provisions relating to the rights of the
Certificateholders in respect of the waiver of events of default or receipt of
payment or (f) adversely affect the status of the Trust as a grantor trust under
Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Code for
U.S. federal income tax purposes. (Section 9.02)
In the event that a Trustee, as holder (or beneficial owner through the
Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders of the relevant Trust or as Controlling Party under the
Intercreditor Agreement, receives (directly or indirectly through the
Subordination Agent) a request for a consent to any amendment, modification,
waiver or supplement under any Indenture, any Participation Agreement, any
Lease, any Equipment Note or any other related document, the Trustee shall
forthwith send a notice of such proposed amendment, modification, waiver or
supplement to each Certificateholder of the relevant Trust as of the date of
such notice. The Trustee shall request from the Certificateholders a direction
as to (a) whether or not to take or refrain from taking (or direct the
Subordination Agent to take or refrain from taking) any action which a holder of
such Equipment Note or the Controlling Party has the option to take, (b) whether
or not to give or execute (or direct the Subordination Agent to give or execute)
any waivers, consents, amendments, modifications or supplements as a holder of
such Equipment Note or as Controlling Party and (c) how to vote (or direct the
Subordination Agent to vote) any Equipment Note if a vote has been called for
with respect thereto. Provided such a request for Certificateholder direction
shall have been made, in directing any action or casting any vote or giving any
consent as the holder of any Equipment Note (or in directing the Subordination
Agent in any of the foregoing), (i) other than as Controlling Party, the Trustee
shall vote for or give consent to any such action with respect to such Equipment
Note in the same
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proportion as that of (x) the aggregate face amounts of all Certificates
actually voted in favor of or for giving consent to such action by such
direction of certificateholders to (y) the aggregate face amount of all
outstanding Certificates of the relevant Trust and (ii) as the Controlling
Party, the Trustee shall vote as directed in such Certificateholder direction by
the Certificateholders evidencing fractional undivided interests aggregating not
less than a majority in interest in the relevant Trust (or, in the event that
the Trustees of the Class C Trusts jointly are the Controlling Party, as such
Trustees, considered in the aggregate, are directed in their respective
Certificateholder directions by the Certificateholders of such Trusts evidencing
fractional undivided interests aggregating not less than a majority in interest
in the Class C Trusts, taken together). For purposes of the immediately
preceding sentence, a Certificate shall have been "actually voted" if the Holder
of such Certificate has delivered to the Trustee an instrument evidencing such
Holder's consent to such direction prior to two Business Days before the Trustee
directs such action or casts such vote or gives such consent. Notwithstanding
the foregoing, but subject to certain rights of the Certificateholders under the
relevant Pass Through Trust Agreement and subject to the Intercreditor
Agreement, the Trustee may, in its own discretion and at its own direction,
consent and notify the relevant Loan Trustee of such consent (or direct the
Subordination Agent to consent and notify the relevant Loan Trustee of such
consent) to any amendment, modification, waiver or supplement under the relevant
Indenture, Participation Agreement or Lease, any relevant Equipment Note or any
other related document, if an Indenture Default under any Indenture shall have
occurred and be continuing, or if such amendment, modification, waiver or
supplement will not materially adversely affect the interests of the
Certificateholders. (Section 10.01)
OBLIGATION TO PURCHASE EQUIPMENT NOTES
The Trustees are obligated to purchase the Equipment Notes issued with
respect to the Aircraft during the Delivery Period, subject to the terms and
conditions of the Note Purchase Agreement. Under the Note Purchase Agreement,
Continental has agreed to finance each Aircraft in the manner provided therein
and in connection therewith will have the option of entering into a leverage
lease financing or a secured debt financing with respect to each Aircraft. The
Note Purchase Agreement provides for the relevant parties to enter into (i) with
respect to each Leased Aircraft, a Participation Agreement, a Lease and a Leased
Aircraft Indenture relating to the financing of such Leased Aircraft and (ii)
with respect to each Owned Aircraft, a Participation Agreement and an Owned
Aircraft Indenture relating to the financing of such Owned Aircraft. The
description of such agreements in this Prospectus is based on the forms of such
agreements contemplated by the Note Purchase Agreement. In the case of a Leased
Aircraft, the terms of the agreements actually entered into may differ from the
forms of such agreements and, consequently, may differ from the description of
such agreements contained in this Prospectus. See "Risk Factors -- Risk Factors
Relating to the Certificates and the Offering -- Owner Participant; Revisions to
Agreements". However, under the Note Purchase Agreement, the terms of such
agreements are required to (i) contain the Mandatory Document Terms and (ii) not
vary the Mandatory Economic Terms. In addition, Continental is obligated (i) to
certify to the Trustees that any such modifications do not materially and
adversely affect the Certificateholders and (ii) to obtain written confirmation
from each Rating Agency that the use of versions of such agreements modified in
any material respect will not result in a withdrawal, suspension or downgrading
of the rating of any Class of Certificates. Further, under the Note Purchase
Agreement, it is a condition precedent to the obligation of each Trustee to
purchase the Equipment Notes related to the financing of an Aircraft that no
Triggering Event shall have occurred. The Trustees will have no right or
obligation to purchase Equipment Notes after the Delivery Period Termination
Date.
The "Mandatory Economic Terms", as defined in the Note Purchase Agreement,
require, among other things, that (i) the maximum principal amount of all the
Equipment Notes issued with respect to an Aircraft not exceed $37,600,000 for
each Boeing 757-224 Aircraft, $18,400,000 for each Boeing 737-524 Aircraft and
$24,400,000 for each Boeing 737-724 Aircraft, (ii) the initial loan to aircraft
value with respect to an Aircraft (with the value of any Aircraft for these
purposes to equal the value for such Aircraft set forth in "Prospectus
Summary -- Terms of Certificates -- Equipment Notes and the Aircraft" under the
column "Appraised Value"), not exceed 41% in the case of Series A Equipment
Notes, 55% in the case of Series B Equipment Notes and 69.99% for Boeing 757-224
Aircraft, 66.19% for Boeing 737-524 Aircraft and 66.25% for Boeing 737-724
Aircraft in the case of Series C Equipment Notes, (iii) the initial average life
of the Series A
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Equipment Notes not be less than 11.75 nor more than 12.60 years in the case of
the 757-224 Aircraft, less than 11.00 nor more than 12.55 years in the case of
the 737-524 Aircraft and less than 12.25 nor more than 12.55 years in the case
of the 737-724 Aircraft, of the Series B Equipment Notes not be less than 9.00
nor more than 9.75 years in the case of the 757-224 Aircraft, less than 6.90 nor
more than 10.52 years in the case of the 737-524 Aircraft and less than 9.75 nor
more than 10.05 years in the case of the 737-724 Aircraft and of the Series C
Equipment Notes not be less than 4.50 nor more than 5.55 years in the case of
the 757-224 Aircraft, less than 3.50 nor more than 7.60 years in the case of the
737-524 Aircraft and less than 5.25 nor more than 5.55 years in the case of the
737-724 Aircraft, (iv) the amortization schedules for each Series of Equipment
Notes, assuming the maximum amount thereof in respect of all of the Aircraft are
purchased by the Trusts and all Aircraft are delivered as currently scheduled,
shall be as set forth in the table under "Description of the New
Certificates -- Pool Factors", (v) as of the Delivery Period Termination Date
(or if earlier, the date of the occurrence of a Triggering Event), the average
life of the Class A Certificates, the Class B Certificates, the Class C-I
Certificates and the Class C-II Certificates shall not exceed, respectively,
12.91 years, 10.15 years, 6.00 years and 6.00 years (computed without regard to
the acceleration of any Equipment Notes and after giving effect to any special
distribution on the Certificates thereafter required in respect of unused
Deposits), (vi) the final maturity date of (a) the Series A Equipment Notes not
be in excess of 18.025 years after the Issuance Date, (b) the Series B Equipment
Notes not be in excess of 16.025 years after the Issuance Date and (c) the
Series C Equipment Notes not be in excess of 10.025 years after the Issuance
Date, (vii) the original aggregate principal amount of all of the Equipment
Notes of each Series shall not exceed the original aggregate face amount of the
Certificates issued by the corresponding Trust, (viii) the maximum aggregate
principal amount of the Equipment Notes issued with respect to all Boeing
757-224 Aircraft shall not exceed $300,800,000, all Boeing 737-524 Aircraft
shall not exceed $331,200,000 and all Boeing 737-724 Aircraft shall not exceed
$97,600,000, (ix) the interest rate applicable to each Series of Equipment Notes
must be equal to the rate applicable to the Certificates issued by the
corresponding Trust, (x) the payment dates for the Equipment Notes and basic
rent under the Leases must be April 1 and October 1, (xi) basic rent, stipulated
loss values and termination values under the Leases must be sufficient to pay
amounts due with respect to the related Equipment Notes, (xii) the amounts
payable under the all-risk aircraft hull insurance maintained with respect to
each Aircraft must be sufficient to pay the applicable stipulated loss value,
subject to certain rights of self-insurance and (xiii) (a) the past due rate in
the Indentures and the Leases, (b) the Make-Whole Premium payable under the
Indentures, (c) the provisions relating to the redemption and purchase of
Equipment Notes in the Indentures, (d) the minimum liability insurance amount on
Aircraft in the Leases, (e) the interest rate payable with respect to stipulated
loss value in the Leases, and (f) the indemnification of the Loan Trustees,
Subordination Agent, Liquidity Providers, Trustees, Escrow Agents and registered
holders of the Equipment Notes (in such capacity, the "Note Holders") with
respect to certain taxes and expenses, in each case be provided as set forth in
the form of Participation Agreements, Lease and Indentures (collectively, the
"Aircraft Operative Agreements").
The "Mandatory Document Terms" prohibit modifications in any material
adverse respect to certain specified provisions of the Aircraft Operative
Agreements contemplated by the Note Purchase Agreement. In the case of the
Indentures, such modifications are prohibited (i) to the Granting Clause of the
Indentures so as to deprive the Note Holders of a first priority security
interest in the Aircraft, certain of Continental's rights under its purchase
agreement with the related manufacturer and, in the case of a Leased Aircraft,
the Lease or to eliminate the obligations intended to be secured thereby, (ii)
to certain provisions relating to the issuance, redemption, purchase, payments,
and ranking of the Equipment Notes (including the obligation to pay the
Make-Whole Premium in certain circumstances), (iii) to certain provisions
regarding Indenture Defaults, remedies relating thereto and rights of the Owner
Trustee and Owner Participant in such circumstances, (iv) to certain provisions
relating to any replaced airframe or engines with respect to an Aircraft and (v)
to the provision that New York law will govern the Indentures. In the case of
the Lease, such modifications are prohibited to certain provisions regarding the
obligation of Continental (i) to pay basic rent, stipulated loss value and
termination value to the Leased Aircraft Trustee, (ii) to record the Leased
Aircraft Indenture with the Federal Aviation Administration and to maintain such
Indenture as a first-priority perfected mortgage on the related Aircraft, (iii)
to furnish certain opinions with respect to a replacement airframe and (iv) to
consent to the assignment of the Lease by the Owner Trustee as collateral under
the Leased Aircraft
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Indenture, as well as modifications which would either alter the provision that
New York law will govern the Lease or would deprive the Loan Trustee of rights
expressly granted to it under the Leases. In the case of the Participation
Agreement, such modifications are prohibited (i) to certain conditions to the
obligations of the Trustees to purchase the Equipment Notes issued with respect
to an Aircraft involving good title to such Aircraft, obtaining a certificate of
airworthiness with respect to such Aircraft, entitlement to the benefits of
Section 1110 with respect to such Aircraft and filings of certain documents with
the Federal Aviation Administration, (ii) to the provisions restricting the Note
Holder's ability to transfer such Equipment Notes, (iii) to certain provisions
requiring the delivery of legal opinions and (iv) to the provision that New York
law will govern the Participation Agreement. In the case of all of the Aircraft
Operative Agreements, modifications are prohibited in any material adverse
respect as regards the interest of the Note Holders, the Subordination Agent,
the Liquidity Providers or the Loan Trustee in the definition of "Make-Whole
Premium". Notwithstanding the foregoing, any such Mandatory Document Term may be
modified to correct or supplement any such provision which may be defective or
to cure any ambiguity or correct any mistake, provided that any such action
shall not materially adversely affect the interests of the Note Holders, the
Subordination Agent, the Liquidity Providers, the Mortgagee or the
Certificateholders.
LIQUIDATION OF ORIGINAL TRUSTS
At the Transfer Date, each of the Original Trusts will transfer and assign
all of its assets and rights to a Successor Trust with substantially identical
terms, except that (i) the Successor Trusts will not have the right to purchase
new Equipment Notes and (ii) Delaware law will govern the Original Trusts and
New York law will govern the Successor Trusts. The Trustee of each of the
Original Trusts will also act as Trustee of the corresponding Successor Trust,
and each New Trustee will assume the obligations of the Original Trustee under
each transaction document to which such Original Trustee was a party. Upon
effectiveness of such transfer, assignment and assumption, each of the Original
Trusts will be liquidated and each of the Certificates will represent the same
interest in the Successor Trust as it represented in the Original Trust
immediately prior to such transfer and assignment. Unless the context otherwise
requires, all references in this Prospectus to the Trusts, the Trustees, the
Pass Through Trust Agreements and similar terms shall be applicable with respect
to the Original Trusts until the effectiveness of such transfer, assignment and
assumption and thereafter shall be applicable with respect to the Successor
Trusts. If for any reason such transfer, assignment and assumption cannot be
effected to any Successor Trust, the related Original Trust will continue in
existence until it is effected.
TERMINATION OF THE TRUSTS
The obligations of Continental and the applicable Trustee with respect to a
Trust will terminate upon the distribution to Certificateholders of such Trust
of all amounts required to be distributed to them pursuant to the applicable
Pass Through Trust Agreement and the disposition of all property held in such
Trust. The applicable Trustee will send to each Certificateholder of such Trust
notice of the termination of such Trust, the amount of the proposed final
payment and the proposed date for the distribution of such final payment for
such Trust. The final distribution to any Certificateholder of such Trust will
be made only upon surrender of such Certificateholder's Certificates at the
office or agency of the applicable Trustee specified in such notice of
termination. (Section 11.01)
THE TRUSTEES
The Trustee for each Trust is Wilmington Trust Company. With certain
exceptions, the Trustees make no representations as to the validity or
sufficiency of the Pass Through Trust Agreements, the Certificates, the
Intercreditor Agreement, the Equipment Notes, the Deposit Agreements, the Escrow
Agreements, the Indentures, the Participation Agreements, the Leases or other
related documents. (Sections 7.04 and 7.15) The Trustee of any Trust shall not
be liable, with respect to the Certificates of such Trust, for any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the holders of Certificates of such Trust evidencing fractional undivided
interests aggregating not less than a majority in interest of such Trust.
Subject to certain provisions, the Trustees shall be under no obligation to
exercise any of their rights or powers
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under any Pass Through Trust Agreement at the request of any holders of
Certificates issued thereunder unless there shall have been offered to the
Trustees reasonable security and indemnity. (Section 7.03(e)) Each Pass Through
Trust Agreement provides that the Trustees in their individual or any other
capacity may acquire and hold Certificates issued thereunder and, subject to
certain conditions, may otherwise deal with Continental, with any Owner Trustee
or with any Loan Trustee with the same rights they would have if they were not
the Trustees. (Section 7.05)
Any Trustee may resign with respect to any or all of the Trusts of which it
is the Trustee at any time, in which event Continental will be obligated to
appoint a successor trustee. If any Trustee ceases to be eligible to continue as
Trustee with respect to a Trust or becomes incapable of acting as Trustee or
becomes insolvent, Continental may, with the consent of the Owner Participants
for the Leased Aircraft (which consent shall not be unreasonably withheld),
remove such Trustee, or any holder of the Certificates of such Trust for at
least six months may, on behalf of such holder and all others similarly
situated, petition any court of competent jurisdiction for the removal of such
Trustee and the appointment of a successor trustee. Any resignation or removal
of the Trustee with respect to a Trust and appointment of a successor trustee
for such Trust does not become effective until acceptance of the appointment by
the successor trustee. (Sections 7.09 and 7.10) Pursuant to such resignation and
successor trustee provisions, it is possible that a different trustee could be
appointed to act as the successor trustee with respect to each Trust. All
references in this Prospectus to the Trustee should be read to take into account
the possibility that the Trusts could have different successor trustees in the
event of such a resignation or removal.
Each Pass Through Trust Agreement provides that Continental will pay or
cause to be paid the applicable Trustee's fees and expenses. (Section 7.07)
BOOK-ENTRY; DELIVERY AND FORM
The New Certificates of each Trust will be represented by one or more
permanent global Certificates, in definitive, fully registered form without
interest coupons (the "Global Certificates"), to be deposited with the Trustee
as custodian for DTC and registered in the name of Cede, as nominee for DTC.
DTC has advised Continental as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provision of Section 17A of the Exchange Act. DTC was created to hold securities
for its participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
Ownership of beneficial interests in Global Certificates is limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in the Global
Certificates is shown on, and the transfer of that ownership is effected only
through, records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). The laws of some states require that certain
purchasers of securities take physical delivery of such securities. Such limits
and such laws may limit the market for beneficial interests in the Global
Certificates.
So long as DTC or its nominee is the registered owner or holder of the
Global Certificates, DTC or such nominee, as the case may be, will be considered
the sole record owner or holder of the Certificates represented by such Global
Certificates for all purposes under the related Pass Through Trust Agreements.
No beneficial owners of an interest in the Global Certificates will be able to
transfer that interest except in accordance with DTC's applicable procedures, in
addition to those provided for under the Pass Through Trust Agreements and, if
applicable, Euroclear or Cedel.
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Payments of the principal of, premium, if any, and interest on the Global
Certificates will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. Neither Continental, the Trustee, nor any paying agent
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Certificates or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
Continental expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of the Global Certificates
will credit participants' accounts with payments in amounts proportionate to
their respective beneficial ownership interests in the principal amount of such
Global Certificates, as shown on the records of DTC or its nominee. Continental
also expects that payments by participants to owners of beneficial interests in
such Global Certificates held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
Neither Continental nor the Trustee has any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Certificates and a successor depositary is not appointed by within 90
days, the Trusts will issue certificates in definitive, fully registered form in
exchange for the Global Certificates.
DESCRIPTION OF THE DEPOSIT AGREEMENTS
The following summary describes certain terms of the Deposit Agreements.
The summary does not purport to be complete and is qualified in its entirety by
reference to all of the provisions of the Deposit Agreements which have been
filed as exhibits to the Registration Statement and copies of which are
available as set forth under the heading "Available Information". The provisions
of the Deposit Agreements are substantially identical except as otherwise
indicated.
GENERAL
Under the Escrow Agreements, the Escrow Agent with respect to each Trust
has entered into a separate Deposit Agreement with the Depositary pursuant to
which the Depositary has established separate accounts into which the proceeds
of the initial sale of the Old Certificates of such Trust were deposited on
behalf of such Escrow Agent, from which the Escrow Agent, upon request from the
Trustee of such Trust, will make withdrawals and into which such Trustee will
make re-deposits during the Delivery Period. Pursuant to the Deposit Agreement
with respect to each Trust, on each Regular Distribution Date the Depositary
will pay to the Paying Agent on behalf of the applicable Escrow Agent, for
distribution to the Certificateholders of such Trust, an amount equal to
interest accrued on the Deposits relating to such Trust during the relevant
interest period at a rate per annum equal to the interest rate applicable to the
Certificates issued by such Trust. The interest rates payable on the Deposits
are subject to change under certain circumstances described in "The Exchange
Offer -- Terms of the Exchange Offer--General". Upon each delivery of an
Aircraft during the Delivery Period, the Trustees for the Class A Trust, the
Class B Trust and the Class C-I Trust (or, if the Deposits relating to the Class
C-I Trust have been fully withdrawn, the Class C-II Trust) will request the
Escrow Agent relating to such Trust to withdraw from the Deposits relating to
such Trust funds sufficient to enable the Trustee of such Trust to purchase the
Equipment Note of the series applicable to such Trust issued with respect to
such Aircraft. Accrued but unpaid interest on all such Deposits withdrawn will
be paid on the next Regular Distribution Date. Any portion of any Deposit
withdrawn which is not used to purchase such Equipment Note will be re-deposited
by each Trustee into an account relating to the applicable Trust. Prior to the
date of this Prospectus, two Boeing 757-224 Aircraft have been delivered and
funds were withdrawn from the Deposits to purchase Equipment Notes in respect of
such Aircraft in the aggregate principal amount of $74.4 million in leveraged
lease transactions. The Deposits relating to each Trust and interest paid
thereon are
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not subject to the subordination provisions of the Intercreditor Agreement and
will not be available to pay any other amount in respect to the Certificates.
UNUSED DEPOSITS
The Trustees' obligations to purchase the Equipment Notes issued with
respect to each Aircraft are subject to satisfaction of certain conditions at
the time of delivery, as set forth in the Note Purchase Agreement. See
"Description of the New Certificates -- Obligation to Purchase Equipment Notes".
Since the Aircraft are scheduled for delivery from time to time during the
Delivery Period, no assurance can be given that all such conditions will be
satisfied at the time of delivery for each Aircraft. Moreover, since the
Aircraft will be newly manufactured, their delivery as scheduled is subject to
delays in the manufacturing process and to the manufacturer's right to postpone
deliveries under its agreement with Continental. See "Description of the
Aircraft and Appraisals -- Deliveries of Aircraft". Depending on the
circumstances of the financing of each Aircraft, the maximum aggregate principal
amount of Equipment Notes may not be issued. In addition, Continental's
obligations to Boeing relating to ordered aircraft and the Predelivery Deposit
Revolver are secured by Continental's purchase agreements with Boeing relating
to the Aircraft. Accordingly, if Continental should breach its obligations
secured thereby, the secured parties could exercise remedies and prevent
delivery of Aircraft to Continental. If any funds remain as Deposits with
respect to any Trust at the Delivery Period Termination Date, they will be
withdrawn by the Escrow Agent and distributed, with accrued and unpaid interest
thereon, plus a premium payable by Continental (i) in the case of the holders of
Certificates issued by the Class A Trust, the Class B Trust and the Class C-I
Trust, equal to the Deposit Make-Whole Premium with respect to the aggregate
amount of funds so distributed (excluding accrued interest) and (ii) in the case
of the holders of Certificates issued by the Class C-II Trust, equal to the
Class C-II Premium with respect to such aggregate amount, to the
Certificateholders of such Trust after at least 20 days' prior written notice.
"Deposit Make-Whole Premium" means, with respect to the distribution of
unused Deposits to holders of any Class of Certificates, as of any date of
determination, an amount equal to the excess, if any, of (a) the present value
of the excess of (i) the scheduled payment of principal and interest to maturity
of the Equipment Notes, assuming the maximum principal amount thereof were
issued, on each remaining Regular Distribution Date for such Class under the
Assumed Amortization Schedule over (ii) the scheduled payment of principal and
interest to maturity of the Equipment Notes actually acquired by the Trustee for
such Class on each such Regular Distribution Date, such present value computed
by discounting such excess on a semiannual basis on each Regular Distribution
Date (assuming a 360-day year of twelve 30-day months) using a discount rate
equal to the Treasury Yield over (b) the amount of such unused Deposits to be
distributed to the holders of such Certificates plus accrued and unpaid interest
to but excluding the date of determination from and including the preceding
Regular Distribution Date (or if such date of determination precedes the first
Regular Distribution Date, the date of issuance of the Old Certificates).
"Class C-II Premium" means, as of any date of determination, with respect
to the distribution of unused Deposits to holders of Class C-II Certificates,
(a) if Equipment Notes with respect to all of the Aircraft (or Substitute
Aircraft in lieu thereof) have been purchased by the Trusts prior to the date of
determination, an amount equal to the excess, if any, of (i) the present value
of the excess of (x) the scheduled payment of principal and interest to maturity
of the Equipment Notes on each remaining Regular Distribution Date for the Class
C-II Certificates under the Assumed Amortization Schedule over (y) the scheduled
payment of principal and interest to maturity of the Equipment Notes actually
acquired by the Trustee for such Class on each such Regular Distribution Date,
such present value computed by discounting such excess on a semiannual basis on
each Regular Distribution Date (assuming a 360-day year of twelve 30-day months)
using a discount rate equal to the "Adjusted Treasury Yield" (meaning the
Treasury Yield plus 42 basis points) over (ii) the amount of such unused
Deposits to be distributed to the holders of such Certificates plus accrued and
unpaid interest to but excluding the date of determination from and including
the preceding Regular Distribution Date (or if such date of determination
precedes the first Regular Distribution Date, the date of issuance of the Old
Certificates) or (b) in any other case, an amount equal to the sum of (i) a
premium calculated pursuant to the preceding clause (a) determined with respect
to the portion of such
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unused Deposits that would have remained unused had the maximum principal amount
of Series C Equipment Notes been purchased with respect to each of the Aircraft
as to which Equipment Notes were not actually purchased by any of the Trusts and
as to which no replacement by a Substitute Aircraft was made and (ii) the
Deposit Make-Whole Premium determined with respect to the balance of such unused
Deposits.
DISTRIBUTION UPON OCCURRENCE OF TRIGGERING EVENT
If a Triggering Event shall occur prior to the Delivery Period Termination
Date, the Escrow Agent for each Trust will withdraw any funds then held as
Deposits with respect to such Trust and cause such funds, with accrued and
unpaid interest thereon but without any premium, to be distributed to the
Certificateholders of such Trust by the Paying Agent on behalf of the Escrow
Agent, after at least 20 days' prior written notice. Accordingly, if a
Triggering Event occurs prior to the Delivery Period Termination Date, the
Trusts will not acquire Equipment Notes issued with respect to Aircraft
delivered after the occurrence of such Triggering Event.
DEPOSITARY
The Depositary is Credit Suisse First Boston, New York Branch. Credit
Suisse First Boston is a Swiss Bank and is one of the largest banking
institutions in the world, with total consolidated assets of approximately Sfr
412 billion ($307 billion) and total consolidated shareholders' equity of
approximately Sfr 9.7 billion ($7.2 billion), in each case as of December 31,
1996, on a pro forma basis. As a "universal bank" (engaged in both commercial
and investment banking activities), Credit Suisse First Boston provides a full
range of banking and financial services from locations around the globe to
corporate, institutional and public sector clients. Credit Suisse, the
predecessor to Credit Suisse First Boston, was founded in 1856 in Zurich and is
the oldest of Switzerland's three principal banks. Banking operations of Credit
Suisse in the United States began in 1940 and are currently conducted through
branches of Credit Suisse First Boston in New York and Los Angeles and a
representative office in Chicago.
Effective January 1, 1997, Credit Suisse First Boston became the successor
to the institutional asset management business and the global corporate and
investment banking business of Credit Suisse Group (formerly CS Holding) and its
principal international banking subsidiary, Credit Suisse. The global corporate
and investment banking business is largely conducted through Credit Suisse First
Boston and its subsidiaries (together, the "CSFB Business Unit"), including
Credit Suisse First Boston Corporation, a U.S. registered broker-dealer, which
acted as an Initial Purchaser of the Old Certificates. The CSFB Business Unit
has four core business divisions: (i) the corporate and investment banking
division, (ii) the trading division, (iii) Credit Suisse Financial Products and
(iv) the private equity division.
Credit Suisse Group (formerly CS Holding) is the parent of Credit Suisse
First Boston. Credit Suisse Group is also the parent of Credit Suisse, a Swiss
bank which effective January 1, 1997 became the successor to the Swiss domestic
banking operations and global private banking operations of the former Credit
Suisse and its affiliate Swiss Volksbank.
Credit Suisse First Boston is subject to regulation by the Swiss Federal
Banking Commission and the Swiss National Bank. Under Swiss banking law, a bank
is subject to inspection and supervision by an independent auditing firm and is
required to maintain an adequate relationship between its equity resources and
its total liabilities. The New York Branch of Credit Suisse First Boston is
licensed and subject to supervision and regulation by the Superintendent of
Banks of the State of New York. It is examined by the New York State Banking
Department and is subject to banking laws and regulations applicable to a
foreign bank that operates a New York branch. It is also subject to review and
supervision by the Federal Reserve Bank.
Credit Suisse First Boston has long-term unsecured debt ratings of Aa3 from
Moody's and AA from Standard & Poor's and short-term unsecured debt ratings of
P-1 from Moody's and A-1+ from Standard & Poor's.
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Credit Suisse First Boston's principal office is at Uetlihof,
Uetlibergstrasse 231, CH-8045, Zurich, Switzerland, and its New York Branch has
executive offices at Eleven Madison Avenue, New York, New York 10010, (212)
325-9000. A copy of the Annual Report of Credit Suisse for the year ended
December 31, 1996 may be obtained from Credit Suisse First Boston by delivery of
a written request to its New York Branch, Attention: Corporate Affairs.
DESCRIPTION OF THE ESCROW AGREEMENTS
The following summary describes certain terms of the Escrow Agreements,
which have been filed as exhibits to the Registration Statement and copies of
which are available as set forth under the heading "Available Information". The
summary does not purport to be complete and is qualified in its entirety by
reference to the provisions of the Escrow Agreements.
Each Escrow Agent, each Paying Agent, each Trustee and the Initial
Purchasers have entered into a separate Escrow Agreement for the benefit of the
Certificateholders of each Trust as holders of the Escrow Receipts affixed
thereto (in such capacity, a "Receiptholder"). The cash proceeds of the initial
sale of Old Certificates of each Trust have been deposited on behalf of the
Escrow Agent (for the benefit of Receiptholders) with the Depositary as Deposits
relating to such Trust. The Escrow Agent of each Trust has been given
irrevocable instructions (i) to permit the Trustee of such Trust to cause funds
to be withdrawn from such Deposits on or prior to the Delivery Period
Termination Date for the purpose of enabling such Trustee to purchase Equipment
Notes on and subject to the terms and conditions of the Note Purchase Agreement
and (ii) to direct the Depositary to pay interest on the Deposits accrued in
accordance with the Deposit Agreement to the Paying Agent for distribution to
the Receiptholders.
Each Escrow Agreement requires that the Paying Agent establish and
maintain, for the benefit of the related Receiptholders, one or more Paying
Agent Account(s), which shall be non-interest-bearing. Pursuant to the terms of
the Escrow Agreement, the Paying Agent is required to deposit interest on
Deposits relating to each Trust and any unused Deposits withdrawn by the Escrow
Agent in the Paying Agent Account. All amounts so deposited will be distributed
by the Paying Agent on a Regular Distribution Date or Special Distribution Date,
as appropriate.
Upon receipt by the Depositary on behalf of the Escrow Agent of the cash
proceeds from the Old Certificates as described above, the Escrow Agent issued
Escrow Receipts which were affixed by the relevant Trustee to each Old
Certificate. Each Escrow Receipt evidences a fractional undivided interest in
amounts from time to time deposited into the Paying Agent Account and is limited
in recourse to amounts deposited into such Account. An Escrow Receipt may not be
assigned or transferred except in connection with the assignment or transfer of
the Certificate to which it is affixed. Each Escrow Receipt will be registered
by the Escrow Agent in the same name and manner as the Certificate to which it
is affixed. Escrow Receipts will be affixed to New Certificates issued pursuant
to the Exchange Offer.
DESCRIPTION OF THE LIQUIDITY FACILITIES
The following summary describes certain terms of the Liquidity Facilities
and certain provisions of the Intercreditor Agreement relating to the Liquidity
Facilities. The summary does not purport to be complete and reference is made to
all of the provisions of the Liquidity Facilities and certain provisions of the
Intercreditor Agreement, each of which has been filed as an exhibit to the
Registration Statement and copies of which are available as set forth under the
heading "Available Information". The provisions of the Liquidity Facilities are
substantially identical except as otherwise indicated.
GENERAL
Each Liquidity Provider will enter into a separate Liquidity Facility with
the Subordination Agent with respect to the Certificates of each of the Trusts
pursuant to which the Liquidity Providers will make one or more advances to the
Subordination Agent to pay interest on such Certificates subject to certain
limitations. The Liquidity Facilities for each Trust are intended to enhance the
likelihood of timely receipt by the
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Certificateholders of such Trust of the interest payable on the Certificates of
such Trust at the Stated Interest Rate therefor on up to three consecutive
semiannual Regular Distribution Dates. If interest payment defaults occur which
exceed the amount covered by or available under the Liquidity Facilities for any
Trust, the Certificateholders of such Trust will bear their allocable share of
the deficiencies to the extent that there are no other sources of funds.
Although ABN AMRO and ING are the initial Liquidity Providers for each of the
Trusts, ABN AMRO and ING each may be replaced by one or more other entities with
respect to the Trusts under certain circumstances. Therefore, the Liquidity
Providers for each Trust may differ.
DRAWINGS
The initial amount available under the Liquidity Facilities for the Class A
Trust, the Class B Trust, the Class C-I Trust and the Class C-II Trust at April
1, 1998, the first Regular Distribution Date after the scheduled Delivery Period
Termination Date, assuming that Equipment Notes in the maximum principal amount
with respect to all Aircraft are acquired by the Trusts and that all interest
and principal due on or prior to April 1, 1998 is paid, will be $48,564,521,
$16,426,917, $12,155,173 and $1,094,144, respectively. Except as otherwise
provided below, the Liquidity Facilities for each Trust will enable the
Subordination Agent to make Interest Drawings thereunder promptly after any
Regular Distribution Date to pay interest then due and payable on the
Certificates of such Trust at the Stated Interest Rate for such Trust to the
extent that the amount, if any, available to the Subordination Agent on such
Regular Distribution Date is not sufficient to pay such interest; provided,
however, that the maximum amount available to be drawn under a Liquidity
Facility with respect to any Trust on any Regular Distribution Date to fund any
shortfall of interest on Certificates of such Trust will not exceed the then
Maximum Available Commitment under such Liquidity Facility. The Liquidity
Facilities for any Trust do not provide for drawings thereunder to pay for
principal of or premium on the Certificates of such Trust or any interest on the
Certificates of such Trust in excess of the Stated Interest Rate for such Trust
or more than three semiannual installments of interest thereon or principal of
or interest or premium on the Certificates of any other Trust. (Liquidity
Facilities, Section 2.02; Intercreditor Agreement, Section 3.6) In addition, the
Liquidity Facilities with respect to each Trust will not cover interest payable
by the Depositary on the Deposits relating to such Trust.
Each payment by the Liquidity Provider under each Liquidity Facility
reduces pro tanto the Maximum Available Commitment under such Liquidity
Facility, subject to reinstatement as hereinafter described. With respect to any
Interest Drawings under either Liquidity Facility for any Trust, upon
reimbursement of the relevant Liquidity Provider in full for the amount of such
Interest Drawings plus interest thereon, the Maximum Available Commitment under
such Liquidity Facility in respect of interest on the Certificates of such Trust
will be reinstated to an amount not to exceed the Stated Portion of the then
Required Amount of such Liquidity Facility; provided, however, that such
Liquidity Facility will not be so reinstated at any time after (i) a Liquidity
Event of Default shall have occurred and be continuing and (ii) less than 65% of
the then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes. With respect to any other drawings under such
Liquidity Facility, amounts available to be drawn thereunder are not subject to
reinstatement. The Required Amount of the Liquidity Facilities for any Trust
will be automatically increased or reduced from time to time to an amount equal
to the next three successive interest payments due on the Certificates of such
Trust (without regard to expected future payment of principal of such
Certificates) at the Stated Interest Rate for such Trust, but excluding interest
payable by the Depositary as described above. (Liquidity Facilities, Section
2.04(a); Intercreditor Agreement, Section 3.6(j))
If at any time the short-term unsecured debt rating of a Liquidity Provider
for any Trust then issued by either Rating Agency is lower than the Threshold
Rating, the Liquidity Facility provided by such Liquidity Provider for the
related Class of Certificates will be required to be replaced. In the event that
such Liquidity Facility is not replaced within 10 days after notice of the
downgrading and as otherwise provided in the Intercreditor Agreement, the
Subordination Agent will request the Downgrade Drawing in an amount equal to the
then Maximum Available Commitment thereunder and will hold the proceeds thereof
in the Cash Collateral Account for such Trust as cash collateral to be used for
the same purposes and under the same circumstances as cash payments of Interest
Drawings under such Liquidity Facility would be used. (Liquidity Facilities,
Section 2.02(c); Intercreditor Agreement, Section 3.6(c))
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A "Replacement Facility" for any Liquidity Facility means an irrevocable
liquidity facility in substantially the form of the replaced Liquidity Facility,
including reinstatement provisions, or in such other form (which may include a
letter of credit) as shall permit the Rating Agencies to confirm in writing
their respective ratings then in effect for the Certificates (before downgrading
of such ratings, if any, as a result of the downgrading of the applicable
Liquidity Provider), in a face amount equal to the Stated Portion of 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 (which will not cover scheduled interest payments with
respect to the Deposits relating to such Trust) and issued by a Person having
unsecured short-term debt ratings issued by both Rating Agencies which are equal
to or higher than the Threshold Rating. (Intercreditor Agreement, Section 1.1)
"Threshold Rating" means the short-term unsecured debt rating of P-1 by
Moody's and A-1+ by Standard & Poor's.
Each Liquidity Facility for each Trust provides that the relevant Liquidity
Provider's obligations thereunder will expire on the earliest of (i) 364 days
after the Issuance Date; (ii) the date on which the Subordination Agent delivers
to such Liquidity Provider a certification that all of the Certificates of such
Trust have been paid in full; (iii) the date on which the Subordination Agent
delivers to such Liquidity Provider a certification that a Replacement Facility
has been substituted for such Liquidity Facility; (iv) the fifth Business Day
following receipt by the Subordination Agent of a Termination Notice from such
Liquidity Provider (see "-- Liquidity Events of Default"); and (v) the date on
which no amount is or may (by reason of reinstatement) become available for
drawing under such Liquidity Facility. Each Liquidity Facility provides that the
scheduled expiration date thereof may be extended for additional 364-day periods
by mutual agreement. The Intercreditor Agreement will provide for the
replacement of any Liquidity Facility for any Trust (other than a Liquidity
Facility which expires no earlier than 15 days later than the final maturity
date) in the event that such Liquidity Facility is not extended at least 25 days
prior to its then scheduled expiration date. In the event such Liquidity
Facility is not so extended or replaced by the 25th day prior to its then
scheduled expiration date, the Subordination Agent shall request the
Non-Extension Drawing in an amount equal to the then Maximum Available
Commitment thereunder and hold the proceeds thereof in the Cash Collateral
Account for such Trust as cash collateral to be used for the same purposes and
under the same circumstances, and subject to the same conditions, as cash
payments of Interest Drawings under such Liquidity Facility would be used.
(Liquidity Facilities, Section 2.02(b))
Continental may, at its option, arrange for a Replacement Facility at any
time to replace either Liquidity Facility for any Trust (including without
limitation any Replacement Facility described in the following sentence). In
addition, if any Liquidity Provider shall determine not to extend its Liquidity
Facility, then such Liquidity Provider may, at its option, arrange for a
Replacement Facility to replace such Liquidity Facility during the period no
earlier than 40 days and no later than 25 days prior to the then scheduled
expiration date of such Liquidity Facility. If any Replacement Facility is
provided at any time after the Downgrade Drawing or a Non-Extension Drawing
under such Liquidity Facility, the funds with respect to the relevant Liquidity
Facility on deposit in the Cash Collateral Account for such Trust will be
returned to the Liquidity Provider being replaced. (Intercreditor Agreement,
Section 3.6(e))
The Intercreditor Agreement provides that, upon receipt by the
Subordination Agent of a Termination Notice with respect to any Liquidity
Facility from the relevant Liquidity Provider (given as described in
"-- Liquidity Events of Default"), the Subordination Agent will request a Final
Drawing under such Liquidity Facility in an amount equal to the then Maximum
Available Commitment thereunder and will hold the proceeds thereof in the Cash
Collateral Account for the related Trust as cash collateral to be used for the
same purposes and under the same circumstances, and subject to the same
conditions, as cash payments of Interest Drawings under such Liquidity Facility
would be used. (Liquidity Facilities, Section 2.02(d); Intercreditor Agreement,
Section 3.6(i))
Drawings under any Liquidity Facility will be made by delivery by the
Subordination Agent of a certificate in the form required by such Liquidity
Facility. Upon receipt of such a certificate, the relevant
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Liquidity Provider is obligated to make payment of the drawing requested thereby
in immediately available funds. Upon payment by any Liquidity Provider of the
amount specified in any drawing under any Liquidity Facility, such Liquidity
Provider will be fully discharged of its obligations under such Liquidity
Facility with respect to such drawing and will not thereafter be obligated to
make any further payments under such Liquidity Facility in respect of such
drawing to the Subordination Agent or any other person.
REIMBURSEMENT OF DRAWINGS
Amounts drawn under any Liquidity Facility by reason of an Interest Drawing
or the Final Drawing will be immediately due and payable, together with interest
on the amount of such drawing, with respect to the period from the date of its
borrowing to (but excluding) the third business day following the applicable
Liquidity Provider's receipt of the notice of such Interest Drawing, at the Base
Rate plus 1.75% per annum, and thereafter, at LIBOR for the applicable Interest
Period plus 1.75% per annum, provided that, in the case of a Final Drawing, the
Subordination Agent may convert the Final Drawing into a Drawing bearing
interest at the Base Rate plus 1.75% per annum on the last day of an Interest
Period for such Drawing; provided, further, that the Subordination Agent will be
obligated to reimburse such amounts only to the extent that the Subordination
Agent has funds available therefor.
The amount drawn under any Liquidity Facility for any Trust by reason of a
Downgrade Drawing or a Non-Extension Drawing will be treated as follows: (i)
such amount will be released on any Distribution Date to the relevant Liquidity
Provider to the extent that such amount exceeds the Stated Portion of the
Required Amount; (ii) any portion of such amount withdrawn from the Cash
Collateral Account for such Certificates to pay interest on such Certificates
will be treated in the same way as Interest Drawings; and (iii) the balance of
such amount will be invested in Eligible Investments. The Downgrade Drawing
under any Liquidity Facility (other than any portion thereof applied to the
payment of interest on the Certificates) will bear interest (i) during the
period from the date of its borrowing to (but excluding) the stated expiry date
of such Liquidity Facility, in an amount equal to the investment earnings on
amounts deposited in the relevant Cash Collateral Account attributable to such
Liquidity Facility plus .35% per annum on the amount of such Downgrade Drawing
and (ii) thereafter, at a rate equal to LIBOR for the applicable Interest Period
plus .40% per annum, and a Non-Extension Drawing (other than any portion thereof
applied to the payment of interest on the Certificates) will bear interest with
respect to the period from the date of borrowing to (but excluding) the third
Business Day following the applicable Liquidity Provider's receipt of the notice
of such Non-Extension Drawing, at the Base Rate plus .40% per annum, and
thereafter at LIBOR for the applicable Interest Period plus .40% per annum;
provided that the Subordination Agent will be obligated to pay such amount only
to the extent that the Subordination Agent has funds available therefor.
(Liquidity Facilities, Section 2.06)
LIQUIDITY EVENTS OF DEFAULT
Events of Default under each Liquidity Facility (each, a "Liquidity Event
of Default") will consist of: (i) the acceleration of all the Equipment Notes
(provided, that during the Delivery Period the aggregate principal amount
thereof exceeds $280 million) and (ii) certain bankruptcy or similar events
involving Continental. (Liquidity Facilities, Section 1.01)
If (i) any Liquidity Event of Default under any Liquidity Facility has
occurred and is continuing and (ii) less than 65% of the aggregate outstanding
principal amount of all Equipment Notes are Performing Equipment Notes, the
applicable Liquidity Provider may, in its discretion, give a notice of
termination of the related Liquidity Facility (a "Termination Notice") the
effect of which will be to cause (i) such Liquidity Facility to expire on the
fifth Business Day after the date on which such Termination Notice is received
by the Subordination Agent, (ii) the Subordination Agent to promptly request,
and the Liquidity Provider to make, a Final Drawing thereunder in an amount
equal to the then Maximum Available Commitment thereunder, (iii) any Drawing
remaining unreimbursed as of the date of termination to be automatically
converted into a Final Drawing under such Liquidity Facility, and (iv) all
amounts owing to such Liquidity Provider automatically to become accelerated.
Notwithstanding the foregoing, the Subordination Agent will be obligated to pay
amounts owing to the Liquidity Providers only to the extent of funds available
therefor after giving effect to the payments in accordance with the provisions
set forth under "Description of the
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Intercreditor Agreement -- Priority of Distributions". (Liquidity Facilities,
Section 6.01) Upon the circumstances described below under "Description of the
Intercreditor Agreement -- Intercreditor Rights", a Liquidity Provider may
become the Controlling Party with respect to the exercise of remedies under the
Indentures. (Intercreditor Agreement, Section 2.6(c))
LIQUIDITY PROVIDERS
The initial Liquidity Providers for each Trust are ABN AMRO and ING, each
of which is a bank organized under the laws of the Netherlands. ABN AMRO has
short term debt ratings of P-1 from Moody's and A-1+ from Standard & Poor's. ING
has short term debt ratings of P-1 from Moody's and A-1+ from Standard & Poor's.
DESCRIPTION OF THE INTERCREDITOR AGREEMENT
The following summary describes certain provisions of the Intercreditor
Agreement. The summary does not purport to be complete and reference is made to
all of the provisions of the Intercreditor Agreement, which has been filed as an
exhibit to the Registration Statement and is available as set forth under the
heading "Available Information".
INTERCREDITOR RIGHTS
Controlling Party
Pursuant to the Intercreditor Agreement, the Trustees and each Liquidity
Provider has agreed that, with respect to any Indenture at any given time, the
Loan Trustee will be directed (a) in taking, or refraining from taking, any
action thereunder or with respect to the Equipment Notes issued thereunder, by
the holders of at least a majority of the outstanding principal amount of the
Equipment Notes issued thereunder (provided that, for so long as the
Subordination Agent is the registered holder of the Equipment Notes, the
Subordination Agent will act with respect to this clause (a) 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), so long as no Indenture Default (which,
with respect to Leased Aircraft, has not been cured by the applicable Owner
Trustee or Owner Participant) shall have occurred and be continuing thereunder,
and (b) after the occurrence and during the continuance of an Indenture Default
thereunder (which, with respect to Leased Aircraft, has not been cured by the
applicable Owner Trustee or Owner Participant), in taking, or refraining from
taking, any action thereunder or with respect to the Equipment Notes issued
thereunder, including exercising remedies thereunder or with respect to such
Equipment Notes (including acceleration of such Equipment Notes or foreclosing
the lien on the Aircraft securing such Equipment Notes), by the Controlling
Party, subject to the limitations described below. See "Description of the New
Certificates -- Indenture Defaults and Certain Rights Upon an Indenture Default"
for a description of the rights of the Certificateholders of each Trust to
direct the respective Trustees. Notwithstanding the foregoing, at any time after
18 months from the earlier to occur of (x) the date on which the entire
available amount under any Liquidity Facility shall have been drawn (for any
reason other than a Downgrade Drawing or a Non-Extension Drawing) and remain
unreimbursed and (y) the date on which all Equipment Notes shall have been
accelerated (provided, that prior to the Delivery Period Termination Date the
aggregate outstanding principal amount thereof exceeds $280 million), the
Liquidity Providers with at least two-thirds of unreimbursed Liquidity
Obligations will have the right to elect to become the Controlling Party with
respect to any Indenture. For purposes of giving effect to the foregoing, the
Trustees (other than the Controlling Party) will irrevocably agree, and the
Certificateholders (other than the Certificateholders represented by the
Controlling Party) will be deemed to agree by virtue of their purchase of
Certificates, that the Subordination Agent, as record holder of the Equipment
Notes, shall exercise its voting rights in respect of the Equipment Notes as
directed by the Controlling Party. (Intercreditor Agreement, Section 2.6) For a
description of certain limitations on the Controlling Party's rights to exercise
remedies, see "Description of the Equipment Notes -- Remedies".
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Sale of Equipment Notes or Aircraft
Upon the occurrence and during the continuation of any Indenture Default
under any Indenture, the Controlling Party may accelerate and, subject to the
provisions of the immediately following sentence, sell all (but not less than
all) of the Equipment Notes issued under such Indenture to any person. So long
as any Certificates are outstanding, during nine months after the earlier of (x)
the acceleration of the Equipment Notes under any Indenture and (y) the
bankruptcy or insolvency of Continental, without the consent of each Trustee,
(a) no Aircraft subject to the lien of such Indenture or such Equipment Notes
may be sold, if the net proceeds from such sale would be less than the Minimum
Sale Price for such Aircraft or such Equipment Notes, and (b) with respect to
any Leased Aircraft, the amount and payment dates of rentals payable by
Continental under the Lease for such Leased Aircraft may not be adjusted, if, as
a result of such adjustment, the discounted present value of all such rentals
would be less than 75% of the discounted present value of the rentals payable by
Continental under such Lease before giving effect to such adjustment, in each
case, using the weighted average interest rate of the Equipment Notes issued
under such Indenture as the discount rate.
The Subordination Agent may from time to time during the continuance of an
Indenture Default (and before the occurrence of a Triggering Event) commission
Appraisals with respect to an Aircraft at the request of the Controlling Party.
(Intercreditor Agreement, Section 4.1(a)(iii))
PRIORITY OF DISTRIBUTIONS
So long as no Triggering Event shall have occurred, the payments in respect
of the Equipment Notes and certain other payments received on any Distribution
Date will be promptly distributed by the Subordination Agent on such
Distribution Date in the following order of priority:
(i) to pay the Liquidity Obligations (other than any interest accrued
thereon or the principal amount of any Drawing) (the "Liquidity Expenses")
to the Liquidity Providers;
(ii) to pay interest accrued on the Liquidity Obligations to the
Liquidity Providers;
(iii) to pay or reimburse the Liquidity Providers for the Liquidity
Obligations (other than amounts payable pursuant to clauses (i) and (ii)
above) and/or, if applicable, to replenish each Cash Collateral Account up
to the Required Amount;
(iv) to pay Expected Distributions to the holders of Class A
Certificates;
(v) to pay Expected Distributions to the holders of Class B
Certificates;
(vi) to pay Expected Distributions to the holders of Class C
Certificates; and
(vii) to pay certain fees and expenses of the Subordination Agent and
the Trustees.
"Expected Distributions" means, with respect to the Certificates of any
Trust on any Current Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates (excluding interest, if any, payable with respect
to the Deposits relating to such Trust) and (y) the difference between (A) the
Pool Balance of such Certificates as of the immediately preceding Distribution
Date and (B) the Pool Balance of such Certificates as of the Current
Distribution Date, calculated on the basis that (i) the principal of the
Equipment Notes held in such Trust has been paid when due (whether at stated
maturity, upon redemption, prepayment or acceleration or otherwise) and such
payments have been distributed to the holders of such Certificates and (ii) the
principal of any Equipment Notes formerly held in such Trust that have been sold
pursuant to the Intercreditor Agreement has been paid in full and such payments
have been distributed to the holders of such Certificates, but without giving
effect to any reduction in the Pool Balance as a result of any distribution
attributable to Deposits.
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Subject to the terms of the Intercreditor Agreement, upon the occurrence of
a Triggering Event and at all times thereafter, all funds received by the
Subordination Agent in respect of the Equipment Notes and certain other payments
will be promptly distributed by the Subordination Agent in the following order
of priority:
(i) to pay certain out-of-pocket costs and expenses actually incurred
by the Subordination Agent or any Trustee or to reimburse any
Certificateholder or the Liquidity Providers in respect of payments made to
the Subordination Agent or any Trustee in connection with the protection or
realization of the value of the Equipment Notes or any Trust Indenture
Estate (the "Administration Expenses");
(ii) to the Liquidity Providers, to pay the Liquidity Expenses;
(iii) to the Liquidity Providers, to pay interest accrued on the
Liquidity Obligations;
(iv) to the Liquidity Providers, to pay the outstanding amount of all
Liquidity Obligations and/or, if applicable, with respect to any particular
Liquidity Facility, unless (x) less than 65% of the aggregate outstanding
principal amount of all Equipment Notes are Performing Equipment Notes and
a Liquidity Event of Default shall have occurred and be continuing under
such Liquidity Facility or (y) a Final Drawing shall have occurred under
such Liquidity Facility, to replenish the Cash Collateral Account with
respect to such Liquidity Facility up to the Stated Portion of the Required
Amount for the related Class of Certificates (less the amount of any
repayments of Interest Drawings under such Liquidity Facility while
sub-clause (x) is applicable);
(v) to pay certain fees, taxes, charges and other amounts payable to
the Subordination Agent, any Trustee or any Certificateholder;
(vi) to pay Adjusted Expected Distributions to the holders of Class A
Certificates;
(vii) to pay Adjusted Expected Distributions to the holders of Class B
Certificates; and
(viii) to pay Adjusted Expected Distributions to the holders of Class
C Certificates.
"Adjusted Expected Distributions" means, with respect to the Certificates
of any Trust on any Current Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates (excluding interest, if any, payable with respect
to the Deposits relating to such Trust) and (y) the greater of:
(A) the difference between (x) the Pool Balance of such Certificates
as of the immediately preceding Distribution Date and (y) the Pool Balance
of such Certificates as of the Current Distribution Date calculated on the
basis that (i) the principal of the Non-Performing Equipment Notes held in
such Trust has been paid in full and such payments have been distributed to
the holders of such Certificates, (ii) the principal of the Performing
Equipment Notes held in such Trust has been paid when due (but without
giving effect to any unpaid 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 Intercreditor Agreement has been paid in
full and such payments have been distributed to the holders of such
Certificates, but without giving effect to any reduction in the Pool
Balance as a result of any distribution attributable to Deposits, and
(B) the amount of the excess, if any, of (i) the Pool Balance of such
Class of Certificates as of the immediately preceding Distribution Date
(less the amount of the Deposits for such Class of Certificates as of such
preceding Distribution Date other than any portion of such Deposits
thereafter used to acquire Equipment Notes pursuant to the Note Purchase
Agreement), 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 Expected Distributions or 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
Expected Distributions or Adjusted Expected Distributions.
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"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 on such
Distribution Date of principal of the Equipment Notes held by the Trust or
Trusts of such senior Class or Classes.
"LTV Collateral Amount" of any Aircraft for any Class of Certificates
means, as of any Distribution Date, the lesser of (i) the LTV Ratio for such
Class of Certificates multiplied by the Appraised Current Market Value of such
Aircraft (or with respect to any such Aircraft that has suffered an Event or
Loss under and as defined in any Lease or Indenture, 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 40.36%, for the Class B
Certificates 54.03% and for the Class C Certificates 65.19%.
"Appraised Current Market Value" of any Aircraft means the lower of the
average and the median of the most recent three Appraisals of such Aircraft.
After a Triggering Event occurs and any Equipment Note becomes a Non-Performing
Equipment Note, the Subordination Agent shall obtain LTV Appraisals for the
Aircraft as soon as practicable and additional LTV Appraisals on or prior to
each anniversary of the date of such initial LTV Appraisals; provided that if
the Controlling Party reasonably objects to the appraised value of the Aircraft
shown in such Appraisals, the Controlling Party shall have the right to obtain
or cause to be obtained substitute LTV Appraisals (including LTV Appraisals
based upon physical inspection of the Aircraft).
"Appraisal" means a fair market value appraisal (which may be a "desktop"
appraisal) performed by any Appraiser or any other nationally recognized
appraiser on the basis of an arm's-length transaction between an informed and
willing purchaser under no compulsion to buy and an informed and willing seller
under no compulsion to sell and both having knowledge of all relevant facts.
In the case of Leased Aircraft Indentures relating to transactions in which
Boeing or an affiliate of Boeing is the Owner Participant, certain amounts
payable to the Trustees, the Subordination Agent and the Liquidity Providers,
including fees and expenses of the Trustees and the Subordination Agent and
indemnification obligations of Continental, will not be entitled to the benefits
of the lien of the Indentures. Consequently, if a default occurs in the payment
of any such amounts, and to the extent that such amounts are distributed to any
such party in accordance with the priorities of distribution described above,
the holders of one or more junior Classes of Certificates may not receive the
full amount due them even if all Equipment Notes are eventually paid in full,
and any unpaid amounts will be unsecured claims against Continental.
Interest Drawings under the Liquidity Facility and withdrawals from the
Cash Collateral Account, in each case in respect of interest on the Certificates
of any Trust, will be distributed to the Trustee for such Trust, notwithstanding
the priority of distributions set forth in the Intercreditor Agreement and
otherwise described herein. All amounts on deposit in the Cash Collateral
Account for any Trust that are in excess of the Required Amount will be paid to
the applicable Liquidity Provider.
VOTING OF EQUIPMENT NOTES
In the event that the Subordination Agent, as the registered holder of any
Equipment Note, receives a request for its consent to any amendment,
modification, consent or waiver under such Equipment Note or the related
Indenture (or, if applicable, the Lease, the Participation Agreement or other
related document), (i) if no Indenture Default shall have occurred and be
continuing with respect to such Indenture, the Subordination Agent shall request
instructions from the Trustees and shall vote or consent in accordance with the
directions of the Trustees (in the case of each such Trustee, with respect to
the Equipment Notes held in such Trust) constituting, in the aggregate,
directions with respect to the requisite principal amount of Equipment Notes
under such Indenture and (ii) if any Indenture Default shall have occurred and
be continuing with respect to
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such Indenture, the Subordination Agent will exercise its voting rights as
directed by the Controlling Party, subject to certain limitations; provided that
no such amendment, modification, consent 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 or reduce the
amount of principal or interest payable by Continental under any Equipment Note
issued under any Owned Aircraft Indenture. (Intercreditor Agreement, Section
9.1)
THE SUBORDINATION AGENT
Wilmington Trust Company is the Subordination Agent under the Intercreditor
Agreement. Continental and its affiliates may from time to time enter into
banking and trustee relationships with the Subordination Agent and its
affiliates. The Subordination Agent's address is Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration.
The Subordination Agent may resign at any time, in which event a successor
Subordination Agent will be appointed as provided in the Intercreditor
Agreement. The Controlling Party may remove the Subordination Agent for cause as
provided in the Intercreditor Agreement. In such circumstances, a successor
Subordination Agent will be appointed as provided in the Intercreditor
Agreement. Any resignation or removal of the Subordination Agent and appointment
of a successor Subordination Agent does not become effective until acceptance of
the appointment by the successor Subordination Agent. (Intercreditor Agreement,
Section 8.1)
DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS
THE AIRCRAFT
The Aircraft consist of eight Boeing 757-224 aircraft, eighteen Boeing
737-524 and four Boeing 737-724 aircraft, all of which will be newly delivered
by the manufacturer at the time that the Equipment Notes relating thereto are
issued. The Aircraft have been designed to be in compliance with Stage 3 noise
level standards, which are the most restrictive regulatory standards currently
in effect in the United States for aircraft noise abatement.
Boeing 757-200 Aircraft
The Boeing 757-200 aircraft is a medium-range aircraft with a seating
capacity of approximately 183 passengers. The engine type utilized on
Continental's 757-224 is anticipated to be the Rolls Royce RB211-535E4B.
Boeing 737-500 Aircraft
The Boeing 737-500 aircraft is a medium-range aircraft with a seating
capacity of approximately 104 passengers. The engine type utilized on
Continental's 737-524 is anticipated to be the CFM International CFM56-3-B2.
Boeing 737-700 Aircraft
The Boeing 737-700 aircraft is a medium-range aircraft with a seating
capacity of approximately 124 passengers. The Boeing 737-700 has not yet entered
commercial airline service, and the initial delivery of such model is scheduled
for November 1997. The engine type utilized on Continental's 737-724 is
anticipated to be the CFM International CFM 56-7B24. Deliveries of the Boeing
737-724 aircraft to Continental are subject to Boeing obtaining certain
approvals of the U.S. Federal Aviation Administration with respect to such
model. See "-- Deliveries of Aircraft".
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THE APPRAISALS
The table below sets forth the appraised values and certain additional
information regarding the Aircraft.
AIRCRAFT APPRAISED VALUE
AIRCRAFT TAIL MANUFACTURER'S ------------------------------
TYPE NUMBER SERIAL NUMBER DELIVERY MONTH* AISI BK MBA
- ------------- -------- -------------- --------------- ------ ------ ------
(IN MILLIONS OF DOLLARS)
757-224 118 27560 March 1997 $53.72 $53.25 $59.43
757-224 119 27561 May 1997 53.80 53.25 59.68
757-224 120 27562 June 1997 53.97 53.25 60.18
757-224 121 27563 July 1997 54.05 53.75 60.43
757-224 122 27564 August 1997 54.13 53.75 60.68
757-224 126 28966 December 1997 54.47 54.00 61.69
757-224 123 27565 January 1998 54.55 54.25 61.94
757-224 127 28967 January 1998 54.55 54.25 61.94
737-524 638 28899 July 1997 31.09 27.80 27.61
737-524 639 28900 July 1997 31.09 27.80 27.61
737-524 640 28901 August 1997 31.14 27.80 27.72
737-524 641 28902 August 1997 31.14 27.80 27.72
737-524 642 28903 August 1997 31.14 27.80 27.72
737-524 643 28904 September 1997 31.19 27.80 27.83
737-524 644 28905 September 1997 31.19 27.80 27.83
737-524 645 28906 October 1997 31.24 27.80 27.93
737-524 646 28907 October 1997 31.24 27.80 27.93
737-524 647 28908 November 1997 31.29 28.00 28.04
737-524 648 28909 November 1997 31.29 28.00 28.04
737-524 649 28910 December 1997 31.34 28.00 28.15
737-524 650 28911 December 1997 31.34 28.00 28.15
737-524 651 28912 December 1997 31.34 28.00 28.15
737-524 652 28913 January 1998 31.39 28.25 28.26
737-524 653 28914 January 1998 31.39 28.25 28.26
737-524 654 28915 February 1998 31.43 28.25 28.36
737-524 655 28916 February 1998 31.43 28.25 28.36
737-724 701 28762 January 1998 36.83 37.75 36.49
737-724 702 28763 January 1998 36.83 37.75 36.49
737-724 703 28764 February 1998 36.89 37.75 36.57
737-724 704 28765 February 1998 36.89 37.75 36.57
- ---------------
* Reflects the scheduled delivery month under Continental's purchase agreement
with the manufacturer. Aircraft 118 and 119 were delivered in March and May
1997, respectively. The actual delivery date for the other Aircraft may be
subject to delay. See "-- Deliveries of Aircraft".
The appraised values set forth in the foregoing chart were determined by
the following three independent aircraft appraisal and consulting firms: AISI,
BK and MBA. Each Appraiser provided its opinion as to the appraised value of
each Aircraft as of February 25, 1997, January 8, 1997 and February 21, 1997,
respectively, and projected as of the scheduled delivery month of each such
Aircraft. As part of this process, all three Appraisers performed "desk-top"
appraisals without any physical inspection of the Aircraft. The appraisals are
based on various assumptions and methodologies, which vary among the appraisals.
The Appraisers have delivered letters summarizing their respective appraisals,
copies of which are annexed to this Prospectus as Appendix II. For a discussion
of the assumptions and methodologies used in each of the appraisals, reference
is hereby made to such summaries.
An appraisal is only an estimate of value, is not indicative of the price
at which an aircraft may be purchased from the manufacturer and should not be
relied upon as a measure of realizable value; the proceeds
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realized upon a sale of any Aircraft may be less than the appraised value
thereof. The value of the Aircraft in the event of the exercise of remedies
under the applicable Indenture will depend on market and economic conditions,
the availability of buyers, the condition of the Aircraft and other similar
factors. Accordingly, there can be no assurance that the proceeds realized upon
any such exercise with respect to the Equipment Notes and the Aircraft pursuant
to the applicable Indenture would be as appraised or sufficient to satisfy in
full payments due on the Equipment Notes issued thereunder or the Certificates.
DELIVERIES OF AIRCRAFT
The Aircraft are scheduled for delivery under Continental's purchase
agreement with Boeing from March 1997 to February 1998. See the table under
"-- The Appraisals" for the scheduled month of delivery of each Aircraft. Under
such purchase agreement, delivery of an Aircraft may be delayed due to
"Excusable Delay", which is defined to include, among other things, acts of God,
governmental acts or failures to act, strikes or other labor troubles, inability
to procure materials, or any other cause beyond Boeing's control or not
occasioned by Boeing's fault or negligence. In addition, the Boeing 737-700
aircraft model has not yet received the necessary U.S. Federal Aviation
Administration approvals, which Boeing is required to obtain under its purchase
agreement with Continental. Boeing has advised Continental that it expects to
receive such approvals by no later than October 1997, although no assurance can
be given that this will occur. The first of the four Boeing 737-724 aircraft
included in the Aircraft is scheduled for delivery in January 1998.
The Note Purchase Agreement provides that the Delivery Period will expire
on March 31, 1998, subject to extension, in the event that the Equipment Notes
relating to all of the Aircraft (or Substitute Aircraft in lieu thereof) have
not been purchased by the Trustees on or prior to such date due to any reason
beyond the control of Continental and not occasioned by Continental's fault or
negligence, to the earlier of (i) the purchase by the Trustees of Equipment
Notes relating to the last Aircraft (or a Substitute Aircraft in lieu thereof)
and (ii) June 30, 1998.
If delivery of any Aircraft is delayed by more than 30 days after the month
scheduled for delivery or beyond June 30, 1998, Continental has the right to
replace such Aircraft with a Substitute Aircraft, subject to certain conditions.
See "-- Substitute Aircraft". If delivery of any Aircraft is delayed beyond the
Delivery Period Termination Date and Continental does not exercise its right to
replace such Aircraft with a Substitute Aircraft, there will be unused Deposits
that will be distributed to Certificateholders together with accrued and unpaid
interest thereon and a premium. See "Description of the Deposit
Agreements -- Unused Deposits".
SUBSTITUTE AIRCRAFT
If the delivery date for any Aircraft is delayed (i) more than 30 days
after the month scheduled for delivery or (ii) beyond June 30, 1998, Continental
may identify for delivery a Substitute Aircraft therefor meeting the following
conditions: (i) a Substitute Aircraft must be a Boeing 757-200, 737-500 or
737-700 aircraft manufactured after the Issuance Date, (ii) one or more
Substitute Aircraft of the same or different types may be substituted for one or
more Aircraft of the same or different types so long as after giving effect
thereto the maximum principal amount of Equipment Notes of each Series issued in
respect of the Substitute Aircraft under the Mandatory Economic Terms would not
exceed the maximum principal amount of the Equipment Notes of each Series that
could have been issued under the Mandatory Economic Terms in respect of the
replaced Aircraft and (iii) Continental will be obligated to obtain written
confirmation from each Rating Agency that substituting such Substitute Aircraft
for the replaced Aircraft will not result in a withdrawal, suspension or
downgrading of the ratings of any Class of Certificates.
DESCRIPTION OF THE EQUIPMENT NOTES
The statements under this caption are summaries and do not purport to be
complete. The summaries make use of terms defined in and reference is made to
all of the provisions of the Equipment Notes, the Indentures, the Leases, the
Participation Agreements, the Trust Agreements and the Note Purchase Agreement.
Except as otherwise indicated, the following summaries relate to the Equipment
Notes, the Indenture, the Lease, the Participation Agreement, and the Trust
Agreement that may be applicable to each
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Aircraft, forms of which are filed as exhibits to the Registration Statement and
are available as set forth under the heading "Available Information".
Under the Note Purchase Agreement, Continental will have the option of
entering into a leveraged lease financing or a debt financing with respect to
each Aircraft. The Note Purchase Agreement provides for the relevant parties to
enter into either (i) with respect to each Leased Aircraft, a Participation
Agreement, a Lease and an Indenture (among other documents) relating to the
financing of such Aircraft and (ii) with respect to each Owned Aircraft, a
Participation Agreement and an Owned Aircraft Indenture relating to the
financing of such Owned Aircraft. The description of such agreements in this
Offering Circular is based on the forms of such agreements annexed to the Note
Purchase Agreement. Requests for the Note Purchase Agreement, including the
forms of such agreements annexed thereto, should be addressed to the Trustees.
Continental has obtained commitments of certain companies to act as the
Owner Participant with respect to the leveraged leases for all of the Aircraft
and, in certain cases, is seeking alternative commitments on more favorable
terms. The existing commitments are subject to satisfaction of certain
conditions with respect to each Aircraft and, in certain cases, Continental may
elect to terminate such commitments with respect to certain Aircraft.
Accordingly, Continental may select one or more other Owner Participants for
some or all of such Aircraft or finance such Aircraft as Owned Aircraft rather
than Leased Aircraft. Such Owner Participants may request revisions to the forms
of the Participation Agreement, the Lease and the Leased Aircraft Indenture that
are contemplated by the Note Purchase Agreement, so that the terms of such
agreements applicable to any particular Leased Aircraft may differ from the
description of such agreements contained in this Prospectus. However, under the
Note Purchase Agreement, the terms of such agreements are required to (i)
contain the Mandatory Documents Terms and (ii) not vary the Mandatory Economic
Terms. In addition, Continental will be obligated (i) to certify to the Trustees
that any such modifications do not materially and adversely affect the
Certificateholders and (ii) to obtain written confirmation from each Rating
Agency that the use of versions of such agreements modified in any material
respect would not result in a withdrawal, suspension or downgrading of the
ratings of any Class of Certificates. See "Description of the New
Certificates -- Obligation to Purchase Equipment Notes". Each Owner Participant
will be required to satisfy certain requirements, including having a minimum
combined capital and surplus or net worth.
GENERAL
The Equipment Notes will be issued in three series with respect to each
Aircraft. The Equipment Notes with respect to each Leased Aircraft will be
issued under a separate Leased Aircraft Indenture between First Security Bank,
National Association, as Owner Trustee of a trust for the benefit of the Owner
Participant who will be the beneficial owner of such Aircraft, and Wilmington
Trust Company, as Leased Aircraft Trustee. The Equipment Notes with respect to
each Owned Aircraft will be issued under a separate Owned Aircraft Indenture
between Continental and Wilmington Trust Company, as Owned Aircraft Trustee.
The related Owner Trustee will lease each Leased Aircraft to Continental
pursuant to a separate Lease between such Owner Trustee and Continental with
respect to such Leased Aircraft. Under each Lease, Continental will be obligated
to make or cause to be made rental and other payments to the related Leased
Aircraft Trustee on behalf of the related Owner Trustee, which rental and other
payments will be at least sufficient to pay in full when due all payments
required to be made on the Equipment Notes issued with respect to such Leased
Aircraft. The Equipment Notes issued with respect to the Leased Aircraft will
not, however, be direct obligations of, or guaranteed by, Continental.
Continental's rental obligations under each Lease and Continental's obligations
under the Equipment Notes issued with respect to each Owned Aircraft will be
general obligations of Continental.
SUBORDINATION
Series B Equipment Notes issued in respect of any Aircraft will be
subordinated in right of payment to Series A Equipment Notes issued in respect
of such Aircraft and Series C Equipment Notes issued in respect of such Aircraft
will be subordinated in right of payment to such Series B Equipment Notes. On
each Equipment Note payment date, (i) payments of interest and principal due on
Series A Equipment Notes
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issued in respect of any Aircraft will be made prior to payments of interest and
principal due on Series B Equipment Notes issued in respect of such Aircraft and
(ii) payments of interest and principal due on Series B Equipment Notes issued
in respect of any Aircraft will be made prior to payments of interest and
principal due on Series C Equipment Notes issued in respect of such Aircraft.
PRINCIPAL AND INTEREST PAYMENTS
Subject to the provisions of the Intercreditor Agreement, interest paid on
the Equipment Notes held in each Trust will be passed through to the
Certificateholders of such Trust on the dates and at the rate per annum set
forth on the cover page of this Prospectus with respect to Certificates issued
by such Trust (subject to change as provided in the Registration Rights
Agreement) until the final expected Regular Distribution Date for such Trust.
Subject to the provisions of the Intercreditor Agreement, principal paid on the
Equipment Notes held in each Trust will be passed through to the
Certificateholders of such Trust in scheduled amounts on the dates set forth
herein until the final expected Regular Distribution Date for such Trust.
Interest is payable on the unpaid principal amount of each Equipment Note
at the rate applicable to such Equipment Note on April 1 and October 1 in each
year, commencing on October 1, 1997, or, if later, the first such date to occur
after initial issuance thereof. Such interest is computed on the basis of a
360-day year of twelve 30-day months. Under certain circumstances described in
"The Exchange Offer -- Terms of the Exchange Offer-General", the interest rates
for the Equipment Notes may be increased to the extent described therein.
Scheduled principal payments on the Equipment Notes will be made on April 1
and October 1 in certain years, commencing April 1, 1998. See "Description of
the New Certificates -- Pool Factors" for a discussion of the scheduled payments
of principal of the Equipment Notes and possible revisions thereto.
If any date scheduled for any payment of principal, premium (if any) or
interest with respect to the Equipment Notes is not a Business Day, such payment
will be made on the next succeeding Business Day without any additional
interest.
REDEMPTION
If an Event of Loss occurs with respect to any Aircraft and such Aircraft
is not replaced by Continental under the related Lease (in the case of a Leased
Aircraft) or under the related Owned Aircraft Indenture (in the case of an Owned
Aircraft), the Equipment Notes issued with respect to such Aircraft will be
redeemed, in whole, in each case at a price equal to the aggregate unpaid
principal amount thereof, together with accrued interest thereon to, but not
including, the date of redemption, but without premium, on a Special
Distribution Date. (Indentures, Section 2.10(a))
If Continental exercises its right to terminate a Lease under Section 9 of
such Lease, the Equipment Notes relating to the applicable Leased Aircraft will
be redeemed, in whole, on a Special Distribution Date at a price equal to the
aggregate unpaid principal amount thereof, together with accrued interest
thereon to, but not including, the date of redemption, plus, in the case of any
series of Equipment Notes, if such redemption is made prior to the Premium
Termination Date applicable to such Series, a Make-Whole Premium. (Leased
Aircraft Indentures, Section 2.10(b)). See "-- The Leases -- Lease Termination".
All of the Equipment Notes issued with respect to a Leased Aircraft may be
redeemed prior to maturity as part of a refunding or refinancing thereof under
Section 11 of the applicable Participation Agreement, and all of the Equipment
Notes issued with respect to the Owned Aircraft may be redeemed prior to
maturity at any time at the option of Continental, in each case at a price equal
to the aggregate unpaid principal thereof, together with accrued interest
thereon to, but not including, the date of redemption, plus, in the case of any
series of Equipment Notes, if such redemption is made prior to the Premium
Termination Date applicable to such Series, a Make-Whole Premium. (Indentures,
Section 2.11) If notice of such a redemption shall have been given in connection
with a refinancing of Equipment Notes with respect to a Leased Aircraft, such
notice
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may be revoked not later than three days prior to the proposed redemption date.
(Leased Aircraft Indentures, Section 2.12)
If, with respect to a Leased Aircraft, (x) one or more Lease Events of
Default shall have occurred and be continuing, (y) in the event of a bankruptcy
proceeding involving Continental, (i) during the Section 1110 Period, the
trustee in such proceeding or Continental does not agree to perform its
obligations under the related Lease or (ii) at any time after agreeing to
perform such obligations, such trustee or Continental ceases to perform such
obligations such that the stay period applicable under the U.S. Bankruptcy Code
comes to an end or (z) the Equipment Notes with respect to such Aircraft have
been accelerated or the Leased Aircraft Trustee with respect to such Equipment
Notes takes action or notifies the applicable Owner Trustee that it intends to
take action to foreclose the lien of the related Leased Aircraft Indenture or
otherwise commence the exercise of any significant remedy under such Indenture
or the related Lease, then in each case all, but not less than all, of the
Equipment Notes issued with respect to such Leased Aircraft may be purchased by
the Owner Trustee or Owner Participant on the applicable purchase date at a
price equal to the aggregate unpaid principal thereof, together with accrued and
unpaid interest thereon to, but not including, the date of purchase, but without
any premium (provided that a Make-Whole Premium shall be payable if such
Equipment Notes are to be purchased pursuant to clause (x) when a Lease Event of
Default shall have occurred and been continuing for less than 120 days). (Leased
Aircraft Indentures, Section 2.13) Continental as owner of the Owned Aircraft
has no comparable right under the Owned Aircraft Indentures to purchase the
Equipment Notes under such circumstances.
"Make-Whole Premium" means, with respect to any Equipment Note, an amount
(as determined by an independent investment banker of national standing) equal
to the excess, if any, of (a) the 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 Premium, "Treasury Yield" means,
at the date of determination with respect to any Equipment Note, the interest
rate (expressed as a semiannual 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 semiannual 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 in the most recent H.15(519), such weekly average yield to
maturity as published in such H.15(519). "H.15(519)" means the weekly
statistical release designated as such, or any successor publication, published
by the Board of Governors of the Federal Reserve System. The date of
determination of a Make-Whole Premium shall be the third Business Day prior to
the applicable payment or redemption date and the "most recent H.15(519)" means
the H.15(519) published prior to the close of business on the third Business Day
prior to the applicable payment or redemption date.
"Average Life Date" for any Equipment Note shall be the date which follows
the time of determination by a period equal to the Remaining Weighted Average
Life of such Equipment Note. "Remaining Weighted Average Life" on a given date
with respect to any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products obtained by
multiplying (i) the amount of each then remaining scheduled payment of principal
of such Equipment Note by (ii) the number of days from and including such
determination date to but excluding the date on which such payment of principal
is scheduled to be made, by (b) the then outstanding principal amount of such
Equipment Note.
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SECURITY
The Equipment Notes issued with respect to each Leased Aircraft will be
secured by (i) an assignment by the related Owner Trustee to the related Leased
Aircraft Trustee of such Owner Trustee's rights, except for certain limited
rights, under the Lease with respect to the related Aircraft, including the
right to receive payments of rent thereunder, (ii) a mortgage to such Leased
Aircraft Trustee of such Aircraft, subject to the rights of Continental under
such Lease, and (iii) an assignment to such Leased Aircraft Trustee of certain
of such Owner Trustee's rights under the purchase agreement between Continental
and the related manufacturer. Unless and until an Indenture Default with respect
to a Leased Aircraft has occurred and is continuing, the Leased Aircraft Trustee
may not exercise the rights of the Owner Trustee under the related Lease, except
the Owner Trustee's right to receive payments of rent due thereunder. The
assignment by the Owner Trustee to the Leased Aircraft Trustee of its rights
under the related Lease will exclude certain rights of such Owner Trustee and
the related Owner Participant, including the rights of the Owner Trustee and the
Owner Participant with respect to indemnification by Continental for certain
matters, insurance proceeds payable to such Owner Trustee in its individual
capacity or to such Owner Participant under public liability insurance
maintained by Continental under such Lease or by such Owner Trustee or such
Owner Participant, insurance proceeds payable to such Owner Trustee in its
individual capacity or to such Owner Participant under certain casualty
insurance maintained by such Owner Trustee or such Owner Participant under such
Lease and certain reimbursement payments made by Continental to such Owner
Trustee. (Leased Aircraft Indenture, Granting Clause) The Equipment Notes are
not cross-collateralized, and, consequently, the Equipment Notes issued in
respect of any one Aircraft are not secured by any of the other Aircraft or
replacement aircraft therefor (as described in "--The Leases--Events of Loss")
or the Leases related thereto.
The Equipment Notes issued with respect to each Owned Aircraft are secured
by (i) a mortgage to the Owned Aircraft Trustee of such Aircraft and (ii) an
assignment to the Owned Aircraft Trustee of certain of Continental's rights
under its purchase agreement with the related manufacturer.
Funds, if any, held from time to time by the Loan Trustee with respect to
any Aircraft, including funds held as the result of an Event of Loss to such
Aircraft or, in the case of a Leased Aircraft, termination of the Lease, if any,
relating thereto, will be invested and reinvested by such Loan Trustee, at the
direction of the related Owner Trustee in the case of the Leased Aircraft or
Continental in the case of the Owned Aircraft (except in the case of certain
Indenture Defaults), in investments described in the related Indenture. (Leased
Aircraft Indentures, Section 5.09; Owned Aircraft Indentures, Section 6.06)
LOAN TO VALUE RATIOS OF EQUIPMENT NOTES
The following tables set forth examples of loan to Aircraft value ratios
for the Equipment Notes issued in respect of Aircraft as of the Regular
Distribution Dates that occur after the scheduled date of original issuance of
such Equipment Notes, assuming that the Equipment Notes in the maximum principal
amount are issued in respect of each such Aircraft. These examples were utilized
by Continental in preparing the Assumed Amortization Schedule, although such
schedule may not be applicable in the case of any particular Aircraft. See
"Description of the New Certificates -- Pool Factors". The LTV was obtained by
dividing (i) the outstanding balance (assuming no payment default) of such
Equipment Notes determined immediately after giving effect to the payments
scheduled to be made on each such Regular Distribution Date by (ii) the assumed
value (the "Assumed Aircraft Value") of the Aircraft securing such Equipment
Notes.
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The following tables are based on the assumption that the value of each
Aircraft set forth opposite the initial Regular Distribution Date included in
each table depreciates by approximately 2% of the initial appraised value per
year until the fifteenth year after the year of delivery of such Aircraft and by
approximately 4% of the initial appraised value per year thereafter. Other rates
or methods of depreciation would result in materially different loan to Aircraft
value ratios, and no assurance can be given (i) that the depreciation rates and
method assumed for the purposes of the tables are the ones most likely to occur
or (ii) as to the actual future value of any Aircraft. Thus the tables should
not be considered a forecast or prediction of expected or likely loan to
Aircraft value ratios, but simply a mathematical calculation based on one set of
assumptions.
BOEING 757-224 BOEING 737-524
------------------------------------ ------------------------------------
EQUIPMENT EQUIPMENT
NOTE ASSUMED LOAN TO NOTE ASSUMED LOAN TO
OUTSTANDING AIRCRAFT VALUE OUTSTANDING AIRCRAFT VALUE
DATE BALANCE VALUE RATIO BALANCE VALUE RATIO
---- ----------- ---------- ------- ----------- ---------- -------
(MILLIONS) (MILLIONS) (MILLIONS) (MILLIONS)
April 1, 1998........................... $36.324 $54.050 67.20% $16.878 $27.800 60.71%
April 1, 1999........................... 35.729 52.969 67.45 16.878 27.244 61.95
April 1, 2000........................... 34.843 51.888 67.15 16.548 26.688 62.00
April 1, 2001........................... 32.523 50.807 64.01 15.168 26.132 58.05
April 1, 2002........................... 29.609 49.726 59.54 13.866 25.576 54.22
April 1, 2003........................... 27.960 48.645 57.48 12.764 25.020 51.02
April 1, 2004........................... 26.184 47.564 55.05 11.547 24.464 47.20
April 1, 2005........................... 24.971 46.483 53.72 10.285 23.908 43.02
April 1, 2006........................... 24.377 45.402 53.69 10.285 23.352 44.04
April 1, 2007........................... 22.976 44.321 51.84 9.432 22.796 41.37
April 1, 2008........................... 18.196 43.240 42.08 8.711 22.240 39.17
April 1, 2009........................... 15.915 42.159 37.75 8.156 21.684 37.62
April 1, 2010........................... 12.274 41.078 29.88 5.678 21.128 26.88
April 1, 2011........................... 8.350 39.997 20.88 5.678 20.572 27.60
April 1, 2012........................... 4.124 38.916 10.60 4.239 20.016 21.18
April 1, 2013........................... 0.000 0.000 0.00 2.608 19.460 13.40
April 1, 2014........................... 0.000 0.000 0.00 1.531 18.348 8.35
BOEING 737-524 BOEING 737-724
------------------------------------ ------------------------------------
EQUIPMENT EQUIPMENT
NOTE ASSUMED LOAN TO NOTE ASSUMED LOAN TO
OUTSTANDING AIRCRAFT VALUE OUTSTANDING AIRCRAFT VALUE
DATE BALANCE VALUE RATIO BALANCE VALUE RATIO
---- ----------- ---------- ------- ----------- ---------- -------
(MILLIONS) (MILLIONS) (MILLIONS) (MILLIONS)
April 1, 1998........................... $18.400 $28.040 65.62% $23.028 $36.830 62.52%
April 1, 1999........................... 18.005 27.479 65.52 22.725 36.093 62.96
April 1, 2000........................... 17.276 26.918 64.18 22.320 36.357 63.13
April 1, 2001........................... 16.657 26.358 63.20 21.915 34.620 63.30
April 1, 2002........................... 15.753 25.797 61.07 20.585 33.884 60.75
April 1, 2003........................... 14.424 25.236 57.16 19.106 33.147 57.64
April 1, 2004........................... 13.457 24.675 54.54 17.176 32.410 53.00
April 1, 2005........................... 12.629 24.114 52.37 15.462 31.674 48.82
April 1, 2006........................... 11.867 23.554 50.38 14.593 30.937 47.17
April 1, 2007........................... 10.883 22.993 47.33 13.352 30.201 44.21
April 1, 2008........................... 9.883 22.432 44.06 12.512 29.464 42.46
April 1, 2009........................... 8.835 21.871 40.39 11.563 28.727 40.25
April 1, 2010........................... 7.735 21.310 36.29 10.773 27.991 38.49
April 1, 2011........................... 6.245 20.750 30.10 9.382 27.254 34.42
April 1, 2012........................... 4.312 20.189 21.36 7.029 26.518 26.51
April 1, 2013........................... 2.229 19.628 11.36 4.407 25.781 17.09
April 1, 2014........................... 0.000 0.000 0.00 1.724 24.308 7.09
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LIMITATION OF LIABILITY
The Equipment Notes issued with respect to the Leased Aircraft will not be
direct obligations of, or guaranteed by, Continental, the Owner Participant or
the Owner Trustees in their individual capacity. None of the Owner Trustees, the
Owner Participants or the Leased Aircraft Trustees, or any affiliates thereof,
will be personally liable to any holder of an Equipment Note or, in the case of
the Owner Trustees and the Owner Participants, to the Leased Aircraft Trustees
for any amounts payable under the Equipment Notes or, except as provided in each
Leased Aircraft Indenture, for any liability under such Leased Aircraft
Indenture. All payments of principal of, premium, if any, and interest on the
Equipment Notes issued with respect to any Leased Aircraft (other than payments
made in connection with an optional redemption or purchase of Equipment Notes
issued with respect to a Leased Aircraft by the related Owner Trustee or the
related Owner Participant) will be made only from the assets subject to the lien
of the Indenture with respect to such Leased Aircraft or the income and proceeds
received by the related Leased Aircraft Trustee therefrom (including rent
payable by Continental under the Lease with respect to such Leased Aircraft).
The Equipment Notes issued with respect to the Owned Aircraft will be
direct obligations of Continental.
Except as otherwise provided in the Indentures, each Owner Trustee and each
Loan Trustee, in its individual capacity, will not be answerable or accountable
under the Indentures or under the Equipment Notes under any circumstances except
for its own willful misconduct or gross negligence. None of the Owner
Participants will have any duty or responsibility under any of the Leased
Aircraft Indentures or the Equipment Notes to the Leased Aircraft Trustees or to
any holder of any Equipment Note.
INDENTURE DEFAULTS, NOTICE AND WAIVER
Indenture Defaults under each Indenture will include: (a) in the case of a
Leased Aircraft Indenture, the occurrence of any Lease Event of Default under
the related Lease (other than the failure to make certain indemnity payments and
other payments to the related Owner Trustee or Owner Participant unless a notice
is given by such Owner Trustee that such failure shall constitute an Indenture
Default), (b) the failure by the related Owner Trustee (other than as a result
of a Lease Default or Lease Event of Default), in the case of a Leased Aircraft
Indenture, or Continental, in the case of an Owned Aircraft Indenture, to pay
any interest or principal or premium, if any, when due, under such Indenture or
under any Equipment Note issued thereunder that continues for more than 10
Business Days, in the case of principal, interest or Make-Whole Premium, and, in
all other cases, ten Business Days after the relevant Owner Trustee or Owner
Participant receives written demand from the related Loan Trustee or holder of
an Equipment Note, (c) the failure by the related Owner Participant or the
related Owner Trustee (in its individual capacity), in the case of a Leased
Aircraft Indenture, or Continental, in the case of an Owned Aircraft Indenture,
to discharge certain liens that continues after notice and specified cure
periods, (d) any representation or warranty made by the related Owner Trustee or
Owner Participant in the related Aircraft Operative Agreements, or certain
related documents furnished to the Loan Trustee pursuant thereto being false or
incorrect in any material respect when made that continues to be material and
adverse to the interests of the Loan Trustee or Note Holders and remains
unremedied after notice and specified cure periods, (e) failure by Continental
or the related Owner Trustee or Owner Participant to perform or observe any
covenant or obligation for the benefit of the Loan Trustee or holders of
Equipment Notes under such Indenture or certain related documents that continues
after notice and specified cure periods, (f) the registration of the related
Aircraft ceasing to be effective as a result of the Owner Participant (in the
case of a Leased Aircraft) or Continental (in the case of an Owned Aircraft) not
being a citizen of the United States, as defined in the Transportation Code
(subject to a cure period), (g) with respect to the Owned Aircraft, the lapse or
cancellation of insurance required under the Owned Aircraft Indenture or (h) the
occurrence of certain events of bankruptcy, reorganization or insolvency of the
related Owner Trustee or Owner Participant (in the case of a Leased Aircraft) or
Continental (in the case of the Owned Aircraft). (Leased Aircraft Indentures,
Section 4.02; Owned Aircraft Indenture, Section 5.01) There will not be
cross-default provisions in the Indentures or in the Leases (unless, in the case
of a Lease, otherwise agreed between an Owner Participant and Continental).
Consequently, events resulting in an Indenture Default under any particular
Indenture may or may not result in an Indenture Default
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occurring under any other Indenture, and a Lease Event of Default under any
particular Lease may or may not constitute a Lease Event of Default under any
other Lease.
If Continental fails to make any semiannual basic rental payment due under
any Lease, within a specified period after such failure the applicable Owner
Trustee may furnish to the Leased Aircraft Trustee the amount due on the
Equipment Notes issued with respect to the related Leased Aircraft, together
with any interest thereon on account of the delayed payment thereof, in which
event the Leased Aircraft Trustee and the holders of outstanding Equipment Notes
issued under such Indenture may not exercise any remedies otherwise available
under such Indenture or such Lease as the result of such failure to make such
rental payment, unless such Owner Trustee has previously cured three or more
immediately preceding semiannual basic rental payment defaults or, in total, six
or more previous semiannual basic rental payment defaults (or, in the case of
certain Owner Participants, six or more immediately preceding semiannual basic
rental payment defaults or, in total, eight or more previous semiannual basic
rental payment defaults). The applicable Owner Trustee also may cure any other
default by Continental in the performance of its obligations under any Lease
that can be cured with the payment of money. (Leased Aircraft Indentures,
Section 4.03)
The holders of a majority in principal amount of the outstanding Equipment
Notes issued with respect to any Aircraft, by notice to the Loan Trustee, may on
behalf of all the holders waive any existing default and its consequences under
the Indenture with respect to such Aircraft, except a default in the payment of
the principal of or premium or interest on any such Equipment Notes or a default
in respect of any covenant or provision of such Indenture that cannot be
modified or amended without the consent of each holder of Equipment Notes
affected thereby. (Leased Aircraft Indentures, Section 4.08; Owned Aircraft
Indenture, Section 5.06)
REMEDIES
If an Indenture Default occurs and is continuing under an Indenture, the
related Loan Trustee or the holders of a majority in principal amount of the
Equipment Notes outstanding under such Indenture may, subject to the applicable
Owner Participant's or Owner Trustee's right to cure, as discussed above,
declare the principal of all such Equipment Notes issued thereunder immediately
due and payable, together with all accrued but unpaid interest thereon, provided
that in the event of a reorganization proceeding involving Continental
instituted under Chapter 11 of the U.S. Bankruptcy Code, if no other Lease Event
of Default and no other Indenture Default (other than the failure to pay the
outstanding amount of the Equipment Notes which by such declaration shall have
become payable) exists at any time after the consummation of such proceeding,
such declaration will be automatically rescinded without any further action on
the part of any holder of Equipment Notes. The holders of a majority in
principal amount of Equipment Notes outstanding under such Indenture may rescind
any such declaration at any time before the judgment or decree for the payment
of the money so due shall be entered if (i) there has been paid to the related
Loan Trustee an amount sufficient to pay all principal, interest, and premium,
if any, on any such Equipment Notes, to the extent such amounts have become due
otherwise than by such declaration of acceleration and (ii) all other Indenture
Defaults and incipient Indenture Defaults under such Indenture have been cured.
(Leased Aircraft Indentures, Section 4.04(b); Owned Aircraft Indenture, Section
5.02(b))
Each Indenture will provide that if an Indenture Default under such
Indenture has occurred and is continuing, the related Loan Trustee may exercise
certain rights or remedies available to it under such Indenture or under
applicable law, including (if, in the case of a Leased Aircraft, the
corresponding Lease has been declared in default) one or more of the remedies
under such Indenture or, in the case of a Leased Aircraft, such Lease with
respect to the Aircraft subject to such Lease. If an Indenture Default arises
solely by reason of one or more events or circumstances which constitute a Lease
Event of Default, the related Leased Aircraft Trustee's right to exercise
remedies under a Leased Aircraft Indenture is subject, with certain exceptions,
to its having proceeded to exercise one or more of the dispossessory remedies
under the Lease with respect to such Leased Aircraft; provided that the
requirement to exercise one or more of such remedies under such Lease shall not
apply in circumstances where such exercise has been involuntarily stayed or
prohibited by applicable law or court order for a continuous period in excess of
60 days or such other period as may be specified in Section 1110(a)(1)(A) of the
U.S. Bankruptcy Code (plus an additional period, if any, resulting
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from (i) the trustee or debtor-in-possession in such proceeding agreeing to
perform its obligations under such Lease with the approval of the applicable
court and its continuous performance of such Lease under Section 1110(a)(1)(A-B)
of the U.S. Bankruptcy Code or such Leased Aircraft Trustee's consent to an
extension of such period, (ii) such Leased Aircraft Trustee's failure to give
any requisite notice, or (iii) Continental's assumption of such Lease with the
approval of the relevant court and its continuous performance of the Lease so
assumed). See "-- The Leases -- Lease Events of Default". Such remedies may be
exercised by the related Leased Aircraft Trustee to the exclusion of the related
Owner Trustee, subject to certain conditions specified in such Indenture, and of
Continental, subject to the terms of such Lease. Any Aircraft sold in the
exercise of such remedies will be free and clear of any rights of those parties,
including the rights of Continental under the Lease with respect to such
Aircraft; provided that no exercise of any remedies by the related Leased
Aircraft Trustee may affect the rights of Continental under any Lease unless a
Lease Event of Default has occurred and is continuing. (Leased Aircraft
Indentures, Section 4.04; Leases, Section 15) The Owned Aircraft Indentures will
not contain such limitations on the Owned Aircraft Trustee's ability to exercise
remedies upon an Indenture Default under an Owned Aircraft Indenture.
If a bankruptcy proceeding involving Continental under the U.S. Bankruptcy
Code occurs, all of the rights of the Owner Trustee as lessor under a particular
Lease will be exercised by the Owner Trustee in accordance with the terms
thereof unless (i) during the Section 1110 Period the trustee in such proceeding
or Continental does not agree to perform its obligations under such Lease, (ii)
at any time after agreeing to perform such obligations, such trustee or
Continental ceases to perform such obligations or (iii) the related Loan Trustee
takes action, or notifies the Owner Trustee that such Loan Trustee intends to
take action, to foreclose the lien of the related Leased Aircraft Indenture in
accordance with the provisions of the immediately preceding paragraph. The Owner
Trustee's exercise of such rights shall be subject to certain limitations and,
in no event, reduce the amount or change the time of any payment in respect of
the Equipment Notes or adversely affect the validity or enforceability of the
lien under the related Leased Aircraft Indenture.
If the Equipment Notes issued in respect of one Aircraft are in default,
the Equipment Notes issued in respect of the other Aircraft may not be in
default, and, if not, no remedies will be exercisable under the applicable
Indentures with respect to such other Aircraft.
Section 1110 of the U.S. Bankruptcy Code provides that the right of
lessors, conditional vendors and holders of security interests with respect to
"equipment" (as defined in Section 1110 of the U.S. Bankruptcy Code) to take
possession of such equipment in compliance with the provisions of a lease,
conditional sale contract or security agreement, as the case may be, is not
affected by (a) the automatic stay provision of the U.S. Bankruptcy Code, which
provision enjoins repossessions by creditors for the duration of the
reorganization period, (b) the provision of the U.S. Bankruptcy Code allowing
the trustee in reorganization to use property of the debtor during the
reorganization period, (c) Section 1129 of the U.S. Bankruptcy Code (which
governs the confirmation of plans of reorganization in Chapter 11 cases) and (d)
any power of the bankruptcy court to enjoin a repossession. Section 1110
provides, however, that the right of a lessor, conditional vendor or holder of a
security interest to take possession of an aircraft in the event of an event of
default may not be exercised for 60 days following the date of commencement of
the reorganization proceedings (unless specifically permitted by the bankruptcy
court) and may not be exercised at all if, within such 60-day period (or such
longer period consented to by the lessor, conditional vendor or holder of a
security interest), the trustee in reorganization agrees to perform the debtor's
obligations that become due on or after such date and cures all existing
defaults (other than defaults resulting solely from the financial condition,
bankruptcy, insolvency or reorganization of the debtor). "Equipment" is defined
in Section 1110 of the U.S. Bankruptcy Code, in part, as "an aircraft, aircraft
engine, propeller, appliance, or spare part (as defined in section 40102 of
title 49 of the U.S. Code) that is subject to a security interest granted by,
leased to, or conditionally sold to a debtor that is a citizen of the United
States (as defined in section 40102 of title 49 of the U.S. Code) holding an air
carrier operating certificate issued by the Secretary of Transportation pursuant
to chapter 447 of title 49 of the U.S. Code for aircraft capable of carrying 10
or more individuals or 6,000 pounds or more of cargo".
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It is a condition to the Trustee's obligation to purchase Equipment Notes
with respect to each Aircraft that outside counsel to Continental, which is
expected to be Hughes Hubbard & Reed LLP, provide its opinion to the Trustees
that (x) if such Aircraft is a Leased Aircraft, the Owner Trustee, as lessor
under the Lease for such Aircraft, and the Leased Aircraft Trustee, as assignee
of such Owner Trustee's rights under such Lease pursuant to the related Leased
Aircraft Indenture, will be entitled to the benefits of Section 1110 of the U.S.
Bankruptcy Code with respect to the airframe and engines comprising such
Aircraft or (y) if such Aircraft is an Owned Aircraft, the Owned Aircraft
Trustee will be entitled to the benefits of Section 1110 with respect to the
airframe and engines comprising such Owned Aircraft, in each case so long as
Continental continues to be a "citizen of the United States" as defined in
Section 40102 of title 49 of the U.S. Code holding an air carrier operating
certificate issued by the Secretary of Transportation pursuant to chapter 447 of
title 49 of the U.S. Code for aircraft capable of carrying 10 or more
individuals or 6,000 pounds or more of cargo. For a description of certain
limitations on the Loan Trustee's exercise of rights contained in the Indenture,
see "-- Indenture Defaults, Notice and Waiver".
The opinion of Hughes Hubbard & Reed LLP will not address the possible
replacement of an Aircraft after an Event of Loss in the future, the
consummation of which is conditioned upon the contemporaneous delivery of an
opinion of counsel to the effect that the related Loan Trustee will be entitled
to Section 1110 benefits with respect to such replacement unless there is a
change in law or court interpretation that results in Section 1110 not being
available. See "-- The Leases -- Events of Loss". The opinion of Hughes Hubbard
& Reed LLP will also not address the availability of Section 1110 with respect
to any possible sublessee of a Leased Aircraft subleased by Continental or to
any possible lessee of an Owned Aircraft if it is leased by Continental.
If an Indenture Default under any Indenture occurs and is continuing, any
sums held or received by the related Loan Trustee may be applied to reimburse
such Loan Trustee for any tax, expense or other loss incurred by it and to pay
any other amounts due to such Loan Trustee prior to any payments to holders of
the Equipment Notes issued under such Indenture. (Indentures, Section 3.03)
In the event of bankruptcy, insolvency, receivership or like proceedings
involving an Owner Participant, it is possible that, notwithstanding that the
applicable Leased Aircraft is owned by the related Owner Trustee in trust, such
Leased Aircraft and the related Lease and Equipment Notes might become part of
such proceeding. In such event, payments under such Lease or on such Equipment
Notes might be interrupted and the ability of the related Leased Aircraft
Trustee to exercise its remedies under the related Leased Aircraft Indenture
might be restricted, although such Leased Aircraft Trustee would retain its
status as a secured creditor in respect of the related Lease and the related
Leased Aircraft.
MODIFICATION OF INDENTURES AND LEASES
Without the consent of holders of a majority in principal amount of the
Equipment Notes outstanding under any Indenture, the provisions of such
Indenture and any related Lease, Participation Agreement or Trust Agreement may
not be amended or modified, except to the extent indicated below.
Subject to certain limitations, certain provisions of any Leased Aircraft
Indenture, and of the Lease, the Participation Agreement, and the Trust
Agreement related thereto, may be amended or modified by the parties thereto
without the consent of any holders of the Equipment Notes outstanding under such
Indenture. In the case of each Lease, such provisions include, among others,
provisions relating to (i) the return to the related Owner Trustee of the
related Leased Aircraft at the end of the term of such Lease (except to the
extent that such amendment would affect the rights or exercise of remedies under
the Lease) and (ii) the renewal of such Lease and the option of Continental at
the end of the term of such Lease to purchase the related Leased Aircraft so
long as the same would not adversely affect the Note Holders. (Leased Aircraft
Indentures, Section 9.01(a)) In addition, any Indenture may be amended without
the consent of the holders of Equipment Notes to, among other things, cure any
defect or inconsistency in such Indenture or the Equipment Notes issued
thereunder, provided that such change does not adversely affect the interests of
any such holder. (Leased Aircraft Indentures, Section 9.01(c); Owned Aircraft
Indenture, Section 10.01)
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Without the consent of the holder of each Equipment Note outstanding under
any Indenture affected thereby, no amendment or modification of such Indenture
may among other things (a) reduce the principal amount of, or premium, if any,
or interest payable on, any Equipment Notes issued under such Indenture or
change the date on which any principal or premium, if any, or interest is due
and payable, (b) permit the creation of any security interest with respect to
the property subject to the lien of such Indenture, except as provided in such
Indenture, or deprive any holder of an Equipment Note issued under such
Indenture of the benefit of the lien of such Indenture upon the property subject
thereto or (c) reduce the percentage in principal amount of outstanding
Equipment Notes issued under such Indenture necessary to modify or amend any
provision of such Indenture or to waive compliance therewith. (Leased Aircraft
Indentures, Section 9.01(b); Owned Aircraft Indenture, Section 10.01(a))
OWNER PARTICIPANT'S RIGHT TO RESTRUCTURE
Certain Owner Participants will have the right, subject to certain
conditions, to restructure the applicable leveraged lease transaction using a
"cross-border lease", a tax lease or a head-lease/sublease structure and any
other type of transaction. In no event, however, shall any such restructuring
(i) change the terms and conditions of the rights and obligations of any holder
of Equipment Notes under the relevant Aircraft Operative Agreements or any
holder of Certificates or (ii) expose any such holder to any additional risks.
As a precondition to any such restructuring, the Owner Participant will be
obligated to deliver to the Leased Aircraft Trustee an appropriate officer's
certificate as to the satisfaction of the foregoing conditions and obtain a
written confirmation from the Rating Agencies prior to the implementation of
such restructuring to the effect that such restructuring will not adversely
affect the ratings of the Certificates.
INDEMNIFICATION
Continental will be required to indemnify each Loan Trustee, each Owner
Participant, each Owner Trustee, each Liquidity Provider, the Subordination
Agent, the Escrow Agent and each Trustee, but not the holders of Certificates,
for certain losses, claims and other matters. Continental will be required under
certain circumstances to indemnify each Owner Participant against the loss of
depreciation deductions and certain other benefits allowable for certain income
tax purposes with respect to the related Leased Aircraft. Each Owner Participant
will be required to indemnify the related Loan Trustee and the holders of the
Equipment Notes issued with respect to the Leased Aircraft in which such Owner
Participant has an interest for certain losses that may be suffered as a result
of the failure of such Owner Participant to discharge certain liens or claims on
or against the assets subject to the lien of the related Indenture.
THE LEASES AND CERTAIN PROVISIONS OF THE OWNED AIRCRAFT INDENTURES
Each Leased Aircraft will be leased to Continental by the relevant Owner
Trustee under the relevant lease agreement (each, a "Lease"). Each Owned
Aircraft will be owned by Continental.
The Note Purchase Agreement provides for two sets of leveraged leased
agreements, one set intended to be applicable to a transaction involving any
Owner Participant (the "Standard Agreements") and another set intended to be
used by a particular Owner Participant that has engaged in a significant number
of previous aircraft financings with Continental (the "Special Agreements").
Certain differences between the Standard Agreements and the Special Agreements
are noted below.
Lease Term Rentals and Payments
Each Leased Aircraft will be leased separately by the relevant Owner
Trustee to Continental for a term commencing on the date on which the Aircraft
is acquired by the Owner Trustee and expiring on a date not earlier than the
latest maturity date of the relevant Equipment Notes, unless terminated prior to
the originally scheduled expiration date as permitted by the applicable Lease.
The semiannual basic rent payment under each Lease will be payable by
Continental on each related Lease Payment Date (or, if such day is not a
Business Day, on the next Business Day), and will be assigned by the Owner
Trustee under the corresponding Leased Aircraft Indenture to provide the funds
necessary to make payments of principal and interest due from
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the Owner Trustee on the Equipment Notes issued under such Indenture. In certain
cases, the semiannual basic rent payments under the Leases may be adjusted, but
each Lease provides that under no circumstances will rent payments by
Continental be less than the scheduled payments on the related Equipment Notes.
In addition, the amount of basic rent will be increased in an amount necessary
to pay additional interest due on the Equipment Notes on the relevant Lease
Payment Date as a result of any increase in the rate of interest on the
Equipment Notes as required by the terms of the Registration Rights Agreement.
See "The Exchange Offer -- Terms of the Exchange Offer -- General". Any balance
of each such semiannual basic rent payment under each Lease, after payment of
amounts due on the Equipment Notes issued under the Indenture corresponding to
such Lease, will be paid over to the Owner Trustee. (Leases, Section 3; Leased
Aircraft Indentures, Section 3.01)
"Lease Payment Date" means, with respect to each Lease, April 1 or October
1 during the term of such Lease.
Semiannual payments of interest on the Equipment Notes issued by
Continental under an Owned Aircraft Indenture will be payable each April 1 and
October 1 commencing on October 1, 1997 or, if later, the first such date after
issuance thereof. Semiannual payments of principal under the Equipment Notes
issued by Continental under an Owned Aircraft Indenture will be payable on April
1 and October 1 in certain years commencing on April 1, 1998. The amount of a
semiannual payment of interest or principal will be increased in an amount equal
to any increase in the amount of interest due on such Equipment Notes on the
relevant payment date as a result of any increase in the rate of interest on
such Equipment Notes as required by the terms of the Registration Rights
Agreement. (Owned Aircraft Indenture, Section 2.02)
Net Lease; Maintenance
Under the terms of each Lease, Continental's obligations in respect of each
Leased Aircraft will be those of a lessee under a "net lease". Accordingly,
Continental will be obligated under each Lease, among other things and at its
expense, to keep each Aircraft duly registered and insured, to pay all costs of
operating the Aircraft and to maintain, service, repair and overhaul the
Aircraft so as to keep it in as good an operating condition as when delivered to
Continental, ordinary wear and tear excepted, and in such condition as required
to maintain the airworthiness certificate for the Aircraft in good standing at
all times. (Leases, Sections 7.1, 8.1 and 11.1 and Annexes C and D) The Owned
Aircraft Indenture imposes comparable maintenance, service and repair
obligations on Continental with respect to the Owned Aircraft. (Owned Aircraft
Indenture, Section 4.02)
Possession, Sublease and Transfer
Each Aircraft may be operated by Continental or, subject to certain
restrictions, by certain other persons. Normal interchange and pooling
agreements with respect to any Engine are permitted. Subleases, in the case of
Leased Aircraft, and leases, in the case of Owned Aircraft, are also permitted
to U.S. air carriers and foreign air carriers that have their principal
executive office in certain specified countries or, in the case of the Special
Agreements, that are listed in the applicable Lease, subject to a reasonably
satisfactory legal opinion that, among other things, such country would
recognize (in the case of the Leased Aircraft) Owner Trustee's title to, and the
Loan Trustee's lien in respect of, the applicable Aircraft. In addition, a
sublessee or lessee may not be subject to insolvency or similar proceedings at
the commencement of such sublease or lease. (Leases, Section 7, Owned Aircraft
Indenture, Section 4.02) Permitted foreign air carriers are not limited to those
based in a country that is a party to the Convention on the International
Recognition of Rights in Aircraft (Geneva 1948) (the "Convention"). It is
uncertain to what extent the relevant Loan Trustee's security interest would be
recognized if an Aircraft is registered or located in a jurisdiction not a party
to the Convention. Moreover, in the case of an Indenture Event of Default, the
ability of the related Loan Trustee to realize upon its security interest in an
Aircraft could be adversely affected as a legal or practical matter if such
Aircraft were registered or located outside the United States.
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Registration
Continental is required to keep each Aircraft duly registered under the
Transportation Code with the FAA, except (in the case of a Leased Aircraft) if
the relevant Owner Trustee or the relevant Owner Participant fails to meet the
applicable citizenship requirements, and to record each Lease (in the case of a
Leased Aircraft) and Indenture and certain other documents under the
Transportation Code. (Leases, Section 7; Owned Aircraft Indenture, Section
4.02(e)) Such recordation of the Indenture and other documents with respect to
each Aircraft will give the relevant Loan Trustee a first-priority, perfected
security interest in such Aircraft whenever it is located in the United States
or any of its territories and possessions. The Convention provides that such
security interest will also be recognized, with certain limited exceptions, in
those jurisdictions that have ratified or adhere to the Convention.
So long as no Lease Event of Default exists, Continental has the right to
register the Leased Aircraft subject to such Lease in a country other than the
United States at its own expense in connection with a permitted sublease of the
Aircraft to permitted foreign air carriers, subject to certain conditions set
forth in the related Participation Agreement. These conditions include a
requirement that the lien of the applicable Indenture continue as a first
priority security interest in the applicable Aircraft. (Leases, Section 7.1.2;
Participation Agreements, Section 7.6.11 or, in the case of the Special
Agreements, Section 8.7.12) The Owned Aircraft Indentures contain comparable
provisions with respect to registration of the Owned Aircraft in connection with
a permitted lease of the Owned Aircraft. (Owned Aircraft Indenture, Section
4.02(e))
Liens
Continental is required to maintain each Aircraft free of any liens, other
than the rights of the relevant Loan Trustee, the holders of the related
Equipment Notes, Continental and, with respect to a Leased Aircraft, the Owner
Participant and Owner Trustee arising under the applicable Indenture, the Lease
(in the case of a Leased Aircraft) or the other operative documents related
thereto, and other than certain limited liens permitted under such documents,
including but not limited to (i) liens for taxes either not yet due or being
contested in good faith by appropriate proceedings; (ii) materialmen's,
mechanics' and other similar liens arising in the ordinary course of business
and securing obligations that either are not yet delinquent (in the case of the
Standard Agreements, for more than 60 days) or are being contested in good faith
by appropriate proceedings; (iii) judgment liens so long as such judgment is
discharged or vacated within 60 days (30 days in the case of the Special
Agreements) or the execution of such judgment is stayed pending appeal and
discharged, vacated or reversed within 60 days (30 days in the case of the
Special Agreements) after expiration of such stay; and (iv) any other lien as to
which Continental has provided a bond or other security adequate in the
reasonable opinion of the Owner Trustee; provided that in the case of each of
the liens described in the foregoing clauses (i), (ii) and (iii), such liens and
proceedings do not involve any material risk of the sale, forfeiture or loss of
such Aircraft or the interest of any Participant therein or impair the lien of
the relevant Indenture. (Leases, Section 6; Owned Aircraft Indenture, Section
4.01)
Replacement of Parts; Alterations
Continental is obligated to replace all parts at its expense that may from
time to time be incorporated or installed in or attached to any Aircraft and
that may become lost, damaged beyond repair, worn out, stolen, seized,
confiscated or rendered permanently unfit for use. Continental or any permitted
lessee or sublessee has the right, at its own expense, to make such alterations,
modifications and additions with respect to each Aircraft as it deems desirable
in the proper conduct of its business and to remove parts which it deems to be
obsolete or no longer suitable or appropriate for use, so long as such
alteration, modification, addition or removal does not materially diminish the
fair market value, utility, or remaining useful life of the related Aircraft,
Airframe or Engine or invalidate the Aircraft's airworthiness certificate.
(Leases, Section 8.1 and Annex C; Owned Aircraft Indenture, Section 4.04(d))
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Insurance
Continental is required to maintain, at its expense (or at the expense of a
permitted lessee, in the case of the Owned Aircraft, or a permitted sublessee,
in the case of a Leased Aircraft), all-risk aircraft hull insurance covering
each Aircraft, at all times in an amount not less than the stipulated loss value
of the Aircraft (which exceeds the aggregate outstanding principal amount of the
Equipment Notes related to such Aircraft, together with accrued interest
thereon). However, after giving effect to self-insurance permitted as described
below, the amount payable under such insurance may be less than such amounts
payable with respect to the Equipment Notes. In the event of a loss involving
insurance proceeds in excess of $3,500,000 per occurrence ($3,000,000 per
occurrence in the case of the Special Agreements and $5,000,000 per occurrence
in the case of Boeing 757-224 aircraft), such proceeds up to the stipulated loss
value of the relevant Aircraft will be payable to the applicable Loan Trustee,
for so long as the relevant Indenture shall be in effect. In the event of a loss
involving insurance proceeds of up to $3,500,000 per occurrence ($3,000,000 per
occurrence in the case of the Special Agreements and $5,000,000 per occurrence
in the case of Boeing 757-224 aircraft) such proceeds will be payable directly
to Continental so long as an Indenture Event of Default does not exist with
respect to the Owned Aircraft Indenture or (in the case of a Leased Aircraft)
the Owner Trustee has not notified the insurance underwriters that a Lease Event
of Default exists. So long as the loss does not constitute an Event of Loss,
insurance proceeds will be applied to repair or replace the property. (Leases,
Sections 11 and Annex D; Owned Aircraft Indenture, Section 4.06)
In addition, Continental is obligated to maintain comprehensive airline
liability insurance at its expense (or at the expense of a permitted lessee, in
the case of an Owned Aircraft, or a permitted sublessee, in the case of a Leased
Aircraft), including, without limitation, passenger liability, baggage
liability, cargo and mail liability, hangarkeeper's liability and contractual
liability insurance with respect to each Aircraft. Such liability insurance must
be underwritten by insurers of nationally or internationally recognized
responsibility. The amount of such liability insurance coverage per occurrence
may not be less than the amount of comprehensive airline liability insurance
from time to time applicable to aircraft owned or leased and operated by
Continental of the same type and operating on similar routes as such Aircraft.
(Leases, Section 11.1 and Annex D, Owned Aircraft Indenture, Section 4.06)
Continental is also required to maintain war-risk, hijacking or allied
perils insurance if it (or any permitted sublessee or lessee) operates any
Aircraft, Airframe or Engine in any area of recognized hostilities or if
Continental (or any permitted sublessee or lessee) maintains such insurance with
respect to other aircraft operated on the same routes or areas on or in which
the Aircraft is operated. (Leases, Annex D, Owned Aircraft Indenture, Section
4.06)
Continental may self-insure in such amounts as are then self-insured with
respect to similar owned or leased aircraft in its fleet, but the amount of such
self-insurance in the aggregate may not exceed 50% of the largest replacement
value of any single aircraft in Continental's fleet or 1 1/2% of the average
aggregate insurable value (during the preceding calendar year) of all aircraft
on which Continental carries insurance, whichever is less, unless an insurance
broker of national standing shall certify that the standard among all other
major U.S. airlines is a higher level of self-insurance, in which case
Continental may self-insure the Aircraft to such higher level. In addition,
Continental may self-insure to the extent of any applicable deductible per
Aircraft that does not exceed industry standards for major U.S. airlines.
(Leases, Section 11.1 and Annex D, Owned Aircraft Indenture, Section 4.06) Self
insurance permitted under the Special Agreements is more limited.
In respect of each Aircraft, Continental is required to name as additional
insured parties the relevant Loan Trustee and holders of the Equipment Notes and
(in the case of the Leased Aircraft) the relevant Owner Participant and Owner
Trustee, in its individual capacity and as owner of such Aircraft, and in some
cases certain other parties under all liability, hull and property and war risk,
hijacking and allied perils insurance policies required with respect to such
Aircraft. In addition, the insurance policies maintained under the Leases and
the Owned Aircraft Indenture will be required to provide that, in respect of the
interests of such additional insured persons, the insurance shall not be
invalidated or impaired by any act or omission of Continental or any other
person and to insure the respective interests of such additional insured
persons,
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regardless of any breach or violation of any representation, warranty,
declaration, term or condition contained in such policies by Continental, any
permitted sublessee or any other person. (Leases, Annex D, Owned Aircraft
Indenture, Section 4.06)
Lease Termination
Unless a Lease Event of Default shall have occurred and be continuing,
Continental may terminate any Lease on any Lease Payment Date occurring after
the fifth anniversary (or, in the case of the Special Agreements, the tenth
anniversary) of the date on which such Lease commenced, if it makes a good faith
determination that the Leased Aircraft subject to such Lease is economically
obsolete or surplus to its requirements. In the case of the Special Agreements,
such determination must be made on a nondiscriminatory basis with respect to the
Aircraft subject to such Special Agreements and all similar aircraft operated by
Continental which could also be terminated. Continental is required to give
notice of its intention to exercise its right of termination described in this
paragraph at least 90 days (in the case of the Special Agreements, six months)
prior to the proposed date of termination, which notice may be withdrawn up to
ten Business Days (in the case of the Special Agreements, 25 days) prior to such
proposed date; provided that Continental may give only five (in the case of the
Special Agreements, three) such termination notices. In such a situation, unless
the Owner Trustee elects to retain title to such Aircraft, Continental is
required to use commercially reasonable efforts to sell such Aircraft as an
agent for such Owner Trustee, and Owner Trustee will sell such Aircraft on the
date of termination to the highest cash bidder. If such sale occurs, the
Equipment Notes related thereto are required to be prepaid. If the net proceeds
to be received from such sale are less than the termination value for such
Aircraft (which is set forth in a schedule to each Lease), Continental is
required to pay to the applicable Owner Trustee an amount equal to the excess,
if any, of the applicable termination value for such Aircraft over such net
proceeds. Upon payment of termination value for such Aircraft and an amount
equal to the Make-Whole Premium, if any, payable on such date of payment,
together with certain additional amounts, the lien of the relevant Indenture
will be released, the relevant Lease will terminate, and the obligation of
Continental thereafter to make scheduled rent payments under such Lease will
cease. (Leases, Section 9; Leased Aircraft Indentures, Section 2.10(b))
The Owner Trustee has the option to retain title to the Leased Aircraft if
Continental has given a notice of termination under the Lease. In such event,
such Owner Trustee will pay to the applicable Loan Trustee an amount sufficient
to prepay the outstanding Equipment Notes issued with respect to such Aircraft
(including the Make-Whole Premiums), in which case the lien of the relevant
Indenture will be released, the relevant Lease will terminate and the obligation
of Continental thereafter to make scheduled rent payments under such Lease will
cease. (Leases, Section 9; Leased Aircraft Indentures, Sections 2.06 and
2.10(b))
Events of Loss
If an Event of Loss occurs with respect to the Airframe or the Airframe and
Engines of an Aircraft, Continental must elect within 45 days (in the case of
the Special Agreements, 20 days) after such occurrence either to make payment
with respect to such Event of Loss or to replace such Airframe and any such
Engines. Not later than the first Business Day following the earliest of (i) the
120th day (in the case of the Special Agreements, the 60th day) following the
date of occurrence of such Event of Loss, and (ii) the fourth Business Day (in
the case of the Special Agreements, the second Business Day) following the
receipt of the insurance proceeds in respect of such Event of Loss, Continental
must either (i) pay to the applicable Owner Trustee (in the case of a Leased
Aircraft) the stipulated loss value of such Aircraft, together with certain
additional amounts, or to the Owned Aircraft Trustee (in the case of the Owned
Aircraft) the outstanding principal amount of and unpaid interest on the
Equipment Notes together with certain additional amounts (if any) but, in any
case, without any Make-Whole Premium or (ii) unless any Lease Event of Default
or failure to pay basic rent under the relevant Lease (in the case of a Leased
Aircraft), an Indenture Event of Default or failure to pay principal or interest
under the Owned Aircraft Indenture (in the case of the Owned Aircraft) or
certain bankruptcy defaults shall have occurred and be continuing, substitute an
airframe (or airframe and one or more engines, as the case may be) for the
Airframe, or Airframe and Engine(s), that suffered such Event
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of Loss. (Leases, Sections 10.1.1 and 10.1.2; Leased Aircraft Indentures,
Section 2.10(a); Owned Aircraft Indenture, Sections 2.10 and 4.05(a))
If Continental elects to replace an Airframe (or Airframe and one or more
Engines, as the case may be) that suffered such Event of Loss, it shall, in the
case of a Leased Aircraft, convey to the related Owner Trustee title to an
airframe (or airframe and one or more engines, as the case may be), and such
replacement airframe or airframe and engines must be the same model as the
Airframe or Airframe and Engines to be replaced or an improved model, with a
value, utility and remaining useful life (without regard to hours or cycles
remaining until the next regular maintenance check) at least equal to the
Airframe or Airframe and Engines to be replaced, assuming that such Airframe and
such Engines had been maintained in accordance with the related Lease.
Continental is also required to provide to the relevant Loan Trustee and (in the
case of a Leased Aircraft) the relevant Owner Trustee and Owner Participant
reasonably acceptable opinions of counsel to the effect, among other things,
that (i) certain specified documents have been duly filed under the
Transportation Code and (ii) such Owner Trustee and Leased Aircraft Trustee (as
assignee of lessor's rights and interests under the Lease), in the case of a
Leased Aircraft, or the Owned Aircraft Trustee, in the case of an Owned
Aircraft, will be entitled to receive the benefits of Section 1110 of the U.S.
Bankruptcy Code with respect to any such replacement airframe (unless, as a
result of a change in law or court interpretation, such benefits are not then
available). (Leases, Sections 10.1.3 and 10.3; Owned Aircraft Indenture, Section
4.05(c))
If Continental elects not to replace such Airframe, or Airframe and
Engine(s), then upon payment of the outstanding principal amount of the
Equipment Notes issued with respect to such Aircraft (in the case of an Owned
Aircraft) or the stipulated loss value for such Aircraft (in the case of a
Leased Aircraft), together with all additional amounts then due and unpaid with
respect to such Aircraft, which must be at least sufficient to pay in full as of
the date of payment thereof the aggregate unpaid principal amount under such
Equipment Notes together with accrued but unpaid interest thereon and all other
amounts due and owing in respect of such Equipment Notes, the lien of the
Indenture and (in the case of a Leased Aircraft) the Lease relating to such
Aircraft shall terminate with respect to such Aircraft, the obligation of
Continental thereafter to make the scheduled rent payments (in the case of a
Leased Aircraft) or interest and principal payments (in the case of an Owned
Aircraft) with respect thereto shall cease and (in the case of a Leased
Aircraft) the related Owner Trustee shall transfer all of its right, title and
interest in and to the related Aircraft to Continental. The stipulated loss
value and other payments made under the Leases or the Owned Aircraft Indenture,
as the case may be, by Continental shall be deposited with the applicable Loan
Trustee. Amounts in excess of the amounts due and owing under the Equipment
Notes issued with respect to such Aircraft will be distributed by such Loan
Trustee to the applicable Owner Trustee or to Continental, as the case may be.
(Leases, Section 10.1.2; Leased Aircraft Indentures, Sections 2.06 and 3.02;
Owned Aircraft Indenture, Sections 2.10 and 4.05(a)(ii))
If an Event of Loss occurs with respect to an Engine alone, Continental
will be required to replace such Engine within 60 days after the occurrence of
such Event of Loss with another engine, free and clear of all liens (other than
certain permitted liens). Such replacement engine shall be the same make and
model as the Engine to be replaced, or an improved model, suitable for
installation and use on the Airframe, and having a value, utility and remaining
useful life (without regard to hours or cycles remaining until overhaul) at
least equal to the Engine to be replaced, assuming that such Engine had been
maintained in accordance with the relevant Lease or the Owned Aircraft
Indenture, as the case may be, immediately prior to the occurrence of the Event
of Loss. (Leases, Section 10.2; Owned Aircraft Indenture, Section 4.05(a)(i))
An Event of Loss with respect to an Aircraft, Airframe or any Engine means
any of the following events with respect to such property: (i) the destruction
of such property, damage to such property beyond economic repair or rendition of
such property permanently unfit for normal use; (ii) the actual or constructive
total loss of such property or any damage to such property or requisition of
title or use of such property which results in an insurance settlement with
respect to such property on the basis of a total loss or a constructive or
compromised total loss; (iii) any theft, hijacking or disappearance of such
property for a period of 180 days (in the case of the Special Agreements, 90
days) or more; (iv) any seizure, condemnation, confiscation, taking or
requisition of title to such property by any non-U.S. governmental entity or
purported non-U.S. governmental entity (other than the country of registration
of the relevant Aircraft), in the case of the Standard
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Agreements, for a period exceeding 180 days (exceeding 90 days in the case of a
requisition of title) or, if earlier, at the end of the term of such Lease (in
the case of a Leased Aircraft) or the final maturity of the Equipment Notes (in
the case of an Owned Aircraft); (v) in the case of any Leased Aircraft, 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 of the relevant Lease (unless the Owner Trustee shall
have elected not to treat such event as an Event of Loss) or, in the case of the
Special Agreements, certain specified shorter periods; or (vi) as a result of
any law, rule, regulation, order or other action by the FAA or any governmental
entity, the use of such property in the normal course of Continental's business
of passenger air transportation is prohibited for 180 days, unless Continental,
prior to the expiration of such 180 day period, shall have undertaken and shall
be diligently carrying forward steps which are necessary or desirable to permit
the normal use of such property by Continental, but in any event if such use
shall have been prohibited for a period of two consecutive years (360 days in
the case of the Special Agreements), provided that (in the case of the Standard
Agreements) no Event of Loss shall be deemed to have occurred if such
prohibition has been applicable to Continental's entire U.S. registered fleet of
similar property and Continental, prior to the expiration of such two-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 and shall be diligently carrying
forward, in a manner which does not discriminate against applicable property in
so conforming such property, steps which are necessary or desirable to permit
the normal use of such property by Continental, but in any event if such use
shall have been prohibited for a period of three years or, in the case of the
Leased Aircraft, such use shall be prohibited at the expiration of the term of
the relevant Lease. (Leases, Annex A; Owned Aircraft Indenture, Annex A)
Renewal and Purchase Options
At the end of the term of each Lease after final maturity of the related
Equipment Notes and subject to certain conditions, Continental will have certain
options to renew such Lease for additional limited periods. In addition,
Continental will have the right at the end of the term of each Lease to purchase
the Aircraft subject thereto for an amount to be calculated in accordance with
the terms of such Lease. (Leases, Section 17)
Events of Default under the Leases
Lease Events of Default under each Lease include, among other things, (i)
failure by Continental to make any payment of basic rent, stipulated loss value
or termination value under such Lease within ten Business Days (in the case of
the Special Agreements, five Business Days) after the same shall have become
due, or failure by Continental to pay any other amount due under such Lease or
under any other related operative document within ten Business Days (in the case
of the Special Agreements, five Business Days) from and after the date of any
written demand therefor from the Owner Trustee; (ii) failure by Continental to
make any excluded payment (as defined) within ten Business Days (in the case of
the Special Agreements, five Business Days) after written notice that such
failure constitutes a Lease Event of Default is given by the relevant Owner
Participant to Continental and the relevant Loan Trustee; (iii) failure by
Continental to carry and maintain insurance on and in respect of the Aircraft,
Airframe and Engines, in accordance with the provisions of such Lease; (iv) in
the case of the Special Agreements, failure by Continental to maintain its
corporate existence, except as permitted by the relevant Lease, the winding up,
liquidation or dissolution of Continental, failure to maintain the registration
of the Aircraft with the FAA or with a permitted foreign registry, failure to
record the Indenture or maintain the Indenture of record as a first-priority,
perfected mortgage (subject to permitted liens) or operation of the Aircraft in
any area excluded by insurance coverage required by such Lease or in any
recognized or threatened area of hostilities unless fully covered by war-risk
insurance, as required by Section 11 of such Lease (subject to certain
exceptions); (v) in the case of the Special Agreements, breach of the covenants
in such Lease pertaining to possession, interchange and pooling of Engines and
subleasing or breach of certain prohibitions against attempted assignments by
Continental of its obligations under such Lease and against the merger of
Continental with any other person, except as expressly permitted by such Lease;
(vi) failure by Continental to perform or observe any other covenant or
agreement to be performed or observed by it under such Lease or the related
Participation Agreement or any other related operative document (other than the
related tax indemnity agreement between Continental and
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the Owner Participant), and such failure shall continue unremedied for a period
of 30 days (or, in the case of the Special Agreements, such other shorter
applicable period) after written notice of such failure by the applicable Owner
Trustee or Loan Trustee unless (in the case of the Standard Agreements), such
failure is capable of being corrected and Continental shall be diligently
proceeding to correct such failure, in which case there shall be no Lease Event
of Default unless and until such failure shall continue unremedied for a period
of 180 days after receipt of such notice; (vii) any representation or warranty
made by Continental in such Lease or the related Participation Agreement or in
any other related operative document (other than in the related tax indemnity
agreement between Continental and the Owner Participant) shall prove to have
been untrue or inaccurate in any material respect at the time made, such
representation or warranty is material at the time in question and the same
shall remain uncured (to the extent of the adverse impact thereof) for more than
30 days after the date of written notice thereof to Continental; and (viii) the
occurrence of certain voluntary events of bankruptcy, reorganization or
insolvency of Continental or the occurrence of involuntary events of bankruptcy,
reorganization or insolvency which shall continue undismissed, unvacated or
unstayed for a period of 90 days (in the case of the Special Agreements, 60
days). (Leases, Section 14)
Indenture Events of Default under the Owned Aircraft Indenture are
discussed above under "-- Indenture Defaults, Notice and Waiver".
Remedies Exercisable upon Events of Default under the Lease
If a Lease Event of Default has occurred and is continuing, the applicable
Owner Trustee may (or, so long as the Indenture shall be in effect, the
applicable Loan Trustee may, subject to the terms of the Indenture) exercise one
or more of the remedies provided in such Lease with respect to the related
Aircraft. These remedies include the right to repossess and use or operate such
Aircraft, to rescind or terminate such Lease, to sell or re-lease such Aircraft
free and clear of Continental's rights, except as set forth in the Lease, and
retain the proceeds, and to require Continental to pay, as liquidated damages,
any due and unpaid basic rent plus an amount, at such Owner Trustee's (or,
subject to the terms of the relevant Leased Aircraft Indenture, the Leased
Aircraft Trustee's) option, either (i) the excess of the present value of all
unpaid rent during the remainder of the term of such Lease over the present
value of the fair market rental value of such Aircraft for the remainder of the
term of such Lease, or (ii) the excess of the stipulated loss value of such
Aircraft over the fair market sales value of such Aircraft or, if such Aircraft
has been sold, the net sales proceeds from the sale of such Aircraft. (Leases,
Section 15; Leased Aircraft Indentures, Section 4.04) The Leases for the Special
Agreements provide a different formula for determining liquidated damages. If
the Loan Trustee has validly terminated such Lease, the Loan Trustee may not
sell or lease or otherwise afford the use of such Aircraft to Continental or any
of its affiliates. (Leased Aircraft Indentures, Sections 4.03 and 4.04(a))
Remedies under the Owned Aircraft Indentures are discussed above under
"-- Remedies".
Transfer of Owner Participant Interests
Subject to certain restrictions, each Owner Participant may transfer all or
any part of its interest in the related Leased Aircraft. (Participation
Agreements, Section 10.1.1)
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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
EXCHANGE OF OLD CERTIFICATES FOR NEW CERTIFICATES
The following summary describes the principal U.S. federal income tax
consequences to Certificateholders of the exchange of the Old Certificates for
New Certificates. This summary is intended to address the beneficial owners of
Certificates that are citizens or residents of the United States, corporations,
partnerships or other entities created or organized in or under the laws of the
United States or any State, or estates or trusts the income of which is subject
to U.S. federal income taxation regardless of its source that will hold the
Certificates as capital assets.
The exchange of Old Certificates for New Certificates (the "Exchange")
pursuant to the Exchange Offer will not be a taxable event for U.S. federal
income tax purposes. As a result, a holder of an Old Certificate whose Old
Certificate is accepted in an Exchange Offer will not recognize gain or loss on
the Exchange. A tendering holder's tax basis in the New Certificates will be the
same as such holder's tax basis in its Old Certificates. A tendering holder's
holding period for the New Certificates received pursuant to the Exchange Offer
will include its holding period for the Old Certificates surrendered therefor.
ALL HOLDERS OF OLD CERTIFICATES ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES
OF THE EXCHANGE OF OLD CERTIFICATES FOR NEW CERTIFICATES AND OF THE OWNERSHIP
AND DISPOSITION OF NEW CERTIFICATES RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF
THEIR OWN PARTICULAR CIRCUMSTANCES.
ERISA CONSIDERATIONS
IN GENERAL
ERISA imposes certain requirements on employee benefit plans subject to
ERISA ("ERISA Plans"), and on those persons who are fiduciaries with respect to
ERISA Plans. Investments by ERISA Plans are subject to ERISA's general fiduciary
requirements, including, but not limited to, the requirement of investment
prudence and diversification and the requirement that an ERISA Plan's
investments be made in accordance with the documents governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit certain
transactions involving the assets of an ERISA Plan (as well as those plans that
are not subject to ERISA but which are subject to Section 4975 of the Code, such
as individual retirement accounts (together with ERISA Plans, "Plans") and
certain persons (referred to as "parties in interest" or "disqualified persons")
having certain relationships to such Plans, unless a statutory or administrative
exemption is applicable to the transaction. A party in interest or disqualified
person who engages in a prohibited transaction may be subject to excise taxes
and other penalties and liabilities under ERISA and the Code.
The Department of Labor has promulgated a regulation, 29 CFR Section
2510.3-101 (the "Plan Asset Regulation"), describing what constitutes the assets
of a Plan with respect to the Plan's investment in an entity for purposes of
ERISA and Section 4975 of the Code. Under the Plan Asset Regulation, if a Plan
invests (directly or indirectly) in a Certificate, the Plan's assets will
include both the Certificate and an undivided interest in each of the underlying
assets of the corresponding Trust, including the Equipment Notes held by such
Trust, unless it is established that equity participation in the Trust by
benefit Plan investors (including but not limited to Plans and entities whose
underlying assets include plan assets by reason of an employee benefit plan's
investment in the entity) is not "significant" within the meaning of the Plan
Asset Regulation. In this regard, the extent to which there is equity
participation in a particular Trust by, or on behalf of, employee benefit plans
will not be monitored. If the assets of a Trust are deemed to constitute the
assets of a Plan, transactions involving the assets of such Trust could be
subject to the prohibited transaction provisions of ERISA and Section 4975 of
the Code unless a statutory or administrative exemption is applicable to the
transaction.
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The fiduciary of a Plan that proposes to purchase and hold any Certificates
should consider, among other things, whether such purchase and holding may
involve (i) the direct or indirect extension of credit to a party in interest or
a disqualified person, (ii) the sale or exchange of any property between a Plan
and a party in interest or a disqualified person, and (iii) the transfer to, or
use by or for the benefit of, a party in interest or a disqualified person, of
any Plan assets. Such parties in interest or disqualified persons could include,
without limitation, Continental and its affiliates, the Initial Purchasers, the
Trustees, the Escrow Agent, the Depositary, the Owner Trustees and the Liquidity
Provider. In addition, whether or not the assets of a Trust are deemed to be
Plan assets under the Plan Asset Regulation, if Certificates are purchased by a
Plan and Certificates of a subordinate Class are held by a party in interest or
a disqualified person with respect to such Plan, the exercise by the holder of
the subordinate Class of Certificates of its right to purchase the senior
Classes of Certificates upon the occurrence and during the continuation of a
Triggering Event could be considered to constitute a prohibited transaction
unless a statutory or administrative exemption were applicable. Depending on the
identity of the Plan fiduciary making the decision to acquire or hold
Certificates on behalf of a Plan, PTCE 91-38 (relating to investments by bank
collective investment funds), PTCE 84-14 (relating to transactions effected by a
"qualified professional asset manager"), PTCE 95-60 (relating to investments by
an insurance company general account), PTCE 96-23 (relating to transactions
directed by an in-house professional asset manager) or PTCE 90-1 (relating to
investments by insurance company pooled separate accounts) (collectively, the
"Class Exemptions") could provide an exemption from the prohibited transaction
provisions of ERISA and Section 4975 of the Code. However, there can be no
assurance that any of these Class Exemptions or any other exemption will be
available with respect to any particular transaction involving the Certificates.
Governmental plans and certain church plans, while not subject to the
fiduciary responsibility provisions of ERISA or the provisions of Section 4975
of the Code, may nevertheless be subject to state or other federal laws that are
substantially similar to the foregoing provisions of ERISA and the Code.
Fiduciaries of any such plans should consult with their counsel before
purchasing any Certificates.
Any Plan fiduciary which proposes to cause a Plan to purchase any
Certificates should consult with its counsel regarding the applicability of the
fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code to such an investment, and to confirm that such
purchase and holding will not constitute or result in a non-exempt prohibited
transaction or any other violation of an applicable requirement of ERISA.
CLASS A CERTIFICATES
In addition to the Class Exemptions referred to above, an individual
exemption may apply to the purchase, holding and secondary market sale of Class
A Certificates by Plans, provided that certain specified conditions are met. In
particular, the Department of Labor has issued individual administrative
exemptions to the Initial Purchasers which are substantially the same as the
administrative exemption issued to The First Boston Corporation, Prohibited
Transaction Exemption 89-90 (54 Fed. Reg. 42,597 (1989), as amended (the
"Underwriter Exemption"). The Underwriter Exemption generally exempts from the
application of certain, but not all, of the prohibited transaction provisions of
Section 406 of ERISA and Section 4975 of the Code certain transactions relating
to the initial purchase, holding and subsequent secondary market sale of pass-
through certificates which represent an interest in a trust that holds equipment
notes secured by leases and certain other assets, provided that certain
conditions set forth in the Underwriter Exemption are satisfied.
The Underwriter Exemption sets forth a number of general and specific
conditions which must be satisfied for a transaction involving the initial
purchase, holding or secondary market sale of certificates representing a
beneficial ownership interest in a trust to be eligible for exemptive relief
thereunder. In particular, the Underwriter Exemption requires that the
acquisition of certificates by a Plan be on terms that are at least as favorable
to the Plan as they would be in an arm's-length transaction with an unrelated
party; the rights and interests evidenced by the certificates not be
subordinated to the rights and interests evidenced by other certificates of the
same trust estate; the certificates at the time of acquisition by the Plan be
rated in one of the three highest generic rating categories by Moody's, Standard
& Poor's, Duff & Phelps Inc. or Fitch
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Investors Service, Inc.; and the investing Plan be an accredited investor as
defined in Rule 501(a)(1) of Regulation D of the Commission under the Securities
Act.
In addition, the trust corpus generally must be invested in qualifying
receivables, such as the Equipment Notes, but may not in general include a
pre-funding account. The Underwriter Exemption may also be available where all
of the otherwise eligible assets of the trust are identified at the time of the
acquisition of certificates by a Plan even though such assets, for
administrative or other reasons, are not transferred to the trust at that time.
In order to comply with the investment restrictions set forth in the
Underwriter Exemption, an investment in a Certificate will evidence both an
interest in the respective Original Trust as well as an interest in the Deposits
held in escrow by an Escrow Agent for the benefit of the Certificateholder.
Pursuant to the terms of the Escrow Agreement, the proceeds from the Offering of
the Certificates of each Class were paid over by the Initial Purchasers to the
Depositary on behalf of the Escrow Agent (for the benefit of such
Certificateholders as the holders of the Escrow Receipts) and do not constitute
property of the Original Trusts. Under the terms of each Escrow Agreement, the
Escrow Agent entered into the Deposit Agreements with the Depositary and was
irrevocably instructed to effect withdrawals upon the receipt of appropriate
notice from the relevant Trustee so as to enable such Trustee to purchase the
identified Equipment Notes on the terms and conditions set forth in the Note
Purchase Agreement. Interest on the Deposits relating to each Trust will be paid
to the Certificateholders of such Trust as Receiptholders through a Paying Agent
appointed by the Escrow Agent. Pending satisfaction of such conditions and
withdrawal of such Deposits, the Escrow Agent's rights with respect to the
Deposits will remain plan assets subject to the fiduciary responsibility and
prohibited transaction provisions of ERISA and Section 4975 of the Code.
There can be no assurance that the Department of Labor would agree that the
Underwriter Exemption is applicable to Class A Certificates in these
circumstances. In particular, the Department of Labor might assert that the
escrow arrangement is tantamount to a pre-funding of the Original Trusts
rendering the Underwriter Exemption inapplicable to the Original Trusts,
although such issue should not exist with respect to the Successor Trusts. The
Department of Labor is currently considering an amendment to the Underwriter
Exemption to permit pre-funding arrangements with respect to a limited portion
of the assets to be acquired by a trust. In addition, even if all of the
conditions of the Underwriter Exemption are satisfied with respect to the Class
A Certificates, no assurance can be given that the Underwriter Exemption would
apply with respect to all transactions involving the Class A Certificates or the
assets of the Class A Trust. In particular, it appears that the Underwriter
Exemption would not apply to the purchase by Class B Certificateholders or Class
C Certificateholders of Class A Certificates in connection with the exercise of
their rights upon the occurrence and during the continuance of a Triggering
Event. Therefore, the fiduciary of a Plan considering the purchase of a Class A
Certificate should consider the availability of the exemptive relief provided by
the Underwriter Exemption, as well as the availability of any other exemptions
with respect to transactions to which the Underwriter Exemption may not apply.
CLASS B AND CLASS C CERTIFICATES
The Underwriter Exemption does not apply to the Class B or Class C
Certificates. The Class B and Class C Certificates may not be acquired with the
assets of a Plan, except that such Certificates may be acquired with the assets
of an insurance company general account that may be deemed to constitute Plan
assets, provided that the conditions of PTCE 95-60 are satisfied at the time of
the acquisition (and during the holding) of such Certificates. Holders of Class
B Certificates or Class C Certificates that tender Old Certificates in exchange
for New Certificates will be deemed to have represented and warranted that
either (i) no Plan assets have been used to acquire and hold such Certificate or
(ii) the acquisition and holding of such Certificate is exempt from the
prohibited transaction restrictions of ERISA and the Code pursuant to PTCE
95-60.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Certificates for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Certificates. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Certificates received in
exchange for Old Certificates where such Old Certificates were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, starting on the Expiration Date and ending on the close of business
180 days after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until such date all broker-dealers effecting transactions
in the New Certificates may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Certificates
by broker-dealers. New Certificates received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Certificates or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Certificates. Any
broker-dealer that resells New Certificates that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Certificates may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Certificates and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Starting on the Expiration Date, the Company will promptly send additional
copies of this Prospectus and any amendment or supplement to this Prospectus to
any broker-dealer that requests such documents in the Letter of Transmittal. The
Company has agreed to pay all expenses incident to the Exchange Offer other than
commissions or concessions of any brokers or dealers, fees of counsel to the
Holders and certain transfer taxes, and will indemnify the Holders of the New
Certificates (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Certificates will be passed upon for Continental by
Hughes Hubbard & Reed LLP, New York, New York. Hughes Hubbard & Reed LLP will
rely on the opinion of Richards, Layton & Finger, Wilmington, Delaware, counsel
for Wilmington Trust Company, as Trustee, as to certain matters of Delaware law
relating to the Pass Through Trust Agreements.
EXPERTS
The consolidated financial statements of Continental Airlines, Inc.
appearing in Continental Airlines, Inc.'s Annual Report (Form 10-K) for the year
ended December 31, 1996 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The references to AISI, BK and MBA, and to their respective appraisal
reports, dated as of February 25, 1997 in the case of AISI, January 8, 1997 in
the case of BK and February 21, 1997 in the case of MBA, are included herein in
reliance upon the authority of each such firm as an expert with respect to the
matters contained in its appraisal report.
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APPENDIX I -- INDEX OF TERMS
PAGE
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ABN AMRO.............................. 2
Adjusted Expected Distributions.........27, 74
Adjusted Treasury Yield............... 66
Administration Expenses............... 74
Aeroflot.............................. 6
Aggregate LTV Collateral Amount.........28, 75
Air Partners.......................... 38
Aircraft.............................. 2
Aircraft Operative Agreements......... 62
AISI.................................. 14
Alitalia.............................. 6
America West.......................... 6
Appraisal............................. 75
Appraised Current Market Value..........28, 75
Appraised Value....................... 61
Appraisers............................ 14
Assumed Aggregate Aircraft Value...... 15
Assumed Aircraft Value................ 82
Assumed Amortization Schedule......... 55
Average Life Date..................... 81
average yield......................... 38
BK.................................... 14
Boeing................................ 34
Book-Entry Confirmation............... 46
Book-Entry Transfer Facility.......... 46
Business Day.......................... 54
Cash Collateral Account............... 25
Cede.................................. 30
Certificate Account................... 53
Certificate Owners.................... 30
Certificateholders.................... 17
Certificates.......................... 1
City.................................. 36
Class A Certificates.................. 10
Class A Trust......................... 1
Class B Certificates.................. 10
Class B Trust......................... 1
Class C-I Certificates................ 10
Class C-I Trust....................... 1
Class C-II Trust...................... 1
Class Exemptions...................... 97
Class C Certificates.................. 10
Class C Trusts........................ 1
Class C-II Certificates............... 10
Class C-II Premium.................... 66
CMI................................... 6
Code.................................. 31
Commission............................ 3
Company............................... 1
Continental........................... 1
Controlling Party..................... 29
Convention............................ 89
CSFB Business Unit.................... 67
Current Distribution Date............. 26
PAGE
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default............................... 58
Delivery Period....................... 2
Delivery Period Termination Date...... 2
Deposit............................... 2
Deposit Agreement..................... 2
Deposit Make-Whole Premium............ 66
Depositary............................ 2
Distribution Date..................... 26
Downgrade Drawing..................... 25
DTC................................... 30
DTC Participants...................... 30
EDGAR................................. 5
eligible guarantor.................... 47
Eligible Institution.................. 47
EMB................................... 34
Equipment............................. 86
Equipment Notes....................... 2
ERISA................................. 31
ERISA Plans........................... 96
Escrow Agent.......................... 2
Escrow Agreement...................... 2
Escrow Receipts....................... 11
Exchange.............................. 96
Exchange Act.......................... 5
Exchange Agent........................ 9
Exchange Offer........................ 1
Exchange Offer No-Action Letters...... 3
Excusable Delay....................... 78
Expected Distributions..................26, 73
Expiration Date....................... 45
Express............................... 6
Exxon Capital Letter.................. 3
FAA................................... 38
Final Distributions................... 29
Final Drawing......................... 26
Final Maturity Date................... 52
$500 Million Dollar Credit Facility... 35
Global Certificates................... 64
H.15(519)............................. 81
holder................................ 46
Holdings.............................. 5
IAH Bonds............................. 36
Indenture Default..................... 56
Indentures............................ 12
Indirect participants................. 64
ING................................... 2
Initial Purchasers.................... 4
Intercreditor Agreement............... 26
Interest Drawings..................... 24
Issuance Date......................... 18
Lease................................. 88
Lease Event of Default................ 56
Lease Payment Date.................... 89
Leased Aircraft....................... 2
I-1
102
PAGE
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Leased Aircraft Indenture............. 12
Leased Aircraft Trustee............... 12
Letter of Transmittal................. 1
Liquidity Event of Default............ 71
Liquidity Expenses.................... 73
Liquidity Facility.................... 24
Liquidity Obligations................. 24
Liquidity Providers................... 2
Loan Trustees......................... 12
LTV Appraisals........................ 28
LTV Collateral Amount...................28, 75
LTV Ratio...............................28, 75
LTVs.................................. 15
Make-Whole Premium.................... 81
Mandatory Document Terms.............. 62
Mandatory Economic Terms.............. 61
Maximum Available Commitment.......... 24
MBA................................... 14
Minimum Sale Price.................... 30
Morgan Stanley Letter................. 3
most recent H.15(519)................. 81
net lease............................. 89
New Certificates...................... 1
New Trustee........................... 3
NOLs.................................. 36
Non-Extension Drawing................. 25
Non-Performing Equipment Notes........ 27
Note Holders.......................... 62
Note Purchase Agreement............... 12
NYSE.................................. 48
Old Certificates...................... 1
Original Trustee...................... 3
Original Trusts....................... 3
Owned Aircraft........................ 2
Owned Aircraft Indenture.............. 12
Owned Aircraft Trustee................ 12
Owner Participant..................... 23
Owner Trustee......................... 2
participants.......................... 64
Participating Broker-Dealer........... 4
Participation Agreement............... 20
Pass Through Trust Agreements......... 1
Paying Agent.......................... 11
Paying Agent Account.................. 53
Performing Equipment Note............. 25
Plan Asset Regulation................. 96
PAGE
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Plans................................. 96
Pool Balance.......................... 54
Pool Factor........................... 54
Predelivery Deposit Revolver.......... 35
Premium Termination Date.............. 21
PTC Event of Default.................. 17
PTCE.................................. 31
Receiptholder......................... 68
Registration Event.................... 45
Registration Statement................ 5
Regular Distribution Dates............ 52
Remaining Weighted Average Life....... 81
Replacement Facility.................. 70
Required Amount....................... 24
Scheduled Payments.................... 52
Section 382........................... 37
Section 1110 Period................... 25
Securities Act........................ 1
Series A Equipment Notes.............. 2
Series B Equipment Notes.............. 2
Series C Equipment Notes.............. 2
Shearman & Sterling Letter............ 3
Shelf Registration Statement.......... 45
SOP 90-7.............................. 34
Special Agreements.................... 88
Special Distribution Date............. 53
Special Payment....................... 53
Special Payments Account.............. 53
Standard Agreements................... 88
Stated Interest Rates................. 24
Stated Portion........................ 24
Subordination Agent................... 11
Successor Trust....................... 3
Termination Notice.................... 71
Threshold Rating...................... 70
ticket tax............................ 38
Transfer Date......................... 3
Transportation Code................... 59
Treasury Yield........................ 81
Triggering Event...................... 18
Trust Property........................ 11
Trustee............................... 1
Trusts................................ 1
Underwriter Exemption................. 97
universal bank........................ 67
Virgin................................ 6
I-2
103
APPENDIX II -- APPRAISAL LETTERS
[AIRCRAFT INFORMATION SERVICES, INC. LOGO]
25 February 1997
Continental Airlines
2929 Allen Parkway, Suite 1588
Houston, TX 77019
Subject: AISI Report No.: A7D00lBVO
AISI Sight Unseen New Aircraft Current Market Value Appraisal, Eight
B757-200,
Eighteen B737-500 and Four B737-700 Aircraft.
Dear Gentlemen:
In response to your request, Aircraft Information Services, Inc. (AISI) is
pleased to offer Continental Airlines our opinion of the sight unseen current
market value of various new aircraft to be delivered from the manufacturer to
Continental Airlines between March 1997 and February 1998 as listed and defined
in Table I.
1. METHODOLOGY AND DEFINITIONS
The method used by AISI in its valuation of the Aircraft was based both on a
review of information and Aircraft specifications supplied by Continental
Airlines and also on a review of present and past market conditions, various
expert opinions (such as aircraft brokers and financiers) and information
contained in AISI's databases that help determine aircraft availability and
price data and thus arrive at the appraised values for the new aircraft to be
delivered to Continental Airlines.
The historical standard term of reference for commercial aircraft value has been
"half-life fair market value" of an "average" aircraft. However, "fair market
value" could mean a fair value in the given market or a value in a hypothetical
"fair" or balanced market, and the two definitions are not equivalent. Recently,
the term "base value" has been created to describe the theoretical balanced
market condition and to avoid the potentially misleading term "fair market
value" which has now become synonymous with the term "current market value" or a
"fair" value in the actual current market. AISI value definitions are consistent
with those of the International Society of Transport Aircraft Trading (ISTAT) of
01 January 1994; AISI is a member of that organization and employs an ISTAT
Certified Senior Aircraft Appraiser.
AISI defines a "base value" as that of a transaction between equally willing and
informed buyer and seller, neither under compulsion to buy or sell, for a single
unit cash transaction with no hidden value or liability, and with supply and
demand of the sale item roughly in balance.
AISI defines a "current market value" or "fair market value" as that value which
reflects the real market conditions, whether at, above or below the base value
conditions. Definitions of aircraft condition, buyer/seller qualifications and
type of transaction remain unchanged from that of base value. Current market
value takes into consideration the status of the economy in which the aircraft
is used, the status of supply and demand for the particular aircraft type, the
value of recent transactions and the opinions of informed buyers and sellers.
Current market value assumes that there is no short term time constraint to buy
or sell.
2. MARKET ANALYSIS B737-500, B737-700 & B757-200
B737-500
The B737-500 is a twin engine, narrowbody, stage 3, two man crew domestic
aircraft, the smallest of the B737-300/400/500 family, typically seating 108
passengers, dual class. With the same fuel capacity as the large B737-300 and
- -400 but lighter empty weight, the B737-500 full passenger range is considerably
greater; approximately 1,800 nautical miles at low MTOW's up to 3,000 nautical
miles at higher MTOW's.
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25 February 1997 [AIRCRAFT INFORMATION SERVICES, INC. LOGO]
AISI File No. A70001BVO
Page -2-
There are 308 aircraft in the B737-500 fleet, making it the smallest fleet of
the B737-300/400/500 family, but 33 airlines operate the -500, distributed
worldwide. 148 of the fleet are operated on a form of lease, either financial or
operational.
The aircraft was first delivered in 1989, and we would anticipate termination of
production prior to year 2000. Major competitors included hushkitted B737-200's
and DC-9 variants, the MD-87, the Fokker 100, the Airbus A319 and soon the
replacement B737-600 and the new MD-95.
The B737-500 market has been reasonably strong and values have held steady in
the face of demand which, while strong is not as strong as for the larger
B737-300 and -400. For the short term we see no significant reduction in
B737-500 values. Long term however, the aircraft, like the B737-300/400, faces
significant competition from newer more advanced aircraft, and we expect the
B737-500 to be significantly more vulnerable than its larger variants, to either
competition or an economic downturn.
Another factor tending to lower values long term is the major manufacturers
policy of deep discounts of list prices to battle for market share -- which
softens market values of all newer 100-160 seat aircraft. The B737-500 has even
more limited appeal than the B737-300 as a converted freighter, and none have
yet been converted.
B737-700
The B737-700 is a twin engine, narrowbody, stage 3, two man crew aircraft
typically seating 128 passengers in mixed class configuration. Typical range
with full passengers at low MTOW is approximately 2,500 nautical miles, while at
high MTOW the range increases to approximately 3,200 nautical miles, sufficient
for transcontinental domestic operations. The aircraft is part of the new Boeing
B737-600/700/800 family, replacing the present B737-500/300/400, respectively.
The aircraft has a larger wing, a higher cruise speed, longer range, and higher
initial cruise altitude capability than its predecessor, the B737-300, while
operating at higher gross weights, with the same size passenger cabin and more
powerful CFM56-7B variants of the same engine.
The B737-700 has a respectable firm order of 176 aircraft, with 93 ordered by
leasing companies, but the customer base is still quite small at 6 airlines.
This reflects the high percentage of leasing company orders and the probable
initial operator count is more like 20 airlines.
The major competitors to the B737-700 are the MD-90 and the Airbus A320 even
though these aircraft types are larger then the B737-700. The B737-700 also must
compete with its larger variant the B737-800 and the earlier B737-300/400/500
variants. In some markets it must also compete with the older B737-200A.
The first B737-700 is currently in flight test, with delivery scheduled for
October 1997. AISI analysis of the market for the new B737 family indicates that
the present strong demand for narrowbody stage 3 domestic aircraft has
stabilized and will continue at least until the next major economic downturn.
There are expected to be some B737-300 users who put insufficient value in the
advantages of the B737-700 over the B737-300 to support any significant price
differential between the two. Due to small size and relatively high cost, we
expect the future potential for freighter conversion to be confined to the older
B737 variants for domestic small package carrier market; it will be several
years before market growth and B737-700 values reductions coincide to make a
B737-700F practical.
Boeing in recent head-to-head B737-600/700/800 competition with Airbus A319 and
A320 aircraft has shown a willingness to offer aircraft at drastically reduced
prices; Airbus has generally matched or exceeded Boeing's discounts. This
willingness to discount, combined with significant increases in production
rates, produces an artificial softening of market prices of all new and newer
100 to 160 seat stage III narrowbody domestic aircraft.
105
25 February 1997 [AIRCRAFT INFORMATION SERVICES, INC. LOGO]
AISI File No. A70001BVO
Page -3-
B757-200
The B757-200 is a twin engine, narrowbody, stage 3, two man crew aircraft
typically seating 186 passengers in mixed class configuration. Typical range
with full passengers at low MTOW is approximately 2,900 nautical miles, while at
high MTOW the range increases to approximately 4,000 nautical miles. The B757
has a relatively large fleet of 648 aircraft, of which 272 are Pratt & Whitney
powered and 376 are Rolls Royce powered. 17 airlines operate Pratt powered
aircraft, while 42 operate the more popular Rolls powered variant. 340 aircraft
are operated on some form of lease arrangement. A variant of the aircraft is
qualified for Extended Twin Engine Overwater Operation (ETOP) giving the
aircraft significant flexibility for use in both domestic and limited
international markets. The aircraft was first produced in 1982, and we do not
anticipate termination of production in the foreseeable future.
The B757-200 occupies a unique place in the family of commercial aircraft in
that it does not have a direct competitor. Its closest narrowbody competitors,
the MD-83 and A321 neither have the range to compete with the B757, and the
MD-83 has considerably smaller passenger capacity. Airbus has considered
increasing the size and weights of the A321, but a new larger wing would be
required for the A321 to be truly competitive with the B757. The closest
widebody competitors, the B767-200 and A310-200/300, are considerably larger
aircraft and cost considerably more per plane mile to operate. For the
foreseeable future, it appears Airbus is content to permit the B757 to remain
unchallenged at the top of the larger, long range, narrowbody market. Boeing,
realizing it has a significant market in which it is uncontested, has now
initiated studies to increase the size and weights of the B757-200 creating the
B757-300. This will further distance the B757 family from its narrowbody
competitors and place it closer to the smallest widebody competitors, over whom
it enjoys considerable plane mile operating cost advantages.
AISI analysis of the market for the B757-200 indicates that demand had
stabilized in late 1995 and through 1996 but has now increased and will continue
at least until the next major economic downturn; orders and backlog for new
aircraft have declined but availability of newer B757 aircraft is tight; a
production rate decrease in 3rd quarter 1996 will be reversed early in 1997.
Current market purchase prices and lease rates for newer used B757-200 aircraft
are now generally stable, although there is some reduction in prices for the
oldest, least capable aircraft. We expect increased production rates and
availability from leasing companies to hold prices steady in the face of
moderately increasing demand.
3. VALUATION
Following is AISI's opinion of the current market value for the subject aircraft
on their respective delivery dates. Valuations are presented in Table I subject
to the assumptions, definitions and disclaimers herein.
106
CONTINENTAL AIRLINES -- AISI FILE # A7D001BVO
25 FEBRUARY 1997
TABLE I
- -------------------------------------------------------------------------------------------------------------------------
1997 MILLION
USDOLLARS
MANUFACTURER'S AIRCRAFT TAIL MANUFACTURER'S NEW CURRENT MARKET
DELIVERY DATE NUMBER SERIAL NUMBER VALUE
- -------------------------------------------------------------------------------------------------------------------------
B757-200, RB211-535E4 Engines, 230,0001b MTOW
- -------------------------------------------------------------------------------------------------------------------------
Mar-97 118 27560 53.72
- -------------------------------------------------------------------------------------------------------------------------
Apr-97 119 27561 53.80
- -------------------------------------------------------------------------------------------------------------------------
Jun-97 120 27562 53.97
- -------------------------------------------------------------------------------------------------------------------------
Jul-97 121 27563 54.05
- -------------------------------------------------------------------------------------------------------------------------
Aug-97 122 27564 54.13
- -------------------------------------------------------------------------------------------------------------------------
Dec-97 126 28966 54.47
- -------------------------------------------------------------------------------------------------------------------------
Jan-98 123 27565 54.55
- -------------------------------------------------------------------------------------------------------------------------
Jan-98 127 28967 54.55
- -------------------------------------------------------------------------------------------------------------------------
B737-500, CFM56-3B1 Engines, 129,5001b MTOW
- -------------------------------------------------------------------------------------------------------------------------
Jul-97 638 28899 31.09
- -------------------------------------------------------------------------------------------------------------------------
Jul-97 639 28900 31.09
- -------------------------------------------------------------------------------------------------------------------------
Aug-97 640 28901 31.14
- -------------------------------------------------------------------------------------------------------------------------
Aug-97 641 28902 31.14
- -------------------------------------------------------------------------------------------------------------------------
Aug-97 642 28903 31.14
- -------------------------------------------------------------------------------------------------------------------------
Sep-97 643 28904 31.19
- -------------------------------------------------------------------------------------------------------------------------
Sep-97 644 28905 31.19
- -------------------------------------------------------------------------------------------------------------------------
Oct-97 645 28906 31.24
- -------------------------------------------------------------------------------------------------------------------------
Oct-97 646 28907 31.24
- -------------------------------------------------------------------------------------------------------------------------
Nov-97 647 28908 31.29
- -------------------------------------------------------------------------------------------------------------------------
Nov-97 648 28909 31.29
- -------------------------------------------------------------------------------------------------------------------------
Dec-97 649 28910 31.34
- -------------------------------------------------------------------------------------------------------------------------
Dec-97 650 28911 31.34
- -------------------------------------------------------------------------------------------------------------------------
Dec-97 651 28912 31.34
- -------------------------------------------------------------------------------------------------------------------------
Jan-98 652 28913 31.39
- -------------------------------------------------------------------------------------------------------------------------
Jan-98 653 28914 31.39
- -------------------------------------------------------------------------------------------------------------------------
Feb-98 654 28915 31.43
- -------------------------------------------------------------------------------------------------------------------------
Feb-98 655 28916 31.43
- -------------------------------------------------------------------------------------------------------------------------
B737-500, CFM56-7B24 Engines, 133,0001b MTOW
- -------------------------------------------------------------------------------------------------------------------------
Jan-98 701 28762 36.83
- -------------------------------------------------------------------------------------------------------------------------
Jan-98 702 28763 36.83
- -------------------------------------------------------------------------------------------------------------------------
Feb-98 703 28764 36.89
- -------------------------------------------------------------------------------------------------------------------------
Feb-98 704 28765 36.89
- -------------------------------------------------------------------------------------------------------------------------
107
25 February 1997 [AIRCRAFT INFORMATION SERVICES, INC. LOGO]
AISI File No. A70001BVO
Page -4-
Unless otherwise agreed by Aircraft Information Services, Inc. (AISI) in
writing, this report shall be for the sole use of the client/addressee. This
report is offered as a fair and unbiased assessment of the subject aircraft.
AISI has no past, present, or anticipated future interest in the subject
aircraft. The conclusions and opinions expressed in this report are based on
published information, information provided by others, reasonable
interpretations and calculations thereof and are given in good faith. Such
conclusions and opinions are judgments that reflect conditions and values which
are current at the time of this report. The values and conditions reported upon
are subject to any subsequent change. AISI shall not be liable to any party for
damages arising out of reliance or alleged reliance on this report, or for any
parties action or failure to act as a result of reliance or alleged reliance on
this report.
Sincerely,
AIRCRAFT INFORMATION SERVICES. INC.
/s/ FRED E. BEARDEN
- ------------------------------------
Fred E. Bearden
President
FB/JDM/jm
108
[BK ASSOCIATES, INC. LOGO]
1295 Northern Boulevard
Manhasset, New York 11030
(516) 365-6272 - Fax (516) 365-6287
January 8, 1997
CONTINENTAL AIRLINES
2929 Allen Parkway
Houston, TX 77019
Gentlemen:
In response to your request, BK Associates, Inc. is pleased to provide this
opinion on the fair market value (FMV) as of January 1997 on each of eight
B757-224, four B737-724 and 18 B737-524 aircraft (Aircraft), which will be
delivered to Continental Airlines between March 1997 and February 1998. The B757
aircraft are each powered by two Rolls-Royce RB211-535E4B engines, the B737-724
by CFM International CFM56-7B24 and the B737-524 by CFM International CFM56-3Bl
engines. We understand that, while they are being delivered as "standard"
aircraft with 230,000 pounds takeoff weight, the B757s have the physical
specifications of high gross weight and Extended Twin Overwater Operations
(ETOPS) and can be re-certified as such without physical changes to the
aircraft. The Aircraft are further identified in the conclusion to this letter.
Set forth below is a summary of the methodology, considerations and
assumptions utilized in this appraisal.
CURRENT FAIR MARKET VALUE
According to the International Society of Transport Aircraft Trading's (ISTAT)
definition of FMV, to which BK Associates subscribes, the quoted FMV is the
Appraiser's opinion of the most likely trading price that may be generated for
an aircraft under the market circumstances that are perceived to exist at the
time in question. The FMV assumes that the aircraft is valued for its highest
and best use, that the parties to the hypothetical sale transaction are willing,
able, prudent and knowledgeable, and under no unusual pressure for a prompt
sale, and that the transaction would be negotiated in an open and unrestricted
market on an arm's length basis, for cash or equivalent consideration, and given
an adequate amount of time for effective exposure to prospective buyers, which
BK Associates considers to be 12 to 18 months.
BASE VALUE
Base value is the Appraiser's opinion of the underlying economic value of an
aircraft in an open, unrestricted, stable market environment with a reasonable
balance of supply and demand, and assumes full consideration of its "highest and
best use". An aircraft's base value is founded in the historical trend of values
and in the projection of future value trends and presumes an arm's length, cash
transaction between willing, able and knowledgeable parties, acting prudently,
with an absence of duress and with a reasonable period of time available for
marketing.
VALUE METHODOLOGY
Fair market valuations are determined based upon one of three methods:
comparable recent sales, replacement cost or rate of return to investor. In this
appraisal, BK used the comparable sales method, which is the most common method,
in determining the base values of the Aircraft. This method uses industry data
to ascertain the prices realized in recent sales of comparable models. The fair
market value of the base Aircraft is based on BK's familiarity with the aircraft
type, its earnings potential in commercial service, its knowledge of its
capabilities and the uses to which it will be put worldwide, its knowledge of
the marketing of used aircraft, and the factors affecting the fair market value
of such aircraft, and on its knowledge of the asking, offered and transaction
prices for similar competitive, and alternative equipment, as well as
transactions and negotiations
109
Continental Airlines, Inc. [BK ASSOCIATES, INC. LOGO]
January 8, 1997
Page 2
involving basically identical aircraft. These realizations, however, which
reflect the market supply and demand at the time of sale, are subject to minor
adjustments for other conditions existing at the time of the appraisal. In this
respect, we consider the market for B757 and B737 aircraft to be in reasonable
balance at this time, and thus, the FMV is equal to the base value. In addition,
values were adjusted for engine type and maximum gross takeoff weights (MGTOW).
In arriving at the current fair market value, BK considered the impact of many
factors affecting the market for used aircraft, including: the current demand
for and availability of aircraft, the projected demand for lift, the suitability
and operating economies of the aircraft, regulatory factors, and recent sales
experience.
LIMITING CONDITIONS AND ASSUMPTIONS
BK has neither inspected the Aircraft nor their maintenance records but relied
upon information supplied by you and from BK's own database. In determining the
fair market value of a used aircraft, the following assumptions apply to the
base aircraft:
1. Unless it is new, the aircraft has half-time remaining to its next
major overhauls or scheduled shop visit on its airframe, engines,
landing gear and auxiliary power unit.
2. The aircraft is in compliance under a Federal Aviation
Administration approved airline maintenance program, with all
airworthiness directives, mandatory modifications and applicable
service bulletins currently up to industry standard.
3. The interior of the aircraft is in a standard configuration for its
specific type, with the buyer furnished equipment and options of
the types and models generally accepted and utilized in the
industry.
4. The aircraft is in current flight operations.
5. The aircraft is sold for cash without seller financing.
6. The Aircraft is in average or better condition.
7. There is no accident damage.
110
Continental Airlines, Inc. [BK ASSOCIATES, INC. LOGO]
January 8, 1997
Page 3
CONCLUSIONS
Based on the above methodology, considerations and assumptions, and since they
are all new and not yet in service, it is our opinion that the current fair
market value of each aircraft are as follows:
MODEL DATE OF DELIVERY SERIAL NUMBER CFMV (EACH)
----- ---------------- ------------- -----------
B757-224 03/97 27560 53,250,000
B757-224 04/97 27561 53,250,000
B757-224 06/97 27562 53,250,000
B757-224 07/97 27563 53,750,000
B757-224 08/97 27564 53,750,000
B757-224 12/97 28966 54,000,000
B757-224 01/98 27565 54,250,000
B757-224 01/98 28967 54,250,000
B737-524 07/97 28899 27,800,000
B737-524 07/97 28900 27,800,000
B737-524 08/97 28901 27,800,000
B737-524 08/97 28902 27,800,000
B737-524 08/97 28903 27,800,000
B737-524 09/97 28904 27,800,000
B737-524 09/97 28905 27,800,000
B737-524 10/97 28906 27,800,000
B737-524 10/97 28907 27,800,000
B737-524 11/97 28908 28,000,000
B737-524 11/97 28909 28,000,000
B737-524 12/97 28910 28,000,000
B737-524 12/97 28911 28,000,000
B737-524 12/97 28912 28,000,000
B737-524 01/98 28913 28,250,000
B737-524 01/98 28914 28,250,000
B737-524 02/98 28915 28,250,000
B737-524 02/98 28916 28,250,000
B737-724 01/98 28762 37,750,000
B737-724 01/98 28763 37,750,000
B737-724 02/98 28764 37,750,000
B737-724 02/98 28765 37,750,000
111
Continental Airlines, Inc. [BK ASSOCIATES, INC. LOGO]
January 8, 1997
Page 4
BK Associates, Inc. has no present or contemplated future interest in the
Aircraft, nor any interest that would preclude our making a fair and unbiased
estimate. This appraisal represents the opinion of BK Associates, Inc. and
reflects our best judgment based on the information available to us at the time
of preparation and the time and budget constraints imposed by the client. It is
not given as a recommendation, or as an inducement, for any financial
transaction and further, BK Associates, Inc. assumes no responsibility or legal
liability for any action taken or not taken by the addressee, or any other
party, with regard to the appraised equipment. By accepting this appraisal, the
addressee agrees that BK Associates, Inc. shall bear no such responsibility or
legal liability. This appraisal is prepared for the use of the addressee and
shall not be provided to other parties without the express consent of the
addressee.
Sincerely yours,
BK ASSOCIATES, INC.
/s/ JOHN F. KEITZ
------------------------------------
John F. Keitz
President
ISTAT Senior Certified Appraiser
JFK/kf
112
[MORTEN BEYER AND ASSOCIATES LOGO]
February 21, 1997
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Gentlemen:
Pursuant to your request, Morten Beyer & Associates (MBA) has set forth its
opinion regarding the value of thirty aircraft (as described in Schedule I
herein) being delivered new from the manufacturer to Continental Airlines during
1997 and 1998. More specifically, our mandate is to render our opinion on this
date as to the value of the aircraft on their delivery dates.
There are several terms used to describe the "value" of an aircraft. MBA
uses the definitions of various value terms as promulgated by the International
Society of Transport Aircraft Trading (ISTAT), a not-for-profit organization of
some 500 members who have an interest in the commercial aviation industry. The
membership consists of management level personnel from banks, leasing companies,
airlines, appraisers, brokers, manufacturers, etc. ISTAT has also established
standards for appraisal practice and a code of ethics for those members who want
to be certified by the Society as appraisers. To attain certification members
must meet rigid educational and experience requirements and must successfully
complete written examinations. Both Morten Beyer and Robert Minnich of MBA are
ISTAT Certified Senior Appraisers.
ISTAT defines Current Market Value (CMV) as the most likely trading price
that may be generated for an aircraft under the market conditions that are
perceived to exist at the time in question. Market Value (MV) assumes that the
aircraft is valued for its highest, best use, that the parties to the
hypothetical sales transaction are willing, able, prudent and knowledgeable, and
under no unusual pressure for a prompt sale, and that the transactions would be
negotiated in an open and unrestricted market on an arm's length basis, for cash
or equivalent consideration and given an adequate amount of time for effective
exposure to prospective buyers. Fair Market Value is synonymous to MV and
Current Fair Market Value is synonymous with CMV because the criteria typically
used in those documents that use the term "fair" reflect the same criteria set
forth in the above definition of Market Value.
Base Value (BV) contains the same elements as MV except the market
conditions are always assumed to be in a reasonable state of equilibrium. Base
values are related to long term trends, and may or may not reflect the actual
value of the aircraft in question. Base values are founded in the historical
values of aircraft and are usually used for analysis of historic values or for
future value projections.
The values set forth herein are Current Market Values. CMVs are provided
for each aircraft, identified by assigned manufacturer's serial numbers and FAA
registration numbers taking into account the expected month of delivery to
Continental.
The delivery period for the aircraft that are the subject of this report
terminates in February, 1998. As of the date of this report, we see no events
that may cause us to revise valuations. However, unforeseen
113
circumstances can occur with little or no warning, and if something does occur,
MBA would revise its market valuations accordingly.
All of the aircraft included in this appraisal are new aircraft with
delivery dates starting in March 1997. The types of aircraft that are the
subject of this report are all considered to be effective competitors in the
industry for years to come, and they all meet or exceed Stage III noise level
standards. The Boeing 737-500 was first built in 1989, and there are currently
319 in service with 28 operators and another 56 on order. It is the truncated
version of the 737-300/400 series and offers a lower cost per aircraft mile.
Because of its smaller capacity, its unit costs as measured by the cost per
available seat mile are higher. Although we consider the aircraft to be a
competitive one, it suffers from the fact that aircraft that are smaller
versions of larger aircraft have historically not been as efficient as aircraft
that are originally designed as smaller machines.
The Boeing 737-700 is Boeing's newest entry into the advanced technology
market to compete with Airbus A319/320/321 series machines. The aircraft has not
yet entered service. There are 208 unfilled orders. We expect that this aircraft
will be very popular with the airlines and will have a long production run.
The Boeing 757 was first built in 1982 and was originally thought to be the
replacement for the Boeing 727 series aircraft. Orders started slowly, but as
time passed the aircraft became very popular because of its outstanding economic
and operational characteristics. At the present time there are 669 of these
aircraft in service with 62 operators. An additional 109 aircraft are on order.
This report has been prepared for the exclusive use of Continental and
shall not be provided to other parties by MBA without the express consent of
Continental.
MBA certifies that this report has been independently prepared and that if
fully and accurately reflects MBA's opinion, as of the date of this report, of
the values set forth herein. MBA further certifies that it does not have, and
does not expect to have, any financial interest in the subject or similar
aircraft.
This report represents MBA's opinion as to the subject aircraft, and is
intended to be advisory only, in nature. Therefore, MBA assumes no
responsibility or legal liability for any actions taken, or not taken, by
Continental or any other party with regard to the subject aircraft.
By accepting this report, all parties agree that MBA shall bear no such
responsibility or legal liability.
Sincerely,
/s/ MORTEN S. BEYER
------------------------------------
Morten S. Beyer
President
[MORTEN BEYER AND ASSOCIATES LOGO]
2
114
PROJECTED AIRCRAFT VALUES AT DELIVERY
CONTINENTAL AIRLINES
Boeing 757-200
MAR APR JUN JUL AUG DEC JAN
97 97 97 97 97 97 98
# of Aircraft 1 ea 1 ea 1 ea 1 ea 1 ea 1 ea 2 ea
Current Mkt Val ($mm) 59.431 59.682 60.182 60.433 60.683 61.685 61.936
Serial Numbers 27560 27561 27562 27563 27564 28966 27565
27567
Tail #s 118 119 120 121 122 126 123
127
Boeing 737-500
JUL AUG SEP OCT NOV DEC JAN FEB
97 97 97 97 97 97 98 98
# of Aircraft 2 ea 3 ea 2 ea 2 ea 2 ea 3 ea 2 ea 2 ea
Current Mkt Val ($mm) 27.610 27.718 27.826 27.932 28.040 28.148 28.256 28.364
Serial Numbers 28899 28901 28904 28906 28908 28910 28913 28915
28900 28902 28905 28907 28909 28911 28914 28961
28903 28912
Tail #s 638 640 643 645 647 649 652 654
639 641 644 646 648 650 653 655
642 651
Boeing 737-700
JAN FEB
98 98
# of Aircraft 2 ea 2 ea
Current Mkt Val ($mm) 36.491 36.573
Serial Numbers 28762 28764
28763 28765
Tail #s 701 703
702 704
[MORTEN BEYER AND ASSOCIATES LOGO]
3
115
======================================================
NO OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF
TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT.
NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH
TOGETHER, CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS, NOR THE
ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THEREOF.
---------------------
TABLE OF CONTENTS
PAGE
----
Available Information................. 5
Reports to Certificateholders......... 5
Incorporation of Certain Documents by
Reference........................... 5
Prospectus Summary.................... 6
Risk Factors.......................... 34
Use of Proceeds....................... 43
Ratios of Earnings to Fixed Charges... 43
The Exchange Offer.................... 43
Description of the New Certificates... 50
Description of the Deposit
Agreements.......................... 65
Description of the Escrow
Agreements.......................... 68
Description of the Liquidity
Facilities.......................... 68
Description of the Intercreditor
Agreement........................... 72
Description of the Aircraft and the
Appraisals.......................... 76
Description of the Equipment Notes.... 78
Certain U.S. Federal Income Tax
Consequences........................ 96
ERISA Considerations.................. 96
Plan of Distribution.................. 99
Legal Matters......................... 99
Experts............................... 99
Index of Terms........................ I-1
Appraisal Letters..................... II-2
======================================================
======================================================
CONTINENTAL AIRLINES, INC.
OFFER TO EXCHANGE
PASS THROUGH CERTIFICATES, SERIES 1997-1,
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OUTSTANDING
PASS THROUGH CERTIFICATES, SERIES 1997-1
PROSPECTUS
May , 1997
======================================================
116
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation and Bylaws provide that the
Company will indemnify each of its directors and officers to the full extent
permitted by the laws of the State of Delaware and may indemnify certain other
persons as authorized by the Delaware General Corporation Law (the "GCL").
Section 145 of the GCL provides as follows:
"(a) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by a majority vote of the board of directors who
are not parties to such action, suit or proceeding, even though less than a
quorum, or (2) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative, or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of undertaking by or on behalf
of such
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117
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation as authorized in
this section. Such expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent for such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees)".
The Certificate of Incorporation and Bylaws also limit the personal
liability of directors to the Company and its stockholders for monetary damages
resulting from certain breaches of the directors' fiduciary duties. The bylaws
of the Company provide as follows:
"No Director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (i) for any breach of the Director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the. . . GCL, or (iv) for any
transaction from which the Director derived any improper personal benefit. If
the GCL is amended to authorize corporate action further eliminating or limiting
the personal liability of Directors, then
II-2
118
the liability of Directors of the Corporation shall be eliminated or limited to
the full extent permitted by the GCL, as so amended".
The Company maintains directors' and officers' liability insurance.
ITEM 21. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
4.1 -- Form of New 7.461% Continental Airlines Pass Through
Certificate Series 1997-1A-0 (included in Exhibit 4.5)
4.2 -- Form of New 7.461% Continental Airlines Pass Through
Certificate Series 1997-1B-0 (included in Exhibit 4.6)
4.3 -- Form of New 7.420% Continental Airlines Pass Through
Certificate Series 1997-1C-I-0 (included in Exhibit 4.7)
4.4 -- Form of New 7.420% Continental Airlines Pass Through
Certificate Series 1997-1C-II-0 (included in Exhibit 4.8)
4.5 -- Pass Through Trust Agreement, dated as of March 21, 1997,
between Continental Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation
of Continental Airlines Pass Through Trust, Series
1997-1A-0 and the issuance of 7.461% Continental Airlines
Pass Through Trust, Series 1997-1A-0 Pass Through
Certificates representing fractional undivided interests
in the Trust
4.6 -- Pass Through Trust Agreement, dated as of March 21, 1997,
between Continental Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation
of Continental Airlines Pass Through Trust, Series
1997-1B-0 and the issuance of 7.461% Continental Airlines
Pass Through Trust, Series 1997-1B-0 Pass Through
Certificates representing fractional undivided interests
in the Trust
4.7 -- Pass Through Trust Agreement, dated as of March 21, 1997,
between Continental Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation
of Continental Airlines Pass Through Trust, Series
1997-1C-I-0 and the issuance of 7.420% Continental
Airlines Pass Through Trust, Series 1997-1C-I-0 Pass
Through Certificates representing fractional undivided
interests in the Trust
4.8 -- Pass Through Trust Agreement, dated as of March 21, 1997,
between Continental Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation
of Continental Airlines Pass Through Trust, Series
1997-1C-II-0 and the issuance of 7.420% Continental
Airlines Pass Through Trust, Series 1997-1C-II-0 Pass
Through Certificates representing fractional undivided
interests in the Trust
4.9 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1A-0, as Borrower and ABN AMRO Bank
N.V., Chicago Branch as Liquidity Provider
4.10 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1A-0, as Borrower and ING Bank N.V. as
Liquidity Provider
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119
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
4.11 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1B-0, as Borrower and ABN AMRO Bank
N.V., Chicago Branch as Liquidity Provider
4.12 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1B-0, as Borrower and ING Bank N.V. as
Liquidity Provider
4.13 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1C-I-0, as Borrower and ABN AMRO Bank
N.V., Chicago Branch as Liquidity Provider
4.14 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1C-I-0, as Borrower and ING Bank N.V.
as Liquidity Provider
4.15 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1C-II-0, as Borrower and ABN AMRO Bank
N.V., Chicago Branch as Liquidity Provider
4.16 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1C-II-0, as Borrower and ING Bank N.V.
as Liquidity Provider
4.17 -- Intercreditor Agreement dated as of March 21, 1997, among
Wilmington Trust Company, as Trustee under the
Continental Airlines Pass Through Trust 1997-1A-0,
Continental Airlines Pass Through Trust 1997-1B-0,
Continental Airlines Pass Through Trust 1997-1-C-I-0 and
Continental Pass Through Trust 1997-1C-II-0, ING Bank
N.V. and ABN AMRO Bank N.V., as Class A Liquidity
Provider, Class B Liquidity Provider, Class C Liquidity
Provider, and Wilmington Trust Company, as Subordination
Agent and Trustee
4.18 -- Exchange and Registration Rights Agreement, dated as of
March 21, 1997, among Continental Airlines, Inc.,
Wilmington Trust Company, as Trustee under Continental
Airlines Pass Through Trust, Series 1997-1A-O,
Continental Airlines Pass Through Trust, Series
1997-1B-O, Continental Airlines Pass Through Trust,
Series 1997-1C-I-O, Continental Airlines Pass Through
Trust, Series 1997-1C-II-O, and Credit Suisse First
Boston Corporation, Morgan Stanley & Co. Incorporated,
Chase Securities Inc. and Goldman, Sachs & Co.
4.19 -- Deposit Agreement (Class A) dated as of March 21, 1997
between First Security Bank, National Association as
Escrow Agent under the Escrow and Paying Agent Agreement,
and Credit Suisse First Boston, New York Branch, as
Depositary
4.20 -- Deposit Agreement (Class B) dated as of March 21, 1997
between First Security Bank, National Association as
Escrow Agent under the Escrow and Paying Agent Agreement,
and Credit Suisse First Boston, New York Branch, as
Depositary
4.21 -- Deposit Agreement (Class C-I) dated as of March 21, 1997
between First Security Bank, National Association as
Escrow Agent under the Escrow and Paying Agent Agreement,
and Credit Suisse First Boston, New York Branch, as
Depositary
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EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
4.22 -- Deposit Agreement (Class C-II) dated as of March 21, 1997
between First Security Bank, National Association as
Escrow Agent under the Escrow and Paying Agent Agreement,
and Credit Suisse First Boston, New York Branch, as
Depositary
4.23 -- Escrow and Paying Agent Agreement (Class A) dated as of
March 21, 1997 among First Security Bank, National
Association as Escrow Agent; Credit Suisse First Boston
Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial
Purchasers under the Certificate Purchase Agreement;
Wilmington Trust Company, not in its individual capacity,
but solely as Pass Through Trustee for and on behalf of
Continental Airlines Pass Through Trust 1997-1A-0 as Pass
Through Trustee; and Wilmington Trust Company as Paying
Agent
4.24 -- Escrow and Paying Agent Agreement (Class B) dated as of
March 21, 1997 among First Security Bank, National
Association as Escrow Agent; Credit Suisse First Boston
Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial
Purchasers under the Certificate Purchase Agreement;
Wilmington Trust Company, not in its individual capacity,
but solely as Pass Through Trustee for and on behalf of
Continental Airlines Pass Through Trust 1997-1B-0 as Pass
Through Trustee; and Wilmington Trust Company as Paying
Agent
4.25 -- Escrow and Paying Agent Agreement (Class C-I) dated as of
March 21, 1997 among First Security Bank, National
Association as Escrow Agent; Credit Suisse First Boston
Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial
Purchasers under the Certificate Purchase Agreement;
Wilmington Trust Company, not in its individual capacity,
but solely as Pass Through Trustee for and on behalf of
Continental Airlines Pass Through Trust 1997-1C-I-0 as
Pass Through Trustee; and Wilmington Trust Company as
Paying Agent
4.26 -- Escrow and Paying Agent Agreement (Class C-II) dated as
of March 21, 1997 among First Security Bank, National
Association as Escrow Agent; Credit Suisse First Boston
Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial
Purchasers under the Certificate Purchase Agreement;
Wilmington Trust Company, not in its individual capacity,
but solely as Pass Through Trustee for and on behalf of
Continental Airlines Pass Through Trust 1997-1C-II-0 as
Pass Through Trustee; and Wilmington Trust Company as
Paying Agent
4.27 -- Note Purchase Agreement dated as of March 21, 1997 among
Continental Airlines, Inc., Wilmington Trust Company as
Pass Through Trustee under each of the Pass Through Trust
Agreements, Wilmington Trust Company, as Subordination
Agent, First Security Bank, National Association, as
Escrow Agent and Wilmington Trust Company as Paying Agent
5.1 -- Opinion of Hughes Hubbard & Reed LLP relating to validity
of New Certificates
12.1 -- Computation of Ratio of Earnings to Fixed Charges
23.1 -- Consent of Ernst & Young LLP
23.2 -- Consent of Hughes Hubbard & Reed LLP (included in its
opinion filed as exhibit 5.1)
23.3 -- Consent of Aircraft Information Services, Inc.
23.4 -- Consent of BK Associates, Inc.
23.5 -- Consent of Morten Beyer and Associates, Inc.
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EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
24.1 -- Powers of Attorney
25.1 -- Statement of Eligibility of Wilmington Trust Company for
the 1997-1A Pass Through Certificates, on Form T-1
25.2 -- Statement of Eligibility of Wilmington Trust Company for
the 1997-1B Pass Through Certificates, on Form T-1
25.3 -- Statement of Eligibility of Wilmington Trust Company for
the 1997-1-C-I Pass Through Certificates, on Form T-1
25.4 -- Statement of Eligibility of Wilmington Trust Company for
the 1997-1-C-II Pass Through Certificates, on Form T-1
99.1 -- Form of Letter of Transmittal
99.2 -- Form of Notice of Guaranteed Delivery
99.3 -- Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees
99.4 -- Form of Letter to Clients
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from
the low or high and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such posteffective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plans annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
II-6
122
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant, pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by any such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether or not
such indemnification is against public policy as expressed in the Securities Act
of 1933 and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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123
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on May 27, 1997.
CONTINENTAL AIRLINES, INC.
By: /s/ JEFFERY A. SMISEK
-----------------------------------
Jeffery A. Smisek
Executive Vice President, General
Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on May 27, 1997.
SIGNATURE TITLE
--------- -----
* Chairman of the Board and Chief Executive
- ----------------------------------------------------- Officer (Principal Executive Officer) and
Gordon M. Bethune Director
* Executive Vice President and Chief Financial
- ----------------------------------------------------- Officer (Principal Financial Officer)
Lawrence W. Kellner
* Vice President and Controller (Principal
- ----------------------------------------------------- Accounting Officer)
Michael P. Bonds
* Director
- -----------------------------------------------------
Thomas J. Barrack, Jr.
* President, Chief Operating Officer and
- ----------------------------------------------------- Director
Gregory D. Brenneman
* Director
- -----------------------------------------------------
Lloyd M. Bentsen, Jr.
* Director
- -----------------------------------------------------
David Bonderman
* Director
- -----------------------------------------------------
Patrick Foley
* Director
- -----------------------------------------------------
Douglas H. McCorkindale
* Director
- -----------------------------------------------------
George G.C. Parker
* Director
- -----------------------------------------------------
Richard W. Pogue
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124
SIGNATURE TITLE
--------- -----
* Director
- -----------------------------------------------------
William S. Price III
* Director
- -----------------------------------------------------
Donald L. Sturm
* Director
- -----------------------------------------------------
Karen Hastie Williams
* Director
- -----------------------------------------------------
Charles A. Yamarone
*By: /s/ SCOTT R. PETERSON
------------------------------------------------
Scott R. Peterson, Attorney-In-Fact
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125
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
4.1 -- Form of New 7.461% Continental Airlines Pass Through
Certificate Series 1997-1A-0 (included in Exhibit 4.5)
4.2 -- Form of New 7.461% Continental Airlines Pass Through
Certificate Series 1997-1B-0 (included in Exhibit 4.6)
4.3 -- Form of New 7.420% Continental Airlines Pass Through
Certificate Series 1997-1C-I-0 (included in Exhibit 4.7)
4.4 -- Form of New 7.420% Continental Airlines Pass Through
Certificate Series 1997-1C-II-0 (included in Exhibit 4.8)
4.5 -- Pass Through Trust Agreement, dated as of March 21, 1997,
between Continental Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation
of Continental Airlines Pass Through Trust, Series
1997-1A-0 and the issuance of 7.461% Continental Airlines
Pass Through Trust, Series 1997-1A-0 Pass Through
Certificates representing fractional undivided interests
in the Trust
4.6 -- Pass Through Trust Agreement, dated as of March 21, 1997,
between Continental Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation
of Continental Airlines Pass Through Trust, Series
1997-1B-0 and the issuance of 7.461% Continental Airlines
Pass Through Trust, Series 1997-1B-0 Pass Through
Certificates representing fractional undivided interests
in the Trust
4.7 -- Pass Through Trust Agreement, dated as of March 21, 1997,
between Continental Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation
of Continental Airlines Pass Through Trust, Series
1997-1C-I-0 and the issuance of 7.420% Continental
Airlines Pass Through Trust, Series 1997-1C-I-0 Pass
Through Certificates representing fractional undivided
interests in the Trust
4.8 -- Pass Through Trust Agreement, dated as of March 21, 1997,
between Continental Airlines, Inc., and Wilmington Trust
Company, as Trustee, made with respect to the formation
of Continental Airlines Pass Through Trust, Series
1997-1C-II-0 and the issuance of 7.420% Continental
Airlines Pass Through Trust, Series 1997-1C-II-0 Pass
Through Certificates representing fractional undivided
interests in the Trust
4.9 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1A-0, as Borrower and ABN AMRO Bank
N.V., Chicago Branch as Liquidity Provider
4.10 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1A-0, as Borrower and ING Bank N.V. as
Liquidity Provider
4.11 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1B-0, as Borrower and ABN AMRO Bank
N.V., Chicago Branch as Liquidity Provider
4.12 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1B-0, as Borrower and ING Bank N.V. as
Liquidity Provider
126
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
4.13 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1C-I-0, as Borrower and ABN AMRO Bank
N.V., Chicago Branch as Liquidity Provider
4.14 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1C-I-0, as Borrower and ING Bank N.V.
as Liquidity Provider
4.15 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1C-II-0, as Borrower and ABN AMRO Bank
N.V., Chicago Branch as Liquidity Provider
4.16 -- Revolving Credit Agreement, dated March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Continental Airlines Pass
Through Trust 1997-1C-II-0, as Borrower and ING Bank N.V.
as Liquidity Provider
4.17 -- Intercreditor Agreement dated as of March 21, 1997, among
Wilmington Trust Company, as Trustee under the
Continental Airlines Pass Through Trust 1997-1A-0,
Continental Airlines Pass Through Trust 1997-1B-0,
Continental Airlines Pass Through Trust 1997-1-C-I-0 and
Continental Pass Through Trust 1997-1C-II-0, ING Bank
N.V. and ABN AMRO Bank N.V., as Class A Liquidity
Provider, Class B Liquidity Provider, Class C Liquidity
Provider, and Wilmington Trust Company, as Subordination
Agent and Trustee
4.18 -- Exchange and Registration Rights Agreement, dated as of
March 21, 1997, among Continental Airlines, Inc.,
Wilmington Trust Company, as Trustee under Continental
Airlines Pass Through Trust, Series 1997-1A-O,
Continental Airlines Pass Through Trust, Series
1997-1B-O, Continental Airlines Pass Through Trust,
Series 1997-1C-I-O, Continental Airlines Pass Through
Trust, Series 1997-1C-II-O, and Credit Suisse First
Boston Corporation, Morgan Stanley & Co. Incorporated,
Chase Securities Inc. and Goldman, Sachs & Co.
4.19 -- Deposit Agreement (Class A) dated as of March 21, 1997
between First Security Bank, National Association as
Escrow Agent under the Escrow and Paying Agent Agreement,
and Credit Suisse First Boston, New York Branch, as
Depositary
4.20 -- Deposit Agreement (Class B) dated as of March 21, 1997
between First Security Bank, National Association as
Escrow Agent under the Escrow and Paying Agent Agreement,
and Credit Suisse First Boston, New York Branch, as
Depositary
4.21 -- Deposit Agreement (Class C-I) dated as of March 21, 1997
between First Security Bank, National Association as
Escrow Agent under the Escrow and Paying Agent Agreement,
and Credit Suisse First Boston, New York Branch, as
Depositary
4.22 -- Deposit Agreement (Class C-II) dated as of March 21, 1997
between First Security Bank, National Association as
Escrow Agent under the Escrow and Paying Agent Agreement,
and Credit Suisse First Boston, New York Branch, as
Depositary
127
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
4.23 -- Escrow and Paying Agent Agreement (Class A) dated as of
March 21, 1997 among First Security Bank, National
Association as Escrow Agent; Credit Suisse First Boston
Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial
Purchasers under the Certificate Purchase Agreement;
Wilmington Trust Company, not in its individual capacity,
but solely as Pass Through Trustee for and on behalf of
Continental Airlines Pass Through Trust 1997-1A-0 as Pass
Through Trustee; and Wilmington Trust Company as Paying
Agent
4.24 -- Escrow and Paying Agent Agreement (Class B) dated as of
March 21, 1997 among First Security Bank, National
Association as Escrow Agent; Credit Suisse First Boston
Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial
Purchasers under the Certificate Purchase Agreement;
Wilmington Trust Company, not in its individual capacity,
but solely as Pass Through Trustee for and on behalf of
Continental Airlines Pass Through Trust 1997-1B-0 as Pass
Through Trustee; and Wilmington Trust Company as Paying
Agent
4.25 -- Escrow and Paying Agent Agreement (Class C-I) dated as of
March 21, 1997 among First Security Bank, National
Association as Escrow Agent; Credit Suisse First Boston
Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial
Purchasers under the Certificate Purchase Agreement;
Wilmington Trust Company, not in its individual capacity,
but solely as Pass Through Trustee for and on behalf of
Continental Airlines Pass Through Trust 1997-1C-I-0 as
Pass Through Trustee; and Wilmington Trust Company as
Paying Agent
4.26 -- Escrow and Paying Agent Agreement (Class C-II) dated as
of March 21, 1997 among First Security Bank, National
Association as Escrow Agent; Credit Suisse First Boston
Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial
Purchasers under the Certificate Purchase Agreement;
Wilmington Trust Company, not in its individual capacity,
but solely as Pass Through Trustee for and on behalf of
Continental Airlines Pass Through Trust 1997-1C-II-0 as
Pass Through Trustee; and Wilmington Trust Company as
Paying Agent
4.27 -- Note Purchase Agreement dated as of March 21, 1997 among
Continental Airlines, Inc., Wilmington Trust Company as
Pass Through Trustee under each of the Pass Through Trust
Agreements, Wilmington Trust Company, as Subordination
Agent, First Security Bank, National Association, as
Escrow Agent and Wilmington Trust Company as Paying Agent
5.1 -- Opinion of Hughes Hubbard & Reed LLP relating to validity
of New Certificates
12.1 -- Computation of Ratio of Earnings to Fixed Charges
23.1 -- Consent of Ernst & Young LLP
23.2 -- Consent of Hughes Hubbard & Reed LLP (included in its
opinion filed as exhibit 5.1)
23.3 -- Consent of Aircraft Information Services, Inc.
23.4 -- Consent of BK Associates, Inc.
23.5 -- Consent of Morten Beyer and Associates, Inc.
24.1 -- Powers of Attorney
128
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
25.1 -- Statement of Eligibility of Wilmington Trust Company for
the 1997-1A Pass Through Certificates, on Form T-1
25.2 -- Statement of Eligibility of Wilmington Trust Company for
the 1997-1B Pass Through Certificates, on Form T-1
25.3 -- Statement of Eligibility of Wilmington Trust Company for
the 1997-1-C-I Pass Through Certificates, on Form T-1
25.4 -- Statement of Eligibility of Wilmington Trust Company for
the 1997-1-C-II Pass Through Certificates, on Form T-1
99.1 -- Form of Letter of Transmittal
99.2 -- Form of Notice of Guaranteed Delivery
99.3 -- Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees
99.4 -- Form of Letter to Clients
1
EXHIBIT 4.5
--------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of March 21, 1997
between
CONTINENTAL AIRLINES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
Continental Airlines Pass Through Trust, Series 1997-1A-O
7.461% Initial Pass Through Certificates, Series 1997-1A-O
7.461% Exchange Pass Through Certificates, Series 1997-1A-O
--------------------------------------
2
2
Reconciliation and tie between Continental Airlines Pass Through Trust
Agreement, Series 1997-1A-O dated as of March 21, 1997, and the Trust Indenture
Act of 1939. This reconciliation does not constitute part of the Pass Through
Trust Agreement.
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
- ------------------- -----------------
310 (a)(1) 7.08
(a)(2) 7.08
312 (a) 3.05; 8.01; 8.02
313 (a) 7.06; 8.03
314 (a) 8.04(a), (C) & (d)
(a)(4) 8.04(e)
(c)(1) 1.02
(c)(2) 1.02
(d)(1) 7.13; 11.01
(d)(2) 7.13; 11.01
(d)(3) 2.01
(e) 1.02
315 (b) 7.02
316 (a)(last sentence) 1.04(c)
(a)(1)(A) 6.04
(a)(1)(B) 6.05
(b) 6.06
(c) 1.04(e)
317 (a)(1) 6.03
(b) 7.13
318 (a) 12.06
3
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.02. Compliance Certificates and Opinions . . . . . . . . . . . 18
Section 1.03. Form of Documents Delivered to Trustee . . . . . . . . . . 19
Section 1.04. Directions of Certificateholders . . . . . . . . . . . . . 19
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of Equipment Notes . 21
Section 2.02. Withdrawal of Deposits . . . . . . . . . . . . . . . . . . 23
Section 2.03. Acceptance by Trustee . . . . . . . . . . . . . . . . . . 23
Section 2.04. Limitation of Powers . . . . . . . . . . . . . . . . . . . 23
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of Certificates . 24
Section 3.02. Restrictive Legends . . . . . . . . . . . . . . . . . . . 27
Section 3.03. Authentication of Certificates . . . . . . . . . . . . . . 29
Section 3.04. Transfer and Exchange . . . . . . . . . . . . . . . . . . 29
Section 3.05. Book-Entry Provisions for Restricted Global Certificates
and Regulation S Global Certificates . . . . . . . . . . . 31
Section 3.06. Special Transfer Provisions . . . . . . . . . . . . . . . 33
Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates . . . . 37
Section 3.08. Persons Deemed Owners . . . . . . . . . . . . . . . . . . 38
Section 3.09. Cancellation . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.10. Temporary Certificates . . . . . . . . . . . . . . . . . . 38
Section 3.11. Limitation of Liability for Payments . . . . . . . . . . . 39
(i)
4
TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
- ------- ----
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments Account . . . . . 39
Section 4.02. Distributions from Certificate Account and Special
Payments Account . . . . . . . . . . . . . . . . . . . . . 40
Section 4.03. Statements to Certificateholders . . . . . . . . . . . . . 42
Section 4.04. Investment of Special Payment Moneys . . . . . . . . . . . 44
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence . . . . . . . . . . . . 44
Section 5.02. Consolidation, Merger, etc. . . . . . . . . . . . . . . . 45
ARTICLE VI
DEFAULT
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . 46
Section 6.02. Incidents of Sale of Equipment Notes . . . . . . . . . . . 49
Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May
Bring Suit . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.04. Control by Certificateholders . . . . . . . . . . . . . . 50
Section 6.05. Waiver of Past Defaults . . . . . . . . . . . . . . . . . 51
(ii)
5
TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
- ------- ----
Section 6.06. Right of Certificateholders to Receive Payments
Not to Be Impaired . . . . . . . . . . . . . . . . . . . . 52
Section 6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions . . . . . . . . . . . . . . . . . 52
Section 6.08. Remedies Cumulative . . . . . . . . . . . . . . . . . . . 53
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities . . . . . . . . . . . 53
Section 7.02. Notice of Defaults . . . . . . . . . . . . . . . . . . . . 54
Section 7.03. Certain Rights of Trustee . . . . . . . . . . . . . . . . 54
Section 7.04. Not Responsible for Recitals or Issuance of Certificates . 56
Section 7.05. May Hold Certificates . . . . . . . . . . . . . . . . . . 56
Section 7.06. Money Held in Trust . . . . . . . . . . . . . . . . . . . 56
Section 7.07. Compensation and Reimbursement . . . . . . . . . . . . . . 57
Section 7.08. Corporate Trustee Required; Eligibility . . . . . . . . . 58
Section 7.09. Resignation and Removal; Appointment of Successor . . . . 59
Section 7.10. Acceptance of Appointment by Successor . . . . . . . . . . 61
Section 7.11. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . . . . 61
Section 7.12. Maintenance of Agencies . . . . . . . . . . . . . . . . . 62
Section 7.13. Money for Certificate Payments to Be Held in Trust . . . . 63
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent . . . . . . . . . . . . . . . . . . . 64
Section 7.15. Representations and Warranties of Trustee . . . . . . . . 64
(iii)
6
TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
- ------- ----
Section 7.16. Withholding Taxes, Information Reporting . . . . . . . . . 65
Section 7.17. Trustee's Liens . . . . . . . . . . . . . . . . . . . . . 67
Section 7.18. Preferential Collection of Claims . . . . . . . . . . . . 67
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders . . . . . . . . . . . . . 67
Section 8.02. Preservation of Information; Communications
to Certificateholders . . . . . . . . . . . . . . . . . . 68
Section 8.03. Reports by Trustee . . . . . . . . . . . . . . . . . . . . 68
Section 8.04. Reports by the Company . . . . . . . . . . . . . . . . . . 68
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent
of Certificateholders . . . . . . . . . . . . . . . . . . 70
Section 9.02. Supplemental Agreements with
Consent of Certificateholders . . . . . . . . . . . . . . 71
Section 9.03. Documents Affecting Immunity or Indemnity . . . . . . . . 73
Section 9.04. Execution of Supplemental Agreements . . . . . . . . . . . 73
Section 9.05. Effect of Supplemental Agreements . . . . . . . . . . . . 73
Section 9.06. Conformity with Trust Indenture Act . . . . . . . . . . . 74
Section 9.07. Reference in Certificates to Supplemental Agreements . . . 74
(iv)
7
TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
- ------- ----
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to Indentures and
Financing Documents . . . . . . . . . . . . . . . . . . . 74
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust . . . . . . . . . . . . . . . . . 75
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders . . . . . . . . 79
Section 12.02. Certificates Nonassessable and Fully Paid . . . . . . . . 79
Section 12.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 12.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.05. Severability of Provisions . . . . . . . . . . . . . . . . 81
Section 12.06. Trust Indenture Act Controls . . . . . . . . . . . . . . . 81
Section 12.07. Effect of Headings and Table of Contents . . . . . . . . . 81
Section 12.08. Successors and Assigns . . . . . . . . . . . . . . . . . . 82
Section 12.09. Benefits of Agreement . . . . . . . . . . . . . . . . . . 82
Section 12.10. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . 82
Section 12.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 82
Section 12.12. Intention of Parties . . . . . . . . . . . . . . . . . . . 82
(v)
8
Exhibit A- Form of Certificate
Exhibit B- Form of Certificate to Request Removal of Restricted Legend
Exhibit C- Form of Certificate to be Delivered by an Institutional
Accredited Investor
Exhibit D- Form of Assignment and Assumption Agreement
Exhibit E- Form of Notice to Withholding Agent
(vi)
9
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of March 21, 1997 (the
"Agreement"), between CONTINENTAL AIRLINES, INC., a Delaware corporation, and
WILMINGTON TRUST COMPANY, as Trustee, is made with respect to the formation of
Continental Airlines Pass Through Trust, Series 1997-1A-O and the issuance of
7.461% Continental Airlines Pass Through Trust, Series 1997-1A-O Pass Through
Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company has obtained commitments from Boeing for the delivery
of certain Aircraft;
WHEREAS, the Company intends to finance the acquisition of each such
Aircraft either (i) through separate leveraged lease transactions in which the
Company will lease such aircraft (collectively, the "Leased Aircraft") or (ii)
through separate secured loan transactions in which the Company will own such
Aircraft (collectively, the "Owned Aircraft");
WHEREAS, in the case of each Leased Aircraft, each Owner Trustee, acting
on behalf of the corresponding Owner Participant, will issue pursuant to an
Indenture, on a non-recourse basis, three series of Equipment Notes in order to
finance a portion of its purchase price of such Leased Aircraft;
WHEREAS, in the case of each Owned Aircraft, the Company, will issue
pursuant to an Indenture, on a recourse basis, three series of Equipment Notes
to finance a portion of the purchase price of such Owned Aircraft;
WHEREAS, the Trustee, upon execution and delivery of this Agreement,
hereby declares the creation of the Trust for the benefit of the
Certificateholders, and the initial Certificateholders, as the grantors of the
Trust, by their respective acceptances of the Certificates, join in the
creation of this Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or interests in respect of any
10
2
property other than the Trust Property except for those Certificates to which
an Escrow Receipt has been affixed;
WHEREAS, the Escrow Agent and the Initial Purchasers have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Paying Agent pursuant to which the Initial Purchasers have delivered to the
Escrow Agent the proceeds from the sale of the Certificates and have
irrevocably instructed the Escrow Agent to withdraw and pay funds from such
proceeds upon request and proper certification by the Trustee to purchase
Equipment Notes as the Aircraft are delivered by Boeing under the Aircraft
Purchase Agreement from time to time prior to the Delivery Period Termination
Date;
WHEREAS, the Escrow Agent on behalf of the Certificateholders has
contemporaneously herewith entered into a Deposit Agreement with the Depositary
under which the Deposits referred to therein will be made and from which it
will withdraw funds to allow the Trustee to purchase Equipment Notes from time
to time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of this Agreement and the
Note Purchase Agreement, upon or shortly following delivery of an Aircraft, the
Trustee on behalf of the Trust, using funds withdrawn under the Escrow
Agreement, may purchase an Equipment Note having the same interest rate as, and
final maturity date not later than the final Regular Distribution Date of, the
Certificates issued hereunder and shall hold such Equipment Note in trust for
the benefit of the Certificateholders;
WHEREAS, to facilitate the sale of Equipment Notes to, and the purchase of
Equipment Notes by, the Trustee on behalf of the Trust, the Company has duly
authorized the execution and delivery of this Agreement as the "issuer", as
such term is defined in and solely for purposes of the Securities Act, of the
Certificates to be issued pursuant hereto and as the "obligor", as such term is
defined in and solely for purposes of the Trust Indenture Act of 1939, as
amended, with respect to all such Certificates and is undertaking to perform
certain administrative and ministerial duties hereunder and is also undertaking
to pay the ongoing fees and expenses of the Trustee;
WHEREAS, all of the conditions and requirements necessary to make this
Agreement, when duly executed and
11
3
delivered, a valid, binding and legal instrument, enforceable in accordance
with its terms and for the purposes herein expressed, have been done, performed
and fulfilled, and the execution and delivery of this Agreement in the form and
with the terms hereof have been in all respects duly authorized; and
WHEREAS, upon issuance of the Exchange Certificates, if any, or the
effectiveness of the Shelf Registration Statement, this Agreement, as amended
or supplemented from time to time, will be subject to the provisions of the
Trust Indenture Act of 1939, and shall, to the extent applicable, be governed
by such provisions;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms used in this Agreement, including in the recitals to this
Agreement, that are defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, or by the rules promulgated
under the Trust Indenture Act, have the meanings assigned to them therein;
(3) all references in this Agreement to designated "Articles", "Sections",
"Subsections" and other subdivisions are to the designated Articles,
Sections, Subsections and other subdivisions of this Agreement;
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, Subsection or other subdivision; and
12
4
(5) unless the context otherwise requires, whenever the words "including",
"include" or "includes" are used herein, it shall be deemed to be followed by
the phrase "without limitation".
Affiliate: Means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person, provided, however, that neither
America West Airlines, Inc. nor any of its subsidiaries shall be deemed to be
an "Affiliate" of the Company for purposes of this Agreement. For the
purposes of this definition, "control" means the power, directly or
indirectly, to direct the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise, and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Agent Members: Has the meaning specified in Section 3.05.
Agreement: Has the meaning specified in the initial paragraph hereto.
Aircraft: Means each of the New Aircraft or Substitute Aircraft in respect
of which a Participation Agreement is entered into in accordance with the
Note Purchase Agreement.
Aircraft Purchase Agreement: Has the meaning specified in the Note
Purchase Agreement.
Applicable Delivery Date: Has the meaning specified in Section 2.01(b).
Applicable Participation Agreement: Has the meaning specified in Section
2.01(b).
Assignment and Assumption Agreement: Means the assignment and assumption
agreement substantially in the form of Exhibit D hereto executed and
delivered in accordance with Section 11.01.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
13
5
Avoidable Tax: Means a state or local tax (i) upon (w) the Trust, (x) the
Trust Property, (y) Certificate-holders or (z) the Trustee for which the
Trustee is entitled to seek reimbursement from the Trust Property, and (ii)
which would be avoided if the Trustee were located in another state, or
jurisdiction within a state, within the United States. A tax shall not be an
Avoidable Tax if the Company or any Owner Trustee shall agree to pay, and
shall pay, such tax.
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 Certificate is
outstanding, the city and state in which the Trustee or any Loan Trustee
maintains its Corporate Trust Office or receives and disburses funds.
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any one of the Initial Certificates or Exchange
Certificates and any such Certificates issued in exchange therefor or
replacement thereof pursuant to this Agreement.
Certificate Account: Means the account or accounts created and maintained
pursuant to Section 4.01(a).
Certificate Purchase Agreement: Means the Purchase Agreement dated March
12, 1997 among the Initial Purchasers, the Company and the Depositary, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
Certificateholder or Holder: Means the Person in whose name a Certificate
is registered in the Register.
Class C Certificateholder: Has the meaning specified in Section 6.01.
Company: Means Continental Airlines, Inc., a Delaware corporation, or its
successor in interest pursuant to Section 5.02, or (only in the context of
provisions hereof, if any, where such reference is required for purposes of
14
6
compliance with the Trust Indenture Act) any other "obligor" (within the
meaning of the Trust Indenture Act) with respect to the Certificates.
Controlling Party: Has the meaning specified in the Intercreditor
Agreement.
Corporate Trust Office: With respect to the Trustee or any Loan Trustee,
means the office of such trustee in the city at which at any particular time
its corporate trust business shall be principally administered.
Cut-off Date: Means the earlier of (a) the Delivery Period Termination
Date and (b) the date on which a Triggering Event occurs.
Definitive Certificates: Has the meaning specified in Section 3.01(e).
Delivery Date: Has the meaning specified in the Note Purchase Agreement.
Delivery Notice: Has the meaning specified in the Note Purchase Agreement.
Delivery Period Termination Date: Means the earlier of (a) March 31, 1998,
or, if the Equipment Notes relating to all of the New Aircraft (or Substitute
Aircraft in lieu thereof) have not been purchased by the Trust and the Other
Trusts on or prior to such date due to any reason beyond the control of the
Company and not occasioned by the Company's fault or negligence, June 30,
1998 and (b) the date on which Equipment Notes issued with respect to all of
the New Aircraft (or Substitute Aircraft in lieu thereof) have been purchased
by the Trust and the Other Trusts in accordance with the Note Purchase
Agreement.
Deposits: Has the meaning specified in the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of March 21, 1997
relating to the Certificates between the Depositary and the Escrow Agent, as
the same may be amended, supplemented or otherwise modified from time to time
in accordance with its terms.
15
7
Depositary: Means Credit Suisse First Boston, a Swiss bank, acting through
its New York branch.
Direction: Has the meaning specified in Section 1.04(a).
Distribution Date: Means any Regular Distribution Date or Special
Distribution Date as the context requires.
DTC: Means The Depository Trust Company, its nominees and their respective
successors.
Equipment Notes: Means the equipment notes issued under the Indentures.
ERISA: Means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor federal statute.
Escrow Agent: Means, initially, First Security Bank, National Association,
and any replacement or successor therefor appointed in accordance with the
Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement dated as of
March 21, 1997 relating to the Certificates, among the Escrow Agent, the
Escrow Paying Agent, the Trustee and the Initial Purchasers, as the same may
be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
Escrow Paying Agent: Means the Person acting as paying agent under the
Escrow Agreement.
Escrow Receipt: Means the receipt substantially in the form annexed to the
Escrow Agreement representing a fractional undivided interest in the funds
held in escrow thereunder.
Euroclear: Means the Euroclear System.
Event of Default: Means an Indenture Default under any Indenture pursuant
to which Equipment Notes held by the Trust were issued.
Exchange Certificates: Means the pass through certificates substantially
in the form of Exhibit A hereto issued in exchange for the Initial
Certificates pursuant to
16
8
the Registration Rights Agreement and authenticated hereunder.
Exchange Offer: Means the exchange offer which may be made pursuant to the
Registration Rights Agreement to exchange Initial Certificates for Exchange
Certificates.
Exchange Offer Registration Statement: Means the registration statement
that, pursuant to the Registration Rights Agreement, is filed by the Company
with the SEC with respect to the exchange of Initial Certificates for
Exchange Certificates.
Final Maturity Date: Means October 1, 2016.
Final Withdrawal: Has the meaning specified in the Escrow Agreement.
Final Withdrawal Date: Has the meaning specified in the Escrow Agreement.
Final Withdrawal Notice: Has the meaning specified in Section 2.02.
Financing Documents: With respect to any Equipment Note, means (i) the
Indenture and the Participation Agreement relating to such Equipment Note,
and (ii) in the case of any Equipment Note related to a Leased Aircraft, the
Lease relating to such Leased Aircraft.
Fractional Undivided Interest: Means the fractional undivided interest in
the Trust that is evidenced by a Certificate.
Global Certificates: Has the meaning specified in Section 3.01(d).
Global Exchange Certificate: Has the meaning specified in Section 3.01(f).
Indenture: Means each of the separate trust indentures and mortgages
relating to the Aircraft, each as specified or described in a Delivery Notice
delivered pursuant to the Note Purchase Agreement or the related
Participation Agreement, in each case as the same may be amended,
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supplemented or otherwise modified from time to time in accordance with
its terms.
Indenture Default: With respect to any Indenture, means any Event of
Default (as such term is defined in such Indenture).
Initial Certificates: Means the certificates issued and authenticated
hereunder substantially in the form of Exhibit A hereto other than the
Exchange Certificates.
Initial Purchasers: Means, collectively, Credit Suisse First Boston
Corporation, Morgan Stanley & Co. Incorporated, Chase Securities Inc. and
Goldman Sachs & Co.
Institutional Accredited Investor: Means an institutional investor that is
an "accredited investor" within the meaning set forth in Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act.
Intercreditor Agreement: Means the Intercreditor Agreement dated as of
March 21, 1997 among the Trustee, the Other Trustees, the Liquidity
Providers, the liquidity providers relating to the Certificates issued under
(and as defined in) each of the Other Pass Through Trust Agreements, and
Wilmington Trust Company, as Subordination Agent and as trustee thereunder,
as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
Investors: Means the Initial Purchasers together with all subsequent
beneficial owners of the Certificates.
Issuance Date: Means the date of the issuance of the Initial Certificates.
Lease: Means, with respect to each Leased Aircraft, the lease between an
Owner Trustee, as the lessor, and the Company, as the lessee, referred to in
the related Indenture, as such lease may be amended, supplemented or
otherwise modified in accordance with its terms.
Leased Aircraft: Has the meaning specified in the second recital to this
Agreement.
Liquidity Facility: Means, initially, (i) the Revolving Credit Agreement
dated as of March 21, 1997
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relating to the Certificates, between ABN Amro Bank N.V. and the
Subordination Agent, as agent and trustee for the Trustee, and (ii) the
Revolving Credit Agreement dated as of March 21, 1997 relating to the
Certificates, between ING Bank N.V. and the Subordination Agent, as agent and
trustee for the Trustee, and, from and after the replacement of either such
Agreement pursuant to the Intercreditor Agreement, the replacement liquidity
facility therefor, in each case as amended, supplemented or otherwise
modified from time to time in accordance with their respective terms.
Liquidity Provider: Means, initially, each of ABN Amro Bank N.V. and ING
Bank N.V., and any replacement or successor therefor appointed in accordance
with the Intercreditor Agreement.
Loan Trustee: With respect to any Equipment Note or the Indenture
applicable thereto, means the bank or trust company designated as trustee
under such Indenture, together with any successor to such trustee appointed
pursuant thereto.
New Aircraft: Has the meaning specified in the Note Purchase Agreement.
Non-U.S. Person: Means a Person that is not a "U.S. person", as defined in
Regulation S.
Note Purchase Agreement: Means the Note Purchase Agreement dated as of
March 21, 1997 among the Trustee, the Other Trustees, the Company, the Escrow
Agent, the Escrow Paying Agent and the Subordination Agent, providing for,
among other things, the purchase of Equipment Notes by the Trustee on behalf
of the Trust, as the same may be amended, supplemented or otherwise modified
from time to time, in accordance with its terms.
Notice of Purchase Withdrawal: Has the meaning specified in the Deposit
Agreement.
Offering Circular: Means the Offering Circular dated March 21, 1997
relating to the offering of the Certificates and the certificates issued
under the Other Pass Through Trust Agreements.
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Officer's Certificate: Means a certificate signed, (a) in the case of the
Company, by (i) the Chairman or Vice Chairman of the Board of Directors, the
President, any Executive Vice President, any Senior Vice President or the
Treasurer of the Company, signing alone, or (ii) any Vice President of the
Company signing together with the Secretary, the Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company or, (b) in the case of an
Owner Trustee or a Loan Trustee, a Responsible Officer of such Owner Trustee
or such Loan Trustee, as the case may be.
Opinion of Counsel: Means a written opinion of legal counsel who (a) in
the case of counsel for the Company may be (i) a senior attorney of the
Company one of whose principal duties is furnishing advice as to legal
matters, (ii) Hughes Hubbard & Reed LLP, or (iii) such other counsel
designated by the Company and reasonably acceptable to the Trustee and (b) in
the case of counsel for any Owner Trustee or any Loan Trustee may be such
counsel as may be designated by any of them whether or not such counsel is an
employee of any of them, and who shall be reasonably acceptable to the
Trustee.
Other Pass Through Trust Agreements: Means each of the three other
Continental Airlines 1997-1 Pass Through Trust Agreements relating to
Continental Airlines Pass Through Trust, Series 1997-1B-O, Continental
Airlines Pass Through Trust, Series 1997-1C-I-O, and Continental Airlines
Pass Through Trust, Series 1997-1C-II-O, dated the date hereof.
Other Trustees: Means the trustees under the Other Pass Through Trust
Agreements, and any successor or other trustee appointed as provided therein.
Other Trusts: Means the Continental Airlines Pass Through Trust, Series
1997-1B-O, Continental Airlines Pass Through Trust, Series 1997-1C-I-O, and
Continental Airlines Pass Through Trust, Series 1997-1C-II-O, created on the
date hereof.
Outstanding: When used with respect to Certificates, means, as of the date
of determination, all Certificates theretofore authenticated and delivered
under this Agreement, except:
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(i) Certificates theretofore canceled by the Registrar or delivered to
the Trustee or the Registrar for cancellation;
(ii) Certificates for which money in the full amount required to make
the final distribution with respect to such Certificates pursuant to
Section 11.01 hereof has been theretofore deposited with the Trustee in
trust for the Holders of such Certificates as provided in Section 4.01
pending distribution of such money to such Certificateholders pursuant to
payment of such final distribution; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this
Agreement.
Owned Aircraft: Has the meaning specified in the second recital to this
Agreement.
Owner Participant: With respect to any Equipment Note relating to a Leased
Aircraft, means the "Owner Participant" as referred to in the Indenture
pursuant to which such Equipment Note is issued and any permitted successor
or assign of such Owner Participant; and Owner Participants at any time of
determination means all of the Owner Participants thus referred to in the
Indentures.
Owner Trustee: With respect to any Equipment Note relating to a Leased
Aircraft, means the "Owner Trustee", as referred to in the Indenture pursuant
to which such Equipment Note is issued, not in its individual capacity but
solely as trustee; and Owner Trustees means all of the Owner Trustees party
to any of the Indentures.
Participation Agreement: Means each Participation Agreement to be entered
into by the Trustee pursuant to the Note Purchase Agreement, as the same may
be amended, supplemented or otherwise modified in accordance with its terms.
Paying Agent: Means the paying agent maintained and appointed for the
Certificates pursuant to Section 7.12.
Permitted Investments: Means obligations of the United States of America
or agencies or instrumentalities thereof
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for the payment of which the full faith and credit of the United States of
America is pledged, maturing in not more than 60 days after the date of
acquisition thereof or such lesser time as is required for the distribution
of any Special Payments on a Special Distribution Date.
Person: Means any person, including any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock
company, trust, trustee, unincorporated organization, or government or any
agency or political subdivision thereof.
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Certificates less (ii) the aggregate amount of all payments
made in respect of such Certificates other than payments made in respect of
interest or premium thereon or reimbursement of any costs or expenses
incurred in connection therewith less (iii) the aggregate amount of unused
Deposits distributed as a Final Withdrawal other than payments in respect of
interest or premium thereon. The Pool Balance as of any Distribution Date
shall be computed after giving effect to the payment of principal, if any, on
the Equipment Notes or other Trust Property held in such Trust and the
distribution thereof to be made on such Distribution Date and the
distribution of the Final Withdrawal to be made on such Distribution Date.
Pool Factor: Means, as of any date, the quotient (rounded to the seventh
decimal place) computed by dividing (i) the Pool Balance as at such date by
(ii) the original aggregate face amount of the Certificates. The Pool Factor
as of any Distribution Date shall be computed after giving effect to the
payment of principal, if any, on the Equipment Notes or other Trust Property
and the distribution thereof to be made on such Distribution Date and the
distribution of the Final Withdrawal to be made on such Distribution Date.
PTC Event of Default: Means any failure to pay within 10 Business Days of
the due date thereof: (i) the outstanding Pool Balance on the Final Maturity
Date or (ii) interest due on the Certificates on any Distribution Date
(unless the Subordination Agent shall have made an Interest Drawing or
Drawings (as defined in the Intercreditor Agreement), or a withdrawal or
withdrawals pursuant to section 3.6(f) of the Intercreditor Agreement,
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with respect thereto in an aggregate amount sufficient to pay such
interest and shall have distributed such amount to the Trustee).
QIB: Means a qualified institutional buyer as defined in Rule 144A.
Record Date: Means (i) for Scheduled Payments to be distributed on any
Regular Distribution Date, other than the final distribution, the 15th day
(whether or not a Business Day) preceding such Regular Distribution Date, and
(ii) for Special Payments to be distributed on any Special Distribution Date,
other than the final distribution, the 15th day (whether or not a Business
Day) preceding such Special Distribution Date.
Register and Registrar: Mean the register maintained and the registrar
appointed pursuant to Sections 3.04 and 7.12.
Registration Event: Means the declaration of the effectiveness by the SEC
of the Exchange Offer Registration Statement or the Shelf Registration
Statement.
Registration Rights Agreement: Means the Exchange and Registration Rights
Agreement dated as of March 21, 1997, among the Initial Purchasers, the
Trustee, the Other Trustees and the Company, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
Regular Distribution Date: With respect to distributions of Scheduled
Payments in respect of the Certificates, means each date designated as a
Regular Distribution Date in the Certificates issued pursuant to this
Agreement, until payment of all the Scheduled Payments to be made under the
Equipment Notes held in the Trust have been made; provided, however, that, if
any such day shall not be a Business Day, the related distribution shall be
made on the next succeeding Business Day without additional interest.
Regulation S: Means Regulation S under the Securities Act or any successor
regulation thereto.
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Regulation S Definitive Certificates: Has the meaning specified in Section
3.01(e).
Regulation S Global Certificates: Has the meaning specified in Section
3.01(d).
Related Pass Through Trust Agreement: Means the Continental Airlines
1997-1 Pass Through Trust Agreement relating to the Continental Airlines Pass
Through Trust, Series 1997-1A-S, dated the date hereof, entered into by the
Company and the institution acting as trustee thereunder, which agreement
becomes effective upon the execution and delivery of the Assignment and
Assumption Agreement pursuant to Section 11.01.
Related Trust: Means the Continental Pass Through Trust, Series 1997-1A-S,
formed under the Related Pass Through Trust Agreement.
Related Trustee: Means the trustee under the Related Pass Through Trust
Agreement.
Responsible Officer: With respect to the Trustee, any Loan Trustee and any
Owner Trustee, means any officer in the Corporate Trust Office of the
Trustee, Loan Trustee or Owner Trustee or any other officer customarily
performing functions similar to those performed by the persons who at the
time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of his knowledge of and familiarity with a
particular subject.
Restricted Definitive Certificates: Has the meaning specified in Section
3.01(e).
Restricted Global Certificate: Has the meaning specified in Section
3.01(c).
Restricted Legend: Has the meaning specified in Section 3.02.
Restricted Period: Has the meaning specified in Section 3.01(d).
Rule 144A: Means Rule 144A under the Securities Act and any successor rule
thereto.
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Scheduled Payment: With respect to any Equipment Note, means (i) any
payment of principal or interest on such Equipment Note (other than any such
payment which is not in fact received by the Subordination Agent within five
days of the date on which such payment is scheduled to be made) due from the
obligor thereon or (ii) any payment of interest on the Certificates with
funds drawn under 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, premium, if any, or interest
resulting from the redemption or purchase of any Equipment Note shall not
constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as from time to time
constituted or created under the United States Securities Exchange Act of
1934, as amended, or, if at any time after the execution of this instrument
such Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performing such duties on such
date.
Securities Act: Means the United States Securities Act of 1933, as amended
from time to time, or any successor thereto.
Shelf Registration Statement: Means the shelf registration statement which
may be required to be filed by the Company with the SEC pursuant to any
Registration Rights Agreement, other than an Exchange Offer Registration
Statement.
Special Distribution Date: Means each date on which a Special Payment is
to be distributed as specified in this Agreement; provided, however, that, if
any such day shall not be a Business Day, the related distribution shall be
made on the next succeeding Business Day without additional interest.
Special Redemption Premium: Means the premium payable by the Company in
respect of the Final Withdrawal pursuant to the Note Purchase Agreement.
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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) or Special Redemption Premium.
Special Payments Account: Means the account or accounts created and
maintained pursuant to Section 4.01(b).
Subordination Agent: Has the meaning specified in the Intercreditor
Agreement.
Substitute Aircraft: Has the meaning specified in the Note Purchase
Agreement.
TIN: Has the meaning specified in Section 7.16.
Transfer Date: Has the meaning specified in Section 11.01.
Triggering Event: Has the meaning assigned to such term in the
Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate of which
consists of the Trust Property.
Trust Indenture Act: Means the United States Trust Indenture Act of 1939,
as amended from time to time, or any successor thereto.
Trust Property: Means (i) the Equipment Notes held as the property of the
Trust and, subject to the Intercreditor Agreement, all monies at any time
paid thereon and all monies due and to become due thereunder, (ii) funds from
time to time deposited in the Certificate Account and the Special Payments
Account and, subject to the Intercreditor Agreement, any proceeds from the
sale by the Trustee pursuant to Article VI hereof of any Equipment Note and
(iii) all rights of the Trust and the Trustee, on behalf of the Trust, under
the Intercreditor Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Liquidity Facilities, including, without limitation, all
rights to receive certain payments thereunder, and all monies paid to the
Trustee on behalf of the Trust pursuant to the Intercreditor Agreement or the
Liquidity Facilities, provided, that rights with respect to the Deposits or
under the Escrow Agreement, except for the right to direct
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withdrawals for the purchase of Equipment Notes to be held herein, will
not constitute Trust Property.
Trustee: Means Wilmington Trust Company, or its successor in interest, and
any successor or other trustee appointed as provided herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
Section 1.02. Compliance Certificates and Opinions. Upon any application
or request (except with respect to matters set forth in Article II) by the
Company, any Owner Trustee or any Loan Trustee to the Trustee to take any
action under any provision of this Agreement, the Company, such Owner Trustee
or such Loan Trustee, as the case may be, shall furnish to the Trustee (i) an
Officer's Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with and (ii) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Agreement relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Agreement (other than a certificate provided
pursuant to Section 8.04(e)) shall include:
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions in this Agreement
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
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(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters and any such Person may certify or give an opinion as to
such matters in one or several documents.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement or, in respect of the Certificates, this
Agreement, they may, but need not, be consolidated and form one instrument.
Section 1.04. Directions of Certificateholders. (a) Any direction,
consent, request, demand, authorization, notice, waiver or other action
provided by this Agreement to be given or taken by Certificateholders (a
"Direction") may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Certificateholders in person or by
an agent or proxy duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required pursuant to this Agreement, to the Company or any Loan Trustee. Proof
of execution of any such instrument or of a writing appointing any such agent
or proxy shall be sufficient for any purpose of this Agreement and conclusive
in favor of the Trustee, the Company and any Loan Trustee, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds
or administer oaths that the Person executing such instrument acknowledged to
him the execution thereof, or by an affidavit of a witness to such execution
sworn to before any such notary or
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such other officer and where such execution is by an officer of a corporation
or association or a member of a partnership, on behalf of such corporation,
association or partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other reasonable manner which the Trustee deems
sufficient.
(c) In determining whether the Certificateholders of the requisite
Fractional Undivided Interests of Certificates Outstanding have given any
Direction under this Agreement, Certificates owned by the Company or any
Affiliate thereof shall be disregarded and deemed not to be Outstanding for
purposes of any such determination. In determining whether the Trustee shall
be protected in relying upon any such Direction, only Certificates which the
Trustee knows to be so owned shall be so disregarded. Notwithstanding the
foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded, and (ii) if any amount of
Certificates so owned by any such Person have been pledged in good faith, such
Certificates shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Company or any Affiliate thereof.
(d) For all purposes of this Agreement, all Initial Certificates and all
Exchange Certificates shall vote and take all other actions of
Certificateholders together as one series of Certificates.
(e) The Company may at its option, by delivery of an Officer's Certificate
to the Trustee, set a record date to determine the Certificateholders entitled
to give any Direction. Notwithstanding Section 316(c) of the Trust Indenture
Act, such record date shall be the record date specified in such Officer's
Certificate, which shall be a date not more than 30 days prior to the first
solicitation of Certificateholders in connection therewith. If such a record
date is fixed, such Direction may be given before or after such record date,
but only the Certificateholders of record at the close of business on such
record date shall be deemed to be Certificateholders for the purposes of
determining whether Certificateholders of the requisite proportion of
Outstanding Certificates have authorized or agreed or consented to such
Direction, and for that purpose
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the Outstanding Certificates shall be computed as of such record date; provided
that no such Direction by the Certificateholders on such record date shall be
deemed effective unless it shall become effective pursuant to the provisions of
this Agreement not later than one year after such record date.
(f) Any Direction by the Holder of any Certificate shall bind the Holder
of every Certificate issued upon the transfer thereof or in exchange therefor
or in lieu thereof, whether or not notation of such Direction is made upon such
Certificate.
(g) Except as otherwise provided in Section 1.04(c), Certificates owned by
or pledged to any Person shall have an equal and proportionate benefit under
the provisions of this Agreement, without preference, priority, or distinction
as among all of the Certificates.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of Equipment Notes.
(a) The Trustee is hereby directed (i) to execute and deliver the Intercreditor
Agreement, the Registration Rights Agreement, the Escrow Agreement and the Note
Purchase Agreement on or prior to the Issuance Date, each in the form delivered
to the Trustee by the Company and (ii) subject to the respective terms thereof,
to perform its obligations thereunder. Upon request of the Company and the
satisfaction or waiver of the closing conditions specified in the Certificate
Purchase Agreement, the Trustee shall execute, deliver, authenticate, issue and
sell Certificates in authorized denominations equalling in the aggregate the
amount set forth, with respect to the Trust, in Schedule II to the Certificate
Purchase Agreement evidencing the entire ownership interest in the Trust, which
amount equals the maximum aggregate principal amount of Equipment Notes which
may be purchased by the Trustee pursuant to the Note Purchase Agreement.
Except as provided in Sections 3.04, 3.05, 3.06, 3.07 and 3.10 hereof, the
Trustee shall not execute, authenticate or deliver Certificates in excess of
the aggregate amount specified in this paragraph.
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(b) On or after the Issuance Date, the Company may deliver from time to
time to the Trustee a Delivery Notice relating to one or more Equipment Notes.
After receipt of a Delivery Notice and in any case no later than one Business
Day prior to a Delivery Date as to which such Delivery Notice relates (the
"Applicable Delivery Date") (or, if the Issuance Date is an Applicable Delivery
Date, on the Issuance Date), the Trustee shall (as and when specified in the
Delivery Notice) instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary requesting (A) the withdrawal of one or more
Deposits on the Applicable Delivery Date in accordance with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and
(B) the payment of all, or a portion, of such Deposit or Deposits in an amount
equal in the aggregate to the purchase price of such Equipment Notes to or on
behalf of the Owner Trustee or the Company, as the case may be, issuing such
Equipment Notes, all as shall be described in the Delivery Notice; provided
that, if the Issuance Date is an Applicable Delivery Date, such purchase price
shall be paid from a portion of the proceeds of the sale of the Certificates.
The Trustee shall (as and when specified in such Delivery Notice), subject to
the conditions set forth in Section 2 of the Note Purchase Agreement, enter
into and perform its obligations under the Participation Agreement specified in
such Delivery Notice (the "Applicable Participation Agreement") and cause such
certificates, documents and legal opinions relating to the Trustee to be duly
delivered as required by the Applicable Participation Agreement. If at any
time prior to the Applicable Delivery Date, the Trustee receives a notice of
postponement pursuant to Section 2(e) or 2(f) of the Note Purchase Agreement,
then the Trustee shall give the Depositary (with a copy to the Escrow Agent) a
notice of cancellation of such Notice of Purchase Withdrawal relating to such
Deposit or Deposits on such Applicable Delivery Date. Upon satisfaction of the
conditions specified in the Note Purchase Agreement and the Applicable
Participation Agreement, the Trustee shall purchase the applicable Equipment
Notes with the proceeds of the withdrawals of one or more Deposits made on the
Applicable Delivery Date in accordance with the terms of the Deposit Agreement
and the Escrow Agreement (or, if the Issuance Date is Applicable Delivery Date
with respect to such Applicable Participation Agreement, from a portion of the
proceeds of the sale of the Certificates). The purchase price of such
Equipment Notes shall equal the principal amount of such Equipment Notes.
Amounts withdrawn from such Deposit or Deposits in excess of the purchase price
of the
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Equipment Notes or to the extent not applied on the Applicable Delivery Date to
the purchase price of the Equipment Notes, shall be re-deposited by the Trustee
with the Depositary on the Applicable Delivery Date in accordance with the
terms of the Deposit Agreement.
Section 2.02. Withdrawal of Deposits. If any Deposits remain outstanding
on the Business Day next succeeding the Cut-Off Date, (i) (A) the Trustee shall
give the Escrow Agent notice that the Trustee's obligation to purchase
Equipment Notes under the Note Purchase Agreement has terminated and instruct
the Escrow Agent to provide a notice of Final Withdrawal to the Depositary
substantially in the form of Exhibit B to the Deposit Agreement (the "Final
Withdrawal Notice") and (B) the Trustee will make a demand upon the Company
under the Note Purchase Agreement for an amount equal to the Special Redemption
Premium, such payment to be made on the Final Withdrawal Date.
Section 2.03. Acceptance by Trustee. The Trustee, upon the execution and
delivery of this Agreement, acknowledges its acceptance of all right, title and
interest in and to the Trust Property and declares that the Trustee holds and
will hold such right, title and interest for the benefit of all then present
and future Certificateholders, upon the trusts herein set forth. Subject to
Section 7.14, the Trustee shall take all actions reasonably necessary to effect
the registration of all such Equipment Notes in the name of the Subordination
Agent. By its payment for and acceptance of each Certificate issued to it
under this Agreement, each initial Certificateholder as grantor of the Trust
thereby joins in the creation and declaration of the Trust.
Section 2.04. Limitation of Powers. The Trust is constituted solely for
the purpose of making the investment in the Equipment Notes, and, except as set
forth herein, the Trustee shall not be authorized or empowered to acquire any
other investments or engage in any other activities and, in particular, the
Trustee shall not be authorized or empowered to do anything that would cause
such Trust to fail to qualify as a "grantor trust" for federal income tax
purposes (including as subject to this restriction, acquiring any Aircraft (as
defined in the respective Indentures) by bidding such Equipment Notes or
otherwise, or taking any action with respect to any such Aircraft once
acquired).
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ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of Certificates.
(a) The Initial Certificates shall be known as the "7.461% Initial Pass Through
Certificates, Series 1997-1A-0" and the Exchange Certificates shall be known as
the "7.461% Exchange Pass Through Certificates, Series 1997-1A-O", in each
case, of the Trust. Each Certificate will represent a fractional undivided
interest in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Agreement and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
Trustee or the officers executing such Certificates, as evidenced by the
Trustee's or officer's execution of the Certificates. At the Escrow Agent's
request under the Escrow Agreement, the Trustee shall affix the corresponding
Escrow Receipt to each Certificate. In any event, any transfer or exchange of
any Certificate shall also effect a transfer or exchange of the related Escrow
Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of any
Certificate shall be permitted unless the Corresponding Escrow Receipt is
attached thereto and also is so transferred or exchanged. By acceptance of any
Certificate to which an Escrow Receipt is attached, each Holder of such a
Certificate acknowledges and accepts the restrictions on transfer of the Escrow
Receipt set forth herein and in the Escrow Agreement.
(b) The Initial Certificates shall be issued only in fully registered form
without coupons and only in denominations of $100,000 or integral multiples of
$1,000 in excess thereof, except that one Certificate may be issued in a
different denomination. The Exchange Certificates will be issued in
denominations of $1,000 or integral multiples thereof, except that one
Certificate may be issued in a different denomination. Each Certificate shall
be dated the date of its authentication. The aggregate Fractional Undivided
Interest of Certificates shall not at any time exceed $437,876,000.
(c) The Initial Certificates offered and sold in reliance on Rule 144A
shall be issued in the form of one or more
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global Certificates substantially in the form of Exhibit A hereto with such
applicable legends as are provided for in Section 3.02 (each a "Restricted
Global Certificate") duly executed and authenticated by the Trustee as
hereinafter provided. Such Restricted Global Certificates shall be in
registered form and be registered in the name of DTC and deposited with the
Trustee, at its Corporate Trust Office, as custodian for DTC. The aggregate
principal amount of any Restricted Global Certificate may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC for such Restricted Global Certificate, as provided in
Section 3.06 hereof, which adjustments shall be conclusive as to the aggregate
principal amount of any such Global Certificate.
(d) The Initial Certificates offered and sold outside the United States in
reliance on Regulation S shall be issued in the form of one or more global
Certificates substantially in the form of Exhibit A hereto (each a "Regulation
S Global Certificate") duly executed and authenticated by the Trustee as
hereinafter provided. Such Regulation S Global Certificates shall be in
registered form and be registered in the name of DTC and deposited with the
Trustee, at its Corporate Trust Office, as custodian for DTC, for credit
initially and during the Restricted Period (hereinafter defined) to the
respective accounts of beneficial owners of such Certificates (or to such other
accounts as they may direct) at Morgan Guaranty Trust Company of New York,
Brussels office, as operator of Euroclear or Cedel. As used herein, the term
"Restricted Period", with respect to the Regulation S Global Certificates
offered and sold in reliance on Regulation S, means the period of 40
consecutive days beginning on and including the later of (i) the day on which
the Certificates are first offered to persons other than distributors (as
defined in Regulation S) in reliance on Regulation S and (ii) the date of the
closing of the offering under the Certificate Purchase Agreement. The
aggregate principal amount of any Regulation S Global Certificate may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for DTC for such Global Certificate, as provided in
Section 3.06 hereof, which adjustments shall be conclusive as to the aggregate
principal amount of any such Global Certificate. The Restricted Global
Certificate and Regulation S Global Certificate are sometimes collectively
referred to herein as the "Global Certificates".
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(e) Initial Certificates offered and sold to any Institutional Accredited
Investor which is not a QIB in a transaction exempt from registration under the
Securities Act (and other than as described in Section 3.01(d)) shall be issued
substantially in the form of Exhibit A hereto in definitive, fully registered
form without interest coupons with such applicable legends as are provided for
in Section 3.02 (the "Restricted Definitive Certificates") duly executed and
authenticated by the Trustee as hereinafter provided. Certificates issued
pursuant to Section 3.05(b) in exchange for interests in a Regulation S Global
Certificate shall be issued in definitive, fully registered form without
interest coupons (the "Regulation S Definitive Certificates"). The Restricted
Definitive Certificates and the Regulation S Definitive Certificates are
sometimes collectively referred to herein as the "Definitive Certificates".
(f) The Exchange Certificates shall be issued in the form of one or more
global Certificates substantially in the form of Exhibit A hereto (each, a
"Global Exchange Certificate"), except that (i) the Restricted Legend
(hereinafter defined) shall be omitted and (ii) such Exchange Certificates
shall contain such appropriate insertions, omissions, substitutions and other
variations from the form set forth in Exhibit A hereto relating to the nature
of the Exchange Certificates as the Responsible Officer of the Trustee
executing such Exchange Certificates on behalf of the Trust may determine, as
evidenced by such officer's execution on behalf of the Trust of such Exchange
Certificates. Such Global Exchange Certificates shall be in registered form
and be registered in the name of DTC and deposited with the Trustee, at its
Corporate Trust Office, as custodian for DTC. The aggregate principal amount
of any Global Exchange Certificate may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
DTC for such Global Exchange Certificate, which adjustments shall be conclusive
as to the aggregate principal amount of any such Global Exchange Certificate.
Subject to clause (i) and (ii) of the first sentence of this Section 3.01(f),
the terms hereof applicable to Restricted Global Certificates and/or Global
Certificates shall apply to the Global Exchange Certificates, mutatis mutandis.
(g) The definitive Certificates shall be in registered form and shall be
typed, printed, lithographed or engraved or produced by any combination of
these methods or may be produced
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in any other manner, all as determined by the officers executing such
Certificates, as evidenced by their execution of such Certificates.
Section 3.02. Restrictive Legends. All Initial Certificates issued
pursuant to this Agreement for resale pursuant to Rule 144A or offered and sold
to any Institutional Accredited Investor which is not a QIB (including any
Global Certificate issued upon registration of transfer, in exchange for or in
lieu of such Certificates) shall be "Restricted Certificates" and shall bear a
legend to the following effect (the "Restricted Legend") unless the Company and
the Trustee determine otherwise consistent with applicable law:
"THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (c) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH
THIS CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS RESELL OR OTHERWISE TRANSFER THIS
CERTIFICATE EXCEPT (A) TO CONTINENTAL AIRLINES, INC., (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(c) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR
(E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT;
AND (3) AGREES THAT IF IT SHOULD RESELL OR OTHERWISE TRANSFER THIS
CERTIFICATE IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS
TRANSFERRED
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A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH
ANY TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS, THE HOLDER MUST CHECK THE APPROPRIATE BOX
SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS."
Each Global Certificate shall bear the following legend on the face
thereof:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED
TO HEREIN."
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Section 3.03. Authentication of Certificates. (a) On the Issuance Date,
the Trustee shall duly execute, authenticate and deliver Certificates in
authorized denominations equalling in the aggregate the amount set forth, with
respect to the Trust, in Schedule II to the Certificate Purchase Agreement,
evidencing the entire ownership of the Trust, which amount equals the maximum
aggregate principal amount of Equipment Notes which may be purchased by the
Trustee pursuant to the Note Purchase Agreement.
(b) No Certificate shall be entitled to any benefit under this Agreement
or be valid or obligatory for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein executed by the Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. The Trustee shall cause to be kept
at the office or agency to be maintained by it in accordance with the
provisions of Section 7.12 a register (the "Register") of the Certificates in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of such Certificates and of transfers and
exchanges of such Certificates as herein provided. The Trustee shall initially
be the registrar (the "Registrar") for the purpose of registering such
Certificates and transfers and exchanges of such Certificates as herein
provided.
All Certificates issued upon any registration of transfer or exchange of
Certificates shall be valid obligations of the Trust, evidencing the same
interest therein, and entitled to the same benefits under this Trust Agreement,
as the Certificates surrendered upon such registration of transfer or exchange.
A Certificateholder may transfer a Certificate, or request that a
Certificate be exchanged for Certificates in an aggregate Fractional Undivided
Interest equal to the Fractional Undivided Interest of such Certificate
surrendered for exchange of other authorized denominations, by surrender of
such Certificate to the Trustee with the form of transfer notice thereon duly
completed and executed, and otherwise complying with the terms of this
Agreement, including providing evidence of compliance with any restrictions on
transfer, in form
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satisfactory to the Trustee and the Registrar; provided that no exchanges of
Initial Certificates for Exchange Certificates shall occur until an Exchange
Offer Registration Statement shall have been declared effective by the SEC
(notice of which shall be provided to the Trustee by the Company). No such
transfer shall be effected until, and such transferee shall succeed to the
rights of a Certificateholder only upon, final acceptance and registration of
the transfer by the Registrar in the Register. Prior to the registration of
any transfer by a Certificateholder as provided herein, the Trustee shall treat
the person in whose name the Certificate is registered as the owner thereof for
all purposes, and the Trustee shall not be affected by notice to the contrary.
Furthermore, DTC shall, by acceptance of a Global Certificate, agree that
transfers of beneficial interests in such Global Certificate may be effected
only through a book-entry system maintained by DTC (or its agent) and that
ownership of a beneficial interest in the Certificate shall be required to be
reflected in a book-entry. When Certificates are presented to the Registrar
with a request to register the transfer thereof or to exchange them for other
authorized denominations of a Certificate in a Fractional Undivided Interest
equal to the aggregate Fractional Undivided Interest of Certificates
surrendered for exchange, the Registrar shall register the transfer or make the
exchange as requested if its requirements for such transactions are met.
To permit registrations of transfers and exchanges in accordance with the
terms, conditions and restrictions hereof, the Trustee shall execute and
authenticate Certificates at the Registrar's request. No service charge shall
be made to a Certificateholder for any registration of transfer or exchange of
Certificates, but the Trustee shall require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates. All Certificates surrendered for
registration of transfer or exchange shall be canceled and subsequently
destroyed by the Trustee.
Section 3.05. Book-Entry Provisions for Restricted Global Certificates and
Regulation S Global Certificates. (a) Members of, or participants in, DTC
("Agent Members") shall have no rights under this Agreement with respect to any
Global Certificate held on their behalf by DTC, or the Trustee as its
custodian, and DTC may be treated by the Trustee and any agent of the Trustee
as the absolute owner of such Global Certificate for
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all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Trustee or any agent of the Trustee from giving effect to any
written certification, proxy or other authorization furnished by DTC or shall
impair, as between DTC and its Agent Members, the operation of customary
practices governing the exercise of the rights of a holder of any Certificate.
Upon the issuance of any Global Certificate, the Registrar or its duly
appointed agent shall record DTC as the registered holder of such Global
Certificate.
(b) Transfers of any Global Certificate shall be limited to transfers of
such Restricted Global Certificate or Regulation S Global Certificate in whole,
but not in part, to DTC. Beneficial interests in the Restricted Global
Certificate and any Regulation S Global Certificate may be transferred in
accordance with the rules and procedures of DTC and the provisions of Section
3.06. Beneficial interests in a Restricted Global Certificate or a Regulation
S Global Certificate shall be delivered to all beneficial owners thereof in the
form of Restricted Definitive Certificates or Regulation S Definitive
Certificates, as the case may be, if (i) DTC notifies the Trustee that it is
unwilling or unable to continue as depositary for such Restricted Global
Certificate or Regulation S Global Certificate, as the case may be, and a
successor depositary is not appointed by the Trustee within 90 days of such
notice, and (ii) after the occurrence and during the continuance of an Event of
Default, owners of beneficial interests in a Global Certificate with Fractional
Undivided Interests aggregating not less than a majority in interest in the
Trust advise the Trustee, the Company and DTC through Agent Members in writing
that the continuation of a book-entry system through DTC or its successor is no
longer in their best interests.
(c) Any beneficial interest in one of the Global Certificates that is
transferred to a Person who takes delivery in the form of an interest in
another Global Certificate will, upon such transfer, cease to be an interest in
such Global Certificate and become an interest in the other Global Certificate
and, accordingly, will thereafter be subject to all transfer restrictions, if
any, and other procedures applicable to beneficial interests in such other
Global Certificate for as long as it remains such an interest.
(d) In connection with the transfer of an entire Restricted Global
Certificate or an entire Regulation S Global
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Certificate to the beneficial owners thereof pursuant to paragraph (b) of this
Section 3.05, such Restricted Global Certificate or Regulation S Global
Certificate, as the case may be, shall be deemed to be surrendered to the
Trustee for cancellation, and the Trustee shall execute, authenticate and
deliver, to each beneficial owner identified by DTC in exchange for its
beneficial interest in such Restricted Global Certificate or Regulation S
Global Certificate, as the case may be, an equal aggregate principal amount of
Restricted Definitive Certificates or Regulation S Definitive Certificates, as
the case may be, of authorized denominations. None of the Company, the
Registrar, the Paying Agent nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such registration instructions. Upon the issuance of
Definitive Certificates, the Trustee shall recognize the Person in whose name
the Definitive Certificates are registered in the Register as
Certificateholders hereunder. Neither the Company nor the Trustee shall be
liable if the Trustee or the Company is unable to locate a qualified successor
clearing agency.
(e) Any Definitive Certificate delivered in exchange for an interest in
the Restricted Global Certificate pursuant to paragraph (b) of this Section
3.05 shall, except as otherwise provided by paragraph (e) of Section 3.06, bear
the Restricted Legend.
(f) Prior to the expiration of the Restricted Period, any Regulation S
Definitive Certificate delivered in exchange for an interest in a Regulation S
Global Certificate pursuant to paragraph (b) of this Section shall bear the
Restricted Legend.
(g) The registered holder of any Restricted Global Certificate or
Regulation S Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and until (i) an
Initial Certificate is sold under an effective Shelf Registration Statement, or
(ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant
to an effective Exchange Offer Registration Statement, in each case pursuant to
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the terms of the Registration Rights Agreement, the following provisions shall
apply to such Initial Certificates:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Certificate to any Institutional Accredited
Investor which is neither a QIB nor a Non-U.S. Person:
(i) The Registrar shall register the transfer of any
Certificate, whether or not bearing the Restricted Legend, only if
(x) the requested transfer is at least two years after the later of
the original issue date of the Certificates and the last date on
which such Certificate was held by the Company, the Trustee or any
affiliate of any of such Persons or (y) the proposed transferor is
an Initial Purchaser who is transferring Certificates purchased
under the Certificates Purchase Agreement and the proposed
transferee has delivered to the Registrar a letter substantially in
the form of Exhibit C hereto and the aggregate principal amount of
the Certificates being transferred is at least $100,000. Except as
provided in the foregoing clause (y), the Registrar shall not
register the transfer of any Certificate to any Institutional
Accredited Investor which is neither a QIB nor a Non-U.S. Person.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in a Restricted Global Certificate, upon
receipt by the Registrar of (x) the documents, if any, required by
paragraph (i) and (y) instructions given in accordance with DTC's
and the Registrar's procedures, the Registrar shall reflect on its
books and records the date of the transfer and a decrease in the
principal amount of such Restricted Global Certificate in an amount
equal to the principal amount of the beneficial interest in such
Restricted Global Certificate to be transferred, and the Trustee
shall execute, authenticate and deliver to the transferor or at its
direction, one or more Restricted Definitive Certificates of like
tenor and amount.
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(b) Transfers to QIBs. The following provisions shall apply with respect
to the registration of any proposed transfer of an Initial Certificate to a QIB
(excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists of
Restricted Definitive Certificates, or of an interest in any
Regulation S Global Certificate during the Restricted Period, the
Registrar shall register the transfer if such transfer is being
made by a proposed transferor who has checked the box provided for
on the form of Initial Certificate stating, or has otherwise
advised the Trustee and the Registrar in writing, that the sale has
been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the
form of Initial Certificate stating, or has otherwise advised the
Trustee and the Registrar in writing, that it is purchasing the
Initial Certificate for its own account or an account with respect
to which it exercises sole investment discretion and that it, or
the Person on whose behalf it is acting with respect to any such
account, is a QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the
Trust and/or the Company as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A.
(ii) Upon receipt by the Registrar of the documents required
by clause (i) above and instructions given in accordance with DTC's
and the Registrar's procedures therefor, the Registrar shall
reflect on its books and records the date of such transfer and an
increase in the principal amount of a Restricted Global Certificate
in an amount equal to the principal amount of the Restricted
Definitive Certificates or interests in such Regulation S Global
Certificate, as the case may be, being transferred, and the Trustee
shall cancel such Definitive Certificates or decrease the amount of
such Regulation S Global Certificate so transferred.
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(c) Transfers of Interests in the Regulation S Global Certificate or
Regulation S Definitive Certificates. After the expiration of the
Restricted Period, the Registrar shall register any transfer of interests
in any Regulation S Global Certificate or Regulation S Definitive
Certificates without requiring any additional certification. Until the
expiration of the Restricted Period, interests in the Regulation S Global
Certificate may only be held through Agent Members acting for and on
behalf of Euroclear and Cedel.
(d) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any registration of any transfer
of an Initial Certificate to a Non-U.S. Person:
(i) Prior to the expiration of the Restricted Period, the
Registrar shall register any proposed transfer of an Initial
Certificate to a Non-U.S.Person upon receipt of a certificate
substantially in the form set forth as Exhibit B hereto from the
proposed transferor.
(ii) After the expiration of the Restricted Period, the
Registrar shall register any proposed transfer to any Non-U.S.
Person if the Certificate to be transferred is a Restricted
Definitive Certificate or an interest in a Restricted Global
Certificate, upon receipt of a certificate substantially in the
form of Exhibit B from the proposed transferor. The Registrar
shall promptly send a copy of such certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the documents, if
any, required by clause (ii) and (y) instructions in accordance
with DTC's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date of such transfer and a
decrease in the principal amount of such Restricted Global
Certificate in an amount equal to the principal amount of the
beneficial interest in such Restricted Global Certificate to be
transferred, and, upon receipt by the Registrar of instructions
given in accordance with DTC's and the Registrar's procedures, the
Registrar shall reflect on its books and records the
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date and an increase in the principal amount of the Regulation S
Global Certificate in an amount equal to the principal amount of
the Restricted Definitive Certificate or the Restricted Global
Certificate, as the case may be, to be transferred, and the Trustee
shall cancel the Definitive Certificate, if any, so transferred or
decrease the amount of such Restricted Global Certificate.
(e) Restricted Legend. Upon the transfer, exchange or replacement
of Certificates not bearing the Restricted Legend, the Registrar shall
deliver Certificates that do not bear the Restricted Legend. Upon the
transfer, exchange or replacement of Certificates bearing the Restricted
Legend, the Registrar shall deliver only Certificates that bear the
Restricted Legend unless either (i) the circumstances contemplated by
paragraph (d)(ii) of this Section 3.06 exist or (ii) there is delivered
to the Registrar an Opinion of Counsel to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(f) General. By acceptance of any Certificate bearing the
Restricted Legend, each Holder of such a Certificate acknowledges the
restrictions on transfer of such Certificate set forth in this Agreement
and agrees that it will transfer such Certificate only as provided in
this Agreement. The Registrar shall not register a transfer of any
Certificate unless such transfer complies with the restrictions on
transfer, if any, of such Certificate set forth in this Agreement. In
connection with any transfer of Certificates, each Certificateholder
agrees by its acceptance of the Certificates to furnish the Registrar or
the Trustee such certifications, legal opinions or other information as
either of them may reasonably require to confirm that such transfer is
being made pursuant to an exemption from, or a transaction not subject
to, the registration requirements of the Securities Act and in accordance
with the terms and provisions of this Article III; provided that the
Registrar shall not be required to determine the sufficiency of any such
certifications, legal opinions or other information.
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Until such time as no Certificates remain Outstanding, the Registrar shall
retain copies of all letters, notices and other written communications received
pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the
Registrar at such time, shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.
Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate is surrendered to the Registrar or the Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Registrar and the Trustee such
security, indemnity or bond, as may be required by them to save each of them
harmless, then, in the absence of notice to the Registrar or the Trustee that
such destroyed, lost or stolen Certificate has been acquired by a bona fide
purchaser, and provided that the requirements of Section 8-405 of the Uniform
Commercial Code in effect in any applicable jurisdiction are met, the Trustee
shall execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate or
Certificates, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate under this Section
3.07, the Trustee may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee and the
Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
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Section 3.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent may treat the Person in whose name any Certificate is registered
(as of the day of determination) as the owner of such Certificate for the
purpose of receiving distributions pursuant to Article IV and for all other
purposes whatsoever, and none of the Trustee, the Registrar or any Paying Agent
shall be affected by any notice to the contrary.
Section 3.09. Cancellation. All Certificates surrendered for payment or
transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for
cancellation and shall promptly be canceled by it. No Certificates shall be
authenticated in lieu of or in exchange for any Certificates canceled as
provided in this Section, except as expressly permitted by this Agreement. All
canceled Certificates held by the Registrar shall be destroyed and a
certification of their destruction delivered to the Trustee.
Section 3.10. Temporary Certificates. Until definitive Certificates are
ready for delivery, the Trustee shall authenticate temporary Certificates.
Temporary Certificates shall be substantially in the form of definitive
Certificates but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the officers executing the temporary
Certificates, as evidenced by their execution of such temporary Certificates.
If temporary Certificates are issued, the Trustee will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation
of definitive Certificates, the temporary Certificates shall be exchangeable
for definitive Certificates upon surrender of the temporary Certificates at the
office or agency of the Trustee designated for such purpose pursuant to Section
7.12, without charge to the Certificateholder. Upon surrender for cancellation
of any one or more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount of definitive
Certificates of authorized denominations. Until so exchanged, the temporary
Certificates shall be entitled to the same benefits under this Agreement as
definitive Certificates.
Section 3.11. Limitation of Liability for Payments. All payments and
distributions made to Certificateholders in
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respect of the Certificates shall be made only from the Trust Property and only
to the extent that the Trustee shall have sufficient income or proceeds from
the Trust Property to make such payments in accordance with the terms of
Article IV of this Agreement. Each Certificateholder, by its acceptance of a
Certificate, agrees that it will look solely to the income and proceeds from
the Trust Property for any payment or distribution due to such
Certificateholder pursuant to the terms of this Agreement and that it will not
have any recourse to the Company, the Trustee, the Loan Trustees, the Liquidity
Providers, the Owner Trustees or the Owner Participants, except as otherwise
expressly provided herein or in the Intercreditor Agreement.
The Company is a party to this Agreement solely for purposes of meeting
the requirements of the Trust Indenture Act, and therefore shall not have any
right, obligation or liability hereunder (except as otherwise expressly
provided herein).
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments Account. (a) The
Trustee shall establish and maintain on behalf of the Certificateholders a
Certificate Account as one or more non-interest-bearing accounts. The Trustee
shall hold the Certificate Account in trust for the benefit of the
Certificateholders, and shall make or permit withdrawals therefrom only as
provided in this Agreement. On each day when a Scheduled Payment is made to
the Trustee under the Intercreditor Agreement, the Trustee upon receipt thereof
shall immediately deposit the aggregate amount of such Scheduled Payment in the
Certificate Account.
(b) The Trustee shall establish and maintain on behalf of the
Certificateholders a Special Payments Account as one or more accounts, which
shall be non-interest bearing except as provided in Section 4.04. The Trustee
shall hold the Special Payments Account in trust for the benefit of the
Certificateholders and shall make or permit withdrawals therefrom only as
provided in this Agreement. On each day when one or more Special Payments are
made to the Trustee under the Intercreditor Agreement and upon the payment of
the Special Redemption Premium to the Trustee under the Note Purchase
Agreement, the Trustee,
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upon receipt thereof, shall immediately deposit the aggregate amount of such
Special Payments in the Special Payments Account.
(c) The Trustee shall cause the Subordination Agent to present to the
related Loan Trustee of each Equipment Note such Equipment Note on the date of
its stated final maturity or, in the case of any Equipment Note which is to be
redeemed in whole pursuant to the related Indenture, on the applicable
redemption date under such Indenture.
Section 4.02. Distributions from Certificate Account and Special Payments
Account. (a) On each Regular Distribution Date or as soon thereafter as the
Trustee has confirmed receipt of the payment of all or any part of the
Scheduled Payments due on such date, the Trustee shall distribute out of the
Certificate Account the entire amount deposited therein pursuant to Section
4.01(a). There shall be so distributed to each Certificateholder of record on
the Record Date with respect to such Regular Distribution Date (other than as
provided in Section 11.01 concerning the final distribution) by check mailed to
such Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional Undivided Interest
in the Trust held by such Certificateholder) of the total amount in the
Certificate Account, except that, with respect to Certificates registered on
the Record Date in the name of DTC, such distribution shall be made by wire
transfer in immediately available funds to the account designated by DTC.
(b) On each Special Distribution Date with respect to any Special Payment
or as soon thereafter as the Trustee has confirmed receipt of any Special
Payments due on the Equipment Notes held in the related Trust or realized upon
the sale of such Equipment Notes or receipt of the Special Redemption Premium,
the Trustee shall distribute out of the Special Payments Account the entire
amount of such Special Payment deposited therein pursuant to Section 4.01(b).
There shall be so distributed to each Certificateholder of record on the Record
Date with respect to such Special Distribution Date (other than as provided in
Section 11.01 concerning the final distribution) by check mailed to such
Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional Undivided Interest
in the Trust held by such Certificateholder) of the total amount in the Special
Payments Account on account of such Special Payment, except that, with
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respect to Certificates registered on the Record Date in the name of DTC, such
distribution shall be made by wire transfer in immediately available funds to
the account designated by DTC.
(c) The Trustee shall, at the expense of the Company, cause notice of each
Special Payment to be mailed to each Certificateholder at his address as it
appears in the Register. In the event of redemption or purchase of Equipment
Notes held in the Trust, such notice shall be mailed not less than 20 days
prior to the Special Distribution Date for the Special Payment resulting from
such redemption or purchase, which Special Distribution Date shall be the date
of such redemption or purchase. In the event of the payment of a Special
Redemption Premium by the Company to the Trustee under the Note Purchase
Agreement, such notice shall be mailed, together with the notice by the Escrow
Paying Agent under Section 2.06 of the Escrow Agreement, not less than 20 days
prior to the Special Distribution Date for such amount, which Special
Distribution Date shall be the Final Withdrawal Date. In the case of any other
Special Payments, such notice shall be mailed as soon as practicable after the
Trustee has confirmed that it has received funds for such Special Payment,
stating the Special Distribution Date for such Special Payment which shall
occur not less than 20 days after the date of such notice and as soon as
practicable thereafter. Notices mailed by the Trustee shall set forth:
(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment for each $1,000 face
amount Certificate and the amount thereof constituting principal,
premium, if any, and interest,
(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the same date as a
Regular Distribution Date, the total amount to be received on such
date for each $1,000 face amount Certificate.
If the amount of (i) premium, if any, payable upon the redemption or purchase
of an Equipment Note or (ii) the Special Redemption Premium, if any, has not
been calculated at the time that the Trustee mails notice of a Special Payment,
it shall be sufficient
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if the notice sets forth the other amounts to be distributed and states that
any premium received will also be distributed.
If any redemption of the Equipment Notes held in the Trust is canceled,
the Trustee, as soon as possible after learning thereof, shall cause notice
thereof to be mailed to each Certificateholder at its address as it appears on
the Register.
Section 4.03. Statements to Certificateholders. (a) On each Distribution
Date, the Trustee will include with each distribution to Certificateholders of
a Scheduled Payment or Special Payment, as the case may be, a statement setting
forth the information provided below (in the case of a Special Payment,
including any Special Redemption Premium, reflecting in part the information
provided by the Escrow Paying Agent under the Escrow Agreement). Such
statement shall set forth (per $1,000 face amount Certificate as to (ii),
(iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on such
Distribution Date hereunder and under the Escrow Agreement,
indicating the amount allocable to each source;
(ii) the amount of such distribution hereunder allocable to
principal and the amount allocable to premium (including the
Special Redemption Premium), if any;
(iii) the amount of such distribution hereunder allocable to
interest; and
(iv) the amount of such distribution under the Escrow
Agreement allocable to interest;
(v) the amount of such distribution under the Escrow Agreement
allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of DTC, on the
Record Date prior to each Distribution Date, the Trustee will request from DTC
a securities position listing setting forth the names of all Agent Members
reflected on DTC's books as holding interests in the Certificates on such
Record Date. On each Distribution Date, the Trustee will mail to
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each such Agent Member the statement described above and will make available
additional copies as requested by such Agent Member for forwarding to holders
of interests in the Certificates.
(b) Within a reasonable period of time after the end of each calendar year
but not later than the latest date permitted by law, the Trustee shall furnish
to each Person who at any time during such calendar year was a
Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above for such calendar year or, in the event such Person was a
Certificateholder of record during a portion of such calendar year, for such
portion of such year, and such other items as are readily available to the
Trustee and which a Certificateholder shall reasonably request as necessary for
the purpose of such Certificateholder's preparation of its federal income tax
returns. Such statement and such other items shall be prepared on the basis of
information supplied to the Trustee by the Agent Members and shall be delivered
by the Trustee to such Agent Members to be available for forwarding by such
Agent Members to the holders of interests in the Certificates in the manner
described in Section 4.03(a).
(c) Promptly following (i) the Delivery Period Termination Date, if there
has been any change in the information set forth in clauses (x), (y) and (z)
below from that set forth in page 81 of the Offering Circular, and (ii) any
early redemption of purchase of, or any default in the payment of principal or
interest in respect of, any of the Equipment Notes held in the Trust, or any
Final Withdrawal, the Trustee shall furnish to Certificateholders of record on
such date a statement setting forth (x) the expected Pool Balances for each
subsequent Regular Distribution Date following the Delivery Period Termination
Date, (y) the related Pool Factors for such Regular Distribution Dates and (z)
the expected principal distribution schedule of the Equipment Notes, in the
aggregate, held as Trust Property at the date of such notice. With respect to
the Certificates registered in the name of DTC, on the Delivery Period
Termination Date, the Trustee will request from DTC a securities position
listing setting forth the names of all Agent Members reflected on DTC's books
as holding interests in the Certificates on such date. The Trustee will mail
to each such Agent Member the statement described above and will make
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available additional copies as requested by such Agent Member for forwarding to
holders of interests in the Certificates.
Section 4.04. Investment of Special Payment Moneys. Any money received by
the Trustee pursuant to Section 4.01(b) representing a Special Payment which is
not distributed on the date received shall, to the extent practicable, be
invested in Permitted Investments by the Trustee pending distribution of such
Special Payment pursuant to Section 4.02. Any investment made pursuant to this
Section 4.04 shall be in such Permitted Investments having maturities not later
than the date that such moneys are required to be used to make the payment
required under Section 4.02 on the applicable Special Distribution Date and the
Trustee shall hold any such Permitted Investments until maturity. The Trustee
shall have no liability with respect to any investment made pursuant to this
Section 4.04, other than by reason of the willful misconduct or negligence of
the Trustee. All income and earnings from such investments shall be
distributed on such Special Distribution Date as part of such Special Payment.
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence. The Company, at its own
cost and expense, will do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence, rights and
franchises, except as otherwise specifically permitted in Section 5.02;
provided, however, that the Company shall not be required to preserve any right
or franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company.
Section 5.02. Consolidation, Merger, etc. The Company shall not
consolidate with or merge into any other corporation or convey, transfer or
lease substantially all of its assets as an entirety to any Person unless:
(a) the corporation formed by such consolidation or into which the Company
is merged or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety shall be (i)
organized and validly existing under the laws of the United States of America
or any
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state thereof or the District of Columbia, (ii) a "citizen of the United
States" as defined in 49 U.S.C. 40102(a)(15), as amended, and (iii) a United
States certificated air carrier, if and so long as such status is a condition
of entitlement to the benefits of Section 1110 of the Bankruptcy Reform Act of
1978, as amended (11 U.S.C. Section 1110), with respect to the Leases;
(b) the corporation formed by such consolidation or into which the Company
is merged or the Person which acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety shall execute and
deliver to the Trustee a duly authorized, valid, binding and enforceable
agreement in form and substance reasonably satisfactory to the Trustee
containing an assumption by such successor corporation or Person of the due and
punctual performance and observance of each covenant and condition of this
Agreement, the Other Pass Through Trust Agreements and each Financing Document
to be performed or observed by the Company; and
(c) the Company shall have delivered to the Trustee an Officer's
Certificate of the Company and an Opinion of Counsel of the Company reasonably
satisfactory to the Trustee, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement mentioned in clause
(b) above comply with this Section 5.02 and that all conditions precedent
herein provided for relating to such transaction have been complied with.
Upon any consolidation or merger, or any conveyance, transfer or lease of
substantially all of the assets of the Company as an entirety in accordance
with this Section 5.02, the successor corporation or Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Agreement with the
same effect as if such successor corporation or Person had been named as the
Company herein. No such conveyance, transfer or lease of substantially all of
the assets of the Company as an entirety shall have the effect of releasing any
successor corporation or Person which shall have become such in the manner
prescribed in this Section 5.02 from its liability in respect of this Agreement
and any Financing Document to which it is a party.
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ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of Remedies. Upon the
occurrence and during the continuation of any Indenture Default under any
Indenture, the Trustee may, to the extent it is the Controlling Party at such
time (as determined pursuant to the Intercreditor Agreement), direct the
exercise of remedies as provided in the Intercreditor Agreement.
(b) Purchase Rights of Certificateholders. By acceptance of its
Certificate, each Certificateholder agrees that at any time after the
occurrence and during the continuation of a Triggering Event,
(i) each Class B Certificateholder shall have the right to
purchase all, but not less than all, of the Certificates upon ten
days' written notice to the Trustee and each other Class B
Certificateholder, provided that (A) if prior to the end of such
ten-day period any other Class B Certificateholder notifies such
purchasing Class B Certificateholder that such other Class B
Certificateholder wants to participate in such purchase, then such
other Class B Certificateholder may join with the purchasing Class
B Certificateholder to purchase all, but not less than all, of the
Certificates pro rata based on the Fractional Undivided Interest in
the Class B Trust held by each such Class B Certificateholder and
(B) if prior to the end of such ten-day period any other Class B
Certificateholder fails to notify the purchasing Class B
Certificateholder of such other Class B Certificateholder's desire
to participate in such a purchase, then such other Class B
Certificateholder shall lose its right to purchase the Certificates
pursuant to this Section 6.01(b); and
(ii) each holder of a Class C-I Certificate or a Class C-II
Certificate (a "Class C Certificateholder") shall have the right
(which shall not expire upon any purchase of the Certificates
pursuant to clause (i) above) to purchase all, but not less than
all, of the Certificates and the Class B Certificates upon ten
days' written notice to the Trustee, the Class B
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Trustee and each other Class C Certificateholder, provided that (A)
if prior to the end of such ten-day period any other Class C
Certificateholder notifies such purchasing Class C
Certificateholder that such other Class C Certificateholder wants
to participate in such purchase, then such other Class C
Certificateholder may join with the purchasing Class C
Certificateholder to purchase all, but not less than all, of the
Certificates and the Class B Certificates pro rata based on the
Fractional Undivided Interest in the Class C-I Trust and the Class
C-II Trust, taken as a whole, held by each such Class C
Certificateholder and (B) if prior to the end of such ten-day
period any other Class C Certificateholder fails to notify the
purchasing Class C Certificateholder of such other Class C
Certificateholder's desire to participate in such a purchase, then
such other Class C Certificateholder shall lose its right to
purchase the Certificates pursuant to this Section 6.01(b).
The purchase price with respect to the Certificates shall be equal to the
Pool Balance of the Certificates, together with accrued and unpaid interest
thereon to the date of such purchase, without premium, but including any other
amounts then due and payable to the Certificateholders under this Agreement,
the Intercreditor Agreement, the Escrow Agreement or any Financing Document or
on or in respect of the Certificates; provided, however, that (i) if such
purchase occurs after the record date specified in Section 2.03(b) of the
Escrow Agreement relating to the distribution of unused Deposits and accrued
and unpaid interest thereunder, such purchase price shall be reduced by the
aggregate amount of unused Deposits and interest to be distributed under the
Escrow Agreement (which deducted amounts shall remain distributable to, and may
be retained by, the Certificateholder as of such Record Date) and (ii) if such
purchase occurs after a Record Date, such purchase price shall be reduced by
the amount to be distributed hereunder on the related Distribution Date (which
deducted amounts shall remain distributable to, and may be retained by, the
Certificateholder as of such Record Date); provided, further, that no such
purchase of Certificates shall be effective unless the purchaser(s) shall
certify to the Trustee that contemporaneously with such purchase, such
purchaser(s) is purchasing, pursuant to the terms of this Agreement and the
Other Pass Through Trust Agreements, the Certificates and the Class B
Certificates which are senior to the
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securities held by such purchaser(s). Each payment of the purchase price of
the Certificates referred to in the first sentence hereof shall be made to an
account or accounts designated by the Trustee and each such purchase shall be
subject to the terms of this Section 6.01(b). Each Certificateholder agrees by
its acceptance of its Certificate that it will, subject to Section 3.04 hereof,
upon payment from such Class B Certificateholder(s) or Class C
Certificateholder(s), as the case may be, of the purchase price set forth in
the first sentence of this paragraph, forthwith sell, assign, transfer and
convey to the purchaser(s) thereof (without recourse, representation or
warranty of any kind except for its own acts), all of the right, title,
interest and obligation of such Certificateholder in this Agreement, the Escrow
Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity
Facility, the Financing Documents and all Certificates and Escrow Receipts held
by such Certificateholder (excluding all right, title and interest under any of
the foregoing to the extent such right, title or interest is with respect to an
obligation not then due and payable as respects any action or inaction or state
of affairs occurring prior to such sale) and the purchaser shall assume all of
such Certificateholder's obligations under this Agreement, the Escrow
Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity
Facility, the Financing Documents and all such Certificates and Escrow
Receipts. The Certificates will be deemed to be purchased on the date payment
of the purchase price is made notwithstanding the failure of the
Certificateholders to deliver any Certificates (whether in the form of
Definitive Certificates or beneficial interests in Global Certificates) and,
upon such a purchase, (i) the only rights of the Certificateholders will be to
deliver the Certificates to the purchaser(s) and receive the purchase price for
such Certificates and (ii) if the purchaser(s) shall so request, such
Certificateholder will comply with all the provisions of Section 3.04 hereof to
enable new Certificates to be issued to the purchaser in such denominations as
it shall request. All charges and expenses in connection with the issuance of
any such new Certificates shall be borne by the purchaser thereof.
As used in this Section 6.01(b), the terms "Certificateholder", "Class",
"Class B Certificate", "Class B Certificateholder", "Class B Trust", "Class B
Trustee",
"Class C-I Certificate", "Class C-II Certificate", "Class C-I Trust" and
"Class C-II Trust", shall have the
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respective meanings assigned to such terms in the Intercreditor Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of all
or any part of the Equipment Notes made either under the power of sale given
under this Agreement or otherwise for the enforcement of this Agreement, the
following shall be applicable:
(1) Certificateholders and Trustee May Purchase Equipment Notes. Any
Certificateholder, the Trustee in its individual or any other capacity or any
other Person may bid for and purchase any of the Equipment Notes, and upon
compliance with the terms of sale, may hold, retain, possess and dispose of
such Equipment Notes in their own absolute right without further
accountability.
(2) Receipt of Trustee Shall Discharge Purchaser. The receipt of the
Trustee making such sale shall be a sufficient discharge to any purchaser for
his purchase money, and, after paying such purchase money and receiving such
receipt, such purchaser or its personal representative or assigns shall not
be obliged to see to the application of such purchase money, or be in any way
answerable for any loss, misapplication or non-application thereof.
(3) Application of Moneys Received upon Sale. Any moneys collected by the
Trustee upon any sale made either under the power of sale given by this
Agreement or otherwise for the enforcement of this Agreement shall be applied
as provided in Section 4.02.
Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May
Bring Suit. If there shall be a failure to make payment of the principal of,
premium, if any, or interest on any Equipment Note, or if there shall be any
failure to pay Rent (as defined in the relevant Lease) under any Lease when due
and payable, then the Trustee, in its own name and as trustee of an express
trust, as holder of such Equipment Notes, to the extent permitted by and in
accordance with the terms of the Intercreditor Agreement and the Financing
Documents (subject to the rights of the applicable Owner Trustee or Owner
Participant to cure any such failure to pay principal of, premium, if any, or
interest on any Equipment Note or to pay Rent under any Lease in accordance
with the applicable Indenture), shall be entitled and
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empowered to institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on such Equipment
Notes or under such Lease and may prosecute any such claim or proceeding to
judgment or final decree with respect to the whole amount of any such sums so
due and unpaid.
Section 6.04. Control by Certificateholders. Subject to Section 6.03 and
the Intercreditor Agreement, the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee with
respect to the Trust or pursuant to the terms of the Intercreditor Agreement,
or exercising any trust or power conferred on the Trustee under this Agreement
or the Intercreditor Agreement, including any right of the Trustee as
Controlling Party under the Intercreditor Agreement or as holder of the
Equipment Notes, provided that
(1) such Direction shall not be in conflict with any rule of law or with
this Agreement and would not involve the Trustee in personal liability or
expense,
(2) the Trustee shall not determine that the action so directed would be
unjustly prejudicial to the Certificateholders not taking part in such
Direction, and
(3) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such Direction.
Section 6.05. Waiver of Past Defaults. Subject to the Intercreditor
Agreement, the Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in the
Trust (i) may on behalf of all of the Certificateholders waive any past Event
of Default hereunder and its consequences or (ii) if the Trustee is the
Controlling Party, may direct the Trustee to instruct the applicable Loan
Trustee to waive any past Indenture Default under any Indenture and its
consequences, and thereby annul any Direction given by such Certificateholders
or the Trustee to such Loan Trustee with respect thereto, except a default:
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(1) in the deposit of any Scheduled Payment or Special Payment under
Section 4.01 or in the distribution of any payment under Section 4.02 on the
Certificates, or
(2) in the payment of the principal of (premium, if any) or interest on
the Equipment Notes, or
(3) in respect of a covenant or provision hereof which under Article IX
cannot be modified or amended without the consent of each Certificateholder
holding an Outstanding Certificate affected thereby.
Upon any such waiver, such default shall cease to exist with respect to
the Certificates and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose and any direction given by the Trustee on
behalf of the Certificateholders to the relevant Loan Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon. Upon
any such waiver, the Trustee shall vote the Equipment Notes issued under the
relevant Indenture to waive the corresponding Indenture Default.
Section 6.06. Right of Certificateholders to Receive Payments Not to Be
Impaired. Anything in this Agreement to the contrary notwithstanding,
including, without limitation, Section 6.07 hereof, but subject to the
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
Certificates when due, or to institute suit for the enforcement of any such
payment on or after the applicable Regular Distribution Date or Special
Distribution Date, shall not be impaired or affected without the consent of
such Certificateholder.
Section 6.07. Certificateholders May Not Bring Suit Except Under Certain
Conditions. A Certificateholder shall not have the right to institute any
suit, action or proceeding at law or in equity or otherwise with respect to
this Agreement, for the appointment of a receiver or for the enforcement of any
other remedy under this Agreement, unless:
(1) such Certificateholder previously shall have given written notice to
the Trustee of a continuing Event of Default;
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(2) Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the Trust shall have
requested the Trustee in writing to institute such action, suit or proceeding
and shall have offered to the Trustee indemnity as provided in Section
7.03(e);
(3) the Trustee shall have refused or neglected to institute such an
action, suit or proceeding for 60 days after receipt of such notice, request
and offer of indemnity; and
(4) no direction inconsistent with such written request shall have been
given to the Trustee during such 60-day period by Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on
any property subject thereto, or the rights of the Certificateholders or the
holders of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder or (iii) enforce
any right under this Agreement, except in the manner herein provided and for
the equal, ratable and common benefit of all the Certificateholders subject to
the provisions of this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given hereunder to the
Trustee or to any of the Certificateholders shall not be exclusive of any other
remedy or remedies, and every such remedy shall be cumulative and in addition
to every other remedy given hereunder or now or hereafter given by statute,
law, equity or otherwise.
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. (a) Except during the
continuance of an Event of Default, the Trustee undertakes to perform such
duties as are specifically set
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forth in this Agreement, and no implied covenants or obligations shall be read
into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of its
own affairs.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every provision of this
Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 7.02. Notice of Defaults. As promptly as practicable after, and
in any event within 90 days after, the occurrence of any default (as such term
is defined below) hereunder, the Trustee shall transmit by mail to the Company,
the Owner Trustees, the Owner Participants, the Loan Trustees and the
Certificateholders in accordance with Section 313(c) of the Trust Indenture
Act, notice of such default hereunder known to the Trustee, unless such default
shall have been cured or waived; provided, however, that, except in the case of
a default on the payment of the principal, premium, if any, or interest on any
Equipment Note held in the Trust, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee
or a trust committee of directors and/or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interests of
the Certificateholders. For the purpose of this Section, the term "default"
means any event that is, or after notice or lapse of time or both would become,
an Event of Default.
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Section 7.03. Certain Rights of Trustee. Subject to the provisions of
Section 315 of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting in reliance upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a written description of the subject matter thereof
accompanied by an Officer's Certificate and an Opinion of Counsel as provided
in Section 1.02 of this Agreement;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officer's Certificate of the Company, any Owner Trustee or
any Loan Trustee;
(d) the Trustee may consult with counsel and the advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement at the Direction of any of the
Certificateholders pursuant to this Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or indemnity against the
cost, expenses and liabilities which might be incurred by it in compliance with
such Direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document;
(g) the Trustee may execute any of the trusts or powers under this
Agreement or perform any duties under this
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Agreement either directly or by or through agents or attorneys, and the Trustee
shall not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it under this Agreement;
(h) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the Direction of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement; and
(i) the Trustee shall not be required to expend or risk its own funds in
the performance of any of its duties under this Agreement, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
is not reasonably assured to it.
Section 7.04. Not Responsible for Recitals or Issuance of Certificates.
The recitals contained herein and in the Certificates, except the certificates
of authentication, shall not be taken as the statements of the Trustee, and the
Trustee assumes no responsibility for their correctness. Subject to Section
7.15, the Trustee makes no representations as to the validity or sufficiency of
this Agreement, any Equipment Notes, the Intercreditor Agreement, the Deposit
Agreement, the Escrow Agreement, the Certificates or any other Financing
Document, except that the Trustee hereby represents and warrants that this
Agreement has been, and the Intercreditor Agreement, the Registration Rights
Agreement, the Note Purchase Agreement, the Escrow Agreement and each
Certificate will be, executed, authenticated and delivered by one of its
officers who is duly authorized to execute, authenticate and deliver such
document on its behalf.
Section 7.05. May Hold Certificates. The Trustee, any Paying Agent,
Registrar or any of their Affiliates or any other agent in their respective
individual or any other capacity may become the owner or pledgee of
Certificates and, subject to Sections 310(b) and 311 of the Trust Indenture
Act, if applicable, may otherwise deal with the Company, the Owner
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Trustees or the Loan Trustees with the same rights it would have if it were not
Trustee, Paying Agent, Registrar or such other agent.
Section 7.06. Money Held in Trust. Money held by the Trustee or the
Paying Agent in trust hereunder need not be segregated from other funds except
to the extent required herein or by law and neither the Trustee nor the Paying
Agent shall have any liability for interest upon any such moneys except as
provided for herein.
Section 7.07. Compensation and Reimbursement. The Company agrees:
(1) to pay, or cause to be paid, to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse, or cause
to be reimbursed, the Trustee upon its request for all reasonable
out-of-pocket expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Agreement (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence, willful misconduct or bad faith or as may be
incurred due to the Trustee's breach of its representations and warranties
set forth in Section 7.15; and
(3) to indemnify, or cause to be indemnified, the Trustee for, and to hold
it harmless against, any loss, liability or expense (other than for or with
respect to any tax) incurred without negligence, willful misconduct or bad
faith, on its part, arising out of or in connection with the acceptance or
administration of this Trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except for any such
loss, liability or expense incurred by reason of the Trustee's breach of its
representations and warranties set forth in Section 7.15; provided, however,
that the foregoing paragraph (3) shall cease to have any further force or
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effect upon the execution and delivery by the Trustee of any Participation
Agreement.
With respect to paragraph (3) above, the Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. The Company shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee
may have separate counsel with the consent of the Company and the Company will
pay the reasonable fees and expenses of such counsel. The Company need not pay
for any settlement made, in settlement or otherwise, without its consent.
The Trustee shall be entitled to reimbursement from, and shall have a lien
prior to the Certificates upon, the Trust Property for any tax incurred without
negligence, bad faith or willful misconduct, on its part, arising out of or in
connection with the acceptance or administration of such Trust (other than any
tax attributable to the Trustee's compensation for serving as such), including
any costs and expenses incurred in contesting the imposition of any such tax.
If the Trustee reimburses itself from the Trust Property of such Trust for any
such tax, it will mail a brief report within 30 days setting forth the
circumstances thereof to all Certificateholders as their names and addresses
appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall at all
times be a Trustee hereunder which shall be eligible to act as a trustee under
Section 310(a) of the Trust Indenture Act and shall have a combined capital and
surplus of at least $75,000,000 (or a combined capital and surplus in excess of
$5,000,000 and the obligations of which, whether now in existence or hereafter
incurred, are fully and unconditionally guaranteed by a corporation organized
and doing business under the laws of the United States, any state or territory
thereof or of the District of Columbia and having a combined capital and
surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of
federal, state, territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section 7.08, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of conditions so published.
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In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 7.08 to act as Trustee, the Trustee shall
resign immediately as Trustee in the manner and with the effect specified in
Section 7.09.
Section 7.09. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by giving prior written
notice thereof to the Company, the Authorized Agents, the Owner Trustees and
the Loan Trustees. If an instrument of acceptance by a successor Trustee shall
not have been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan Trustees and the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Direction of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee and to the Company, the Owner Trustees and the Loan
Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310 of the Trust
Indenture Act, if applicable, after written request therefor by the Company
or by any Certificateholder who has been a bona fide Certificateholder for at
least six months; or
(2) the Trustee shall cease to be eligible under Section 7.08 and shall
fail to resign after written request therefor by the Company or by any such
Certificateholder; or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;
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then, in any case, (i) the Company may, with the consent of the Owner
Participants, which consent may not be unreasonably withheld, remove the
Trustee or (ii) any Certificateholder who has been a bona fide
Certificateholder for at least six months may, on behalf of itself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall obtain actual knowledge
of an Avoidable Tax which has been or is likely to be asserted, the Trustee
shall promptly notify the Company and shall, within 30 days of such
notification, resign hereunder unless within such 30-day period the Trustee
shall have received notice that the Company has agreed to pay such tax. The
Company shall promptly appoint a successor Trustee in a jurisdiction where
there are no Avoidable Taxes.
(f) If the Trustee shall resign, be removed or become incapable of acting
or if a vacancy shall occur in the office of the Trustee for any cause, the
Company shall promptly appoint a successor Trustee. If, within one year after
such resignation, removal or incapability, or other occurrence of such vacancy,
a successor Trustee shall be appointed by Direction of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust delivered to the Company, the
Owner Trustees, the Loan Trustees and the retiring Trustee, and the Company
approves such appointment, which approval shall not be unreasonably withheld,
then the successor Trustee so appointed shall, forthwith upon its acceptance of
such appointment, become the successor Trustee and supersede the successor
Trustee appointed as provided above. If no successor Trustee shall have been
so appointed as provided above and accepted appointment in the manner
hereinafter provided, any Certificateholder who has been a bona fide
Certificateholder for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(g) The successor Trustee shall give notice of the resignation and removal
of the Trustee and appointment of the successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the
Certificateholders as their names and addresses appear in the Register. Each
notice
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shall include the name of such successor Trustee and the address of its
Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor. Every successor
Trustee appointed hereunder shall execute and deliver to the Company, the
Authorized Agents, the Owner Trustees and the Loan Trustees and to the retiring
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on
request of the Company or the successor Trustee, such retiring Trustee shall
execute and deliver an instrument transferring to such successor Trustee all
such rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all Trust Property held by such
retiring Trustee hereunder, subject nevertheless to its lien, if any, provided
for in Section 7.07. Upon request of any such successor Trustee, the Company,
the retiring Trustee and such successor Trustee shall execute and deliver any
and all instruments containing such provisions as shall be necessary or
desirable to transfer and confirm to, and for more fully and certainly vesting
in, such successor Trustee all such rights, powers and trusts.
No institution shall accept its appointment as a Trustee hereunder unless
at the time of such acceptance such institution shall be qualified and eligible
under this Article VII.
Section 7.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article VII, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Certificates shall have
been executed or authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such execution or authentication and deliver
the Certificates so
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executed or authenticated with the same effect as if such successor Trustee had
itself executed or authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at all times be
maintained an office or agency in the location set forth in Section 12.03 where
Certificates may be presented or surrendered for registration of transfer or
for exchange, and for payment thereof and where notices and demands to or upon
the Trustee in respect of such certificates or this Agreement may be served;
provided, however, that, if it shall be necessary that the Trustee maintain an
office or agency in another location (e.g., the Certificates shall be
represented by Definitive Certificates and shall be listed on a national
securities exchange), the Trustee will make all reasonable efforts to establish
such an office or agency. Written notice of the location of each such other
office or agency and of any change of location thereof shall be given by the
Trustee to the Company, the Owner Trustees, the Loan Trustees (in the case of
any Owner Trustee or Loan Trustee, at its address specified in the Financing
Documents or such other address as may be notified to the Trustee) and the
Certificateholders. In the event that no such office or agency shall be
maintained or no such notice of location or of change of location shall be
given, presentations and demands may be made and notices may be served at the
Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a Paying Agent hereunder
with respect to the Certificates. Each such Authorized Agent shall be a bank
or trust company, shall be a corporation organized and doing business under the
laws of the United States or any state, with a combined capital and surplus of
at least $75,000,000, or, if the Trustee shall be acting as the Registrar or
Paying Agent hereunder, a corporation having a combined capital and surplus in
excess of $5,000,000, the obligations of which are guaranteed by a corporation
organized and doing business under the laws of the United States or any state,
with a combined capital and surplus of at least $75,000,000, and shall be
authorized under such laws to exercise corporate trust powers, subject to
supervision by Federal or state authorities. The Trustee shall initially be
the Paying Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. Each Registrar shall furnish to the Trustee, at
stated intervals of not more than six months, and at
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such other times as the Trustee may request in writing, a copy of the Register
maintained by such Registrar.
(c) Any corporation into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authorized Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authorized Agent, shall be the successor of such Authorized Agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or such Authorized Agent or such successor
corporation.
(d) Any Authorized Agent may at any time resign by giving written notice
of resignation to the Trustee, the Company, the Owner Trustees and the Loan
Trustees. The Company may, and at the request of the Trustee shall, at any
time terminate the agency of any Authorized Agent by giving written notice of
termination to such Authorized Agent and to the Trustee. Upon the resignation
or termination of an Authorized Agent or in case at any time any such
Authorized Agent shall cease to be eligible under this Section (when, in either
case, no other Authorized Agent performing the functions of such Authorized
Agent shall have been appointed), the Company shall promptly appoint one or
more qualified successor Authorized Agents, reasonably satisfactory to the
Trustee, to perform the functions of the Authorized Agent which has resigned or
whose agency has been terminated or who shall have ceased to be eligible under
this Section. The Company shall give written notice of any such appointment
made by it to the Trustee, the Owner Trustees and the Loan Trustees; and in
each case the Trustee shall mail notice of such appointment to all
Certificateholders as their names and addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid, from time to time to
each Authorized Agent reasonable compensation for its services and to reimburse
it for its reasonable expenses.
Section 7.13. Money for Certificate Payments to Be Held in Trust. All
moneys deposited with any Paying Agent for the purpose of any payment on
Certificates shall be deposited and held in trust for the benefit of the
Certificateholders entitled to such payment, subject to the provisions of this
Section.
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Moneys so deposited and held in trust shall constitute a separate trust fund
for the benefit of the Certificateholders with respect to which such money was
deposited.
The Trustee may at any time, for the purpose of obtaining the satisfaction
and discharge of this Agreement or for any other purpose, direct any Paying
Agent to pay to the Trustee all sums held in trust by such Paying Agent, such
sums to be held by the Trustee upon the same trusts as those upon which such
sums were held by such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Section 7.14. Registration of Equipment Notes in Name of Subordination
Agent. The Trustee agrees that all Equipment Notes to be purchased by the
Trust shall be issued in the name of the Subordination Agent or its nominee and
held by the Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the Subordination Agent or its nominee
shall be reflected as the owner of such Equipment Notes in the register of the
issuer of such Equipment Notes.
Section 7.15. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation organized and validly
existing in good standing under the laws of the State of Delaware;
(b) the Trustee has full power, authority and legal right to execute,
deliver, and perform this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Financing Documents to which it is a party and has taken all
necessary action to authorize the execution, delivery, and performance by it of
this Agreement, the Intercreditor Agreement, the Registration Rights Agreement,
the Escrow Agreement, the Note Purchase Agreement and the Financing Documents
to which it is a party;
(c) the execution, delivery and performance by the Trustee of this
Agreement, the Intercreditor Agreement, the Registration Rights Agreement, the
Escrow Agreement, the Note Purchase Agreement and the Financing Documents to
which it is a party (i) will not violate any provision of United States federal
law or the law of the state of the United States where it is
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located governing the banking and trust powers of the Trustee or any order,
writ, judgment, or decree of any court, arbitrator or governmental authority
applicable to the Trustee or any of its assets, (ii) will not violate any
provision of the articles of association or by-laws of the Trustee, or (iii)
will not violate any provision of, or constitute, with or without notice or
lapse of time, a default under, or result in the creation or imposition of any
lien on any properties included in the Trust Property pursuant to the
provisions of any mortgage, indenture, contract, agreement or other undertaking
to which it is a party, which violation, default or lien could reasonably be
expected to have an adverse effect on the Trustee's performance or ability to
perform its duties hereunder or thereunder or on the transactions contemplated
herein or therein;
(d) the execution, delivery and performance by the Trustee of this
Agreement, the Intercreditor Agreement, the Registration Rights Agreement, the
Escrow Agreement, the Note Purchase Agreement, and the Financing Documents to
which it is a party will not require the authorization, consent, or approval
of, the giving of notice to, the filing or registration with, or the taking of
any other action in respect of, any governmental authority or agency of the
United States or the state of the United States where it is located regulating
the banking and corporate trust activities of the Trustee; and
(e) this Agreement, the Intercreditor Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Note Purchase Agreement, and the Financing
Documents to which it is a party have been duly executed and delivered by the
Trustee and constitute the legal, valid, and binding agreements of the Trustee,
enforceable against it in accordance with their respective terms, provided that
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and (ii) general principles of equity.
Section 7.16. Withholding Taxes, Information Reporting. The Trustee, as
trustee of the grantor trust created by this Agreement, shall exclude and
withhold from each distribution of principal, premium, if any, and interest and
other amounts due under this Agreement or under the Certificates any and all
withholding taxes applicable thereto as required by law. In addition, the
Trustee shall remit such amounts as would be required by section 1446 of the
Internal Revenue Code of 1986,
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as amended, if the Trust were characterized as a partnership engaged in a U.S.
trade or business for U.S. federal income tax purposes and shall withhold such
amounts from amounts distributable to or for the benefit of Certificateholders
or Investors that are not United States persons within the meaning of section
7701(a)(30) of the Internal Revenue Code of 1986, as amended. In this regard,
the Trustee shall cause the appropriate withholding agent to withhold with
respect to such distributions in the manner contemplated by Section 10.04 of
Revenue Procedure 89-31 and Treasury Regulation 1.1445-8(b)(3)) by filing a
notice with the National Association of Securities Dealers, Inc. substantially
in the form of Exhibit E hereto on or before the date 10 days prior to the
Record Date. The Trustee shall mail such notice to the National Association of
Securities Dealers no later than the date than 15 days prior to the Record
Date. Investors that are not United States Persons agree to furnish a United
States taxpayer identification number ("TIN") to the Trustee and the Trustee
shall provide such TINs to the appropriate withholding agent. The Trustee
agrees to act as such withholding agent (except to the extent contemplated
above with respect to withholding amounts as if the Trust were characterized as
a partnership engaged in a U.S. trade or business for U.S. federal income tax
purposes) and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Certificates, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Certificateholders, that it will file any necessary withholding tax returns or
statements when due, and that, as promptly as possible after the payment
thereof, it will deliver to each such Certificateholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Certificateholders may reasonably request from
time to time. The Trustee agrees to file any other information reports as it
may be required to file under United States law. Each Certificateholder or
Investor that is not a United States person within the meaning of section
7701(a)(30) of the Internal Revenue Code, as amended, by its acceptance of a
Certificate or a beneficial interest therein, agrees to indemnify and hold
harmless the Trust and the Trustee from and against any improper failure to
withhold taxes from amounts payable to it or for its benefit, other than an
improper failure attributable to the gross negligence or willful misconduct of
the Trustee.
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Section 7.17. Trustee's Liens. The Trustee in its individual capacity
agrees that it will at its own cost and expense promptly take any action as may
be necessary to duly discharge and satisfy in full any mortgage, pledge, lien,
charge, encumbrance, security interest or claim ("Trustee's Liens") on or with
respect to the Trust Property which is attributable to the Trustee either (i)
in its individual capacity and which is unrelated to the transactions
contemplated by this Agreement, the Intercreditor Agreement, the Note Purchase
Agreement or the Financing Documents, or (ii) as Trustee hereunder or in its
individual capacity and which arises out of acts or omissions which are not
contemplated by this Agreement.
Section 7.18. Preferential Collection of Claims. The Trustee shall comply
with Section 311(a) of the Trust Indenture Act, excluding any creditor
relationship listed in Section 311(b) of the Trust Indenture Act. If the
Trustee shall resign or be removed as Trustee, it shall be subject to Section
311(a) of the Trust Indenture Act to the extent provided therein.
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and Addresses of
Certificateholders. The Company will furnish to the Trustee within 15 days
after each Record Date with respect to a Scheduled Payment, and at such other
times as the Trustee may request in writing within 30 days after receipt by the
Company of any such request, a list, in such form as the Trustee may reasonably
require, of all information in the possession or control of the Company as to
the names and addresses of the Certificateholders, in each case as of a date
not more than 15 days prior to the time such list is furnished; provided,
however, that so long as the Trustee is the sole Registrar, no such list need
be furnished; and provided further, however, that no such list need be
furnished for so long as a copy of the Register is being furnished to the
Trustee pursuant to Section 7.12.
Section 8.02. Preservation of Information; Communications to
Certificateholders. The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Certificateholders contained
in the most recent list furnished to the Trustee as provided in Section 7.12
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or Section 8.01, as the case may be, and the names and addresses of
Certificateholders received by the Trustee in its capacity as Registrar, if so
acting. The Trustee may destroy any list furnished to it as provided in
Section 7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.
Section 8.03. Reports by Trustee. Within 60 days after May 15 of each
year commencing with the first full year following the issuance of the
Certificates, the Trustee shall transmit to the Certificateholders, as provided
in Section 313(c) of the Trust Indenture Act, a brief report dated as of such
May 15, if required by Section 313(a) of the Trust Indenture Act.
Section 8.04. Reports by the Company. The Company shall:
(a) file with the Trustee, within 30 days after the Company is required to
file the same with the SEC, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may from time to time by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended;
or, if the Company is not required to file information, documents or reports
pursuant to either of such sections, then to file with the Trustee and the SEC,
in accordance with rules and regulations prescribed by the SEC, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to section 13 of the Securities Exchange Act of 1934, as
amended, in respect of a security listed and registered on a national
securities exchange as may be prescribed in such rules and regulations;
(b) during any period, prior to the consummation of the Exchange Offer and
during which the Shelf Registration Statement is not in effect, in which the
Company is not subject to Section 13(a), 13(c) or 15(d) under the Securities
Exchange Act of 1934, make available to any Holder of the Certificates in
connection with any sale thereof and any prospective purchaser of the
Certificates from such Holder, in each case upon request, the information
specified in, and meeting the requirements of, Rule 144A(d)(4) under the
Securities Act but only for so long as any of the Certificates remain
outstanding and are "restricted securities" within the meaning of Rule
144(a)(3) under the
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Securities Act and, in any event, only until the second anniversary of the
Issuance Date;
(c) file with the Trustee and the SEC, in accordance with the rules and
regulations prescribed by the SEC, such additional information, documents and
reports with respect to compliance by the Company with the conditions and
covenants provided for in this Agreement, as may be required by such rules and
regulations, including, in the case of annual reports, if required by such
rules and regulations, certificates or opinions of independent public
accountants, conforming to the requirements of Section 1.02;
(d) transmit to all Certificateholders, in the manner and to the extent
provided in Section 313(c) of the Trust Indenture Act such summaries of any
information, documents and reports required to be filed by the Company pursuant
to subsections (a) and (c) of this Section 8.04 as may be required by rules and
regulations prescribed by the SEC; and
(e) furnish to the Trustee, not less often than annually, a brief
certificate from the principal executive officer, principal financial officer
or principal accounting officer as to his or her knowledge of the Company's
compliance with all conditions and covenants under this Agreement (it being
understood that for purposes of this paragraph (e), such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Agreement).
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders. Without the consent of the Certificateholders, the Company
may (but will not be required to), and the Trustee (subject to Section 9.03)
shall, at the Company's request, at any time and from time to time, enter into
one or more agreements supplemental hereto or, if applicable, to the
Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the
Deposit Agreement, the Registration Rights Agreement or any Liquidity Facility
in form satisfactory to the Trustee, for any of the following purposes:
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(1) to evidence the succession of another corporation to the Company and
the assumption by any such successor of the covenants of the Company herein
contained or of the Company's obligations under the Note Purchase Agreement,
the Registration Rights Agreement or any Liquidity Facility; or
(2) to add to the covenants of the Company for the benefit of the
Certificateholders, or to surrender any right or power conferred upon the
Company in this Agreement, the Note Purchase Agreement, the Registration
Rights Agreement or any Liquidity Facility; or
(3) to correct or supplement any provision in this Agreement, the
Intercreditor Agreement, the Escrow Agreement, the Deposit Agreement, the
Note Purchase Agreement, the Registration Rights Agreement or any Liquidity
Facility which may be defective or inconsistent with any other provision
herein or therein or to cure any ambiguity or correct any mistake or to
modify any other provision with respect to matters or questions arising under
this Agreement, the Escrow Agreement, the Deposit Agreement, the Note
Purchase Agreement, the Intercreditor Agreement, the Registration Rights
Agreement or any Liquidity Facility, provided that any such action shall not
materially adversely affect the interests of the Certificateholders; or
(4) to comply with any requirement of the SEC, any applicable law, rules
or regulations of any exchange or quotation system on which the Certificates
are listed, any regulatory body or the Registration Rights Agreement to
effectuate the Exchange Offer; or
(5) to modify, eliminate or add to the provisions of this Agreement to
such extent as shall be necessary to continue the qualification of this
Agreement (including any supplemental agreement) under the Trust Indenture
Act or under any similar Federal statute hereafter enacted, and to add to
this Agreement such other provisions as may be expressly permitted by the
Trust Indenture Act, excluding, however, the provisions referred to in
Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of
which this instrument was executed or any corresponding provision in any
similar Federal statute hereafter enacted; or
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(6) to evidence and provide for the acceptance of appointment under this
Agreement by the Trustee of a successor Trustee and to add to or change any
of the provisions of this Agreement as shall be necessary to provide for or
facilitate the administration of the Trust, pursuant to the requirements of
Section 7.10; or
(7) to provide the information required under Section 7.12 and Section
12.03 as to the Trustee; or
(8) to modify or eliminate provisions relating to the transfer or exchange
of Exchange Certificates or the Initial Certificates upon consummation of the
Exchange Offer (as defined in the Registration Rights Agreement) or
effectiveness of the Shelf Registration Statement or the Exchange Offer
Registration Statement;
provided, however, that no such supplemental agreement shall adversely affect
the status of any Trust as a grantor trust under Subpart E, Part I of
Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986,
as amended, for U.S. federal income tax purposes.
Section 9.02. Supplemental Agreements with Consent of Certificateholders.
With the consent of the Certificateholders holding Certificates (including
consents obtained in connection with a tender offer or exchange offer for the
Certificates) evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Trust, by Direction of said
Certificateholders delivered to the Company and the Trustee, the Company may
(with the consent of the Owner Trustees, if any, which consent shall not be
unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter
into an agreement or agreements for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
the Intercreditor Agreement, any Liquidity Facility, the Registration Rights
Agreement, the Escrow Agreement, the Deposit Agreement or the Note Purchase
Agreement to the extent applicable to such Certificateholders or of modifying
in any manner the rights and obligations of such Certificateholders under this
Agreement, the Intercreditor Agreement, any Liquidity Facility, the
Registration Rights Agreement, the Escrow Agreement, the Deposit Agreement or
the Note Purchase Agreement to the extent applicable to such Certificateholders
or of modifying in any manner the rights and
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obligations of such Certificateholders under this Agreement, the Intercreditor
Agreement, any Liquidity Facility, the Registration Rights Agreement, the
Escrow Agreement, the Deposit Agreement or the Note Purchase Agreement;
provided, however, that no such agreement shall, without the consent of the
Certificateholder of each Outstanding Certificate affected thereby:
(1) reduce in any manner the amount of, or delay the timing of, any
receipt by the Trustee (or, with respect to the Deposits, the
Certificateholders) of payments on the Equipment Notes held in the Trust or
on the Deposits or distributions that are required to be made herein on any
Certificate, or change any date of payment on any Certificate, or change the
place of payment where, or the coin or currency in which, any Certificate is
payable, or impair the right to institute suit for the enforcement of any
such payment or distribution on or after the Regular Distribution Date or
Special Distribution Date applicable thereto; or
(2) permit the disposition of any Equipment Note included in the Trust
Property except as permitted by this Agreement, or otherwise deprive such
Certificateholder of the benefit of the ownership of the Equipment Notes in
the Trust; or
(3) reduce the specified percentage of the aggregate Fractional Undivided
Interests of the Trust which is required for any such supplemental agreement,
or reduce such specified percentage required for any waiver of compliance
with certain provisions of this Agreement or certain defaults hereunder and
their consequences provided for in this Agreement; or
(4) waive, amend or modify Section 2.4, 3.2 or 3.3 of the Intercreditor
Agreement in a manner adverse to the Certificateholders; or
(5) modify any of the provisions of this Section 9.02 or Section 6.05,
except to increase any such percentage or to provide that certain other
provisions of this Agreement cannot be modified or waived without the consent
of the Certificateholder of each Certificate affected thereby; or
(6) adversely affect the status of any Trust as a grantor trust under
Subpart E, Part I of Subchapter J of
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Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended,
for U.S. federal income tax purposes.
It shall not be necessary for any Direction of Certificateholders under
this Section to approve the particular form of any proposed supplemental
agreement, but it shall be sufficient if such Direction shall approve the
substance thereof.
Section 9.03. Documents Affecting Immunity or Indemnity. If in the
opinion of the Trustee any document required to be executed by it pursuant to
the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity
or indemnity in favor of the Trustee under this Agreement, the Trustee may in
its discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In executing, or
accepting the additional trusts created by, any agreement permitted by this
Article or the modifications thereby of the trusts created by this Agreement,
the Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental agreement is authorized or permitted by this Agreement.
Section 9.05. Effect of Supplemental Agreements. Upon the execution of
any agreement supplemental to this Agreement under this Article, this Agreement
shall be modified in accordance therewith, and such supplemental agreement
shall form a part of this Agreement for all purposes; and every Holder of a
Certificate theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.06. Conformity with Trust Indenture Act. Every supplemental
agreement executed pursuant to this Article shall conform to the requirements
of the Trust Indenture Act as then in effect.
Section 9.07. Reference in Certificates to Supplemental Agreements.
Certificates authenticated and delivered after the execution of any
supplemental agreement pursuant to this Article may bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
agreement; and, in such case, suitable notation may be made upon Outstanding
Certificates after proper presentation and demand.
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ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to Indentures and Financing
Documents. In the event that the Trustee, as holder (or beneficial owner
through the Subordination Agent) of any Equipment Note in trust for the benefit
of the Certificateholders or as Controlling Party under the Intercreditor
Agreement, receives (directly or indirectly through the Subordination Agent) a
request for a consent to any amendment, modification, waiver or supplement
under any Indenture, any other Financing Document, any Equipment Note or any
other related document, the Trustee shall forthwith send a notice of such
proposed amendment, modification, waiver or supplement to each
Certificateholder registered on the Register as of the date of such notice.
The Trustee shall request from the Certificateholders a Direction as to (a)
whether or not to take or refrain from taking (or direct the Subordination
Agent to take or refrain from taking) any action which a holder of such
Equipment Note has the option to direct, (b) whether or not to give or execute
(or direct the Subordination Agent to give or execute) any waivers, consents,
amendments, modifications or supplements as a holder of such Equipment Note or
a Controlling Party and (c) how to vote (or direct the Subordination Agent to
vote) any Equipment Note if a vote has been called for with respect thereto.
Provided such a request for Certificateholder Direction shall have been made,
in directing any action or casting any vote or giving any consent as the holder
of any Equipment Note (or in directing the Subordination Agent in any of the
foregoing), (i) other than as Controlling Party, the Trustee shall vote for or
give consent to any such action with respect to such Equipment Note in the same
proportion as that of (A) the aggregate face amounts of all Certificates
actually voted in favor of or for giving consent to such action by such
Direction of Certificateholders to (B) the aggregate face amount of all
Outstanding Certificates and (ii) as Controlling Party, the Trustee shall vote
as directed in such Certificateholder Direction by the Certificateholders
evidencing a Fractional Undivided Interest aggregating not less than a majority
in interest in the Trust. For purposes of the immediately preceding sentence,
a Certificate shall have been "actually voted" if the Holder of such
Certificate has delivered to the Trustee an instrument evidencing such Holder's
consent to such Direction prior to two Business Days before the Trustee directs
such action
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or casts such vote or gives such consent. Notwithstanding the foregoing, but
subject to Section 6.04 and the Intercreditor Agreement, the Trustee may, in
its own discretion and at its own direction, consent and notify the relevant
Loan Trustee of such consent (or direct the Subordination Agent to consent and
notify the Loan Trustee of such consent) to any amendment, modification, waiver
or supplement under the relevant Indenture, any other Financing Document, any
Equipment Note or any other related document, if an Event of Default hereunder
shall have occurred and be continuing, or if such amendment, modification,
waiver or supplement will not materially adversely affect the interests of the
Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The respective obligations and
responsibilities of the Company and the Trustee with respect to the Trust shall
terminate upon the earlier of (A) the completion of the assignment, transfer
and discharge described in the first sentence of the immediately following
paragraph and (B) distribution to all Holders of Certificates and the Trustee
of all amounts required to be distributed to them pursuant to this Agreement
and the disposition of all property held as part of the Trust Property;
provided, however, that in no event shall the Trust continue beyond one hundred
ten (110) years following the date of the earliest execution of this Trust
Agreement.
Upon the earlier of (i) the first Business Day following March 31, 1998,
or, if later, the fifth Business Day following the Delivery Period Termination
Date and (ii) the fifth Business Day following the date on which a Triggering
Event occurs (such date, the "Transfer Date"), or, if later the date on which
all of the conditions set forth in the immediately following sentence have been
satisfied, the Trustee is hereby directed (subject only to the immediately
following sentence) to, and the Company shall direct the institution that will
serve as the Related Trustee under the Related Pass Through Trust Agreement to,
execute and deliver the Assignment and Assumption Agreement, pursuant to which
the Trustee shall assign, transfer and deliver all of the Trustee's right,
title and interest to the Trust Property to the Related Trustee under the
Related Pass Through Trust Agreement. The Trustee and the Related Trustee
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shall execute and deliver the Assignment and Assumption Agreement upon the
satisfaction of the following conditions:
(i) The Trustee, the Related Trustee and each of the Rating Agencies
then rating the Certificates shall have received an Officer's Certificate
and an Opinion of Counsel dated the date of the Assignment and Assumption
Agreement and each satisfying the requirements of Section 1.02, which
Opinion of Counsel shall be substantially to the effect set forth below
and may be relied upon by the Beneficiaries (as defined in the Assignment
and Assumption Agreement):
(a) upon the execution and delivery thereof by the
parties thereto in accordance with the terms of this Agreement
and the Related Pass Through Trust Agreement, the Assignment
and Assumption Agreement will constitute the valid and binding
obligation of each of the parties thereto enforceable against
each such party in accordance with its terms;
(b) upon the execution and delivery of the Assignment
and Assumption Agreement in accordance with the terms of this
Agreement and the Related Pass Through Trust Agreement, each
of the Certificates then Outstanding will be entitled to the
benefits of the Related Pass Through Trust Agreement;
(c) the Related Trust is not required to be
registered as an investment company under the Investment
Company Act of 1940, as amended;
(d) the Related Pass Through Trust Agreement
constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms;
and
(e) neither the execution and delivery of the
Assignment and Assumption Agreement in accordance with the
terms of this Agreement and the Related Pass Through Trust
Agreement, nor the consummation by the parties thereto of the
transactions contemplated to be consummated thereunder on the
date thereof, will violate any law or governmental rule or
regulation of the State of New York or the United States of
America known to such counsel to
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be applicable to the transactions contemplated by the
Assignment and Assumption Agreement.
(ii) The Trustee and the Company shall have received (x) a copy of
the articles of incorporation and bylaws of the Related Trustee certified
as of the Transfer Date by the Secretary or Assistant Secretary of such
institution and (y) a copy of the filing (including all attachments
thereto) made by the institution serving as the Related Trustee with the
Office of the Superintendent, State of New York Banking Department for
the qualification of the Related Trustee under Section 131(3) of the New
York Banking Law.
Upon the execution of the Assignment and Assumption Agreement by the parties
thereto, the Trust shall be terminated, the Certificateholders shall receive
beneficial interests in the Related Trust in exchange for their interests in
the Trust equal to their respective beneficial interests in the Trust, and the
Outstanding Certificates representing Fractional Undivided Interests in the
Trust shall be deemed for all purposes of this Agreement and the Related Pass
Through Trust Agreement, without further signature or action of any party or
Certificateholder, to be certificates representing the same fractional
undivided interests in the Related Trust and its trust property. By acceptance
of its Certificate, each Certificateholder consents to such assignment,
transfer and delivery of the Trust Property to the trustee of the Related Trust
upon the execution and delivery of the Assignment and Assumption Agreement.
In connection with the occurrence of the event set forth in clause (B)
above, notice of such termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be mailed promptly by
the Trustee to Certificateholders not earlier than the 60th day and not later
than the 20th day next preceding such final Distribution Date specifying (A)
the Distribution Date upon which the proposed final payment of the Certificates
will be made upon presentation and surrender of Certificates at the office or
agency of the Trustee therein specified, (B) the amount of any such proposed
final payment, and (c) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon presentation
and surrender of the Certificates at the office or agency of the Trustee
therein specified. The Trustee shall give such notice to the Registrar
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at the time such notice is given to Certificateholders. Upon presentation and
surrender of the Certificates in accordance with such notice, the Trustee shall
cause to be distributed to Certificateholders such final payments.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. No
additional interest shall accrue on the Certificates after the Distribution
Date specified in the first written notice. In the event that any money held
by the Trustee for the payment of distributions on the Certificates shall
remain unclaimed for two years (or such lesser time as the Trustee shall be
satisfied, after sixty days' notice from the Company, is one month prior to the
escheat period provided under applicable law) after the final distribution date
with respect thereto, the Trustee shall pay to each Loan Trustee the
appropriate amount of money relating to such Loan Trustee and shall give
written notice thereof to the related Owner Trustees, the Owner Participants
and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations, and liabilities of the
parties hereto or any of them.
Section 12.02. Certificates Nonassessable and Fully Paid. Except as set
forth in the last sentence of this Section 12.02, Certificateholders shall not
be personally liable for obligations of the Trust, the Fractional Undivided
Interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and Certificates, upon
authentication thereof by the Trustee pursuant
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to Section 3.03, are and shall be deemed fully paid. No Certificateholder
shall have any right (except as expressly provided herein) to vote or in any
manner otherwise control the operation and management of the Trust Property,
the Trust, or the obligations of the parties hereto, nor shall anything set
forth herein, or contained in the terms of the Certificates, be construed so as
to constitute the Certificateholders from time to time as partners or members
of an association. Neither the existence of the Trust nor any provision herein
is intended to or shall limit the liability the Certificateholders would
otherwise incur if the Certificateholders owned Trust Property as co-owners, or
incurred any obligations of the Trust, directly rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise specifically provided
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by United
States mail, courier service or telecopy, and any such notice shall be
effective when delivered or received or, if mailed, three days after deposit in
the United States mail with proper postage for ordinary mail prepaid,
if to the Company, to:
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Attention: Chief Financial Officer and
General Counsel
Facsimile: (713) 523-2831
if to the Trustee, to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Department
Facsimile: (302) 651-8882
Telephone: (302) 651-8584
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(b) The Company or the Trustee, by notice to the other, may designate
additional or different addresses for subsequent notices or communications.
(c) Any notice or communication to Certificateholders shall be mailed by
first-class mail to the addresses for Certificateholders shown on the Register
kept by the Registrar. Failure so to mail a notice or communication or any
defect in such notice or communication shall not affect its sufficiency with
respect to other Certificateholders.
(d) If a notice or communication is mailed in the manner provided above
within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.
(e) If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.
(f) Notwithstanding the foregoing, all communications or notices to the
Trustee shall be deemed to be given only when received by a Responsible Officer
of the Trustee.
(g) The Trustee shall promptly furnish the Company with a copy of any
demand, notice or written communication received by the Trustee hereunder from
any Certificateholder, Owner Trustee or Loan Trustee.
Section 12.04. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN THE
STATE OF DELAWARE AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
Section 12.05. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or the Trust, or of
the Certificates or the rights of the Certificateholders thereof.
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Section 12.06. Trust Indenture Act Controls. Upon the occurrence of any
Registration Event, this Agreement shall become subject to the provisions of
the Trust Indenture Act and shall, to the extent applicable, be governed by
such provisions. From and after any Registration Event, if any provision of
this Agreement limits, qualifies or conflicts with another provision which is
required to be included in this Agreement by the Trust Indenture Act, the
required provision shall control.
Section 12.07. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 12.08. Successors and Assigns. All covenants, agreements,
representations and warranties in this Agreement by the Trustee and the Company
shall bind and, to the extent permitted hereby, shall inure to the benefit of
and be enforceable by their respective successors and assigns, whether so
expressed or not.
Section 12.09. Benefits of Agreement. Nothing in this Agreement or in the
Certificates, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Certificateholders, any
benefit or any legal or equitable right, remedy or claim under this Agreement.
Section 12.10. Legal Holidays. In any case where any Regular Distribution
Date or Special Distribution Date relating to any Certificate shall not be a
Business Day, then (notwithstanding any other provision of this Agreement)
payment need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on such Regular
Distribution Date or Special Distribution Date, and no interest shall accrue
during the intervening period.
Section 12.11. Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
Section 12.12. Intention of Parties. The parties hereto intend that the
Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of
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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
Certificateholder and Investor, by its acceptance of its Certificate or a
beneficial interest therein, agrees to treat the Trust as a grantor trust for
all U.S. federal, state and local income tax purposes. The powers granted and
obligations undertaken pursuant to this Agreement shall be so construed so as
to further such intent.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
CONTINENTAL AIRLINES,INC.
By:
----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Trustee
By:
----------------------------------
Name:
Title:
90
EXHIBIT A
FORM OF CERTIFICATE
REGISTERED
No._________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT
IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (c) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT; (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE LATER
OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON
WHICH THIS CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE
TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS RESELL OR
OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) CONTINENTAL
AIRLINES, INC., (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IF IT
SHOULD RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE IT WILL
DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST
DATE ON WHICH
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THIS CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE
TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING
TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION",
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE
FOREGOING RESTRICTIONS.](1)
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN
EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS
3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO
HEREIN.](2)
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(1) Not to be included on the face of the Regulation S Global Certificate.
(2) To be included on the face of each Global Certificate.
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[GLOBAL CERTIFICATE](3)
CONTINENTAL AIRLINES PASS THROUGH TRUST, SERIES 1997-1A-O
____% Continental Airlines [Initial] [Exchange]
Pass Through Certificate,
Series 1997-1A-O
Final Maturity Date: October 1, 2016
evidencing a fractional undivided interest in a trust, 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 .______% 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, Series 1997-1A-O (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of March 21, 1997 (the
"Agreement"), between Wilmington Trust Company (the "Trustee") and Continental
Airlines, Inc., a corporation incorporated under Delaware law (the "Company"),
a summary of certain of the pertinent provisions of which is set forth below.
To the extent not otherwise defined herein, the capitalized terms used herein
have the meanings assigned to them in the Agreement. This Certificate is one
of the duly authorized Certificates designated as "7.461% Continental Airlines
[Initial] [Exchange] Pass Through Certificates, Series 1997-1A-O" (herein
called the "Certificates"). This Certificate is issued under and is subject to
the terms, provisions, and conditions of the Agreement. By virtue of its
acceptance hereof the Certificateholder of this Certificate assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. The property of the Trust includes an interest in certain Equipment
Notes and all rights of the Trust to receive payments under the Intercreditor
Agreement and any Liquidity Facility (the "Trust Property"). Each issue of the
Equipment Notes is secured by, among other things, a security interest in the
Aircraft leased to or owned by the Company.
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(3) To be included on the face of each Global Certificate.
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The Certificates represent fractional undivided interests in the Trust and
the Trust Property, and have no rights, benefits or interest in respect of any
assets or property other than the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from and to the extent of funds then available to the
Trustee, there will be distributed on each April 1 and October 1 (a "Regular
Distribution Date"), commencing on October 1, 1997, 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 due on such Regular Distribution Date 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 Scheduled Payments. Subject to and in accordance with
the terms of the Agreement and the Intercreditor Agreement, in the event that
Special Payments on the Equipment Notes are received by the Trustee, from funds
then available to the Trustee, there shall be distributed on the applicable
Special Distribution Date, to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Special
Distribution Date, an amount in respect of such Special Payments on the
Equipment Notes, the receipt of which has been confirmed by the Trustee, equal
to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Special Payments so
received. If a Regular Distribution Date or Special Distribution Date is not a
Business Day, distribution shall be made on the immediately following Business
Day with the same force and effect as if made on such Regular Distribution Date
or Special Distribution Date and no interest shall accrue during the
intervening period. The Trustee shall mail notice of each Special Payment and
the Special Distribution Date therefor to the Certificateholder of this
Certificate.
The Certificates do not represent a direct obligation of, or an obligation
guaranteed by, or an interest in, the Company or the Trustee or any of their
affiliates. The Certificates are limited in right or payment, all as more
specifically set forth on the face hereof and in the Agreement. All payments
or distributions made to Certificateholders under the Agreement shall be made
only from the Trust Property and only to the extent that the Trustee shall have
sufficient income or
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proceeds from the Trust Property to make such payments in accordance with the
terms of the Agreement. Each Certificate-holder of this Certificate, by its
acceptance hereof, agrees that it will look solely to the income and proceeds
from the Trust Property to the extent available for distribution to such
Certificateholder as provided in the Agreement. This Certificate does not
purport to summarize the Agreement and reference is made to the Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds, and duties evidenced hereby. A copy of the Agreement may be examined
during normal business hours at the principal office of the Trustee, and at
such other places, if any, designated by the Trustee, by any Certificateholder
upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any
time by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate
and of any Certificate issued upon the transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Register upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, in the Borough of Manhattan, the City of New York, duly
endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Registrar duly executed by the
Certificateholder hereof or such Certificateholder's attorney duly authorized
in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in
the Trust will be issued to the designated transferee or transferees.
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[The Holder of this Certificate is entitled to the benefits of the
Exchange and Registration Rights Agreement, dated as of March 21, 1997, among
the Company, the Trustee and the Initial Purchasers named therein (the
"Registration Rights Agreement"). In the event that no Registration Event has
occurred on or prior to the 210th day after the date of the issuance of the
Certificates, the interest rate per annum payable in respect of the Equipment
Notes and the Deposits shall be increased by 0.50%, from and including the
210th day after the Issuance Date to but excluding the earlier of (i) the date
on which a Registration Event occurs and (ii) the date on which there cease to
be any Registrable Certificates (as defined in the Registration Rights
Agreement). In the event that the Shelf Registration Statement ceases to be
effective at any time during the period specified by Section 2(b)(B) of the
Registration Rights Agreement for more than 60 days, whether or not
consecutive, during any 12-month period, the interest rate per annum payable in
respect of the Equipment Notes and the Deposits shall be increased by 0.50%
from the 61st day of the applicable 12-month period such Shelf Registration
Statement ceases to be effective until such time as the Shelf Registration
Statement again becomes effective ( or, if earlier, the end of the period
specified by Section 2(b)(B) of the Registration Rights Agreement).](4)
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.
Under certain circumstances set forth in Section 11.01 of the Agreement,
all of the Trustee's right, title and interest to the Trust Property may be
assigned, transferred and delivered to the Related Trustee of the Related Trust
pursuant to the Assignment and Assumption Agreement. Upon the effectiveness of
such Assignment and Assumption Agreement (the "Transfer"), the Trust shall be
terminated, the Certificateholders shall receive beneficial interests in the
Related Trust in exchange for their interests in the Trust equal to their
respective beneficial interests in the Trust, the Certificates representing
Fractional
- ---------
(4) To be included only on each Initial Certificate.
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Undivided Interests in the Trust shall be deemed for all purposes of the
Agreement and the Related Pass Through Trust Agreement to be certificates
representing the same fractional undivided interests in the Related Trust and
its trust property. Each Certificateholder, by its acceptance of this
Certificate or a beneficial interest herein, agrees to be bound by the
Assignment and Assumption Agreement and subject to the terms of the Related
Pass Through Trust Agreement as a certificateholder thereunder. From and after
the Transfer, unless and to the extent the context otherwise requires,
references herein to the Trust, the Agreement and the Trustee shall constitute
references to the Related Trust, the Related Pass Through Trust Agreement and
trustee of the Related Trust, respectively.
The Certificates are issuable only as registered Certificates without
coupons in minimum denominations of [$100,000](5) [$1,000](6) Fractional
Undivided Interest and integral multiples of $1,000 in excess thereof except
that one Certificate may be 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 by the Holder of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
Each Certificateholder or Investor that is not a United States person
within the meaning of section 7701(a)(30) of the Internal Revenue Code, as
amended, by its acceptance of a Certificate or a beneficial interest therein,
agrees to indemnify and hold harmless the Trust and the Trustee from and
against any improper failure to withhold taxes from amounts payable to it or
for its benefit. 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.
- ---------
(5) To be included only on each Initial Certificate.
(6) To be included only on each Initial Certificate.
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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.
UNTIL THE TRANSFER, THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS. FROM AND AFTER THE TRANSFER, THE AGREEMENT AND
THIS CERTIFICATE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _______________, 1997 CONTINENTAL AIRLINES PASS THROUGH TRUST,
SERIES 1997-1A-O
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but
solely as Trustee
By:
----------------------------------
Name:
Title:
[Attest:
- ---------------------------------
Authorized Signature]
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[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred
to in the within-mentioned Agreement.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
By:
----------------------------------
Authorized Officer
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FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
please print or typewrite name and address including zip code of assignee
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT REGULATION S GLOBAL AND
REGULATION S DEFINITIVE CERTIFICATES]
In connection with any transfer of this Certificate occurring prior to the
date that is the earlier of the date of an effective Registration Statement or
the date two years after the later of the original issuance of this Certificate
or the last date on which this Certificate was held by Continental Airlines,
Inc., the Trustee or any affiliate of such Persons, the undersigned confirms
that without utilizing any general solicitation or general advertising that:
[Check One]
[ ] (a) this Certificate is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
[ ] (b) this Certificate is being transferred other than in accordance with
(a) above and documents are being furnished that
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comply with the conditions of transfer set forth in this Certificate and the
Agreement.
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 3.06 of the Agreement
shall have been satisfied.
Date: __________________ [Name of Transferor]
NOTE: The signature must correspond with
the name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or any
change whatsoever.
Signature Guarantee: ______________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Certificate for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.
Dated:
------------------ -------------------------------------
NOTE: To be executed by an executive
officer.
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EXHIBIT B
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS OF CERTIFICATES PURSUANT TO REGULATION S
[date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines Pass Through Trust (the "Trust"), Series
1997-1A-O, Continental Airlines Pass Through Certificates, Series
1997-1A-O (the "Certificates")
Sirs:
In connection with our proposed sale of $_____ Fractional Undivided
Interest of the Certificates, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended, and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
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(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and Continental Airlines, Inc. are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
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EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS OF CERTIFICATES TO
NON-QIB INSTITUTIONAL ACCREDITED INVESTORS
________________, ____
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
CONTINENTAL AIRLINES
PASS THROUGH TRUST, SERIES 1997-1A-O (the "Trust")
Pass Through Certificates, Series 1997-1A-O
(the "Certificates")
Ladies and Gentlemen:
In connection with our proposed purchase of U.S. $[_____________]
Fractional Undivided Interest of Certificates, we confirm that:
1. We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Trust
Agreement, dated as of March 21, 1997, between Continental Airlines, Inc. (the
"Company") and Wilmington Trust Company (the "Trustee") relating to the
Certificates, and we agree to be bound by, and not to resell, pledge or
otherwise transfer the Certificates except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
2. We are purchasing Certificates having an aggregate principal amount of
not less than $100,000 and each account (if any) for which we are purchasing
Certificates is purchasing
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Certificates having an aggregate principal amount of not less than $100,000.
3. We understand that the Certificates have not been registered under the
Securities Act, that the Certificates are being sold to us in a transaction
that is exempt from the registration requirements of the Securities Act and
that the Certificates may not be offered or resold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any accounts
for which we are acting as hereinafter stated, that, if we should sell any
Certificates within two years after the later of the original issuance of such
Certificate and the last date on which such Certificate is owned by the
Company, the Trustee or any affiliate of any of such persons, we will do so
only (A) to the Company, (B) in accordance with Rule 144A under the Securities
Act to a "qualified institutional buyer" (as defined therein), (c) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (D) pursuant to the exemption from registration provided by Rule 144 under
the Securities Act or (E) pursuant to an effective registration statement under
the Securities Act, and we further agree to provide to any person purchasing
any of the Certificates from us a notice advising such purchaser that resales
of the Certificates are restricted as stated herein.
4. We understand that, on any proposed resale of any Certificates, we will
be required to furnish to the Company and the Trustee such certifications,
legal opinions and other information as the Company and the Trustee may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Certificates purchased
by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Certificates, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investments.
6. We are acquiring the Certificates purchased by us for our own account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion and not
with a view to any
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distribution of the Certificates, subject, nevertheless to the understanding
that the disposition of our property shall at all times be and remain within
our control.
You are entitled to rely upon this letter and are irrevocably authorized
to produce this letter or a copy thereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:
----------------------------------
Name:
Title:
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EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
Continental Airlines Pass Through Trust, Series 1997-[1_]
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated ____________, 199_ (the
"Agreement"), between Wilmington Trust Company, a Delaware banking corporation
("WTC"), not in its individual capacity except as expressly provided herein,
but solely as trustee under the Pass Through Trust Agreement dated as of March
21, 1997 (as amended, modified or otherwise supplemented from time to time, the
"Pass Through Trust Agreement") in respect of the Continental Airlines Pass
Through Trust, Series 1997-1_-O (the "Assignor"), and Wilmington Trust Company,
a Delaware banking corporation, not in its individual capacity except as
expressly provided herein, but solely as trustee under the Pass Through Trust
Agreement dated as of March 21, 1997 (the "New Pass Through Trust Agreement")
in respect of the Continental Airlines Pass Through Trust, Series 1997-1_-S
(the "Assignee").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to effect on the date hereof (the
"Transfer Date") (a) the transfer by the Assignor to the Assignee of all of the
right, title and interest of the Assignor in, under and with respect to, among
other things, the Trust Property and each of the documents listed in Schedule I
hereto (the "Scheduled Documents") and (b) the assumption by the Assignee of
the obligations of the Assignor (i) under the Scheduled Documents and (ii) in
respect of the Certificates issued under the Pass Through Trust Agreement; and
WHEREAS, the Scheduled Documents permit such transfer upon satisfaction of
certain conditions heretofore or concurrently herewith being complied with;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree
as follows (capitalized terms used herein without definition having the meaning
ascribed thereto in the Pass Through Trust Agreement):
1. Assignment. The Assignor does hereby sell, assign, convey, transfer
and set over unto the Assignee as of the Transfer Date all of its present and
future right, title and
D-1
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interest in, under and with respect to the Trust Property and the Scheduled
Documents and each other contract, agreement, document or instrument relating
to the Trust Property or the Scheduled Documents (such other contracts,
agreements, documents or instruments, together with the Scheduled Documents, to
be referred to as the "Assigned Documents"), and any proceeds therefrom,
together with all documents and instruments evidencing any of such right, title
and interest.
2. Assumption. The Assignee hereby assumes for the benefit of the
Assignor and each of the parties listed in Schedule II hereto (collectively,
the "Beneficiaries") all of the duties and obligations of the Assignor,
whenever accrued, pursuant to the Assigned Documents and hereby confirms that
it shall be deemed a party to each of the Assigned Documents to which the
Assignor is a party and shall be bound by all the terms thereof (including the
agreements and obligations of the Assignor set forth therein) as if therein
named as the Assignor. Further, the Assignee hereby assumes for the benefit of
the Assignor and the Beneficiaries all of the duties and obligations of the
Assignor under the Outstanding Certificates and hereby confirms that the
Certificates representing Fractional Undivided Interests under the Pass Through
Trust Agreement shall be deemed for all purposes of the Pass Through Trust
Agreement and the New Pass Through Trust Agreement to be certificates
representing the same fractional undivided interests under the New Pass Through
Trust Agreement equal to their respective beneficial interests in the trust
created under the Pass Through Trust Agreement.
3. Effectiveness. This Agreement shall be effective upon the execution
and delivery hereof by the parties hereto, and each Certificateholder, by its
acceptance of its Certificate or a beneficial interest therein, agrees to be
bound by the terms of this Agreement.
4. Payments. The Assignor hereby covenants and agrees to pay over to the
Assignee, if and when received following the Transfer Date, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of the Assignor that, under Section 1 hereof, belong to the Assignee.
5. Further Assurances. The Assignor shall, at any time and from time to
time, upon the request of the Assignee, promptly and duly execute and deliver
any and all such further
D-2
109
instruments and documents and take such further action as the Assignee may
reasonably request to obtain the full benefits of this Agreement and of the
right and powers herein granted. The Assignor agrees to deliver the Global
Certificates, and all Trust Property, if any, then in the physical possession
of the Assignor, to the Assignee.
6. Representations and Warranties. (a) The Assignee represents and
warrants to the Assignor and each of the Beneficiaries that:
(i) it has all requisite power and authority and legal right to enter into
and carry out the transactions contemplated hereby and to carry out and
perform the obligations of the "Pass Through Trustee" under the Assigned
Documents;
(ii) on and as of the date hereof, the representations and warranties of
the Assignee set forth in Section 7.15 of the New Pass Through Trust
Agreement are true and correct.
(b) The Assignor represents and warrants to the Assignee that:
(i) it is duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has the full trust power, authority and
legal right under the laws of the State of Delaware and the United States
pertaining to its trust and fiduciary powers to execute and deliver this
Agreement;
(ii) the execution and delivery by it of this Agreement and the
performance by it of its obligations hereunder have been duly authorized by
it and will not violate its articles of association or by-laws or the
provisions of any indenture, mortgage, contract or other agreement to which
it is a party or by which it is bound; and
(iii) this Agreement constitutes the legal, valid and binding obligations
of it enforceable against it in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at law or in
equity.
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7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS.
8. Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute a single instrument. It
shall not be necessary that any counterpart be signed by both parties so long
as each party shall sign at least one counterpart.
9. Third Party Beneficiaries. The Assignee hereby agrees, for the benefit
of the Beneficiaries, that its representations, warranties and covenants
contained herein are also intended to be for the benefit of each Beneficiary,
and each Beneficiary shall be deemed to be an express third party beneficiary
with respect thereto, entitled to enforce directly and in its own name any
rights or claims it may have against such party as such beneficiary.
D-4
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IN WITNESS WHEREOF, the parties hereto, through their respective officers
thereunto duly authorized, have duly executed this Assignment as of the day and
year first above written.
ASSIGNOR:
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
provided herein, but solely as trustee
under the Pass Through Trust Agreement in
respect of the Continental Airlines Pass
Through Trust 1997-1_-O
By:
----------------------------------
Title:
ASSIGNEE:
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
provided herein, but solely as trustee
under the Pass Through Trust Agreement in
respect of the Continental Airlines Pass
Through Trust 1997-1_-S
By:
----------------------------------
Title:
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112
Schedule I
Schedule of Assigned Documents
(1) Intercreditor Agreement dated as of March 21, 1997 among the
Trustee, the Other Trustees, the Liquidity Providers, the liquidity
providers, if any, relating to the Certificates issued under (and as
defined in) each of the Other Pass Through Trust Agreements and the
Subordination Agent.
(2) Registration Rights Agreement dated as of March 21, 1997 among
the Initial Purchasers, the Trustee, the Other Trustees, and the Company.
(3) Escrow and Paying Agent Agreement (Class __) dated as of March
21, 1997 among the Escrow Agent, the Initial Purchasers, the Trustee and
the Paying Agent.
(4) Note Purchase Agreement dated as of March 21, 1997 among the
Company, the Trustee, the Other Trustees, the Depositary, the Escrow
Agent, the Paying Agent and the Subordination Agent.
(5) Deposit Agreement (Class __) dated as of March 21, 1997 between
the Escrow Agent and the Depositary.
(6) Each of the Operative Agreements (as defined in the
Participation Agreement for each Aircraft) in effect as of the Transfer
Date.
D-6
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Schedule II
Schedule of Beneficiaries
Wilmington Trust Company, not in its individual capacity but solely as
Subordination Agent.
Wilmington Trust Company, not in its individual capacity but solely as Paying
Agent
ABN AMRO Bank N.V., Chicago Branch, as Liquidity Provider
ING Bank N.V., as Liquidity Provider
Continental Airlines, Inc.
Credit Suisse First Boston Corporation, as Initial Purchaser
Morgan Stanley & Co. Incorporated, as Initial Purchaser
Chase Securities Inc., as Initial Purchaser
Goldman Sachs & Co., as Initial Purchaser
First Security Bank, National Association, as Escrow Agent
Each of the other parties to the Assigned Documents
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EXHIBIT E
FORM OF NOTICE TO DESIGNATE NOMINEE AS WITHHOLDING AGENT
(Treas. Reg. Section 1.1445-8(f); 17 C.F.R. 240.10b-17(b)(1))
[DATE]
National Association of
Securities Dealers, Inc.
Market Operations
80 Merritt Blvd.
Trumbull, CT 06611
Re: Continental Airlines Pass Through Certificates,
Series 1997-1A-O Pass Through Certificates,
Series 1997-1A-O
With respect to distributions to be made on [INSERT DISTRIBUTION DATE] to
holders of the above-referenced Pass Through Certificates in the amount of $
____ per $1,000 principal amount of Certificate, we hereby designate the
appropriate nominees to withhold from amounts distributable to any non-U.S.
Person such amounts as required by section 1446 of the Internal Revenue Code of
1986, as amended. The term "non-U.S. Person" means any person or entity that,
for U.S. federal income tax purposes, is not a "U.S. Person." "U.S. Person"
for this purpose means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized under the laws of
the United States or any political subdivision thereof, or an estate or trust,
the income of which is subject to U.S. federal income taxation regardless of
its source. The date of record for determining holders of Certificates
entitled to receive the distribution on [INSERT DISTRIBUTION DATE] is [INSERT
RELATED RECORD DATE].
Very truly yours,
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EXHIBIT 4.6
--------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of March 21, 1997
between
CONTINENTAL AIRLINES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
Continental Airlines Pass Through Trust, Series 1997-1B-O
7.461% Initial Pass Through Certificates, Series 1997-1B-O
7.461% Exchange Pass Through Certificates, Series 1997-1B-O
--------------------------------------
2
Reconciliation and tie between Continental Airlines Pass Through Trust
Agreement, Series 1997-1B-O dated as of March 21, 1997, and the Trust Indenture
Act of 1939. This reconciliation does not constitute part of the Pass Through
Trust Agreement.
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
------------------- ------------------
310(a)(1) 7.08
(a)(2) 7.08
312(a) 3.05; 8.01; 8.02
313(a) 7.06; 8.03
314(a) 8.04(a),
(c) & (d)
(a)(4) 8.04(e)
(c)(1) 1.02
(c)(2) 1.02
(d)(1) 7.13; 11.01
(d)(2) 7.13; 11.01
(d)(3) 2.01
(e) 1.02
315(b) 7.02
316(a)(last sentence) 1.04(c)
(a)(1)(A) 6.04
(a)(1)(B) 6.05
(b) 6.06
(c) 1.04(e)
317(a)(1) 6.03
(b) 7.13
318(a) 12.06
3
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.02. Compliance Certificates and Opinions . . . . . . . . . . . 18
Section 1.03. Form of Documents Delivered to Trustee . . . . . . . . . . 19
Section 1.04. Directions of Certificateholders . . . . . . . . . . . . . 19
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of Equipment Notes . 21
Section 2.02. Withdrawal of Deposits . . . . . . . . . . . . . . . . . . 23
Section 2.03. Acceptance by Trustee . . . . . . . . . . . . . . . . . . 23
Section 2.04. Limitation of Powers . . . . . . . . . . . . . . . . . . . 23
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of Certificates . 24
Section 3.02. Restrictive Legends . . . . . . . . . . . . . . . . . . . 27
Section 3.03. Authentication of Certificates . . . . . . . . . . . . . . 29
Section 3.04. Transfer and Exchange . . . . . . . . . . . . . . . . . . 29
Section 3.05. Book-Entry Provisions for Restricted Global Certificates
and Regulation S Global Certificates . . . . . . . . . . . 31
Section 3.06. Special Transfer Provisions . . . . . . . . . . . . . . . 33
Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates . . . . 37
Section 3.08. Persons Deemed Owners . . . . . . . . . . . . . . . . . . 38
Section 3.09. Cancellation . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.10. Temporary Certificates . . . . . . . . . . . . . . . . . . 38
Section 3.11. Limitation of Liability for Payments . . . . . . . . . . . 39
(i)
4
TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
- ------- ----
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments Account . . . . . 39
Section 4.02. Distributions from Certificate Account and Special
Payments Account . . . . . . . . . . . . . . . . . . . . . 40
Section 4.03. Statements to Certificateholders . . . . . . . . . . . . . 42
Section 4.04. Investment of Special Payment Moneys . . . . . . . . . . . 44
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence . . . . . . . . . . . . 44
Section 5.02. Consolidation, Merger, etc. . . . . . . . . . . . . . . . 45
ARTICLE VI
DEFAULT
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . 46
Section 6.02. Incidents of Sale of Equipment Notes . . . . . . . . . . . 49
Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May
Bring Suit . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.04. Control by Certificateholders . . . . . . . . . . . . . . 50
Section 6.05. Waiver of Past Defaults . . . . . . . . . . . . . . . . . 51
(ii)
5
TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
- ------- ----
Section 6.06. Right of Certificateholders to Receive Payments
Not to Be Impaired . . . . . . . . . . . . . . . . . . . . 52
Section 6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions . . . . . . . . . . . . . . . . . 52
Section 6.08. Remedies Cumulative . . . . . . . . . . . . . . . . . . . 53
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities . . . . . . . . . . . 53
Section 7.02. Notice of Defaults . . . . . . . . . . . . . . . . . . . . 54
Section 7.03. Certain Rights of Trustee . . . . . . . . . . . . . . . . 54
Section 7.04. Not Responsible for Recitals or Issuance of Certificates . 56
Section 7.05. May Hold Certificates . . . . . . . . . . . . . . . . . . 56
Section 7.06. Money Held in Trust . . . . . . . . . . . . . . . . . . . 56
Section 7.07. Compensation and Reimbursement . . . . . . . . . . . . . . 57
Section 7.08. Corporate Trustee Required; Eligibility . . . . . . . . . 58
Section 7.09. Resignation and Removal; Appointment of Successor . . . . 59
Section 7.10. Acceptance of Appointment by Successor . . . . . . . . . . 61
Section 7.11. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . . . . 61
Section 7.12. Maintenance of Agencies . . . . . . . . . . . . . . . . . 62
Section 7.13. Money for Certificate Payments to Be Held in Trust . . . . 63
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent . . . . . . . . . . . . . . . . . . . 64
Section 7.15. Representations and Warranties of Trustee . . . . . . . . 64
(iii)
6
TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
- ------- ----
Section 7.16. Withholding Taxes, Information Reporting . . . . . . . . . 65
Section 7.17. Trustee's Liens . . . . . . . . . . . . . . . . . . . . . 67
Section 7.18. Preferential Collection of Claims . . . . . . . . . . . . 67
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders . . . . . . . . . . . . . 67
Section 8.02. Preservation of Information; Communications
to Certificateholders . . . . . . . . . . . . . . . . . . 68
Section 8.03. Reports by Trustee . . . . . . . . . . . . . . . . . . . . 68
Section 8.04. Reports by the Company . . . . . . . . . . . . . . . . . . 68
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent
of Certificateholders . . . . . . . . . . . . . . . . . . 70
Section 9.02. Supplemental Agreements with
Consent of Certificateholders . . . . . . . . . . . . . . 71
Section 9.03. Documents Affecting Immunity or Indemnity . . . . . . . . 73
Section 9.04. Execution of Supplemental Agreements . . . . . . . . . . . 73
Section 9.05. Effect of Supplemental Agreements . . . . . . . . . . . . 73
Section 9.06. Conformity with Trust Indenture Act . . . . . . . . . . . 74
Section 9.07. Reference in Certificates to Supplemental Agreements . . . 74
(iv)
7
TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
- ------- ----
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to Indentures and
Financing Documents . . . . . . . . . . . . . . . . . . . 74
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust . . . . . . . . . . . . . . . . . 75
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders . . . . . . . . 79
Section 12.02. Certificates Nonassessable and Fully Paid . . . . . . . . 79
Section 12.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 12.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.05. Severability of Provisions . . . . . . . . . . . . . . . . 81
Section 12.06. Trust Indenture Act Controls . . . . . . . . . . . . . . . 81
Section 12.07. Effect of Headings and Table of Contents . . . . . . . . . 81
Section 12.08. Successors and Assigns . . . . . . . . . . . . . . . . . . 82
Section 12.09. Benefits of Agreement . . . . . . . . . . . . . . . . . . 82
Section 12.10. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . 82
Section 12.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 82
Section 12.12. Intention of Parties . . . . . . . . . . . . . . . . . . . 82
(v)
8
Exhibit A- Form of Certificate
Exhibit B- Form of Certificate to Request Removal of Restricted Legend
Exhibit C- Form of Certificate to be Delivered by an Institutional
Accredited Investor
Exhibit D- Form of Assignment and Assumption Agreement
Exhibit E- Form of Notice to Withholding Agent
(vi)
9
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of March 21, 1997
(the "Agreement"), between CONTINENTAL AIRLINES, INC., a Delaware corporation,
and WILMINGTON TRUST COMPANY, as Trustee, is made with respect to the formation
of Continental Airlines Pass Through Trust, Series 1997-1B-O and the issuance
of 7.461% Continental Airlines Pass Through Trust, Series 1997-1B-O Pass
Through Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company has obtained commitments from Boeing for
the delivery of certain Aircraft;
WHEREAS, the Company intends to finance the acquisition of
each such Aircraft either (i) through separate leveraged lease transactions in
which the Company will lease such aircraft (collectively, the "Leased
Aircraft") or (ii) through separate secured loan transactions in which the
Company will own such Aircraft (collectively, the "Owned Aircraft");
WHEREAS, in the case of each Leased Aircraft, each Owner
Trustee, acting on behalf of the corresponding Owner Participant, will issue
pursuant to an Indenture, on a non-recourse basis, three series of Equipment
Notes in order to finance a portion of its purchase price of such Leased
Aircraft;
WHEREAS, in the case of each Owned Aircraft, the Company, will
issue pursuant to an Indenture, on a recourse basis, three series of Equipment
Notes to finance a portion of the purchase price of such Owned Aircraft;
WHEREAS, the Trustee, upon execution and delivery of this
Agreement, hereby declares the creation of the Trust for the benefit of the
Certificateholders, and the initial Certificateholders, as the grantors of the
Trust, by their respective acceptances of the Certificates, join in the
creation of this Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust will
evidence fractional undivided interests in the Trust and will convey no rights,
benefits or interests in respect of any
10
2
property other than the Trust Property except for those Certificates to which
an Escrow Receipt has been affixed;
WHEREAS, the Escrow Agent and the Initial Purchasers have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Paying Agent pursuant to which the Initial Purchasers have delivered to the
Escrow Agent the proceeds from the sale of the Certificates and have
irrevocably instructed the Escrow Agent to withdraw and pay funds from such
proceeds upon request and proper certification by the Trustee to purchase
Equipment Notes as the Aircraft are delivered by Boeing under the Aircraft
Purchase Agreement from time to time prior to the Delivery Period Termination
Date;
WHEREAS, the Escrow Agent on behalf of the Certificateholders
has contemporaneously herewith entered into a Deposit Agreement with the
Depositary under which the Deposits referred to therein will be made and from
which it will withdraw funds to allow the Trustee to purchase Equipment Notes
from time to time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of this
Agreement and the Note Purchase Agreement, upon or shortly following delivery
of an Aircraft, the Trustee on behalf of the Trust, using funds withdrawn under
the Escrow Agreement, may purchase an Equipment Note having the same interest
rate as, and final maturity date not later than the final Regular Distribution
Date of, the Certificates issued hereunder and shall hold such Equipment Note
in trust for the benefit of the Certificateholders;
WHEREAS, to facilitate the sale of Equipment Notes to, and the
purchase of Equipment Notes by, the Trustee on behalf of the Trust, the Company
has duly authorized the execution and delivery of this Agreement as the
"issuer", as such term is defined in and solely for purposes of the Securities
Act, of the Certificates to be issued pursuant hereto and as the "obligor", as
such term is defined in and solely for purposes of the Trust Indenture Act of
1939, as amended, with respect to all such Certificates and is undertaking to
perform certain administrative and ministerial duties hereunder and is also
undertaking to pay the ongoing fees and expenses of the Trustee;
WHEREAS, all of the conditions and requirements necessary to
make this Agreement, when duly executed and
11
6
delivered, a valid, binding and legal instrument, enforceable in accordance
with its terms and for the purposes herein expressed, have been done, performed
and fulfilled, and the execution and delivery of this Agreement in the form and
with the terms hereof have been in all respects duly authorized; and
WHEREAS, upon issuance of the Exchange Certificates, if any,
or the effectiveness of the Shelf Registration Statement, this Agreement, as
amended or supplemented from time to time, will be subject to the provisions of
the Trust Indenture Act of 1939, and shall, to the extent applicable, be
governed by such provisions;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, and of other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms used in this Agreement, including in the
recitals to this Agreement, that are defined in this Article have the
meanings assigned to them in this Article, and include the plural as
well as the singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, or by
the rules promulgated under the Trust Indenture Act, have the meanings
assigned to them therein;
(3) all references in this Agreement to designated
"Articles", "Sections", "Subsections" and other subdivisions are to
the designated Articles, Sections, Subsections and other subdivisions
of this Agreement;
(4) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and
not to any particular Article, Section, Subsection or other
subdivision; and
12
7
(5) unless the context otherwise requires, whenever the
words "including", "include" or "includes" are used herein, it shall
be deemed to be followed by the phrase "without limitation".
Affiliate: Means, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person, provided, however, that neither
America West Airlines, Inc. nor any of its subsidiaries shall be deemed to be an
"Affiliate" of the Company for purposes of this Agreement. For the purposes of
this definition, "control" means the power, directly or indirectly, to direct
the management and policies of such Person, whether through the ownership of
voting securities or by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agent Members: Has the meaning specified in Section 3.05.
Agreement: Has the meaning specified in the initial paragraph
hereto.
Aircraft: Means each of the New Aircraft or Substitute
Aircraft in respect of which a Participation Agreement is entered into
in accordance with the Note Purchase Agreement.
Aircraft Purchase Agreement: Has the meaning specified in the
Note Purchase Agreement.
Applicable Delivery Date: Has the meaning specified in
Section 2.01(b).
Applicable Participation Agreement: Has the meaning specified
in Section 2.01(b).
Assignment and Assumption Agreement: Means the assignment and
assumption agreement substantially in the form of Exhibit D hereto executed
and delivered in accordance with Section 11.01.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
13
8
Avoidable Tax: Means a state or local tax (i) upon (w) the
Trust, (x) the Trust Property, (y) Certificateholders or (z) the
Trustee for which the Trustee is entitled to seek reimbursement from
the Trust Property, and (ii) which would be avoided if the Trustee
were located in another state, or jurisdiction within a state, within
the United States. A tax shall not be an Avoidable Tax if the Company
or any Owner Trustee shall agree to pay, and shall pay, such tax.
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 Certificate is outstanding, the city and state in which
the Trustee or any Loan Trustee maintains its Corporate Trust Office
or receives and disburses funds.
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any one of the Initial Certificates or
Exchange Certificates and any such Certificates issued in exchange
therefor or replacement thereof pursuant to this Agreement.
Certificate Account: Means the account or accounts created
and maintained pursuant to Section 4.01(a).
Certificate Purchase Agreement: Means the Purchase Agreement
dated March 12, 1997 among the Initial Purchasers, the Company and the
Depositary, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
Class C Certificateholder: Has the meaning specified in
Section 6.01.
Company: Means Continental Airlines, Inc., a Delaware
corporation, or its successor in interest pursuant to Section 5.02, or
(only in the context of provisions hereof, if any, where such
reference is required for purposes of
14
9
compliance with the Trust Indenture Act) any other "obligor" (within
the meaning of the Trust Indenture Act) with respect to the
Certificates.
Controlling Party: Has the meaning specified in the
Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or any
Loan Trustee, means the office of such trustee in the city at which at
any particular time its corporate trust business shall be principally
administered.
Cut-off Date: Means the earlier of (a) the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
Definitive Certificates: Has the meaning specified in Section
3.01(e).
Delivery Date: Has the meaning specified in the Note Purchase
Agreement.
Delivery Notice: Has the meaning specified in the Note
Purchase Agreement.
Delivery Period Termination Date: Means the earlier of (a)
March 31, 1998, or, if the Equipment Notes relating to all of the New
Aircraft (or Substitute Aircraft in lieu thereof) have not been
purchased by the Trust and the Other Trusts on or prior to such date
due to any reason beyond the control of the Company and not occasioned
by the Company's fault or negligence, June 30, 1998 and (b) the date
on which Equipment Notes issued with respect to all of the New
Aircraft (or Substitute Aircraft in lieu thereof) have been purchased
by the Trust and the Other Trusts in accordance with the Note Purchase
Agreement.
Deposits: Has the meaning specified in the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of
March 21, 1997 relating to the Certificates between the Depositary and
the Escrow Agent, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
15
10
Depositary: Means Credit Suisse First Boston, a Swiss bank,
acting through its New York branch.
Direction: Has the meaning specified in Section 1.04(a).
Distribution Date: Means any Regular Distribution Date or
Special Distribution Date as the context requires.
DTC: Means The Depository Trust Company, its nominees and
their respective successors.
Equipment Notes: Means the equipment notes issued under the
Indentures.
ERISA: Means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor federal statute.
ERISA Legend: Has the meaning specified in Section 3.12.
Escrow Agent: Means, initially, First Security Bank, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement
dated as of March 21, 1997 relating to the Certificates, among the
Escrow Agent, the Escrow Paying Agent, the Trustee and the Initial
Purchasers, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Escrow Paying Agent: Means the Person acting as paying agent
under the Escrow Agreement.
Escrow Receipt: Means the receipt substantially in the form
annexed to the Escrow Agreement representing a fractional undivided
interest in the funds held in escrow thereunder.
Euroclear: Means the Euroclear System.
Event of Default: Means an Indenture Default under any
Indenture pursuant to which Equipment Notes held by the Trust were
issued.
16
11
Exchange Certificates: Means the pass through certificates
substantially in the form of Exhibit A hereto issued in exchange for
the Initial Certificates pursuant to the Registration Rights Agreement
and authenticated hereunder.
Exchange Offer: Means the exchange offer which may be made
pursuant to the Registration Rights Agreement to exchange Initial
Certificates for Exchange Certificates.
Exchange Offer Registration Statement: Means the registration
statement that, pursuant to the Registration Rights Agreement, is
filed by the Company with the SEC with respect to the exchange of
Initial Certificates for Exchange Certificates.
Final Maturity Date: Means October 1, 2014.
Final Withdrawal: Has the meaning specified in the Escrow
Agreement.
Final Withdrawal Date: Has the meaning specified in the
Escrow Agreement.
Final Withdrawal Notice: Has the meaning specified in Section
2.02.
Financing Documents: With respect to any Equipment Note,
means (i) the Indenture and the Participation Agreement relating to
such Equipment Note, and (ii) in the case of any Equipment Note
related to a Leased Aircraft, the Lease relating to such Leased
Aircraft.
Fractional Undivided Interest: Means the fractional undivided
interest in the Trust that is evidenced by a Certificate.
Global Certificates: Has the meaning specified in Section
3.01(d).
Global Exchange Certificate: Has the meaning specified in
Section 3.01(f).
Indenture: Means each of the separate trust indentures and
mortgages relating to the Aircraft, each as specified or described in
a Delivery Notice delivered pursuant to the
17
12
Note Purchase Agreement or the related Participation Agreement, in
each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Indenture Default: With respect to any Indenture, means any
Event of Default (as such term is defined in such Indenture).
Initial Certificates: Means the certificates issued and
authenticated hereunder substantially in the form of Exhibit A hereto
other than the Exchange Certificates.
Initial Purchasers: Means, collectively, Credit Suisse First
Boston Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman Sachs & Co.
Institutional Accredited Investor: Means an institutional
investor that is an "accredited investor" within the meaning set forth
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act.
Intercreditor Agreement: Means the Intercreditor Agreement
dated as of March 21, 1997 among the Trustee, the Other Trustees, the
Liquidity Providers, the liquidity providers relating to the
Certificates issued under (and as defined in) each of the Other Pass
Through Trust Agreements, and Wilmington Trust Company, as
Subordination Agent and as trustee thereunder, as amended,
supplemented or otherwise modified from time to time in accordance
with its terms.
Investors: Means the Initial Purchasers together with all
subsequent beneficial owners of the Certificates.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
Lease: Means, with respect to each Leased Aircraft, the lease
between an Owner Trustee, as the lessor, and the Company, as the
lessee, referred to in the related Indenture, as such lease may be
amended, supplemented or otherwise modified in accordance with its
terms.
Leased Aircraft: Has the meaning specified in the second
recital to this Agreement.
18
13
Liquidity Facility: Means, initially, (i) the Revolving
Credit Agreement dated as of March 21, 1997 relating to the
Certificates, between ABN Amro Bank N.V. and the Subordination Agent,
as agent and trustee for the Trustee, and (ii) the Revolving Credit
Agreement dated as of March 21, 1997 relating to the Certificates,
between ING Bank N.V. and the Subordination Agent, as agent and
trustee for the Trustee, and, from and after the replacement of either
such Agreement pursuant to the Intercreditor Agreement, the
replacement liquidity facility therefor, in each case as amended,
supplemented or otherwise modified from time to time in accordance
with their respective terms.
Liquidity Provider: Means, initially, each of ABN Amro Bank
N.V. and ING Bank N.V., and any replacement or successor therefor
appointed in accordance with the Intercreditor Agreement.
Loan Trustee: With respect to any Equipment Note or the
Indenture applicable thereto, means the bank or trust company
designated as trustee under such Indenture, together with any
successor to such trustee appointed pursuant thereto.
New Aircraft: Has the meaning specified in the Note Purchase
Agreement.
Non-U.S. Person: Means a Person that is not a "U.S. person",
as defined in Regulation S.
Note Purchase Agreement: Means the Note Purchase Agreement
dated as of March 21, 1997 among the Trustee, the Other Trustees, the
Company, the Escrow Agent, the Escrow Paying Agent and the
Subordination Agent, providing for, among other things, the purchase
of Equipment Notes by the Trustee on behalf of the Trust, as the same
may be amended, supplemented or otherwise modified from time to time,
in accordance with its terms.
Notice of Purchase Withdrawal: Has the meaning specified in
the Deposit Agreement.
Offering Circular: Means the Offering Circular dated March
12, 1997 relating to the offering of the Certificates and the
certificates issued under the Other Pass Through Trust Agreements.
19
14
Officer's Certificate: Means a certificate signed, (a) in the
case of the Company, by (i) the Chairman or Vice Chairman of the Board
of Directors, the President, any Executive Vice President, any Senior
Vice President or the Treasurer of the Company, signing alone, or (ii)
any Vice President of the Company signing together with the Secretary,
the Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company or, (b) in the case of an Owner Trustee or a Loan Trustee,
a Responsible Officer of such Owner Trustee or such Loan Trustee, as
the case may be.
Opinion of Counsel: Means a written opinion of legal counsel
who (a) in the case of counsel for the Company may be (i) a senior
attorney of the Company one of whose principal duties is furnishing
advice as to legal matters, (ii) Hughes Hubbard & Reed LLP, or (iii)
such other counsel designated by the Company and reasonably acceptable
to the Trustee and (b) in the case of counsel for any Owner Trustee or
any Loan Trustee may be such counsel as may be designated by any of
them whether or not such counsel is an employee of any of them, and
who shall be reasonably acceptable to the Trustee.
Other Pass Through Trust Agreements: Means each of the three
other Continental Airlines 1997-1 Pass Through Trust Agreements
relating to Continental Airlines Pass Through Trust, Series 1997-1A-O,
Continental Airlines Pass Through Trust, Series 1997-1C-I-O, and
Continental Airlines Pass Through Trust, Series 1997-1C- II-O, dated
the date hereof.
Other Trustees: Means the trustees under the Other Pass
Through Trust Agreements, and any successor or other trustee appointed
as provided therein.
Other Trusts: Means the Continental Airlines Pass Through
Trust, Series 1997-1A-O, Continental Airlines Pass Through Trust,
Series 1997-1C-I-O, and Continental Airlines Pass Through Trust,
Series 1997-1C- II-O, created on the date hereof.
Outstanding: When used with respect to Certificates, means,
as of the date of determination, all Certificates theretofore
authenticated and delivered under this Agreement, except:
20
15
(i) Certificates theretofore canceled by the
Registrar or delivered to the Trustee or the Registrar for
cancellation;
(ii) Certificates for which money in the full
amount required to make the final distribution with respect to
such Certificates pursuant to Section 11.01 hereof has been
theretofore deposited with the Trustee in trust for the
Holders of such Certificates as provided in Section 4.01
pending distribution of such money to such Certificateholders
pursuant to payment of such final distribution; and
(iii) Certificates in exchange for or in lieu of
which other Certificates have been authenticated and delivered
pursuant to this Agreement.
Owned Aircraft: Has the meaning specified in the second
recital to this Agreement.
Owner Participant: With respect to any Equipment Note
relating to a Leased Aircraft, means the "Owner Participant" as
referred to in the Indenture pursuant to which such Equipment Note is
issued and any permitted successor or assign of such Owner
Participant; and Owner Participants at any time of determination means
all of the Owner Participants thus referred to in the Indentures.
Owner Trustee: With respect to any Equipment Note relating to
a Leased Aircraft, means the "Owner Trustee", as referred to in the
Indenture pursuant to which such Equipment Note is issued, not in its
individual capacity but solely as trustee; and Owner Trustees means
all of the Owner Trustees party to any of the Indentures.
Participation Agreement: Means each Participation Agreement
to be entered into by the Trustee pursuant to the Note Purchase
Agreement, as the same may be amended, supplemented or otherwise
modified in accordance with its terms.
Paying Agent: Means the paying agent maintained and appointed
for the Certificates pursuant to Section 7.12.
Permitted Investments: Means obligations of the United States
of America or agencies or instrumentalities thereof
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for the payment of which the full faith and credit of the United
States of America is pledged, maturing in not more than 60 days after
the date of acquisition thereof or such lesser time as is required for
the distribution of any Special Payments on a Special Distribution
Date.
Person: Means any person, including any individual,
corporation, limited liability company, partnership, joint venture,
association, joint-stock company, trust, trustee, unincorporated
organization, or government or any agency or political subdivision
thereof.
Plan Transferee: Means any Plan or any entity that is using
the assets of any Plan to purchase or hold its interest in a
Certificate. For purposes of this definition, a "Plan" means any
employee benefit plan subject to ERISA as well as any plan that is not
subject to ERISA but which is subject to Section 4975 of the Internal
Revenue Code of 1986, as amended.
Pool Balance: Means, as of any date, (i) the original
aggregate face amount of the Certificates less (ii) the aggregate
amount of all payments made in respect of such Certificates other than
payments made in respect of interest or premium thereon or
reimbursement of any costs or expenses incurred in connection
therewith less (iii) the aggregate amount of unused Deposits
distributed as a Final Withdrawal other than payments in respect of
interest or premium thereon. The Pool Balance as of any Distribution
Date shall be computed after giving effect to the payment of
principal, if any, on the Equipment Notes or other Trust Property held
in such Trust and the distribution thereof to be made on such
Distribution Date and the distribution of the Final Withdrawal to be
made on such Distribution Date.
Pool Factor: Means, as of any date, the quotient (rounded to
the seventh decimal place) computed by dividing (i) the Pool Balance
as at such date by (ii) the original aggregate face amount of the
Certificates. The Pool Factor as of any Distribution Date shall be
computed after giving effect to the payment of principal, if any, on
the Equipment Notes or other Trust Property and the distribution
thereof to be made on such Distribution Date and the distribution of
the Final Withdrawal to be made on such Distribution Date.
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PTC Event of Default: Means any failure to pay within 10
Business Days of the due date thereof: (i) the outstanding Pool
Balance on the Final Maturity Date or (ii) interest due on the
Certificates on any Distribution Date (unless the Subordination Agent
shall have made an Interest Drawing or Drawings (as defined in the
Intercreditor Agreement), or a withdrawal or withdrawals pursuant to
section 3.6(f) of the Intercreditor Agreement, with respect thereto in
an aggregate amount sufficient to pay such interest and shall have
distributed such amount to the Trustee).
QIB: Means a qualified institutional buyer as defined in
Rule 144A.
Record Date: Means (i) for Scheduled Payments to be
distributed on any Regular Distribution Date, other than the final
distribution, the 15th day (whether or not a Business Day) preceding
such Regular Distribution Date, and (ii) for Special Payments to be
distributed on any Special Distribution Date, other than the final
distribution, the 15th day (whether or not a Business Day) preceding
such Special Distribution Date.
Register and Registrar: Mean the register maintained and the
registrar appointed pursuant to Sections 3.04 and 7.12.
Registration Event: Means the declaration of the
effectiveness by the SEC of the Exchange Offer Registration Statement
or the Shelf Registration Statement.
Registration Rights Agreement: Means the Exchange and
Registration Rights Agreement dated as of March 21, 1997, among the
Initial Purchasers, the Trustee, the Other Trustees and the Company,
as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
Regular Distribution Date: With respect to distributions of
Scheduled Payments in respect of the Certificates, means each date
designated as a Regular Distribution Date in the Certificates issued
pursuant to this Agreement, until payment of all the Scheduled
Payments to be made under the Equipment Notes held in the Trust have
been made; provided, however, that, if any such day shall
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not be a Business Day, the related distribution shall be made on the
next succeeding Business Day without additional interest.
Regulation S: Means Regulation S under the Securities Act or
any successor regulation thereto.
Regulation S Definitive Certificates: Has the meaning
specified in Section 3.01(e).
Regulation S Global Certificates: Has the meaning specified
in Section 3.01(d).
Related Pass Through Trust Agreement: Means the Continental
Airlines 1997-1 Pass Through Trust Agreement relating to the
Continental Airlines Pass Through Trust, Series 1997-1B-S, dated the
date hereof, entered into by the Company and the institution acting as
trustee thereunder, which agreement becomes effective upon the
execution and delivery of the Assignment and Assumption Agreement
pursuant to Section 11.01.
Related Trust: Means the Continental Pass Through Trust,
Series 1997-1B-S, formed under the Related Pass Through Trust
Agreement.
Related Trustee: Means the trustee under the Related Pass
Through Trust Agreement.
Responsible Officer: With respect to the Trustee, any Loan
Trustee and any Owner Trustee, means any officer in the Corporate
Trust Office of the Trustee, Loan Trustee or Owner Trustee or any
other officer customarily performing functions similar to those
performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred
because of his knowledge of and familiarity with a particular subject.
Restricted Definitive Certificates: Has the meaning specified
in Section 3.01(e).
Restricted Global Certificate: Has the meaning specified in
Section 3.01(c).
Restricted Legend: Has the meaning specified in Section 3.02.
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Restricted Period: Has the meaning specified in Section
3.01(d).
Rule 144A: Means Rule 144A under the Securities Act and any
successor rule thereto.
Scheduled Payment: With respect to any Equipment Note, means
(i) any payment of principal or interest on such Equipment Note (other
than any such payment which is not in fact received by the
Subordination Agent within five days of the date on which such payment
is scheduled to be made) due from the obligor thereon or (ii) any
payment of interest on the Certificates with funds drawn under 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, premium, if any, or
interest resulting from the redemption or purchase of any Equipment
Note shall not constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as
from time to time constituted or created under the United States
Securities Exchange Act of 1934, as amended, or, if at any time after
the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties on such date.
Securities Act: Means the United States Securities Act of
1933, as amended from time to time, or any successor thereto.
Shelf Registration Statement: Means the shelf registration
statement which may be required to be filed by the Company with the
SEC pursuant to any Registration Rights Agreement, other than an
Exchange Offer Registration Statement.
Special Distribution Date: Means each date on which a Special
Payment is to be distributed as specified in this Agreement; provided,
however, that, if any such day shall not be a Business Day, the
related distribution shall be made on the next succeeding Business Day
without additional interest.
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Special Redemption Premium: Means the premium payable by the
Company in respect of the Final Withdrawal pursuant to the Note
Purchase 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) or Special
Redemption Premium.
Special Payments Account: Means the account or accounts
created and maintained pursuant to Section 4.01(b).
Subordination Agent: Has the meaning specified in the
Intercreditor Agreement.
Substitute Aircraft: Has the meaning specified in the Note
Purchase Agreement.
TIN: Has the meaning specified in Section 7.16.
Transfer Date: Has the meaning specified in Section 11.01.
Triggering Event: Has the meaning assigned to such term in
the Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate
of which consists of the Trust Property.
Trust Indenture Act: Means the United States Trust Indenture
Act of 1939, as amended from time to time, or any successor thereto.
Trust Property: Means (i) the Equipment Notes held as the
property of the Trust and, subject to the Intercreditor Agreement, all
monies at any time paid thereon and all monies due and to become due
thereunder, (ii) funds from time to time deposited in the Certificate
Account and the Special Payments Account and, subject to the
Intercreditor Agreement, any proceeds from the sale by the Trustee
pursuant to Article VI hereof of any Equipment Note and (iii) all
rights of the Trust and the Trustee, on behalf of the Trust, under the
Intercreditor Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Liquidity Facilities, including, without limitation,
all rights to receive certain payments thereunder, and all monies paid
to
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the Trustee on behalf of the Trust pursuant to the Intercreditor
Agreement or the Liquidity Facilities, provided, that rights with
respect to the Deposits or under the Escrow Agreement, except for the
right to direct withdrawals for the purchase of Equipment Notes to be
held herein, will not constitute Trust Property.
Trustee: Means Wilmington Trust Company, or its successor in
interest, and any successor or other trustee appointed as provided
herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
Section 1.02. Compliance Certificates and Opinions. Upon any
application or request (except with respect to matters set forth in Article II)
by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take
any action under any provision of this Agreement, the Company, such Owner
Trustee or such Loan Trustee, as the case may be, shall furnish to the Trustee
(i) an Officer's Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with and (ii) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Agreement relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement (other than a certificate
provided pursuant to Section 8.04(e)) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions in this Agreement relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
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(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters and any such Person may certify or give an
opinion as to such matters in one or several documents.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement or, in respect of the Certificates, this
Agreement, they may, but need not, be consolidated and form one instrument.
Section 1.04. Directions of Certificateholders. (a) Any
direction, consent, request, demand, authorization, notice, waiver or other
action provided by this Agreement to be given or taken by Certificateholders (a
"Direction") may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Certificateholders in person or by
an agent or proxy duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required pursuant to this Agreement, to the Company or any Loan Trustee. Proof
of execution of any such instrument or of a writing appointing any such agent
or proxy shall be sufficient for any purpose of this Agreement and conclusive
in favor of the Trustee, the Company and any Loan Trustee, if made in the
manner provided in this Section.
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(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the certificate of any notary
public or other officer of any jurisdiction authorized to take acknowledgments
of deeds or administer oaths that the Person executing such instrument
acknowledged to him the execution thereof, or by an affidavit of a witness to
such execution sworn to before any such notary or such other officer and where
such execution is by an officer of a corporation or association or a member of
a partnership, on behalf of such corporation, association or partnership, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other reasonable manner which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the
requisite Fractional Undivided Interests of Certificates Outstanding have given
any Direction under this Agreement, Certificates owned by the Company or any
Affiliate thereof shall be disregarded and deemed not to be Outstanding for
purposes of any such determination. In determining whether the Trustee shall
be protected in relying upon any such Direction, only Certificates which the
Trustee knows to be so owned shall be so disregarded. Notwithstanding the
foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded, and (ii) if any amount of
Certificates so owned by any such Person have been pledged in good faith, such
Certificates shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Company or any Affiliate thereof.
(d) For all purposes of this Agreement, all Initial
Certificates and all Exchange Certificates shall vote and take all other
actions of Certificateholders together as one series of Certificates.
(e) The Company may at its option, by delivery of an
Officer's Certificate to the Trustee, set a record date to determine the
Certificateholders entitled to give any Direction. Notwithstanding Section
316(c) of the Trust Indenture Act, such record date shall be the record date
specified in such Officer's Certificate, which shall be a date not more than 30
days prior to the first solicitation of Certificateholders in connection
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therewith. If such a record date is fixed, such Direction may be given before
or after such record date, but only the Certificateholders of record at the
close of business on such record date shall be deemed to be Certificateholders
for the purposes of determining whether Certificateholders of the requisite
proportion of Outstanding Certificates have authorized or agreed or consented
to such Direction, and for that purpose the Outstanding Certificates shall be
computed as of such record date; provided that no such Direction by the
Certificateholders on such record date shall be deemed effective unless it
shall become effective pursuant to the provisions of this Agreement not later
than one year after such record date.
(f) Any Direction by the Holder of any Certificate shall
bind the Holder of every Certificate issued upon the transfer thereof or in
exchange therefor or in lieu thereof, whether or not notation of such Direction
is made upon such Certificate.
(g) Except as otherwise provided in Section 1.04(c),
Certificates owned by or pledged to any Person shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Certificates.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of
Equipment Notes. (a) The Trustee is hereby directed (i) to execute and
deliver the Intercreditor Agreement, the Registration Rights Agreement, the
Escrow Agreement and the Note Purchase Agreement on or prior to the Issuance
Date, each in the form delivered to the Trustee by the Company and (ii) subject
to the respective terms thereof, to perform its obligations thereunder. Upon
request of the Company and the satisfaction or waiver of the closing conditions
specified in the Certificate Purchase Agreement, the Trustee shall execute,
deliver, authenticate, issue and sell Certificates in authorized denominations
equalling in the aggregate the amount set forth, with respect to the Trust, in
Schedule II to the Certificate Purchase Agreement evidencing the entire
ownership interest in the Trust, which amount equals the maximum aggregate
principal amount of Equipment Notes which
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may be purchased by the Trustee pursuant to the Note Purchase Agreement.
Except as provided in Sections 3.04, 3.05, 3.06, 3.07 and 3.10 hereof, the
Trustee shall not execute, authenticate or deliver Certificates in excess of
the aggregate amount specified in this paragraph.
(b) On or after the Issuance Date, the Company may
deliver from time to time to the Trustee a Delivery Notice relating to one or
more Equipment Notes. After receipt of a Delivery Notice and in any case no
later than one Business Day prior to a Delivery Date as to which such Delivery
Notice relates (the "Applicable Delivery Date") (or, if the Issuance Date is an
Applicable Delivery Date, on the Issuance Date), the Trustee shall (as and when
specified in the Delivery Notice) instruct the Escrow Agent to provide a Notice
of Purchase Withdrawal to the Depositary requesting (A) the withdrawal of one
or more Deposits on the Applicable Delivery Date in accordance with and to the
extent permitted by the terms of the Escrow Agreement and the Deposit Agreement
and (B) the payment of all, or a portion, of such Deposit or Deposits in an
amount equal in the aggregate to the purchase price of such Equipment Notes to
or on behalf of the Owner Trustee or the Company, as the case may be, issuing
such Equipment Notes, all as shall be described in the Delivery Notice;
provided that, if the Issuance Date is an Applicable Delivery Date, such
purchase price shall be paid from a portion of the proceeds of the sale of the
Certificates. The Trustee shall (as and when specified in such Delivery
Notice), subject to the conditions set forth in Section 2 of the Note Purchase
Agreement, enter into and perform its obligations under the Participation
Agreement specified in such Delivery Notice (the "Applicable Participation
Agreement") and cause such certificates, documents and legal opinions relating
to the Trustee to be duly delivered as required by the Applicable Participation
Agreement. If at any time prior to the Applicable Delivery Date, the Trustee
receives a notice of postponement pursuant to Section 2(e) or 2(f) of the Note
Purchase Agreement, then the Trustee shall give the Depositary (with a copy to
the Escrow Agent) a notice of cancellation of such Notice of Purchase
Withdrawal relating to such Deposit or Deposits on such Applicable Delivery
Date. Upon satisfaction of the conditions specified in the Note Purchase
Agreement and the Applicable Participation Agreement, the Trustee shall
purchase the applicable Equipment Notes with the proceeds of the withdrawals of
one or more Deposits made on the Applicable Delivery Date in accordance with
the terms of the Deposit Agreement and the Escrow
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Agreement (or, if the Issuance Date is Applicable Delivery Date with respect to
such Applicable Participation Agreement, from a portion of the proceeds of the
sale of the Certificates). The purchase price of such Equipment Notes shall
equal the principal amount of such Equipment Notes. Amounts withdrawn from
such Deposit or Deposits in excess of the purchase price of the Equipment Notes
or to the extent not applied on the Applicable Delivery Date to the purchase
price of the Equipment Notes, shall be re-deposited by the Trustee with the
Depositary on the Applicable Delivery Date in accordance with the terms of the
Deposit Agreement.
Section 2.02. Withdrawal of Deposits. If any Deposits
remain outstanding on the Business Day next succeeding the Cut-Off Date, (i)
(A) the Trustee shall give the Escrow Agent notice that the Trustee's
obligation to purchase Equipment Notes under the Note Purchase Agreement has
terminated and instruct the Escrow Agent to provide a notice of Final
Withdrawal to the Depositary substantially in the form of Exhibit B to the
Deposit Agreement (the "Final Withdrawal Notice") and (B) the Trustee will make
a demand upon the Company under the Note Purchase Agreement for an amount equal
to the Special Redemption Premium, such payment to be made on the Final
Withdrawal Date.
Section 2.03. Acceptance by Trustee. The Trustee, upon the
execution and delivery of this Agreement, acknowledges its acceptance of all
right, title and interest in and to the Trust Property and declares that the
Trustee holds and will hold such right, title and interest for the benefit of
all then present and future Certificateholders, upon the trusts herein set
forth. Subject to Section 7.14, the Trustee shall take all actions reasonably
necessary to effect the registration of all such Equipment Notes in the name of
the Subordination Agent. By its payment for and acceptance of each Certificate
issued to it under this Agreement, each initial Certificateholder as grantor of
the Trust thereby joins in the creation and declaration of the Trust.
Section 2.04. Limitation of Powers. The Trust is constituted
solely for the purpose of making the investment in the Equipment Notes, and,
except as set forth herein, the Trustee shall not be authorized or empowered to
acquire any other investments or engage in any other activities and, in
particular, the Trustee shall not be authorized or empowered to do anything
that would cause such Trust to fail to qualify as a "grantor
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trust" for federal income tax purposes (including as subject to this
restriction, acquiring any Aircraft (as defined in the respective Indentures)
by bidding such Equipment Notes or otherwise, or taking any action with respect
to any such Aircraft once acquired).
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "7.461%
Initial Pass Through Certificates, Series 1997-1B-0" and the Exchange
Certificates shall be known as the "7.461% Exchange Pass Through Certificates,
Series 1997-1B-O", in each case, of the Trust. Each Certificate will represent
a fractional undivided interest in the Trust and shall be substantially in the
form set forth as Exhibit A hereto, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the Trustee or the officers executing
such Certificates, as evidenced by the Trustee's or officer's execution of the
Certificates. At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Certificate. In
any event, any transfer or exchange of any Certificate shall also effect a
transfer or exchange of the related Escrow Receipt. Prior to the Final
Withdrawal Date, no transfer or exchange of any Certificate shall be permitted
unless the corresponding Escrow Receipt is attached thereto and also is so
transferred or exchanged. By acceptance of any Certificate to which an Escrow
Receipt is attached, each Holder of such a Certificate acknowledges and accepts
the restrictions on transfer of the Escrow Receipt set forth herein and in the
Escrow Agreement.
(b) The Initial Certificates shall be issued only in
fully registered form without coupons and only in denominations of $100,000 or
integral multiples of $1,000 in excess thereof, except that one Certificate may
be issued in a different denomination. The Exchange Certificates will be
issued in denominations of $1,000 or integral multiples thereof, except that
one Certificate may be issued in a different denomination.
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Each Certificate shall be dated the date of its authentication. The aggregate
Fractional Undivided Interest of Certificates shall not at any time exceed
$148,333,000.
(c) The Initial Certificates offered and sold in reliance
on Rule 144A shall be issued in the form of one or more global Certificates
substantially in the form of Exhibit A hereto with such applicable legends as
are provided for in Section 3.02 (each a "Restricted Global Certificate") duly
executed and authenticated by the Trustee as hereinafter provided. Such
Restricted Global Certificates shall be in registered form and be registered in
the name of DTC and deposited with the Trustee, at its Corporate Trust Office,
as custodian for DTC. The aggregate principal amount of any Restricted Global
Certificate may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for DTC for such Restricted Global
Certificate, as provided in Section 3.06 hereof, which adjustments shall be
conclusive as to the aggregate principal amount of any such Global Certificate.
(d) The Initial Certificates offered and sold outside the
United States in reliance on Regulation S shall be issued in the form of one or
more global Certificates substantially in the form of Exhibit A hereto (each a
"Regulation S Global Certificate") duly executed and authenticated by the
Trustee as hereinafter provided. Such Regulation S Global Certificates shall
be in registered form and be registered in the name of DTC and deposited with
the Trustee, at its Corporate Trust Office, as custodian for DTC, for credit
initially and during the Restricted Period (hereinafter defined) to the
respective accounts of beneficial owners of such Certificates (or to such other
accounts as they may direct) at Morgan Guaranty Trust Company of New York,
Brussels office, as operator of Euroclear or Cedel. As used herein, the term
"Restricted Period", with respect to the Regulation S Global Certificates
offered and sold in reliance on Regulation S, means the period of 40
consecutive days beginning on and including the later of (i) the day on which
the Certificates are first offered to persons other than distributors (as
defined in Regulation S) in reliance on Regulation S and (ii) the date of the
closing of the offering under the Certificate Purchase Agreement. The
aggregate principal amount of any Regulation S Global Certificate may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for DTC for such Global Certificate, as provided in
Section 3.06 hereof, which adjustments shall be
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conclusive as to the aggregate principal amount of any such Global Certificate.
The Restricted Global Certificate and Regulation S Global Certificate are
sometimes collectively referred to herein as the "Global Certificates".
(e) Initial Certificates offered and sold to any
Institutional Accredited Investor which is not a QIB in a transaction exempt
from registration under the Securities Act (and other than as described in
Section 3.01(d)) shall be issued substantially in the form of Exhibit A hereto
in definitive, fully registered form without interest coupons with such
applicable legends as are provided for in Section 3.02 (the "Restricted
Definitive Certificates") duly executed and authenticated by the Trustee as
hereinafter provided. Certificates issued pursuant to Section 3.05(b) in
exchange for interests in a Regulation S Global Certificate shall be issued in
definitive, fully registered form without interest coupons (the "Regulation S
Definitive Certificates"). The Restricted Definitive Certificates and the
Regulation S Definitive Certificates are sometimes collectively referred to
herein as the "Definitive Certificates".
(f) The Exchange Certificates shall be issued in the form
of one or more global Certificates substantially in the form of Exhibit A
hereto (each, a "Global Exchange Certificate"), except that (i) the Restricted
Legend (hereinafter defined) shall be omitted and (ii) such Exchange
Certificates shall contain such appropriate insertions, omissions,
substitutions and other variations from the form set forth in Exhibit A hereto
relating to the nature of the Exchange Certificates as the Responsible Officer
of the Trustee executing such Exchange Certificates on behalf of the Trust may
determine, as evidenced by such officer's execution on behalf of the Trust of
such Exchange Certificates. Such Global Exchange Certificates shall be in
registered form and be registered in the name of DTC and deposited with the
Trustee, at its Corporate Trust Office, as custodian for DTC. The aggregate
principal amount of any Global Exchange Certificate may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC for such Global Exchange Certificate, which adjustments shall
be conclusive as to the aggregate principal amount of any such Global Exchange
Certificate. Subject to clause (i) and (ii) of the first sentence of this
Section 3.01(f), the terms hereof applicable to Restricted Global
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Certificates and/or Global Certificates shall apply to the Global Exchange
Certificates, mutatis mutandis.
(g) The definitive Certificates shall be in registered
form and shall be typed, printed, lithographed or engraved or produced by any
combination of these methods or may be produced in any other manner, all as
determined by the officers executing such Certificates, as evidenced by their
execution of such Certificates.
Section 3.02. Restrictive Legends. All Initial Certificates
issued pursuant to this Agreement for resale pursuant to Rule 144A or offered
and sold to any Institutional Accredited Investor which is not a QIB (including
any Global Certificate issued upon registration of transfer, in exchange for or
in lieu of such Certificates) shall be "Restricted Certificates" and shall bear
a legend to the following effect (the "Restricted Legend") unless the Company
and the Trustee determine otherwise consistent with applicable law:
"THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS
HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY AFFILIATE OF
ANY OF SUCH PERSONS RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE
EXCEPT (A) TO CONTINENTAL AIRLINES, INC., (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IF IT SHOULD
RESELL OR
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OTHERWISE TRANSFER THIS CERTIFICATE IT WILL DELIVER TO EACH PERSON TO
WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS
HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY AFFILIATE OF
ANY OF SUCH PERSONS, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER
AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE
PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN
VIOLATION OF THE FOREGOING RESTRICTIONS."
Each Global Certificate shall bear the following legend on the
face thereof:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS
CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND
3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN."
Section 3.03. Authentication of Certificates. (a) On the
Issuance Date, the Trustee shall duly execute, authenticate and deliver
Certificates in authorized denominations equalling in the aggregate the amount
set forth, with respect to the Trust, in
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Schedule II to the Certificate Purchase Agreement, evidencing the entire
ownership of the Trust, which amount equals the maximum aggregate principal
amount of Equipment Notes which may be purchased by the Trustee pursuant to the
Note Purchase Agreement.
(b) No Certificate shall be entitled to any benefit under
this Agreement or be valid or obligatory for any purpose, unless there appears
on such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. The Trustee shall cause
to be kept at the office or agency to be maintained by it in accordance with
the provisions of Section 7.12 a register (the "Register") of the Certificates
in which, subject to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of such Certificates and of
transfers and exchanges of such Certificates as herein provided. The Trustee
shall initially be the registrar (the "Registrar") for the purpose of
registering such Certificates and transfers and exchanges of such Certificates
as herein provided.
All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid obligations of the Trust, evidencing
the same interest therein, and entitled to the same benefits under this Trust
Agreement, as the Certificates surrendered upon such registration of transfer
or exchange.
A Certificateholder may transfer a Certificate, or request
that a Certificate be exchanged for Certificates in an aggregate Fractional
Undivided Interest equal to the Fractional Undivided Interest of such
Certificate surrendered for exchange of other authorized denominations, by
surrender of such Certificate to the Trustee with the form of transfer notice
thereon duly completed and executed, and otherwise complying with the terms of
this Agreement, including providing evidence of compliance with any
restrictions on transfer, in form satisfactory to the Trustee and the
Registrar; provided that no exchanges of Initial Certificates for Exchange
Certificates shall occur until an Exchange Offer Registration Statement shall
have been declared effective by the SEC (notice of which shall be
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provided to the Trustee by the Company). No such transfer shall be effected
until, and such transferee shall succeed to the rights of a Certificateholder
only upon, final acceptance and registration of the transfer by the Registrar
in the Register. Prior to the registration of any transfer by a
Certificateholder as provided herein, the Trustee shall treat the person in
whose name the Certificate is registered as the owner thereof for all purposes,
and the Trustee shall not be affected by notice to the contrary. Furthermore,
DTC shall, by acceptance of a Global Certificate, agree that transfers of
beneficial interests in such Global Certificate may be effected only through a
book-entry system maintained by DTC (or its agent), and that ownership of a
beneficial interest in the Certificate shall be required to be reflected in a
book-entry. When Certificates are presented to the Registrar with a request to
register the transfer thereof or to exchange them for other authorized
denominations of a Certificate in a Fractional Undivided Interest equal to the
aggregate Fractional Undivided Interest of Certificates surrendered for
exchange, the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met.
To permit registrations of transfers and exchanges in
accordance with the terms, conditions and restrictions hereof, the Trustee
shall execute and authenticate Certificates at the Registrar's request. No
service charge shall be made to a Certificateholder for any registration of
transfer or exchange of Certificates, but the Trustee shall require payment of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for registration of transfer or exchange shall be canceled and
subsequently destroyed by the Trustee.
Section 3.05. Book-Entry Provisions for Restricted Global
Certificates and Regulation S Global Certificates. (a) Members of, or
participants in, DTC ("Agent Members") shall have no rights under this
Agreement with respect to any Global Certificate held on their behalf by DTC,
or the Trustee as its custodian, and DTC may be treated by the Trustee and any
agent of the Trustee as the absolute owner of such Global Certificate for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Trustee or any agent of the Trustee from giving effect to any
written certification, proxy or other authorization furnished by DTC or shall
impair, as between DTC
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and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Certificate. Upon the issuance of
any Global Certificate, the Registrar or its duly appointed agent shall record
DTC as the registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be limited
to transfers of such Restricted Global Certificate or Regulation S Global
Certificate in whole, but not in part, to DTC. Beneficial interests in the
Restricted Global Certificate and any Regulation S Global Certificate may be
transferred in accordance with the rules and procedures of DTC and the
provisions of Section 3.06. Beneficial interests in a Restricted Global
Certificate or a Regulation S Global Certificate shall be delivered to all
beneficial owners thereof in the form of Restricted Definitive Certificates or
Regulation S Definitive Certificates, as the case may be, if (i) DTC notifies
the Trustee that it is unwilling or unable to continue as depositary for such
Restricted Global Certificate or Regulation S Global Certificate, as the case
may be, and a successor depositary is not appointed by the Trustee within 90
days of such notice, and (ii) after the occurrence and during the continuance
of an Event of Default, owners of beneficial interests in a Global Certificate
with Fractional Undivided Interests aggregating not less than a majority in
interest in the Trust advise the Trustee, the Company and DTC through Agent
Members in writing that the continuation of a book-entry system through DTC or
its successor is no longer in their best interests.
(c) Any beneficial interest in one of the Global Certificates
that is transferred to a Person who takes delivery in the form of an interest
in another Global Certificate will, upon such transfer, cease to be an interest
in such Global Certificate and become an interest in the other Global
Certificate and, accordingly, will thereafter be subject to all transfer
restrictions, if any, and other procedures applicable to beneficial interests
in such other Global Certificate for as long as it remains such an interest.
(d) In connection with the transfer of an entire Restricted
Global Certificate or an entire Regulation S Global Certificate to the
beneficial owners thereof pursuant to paragraph (b) of this Section 3.05, such
Restricted Global Certificate or Regulation S Global Certificate, as the case
may be, shall be deemed to be surrendered to the Trustee for
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cancellation, and the Trustee shall execute, authenticate and deliver, to each
beneficial owner identified by DTC in exchange for its beneficial interest in
such Restricted Global Certificate or Regulation S Global Certificate, as the
case may be, an equal aggregate principal amount of Restricted Definitive
Certificates or Regulation S Definitive Certificates, as the case may be, of
authorized denominations. None of the Company, the Registrar, the Paying Agent
nor the Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
registration instructions. Upon the issuance of Definitive Certificates, the
Trustee shall recognize the Person in whose name the Definitive Certificates
are registered in the Register as Certificateholders hereunder. Neither the
Company nor the Trustee shall be liable if the Trustee or the Company is unable
to locate a qualified successor clearing agency.
(e) Any Definitive Certificate delivered in exchange for an
interest in the Restricted Global Certificate pursuant to paragraph (b) of this
Section 3.05 shall, except as otherwise provided by paragraph (e) of Section
3.06, bear the Restricted Legend.
(f) Prior to the expiration of the Restricted Period, any
Regulation S Definitive Certificate delivered in exchange for an interest in a
Regulation S Global Certificate pursuant to paragraph (b) of this Section shall
bear the Restricted Legend.
(g) The registered holder of any Restricted Global
Certificate or Regulation S Global Certificate may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and until
(i) an Initial Certificate is sold under an effective Shelf Registration
Statement, or (ii) an Initial Certificate is exchanged for an Exchange
Certificate pursuant to an effective Exchange Offer Registration Statement, in
each case pursuant to the terms of the Registration Rights Agreement, the
following provisions shall apply to such Initial Certificates:
(a) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with
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respect to the registration of any proposed transfer of a Certificate
to any Institutional Accredited Investor which is neither a QIB nor a
Non-U.S. Person:
(i) The Registrar shall register the transfer of
any Certificate, whether or not bearing the Restricted Legend,
only if (x) the requested transfer is at least two years after
the later of the original issue date of the Certificates and
the last date on which such Certificate was held by the
Company, the Trustee or any affiliate of any of such Persons
or (y) the proposed transferor is an Initial Purchaser who is
transferring Certificates purchased under the Certificates
Purchase Agreement and the proposed transferee has delivered
to the Registrar a letter substantially in the form of Exhibit
C hereto and the aggregate principal amount of the
Certificates being transferred is at least $100,000. Except
as provided in the foregoing clause (y), the Registrar shall
not register the transfer of any Certificate to any
Institutional Accredited Investor which is neither a QIB nor a
Non- U.S. Person.
(ii) If the proposed transferor is an Agent Member
holding a beneficial interest in a Restricted Global
Certificate, upon receipt by the Registrar of (x) the
documents, if any, required by paragraph (i) and (y)
instructions given in accordance with DTC's and the
Registrar's procedures, the Registrar shall reflect on its
books and records the date of the transfer and a decrease in
the principal amount of such Restricted Global Certificate in
an amount equal to the principal amount of the beneficial
interest in such Restricted Global Certificate to be
transferred, and the Trustee shall execute, authenticate and
deliver to the transferor or at its direction, one or more
Restricted Definitive Certificates of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of an
Initial Certificate to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists
of Restricted Definitive Certificates, or of
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an interest in any Regulation S Global Certificate during the
Restricted Period, the Registrar shall register the transfer
if such transfer is being made by a proposed transferor who
has checked the box provided for on the form of Initial
Certificate stating, or has otherwise advised the Trustee and
the Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee
who has signed the certification provided for on the form of
Initial Certificate stating, or has otherwise advised the
Trustee and the Registrar in writing, that it is purchasing
the Initial Certificate for its own account or an account with
respect to which it exercises sole investment discretion and
that it, or the Person on whose behalf it is acting with
respect to any such account, is a QIB within the meaning of
Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received
such information regarding the Trust and/or the Company as it
has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the
transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by
Rule 144A.
(ii) Upon receipt by the Registrar of the
documents required by clause (i) above and instructions given
in accordance with DTC's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records
the date of such transfer and an increase in the principal
amount of a Restricted Global Certificate in an amount equal
to the principal amount of the Restricted Definitive
Certificates or interests in such Regulation S Global
Certificate, as the case may be, being transferred, and the
Trustee shall cancel such Definitive Certificates or decrease
the amount of such Regulation S Global Certificate so
transferred.
(c) Transfers of Interests in the Regulation S Global
Certificate or Regulation S Definitive Certificates. After the
expiration of the Restricted Period, the Registrar shall register any
transfer of interests in any Regulation S Global Certificate or
Regulation S Definitive Certificates without requiring any additional
certification. Until the expiration of the Restricted Period,
interests in the
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Regulation S Global Certificate may only be held through Agent Members
acting for and on behalf of Euroclear and Cedel.
(d) Transfers to Non-U.S. Persons at Any Time. The
following provisions shall apply with respect to any registration of
any transfer of an Initial Certificate to a Non-U.S. Person:
(i) Prior to the expiration of the Restricted
Period, the Registrar shall register any proposed transfer of
an Initial Certificate to a Non-U.S.Person upon receipt of a
certificate substantially in the form set forth as Exhibit B
hereto from the proposed transferor.
(ii) After the expiration of the Restricted
Period, the Registrar shall register any proposed transfer to
any Non-U.S. Person if the Certificate to be transferred is a
Restricted Definitive Certificate or an interest in a
Restricted Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit B from the proposed
transferor. The Registrar shall promptly send a copy of such
certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the
documents, if any, required by clause (ii) and (y)
instructions in accordance with DTC's and the Registrar's
procedures, the Registrar shall reflect on its books and
records the date of such transfer and a decrease in the
principal amount of such Restricted Global Certificate in an
amount equal to the principal amount of the beneficial
interest in such Restricted Global Certificate to be
transferred, and, upon receipt by the Registrar of
instructions given in accordance with DTC's and the
Registrar's procedures, the Registrar shall reflect on its
books and records the date and an increase in the principal
amount of the Regulation S Global Certificate in an amount
equal to the principal amount of the Restricted Definitive
Certificate or the Restricted Global Certificate, as the case
may be, to be transferred, and the Trustee shall cancel the
Definitive Certificate, if any, so
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transferred or decrease the amount of such Restricted Global
Certificate.
(e) Restricted Legend. Upon the transfer, exchange or
replacement of Certificates not bearing the Restricted Legend, the
Registrar shall deliver Certificates that do not bear the Restricted
Legend. Upon the transfer, exchange or replacement of Certificates
bearing the Restricted Legend, the Registrar shall deliver only
Certificates that bear the Restricted Legend unless either (i) the
circumstances contemplated by paragraph (d)(ii) of this Section 3.06
exist or (ii) there is delivered to the Registrar an Opinion of
Counsel to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance
with the provisions of the Securities Act.
(f) General. By acceptance of any Certificate bearing
the Restricted Legend, each Holder of such a Certificate acknowledges
the restrictions on transfer of such Certificate set forth in this
Agreement and agrees that it will transfer such Certificate only as
provided in this Agreement. The Registrar shall not register a
transfer of any Certificate unless such transfer complies with the
restrictions on transfer, if any, of such Certificate set forth in
this Agreement. In connection with any transfer of Certificates, each
Certificateholder agrees by its acceptance of the Certificates to
furnish the Registrar or the Trustee such certifications, legal
opinions or other information as either of them may reasonably require
to confirm that such transfer is being made pursuant to an exemption
from, or a transaction not subject to, the registration requirements
of the Securities Act and in accordance with the terms and provisions
of this Article III; provided that the Registrar shall not be required
to determine the sufficiency of any such certifications, legal
opinions or other information.
Until such time as no Certificates remain Outstanding, the
Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 3.05 or this Section 3.06. The
Trustee, if not the Registrar at such time, shall have the right to inspect and
make copies of all such letters, notices or other written communications at any
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reasonable time upon the giving of reasonable written notice to the Registrar.
Section 3.07. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to the Registrar
or the Registrar receives evidence to its satisfaction of the destruction, loss
or theft of any Certificate and (b) there is delivered to the Registrar and the
Trustee such security, indemnity or bond, as may be required by them to save
each of them harmless, then, in the absence of notice to the Registrar or the
Trustee that such destroyed, lost or stolen Certificate has been acquired by a
bona fide purchaser, and provided that the requirements of Section 8-405 of the
Uniform Commercial Code in effect in any applicable jurisdiction are met, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or
Certificates, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate under
this Section 3.07, the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and the Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section 3.07
shall constitute conclusive evidence of the appropriate Fractional Undivided
Interest in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen
Certificates.
Section 3.08. Persons Deemed Owners. Prior to due
presentment of a Certificate for registration of transfer, the Trustee, the
Registrar and any Paying Agent may treat the Person in whose name any
Certificate is registered (as of the day of determination) as the owner of such
Certificate for the purpose of receiving distributions pursuant to Article IV
and for all other purposes whatsoever, and none of the Trustee, the Registrar
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or any Paying Agent shall be affected by any notice to the contrary.
Section 3.09. Cancellation. All Certificates surrendered for
payment or transfer or exchange shall, if surrendered to the Trustee or any
agent of the Trustee other than the Registrar, be delivered to the Registrar
for cancellation and shall promptly be canceled by it. No Certificates shall
be authenticated in lieu of or in exchange for any Certificates canceled as
provided in this Section, except as expressly permitted by this Agreement. All
canceled Certificates held by the Registrar shall be destroyed and a
certification of their destruction delivered to the Trustee.
Section 3.10. Temporary Certificates. Until definitive
Certificates are ready for delivery, the Trustee shall authenticate temporary
Certificates. Temporary Certificates shall be substantially in the form of
definitive Certificates but may have insertions, substitutions, omissions and
other variations determined to be appropriate by the officers executing the
temporary Certificates, as evidenced by their execution of such temporary
Certificates. If temporary Certificates are issued, the Trustee will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee designated for such purpose
pursuant to Section 7.12, without charge to the Certificateholder. Upon
surrender for cancellation of any one or more temporary Certificates, the
Trustee shall execute, authenticate and deliver in exchange therefor a like
face amount of definitive Certificates of authorized denominations. Until so
exchanged, the temporary Certificates shall be entitled to the same benefits
under this Agreement as definitive Certificates.
Section 3.11. Limitation of Liability for Payments. All
payments and distributions made to Certificateholders in respect of the
Certificates shall be made only from the Trust Property and only to the extent
that the Trustee shall have sufficient income or proceeds from the Trust
Property to make such payments in accordance with the terms of Article IV of
this Agreement. Each Certificateholder, by its acceptance of a Certificate,
agrees that it will look solely to the income and proceeds from the Trust
Property for any payment or distribution
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due to such Certificateholder pursuant to the terms of this Agreement and that
it will not have any recourse to the Company, the Trustee, the Loan Trustees,
the Liquidity Providers, the Owner Trustees or the Owner Participants, except
as otherwise expressly provided herein or in the Intercreditor Agreement.
The Company is a party to this Agreement solely for purposes
of meeting the requirements of the Trust Indenture Act, and therefore shall not
have any right, obligation or liability hereunder (except as otherwise
expressly provided herein).
Section 3.12 ERISA Restrictive Legend. All Certificates
issued pursuant to this Agreement shall bear a legend to the following effect
(the "ERISA Legend") unless the Company and the Trustee determine otherwise
consistent with applicable law:
"BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT
IS NOT A PLAN TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST
AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY USING THE ASSETS OF ITS
GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE, AND THE CONDITIONS OF
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S.
DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN
CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE PASS
THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
THE FOREGOING RESTRICTIONS."
By acceptance of any Certificate bearing the ERISA Legend,
each Holder of such a Certificate acknowledges the restrictions on transfer of
such Certificate set forth in this Agreement and agrees that it will transfer
such Certificate only as provided in this Agreement. The Registrar shall not
register a transfer of any Certificate unless such transfer complies with the
restrictions on transfer, if any, of such Certificate set forth in such legend.
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments
Account. (a) The Trustee shall establish and maintain on behalf
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of the Certificateholders a Certificate Account as one or more
non-interest-bearing accounts. The Trustee shall hold the Certificate Account
in trust for the benefit of the Certificateholders, and shall make or permit
withdrawals therefrom only as provided in this Agreement. On each day when a
Scheduled Payment is made to the Trustee under the Intercreditor Agreement, the
Trustee upon receipt thereof shall immediately deposit the aggregate amount of
such Scheduled Payment in the Certificate Account.
(b) The Trustee shall establish and maintain on behalf of
the Certificateholders a Special Payments Account as one or more accounts,
which shall be non-interest bearing except as provided in Section 4.04. The
Trustee shall hold the Special Payments Account in trust for the benefit of the
Certificateholders and shall make or permit withdrawals therefrom only as
provided in this Agreement. On each day when one or more Special Payments are
made to the Trustee under the Intercreditor Agreement and upon the payment of
the Special Redemption Premium to the Trustee under the Note Purchase
Agreement, the Trustee, upon receipt thereof, shall immediately deposit the
aggregate amount of such Special Payments in the Special Payments Account.
(c) The Trustee shall cause the Subordination Agent to
present to the related Loan Trustee of each Equipment Note such Equipment Note
on the date of its stated final maturity or, in the case of any Equipment Note
which is to be redeemed in whole pursuant to the related Indenture, on the
applicable redemption date under such Indenture.
Section 4.02. Distributions from Certificate Account and
Special Payments Account. (a) On each Regular Distribution Date or as soon
thereafter as the Trustee has confirmed receipt of the payment of all or any
part of the Scheduled Payments due on such date, the Trustee shall distribute
out of the Certificate Account the entire amount deposited therein pursuant to
Section 4.01(a). There shall be so distributed to each Certificateholder of
record on the Record Date with respect to such Regular Distribution Date (other
than as provided in Section 11.01 concerning the final distribution) by check
mailed to such Certificateholder, at the address appearing in the Register,
such Certificateholder's pro rata share (based on the Fractional Undivided
Interest in the Trust held by such Certificateholder) of the total amount in
the Certificate Account, except that, with respect to Certificates registered
on the Record Date in the name
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of DTC, such distribution shall be made by wire transfer in immediately
available funds to the account designated by DTC.
(b) On each Special Distribution Date with respect to any
Special Payment or as soon thereafter as the Trustee has confirmed receipt of
any Special Payments due on the Equipment Notes held in the related Trust or
realized upon the sale of such Equipment Notes or receipt of the Special
Redemption Premium, the Trustee shall distribute out of the Special Payments
Account the entire amount of such Special Payment deposited therein pursuant to
Section 4.01(b). There shall be so distributed to each Certificateholder of
record on the Record Date with respect to such Special Distribution Date (other
than as provided in Section 11.01 concerning the final distribution) by check
mailed to such Certificateholder, at the address appearing in the Register,
such Certificateholder's pro rata share (based on the Fractional Undivided
Interest in the Trust held by such Certificateholder) of the total amount in
the Special Payments Account on account of such Special Payment, except that,
with respect to Certificates registered on the Record Date in the name of DTC,
such distribution shall be made by wire transfer in immediately available funds
to the account designated by DTC.
(c) The Trustee shall, at the expense of the Company,
cause notice of each Special Payment to be mailed to each Certificateholder at
his address as it appears in the Register. In the event of redemption or
purchase of Equipment Notes held in the Trust, such notice shall be mailed not
less than 20 days prior to the Special Distribution Date for the Special
Payment resulting from such redemption or purchase, which Special Distribution
Date shall be the date of such redemption or purchase. In the event of the
payment of a Special Redemption Premium by the Company to the Trustee under the
Note Purchase Agreement, such notice shall be mailed, together with the notice
by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement, not less
than 20 days prior to the Special Distribution Date for such amount, which
Special Distribution Date shall be the Final Withdrawal Date. In the case of
any other Special Payments, such notice shall be mailed as soon as practicable
after the Trustee has confirmed that it has received funds for such Special
Payment, stating the Special Distribution Date for such Special Payment which
shall occur not less than 20 days after the date of such notice and as soon as
practicable thereafter. Notices mailed by the Trustee shall set forth:
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(i) the Special Distribution Date and the Record
Date therefor (except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment for each
$1,000 face amount Certificate and the amount thereof
constituting principal, premium, if any, and interest,
(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the same
date as a Regular Distribution Date, the total amount to be
received on such date for each $1,000 face amount Certificate.
If the amount of (i) premium, if any, payable upon the
redemption or purchase of an Equipment Note or (ii) the Special Redemption
Premium, if any, has not been calculated at the time that the Trustee mails
notice of a Special Payment, it shall be sufficient if the notice sets forth
the other amounts to be distributed and states that any premium received will
also be distributed.
If any redemption of the Equipment Notes held in the Trust is
canceled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, including any Special Redemption Premium, reflecting in part
the information provided by the Escrow Paying Agent under the Escrow
Agreement). Such statement shall set forth (per $1,000 face amount Certificate
as to (ii), (iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on
such Distribution Date hereunder and under the Escrow
Agreement, indicating the amount allocable to each source;
(ii) the amount of such distribution hereunder
allocable to principal and the amount allocable to
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premium (including the Special Redemption Premium), if any;
(iii) the amount of such distribution hereunder
allocable to interest; and
(iv) the amount of such distribution under the
Escrow Agreement allocable to interest;
(v) the amount of such distribution under the
Escrow Agreement allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of
DTC, on the Record Date prior to each Distribution Date, the Trustee will
request from DTC a securities position listing setting forth the names of all
Agent Members reflected on DTC's books as holding interests in the Certificates
on such Record Date. On each Distribution Date, the Trustee will mail to each
such Agent Member the statement described above and will make available
additional copies as requested by such Agent Member for forwarding to holders
of interests in the Certificates.
(b) Within a reasonable period of time after the end of
each calendar year but not later than the latest date permitted by law, the
Trustee shall furnish to each Person who at any time during such calendar year
was a Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above for such calendar year or, in the event such Person was a
Certificateholder of record during a portion of such calendar year, for such
portion of such year, and such other items as are readily available to the
Trustee and which a Certificateholder shall reasonably request as necessary for
the purpose of such Certificateholder's preparation of its federal income tax
returns. Such statement and such other items shall be prepared on the basis of
information supplied to the Trustee by the Agent Members and shall be delivered
by the Trustee to such Agent Members to be available for forwarding by such
Agent Members to the holders of interests in the Certificates in the manner
described in Section 4.03(a).
(c) Promptly following (i) the Delivery Period Termination
Date, if there has been any change in the information
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set forth in clauses (x), (y) and (z) below from that set forth in page 81 of
the Offering Circular, and (ii) any early redemption of purchase of, or any
default in the payment of principal or interest in respect of, any of the
Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee shall
furnish to Certificateholders of record on such date a statement setting forth
(x) the expected Pool Balances for each subsequent Regular Distribution Date
following the Delivery Period Termination Date, (y) the related Pool Factors
for such Regular Distribution Dates and (z) the expected principal distribution
schedule of the Equipment Notes, in the aggregate, held as Trust Property at
the date of such notice. With respect to the Certificates registered in the
name of DTC, on the Delivery Period Termination Date, the Trustee will request
from DTC a securities position listing setting forth the names of all Agent
Members reflected on DTC's books as holding interests in the Certificates on
such date. The Trustee will mail to each such Agent Member the statement
described above and will make available additional copies as requested by such
Agent Member for forwarding to holders of interests in the Certificates.
Section 4.04. Investment of Special Payment Moneys. Any
money received by the Trustee pursuant to Section 4.01(b) representing a
Special Payment which is not distributed on the date received shall, to the
extent practicable, be invested in Permitted Investments by the Trustee pending
distribution of such Special Payment pursuant to Section 4.02. Any investment
made pursuant to this Section 4.04 shall be in such Permitted Investments
having maturities not later than the date that such moneys are required to be
used to make the payment required under Section 4.02 on the applicable Special
Distribution Date and the Trustee shall hold any such Permitted Investments
until maturity. The Trustee shall have no liability with respect to any
investment made pursuant to this Section 4.04, other than by reason of the
willful misconduct or negligence of the Trustee. All income and earnings from
such investments shall be distributed on such Special Distribution Date as part
of such Special Payment.
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence. The
Company, at its own cost and expense, will do or cause to be done
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all things necessary to preserve and keep in full force and effect its
corporate existence, rights and franchises, except as otherwise specifically
permitted in Section 5.02; provided, however, that the Company shall not be
required to preserve any right or franchise if the Company shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company.
Section 5.02. Consolidation, Merger, etc. The Company shall
not consolidate with or merge into any other corporation or convey, transfer or
lease substantially all of its assets as an entirety to any Person unless:
(a) the corporation formed by such consolidation or into
which the Company is merged or the Person that acquires by conveyance,
transfer or lease substantially all of the assets of the Company as an
entirety shall be (i) organized and validly existing under the laws of
the United States of America or any state thereof or the District of
Columbia, (ii) a "citizen of the United States" as defined in 49
U.S.C. 40102(a)(15), as amended, and (iii) a United States
certificated air carrier, if and so long as such status is a condition
of entitlement to the benefits of Section 1110 of the Bankruptcy
Reform Act of 1978, as amended (11 U.S.C. Section 1110), with respect
to the Leases;
(b) the corporation formed by such consolidation or into
which the Company is merged or the Person which acquires by
conveyance, transfer or lease substantially all of the assets of the
Company as an entirety shall execute and deliver to the Trustee a duly
authorized, valid, binding and enforceable agreement in form and
substance reasonably satisfactory to the Trustee containing an
assumption by such successor corporation or Person of the due and
punctual performance and observance of each covenant and condition of
this Agreement, the Other Pass Through Trust Agreements and each
Financing Document to be performed or observed by the Company; and
(c) the Company shall have delivered to the Trustee an
Officer's Certificate of the Company and an Opinion of Counsel of the
Company reasonably satisfactory to the Trustee, each stating that such
consolidation, merger, conveyance, transfer or lease and the
assumption agreement mentioned in clause (b) above comply with this
Section 5.02
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and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Upon any consolidation or merger, or any conveyance, transfer
or lease of substantially all of the assets of the Company as an entirety in
accordance with this Section 5.02, the successor corporation or Person formed
by such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Agreement
with the same effect as if such successor corporation or Person had been named
as the Company herein. No such conveyance, transfer or lease of substantially
all of the assets of the Company as an entirety shall have the effect of
releasing any successor corporation or Person which shall have become such in
the manner prescribed in this Section 5.02 from its liability in respect of
this Agreement and any Financing Document to which it is a party.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of
Remedies. Upon the occurrence and during the continuation of any Indenture
Default under any Indenture, the Trustee may, to the extent it is the
Controlling Party at such time (as determined pursuant to the Intercreditor
Agreement), direct the exercise of remedies as provided in the Intercreditor
Agreement.
(b) Purchase Rights of Certificateholders. (i) At any
time after the occurrence and during the continuation of a Triggering
Event, each Certificateholder shall have the right to purchase all,
but not less than all, of the Class A Certificates upon ten days'
written notice to the Class A Trustee and each other
Certificateholder, provided that (A) if prior to the end of such
ten-day period any other Certificateholder notifies such purchasing
Certificateholder that such other Certificateholder wants to
participate in such purchase, then such other Certificateholder may
join with the purchasing Certificateholder to purchase all, but not
less than all, of the Class A Certificates pro rata based on the
outstanding principal amount of the Certificates held by each such
Certificateholder and (B) if prior to the end of such ten-day period
any other
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Certificateholder fails to notify the purchasing Certificateholder of
such other Certificateholder's desire to participate in such a
purchase, then such other Certificateholder shall lose its right to
purchase the Class A Certificates pursuant to this Section 6.01(b)(i).
(ii) By acceptance of its Certificate, each
Certificateholder agrees that at any time after the occurrence
and during the continuation of a Triggering Event, each holder
of a Class C-I Certificate or Class C-II Certificate (a "Class
C Certificateholder") shall have the right (which shall not
expire upon any purchase of the Class A Certificates pursuant
to paragraph (i) above) to purchase all, but not less than
all, of the Class A Certificates and the Certificates upon ten
days' written notice to the Class A Trustee, the Trustee and
each other Class C Certificateholder, provided that (A) if
prior to the end of such ten-day period any other Class C
Certificateholder notifies such purchasing Class C
Certificateholder that such other Class C Certificateholder
wants to participate in such purchase, then such other Class C
Certificateholder may join with the purchasing Class C
Certificateholder to purchase all, but not less than all, of
the Class A Certificates and the Certificates pro rata based
on the Fractional Undivided Interest in the Class C-I Trust
and Class C-II Trust, taken as a whole, 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 Class A Certificates and the
Certificates pursuant to this Section 6.01(b).
The purchase price with respect to the Certificates shall be
equal to the Pool Balance of the Certificates, together with accrued and unpaid
interest thereon to the date of such purchase, without premium, but including
any other amounts then due and payable to the Certificateholders under this
Agreement, the Intercreditor Agreement, the Escrow Agreement or any Financing
Document or on or in respect of the Certificates; provided, however, that (i)
if such purchase occurs after the
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record date specified in Section 2.03(b) of the Escrow Agreement relating to
the distribution of unused Deposits and accrued and unpaid interest thereunder,
such purchase price shall be reduced by the aggregate amount of unused Deposits
and interest to be distributed under the Escrow Agreement (which deducted
amounts shall remain distributable to, and may be retained by, the
Certificateholder as of such Record Date) and (ii) if such purchase occurs
after a Record Date, such purchase price shall be reduced by the amount to be
distributed hereunder on the related Distribution Date (which deducted amounts
shall remain distributable to, and may be retained by, the Certificateholder as
of such Record Date); provided, further, that no such purchase of Certificates
shall be effective unless the purchaser(s) shall certify to the Trustee that
contemporaneously with such purchase, such purchaser(s) is purchasing, pursuant
to the terms of this Agreement and the Other Pass Through Trust Agreements, the
Class A Certificates and the Certificates which are senior to the securities
held by such purchaser(s). Each payment of the purchase price of the
Certificates referred to in the first sentence hereof shall be made to an
account or accounts designated by the Trustee and each such purchase shall be
subject to the terms of this Section 6.01(b). Each Certificateholder agrees by
its acceptance of its Certificate that it will, subject to Section 3.04 hereof,
upon payment from such Class C Certificateholder(s) of the purchase price set
forth in the first sentence of this paragraph, forthwith sell, assign, transfer
and convey to the purchaser(s) thereof (without recourse, representation or
warranty of any kind except for its own acts), all of the right, title,
interest and obligation of such Certificateholder in this Agreement, the Escrow
Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity
Facility, the Financing Documents and all Certificates and Escrow Receipts held
by such Certificateholder (excluding all right, title and interest under any of
the foregoing to the extent such right, title or interest is with respect to an
obligation not then due and payable as respects any action or inaction or state
of affairs occurring prior to such sale) and the purchaser shall assume all of
such Certificateholder's obligations under this Agreement, the Escrow
Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity
Facility, the Financing Documents and all such Certificates and Escrow
Receipts. The Certificates will be deemed to be purchased on the date payment
of the purchase price is made notwithstanding the failure of the
Certificateholders to deliver any Certificates (whether in the form of
Definitive Certificates or beneficial interests in Global
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Certificates) and, upon such a purchase, (i) the only rights of the
Certificateholders will be to deliver the Certificates to the purchaser(s) and
receive the purchase price for such Certificates and (ii) if the purchaser(s)
shall so request, such Certificateholder will comply with all the provisions of
Section 3.04 hereof to enable new Certificates to be issued to the purchaser in
such denominations as it shall request. All charges and expenses in connection
with the issuance of any such new Certificates shall be borne by the purchaser
thereof.
As used in this Section 6.01(b), the terms "Class", "Class A
Certificate", "Class A Trustee", "Class C- I Certificate", "Class C-II
Certificate", "Class C-I Trust" and "Class C-II Trust" shall have the
respective meanings assigned to such terms in the Intercreditor Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon
any sale of all or any part of the Equipment Notes made either under the power
of sale given under this Agreement or otherwise for the enforcement of this
Agreement, the following shall be applicable:
(1) Certificateholders and Trustee May Purchase Equipment
Notes. Any Certificateholder, the Trustee in its individual or any
other capacity or any other Person may bid for and purchase any of the
Equipment Notes, and upon compliance with the terms of sale, may hold,
retain, possess and dispose of such Equipment Notes in their own
absolute right without further accountability.
(2) Receipt of Trustee Shall Discharge Purchaser. The
receipt of the Trustee making such sale shall be a sufficient
discharge to any purchaser for his purchase money, and, after paying
such purchase money and receiving such receipt, such purchaser or its
personal representative or assigns shall not be obliged to see to the
application of such purchase money, or be in any way answerable for
any loss, misapplication or non- application thereof.
(3) Application of Moneys Received upon Sale. Any moneys
collected by the Trustee upon any sale made either under the power of
sale given by this Agreement or otherwise for the enforcement of this
Agreement shall be applied as provided in Section 4.02.
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Section 6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit. If there shall be a failure to make payment of the
principal of, premium, if any, or interest on any Equipment Note, or if there
shall be any failure to pay Rent (as defined in the relevant Lease) under any
Lease when due and payable, then the Trustee, in its own name and as trustee of
an express trust, as holder of such Equipment Notes, to the extent permitted by
and in accordance with the terms of the Intercreditor Agreement and the
Financing Documents (subject to the rights of the applicable Owner Trustee or
Owner Participant to cure any such failure to pay principal of, premium, if
any, or interest on any Equipment Note or to pay Rent under any Lease in
accordance with the applicable Indenture), shall be entitled and empowered to
institute any suits, actions or proceedings at law, in equity or otherwise, for
the collection of the sums so due and unpaid on such Equipment Notes or under
such Lease and may prosecute any such claim or proceeding to judgment or final
decree with respect to the whole amount of any such sums so due and unpaid.
Section 6.04. Control by Certificateholders. Subject to
Section 6.03 and the Intercreditor Agreement, the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Trust shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee with respect to the Trust or pursuant to the terms of the
Intercreditor Agreement, or exercising any trust or power conferred on the
Trustee under this Agreement or the Intercreditor Agreement, including any
right of the Trustee as Controlling Party under the Intercreditor Agreement or
as holder of the Equipment Notes, provided that
(1) such Direction shall not be in conflict with any rule
of law or with this Agreement and would not involve the Trustee in
personal liability or expense,
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the Certificateholders not
taking part in such Direction, and
(3) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such Direction.
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Section 6.05. Waiver of Past Defaults. Subject to the
Intercreditor Agreement, the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust (i) may on behalf of all of the Certificateholders waive any past
Event of Default hereunder and its consequences or (ii) if the Trustee is the
Controlling Party, may direct the Trustee to instruct the applicable Loan
Trustee to waive any past Indenture Default under any Indenture and its
consequences, and thereby annul any Direction given by such Certificateholders
or the Trustee to such Loan Trustee with respect thereto, except a default:
(1) in the deposit of any Scheduled Payment or Special
Payment under Section 4.01 or in the distribution of any payment under
Section 4.02 on the Certificates, or
(2) in the payment of the principal of (premium, if any)
or interest on the Equipment Notes, or
(3) in respect of a covenant or provision hereof which
under Article IX cannot be modified or amended without the consent of
each Certificateholder holding an Outstanding Certificate affected
thereby.
Upon any such waiver, such default shall cease to exist with
respect to the Certificates and any Event of Default arising therefrom shall be
deemed to have been cured for every purpose and any direction given by the
Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall
be annulled with respect thereto; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes
issued under the relevant Indenture to waive the corresponding Indenture
Default.
Section 6.06. Right of Certificateholders to Receive
Payments Not to Be Impaired. Anything in this Agreement to the contrary
notwithstanding, including, without limitation, Section 6.07 hereof, but
subject to the Intercreditor Agreement, the right of any Certificateholder to
receive distributions of payments required pursuant to Section 4.02 hereof on
the Certificates when due, or to institute suit for the enforcement of any such
payment on or after the applicable Regular Distribution Date or Special
Distribution Date, shall not be
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impaired or affected without the consent of such Certificateholder.
Section 6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions. A Certificateholder shall not have the right to
institute any suit, action or proceeding at law or in equity or otherwise with
respect to this Agreement, for the appointment of a receiver or for the
enforcement of any other remedy under this Agreement, unless:
(1) such Certificateholder previously shall have given
written notice to the Trustee of a continuing Event of Default;
(2) Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than 25% of the
Trust shall have requested the Trustee in writing to institute such
action, suit or proceeding and shall have offered to the Trustee
indemnity as provided in Section 7.03(e);
(3) the Trustee shall have refused or neglected to
institute such an action, suit or proceeding for 60 days after receipt
of such notice, request and offer of indemnity; and
(4) no direction inconsistent with such written request
shall have been given to the Trustee during such 60-day period by
Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in interest
in the Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on
any property subject thereto, or the rights of the Certificateholders or the
holders of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder or (iii) enforce
any right under this Agreement, except in the manner herein provided and for
the equal, ratable and common benefit of all the Certificateholders subject to
the provisions of this Agreement.
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Section 6.08. Remedies Cumulative. Every remedy given
hereunder to the Trustee or to any of the Certificateholders shall not be
exclusive of any other remedy or remedies, and every such remedy shall be
cumulative and in addition to every other remedy given hereunder or now or
hereafter given by statute, law, equity or otherwise.
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. (a)
Except during the continuance of an Event of Default, the Trustee undertakes to
perform such duties as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement against the
Trustee.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of its own affairs.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the
effect of Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every
provision of this Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.
Section 7.02. Notice of Defaults. As promptly as
practicable after, and in any event within 90 days after, the occurrence of any
default (as such term is defined below) hereunder, the Trustee shall transmit
by mail to the Company, the Owner Trustees, the Owner Participants, the Loan
Trustees and the
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Certificateholders in accordance with Section 313(c) of the Trust Indenture
Act, notice of such default hereunder known to the Trustee, unless such default
shall have been cured or waived; provided, however, that, except in the case of
a default on the payment of the principal, premium, if any, or interest on any
Equipment Note held in the Trust, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee
or a trust committee of directors and/or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interests of
the Certificateholders. For the purpose of this Section, the term "default"
means any event that is, or after notice or lapse of time or both would become,
an Event of Default.
Section 7.03. Certain Rights of Trustee. Subject to the
provisions of Section 315 of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting in reliance upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a written description of the
subject matter thereof accompanied by an Officer's Certificate and an
Opinion of Counsel as provided in Section 1.02 of this Agreement;
(c) whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officer's
Certificate of the Company, any Owner Trustee or any Loan Trustee;
(d) the Trustee may consult with counsel and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
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(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement at the
Direction of any of the Certificateholders pursuant to this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the cost, expenses and
liabilities which might be incurred by it in compliance with such
Direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture or other paper or document;
(g) the Trustee may execute any of the trusts or powers
under this Agreement or perform any duties under this Agreement either
directly or by or through agents or attorneys, and the Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it under this Agreement;
(h) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the Direction of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a
majority in interest in the Trust relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Agreement; and
(i) the Trustee shall not be required to expend or risk
its own funds in the performance of any of its duties under this
Agreement, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk is not reasonably
assured to it.
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, except
the certificates of authentication, shall not be taken as the statements of the
Trustee, and the Trustee assumes no responsibility for their correctness.
Subject to Section 7.15, the Trustee makes no representations as to the
validity or sufficiency of this Agreement, any Equipment Notes,
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the Intercreditor Agreement, the Deposit Agreement, the Escrow Agreement, the
Certificates or any other Financing Document, except that the Trustee hereby
represents and warrants that this Agreement has been, and the Intercreditor
Agreement, the Registration Rights Agreement, the Note Purchase Agreement, the
Escrow Agreement and each Certificate will be, executed, authenticated and
delivered by one of its officers who is duly authorized to execute,
authenticate and deliver such document on its behalf.
Section 7.05. May Hold Certificates. The Trustee, any
Paying Agent, Registrar or any of their Affiliates or any other agent in their
respective individual or any other capacity may become the owner or pledgee of
Certificates and, subject to Sections 310(b) and 311 of the Trust Indenture
Act, if applicable, may otherwise deal with the Company, the Owner Trustees or
the Loan Trustees with the same rights it would have if it were not Trustee,
Paying Agent, Registrar or such other agent.
Section 7.06. Money Held in Trust. Money held by the
Trustee or the Paying Agent in trust hereunder need not be segregated from
other funds except to the extent required herein or by law and neither the
Trustee nor the Paying Agent shall have any liability for interest upon any
such moneys except as provided for herein.
Section 7.07. Compensation and Reimbursement. The Company
agrees:
(1) to pay, or cause to be paid, to the Trustee from time
to time reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse, or cause to be reimbursed, the Trustee upon its request for
all reasonable out-of-pocket expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of
this Agreement (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence,
willful misconduct or bad faith or as may be
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incurred due to the Trustee's breach of its representations and
warranties set forth in Section 7.15; and
(3) to indemnify, or cause to be indemnified, the Trustee
for, and to hold it harmless against, any loss, liability or expense
(other than for or with respect to any tax) incurred without
negligence, willful misconduct or bad faith, on its part, arising out
of or in connection with the acceptance or administration of this
Trust, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder, except for any such loss,
liability or expense incurred by reason of the Trustee's breach of its
representations and warranties set forth in Section 7.15; provided,
however, that the foregoing paragraph (3) shall cease to have any
further force or effect upon the execution and delivery by the Trustee
of any Participation Agreement.
With respect to paragraph (3) above, the Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel with the consent of the Company and the
Company will pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made, in settlement or otherwise, without its
consent.
The Trustee shall be entitled to reimbursement from, and shall
have a lien prior to the Certificates upon, the Trust Property for any tax
incurred without negligence, bad faith or willful misconduct, on its part,
arising out of or in connection with the acceptance or administration of such
Trust (other than any tax attributable to the Trustee's compensation for
serving as such), including any costs and expenses incurred in contesting the
imposition of any such tax. If the Trustee reimburses itself from the Trust
Property of such Trust for any such tax, it will mail a brief report within 30
days setting forth the circumstances thereof to all Certificateholders as their
names and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be eligible to act
as a trustee under Section 310(a) of the Trust Indenture Act and shall have a
combined capital and surplus of at
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least $75,000,000 (or a combined capital and surplus in excess of $5,000,000
and the obligations of which, whether now in existence or hereafter incurred,
are fully and unconditionally guaranteed by a corporation organized and doing
business under the laws of the United States, any state or territory thereof or
of the District of Columbia and having a combined capital and surplus of at
least $75,000,000). If such corporation publishes reports of conditions at
least annually, pursuant to law or to the requirements of federal, state,
territorial or District of Columbia supervising or examining authority, then
for the purposes of this Section 7.08, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
Section 7.09. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by
giving prior written notice thereof to the Company, the Authorized Agents, the
Owner Trustees and the Loan Trustees. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Company, the Authorized
Agents, the Owner Trustees, the Loan Trustees and the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Direction
of the Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee and to the Company, the Owner Trustees and the Loan
Trustees.
(d) If at any time:
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(1) the Trustee shall fail to comply with Section 310 of
the Trust Indenture Act, if applicable, after written request therefor
by the Company or by any Certificateholder who has been a bona fide
Certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section
7.08 and shall fail to resign after written request therefor by the
Company or by any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may, with the consent of the Owner
Participants, which consent may not be unreasonably withheld, remove the
Trustee or (ii) any Certificateholder who has been a bona fide
Certificateholder for at least six months may, on behalf of itself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall obtain
actual knowledge of an Avoidable Tax which has been or is likely to be
asserted, the Trustee shall promptly notify the Company and shall, within 30
days of such notification, resign hereunder unless within such 30-day period
the Trustee shall have received notice that the Company has agreed to pay such
tax. The Company shall promptly appoint a successor Trustee in a jurisdiction
where there are no Avoidable Taxes.
(f) If the Trustee shall resign, be removed or become
incapable of acting or if a vacancy shall occur in the office of the Trustee
for any cause, the Company shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or other
occurrence of such vacancy, a successor Trustee shall be appointed by Direction
of the Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Company, the Owner Trustees, the Loan Trustees and the
retiring Trustee, and the Company approves such appointment, which approval
shall not be
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unreasonably withheld, then the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Trustee and
supersede the successor Trustee appointed as provided above. If no successor
Trustee shall have been so appointed as provided above and accepted appointment
in the manner hereinafter provided, any Certificateholder who has been a bona
fide Certificateholder for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee.
(g) The successor Trustee shall give notice of the
resignation and removal of the Trustee and appointment of the successor Trustee
by mailing written notice of such event by first-class mail, postage prepaid,
to the Certificateholders as their names and addresses appear in the Register.
Each notice shall include the name of such successor Trustee and the address of
its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute and deliver to the
Company, the Authorized Agents, the Owner Trustees and the Loan Trustees and to
the retiring Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee; but, on request of the Company or the successor Trustee, such retiring
Trustee shall execute and deliver an instrument transferring to such successor
Trustee all such rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all Trust Property
held by such retiring Trustee hereunder, subject nevertheless to its lien, if
any, provided for in Section 7.07. Upon request of any such successor Trustee,
the Company, the retiring Trustee and such successor Trustee shall execute and
deliver any and all instruments containing such provisions as shall be
necessary or desirable to transfer and confirm to, and for more fully and
certainly vesting in, such successor Trustee all such rights, powers and
trusts.
No institution shall accept its appointment as a Trustee
hereunder unless at the time of such acceptance such institution shall be
qualified and eligible under this Article VII.
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Section 7.11. Merger, Conversion, Consolidation or
Succession to Business. Any corporation into which the Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article VII, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Certificates
shall have been executed or authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such execution or authentication and deliver
the Certificates so executed or authenticated with the same effect as if such
successor Trustee had itself executed or authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at
all times be maintained an office or agency in the location set forth in
Section 12.03 where Certificates may be presented or surrendered for
registration of transfer or for exchange, and for payment thereof and where
notices and demands to or upon the Trustee in respect of such certificates or
this Agreement may be served; provided, however, that, if it shall be necessary
that the Trustee maintain an office or agency in another location (e.g., the
Certificates shall be represented by Definitive Certificates and shall be
listed on a national securities exchange), the Trustee will make all reasonable
efforts to establish such an office or agency. Written notice of the location
of each such other office or agency and of any change of location thereof shall
be given by the Trustee to the Company, the Owner Trustees, the Loan Trustees
(in the case of any Owner Trustee or Loan Trustee, at its address specified in
the Financing Documents or such other address as may be notified to the
Trustee) and the Certificateholders. In the event that no such office or
agency shall be maintained or no such notice of location or of change of
location shall be given, presentations and demands may be made and notices may
be served at the Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a Paying
Agent hereunder with respect to the Certificates. Each such Authorized Agent
shall be a bank or trust company, shall be
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a corporation organized and doing business under the laws of the United States
or any state, with a combined capital and surplus of at least $75,000,000, or,
if the Trustee shall be acting as the Registrar or Paying Agent hereunder, a
corporation having a combined capital and surplus in excess of $5,000,000, the
obligations of which are guaranteed by a corporation organized and doing
business under the laws of the United States or any state, with a combined
capital and surplus of at least $75,000,000, and shall be authorized under such
laws to exercise corporate trust powers, subject to supervision by Federal or
state authorities. The Trustee shall initially be the Paying Agent and, as
provided in Section 3.04, Registrar hereunder with respect to the Certificates.
Each Registrar shall furnish to the Trustee, at stated intervals of not more
than six months, and at such other times as the Trustee may request in writing,
a copy of the Register maintained by such Registrar.
(c) Any corporation into which any Authorized Agent may
be merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any Authorized
Agent shall be a party, or any corporation succeeding to the corporate trust
business of any Authorized Agent, shall be the successor of such Authorized
Agent hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or such Authorized Agent or such successor
corporation.
(d) Any Authorized Agent may at any time resign by giving
written notice of resignation to the Trustee, the Company, the Owner Trustees
and the Loan Trustees. The Company may, and at the request of the Trustee
shall, at any time terminate the agency of any Authorized Agent by giving
written notice of termination to such Authorized Agent and to the Trustee.
Upon the resignation or termination of an Authorized Agent or in case at any
time any such Authorized Agent shall cease to be eligible under this Section
(when, in either case, no other Authorized Agent performing the functions of
such Authorized Agent shall have been appointed), the Company shall promptly
appoint one or more qualified successor Authorized Agents, reasonably
satisfactory to the Trustee, to perform the functions of the Authorized Agent
which has resigned or whose agency has been terminated or who shall have ceased
to be eligible under this Section. The Company shall give written notice of
any such appointment made by it to the Trustee, the Owner Trustees and the
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Loan Trustees; and in each case the Trustee shall mail notice of such
appointment to all Certificateholders as their names and addresses appear on
the Register.
(e) The Company agrees to pay, or cause to be paid, from
time to time to each Authorized Agent reasonable compensation for its services
and to reimburse it for its reasonable expenses.
Section 7.13. Money for Certificate Payments to Be Held in
Trust. All moneys deposited with any Paying Agent for the purpose of any
payment on Certificates shall be deposited and held in trust for the benefit of
the Certificateholders entitled to such payment, subject to the provisions of
this Section. Moneys so deposited and held in trust shall constitute a
separate trust fund for the benefit of the Certificateholders with respect to
which such money was deposited.
The Trustee may at any time, for the purpose of obtaining the
satisfaction and discharge of this Agreement or for any other purpose, direct
any Paying Agent to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon
which such sums were held by such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be
purchased by the Trust shall be issued in the name of the Subordination Agent
or its nominee and held by the Subordination Agent in trust for the benefit of
the Certificateholders, or, if not so held, the Subordination Agent or its
nominee shall be reflected as the owner of such Equipment Notes in the register
of the issuer of such Equipment Notes.
Section 7.15. Representations and Warranties of Trustee.
The Trustee hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation
organized and validly existing in good standing under the laws of the State of
Delaware;
(b) the Trustee has full power, authority and legal right
to execute, deliver, and perform this Agreement, the Intercreditor Agreement,
the Registration Rights Agreement, the
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Escrow Agreement, the Note Purchase Agreement and the Financing Documents to
which it is a party and has taken all necessary action to authorize the
execution, delivery, and performance by it of this Agreement, the Intercreditor
Agreement, the Registration Rights Agreement, the Escrow Agreement, the Note
Purchase Agreement and the Financing Documents to which it is a party;
(c) the execution, delivery and performance by the
Trustee of this Agreement, the Intercreditor Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Note Purchase Agreement and the Financing
Documents to which it is a party (i) will not violate any provision of United
States federal law or the law of the state of the United States where it is
located governing the banking and trust powers of the Trustee or any order,
writ, judgment, or decree of any court, arbitrator or governmental authority
applicable to the Trustee or any of its assets, (ii) will not violate any
provision of the articles of association or by-laws of the Trustee, or (iii)
will not violate any provision of, or constitute, with or without notice or
lapse of time, a default under, or result in the creation or imposition of any
lien on any properties included in the Trust Property pursuant to the
provisions of any mortgage, indenture, contract, agreement or other undertaking
to which it is a party, which violation, default or lien could reasonably be
expected to have an adverse effect on the Trustee's performance or ability to
perform its duties hereunder or thereunder or on the transactions contemplated
herein or therein;
(d) the execution, delivery and performance by the
Trustee of this Agreement, the Intercreditor Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Note Purchase Agreement, and the Financing
Documents to which it is a party will not require the authorization, consent,
or approval of, the giving of notice to, the filing or registration with, or
the taking of any other action in respect of, any governmental authority or
agency of the United States or the state of the United States where it is
located regulating the banking and corporate trust activities of the Trustee;
and
(e) this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Note Purchase
Agreement, and the Financing Documents to which it is a party have been duly
executed and delivered by the Trustee and constitute the legal, valid, and
binding agreements of the
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Trustee, enforceable against it in accordance with their respective terms,
provided that enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and (ii) general principles of equity.
Section 7.16. Withholding Taxes, Information Reporting.
The Trustee, as trustee of the grantor trust created by this Agreement, shall
exclude and withhold from each distribution of principal, premium, if any, and
interest and other amounts due under this Agreement or under the Certificates
any and all withholding taxes applicable thereto as required by law. In
addition, the Trustee shall remit such amounts as would be required by section
1446 of the Internal Revenue Code of 1986, as amended, if the Trust were
characterized as a partnership engaged in a U.S. trade or business for U.S.
federal income tax purposes and shall withhold such amounts from amounts
distributable to or for the benefit of Certificateholders or Investors that are
not United States persons within the meaning of section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended. In this regard, the Trustee shall
cause the appropriate withholding agent to withhold with respect to such
distributions in the manner contemplated by Section 10.04 of Revenue Procedure
89-31 and Treasury Regulation 1.1445-8(b)(3)) by filing a notice with the
National Association of Securities Dealers, Inc. substantially in the form of
Exhibit E hereto on or before the date 10 days prior to the Record Date. The
Trustee shall mail such notice to the National Association of Securities
Dealers no later than the date than 15 days prior to the Record Date.
Investors that are not United States Persons agree to furnish a United States
taxpayer identification number ("TIN") to the Trustee and the Trustee shall
provide such TINs to the appropriate withholding agent. The Trustee agrees to
act as such withholding agent (except to the extent contemplated above with
respect to withholding amounts as if the Trust were characterized as a
partnership engaged in a U.S. trade or business for U.S. federal income tax
purposes) and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Certificates, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Certificateholders, that it will file any necessary withholding tax returns or
statements when due, and that, as promptly as possible after the payment
thereof, it will deliver to each such Certificateholder appropriate
documentation showing
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the payment thereof, together with such additional documentary evidence as such
Certificateholders may reasonably request from time to time. The Trustee
agrees to file any other information reports as it may be required to file
under United States law. Each Certificateholder or Investor that is not a
United States person within the meaning of section 7701(a)(30) of the Internal
Revenue Code, as amended, by its acceptance of a Certificate or a beneficial
interest therein, agrees to indemnify and hold harmless the Trust and the
Trustee from and against any improper failure to withhold taxes from amounts
payable to it or for its benefit, other than an improper failure attributable
to the gross negligence or willful misconduct of the Trustee.
Section 7.17. Trustee's Liens. The Trustee in its
individual capacity agrees that it will at its own cost and expense promptly
take any action as may be necessary to duly discharge and satisfy in full any
mortgage, pledge, lien, charge, encumbrance, security interest or claim
("Trustee's Liens") on or with respect to the Trust Property which is
attributable to the Trustee either (i) in its individual capacity and which is
unrelated to the transactions contemplated by this Agreement, the Intercreditor
Agreement, the Note Purchase Agreement or the Financing Documents, or (ii) as
Trustee hereunder or in its individual capacity and which arises out of acts or
omissions which are not contemplated by this Agreement.
Section 7.18. Preferential Collection of Claims. The
Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding
any creditor relationship listed in Section 311(b) of the Trust Indenture Act.
If the Trustee shall resign or be removed as Trustee, it shall be subject to
Section 311(a) of the Trust Indenture Act to the extent provided therein.
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders. The Company will furnish to the Trustee
within 15 days after each Record Date with respect to a Scheduled Payment, and
at such other times as the Trustee may request in writing within 30 days after
receipt by the Company of any such request, a list, in such form as the Trustee
may reasonably require, of all information in the possession or control of the
Company as to the names and
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addresses of the Certificateholders, in each case as of a date not more than 15
days prior to the time such list is furnished; provided, however, that so long
as the Trustee is the sole Registrar, no such list need be furnished; and
provided further, however, that no such list need be furnished for so long as a
copy of the Register is being furnished to the Trustee pursuant to Section
7.12.
Section 8.02. Preservation of Information; Communications
to Certificateholders. The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Certificateholders contained
in the most recent list furnished to the Trustee as provided in Section 7.12 or
Section 8.01, as the case may be, and the names and addresses of
Certificateholders received by the Trustee in its capacity as Registrar, if so
acting. The Trustee may destroy any list furnished to it as provided in
Section 7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.
Section 8.03. Reports by Trustee. Within 60 days after May
15 of each year commencing with the first full year following the issuance of
the Certificates, the Trustee shall transmit to the Certificateholders, as
provided in Section 313(c) of the Trust Indenture Act, a brief report dated as
of such May 15, if required by Section 313(a) of the Trust Indenture Act.
Section 8.04. Reports by the Company. The Company shall:
(a) file with the Trustee, within 30 days after the
Company is required to file the same with the SEC, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the SEC may from
time to time by rules and regulations prescribe) which the Company is
required to file with the SEC pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934, as amended; or, if the Company
is not required to file information, documents or reports pursuant to
either of such sections, then to file with the Trustee and the SEC, in
accordance with rules and regulations prescribed by the SEC, such of
the supplementary and periodic information, documents and reports
which may be required pursuant to section 13 of the Securities
Exchange Act of 1934, as amended, in respect of a security listed and
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registered on a national securities exchange as may be prescribed in
such rules and regulations;
(b) during any period, prior to the consummation of the
Exchange Offer and during which the Shelf Registration Statement is
not in effect, in which the Company is not subject to Section 13(a),
13(c) or 15(d) under the Securities Exchange Act of 1934, make
available to any Holder of the Certificates in connection with any
sale thereof and any prospective purchaser of the Certificates from
such Holder, in each case upon request, the information specified in,
and meeting the requirements of, Rule 144A(d)(4) under the Securities
Act but only for so long as any of the Certificates remain outstanding
and are "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act and, in any event, only until the second
anniversary of the Issuance Date;
(c) file with the Trustee and the SEC, in accordance with
the rules and regulations prescribed by the SEC, such additional
information, documents and reports with respect to compliance by the
Company with the conditions and covenants provided for in this
Agreement, as may be required by such rules and regulations,
including, in the case of annual reports, if required by such rules
and regulations, certificates or opinions of independent public
accountants, conforming to the requirements of Section 1.02;
(d) transmit to all Certificateholders, in the manner and
to the extent provided in Section 313(c) of the Trust Indenture Act
such summaries of any information, documents and reports required to
be filed by the Company pursuant to subsections (a) and (c) of this
Section 8.04 as may be required by rules and regulations prescribed by
the SEC; and
(e) furnish to the Trustee, not less often than annually,
a brief certificate from the principal executive officer, principal
financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and
covenants under this Agreement (it being understood that for purposes
of this paragraph (e), such compliance shall be determined without
regard to any period of grace or requirement of notice provided under
this Agreement).
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ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders. Without the consent of the Certificateholders, the Company
may (but will not be required to), and the Trustee (subject to Section 9.03)
shall, at the Company's request, at any time and from time to time, enter into
one or more agreements supplemental hereto or, if applicable, to the
Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the
Deposit Agreement, the Registration Rights Agreement or any Liquidity Facility
in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to
the Company and the assumption by any such successor of the covenants
of the Company herein contained or of the Company's obligations under
the Note Purchase Agreement, the Registration Rights Agreement or any
Liquidity Facility; or
(2) to add to the covenants of the Company for the
benefit of the Certificateholders, or to surrender any right or power
conferred upon the Company in this Agreement, the Note Purchase
Agreement, the Registration Rights Agreement or any Liquidity
Facility; or
(3) to correct or supplement any provision in this
Agreement, the Intercreditor Agreement, the Escrow Agreement, the
Deposit Agreement, the Note Purchase Agreement, the Registration
Rights Agreement or any Liquidity Facility which may be defective or
inconsistent with any other provision herein or therein or to cure any
ambiguity or correct any mistake or to modify any other provision with
respect to matters or questions arising under this Agreement, the
Escrow Agreement, the Deposit Agreement, the Note Purchase Agreement,
the Intercreditor Agreement, the Registration Rights Agreement or any
Liquidity Facility, provided that any such action shall not materially
adversely affect the interests of the Certificateholders; or
(4) to comply with any requirement of the SEC, any
applicable law, rules or regulations of any exchange or quotation
system on which the Certificates are listed, any regulatory body or
the Registration Rights Agreement to effectuate the Exchange Offer; or
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(5) to modify, eliminate or add to the provisions of this
Agreement to such extent as shall be necessary to continue the
qualification of this Agreement (including any supplemental agreement)
under the Trust Indenture Act or under any similar Federal statute
hereafter enacted, and to add to this Agreement such other provisions
as may be expressly permitted by the Trust Indenture Act, excluding,
however, the provisions referred to in Section 316(a)(2) of the Trust
Indenture Act as in effect at the date as of which this instrument was
executed or any corresponding provision in any similar Federal statute
hereafter enacted; or
(6) to evidence and provide for the acceptance of
appointment under this Agreement by the Trustee of a successor Trustee
and to add to or change any of the provisions of this Agreement as
shall be necessary to provide for or facilitate the administration of
the Trust, pursuant to the requirements of Section 7.10; or
(7) to provide the information required under Section
7.12 and Section 12.03 as to the Trustee; or
(8) to modify or eliminate provisions relating to the
transfer or exchange of Exchange Certificates or the Initial
Certificates upon consummation of the Exchange Offer (as defined in
the Registration Rights Agreement) or effectiveness of the Shelf
Registration Statement or the Exchange Offer Registration Statement;
provided, however, that no such supplemental agreement shall adversely affect
the status of any Trust as a grantor trust under Subpart E, Part I of
Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986,
as amended, for U.S. federal income tax purposes.
Section 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders holding
Certificates (including consents obtained in connection with a tender offer or
exchange offer for the Certificates) evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust, by Direction of
said Certificateholders delivered to the Company and the Trustee, the Company
may (with the consent of the Owner Trustees, if any, which consent shall not be
unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter
into an agreement
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or agreements for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, the
Intercreditor Agreement, any Liquidity Facility, the Registration Rights
Agreement, the Escrow Agreement, the Deposit Agreement or the Note Purchase
Agreement to the extent applicable to such Certificateholders or of modifying
in any manner the rights and obligations of such Certificateholders under this
Agreement, the Intercreditor Agreement, any Liquidity Facility, the
Registration Rights Agreement, the Escrow Agreement, the Deposit Agreement or
the Note Purchase Agreement; provided, however, that no such agreement shall,
without the consent of the Certificateholder of each Outstanding Certificate
affected thereby:
(1) reduce in any manner the amount of, or delay the
timing of, any receipt by the Trustee (or, with respect to the
Deposits, the Certificateholders) of payments on the Equipment Notes
held in the Trust or on the Deposits or distributions that are
required to be made herein on any Certificate, or change any date of
payment on any Certificate, or change the place of payment where, or
the coin or currency in which, any Certificate is payable, or impair
the right to institute suit for the enforcement of any such payment or
distribution on or after the Regular Distribution Date or Special
Distribution Date applicable thereto; or
(2) permit the disposition of any Equipment Note included
in the Trust Property except as permitted by this Agreement, or
otherwise deprive such Certificateholder of the benefit of the
ownership of the Equipment Notes in the Trust; or
(3) reduce the specified percentage of the aggregate
Fractional Undivided Interests of the Trust which is required for any
such supplemental agreement, or reduce such specified percentage
required for any waiver of compliance with certain provisions of this
Agreement or certain defaults hereunder and their consequences
provided for in this Agreement; or
(4) waive, amend or modify Section 2.4, 3.2 or 3.3 of the
Intercreditor Agreement in a manner adverse to the Certificateholders;
or
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(5) modify any of the provisions of this Section 9.02 or
Section 6.05, except to increase any such percentage or to provide
that certain other provisions of this Agreement cannot be modified or
waived without the consent of the Certificateholder of each
Certificate affected thereby; or
(6) adversely affect the status of any Trust as a grantor
trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle
A of the Internal Revenue Code of 1986, as amended, for U.S. federal
income tax purposes.
It shall not be necessary for any Direction of
Certificateholders under this Section to approve the particular form of any
proposed supplemental agreement, but it shall be sufficient if such Direction
shall approve the substance thereof.
Section 9.03. Documents Affecting Immunity or Indemnity.
If in the opinion of the Trustee any document required to be executed by it
pursuant to the terms of Section 9.01 or 9.02 affects any interest, right,
duty, immunity or indemnity in favor of the Trustee under this Agreement, the
Trustee may in its discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In
executing, or accepting the additional trusts created by, any agreement
permitted by this Article or the modifications thereby of the trusts created by
this Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
Section 9.05. Effect of Supplemental Agreements. Upon the
execution of any agreement supplemental to this Agreement under this Article,
this Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Holder of a Certificate theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.06. Conformity with Trust Indenture Act. Every
supplemental agreement executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
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Section 9.07. Reference in Certificates to Supplemental
Agreements. Certificates authenticated and delivered after the execution of
any supplemental agreement pursuant to this Article may bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
agreement; and, in such case, suitable notation may be made upon Outstanding
Certificates after proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to Indentures and
Financing Documents. In the event that the Trustee, as holder (or beneficial
owner through the Subordination Agent) of any Equipment Note in trust for the
benefit of the Certificateholders or as Controlling Party under the
Intercreditor Agreement, receives (directly or indirectly through the
Subordination Agent) a request for a consent to any amendment, modification,
waiver or supplement under any Indenture, any other Financing Document, any
Equipment Note or any other related document, the Trustee shall forthwith send
a notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder registered on the Register as of the date of such notice.
The Trustee shall request from the Certificateholders a Direction as to (a)
whether or not to take or refrain from taking (or direct the Subordination
Agent to take or refrain from taking) any action which a holder of such
Equipment Note has the option to direct, (b) whether or not to give or execute
(or direct the Subordination Agent to give or execute) any waivers, consents,
amendments, modifications or supplements as a holder of such Equipment Note or
a Controlling Party and (c) how to vote (or direct the Subordination Agent to
vote) any Equipment Note if a vote has been called for with respect thereto.
Provided such a request for Certificateholder Direction shall have been made,
in directing any action or casting any vote or giving any consent as the holder
of any Equipment Note (or in directing the Subordination Agent in any of the
foregoing), (i) other than as Controlling Party, the Trustee shall vote for or
give consent to any such action with respect to such Equipment Note in the same
proportion as that of (A) the aggregate face amounts of all Certificates
actually voted in favor of or for giving consent to such action by such
Direction of Certificateholders to (B) the aggregate face amount of all
Outstanding Certificates and (ii) as Controlling Party, the
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Trustee shall vote as directed in such Certificateholder Direction by the
Certificateholders evidencing a Fractional Undivided Interest aggregating not
less than a majority in interest in the Trust. For purposes of the immediately
preceding sentence, a Certificate shall have been "actually voted" if the
Holder of such Certificate has delivered to the Trustee an instrument
evidencing such Holder's consent to such Direction prior to two Business Days
before the Trustee directs such action or casts such vote or gives such
consent. Notwithstanding the foregoing, but subject to Section 6.04 and the
Intercreditor Agreement, the Trustee may, in its own discretion and at its own
direction, consent and notify the relevant Loan Trustee of such consent (or
direct the Subordination Agent to consent and notify the Loan Trustee of such
consent) to any amendment, modification, waiver or supplement under the
relevant Indenture, any other Financing Document, any Equipment Note or any
other related document, if an Event of Default hereunder shall have occurred
and be continuing, or if such amendment, modification, waiver or supplement
will not materially adversely affect the interests of the Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The respective
obligations and responsibilities of the Company and the Trustee with respect to
the Trust shall terminate upon the earlier of (A) the completion of the
assignment, transfer and discharge described in the first sentence of the
immediately following paragraph and (B) distribution to all Holders of
Certificates and the Trustee of all amounts required to be distributed to them
pursuant to this Agreement and the disposition of all property held as part of
the Trust Property; provided, however, that in no event shall the Trust
continue beyond one hundred ten (110) years following the date of the earliest
execution of this Trust Agreement.
Upon the earlier of (i) the first Business Day following March
31, 1998, or, if later, the fifth Business Day following the Delivery Period
Termination Date and (ii) the fifth Business Day following the date on which a
Triggering Event occurs (such date, the "Transfer Date"), or, if later, the
date on which all of the conditions set forth in the immediately following
sentence have been satisfied, the Trustee is hereby
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directed (subject only to the immediately following sentence) to, and the
Company shall direct the institution that will serve as the Related Trustee
under the Related Pass Through Trust Agreement to, execute and deliver the
Assignment and Assumption Agreement, pursuant to which the Trustee shall
assign, transfer and deliver all of the Trustee's right, title and interest to
the Trust Property to the Related Trustee under the Related Pass Through Trust
Agreement. The Trustee and the Related Trustee shall execute and deliver the
Assignment and Assumption Agreement upon the satisfaction of the following
conditions:
(i) The Trustee, the Related Trustee and each of the
Rating Agencies then rating the Certificates shall have
received an Officer's Certificate and an Opinion of Counsel
dated the date of the Assignment and Assumption Agreement and
each satisfying the requirements of Section 1.02, which
Opinion of Counsel shall be substantially to the effect set
forth below and may be relied upon by the Beneficiaries (as
defined in the Assignment and Assumption Agreement):
(a) upon the execution and delivery thereof by the
parties thereto in accordance with the terms of this
Agreement and the Related Pass Through Trust
Agreement, the Assignment and Assumption Agreement
will constitute the valid and binding obligation of
each of the parties thereto enforceable against each
such party in accordance with its terms;
(b) upon the execution and delivery of the Assignment an
Assumption Agreement in accordance with the terms of
this Agreement and the Related Pass Through Trust
Agreement, each of the Certificates then Outstanding
is entitled to the benefits of the Related Pass
Through Trust Agreement;
(c) the Related Trust is not required to be registered as
an investment company under the Investment Company
Act of 1940, as amended;
(d) the Related Pass Through Trust Agreement constitutes
the valid and binding obligation of the Company
enforceable against the Company in accordance with
its terms; and
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(e) neither the execution and delivery of the Assignment
and Assumption Agreement in accordance with the terms
of this Agreement and the Related Pass Through Trust
Agreement, nor the consummation by the Parties
thereto of the transactions contemplated to be
consummated thereunder on the date thereof, violate
any law or governmental rule or regulation of the
State of New York or the United States of America
known to such counsel to be applicable to the
transactions contemplated by the Assignment and
Assumption Agreement.
(ii) The Trustee and the Company shall have received
(x) a copy of the articles of incorporation and bylaws of the
Related Trustee certified as of the Transfer Date by the
Secretary or Assistant Secretary of such institution and (y) a
copy of the filing (including all attachments thereto) made by
the institution serving as the Related Trustee with the Office
of the Superintendent, State of New York Banking Department
for the qualification of the Related Trustee under section
131(3) of the New York Banking Law.
Upon the execution of the Assignment and Assumption Agreement by the parties
thereto, the Trust shall be terminated, the Certificateholders shall receive
beneficial interests in the Related Trust in exchange for their interests in
the Trust equal to their respective beneficial interests in the Trust, and the
Outstanding Certificates representing Fractional Undivided Interests in the
Trust shall be deemed for all purposes of this Agreement and the Related Pass
Through Trust Agreement, without further signature or action of any party or
Certificateholder, to be certificates representing the same fractional
undivided interests in the Related Trust and its trust property. By acceptance
of its Certificate, each Certificateholder consents to such assignment,
transfer and delivery of the Trust Property to the trustee of the Related Trust
upon the execution and delivery of the Assignment and Assumption Agreement.
In connection with the occurrence of the event set forth in
clause (B) above, notice of such termination, specifying the Distribution Date
upon which the Certificateholders may surrender their Certificates to the
Trustee for payment of the final distribution and cancellation, shall be mailed
promptly by the Trustee to Certificateholders not earlier than the 60th day
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and not later than the 20th day next preceding such final Distribution Date
specifying (A) the Distribution Date upon which the proposed final payment of
the Certificates will be made upon presentation and surrender of Certificates
at the office or agency of the Trustee therein specified, (B) the amount of any
such proposed final payment, and (C) that the Record Date otherwise applicable
to such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office or agency of the
Trustee therein specified. The Trustee shall give such notice to the Registrar
at the time such notice is given to Certificateholders. Upon presentation and
surrender of the Certificates in accordance with such notice, the Trustee shall
cause to be distributed to Certificateholders such final payments.
In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. No additional interest shall accrue on the Certificates after the
Distribution Date specified in the first written notice. In the event that any
money held by the Trustee for the payment of distributions on the Certificates
shall remain unclaimed for two years (or such lesser time as the Trustee shall
be satisfied, after sixty days' notice from the Company, is one month prior to
the escheat period provided under applicable law) after the final distribution
date with respect thereto, the Trustee shall pay to each Loan Trustee the
appropriate amount of money relating to such Loan Trustee and shall give
written notice thereof to the related Owner Trustees, the Owner Participants
and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to terminate
this Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights,
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obligations, and liabilities of the parties hereto or any of them.
Section 12.02. Certificates Nonassessable and Fully Paid.
Except as set forth in the last sentence of this Section 12.02,
Certificateholders shall not be personally liable for obligations of the Trust,
the Fractional Undivided Interests represented by the Certificates shall be
nonassessable for any losses or expenses of the Trust or for any reason
whatsoever, and Certificates, upon authentication thereof by the Trustee
pursuant to Section 3.03, are and shall be deemed fully paid. No
Certificateholder shall have any right (except as expressly provided herein) to
vote or in any manner otherwise control the operation and management of the
Trust Property, the Trust, or the obligations of the parties hereto, nor shall
anything set forth herein, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association. Neither the existence of the Trust nor
any provision herein is intended to or shall limit the liability the
Certificateholders would otherwise incur if the Certificateholders owned Trust
Property as co-owners, or incurred any obligations of the Trust, directly
rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise specifically
provided herein, all notices required under the terms and provisions of this
Agreement shall be in English and in writing, and any such notice may be given
by United States mail, courier service or telecopy, and any such notice shall
be effective when delivered or received or, if mailed, three days after deposit
in the United States mail with proper postage for ordinary mail prepaid,
if to the Company, to:
Continental Airlines, Inc. 2929 Allen
Parkway Houston, TX 77019 Attention:
Chief Financial Officer and General
Counsel Facsimile: (713) 523-2831
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if to the Trustee, to:
Wilmington Trust Company Rodney Square
North 1100 North Market Street
Wilmington, DE 19890-0001 Attention:
Corporate Trust Department Facsimile:
(302) 651-8882 Telephone: (302)
651-8584
(b) The Company or the Trustee, by notice to the other,
may designate additional or different addresses for subsequent notices or
communications.
(c) Any notice or communication to Certificateholders
shall be mailed by first-class mail to the addresses for Certificateholders
shown on the Register kept by the Registrar. Failure so to mail a notice or
communication or any defect in such notice or communication shall not affect
its sufficiency with respect to other Certificateholders.
(d) If a notice or communication is mailed in the manner
provided above within the time prescribed, it is conclusively presumed to have
been duly given, whether or not the addressee receives it.
(e) If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.
(f) Notwithstanding the foregoing, all communications or
notices to the Trustee shall be deemed to be given only when received by a
Responsible Officer of the Trustee.
(g) The Trustee shall promptly furnish the Company with a
copy of any demand, notice or written communication received by the Trustee
hereunder from any Certificateholder, Owner Trustee or Loan Trustee.
Section 12.04. Governing Law. THIS AGREEMENT HAS BEEN
DELIVERED IN THE STATE OF DELAWARE AND THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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Section 12.05. Severability of Provisions. If any one or
more of the covenants, agreements, provisions or terms of this Agreement shall
be for any reason whatsoever held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or the
Trust, or of the Certificates or the rights of the Certificateholders thereof.
Section 12.06. Trust Indenture Act Controls. Upon the
occurrence of any Registration Event, this Agreement shall become subject to
the provisions of the Trust Indenture Act and shall, to the extent applicable,
be governed by such provisions. From and after any Registration Event, if any
provision of this Agreement limits, qualifies or conflicts with another
provision which is required to be included in this Agreement by the Trust
Indenture Act, the required provision shall control.
Section 12.07. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 12.08. Successors and Assigns. All covenants,
agreements, representations and warranties in this Agreement by the Trustee and
the Company shall bind and, to the extent permitted hereby, shall inure to the
benefit of and be enforceable by their respective successors and assigns,
whether so expressed or not.
Section 12.09. Benefits of Agreement. Nothing in this
Agreement or in the Certificates, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, and the
Certificateholders, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 12.10. Legal Holidays. In any case where any
Regular Distribution Date or Special Distribution Date relating to any
Certificate shall not be a Business Day, then (notwithstanding any other
provision of this Agreement) payment need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on such Regular Distribution Date or Special Distribution Date, and no
interest shall accrue during the intervening period.
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Section 12.11. Counterparts. For the purpose of
facilitating the execution of this Agreement and for other purposes, this
Agreement may be executed simultaneously in any number of counterparts, each of
which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.
Section 12.12. Intention of Parties. The parties hereto
intend that the Trust be classified for U.S. federal income tax purposes as a
grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue
Code of 1986, as amended, and not as a trust or association taxable as a
corporation or as a partnership. Each Certificateholder and Investor, by its
acceptance of its Certificate or a beneficial interest therein, agrees to treat
the Trust as a grantor trust for all U.S. federal, state and local income tax
purposes. The powers granted and obligations undertaken pursuant to this
Agreement shall be so construed so as to further such intent.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first written above.
CONTINENTAL AIRLINES,INC.
By:
-------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, as Trustee
By:
-------------------------------------
Name:
Title:
90
EXHIBIT A
FORM OF CERTIFICATE
REGISTERED
No._______
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS
HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY AFFILIATE OF
ANY OF SUCH PERSONS RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE
EXCEPT (A) CONTINENTAL AIRLINES, INC., (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IF IT SHOULD
RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE IT WILL DELIVER TO EACH
PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS
HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY AFFILIATE OF
ANY OF SUCH PERSONS, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER
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OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.](1)
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A
PLAN TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR
(B) IT IS AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT
TO ACQUIRE THIS CERTIFICATE, AND THE CONDITIONS OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S. DEPARTMENT OF
LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN CONNECTION WITH
ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE
FOREGOING RESTRICTIONS. [UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE
FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH
TRUST AGREEMENT REFERRED TO HEREIN.](2)
__________________________________
(1) Not to be included on the face of the Regulation S Global Certificate.
(2) To be included on the face of each Global Certificate.
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[GLOBAL CERTIFICATE](3)
CONTINENTAL AIRLINES PASS THROUGH TRUST, SERIES 1997-1B-O
7.461% Continental Airlines [Initial] [Exchange]
Pass Through Certificate,
Series 1
997-1B-O
Final Maturity Date: October 1, 2014
evidencing a fractional undivided interest in a trust, 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
.______% 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, Series 1997-1B-O (the
"Trust") created pursuant to a Pass Through Trust Agreement, dated as of March
21, 1997 (the "Agreement"), between Wilmington Trust Company (the "Trustee")
and Continental Airlines, Inc., a corporation incorporated under Delaware law
(the "Company"), a summary of certain of the pertinent provisions of which is
set forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Agreement. This
Certificate is one of the duly authorized Certificates designated as "7.461%
Continental Airlines [Initial] [Exchange] Pass Through Certificates, Series
1997-1B-O" (herein called the "Certificates"). This Certificate is issued
under and is subject to the terms, provisions, and conditions of the Agreement.
By virtue of its acceptance hereof the Certificateholder of this Certificate
assents to and agrees to be bound by the provisions of the Agreement and the
Intercreditor Agreement. The property of the Trust includes an interest in
certain Equipment Notes and all rights of the Trust to receive payments under
the Intercreditor Agreement and any Liquidity Facility (the "Trust Property").
Each issue of the Equipment Notes is secured by, among other things, a security
interest in the Aircraft leased to or owned by the Company.
__________________________________
(3) To be included on the face of each Global Certificate.
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The Certificates represent fractional undivided interests in
the Trust and the Trust Property, and have no rights, benefits or interest in
respect of any assets or property other than the Trust Property.
Subject to and in accordance with the terms of the Agreement
and the Intercreditor Agreement, from and to the extent of funds then available
to the Trustee, there will be distributed on each April 1 and October 1 (a
"Regular Distribution Date"), commencing on October 1, 1997, 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 due on such Regular Distribution Date 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 Scheduled Payments. Subject to and in
accordance with the terms of the Agreement and the Intercreditor Agreement, in
the event that Special Payments on the Equipment Notes are received by the
Trustee, from funds then available to the Trustee, there shall be distributed
on the applicable Special Distribution Date, to the Person in whose name this
Certificate is registered at the close of business on the 15th day preceding
the Special Distribution Date, an amount in respect of such Special Payments on
the Equipment Notes, the receipt of which has been confirmed by the Trustee,
equal to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Special Payments so
received. If a Regular Distribution Date or Special Distribution Date is not a
Business Day, distribution shall be made on the immediately following Business
Day with the same force and effect as if made on such Regular Distribution Date
or Special Distribution Date and no interest shall accrue during the
intervening period. The Trustee shall mail notice of each Special Payment and
the Special Distribution Date therefor to the Certificateholder of this
Certificate.
The Certificates do not represent a direct obligation of, or
an obligation guaranteed by, or an interest in, the Company or the Trustee or
any of their affiliates. The Certificates are limited in right or payment, all
as more specifically set forth on the face hereof and in the Agreement. All
payments or distributions made to Certificateholders under the Agreement shall
be made only from the Trust Property and only to the extent that the Trustee
shall have sufficient income or
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proceeds from the Trust Property to make such payments in accordance with the
terms of the Agreement. Each Certificateholder of this Certificate, by its
acceptance hereof, agrees that it will look solely to the income and proceeds
from the Trust Property to the extent available for distribution to such
Certificateholder as provided in the Agreement. This Certificate does not
purport to summarize the Agreement and reference is made to the Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds, and duties evidenced hereby. A copy of the Agreement may be examined
during normal business hours at the principal office of the Trustee, and at
such other places, if any, designated by the Trustee, by any Certificateholder
upon request.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Certificateholders under the
Agreement at any time by the Company and the Trustee with the consent of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust. Any
such consent by the Certificateholder of this Certificate shall be conclusive
and binding on such Certificateholder and upon all future Certificateholders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Certificateholders
of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Register upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee in its capacity as
Registrar, or by any successor Registrar, in the Borough of Manhattan, the City
of New York, duly endorsed or accompanied by a written instrument of transfer
in form satisfactory to the Trustee and the Registrar duly executed by the
Certificateholder hereof or such Certificateholder's attorney duly authorized
in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in
the Trust will be issued to the designated transferee or transferees.
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[The Holder of this Certificate is entitled to the benefits of
the Exchange and Registration Rights Agreement, dated as of March 21, 1997,
among the Company, the Trustee and the Initial Purchasers named therein (the
"Registration Rights Agreement"). In the event that no Registration Event has
occurred on or prior to the 210th day after the date of the issuance of the
Certificates, the interest rate per annum payable in respect of the Equipment
Notes and the Deposits shall be increased by 0.50%, from and including the
210th day after the Issuance Date to but excluding (i) the earlier of the date
on which a Registration Event occurs and (ii) the date on which there cease to
be any Registrable Certificates (as defined in the Registration Rights
Agreement). In the event that the Shelf Registration Statement ceases to be
effective at any time during the period specified by Section 2(b)(B) of the
Registration Rights Agreement for more than 60 days, whether or not
consecutive, during any 12-month period, the interest rate per annum payable in
respect of the Equipment Notes and the Deposits shall be increased by 0.50%
from the 61st day of the applicable 12-month period such Shelf Registration
Statement ceases to be effective until such time as the Shelf Registration
Statement again becomes effective ( or, if earlier, the end of the period
specified by Section 2(b)(B) of the Registration Rights Agreement).](4)
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.
Under certain circumstances set forth in Section 11.01 of the
Agreement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the
Related Trust pursuant to the Assignment and Assumption Agreement. Upon the
effectiveness of such Assignment and Assumption Agreement (the "Transfer"), the
Trust shall be terminated, the Certificateholders shall receive beneficial
interests in the Related Trust in exchange for their interests in the Trust
equal to their respective beneficial interests in the Trust, the Certificates
representing Fractional
__________________________________
(4) To be included only on each Initial Certificate.
A-6
96
Undivided Interests in the Trust shall be deemed for all purposes of the
Agreement and the Related Pass Through Trust Agreement to be certificates
representing the same fractional undivided interests in the Related Trust and
its trust property. Each Certificateholder, by its acceptance of this
Certificate or a beneficial interest herein, agrees to be bound by the
Assignment and Assumption Agreement and subject to the terms of the Related
Pass Through Trust Agreement as a certificateholder thereunder. From and after
the Transfer, unless and to the extent the context otherwise requires,
references herein to the Trust, the Agreement and the Trustee shall constitute
references to the Related Trust, the Related Pass Through Trust Agreement and
trustee of the Related Trust, respectively.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of [$100,000](5) [$1,000](6)
Fractional Undivided Interest and integral multiples of $1,000 in excess
thereof except that one Certificate may be 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 by the Holder of a
sum sufficient to cover any tax or governmental charge payable in connection
therewith.
Each Certificateholder or Investor that is not a United States
person within the meaning of section 7701(a)(30) of the Internal Revenue Code,
as amended, by its acceptance of a Certificate or a beneficial interest
therein, agrees to indemnify and hold harmless the Trust and the Trustee from
and against any improper failure to withhold taxes from amounts payable to it
or for its benefit. 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.
__________________________________
(5) To be included only on each Initial Certificate.
(6) To be included only on each Exchange Certificate
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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.
UNTIL THE TRANSFER, THE AGREEMENT AND THIS CERTIFICATE SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. FROM AND AFTER THE TRANSFER,
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: , 1997 CONTINENTAL AIRLINES
---------------- PASS THROUGH TRUST, SERIES
1997-1B-O
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Trustee
By:
------------------------------------
Name:
Title:
Attest:
- ----------------------------
Authorized Signature
A-9
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[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred
to in the within-mentioned Agreement.
WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Trustee
By:
-------------------------------------
Authorized Officer
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FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby
sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
please print or typewrite name and address including zip code of assignee
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT REGULATION S GLOBAL AND
REGULATION S DEFINITIVE CERTIFICATES]
In connection with any transfer of this Certificate occurring
prior to the date that is the earlier of the date of an effective Registration
Statement or the date two years after the later of the original issuance of
this Certificate or the last date on which this Certificate was held by
Continental Airlines, Inc., the Trustee or any affiliate of such Persons, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[ ] (a) this Certificate is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
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[ ] (b) this Certificate is being transferred other than in accordance with
(a) above and documents are being furnished that comply with the conditions of
transfer set forth in this Certificate and the Agreement.
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 3.06 of the Agreement
shall have been satisfied.
Date: [Name of Transferor]
------------------------- --------------------
NOTE: The signature must correspond
with the name as written upon the face
of the within-mentioned instrument in
every particular, without alteration or
any change whatsoever.
Signature Guarantee:
-----------------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Certificate for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.
Dated:
------------------------ ------------------------------
NOTE: To be executed by
an executive officer.
A-12
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EXHIBIT B
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS OF CERTIFICATES PURSUANT TO REGULATION S
[date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines Pass Through Trust (the "Trust"), Series
1997-1B-O, Continental Airlines Pass Through Certificates,
Series 1997-1B-O (the "Certificates")
Sirs:
In connection with our proposed sale of $_____ Fractional
Undivided Interest of the Certificates, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933, as amended, and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a
person in the United States;
(2) either (a) at the time the buy order was originated,
the transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States or (b) the transaction was executed in, on
or through the facilities of a designated off-shore securities market
and neither we nor any person acting on our behalf knows that the
transaction has been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act.
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103
In addition, if the sale is made during a restricted period
and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may
be.
You and Continental Airlines, Inc. are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. Terms used in
this certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
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EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS OF CERTIFICATES TO
NON-QIB INSTITUTIONAL ACCREDITED INVESTORS
________________, ____
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
CONTINENTAL AIRLINES
PASS THROUGH TRUST, SERIES 1997-1B-O (the "Trust")
Pass Through Certificates, Series 1997-1B-O
(the "Certificates")
Ladies and Gentlemen:
In connection with our proposed purchase of U.S.
$[_____________] Fractional Undivided Interest of Certificates, we confirm
that:
1. We understand that any subsequent transfer of the
Certificates is subject to certain restrictions and conditions set forth in the
Trust Agreement, dated as of March 21, 1997, between Continental Airlines, Inc.
(the "Company") and Wilmington Trust Company (the "Trustee") relating to the
Certificates, and we agree to be bound by, and not to resell, pledge or
otherwise transfer the Certificates except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
2. We are purchasing Certificates having an aggregate
principal amount of not less than $100,000 and each account (if
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105
any) for which we are purchasing Certificates is purchasing Certificates having
an aggregate principal amount of not less than $100,000.
3. We understand that the Certificates have not been
registered under the Securities Act, that the Certificates are being sold to us
in a transaction that is exempt from the registration requirements of the
Securities Act and that the Certificates may not be offered or resold except as
permitted in the following sentence. We agree, on our own behalf and on behalf
of any accounts for which we are acting as hereinafter stated, that, if we
should sell any Certificates within two years after the later of the original
issuance of such Certificate and the last date on which such Certificate is
owned by the Company, the Trustee or any affiliate of any of such persons, we
will do so only (A) to the Company, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined therein), (C)
outside the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (D) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act or (E) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing any of the Certificates from us a notice advising such
purchaser that resales of the Certificates are restricted as stated herein.
4. We understand that, on any proposed resale of any
Certificates, we will be required to furnish to the Company and the Trustee
such certifications, legal opinions and other information as the Company and
the Trustee may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Certificates
purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our investment in the
Certificates, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investments.
6. We are acquiring the Certificates purchased by us for
our own account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we
C-2
106
exercise sole investment discretion and not with a view to any distribution of
the Certificates, subject, nevertheless to the understanding that the
disposition of our property shall at all times be and remain within our
control.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:
-----------------------------------
Name:
Title:
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107
EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
Continental Airlines Pass Through Trust, Series 1997-[1_]
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated ____________, 199_
(the "Agreement"), between Wilmington Trust Company, a Delaware banking
corporation ("WTC"), not in its individual capacity except as expressly
provided herein, but solely as trustee under the Pass Through Trust Agreement
dated as of March 21, 1997 (as amended, modified or otherwise supplemented from
time to time, the "Pass Through Trust Agreement") in respect of the Continental
Airlines Pass Through Trust, Series 1997-1_-O (the "Assignor"), and Wilmington
Trust Company, a Delaware banking corporation, not in its individual capacity
except as expressly provided herein, but solely as trustee under the Pass
Through Trust Agreement dated as of March 21, 1997 (the "New Pass Through
Trust Agreement") in respect of the Continental Airlines Pass Through Trust,
Series 1997-1_-S (the "Assignee").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to effect on the date
hereof (the "Transfer Date") (a) the transfer by the Assignor to the Assignee
of all of the right, title and interest of the Assignor in, under and with
respect to, among other things, the Trust Property and each of the documents
listed in Schedule I hereto (the "Scheduled Documents") and (b) the assumption
by the Assignee of the obligations of the Assignor (i) under the Scheduled
Documents and (ii) in respect of the Certificates issued under the Pass Through
Trust Agreement; and
WHEREAS, the Scheduled Documents permit such transfer upon
satisfaction of certain conditions heretofore or concurrently herewith being
complied with;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto do hereby
agree as follows (capitalized terms used herein without definition having the
meaning ascribed thereto in the Pass Through Trust Agreement):
1. Assignment. The Assignor does hereby sell, assign,
convey, transfer and set over unto the Assignee as of the Transfer Date all of
its present and future right, title and
D-1
108
interest in, under and with respect to the Trust Property and the Scheduled
Documents and each other contract, agreement, document or instrument relating
to the Trust Property or the Scheduled Documents (such other contracts,
agreements, documents or instruments, together with the Scheduled Documents, to
be referred to as the "Assigned Documents"), and any proceeds therefrom,
together with all documents and instruments evidencing any of such right, title
and interest.
2. Assumption. The Assignee hereby assumes for the benefit
of the Assignor and each of the parties listed in Schedule II hereto
(collectively, the "Beneficiaries") all of the duties and obligations of the
Assignor, whenever accrued, pursuant to the Assigned Documents and hereby
confirms that it shall be deemed a party to each of the Assigned Documents to
which the Assignor is a party and shall be bound by all the terms thereof
(including the agreements and obligations of the Assignor set forth therein) as
if therein named as the Assignor. Further, the Assignee hereby assumes for the
benefit of the Assignor and the Beneficiaries all of the duties and obligations
of the Assignor under the Outstanding Certificates and hereby confirms that the
Certificates representing Fractional Undivided Interests under the Pass Through
Trust Agreement shall be deemed for all purposes of the Pass Through Trust
Agreement and the New Pass Through Trust Agreement to be certificates
representing the same fractional undivided interests under the New Pass Through
Trust Agreement equal to their respective beneficial interests in the trust
created under the Pass Through Trust Agreement.
3. Effectiveness. This Agreement shall be effective upon the
execution and delivery hereof by the parties hereto, and each
Certificateholder, by its acceptance of its Certificate or a beneficial
interest therein, agrees to be bound by the terms of this Agreement.
4. Payments. The Assignor hereby covenants and agrees to pay
over to the Assignee, if and when received following the Transfer Date, any
amounts (including any sums payable as interest in respect thereof) paid to or
for the benefit of the Assignor that, under Section 1 hereof, belong to the
Assignee.
5. Further Assurances. The Assignor shall, at any time and
from time to time, upon the request of the Assignee, promptly and duly execute
and deliver any and all such further instruments and documents and take such
further action as the
D-2
109
Assignee may reasonably request to obtain the full benefits of this Agreement
and of the right and powers herein granted. The Assignor agrees to deliver the
Global Certificates, and all Trust Property, if any, then in the physical
possession of the Assignor, to the Assignee.
6. Representations and Warranties. (a) The Assignee
represents and warrants to the Assignor and each of the Beneficiaries that:
(i) it has all requisite power and authority and
legal right to enter into and carry out the transactions
contemplated hereby and to carry out and perform the
obligations of the "Pass Through Trustee" under the Assigned
Documents;
(ii) on and as of the date hereof, the
representations and warranties of the Assignee set forth in
Section 7.15 of the New Pass Through Trust Agreement are true
and correct.
(b) The Assignor represents and warrants to the Assignee
that:
(i) it is duly incorporated, validly existing and
in good standing under the laws of the State of Delaware and
has the full trust power, authority and legal right under the
laws of the State of Delaware and the United States pertaining
to its trust and fiduciary powers to execute and deliver this
Agreement;
(ii) the execution and delivery by it of this
Agreement and the performance by it of its obligations
hereunder have been duly authorized by it and will not violate
its articles of association or by-laws or the provisions of
any indenture, mortgage, contract or other agreement to which
it is a party or by which it is bound; and
(iii) this Agreement constitutes the legal, valid
and binding obligations of it enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general
D-3
110
principles of equity, whether considered in a proceeding at
law or in equity.
7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAWS.
8. Counterparts. This Agreement may be executed in any
number of counterparts, all of which together shall constitute a single
instrument. It shall not be necessary that any counterpart be signed by both
parties so long as each party shall sign at least one counterpart.
9. Third Party Beneficiaries. The Assignee hereby agrees,
for the benefit of the Beneficiaries, that its representations, warranties and
covenants contained herein are also intended to be for the benefit of each
Beneficiary, and each Beneficiary shall be deemed to be an express third party
beneficiary with respect thereto, entitled to enforce directly and in its own
name any rights or claims it may have against such party as such beneficiary.
D-4
111
IN WITNESS WHEREOF, the parties hereto, through their
respective officers thereunto duly authorized, have duly executed this
Assignment as of the day and year first above written.
ASSIGNOR:
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
provided herein, but solely as trustee
under the Pass Through Trust Agreement
in respect of the Continental Airlines
Pass Through Trust 1997-1_-O
By:
-------------------------------------
Title:
ASSIGNEE:
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
provided herein, but solely as trustee
under the Pass Through Trust Agreement
in respect of the Continental Airlines
Pass Through Trust 1997-1_-S
By:
-------------------------------------
Title:
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112
Schedule I
Schedule of Assigned Documents
(1) Intercreditor Agreement dated as of March 21, 1997 among the Trustee,
the Other Trustees, the Liquidity Providers, the liquidity providers,
if any, relating to the Certificates issued under (and as defined in)
each of the Other Pass Through Trust Agreements and the Subordination
Agent.
(2) Registration Rights Agreement dated as of March 21, 1997 among the
Initial Purchasers, the Trustee, the Other Trustees, and the Company.
(3) Escrow and Paying Agent Agreement (Class __) dated as of March 21,
1997 among the Escrow Agent, the Initial Purchasers, the Trustee and
the Paying Agent.
(4) Note Purchase Agreement dated as of March 21, 1997 among the Company,
the Trustee, the Other Trustees, the Depositary, the Escrow Agent, the
Paying Agent and the Subordination Agent.
(5) Deposit Agreement (Class __) dated as of March 21, 1997 between the
Escrow Agent and the Depositary.
(6) Each of the Operative Agreements (as defined in the Participation
Agreement for each Aircraft) in effect as of the Transfer Date.
D-6
113
Schedule II
Schedule of Beneficiaries
Wilmington Trust Company, not in its individual capacity but solely as
Subordination Agent.
Wilmington Trust Company, not in its individual capacity but solely as Paying
Agent
ABN AMRO Bank N.V., Chicago Branch, as Liquidity Provider
ING Bank N.V., as Liquidity Provider
Continental Airlines, Inc.
Credit Suisse First Boston Corporation, as Initial Purchaser
Morgan Stanley & Co. Incorporated, as Initial Purchaser
Chase Securities Inc., as Initial Purchaser
Goldman Sachs & Co., as Initial Purchaser
First Security Bank, National Association, as Escrow Agent
Each of the other parties to the Assigned Documents
D-7
114
EXHIBIT E
FORM OF NOTICE TO DESIGNATE NOMINEE AS WITHHOLDING AGENT
(Treas. Reg. Section 1.1445-8(f); 17 C.F.R. 240.10b-17(b)(1))
[DATE]
National Association of
Securities Dealers, Inc.
Market Operations
80 Merritt Blvd.
Trumbull, CT 06611
Re: Continental Airlines Pass Through Certificates,
Series 1997-1B-O Pass Through Certificates, Series
1997-1B-O
With respect to distributions to be made on [INSERT
DISTRIBUTION DATE] to holders of the above- referenced Pass Through
Certificates in the amount of $ ____ per $1,000 principal amount of
Certificate, we hereby designate the appropriate nominees to withhold from
amounts distributable to any non-U.S. Person such amounts as required by
section 1446 of the Internal Revenue Code of 1986, as amended. The term
"non-U.S. Person" means any person or entity that, for U.S. federal income tax
purposes, is not a "U.S. Person." "U.S. Person" for this purpose means a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized under the laws of the United States or any
political subdivision thereof, or an estate or trust, the income of which is
subject to U.S. federal income taxation regardless of its source. The date of
record for determining holders of Certificates entitled to receive the
distribution on [INSERT DISTRIBUTION DATE] is [INSERT RELATED RECORD DATE].
Very truly yours,
E-1
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EXHIBIT 4.7
--------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of March 21, 1997
between
CONTINENTAL AIRLINES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
Continental Airlines Pass Through Trust, Series 1997-1C-I-O
7.420% Initial Pass Through Certificates, Series 1997-1C-I-O
7.420% Exchange Pass Through Certificates, Series 1997-1C-I-O
--------------------------------------
2
Reconciliation and tie between Continental Airlines Pass Through Trust
Agreement, Series 1997-1C-I-O dated as of March 21, 1997, and the Trust
Indenture Act of 1939. This reconciliation does not constitute part of the
Pass Through Trust Agreement.
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
--------------------- ---------------------
310 (a)(1) 7.08
(a)(2) 7.08
312 (a) 3.05; 8.01; 8.02
313 (a) 7.06; 8.03
314 (a) 8.04(a), (c) & (d)
(a)(4) 8.04(e)
(c)(1) 1.02
(c)(2) 1.02
(d)(1) 7.13; 11.01
(d)(2) 7.13; 11.01
(d)(3) 2.01
(e) 1.02
315 (b) 7.02
316 (a)(last sentence) 1.04(c)
(a)(1)(A) 6.04
(a)(1)(B) 6.05
(b) 6.06
(c) 1.04(e)
317 (a)(1) 6.03
(b) 7.13
318 (a) 12.06
3
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . 3
Section 1.02. Compliance Certificates and Opinions . . . . . . . . 18
Section 1.03. Form of Documents Delivered to Trustee . . . . . . . 19
Section 1.04. Directions of Certificateholders . . . . . . . . . . 19
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION
OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of
Equipment Notes . . . . . . . . . . . . . . . . . . 21
Section 2.02. Withdrawal of Deposits . . . . . . . . . . . . . . . 23
Section 2.03. Acceptance by Trustee . . . . . . . . . . . . . . . 23
Section 2.04. Limitation of Powers . . . . . . . . . . . . . . . 23
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution
of Certificates . . . . . . . . . . . . . . . . . . 24
Section 3.02. Restrictive Legends . . . . . . . . . . . . . . . . 27
Section 3.03. Authentication of Certificates . . . . . . . . . . . 29
Section 3.04. Transfer and Exchange . . . . . . . . . . . . . . . 29
Section 3.05. Book-Entry Provisions for Restricted
Global Certificates and Regulation S
Global Certificates . . . . . . . . . . . . . . 31
Section 3.06. Special Transfer Provisions . . . . . . . . . . . . 33
Section 3.07. Mutilated, Destroyed, Lost or
Stolen Certificates . . . . . . . . . . . . . . . . 37
Section 3.08. Persons Deemed Owners . . . . . . . . . . . . . . . 38
Section 3.09. Cancellation . . . . . . . . . . . . . . . . . . . 38
Section 3.10. Temporary Certificates . . . . . . . . . . . . . . 38
Section 3.11. Limitation of Liability for Payments . . . . . . . . 39
Section 3.12 ERISA Restrictive Legend . . . . . . . . . . . . . 39
(i)
4
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments Account . . . . . . . . . . . . . . . . . . . 40
Section 4.02. Distributions from Certificate Account and Special
Payments Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.02. Consolidation, Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VI
DEFAULT
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.02. Incidents of Sale of Equipment Notes . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee
May Bring Suit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.04. Control by Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.05. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.06. Right of Certificateholders to Receive Payments Not to
Be Impaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.07. Certificateholders May Not Bring Suit Except Under
Certain Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.08. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(ii)
5
TABLE OF CONTENTS
SECTION PAGE
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Section 7.02. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.03. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.04. Not Responsible for Recitals or Issuance of Certificates . . . . . . . . . . . . . . . 55
Section 7.05. May Hold Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.06. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7.07. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7.08. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.09. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . 58
Section 7.10. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 7.11. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . 60
Section 7.12. Maintenance of Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.13. Money for Certificate Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . 62
Section 7.14. Registration of Equipment Notes in Name of Subordination Agent . . . . . . . . . . . . 63
Section 7.15. Representations and Warranties of Trustee . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.16. Withholding Taxes, Information Reporting . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.17. Trustee's Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.18. Preferential Collection of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and Addresses of
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.02. Preservation of Information; Communications to
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.03. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
(iii)
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TABLE OF CONTENTS
SECTION PAGE
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Section 8.04. Reports by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of Certificateholders . . . . . . . . . . . . . 69
Section 9.02. Supplemental Agreements with Consent of Certificateholders . . . . . . . . . . . . . . 70
Section 9.03. Documents Affecting Immunity or Indemnity . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.04. Execution of Supplemental Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.05. Effect of Supplemental Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.06. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 9.07. Reference in Certificates to Supplemental Agreements . . . . . . . . . . . . . . . . . 73
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to Indentures and Financing Documents . . . . . . . . . . . 73
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . 78
Section 12.02. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . . . . . . 78
Section 12.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
(iv)
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TABLE OF CONTENTS
SECTION PAGE
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Section 12.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 12.05. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 12.06. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 12.07. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . 80
Section 12.08. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 12.09. Benefits of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.10. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.12. Intention of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(v)
8
Exhibit A- Form of Certificate
Exhibit B- Form of Certificate to Request Removal of Restricted Legend
Exhibit C- Form of Certificate to be Delivered by an Institutional Accredited Investor
Exhibit D- Form of Assignment and Assumption Agreement
Exhibit E- Form of Notice to Withholding Agent
(vi)
9
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of March 21, 1997
(the "Agreement"), between CONTINENTAL AIRLINES, INC., a Delaware corporation,
and WILMINGTON TRUST COMPANY, as Trustee, is made with respect to the formation
of Continental Airlines Pass Through Trust, Series 1997-1C-I-O and the issuance
of 7.420% Continental Airlines Pass Through Trust, Series 1997-1C-I-O Pass
Through Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company has obtained commitments from Boeing for
the delivery of certain Aircraft;
WHEREAS, the Company intends to finance the acquisition of
each such Aircraft either (i) through separate leveraged lease transactions in
which the Company will lease such aircraft (collectively, the "Leased
Aircraft") or (ii) through separate secured loan transactions in which the
Company will own such Aircraft (collectively, the "Owned Aircraft");
WHEREAS, in the case of each Leased Aircraft, each Owner
Trustee, acting on behalf of the corresponding Owner Participant, will issue
pursuant to an Indenture, on a non-recourse basis, three series of Equipment
Notes in order to finance a portion of its purchase price of such Leased
Aircraft;
WHEREAS, in the case of each Owned Aircraft, the Company, will
issue pursuant to an Indenture, on a recourse basis, three series of Equipment
Notes to finance a portion of the purchase price of such Owned Aircraft;
WHEREAS, the Trustee, upon execution and delivery of this
Agreement, hereby declares the creation of the Trust for the benefit of the
Certificateholders, and the initial Certificateholders, as the grantors of the
Trust, by their respective acceptances of the Certificates, join in the
creation of this Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust will
evidence fractional undivided interests in the Trust and will convey no rights,
benefits or interests in respect of any
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property other than the Trust Property except for those Certificates to which
an Escrow Receipt has been affixed;
WHEREAS, the Escrow Agent and the Initial Purchasers have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Paying Agent pursuant to which the Initial Purchasers have delivered to the
Escrow Agent the proceeds from the sale of the Certificates and have
irrevocably instructed the Escrow Agent to withdraw and pay funds from such
proceeds upon request and proper certification by the Trustee to purchase
Equipment Notes as the Aircraft are delivered by Boeing under the Aircraft
Purchase Agreement from time to time prior to the Delivery Period Termination
Date;
WHEREAS, the Escrow Agent on behalf of the Certificateholders
has contemporaneously herewith entered into a Deposit Agreement with the
Depositary under which the Deposits referred to therein will be made and from
which it will withdraw funds to allow the Trustee to purchase Equipment Notes
from time to time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of this
Agreement and the Note Purchase Agreement, upon or shortly following delivery
of an Aircraft, the Trustee on behalf of the Trust, using funds withdrawn under
the Escrow Agreement, may purchase an Equipment Note having the same interest
rate as, and final maturity date not later than the final Regular Distribution
Date of, the Certificates issued hereunder and shall hold such Equipment Note
in trust for the benefit of the Certificateholders;
WHEREAS, to facilitate the sale of Equipment Notes to, and the
purchase of Equipment Notes by, the Trustee on behalf of the Trust, the Company
has duly authorized the execution and delivery of this Agreement as the
"issuer", as such term is defined in and solely for purposes of the Securities
Act, of the Certificates to be issued pursuant hereto and as the "obligor", as
such term is defined in and solely for purposes of the Trust Indenture Act of
1939, as amended, with respect to all such Certificates and is undertaking to
perform certain administrative and ministerial duties hereunder and is also
undertaking to pay the ongoing fees and expenses of the Trustee;
WHEREAS, all of the conditions and requirements necessary to
make this Agreement, when duly executed and
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delivered, a valid, binding and legal instrument, enforceable in accordance
with its terms and for the purposes herein expressed, have been done, performed
and fulfilled, and the execution and delivery of this Agreement in the form and
with the terms hereof have been in all respects duly authorized; and
WHEREAS, upon issuance of the Exchange Certificates, if any,
or the effectiveness of the Shelf Registration Statement, this Agreement, as
amended or supplemented from time to time, will be subject to the provisions of
the Trust Indenture Act of 1939, and shall, to the extent applicable, be
governed by such provisions;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, and of other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms used in this Agreement, including in the
recitals to this Agreement, that are defined in this Article have the
meanings assigned to them in this Article, and include the plural as
well as the singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, or by the
rules promulgated under the Trust Indenture Act, have the meanings
assigned to them therein;
(3) all references in this Agreement to designated
"Articles", "Sections", "Subsections" and other subdivisions are to the
designated Articles, Sections, Subsections and other subdivisions of
this Agreement;
(4) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section, Subsection or other subdivision; and
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(5) unless the context otherwise requires, whenever the
words "including", "include" or "includes" are used herein, it shall be
deemed to be followed by the phrase "without limitation".
Affiliate: Means, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such Person, provided,
however, that neither America West Airlines, Inc. nor any of its
subsidiaries shall be deemed to be an "Affiliate" of the Company for
purposes of this Agreement. For the purposes of this definition,
"control" means the power, directly or indirectly, to direct the
management and policies of such Person, whether through the ownership
of voting securities or by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
Agent Members: Has the meaning specified in Section 3.05.
Agreement: Has the meaning specified in the initial
paragraph hereto.
Aircraft: Means each of the New Aircraft or Substitute
Aircraft in respect of which a Participation Agreement is entered into
in accordance with the Note Purchase Agreement.
Aircraft Purchase Agreement: Has the meaning specified in the
Note Purchase Agreement.
Applicable Delivery Date: Has the meaning specified in
Section 2.01(b).
Applicable Participation Agreement: Has the meaning specified
in Section 2.01(b).
Assignment and Assumption Agreement: Means the assignment and
assumption agreement substantially in the form of Exhibit D hereto
executed and delivered in accordance with Section 11.01.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
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Avoidable Tax: Means a state or local tax (i) upon (w) the
Trust, (x) the Trust Property, (y) Certificateholders or (z) the
Trustee for which the Trustee is entitled to seek reimbursement from
the Trust Property, and (ii) which would be avoided if the Trustee were
located in another state, or jurisdiction within a state, within the
United States. A tax shall not be an Avoidable Tax if the Company or
any Owner Trustee shall agree to pay, and shall pay, such tax.
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 Certificate is outstanding, the city and state in which the
Trustee or any Loan Trustee maintains its Corporate Trust Office or
receives and disburses funds.
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any one of the Initial Certificates or
Exchange Certificates and any such Certificates issued in exchange
therefor or replacement thereof pursuant to this Agreement.
Certificate Account: Means the account or accounts created
and maintained pursuant to Section 4.01(a).
Certificate Purchase Agreement: Means the Purchase Agreement
dated March 12, 1997 among the Initial Purchasers, the Company and the
Depositary, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
Class C Certificateholder: Has the meaning specified in
Section 6.01.
Company: Means Continental Airlines, Inc., a Delaware
corporation, or its successor in interest pursuant to Section 5.02, or
(only in the context of provisions hereof, if any, where such reference
is required for purposes of compliance with the Trust Indenture Act)
any other "obligor"
14
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(within the meaning of the Trust Indenture Act) with respect to the
Certificates.
Controlling Party: Has the meaning specified in the
Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or any
Loan Trustee, means the office of such trustee in the city at which at
any particular time its corporate trust business shall be principally
administered.
Cut-off Date: Means the earlier of (a) the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
Definitive Certificates: Has the meaning specified in Section
3.01(e).
Delivery Date: Has the meaning specified in the Note Purchase
Agreement.
Delivery Notice: Has the meaning specified in the Note
Purchase Agreement.
Delivery Period Termination Date: Means the earlier of (a)
March 31, 1998, or, if the Equipment Notes relating to all of the New
Aircraft (or Substitute Aircraft in lieu thereof) have not been
purchased by the Trust and the Other Trusts on or prior to such date
due to any reason beyond the control of the Company and not occasioned
by the Company's fault or negligence, June 30, 1998 and (b) the date on
which Equipment Notes issued with respect to all of the New Aircraft
(or Substitute Aircraft in lieu thereof) have been purchased by the
Trust and the Other Trusts in accordance with the Note Purchase
Agreement.
Deposits: Has the meaning specified in the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of
March 21, 1997 relating to the Certificates between the Depositary and
the Escrow Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
15
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Depositary: Means Credit Suisse First Boston, a Swiss bank,
acting through its New York branch.
Direction: Has the meaning specified in Section 1.04(a).
Distribution Date: Means any Regular Distribution Date or
Special Distribution Date as the context requires.
DTC: Means The Depository Trust Company, its nominees and
their respective successors.
Equipment Notes: Means the equipment notes issued under the
Indentures.
ERISA: Means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor federal statute.
ERISA Legend: Has the meaning specified in Section 3.12.
Escrow Agent: Means, initially, First Security Bank, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement
dated as of March 21, 1997 relating to the Certificates, among the
Escrow Agent, the Escrow Paying Agent, the Trustee and the Initial
Purchasers, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Escrow Paying Agent: Means the Person acting as paying agent
under the Escrow Agreement.
Escrow Receipt: Means the receipt substantially in the form
annexed to the Escrow Agreement representing a fractional undivided
interest in the funds held in escrow thereunder.
Euroclear: Means the Euroclear System.
Event of Default: Means an Indenture Default under any
Indenture pursuant to which Equipment Notes held by the Trust were
issued.
16
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Exchange Certificates: Means the pass through certificates
substantially in the form of Exhibit A hereto issued in exchange for
the Initial Certificates pursuant to the Registration Rights Agreement
and authenticated hereunder.
Exchange Offer: Means the exchange offer which may be made
pursuant to the Registration Rights Agreement to exchange Initial
Certificates for Exchange Certificates.
Exchange Offer Registration Statement: Means the registration
statement that, pursuant to the Registration Rights Agreement, is filed
by the Company with the SEC with respect to the exchange of Initial
Certificates for Exchange Certificates.
Final Maturity Date: Means October 1, 2008.
Final Withdrawal: Has the meaning specified in the Escrow
Agreement.
Final Withdrawal Date: Has the meaning specified in the
Escrow Agreement.
Final Withdrawal Notice: Has the meaning specified in Section
2.02.
Financing Documents: With respect to any Equipment Note,
means (i) the Indenture and the Participation Agreement relating to
such Equipment Note, and (ii) in the case of any Equipment Note related
to a Leased Aircraft, the Lease relating to such Leased Aircraft.
Fractional Undivided Interest: Means the fractional undivided
interest in the Trust that is evidenced by a Certificate.
Global Certificates: Has the meaning specified in Section
3.01(d).
Global Exchange Certificate: Has the meaning specified in
Section 3.01(f).
Indenture: Means each of the separate trust indentures and
mortgages relating to the Aircraft, each as specified or described in a
Delivery Notice delivered pursuant to the
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Note Purchase Agreement or the related Participation Agreement, in each
case as the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
Indenture Default: With respect to any Indenture, means any
Event of Default (as such term is defined in such Indenture).
Initial Certificates: Means the certificates issued and
authenticated hereunder substantially in the form of Exhibit A hereto
other than the Exchange Certificates.
Initial Purchasers: Means, collectively, Credit Suisse First
Boston Corporation, Morgan Stanley & Co. Incorporated, Chase Securities
Inc. and Goldman Sachs & Co.
Institutional Accredited Investor: Means an institutional
investor that is an "accredited investor" within the meaning set forth
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act.
Intercreditor Agreement: Means the Intercreditor Agreement
dated as of March 21, 1997 among the Trustee, the Other Trustees, the
Liquidity Providers, the liquidity providers relating to the
Certificates issued under (and as defined in) each of the Other Pass
Through Trust Agreements, and Wilmington Trust Company, as
Subordination Agent and as trustee thereunder, as amended, supplemented
or otherwise modified from time to time in accordance with its terms.
Investors: Means the Initial Purchasers together with all
subsequent beneficial owners of the Certificates.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
Lease: Means, with respect to each Leased Aircraft, the lease
between an Owner Trustee, as the lessor, and the Company, as the
lessee, referred to in the related Indenture, as such lease may be
amended, supplemented or otherwise modified in accordance with its
terms.
Leased Aircraft: Has the meaning specified in the second
recital to this Agreement.
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Liquidity Facility: Means, initially, (i) the Revolving
Credit Agreement dated as of March 21, 1997 relating to the
Certificates, between ABN Amro Bank N.V. and the Subordination Agent,
as agent and trustee for the Trustee, and (ii) the Revolving Credit
Agreement dated as of March 21, 1997 relating to the Certificates,
between ING Bank N.V. and the Subordination Agent, as agent and trustee
for the Trustee, and, from and after the replacement of either such
Agreement pursuant to the Intercreditor Agreement, the replacement
liquidity facility therefor, in each case as amended, supplemented or
otherwise modified from time to time in accordance with their
respective terms.
Liquidity Provider: Means, initially, each of ABN Amro Bank
N.V. and ING Bank N.V., and any replacement or successor therefor
appointed in accordance with the Intercreditor Agreement.
Loan Trustee: With respect to any Equipment Note or the
Indenture applicable thereto, means the bank or trust company
designated as trustee under such Indenture, together with any successor
to such trustee appointed pursuant thereto.
New Aircraft: Has the meaning specified in the Note Purchase Agreement.
Non-U.S. Person: Means a Person that is not a "U.S. person",
as defined in Regulation S.
Note Purchase Agreement: Means the Note Purchase Agreement
dated as of March 21, 1997 among the Trustee, the Other Trustees, the
Company, the Escrow Agent, the Escrow Paying Agent and the
Subordination Agent, providing for, among other things, the purchase of
Equipment Notes by the Trustee on behalf of the Trust, as the same may
be amended, supplemented or otherwise modified from time to time, in
accordance with its terms.
Notice of Purchase Withdrawal: Has the meaning specified in
the Deposit Agreement.
Offering Circular: Means the Offering Circular dated March
12, 1997 relating to the offering of the Certificates and the
certificates issued under the Other Pass Through Trust Agreements.
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Officer's Certificate: Means a certificate signed, (a) in the
case of the Company, by (i) the Chairman or Vice Chairman of the Board
of Directors, the President, any Executive Vice President, any Senior
Vice President or the Treasurer of the Company, signing alone, or (ii)
any Vice President of the Company signing together with the Secretary,
the Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company or, (b) in the case of an Owner Trustee or a Loan Trustee,
a Responsible Officer of such Owner Trustee or such Loan Trustee, as
the case may be.
Opinion of Counsel: Means a written opinion of legal counsel
who (a) in the case of counsel for the Company may be (i) a senior
attorney of the Company one of whose principal duties is furnishing
advice as to legal matters, (ii) Hughes Hubbard & Reed LLP, or (iii)
such other counsel designated by the Company and reasonably acceptable
to the Trustee and (b) in the case of counsel for any Owner Trustee or
any Loan Trustee may be such counsel as may be designated by any of
them whether or not such counsel is an employee of any of them, and who
shall be reasonably acceptable to the Trustee.
Other Pass Through Trust Agreements: Means each of the three
other Continental Airlines 1997-1 Pass Through Trust Agreements
relating to Continental Airlines Pass Through Trust, Series 1997-1A-O,
Continental Airlines Pass Through Trust, Series 1997-1B-O, and
Continental Airlines Pass Through Trust, Series 1997-1C-II-O, dated the
date hereof.
Other Trustees: Means the trustees under the Other Pass
Through Trust Agreements, and any successor or other trustee appointed
as provided therein.
Other Trusts: Means the Continental Airlines Pass Through
Trust, Series 1997-1A-O, Continental Airlines Pass Through Trust,
Series 1997-1B-O, and Continental Airlines Pass Through Trust, Series
1997-1C- II-O, created on the date hereof.
Outstanding: When used with respect to Certificates, means,
as of the date of determination, all Certificates theretofore
authenticated and delivered under this Agreement, except:
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(i) Certificates theretofore canceled by the
Registrar or delivered to the Trustee or the Registrar for
cancellation;
(ii) Certificates for which money in the full
amount required to make the final distribution with respect to
such Certificates pursuant to Section 11.01 hereof has been
theretofore deposited with the Trustee in trust for the
Holders of such Certificates as provided in Section 4.01
pending distribution of such money to such Certificateholders
pursuant to payment of such final distribution; and
(iii) Certificates in exchange for or in lieu of
which other Certificates have been authenticated and delivered
pursuant to this Agreement. Owned Aircraft: Has the meaning
specified in the second recital to this Agreement.
Owner Participant: With respect to any Equipment Note
relating to a Leased Aircraft, means the "Owner Participant" as
referred to in the Indenture pursuant to which such Equipment Note is
issued and any permitted successor or assign of such Owner Participant;
and Owner Participants at any time of determination means all of the
Owner Participants thus referred to in the Indentures.
Owner Trustee: With respect to any Equipment Note relating to
a Leased Aircraft, means the "Owner Trustee", as referred to in the
Indenture pursuant to which such Equipment Note is issued, not in its
individual capacity but solely as trustee; and Owner Trustees means all
of the Owner Trustees party to any of the Indentures.
Participation Agreement: Means each Participation Agreement
to be entered into by the Trustee pursuant to the Note Purchase
Agreement, as the same may be amended, supplemented or otherwise
modified in accordance with its terms.
Paying Agent: Means the paying agent maintained and appointed
for the Certificates pursuant to Section 7.12.
Permitted Investments: Means obligations of the United States
of America or agencies or instrumentalities thereof
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for the payment of which the full faith and credit of the United States
of America is pledged, maturing in not more than 60 days after the date
of acquisition thereof or such lesser time as is required for the
distribution of any Special Payments on a Special Distribution Date.
Person: Means any person, including any individual,
corporation, limited liability company, partnership, joint venture,
association, joint-stock company, trust, trustee, unincorporated
organization, or government or any agency or political subdivision
thereof.
Plan Transferee: Means any Plan or any entity that is
using the assets of any Plan to purchase or hold its interest in a
Certificate. For purposes of this definition, a "Plan" means any
employee benefit plan subject to ERISA as well as any plan that is not
subject to ERISA but which is subject to Section 4975 of the Internal
Revenue Code of 1986, as amended.
Pool Balance: Means, as of any date, (i) the original
aggregate face amount of the Certificates less (ii) the aggregate
amount of all payments made in respect of such Certificates other than
payments made in respect of interest or premium thereon or
reimbursement of any costs or expenses incurred in connection therewith
less (iii) the aggregate amount of unused Deposits distributed as a
Final Withdrawal other than payments in respect of interest or premium
thereon. The Pool Balance as of any Distribution Date shall be
computed after giving effect to the payment of principal, if any, on
the Equipment Notes or other Trust Property held in such Trust and the
distribution thereof to be made on such Distribution Date and the
distribution of the Final Withdrawal to be made on such Distribution
Date.
Pool Factor: Means, as of any date, the quotient (rounded to
the seventh decimal place) computed by dividing (i) the Pool Balance as
at such date by (ii) the original aggregate face amount of the
Certificates. The Pool Factor as of any Distribution Date shall be
computed after giving effect to the payment of principal, if any, on
the Equipment Notes or other Trust Property and the distribution
thereof to be made on such Distribution Date and the distribution of
the Final Withdrawal to be made on such Distribution Date.
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PTC Event of Default: Means any failure to pay within 10
Business Days of the due date thereof: (i) the outstanding Pool Balance
on the Final Maturity Date or (ii) interest due on the Certificates on
any Distribution Date (unless the Subordination Agent shall have made
an Interest Drawing or Drawings (as defined in the Intercreditor
Agreement), or a withdrawal or withdrawals pursuant to section 3.6(f)
of the Intercreditor Agreement, with respect thereto in an aggregate
amount sufficient to pay such interest and shall have distributed such
amount to the Trustee).
QIB: Means a qualified institutional buyer as defined in
Rule 144A.
Record Date: Means (i) for Scheduled Payments to be
distributed on any Regular Distribution Date, other than the final
distribution, the 15th day (whether or not a Business Day) preceding
such Regular Distribution Date, and (ii) for Special Payments to be
distributed on any Special Distribution Date, other than the final
distribution, the 15th day (whether or not a Business Day) preceding
such Special Distribution Date.
Register and Registrar: Mean the register maintained and the
registrar appointed pursuant to Sections 3.04 and 7.12.
Registration Event: Means the declaration of the
effectiveness by the SEC of the Exchange Offer Registration Statement
or the Shelf Registration Statement.
Registration Rights Agreement: Means the Exchange and
Registration Rights Agreement dated as of March 21, 1997, among the
Initial Purchasers, the Trustee, the Other Trustees and the Company, as
amended, supplemented or otherwise modified from time to time in
accordance with its terms.
Regular Distribution Date: With respect to distributions of
Scheduled Payments in respect of the Certificates, means each date
designated as a Regular Distribution Date in the Certificates issued
pursuant to this Agreement, until payment of all the Scheduled Payments
to be made under the Equipment Notes held in the Trust have been made;
provided, however, that, if any such day shall
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not be a Business Day, the related distribution shall be made on the
next succeeding Business Day without additional interest.
Regulation S: Means Regulation S under the Securities Act or
any successor regulation thereto.
Regulation S Definitive Certificates: Has the meaning
specified in Section 3.01(e).
Regulation S Global Certificates: Has the meaning specified
in Section 3.01(d).
Related Pass Through Trust Agreement: Means the Continental
Airlines 1997-1 Pass Through Trust Agreement relating to the
Continental Airlines Pass Through Trust, Series 1997-1C-I-S, dated the
date hereof, entered into by the Company and the institution acting as
trustee thereunder, which agreement becomes effective upon the
execution and delivery of the Assignment and Assumption Agreement
pursuant to Section 11.01.
Related Trust: Means the Continental Pass Through Trust,
Series 1997-1C-I-S, formed under the Related Pass Through Trust
Agreement.
Related Trustee: Means the trustee under the Related Pass
Through Trust Agreement.
Responsible Officer: With respect to the Trustee, any Loan
Trustee and any Owner Trustee, means any officer in the Corporate Trust
Office of the Trustee, Loan Trustee or Owner Trustee or any other
officer customarily performing functions similar to those performed by
the persons who at the time shall be such officers, respectively, or to
whom any corporate trust matter is referred because of his knowledge of
and familiarity with a particular subject.
Restricted Definitive Certificates: Has the meaning specified
in Section 3.01(e).
Restricted Global Certificate: Has the meaning specified in
Section 3.01(c).
Restricted Legend: Has the meaning specified in Section 3.02.
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Restricted Period: Has the meaning specified in Section
3.01(d).
Rule 144A: Means Rule 144A under the Securities Act and any
successor rule thereto.
Scheduled Payment: With respect to any Equipment Note, means
(i) any payment of principal or interest on such Equipment Note (other
than any such payment which is not in fact received by the
Subordination Agent within five days of the date on which such payment
is scheduled to be made) due from the obligor thereon or (ii) any
payment of interest on the Certificates with funds drawn under 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, premium, if any, or interest
resulting from the redemption or purchase of any Equipment Note shall
not constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as from
time to time constituted or created under the United States Securities
Exchange Act of 1934, as amended, or, if at any time after the
execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act,
then the body performing such duties on such date.
Securities Act: Means the United States Securities Act of
1933, as amended from time to time, or any successor thereto.
Shelf Registration Statement: Means the shelf registration
statement which may be required to be filed by the Company with the SEC
pursuant to any Registration Rights Agreement, other than an Exchange
Offer Registration Statement.
Special Distribution Date: Means each date on which a Special
Payment is to be distributed as specified in this Agreement; provided,
however, that, if any such day shall not be a Business Day, the related
distribution shall be made on the next succeeding Business Day without
additional interest.
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Special Redemption Premium: Means the premium payable by the
Company in respect of the Final Withdrawal pursuant to the Note
Purchase 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) or Special Redemption
Premium.
Special Payments Account: Means the account or accounts
created and maintained pursuant to Section 4.01(b).
Subordination Agent: Has the meaning specified in the
Intercreditor Agreement.
Substitute Aircraft: Has the meaning specified in the Note
Purchase Agreement.
TIN: Has the meaning specified in Section 7.16.
Transfer Date: Has the meaning specified in Section 11.01.
Triggering Event: Has the meaning assigned to such term in
the Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate
of which consists of the Trust Property.
Trust Indenture Act: Means the United States Trust Indenture
Act of 1939, as amended from time to time, or any successor thereto.
Trust Property: Means (i) the Equipment Notes held as the
property of the Trust and, subject to the Intercreditor Agreement, all
monies at any time paid thereon and all monies due and to become due
thereunder, (ii) funds from time to time deposited in the Certificate
Account and the Special Payments Account and, subject to the
Intercreditor Agreement, any proceeds from the sale by the Trustee
pursuant to Article VI hereof of any Equipment Note and (iii) all
rights of the Trust and the Trustee, on behalf of the Trust, under the
Intercreditor Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Liquidity Facilities, including, without limitation,
all rights to receive certain payments thereunder, and all monies paid
to
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the Trustee on behalf of the Trust pursuant to the Intercreditor
Agreement or the Liquidity Facilities, provided, that rights with
respect to the Deposits or under the Escrow Agreement, except for the
right to direct withdrawals for the purchase of Equipment Notes to be
held herein, will not constitute Trust Property.
Trustee: Means Wilmington Trust Company, or its successor in
interest, and any successor or other trustee appointed as provided
herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
Section 1.02. Compliance Certificates and Opinions. Upon
any application or request (except with respect to matters set forth in Article
II) by the Company, any Owner Trustee or any Loan Trustee to the Trustee to
take any action under any provision of this Agreement, the Company, such Owner
Trustee or such Loan Trustee, as the case may be, shall furnish to the Trustee
(i) an Officer's Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with and (ii) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Agreement relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement (other than a certificate
provided pursuant to Section 8.04(e)) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions in this Agreement relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
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(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In
any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters and any such Person may certify or give an
opinion as to such matters in one or several documents.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement or, in respect of the Certificates, this
Agreement, they may, but need not, be consolidated and form one instrument.
Section 1.04. Directions of Certificateholders.
(a) Any direction, consent, request, demand, authorization, notice, waiver or
other action provided by this Agreement to be given or taken by
Certificateholders (a "Direction") may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such
Certificateholders in person or by an agent or proxy duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required pursuant to this Agreement, to the Company
or any Loan Trustee. Proof of execution of any such instrument or of a writing
appointing any such agent or proxy shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee, the Company and any Loan
Trustee, if made in the manner provided in this Section.
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(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the certificate of any notary
public or other officer of any jurisdiction authorized to take acknowledgments
of deeds or administer oaths that the Person executing such instrument
acknowledged to him the execution thereof, or by an affidavit of a witness to
such execution sworn to before any such notary or such other officer and where
such execution is by an officer of a corporation or association or a member of
a partnership, on behalf of such corporation, association or partnership, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other reasonable manner which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the
requisite Fractional Undivided Interests of Certificates Outstanding have given
any Direction under this Agreement, Certificates owned by the Company or any
Affiliate thereof shall be disregarded and deemed not to be Outstanding for
purposes of any such determination. In determining whether the Trustee shall
be protected in relying upon any such Direction, only Certificates which the
Trustee knows to be so owned shall be so disregarded. Notwithstanding the
foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded, and (ii) if any amount of
Certificates so owned by any such Person have been pledged in good faith, such
Certificates shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Company or any Affiliate thereof.
(d) For all purposes of this Agreement, all Initial
Certificates and all Exchange Certificates shall vote and take all other
actions of Certificateholders together as one series of Certificates.
(e) The Company may at its option, by delivery of an
Officer's Certificate to the Trustee, set a record date to determine the
Certificateholders entitled to give any Direction. Notwithstanding Section
316(c) of the Trust Indenture Act, such record date shall be the record date
specified in such Officer's Certificate, which shall be a date not more than 30
days prior to the first solicitation of Certificateholders in connection
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therewith. If such a record date is fixed, such Direction may be given before
or after such record date, but only the Certificateholders of record at the
close of business on such record date shall be deemed to be Certificateholders
for the purposes of determining whether Certificateholders of the requisite
proportion of Outstanding Certificates have authorized or agreed or consented
to such Direction, and for that purpose the Outstanding Certificates shall be
computed as of such record date; provided that no such Direction by the
Certificateholders on such record date shall be deemed effective unless it
shall become effective pursuant to the provisions of this Agreement not later
than one year after such record date.
(f) Any Direction by the Holder of any Certificate shall
bind the Holder of every Certificate issued upon the transfer thereof or in
exchange therefor or in lieu thereof, whether or not notation of such Direction
is made upon such Certificate.
(g) Except as otherwise provided in Section 1.04(c),
Certificates owned by or pledged to any Person shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Certificates.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of
Equipment Notes. (a) The Trustee is hereby directed (i) to execute and deliver
the Intercreditor Agreement, the Registration Rights Agreement, the Escrow
Agreement and the Note Purchase Agreement on or prior to the Issuance Date,
each in the form delivered to the Trustee by the Company and (ii) subject to
the respective terms thereof, to perform its obligations thereunder. Upon
request of the Company and the satisfaction or waiver of the closing conditions
specified in the Certificate Purchase Agreement, the Trustee shall execute,
deliver, authenticate, issue and sell Certificates in authorized denominations
equalling in the aggregate the amount set forth, with respect to the Trust, in
Schedule II to the Certificate Purchase Agreement evidencing the entire
ownership interest in the Trust, which amount equals the maximum aggregate
principal amount of Equipment Notes which
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may be purchased by the Trustee pursuant to the Note Purchase Agreement.
Except as provided in Sections 3.04, 3.05, 3.06, 3.07 and 3.10 hereof, the
Trustee shall not execute, authenticate or deliver Certificates in excess of
the aggregate amount specified in this paragraph.
(b) On or after the Issuance Date, the Company may deliver
from time to time to the Trustee a Delivery Notice relating to one or more
Equipment Notes. After receipt of a Delivery Notice and in any case no later
than one Business Day prior to a Delivery Date as to which such Delivery Notice
relates (the "Applicable Delivery Date") (or, if the Issuance Date is an
Applicable Delivery Date, on the Issuance Date), the Trustee shall (as and when
specified in the Delivery Notice) instruct the Escrow Agent to provide a Notice
of Purchase Withdrawal to the Depositary requesting (A) the withdrawal of one
or more Deposits on the Applicable Delivery Date in accordance with and to the
extent permitted by the terms of the Escrow Agreement and the Deposit Agreement
and (B) the payment of all, or a portion, of such Deposit or Deposits in an
amount equal in the aggregate to the purchase price of such Equipment Notes to
or on behalf of the Owner Trustee or the Company, as the case may be, issuing
such Equipment Notes, all as shall be described in the Delivery Notice;
provided that, if the Issuance Date is an Applicable Delivery Date, such
purchase price shall be paid from a portion of the proceeds of the sale of the
Certificates. The Trustee shall (as and when specified in such Delivery
Notice), subject to the conditions set forth in Section 2 of the Note Purchase
Agreement, enter into and perform its obligations under the Participation
Agreement specified in such Delivery Notice (the "Applicable Participation
Agreement") and cause such certificates, documents and legal opinions relating
to the Trustee to be duly delivered as required by the Applicable Participation
Agreement. If at any time prior to the Applicable Delivery Date, the Trustee
receives a notice of postponement pursuant to Section 2(e) or 2(f) of the Note
Purchase Agreement, then the Trustee shall give the Depositary with a copy to
the Escrow Agent a notice of cancellation of such Notice of Purchase Withdrawal
relating to such Deposit or Deposits on such Applicable Delivery Date. Upon
satisfaction of the conditions specified in the Note Purchase Agreement and the
Applicable Participation Agreement, the Trustee shall purchase the applicable
Equipment Notes with the proceeds of the withdrawals of one or more Deposits
made on the Applicable Delivery Date in accordance with the terms of the
Deposit Agreement and the Escrow
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Agreement (or, if the Issuance Date is Applicable Delivery Date with respect to
such Applicable Participation Agreement, from a portion of the proceeds of the
sale of the Certificates). The purchase price of such Equipment Notes shall
equal the principal amount of such Equipment Notes. Amounts withdrawn from
such Deposit or Deposits in excess of the purchase price of the Equipment Notes
or to the extent not applied on the Applicable Delivery Date to the purchase
price of the Equipment Notes, shall be re-deposited by the Trustee with the
Depositary on the Applicable Delivery Date in accordance with the terms of the
Deposit Agreement.
Section 2.02. Withdrawal of Deposits. If any Deposits
remain outstanding on the Business Day next succeeding the Cut-Off Date, (i)
(A) the Trustee shall give the Escrow Agent notice that the Trustee's
obligation to purchase Equipment Notes under the Note Purchase Agreement has
terminated and instruct the Escrow Agent to provide a notice of Final
Withdrawal to the Depositary substantially in the form of Exhibit B to the
Deposit Agreement (the "Final Withdrawal Notice") and (B) the Trustee will make
a demand upon the Company under the Note Purchase Agreement for an amount equal
to the Special Redemption Premium, such payment to be made on the Final
Withdrawal Date.
Section 2.03. Acceptance by Trustee. The Trustee, upon the
execution and delivery of this Agreement, acknowledges its acceptance of all
right, title and interest in and to the Trust Property and declares that the
Trustee holds and will hold such right, title and interest for the benefit of
all then present and future Certificateholders, upon the trusts herein set
forth. Subject to Section 7.14, the Trustee shall take all actions reasonably
necessary to effect the registration of all such Equipment Notes in the name of
the Subordination Agent. By its payment for and acceptance of each Certificate
issued to it under this Agreement, each initial Certificateholder as grantor of
the Trust thereby joins in the creation and declaration of the Trust.
Section 2.04. Limitation of Powers. The Trust is
constituted solely for the purpose of making the investment in the Equipment
Notes, and, except as set forth herein, the Trustee shall not be authorized or
empowered to acquire any other investments or engage in any other activities
and, in particular, the Trustee shall not be authorized or empowered to do
anything that would cause such Trust to fail to qualify as a "grantor
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trust" for federal income tax purposes (including as subject to this
restriction, acquiring any Aircraft (as defined in the respective Indentures) by
bidding such Equipment Notes or otherwise, or taking any action with respect to
any such Aircraft once acquired).
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "7.420%
Initial Pass Through Certificates, Series 1997-1C-I-O" and the Exchange
Certificates shall be known as the "7.420% Exchange Pass Through Certificates,
Series 1997-1C-I-O", in each case, of the Trust. Each Certificate will
represent a fractional undivided interest in the Trust and shall be
substantially in the form set forth as Exhibit A hereto, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Agreement and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the Trustee or the officers executing
such Certificates, as evidenced by the Trustee's or officer's execution of the
Certificates. At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Certificate. In
any event, any transfer or exchange of any Certificate shall also effect a
transfer or exchange of the related Escrow Receipt. Prior to the Final
Withdrawal Date, no transfer or exchange of any Certificate shall be permitted
unless the corresponding Escrow Receipt is attached thereto and also is so
transferred or exchanged. By acceptance of any Certificate to which an Escrow
Receipt is attached, each Holder of such a Certificate acknowledges and accepts
the restrictions on transfer of the Escrow Receipt set forth herein and in the
Escrow Agreement.
(b) The Initial Certificates shall be issued only in fully
registered form without coupons and only in denominations of $100,000 or
integral multiples of $1,000 in excess thereof, except that one Certificate may
be issued in a different denomination. The Exchange Certificates will be
issued in denominations of $1,000 or integral multiples thereof, except that
one Certificate may be issued in a different denomination.
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Each Certificate shall be dated the date of its authentication. The aggregate
Fractional Undivided Interest of Certificates shall not at any time exceed
$111,093,000.
(c) The Initial Certificates offered and sold in reliance
on Rule 144A shall be issued in the form of one or more global Certificates
substantially in the form of Exhibit A hereto with such applicable legends as
are provided for in Section 3.02 (each a "Restricted Global Certificate") duly
executed and authenticated by the Trustee as hereinafter provided. Such
Restricted Global Certificates shall be in registered form and be registered in
the name of DTC and deposited with the Trustee, at its Corporate Trust Office,
as custodian for DTC. The aggregate principal amount of any Restricted Global
Certificate may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for DTC for such Restricted Global
Certificate, as provided in Section 3.06 hereof, which adjustments shall be
conclusive as to the aggregate principal amount of any such Global Certificate.
(d) The Initial Certificates offered and sold outside the
United States in reliance on Regulation S shall be issued in the form of one or
more global Certificates substantially in the form of Exhibit A hereto (each a
"Regulation S Global Certificate") duly executed and authenticated by the
Trustee as hereinafter provided. Such Regulation S Global Certificates shall
be in registered form and be registered in the name of DTC and deposited with
the Trustee, at its Corporate Trust Office, as custodian for DTC, for credit
initially and during the Restricted Period (hereinafter defined) to the
respective accounts of beneficial owners of such Certificates (or to such other
accounts as they may direct) at Morgan Guaranty Trust Company of New York,
Brussels office, as operator of Euroclear or Cedel. As used herein, the term
"Restricted Period", with respect to the Regulation S Global Certificates
offered and sold in reliance on Regulation S, means the period of 40
consecutive days beginning on and including the later of (i) the day on which
the Certificates are first offered to persons other than distributors (as
defined in Regulation S) in reliance on Regulation S and (ii) the date of the
closing of the offering under the Certificate Purchase Agreement. The
aggregate principal amount of any Regulation S Global Certificate may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for DTC for such Global Certificate, as provided in
Section 3.06 hereof, which adjustments shall be
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conclusive as to the aggregate principal amount of any such Global Certificate.
The Restricted Global Certificate and Regulation S Global Certificate are
sometimes collectively referred to herein as the "Global Certificates".
(e) Initial Certificates offered and sold to any
Institutional Accredited Investor which is not a QIB in a transaction exempt
from registration under the Securities Act (and other than as described in
Section 3.01(d)) shall be issued substantially in the form of Exhibit A hereto
in definitive, fully registered form without interest coupons with such
applicable legends as are provided for in Section 3.02 (the "Restricted
Definitive Certificates") duly executed and authenticated by the Trustee as
hereinafter provided. Certificates issued pursuant to Section 3.05(b) in
exchange for interests in a Regulation S Global Certificate shall be issued in
definitive, fully registered form without interest coupons (the "Regulation S
Definitive Certificates"). The Restricted Definitive Certificates and the
Regulation S Definitive Certificates are sometimes collectively referred to
herein as the "Definitive Certificates".
(f) The Exchange Certificates shall be issued in the form
of one or more global Certificates substantially in the form of Exhibit A
hereto (each, a "Global Exchange Certificate"), except that (i) the Restricted
Legend (hereinafter defined) shall be omitted and (ii) such Exchange
Certificates shall contain such appropriate insertions, omissions,
substitutions and other variations from the form set forth in Exhibit A hereto
relating to the nature of the Exchange Certificates as the Responsible Officer
of the Trustee executing such Exchange Certificates on behalf of the Trust may
determine, as evidenced by such officer's execution on behalf of the Trust of
such Exchange Certificates. Such Global Exchange Certificates shall be in
registered form and be registered in the name of DTC and deposited with the
Trustee, at its Corporate Trust Office, as custodian for DTC. The aggregate
principal amount of any Global Exchange Certificate may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC for such Global Exchange Certificate, which adjustments shall
be conclusive as to the aggregate principal amount of any such Global Exchange
Certificate. Subject to clause (i) and (ii) of the first sentence of this
Section 3.01(f), the terms hereof applicable to Restricted Global Certificates
and/or Global
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Certificates shall apply to the Global Exchange Certificates, mutatis mutandis.
(g) The definitive Certificates shall be in registered
form and shall be typed, printed, lithographed or engraved or produced by any
combination of these methods or may be produced in any other manner, all as
determined by the officers executing such Certificates, as evidenced by their
execution of such Certificates.
Section 3.02. Restrictive Legends. All Initial
Certificates issued pursuant to this Agreement for resale pursuant to Rule 144A
or offered and sold to any Institutional Accredited Investor which is not a QIB
(including any Global Certificate issued upon registration of transfer, in
exchange for or in lieu of such Certificates) shall be "Restricted
Certificates" and shall bear a legend to the following effect (the "Restricted
Legend") unless the Company and the Trustee determine otherwise consistent with
applicable law:
"THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE
LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES,
INC., THE TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS RESELL OR
OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO CONTINENTAL AIRLINES,
INC., (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (D) PURSUANT TO
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THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IF
IT SHOULD RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE IT WILL DELIVER
TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING
THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN
VIOLATION OF THE FOREGOING RESTRICTIONS."
Each Global Certificate shall bear the following legend on the
face thereof:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS
CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS
OF THIS
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GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE
WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS
THROUGH TRUST AGREEMENT REFERRED TO HEREIN."
Section 3.03. Authentication of Certificates. (a) On the
Issuance Date, the Trustee shall duly execute, authenticate and deliver
Certificates in authorized denominations equalling in the aggregate the amount
set forth, with respect to the Trust, in Schedule II to the Certificate
Purchase Agreement, evidencing the entire ownership of the Trust, which amount
equals the maximum aggregate principal amount of Equipment Notes which may be
purchased by the Trustee pursuant to the Note Purchase Agreement.
(b) No Certificate shall be entitled to any benefit under
this Agreement or be valid or obligatory for any purpose, unless there appears
on such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. The Trustee shall
cause to be kept at the office or agency to be maintained by it in accordance
with the provisions of Section 7.12 a register (the "Register") of the
Certificates in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of such Certificates
and of transfers and exchanges of such Certificates as herein provided. The
Trustee shall initially be the registrar (the "Registrar") for the purpose of
registering such Certificates and transfers and exchanges of such Certificates
as herein provided.
All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid obligations of the Trust, evidencing
the same interest therein, and entitled to the same benefits under this Trust
Agreement, as the Certificates surrendered upon such registration of transfer
or exchange.
A Certificateholder may transfer a Certificate, or request
that a Certificate be exchanged for Certificates in an aggregate Fractional
Undivided Interest equal to the Fractional Undivided Interest of such
Certificate surrendered for exchange
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of other authorized denominations, by surrender of such Certificate to the
Trustee with the form of transfer notice thereon duly completed and executed,
and otherwise complying with the terms of this Agreement, including providing
evidence of compliance with any restrictions on transfer, in form satisfactory
to the Trustee and the Registrar; provided that no exchanges of Initial
Certificates for Exchange Certificates shall occur until an Exchange Offer
Registration Statement shall have been declared effective by the SEC (notice of
which shall be provided to the Trustee by the Company). No such transfer shall
be effected until, and such transferee shall succeed to the rights of a
Certificateholder only upon, final acceptance and registration of the transfer
by the Registrar in the Register. Prior to the registration of any transfer by
a Certificateholder as provided herein, the Trustee shall treat the person in
whose name the Certificate is registered as the owner thereof for all purposes,
and the Trustee shall not be affected by notice to the contrary. Furthermore,
DTC shall, by acceptance of a Global Certificate, agree that transfers of
beneficial interests in such Global Certificate may be effected only through a
book-entry system maintained by DTC (or its agent), and that ownership of a
beneficial interest in the Certificate shall be required to be reflected in a
book-entry. When Certificates are presented to the Registrar with a request to
register the transfer thereof or to exchange them for other authorized
denominations of a Certificate in a Fractional Undivided Interest equal to the
aggregate Fractional Undivided Interest of Certificates surrendered for
exchange, the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met.
To permit registrations of transfers and exchanges in
accordance with the terms, conditions and restrictions hereof, the Trustee
shall execute and authenticate Certificates at the Registrar's request. No
service charge shall be made to a Certificateholder for any registration of
transfer or exchange of Certificates, but the Trustee shall require payment of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for registration of transfer or exchange shall be canceled and
subsequently destroyed by the Trustee.
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Section 3.05. Book-Entry Provisions for Restricted Global
Certificates and Regulation S Global Certificates. (a) Members of, or
participants in, DTC ("Agent Members") shall have no rights under this
Agreement with respect to any Global Certificate held on their behalf by DTC,
or the Trustee as its custodian, and DTC may be treated by the Trustee and any
agent of the Trustee as the absolute owner of such Global Certificate for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Trustee or any agent of the Trustee from giving effect to any
written certification, proxy or other authorization furnished by DTC or shall
impair, as between DTC and its Agent Members, the operation of customary
practices governing the exercise of the rights of a holder of any Certificate.
Upon the issuance of any Global Certificate, the Registrar or its duly
appointed agent shall record DTC as the registered holder of such Global
Certificate.
(b) Transfers of any Global Certificate shall be limited
to transfers of such Restricted Global Certificate or Regulation S Global
Certificate in whole, but not in part, to DTC. Beneficial interests in the
Restricted Global Certificate and any Regulation S Global Certificate may be
transferred in accordance with the rules and procedures of DTC and the
provisions of Section 3.06. Beneficial interests in a Restricted Global
Certificate or a Regulation S Global Certificate shall be delivered to all
beneficial owners thereof in the form of Restricted Definitive Certificates or
Regulation S Definitive Certificates, as the case may be, if (i) DTC notifies
the Trustee that it is unwilling or unable to continue as depositary for such
Restricted Global Certificate or Regulation S Global Certificate, as the case
may be, and a successor depositary is not appointed by the Trustee within 90
days of such notice, and (ii) after the occurrence and during the continuance
of an Event of Default, owners of beneficial interests in a Global Certificate
with Fractional Undivided Interests aggregating not less than a majority in
interest in the Trust advise the Trustee, the Company and DTC through Agent
Members in writing that the continuation of a book-entry system through DTC or
its successor is no longer in their best interests.
(c) Any beneficial interest in one of the Global
Certificates that is transferred to a Person who takes delivery in the form of
an interest in another Global Certificate will, upon such transfer, cease to be
an interest in such Global Certificate and become an interest in the other
Global Certificate and, accordingly, will thereafter be subject to all transfer
restrictions, if any, and other procedures applicable to
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beneficial interests in such other Global Certificate for as long as it remains
such an interest.
(d) In connection with the transfer of an entire
Restricted Global Certificate or an entire Regulation S Global Certificate to
the beneficial owners thereof pursuant to paragraph (b) of this Section 3.05,
such Restricted Global Certificate or Regulation S Global Certificate, as the
case may be, shall be deemed to be surrendered to the Trustee for
cancellation, and the Trustee shall execute, authenticate and deliver, to each
beneficial owner identified by DTC in exchange for its beneficial interest in
such Restricted Global Certificate or Regulation S Global Certificate, as the
case may be, an equal aggregate principal amount of Restricted Definitive
Certificates or Regulation S Definitive Certificates, as the case may be, of
authorized denominations. None of the Company, the Registrar, the Paying Agent
nor the Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
registration instructions. Upon the issuance of Definitive Certificates, the
Trustee shall recognize the Person in whose name the Definitive Certificates
are registered in the Register as Certificateholders hereunder. Neither the
Company nor the Trustee shall be liable if the Trustee or the Company is unable
to locate a qualified successor clearing agency.
(e) Any Definitive Certificate delivered in exchange for
an interest in the Restricted Global Certificate pursuant to paragraph (b) of
this Section 3.05 shall, except as otherwise provided by paragraph (e) of
Section 3.06, bear the Restricted Legend.
(f) Prior to the expiration of the Restricted Period, any
Regulation S Definitive Certificate delivered in exchange for an interest in a
Regulation S Global Certificate pursuant to paragraph (b) of this Section shall
bear the Restricted Legend.
(g) The registered holder of any Restricted Global
Certificate or Regulation S Global Certificate may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Agreement or the Certificates.
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Section 3.06. Special Transfer Provisions. Unless and
until (i) an Initial Certificate is sold under an effective Shelf Registration
Statement, or (ii) an Initial Certificate is exchanged for an Exchange
Certificate pursuant to an effective Exchange Offer Registration Statement, in
each case pursuant to the terms of the Registration Rights Agreement, the
following provisions shall apply to such Initial Certificates:
(a) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect to the
registration of any proposed transfer of a Certificate to any
Institutional Accredited Investor which is neither a QIB nor a Non-U.S.
Person:
(i) The Registrar shall register the transfer
of any Certificate, whether or not bearing the Restricted
Legend, only if (x) the requested transfer is at least two
years after the later of the original issue date of the
Certificates and the last date on which such Certificate was
held by the Company, the Trustee or any affiliate of any of
such Persons or (y) the proposed transferor is an Initial
Purchaser who is transferring Certificates purchased under the
Certificates Purchase Agreement and the proposed transferee
has delivered to the Registrar a letter substantially in the
form of Exhibit C hereto and the aggregate principal amount of
the Certificates being transferred is at least $100,000.
Except as provided in the foregoing clause (y), the Registrar
shall not register the transfer of any Certificate to any
Institutional Accredited Investor which is neither a QIB nor a
Non-U.S. Person.
(ii) If the proposed transferor is an Agent
Member holding a beneficial interest in a Restricted Global
Certificate, upon receipt by the Registrar of (x) the
documents, if any, required by paragraph (i) and (y)
instructions given in accordance with DTC's and the
Registrar's procedures, the Registrar shall reflect on its
books and records the date of the transfer and a decrease in
the principal amount of such Restricted Global Certificate in
an amount equal to the principal amount of the beneficial
interest in such Restricted Global Certificate to be
transferred, and the Trustee shall execute, authenticate and
deliver to the
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transferor or at its direction, one or more Restricted
Definitive Certificates of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of an Initial
Certificate to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred
consists of Restricted Definitive Certificates, or of an
interest in any Regulation S Global Certificate during the
Restricted Period, the Registrar shall register the transfer
if such transfer is being made by a proposed transferor who
has checked the box provided for on the form of Initial
Certificate stating, or has otherwise advised the Trustee and
the Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee
who has signed the certification provided for on the form of
Initial Certificate stating, or has otherwise advised the
Trustee and the Registrar in writing, that it is purchasing
the Initial Certificate for its own account or an account with
respect to which it exercises sole investment discretion and
that it, or the Person on whose behalf it is acting with
respect to any such account, is a QIB within the meaning of
Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received
such information regarding the Trust and/or the Company as it
has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the
transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by
Rule 144A.
(ii) Upon receipt by the Registrar of the
documents required by clause (i) above and instructions given
in accordance with DTC's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records
the date of such transfer and an increase in the principal
amount of a Restricted Global Certificate in an amount equal
to the principal amount of the Restricted Definitive
Certificates or interests in such Regulation S Global
Certificate, as the case may be, being transferred, and the
Trustee shall cancel
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such Definitive Certificates or decrease the amount of such
Regulation S Global Certificate so transferred.
(c) Transfers of Interests in the Regulation S Global
Certificate or Regulation S Definitive Certificates. After the expiration of
the Restricted Period, the Registrar shall register any transfer of interests
in any Regulation S Global Certificate or Regulation S Definitive Certificates
without requiring any additional certification. Until the expiration of the
Restricted Period, interests in the Regulation S Global Certificate may only be
held through Agent Members acting for and on behalf of Euroclear and Cedel.
(d) Transfers to Non-U.S. Persons at Any Time. The
following provisions shall apply with respect to any registration of any
transfer of an Initial Certificate to a Non-U.S. Person:
(i) Prior to the expiration of the Restricted
Period, the Registrar shall register any proposed transfer of
an Initial Certificate to a Non-U.S.Person upon receipt of a
certificate substantially in the form set forth as Exhibit B
hereto from the proposed transferor.
(ii) After the expiration of the Restricted
Period, the Registrar shall register any proposed transfer to
any Non-U.S. Person if the Certificate to be transferred is a
Restricted Definitive Certificate or an interest in a
Restricted Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit B from the proposed
transferor. The Registrar shall promptly send a copy of such
certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the
documents, if any, required by clause (ii) and (y)
instructions in accordance with DTC's and the Registrar's
procedures, the Registrar shall reflect on its books and
records the date of such transfer and a decrease in the
principal amount of such Restricted Global Certificate in an
amount equal to the principal amount of the beneficial
interest in such Restricted Global Certificate to be
transferred, and, upon receipt by the Registrar of
instructions given in accordance with DTC's and the
Registrar's procedures, the
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Registrar shall reflect on its books and records the date and
an increase in the principal amount of the Regulation S Global
Certificate in an amount equal to the principal amount of the
Restricted Definitive Certificate or the Restricted Global
Certificate, as the case may be, to be transferred, and the
Trustee shall cancel the Definitive Certificate, if any, so
transferred or decrease the amount of such Restricted Global
Certificate.
(e) Restricted Legend. Upon the transfer, exchange or
replacement of Certificates not bearing the Restricted Legend, the Registrar
shall deliver Certificates that do not bear the Restricted Legend. Upon the
transfer, exchange or replacement of Certificates bearing the Restricted
Legend, the Registrar shall deliver only Certificates that bear the Restricted
Legend unless either (i) the circumstances contemplated by paragraph (d)(ii) of
this Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion
of Counsel to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(f) General. By acceptance of any Certificate bearing the
Restricted Legend, each Holder of such a Certificate acknowledges the
restrictions on transfer of such Certificate set forth in this Agreement and
agrees that it will transfer such Certificate only as provided in this
Agreement. The Registrar shall not register a transfer of any Certificate
unless such transfer complies with the restrictions on transfer, if any, of
such Certificate set forth in this Agreement. In connection with any transfer
of Certificates, each Certificateholder agrees by its acceptance of the
Certificates to furnish the Registrar or the Trustee such certifications, legal
opinions or other information as either of them may reasonably require to
confirm that such transfer is being made pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the Securities Act
and in accordance with the terms and provisions of this Article III; provided
that the Registrar shall not be required to determine the sufficiency of any
such certifications, legal opinions or other information.
Until such time as no Certificates remain Outstanding, the
Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 3.05 or
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this Section 3.06. The Trustee, if not the Registrar at such time, shall have
the right to inspect and make copies of all such letters, notices or other
written communications at any reasonable time upon the giving of reasonable
written notice to the Registrar.
Section 3.07. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to the Registrar
or the Registrar receives evidence to its satisfaction of the destruction, loss
or theft of any Certificate and (b) there is delivered to the Registrar and the
Trustee such security, indemnity or bond, as may be required by them to save
each of them harmless, then, in the absence of notice to the Registrar or the
Trustee that such destroyed, lost or stolen Certificate has been acquired by a
bona fide purchaser, and provided that the requirements of Section 8-405 of the
Uniform Commercial Code in effect in any applicable jurisdiction are met, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or
Certificates, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate under
this Section 3.07, the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and the Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section 3.07
shall constitute conclusive evidence of the appropriate Fractional Undivided
Interest in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen
Certificates.
Section 3.08. Persons Deemed Owners. Prior to due
presentment of a Certificate for registration of transfer, the Trustee, the
Registrar and any Paying Agent may treat the Person in whose name any
Certificate is registered (as of the day of
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determination) as the owner of such Certificate for the purpose of receiving
distributions pursuant to Article IV and for all other purposes whatsoever, and
none of the Trustee, the Registrar or any Paying Agent shall be affected by any
notice to the contrary.
Section 3.09. Cancellation. All Certificates surrendered
for payment or transfer or exchange shall, if surrendered to the Trustee or any
agent of the Trustee other than the Registrar, be delivered to the Registrar
for cancellation and shall promptly be canceled by it. No Certificates shall
be authenticated in lieu of or in exchange for any Certificates canceled as
provided in this Section, except as expressly permitted by this Agreement. All
canceled Certificates held by the Registrar shall be destroyed and a
certification of their destruction delivered to the Trustee.
Section 3.10. Temporary Certificates. Until definitive
Certificates are ready for delivery, the Trustee shall authenticate temporary
Certificates. Temporary Certificates shall be substantially in the form of
definitive Certificates but may have insertions, substitutions, omissions and
other variations determined to be appropriate by the officers executing the
temporary Certificates, as evidenced by their execution of such temporary
Certificates. If temporary Certificates are issued, the Trustee will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee designated for such purpose
pursuant to Section 7.12, without charge to the Certificateholder. Upon
surrender for cancellation of any one or more temporary Certificates, the
Trustee shall execute, authenticate and deliver in exchange therefor a like
face amount of definitive Certificates of authorized denominations. Until so
exchanged, the temporary Certificates shall be entitled to the same benefits
under this Agreement as definitive Certificates.
Section 3.11. Limitation of Liability for Payments. All
payments and distributions made to Certificateholders in respect of the
Certificates shall be made only from the Trust Property and only to the extent
that the Trustee shall have sufficient income or proceeds from the Trust
Property to make such payments in accordance with the terms of Article IV of
this
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Agreement. Each Certificateholder, by its acceptance of a Certificate, agrees
that it will look solely to the income and proceeds from the Trust Property for
any payment or distribution due to such Certificateholder pursuant to the terms
of this Agreement and that it will not have any recourse to the Company, the
Trustee, the Loan Trustees, the Liquidity Providers, the Owner Trustees or the
Owner Participants, except as otherwise expressly provided herein or in the
Intercreditor Agreement.
The Company is a party to this Agreement solely for purposes
of meeting the requirements of the Trust Indenture Act, and therefore shall not
have any right, obligation or liability hereunder (except as otherwise
expressly provided herein).
Section 3.12 ERISA Restrictive Legend. All Certificates
issued pursuant to this Agreement shall bear a legend to the following effect
(the "ERISA Legend") unless the Company and the Trustee determine otherwise
consistent with applicable law:
"BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT
IS NOT A PLAN TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST
AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY USING THE ASSETS OF ITS
GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE, AND THE CONDITIONS OF
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S.
DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN
CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE PASS
THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE
FOREGOING RESTRICTIONS."
By acceptance of any Certificate bearing the ERISA Legend,
each Holder of such a Certificate acknowledges the restrictions on transfer of
such Certificate set forth in this Agreement and agrees that it will transfer
such Certificate only as provided in this Agreement. The Registrar shall not
register a transfer of any Certificate unless such transfer complies with the
restrictions on transfer, if any, of such Certificate set forth in this
Agreement.
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ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments
Account. (a) The Trustee shall establish and maintain on behalf of the
Certificateholders a Certificate Account as one or more non-interest- bearing
accounts. The Trustee shall hold the Certificate Account in trust for the
benefit of the Certificateholders, and shall make or permit withdrawals
therefrom only as provided in this Agreement. On each day when a Scheduled
Payment is made to the Trustee under the Intercreditor Agreement, the Trustee
upon receipt thereof shall immediately deposit the aggregate amount of such
Scheduled Payment in the Certificate Account.
(b) The Trustee shall establish and maintain on behalf of
the Certificateholders a Special Payments Account as one or more accounts,
which shall be non-interest bearing except as provided in Section 4.04. The
Trustee shall hold the Special Payments Account in trust for the benefit of the
Certificateholders and shall make or permit withdrawals therefrom only as
provided in this Agreement. On each day when one or more Special Payments are
made to the Trustee under the Intercreditor Agreement and upon the payment of
the Special Redemption Premium to the Trustee under the Note Purchase
Agreement, the Trustee, upon receipt thereof, shall immediately deposit the
aggregate amount of such Special Payments in the Special Payments Account.
(c) The Trustee shall cause the Subordination Agent to
present to the related Loan Trustee of each Equipment Note such Equipment Note
on the date of its stated final maturity or, in the case of any Equipment Note
which is to be redeemed in whole pursuant to the related Indenture, on the
applicable redemption date under such Indenture.
Section 4.02. Distributions from Certificate Account and
Special Payments Account. (a) On each Regular Distribution Date or as soon
thereafter as the Trustee has confirmed receipt of the payment of all or any
part of the Scheduled Payments due on such date, the Trustee shall distribute
out of the Certificate Account the entire amount deposited therein pursuant to
Section 4.01(a). There shall be so distributed to each Certificateholder of
record on the Record Date with respect to such Regular
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Distribution Date (other than as provided in Section 11.01 concerning the final
distribution) by check mailed to such Certificateholder, at the address
appearing in the Register, such Certificateholder's pro rata share (based on
the Fractional Undivided Interest in the Trust held by such Certificateholder)
of the total amount in the Certificate Account, except that, with respect to
Certificates registered on the Record Date in the name of DTC, such
distribution shall be made by wire transfer in immediately available funds to
the account designated by DTC.
(b) On each Special Distribution Date with respect to any
Special Payment or as soon thereafter as the Trustee has confirmed receipt of
any Special Payments due on the Equipment Notes held in the related Trust or
realized upon the sale of such Equipment Notes or receipt of the Special
Redemption Premium, the Trustee shall distribute out of the Special Payments
Account the entire amount of such Special Payment deposited therein pursuant to
Section 4.01(b). There shall be so distributed to each Certificateholder of
record on the Record Date with respect to such Special Distribution Date (other
than as provided in Section 11.01 concerning the final distribution) by check
mailed to such Certificateholder, at the address appearing in the Register,
such Certificateholder's pro rata share (based on the Fractional Undivided
Interest in the Trust held by such Certificateholder) of the total amount in
the Special Payments Account on account of such Special Payment, except that,
with respect to Certificates registered on the Record Date in the name of DTC,
such distribution shall be made by wire transfer in immediately available funds
to the account designated by DTC.
(c) The Trustee shall, at the expense of the Company,
cause notice of each Special Payment to be mailed to each Certificateholder at
his address as it appears in the Register. In the event of redemption or
purchase of Equipment Notes held in the Trust, such notice shall be mailed not
less than 20 days prior to the Special Distribution Date for the Special
Payment resulting from such redemption or purchase, which Special Distribution
Date shall be the date of such redemption or purchase. In the event of the
payment of a Special Redemption Premium by the Company to the Trustee under the
Note Purchase Agreement, such notice shall be mailed, together with the notice
by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement, not less
than 20 days prior to the Special Distribution Date for such amount, which
Special Distribution Date shall be the Final Withdrawal Date. In the case of
any
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other Special Payments, such notice shall be mailed as soon as practicable
after the Trustee has confirmed that it has received funds for such Special
Payment, stating the Special Distribution Date for such Special Payment which
shall occur not less than 20 days after the date of such notice and as soon as
practicable thereafter. Notices mailed by the Trustee shall set forth:
(i) the Special Distribution Date and the
Record Date therefor (except as otherwise provided in Section
11.01),
(ii) the amount of the Special Payment for each
$1,000 face amount Certificate and the amount thereof
constituting principal, premium, if any, and interest,
(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the
same date as a Regular Distribution Date, the total amount to
be received on such date for each $1,000 face amount
Certificate.
If the amount of (i) premium, if any, payable upon the redemption or purchase
of an Equipment Note or (ii) the Special Redemption Premium, if any, has not
been calculated at the time that the Trustee mails notice of a Special Payment,
it shall be sufficient if the notice sets forth the other amounts to be
distributed and states that any premium received will also be distributed.
If any redemption of the Equipment Notes held in the Trust is
canceled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, including any Special Redemption Premium, reflecting in part
the information provided by the Escrow Paying Agent under the Escrow
Agreement). Such statement shall set forth (per $1,000 face amount Certificate
as to (ii), (iii), (iv) and (v) below) the following information:
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(i) the aggregate amount of funds distributed
on such Distribution Date hereunder and under the Escrow
Agreement, indicating the amount allocable to each source;
(ii) the amount of such distribution hereunder
allocable to principal and the amount allocable to premium
(including the Special Redemption Premium), if any;
(iii) the amount of such distribution hereunder
allocable to interest; and
(iv) the amount of such distribution under the
Escrow Agreement allocable to interest;
(v) the amount of such distribution under the
Escrow Agreement allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of
DTC, on the Record Date prior to each Distribution Date, the Trustee will
request from DTC a securities position listing setting forth the names of all
Agent Members reflected on DTC's books as holding interests in the Certificates
on such Record Date. On each Distribution Date, the Trustee will mail to each
such Agent Member the statement described above and will make available
additional copies as requested by such Agent Member for forwarding to holders
of interests in the Certificates.
(b) Within a reasonable period of time after the end of
each calendar year but not later than the latest date permitted by law, the
Trustee shall furnish to each Person who at any time during such calendar year
was a Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above for such calendar year or, in the event such Person was a
Certificateholder of record during a portion of such calendar year, for such
portion of such year, and such other items as are readily available to the
Trustee and which a Certificateholder shall reasonably request as necessary for
the purpose of such Certificateholder's preparation of its federal income tax
returns. Such statement and such other items shall be prepared on the basis of
information supplied to the Trustee by the Agent Members and shall be delivered
by the Trustee to such Agent
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Members to be available for forwarding by such Agent Members to the holders of
interests in the Certificates in the manner described in Section 4.03(a).
(c) Promptly following (i) the Delivery Period Termination
Date, if there has been any change in the information set forth in clauses (x),
(y) and (z) below from that set forth in page 81 of the Offering Circular, and
(ii) any early redemption of purchase of, or any default in the payment of
principal or interest in respect of, any of the Equipment Notes held in the
Trust, or any Final Withdrawal, the Trustee shall furnish to Certificateholders
of record on such date a statement setting forth (x) the expected Pool Balances
for each subsequent Regular Distribution Date following the Delivery Period
Termination Date, (y) the related Pool Factors for such Regular Distribution
Dates and (z) the expected principal distribution schedule of the Equipment
Notes, in the aggregate, held as Trust Property at the date of such notice.
With respect to the Certificates registered in the name of DTC, on the Delivery
Period Termination Date, the Trustee will request from DTC a securities
position listing setting forth the names of all Agent Members reflected on
DTC's books as holding interests in the Certificates on such date. The Trustee
will mail to each such Agent Member the statement described above and will make
available additional copies as requested by such Agent Member for forwarding to
holders of interests in the Certificates.
Section 4.04. Investment of Special Payment Moneys. Any
money received by the Trustee pursuant to Section 4.01(b) representing a
Special Payment which is not distributed on the date received shall, to the
extent practicable, be invested in Permitted Investments by the Trustee pending
distribution of such Special Payment pursuant to Section 4.02. Any investment
made pursuant to this Section 4.04 shall be in such Permitted Investments
having maturities not later than the date that such moneys are required to be
used to make the payment required under Section 4.02 on the applicable Special
Distribution Date and the Trustee shall hold any such Permitted Investments
until maturity. The Trustee shall have no liability with respect to any
investment made pursuant to this Section 4.04, other than by reason of the
willful misconduct or negligence of the Trustee. All income and earnings from
such investments shall be distributed on such Special Distribution Date as part
of such Special Payment.
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ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence. The
Company, at its own cost and expense, will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate
existence, rights and franchises, except as otherwise specifically permitted in
Section 5.02; provided, however, that the Company shall not be required to
preserve any right or franchise if the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company.
Section 5.02. Consolidation, Merger, etc. The Company
shall not consolidate with or merge into any other corporation or convey,
transfer or lease substantially all of its assets as an entirety to any Person
unless:
(a) the corporation formed by such consolidation or into
which the Company is merged or the Person that acquires by conveyance, transfer
or lease substantially all of the assets of the Company as an entirety shall be
(i) organized and validly existing under the laws of the United States of
America or any state thereof or the District of Columbia, (ii) a "citizen of
the United States" as defined in 49 U.S.C. 40102(a)(15), as amended, and (iii)
a United States certificated air carrier, if and so long as such status is a
condition of entitlement to the benefits of Section 1110 of the Bankruptcy
Reform Act of 1978, as amended (11 U.S.C. Section 1110), with respect to the
Leases;
(b) the corporation formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of the Company as an entirety
shall execute and deliver to the Trustee a duly authorized, valid, binding and
enforceable agreement in form and substance reasonably satisfactory to the
Trustee containing an assumption by such successor corporation or Person of the
due and punctual performance and observance of each covenant and condition of
this Agreement, the Other Pass Through Trust Agreements and each Financing
Document to be performed or observed by the Company; and
(c) the Company shall have delivered to the Trustee an
Officer's Certificate of the Company and an Opinion of Counsel of the Company
reasonably satisfactory to the Trustee, each stating
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that such consolidation, merger, conveyance, transfer or lease and the
assumption agreement mentioned in clause (b) above comply with this Section
5.02 and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Upon any consolidation or merger, or any conveyance, transfer
or lease of substantially all of the assets of the Company as an entirety in
accordance with this Section 5.02, the successor corporation or Person formed
by such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Agreement
with the same effect as if such successor corporation or Person had been named
as the Company herein. No such conveyance, transfer or lease of substantially
all of the assets of the Company as an entirety shall have the effect of
releasing any successor corporation or Person which shall have become such in
the manner prescribed in this Section 5.02 from its liability in respect of
this Agreement and any Financing Document to which it is a party.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of Remedies.
Upon the occurrence and during the continuation of any Indenture Default under
any Indenture, the Trustee may, to the extent it is the Controlling Party at
such time (as determined pursuant to the Intercreditor Agreement), direct the
exercise of remedies as provided in the Intercreditor Agreement.
(b) Purchase Rights of Certificateholders. At any time
after the occurrence and during the continuation of a Triggering Event, each
Holder of a Certificate or a Class C-II Certificate (a "Class C
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 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 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
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Certificateholder wants to participate in such purchase, then such other Class
C Certificateholder may join with the purchasing Class C Certificateholder to
purchase all, but not less than all, of the Class A Certificates and the Class
B Certificates pro rata based on the Fractional Undivided Interest in the Trust
and Class C-II Trust, taken as a whole, 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 Class A Certificates and Class B Certificates
pursuant to this Section 6.01(b).
No such purchase of Class A Certificates and Class B
Certificates shall be effective unless the purchaser(s) shall certify to the
Other Trustees of each such Class that contemporaneously with such purchase,
such purchaser(s) is purchasing, pursuant to the terms of this Agreement and
the Other Pass Through Trust Agreements, the Class A Certificates and the Class
B Certificates. Each payment of the purchase price of the Certificates as
determined in the Other Pass Through Trust Agreement for such Class shall be
made to an account or accounts designated by the trustee under such Other Pass
Through Trust Agreement and each such purchase shall be subject to the terms of
this Section 6.01(b). The Class A Certificates and the Class B Certificates
will be deemed to be purchased on the date payment of the purchase price is
made notwithstanding the failure of the Certificateholders of either Class to
deliver any Certificates of such Class (whether in the form of Definitive
Certificates or beneficial interests in Global Certificates (as defined in the
Other Pass Through Trust Agreement for such Class)) and, upon such a purchase,
(i) the only rights of the Certificateholders of such Class will be to deliver
the Class A Certificates or the Class B Certificates, as the case may be, to
the purchaser(s) and receive the purchase price for such Certificates and (ii)
if the purchaser(s) shall so request, such Certificateholder will comply with
all the provisions of Section 3.04 of the Other Pass Through Trust Agreement
for such Class to enable new Certificates of such Class to be issued to the
purchaser in such denominations as it shall request. All charges and expenses
in connection with the issuance of any such new Certificates shall be borne by
the purchaser thereof.
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As used in this Section 6.01(b), the terms "Class", "Class A
Certificate", "Class A Trustee", "Class B Certificate", "Class B Trust
Agreement", "Class B Trustee", "Class C-II Certificate" and "Class C-II Trust"
shall have the respective meanings assigned to such terms in the Intercreditor
Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon
any sale of all or any part of the Equipment Notes made either under the power
of sale given under this Agreement or otherwise for the enforcement of this
Agreement, the following shall be applicable:
(1) Certificateholders and Trustee May Purchase Equipment
Notes. Any Certificateholder, the Trustee in its individual or any
other capacity or any other Person may bid for and purchase any of the
Equipment Notes, and upon compliance with the terms of sale, may hold,
retain, possess and dispose of such Equipment Notes in their own
absolute right without further accountability.
(2) Receipt of Trustee Shall Discharge Purchaser. The
receipt of the Trustee making such sale shall be a sufficient discharge
to any purchaser for his purchase money, and, after paying such
purchase money and receiving such receipt, such purchaser or its
personal representative or assigns shall not be obliged to see to the
application of such purchase money, or be in any way answerable for any
loss, misapplication or non-application thereof.
(3) Application of Moneys Received upon Sale. Any moneys
collected by the Trustee upon any sale made either under the power of
sale given by this Agreement or otherwise for the enforcement of this
Agreement shall be applied as provided in Section 4.02.
Section 6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit. If there shall be a failure to make payment of the
principal of, premium, if any, or interest on any Equipment Note, or if there
shall be any failure to pay Rent (as defined in the relevant Lease) under any
Lease when due and payable, then the Trustee, in its own name and as trustee of
an express trust, as holder of such Equipment Notes, to the extent permitted by
and in accordance with the terms of the Intercreditor Agreement and the
Financing Documents (subject to the rights of the applicable Owner Trustee or
Owner Participant
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to cure any such failure to pay principal of, premium, if any, or interest on
any Equipment Note or to pay Rent under any Lease in accordance with the
applicable Indenture), shall be entitled and empowered to institute any suits,
actions or proceedings at law, in equity or otherwise, for the collection of
the sums so due and unpaid on such Equipment Notes or under such Lease and may
prosecute any such claim or proceeding to judgment or final decree with respect
to the whole amount of any such sums so due and unpaid.
Section 6.04. Control by Certificateholders. Subject to
Section 6.03 and the Intercreditor Agreement, the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Trust shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee with respect to the Trust or pursuant to the terms of the
Intercreditor Agreement, or exercising any trust or power conferred on the
Trustee under this Agreement or the Intercreditor Agreement, including any
right of the Trustee as Controlling Party under the Intercreditor Agreement or
as holder of the Equipment Notes, provided that
(1) such Direction shall not be in conflict with any rule
of law or with this Agreement and would not involve the Trustee in
personal liability or expense,
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the Certificateholders not
taking part in such Direction, and
(3) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such Direction.
Section 6.05. Waiver of Past Defaults. Subject to the
Intercreditor Agreement, the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust (i) may on behalf of all of the Certificateholders waive any past
Event of Default hereunder and its consequences or (ii) if the Trustee is the
Controlling Party, may direct the Trustee to instruct the applicable Loan
Trustee to waive any past Indenture Default under any Indenture and its
consequences, and thereby annul any Direction given by such Certificateholders
or the
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Trustee to such Loan Trustee with respect thereto, except a default:
(1) in the deposit of any Scheduled Payment or Special
Payment under Section 4.01 or in the distribution of any payment under
Section 4.02 on the Certificates, or
(2) in the payment of the principal of (premium, if any)
or interest on the Equipment Notes, or
(3) in respect of a covenant or provision hereof which
under Article IX cannot be modified or amended without the consent of
each Certificateholder holding an Outstanding Certificate affected
thereby.
Upon any such waiver, such default shall cease to exist with
respect to the Certificates and any Event of Default arising therefrom shall be
deemed to have been cured for every purpose and any direction given by the
Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall
be annulled with respect thereto; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes
issued under the relevant Indenture to waive the corresponding Indenture
Default.
Section 6.06. Right of Certificateholders to Receive
Payments Not to Be Impaired. Anything in this Agreement to the contrary
notwithstanding, including, without limitation, Section 6.07 hereof, but
subject to the Intercreditor Agreement, the right of any Certificateholder to
receive distributions of payments required pursuant to Section 4.02 hereof on
the Certificates when due, or to institute suit for the enforcement of any such
payment on or after the applicable Regular Distribution Date or Special
Distribution Date, shall not be impaired or affected without the consent of
such Certificateholder.
Section 6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions. A Certificateholder shall not have the right to
institute any suit, action or proceeding at law or in equity or otherwise with
respect to this Agreement, for the appointment of a receiver or for the
enforcement of any other remedy under this Agreement, unless:
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(1) such Certificateholder previously shall have given
written notice to the Trustee of a continuing Event of Default;
(2) Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than 25% of the
Trust shall have requested the Trustee in writing to institute such
action, suit or proceeding and shall have offered to the Trustee
indemnity as provided in Section 7.03(e);
(3) the Trustee shall have refused or neglected to
institute such an action, suit or proceeding for 60 days after receipt
of such notice, request and offer of indemnity; and
(4) no direction inconsistent with such written request
shall have been given to the Trustee during such 60-day period by
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the
Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on
any property subject thereto, or the rights of the Certificateholders or the
holders of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder or (iii) enforce
any right under this Agreement, except in the manner herein provided and for
the equal, ratable and common benefit of all the Certificateholders subject to
the provisions of this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given
hereunder to the Trustee or to any of the Certificateholders shall not be
exclusive of any other remedy or remedies, and every such remedy shall be
cumulative and in addition to every other remedy given hereunder or now or
hereafter given by statute, law, equity or otherwise.
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ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. (a)
Except during the continuance of an Event of Default, the Trustee undertakes to
perform such duties as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement against the
Trustee.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of its own affairs.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the
effect of Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every
provision of this Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.
Section 7.02. Notice of Defaults. As promptly as
practicable after, and in any event within 90 days after, the occurrence of any
default (as such term is defined below) hereunder, the Trustee shall transmit
by mail to the Company, the Owner Trustees, the Owner Participants, the Loan
Trustees and the Certificateholders in accordance with Section 313(c) of the
Trust Indenture Act, notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; provided, however, that,
except in the case of a default on the payment of the principal, premium, if
any, or interest on any Equipment Note held in the Trust, the Trustee shall be
protected in withholding such notice if and so long as the board of
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directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interests of the Certificateholders. For
the purpose of this Section, the term "default" means any event that is, or
after notice or lapse of time or both would become, an Event of Default.
Section 7.03. Certain Rights of Trustee. Subject to the
provisions of Section 315 of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting in reliance upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a written description of the subject
matter thereof accompanied by an Officer's Certificate and an Opinion of
Counsel as provided in Section 1.02 of this Agreement;
(c) whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officer's Certificate of the Company, any Owner Trustee
or any Loan Trustee;
(d) the Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement at the Direction of
any of the Certificateholders pursuant to this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the cost, expenses and liabilities which might be incurred by
it in compliance with such Direction;
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(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture or other paper or document;
(g) the Trustee may execute any of the trusts or powers
under this Agreement or perform any duties under this Agreement either directly
or by or through agents or attorneys, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it under this Agreement;
(h) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
Direction of the Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in the
Trust relating to the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement; and
(i) the Trustee shall not be required to expend or
risk its own funds in the performance of any of its duties under
this Agreement, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such
risk is not reasonably assured to it.
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, except
the certificates of authentication, shall not be taken as the statements of the
Trustee, and the Trustee assumes no responsibility for their correctness.
Subject to Section 7.15, the Trustee makes no representations as to the
validity or sufficiency of this Agreement, any Equipment Notes, the
Intercreditor Agreement, the Deposit Agreement, the Escrow Agreement, the
Certificates or any other Financing Document, except that the Trustee hereby
represents and warrants that this Agreement has been, and the Intercreditor
Agreement, the Registration Rights Agreement, the Note Purchase Agreement, the
Escrow Agreement and each Certificate will be, executed, authenticated and
delivered by one of its officers who is duly
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authorized to execute, authenticate and deliver such document on its behalf.
Section 7.05. May Hold Certificates. The Trustee, any
Paying Agent, Registrar or any of their Affiliates or any other agent in their
respective individual or any other capacity may become the owner or pledgee of
Certificates and, subject to Sections 310(b) and 311 of the Trust Indenture
Act, if applicable, may otherwise deal with the Company, the Owner Trustees or
the Loan Trustees with the same rights it would have if it were not Trustee,
Paying Agent, Registrar or such other agent.
Section 7.06. Money Held in Trust. Money held by the
Trustee or the Paying Agent in trust hereunder need not be segregated from
other funds except to the extent required herein or by law and neither the
Trustee nor the Paying Agent shall have any liability for interest upon any
such moneys except as provided for herein.
Section 7.07. Compensation and Reimbursement. The Company
agrees:
(1) to pay, or cause to be paid, to the Trustee from time
to time reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse, or cause to be reimbursed, the Trustee upon its request for
all reasonable out-of-pocket expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of
this Agreement (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence,
willful misconduct or bad faith or as may be incurred due to the
Trustee's breach of its representations and warranties set forth in
Section 7.15; and
(3) to indemnify, or cause to be indemnified, the Trustee
for, and to hold it harmless against, any loss, liability or expense
(other than for or with respect to any tax) incurred without
negligence, willful misconduct or bad faith, on its part, arising out
of or in connection with the
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acceptance or administration of this Trust, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder, except for any such loss, liability or expense
incurred by reason of the Trustee's breach of its representations and
warranties set forth in Section 7.15; provided, however, that the
foregoing paragraph (3) shall cease to have any further force or effect
upon the execution and delivery by the Trustee of any Participation
Agreement.
With respect to paragraph (3) above, the Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel with the consent of the Company and the
Company will pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made, in settlement or otherwise, without its
consent.
The Trustee shall be entitled to reimbursement from, and shall
have a lien prior to the Certificates upon, the Trust Property for any tax
incurred without negligence, bad faith or willful misconduct, on its part,
arising out of or in connection with the acceptance or administration of such
Trust (other than any tax attributable to the Trustee's compensation for serving
as such), including any costs and expenses incurred in contesting the imposition
of any such tax. If the Trustee reimburses itself from the Trust Property of
such Trust for any such tax, it will mail a brief report within 30 days setting
forth the circumstances thereof to all Certificateholders as their names and
addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be eligible to act
as a trustee under Section 310(a) of the Trust Indenture Act and shall have a
combined capital and surplus of at least $75,000,000 (or a combined capital and
surplus in excess of $5,000,000 and the obligations of which, whether now in
existence or hereafter incurred, are fully and unconditionally guaranteed by a
corporation organized and doing business under the laws of the United States,
any state or territory thereof or of the District of Columbia and having a
combined capital and surplus of at least $75,000,000). If such corporation
publishes reports of conditions at least annually, pursuant to law or to the
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requirements of federal, state, territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section 7.08, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
conditions so published.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
Section 7.09. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by
giving prior written notice thereof to the Company, the Authorized Agents, the
Owner Trustees and the Loan Trustees. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Company, the Authorized
Agents, the Owner Trustees, the Loan Trustees and the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Direction of
the Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee and to the Company, the Owner Trustees and the Loan
Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310 of
the Trust Indenture Act, if applicable, after written request therefor
by the Company or by any Certificateholder who has been a bona fide
Certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section
7.08 and shall fail to resign after written request therefor by the
Company or by any such Certificateholder; or
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(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may, with the consent of the Owner
Participants, which consent may not be unreasonably withheld, remove the
Trustee or (ii) any Certificateholder who has been a bona fide
Certificateholder for at least six months may, on behalf of itself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall obtain
actual knowledge of an Avoidable Tax which has been or is likely to be
asserted, the Trustee shall promptly notify the Company and shall, within 30
days of such notification, resign hereunder unless within such 30-day period
the Trustee shall have received notice that the Company has agreed to pay such
tax. The Company shall promptly appoint a successor Trustee in a jurisdiction
where there are no Avoidable Taxes.
(f) If the Trustee shall resign, be removed or become
incapable of acting or if a vacancy shall occur in the office of the Trustee
for any cause, the Company shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or other
occurrence of such vacancy, a successor Trustee shall be appointed by Direction
of the Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Company, the Owner Trustees, the Loan Trustees and the
retiring Trustee, and the Company approves such appointment, which approval
shall not be unreasonably withheld, then the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the successor
Trustee and supersede the successor Trustee appointed as provided above. If no
successor Trustee shall have been so appointed as provided above and accepted
appointment in the manner hereinafter provided, any Certificateholder who has
been a bona fide Certificateholder for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
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(g) The successor Trustee shall give notice of the
resignation and removal of the Trustee and appointment of the successor Trustee
by mailing written notice of such event by first-class mail, postage prepaid,
to the Certificateholders as their names and addresses appear in the Register.
Each notice shall include the name of such successor Trustee and the address of
its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute and deliver to the
Company, the Authorized Agents, the Owner Trustees and the Loan Trustees and to
the retiring Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee; but, on request of the Company or the successor Trustee, such retiring
Trustee shall execute and deliver an instrument transferring to such successor
Trustee all such rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all Trust Property
held by such retiring Trustee hereunder, subject nevertheless to its lien, if
any, provided for in Section 7.07. Upon request of any such successor Trustee,
the Company, the retiring Trustee and such successor Trustee shall execute and
deliver any and all instruments containing such provisions as shall be
necessary or desirable to transfer and confirm to, and for more fully and
certainly vesting in, such successor Trustee all such rights, powers and
trusts.
No institution shall accept its appointment as a Trustee
hereunder unless at the time of such acceptance such institution shall be
qualified and eligible under this Article VII.
Section 7.11. Merger, Conversion, Consolidation or
Succession to Business. Any corporation into which the Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article VII, without the execution or filing of any paper or any
further act on the
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part of any of the parties hereto. In case any Certificates shall have been
executed or authenticated, but not delivered, by the Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such execution or authentication and deliver the Certificates
so executed or authenticated with the same effect as if such successor Trustee
had itself executed or authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at
all times be maintained an office or agency in the location set forth in
Section 12.03 where Certificates may be presented or surrendered for
registration of transfer or for exchange, and for payment thereof and where
notices and demands to or upon the Trustee in respect of such certificates or
this Agreement may be served; provided, however, that, if it shall be necessary
that the Trustee maintain an office or agency in another location (e.g., the
Certificates shall be represented by Definitive Certificates and shall be
listed on a national securities exchange), the Trustee will make all reasonable
efforts to establish such an office or agency. Written notice of the location
of each such other office or agency and of any change of location thereof shall
be given by the Trustee to the Company, the Owner Trustees, the Loan Trustees
(in the case of any Owner Trustee or Loan Trustee, at its address specified in
the Financing Documents or such other address as may be notified to the
Trustee) and the Certificateholders. In the event that no such office or
agency shall be maintained or no such notice of location or of change of
location shall be given, presentations and demands may be made and notices may
be served at the Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a Paying
Agent hereunder with respect to the Certificates. Each such Authorized Agent
shall be a bank or trust company, shall be a corporation organized and doing
business under the laws of the United States or any state, with a combined
capital and surplus of at least $75,000,000, or, if the Trustee shall be acting
as the Registrar or Paying Agent hereunder, a corporation having a combined
capital and surplus in excess of $5,000,000, the obligations of which are
guaranteed by a corporation organized and doing business under the laws of the
United States or any state, with a combined capital and surplus of at least
$75,000,000, and shall be authorized under such laws to exercise corporate
trust powers, subject to supervision by Federal or
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state authorities. The Trustee shall initially be the Paying Agent and, as
provided in Section 3.04, Registrar hereunder with respect to the Certificates.
Each Registrar shall furnish to the Trustee, at stated intervals of not more
than six months, and at such other times as the Trustee may request in writing,
a copy of the Register maintained by such Registrar.
(c) Any corporation into which any Authorized Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any Authorized
Agent shall be a party, or any corporation succeeding to the corporate trust
business of any Authorized Agent, shall be the successor of such Authorized
Agent hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or such Authorized Agent or such successor
corporation.
(d) Any Authorized Agent may at any time resign by giving
written notice of resignation to the Trustee, the Company, the Owner Trustees
and the Loan Trustees. The Company may, and at the request of the Trustee
shall, at any time terminate the agency of any Authorized Agent by giving
written notice of termination to such Authorized Agent and to the Trustee.
Upon the resignation or termination of an Authorized Agent or in case at any
time any such Authorized Agent shall cease to be eligible under this Section
(when, in either case, no other Authorized Agent performing the functions of
such Authorized Agent shall have been appointed), the Company shall promptly
appoint one or more qualified successor Authorized Agents, reasonably
satisfactory to the Trustee, to perform the functions of the Authorized Agent
which has resigned or whose agency has been terminated or who shall have ceased
to be eligible under this Section. The Company shall give written notice of
any such appointment made by it to the Trustee, the Owner Trustees and the Loan
Trustees; and in each case the Trustee shall mail notice of such appointment to
all Certificateholders as their names and addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid, from
time to time to each Authorized Agent reasonable compensation for its services
and to reimburse it for its reasonable expenses.
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Section 7.13. Money for Certificate Payments to Be Held in
Trust. All moneys deposited with any Paying Agent for the purpose of any
payment on Certificates shall be deposited and held in trust for the benefit of
the Certificateholders entitled to such payment, subject to the provisions of
this Section. Moneys so deposited and held in trust shall constitute a
separate trust fund for the benefit of the Certificateholders with respect to
which such money was deposited.
The Trustee may at any time, for the purpose of obtaining the
satisfaction and discharge of this Agreement or for any other purpose, direct
any Paying Agent to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon
which such sums were held by such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be
purchased by the Trust shall be issued in the name of the Subordination Agent
or its nominee and held by the Subordination Agent in trust for the benefit of
the Certificateholders, or, if not so held, the Subordination Agent or its
nominee shall be reflected as the owner of such Equipment Notes in the register
of the issuer of such Equipment Notes.
Section 7.15. Representations and Warranties of Trustee.
The Trustee hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation
organized and validly existing in good standing under the laws of the State of
Delaware;
(b) the Trustee has full power, authority and legal right
to execute, deliver, and perform this Agreement, the Intercreditor Agreement,
the Registration Rights Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Financing Documents to which it is a party and has taken all
necessary action to authorize the execution, delivery, and performance by it of
this Agreement, the Intercreditor Agreement, the Registration Rights Agreement,
the Escrow Agreement, the Note Purchase Agreement and the Financing Documents
to which it is a party;
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(c) the execution, delivery and performance by the Trustee
of this Agreement, the Intercreditor Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Note Purchase Agreement and the Financing
Documents to which it is a party (i) will not violate any provision of United
States federal law or the law of the state of the United States where it is
located governing the banking and trust powers of the Trustee or any order,
writ, judgment, or decree of any court, arbitrator or governmental authority
applicable to the Trustee or any of its assets, (ii) will not violate any
provision of the articles of association or by-laws of the Trustee, or (iii)
will not violate any provision of, or constitute, with or without notice or
lapse of time, a default under, or result in the creation or imposition of any
lien on any properties included in the Trust Property pursuant to the
provisions of any mortgage, indenture, contract, agreement or other undertaking
to which it is a party, which violation, default or lien could reasonably be
expected to have an adverse effect on the Trustee's performance or ability to
perform its duties hereunder or thereunder or on the transactions contemplated
herein or therein;
(d) the execution, delivery and performance by the Trustee
of this Agreement, the Intercreditor Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Note Purchase Agreement, and the Financing
Documents to which it is a party will not require the authorization, consent,
or approval of, the giving of notice to, the filing or registration with, or
the taking of any other action in respect of, any governmental authority or
agency of the United States or the state of the United States where it is
located regulating the banking and corporate trust activities of the Trustee;
and
(e) this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Note Purchase
Agreement, and the Financing Documents to which it is a party have been duly
executed and delivered by the Trustee and constitute the legal, valid, and
binding agreements of the Trustee, enforceable against it in accordance with
their respective terms, provided that enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and (ii) general principles of
equity.
Section 7.16. Withholding Taxes, Information Reporting.
The Trustee, as trustee of the grantor trust created
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by this Agreement, shall exclude and withhold from each distribution of
principal, premium, if any, and interest and other amounts due under this
Agreement or under the Certificates any and all withholding taxes applicable
thereto as required by law. In addition, the Trustee shall remit such amounts
as would be required by section 1446 of the Internal Revenue Code of 1986, as
amended, if the Trust were characterized as a partnership engaged in a U.S.
trade or business for U.S. federal income tax purposes and shall withhold such
amounts from amounts distributable to or for the benefit of Certificateholders
or Investors that are not United States persons within the meaning of section
7701(a)(30) of the Internal Revenue Code of 1986, as amended. In this regard,
the Trustee shall cause the appropriate withholding agent to withhold with
respect to such distributions in the manner contemplated by Section 10.04 of
Revenue Procedure 89-31 and Treasury Regulation 1.1445-8(b)(3)) by filing a
notice with the National Association of Securities Dealers, Inc. substantially
in the form of Exhibit E hereto on or before the date 10 days prior to the
Record Date. The Trustee shall mail such notice to the National Association of
Securities Dealers no later than the date than 15 days prior to the Record
Date. Investors that are not United States Persons agree to furnish a United
States taxpayer identification number ("TIN") to the Trustee and the Trustee
shall provide such TINs to the appropriate withholding agent. The Trustee
agrees to act as such withholding agent (except to the extent contemplated
above with respect to withholding amounts as if the Trust were characterized as
a partnership engaged in a U.S. trade or business for U.S. federal income tax
purposes) and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Certificates, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Certificateholders, that it will file any necessary withholding tax returns or
statements when due, and that, as promptly as possible after the payment
thereof, it will deliver to each such Certificateholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Certificateholders may reasonably request from
time to time. The Trustee agrees to file any other information reports as it
may be required to file under United States law. Each Certificateholder or
Investor that is not a United States person within the meaning of section
7701(a)(30) of the Internal Revenue Code, as amended, by its acceptance of a
Certificate or a beneficial interest therein, agrees to indemnify and hold
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harmless the Trust and the Trustee from and against any improper failure to
withhold taxes from amounts payable to it or for its benefit, other than an
improper failure attributable to the gross negligence or willful misconduct of
the Trustee.
Section 7.17. Trustee's Liens. The Trustee in its
individual capacity agrees that it will at its own cost and expense promptly
take any action as may be necessary to duly discharge and satisfy in full any
mortgage, pledge, lien, charge, encumbrance, security interest or claim
("Trustee's Liens") on or with respect to the Trust Property which is
attributable to the Trustee either (i) in its individual capacity and which is
unrelated to the transactions contemplated by this Agreement, the Intercreditor
Agreement, the Note Purchase Agreement or the Financing Documents, or (ii) as
Trustee hereunder or in its individual capacity and which arises out of acts or
omissions which are not contemplated by this Agreement.
Section 7.18. Preferential Collection of Claims. The
Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding
any creditor relationship listed in Section 311(b) of the Trust Indenture Act.
If the Trustee shall resign or be removed as Trustee, it shall be subject to
Section 311(a) of the Trust Indenture Act to the extent provided therein.
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders. The Company will furnish to the Trustee
within 15 days after each Record Date with respect to a Scheduled Payment, and
at such other times as the Trustee may request in writing within 30 days after
receipt by the Company of any such request, a list, in such form as the Trustee
may reasonably require, of all information in the possession or control of the
Company as to the names and addresses of the Certificateholders, in each case
as of a date not more than 15 days prior to the time such list is furnished;
provided, however, that so long as the Trustee is the sole Registrar, no such
list need be furnished; and provided further, however, that no such list need
be furnished for so long as a copy of the Register is being furnished to the
Trustee pursuant to Section 7.12.
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Section 8.02. Preservation of Information; Communications
to Certificateholders. The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Certificateholders contained
in the most recent list furnished to the Trustee as provided in Section 7.12 or
Section 8.01, as the case may be, and the names and addresses of
Certificateholders received by the Trustee in its capacity as Registrar, if so
acting. The Trustee may destroy any list furnished to it as provided in
Section 7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.
Section 8.03. Reports by Trustee. Within 60 days after May
15 of each year commencing with the first full year following the issuance of
the Certificates, the Trustee shall transmit to the Certificateholders, as
provided in Section 313(c) of the Trust Indenture Act, a brief report dated as
of such May 15, if required by Section 313(a) of the Trust Indenture Act.
Section 8.04. Reports by the Company. The Company shall:
(a) file with the Trustee, within 30 days after the
Company is required to file the same with the SEC, copies of the annual reports
and of the information, documents and other reports (or copies of such portions
of any of the foregoing as the SEC may from time to time by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934,
as amended; or, if the Company is not required to file information, documents
or reports pursuant to either of such sections, then to file with the Trustee
and the SEC, in accordance with rules and regulations prescribed by the SEC,
such of the supplementary and periodic information, documents and reports which
may be required pursuant to section 13 of the Securities Exchange Act of 1934,
as amended, in respect of a security listed and registered on a national
securities exchange as may be prescribed in such rules and regulations;
(b) during any period, prior to the consummation of the
Exchange Offer and during which the Shelf Registration Statement is not in
effect, in which the Company is not subject to Section 13(a), 13(c) or 15(d)
under the Securities Exchange Act of 1934, make available to any Holder of the
Certificates in connection with any sale thereof and any prospective purchaser
of the Certificates from such Holder, in each case upon request, the
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information specified in, and meeting the requirements of, Rule 144A(d)(4)
under the Securities Act but only for so long as any of the Certificates remain
outstanding and are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act and, in any event, only until the second
anniversary of the Issuance Date;
(c) file with the Trustee and the SEC, in accordance with
the rules and regulations prescribed by the SEC, such additional information,
documents and reports with respect to compliance by the Company with the
conditions and covenants provided for in this Agreement, as may be required by
such rules and regulations, including, in the case of annual reports, if
required by such rules and regulations, certificates or opinions of independent
public accountants, conforming to the requirements of Section 1.02;
(d) transmit to all Certificateholders, in the manner and
to the extent provided in Section 313(c) of the Trust Indenture Act such
summaries of any information, documents and reports required to be filed by the
Company pursuant to subsections (a) and (c) of this Section 8.04 as may be
required by rules and regulations prescribed by the SEC; and
(e) furnish to the Trustee, not less often than annually,
a brief certificate from the principal executive officer, principal financial
officer or principal accounting officer as to his or her knowledge of the
Company's compliance with all conditions and covenants under this Agreement (it
being understood that for purposes of this paragraph (e), such compliance shall
be determined without regard to any period of grace or requirement of notice
provided under this Agreement).
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders. Without the consent of the Certificateholders, the Company
may (but will not be required to), and the Trustee (subject to Section 9.03)
shall, at the Company's request, at any time and from time to time, enter into
one or more agreements supplemental hereto or, if applicable, to the
Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the
Deposit Agreement, the Registration
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Rights Agreement or any Liquidity Facility in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to
the Company and the assumption by any such successor of the covenants
of the Company herein contained or of the Company's obligations under
the Note Purchase Agreement, the Registration Rights Agreement or any
Liquidity Facility; or
(2) to add to the covenants of the Company for the benefit
of the Certificateholders, or to surrender any right or power conferred
upon the Company in this Agreement, the Note Purchase Agreement, the
Registration Rights Agreement or any Liquidity Facility; or
(3) to correct or supplement any provision in this
Agreement, the Intercreditor Agreement, the Escrow Agreement, the
Deposit Agreement, the Note Purchase Agreement, the Registration Rights
Agreement or any Liquidity Facility which may be defective or
inconsistent with any other provision herein or therein or to cure any
ambiguity or correct any mistake or to modify any other provision with
respect to matters or questions arising under this Agreement, the
Escrow Agreement, the Deposit Agreement, the Note Purchase Agreement,
the Intercreditor Agreement, the Registration Rights Agreement or any
Liquidity Facility, provided that any such action shall not materially
adversely affect the interests of the Certificateholders; or
(4) to comply with any requirement of the SEC, any
applicable law, rules or regulations of any exchange or quotation
system on which the Certificates are listed, any regulatory body or the
Registration Rights Agreement to effectuate the Exchange Offer; or
(5) to modify, eliminate or add to the provisions of this
Agreement to such extent as shall be necessary to continue the
qualification of this Agreement (including any supplemental agreement)
under the Trust Indenture Act or under any similar Federal statute
hereafter enacted, and to add to this Agreement such other provisions
as may be expressly permitted by the Trust Indenture Act, excluding,
however, the provisions referred to in Section 316(a)(2) of the Trust
Indenture Act as in effect at the date as of which
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this instrument was executed or any corresponding provision in any similar
Federal statute hereafter enacted; or
(6) to evidence and provide for the acceptance of
appointment under this Agreement by the Trustee of a successor Trustee
and to add to or change any of the provisions of this Agreement as
shall be necessary to provide for or facilitate the administration of
the Trust, pursuant to the requirements of Section 7.10; or
(7) to provide the information required under Section 7.12
and Section 12.03 as to the Trustee; or
(8) to modify or eliminate provisions relating to the
transfer or exchange of Exchange Certificates or the Initial
Certificates upon consummation of the Exchange Offer (as defined in the
Registration Rights Agreement) or effectiveness of the Shelf
Registration Statement or the Exchange Offer Registration Statement;
provided, however, that no such supplemental agreement shall adversely affect
the status of any Trust as a grantor trust under Subpart E, Part I of
Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986,
as amended, for U.S. federal income tax purposes.
Section 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders holding
Certificates (including consents obtained in connection with a tender offer or
exchange offer for the Certificates) evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust, by Direction of
said Certificateholders delivered to the Company and the Trustee, the Company
may (with the consent of the Owner Trustees, if any, which consent shall not be
unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter
into an agreement or agreements for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
the Intercreditor Agreement, any Liquidity Facility, the Registration Rights
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Agreement, the Escrow Agreement, the Deposit Agreement or the Note Purchase
Agreement to the extent applicable to such Certificateholders or of modifying
in any manner the rights and obligations of such Certificateholders under this
Agreement, the Intercreditor Agreement, any Liquidity Facility, the
Registration Rights Agreement, the Escrow Agreement, the Deposit Agreement or
the Note Purchase Agreement; provided, however, that no such agreement shall,
without the consent of the Certificateholder of each Outstanding Certificate
affected thereby:
(1) reduce in any manner the amount of, or delay the
timing of, any receipt by the Trustee (or, with respect to the
Deposits, the Certificateholders) of payments on the Equipment Notes
held in the Trust or on the Deposits or distributions that are required
to be made herein on any Certificate, or change any date of payment on
any Certificate, or change the place of payment where, or the coin or
currency in which, any Certificate is payable, or impair the right to
institute suit for the enforcement of any such payment or distribution
on or after the Regular Distribution Date or Special Distribution Date
applicable thereto; or
(2) permit the disposition of any Equipment Note included
in the Trust Property except as permitted by this Agreement, or
otherwise deprive such Certificateholder of the benefit of the
ownership of the Equipment Notes in the Trust; or
(3) reduce the specified percentage of the aggregate
Fractional Undivided Interests of the Trust which is required for any
such supplemental agreement, or reduce such specified percentage
required for any waiver of compliance with certain provisions of this
Agreement or certain defaults hereunder and their consequences provided
for in this Agreement; or
(4) waive, amend or modify Section 2.4, 3.2 or 3.3 of the
Intercreditor Agreement in a manner adverse to the Certificateholders;
or
(5) modify any of the provisions of this Section 9.02 or
Section 6.05, except to increase any such percentage or to provide that
certain other provisions of this Agreement cannot be modified or waived
without the consent of the Certificateholder of each Certificate
affected thereby; or
(6) adversely affect the status of any Trust as a grantor
trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle
A of the Internal Revenue Code of 1986, as amended, for U.S. federal
income tax purposes.
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It shall not be necessary for any Direction of
Certificateholders under this Section to approve the particular form of any
proposed supplemental agreement, but it shall be sufficient if such Direction
shall approve the substance thereof.
Section 9.03. Documents Affecting Immunity or Indemnity.
If in the opinion of the Trustee any document required to be executed by it
pursuant to the terms of Section 9.01 or 9.02 affects any interest, right,
duty, immunity or indemnity in favor of the Trustee under this Agreement, the
Trustee may in its discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In
executing, or accepting the additional trusts created by, any agreement
permitted by this Article or the modifications thereby of the trusts created by
this Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
Section 9.05. Effect of Supplemental Agreements. Upon the
execution of any agreement supplemental to this Agreement under this Article,
this Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Holder of a Certificate theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.06. Conformity with Trust Indenture Act. Every
supplemental agreement executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
Section 9.07. Reference in Certificates to Supplemental
Agreements. Certificates authenticated and delivered after the execution of
any supplemental agreement pursuant to this Article may bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
agreement; and, in such case, suitable notation may be made upon Outstanding
Certificates after proper presentation and demand.
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ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to Indentures and
Financing Documents. In the event that the Trustee, as holder (or beneficial
owner through the Subordination Agent) of any Equipment Note in trust for the
benefit of the Certificateholders or as Controlling Party under the
Intercreditor Agreement, receives (directly or indirectly through the
Subordination Agent) a request for a consent to any amendment, modification,
waiver or supplement under any Indenture, any other Financing Document, any
Equipment Note or any other related document, the Trustee shall forthwith send
a notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder registered on the Register as of the date of such notice.
The Trustee shall request from the Certificateholders a Direction as to (a)
whether or not to take or refrain from taking (or direct the Subordination
Agent to take or refrain from taking) any action which a holder of such
Equipment Note has the option to direct, (b) whether or not to give or execute
(or direct the Subordination Agent to give or execute) any waivers, consents,
amendments, modifications or supplements as a holder of such Equipment Note or
a Controlling Party and (c) how to vote (or direct the Subordination Agent to
vote) any Equipment Note if a vote has been called for with respect thereto.
Provided such a request for Certificateholder Direction shall have been made,
in directing any action or casting any vote or giving any consent as the holder
of any Equipment Note (or in directing the Subordination Agent in any of the
foregoing), (i) other than as Controlling Party, the Trustee shall vote for or
give consent to any such action with respect to such Equipment Note in the same
proportion as that of (A) the aggregate face amounts of all Certificates
actually voted in favor of or for giving consent to such action by such
Direction of Certificateholders to (B) the aggregate face amount of all
Outstanding Certificates and (ii) as Controlling Party, the Trustee shall vote
as directed in such Certificateholder Direction by the Certificateholders
evidencing a Fractional Undivided Interest aggregating not less than a majority
in interest in the Trust. For purposes of the immediately preceding sentence,
a Certificate shall have been "actually voted" if the Holder of such
Certificate has delivered to the Trustee an instrument evidencing such Holder's
consent to such Direction prior to two Business Days before the Trustee directs
such action
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or casts such vote or gives such consent. Notwithstanding the foregoing, but
subject to Section 6.04 and the Intercreditor Agreement, the Trustee may, in
its own discretion and at its own direction, consent and notify the relevant
Loan Trustee of such consent (or direct the Subordination Agent to consent and
notify the Loan Trustee of such consent) to any amendment, modification, waiver
or supplement under the relevant Indenture, any other Financing Document, any
Equipment Note or any other related document, if an Event of Default hereunder
shall have occurred and be continuing, or if such amendment, modification,
waiver or supplement will not materially adversely affect the interests of the
Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The respective
obligations and responsibilities of the Company and the Trustee with respect to
the Trust shall terminate upon the earlier of (A) the completion of the
assignment, transfer and discharge described in the first sentence of the
immediately following paragraph and (B) distribution to all Holders of
Certificates and the Trustee of all amounts required to be distributed to them
pursuant to this Agreement and the disposition of all property held as part of
the Trust Property; provided, however, that in no event shall the Trust
continue beyond one hundred ten (110) years following the date of the earliest
execution of this Trust Agreement.
Upon the earlier of (i) the first Business Day following March
31, 1998, or, if later, the fifth Business Day following the Delivery Period
Termination Date and (ii) the fifth Business Day following the date on which a
Triggering Event occurs (such date, the "Transfer Date"), or, if later, the
date on which all of the conditions set forth in the immediately following
sentence have been satisfied, the Trustee is hereby directed (subject only to
the immediately following sentence) to, and the Company shall direct the
institution that will serve as the Related Trustee under the Related Pass
Through Trust Agreement to, execute and deliver the Assignment and Assumption
Agreement, pursuant to which the Trustee shall assign, transfer and deliver all
of the Trustee's right, title and interest to the Trust Property to the Related
Trustee under the Related Pass Through Trust Agreement. The Trustee and the
Related Trustee
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shall execute and deliver the Assignment and Assumption Agreement upon the
satisfaction of the following conditions:
(i) The Trustee, the Related Trustee and each of the
Rating Agencies then rating the Certificates shall have received an
Officer's Certificate and an Opinion of Counsel dated the date of the
Assignment and Assumption Agreement and each satisfying the
requirements of Section 1.02, which Opinion of Counsel shall be
substantially to the effect set forth below and may be relied upon by
the Beneficiaries (as defined in the Assignment and Assumption
Agreement):
(a) upon the execution and delivery thereof by the parties
thereto in accordance with the terms of this Agreement
and the Related Pass Through Trust Agreement, the
Assignment and Assumption Agreement will constitute
the valid and binding obligation of each of the
parties thereto enforceable against each such party in
accordance with its terms;
(b) upon the execution and delivery of the Assignment an
Assumption Agreement in accordance with the terms of
this Agreement and the Related Pass Through Trust
Agreement, each of the Certificates then Outstanding
is entitled to the benefits of the Related Pass
Through Trust Agreement;
(c) the Related Trust is not required to be registered as
an investment company under the Investment Company Act
of 1940, as amended;
(d) the Related Pass Through Trust Agreement constitutes
the valid and binding obligation of the Company
enforceable against the Company in accordance with its
terms; and
(e) neither the execution and delivery of the Assignment
and Assumption Agreement in accordance with the terms
of this Agreement and the Related Pass Through Trust
Agreement, nor the consummation by the Parties thereto
of the transactions contemplated to be consummated
thereunder on the date thereof, violate any law or
governmental rule or regulation of the State of New
York or the United States of America known to such
counsel to
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be applicable to the transactions contemplated by the
Assignment and Assumption Agreement.
(ii) The Trustee and the Company shall have received (x) a
copy of the articles of incorporation and bylaws of the Related Trustee
certified as of the Transfer Date by the Secretary or Assistant
Secretary of such institution and (y) a copy of the filing (including
all attachments thereto) made by the institution serving as the Related
Trustee with the Office of the Superintendent, State of New York
Banking Department for the qualification of the Related Trustee under
section 131(3) of the New York Banking Law.
Upon the execution of the Assignment and Assumption Agreement by the parties
thereto, the Trust shall be terminated, the Certificateholders shall receive
beneficial interests in the Related Trust in exchange for their interests in
the Trust equal to their respective beneficial interests in the Trust, and the
Outstanding Certificates representing Fractional Undivided Interests in the
Trust shall be deemed for all purposes of this Agreement and the Related Pass
Through Trust Agreement, without further signature or action of any party or
Certificateholder, to be certificates representing the same fractional
undivided interests in the Related Trust and its trust property. By acceptance
of its Certificate, each Certificateholder consents to such assignment,
transfer and delivery of the Trust Property to the trustee of the Related Trust
upon the execution and delivery of the Assignment and Assumption Agreement.
In connection with the occurrence of the event set forth in clause (B) above,
notice of such termination, specifying the Distribution Date upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be mailed promptly by the
Trustee to Certificateholders not earlier than the 60th day and not later than
the 20th day next preceding such final Distribution Date specifying (A) the
Distribution Date upon which the proposed final payment of the Certificates
will be made upon presentation and surrender of Certificates at the office or
agency of the Trustee therein specified, (B) the amount of any such proposed
final payment, and (C) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon presentation
and surrender of the Certificates at the office or agency of the Trustee
therein specified. The Trustee shall give such notice to the Registrar
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at the time such notice is given to Certificateholders. Upon presentation and
surrender of the Certificates in accordance with such notice, the Trustee shall
cause to be distributed to Certificateholders such final payments.
In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. No additional interest shall accrue on the Certificates after the
Distribution Date specified in the first written notice. In the event that any
money held by the Trustee for the payment of distributions on the Certificates
shall remain unclaimed for two years (or such lesser time as the Trustee shall
be satisfied, after sixty days' notice from the Company, is one month prior to
the escheat period provided under applicable law) after the final distribution
date with respect thereto, the Trustee shall pay to each Loan Trustee the
appropriate amount of money relating to such Loan Trustee and shall give
written notice thereof to the related Owner Trustees, the Owner Participants
and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to terminate
this Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations, and liabilities of the
parties hereto or any of them.
Section 12.02. Certificates Nonassessable and Fully Paid.
Except as set forth in the last sentence of this Section 12.02,
Certificateholders shall not be personally liable for obligations of the Trust,
the Fractional Undivided Interests represented by the Certificates shall be
nonassessable
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for any losses or expenses of the Trust or for any reason whatsoever, and
Certificates, upon authentication thereof by the Trustee pursuant to Section
3.03, are and shall be deemed fully paid. No Certificateholder shall have any
right (except as expressly provided herein) to vote or in any manner otherwise
control the operation and management of the Trust Property, the Trust, or the
obligations of the parties hereto, nor shall anything set forth herein, or
contained in the terms of the Certificates, be construed so as to constitute
the Certificateholders from time to time as partners or members of an
association. Neither the existence of the Trust nor any provision herein is
intended to or shall limit the liability the Certificateholders would otherwise
incur if the Certificateholders owned Trust Property as co-owners, or incurred
any obligations of the Trust, directly rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise specifically
provided herein, all notices required under the terms and provisions of this
Agreement shall be in English and in writing, and any such notice may be given
by United States mail, courier service or telecopy, and any such notice shall
be effective when delivered or received or, if mailed, three days after deposit
in the United States mail with proper postage for ordinary mail prepaid,
if to the Company, to:
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Attention: Chief Financial Officer and
General Counsel
Facsimile: (713) 523-2831
if to the Trustee, to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Department
Facsimile: (302) 651-8882
Telephone: (302) 651-8584
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(b) The Company or the Trustee, by notice to the other,
may designate additional or different addresses for subsequent notices or
communications.
(c) Any notice or communication to Certificateholders
shall be mailed by first-class mail to the addresses for Certificateholders
shown on the Register kept by the Registrar. Failure so to mail a notice or
communication or any defect in such notice or communication shall not affect
its sufficiency with respect to other Certificateholders.
(d) If a notice or communication is mailed in the manner
provided above within the time prescribed, it is conclusively presumed to have
been duly given, whether or not the addressee receives it.
(e) If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.
(f) Notwithstanding the foregoing, all communications or
notices to the Trustee shall be deemed to be given only when received by a
Responsible Officer of the Trustee.
(g) The Trustee shall promptly furnish the Company with a
copy of any demand, notice or written communication received by the Trustee
hereunder from any Certificateholder, Owner Trustee or Loan Trustee.
Section 12.04. Governing Law. THIS AGREEMENT HAS BEEN
DELIVERED IN THE STATE OF DELAWARE AND THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.05. Severability of Provisions. If any one or
more of the covenants, agreements, provisions or terms of this Agreement shall
be for any reason whatsoever held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or
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the Trust, or of the Certificates or the rights of the Certificateholders
thereof.
Section 12.06. Trust Indenture Act Controls. Upon the
occurrence of any Registration Event, this Agreement shall become subject to
the provisions of the Trust Indenture Act and shall, to the extent applicable,
be governed by such provisions. From and after any Registration Event, if any
provision of this Agreement limits, qualifies or conflicts with another
provision which is required to be included in this Agreement by the Trust
Indenture Act, the required provision shall control.
Section 12.07. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 12.08. Successors and Assigns. All covenants,
agreements, representations and warranties in this Agreement by the Trustee and
the Company shall bind and, to the extent permitted hereby, shall inure to the
benefit of and be enforceable by their respective successors and assigns,
whether so expressed or not.
Section 12.09. Benefits of Agreement. Nothing in this
Agreement or in the Certificates, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, and the
Certificateholders, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 12.10. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate shall
not be a Business Day, then (notwithstanding any other provision of this
Agreement) payment need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on such
Regular Distribution Date or Special Distribution Date, and no interest shall
accrue during the intervening period.
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Section 12.11. Counterparts. For the purpose of facilitating
the execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
Section 12.12. Intention of Parties. The parties hereto
intend that the Trust be classified for U.S. federal income tax purposes as a
grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue
Code of 1986, as amended, and not as a trust or association taxable as a
corporation or as a partnership. Each Certificateholder and Investor, by its
acceptance of its Certificate or a beneficial interest therein, agrees to treat
the Trust as a grantor trust for all U.S. federal, state and local income tax
purposes. The powers granted and obligations undertaken pursuant to this
Agreement shall be so construed so as to further such intent.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first written above.
CONTINENTAL AIRLINES,INC.
By:
--------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Trustee
By:
-------------------------
Name:
Title:
90
EXHIBIT A
FORM OF CERTIFICATE
REGISTERED
No._________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS
NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT;
(2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS RESELL OR OTHERWISE TRANSFER THIS
CERTIFICATE EXCEPT (A) CONTINENTAL AIRLINES, INC., (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IF IT SHOULD
RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE IT WILL DELIVER TO EACH
PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD
BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY AFFILIATE OF ANY OF
SUCH PERSONS, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON
THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED
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STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION
S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS
A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.](1)
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A
PLAN TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B)
IT IS AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT TO
ACQUIRE THIS CERTIFICATE, AND THE CONDITIONS OF PROHIBITED TRANSACTION
CLASS EXEMPTION 95-60 ISSUED BY THE U.S. DEPARTMENT OF LABOR HAVE BEEN
AND WILL CONTINUE TO BE SATISFIED IN CONNECTION WITH ITS PURCHASE AND
HOLDING OF THIS CERTIFICATE. THE PASS THROUGH TRUST AGREEMENT CONTAINS
A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH
TRUST AGREEMENT REFERRED TO HEREIN.](2)
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(1) Not to be included on the face of the Regulation S Global Certificate.
(2) To be included on the face of each Global Certificate.
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[GLOBAL CERTIFICATE](3)
CONTINENTAL AIRLINES PASS THROUGH TRUST, SERIES 1997-1C-I-O
7.420% Continental Airlines [Initial] [Exchange]
Pass Through Certificate,
Series 1997-1C-I-O
Final Maturity Date: October 1, 2008
evidencing a fractional undivided interest in a trust, 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
.______% 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, Series 1997-1C-I- O
(the "Trust") created pursuant to a Pass Through Trust Agreement, dated as of
March 21, 1997 (the "Agreement"), between Wilmington Trust Company (the
"Trustee") and Continental Airlines, Inc., a corporation incorporated under
Delaware law (the "Company"), a summary of certain of the pertinent provisions
of which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Certificates
designated as "7.420% Continental Airlines [Initial] [Exchange] Pass Through
Certificates, Series 1997-1C-I-O" (herein called the "Certificates"). This
Certificate is issued under and is subject to the terms, provisions, and
conditions of the Agreement. By virtue of its acceptance hereof the
Certificateholder of this Certificate assents to and agrees to be bound by the
provisions of the Agreement and the Intercreditor Agreement. The property of
the Trust includes an interest in certain Equipment Notes and all rights of the
Trust to receive payments under the Intercreditor Agreement and any Liquidity
Facility (the "Trust Property"). Each issue of the Equipment Notes is secured
by, among other things, a security interest in the Aircraft leased to or owned
by the Company.
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(3) To be included on the face of each Global Certificate.
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The Certificates represent fractional undivided interests in
the Trust and the Trust Property, and have no rights, benefits or interest in
respect of any assets or property other than the Trust Property.
Subject to and in accordance with the terms of the Agreement
and the Intercreditor Agreement, from and to the extent of funds then available
to the Trustee, there will be distributed on each April 1 and October 1 (a
"Regular Distribution Date"), commencing on October 1, 1997, 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 due on such Regular Distribution Date 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 Scheduled Payments. Subject to and in
accordance with the terms of the Agreement and the Intercreditor Agreement, in
the event that Special Payments on the Equipment Notes are received by the
Trustee, from funds then available to the Trustee, there shall be distributed
on the applicable Special Distribution Date, to the Person in whose name this
Certificate is registered at the close of business on the 15th day preceding
the Special Distribution Date, an amount in respect of such Special Payments on
the Equipment Notes, the receipt of which has been confirmed by the Trustee,
equal to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Special Payments so
received. If a Regular Distribution Date or Special Distribution Date is not a
Business Day, distribution shall be made on the immediately following Business
Day with the same force and effect as if made on such Regular Distribution Date
or Special Distribution Date and no interest shall accrue during the
intervening period. The Trustee shall mail notice of each Special Payment and
the Special Distribution Date therefor to the Certificateholder of this
Certificate.
The Certificates do not represent a direct obligation of, or
an obligation guaranteed by, or an interest in, the Company or the Trustee or
any of their affiliates. The Certificates are limited in right or payment, all
as more specifically set forth on the face hereof and in the Agreement. All
payments or distributions made to Certificateholders under the Agreement shall
be made only from the Trust Property and only to the extent that the Trustee
shall have sufficient income or
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proceeds from the Trust Property to make such payments in accordance with the
terms of the Agreement. Each Certificateholder of this Certificate, by its
acceptance hereof, agrees that it will look solely to the income and proceeds
from the Trust Property to the extent available for distribution to such
Certificateholder as provided in the Agreement. This Certificate does not
purport to summarize the Agreement and reference is made to the Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds, and duties evidenced hereby. A copy of the Agreement may be examined
during normal business hours at the principal office of the Trustee, and at
such other places, if any, designated by the Trustee, by any Certificateholder
upon request.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Certificateholders under the
Agreement at any time by the Company and the Trustee with the consent of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust. Any
such consent by the Certificateholder of this Certificate shall be conclusive
and binding on such Certificateholder and upon all future Certificateholders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Certificateholders
of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Register upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee in its capacity as
Registrar, or by any successor Registrar, in the Borough of Manhattan, the City
of New York, duly endorsed or accompanied by a written instrument of transfer
in form satisfactory to the Trustee and the Registrar duly executed by the
Certificateholder hereof or such Certificateholder's attorney duly authorized
in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in
the Trust will be issued to the designated transferee or transferees.
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[The Holder of this Certificate is entitled to the benefits of
the Exchange and Registration Rights Agreement, dated as of March 21, 1997,
among the Company, the Trustee and the Initial Purchasers named therein (the
"Registration Rights Agreement"). In the event that no Registration Event has
occurred on or prior to the 210th day after the date of the issuance of the
Certificates, the interest rate per annum payable in respect of the Equipment
Notes and the Deposits shall be increased by 0.50%, from and including the
210th day after the Issuance Date to but excluding (i) the earlier of the date
on which a Registration Event occurs and (ii) the date on which there cease to
be any Registrable Certificates (as defined in the Registration Rights
Agreement). In the event that the Shelf Registration Statement ceases to be
effective at any time during the period specified by Section 2(b)(B) of the
Registration Rights Agreement for more than 60 days, whether or not
consecutive, during any 12-month period, the interest rate per annum payable in
respect of the Equipment Notes and the Deposits shall be increased by 0.50%
from the 61st day of the applicable 12-month period such Shelf Registration
Statement ceases to be effective until such time as the Shelf Registration
Statement again becomes effective ( or, if earlier, the end of the period
specified by Section 2(b)(B) of the Registration Rights Agreement).](4)
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.
Under certain circumstances set forth in Section 11.01 of the
Agreement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the
Related Trust pursuant to the Assignment and Assumption Agreement. Upon the
effectiveness of such Assignment and Assumption Agreement (the "Transfer"), the
Trust shall be terminated, the Certificateholders shall receive beneficial
interests in the Related Trust in exchange for their interests in the Trust
equal to their respective beneficial interests in the Trust, the Certificates
representing Fractional
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(4) To be included only on each Initial Certificate.
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Undivided Interests in the Trust shall be deemed for all purposes of the
Agreement and the Related Pass Through Trust Agreement to be certificates
representing the same fractional undivided interests in the Related Trust and
its trust property. Each Certificateholder, by its acceptance of this
Certificate or a beneficial interest herein, agrees to be bound by the
Assignment and Assumption Agreement and subject to the terms of the Related
Pass Through Trust Agreement as a certificateholder thereunder. From and after
the Transfer, unless and to the extent the context otherwise requires,
references herein to the Trust, the Agreement and the Trustee shall constitute
references to the Related Trust, the Related Pass Through Trust Agreement and
trustee of the Related Trust, respectively.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of [$100,000]1 [$1,000]2 Fractional
Undivided Interest and integral multiples of $1,000 in excess thereof except
that one Certificate may be 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 by the Holder of a
sum sufficient to cover any tax or governmental charge payable in connection
therewith. Each Certificateholder or Investor that is not a United States
person within the meaning of section 7701(a)(30) of the Internal Revenue Code,
as amended, by its acceptance of a Certificate or a beneficial interest
therein, agrees to indemnify and hold harmless the Trust and the Trustee from
and against any improper failure to withhold taxes from amounts payable to it
or for its benefit. 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.
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(5) To be included only on each Initial Certificate.
(6) To be included only on each Exchange Certificate.
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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.
UNTIL THE TRANSFER, THE AGREEMENT AND THIS CERTIFICATE SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. FROM AND AFTER THE TRANSFER,
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED 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.
Dated: , 1997 CONTINENTAL AIRLINES PASS
--------------- THROUGH TRUST, SERIES 1997-
1C-I-O
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee
By:
---------------------------------
Name:
Title:
Attest:
- ----------------------------------
Authorized Signature
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[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred
to in the within-mentioned Agreement.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Trustee
By:
-------------------------------------
Authorized Officer
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FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s)
and transfer(s) unto
Insert Taxpayer Identification No.
please print or typewrite name and address including zip code of assignee
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT REGULATION S GLOBAL AND
REGULATION S DEFINITIVE CERTIFICATES]
In connection with any transfer of this Certificate occurring prior to the date
that is the earlier of the date of an effective Registration Statement or the
date two years after the later of the original issuance of this Certificate or
the last date on which this Certificate was held by Continental Airlines, Inc.,
the Trustee or any affiliate of such Persons, the undersigned confirms that
without utilizing any general solicitation or general advertising that:
[Check One]
[ ] (a) this Certificate is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
[ ] (b) this Certificate is being transferred other than in accordance with
(a) above and documents are being furnished that
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comply with the conditions of transfer set forth in this Certificate and the
Agreement.
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 3.06 of the Agreement
shall have been satisfied.
Date: [Name of Transferor]
--------------------- --------------------
NOTE: The signature must
correspond with the name as
written upon the face of the
within-mentioned instrument in
every particular, without
alteration or any change
whatsoever.
Signature Guarantee:
---------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Certificate for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.
Dated:
----------------------- -------------------------------------
NOTE: To be executed by an executive
officer.
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EXHIBIT B
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS OF CERTIFICATES PURSUANT TO REGULATION S
[date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines Pass Through Trust (the "Trust"),
Series 1997-1C-I-O, Continental Airlines Pass Through
Certificates, Series 1997-1C-I-O (the "Certificates")
Sirs:
In connection with our proposed sale of $_____ Fractional
Undivided Interest of the Certificates, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933, as amended, and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person
in the United States;
(2) either (a) at the time the buy order was originated,
the transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States or (b) the transaction was executed in, on or
through the facilities of a designated off- shore securities market and
neither we nor any person acting on our behalf knows that the
transaction has been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable; and
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(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period
and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may
be.
You and Continental Airlines, Inc. are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. Terms used in
this certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
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EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS OF CERTIFICATES TO NON-QIB
INSTITUTIONAL ACCREDITED INVESTORS
________________, ____
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
CONTINENTAL AIRLINES
PASS THROUGH TRUST, SERIES 1997-1C-I-O (the "Trust")
Pass Through Certificates, Series 1997-1C-I-O
(the "Certificates")
Ladies and Gentlemen:
In connection with our proposed purchase of U.S.
$[_____________] Fractional Undivided Interest of Certificates, we confirm
that:
1. We understand that any subsequent transfer of the
Certificates is subject to certain restrictions and conditions set forth in the
Trust Agreement, dated as of March 21, 1997, between Continental Airlines, Inc.
(the "Company") and Wilmington Trust Company (the "Trustee") relating to the
Certificates, and we agree to be bound by, and not to resell, pledge or
otherwise transfer the Certificates except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
2. We are purchasing Certificates having an aggregate
principal amount of not less than $100,000 and each account (if any) for which
we are purchasing Certificates is purchasing
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Certificates having an aggregate principal amount of not less than $100,000.
3. We understand that the Certificates have not been
registered under the Securities Act, that the Certificates are being sold to us
in a transaction that is exempt from the registration requirements of the
Securities Act and that the Certificates may not be offered or resold except as
permitted in the following sentence. We agree, on our own behalf and on behalf
of any accounts for which we are acting as hereinafter stated, that, if we
should sell any Certificates within two years after the later of the original
issuance of such Certificate and the last date on which such Certificate is
owned by the Company, the Trustee or any affiliate of any of such persons, we
will do so only (A) to the Company, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined therein), (C)
outside the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (D) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act or (E) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing any of the Certificates from us a notice advising such
purchaser that resales of the Certificates are restricted as stated herein.
4. We understand that, on any proposed resale of any
Certificates, we will be required to furnish to the Company and the Trustee
such certifications, legal opinions and other information as the Company and
the Trustee may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Certificates
purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our investment in the
Certificates, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investments.
6. We are acquiring the Certificates purchased by us for
our own account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion and not with a view to any
C-2
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distribution of the Certificates, subject, nevertheless to the understanding
that the disposition of our property shall at all times be and remain within
our control.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:
-------------------------------
Name:
Title:
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EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
Continental Airlines Pass Through Trust, Series 1997-[1_]
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated ____________, 199_
(the "Agreement"), between Wilmington Trust Company, a Delaware banking
corporation ("WTC"), not in its individual capacity except as expressly
provided herein, but solely as trustee under the Pass Through Trust Agreement
dated as of March 21, 1997 (as amended, modified or otherwise supplemented from
time to time, the "Pass Through Trust Agreement") in respect of the Continental
Airlines Pass Through Trust, Series 1997-1_-O (the "Assignor"), and Wilmington
Trust Company, a Delaware banking corporation, not in its individual capacity
except as expressly provided herein, but solely as trustee under the Pass
Through Trust Agreement dated as of March 21, 1997 (the "New Pass Through
Trust Agreement") in respect of the Continental Airlines Pass Through Trust,
Series 1997-1_-S (the "Assignee").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to effect on the date
hereof (the "Transfer Date") (a) the transfer by the Assignor to the Assignee
of all of the right, title and interest of the Assignor in, under and with
respect to, among other things, the Trust Property and each of the documents
listed in Schedule I hereto (the "Scheduled Documents") and (b) the assumption
by the Assignee of the obligations of the Assignor (i) under the Scheduled
Documents and (ii) in respect of the Certificates issued under the Pass Through
Trust Agreement; and
WHEREAS, the Scheduled Documents permit such transfer upon
satisfaction of certain conditions heretofore or concurrently herewith being
complied with;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto do hereby
agree as follows (capitalized terms used herein without definition having the
meaning ascribed thereto in the Pass Through Trust Agreement):
1. Assignment. The Assignor does hereby sell, assign,
convey, transfer and set over unto the Assignee as of the
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Transfer Date all of its present and future right, title and interest in, under
and with respect to the Trust Property and the Scheduled Documents and each
other contract, agreement, document or instrument relating to the Trust
Property or the Scheduled Documents (such other contracts, agreements,
documents or instruments, together with the Scheduled Documents, to be referred
to as the "Assigned Documents"), and any proceeds therefrom, together with all
documents and instruments evidencing any of such right, title and interest.
2. Assumption. The Assignee hereby assumes for the
benefit of the Assignor and each of the parties listed in Schedule II hereto
(collectively, the "Beneficiaries") all of the duties and obligations of the
Assignor, whenever accrued, pursuant to the Assigned Documents and hereby
confirms that it shall be deemed a party to each of the Assigned Documents to
which the Assignor is a party and shall be bound by all the terms thereof
(including the agreements and obligations of the Assignor set forth therein) as
if therein named as the Assignor. Further, the Assignee hereby assumes for the
benefit of the Assignor and the Beneficiaries all of the duties and obligations
of the Assignor under the Outstanding Certificates and hereby confirms that the
Certificates representing Fractional Undivided Interests under the Pass Through
Trust Agreement shall be deemed for all purposes of the Pass Through Trust
Agreement and the New Pass Through Trust Agreement to be certificates
representing the same fractional undivided interests under the New Pass Through
Trust Agreement equal to their respective beneficial interests in the trust
created under the Pass Through Trust Agreement.
3. Effectiveness. This Agreement shall be effective upon
the execution and delivery hereof by the parties hereto, and each
Certificateholder, by its acceptance of its Certificate or a beneficial
interest therein, agrees to be bound by the terms of this Agreement.
4. Payments. The Assignor hereby covenants and agrees to
pay over to the Assignee, if and when received following the Transfer Date, any
amounts (including any sums payable as interest in respect thereof) paid to or
for the benefit of the Assignor that, under Section 1 hereof, belong to the
Assignee.
5. Further Assurances. The Assignor shall, at any time
and from time to time, upon the request of the Assignee,
D-2
108
promptly and duly execute and deliver any and all such further instruments and
documents and take such further action as the Assignee may reasonably request
to obtain the full benefits of this Agreement and of the right and powers
herein granted. The Assignor agrees to deliver the Global Certificates, and
all Trust Property, if any, then in the physical possession of the Assignor, to
the Assignee.
6. Representations and Warranties. (a) The Assignee
represents and warrants to the Assignor and each of the Beneficiaries that:
(i) it has all requisite power and authority and legal
right to enter into and carry out the transactions contemplated hereby
and to carry out and perform the obligations of the "Pass Through
Trustee" under the Assigned Documents;
(ii) on and as of the date hereof, the representations and
warranties of the Assignee set forth in Section 7.15 of the New Pass
Through Trust Agreement are true and correct.
(b) The Assignor represents and warrants to the Assignee
that:
(i) it is duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the full trust
power, authority and legal right under the laws of the State of
Delaware and the United States pertaining to its trust and fiduciary
powers to execute and deliver this Agreement;
(ii) the execution and delivery by it of this Agreement and
the performance by it of its obligations hereunder have been duly
authorized by it and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound; and
(iii) this Agreement constitutes the legal, valid and
binding obligations of it enforceable against it in accordance with its
terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity.
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7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAWS.
8. Counterparts. This Agreement may be executed in any
number of counterparts, all of which together shall constitute a single
instrument. It shall not be necessary that any counterpart be signed by both
parties so long as each party shall sign at least one counterpart.
9. Third Party Beneficiaries. The Assignee hereby
agrees, for the benefit of the Beneficiaries, that its representations,
warranties and covenants contained herein are also intended to be for the
benefit of each Beneficiary, and each Beneficiary shall be deemed to be an
express third party beneficiary with respect thereto, entitled to enforce
directly and in its own name any rights or claims it may have against such
party as such beneficiary.
D-4
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IN WITNESS WHEREOF, the parties hereto, through their
respective officers thereunto duly authorized, have duly executed this
Assignment as of the day and year first above written.
ASSIGNOR:
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
provided herein, but solely as trustee
under the Pass Through Trust Agreement
in respect of the Continental Airlines
Pass Through Trust 1997-1_-O
By:
---------------------------------------
Title:
ASSIGNEE:
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
provided herein, but solely as trustee under
the Pass Through Trust Agreement in respect
of the Continental Airlines Pass Through
Trust 1997-1_-S
By:
---------------------------------------
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Schedule I
Schedule of Assigned Documents
(1) Intercreditor Agreement dated as of March 21, 1997 among the Trustee,
the Other Trustees, the Liquidity Providers, the liquidity providers,
if any, relating to the Certificates issued under (and as defined in)
each of the Other Pass Through Trust Agreements and the Subordination
Agent.
(2) Registration Rights Agreement dated as of March 21, 1997 among the
Initial Purchasers, the Trustee, the Other Trustees, and the Company.
(3) Escrow and Paying Agent Agreement (Class __) dated as of March 21, 1997
among the Escrow Agent, the Initial Purchasers, the Trustee and the
Paying Agent.
(4) Note Purchase Agreement dated as of March 21, 1997 among the Company,
the Trustee, the Other Trustees, the Depositary, the Escrow Agent, the
Paying Agent and the Subordination Agent.
(5) Deposit Agreement (Class __) dated as of March 21, 1997 between the
Escrow Agent and the Depositary.
(6) Each of the Operative Agreements (as defined in the Participation
Agreement for each Aircraft) in effect as of the Transfer Date.
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Schedule II
Schedule of Beneficiaries
Wilmington Trust Company, not in its individual capacity but solely as
Subordination Agent.
Wilmington Trust Company, not in its individual capacity but solely as Paying
Agent
ABN AMRO Bank N.V., Chicago Branch, as Liquidity Provider
ING Bank N.V., as Liquidity Provider
Continental Airlines, Inc.
Credit Suisse First Boston Corporation, as Initial Purchaser
Morgan Stanley & Co. Incorporated, as Initial Purchaser
Chase Securities Inc., as Initial Purchaser
Goldman Sachs & Co., as Initial Purchaser
First Security Bank, National Association, as Escrow Agent
Each of the other parties to the Assigned Documents
D-7
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EXHIBIT E
FORM OF NOTICE TO DESIGNATE NOMINEE AS WITHHOLDING AGENT
(Treas. Reg. Section 1.1445-8(f); 17 C.F.R. 240.10b-17(b)(1))
[DATE]
National Association of
Securities Dealers, Inc.
Market Operations
80 Merritt Blvd.
Trumbull, CT 06611
Re: Continental Airlines Pass Through Certificates, Series
1997-1C-I-O Pass Through Certificates, Series 1997-1C-I-O
With respect to distributions to be made on [INSERT
DISTRIBUTION DATE] to holders of the above- referenced Pass Through
Certificates in the amount of $ ____ per $1,000 principal amount of
Certificate, we hereby designate the appropriate nominees to withhold from
amounts distributable to any non-U.S. Person such amounts as required by
section 1446 of the Internal Revenue Code of 1986, as amended. The term
"non-U.S. Person" means any person or entity that, for U.S. federal income tax
purposes, is not a "U.S. Person." "U.S. Person" for this purpose means a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized under the laws of the United States or any
political subdivision thereof, or an estate or trust, the income of which is
subject to U.S. federal income taxation regardless of its source. The date of
record for determining holders of Certificates entitled to receive the
distribution on [INSERT DISTRIBUTION DATE] is [INSERT RELATED RECORD DATE].
Very truly yours,
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EXHIBIT 4.8
----------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of March 21, 1997
between
CONTINENTAL AIRLINES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
Continental Airlines Pass Through Trust, Series 1997-1C-II-O
7.420% Initial Pass Through Certificates, Series 1997-1C-II-O
7.420% Exchange Pass Through Certificates, Series 1997-1C-II-O
----------------------------------------
2
Reconciliation and tie between Continental Airlines Pass Through Trust
Agreement, Series 1997-1C-II-O dated as of March 21, 1997, and the Trust
Indenture Act of 1939. This reconciliation does not constitute part of the
Pass Through Trust Agreement.
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
------------------- ------------------
310(a)(1) 7.08
(a)(2) 7.08
312(a) 3.05; 8.01; 8.02
313(a) 7.06; 8.03
314(a) 8.04(a), (c) & (d)
(a)(4) 8.04(e)
(c)(1) 1.02
(c)(2) 1.02
(d)(1) 7.13; 11.01
(d)(2) 7.13; 11.01
(d)(3) 2.01
(e) 1.02
315(b) 7.02
316(a)(last sentence) 1.04(c)
(a)(1)(A) 6.04
(a)(1)(B) 6.05
(b) 6.06
(c) 1.04(e)
317(a)(1) 6.03
(b) 7.13
318(a) 12.06
3
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.02. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 1.03. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 1.04. Directions of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of Equipment Notes. . . . . . . . . . . . . . . . . . . . . . 21
Section 2.02. Withdrawal of Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.03. Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.04. Limitation of Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of Certificates . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.02. Restrictive Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.03. Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.04. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.05. Book-Entry Provisions for Restricted
Global Certificates and Regulation S
Global Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.06. Special Transfer Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.08. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.09. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.10. Temporary Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.11. Limitation of Liability for Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.12. ERISA Restrictive Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(i)
4
TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
- ------- ----
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments Account . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.02. Distributions from Certificate Account and Special Payments Account . . . . . . . . . . . . . . . . 41
Section 4.03. Statements to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 4.04. Investment of Special Payment Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.02. Consolidation, Merger, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VI
DEFAULT
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.02. Incidents of Sale of Equipment Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit . . . . . . . . . . . . . . . . . 49
Section 6.04. Control by Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.05. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.06. Right of Certificateholders to Receive Payments Not to Be Impaired . . . . . . . . . . . . . . . . . 51
Section 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions . . . . . . . . . . . . . . . 51
Section 6.08. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.02. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.03. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 7.04. Not Responsible for Recitals or Issuance of Certificates . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.05. May Hold Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(ii)
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TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
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Section 7.06. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7.07. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7.08. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.09. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.10. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 7.11. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . . 60
Section 7.12. Maintenance of Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.13. Money for Certificate Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.14. Registration of Equipment Notes in Name of Subordination Agent . . . . . . . . . . . . . . . . . . . 63
Section 7.15. Representations and Warranties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.16. Withholding Taxes, Information Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.17. Trustee's Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.18. Preferential Collection of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and Addresses of
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.02. Preservation of Information; Communications to Certificateholders . . . . . . . . . . . . . . . . . 67
Section 8.03. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.04. Reports by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of Certificateholders . . . . . . . . . . . . . . . . . . . 69
Section 9.02. Supplemental Agreements with Consent of Certificateholders . . . . . . . . . . . . . . . . . . . . . 71
Section 9.03. Documents Affecting Immunity or Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.04. Execution of Supplemental Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 9.05. Effect of Supplemental Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
(iii)
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TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
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Section 9.06. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 9.07. Reference in Certificates to Supplemental Agreements . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to Indentures and Financing Documents . . . . . . . . . . . . . . . . . . 74
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 12.02. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 12.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 12.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 12.05. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.06. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.07. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.08. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.09. Benefits of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.10. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 12.12. Intention of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(iv)
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Exhibit A- Form of Certificate
Exhibit B- Form of Certificate to Request Removal of Restricted Legend
Exhibit C- Form of Certificate to be Delivered by an Institutional Accredited Investor
Exhibit D- Form of Assignment and Assumption Agreement
Exhibit E- Form of Notice to Withholding Agent
(v)
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PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of March 21, 1997
(the "Agreement"), between CONTINENTAL AIRLINES, INC., a Delaware corporation,
and WILMINGTON TRUST COMPANY, as Trustee, is made with respect to the formation
of Continental Airlines Pass Through Trust, Series 1997-1C-II-O and the
issuance of 7.420% Continental Airlines Pass Through Trust, Series 1997-1C-II-O
Pass Through Certificates representing fractional undivided interests in the
Trust.
WITNESSETH:
WHEREAS, the Company has obtained commitments from Boeing for
the delivery of certain Aircraft;
WHEREAS, the Company intends to finance the acquisition of
each such Aircraft either (i) through separate leveraged lease transactions in
which the Company will lease such aircraft (collectively, the "Leased
Aircraft") or (ii) through separate secured loan transactions in which the
Company will own such Aircraft (collectively, the "Owned Aircraft");
WHEREAS, in the case of each Leased Aircraft, each Owner
Trustee, acting on behalf of the corresponding Owner Participant, will issue
pursuant to an Indenture, on a non-recourse basis, three series of Equipment
Notes in order to finance a portion of its purchase price of such Leased
Aircraft;
WHEREAS, in the case of each Owned Aircraft, the Company, will
issue pursuant to an Indenture, on a recourse basis, three series of Equipment
Notes to finance a portion of the purchase price of such Owned Aircraft;
WHEREAS, the Trustee, upon execution and delivery of this
Agreement, hereby declares the creation of the Trust for the benefit of the
Certificateholders, and the initial Certificateholders, as the grantors of the
Trust, by their respective acceptances of the Certificates, join in the
creation of this Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust will
evidence fractional undivided interests in the Trust and will convey no rights,
benefits or interests in respect of any
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property other than the Trust Property except for those Certificates to which
an Escrow Receipt has been affixed;
WHEREAS, the Escrow Agent and the Initial Purchasers have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Paying Agent pursuant to which the Initial Purchasers have delivered to the
Escrow Agent the proceeds from the sale of the Certificates and have
irrevocably instructed the Escrow Agent to withdraw and pay funds from such
proceeds upon request and proper certification by the Trustee to purchase
Equipment Notes as the Aircraft are delivered by Boeing under the Aircraft
Purchase Agreement from time to time prior to the Delivery Period Termination
Date;
WHEREAS, the Escrow Agent on behalf of the Certificateholders
has contemporaneously herewith entered into a Deposit Agreement with the
Depositary under which the Deposits referred to therein will be made and from
which it will withdraw funds to allow the Trustee to purchase Equipment Notes
from time to time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of this
Agreement and the Note Purchase Agreement, upon or shortly following delivery
of an Aircraft, the Trustee on behalf of the Trust, using funds withdrawn under
the Escrow Agreement, may purchase an Equipment Note having the same interest
rate as, and final maturity date not later than the final Regular Distribution
Date of, the Certificates issued hereunder and shall hold such Equipment Note
in trust for the benefit of the Certificateholders;
WHEREAS, to facilitate the sale of Equipment Notes to, and the
purchase of Equipment Notes by, the Trustee on behalf of the Trust, the Company
has duly authorized the execution and delivery of this Agreement as the
"issuer", as such term is defined in and solely for purposes of the Securities
Act, of the Certificates to be issued pursuant hereto and as the "obligor", as
such term is defined in and solely for purposes of the Trust Indenture Act of
1939, as amended, with respect to all such Certificates and is undertaking to
perform certain administrative and ministerial duties hereunder and is also
undertaking to pay the ongoing fees and expenses of the Trustee;
WHEREAS, all of the conditions and requirements necessary to
make this Agreement, when duly executed and
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delivered, a valid, binding and legal instrument, enforceable in accordance
with its terms and for the purposes herein expressed, have been done, performed
and fulfilled, and the execution and delivery of this Agreement in the form and
with the terms hereof have been in all respects duly authorized; and
WHEREAS, upon issuance of the Exchange Certificates, if any,
or the effectiveness of the Shelf Registration Statement, this Agreement, as
amended or supplemented from time to time, will be subject to the provisions of
the Trust Indenture Act of 1939, and shall, to the extent applicable, be
governed by such provisions;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, and of other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms used in this Agreement, including in the
recitals to this Agreement, that are defined in this Article have the
meanings assigned to them in this Article, and include the plural as
well as the singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, or by
the rules promulgated under the Trust Indenture Act, have the meanings
assigned to them therein;
(3) all references in this Agreement to designated
"Articles", "Sections", "Subsections" and other subdivisions are to
the designated Articles, Sections, Subsections and other subdivisions
of this Agreement;
(4) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and
not to any particular Article, Section, Subsection or other
subdivision; and
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(5) unless the context otherwise requires, whenever the
words "including", "include" or "includes" are used herein, it shall
be deemed to be followed by the phrase "without limitation".
Affiliate: Means, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such Person, provided,
however, that neither America West Airlines, Inc. nor any of its
subsidiaries shall be deemed to be an "Affiliate" of the Company for
purposes of this Agreement. For the purposes of this definition,
"control" means the power, directly or indirectly, to direct the
management and policies of such Person, whether through the ownership
of voting securities or by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
Agent Members: Has the meaning specified in Section 3.05.
Agreement: Has the meaning specified in the initial paragraph
hereto.
Aircraft: Means each of the New Aircraft or Substitute
Aircraft in respect of which a Participation Agreement is entered into
in accordance with the Note Purchase Agreement.
Aircraft Purchase Agreement: Has the meaning specified in the
Note Purchase Agreement.
Applicable Delivery Date: Has the meaning specified in
Section 2.01(b).
Applicable Participation Agreement: Has the meaning specified
in Section 2.01(b).
Assignment and Assumption Agreement: Means the assignment and
assumption agreement substantially in the form of Exhibit D hereto
executed and delivered in accordance with Section 11.01.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
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Avoidable Tax: Means a state or local tax (i) upon (w) the
Trust, (x) the Trust Property, (y) Certificateholders or (z) the
Trustee for which the Trustee is entitled to seek reimbursement from
the Trust Property, and (ii) which would be avoided if the Trustee
were located in another state, or jurisdiction within a state, within
the United States. A tax shall not be an Avoidable Tax if the Company
or any Owner Trustee shall agree to pay, and shall pay, such tax.
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 Certificate is outstanding, the city and state in which
the Trustee or any Loan Trustee maintains its Corporate Trust Office
or receives and disburses funds.
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any one of the Initial Certificates or
Exchange Certificates and any such Certificates issued in exchange
therefor or replacement thereof pursuant to this Agreement.
Certificate Account: Means the account or accounts created
and maintained pursuant to Section 4.01(a).
Certificate Purchase Agreement: Means the Purchase Agreement
dated March 12, 1997 among the Initial Purchasers, the Company and the
Depositary, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
Class C Certificateholder: Has the meaning specified in
Section 6.01.
Company: Means Continental Airlines, Inc., a Delaware
corporation, or its successor in interest pursuant to Section 5.02, or
(only in the context of provisions hereof, if any, where such
reference is required for purposes of compliance with the Trust
Indenture Act) any other "obligor"
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(within the meaning of the Trust Indenture Act) with respect to the
Certificates.
Controlling Party: Has the meaning specified in the
Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or any
Loan Trustee, means the office of such trustee in the city at which at
any particular time its corporate trust business shall be principally
administered.
Cut-off Date: Means the earlier of (a) the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
Definitive Certificates: Has the meaning specified in Section
3.01(e).
Delivery Date: Has the meaning specified in the Note Purchase
Agreement.
Delivery Notice: Has the meaning specified in the Note
Purchase Agreement.
Delivery Period Termination Date: Means the earlier of (a)
March 31, 1998, or, if the Equipment Notes relating to all of the New
Aircraft (or Substitute Aircraft in lieu thereof) have not been
purchased by the Trust and the Other Trusts on or prior to such date
due to any reason beyond the control of the Company and not occasioned
by the Company's fault or negligence, June 30, 1998 and (b) the date
on which Equipment Notes issued with respect to all of the New
Aircraft (or Substitute Aircraft in lieu thereof) have been purchased
by the Trust and the Other Trusts in accordance with the Note Purchase
Agreement.
Deposits: Has the meaning specified in the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of
March 21, 1997 relating to the Certificates between the Depositary and
the Escrow Agent, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
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Depositary: Means Credit Suisse First Boston, a Swiss bank,
acting through its New York branch.
Direction: Has the meaning specified in Section 1.04(a).
Distribution Date: Means any Regular Distribution Date or
Special Distribution Date as the context requires.
DTC: Means The Depository Trust Company, its nominees and
their respective successors.
Equipment Notes: Means the equipment notes issued under the
Indentures.
ERISA: Means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor federal statute.
ERISA Legend: Has the meaning specified in Section 3.12.
Escrow Agent: Means, initially, First Security Bank, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement
dated as of March 21, 1997 relating to the Certificates, among the
Escrow Agent, the Escrow Paying Agent, the Trustee and the Initial
Purchasers, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Escrow Paying Agent: Means the Person acting as paying agent
under the Escrow Agreement.
Escrow Receipt: Means the receipt substantially in the form
annexed to the Escrow Agreement representing a fractional undivided
interest in the funds held in escrow thereunder.
Euroclear: Means the Euroclear System.
Event of Default: Means an Indenture Default under any
Indenture pursuant to which Equipment Notes held by the Trust were
issued.
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Exchange Certificates: Means the pass through certificates
substantially in the form of Exhibit A hereto issued in exchange for
the Initial Certificates pursuant to the Registration Rights Agreement
and authenticated hereunder.
Exchange Offer: Means the exchange offer which may be made
pursuant to the Registration Rights Agreement to exchange Initial
Certificates for Exchange Certificates.
Exchange Offer Registration Statement: Means the registration
statement that, pursuant to the Registration Rights Agreement, is
filed by the Company with the SEC with respect to the exchange of
Initial Certificates for Exchange Certificates.
Final Maturity Date: Means October 1, 2008.
Final Withdrawal: Has the meaning specified in the Escrow
Agreement.
Final Withdrawal Date: Has the meaning specified in the
Escrow Agreement.
Final Withdrawal Notice: Has the meaning specified in Section
2.02.
Financing Documents: With respect to any Equipment Note,
means (i) the Indenture and the Participation Agreement relating to
such Equipment Note, and (ii) in the case of any Equipment Note
related to a Leased Aircraft, the Lease relating to such Leased
Aircraft.
Fractional Undivided Interest: Means the fractional undivided
interest in the Trust that is evidenced by a Certificate.
Global Certificates: Has the meaning specified in Section
3.01(d).
Global Exchange Certificate: Has the meaning specified in
Section 3.01(f).
Indenture: Means each of the separate trust indentures and
mortgages relating to the Aircraft, each as specified or described in
a Delivery Notice delivered pursuant to the
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Note Purchase Agreement or the related Participation Agreement, in
each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Indenture Default: With respect to any Indenture, means any
Event of Default (as such term is defined in such Indenture).
Initial Certificates: Means the certificates issued and
authenticated hereunder substantially in the form of Exhibit A hereto
other than the Exchange Certificates.
Initial Purchasers: Means, collectively, Credit Suisse First
Boston Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman Sachs & Co.
Institutional Accredited Investor: Means an institutional
investor that is an "accredited investor" within the meaning set forth
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act.
Intercreditor Agreement: Means the Intercreditor Agreement
dated as of March 21, 1997 among the Trustee, the Other Trustees, the
Liquidity Providers, the liquidity providers relating to the
Certificates issued under (and as defined in) each of the Other Pass
Through Trust Agreements, and Wilmington Trust Company, as
Subordination Agent and as trustee thereunder, as amended,
supplemented or otherwise modified from time to time in accordance
with its terms.
Investors: Means the Initial Purchasers together with all
subsequent beneficial owners of the Certificates.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
Lease: Means, with respect to each Leased Aircraft, the lease
between an Owner Trustee, as the lessor, and the Company, as the
lessee, referred to in the related Indenture, as such lease may be
amended, supplemented or otherwise modified in accordance with its
terms.
Leased Aircraft: Has the meaning specified in the second
recital to this Agreement.
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Liquidity Facility: Means, initially, (i) the Revolving
Credit Agreement dated as of March 21, 1997 relating to the
Certificates, between ABN Amro Bank N.V. and the Subordination Agent,
as agent and trustee for the Trustee, and (ii) the Revolving Credit
Agreement dated as of March 21, 1997 relating to the Certificates,
between ING Bank N.V. and the Subordination Agent, as agent and
trustee for the Trustee, and, from and after the replacement of either
such Agreement pursuant to the Intercreditor Agreement, the
replacement liquidity facility therefor, in each case as amended,
supplemented or otherwise modified from time to time in accordance
with their respective terms.
Liquidity Provider: Means, initially, each of ABN Amro Bank
N.V. and ING Bank N.V., and any replacement or successor therefor
appointed in accordance with the Intercreditor Agreement.
Loan Trustee: With respect to any Equipment Note or the
Indenture applicable thereto, means the bank or trust company
designated as trustee under such Indenture, together with any
successor to such trustee appointed pursuant thereto.
New Aircraft: Has the meaning specified in the Note Purchase
Agreement.
Non-U.S. Person: Means a Person that is not a "U.S. person",
as defined in Regulation S.
Note Purchase Agreement: Means the Note Purchase Agreement
dated as of March 21, 1997 among the Trustee, the Other Trustees, the
Company, the Escrow Agent, the Escrow Paying Agent and the
Subordination Agent, providing for, among other things, the purchase
of Equipment Notes by the Trustee on behalf of the Trust, as the same
may be amended, supplemented or otherwise modified from time to time,
in accordance with its terms.
Notice of Purchase Withdrawal: Has the meaning specified in
the Deposit Agreement.
Offering Circular: Means the Offering Circular dated March
12, 1997 relating to the offering of the Certificates and the
certificates issued under the Other Pass Through Trust Agreements.
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Officer's Certificate: Means a certificate signed, (a) in the
case of the Company, by (i) the Chairman or Vice Chairman of the Board
of Directors, the President, any Executive Vice President, any Senior
Vice President or the Treasurer of the Company, signing alone, or (ii)
any Vice President of the Company signing together with the Secretary,
the Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company or, (b) in the case of an Owner Trustee or a Loan Trustee,
a Responsible Officer of such Owner Trustee or such Loan Trustee, as
the case may be.
Opinion of Counsel: Means a written opinion of legal counsel
who (a) in the case of counsel for the Company may be (i) a senior
attorney of the Company one of whose principal duties is furnishing
advice as to legal matters, (ii) Hughes Hubbard & Reed LLP, or (iii)
such other counsel designated by the Company and reasonably acceptable
to the Trustee and (b) in the case of counsel for any Owner Trustee or
any Loan Trustee may be such counsel as may be designated by any of
them whether or not such counsel is an employee of any of them, and
who shall be reasonably acceptable to the Trustee.
Other Pass Through Trust Agreements: Means each of the three
other Continental Airlines 1997-1 Pass Through Trust Agreements
relating to Continental Airlines Pass Through Trust, Series 1997-1A-O,
Continental Airlines Pass Through Trust, Series 1997-1B-O, and
Continental Airlines Pass Through Trust, Series 1997-1C-I-O, dated the
date hereof.
Other Trustees: Means the trustees under the Other Pass
Through Trust Agreements, and any successor or other trustee appointed
as provided therein.
Other Trusts: Means the Continental Airlines Pass Through
Trust, Series 1997-1A-O, Continental Airlines Pass Through Trust,
Series 1997-1B-O, and Continental Airlines Pass Through Trust, Series
1997-1C-I-O, created on the date hereof.
Outstanding: When used with respect to Certificates, means,
as of the date of determination, all Certificates theretofore
authenticated and delivered under this Agreement, except:
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(i) Certificates theretofore canceled by the
Registrar or delivered to the Trustee or the Registrar for
cancellation;
(ii) Certificates for which money in the full
amount required to make the final distribution with respect to
such Certificates pursuant to Section 11.01 hereof has been
theretofore deposited with the Trustee in trust for the
Holders of such Certificates as provided in Section 4.01
pending distribution of such money to such Certificateholders
pursuant to payment of such final distribution; and
(iii) Certificates in exchange for or in lieu of
which other Certificates have been authenticated and delivered
pursuant to this Agreement.
Owned Aircraft: Has the meaning specified in the second
recital to this Agreement.
Owner Participant: With respect to any Equipment Note
relating to a Leased Aircraft, means the "Owner Participant" as
referred to in the Indenture pursuant to which such Equipment Note is
issued and any permitted successor or assign of such Owner
Participant; and Owner Participants at any time of determination means
all of the Owner Participants thus referred to in the Indentures.
Owner Trustee: With respect to any Equipment Note relating to
a Leased Aircraft, means the "Owner Trustee", as referred to in the
Indenture pursuant to which such Equipment Note is issued, not in its
individual capacity but solely as trustee; and Owner Trustees means
all of the Owner Trustees party to any of the Indentures.
Participation Agreement: Means each Participation Agreement
to be entered into by the Trustee pursuant to the Note Purchase
Agreement, as the same may be amended, supplemented or otherwise
modified in accordance with its terms.
Paying Agent: Means the paying agent maintained and appointed
for the Certificates pursuant to Section 7.12.
Permitted Investments: Means obligations of the United States
of America or agencies or instrumentalities thereof
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for the payment of which the full faith and credit of the United
States of America is pledged, maturing in not more than 60 days after
the date of acquisition thereof or such lesser time as is required for
the distribution of any Special Payments on a Special Distribution
Date.
Person: Means any person, including any individual,
corporation, limited liability company, partnership, joint venture,
association, joint-stock company, trust, trustee, unincorporated
organization, or government or any agency or political subdivision
thereof.
Plan Transferee: Means any Plan or any entity that is using
the assets of any Plan to purchase or hold its interest in a
Certificate. For purposes of this definition, a "Plan" means any
employee benefit plan subject to ERISA as well as any plan that is not
subject to ERISA but which is subject to Section 4975 of the Internal
Revenue Code of 1986, as amended.
Pool Balance: Means, as of any date, (i) the original
aggregate face amount of the Certificates less (ii) the aggregate
amount of all payments made in respect of such Certificates other than
payments made in respect of interest or premium thereon or
reimbursement of any costs or expenses incurred in connection
therewith less (iii) the aggregate amount of unused Deposits
distributed as a Final Withdrawal other than payments in respect of
interest or premium thereon. The Pool Balance as of any Distribution
Date shall be computed after giving effect to the payment of
principal, if any, on the Equipment Notes or other Trust Property held
in such Trust and the distribution thereof to be made on such
Distribution Date and the distribution of the Final Withdrawal to be
made on such Distribution Date.
Pool Factor: Means, as of any date, the quotient (rounded to
the seventh decimal place) computed by dividing (i) the Pool Balance
as at such date by (ii) the original aggregate face amount of the
Certificates. The Pool Factor as of any Distribution Date shall be
computed after giving effect to the payment of principal, if any, on
the Equipment Notes or other Trust Property and the distribution
thereof to be made on such Distribution Date and the distribution of
the Final Withdrawal to be made on such Distribution Date.
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PTC Event of Default: Means any failure to pay within 10
Business Days of the due date thereof: (i) the outstanding Pool
Balance on the Final Maturity Date or (ii) interest due on the
Certificates on any Distribution Date (unless the Subordination Agent
shall have made an Interest Drawing or Drawings (as defined in the
Intercreditor Agreement), or a withdrawal or withdrawals pursuant to
section 3.6(f) of the Intercreditor Agreement, with respect thereto in
an aggregate amount sufficient to pay such interest and shall have
distributed such amount to the Trustee).
QIB: Means a qualified institutional buyer as defined in
Rule 144A.
Record Date: Means (i) for Scheduled Payments to be
distributed on any Regular Distribution Date, other than the final
distribution, the 15th day (whether or not a Business Day) preceding
such Regular Distribution Date, and (ii) for Special Payments to be
distributed on any Special Distribution Date, other than the final
distribution, the 15th day (whether or not a Business Day) preceding
such Special Distribution Date.
Register and Registrar: Mean the register maintained and the
registrar appointed pursuant to Sections 3.04 and 7.12.
Registration Event: Means the declaration of the
effectiveness by the SEC of the Exchange Offer Registration Statement
or the Shelf Registration Statement.
Registration Rights Agreement: Means the Exchange and
Registration Rights Agreement dated as of March 21, 1997, among the
Initial Purchasers, the Trustee, the Other Trustees and the Company,
as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
Regular Distribution Date: With respect to distributions of
Scheduled Payments in respect of the Certificates, means each date
designated as a Regular Distribution Date in the Certificates issued
pursuant to this Agreement, until payment of all the Scheduled
Payments to be made under the Equipment Notes held in the Trust have
been made; provided, however, that, if any such day shall
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not be a Business Day, the related distribution shall be made on the
next succeeding Business Day without additional interest.
Regulation S: Means Regulation S under the Securities Act or
any successor regulation thereto.
Regulation S Definitive Certificates: Has the meaning
specified in Section 3.01(e).
Regulation S Global Certificates: Has the meaning specified
in Section 3.01(d).
Related Pass Through Trust Agreement: Means the Continental
Airlines 1997-1 Pass Through Trust Agreement relating to the
Continental Airlines Pass Through Trust, Series 1997-CII-S, dated the
date hereof, entered into by the Company and the institution acting as
trustee thereunder, which agreement becomes effective upon the
execution and delivery of the Assignment and Assumption Agreement
pursuant to Section 11.01.
Related Trust: Means the Continental Pass Through Trust,
Series 1997-1C-II-S, formed under the Related Pass Through Trust
Agreement.
Related Trustee: Means the trustee under the Related Pass
Through Trust Agreement.
Responsible Officer: With respect to the Trustee, any Loan
Trustee and any Owner Trustee, means any officer in the Corporate
Trust Office of the Trustee, Loan Trustee or Owner Trustee or any
other officer customarily performing functions similar to those
performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred
because of his knowledge of and familiarity with a particular subject.
Restricted Definitive Certificates: Has the meaning specified
in Section 3.01(e).
Restricted Global Certificate: Has the meaning specified in
Section 3.01(c).
Restricted Legend: Has the meaning specified in Section 3.02.
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Restricted Period: Has the meaning specified in Section
3.01(d).
Rule 144A: Means Rule 144A under the Securities Act and any
successor rule thereto.
Scheduled Payment: With respect to any Equipment Note, means
(i) any payment of principal or interest on such Equipment Note (other
than any such payment which is not in fact received by the
Subordination Agent within five days of the date on which such payment
is scheduled to be made) due from the obligor thereon or (ii) any
payment of interest on the Certificates with funds drawn under 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, premium, if any, or
interest resulting from the redemption or purchase of any Equipment
Note shall not constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as
from time to time constituted or created under the United States
Securities Exchange Act of 1934, as amended, or, if at any time after
the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties on such date.
Securities Act: Means the United States Securities Act of
1933, as amended from time to time, or any successor thereto.
Shelf Registration Statement: Means the shelf registration
statement which may be required to be filed by the Company with the
SEC pursuant to any Registration Rights Agreement, other than an
Exchange Offer Registration Statement.
Special Distribution Date: Means each date on which a Special
Payment is to be distributed as specified in this Agreement; provided,
however, that, if any such day shall not be a Business Day, the
related distribution shall be made on the next succeeding Business Day
without additional interest.
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Special Redemption Premium: Means the premium payable by the
Company in respect of the Final Withdrawal pursuant to the Note
Purchase 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) or Special
Redemption Premium.
Special Payments Account: Means the account or accounts
created and maintained pursuant to Section 4.01(b).
Subordination Agent: Has the meaning specified in the
Intercreditor Agreement.
Substitute Aircraft: Has the meaning specified in the Note
Purchase Agreement.
TIN: Has the meaning specified in Section 7.16.
Transfer Date: Has the meaning specified in Section 11.01.
Triggering Event: Has the meaning assigned to such term in
the Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate
of which consists of the Trust Property.
Trust Indenture Act: Means the United States Trust Indenture
Act of 1939, as amended from time to time, or any successor thereto.
Trust Property: Means (i) the Equipment Notes held as the
property of the Trust and, subject to the Intercreditor Agreement, all
monies at any time paid thereon and all monies due and to become due
thereunder, (ii) funds from time to time deposited in the Certificate
Account and the Special Payments Account and, subject to the
Intercreditor Agreement, any proceeds from the sale by the Trustee
pursuant to Article VI hereof of any Equipment Note and (iii) all
rights of the Trust and the Trustee, on behalf of the Trust, under the
Intercreditor Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Liquidity Facilities, including, without limitation,
all rights to receive certain payments thereunder, and all monies paid
to
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the Trustee on behalf of the Trust pursuant to the Intercreditor
Agreement or the Liquidity Facilities, provided, that rights with
respect to the Deposits or under the Escrow Agreement, except for the
right to direct withdrawals for the purchase of Equipment Notes to be
held herein, will not constitute Trust Property.
Trustee: Means Wilmington Trust Company, or its successor in
interest, and any successor or other trustee appointed as provided
herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
Section 1.02. Compliance Certificates and Opinions. Upon any
application or request (except with respect to matters set forth in Article II)
by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take
any action under any provision of this Agreement, the Company, such Owner
Trustee or such Loan Trustee, as the case may be, shall furnish to the Trustee
(i) an Officer's Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with and (ii) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Agreement relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement (other than a certificate
provided pursuant to Section 8.04(e)) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions in this Agreement relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
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(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters and any such Person may certify or give an
opinion as to such matters in one or several documents.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement or, in respect of the Certificates, this
Agreement, they may, but need not, be consolidated and form one instrument.
Section 1.04. Directions of Certificateholders. (a) Any
direction, consent, request, demand, authorization, notice, waiver or other
action provided by this Agreement to be given or taken by Certificateholders (a
"Direction") may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Certificateholders in person or by
an agent or proxy duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required pursuant to this Agreement, to the Company or any Loan Trustee. Proof
of execution of any such instrument or of a writing appointing any such agent
or proxy shall be sufficient for any purpose of this Agreement and conclusive
in favor of the Trustee, the Company and any Loan Trustee, if made in the
manner provided in this Section.
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(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the certificate of any notary
public or other officer of any jurisdiction authorized to take acknowledgments
of deeds or administer oaths that the Person executing such instrument
acknowledged to him the execution thereof, or by an affidavit of a witness to
such execution sworn to before any such notary or such other officer and where
such execution is by an officer of a corporation or association or a member of
a partnership, on behalf of such corporation, association or partnership, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other reasonable manner which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the
requisite Fractional Undivided Interests of Certificates Outstanding have given
any Direction under this Agreement, Certificates owned by the Company or any
Affiliate thereof shall be disregarded and deemed not to be Outstanding for
purposes of any such determination. In determining whether the Trustee shall
be protected in relying upon any such Direction, only Certificates which the
Trustee knows to be so owned shall be so disregarded. Notwithstanding the
foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded, and (ii) if any amount of
Certificates so owned by any such Person have been pledged in good faith, such
Certificates shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Company or any Affiliate thereof.
(d) For all purposes of this Agreement, all Initial
Certificates and all Exchange Certificates shall vote and take all other
actions of Certificateholders together as one series of Certificates.
(e) The Company may at its option, by delivery of an
Officer's Certificate to the Trustee, set a record date to determine the
Certificateholders entitled to give any Direction. Notwithstanding Section
316(c) of the Trust Indenture Act, such record date shall be the record date
specified in such Officer's Certificate, which shall be a date not more than 30
days prior to the first solicitation of Certificateholders in connection
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therewith. If such a record date is fixed, such Direction may be given before
or after such record date, but only the Certificateholders of record at the
close of business on such record date shall be deemed to be Certificateholders
for the purposes of determining whether Certificateholders of the requisite
proportion of Outstanding Certificates have authorized or agreed or consented
to such Direction, and for that purpose the Outstanding Certificates shall be
computed as of such record date; provided that no such Direction by the
Certificateholders on such record date shall be deemed effective unless it
shall become effective pursuant to the provisions of this Agreement not later
than one year after such record date.
(f) Any Direction by the Holder of any Certificate shall
bind the Holder of every Certificate issued upon the transfer thereof or in
exchange therefor or in lieu thereof, whether or not notation of such Direction
is made upon such Certificate.
(g) Except as otherwise provided in Section 1.04(c),
Certificates owned by or pledged to any Person shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Certificates.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of
Equipment Notes. (a) The Trustee is hereby directed (i) to execute and deliver
the Intercreditor Agreement, the Registration Rights Agreement, the Escrow
Agreement and the Note Purchase Agreement on or prior to the Issuance Date,
each in the form delivered to the Trustee by the Company and (ii) subject to
the respective terms thereof, to perform its obligations thereunder. Upon
request of the Company and the satisfaction or waiver of the closing conditions
specified in the Certificate Purchase Agreement, the Trustee shall execute,
deliver, authenticate, issue and sell Certificates in authorized denominations
equalling in the aggregate the amount set forth, with respect to the Trust, in
Schedule II to the Certificate Purchase Agreement evidencing the entire
ownership interest in the Trust, which amount equals the maximum aggregate
principal amount of Equipment Notes which
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may be purchased by the Trustee pursuant to the Note Purchase Agreement.
Except as provided in Sections 3.04, 3.05, 3.06, 3.07 and 3.10 hereof, the
Trustee shall not execute, authenticate or deliver Certificates in excess of
the aggregate amount specified in this paragraph.
(b) On or after the Issuance Date, the Company may
deliver from time to time to the Trustee a Delivery Notice relating to one or
more Equipment Notes. After receipt of a Delivery Notice and in any case no
later than one Business Day prior to a Delivery Date as to which such Delivery
Notice relates (the "Applicable Delivery Date") (or, if the Issuance Date is an
Applicable Delivery Date, on the Issuance Date), the Trustee shall (as and when
specified in the Delivery Notice) instruct the Escrow Agent to provide a Notice
of Purchase Withdrawal to the Depositary requesting (A) the withdrawal of one
or more Deposits on the Applicable Delivery Date in accordance with and to the
extent permitted by the terms of the Escrow Agreement and the Deposit Agreement
and (B) the payment of all, or a portion, of such Deposit or Deposits in an
amount equal in the aggregate to the purchase price of such Equipment Notes to
or on behalf of the Owner Trustee or the Company, as the case may be, issuing
such Equipment Notes, all as shall be described in the Delivery Notice;
provided that, if the Issuance Date is an Applicable Delivery Date, such
purchase price shall be paid from a portion of the proceeds of the sale of the
Certificates. The Trustee shall (as and when specified in such Delivery
Notice), subject to the conditions set forth in Section 2 of the Note Purchase
Agreement, enter into and perform its obligations under the Participation
Agreement specified in such Delivery Notice (the "Applicable Participation
Agreement") and cause such certificates, documents and legal opinions relating
to the Trustee to be duly delivered as required by the Applicable Participation
Agreement. If at any time prior to the Applicable Delivery Date, the Trustee
receives a notice of postponement pursuant to Section 2(e) or 2(f) of the Note
Purchase Agreement, then the Trustee shall give the Depositary with a copy to
the Escrow Agent a notice of cancellation of such Notice of Purchase Withdrawal
relating to such Deposit or Deposits on such Applicable Delivery Date. Upon
satisfaction of the conditions specified in the Note Purchase Agreement and the
Applicable Participation Agreement, the Trustee shall purchase the applicable
Equipment Notes with the proceeds of the withdrawals of one or more Deposits
made on the Applicable Delivery Date in accordance with the terms of the
Deposit Agreement and the Escrow
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Agreement (or, if the Issuance Date is Applicable Delivery Date with respect to
such Applicable Participation Agreement, from a portion of the proceeds of the
sale of the Certificates). The purchase price of such Equipment Notes shall
equal the principal amount of such Equipment Notes. Amounts withdrawn from
such Deposit or Deposits in excess of the purchase price of the Equipment Notes
or to the extent not applied on the Applicable Delivery Date to the purchase
price of the Equipment Notes, shall be re-deposited by the Trustee with the
Depositary on the Applicable Delivery Date in accordance with the terms of the
Deposit Agreement.
Section 2.02. Withdrawal of Deposits. If any Deposits remain
outstanding on the Business Day next succeeding the Cut-Off Date, (i) (A) the
Trustee shall give the Escrow Agent notice that the Trustee's obligation to
purchase Equipment Notes under the Note Purchase Agreement has terminated and
instruct the Escrow Agent to provide a notice of Final Withdrawal to the
Depositary substantially in the form of Exhibit B to the Deposit Agreement (the
"Final Withdrawal Notice") and (B) the Trustee will make a demand upon the
Company under the Note Purchase Agreement for an amount equal to the Special
Redemption Premium, such payment to be made on the Final Withdrawal Date.
Section 2.03. Acceptance by Trustee. The Trustee, upon the
execution and delivery of this Agreement, acknowledges its acceptance of all
right, title and interest in and to the Trust Property and declares that the
Trustee holds and will hold such right, title and interest for the benefit of
all then present and future Certificateholders, upon the trusts herein set
forth. Subject to Section 7.14, the Trustee shall take all actions reasonably
necessary to effect the registration of all such Equipment Notes in the name of
the Subordination Agent. By its payment for and acceptance of each Certificate
issued to it under this Agreement, each initial Certificateholder as grantor of
the Trust thereby joins in the creation and declaration of the Trust.
Section 2.04. Limitation of Powers. The Trust is constituted
solely for the purpose of making the investment in the Equipment Notes, and,
except as set forth herein, the Trustee shall not be authorized or empowered to
acquire any other investments or engage in any other activities and, in
particular, the Trustee shall not be authorized or empowered to do anything
that would cause such Trust to fail to qualify as a "grantor
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trust" for federal income tax purposes (including as subject to this
restriction, acquiring any Aircraft (as defined in the respective Indentures)
by bidding such Equipment Notes or otherwise, or taking any action with respect
to any such Aircraft once acquired).
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "7.420%
Initial Pass Through Certificates, Series 1997-1C-II-0" and the Exchange
Certificates shall be known as the "7.420% Exchange Pass Through Certificates,
Series 1997-1C-II-O", in each case, of the Trust. Each Certificate will
represent a fractional undivided interest in the Trust and shall be
substantially in the form set forth as Exhibit A hereto, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Agreement and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the Trustee or the officers executing
such Certificates, as evidenced by the Trustee's or officer's execution of the
Certificates. At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Certificate. In
any event, any transfer or exchange of any Certificate shall also effect a
transfer or exchange of the related Escrow Receipt. Prior to the Final
Withdrawal Date, no transfer or exchange of any Certificate shall be permitted
unless the corresponding Escrow Receipt is attached thereto and also is so
transferred or exchanged. By acceptance of any Certificate to which an Escrow
Receipt is attached, each Holder of such a Certificate acknowledges and accepts
the restrictions on transfer of the Escrow Receipt set forth herein and in the
Escrow Agreement.
(b) The Initial Certificates shall be issued only in
fully registered form without coupons and only in denominations of $100,000 or
integral multiples of $1,000 in excess thereof, except that one Certificate may
be issued in a different denomination. The Exchange Certificates will be
issued in denominations of $1,000 or integral multiples thereof, except that
one Certificate may be issued in a different denomination.
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Each Certificate shall be dated the date of its authentication. The aggregate
Fractional Undivided Interest of Certificates shall not at any time exceed
$10,000,000.
(c) The Initial Certificates offered and sold in reliance
on Rule 144A shall be issued in the form of one or more global Certificates
substantially in the form of Exhibit A hereto with such applicable legends as
are provided for in Section 3.02 (each a "Restricted Global Certificate") duly
executed and authenticated by the Trustee as hereinafter provided. Such
Restricted Global Certificates shall be in registered form and be registered in
the name of DTC and deposited with the Trustee, at its Corporate Trust Office,
as custodian for DTC. The aggregate principal amount of any Restricted Global
Certificate may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for DTC for such Restricted Global
Certificate, as provided in Section 3.06 hereof, which adjustments shall be
conclusive as to the aggregate principal amount of any such Global Certificate.
(d) The Initial Certificates offered and sold outside the
United States in reliance on Regulation S shall be issued in the form of one or
more global Certificates substantially in the form of Exhibit A hereto (each a
"Regulation S Global Certificate") duly executed and authenticated by the
Trustee as hereinafter provided. Such Regulation S Global Certificates shall
be in registered form and be registered in the name of DTC and deposited with
the Trustee, at its Corporate Trust Office, as custodian for DTC, for credit
initially and during the Restricted Period (hereinafter defined) to the
respective accounts of beneficial owners of such Certificates (or to such other
accounts as they may direct) at Morgan Guaranty Trust Company of New York,
Brussels office, as operator of Euroclear or Cedel. As used herein, the term
"Restricted Period", with respect to the Regulation S Global Certificates
offered and sold in reliance on Regulation S, means the period of 40
consecutive days beginning on and including the later of (i) the day on which
the Certificates are first offered to persons other than distributors (as
defined in Regulation S) in reliance on Regulation S and (ii) the date of the
closing of the offering under the Certificate Purchase Agreement. The
aggregate principal amount of any Regulation S Global Certificate may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for DTC for such Global Certificate, as provided in
Section 3.06 hereof, which adjustments shall be
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conclusive as to the aggregate principal amount of any such Global Certificate.
The Restricted Global Certificate and Regulation S Global Certificate are
sometimes collectively referred to herein as the "Global Certificates".
(e) Initial Certificates offered and sold to any
Institutional Accredited Investor which is not a QIB in a transaction exempt
from registration under the Securities Act (and other than as described in
Section 3.01(d)) shall be issued substantially in the form of Exhibit A hereto
in definitive, fully registered form without interest coupons with such
applicable legends as are provided for in Section 3.02 (the "Restricted
Definitive Certificates") duly executed and authenticated by the Trustee as
hereinafter provided. Certificates issued pursuant to Section 3.05(b) in
exchange for interests in a Regulation S Global Certificate shall be issued in
definitive, fully registered form without interest coupons (the "Regulation S
Definitive Certificates"). The Restricted Definitive Certificates and the
Regulation S Definitive Certificates are sometimes collectively referred to
herein as the "Definitive Certificates".
(f) The Exchange Certificates shall be issued in the form
of one or more global Certificates substantially in the form of Exhibit A
hereto (each, a "Global Exchange Certificate"), except that (i) the Restricted
Legend (hereinafter defined) shall be omitted and (ii) such Exchange
Certificates shall contain such appropriate insertions, omissions,
substitutions and other variations from the form set forth in Exhibit A hereto
relating to the nature of the Exchange Certificates as the Responsible Officer
of the Trustee executing such Exchange Certificates on behalf of the Trust may
determine, as evidenced by such officer's execution on behalf of the Trust of
such Exchange Certificates. Such Global Exchange Certificates shall be in
registered form and be registered in the name of DTC and deposited with the
Trustee, at its Corporate Trust Office, as custodian for DTC. The aggregate
principal amount of any Global Exchange Certificate may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC for such Global Exchange Certificate, which adjustments shall
be conclusive as to the aggregate principal amount of any such Global Exchange
Certificate. Subject to clause (i) and (ii) of the first sentence of this
Section 3.01(f), the terms hereof applicable to Restricted Global Certificates
and/or Global
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Certificates shall apply to the Global Exchange Certificates, mutatis mutandis.
(g) The definitive Certificates shall be in registered
form and shall be typed, printed, lithographed or engraved or produced by any
combination of these methods or may be produced in any other manner, all as
determined by the officers executing such Certificates, as evidenced by their
execution of such Certificates.
Section 3.02. Restrictive Legends. All Initial Certificates
issued pursuant to this Agreement for resale pursuant to Rule 144A or offered
and sold to any Institutional Accredited Investor which is not a QIB (including
any Global Certificate issued upon registration of transfer, in exchange for or
in lieu of such Certificates) shall be "Restricted Certificates" and shall bear
a legend to the following effect (the "Restricted Legend") unless the Company
and the Trustee determine otherwise consistent with applicable law:
"THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS
HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY AFFILIATE OF
ANY OF SUCH PERSONS RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE
EXCEPT (A) TO CONTINENTAL AIRLINES, INC., (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE) OR
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(E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT; AND (3) AGREES THAT IF IT SHOULD RESELL OR OTHERWISE
TRANSFER THIS CERTIFICATE IT WILL DELIVER TO EACH PERSON TO WHOM THIS
CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE
WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS
CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY AFFILIATE OF ANY OF
SUCH PERSONS, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON
THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS
THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
THE FOREGOING RESTRICTIONS."
Each Global Certificate shall bear the following legend on the
face thereof:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS
CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND
3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN."
Section 3.03. Authentication of Certificates. (a) On the
Issuance Date, the Trustee shall duly execute, authenticate
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and deliver Certificates in authorized denominations equalling in the aggregate
the amount set forth, with respect to the Trust, in Schedule II to the
Certificate Purchase Agreement, evidencing the entire ownership of the Trust,
which amount equals the maximum aggregate principal amount of Equipment Notes
which may be purchased by the Trustee pursuant to the Note Purchase Agreement.
(b) No Certificate shall be entitled to any benefit under
this Agreement or be valid or obligatory for any purpose, unless there appears
on such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. The Trustee shall cause
to be kept at the office or agency to be maintained by it in accordance with
the provisions of Section 7.12 a register (the "Register") of the Certificates
in which, subject to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of such Certificates and of
transfers and exchanges of such Certificates as herein provided. The Trustee
shall initially be the registrar (the "Registrar") for the purpose of
registering such Certificates and transfers and exchanges of such Certificates
as herein provided.
All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid obligations of the Trust, evidencing
the same interest therein, and entitled to the same benefits under this Trust
Agreement, as the Certificates surrendered upon such registration of transfer
or exchange.
A Certificateholder may transfer a Certificate, or request
that a Certificate be exchanged for Certificates in an aggregate Fractional
Undivided Interest equal to the Fractional Undivided Interest of such
Certificate surrendered for exchange of other authorized denominations, by
surrender of such Certificate to the Trustee with the form of transfer notice
thereon duly completed and executed, and otherwise complying with the terms of
this Agreement, including providing evidence of compliance with any
restrictions on transfer, in form satisfactory to the Trustee and the
Registrar; provided that no exchanges of Initial Certificates for Exchange
Certificates shall
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occur until an Exchange Offer Registration Statement shall have been declared
effective by the SEC (notice of which shall be provided to the Trustee by the
Company). No such transfer shall be effected until, and such transferee shall
succeed to the rights of a Certificateholder only upon, final acceptance and
registration of the transfer by the Registrar in the Register. Prior to the
registration of any transfer by a Certificateholder as provided herein, the
Trustee shall treat the person in whose name the Certificate is registered as
the owner thereof for all purposes, and the Trustee shall not be affected by
notice to the contrary. Furthermore, DTC shall, by acceptance of a Global
Certificate, agree that transfers of beneficial interests in such global
certificate may be effected only through a book-entry system maintained by DTC
(or its agent), and that ownership of a beneficial interest in the Certificate
shall be required to be reflected in a book-entry. When Certificates are
presented to the Registrar with a request to register the transfer thereof or
to exchange them for other authorized denominations of a Certificate in a
Fractional Undivided Interest equal to the aggregate Fractional Undivided
Interest of Certificates surrendered for exchange, the Registrar shall register
the transfer or make the exchange as requested if its requirements for such
transactions are met.
To permit registrations of transfers and exchanges in
accordance with the terms, conditions and restrictions hereof, the Trustee
shall execute and authenticate Certificates at the Registrar's request. No
service charge shall be made to a Certificateholder for any registration of
transfer or exchange of Certificates, but the Trustee shall require payment of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for registration of transfer or exchange shall be canceled and
subsequently destroyed by the Trustee.
Section 3.05. Book-Entry Provisions for Restricted Global
Certificates and Regulation S Global Certificates. (a) Members of, or
participants in, DTC ("Agent Members") shall have no rights under this
Agreement with respect to any Global Certificate held on their behalf by DTC,
or the Trustee as its custodian, and DTC may be treated by the Trustee and any
agent of the Trustee as the absolute owner of such Global Certificate for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Trustee or any agent of the Trustee from
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giving effect to any written certification, proxy or other authorization
furnished by DTC or shall impair, as between DTC and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
holder of any Certificate. Upon the issuance of any Global Certificate, the
Registrar or its duly appointed agent shall record DTC as the registered holder
of such Global Certificate.
(b) Transfers of any Global Certificate shall be limited
to transfers of such Restricted Global Certificate or Regulation S Global
Certificate in whole, but not in part, to DTC. Beneficial interests in the
Restricted Global Certificate and any Regulation S Global Certificate may be
transferred in accordance with the rules and procedures of DTC and the
provisions of Section 3.06. Beneficial interests in a Restricted Global
Certificate or a Regulation S Global Certificate shall be delivered to all
beneficial owners thereof in the form of Restricted Definitive Certificates or
Regulation S Definitive Certificates, as the case may be, if (i) DTC notifies
the Trustee that it is unwilling or unable to continue as depositary for such
Restricted Global Certificate or Regulation S Global Certificate, as the case
may be, and a successor depositary is not appointed by the Trustee within 90
days of such notice, and (ii) after the occurrence and during the continuance
of an Event of Default, owners of beneficial interests in a Global Certificate
with Fractional Undivided Interests aggregating not less than a majority in
interest in the Trust advise the Trustee, the Company and DTC through Agent
Members in writing that the continuation of a book-entry system through DTC or
its successor is no longer in their best interests.
(c) Any beneficial interest in one of the Global
Certificates that is transferred to a Person who takes delivery in the form of
an interest in another Global Certificate will, upon such transfer, cease to be
an interest in such Global Certificate and become an interest in the other
Global Certificate and, accordingly, will thereafter be subject to all transfer
restrictions, if any, and other procedures applicable to beneficial interests
in such other Global Certificate for as long as it remains such an interest.
(d) In connection with the transfer of an entire
Restricted Global Certificate or an entire Regulation Global Certificate to the
beneficial owners thereof pursuant to paragraph (b) of this Section 3.05, such
Restricted Global
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Certificate or Regulation S Global Certificate, as the case may be, shall be
deemed to be surrendered to the Trustee for cancellation, and the Trustee shall
execute, authenticate and deliver, to each beneficial owner identified by DTC
in exchange for its beneficial interest in such Restricted Global Certificate
or Regulation S Global Certificate, as the case may be, an equal aggregate
principal amount of Restricted Definitive Certificates or Regulation S
Definitive Certificates, as the case may be, of authorized denominations. None
of the Company, the Registrar, the Paying Agent nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on,
and shall be protected in relying on, such registration instructions. Upon the
issuance of Definitive Certificates, the Trustee shall recognize the Person in
whose name the Definitive Certificates are registered in the Register as
Certificateholders hereunder. Neither the Company nor the Trustee shall be
liable if the Trustee or the Company is unable to locate a qualified successor
clearing agency.
(e) Any Definitive Certificate delivered in exchange for
an interest in the Restricted Global Certificate pursuant to paragraph (b) of
this Section 3.05 shall, except as otherwise provided by paragraph (e) of
Section 3.06, bear the Restricted Legend.
(f) Prior to the expiration of the Restricted Period, any
Regulation S Definitive Certificate delivered in exchange for an interest in a
Regulation S Global Certificate pursuant to paragraph (b) of this Section shall
bear the Restricted Legend.
(g) The registered holder of any Restricted Global
Certificate or Regulation S Global Certificate may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and until
(i) an Initial Certificate is sold under an effective Shelf Registration
Statement, or (ii) an Initial Certificate is exchanged for an Exchange
Certificate pursuant to an effective Exchange Offer Registration Statement, in
each case pursuant to the terms of the Registration Rights Agreement, the
following provisions shall apply to such Initial Certificates:
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(a) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect to the
registration of any proposed transfer of a Certificate to any
Institutional Accredited Investor which is neither a QIB nor a
Non-U.S. Person:
(i) The Registrar shall register the transfer of
any Certificate, whether or not bearing the Restricted Legend,
only if (x) the requested transfer is at least two years after
the later of the original issue date of the Certificates and
the last date on which such Certificate was held by the
Company, the Trustee or any affiliate of any of such Persons
or (y) the proposed transferor is an Initial Purchaser who is
transferring Certificates purchased under the Certificates
Purchase Agreement and the proposed transferee has delivered
to the Registrar a letter substantially in the form of Exhibit
C hereto and the aggregate principal amount of the
Certificates being transferred is at least $100,000. Except
as provided in the foregoing clause (y), the Registrar shall
not register the transfer of any Certificate to any
Institutional Accredited Investor which is neither a QIB nor a
Non- U.S. Person.
(ii) If the proposed transferor is an Agent Member
holding a beneficial interest in a Restricted Global
Certificate, upon receipt by the Registrar of (x) the
documents, if any, required by paragraph (i) and (y)
instructions given in accordance with DTC's and the
Registrar's procedures, the Registrar shall reflect on its
books and records the date of the transfer and a decrease in
the principal amount of such Restricted Global Certificate in
an amount equal to the principal amount of the beneficial
interest in such Restricted Global Certificate to be
transferred, and the Trustee shall execute, authenticate and
deliver to the transferor or at its direction, one or more
Restricted Definitive Certificates of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of an
Initial Certificate to a QIB (excluding Non-U.S. Persons):
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(i) If the Certificate to be transferred consists
of Restricted Definitive Certificates, or of an interest in
any Regulation S Global Certificate during the Restricted
Period, the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has
checked the box provided for on the form of Initial
Certificate stating, or has otherwise advised the Trustee and
the Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee
who has signed the certification provided for on the form of
Initial Certificate stating, or has otherwise advised the
Trustee and the Registrar in writing, that it is purchasing
the Initial Certificate for its own account or an account with
respect to which it exercises sole investment discretion and
that it, or the Person on whose behalf it is acting with
respect to any such account, is a QIB within the meaning of
Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received
such information regarding the Trust and/or the Company as it
has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the
transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by
Rule 144A.
(ii) Upon receipt by the Registrar of the
documents required by clause (i) above and instructions given
in accordance with DTC's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records
the date of such transfer and an increase in the principal
amount of a Restricted Global Certificate in an amount equal
to the principal amount of the Restricted Definitive
Certificates or interests in such Regulation S Global
Certificate, as the case may be, being transferred, and the
Trustee shall cancel such Definitive Certificates or decrease
the amount of such Regulation S Global Certificate so
transferred.
(c) Transfers of Interests in the Regulation S Global
Certificate or Regulation S Definitive Certificates. After the
expiration of the Restricted Period, the Registrar shall register any
transfer of interests in any Regulation S Global Certificate or
Regulation S Definitive Certificates
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without requiring any additional certification. Until the expiration
of the Restricted Period, interests in the Regulation S Global
Certificate may only be held through Agent Members acting for and on
behalf of Euroclear and Cedel.
(d) Transfers to Non-U.S. Persons at Any Time. The
following provisions shall apply with respect to any registration of
any transfer of an Initial Certificate to a Non-U.S. Person:
(i) Prior to the expiration of the Restricted
Period, the Registrar shall register any proposed transfer of
an Initial Certificate to a Non-U.S.Person upon receipt of a
certificate substantially in the form set forth as Exhibit B
hereto from the proposed transferor.
(ii) After the expiration of the Restricted
Period, the Registrar shall register any proposed transfer to
any Non-U.S. Person if the Certificate to be transferred is a
Restricted Definitive Certificate or an interest in a
Restricted Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit B from the proposed
transferor. The Registrar shall promptly send a copy of such
certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the
documents, if any, required by clause (ii) and (y)
instructions in accordance with DTC's and the Registrar's
procedures, the Registrar shall reflect on its books and
records the date of such transfer and a decrease in the
principal amount of such Restricted Global Certificate in an
amount equal to the principal amount of the beneficial
interest in such Restricted Global Certificate to be
transferred, and, upon receipt by the Registrar of
instructions given in accordance with DTC's and the
Registrar's procedures, the Registrar shall reflect on its
books and records the date and an increase in the principal
amount of the Regulation S Global Certificate in an amount
equal to the principal amount of the Restricted Definitive
Certificate or the Restricted Global Certificate, as the case
may be, to be transferred, and the Trustee
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shall cancel the Definitive Certificate, if any, so
transferred or decrease the amount of such Restricted Global
Certificate.
(e) Restricted Legend. Upon the transfer, exchange or
replacement of Certificates not bearing the Restricted Legend, the
Registrar shall deliver Certificates that do not bear the Restricted
Legend. Upon the transfer, exchange or replacement of Certificates
bearing the Restricted Legend, the Registrar shall deliver only
Certificates that bear the Restricted Legend unless either (i) the
circumstances contemplated by paragraph (d)(ii) of this Section 3.06
exist or (ii) there is delivered to the Registrar an Opinion of
Counsel to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance
with the provisions of the Securities Act.
(f) General. By acceptance of any Certificate bearing
the Restricted Legend, each Holder of such a Certificate acknowledges
the restrictions on transfer of such Certificate set forth in this
Agreement and agrees that it will transfer such Certificate only as
provided in this Agreement. The Registrar shall not register a
transfer of any Certificate unless such transfer complies with the
restrictions on transfer, if any, of such Certificate set forth in
this Agreement. In connection with any transfer of Certificates, each
Certificateholder agrees by its acceptance of the Certificates to
furnish the Registrar or the Trustee such certifications, legal
opinions or other information as either of them may reasonably require
to confirm that such transfer is being made pursuant to an exemption
from, or a transaction not subject to, the registration requirements
of the Securities Act and in accordance with the terms and provisions
of this Article III; provided that the Registrar shall not be required
to determine the sufficiency of any such certifications, legal
opinions or other information.
Until such time as no Certificates remain Outstanding, the
Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 3.05 or this Section 3.06. The
Trustee, if not the Registrar at such time, shall have the right to inspect and
make copies of all such letters, notices or other written communications at any
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reasonable time upon the giving of reasonable written notice to the Registrar.
Section 3.07. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to the Registrar
or the Registrar receives evidence to its satisfaction of the destruction, loss
or theft of any Certificate and (b) there is delivered to the Registrar and the
Trustee such security, indemnity or bond, as may be required by them to save
each of them harmless, then, in the absence of notice to the Registrar or the
Trustee that such destroyed, lost or stolen Certificate has been acquired by a
bona fide purchaser, and provided that the requirements of Section 8-405 of the
Uniform Commercial Code in effect in any applicable jurisdiction are met, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or
Certificates, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate under
this Section 3.07, the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and the Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section 3.07
shall constitute conclusive evidence of the appropriate Fractional Undivided
Interest in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen
Certificates.
Section 3.08. Persons Deemed Owners. Prior to due
presentment of a Certificate for registration of transfer, the Trustee, the
Registrar and any Paying Agent may treat the Person in whose name any
Certificate is registered (as of the day of determination) as the owner of such
Certificate for the purpose of receiving distributions pursuant to Article IV
and for all other purposes whatsoever, and none of the Trustee, the Registrar
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or any Paying Agent shall be affected by any notice to the contrary.
Section 3.09. Cancellation. All Certificates surrendered for
payment or transfer or exchange shall, if surrendered to the Trustee or any
agent of the Trustee other than the Registrar, be delivered to the Registrar
for cancellation and shall promptly be canceled by it. No Certificates shall
be authenticated in lieu of or in exchange for any Certificates canceled as
provided in this Section, except as expressly permitted by this Agreement. All
canceled Certificates held by the Registrar shall be destroyed and a
certification of their destruction delivered to the Trustee.
Section 3.10. Temporary Certificates. Until definitive
Certificates are ready for delivery, the Trustee shall authenticate temporary
Certificates. Temporary Certificates shall be substantially in the form of
definitive Certificates but may have insertions, substitutions, omissions and
other variations determined to be appropriate by the officers executing the
temporary Certificates, as evidenced by their execution of such temporary
Certificates. If temporary Certificates are issued, the Trustee will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee designated for such purpose
pursuant to Section 7.12, without charge to the Certificateholder. Upon
surrender for cancellation of any one or more temporary Certificates, the
Trustee shall execute, authenticate and deliver in exchange therefor a like
face amount of definitive Certificates of authorized denominations. Until so
exchanged, the temporary Certificates shall be entitled to the same benefits
under this Agreement as definitive Certificates.
Section 3.11. Limitation of Liability for Payments. All
payments and distributions made to Certificateholders in respect of the
Certificates shall be made only from the Trust Property and only to the extent
that the Trustee shall have sufficient income or proceeds from the Trust
Property to make such payments in accordance with the terms of Article IV of
this Agreement. Each Certificateholder, by its acceptance of a Certificate,
agrees that it will look solely to the income and proceeds from the Trust
Property for any payment or distribution
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due to such Certificateholder pursuant to the terms of this Agreement and that
it will not have any recourse to the Company, the Trustee, the Loan Trustees,
the Liquidity Providers, the Owner Trustees or the Owner Participants, except
as otherwise expressly provided herein or in the Intercreditor Agreement.
The Company is a party to this Agreement solely for purposes
of meeting the requirements of the Trust Indenture Act, and therefore shall not
have any right, obligation or liability hereunder (except as otherwise
expressly provided herein).
Section 3.12. ERISA Restrictive Legend. All Certificates
issued pursuant to this Agreement shall bear a legend to the following effect
(the "ERISA Legend") unless the Company and the Trustee determine otherwise
consistent with applicable law:
"BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT
IS NOT A PLAN TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST
AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY USING THE ASSETS OF ITS
GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE, AND THE CONDITIONS OF
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S.
DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN
CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE PASS
THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
THE FOREGOING RESTRICTIONS."
By acceptance of any Certificate bearing the ERISA Legend,
each Holder of such a Certificate acknowledges the restrictions on transfer of
such Certificate set forth in this Agreement and agrees that it will transfer
such Certificate only as provided in this Agreement. The Registrar shall not
register a transfer of any Certificate unless such transfer complies with the
restrictions on transfer, if any, of such Certificate set forth in this
Agreement.
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments
Account. (a) The Trustee shall establish and maintain on behalf of the
Certificateholders a Certificate Account as one or more
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non-interest-bearing accounts. The Trustee shall hold the Certificate Account
in trust for the benefit of the Certificateholders, and shall make or permit
withdrawals therefrom only as provided in this Agreement. On each day when a
Scheduled Payment is made to the Trustee under the Intercreditor Agreement, the
Trustee upon receipt thereof shall immediately deposit the aggregate amount of
such Scheduled Payment in the Certificate Account.
(b) The Trustee shall establish and maintain on behalf of
the Certificateholders a Special Payments Account as one or more accounts,
which shall be non-interest bearing except as provided in Section 4.04. The
Trustee shall hold the Special Payments Account in trust for the benefit of the
Certificateholders and shall make or permit withdrawals therefrom only as
provided in this Agreement. On each day when one or more Special Payments are
made to the Trustee under the Intercreditor Agreement and upon the payment of
the Special Redemption Premium to the Trustee under the Note Purchase
Agreement, the Trustee, upon receipt thereof, shall immediately deposit the
aggregate amount of such Special Payments in the Special Payments Account.
(c) The Trustee shall cause the Subordination Agent to
present to the related Loan Trustee of each Equipment Note such Equipment Note
on the date of its stated final maturity or, in the case of any Equipment Note
which is to be redeemed in whole pursuant to the related Indenture, on the
applicable redemption date under such Indenture.
Section 4.02. Distributions from Certificate Account and
Special Payments Account. (a) On each Regular Distribution Date or as soon
thereafter as the Trustee has confirmed receipt of the payment of all or any
part of the Scheduled Payments due on such date, the Trustee shall distribute
out of the Certificate Account the entire amount deposited therein pursuant to
Section 4.01(a). There shall be so distributed to each Certificateholder of
record on the Record Date with respect to such Regular Distribution Date (other
than as provided in Section 11.01 concerning the final distribution) by check
mailed to such Certificateholder, at the address appearing in the Register,
such Certificateholder's pro rata share (based on the Fractional Undivided
Interest in the Trust held by such Certificateholder) of the total amount in
the Certificate Account, except that, with respect to Certificates registered
on the Record Date in the name
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of DTC, such distribution shall be made by wire transfer in immediately
available funds to the account designated by DTC.
(b) On each Special Distribution Date with respect to any
Special Payment or as soon thereafter as the Trustee has confirmed receipt of
any Special Payments due on the Equipment Notes held in the related Trust or
realized upon the sale of such Equipment Notes or receipt of the Special
Redemption Premium, the Trustee shall distribute out of the Special Payments
Account the entire amount of such Special Payment deposited therein pursuant to
Section 4.01(b). There shall be so distributed to each Certificateholder of
record on the Record Date with respect to such Special Distribution Date (other
than as provided in Section 11.01 concerning the final distribution) by check
mailed to such Certificateholder, at the address appearing in the Register,
such Certificateholder's pro rata share (based on the Fractional Undivided
Interest in the Trust held by such Certificateholder) of the total amount in
the Special Payments Account on account of such Special Payment, except that,
with respect to Certificates registered on the Record Date in the name of DTC,
such distribution shall be made by wire transfer in immediately available funds
to the account designated by DTC.
(c) The Trustee shall, at the expense of the Company,
cause notice of each Special Payment to be mailed to each Certificateholder at
his address as it appears in the Register. In the event of redemption or
purchase of Equipment Notes held in the Trust, such notice shall be mailed not
less than 20 days prior to the Special Distribution Date for the Special
Payment resulting from such redemption or purchase, which Special Distribution
Date shall be the date of such redemption or purchase. In the event of the
payment of a Special Redemption Premium by the Company to the Trustee under the
Note Purchase Agreement, such notice shall be mailed, together with the notice
by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement, not less
than 20 days prior to the Special Distribution Date for such amount, which
Special Distribution Date shall be the Final Withdrawal Date. In the case of
any other Special Payments, such notice shall be mailed as soon as practicable
after the Trustee has confirmed that it has received funds for such Special
Payment, stating the Special Distribution Date for such Special Payment which
shall occur not less than 20 days after the date of such notice and as soon as
practicable thereafter. Notices mailed by the Trustee shall set forth:
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(i) the Special Distribution Date and the Record Date
therefor (except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment for each $1,000
face amount Certificate and the amount thereof constituting principal,
premium, if any, and interest,
(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the same date as
a Regular Distribution Date, the total amount to be received on such
date for each $1,000 face amount Certificate.
If the amount of (i) premium, if any, payable upon the redemption or purchase
of an Equipment Note or (ii) the Special Redemption Premium, if any, has not
been calculated at the time that the Trustee mails notice of a Special Payment,
it shall be sufficient if the notice sets forth the other amounts to be
distributed and states that any premium received will also be distributed.
If any redemption of the Equipment Notes held in the Trust is
canceled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, including any Special Redemption Premium, reflecting in part
the information provided by the Escrow Paying Agent under the Escrow
Agreement). Such statement shall set forth (per $1,000 face amount Certificate
as to (ii), (iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on such
Distribution Date hereunder and under the Escrow Agreement, indicating
the amount allocable to each source;
(ii) the amount of such distribution hereunder allocable
to principal and the amount allocable to premium (including the
Special Redemption Premium), if any;
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(iii) the amount of such distribution hereunder allocable
to interest; and
(iv) the amount of such distribution under the Escrow
Agreement allocable to interest;
(v) the amount of such distribution under the Escrow
Agreement allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of
DTC, on the Record Date prior to each Distribution Date, the Trustee will
request from DTC a securities position listing setting forth the names of all
Agent Members reflected on DTC's books as holding interests in the Certificates
on such Record Date. On each Distribution Date, the Trustee will mail to each
such Agent Member the statement described above and will make available
additional copies as requested by such Agent Member for forwarding to holders
of interests in the Certificates.
(b) Within a reasonable period of time after the end of
each calendar year but not later than the latest date permitted by law, the
Trustee shall furnish to each Person who at any time during such calendar year
was a Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above for such calendar year or, in the event such Person was a
Certificateholder of record during a portion of such calendar year, for such
portion of such year, and such other items as are readily available to the
Trustee and which a Certificateholder shall reasonably request as necessary for
the purpose of such Certificateholder's preparation of its federal income tax
returns. Such statement and such other items shall be prepared on the basis of
information supplied to the Trustee by the Agent Members and shall be delivered
by the Trustee to such Agent Members to be available for forwarding by such
Agent Members to the holders of interests in the Certificates in the manner
described in Section 4.03(a).
(c) Promptly following (i) the Delivery Period
Termination Date, if there has been any change in the information set forth in
clauses (x), (y) and (z) below from that set forth in page 81 of the Offering
Circular, and (ii) any early redemption of purchase of, or any default in the
payment of principal or interest in respect of, any of the Equipment Notes
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held in the Trust, or any Final Withdrawal, the Trustee shall furnish to
Certificateholders of record on such date a statement setting forth (x) the
expected Pool Balances for each subsequent Regular Distribution Date following
the Delivery Period Termination Date, (y) the related Pool Factors for such
Regular Distribution Dates and (z) the expected principal distribution schedule
of the Equipment Notes, in the aggregate, held as Trust Property at the date of
such notice. With respect to the Certificates registered in the name of DTC,
on the Delivery Period Termination Date, the Trustee will request from DTC a
securities position listing setting forth the names of all Agent Members
reflected on DTC's books as holding interests in the Certificates on such date.
The Trustee will mail to each such Agent Member the statement described above
and will make available additional copies as requested by such Agent Member for
forwarding to holders of interests in the Certificates.
Section 4.04. Investment of Special Payment Moneys. Any
money received by the Trustee pursuant to Section 4.01(b) representing a
Special Payment which is not distributed on the date received shall, to the
extent practicable, be invested in Permitted Investments by the Trustee pending
distribution of such Special Payment pursuant to Section 4.02. Any investment
made pursuant to this Section 4.04 shall be in such Permitted Investments
having maturities not later than the date that such moneys are required to be
used to make the payment required under Section 4.02 on the applicable Special
Distribution Date and the Trustee shall hold any such Permitted Investments
until maturity. The Trustee shall have no liability with respect to any
investment made pursuant to this Section 4.04, other than by reason of the
willful misconduct or negligence of the Trustee. All income and earnings from
such investments shall be distributed on such Special Distribution Date as part
of such Special Payment.
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence. The
Company, at its own cost and expense, will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate
existence, rights and franchises, except as otherwise specifically permitted in
Section 5.02; provided, however, that the Company shall not be required to
preserve any
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right or franchise if the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company.
Section 5.02. Consolidation, Merger, etc. The Company shall
not consolidate with or merge into any other corporation or convey, transfer or
lease substantially all of its assets as an entirety to any Person unless:
(a) the corporation formed by such consolidation or into
which the Company is merged or the Person that acquires by conveyance, transfer
or lease substantially all of the assets of the Company as an entirety shall be
(i) organized and validly existing under the laws of the United States of
America or any state thereof or the District of Columbia, (ii) a "citizen of
the United States" as defined in 49 U.S.C. 40102(a)(15), as amended, and (iii)
a United States certificated air carrier, if and so long as such status is a
condition of entitlement to the benefits of Section 1110 of the Bankruptcy
Reform Act of 1978, as amended (11 U.S.C. Section 1110), with respect to the
Leases;
(b) the corporation formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of the Company as an entirety
shall execute and deliver to the Trustee a duly authorized, valid, binding and
enforceable agreement in form and substance reasonably satisfactory to the
Trustee containing an assumption by such successor corporation or Person of the
due and punctual performance and observance of each covenant and condition of
this Agreement, the Other Pass Through Trust Agreements and each Financing
Document to be performed or observed by the Company; and
(c) the Company shall have delivered to the Trustee an
Officer's Certificate of the Company and an Opinion of Counsel of the Company
reasonably satisfactory to the Trustee, each stating that such consolidation,
merger, conveyance, transfer or lease and the assumption agreement mentioned in
clause (b) above comply with this Section 5.02 and that all conditions
precedent herein provided for relating to such transaction have been complied
with.
Upon any consolidation or merger, or any conveyance, transfer
or lease of substantially all of the assets of the Company as an entirety in
accordance with this Section 5.02, the
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successor corporation or Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Agreement with the same effect as if such successor
corporation or Person had been named as the Company herein. No such
conveyance, transfer or lease of substantially all of the assets of the Company
as an entirety shall have the effect of releasing any successor corporation or
Person which shall have become such in the manner prescribed in this Section
5.02 from its liability in respect of this Agreement and any Financing Document
to which it is a party.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of Remedies.
Upon the occurrence and during the continuation of any Indenture Default under
any Indenture, the Trustee may, to the extent it is the Controlling Party at
such time (as determined pursuant to the Intercreditor Agreement), direct the
exercise of remedies as provided in the Intercreditor Agreement.
(b) Purchase Rights of Certificateholders. At any time
after the occurrence and during the continuation of a Triggering Event, each
Holder of a Certificate or a Class C-I Certificate (a "Class C
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 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 Class C Certificateholder, provided that (A) if
prior to the end of such ten-day period any other Class C Certificateholder
notifies such purchasing Class C Certificateholder that such other Class C
Certificateholder wants to participate in such purchase, then such other Class
C Certificateholder may join with the purchasing Class C Certificateholder to
purchase all, but not less than all, of the Class A Certificates and the Class
B Certificates pro rata based on the Fractional Undivided Interest in the Trust
and Class C-I Trust, taken as a whole, 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
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Certificateholder's desire to participate in such a purchase, then such other
Class C Certificateholder shall lose its right to purchase the Class A
Certificates and Class B Certificates pursuant to this Section 6.01(b).
No such purchase of Class A Certificates and Class B
Certificates shall be effective unless the purchaser(s) shall certify to the
Other Trustees of each such Class that contemporaneously with such purchase,
such purchaser(s) is purchasing, pursuant to the terms of this Agreement and
the Other Pass Through Trust Agreements, the Class A Certificates and the Class
B Certificates. Each payment of the purchase price of the Certificates as
determined in the Other Pass Through Trust Agreement for such Class shall be
made to an account or accounts designated by the trustee under such Other Pass
Through Trust Agreement and each such purchase shall be subject to the terms of
this Section 6.01(b). The Class A Certificates and the Class B Certificates
will be deemed to be purchased on the date payment of the purchase price is
made notwithstanding the failure of the Certificateholders of either Class to
deliver any Certificates of such Class (whether in the form of Definitive
Certificates or beneficial interests in Global Certificates (as defined in the
Other Pass Through Trust Agreement for such Class)) and, upon such a purchase,
(i) the only rights of the Certificateholders of such Class will be to deliver
the Class A Certificates on the Class B Certificates, as the case may be, to
the purchaser(s) and receive the purchase price for such Certificates and (ii)
if the purchaser(s) shall so request, such Certificateholder will comply with
all the provisions of Section 3.04 of the Other Pass Through Trust Agreement
for such Class to enable new Certificates of such Class to be issued to the
purchaser in such denominations as it shall request. All charges and expenses
in connection with the issuance of any such new Certificates shall be borne by
the purchaser thereof.
As used in this Section 6.01(b), the terms "Class", "Class A
Certificate", "Class A Trustee", ""Class B Certificate", "Class B Trust
Agreement", "Class B Trustee", "Class C-I Certificate" and "Class C-I Trust"
shall have the respective meanings assigned to such terms in the Intercreditor
Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any
sale of all or any part of the Equipment Notes made either under the power of
sale given under this Agreement or
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otherwise for the enforcement of this Agreement, the following shall be
applicable:
(1) Certificateholders and Trustee May Purchase Equipment
Notes. Any Certificateholder, the Trustee in its individual or any
other capacity or any other Person may bid for and purchase any of the
Equipment Notes, and upon compliance with the terms of sale, may hold,
retain, possess and dispose of such Equipment Notes in their own
absolute right without further accountability.
(2) Receipt of Trustee Shall Discharge Purchaser. The
receipt of the Trustee making such sale shall be a sufficient
discharge to any purchaser for his purchase money, and, after paying
such purchase money and receiving such receipt, such purchaser or its
personal representative or assigns shall not be obliged to see to the
application of such purchase money, or be in any way answerable for
any loss, misapplication or non- application thereof.
(3) Application of Moneys Received upon Sale. Any moneys
collected by the Trustee upon any sale made either under the power of
sale given by this Agreement or otherwise for the enforcement of this
Agreement shall be applied as provided in Section 4.02.
Section 6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit. If there shall be a failure to make payment of the
principal of, premium, if any, or interest on any Equipment Note, or if there
shall be any failure to pay Rent (as defined in the relevant Lease) under any
Lease when due and payable, then the Trustee, in its own name and as trustee of
an express trust, as holder of such Equipment Notes, to the extent permitted by
and in accordance with the terms of the Intercreditor Agreement and the
Financing Documents (subject to the rights of the applicable Owner Trustee or
Owner Participant to cure any such failure to pay principal of, premium, if
any, or interest on any Equipment Note or to pay Rent under any Lease in
accordance with the applicable Indenture), shall be entitled and empowered to
institute any suits, actions or proceedings at law, in equity or otherwise, for
the collection of the sums so due and unpaid on such Equipment Notes or under
such Lease and may prosecute any such claim or proceeding to judgment or final
decree with respect to the whole amount of any such sums so due and unpaid.
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Section 6.04. Control by Certificateholders. Subject to
Section 6.03 and the Intercreditor Agreement, the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Trust shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee with respect to the Trust or pursuant to the terms of the
Intercreditor Agreement, or exercising any trust or power conferred on the
Trustee under this Agreement or the Intercreditor Agreement, including any
right of the Trustee as Controlling Party under the Intercreditor Agreement or
as holder of the Equipment Notes, provided that
(1) such Direction shall not be in conflict with any rule
of law or with this Agreement and would not involve the Trustee in
personal liability or expense,
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the Certificateholders not
taking part in such Direction, and
(3) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such Direction.
Section 6.05. Waiver of Past Defaults. Subject to the
Intercreditor Agreement, the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust (i) may on behalf of all of the Certificateholders waive any past
Event of Default hereunder and its consequences or (ii) if the Trustee is the
Controlling Party, may direct the Trustee to instruct the applicable Loan
Trustee to waive any past Indenture Default under any Indenture and its
consequences, and thereby annul any Direction given by such Certificateholders
or the Trustee to such Loan Trustee with respect thereto, except a default:
(1) in the deposit of any Scheduled Payment or Special
Payment under Section 4.01 or in the distribution of any payment under
Section 4.02 on the Certificates, or
(2) in the payment of the principal of (premium, if any)
or interest on the Equipment Notes, or
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(3) in respect of a covenant or provision hereof which
under Article IX cannot be modified or amended without the consent of
each Certificateholder holding an Outstanding Certificate affected
thereby.
Upon any such waiver, such default shall cease to exist with
respect to the Certificates and any Event of Default arising therefrom shall be
deemed to have been cured for every purpose and any direction given by the
Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall
be annulled with respect thereto; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes
issued under the relevant Indenture to waive the corresponding Indenture
Default.
Section 6.06. Right of Certificateholders to Receive Payments
Not to Be Impaired. Anything in this Agreement to the contrary
notwithstanding, including, without limitation, Section 6.07 hereof, but
subject to the Intercreditor Agreement, the right of any Certificateholder to
receive distributions of payments required pursuant to Section 4.02 hereof on
the Certificates when due, or to institute suit for the enforcement of any such
payment on or after the applicable Regular Distribution Date or Special
Distribution Date, shall not be impaired or affected without the consent of
such Certificateholder.
Section 6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions. A Certificateholder shall not have the right to
institute any suit, action or proceeding at law or in equity or otherwise with
respect to this Agreement, for the appointment of a receiver or for the
enforcement of any other remedy under this Agreement, unless:
(1) such Certificateholder previously shall have given
written notice to the Trustee of a continuing Event of Default;
(2) Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than 25% of the
Trust shall have requested the Trustee in writing to institute such
action, suit or proceeding and shall have offered to the Trustee
indemnity as provided in Section 7.03(e);
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(3) the Trustee shall have refused or neglected to
institute such an action, suit or proceeding for 60 days after receipt
of such notice, request and offer of indemnity; and
(4) no direction inconsistent with such written request
shall have been given to the Trustee during such 60-day period by
Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in interest
in the Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on
any property subject thereto, or the rights of the Certificateholders or the
holders of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder or (iii) enforce
any right under this Agreement, except in the manner herein provided and for
the equal, ratable and common benefit of all the Certificateholders subject to
the provisions of this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given
hereunder to the Trustee or to any of the Certificateholders shall not be
exclusive of any other remedy or remedies, and every such remedy shall be
cumulative and in addition to every other remedy given hereunder or now or
hereafter given by statute, law, equity or otherwise.
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. (a)
Except during the continuance of an Event of Default, the Trustee undertakes to
perform such duties as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement against the
Trustee.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of its own affairs.
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(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the
effect of Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every
provision of this Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.
Section 7.02. Notice of Defaults. As promptly as practicable
after, and in any event within 90 days after, the occurrence of any default (as
such term is defined below) hereunder, the Trustee shall transmit by mail to
the Company, the Owner Trustees, the Owner Participants, the Loan Trustees and
the Certificateholders in accordance with Section 313(c) of the Trust Indenture
Act, notice of such default hereunder known to the Trustee, unless such default
shall have been cured or waived; provided, however, that, except in the case of
a default on the payment of the principal, premium, if any, or interest on any
Equipment Note held in the Trust, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee
or a trust committee of directors and/or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interests of
the Certificateholders. For the purpose of this Section, the term "default"
means any event that is, or after notice or lapse of time or both would become,
an Event of Default.
Section 7.03. Certain Rights of Trustee. Subject to the
provisions of Section 315 of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting in reliance upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture or other paper or document
believed by it to be
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genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a written description of the
subject matter thereof accompanied by an Officer's Certificate and an
Opinion of Counsel as provided in Section 1.02 of this Agreement;
(c) whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officer's
Certificate of the Company, any Owner Trustee or any Loan Trustee;
(d) the Trustee may consult with counsel and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement at the
Direction of any of the Certificateholders pursuant to this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the cost, expenses and
liabilities which might be incurred by it in compliance with such
Direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture or other paper or document;
(g) the Trustee may execute any of the trusts or powers
under this Agreement or perform any duties under this Agreement either
directly or by or through agents or attorneys, and the Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it under this Agreement;
(h) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith
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in accordance with the Direction of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust relating to the time,
method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement; and
(i) the Trustee shall not be required to expend or risk
its own funds in the performance of any of its duties under this
Agreement, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk is not reasonably
assured to it.
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, except
the certificates of authentication, shall not be taken as the statements of the
Trustee, and the Trustee assumes no responsibility for their correctness.
Subject to Section 7.15, the Trustee makes no representations as to the
validity or sufficiency of this Agreement, any Equipment Notes, the
Intercreditor Agreement, the Deposit Agreement, the Escrow Agreement, the
Certificates or any other Financing Document, except that the Trustee hereby
represents and warrants that this Agreement has been, and the Intercreditor
Agreement, the Registration Rights Agreement, the Note Purchase Agreement, the
Escrow Agreement and each Certificate will be, executed, authenticated and
delivered by one of its officers who is duly authorized to execute,
authenticate and deliver such document on its behalf.
Section 7.05. May Hold Certificates. The Trustee, any Paying
Agent, Registrar or any of their Affiliates or any other agent in their
respective individual or any other capacity may become the owner or pledgee of
Certificates and, subject to Sections 310(b) and 311 of the Trust Indenture
Act, if applicable, may otherwise deal with the Company, the Owner Trustees or
the Loan Trustees with the same rights it would have if it were not Trustee,
Paying Agent, Registrar or such other agent.
Section 7.06. Money Held in Trust. Money held by the Trustee
or the Paying Agent in trust hereunder need not be segregated from other funds
except to the extent required herein
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or by law and neither the Trustee nor the Paying Agent shall have any liability
for interest upon any such moneys except as provided for herein.
Section 7.07. Compensation and Reimbursement. The Company
agrees:
(1) to pay, or cause to be paid, to the Trustee from time
to time reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse, or cause to be reimbursed, the Trustee upon its request for
all reasonable out-of-pocket expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of
this Agreement (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence,
willful misconduct or bad faith or as may be incurred due to the
Trustee's breach of its representations and warranties set forth in
Section 7.15; and
(3) to indemnify, or cause to be indemnified, the Trustee
for, and to hold it harmless against, any loss, liability or expense
(other than for or with respect to any tax) incurred without
negligence, willful misconduct or bad faith, on its part, arising out
of or in connection with the acceptance or administration of this
Trust, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder, except for any such loss,
liability or expense incurred by reason of the Trustee's breach of its
representations and warranties set forth in Section 7.15; provided,
however, that the foregoing paragraph (3) shall cease to have any
further force or effect upon the execution and delivery by the Trustee
of any Participation Agreement.
With respect to paragraph (3) above, the Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate
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counsel with the consent of the Company and the Company will pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made, in settlement or otherwise, without its consent.
The Trustee shall be entitled to reimbursement from, and shall
have a lien prior to the Certificates upon, the Trust Property for any tax
incurred without negligence, bad faith or willful misconduct, on its part,
arising out of or in connection with the acceptance or administration of such
Trust (other than any tax attributable to the Trustee's compensation for
serving as such), including any costs and expenses incurred in contesting the
imposition of any such tax. If the Trustee reimburses itself from the Trust
Property of such Trust for any such tax, it will mail a brief report within 30
days setting forth the circumstances thereof to all Certificateholders as their
names and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There
shall at all times be a Trustee hereunder which shall be eligible to act as a
trustee under Section 310(a) of the Trust Indenture Act and shall have a
combined capital and surplus of at least $75,000,000 (or a combined capital and
surplus in excess of $5,000,000 and the obligations of which, whether now in
existence or hereafter incurred, are fully and unconditionally guaranteed by a
corporation organized and doing business under the laws of the United States,
any state or territory thereof or of the District of Columbia and having a
combined capital and surplus of at least $75,000,000). If such corporation
publishes reports of conditions at least annually, pursuant to law or to the
requirements of federal, state, territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section 7.08, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
conditions so published.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
Section 7.09. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no
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appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee under
Section 7.10.
(b) The Trustee may resign at any time as trustee by
giving prior written notice thereof to the Company, the Authorized Agents, the
Owner Trustees and the Loan Trustees. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Company, the Authorized
Agents, the Owner Trustees, the Loan Trustees and the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Direction
of the Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee and to the Company, the Owner Trustees and the Loan
Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310 of
the Trust Indenture Act, if applicable, after written request therefor
by the Company or by any Certificateholder who has been a bona fide
Certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section
7.08 and shall fail to resign after written request therefor by the
Company or by any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may, with the consent of the Owner
Participants, which consent may not be unreasonably withheld, remove the
Trustee or (ii) any Certificateholder who has been a bona fide
Certificateholder for at least six months may, on behalf of itself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
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(e) If a Responsible Officer of the Trustee shall obtain
actual knowledge of an Avoidable Tax which has been or is likely to be
asserted, the Trustee shall promptly notify the Company and shall, within 30
days of such notification, resign hereunder unless within such 30-day period
the Trustee shall have received notice that the Company has agreed to pay such
tax. The Company shall promptly appoint a successor Trustee in a jurisdiction
where there are no Avoidable Taxes.
(f) If the Trustee shall resign, be removed or become
incapable of acting or if a vacancy shall occur in the office of the Trustee
for any cause, the Company shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or other
occurrence of such vacancy, a successor Trustee shall be appointed by Direction
of the Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Company, the Owner Trustees, the Loan Trustees and the
retiring Trustee, and the Company approves such appointment, which approval
shall not be unreasonably withheld, then the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the successor
Trustee and supersede the successor Trustee appointed as provided above. If no
successor Trustee shall have been so appointed as provided above and accepted
appointment in the manner hereinafter provided, any Certificateholder who has
been a bona fide Certificateholder for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(g) The successor Trustee shall give notice of the
resignation and removal of the Trustee and appointment of the successor Trustee
by mailing written notice of such event by first-class mail, postage prepaid,
to the Certificateholders as their names and addresses appear in the Register.
Each notice shall include the name of such successor Trustee and the address of
its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute and deliver to the Company,
the Authorized Agents, the Owner Trustees and the Loan Trustees and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
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successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on request of the Company or the successor Trustee, such retiring Trustee
shall execute and deliver an instrument transferring to such successor Trustee
all such rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all Trust Property held
by such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for in Section 7.07. Upon request of any such successor Trustee, the
Company, the retiring Trustee and such successor Trustee shall execute and
deliver any and all instruments containing such provisions as shall be
necessary or desirable to transfer and confirm to, and for more fully and
certainly vesting in, such successor Trustee all such rights, powers and
trusts.
No institution shall accept its appointment as a Trustee
hereunder unless at the time of such acceptance such institution shall be
qualified and eligible under this Article VII.
Section 7.11. Merger, Conversion, Consolidation or Succession
to Business. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article VII, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Certificates shall have
been executed or authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such execution or authentication and deliver
the Certificates so executed or authenticated with the same effect as if such
successor Trustee had itself executed or authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at
all times be maintained an office or agency in the location set forth in
Section 12.03 where Certificates may be presented or surrendered for
registration of transfer or for exchange, and for payment thereof and where
notices and demands
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to or upon the Trustee in respect of such certificates or this Agreement may be
served; provided, however, that, if it shall be necessary that the Trustee
maintain an office or agency in another location (e.g., the Certificates shall
be represented by Definitive Certificates and shall be listed on a national
securities exchange), the Trustee will make all reasonable efforts to establish
such an office or agency. Written notice of the location of each such other
office or agency and of any change of location thereof shall be given by the
Trustee to the Company, the Owner Trustees, the Loan Trustees (in the case of
any Owner Trustee or Loan Trustee, at its address specified in the Financing
Documents or such other address as may be notified to the Trustee) and the
Certificateholders. In the event that no such office or agency shall be
maintained or no such notice of location or of change of location shall be
given, presentations and demands may be made and notices may be served at the
Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a Paying
Agent hereunder with respect to the Certificates. Each such Authorized Agent
shall be a bank or trust company, shall be a corporation organized and doing
business under the laws of the United States or any state, with a combined
capital and surplus of at least $75,000,000, or, if the Trustee shall be acting
as the Registrar or Paying Agent hereunder, a corporation having a combined
capital and surplus in excess of $5,000,000, the obligations of which are
guaranteed by a corporation organized and doing business under the laws of the
United States or any state, with a combined capital and surplus of at least
$75,000,000, and shall be authorized under such laws to exercise corporate
trust powers, subject to supervision by Federal or state authorities. The
Trustee shall initially be the Paying Agent and, as provided in Section 3.04,
Registrar hereunder with respect to the Certificates. Each Registrar shall
furnish to the Trustee, at stated intervals of not more than six months, and at
such other times as the Trustee may request in writing, a copy of the Register
maintained by such Registrar.
(c) Any corporation into which any Authorized Agent may
be merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any Authorized
Agent shall be a party, or any corporation succeeding to the corporate trust
business of any Authorized Agent, shall be the successor of such Authorized
Agent hereunder, if such successor corporation is otherwise eligible
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under this Section, without the execution or filing of any paper or any further
act on the part of the parties hereto or such Authorized Agent or such
successor corporation.
(d) Any Authorized Agent may at any time resign by giving
written notice of resignation to the Trustee, the Company, the Owner Trustees
and the Loan Trustees. The Company may, and at the request of the Trustee
shall, at any time terminate the agency of any Authorized Agent by giving
written notice of termination to such Authorized Agent and to the Trustee.
Upon the resignation or termination of an Authorized Agent or in case at any
time any such Authorized Agent shall cease to be eligible under this Section
(when, in either case, no other Authorized Agent performing the functions of
such Authorized Agent shall have been appointed), the Company shall promptly
appoint one or more qualified successor Authorized Agents, reasonably
satisfactory to the Trustee, to perform the functions of the Authorized Agent
which has resigned or whose agency has been terminated or who shall have ceased
to be eligible under this Section. The Company shall give written notice of
any such appointment made by it to the Trustee, the Owner Trustees and the Loan
Trustees; and in each case the Trustee shall mail notice of such appointment to
all Certificateholders as their names and addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid, from
time to time to each Authorized Agent reasonable compensation for its services
and to reimburse it for its reasonable expenses.
Section 7.13. Money for Certificate Payments to Be Held in
Trust. All moneys deposited with any Paying Agent for the purpose of any
payment on Certificates shall be deposited and held in trust for the benefit of
the Certificateholders entitled to such payment, subject to the provisions of
this Section. Moneys so deposited and held in trust shall constitute a
separate trust fund for the benefit of the Certificateholders with respect to
which such money was deposited.
The Trustee may at any time, for the purpose of obtaining the
satisfaction and discharge of this Agreement or for any other purpose, direct
any Paying Agent to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon
which such sums were held by such Paying Agent; and, upon such payment by any
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Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be
purchased by the Trust shall be issued in the name of the Subordination Agent
or its nominee and held by the Subordination Agent in trust for the benefit of
the Certificateholders, or, if not so held, the Subordination Agent or its
nominee shall be reflected as the owner of such Equipment Notes in the register
of the issuer of such Equipment Notes.
Section 7.15. Representations and Warranties of Trustee. The
Trustee hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation
organized and validly existing in good standing under the laws of the State of
Delaware;
(b) the Trustee has full power, authority and legal right
to execute, deliver, and perform this Agreement, the Intercreditor Agreement,
the Registration Rights Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Financing Documents to which it is a party and has taken all
necessary action to authorize the execution, delivery, and performance by it of
this Agreement, the Intercreditor Agreement, the Registration Rights Agreement,
the Escrow Agreement, the Note Purchase Agreement and the Financing Documents
to which it is a party;
(c) the execution, delivery and performance by the
Trustee of this Agreement, the Intercreditor Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Note Purchase Agreement and the Financing
Documents to which it is a party (i) will not violate any provision of United
States federal law or the law of the state of the United States where it is
located governing the banking and trust powers of the Trustee or any order,
writ, judgment, or decree of any court, arbitrator or governmental authority
applicable to the Trustee or any of its assets, (ii) will not violate any
provision of the articles of association or by-laws of the Trustee, or (iii)
will not violate any provision of, or constitute, with or without notice or
lapse of time, a default under, or result in the creation or imposition of any
lien on any properties included in the Trust Property pursuant to the
provisions of any mortgage, indenture, contract,
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agreement or other undertaking to which it is a party, which violation, default
or lien could reasonably be expected to have an adverse effect on the Trustee's
performance or ability to perform its duties hereunder or thereunder or on the
transactions contemplated herein or therein;
(d) the execution, delivery and performance by the
Trustee of this Agreement, the Intercreditor Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Note Purchase Agreement, and the Financing
Documents to which it is a party will not require the authorization, consent,
or approval of, the giving of notice to, the filing or registration with, or
the taking of any other action in respect of, any governmental authority or
agency of the United States or the state of the United States where it is
located regulating the banking and corporate trust activities of the Trustee;
and
(e) this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Note Purchase
Agreement, and the Financing Documents to which it is a party have been duly
executed and delivered by the Trustee and constitute the legal, valid, and
binding agreements of the Trustee, enforceable against it in accordance with
their respective terms, provided that enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and (ii) general principles of
equity.
Section 7.16. Withholding Taxes, Information Reporting. The
Trustee, as trustee of the grantor trust created by this Agreement, shall
exclude and withhold from each distribution of principal, premium, if any, and
interest and other amounts due under this Agreement or under the Certificates
any and all withholding taxes applicable thereto as required by law. In
addition, the Trustee shall remit such amounts as would be required by section
1446 of the Internal Revenue Code of 1986, as amended, if the Trust were
characterized as a partnership engaged in a U.S. trade or business for U.S.
federal income tax purposes and shall withhold such amounts from amounts
distributable to or for the benefit of Certificateholders or Investors that are
not United States persons within the meaning of section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended. In this regard, the Trustee shall
cause the appropriate withholding agent to withhold with respect to such
distributions in the manner contemplated by Section 10.04 of Revenue Procedure
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89-31 and Treasury Regulation 1.1445-8(b)(3)) by filing a notice with the
National Association of Securities Dealers, Inc. substantially in the form of
Exhibit E hereto on or before the date 10 days prior to the Record Date. The
Trustee shall mail such notice to the National Association of Securities
Dealers no later than the date than 15 days prior to the Record Date.
Investors that are not United States Persons agree to furnish a United States
taxpayer identification number ("TIN") to the Trustee and the Trustee shall
provide such TINs to the appropriate withholding agent. The Trustee agrees to
act as such withholding agent (except to the extent contemplated above with
respect to withholding amounts as if the Trust were characterized as a
partnership engaged in a U.S. trade or business for U.S. federal income tax
purposes) and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Certificates, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Certificateholders, that it will file any necessary withholding tax returns or
statements when due, and that, as promptly as possible after the payment
thereof, it will deliver to each such Certificateholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Certificateholders may reasonably request from
time to time. The Trustee agrees to file any other information reports as it
may be required to file under United States law. Each Certificateholder or
Investor that is not a United States person within the meaning of section
7701(a)(30) of the Internal Revenue Code, as amended, by its acceptance of a
Certificate or a beneficial interest therein, agrees to indemnify and hold
harmless the Trust and the Trustee from and against any improper failure to
withhold taxes from amounts payable to it or for its benefit, other than an
improper failure attributable to the gross negligence or willful misconduct of
the Trustee.
Section 7.17. Trustee's Liens. The Trustee in its individual
capacity agrees that it will at its own cost and expense promptly take any
action as may be necessary to duly discharge and satisfy in full any mortgage,
pledge, lien, charge, encumbrance, security interest or claim ("Trustee's
Liens") on or with respect to the Trust Property which is attributable to the
Trustee either (i) in its individual capacity and which is unrelated to the
transactions contemplated by this Agreement, the Intercreditor Agreement, the
Note Purchase Agreement or the Financing Documents, or (ii) as Trustee
hereunder or in its
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individual capacity and which arises out of acts or omissions which are not
contemplated by this Agreement.
Section 7.18. Preferential Collection of Claims. The Trustee
shall comply with Section 311(a) of the Trust Indenture Act, excluding any
creditor relationship listed in Section 311(b) of the Trust Indenture Act. If
the Trustee shall resign or be removed as Trustee, it shall be subject to
Section 311(a) of the Trust Indenture Act to the extent provided therein.
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders. The Company will furnish to the Trustee
within 15 days after each Record Date with respect to a Scheduled Payment, and
at such other times as the Trustee may request in writing within 30 days after
receipt by the Company of any such request, a list, in such form as the Trustee
may reasonably require, of all information in the possession or control of the
Company as to the names and addresses of the Certificateholders, in each case
as of a date not more than 15 days prior to the time such list is furnished;
provided, however, that so long as the Trustee is the sole Registrar, no such
list need be furnished; and provided further, however, that no such list need
be furnished for so long as a copy of the Register is being furnished to the
Trustee pursuant to Section 7.12.
Section 8.02. Preservation of Information; Communications to
Certificateholders. The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Certificateholders contained
in the most recent list furnished to the Trustee as provided in Section 7.12 or
Section 8.01, as the case may be, and the names and addresses of
Certificateholders received by the Trustee in its capacity as Registrar, if so
acting. The Trustee may destroy any list furnished to it as provided in
Section 7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.
Section 8.03. Reports by Trustee. Within 60 days after May
15 of each year commencing with the first full year following the issuance of
the Certificates, the Trustee shall transmit to the Certificateholders, as
provided in Section 313(c)
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of the Trust Indenture Act, a brief report dated as of such May 15, if required
by Section 313(a) of the Trust Indenture Act.
Section 8.04. Reports by the Company. The Company shall:
(a) file with the Trustee, within 30 days after the
Company is required to file the same with the SEC, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the SEC may from
time to time by rules and regulations prescribe) which the Company is
required to file with the SEC pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934, as amended; or, if the Company
is not required to file information, documents or reports pursuant to
either of such sections, then to file with the Trustee and the SEC, in
accordance with rules and regulations prescribed by the SEC, such of
the supplementary and periodic information, documents and reports
which may be required pursuant to section 13 of the Securities
Exchange Act of 1934, as amended, in respect of a security listed and
registered on a national securities exchange as may be prescribed in
such rules and regulations;
(b) during any period, prior to the consummation of the
Exchange Offer and during which the Shelf Registration Statement is
not in effect, in which the Company is not subject to Section 13(a),
13(c) or 15(d) under the Securities Exchange Act of 1934, make
available to any Holder of the Certificates in connection with any
sale thereof and any prospective purchaser of the Certificates from
such Holder, in each case upon request, the information specified in,
and meeting the requirements of, Rule 144A(d)(4) under the Securities
Act but only for so long as any of the Certificates remain outstanding
and are "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act and, in any event, only until the second
anniversary of the Issuance Date;
(c) file with the Trustee and the SEC, in accordance with
the rules and regulations prescribed by the SEC, such additional
information, documents and reports with respect to compliance by the
Company with the conditions and covenants provided for in this
Agreement, as may be required by such rules and regulations,
including, in the case of
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annual reports, if required by such rules and regulations,
certificates or opinions of independent public accountants, conforming
to the requirements of Section 1.02;
(d) transmit to all Certificateholders, in the manner and
to the extent provided in Section 313(c) of the Trust Indenture Act
such summaries of any information, documents and reports required to
be filed by the Company pursuant to subsections (a) and (c) of this
Section 8.04 as may be required by rules and regulations prescribed by
the SEC; and
(e) furnish to the Trustee, not less often than annually,
a brief certificate from the principal executive officer, principal
financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and
covenants under this Agreement (it being understood that for purposes
of this paragraph (e), such compliance shall be determined without
regard to any period of grace or requirement of notice provided under
this Agreement).
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders. Without the consent of the Certificateholders, the Company
may (but will not be required to), and the Trustee (subject to Section 9.03)
shall, at the Company's request, at any time and from time to time, enter into
one or more agreements supplemental hereto or, if applicable, to the
Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the
Deposit Agreement, the Registration Rights Agreement or any Liquidity Facility
in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to
the Company and the assumption by any such successor of the covenants
of the Company herein contained or of the Company's obligations under
the Note Purchase Agreement, the Registration Rights Agreement or any
Liquidity Facility; or
(2) to add to the covenants of the Company for the
benefit of the Certificateholders, or to surrender any right or power
conferred upon the Company in this Agreement, the
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Note Purchase Agreement, the Registration Rights Agreement or any
Liquidity Facility; or
(3) to correct or supplement any provision in this
Agreement, the Intercreditor Agreement, the Escrow Agreement, the
Deposit Agreement, the Note Purchase Agreement, the Registration
Rights Agreement or any Liquidity Facility which may be defective or
inconsistent with any other provision herein or therein or to cure any
ambiguity or correct any mistake or to modify any other provision with
respect to matters or questions arising under this Agreement, the
Escrow Agreement, the Deposit Agreement, the Note Purchase Agreement,
the Intercreditor Agreement, the Registration Rights Agreement or any
Liquidity Facility, provided that any such action shall not materially
adversely affect the interests of the Certificateholders; or
(4) to comply with any requirement of the SEC, any
applicable law, rules or regulations of any exchange or quotation
system on which the Certificates are listed, any regulatory body or
the Registration Rights Agreement to effectuate the Exchange Offer; or
(5) to modify, eliminate or add to the provisions of this
Agreement to such extent as shall be necessary to continue the
qualification of this Agreement (including any supplemental agreement)
under the Trust Indenture Act or under any similar Federal statute
hereafter enacted, and to add to this Agreement such other provisions
as may be expressly permitted by the Trust Indenture Act, excluding,
however, the provisions referred to in Section 316(a)(2) of the Trust
Indenture Act as in effect at the date as of which this instrument was
executed or any corresponding provision in any similar Federal statute
hereafter enacted; or
(6) to evidence and provide for the acceptance of
appointment under this Agreement by the Trustee of a successor Trustee
and to add to or change any of the provisions of this Agreement as
shall be necessary to provide for or facilitate the administration of
the Trust, pursuant to the requirements of Section 7.10; or
(7) to provide the information required under Section
7.12 and Section 12.03 as to the Trustee; or
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(8) to modify or eliminate provisions relating to the
transfer or exchange of Exchange Certificates or the Initial
Certificates upon consummation of the Exchange Offer (as defined in
the Registration Rights Agreement) or effectiveness of the Shelf
Registration Statement or the Exchange Offer Registration Statement;
provided, however, that no such supplemental agreement shall adversely affect
the status of any Trust as a grantor trust under Subpart E, Part I of
Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986,
as amended, for U.S. federal income tax purposes.
Section 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders holding
Certificates (including consents obtained in connection with a tender offer or
exchange offer for the Certificates) evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust, by Direction of
said Certificateholders delivered to the Company and the Trustee, the Company
may (with the consent of the Owner Trustees, if any, which consent shall not be
unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter
into an agreement or agreements for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
the Intercreditor Agreement, any Liquidity Facility, the Registration Rights
Agreement, the Escrow Agreement, the Deposit Agreement or the Note Purchase
Agreement to the extent applicable to such Certificateholders or of modifying
in any manner the rights and obligations of such Certificateholders under this
Agreement, the Intercreditor Agreement, any Liquidity Facility, the
Registration Rights Agreement, the Escrow Agreement, the Deposit Agreement or
the Note Purchase Agreement; provided, however, that no such agreement shall,
without the consent of the Certificateholder of each Outstanding Certificate
affected thereby:
(1) reduce in any manner the amount of, or delay the
timing of, any receipt by the Trustee (or, with respect to the
Deposits, the Certificateholders) of payments on the Equipment Notes
held in the Trust or on the Deposits or distributions that are
required to be made herein on any Certificate, or change any date of
payment on any Certificate, or change the place of payment where, or
the coin or currency in which, any Certificate is payable, or
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impair the right to institute suit for the enforcement of any such
payment or distribution on or after the Regular Distribution Date or
Special Distribution Date applicable thereto; or
(2) permit the disposition of any Equipment Note included
in the Trust Property except as permitted by this Agreement, or
otherwise deprive such Certificateholder of the benefit of the
ownership of the Equipment Notes in the Trust; or
(3) reduce the specified percentage of the aggregate
Fractional Undivided Interests of the Trust which is required for any
such supplemental agreement, or reduce such specified percentage
required for any waiver of compliance with certain provisions of this
Agreement or certain defaults hereunder and their consequences
provided for in this Agreement; or
(4) waive, amend or modify Section 2.4, 3.2 or 3.3 of the
Intercreditor Agreement in a manner adverse to the Certificateholders;
or
(5) modify any of the provisions of this Section 9.02 or
Section 6.05, except to increase any such percentage or to provide
that certain other provisions of this Agreement cannot be modified or
waived without the consent of the Certificateholder of each
Certificate affected thereby; or
(6) adversely affect the status of any Trust as a grantor
trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle
A of the Internal Revenue Code of 1986, as amended, for U.S. federal
income tax purposes.
It shall not be necessary for any Direction of
Certificateholders under this Section to approve the particular form of any
proposed supplemental agreement, but it shall be sufficient if such Direction
shall approve the substance thereof.
Section 9.03. Documents Affecting Immunity or Indemnity. If
in the opinion of the Trustee any document required to be executed by it
pursuant to the terms of Section 9.01 or 9.02 affects any interest, right,
duty, immunity or indemnity in favor of the Trustee under this Agreement, the
Trustee may in its discretion decline to execute such document.
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Section 9.04. Execution of Supplemental Agreements. In
executing, or accepting the additional trusts created by, any agreement
permitted by this Article or the modifications thereby of the trusts created by
this Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
Section 9.05. Effect of Supplemental Agreements. Upon the
execution of any agreement supplemental to this Agreement under this Article,
this Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Holder of a Certificate theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.06. Conformity with Trust Indenture Act. Every
supplemental agreement executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
Section 9.07. Reference in Certificates to Supplemental
Agreements. Certificates authenticated and delivered after the execution of
any supplemental agreement pursuant to this Article may bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
agreement; and, in such case, suitable notation may be made upon Outstanding
Certificates after proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to Indentures and
Financing Documents. In the event that the Trustee, as holder (or beneficial
owner through the Subordination Agent) of any Equipment Note in trust for the
benefit of the Certificateholders or as Controlling Party under the
Intercreditor Agreement, receives (directly or indirectly through the
Subordination Agent) a request for a consent to any amendment, modification,
waiver or supplement under any Indenture, any other Financing Document, any
Equipment Note or any other related document, the Trustee shall forthwith send
a notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder registered on the Register
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as of the date of such notice. The Trustee shall request from the
Certificateholders a Direction as to (a) whether or not to take or refrain from
taking (or direct the Subordination Agent to take or refrain from taking) any
action which a holder of such Equipment Note has the option to direct, (b)
whether or not to give or execute (or direct the Subordination Agent to give or
execute) any waivers, consents, amendments, modifications or supplements as a
holder of such Equipment Note or a Controlling Party and (c) how to vote (or
direct the Subordination Agent to vote) any Equipment Note if a vote has been
called for with respect thereto. Provided such a request for Certificateholder
Direction shall have been made, in directing any action or casting any vote or
giving any consent as the holder of any Equipment Note (or in directing the
Subordination Agent in any of the foregoing), (i) other than as Controlling
Party, the Trustee shall vote for or give consent to any such action with
respect to such Equipment Note in the same proportion as that of (A) the
aggregate face amounts of all Certificates actually voted in favor of or for
giving consent to such action by such Direction of Certificateholders to (B)
the aggregate face amount of all Outstanding Certificates and (ii) as
Controlling Party, the Trustee shall vote as directed in such Certificateholder
Direction by the Certificateholders evidencing a Fractional Undivided Interest
aggregating not less than a majority in interest in the Trust. For purposes of
the immediately preceding sentence, a Certificate shall have been "actually
voted" if the Holder of such Certificate has delivered to the Trustee an
instrument evidencing such Holder's consent to such Direction prior to two
Business Days before the Trustee directs such action or casts such vote or
gives such consent. Notwithstanding the foregoing, but subject to Section 6.04
and the Intercreditor Agreement, the Trustee may, in its own discretion and at
its own direction, consent and notify the relevant Loan Trustee of such consent
(or direct the Subordination Agent to consent and notify the Loan Trustee of
such consent) to any amendment, modification, waiver or supplement under the
relevant Indenture, any other Financing Document, any Equipment Note or any
other related document, if an Event of Default hereunder shall have occurred
and be continuing, or if such amendment, modification, waiver or supplement
will not materially adversely affect the interests of the Certificateholders.
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ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The respective
obligations and responsibilities of the Company and the Trustee with respect to
the Trust shall terminate upon the earlier of (A) the completion of the
assignment, transfer and discharge described in the first sentence of the
immediately following paragraph and (B) distribution to all Holders of
Certificates and the Trustee of all amounts required to be distributed to them
pursuant to this Agreement and the disposition of all property held as part of
the Trust Property; provided, however, that in no event shall the Trust
continue beyond one hundred ten (110) years following the date of the earliest
execution of this Trust Agreement.
Upon the earlier of (i) the first Business Day following March
31, 1998, or, if later, the fifth Business Day following the Delivery Period
Termination Date and (ii) the fifth Business Day following the date on which a
Triggering Event occurs (such date, the "Transfer Date"), or, if later, the
date on which all of the conditions set forth in the immediately following
sentence have been satisfied, the Trustee is hereby directed (subject only to
the immediately following sentence) to, and the Company shall direct the
institution that will serve as the Related Trustee under the Related Pass
Through Trust Agreement to, execute and deliver the Assignment and Assumption
Agreement, pursuant to which the Trustee shall assign, transfer and deliver all
of the Trustee's right, title and interest to the Trust Property to the Related
Trustee under the Related Pass Through Trust Agreement. The Trustee and the
Related Trustee shall execute and deliver the Assignment and Assumption
Agreement upon the satisfaction of the following conditions:
(i) The Trustee, the Related Trustee and each of the
Rating Agencies then rating the Certificates shall have received an
Officer's Certificate and an Opinion of Counsel dated the date of the
Assignment and Assumption Agreement and each satisfying the
requirements of Section 1.02, which Opinion of Counsel shall be
substantially to the effect set forth below and may be relied upon by
the Beneficiaries (as defined in the Assignment and Assumption
Agreement):
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(a) upon the execution and delivery thereof by the
parties thereto in accordance with the terms of this
Agreement and the Related Pass Through Trust
Agreement, the Assignment and Assumption Agreement
will constitute the valid and binding obligation of
each of the parties thereto enforceable against each
such party in accordance with its terms;
(b) upon the execution and delivery of the Assignment an
Assumption Agreement in accordance with the terms of
this Agreement and the Related Pass Through Trust
Agreement, each of the Certificates then Outstanding
is entitled to the benefits of the Related Pass
Through Trust Agreement;
(c) the Related Trust is not required to be registered as
an investment company under the Investment Company
Act of 1940, as amended;
(d) the Related Pass Through Trust Agreement constitutes
the valid and binding obligation of the Company
enforceable against the Company in accordance with
its terms; and
(e) neither the execution and delivery of the Assignment
and Assumption Agreement in accordance with the terms
of this Agreement and the Related Pass Through Trust
Agreement, nor the consummation by the Parties
thereto of the transactions contemplated to be
consummated thereunder on the date thereof, violate
any law or governmental rule or regulation of the
State of New York or the United States of America
known to such counsel to be applicable to the
transactions contemplated by the Assignment and
Assumption Agreement.
(ii) The Trustee and the Company shall have received (x) a
copy of the articles of incorporation and bylaws of the Related
Trustee certified as of the Transfer Date by the Secretary or
Assistant Secretary of such institution and (y) a copy of the filing
(including all attachments thereto) made by the institution serving as
the Related Trustee with the Office of the Superintendent, State of
New York Banking Department for the qualification of the Related
Trustee under section 131(3) of the New York Banking Law.
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Upon the execution of the Assignment and Assumption Agreement by the parties
thereto, the Trust shall be terminated, the Certificateholders shall receive
beneficial interests in the Related Trust in exchange for their interests in
the Trust equal to their respective beneficial interests in the Trust, and the
Outstanding Certificates representing Fractional Undivided Interests in the
Trust shall be deemed for all purposes of this Agreement and the Related Pass
Through Trust Agreement, without further signature or action of any party or
Certificateholder, to be certificates representing the same fractional
undivided interests in the Related Trust and its trust property. By acceptance
of its Certificate, each Certificateholder consents to such assignment,
transfer and delivery of the Trust Property to the trustee of the Related Trust
upon the execution and delivery of the Assignment and Assumption Agreement.
In connection with the occurrence of the event set forth in
clause (B) above, notice of such termination, specifying the Distribution Date
upon which the Certificateholders may surrender their Certificates to the
Trustee for payment of the final distribution and cancellation, shall be mailed
promptly by the Trustee to Certificateholders not earlier than the 60th day and
not later than the 20th day next preceding such final Distribution Date
specifying (A) the Distribution Date upon which the proposed final payment of
the Certificates will be made upon presentation and surrender of Certificates
at the office or agency of the Trustee therein specified, (B) the amount of any
such proposed final payment, and (C) that the Record Date otherwise applicable
to such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office or agency of the
Trustee therein specified. The Trustee shall give such notice to the Registrar
at the time such notice is given to Certificateholders. Upon presentation and
surrender of the Certificates in accordance with such notice, the Trustee shall
cause to be distributed to Certificateholders such final payments.
In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. No additional interest shall accrue on the Certificates after the
Distribution Date specified in the first written
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notice. In the event that any money held by the Trustee for the payment of
distributions on the Certificates shall remain unclaimed for two years (or such
lesser time as the Trustee shall be satisfied, after sixty days' notice from
the Company, is one month prior to the escheat period provided under applicable
law) after the final distribution date with respect thereto, the Trustee shall
pay to each Loan Trustee the appropriate amount of money relating to such Loan
Trustee and shall give written notice thereof to the related Owner Trustees,
the Owner Participants and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to terminate
this Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations, and liabilities of the
parties hereto or any of them.
Section 12.02. Certificates Nonassessable and Fully Paid.
Except as set forth in the last sentence of this Section 12.02,
Certificateholders shall not be personally liable for obligations of the Trust,
the Fractional Undivided Interests represented by the Certificates shall be
nonassessable for any losses or expenses of the Trust or for any reason
whatsoever, and Certificates, upon authentication thereof by the Trustee
pursuant to Section 3.03, are and shall be deemed fully paid. No
Certificateholder shall have any right (except as expressly provided herein) to
vote or in any manner otherwise control the operation and management of the
Trust Property, the Trust, or the obligations of the parties hereto, nor shall
anything set forth herein, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association. Neither the existence of the Trust nor
any provision herein is intended to or shall limit the liability the
Certificateholders would otherwise incur if the Certificateholders owned Trust
Property as co-owners, or incurred any obligations of the Trust, directly
rather than through the Trust.
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Section 12.03. Notices. (a) Unless otherwise specifically
provided herein, all notices required under the terms and provisions of this
Agreement shall be in English and in writing, and any such notice may be given
by United States mail, courier service or telecopy, and any such notice shall
be effective when delivered or received or, if mailed, three days after deposit
in the United States mail with proper postage for ordinary mail prepaid,
if to the Company, to:
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Attention: Chief Financial Officer and
General Counsel
Facsimile: (713) 523-2831
if to the Trustee, to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Department
Facsimile: (302) 651-8882
Telephone: (302) 651-8584
(b) The Company or the Trustee, by notice to the other,
may designate additional or different addresses for subsequent notices or
communications.
(c) Any notice or communication to Certificateholders
shall be mailed by first-class mail to the addresses for Certificateholders
shown on the Register kept by the Registrar. Failure so to mail a notice or
communication or any defect in such notice or communication shall not affect
its sufficiency with respect to other Certificateholders.
(d) If a notice or communication is mailed in the manner
provided above within the time prescribed, it is conclusively presumed to have
been duly given, whether or not the addressee receives it.
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(e) If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.
(f) Notwithstanding the foregoing, all communications or
notices to the Trustee shall be deemed to be given only when received by a
Responsible Officer of the Trustee.
(g) The Trustee shall promptly furnish the Company with a
copy of any demand, notice or written communication received by the Trustee
hereunder from any Certificateholder, Owner Trustee or Loan Trustee.
Section 12.04. Governing Law. THIS AGREEMENT HAS BEEN
DELIVERED IN THE STATE OF DELAWARE AND THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.05. Severability of Provisions. If any one or
more of the covenants, agreements, provisions or terms of this Agreement shall
be for any reason whatsoever held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or the
Trust, or of the Certificates or the rights of the Certificateholders thereof.
Section 12.06. Trust Indenture Act Controls. Upon the
occurrence of any Registration Event, this Agreement shall become subject to
the provisions of the Trust Indenture Act and shall, to the extent applicable,
be governed by such provisions. From and after any Registration Event, if any
provision of this Agreement limits, qualifies or conflicts with another
provision which is required to be included in this Agreement by the Trust
Indenture Act, the required provision shall control.
Section 12.07. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 12.08. Successors and Assigns. All covenants,
agreements, representations and warranties in this Agreement by
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the Trustee and the Company shall bind and, to the extent permitted hereby,
shall inure to the benefit of and be enforceable by their respective successors
and assigns, whether so expressed or not.
Section 12.09. Benefits of Agreement. Nothing in this
Agreement or in the Certificates, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, and the
Certificateholders, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 12.10. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate
shall not be a Business Day, then (notwithstanding any other provision of this
Agreement) payment need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on such
Regular Distribution Date or Special Distribution Date, and no interest shall
accrue during the intervening period.
Section 12.11. Counterparts. For the purpose of facilitating
the execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
Section 12.12. Intention of Parties. The parties hereto
intend that the Trust be classified for U.S. federal income tax purposes as a
grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue
Code of 1986, as amended, and not as a trust or association taxable as a
corporation or as a partnership. Each Certificateholder and Investor, by its
acceptance of its Certificate or a beneficial interest therein, agrees to treat
the Trust as a grantor trust for all U.S. federal, state and local income tax
purposes. The powers granted and obligations undertaken pursuant to this
Agreement shall be so construed so as to further such intent.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first written above.
CONTINENTAL AIRLINES,INC.
By:
-----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Trustee
By:
-----------------------------------
Name:
Title:
88
EXHIBIT A
FORM OF CERTIFICATE
REGISTERED
No._________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS
HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY AFFILIATE OF
ANY OF SUCH PERSONS RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE
EXCEPT (A) CONTINENTAL AIRLINES, INC., (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IF IT SHOULD
RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE IT WILL DELIVER TO EACH
PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS
HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY AFFILIATE OF
ANY OF SUCH PERSONS, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER
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OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.](1)
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A
PLAN TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR
(B) IT IS AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT
TO ACQUIRE THIS CERTIFICATE, AND THE CONDITIONS OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S. DEPARTMENT OF
LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN CONNECTION WITH
ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE
FOREGOING RESTRICTIONS.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH
TRUST AGREEMENT REFERRED TO HEREIN.(2)
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(1). Not to be included on the face of the Regulation S Global Certificate.
(2). To be included on the face of each Global Certificate.
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[GLOBAL CERTIFICATE](3)
CONTINENTAL AIRLINES PASS THROUGH TRUST, SERIES 1997-1C-II-O
7.420% Continental Airlines [Initial] [Exchange]
Pass Through Certificate,
Series 1997-1C-II-O
Final Maturity Date: October 1, 2008
evidencing a fractional undivided interest in a trust, 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
.______% 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, Series 1997-1C-II-O
(the "Trust") created pursuant to a Pass Through Trust Agreement, dated as of
March 21, 1997 (the "Agreement"), between Wilmington Trust Company (the
"Trustee") and Continental Airlines, Inc., a corporation incorporated under
Delaware law (the "Company"), a summary of certain of the pertinent provisions
of which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Certificates
designated as "7.420% Continental Airlines [Initial] [Exchange] Pass Through
Certificates, Series 1997-1C-II-O" (herein called the "Certificates"). This
Certificate is issued under and is subject to the terms, provisions, and
conditions of the Agreement. By virtue of its acceptance hereof the
Certificateholder of this Certificate assents to and agrees to be bound by the
provisions of the Agreement and the Intercreditor Agreement. The property of
the Trust includes an interest in certain Equipment Notes and all rights of the
Trust to receive payments under the Intercreditor Agreement and any Liquidity
Facility (the "Trust Property"). Each issue of the Equipment Notes is secured
by, among other things, a security interest in the Aircraft leased to or owned
by the Company.
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(3). To be included on the face of each Global Certificate.
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The Certificates represent fractional undivided interests in
the Trust and the Trust Property, and have no rights, benefits or interest in
respect of any assets or property other than the Trust Property.
Subject to and in accordance with the terms of the Agreement
and the Intercreditor Agreement, from and to the extent of funds then available
to the Trustee, there will be distributed on each April 1 and October 1 (a
"Regular Distribution Date"), commencing on October 1, 1997, 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 due on such Regular Distribution Date 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 Scheduled Payments. Subject to and in
accordance with the terms of the Agreement and the Intercreditor Agreement, in
the event that Special Payments on the Equipment Notes are received by the
Trustee, from funds then available to the Trustee, there shall be distributed
on the applicable Special Distribution Date, to the Person in whose name this
Certificate is registered at the close of business on the 15th day preceding
the Special Distribution Date, an amount in respect of such Special Payments on
the Equipment Notes, the receipt of which has been confirmed by the Trustee,
equal to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Special Payments so
received. If a Regular Distribution Date or Special Distribution Date is not a
Business Day, distribution shall be made on the immediately following Business
Day with the same force and effect as if made on such Regular Distribution Date
or Special Distribution Date and no interest shall accrue during the
intervening period. The Trustee shall mail notice of each Special Payment and
the Special Distribution Date therefor to the Certificateholder of this
Certificate.
The Certificates do not represent a direct obligation of, or
an obligation guaranteed by, or an interest in, the Company or the Trustee or
any of their affiliates. The Certificates are limited in right or payment, all
as more specifically set forth on the face hereof and in the Agreement. All
payments or distributions made to Certificateholders under the Agreement shall
be made only from the Trust Property and only to the extent that the Trustee
shall have sufficient income or
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proceeds from the Trust Property to make such payments in accordance with the
terms of the Agreement. Each Certificateholder of this Certificate, by its
acceptance hereof, agrees that it will look solely to the income and proceeds
from the Trust Property to the extent available for distribution to such
Certificateholder as provided in the Agreement. This Certificate does not
purport to summarize the Agreement and reference is made to the Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds, and duties evidenced hereby. A copy of the Agreement may be examined
during normal business hours at the principal office of the Trustee, and at
such other places, if any, designated by the Trustee, by any Certificateholder
upon request.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Certificateholders under the
Agreement at any time by the Company and the Trustee with the consent of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust. Any
such consent by the Certificateholder of this Certificate shall be conclusive
and binding on such Certificateholder and upon all future Certificateholders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Certificateholders
of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Register upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee in its capacity as
Registrar, or by any successor Registrar, in the Borough of Manhattan, the City
of New York, duly endorsed or accompanied by a written instrument of transfer
in form satisfactory to the Trustee and the Registrar duly executed by the
Certificateholder hereof or such Certificateholder's attorney duly authorized
in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in
the Trust will be issued to the designated transferee or transferees.
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[The Holder of this Certificate is entitled to the benefits of
the Exchange and Registration Rights Agreement, dated as of March 21, 1997,
among the Company, the Trustee and the Initial Purchasers named therein (the
"Registration Rights Agreement"). In the event that no Registration Event has
occurred on or prior to the 210th day after the date of the issuance of the
Certificates, the interest rate per annum payable in respect of the Equipment
Notes and the Deposits shall be increased by 0.50%, from and including the
210th day after the Issuance Date to but excluding (i) the earlier of the date
on which a Registration Event occurs and (ii) the date on which there cease to
be any Registrable Certificates (as defined in the Registration Rights
Agreement). In the event that the Shelf Registration Statement ceases to be
effective at any time during the period specified by Section 2(b)(B) of the
Registration Rights Agreement for more than 60 days, whether or not
consecutive, during any 12-month period, the interest rate per annum payable in
respect of the Equipment Notes and the Deposits shall be increased by 0.50%
from the 61st day of the applicable 12-month period such Shelf Registration
Statement ceases to be effective until such time as the Shelf Registration
Statement again becomes effective ( or, if earlier, the end of the period
specified by Section 2(b)(B) of the Registration Rights Agreement).](4)
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.
Under certain circumstances set forth in Section 11.01 of the
Agreement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the
Related Trust pursuant to the Assignment and Assumption Agreement. Upon the
effectiveness of such Assignment and Assumption Agreement (the "Transfer"), the
Trust shall be terminated, the Certificateholders shall receive beneficial
interests in the Related Trust in exchange for their interests in the Trust
equal to their respective beneficial interests in the Trust, the Certificates
representing Fractional
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(4). To be included only on each Initial Certificate.
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Undivided Interests in the Trust shall be deemed for all purposes of the
Agreement and the Related Pass Through Trust Agreement to be certificates
representing the same fractional undivided interests in the Related Trust and
its trust property. Each Certificateholder, by its acceptance of this
Certificate or a beneficial interest herein, agrees to be bound by the
Assignment and Assumption Agreement and subject to the terms of the Related
Pass Through Trust Agreement as a certificateholder thereunder. From and after
the Transfer, unless and to the extent the context otherwise requires,
references herein to the Trust, the Agreement and the Trustee shall constitute
references to the Related Trust, the Related Pass Through Trust Agreement and
trustee of the Related Trust, respectively.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of [$100,000](5) [$1,000](6)
Fractional Undivided Interest and integral multiples of $1,000 in excess
thereof except that one Certificate may be 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 by the Holder of a
sum sufficient to cover any tax or governmental charge payable in connection
therewith.
Each Certificateholder or Investor that is not a United States
person within the meaning of section 7701(a)(30) of the Internal Revenue Code,
as amended, by its acceptance of a Certificate or a beneficial interest
therein, agrees to indemnify and hold harmless the Trust and the Trustee from
and against any improper failure to withhold taxes from amounts payable to it
or for its benefit. 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.
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(5). To be included only on each Initial Certificate.
(6). To be included only on each Exchange Certificate.
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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.
UNTIL THE TRANSFER, THE AGREEMENT AND THIS CERTIFICATE SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. FROM AND AFTER THE TRANSFER,
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: ,1997
------------------
CONTINENTAL AIRLINES
PASS THROUGH TRUST, SERIES
1997-1C-II-O
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Trustee
By:
-----------------------------------
Name:
Title:
Attest:
- -----------------------------------
Authorized Signature
A-9
97
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred
to in the within-mentioned Agreement.
WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Trustee
By:
-----------------------------------
Authorized Officer
A-10
98
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby
sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- ----------------------------------
please print or typewrite name and address including zip code of assignee
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT REGULATION S GLOBAL AND
REGULATION S DEFINITIVE CERTIFICATES]
In connection with any transfer of this Certificate occurring
prior to the date that is the earlier of the date of an effective Registration
Statement or the date two years after the later of the original issuance of
this Certificate or the last date on which this Certificate was held by
Continental Airlines, Inc., the Trustee or any affiliate of such Persons, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[ ] (a) this Certificate is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as amended,
provided by Rule 144A thereunder.
A-11
99
or
[ ] (b) this Certificate is being transferred other than in accordance with
(a) above and documents are being furnished that comply with the conditions of
transfer set forth in this Certificate and the Agreement. If neither of the
foregoing boxes is checked, the Trustee or other Registrar shall not be
obligated to register this Certificate in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 3.06 of the Agreement shall have
been satisfied.
Date: [Name of Transferor]
---------------------
NOTE: The signature must correspond
with the name as written upon the face
of the within-mentioned instrument in
every particular, without alteration or
any change whatsoever.
Signature Guarantee:
--------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Certificate for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.
Date:
------------------------ -------------------------------------
NOTE: To be executed by an
executive officer.
A-12
100
EXHIBIT B
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS OF CERTIFICATES PURSUANT TO REGULATION S
[date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines Pass Through Trust (the "Trust"), Series
1997-1C-II-O, Continental Airlines Pass Through Certificates,
Series 1997-1C-II-O (the "Certificates")
Sirs:
In connection with our proposed sale of $_____ Fractional
Undivided Interest of the Certificates, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933, as amended, and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a
person in the United States;
(2) either (a) at the time the buy order was originated,
the transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States or (b) the transaction was executed in, on
or through the facilities of a designated off-shore securities market
and neither we nor any person acting on our behalf knows that the
transaction has been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act.
B-1
101
In addition, if the sale is made during a restricted period
and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may
be.
You and Continental Airlines, Inc. are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. Terms used in
this certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
B-2
102
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS OF CERTIFICATES TO
NON-QIB INSTITUTIONAL ACCREDITED INVESTORS
_______, ____
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
CONTINENTAL AIRLINES
PASS THROUGH TRUST, SERIES 1997-1C-II-O (the "Trust")
Pass Through Certificates, Series 1997-1C-II-O
(the "Certificates")
Ladies and Gentlemen:
In connection with our proposed purchase of U.S.
$[_____________] Fractional Undivided Interest of Certificates, we confirm
that:
1. We understand that any subsequent transfer of the
Certificates is subject to certain restrictions and conditions set forth in the
Trust Agreement, dated as of March 21, 1997, between Continental Airlines, Inc.
(the "Company") and Wilmington Trust Company (the "Trustee") relating to the
Certificates, and we agree to be bound by, and not to resell, pledge or
otherwise transfer the Certificates except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
2. We are purchasing Certificates having an aggregate
principal amount of not less than $100,000 and each account (if any) for which
we are purchasing Certificates is purchasing Certificates having an aggregate
principal amount of not less than $100,000.
C-1
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3. We understand that the Certificates have not been
registered under the Securities Act, that the Certificates are being sold to us
in a transaction that is exempt from the registration requirements of the
Securities Act and that the Certificates may not be offered or resold except as
permitted in the following sentence. We agree, on our own behalf and on behalf
of any accounts for which we are acting as hereinafter stated, that, if we
should sell any Certificates within two years after the later of the original
issuance of such Certificate and the last date on which such Certificate is
owned by the Company, the Trustee or any affiliate of any of such persons, we
will do so only (A) to the Company, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined therein), (C)
outside the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (D) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act or (E) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing any of the Certificates from us a notice advising such
purchaser that resales of the Certificates are restricted as stated herein.
4. We understand that, on any proposed resale of any
Certificates, we will be required to furnish to the Company and the Trustee
such certifications, legal opinions and other information as the Company and
the Trustee may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Certificates
purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our investment in the
Certificates, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investments.
6. We are acquiring the Certificates purchased by us for
our own account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion and not with a view to any distribution of the Certificates,
subject, nevertheless to the understanding that the disposition of our property
shall at all times be and remain within our control.
C-2
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You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:
-----------------------------------
Name:
Title:
C-3
105
EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
Continental Airlines Pass Through Trust, Series 1997-[1_]
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated ____________, 199_
(the "Agreement"), between Wilmington Trust Company, a Delaware banking
corporation ("WTC"), not in its individual capacity except as expressly
provided herein, but solely as trustee under the Pass Through Trust Agreement
dated as of March 21, 1997 (as amended, modified or otherwise supplemented from
time to time, the "Pass Through Trust Agreement") in respect of the Continental
Airlines Pass Through Trust, Series 1997-1_-O (the "Assignor"), and Wilmington
Trust Company, a Delaware banking corporation, not in its individual capacity
except as expressly provided herein, but solely as trustee under the Pass
Through Trust Agreement dated as of March 21, 1997 (the "New Pass Through
Trust Agreement") in respect of the Continental Airlines Pass Through Trust,
Series 1997-1_-S (the "Assignee").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to effect on the date
hereof (the "Transfer Date") (a) the transfer by the Assignor to the Assignee
of all of the right, title and interest of the Assignor in, under and with
respect to, among other things, the Trust Property and each of the documents
listed in Schedule I hereto (the "Scheduled Documents") and (b) the assumption
by the Assignee of the obligations of the Assignor (i) under the Scheduled
Documents and (ii) in respect of the Certificates issued under the Pass Through
Trust Agreement; and
WHEREAS, the Scheduled Documents permit such transfer upon
satisfaction of certain conditions heretofore or concurrently herewith being
complied with;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto do hereby
agree as follows (capitalized terms used herein without definition having the
meaning ascribed thereto in the Pass Through Trust Agreement):
1. Assignment. The Assignor does hereby sell, assign,
convey, transfer and set over unto the Assignee as of the
D-1
106
Transfer Date all of its present and future right, title and interest in, under
and with respect to the Trust Property and the Scheduled Documents and each
other contract, agreement, document or instrument relating to the Trust
Property or the Scheduled Documents (such other contracts, agreements,
documents or instruments, together with the Scheduled Documents, to be referred
to as the "Assigned Documents"), and any proceeds therefrom, together with all
documents and instruments evidencing any of such right, title and interest.
2. Assumption. The Assignee hereby assumes for the
benefit of the Assignor and each of the parties listed in Schedule II hereto
(collectively, the "Beneficiaries") all of the duties and obligations of the
Assignor, whenever accrued, pursuant to the Assigned Documents and hereby
confirms that it shall be deemed a party to each of the Assigned Documents to
which the Assignor is a party and shall be bound by all the terms thereof
(including the agreements and obligations of the Assignor set forth therein) as
if therein named as the Assignor. Further, the Assignee hereby assumes for the
benefit of the Assignor and the Beneficiaries all of the duties and obligations
of the Assignor under the Outstanding Certificates and hereby confirms that the
Certificates representing Fractional Undivided Interests under the Pass Through
Trust Agreement shall be deemed for all purposes of the Pass Through Trust
Agreement and the New Pass Through Trust Agreement to be certificates
representing the same fractional undivided interests under the New Pass Through
Trust Agreement equal to their respective beneficial interests in the trust
created under the Pass Through Trust Agreement.
3. Effectiveness. This Agreement shall be effective
upon the execution and delivery hereof by the parties hereto, and each
Certificateholder, by its acceptance of its Certificate or a beneficial
interest therein, agrees to be bound by the terms of this Agreement.
4. Payments. The Assignor hereby covenants and agrees
to pay over to the Assignee, if and when received following the Transfer Date,
any amounts (including any sums payable as interest in respect thereof) paid to
or for the benefit of the Assignor that, under Section 1 hereof, belong to the
Assignee.
5. Further Assurances. The Assignor shall, at any time
and from time to time, upon the request of the Assignee,
D-2
107
promptly and duly execute and deliver any and all such further instruments and
documents and take such further action as the Assignee may reasonably request
to obtain the full benefits of this Agreement and of the right and powers
herein granted. The Assignor agrees to deliver the Global Certificates, and
all Trust Property, if any, then in the physical possession of the Assignor, to
the Assignee.
6. Representations and Warranties. (a) The Assignee
represents and warrants to the Assignor and each of the Beneficiaries that:
(i) it has all requisite power and authority and legal
right to enter into and carry out the transactions contemplated hereby
and to carry out and perform the obligations of the "Pass Through
Trustee" under the Assigned Documents;
(ii) on and as of the date hereof, the representations and
warranties of the Assignee set forth in Section 7.15 of the New Pass
Through Trust Agreement are true and correct.
(b) The Assignor represents and warrants to the Assignee
that:
(i) it is duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the full
trust power, authority and legal right under the laws of the State of
Delaware and the United States pertaining to its trust and fiduciary
powers to execute and deliver this Agreement;
(ii) the execution and delivery by it of this Agreement
and the performance by it of its obligations hereunder have been duly
authorized by it and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or
other agreement to which it is a party or by which it is bound; and
(iii) this Agreement constitutes the legal, valid and
binding obligations of it enforceable against it in accordance with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity.
D-3
108
7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAWS.
8. Counterparts. This Agreement may be executed in any
number of counterparts, all of which together shall constitute a single
instrument. It shall not be necessary that any counterpart be signed by both
parties so long as each party shall sign at least one counterpart.
9. Third Party Beneficiaries. The Assignee hereby
agrees, for the benefit of the Beneficiaries, that its representations,
warranties and covenants contained herein are also intended to be for the
benefit of each Beneficiary, and each Beneficiary shall be deemed to be an
express third party beneficiary with respect thereto, entitled to enforce
directly and in its own name any rights or claims it may have against such
party as such beneficiary.
IN WITNESS WHEREOF, the parties hereto, through their
respective officers thereunto duly authorized, have duly executed this
Assignment as of the day and year first above written.
ASSIGNOR:
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
provided herein, but solely as trustee
under the Pass Through Trust Agreement
in respect of the Continental Airlines
Pass Through Trust 1997-1_-O
By:
-----------------------------------
Title:
D-4
109
ASSIGNEE:
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
provided herein, but solely as trustee
under the Pass Through Trust Agreement
in respect of the Continental Airlines
Pass Through Trust 1997-1_-S
By:
-----------------------------------
Title:
D-5
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Schedule I
Schedule of Assigned Documents
(1) Intercreditor Agreement dated as of March 21, 1997 among the Trustee,
the Other Trustees, the Liquidity Providers, the liquidity providers,
if any, relating to the Certificates issued under (and as defined in)
each of the Other Pass Through Trust Agreements and the Subordination
Agent.
(2) Registration Rights Agreement dated as of March 21, 1997 among the
Initial Purchasers, the Trustee, the Other Trustees, and the Company.
(3) Escrow and Paying Agent Agreement (Class __) dated as of March 21,
1997 among the Escrow Agent, the Initial Purchasers, the Trustee and
the Paying Agent.
(4) Note Purchase Agreement dated as of March 21, 1997 among the Company,
the Trustee, the Other Trustees, the Depositary, the Escrow Agent, the
Paying Agent and the Subordination Agent.
(5) Deposit Agreement (Class __) dated as of March 21, 1997 between the
Escrow Agent and the Depositary.
(6) Each of the Operative Agreements (as defined in the Participation
Agreement for each Aircraft) in effect as of the Transfer Date.
D-6
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Schedule II
Schedule of Beneficiaries
Wilmington Trust Company, not in its individual capacity but solely as
Subordination Agent.
Wilmington Trust Company, not in its individual capacity but solely as Paying
Agent
ABN AMRO Bank N.V., Chicago Branch, as Liquidity Provider
ING Bank N.V., as Liquidity Provider
Continental Airlines, Inc.
Credit Suisse First Boston Corporation, as Initial Purchaser
Morgan Stanley & Co. Incorporated, as Initial Purchaser
Chase Securities Inc., as Initial Purchaser
Goldman Sachs & Co., as Initial Purchaser
First Security Bank, National Association, as Escrow Agent
Each of the other parties to the Assigned Documents
D-7
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EXHIBIT E
FORM OF NOTICE TO DESIGNATE NOMINEE AS WITHHOLDING AGENT
(Treas. Reg. Section 1.1445-8(f); 17 C.F.R. 240.10b-17(b)(1))
[DATE]
National Association of
Securities Dealers, Inc.
Market Operations
80 Merritt Blvd.
Trumbull, CT 06611
Re: Continental Airlines Pass Through Certificates,
Series 1997-1C-II-O
Pass Through Certificates, Series 1997-1C-II-O
With respect to distributions to be made on [INSERT
DISTRIBUTION DATE] to holders of the above-referenced Pass Through
Certificates in the amount of $ ____ per $1,000 principal amount of
Certificate, we hereby designate the appropriate nominees to withhold from
amounts distributable to any non-U.S. Person such amounts as required by
section 1446 of the Internal Revenue Code of 1986, as amended. The term
"non-U.S. Person" means any person or entity that, for U.S. federal income tax
purposes, is not a "U.S. Person." "U.S. Person" for this purpose means a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized under the laws of the United States or any
political subdivision thereof, or an estate or trust, the income of which is
subject to U.S. federal income taxation regardless of its source. The date of
record for determining holders of Certificates entitled to receive the
distribution on [INSERT DISTRIBUTION DATE] is [INSERT RELATED RECORD DATE].
Very truly yours,
E-1
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EXHIBIT 4.9
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1997-1A)
Dated as of March 21, 1997
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines Pass Through Trust 1997-1A-O
as Borrower
and
ABN AMRO BANK N.V., CHICAGO BRANCH
as Liquidity Provider
- --------------------------------------------------------------------------------
Relating to
Continental Airlines Pass Through Trust 1997-1A-O
7.461% Continental Airlines Pass Through Certificates,
Series 1997-1A-O
2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT . . . . . . . . . . . . . . . 9
Section 2.01. The Advances . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.02. Making the Advances . . . . . . . . . . . . . . . . . . . . 9
Section 2.03. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.04. Adjustments or Termination of the Maximum Commitment . . 12
Section 2.05. Repayments of Interest Advances or the Final Advance . . 13
Section 2.06. Repayments of Provider Advances . . . . . . . . . . . . . 13
Section 2.07. Payments to the Liquidity Provider Under the
Intercreditor Agreement . . . . . . . . . . . . . . . . . 15
Section 2.08. Book Entries . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.09. Payments from Available Funds Only . . . . . . . . . . . 15
Section 2.10. Extension of the Expiry Date; Non-Extension Advance . . . 16
Section 3.01. Increased Costs . . . . . . . . . . . . . . . . . . . . . 17
Section 3.02. Capital Adequacy . . . . . . . . . . . . . . . . . . . . 18
Section 3.03. Payments Free of Deductions . . . . . . . . . . . . . . . 19
Section 3.04. Payments . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.05. Computations . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.06. Payment on Non-Business Days . . . . . . . . . . . . . . 20
Section 3.07. Interest . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.08. Replacement of Borrower . . . . . . . . . . . . . . . . . 22
i
3
Section 3.09. Funding Loss Indemnification . . . . . . . . . . . . . . 22
Section 3.10. Illegality . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IV
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 23
Section 4.01. Conditions Precedent to Effectiveness of Section
2.01 . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.02. Conditions Precedent to Borrowing . . . . . . . . . . . . 26
ARTICLE V
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.01. Affirmative Covenants of the Borrower . . . . . . . . . . 26
Section 5.02. Negative Covenants of the Borrower . . . . . . . . . . . 27
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . 27
Section 6.01. Liquidity Events of Default . . . . . . . . . . . . . . . 27
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . 27
Section 7.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . 29
Section 7.04. Further Assurances . . . . . . . . . . . . . . . . . . . 29
Section 7.05. Indemnification; Survival of Certain Provisions . . . . . 29
Section 7.06. Liability of the Liquidity Provider . . . . . . . . . . . 30
Section 7.07. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . 31
Section 7.08. Binding Effect; Participations . . . . . . . . . . . . . 32
Section 7.09. Severability . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.10. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 34
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4
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity . . . . . . . . . . . . . . . . . . . 34
Section 7.12. Execution in Counterparts . . . . . . . . . . . . . . . . 35
Section 7.13. Entirety . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.14. Headings . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.15. Transfer . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.16. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES . . . . 36
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
1
5
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of March 21, 1997,
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 ABN AMRO BANK N.V., a bank organized under the
laws of The Netherlands, acting through its Chicago Branch ("ABN AMRO" or the
"Liquidity Provider").
W I T N E 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.
6
2
"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 (w) with respect to any Unpaid
Advance or Applied Provider Advance that is a LIBOR Advance, 1.75%,
(x) with respect to any Unpaid Advance or Applied Provider Advance
that is a Base Rate Advance, 1.75%, (y) with respect to any Unapplied
Provider Advance that is a LIBOR Advance, .40% and (z) with respect to
any Unapplied Provider Advance that is a Base Rate 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).
"Assignment and Assumption Agreement" means the Assignment and
Assumption to be entered into between the Borrower and the trustee of
the Successor Trust, substantially in the form of Exhibit D to the
Class A Trust Agreement.
"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 or 1%).
"Base Rate Advance" means an Advance that bears interest at a
rate based upon the Base Rate.
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"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, Chicago, Illinois 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.
"Certificates of Deposit" has the meaning assigned to such
term in the Deposit Agreement.
"Deposits" has the meaning assigned to such terms in the
Deposit Agreement.
"Depositary" has the meaning assigned to such term in the
Deposit Agreement.
"Deposit Agreement" means the Deposit Agreement dated March
21, 1997 between First Security Bank, National Association, as Escrow
Agent and Credit Suisse First Boston, as Depositary, pertaining to the
Class A Certificates, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"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.
"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.
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"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 after the date hereof (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), 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.
"Expiry Date" means March 19, 1998, 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).
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"Interest Period" means, with respect to any LIBOR Advance,
each of the following periods:
(i) the period beginning on the third Business Day
following the Liquidity Provider's receipt of the
Notice of Borrowing for such LIBOR Advance (or, in
the case of an Unapplied Downgrade Advance, the
period beginning on the Expiry Date) and ending on
the next Regular Distribution Date; and
(ii) each subsequent period commencing on the last day
of the immediately preceding Interest Period and
ending on the next Regular Distribution Date;
provided, however, that (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 Regular Distribution Date following such conversion
(in the case of clause (y) above).
"Lending Office" means the lending office of the Liquidity
Provider presently located at Chicago, Illinois, 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)
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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 (provided that,
with respect to the period prior to the Delivery Period Expiry Date,
such Equipment Notes have an aggregate outstanding principal balance
in excess of $280,000,000) or (b) a Continental Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii)
the directors, officers, employees and agents of the Liquidity
Provider, and (iii) the successors and permitted assigns of the
persons described in clauses (i) and (ii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in
the recital of parties to this Agreement.
"Maximum Available Commitment" 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, for any day, the lesser of (x)
$26,628,638.33 and (y) the Stated Portion of the Required Amount on
such day.
"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.
"Offering Memorandum" means the Offering Memorandum dated
March 12, 1997 relating to the Certificates, as such Offering
Memorandum may be amended or supplemented.
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"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.
"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.
"Stated Portion" means 50%.
"Successor Trust" means Continental Airlines Pass Through
Trust 1997-1A-S.
"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
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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 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:
"ABN AMRO Fee Letter", "ABN AMRO Sub-Account", "Certificates", "Class
A Cash Collateral Account", "Class A Certificates", "Class A
Certificateholders", "Class A Trust", "Class A Trust Agreement",
"Class A Trustee", "Class B Certificates", "Class C-I Certificates",
"Class C-II Certificates", "Closing Date", "Continental", "Continental
Bankruptcy Event", "Controlling Party", "Corporate Trust Office",
"Delivery Period Expiry Date", "Distribution Date", "Downgraded
Facility", "Equipment Notes", "Financing Agreement", "Indenture",
"Initial Purchasers", "Investment Earnings", "Liquidity Facility",
"Loan Trustee", "Moody's", "Non-Extended Facility", "Note Purchase
Agreement", "Operative Agreements", "Performing Equipment Note",
"Person", "Pool Balance", "Purchase Agreement", "Rating Agency",
"Registration Rights Agreement", "Regular Distribution Date,
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"Replacement Liquidity Facility", "Responsible Officer", "Scheduled
Payment", "Special Payment", "Standard & Poor's", "Stated Interest
Rate", "Sub-Account", "Subordination Agent", "Taxes", "Threshold
Rating", "Transfer", "Trust Agreements, "Trustee" and "Written
Notice".
(c) Interest on Certificates. For all purposes of this
Agreement, each scheduled payment with respect to a Class A Certificate shall
be deemed to be comprised of interest and principal components, with the
interest component equalling interest accrued at the Stated Interest Rate for
the Class A Certificates from (i) the later of (x) the date of issuance thereof
and (y) the most recent but preceding Regular Distribution Date to (ii) the
Regular Distribution Date on which such Scheduled Payment is being made, such
interest to be considered payable in arrears on such Regular Distribution Date
and to be calculated and allocated in the same manner as interest on the Class
A Equipment Notes.
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 the Stated Portion 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
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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 in accordance
with said Section 3.6(d)) 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 ABN AMRO Sub-Account of the Class A Cash Collateral Account in
accordance with said Section 3.6(d).
(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 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
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 ABN AMRO Sub-Account of the Class A
Cash Collateral Account in accordance with said Section 3.6(c).
(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
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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 ABN AMRO Sub-Account of the Class A Cash Collateral Account
(in accordance with Section 3.6(i) of the Intercreditor Agreement).
(e) Each Borrowing shall be made on notice in writing (a
"Notice of Borrowing") in substantially the form required by Section 2.02(a),
2.02(b), 2.02(c) or 2.02(d), as the case may be, given by the Borrower to the
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, the Liquidity Provider shall, upon satisfaction of the conditions
precedent set forth in Section 4.02 with respect to a requested Borrowing,
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, make available to the Borrower, in
accordance with its payment instructions, in U.S. dollars and immediately
available funds, the amount of such 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, the Liquidity Provider shall, upon
satisfaction of the conditions precedent set forth in Section 4.02 with respect
to a requested Borrowing, 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, make available to the Borrower, in accordance with its payment
instructions, in U.S. dollars and in immediately available funds, the amount of
such Borrowing. Payments of proceeds of a Borrowing shall be made by wire
transfer of immediately available funds to the Borrower in accordance with such
wire transfer instructions as the Borrower shall furnish from time to time to
the Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(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
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Section 2.02(b), (c) or (d) hereof to fund the ABN AMRO Sub-Account of the
Class A Cash Collateral Account, the Liquidity Provider shall have no interest
in or rights to the Class A Cash Collateral Account, any Sub-Account thereof,
such Advance or any other amounts from time to time on deposit in the Class A
Cash Collateral Account or any Sub-Account thereof; provided that the foregoing
shall not affect or impair the obligations of the Subordination Agent to make
the distributions contemplated by Section 3.6(e) or (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 ABN AMRO Fee Letter.
Section 2.04. Adjustments or Termination of the Maximum
Commitment. (a) Automatic Adjustments. Promptly following each date on which
the Required Amount is (1) reduced as a result of a reduction in the Pool
Balance of the Class A Certificates or otherwise, (2) increased as a result of
an increase in the Stated Interest Rate or (3) subsequent to such an increase
described in clause (2), reduced pursuant to the definition of "Stated Interest
Rate", clause (y) of the definition of Maximum Commitment shall automatically
be reduced or increased, as the case may be, to an amount equal to the Stated
Portion of the Required Amount (as calculated by the Borrower). The Borrower
shall give notice of any such automatic reduction or increase 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 or increase 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
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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
ABN AMRO Sub-Account of the Class A Cash Collateral Account, invested and
withdrawn from the ABN AMRO Sub-Account of 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 ABN AMRO Sub-Account of 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,
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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 ABN AMRO Sub-Account of 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 the Stated Portion of 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 ABN AMRO Sub-Account
of 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 Stated
Portion of 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 ABN AMRO
Sub-Account of 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.
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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 such manner as it 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 Stated Portion of amounts that constitute Scheduled Payments, Special
Payments or payments under Section 9.1 of the Participation Agreements and
Sections 6 and 7 of the Note Purchase Agreement and only to the extent that the
Borrower shall have sufficient income or proceeds therefrom to enable the
Borrower to make payments in accordance with the terms hereof after giving
effect to the priority of payments provisions set forth in the Intercreditor
Agreement. The Liquidity Provider agrees that it will look solely to such
amounts to the extent available for distribution to it as provided in the
Intercreditor Agreement and this Agreement and that the Borrower, in its
individual capacity, is not personally liable to it for any amounts payable or
liability under this Agreement except as expressly provided in this Agreement,
the Intercreditor Agreement or any Participation Agreement. Amounts on deposit
in the ABN AMRO Sub-Account of 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. Amounts on deposit in the other Sub-Account in
respect of the Class A Certificates shall not be available to make payments
under this Agreement.
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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 Maturity 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. Subject to the ABN AMRO Fee
Letter, 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,
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state, municipal, or foreign laws or regulations (including Regulation D), or
the adoption or making after the date of this Agreement of any interpretations,
directives, or requirements applying to a class of banks including the
Liquidity Provider under any U.S. federal, state, municipal, or any foreign
laws or regulations (whether or not having the force of law) by any court,
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. Subject to the ABN AMRO
Fee Letter, 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)
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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 bank and of the amount
allocable to the Liquidity Provider's obligations to the Borrower hereunder
shall be prima facie evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. All payments
made by the Borrower under this Agreement shall be made free and clear of, and
without reduction for or on account of, any 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
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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 Forms 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.
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 ABN AMRO Bank
N.V., New York, NY, ABA # 026009580, Account Name: ABN AMRO Bank, N.V. -
Chicago Branch, Account # 651-0-010111-42, Reference: Continental Airlines,
Inc.
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
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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 ABN AMRO
Sub-Account of 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
ABN AMRO Sub-Account of 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
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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) may 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.
(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 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 ABN AMRO Sub-Account of the Class A Cash Collateral Account for such period
plus .35% per annum 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.
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(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
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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 Offering Memorandum 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
(together with, in the case of each such opinion, other than
the opinion of counsel
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for the Initial Purchasers, a letter from the counsel
rendering such opinion to the effect that the Liquidity
Provider is entitled to rely on such opinion as 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 (related to Leased Aircraft) or the corresponding
section of the Indentures (related to Owned Aircraft) to the
parties thereto and (ii) Continental agrees to allow the
Liquidity Provider to inspect Continental's books and records
regarding such transactions, and to discuss such transactions
with officers and employees of Continental; and
(viii) Such other documents, instruments, opinions
and approvals as the Liquidity Provider shall have reasonably
requested.
(b) The following 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.
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(c) The Liquidity Provider shall have received payment in
full of all fees and other sums required to be paid to or for the account of
the Liquidity Provider on or prior to the Effective Date.
(d) All conditions precedent to the issuance of the
Certificates under the Trust Agreements shall have been satisfied, all
conditions precedent to the effectiveness of the other Liquidity Facilities
shall have been satisfied, and all conditions precedent to the purchase of the
Certificates by the Initial Purchasers under the Purchase Agreement shall have
been satisfied (unless any of such conditions precedent shall have been waived
by the Initial Purchasers).
(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:
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(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 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) this Agreement to expire on the fifth Business Day after the date on
which such Termination Notice is received by the Borrower, (ii) the Borrower to
promptly request, and the Liquidity Provider to promptly make, a Final Advance
in accordance with Section 2.02(d) hereof and Section 3.6(i) of the
Intercreditor Agreement, (iii) all other
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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: ABN AMRO BANK N.V.
Aerospace Department
135 South LaSalle Street, #760
Chicago, IL 60674-9135
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Attention: Lukas van der Hoef
Telephone: (312) 904-2836
Telecopy: (312) 606-8428
with a copy to:
ABN AMRO Bank N.V.
135 South LaSalle St., #625
Chicago, IL 60674-9135
Attention: Loan Operations
Telephone: (312) 904-2836
Telecopy: (312) 606-8428
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.
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Section 7.05. Indemnification; Survival of Certain
Provisions. The Liquidity Provider shall be indemnified hereunder to the
extent and in the manner described in Section 10.1 of the Participation
Agreements and Section 6 of the Note Purchase Agreement. In addition, the
Borrower agrees to indemnify, protect, defend and hold harmless the Liquidity
Provider from, against and in respect of, and shall pay on demand, all Expenses
of any kind or nature whatsoever (other than any Expenses of the nature
described in Sections 3.01, 3.02 or 7.07 hereof or in the ABN AMRO 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 ABN AMRO Fee
Letter, the Intercreditor Agreement or any Financing Agreement; provided,
however, that the Borrower shall not be required to indemnify, protect, defend
and hold harmless any Liquidity Indemnitee in respect of any Expense of such
Liquidity Indemnitee (i) to the extent such Expense is attributable to the
gross negligence or willful misconduct of such Liquidity Indemnitee or any
other Liquidity Indemnitee, (ii) that is ordinary and usual operating overhead
expense, and (iii) to the extent such Expense is attributable to the failure by
such Liquidity Indemnitee or any other Liquidity Indemnitee to perform or
observe any agreement, covenant or condition on its part to be performed or
observed in this Agreement, the Intercreditor Agreement, the ABN AMRO Fee
Letter, the Tax Letter or any other Operative Document to which it is a party.
The indemnities contained in such Section 10.1, 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
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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, director 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
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otherwise affecting the application of funds in the Cash Collateral Accounts.
In addition, the Borrower shall pay any and all recording, stamp and other
similar taxes and fees payable or determined to be payable in connection with
the execution, delivery, filing and recording of this Agreement, any other
Operative Agreement and such other documents, and agrees to save the Liquidity
Provider harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes or fees.
Section 7.08. Binding Effect; Participations. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower and
the Liquidity Provider and their respective successors and assigns, except that
neither the Liquidity Provider (except as otherwise provided in this Section
7.08) nor (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(a) 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).
36
32
(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
transfer, the Transferee shall (i) represent to the Liquidity Provider (for the
benefit of the Liquidity Provider and the Borrower) either (A) that it is
incorporated under the laws of the United States or a state thereof or (B) that
under applicable law and treaties, no taxes will be required to be withheld
with respect to any payments to be made to such Transferee in respect of this
Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a
state thereof or (y) if it is not so incorporated, two copies of a properly
completed United States Internal Revenue Service Form 4224 or Form 1001, as
appropriate, or other applicable form, certificate or document prescribed by
the Internal Revenue Service certifying, in each case, such Transferee's
entitlement to a complete exemption from United States federal withholding tax
in respect to any and all payments to be made hereunder, and (iii) agree (for
the benefit of the Liquidity Provider and the Borrower) to provide the
Liquidity Provider and the Borrower a new Form 4224 or Form 1001, as
appropriate, (A) on or before the date that any such form expires or becomes
obsolete or (B) after the occurrence of any event requiring a change in the
most recent form previously delivered by it and prior to the immediately
following due date of any payment by the Borrower hereunder, certifying in the
case of a Form 1001 or Form 4224 that such Transferee is entitled to a complete
exemption from United States federal withholding tax on payments under this
Agreement. Unless the Borrower has received forms or other documents
reasonably satisfactory to it (and required by applicable law) indicating that
payments hereunder are not subject to United States federal withholding tax,
the Borrower will withhold taxes as required by law from such payments at the
applicable statutory rate.
(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
37
33
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
38
34
(iv) agrees that nothing herein shall affect the right
to effect service of process in any other manner
permitted by law or shall limit the right to sue in
any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR
IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it
may have from the jurisdiction of the courts of the United States or of any
State and waives any immunity any of its properties located in the United
States may have from attachment or execution upon a judgement entered by any
such court under the United States Foreign Sovereign Immunities Act of 1976 or
any similar successor legislation.
Section 7.12. Execution in Counterparts. This Agreement
may be executed in any number of counterparts and by different parties hereto
on separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13. Entirety. This Agreement, 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.
39
35
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. Transfer. The Liquidity Provider hereby
acknowledges and consents to the Transfer contemplated by the Assignment and
Assumption Agreement.
Section 7.16. 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.
40
36
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duty 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:
ABN AMRO BANK N.V.,
Chicago Branch,
as Liquidity Provider
By:
---------------------------------------
Name:
Title:
By:
---------------------------------------
Name:
Title:
41
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 ABN AMRO N.V.,
Chicago Branch (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1997-1A) dated as of March 21, 1997, 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 the Stated
Portion of the 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 pursuant to clause fifth of Section 3.2 of the
Intercreditor Agreement or clause seventh of Section 3.3 of the
Intercreditor Agreement, which Advance is requested to be made on
____________, ____.
(3) The amount of the Interest Advance requested hereby
(i) is $_______________.__, to be applied in respect of the payment of
the Stated Portion of the 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, the Class C-I
Certificates or the Class C-II Certificates, or interest on the Class
B Certificates, the Class C-I Certificates or the Class C-II
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, (v) does not include any amount of
interest which was due and payable on the Class A Certificates on
42
2
such Distribution Date but which remains unpaid due to the failure of
the Depositary to pay any amount of accrued interest on the
Certificates of Deposit on such Distribution Date and (vi) has not
been and is not the subject of a prior or contemporaneous Notice of
Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the
amount requested hereby, (a) the Borrower will apply the same in
accordance with the terms of Section 3.2 or 3.3 of the Intercreditor
Agreement, as the case may be, (b) no portion of such amount shall be
applied by the Borrower for any other purpose and (c) no portion of
such amount until so applied shall be commingled with other funds held
by the Borrower.
The Borrower hereby acknowledges that, pursuant to the
Liquidity Agreement, the making of the Interest Advance as requested by this
Notice of Borrowing shall automatically reduce, subject to reinstatement in
accordance with the terms of the Liquidity Agreement, the 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.
43
3
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:
44
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest Advance Notice of
Borrowing]
45
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 ABN AMRO
BANK N.V., Chicago Branch (the "Liquidity Provider"), with reference to the
Revolving Credit Agreement (1997-1A) dated as of March 21, 1997, 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 ABN AMRO Sub-Account 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 ABN AMRO Sub-Account 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,
the Class C-I Certificates or the Class C-II 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 ABN AMRO Sub-Account of the Class A Cash
46
2
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.
(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 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:
47
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
48
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 ABN AMRO
BANK N.V., Chicago Branch (the "Liquidity Provider"), with reference to the
Revolving Credit Agreement (1997-1A) dated as of March 21, 1997, 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 ABN AMRO Sub-Account 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 ABN AMRO Sub-Account of the Class A Cash Collateral
Account in accordance with Section 3.6(c) of the Intercreditor
Agreement, (ii) does not include any amount with respect to the
payment of the principal of, or premium on, the Class A Certificates,
or principal of, or interest or premium on, the Class B Certificates,
the Class C-I Certificates or the Class C-II 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.
49
(4) Upon receipt by or on behalf of the Borrower of the
amount requested hereby, (a) the Borrower will deposit such amount in
the ABN AMRO Sub-Account of 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.
(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 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:
50
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
51
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 ABN AMRO BANK N.V.,
Chicago Branch (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1997-1A) dated as of March _21, 1997, 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 ABN AMRO Sub-Account 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 ABN AMRO Sub-Account 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, the
Class C-I Certificates or the Class C-II 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.
52
2
(4) Upon receipt by or on behalf of the Borrower of the
amount requested hereby, (a) the Borrower will deposit such amount in
the ABN AMRO Sub-Account of 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:
53
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
54
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 March 21, 1997, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Continental
Airlines Pass Through Trust, 1997-1A-[O/S], as Borrower, and ABN AMRO BANK
N.V., Chicago 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.
55
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,
ABN AMRO BANK N.V.,
Chicago Branch, as Liquidity Provider
By:
-------------------------------
Name:
Title:
By:
---------------------------------------
Name:
Title:
cc: Wilmington Trust Company,
as Class A Trustee
56
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines Pass Through Trust, 1997-1A-[O/S], as
Borrower, and ABN AMRO BANK N.V., Chicago 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.
57
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:
1
EXHIBIT 4.10
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1997-1A)
Dated as of March 21, 1997
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines Pass Through Trust 1997-1A-O
as Borrower
and
ING Bank N.V.
as Liquidity Provider
- --------------------------------------------------------------------------------
Relating to
Continental Airlines Pass Through Trust 1997-1A-O
7.461% Continental Airlines Pass Through Certificates,
Series 1997-1A-O
2
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 . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.02. Making the Advances . . . . . . . . . . . . . . . . . . 9
Section 2.03. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.04. Adjustments or Termination of the Maximum Commitment . . 12
Section 2.05. Repayments of Interest Advances or the Final Advance . . 12
Section 2.06. Repayments of Provider Advances . . . . . . . . . . . . 13
Section 2.07. Payments to the Liquidity Provider Under the
Intercreditor Agreement . . . . . . . . . . . . . . . . 14
Section 2.08. Book Entries . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.09. Payments from Available Funds Only . . . . . . . . . . . 15
Section 2.10. Extension of the Expiry Date; Non-Extension Advance . . 16
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs . . . . . . . . . . . . . . . . . . . . 16
Section 3.02. Capital Adequacy . . . . . . . . . . . . . . . . . . . . 17
Section 3.03. Payments Free of Deductions . . . . . . . . . . . . . . 18
Section 3.04. Payments . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.05. Computations . . . . . . . . . . . . . . . . . . . . . . 20
(i)
3
TABLE OF CONTENTS
(Continued)
Section 3.06. Payment on Non-Business Days . . . . . . . . . . . . . . . 20
Section 3.07. Interest . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.08. Replacement of Borrower . . . . . . . . . . . . . . . . . 22
Section 3.09. Funding Loss Indemnification . . . . . . . . . . . . . . . 22
Section 3.10. Illegality . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01 . . 23
Section 4.02. Conditions Precedent to Borrowing . . . . . . . . . . . . 25
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower . . . . . . . . . . 26
Section 5.02. Negative Covenants of the Borrower . . . . . . . . . . . . 26
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default . . . . . . . . . . . . . . . 27
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . 27
Section 7.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . 29
Section 7.04. Further Assurances . . . . . . . . . . . . . . . . . . . 29
Section 7.05. Indemnification; Survival of Certain Provisions . . . . . 29
(ii)
4
TABLE OF CONTENTS
(Continued)
Section 7.06. Liability of the Liquidity Provider . . . . . . . . . 30
Section 7.07. Costs, Expenses and Taxes . . . . . . . . . . . . . . 31
Section 7.08. Binding Effect; Participations . . . . . . . . . . . . 31
Section 7.09. Severability . . . . . . . . . . . . . . . . . . . . . 34
Section 7.10. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 34
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity . . . . . . . . . . . . . . . . . . 34
Section 7.12. Execution in Counterparts . . . . . . . . . . . . . . 35
Section 7.13. Entirety . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.14. Headings . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.15. Transfer . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.16. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES . . . 36
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
(iii)
5
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of March 21, 1997,
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 ING BANK N.V., a bank organized under the laws of
The Netherlands ("ING" or the "Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class A Trust Agreement (such term
and all other capitalized terms used in these recitals having the meanings set
forth or referred to in Section 1.01), the Class A Trust is issuing the Class A
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment
of a portion of the interest on the Class A Certificates in accordance with
their terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
Advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. (a) Definitions. As
used in this Agreement and unless otherwise expressly indicated, or unless the
context clearly requires otherwise, the following capitalized terms shall have
the following respective meanings for all purposes of this Agreement:
"Additional Cost" has the meaning assigned to such term in
Section 3.01.
"Advance" means an Interest Advance, a Final Advance, a
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).
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"Applicable Margin" means (w) with respect to any Unpaid
Advance or Applied Provider Advance that is a LIBOR Advance, 1.75%,
(x) with respect to any Unpaid Advance or Applied Provider Advance
that is a Base Rate Advance, 1.75%, (y) with respect to any Unapplied
Provider Advance that is a LIBOR Advance, .40% and (z) with respect to
any Unapplied Provider Advance that is a Base Rate 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).
"Assignment and Assumption Agreement" means the Assignment and
Assumption to be entered into between the Borrower and the trustee of
the Successor Trust, substantially in the form of Exhibit D to the
Class A Trust Agreement.
"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 or 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.
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"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to close
in Houston, Texas, New York, New York, Amsterdam, The Netherlands or,
so long as any Class A Certificate is outstanding, the city and state
in which the Class A Trustee, 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.
"Certificates of Deposit" has the meaning assigned to such
term in the Deposit Agreement.
"Deposits" has the meaning assigned to such terms in the
Deposit Agreement.
"Depositary" has the meaning assigned to such term in the
Deposit Agreement.
"Deposit Agreement" means the Deposit Agreement dated March
21, 1997 between First Security Bank, National Association, as Escrow
Agent and Credit Suisse First Boston, as Depositary, pertaining to the
Class A Certificates, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"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.
"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.
"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
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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 after the date hereof (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), 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.
"Expiry Date" means March 19, 1998, 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 the Liquidity Provider's receipt of the
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Notice of Borrowing for such LIBOR Advance (or, in
the case of an Unapplied Downgrade Advance, the
period beginning on the Expiry Date) and ending on
the next Regular Distribution Date; and
(ii) each subsequent period commencing on the last day of
the immediately preceding Interest Period and ending
on the next Regular Distribution Date;
provided, however, that (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 Regular Distribution Date following such conversion (in the
case of clause (y) above).
"Lending Office" means the lending office of the Liquidity
Provider presently located at Amsterdam, The Netherlands, 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.
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6
"Liquidity Event of Default" means the occurrence of either
(a) the acceleration of all of the Equipment Notes (provided that,
with respect to the period prior to the Delivery Period Expiry Date,
such Equipment Notes have an aggregate outstanding principal balance
in excess of $280,000,000) or (b) a Continental Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii)
the directors, officers, employees and agents of the Liquidity
Provider, and (iii) the successors and permitted assigns of the
persons described in clauses (i) and (ii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in
the recital of parties to this Agreement.
"Maximum Available Commitment" 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, for any day, the lesser of (x)
$26,628,638.33 and (y) the Stated Portion of the Required Amount on
such day.
"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.
"Offering Memorandum" means the Offering Memorandum dated
March 12, 1997 relating to the Certificates, as such Offering
Memorandum may be amended or supplemented.
"Performing Note Deficiency" means any time that less than 65
% of the then aggregate outstanding principal amount of all Equipment
Notes are Performing Equipment Notes.
"Provider Advance" means a Downgrade Advance or a
Non-Extension Advance.
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"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.
"Stated Portion" means 50%.
"Successor Trust" means Continental Airlines Pass Through
Trust 1997-1A-S.
"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
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(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 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:
"Certificates", "Class A Cash Collateral Account", "Class A
Certificates", "Class A Certificateholders", "Class A Trust", "Class A
Trust Agreement", "Class A Trustee", "Class B Certificates", "Class
C-I Certificates", "Class C-II Certificates", "Closing Date",
"Continental", "Continental Bankruptcy Event", "Controlling Party",
"Corporate Trust Office", "Delivery Period Expiry Date", "Distribution
Date", "Downgraded Facility", "Equipment Notes", "Financing
Agreement", "Indenture", "ING Fee Letter", "ING Sub-Account", "Initial
Purchasers", "Investment Earnings", "Liquidity Facility", "Loan
Trustee", "Moody's", "Non-Extended Facility", "Note Purchase
Agreement", "Operative Agreements", "Performing Equipment Note",
"Person", "Pool Balance", "Purchase Agreement", "Rating Agency",
"Registration Rights Agreement", "Regular Distribution Date,
"Replacement Liquidity Facility", "Responsible Officer", "Scheduled
Payment", "Special Payment", "Standard & Poor's", "Stated Interest
Rate", "Sub-Account", "Subordination Agent", "Taxes", "Threshold
Rating", "Transfer", "Trust Agreements, "Trustee" and "Written
Notice".
(c) Interest on Certificates. For all purposes of this
Agreement, each scheduled payment with respect to a Class A Certificate shall be
deemed to be comprised of
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interest and principal components, with the interest component equalling
interest accrued at the Stated Interest Rate for the Class A Certificates from
(i) the later of (x) the date of issuance thereof and (y) the most recent but
preceding Regular Distribution Date to (ii) the Regular Distribution Date on
which such Scheduled Payment is being made, such interest to be considered
payable in arrears on such Regular Distribution Date and to be calculated and
allocated in the same manner as interest on the Class A Equipment Notes.
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 the Stated Portion 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
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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 in accordance
with said Section 3.6(d)) 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 ING Sub-Account of the Class A Cash Collateral Account in accordance
with said Section 3.6(d).
(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 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
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 ING Sub-Account of the Class A Cash
Collateral Account in accordance with said Section 3.6(c).
(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 ING Sub-Account of the Class A Cash Collateral Account (in
accordance with Section 3.6(i) of the Intercreditor Agreement).
(e) Each Borrowing shall be made on notice in writing (a
"Notice of Borrowing") in substantially the form required by Section 2.02(a),
2.02(b), 2.02(c) or 2.02(d), as the case may be, given by the Borrower to the
Liquidity Provider. If a Notice of Borrowing is delivered by the Borrower in
respect of any
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Borrowing no later than 12:00 Noon (New York City time) on a Business Day, the
Liquidity Provider shall, upon satisfaction of the conditions precedent set
forth in Section 4.02 with respect to a requested Borrowing, 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, make available to the Borrower, in accordance with
its payment instructions, in U.S. dollars and immediately available funds, the
amount of such 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, the Liquidity Provider shall, upon satisfaction of the conditions
precedent set forth in Section 4.02 with respect to a requested Borrowing,
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, make
available to the Borrower, in accordance with its payment instructions, in U.S.
dollars and in immediately available funds, the amount of such Borrowing.
Payments of proceeds of a Borrowing shall be made by wire transfer of
immediately available funds to the Borrower in accordance with such wire
transfer instructions as the Borrower shall furnish from time to time to the
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(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 ING Sub-Account of the Class A Cash Collateral Account, the Liquidity
Provider shall have no interest in or rights to the Class A Cash Collateral
Account, any Sub-Account thereof, such Advance or any other amounts from time
to time on deposit in the Class A Cash Collateral Account or any Sub-Account
thereof; provided that the foregoing shall not affect or impair the obligations
of the Subordination Agent to make the distributions contemplated by Section
3.6(e) or (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
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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 ING Fee Letter.
Section 2.04. Adjustments or Termination of the Maximum
Commitment. (a) Automatic Adjustments. Promptly following each date on which
the Required Amount is (1) reduced as a result of a reduction in the Pool
Balance of the Class A Certificates or otherwise, (2) increased as a result of
an increase in the Stated Interest Rate or (3) subsequent to such an increase
described in clause (2), reduced pursuant to the definition of "Stated Interest
Rate", clause (y) of the definition of Maximum Commitment shall automatically
be reduced or increased, as the case may be, to an amount equal to the Stated
Portion of the Required Amount (as calculated by the Borrower). The Borrower
shall give notice of any such automatic reduction or increase 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 or increase 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
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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
ING Sub-Account of the Class A Cash Collateral Account, invested and withdrawn
from the ING Sub-Account of 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 ING Sub-Account of 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
ING Sub-Account of the Class A Cash Collateral Account on
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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 the Stated Portion of 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 ING Sub-Account of 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 Stated
Portion of 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 ING
Sub-Account of 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 such manner as it shall deem
appropriate.
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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 Stated Portion of amounts that constitute Scheduled Payments, Special
Payments or payments under Section 9.1 of the Participation Agreements and
Sections 6 and 7 of the Note Purchase Agreement and only to the extent that the
Borrower shall have sufficient income or proceeds therefrom to enable the
Borrower to make payments in accordance with the terms hereof after giving
effect to the priority of payments provisions set forth in the Intercreditor
Agreement. The Liquidity Provider agrees that it will look solely to such
amounts to the extent available for distribution to it as provided in the
Intercreditor Agreement and this Agreement and that the Borrower, in its
individual capacity, is not personally liable to it for any amounts payable or
liability under this Agreement except as expressly provided in this Agreement,
the Intercreditor Agreement or any Participation Agreement. Amounts on deposit
in the ING Sub-Account of 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. Amounts on deposit in the other Sub-Account in
respect of the Class A Certificates shall not be available to make payments
under this Agreement.
Section 2.10. Extension of the Expiry Date; Non-Extension
Advance. No earlier than the 60th day and no later than the 40th day prior to
the then effective Expiry Date (unless such Expiry Date is on or after the date
that is 15 days after the Final Maturity 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
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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. Subject to the ING Fee
Letter, 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), 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
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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. Subject to the ING Fee
Letter, 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
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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 bank and of the amount
allocable to the Liquidity Provider's obligations to the Borrower hereunder
shall be prima facie evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. (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
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Revenue Service Forms 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 Northern Trust
Company of New York, One World Trade Center, Suite 3941, New York, New York
10048, Account No. 105981-20010, Account Name: ING Lease (Ireland) B.V., as
agent for ING Bank N.V.
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.
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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 ING
Sub-Account of 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
ING Sub-Account of 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
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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) may 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.
(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 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 ING Sub-Account of the Class A Cash Collateral Account for such period plus
.35% per annum 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.
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(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
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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 Offering Memorandum 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
(together with, in the case of each such opinion, other than
the opinion of counsel for the Initial Purchasers, a letter
from the counsel rendering such opinion to the effect that the
Liquidity Provider is entitled to rely on such opinion as of
its date as if it were addressed to the Liquidity Provider);
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(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 (related to Leased Aircraft) or the corresponding
section of the Indentures (related to Owned Aircraft) to the
parties thereto and (ii) Continental agrees to allow the
Liquidity Provider to inspect Continental's books and records
regarding such transactions, and to discuss such transactions
with officers and employees of Continental; and
(viii) Such other documents, instruments, opinions
and approvals as the Liquidity Provider shall have reasonably
requested.
(b) The following 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.
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(d) All conditions precedent to the issuance of the
Certificates under the Trust Agreements shall have been satisfied, all
conditions precedent to the effectiveness of the other Liquidity
Facilities shall have been satisfied, and all conditions precedent to
the purchase of the Certificates by the Initial Purchasers under the
Purchase Agreement shall have been satisfied (unless any of such
conditions precedent shall have been waived by the Initial
Purchasers).
(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.
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(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 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) this Agreement to expire on the fifth Business Day after the date on
which such Termination Notice is received by the Borrower, (ii) the Borrower to
promptly request, and the Liquidity Provider to promptly make, a Final Advance
in accordance with Section 2.02(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.
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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: ING Bank N.V.
Department of Bankgarantie Zaken -
Juridische Zaken
Location code HG 01.06
P.O. Box 1800
1000 B.V. Amsterdam
by courier:
Amsterdamse Poort
Bijlmer plein 888
1102 MG Amsterdam
The Netherlands
Telephone: 011-31-20-652-3260
Telecopy: 011-31-20-652-3235
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with a copy to:
ING Lease (Ireland) B.V.
49 St. Stephen's Green
Dublin 2, Ireland
Telephone: 011-353-1-662-2211
Telecopy: 011-353-1-662-2240
or, as to each of the foregoing, at such other address as shall be designated
by such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.03. No Waiver; Remedies. No failure on the part of
the Liquidity Provider to exercise, and no delay in exercising, any right under
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 7.04. Further Assurances. The Borrower agrees to do
such further acts and things and to execute and deliver to the Liquidity
Provider such additional assignments, agreements, powers and instruments as the
Liquidity Provider may reasonably require or deem advisable to carry into
effect the purposes of this Agreement and the other Operative Agreements or to
better assure and confirm unto the Liquidity Provider its rights, powers and
remedies hereunder and under the other Operative Agreements.
Section 7.05. Indemnification; Survival of Certain
Provisions. The Liquidity Provider shall be indemnified hereunder to the
extent and in the manner described in Section 10.1 of the Participation
Agreements and Section 6 of the Note Purchase Agreement. In addition, the
Borrower agrees to indemnify, protect, defend and hold harmless the Liquidity
33
29
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 ING 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 ING Fee Letter,
the Intercreditor Agreement or any Financing Agreement; provided, however, that
the Borrower shall not be required to indemnify, protect, defend and hold
harmless any Liquidity Indemnitee in respect of any Expense of such Liquidity
Indemnitee (i) to the extent such Expense is attributable to the gross
negligence or willful misconduct of such Liquidity Indemnitee or any other
Liquidity Indemnitee, (ii) that is ordinary and usual operating overhead
expense, and (iii) to the extent such Expense is attributable to the failure by
such Liquidity Indemnitee or any other Liquidity Indemnitee to perform or
observe any agreement, covenant or condition on its part to be performed or
observed in this Agreement, the Intercreditor Agreement, the ING Fee Letter,
the Tax Letter or any other Operative Document to which it is a party. The
indemnities contained in such Section 10.1, 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
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30
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, director 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 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.
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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(a) 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
transfer, the Transferee shall (i) represent to the Liquidity Provider (for the
benefit of the Liquidity Provider and the Borrower) either (A) that it is
incorporated under the laws of the United States or a state thereof or (B) that
under applicable law and treaties, no taxes will be required to be withheld
with respect to any
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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.
(d) Notwithstanding the other provisions of this Section
7.08, if at any time after the date hereof the Borrower shall withhold taxes as
required by law from any payments made to the Liquidity Provider, the Liquidity
Provider may assign all (but not less than all) of its rights and obligations
under this Agreement to the New York Branch of ING Bank N.V. ( the "ING
37
33
Transferee"); provided, that it shall be a condition to any such transfer that
(i) the ING Transferee enters into an agreement in form and substance
reasonably satisfactory to the Borrower pursuant to which the ING Transferee
assumes all of the obligations of the Liquidity Provider hereunder, under the
Intercreditor Agreement, the ING Fee Letter and the Tax Letter, (ii) the ING
Transferee delivers an opinion to the Borrower and each of the Rating Agencies
in form and substance reasonably satisfactory to the Borrower opining that this
Agreement, the Intercreditor Agreement, the ING Fee Letter and the Tax Letter
are enforceable obligations of the ING Transferee, (iii) the Liquidity Provider
shall have delivered to the Borrower a Ratings Confirmation with respect to
such transfer from each Rating Agency, (iv) the ING Transferee shall satisfy
each of the requirements in respect of a Transferee set forth in Section
7.08(b) and (v) the Liquidity Provider shall pay all fees and expenses
(including, without limitation, legal fees and disbursements) of the Borrower
in connection with such transfer. Upon the satisfaction of the conditions set
forth in this Section 7.08(d), the ING Transferee shall be deemed to be the
Liquidity Provider with the rights and obligations of the Liquidity Provider
hereunder and under the other Operative Agreements.
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;
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34
(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.
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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. Transfer. The Liquidity Provider hereby
acknowledges and consents to the Transfer contemplated by the Assignment and
Assumption Agreement.
Section 7.16. 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 duty 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
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By:
------------------------------------
Name:
Title:
ING BANK N.V.,
as Liquidity Provider
By:
------------------------------------
Name:
Title:
41
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 ING BANK N.V. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1997-1A) dated as of March 21, 1997, 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 the Stated
Portion of the 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 pursuant to clause fifth of Section 3.2 of the
Intercreditor Agreement or clause seventh of Section 3.3 of the
Intercreditor Agreement, which Advance is requested to be made on
____________, ____.
(3) The amount of the Interest Advance requested hereby
(i) is $_______________.__, to be applied in respect of the payment of
the Stated Portion of the 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, the Class C-I
Certificates or the Class C-II Certificates, or interest on the Class
B Certificates, the Class C-I Certificates or the Class C-II
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, (v) does not include any amount of
interest which was due and payable on the Class A Certificates on such
Distribution Date but which remains unpaid due to the
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failure of the Depositary to pay any amount of accrued interest on the
Certificates of Deposit on such Distribution Date and (vi) has not
been and is not the subject of a prior or contemporaneous Notice of
Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the
amount requested hereby, (a) the Borrower will apply the same in
accordance with the terms of Section 3.2 or 3.3 of the Intercreditor
Agreement, as the case may be, (b) no portion of such amount shall be
applied by the Borrower for any other purpose and (c) no portion of
such amount until so applied shall be commingled with other funds held
by the Borrower.
The Borrower hereby acknowledges that, pursuant to the
Liquidity Agreement, the making of the Interest Advance as requested by this
Notice of Borrowing shall automatically reduce, subject to reinstatement in
accordance with the terms of the Liquidity Agreement, the 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.
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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:
44
I-40
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest Advance Notice of
Borrowing]
45
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 ING BANK
N.V. (the "Liquidity Provider"), with reference to the Revolving Credit
Agreement (1997-1A) dated as of March 21, 1997, 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 ING Sub-Account 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 ING Sub-Account 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, the Class C-I
Certificates or the Class C-II 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 ING Sub-Account of the Class A Cash Collateral Account and apply
the same in accordance with the
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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.
(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 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:
47
II-43
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with Non-Extension Advance Notice of
Borrowing]
48
III-44
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 ING BANK
N.V. (the "Liquidity Provider"), with reference to the Revolving Credit
Agreement (1997-1A) dated as of March 21, 1997, 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 ING Sub-Account 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 ING Sub-Account of the Class A Cash Collateral Account
in accordance with Section 3.6(c) of the Intercreditor Agreement, (ii)
does not include any amount with respect to the payment of the
principal of, or premium on, the Class A Certificates, or principal
of, or interest or premium on, the Class B Certificates, the Class C-I
Certificates or the Class C-II 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
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III-45
such amount in the ING Sub-Account of 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.
(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 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:
50
III-46
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with Downgrade Advance Notice of
Borrowing]
51
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 ING BANK N.V. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1997-1A) dated as of March 21, 1997, 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 ING Sub-Account 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 ING Sub-Account 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, the Class C-I
Certificates or the Class C-II 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 ING Sub-Account of the Class A Cash
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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:
53
IV-49
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Final Advance Notice of
Borrowing]
54
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 March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as agent and trustee
for the Continental Airlines Pass Through Trust, 1997-1A-[O/S], as
Borrower, and ING BANK N.V. (the "Liquidity Agreement")
- --------------------------------------------------------
Ladies and Gentlemen:
You are hereby notified that pursuant to Section 6.01 of the
Liquidity Agreement, by reason of the occurrence of a Liquidity Event of
Default and 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.
55
IV-51
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,
ING BANK N.V.,
as Liquidity Provider
By:
-----------------------------------
Name:
Title:
cc: Wilmington Trust Company,
as Class A Trustee
56
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as agent and trustee
for the Continental Airlines Pass Through Trust, 1997-1A-[O/S], as
Borrower, and ING BANK N.V. (the "Liquidity Agreement")
- ----------------------------------------------------
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to:
-------------------------------
[Name of Transferee]
-------------------------------
[Address of Transferee]
all rights 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.
57
IV-53
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:
1
EXHIBIT 4.11
- -------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1997-1B)
Dated as of March 21, 1997
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines Pass Through Trust 1997-1B-O
as Borrower
and
ABN AMRO BANK N.V., CHICAGO BRANCH
as Liquidity Provider
- -------------------------------------------------------------------------------
Relating to
Continental Airlines Pass Through Trust 1997-1B-O
7.461% Continental Airlines Pass Through Certificates,
Series 1997-1B-O
2
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 ............................................... 9
Section 2.02. Making the Advances ........................................ 9
Section 2.03. Fees ....................................................... 12
Section 2.04. Adjustments or Termination of the Maximum Commitment........ 12
Section 2.05. Repayments of Interest Advances or the Final Advance........ 12
Section 2.06. Repayments of Provider Advances ............................ 13
Section 2.07. Payments to the Liquidity Provider Under
the Intercreditor Agreement................................. 15
Section 2.08. Book Entries ............................................... 15
Section 2.09. Payments from Available Funds Only.......................... 15
Section 2.10. Extension of the Expiry Date; Non-Extension Advance......... 16
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs ............................................ 16
Section 3.02. Capital Adequacy ........................................... 17
Section 3.03. Payments Free of Deductions ................................ 18
Section 3.04. Payments ................................................... 19
Section 3.05. Computations ............................................... 19
Section 3.06. Payment on Non-Business Days ............................... 19
Section 3.07. Interest ................................................... 20
Section 3.08. Replacement of Borrower .................................... 22
Section 3.09. Funding Loss Indemnification ............................... 22
Section 3.10. Illegality.................................................. 22
(i)
3
TABLE OF CONTENTS
(continued)
ARTICLE IV
CONDITIONS PRECEDENT
Page
----
Section 4.01. Conditions Precedent to
Effectiveness of Section 2.01............................... 23
Section 4.02. Conditions Precedent to Borrowing .......................... 25
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower....................... 25
Section 5.02. Negative Covenants of the Borrower.......................... 26
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default ................................ 27
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. ........................................... 27
Section 7.02. Notices, Etc. .............................................. 27
Section 7.03. No Waiver; Remedies ........................................ 28
Section 7.04. Further Assurances ......................................... 28
Section 7.05. Indemnification; Survival of Certain Provisions ............ 29
Section 7.06. Liability of the Liquidity Provider ........................ 29
Section 7.07. Costs, Expenses and Taxes .................................. 30
Section 7.08. Binding Effect; Participations ............................. 31
Section 7.09. Severability ............................................... 33
Section 7.10. GOVERNING LAW .............................................. 33
Section 7.11. Submission to Jurisdiction; Waiver of Jury
Trial; Waiver of Immunity................................... 33
Section 7.12. Execution in Counterparts................................... 34
(ii)
4
TABLE OF CONTENTS
(continued)
Page
----
Section 7.13. Entirety .................................................. 34
Section 7.14. Headings .................................................. 35
Section 7.15. Transfer .................................................. 35
Section 7.16. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES .......... 35
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
(iii)
5
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of March 21, 1997, 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 ABN AMRO BANK N.V., a bank organized under the
laws of The Netherlands, acting through its Chicago Branch ("ABN AMRO" or the
"Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class B Trust Agreement (such term and all other
capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class B Trust is issuing the Class B
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a portion
of the interest on the Class B Certificates in accordance with their terms, has
requested the Liquidity Provider to enter into this Agreement, providing in
part for the Borrower to request in specified circumstances that Advances be
made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. (a) Definitions. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Additional Cost" has the meaning assigned to such term in Section
3.01.
6
2
"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 (w) with respect to any Unpaid Advance or
Applied Provider Advance that is a LIBOR Advance, 1.75%, (x) with respect
to any Unpaid Advance or Applied Provider Advance that is a Base Rate
Advance, 1.75%, (y) with respect to any Unapplied Provider Advance that
is a LIBOR Advance, .40% and (z) with respect to any Unapplied Provider
Advance that is a Base Rate 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).
"Assignment and Assumption Agreement" means the Assignment and
Assumption to be entered into between the Borrower and the trustee of the
Successor Trust, substantially in the form of Exhibit D to the Class B
Trust Agreement.
"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 or 1%).
"Base Rate Advance" means an Advance that bears interest at a rate
based upon the Base Rate.
7
3
"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, Chicago, Illinois 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.
"Certificates of Deposit" has the meaning assigned to such term in
the Deposit Agreement.
"Deposits" has the meaning assigned to such terms in the Deposit
Agreement.
"Depositary" has the meaning assigned to such term in the Deposit
Agreement.
"Deposit Agreement" means the Deposit Agreement dated March 21, 1997
between First Security Bank, National Association, as Escrow Agent and
Credit Suisse First Boston, as Depositary, pertaining to the Class B
Certificates, as the same may be amended, modified or supplemented from
time to time in accordance with the terms thereof.
"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.
"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
8
4
of investigation), provided that Expenses shall not include any Taxes.
"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
after the date hereof (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), 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.
"Expiry Date" means March 19, 1998, 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).
9
5
"Interest Period" means, with respect to any LIBOR Advance, each of
the following periods:
(i) the period beginning on the third Business Day
following the Liquidity Provider's receipt of the Notice of
Borrowing for such LIBOR Advance (or, in the case of an
Unapplied Downgrade Advance, the period beginning on the
Expiry Date) and ending on the next Regular Distribution Date;
and
(ii) each subsequent period commencing on the last day
of the immediately preceding Interest Period and ending on the
next Regular Distribution Date;
provided, however, that (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 Regular Distribution Date following such conversion
(in the case of clause (y) above).
"Lending Office" means the lending office of the Liquidity Provider
presently located at Chicago, Illinois, 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)
10
6
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 (provided that, with respect
to the period prior to the Delivery Period Expiry Date, such Equipment
Notes have an aggregate outstanding principal balance in excess of
$280,000,000) or (b) a Continental Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
directors, officers, employees and agents of the Liquidity Provider, and
(iii) the successors and permitted assigns of the persons described in
clauses (i) and (ii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Maximum Available Commitment" 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, for any day, the lesser of (x)
$9,020,603.58 and (y) the Stated Portion of the Required Amount on such
day.
"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.
"Offering Memorandum" means the Offering Memorandum dated March 12,
1997 relating to the Certificates, as such Offering Memorandum may be
amended or supplemented.
11
7
"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.
"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.
"Stated Portion" means 50%.
"Successor Trust" means Continental Airlines Pass Through Trust
1997-1B-S.
"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
12
8
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 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:
"ABN AMRO Fee Letter", "ABN AMRO Sub-Account", "Certificates", "Class A
Certificates", "Class B Cash Collateral Account","Class B Certificates",
"Class B Certificateholders", "Class B Trust", "Class B Trust Agreement",
"Class B Trustee", "Class C-I Certificates", "Class C-II Certificates",
"Closing Date", "Continental", "Continental Bankruptcy Event",
"Controlling Party", "Corporate Trust Office", "Delivery Period Expiry
Date", "Distribution Date", "Downgraded Facility", "Equipment Notes",
"Financing Agreement", "Indenture", "Initial Purchasers", "Investment
Earnings", "Liquidity Facility", "Loan Trustee", "Moody's", "Non-Extended
Facility", "Note Purchase Agreement", "Operative Agreements", "Performing
Equipment Note", "Person", "Pool Balance", "Purchase Agreement", "Rating
Agency", "Registration Rights Agreement", "Regular Distribution Date,
"Replacement Liquidity Facility", "Responsible Officer", "Scheduled
13
9
Payment", "Special Payment", "Standard & Poor's", "Stated Interest Rate",
"Sub-Account", "Subordination Agent", "Taxes", "Threshold Rating",
"Transfer", "Trust Agreements, "Trustee" and "Written Notice".
(c) Interest on Certificates. For all purposes of this Agreement, each
scheduled payment with respect to a Class B Certificate shall be deemed to be
comprised of interest and principal components, with the interest component
equalling interest accrued at the Stated Interest Rate for the Class B
Certificates from (i) the later of (x) the date of issuance thereof and (y) the
most recent but preceding Regular Distribution Date to (ii) the Regular
Distribution Date on which such Scheduled Payment is being made, such interest
to be considered payable in arrears on such Regular Distribution Date and to be
calculated and allocated in the same manner as interest on the Class B
Equipment Notes.
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 the Stated Portion 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
14
10
(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 in accordance with
said Section 3.6(d)) 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
ABN AMRO Sub-Account of the Class B Cash Collateral Account in accordance with
said Section 3.6(d).
(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 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 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 ABN AMRO Sub-Account of the Class B Cash Collateral Account in
accordance with said Section 3.6(c).
(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
15
11
at such time, and shall be used to fund the ABN AMRO Sub-Account of the Class B
Cash Collateral Account (in accordance with Section 3.6(i) of the Intercreditor
Agreement).
(e) Each Borrowing shall be made on notice in writing (a "Notice of
Borrowing") in substantially the form required by Section 2.02(a), 2.02(b),
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the 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,
the Liquidity Provider shall, upon satisfaction of the conditions precedent set
forth in Section 4.02 with respect to a requested Borrowing, 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, make available to the Borrower, in accordance with
its payment instructions, in U.S. dollars and immediately available funds, the
amount of such 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, the Liquidity Provider shall, upon satisfaction of the conditions
precedent set forth in Section 4.02 with respect to a requested Borrowing,
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, make
available to the Borrower, in accordance with its payment instructions, in U.S.
dollars and in immediately available funds, the amount of such Borrowing.
Payments of proceeds of a Borrowing shall be made by wire transfer of
immediately available funds to the Borrower in accordance with such wire
transfer instructions as the Borrower shall furnish from time to time to the
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(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 ABN AMRO Sub-Account of the Class B Cash Collateral Account, the Liquidity
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Provider shall have no interest in or rights to the Class B Cash Collateral
Account, any Sub-Account thereof, such Advance or any other amounts from time
to time on deposit in the Class B Cash Collateral Account or any Sub-Account
thereof; provided that the foregoing shall not affect or impair the obligations
of the Subordination Agent to make the distributions contemplated by Section
3.6(e) or (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 ABN AMRO Fee Letter.
Section 2.04. Adjustments or Termination of the Maximum Commitment. (a)
Automatic Adjustments. Promptly following each date on which the Required
Amount is (1) reduced as a result of a reduction in the Pool Balance of the
Class B Certificates or otherwise, (2) increased as a result of an increase in
the Stated Interest Rate or (3) subsequent to such an increase described in
clause (2), reduced pursuant to the definition of "Stated Interest Rate",
clause (y) of the definition of Maximum Commitment shall automatically be
reduced or increased, as the case may be, to an amount equal to the Stated
Portion of the Required Amount (as calculated by the Borrower). The Borrower
shall give notice of any such automatic reduction or increase 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 or increase 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
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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 ABN AMRO
Sub-Account of the Class B Cash Collateral Account, invested and withdrawn from
the ABN AMRO Sub-Account of 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 ABN AMRO Sub-Account of 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
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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 ABN AMRO Sub-Account of
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 the Stated Portion of 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 ABN AMRO Sub-Account of 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 Stated Portion of 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 ABN AMRO Sub-Account of 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.
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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 such manner as it 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 Stated
Portion of amounts that constitute Scheduled Payments, Special Payments or
payments under Section 9.1 of the Participation Agreements and Sections 6 and 7
of the Note Purchase Agreement and only to the extent that the Borrower shall
have sufficient income or proceeds therefrom to enable the Borrower to make
payments in accordance with the terms hereof after giving effect to the
priority of payments provisions set forth in the Intercreditor Agreement. The
Liquidity Provider agrees that it will look solely to such amounts to the
extent available for distribution to it as provided in the Intercreditor
Agreement and this Agreement and that the Borrower, in its individual capacity,
is not personally liable to it for any amounts payable or liability under this
Agreement except as expressly provided in this Agreement, the Intercreditor
Agreement or any Participation Agreement. Amounts on deposit in the ABN AMRO
Sub-Account of 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. Amounts on deposit in the other Sub-Account in respect of the Class
B
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Certificates shall not be available to make payments under this Agreement.
Section 2.10. Extension of the Expiry Date; Non-Extension Advance. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Maturity 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. Subject to the ABN AMRO Fee Letter, 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,
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state, municipal, or foreign laws or regulations (including Regulation D), or
the adoption or making after the date of this Agreement of any interpretations,
directives, or requirements applying to a class of banks including the
Liquidity Provider under any U.S. federal, state, municipal, or any foreign
laws or regulations (whether or not having the force of law) by any court,
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. Subject to the ABN AMRO Fee Letter, 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
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(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 bank and of the amount allocable to the
Liquidity Provider's obligations to the Borrower hereunder shall be prima facie
evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. All payments made by the
Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any 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
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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 Forms 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.
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 ABN AMRO Bank N.V., New York,
NY, ABA # 026009580, Account Name: ABN AMRO Bank, N.V. - Chicago Branch,
Account # 651-0-010111-42, Reference: Continental Airlines, Inc.
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
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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 ABN AMRO Sub-Account of 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 ABN AMRO Sub-Account
of 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
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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) may 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.
(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 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 ABN AMRO
Sub-Account of the Class B Cash Collateral Account for such period plus .35%
per annum 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.
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(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
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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 Offering Memorandum 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 (together with, in the case of each such
opinion, other than the opinion of counsel
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for the Initial Purchasers, a letter from the counsel rendering
such opinion to the effect that the Liquidity Provider is entitled
to rely on such opinion as 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 (related to Leased
Aircraft) or the corresponding section of the Indentures (related
to Owned Aircraft) to the parties thereto and (ii) Continental
agrees to allow the Liquidity Provider to inspect Continental's
books and records regarding such transactions, and to discuss such
transactions with officers and employees of Continental; and
(viii) Such other documents, instruments, opinions and
approvals as the Liquidity Provider shall have reasonably
requested.
(b) The following 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
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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, all conditions
precedent to the effectiveness of the other Liquidity Facilities shall
have been satisfied, and all conditions precedent to the purchase of the
Certificates by the Initial Purchasers under the Purchase Agreement shall
have been satisfied (unless any of such conditions precedent shall have
been waived by the Initial Purchasers).
(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:
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(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 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) this
Agreement to expire on the fifth Business Day after the date on which such
Termination Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final Advance in
accordance with Section 2.02(d) hereof and
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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: ABN AMRO BANK N.V.
Aerospace Department
135 South LaSalle Street, #760
Chicago, IL 60674-9135
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Attention: Lukas van der Hoef
Telephone: (312) 904-2836
Telecopy: (312) 606-8428
with a copy to:
ABN AMRO Bank N.V.
135 South LaSalle St., #625
Chicago, IL 60674-9135
Attention: Loan Operations
Telephone: (312) 904-2836
Telecopy: (312) 606-8428
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.
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Section 7.05. Indemnification; Survival of Certain Provisions. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 10.1 of the Participation Agreements and Section 6
of the Note Purchase Agreement. In addition, the Borrower agrees to indemnify,
protect, defend and hold harmless the Liquidity Provider from, against and in
respect of, and shall pay on demand, all Expenses of any kind or nature
whatsoever (other than any Expenses of the nature described in Sections 3.01,
3.02 or 7.07 hereof or in the ABN AMRO 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 ABN AMRO Fee Letter, the Intercreditor
Agreement or any Financing Agreement; provided, however, that the Borrower
shall not be required to indemnify, protect, defend and hold harmless any
Liquidity Indemnitee in respect of any Expense of such Liquidity Indemnitee (i)
to the extent such Expense is attributable to the gross negligence or willful
misconduct of such Liquidity Indemnitee or any other Liquidity Indemnitee, (ii)
that is ordinary and usual operating overhead expense, and (iii) to the extent
such Expense is attributable to the failure by such Liquidity Indemnitee or any
other Liquidity Indemnitee to perform or observe any agreement, covenant or
condition on its part to be performed or observed in this Agreement, the
Intercreditor Agreement, the ABN AMRO Fee Letter, the Tax Letter or any other
Operative Document to which it is a party. The indemnities contained in such
Section 10.1, 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
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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,
director 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
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otherwise affecting the application of funds in the Cash Collateral Accounts.
In addition, the Borrower shall pay any and all recording, stamp and other
similar taxes and fees payable or determined to be payable in connection with
the execution, delivery, filing and recording of this Agreement, any other
Operative Agreement and such other documents, and agrees to save the Liquidity
Provider harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes or fees.
Section 7.08. Binding Effect; Participations.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower and the Liquidity Provider and their respective successors and
assigns, except that neither the Liquidity Provider (except as otherwise
provided in this Section 7.08) nor (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(a) 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).
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(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 transfer, the
Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld with
respect to any payments to be made to such Transferee in respect of this
Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a
state thereof or (y) if it is not so incorporated, two copies of a properly
completed United States Internal Revenue Service Form 4224 or Form 1001, as
appropriate, or other applicable form, certificate or document prescribed by
the Internal Revenue Service certifying, in each case, such Transferee's
entitlement to a complete exemption from United States federal withholding tax
in respect to any and all payments to be made hereunder, and (iii) agree (for
the benefit of the Liquidity Provider and the Borrower) to provide the
Liquidity Provider and the Borrower a new Form 4224 or Form 1001, as
appropriate, (A) on or before the date that any such form expires or becomes
obsolete or (B) after the occurrence of any event requiring a change in the
most recent form previously delivered by it and prior to the immediately
following due date of any payment by the Borrower hereunder, certifying in the
case of a Form 1001 or Form 4224 that such Transferee is entitled to a complete
exemption from United States federal withholding tax on payments under this
Agreement. Unless the Borrower has received forms or other documents reasonably
satisfactory to it (and required by applicable law) indicating that payments
hereunder are not subject to United States federal withholding tax, the
Borrower will withhold taxes as required by law from such payments at the
applicable statutory rate.
(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
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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
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Provider shall have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted by
law or shall limit the right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it may have from the
jurisdiction of the courts of the United States or of any State and waives any
immunity any of its properties located in the United States may have from
attachment or execution upon a judgement entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any similar successor
legislation.
Section 7.12. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
Section 7.13. Entirety. This Agreement, 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.
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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. Transfer. The Liquidity Provider hereby acknowledges and
consents to the Transfer contemplated by the Assignment and Assumption
Agreement.
Section 7.16. 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 duty
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:
ABN
AMRO BANK N.V., Chicago Branch,
as Liquidity Provider
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
40
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 ABN AMRO N.V., Chicago Branch (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1997-1B) dated as of March 21, 1997, 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 the Stated Portion of
the 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 pursuant to clause fifth of Section 3.2 of the Intercreditor
Agreement or clause seventh of Section 3.3 of the Intercreditor
Agreement, which Advance is requested to be made on ____________, ____.
(3) The amount of the Interest Advance requested hereby (i) is
$_______________.__, to be applied in respect of the payment of the
Stated Portion of the 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, Class B Certificates, the Class C-I Certificates or the
Class C-II Certificates, or interest on the Class A Certificates, the
Class C-I Certificates or the Class C-II 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, (v) does not include any
amount of interest which was due and payable on the Class B Certificates
on
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such Distribution Date but which remains unpaid due to the failure of
the Depositary to pay any amount of accrued interest on the Certificates
of Deposit on such Distribution Date and (vi) has not been and is not
the subject of a prior or contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.2 or 3.3 of the Intercreditor Agreement, as the
case may be, (b) no portion of such amount shall be applied by the
Borrower for any other purpose and (c) no portion of such amount until so
applied shall be commingled with other funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, the making of the Interest Advance as requested by this Notice of
Borrowing shall automatically reduce, subject to reinstatement in accordance
with the terms of the Liquidity Agreement, the 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:
42
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
43
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 ABN AMRO BANK N.V.,
Chicago Branch (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1997-1B) dated as of March 21, 1997, 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 ABN AMRO Sub-Account 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 ABN
AMRO Sub-Account 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, the Class C-I Certificates or the Class C-II
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 ABN
AMRO Sub-Account of the Class B Cash
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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.
(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 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:
45
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
46
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 ABN AMRO BANK N.V.,
Chicago Branch (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1997-1B) dated as of March 21, 1997, 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 ABN AMRO Sub-Account 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 ABN
AMRO Sub-Account of the Class B Cash Collateral Account in accordance
with Section 3.6(c) of the Intercreditor Agreement, (ii) does not include
any amount with respect to the payment of the principal of, or premium
on, the Class B Certificates, or principal of, or interest or premium on,
the Class A Certificates, the Class C-I Certificates or the Class C-II
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.
47
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the ABN
AMRO Sub-Account of 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.
(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 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:
48
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
49
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 ABN AMRO BANK N.V., Chicago Branch (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1997-1B) dated as of March _21, 1997, 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 ABN AMRO Sub-Account 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 ABN
AMRO Sub-Account 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, the Class C-I Certificates or the Class C-II
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.
50
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the ABN
AMRO Sub-Account of 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:
51
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
52
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 March 21, 1997, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Continental
Airlines Pass Through Trust, 1997-1B-[O/S], as Borrower, and ABN AMRO BANK
N.V., Chicago 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.
53
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,
ABN AMRO BANK N.V., Chicago Branch, as
Liquidity Provider
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
cc: Wilmington Trust Company,
as Class B Trustee
54
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of March 21, 1997, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Continental
Airlines Pass Through Trust, 1997-1B-[O/S], as Borrower, and ABN AMRO BANK
N.V., Chicago 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.
55
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:
1
EXHIBIT 4.12
------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1997-1B)
Dated as of March 21, 1997
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines Pass Through Trust 1997-1B-O
as Borrower
and
ING Bank N.V.
as Liquidity Provider
------------------------------------------------------------
Relating to
Continental Airlines Pass Through Trust 1997-1B-O
7.461% Continental Airlines Pass Through Certificates,
Series 1997-1B-O
2
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Certain Defined Terms . . . . . . . . . . . . 1
ARTICLE II AMOUNT AND TERMS OF THE COMMITMENT . . . . . . . . 9
Section 2.01. The Advances . . . . . . . . . . . . . . . . 9
Section 2.02. Making the Advances . . . . . . . . . . . . . 9
Section 2.03. Fees . . . . . . . . . . . . . . . . . . . . 12
Section 2.04. Adjustments or Termination of the Maximum
Commitment . . . . . . . . . . . . . . . . 12
Section 2.05. Repayments of Interest Advances or the Final
Advance . . . . . . . . . . . . . . . . . . 12
Section 2.06. Repayments of Provider Advances . . . . . . . 13
Section 2.07. Payments to the Liquidity Provider Under the
Intercreditor Agreement . . . . . . . . . . . 14
Section 2.08. Book Entries . . . . . . . . . . . . . . . . 15
Section 2.09. Payments from Available Funds Only . . . . . 15
Section 2.10. Extension of the Expiry Date; Non-Extension
Advance . . . . . . . . . . . . . . . . . . 15
ARTICLE III OBLIGATIONS OF THE BORROWER . . . . . . . . . . . . 16
Section 3.01. Increased Costs . . . . . . . . . . . . . . . 16
Section 3.02. Capital Adequacy . . . . . . . . . . . . . . 17
Section 3.03. Payments Free of Deductions . . . . . . . . . 18
Section 3.04. Payments . . . . . . . . . . . . . . . . . . 19
Section 3.05. Computations . . . . . . . . . . . . . . . . 19
Section 3.06. Payment on Non-Business Days . . . . . . . . 20
Section 3.07. Interest . . . . . . . . . . . . . . . . . . 20
Section 3.08. Replacement of Borrower . . . . . . . . . . . 22
Section 3.09. Funding Loss Indemnification . . . . . . . . 22
Section 3.10. Illegality . . . . . . . . . . . . . . . . . 22
ARTICLE IV CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 23
Section 4.01. Conditions Precedent to Effectiveness
of Section 2.01 . . . . . . . . . . . . . . 23
Section 4.02. Conditions Precedent to Borrowing . . . . . . 26
3
TABLE OF CONTENTS
(CONTINUED)
Page
----
ARTICLE V COVENANTS . . . . . . . . . . . . . . . . . . . . 25
Section 5.01. Affirmative Covenants of the Borrower . . . 25
Section 5.02. Negative Covenants of the Borrower . . . . 26
ARTICLE VI LIQUIDITY EVENTS OF DEFAULT . . . . . . . . . . . 26
Section 6.01. Liquidity Events of Default . . . . . . . . 26
ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . 27
Section 7.01. Amendments, Etc. . . . . . . . . . . . . . 27
Section 7.02. Notices, Etc. . . . . . . . . . . . . . . . 27
Section 7.03. No Waiver; Remedies . . . . . . . . . . . . 28
Section 7.04. Further Assurances . . . . . . . . . . . . 28
Section 7.05. Indemnification; Survival of
Certain Provisions. . . . . . . . . . . . 29
Section 7.06. Liability of the Liquidity Provider . . . . 29
Section 7.07. Costs, Expenses and Taxes . . . . . . . . . 30
Section 7.08. Binding Effect; Participations . . . . . . 31
Section 7.09. Severability . . . . . . . . . . . . . . . 33
Section 7.10. GOVERNING LAW . . . . . . . . . . . . . . . 34
Section 7.11. Submission to Jurisdiction; Waiver
of Jury Trial; Waiver of Immunity. . . . . 34
Section 7.12. Execution in Counterparts . . . . . . . . . 36
Section 7.13. Entirety . . . . . . . . . . . . . . . . . 36
Section 7.14. Headings . . . . . . . . . . . . . . . . . 36
Section 7.15. Transfer . . . . . . . . . . . . . . . . . 36
Section 7.16. LIQUIDITY PROVIDER'S OBLIGATION
TO MAKE ADVANCES . . . . . . . . . . . . 36
ANNEX I Interest Advance Notice of Borrowing
ANNEX II Non-Extension Advance Notice of Borrowing
ANNEX III Downgrade Advance Notice of Borrowing
ANNEX IV Final Advance Notice of Borrowing
ANNEX V Notice of Termination
ANNEX VI Notice of Replacement Subordination Agent
ii
4
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of MarchE21, 1997,
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 ING BANK N.V., a bank organized under the laws of
The Netherlands ("ING" or the "Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class B Trust Agreement (such term
and all other capitalized terms used in these recitals having the meanings set
forth or referred to in Section 1.01), the Class B Trust is issuing the Class B
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment
of a portion of the interest on the Class B Certificates in accordance with
their terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
Advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. (a) Definitions. As
used in this Agreement and unless otherwise expressly indicated, or unless the
context clearly requires otherwise, the following capitalized terms shall have
the following respective meanings for all purposes of this Agreement:
"Additional Cost" has the meaning assigned to such term in
Section 3.01.
"Advance" means an Interest Advance, a Final Advance, a
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).
5
2
"Applicable Margin" means (w) with respect to any Unpaid
Advance or Applied Provider Advance that is a LIBOR Advance, 1.75%,
(x) with respect to any Unpaid Advance or Applied Provider Advance
that is a Base Rate Advance, 1.75%, (y) with respect to any Unapplied
Provider Advance that is a LIBOR Advance, .40% and (z) with respect to
any Unapplied Provider Advance that is a Base Rate 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).
"Assignment and Assumption Agreement" means the Assignment and
Assumption to be entered into between the Borrower and the trustee of
the Successor Trust, substantially in the form of Exhibit D to the
Class B Trust Agreement.
"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 or 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.
6
3
"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to close
in Houston, Texas, New York, New York, Amsterdam, The Netherlands or,
so long as any Class B Certificate is outstanding, the city and state
in which the Class B Trustee, 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.
"Certificates of Deposit" has the meaning assigned to such
term in the Deposit Agreement.
"Deposits" has the meaning assigned to such terms in the
Deposit Agreement.
"Depositary" has the meaning assigned to such term in the
Deposit Agreement.
"Deposit Agreement" means the Deposit Agreement dated March
21, 1997 between First Security Bank, National Association, as Escrow
Agent and Credit Suisse First Boston, as Depositary, pertaining to the
Class B Certificates, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"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.
"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.
"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.
7
4
"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 after the date hereof (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), 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.
"Expiry Date" means March 19, 1998, 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 the Liquidity Provider's receipt of the
8
5
Notice of Borrowing for such LIBOR Advance (or, in
the case of an Unapplied Downgrade Advance, the
period beginning on the Expiry Date) and ending on
the next Regular Distribution Date; and
(ii) each subsequent period commencing on the last day of
the immediately preceding Interest Period and ending
on the next Regular Distribution Date;
provided, however, that(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
Regular Distribution Date following such conversion (in the case of
clause (y) above).
"Lending Office" means the lending office of the Liquidity
Provider presently located at Amsterdam, The Netherlands, 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.
9
6
"Liquidity Event of Default" means the occurrence of either
(a) the acceleration of all of the Equipment Notes (provided that,
with respect to the period prior to the Delivery Period Expiry Date,
such Equipment Notes have an aggregate outstanding principal balance
in excess of $280,000,000) or (b) a Continental Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii)
the directors, officers, employees and agents of the Liquidity
Provider, and (iii) the successors and permitted assigns of the
persons described in clauses (i) and (ii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in
the recital of parties to this Agreement.
"Maximum Available Commitment" 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, for any day, the lesser of (x)
$9,020,603.58 and (y) the Stated Portion of the Required Amount on
such day.
"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.
"Offering Memorandum" means the Offering Memorandum dated
March 12, 1997 relating to the Certificates, as such Offering
Memorandum may be amended or supplemented.
"Performing Note Deficiency" means any time that less than 65
% of the then aggregate outstanding principal amount of all Equipment
Notes are Performing Equipment Notes.
"Provider Advance" means a Downgrade Advance or a
Non-Extension Advance.
10
7
"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.
"Stated Portion" means 50%.
"Successor Trust" means Continental Airlines Pass Through
Trust 1997-1B-S.
"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
11
8
(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 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:
"Certificates", "Class A Certificates","Class B Cash Collateral
Account", "Class B Certificates", "Class B Certificateholders", "Class
B Trust", "Class B Trust Agreement", "Class B Trustee", "Class C-I
Certificates", "Class C-II Certificates", "Closing Date",
"Continental", "Continental Bankruptcy Event", "Controlling Party",
"Corporate Trust Office", "Delivery Period Expiry Date", "Distribution
Date", "Downgraded Facility", "Equipment Notes", "Financing
Agreement", "Indenture", "ING Fee Letter", "ING Sub-Account", "Initial
Purchasers", "Investment Earnings", "Liquidity Facility", "Loan
Trustee", "Moody's", "Non-Extended Facility", "Note Purchase
Agreement", "Operative Agreements", "Performing Equipment Note",
"Person", "Pool Balance", "Purchase Agreement", "Rating Agency",
"Registration Rights Agreement", "Regular Distribution Date,
"Replacement Liquidity Facility", "Responsible Officer", "Scheduled
Payment", "Special Payment", "Standard & Poor's", "Stated Interest
Rate", "Sub-Account", "Subordination Agent", "Taxes", "Threshold
Rating", "Transfer", "Trust Agreements, "Trustee" and "Written
Notice".
12
9
(c) Interest on Certificates. For all purposes of this
Agreement, each scheduled payment with respect to a Class B Certificate shall
be deemed to be comprised of interest and principal components, with the
interest component equalling interest accrued at the Stated Interest Rate for
the Class B Certificates from (i) the later of (x) the date of issuance thereof
and (y) the most recent but preceding Regular Distribution Date to (ii) the
Regular Distribution Date on which such Scheduled Payment is being made, such
interest to be considered payable in arrears on such Regular Distribution Date
and to be calculated and allocated in the same manner as interest on the Class
B Equipment Notes.
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 the Stated Portion 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
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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 in accordance
with said Section 3.6(d)) 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 ING Sub-Account of the Class B Cash Collateral Account in accordance
with said Section 3.6(d).
(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 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
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 ING Sub-Account of the Class B Cash
Collateral Account in accordance with said Section 3.6(c).
(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 ING Sub-Account of the Class B Cash Collateral Account (in
accordance with Section 3.6(i) of the Intercreditor Agreement).
(e) Each Borrowing shall be made on notice in writing (a
"Notice of Borrowing") in substantially the form required by Section 2.02(a),
2.02(b), 2.02(c) or 2.02(d), as the case may be,
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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, the Liquidity Provider shall, upon
satisfaction of the conditions precedent set forth in Section 4.02 with respect
to a requested Borrowing, 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, make
available to the Borrower, in accordance with its payment instructions, in U.S.
dollars and immediately available funds, the amount of such 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, the Liquidity Provider
shall, upon satisfaction of the conditions precedent set forth in Section 4.02
with respect to a requested Borrowing, 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, make available to the Borrower, in accordance with its
payment instructions, in U.S. dollars and in immediately available funds, the
amount of such Borrowing. Payments of proceeds of a Borrowing shall be made by
wire transfer of immediately available funds to the Borrower in accordance with
such wire transfer instructions as the Borrower shall furnish from time to time
to the Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(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 ING Sub-Account of the Class B Cash Collateral Account, the Liquidity
Provider shall have no interest in or rights to the Class B Cash Collateral
Account, any Sub- Account thereof, such Advance or any other amounts from time
to time on deposit in the Class B Cash Collateral Account or any Sub-Account
thereof; provided that the foregoing shall not affect or impair the obligations
of the Subordination Agent to make the distributions contemplated by Section
3.6(e) or (f) of the Intercreditor Agreement. By paying
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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 ING Fee Letter.
Section 2.04. Adjustments or Termination of the Maximum
Commitment. (a) Automatic Adjustments. Promptly following each date on which
the Required Amount is (1) reduced as a result of a reduction in the Pool
Balance of the Class B Certificates or otherwise, (2) increased as a result of
an increase in the Stated Interest Rate or (3) subsequent to such an increase
described in clause (2), reduced pursuant to the definition of "Stated Interest
Rate", clause (y) of the definition of Maximum Commitment shall automatically
be reduced or increased, as the case may be, to an amount equal to the Stated
Portion of the Required Amount (as calculated by the Borrower). The Borrower
shall give notice of any such automatic reduction or increase 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 or increase 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
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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
ING Sub-Account of the Class B Cash Collateral Account, invested and withdrawn
from the ING Sub-Account of 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 ING Sub-Account of 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
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2.09 hereof, immediately upon the withdrawal of any amounts from the ING
Sub-Account of 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 the Stated
Portion of 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 ING Sub-Account of 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 Stated
Portion of 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 ING
Sub-Account of 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
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Provider shall be applied by the Liquidity Provider to Liquidity Obligations
then due and payable in such manner as it 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 Stated Portion of amounts that constitute Scheduled Payments, Special
Payments or payments under Section 9.1 of the Participation Agreements and
Sections 6 and 7 of the Note Purchase Agreement and only to the extent that the
Borrower shall have sufficient income or proceeds therefrom to enable the
Borrower to make payments in accordance with the terms hereof after giving
effect to the priority of payments provisions set forth in the Intercreditor
Agreement. The Liquidity Provider agrees that it will look solely to such
amounts to the extent available for distribution to it as provided in the
Intercreditor Agreement and this Agreement and that the Borrower, in its
individual capacity, is not personally liable to it for any amounts payable or
liability under this Agreement except as expressly provided in this Agreement,
the Intercreditor Agreement or any Participation Agreement. Amounts on deposit
in the ING Sub-Account of 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. Amounts on deposit in the other Sub-Account in respect
of the Class B Certificates shall not be available to make payments under this
Agreement.
Section 2.10. Extension of the Expiry Date; Non-Extension
Advance. No earlier than the 60th day and no later than the 40th day prior to
the then effective Expiry Date (unless such Expiry Date is on or after the date
that is 15 days after the Final Maturity 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
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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. Subject to the ING Fee
Letter, 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), 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
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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. Subject to the ING Fee
Letter, 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
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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 bank and of the amount
allocable to the Liquidity Provider's obligations to the Borrower hereunder
shall be prima facie evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. (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
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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 Forms 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 Northern Trust
Company of New York, One World Trade Center, Suite 3941, New York, New York
10048, Account No. 105981-20010, Account Name: ING Lease (Ireland) B.V., as
agent for ING Bank N.V.
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
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(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 ING
Sub-Account of 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
ING Sub-Account of 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
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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) may 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.
(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 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 ING Sub-Account of the Class B Cash Collateral Account for such period plus
.35% per annum 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.
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(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
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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 Offering Memorandum
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
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24
Agreement, the Intercreditor Agreement and the other
Operative Agreements (together with, in the case of
each such opinion, other than the opinion of counsel
for the Initial Purchasers, a letter from the counsel
rendering such opinion to the effect that the
Liquidity Provider is entitled to rely on such
opinion as 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 (related to
Leased Aircraft) or the corresponding section of the
Indentures (related to Owned Aircraft) to the parties
thereto and (ii) Continental agrees to allow the
Liquidity Provider to inspect Continental's books and
records regarding such transactions, and to discuss
such transactions with officers and employees of
Continental; and
(viii) Such other documents, instruments,
opinions and approvals as the Liquidity Provider
shall have reasonably requested.
(b) The following statement shall be true on and as of
the Effective Date: No event has occurred and is continuing,
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25
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, all
conditions precedent to the effectiveness of the other Liquidity
Facilities shall have been satisfied, and all conditions precedent to
the purchase of the Certificates by the Initial Purchasers under the
Purchase Agreement shall have been satisfied (unless any of such
conditions precedent shall have been waived by the Initial
Purchasers).
(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:
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26
(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 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) this Agreement to expire on the fifth Business Day after the date on
which such Termination Notice is received by the Borrower, (ii) the Borrower to
promptly request, and the Liquidity Provider to promptly make, a Final Advance
in accordance with Section 2.02(d) hereof and Section 3.6(i) of the
Intercreditor Agreement, (iii) all other
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27
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: ING Bank N.V.
Department of Bankgarantie Zaken -
Juridische Zaken
Location code HG 01.06
P.O. Box 1800
1000 B.V. Amsterdam
by courier:
Amsterdamse Poort
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Bijlmer plein 888
1102 MG Amsterdam
The Netherlands
Telephone: 011-31-20-652-3260
Telecopy: 011-31-20-652-3235
with a copy to:
ING Lease (Ireland) B.V.
49 St. Stephen's Green
Dublin 2, Ireland
Telephone: 011-353-1-662-2211
Telecopy: 011-353-1-662-2240
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
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assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.05. Indemnification; Survival of Certain
Provisions. The Liquidity Provider shall be indemnified hereunder to the extent
and in the manner described in Section 10.1 of the Participation Agreements and
Section 6 of the Note Purchase Agreement. In addition, the Borrower agrees to
indemnify, protect, defend and hold harmless the Liquidity Provider from,
against and in respect of, and shall pay on demand, all Expenses of any kind or
nature whatsoever (other than any Expenses of the nature described in Sections
3.01, 3.02 or 7.07 hereof or in the ING 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 ING Fee Letter, the Intercreditor Agreement
or any Financing Agreement; provided, however, that the Borrower shall not be
required to indemnify, protect, defend and hold harmless any Liquidity
Indemnitee in respect of any Expense of such Liquidity Indemnitee (i) to the
extent such Expense is attributable to the gross negligence or willful
misconduct of such Liquidity Indemnitee or any other Liquidity Indemnitee,
(ii)Ethat is ordinary and usual operating overhead expense, and (iii)Eto the
extent such Expense is attributable to the failure by such Liquidity Indemnitee
or any other Liquidity Indemnitee to perform or observe any agreement, covenant
or condition on its part to be performed or observed in this Agreement, the
Intercreditor Agreement, the ING Fee Letter, the Tax Letter or any other
Operative Document to which it is a party. The indemnities contained in such
Section 10.1, 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
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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, director 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,
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31
or other process or decree restraining or seeking to restrain the Liquidity
Provider from paying any amount under this Agreement, the Intercreditor
Agreement or any other Operative Agreement or otherwise affecting the
application of funds in the Cash Collateral Accounts. In addition, the Borrower
shall pay any and all recording, stamp and other similar taxes and fees payable
or determined to be payable in connection with the execution, delivery, filing
and recording of this Agreement, any other Operative Agreement and such other
documents, and agrees to save the Liquidity Provider harmless from and against
any and all liabilities with respect to or resulting from any delay in paying
or omission to pay such taxes or fees.
Section 7.08. Binding Effect; Participations. (a)EEThis
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(a) 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
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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
transfer, the Transferee shall (i) represent to the Liquidity Provider (for the
benefit of the Liquidity Provider and the Borrower) either (A) that it is
incorporated under the laws of the United States or a state thereof or (B) that
under applicable law and treaties, no taxes will be required to be withheld
with respect to any payments to be made to such Transferee in respect of this
Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a
state thereof or (y) if it is not so incorporated, two copies of a properly
completed United States Internal Revenue Service Form 4224 or Form 1001, as
appropriate, or other applicable form, certificate or document prescribed by
the Internal Revenue Service certifying, in each case, such Transferee's
entitlement to a complete exemption from United States federal withholding tax
in respect to any and all payments to be made hereunder, and (iii) agree (for
the benefit of the Liquidity Provider and the Borrower) to provide the
Liquidity Provider and the Borrower a new Form 4224 or Form 1001, as
appropriate, (A) on or before the date that any such form expires or becomes
obsolete or (B) after the occurrence of any event requiring a change in the
most recent form previously delivered by it and prior to the immediately
following due date of any payment by the Borrower hereunder, certifying in the
case of a Form 1001 or Form 4224 that such Transferee is entitled to a complete
exemption from United States federal withholding tax on payments under this
Agreement. Unless the Borrower has received forms or other documents reasonably
satisfactory to it (and required by applicable law) indicating that payments
hereunder are not subject to United States federal withholding tax, the
Borrower will withhold taxes as required by law from such payments at the
applicable statutory rate.
(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
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33
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.
(d) Notwithstanding the other provisions of this Section
7.08, if at any time after the date hereof the Borrower shall withhold taxes as
required by law from any payments made to the Liquidity Provider, the Liquidity
Provider may assign all (but not less than all) of its rights and obligations
under this Agreement to the New York Branch of ING Bank N.V. ( the "ING
Transferee"); provided, that it shall be a condition to any such transfer that
(i) the ING Transferee enters into an agreement in form and substance
reasonably satisfactory to the Borrower pursuant to which the ING Transferee
assumes all of the obligations of the Liquidity Provider hereunder, under the
Intercreditor Agreement, the ING Fee Letter and the Tax Letter, (ii) the ING
Transferee delivers an opinion to the Borrower and each of the Rating Agencies
in form and substance reasonably satisfactory to the Borrower opining that this
Agreement, the Intercreditor Agreement, the ING Fee Letter and the Tax Letter
are enforceable obligations of the ING Transferee, (iii) the Liquidity Provider
shall have delivered to the Borrower a Ratings Confirmation with respect to
such transfer from each Rating Agency, (iv) the ING Transferee shall satisfy
each of the requirements in respect of a Transferee set forth in Section
7.08(b) and (v) the Liquidity Provider shall pay all fees and expenses
(including, without limitation, legal fees and disbursements) of the Borrower
in connection with such transfer. Upon the satisfaction of the conditions set
forth in this Section 7.08(d), the ING Transferee shall be deemed to be the
Liquidity Provider with the rights and obligations of the Liquidity Provider
hereunder and under the other Operative Agreements.
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.
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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
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statutory claims. The Borrower and the Liquidity Provider each warrant and
represent that it has reviewed this waiver with its legal counsel, and that it
knowingly and voluntarily waives its jury trial rights following consultation
with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it
may have from the jurisdiction of the courts of the United States or of any
State and waives any immunity any of its properties located in the United
States may have from attachment or execution upon a judgement entered by any
such court under the United States Foreign Sovereign Immunities Act of 1976 or
any similar successor legislation.
Section 7.12. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13. Entirety. This Agreement, 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 Transfer. The Liquidity Provider hereby
acknowledges and consents to the Transfer contemplated by the Assignment and
Assumption Agreement.
Section 7.16. 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.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duty 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:
ING BANK N.V.,
as Liquidity Provider
By:
-----------------------------------
Name:
Title:
40
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 ING BANK N.V. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1997-1B) dated as of March 21, 1997, 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 the Stated
Portion of the interest on the ClassEB Certificates which was payable
on ____________, ____ (the "Distribution Date") in accordance with the
terms and provisions of the ClassEB Trust Agreement and the ClassEB
Certificates pursuant to clause fifth of Section 3.2 of the
Intercreditor Agreement or clause seventh of Section 3.3 of the
Intercreditor Agreement, which Advance is requested to be made on
____________, ____.
(3) The amount of the Interest Advance requested hereby
(i) is $_______________.__, to be applied in respect of the payment of
the Stated Portion of the 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, the Class C-I
Certificates or the Class C-II Certificates, or interest on the Class
A Certificates, the Class C-I Certificates or the Class C-II
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, (v) does not include any amount of
interest which was due and payable on the Class B Certificates on such
Distribution Date but which remains unpaid due to the failure of the
Depositary to pay any amount of accrued interest on the Certificates
of Deposit on such Distribution
41
I-2
Date and (vi) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the
amount requested hereby, (a) the Borrower will apply the same in
accordance with the terms of Section 3.2 or 3.3 of the Intercreditor
Agreement, as the case may be, (b) no portion of such amount shall be
applied by the Borrower for any other purpose and (c) no portion of
such amount until so applied shall be commingled with other funds held
by the Borrower.
The Borrower hereby acknowledges that, pursuant to the
Liquidity Agreement, the making of the Interest Advance as requested by this
Notice of Borrowing shall automatically reduce, subject to reinstatement in
accordance with the terms of the Liquidity Agreement, the 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:
42
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest Advance Notice of
Borrowing]
43
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 ING BANK
N.V. (the "Liquidity Provider"), with reference to the Revolving Credit
Agreement (1997-1B) dated as of March 21, 1997, 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 ING Sub-Account 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 ING Sub-Account 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, the Class C-I
Certificates or the Class C-II 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 ING Sub-Account of the Class B Cash Collateral Account and apply
the same in accordance with the terms of Section 3.6(d) of the
Intercreditor Agreement,
44
II-2
(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 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:
45
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
46
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 ING BANK
N.V. (the "Liquidity Provider"), with reference to the Revolving Credit
Agreement (1997-1B) dated as of March 21, 1997, 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 ING Sub-Account 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 ING Sub-Account of the Class B Cash Collateral Account
in accordance with Section 3.6(c) of the Intercreditor Agreement, (ii)
does not include any amount with respect to the payment of the
principal of, or premium on, the Class B Certificates, or principal
of, or interest or premium on, the Class A Certificates, the Class C-I
Certificates or the Class C-II 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 ING Sub-Account of the Class B Cash
47
III-2
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.
(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 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)Efollowing 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:
48
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
49
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 ING BANK N.V. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1997-1B) dated as of March 21, 1997, 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 ING Sub-Account 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 ING Sub-Account 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, the Class C-I
Certificates or the Class C-II 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 ING Sub-Account of the Class B Cash Collateral Account and apply
the same in accordance with the
50
IV-2
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:
51
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
52
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 March 21, 1997, between Wilmington Trust
Company, as Subordination Agent, as agent and trustee for the Continental
Airlines Pass Through Trust, 1997-1B-[O/S], as Borrower, and ING BANK N.V. (the
"Liquidity Agreement")
_________________________________________________________________
Ladies and Gentlemen:
You are hereby notified that pursuant to Section 6.01 of the
Liquidity Agreement, by reason of the occurrence of a Liquidity Event of
Default and 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.
53
V-2
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,
ING BANK N.V.,
as Liquidity Provider
By:
-----------------------------------
Name:
Title:
cc: Wilmington Trust Company,
as Class B Trustee
54
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of March 21, 1997, between Wilmington Trust
Company, as Subordination Agent, as agent and trustee for the Continental
Airlines Pass Through Trust, 1997-1B-[O/S], as Borrower, and ING BANK N.V. (the
"Liquidity Agreement")
_________________________________________________________________
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to:
----------------------------------
[Name of Transferee]
----------------------------------
[Address of Transferee]
all rights 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.
55
VI-2
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:
1
EXHIBIT 4.13
-------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1997-1C-I)
Dated as of March 21, 1997
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines Pass Through Trust 1997-1C-I-O
as Borrower
and
ABN AMRO BANK N.V., CHICAGO BRANCH
as Liquidity Provider
-------------------------------------------------------------
Relating to
Continental Airlines Pass Through Trust 1997-1C-I-O
7.42% Continental Airlines Pass Through Certificates,
Series 1997-1C-I-O
2
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 . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.02. Making the Advances . . . . . . . . . . . . . . . . . . . 9
Section 2.03. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.04. Adjustments or Termination of the Maximum Commitment . . 12
Section 2.05. Repayments of Interest Advances or the Final Advance . . 13
Section 2.06. Repayments of Provider Advances . . . . . . . . . . . . . 13
Section 2.07. Payments to the Liquidity Provider Under the
Intercreditor Agreement . . . . . . . . . . . . . . . . . 15
Section 2.08. Book Entries . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.09. Payments from Available Funds Only . . . . . . . . . . . 15
Section 2.10. Extension of the Expiry Date; Non-Extension Advance . . . 16
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs . . . . . . . . . . . . . . . . . . . . . 16
Section 3.02. Capital Adequacy . . . . . . . . . . . . . . . . . . . . 18
Section 3.03. Payments Free of Deductions . . . . . . . . . . . . . . . 19
Section 3.04. Payments . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.05. Computations . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.06. Payment on Non-Business Days . . . . . . . . . . . . . . 20
Section 3.07. Interest . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.08. Replacement of Borrower . . . . . . . . . . . . . . . . . 22
Section 3.09. Funding Loss Indemnification . . . . . . . . . . . . . . 22
Section 3.10. Illegality . . . . . . . . . . . . . . . . . . . . . . . 23
-i-
3
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01 . . . . 23
Section 4.02. Conditions Precedent to Borrowing . . . . . . . . . . . . . . 26
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower . . . . . . . . . . . . 26
Section 5.02. Negative Covenants of the Borrower . . . . . . . . . . . . . 27
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default . . . . . . . . . . . . . . . . . 27
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . 29
Section 7.04. Further Assurances . . . . . . . . . . . . . . . . . . . . . 29
Section 7.05. Indemnification; Survival of Certain Provisions . . . . . . . 29
Section 7.06. Liability of the Liquidity Provider . . . . . . . . . . . . . 30
Section 7.07. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . 31
Section 7.08. Binding Effect; Participations . . . . . . . . . . . . . . . 31
Section 7.09. Severability . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.10. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity . . . . . . . . . . . . . . . . . . . . . 34
Section 7.12. Execution in Counterparts . . . . . . . . . . . . . . . . . . 35
Section 7.13. Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.14. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.15. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.16. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES . . . . . . 35
-ii-
4
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
-iii-
5
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of March 21, 1997, 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-I Trust (as
defined below) (the "Borrower"), and ABN AMRO BANK N.V., a bank organized under
the laws of The Netherlands, acting through its Chicago Branch ("ABN AMRO" or
the "Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class C-I 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-I Trust is issuing the Class C-I
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a portion
of the interest on the Class C-I 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.
6
"Applicable Liquidity Rate" has the meaning assigned to such term in
Section 3.07(g).
"Applicable Margin" means (w) with respect to any Unpaid Advance or
Applied Provider Advance that is a LIBOR Advance, 1.75%, (x) with respect to
any Unpaid Advance or Applied Provider Advance that is a Base Rate Advance,
1.75%, (y) with respect to any Unapplied Provider Advance that is a LIBOR
Advance, .40% and (z) with respect to any Unapplied Provider Advance that is
a Base Rate 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).
"Assignment and Assumption Agreement" means the Assignment and Assumption
to be entered into between the Borrower and the trustee of the Successor
Trust, substantially in the form of Exhibit D to the Class C-I Trust
Agreement.
"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 or 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.
-2-
7
"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, Chicago, Illinois or, so long as any Class C-I
Certificate is outstanding, the city and state in which the Class C-I
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.
"Certificates of Deposit" has the meaning assigned to such term in the
Deposit Agreement.
"Deposits" has the meaning assigned to such terms in the Deposit
Agreement.
"Depositary" has the meaning assigned to such term in the Deposit
Agreement.
"Deposit Agreement" means the Deposit Agreement dated March 21, 1997
between First Security Bank, National Association, as Escrow Agent and Credit
Suisse First Boston, as Depositary, pertaining to the Class C-I Certificates,
as the same may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
"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.
"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.
-3-
8
"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 after the date hereof
(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), 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.
"Expiry Date" means March 19, 1998, 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:
-4-
9
(i) the period beginning on the third Business Day following 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) and ending on the next Regular
Distribution Date; and
(ii) each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the next Regular Distribution
Date;
provided, however, that (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 Regular Distribution Date following such conversion
(in the case of clause (y) above).
"Lending Office" means the lending office of the Liquidity Provider
presently located at Chicago, Illinois, 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
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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 (provided that, with respect to
the period prior to the Delivery Period Expiry Date, such Equipment Notes
have an aggregate outstanding principal balance in excess of $280,000,000) or
(b) a Continental Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
directors, officers, employees and agents of the Liquidity Provider, and
(iii) the successors and permitted assigns of the persons described in
clauses (i) and (ii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the recital
of parties to this Agreement.
"Maximum Available Commitment" 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, for any day, the lesser of (x) $6,721,126.50
and (y) the Stated Portion of the Required Amount on such day.
"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.
"Offering Memorandum" means the Offering Memorandum dated March 12, 1997
relating to the Certificates, as such Offering Memorandum may be amended or
supplemented.
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"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.
"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-I Certificates, that would be payable on the Class C-I
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-I Certificates on such day and without regard to expected
future payments of principal on the Class C-I Certificates.
"Stated Portion" means 50%.
"Successor Trust" means Continental Airlines Pass Through Trust
1997-1C-I-S.
"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-I 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
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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 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:
"ABN AMRO Fee Letter", "ABN AMRO Sub-Account", "Certificates", "Class A
Certificates", "Class B Certificates", "Class C-I Cash Collateral Account",
"Class C-I Certificateholders", "Class C-I Certificates", "Class C-I Trust",
"Class C-I Trust Agreement", "Class C-I Trustee", "Class C-II Certificates",
"Closing Date", "Continental", "Continental Bankruptcy Event", "Controlling
Party", "Corporate Trust Office", "Delivery Period Expiry Date",
"Distribution Date", "Downgraded Facility", "Equipment Notes", "Financing
Agreement", "Indenture", "Initial Purchasers", "Investment Earnings",
"Liquidity Facility", "Loan Trustee", "Moody's", "Non-Extended Facility",
"Note Purchase Agreement", "Operative Agreements", "Performing Equipment
Note", "Person", "Pool Balance", "Purchase Agreement", "Rating Agency",
"Registration Rights Agreement", "Regular Distribution Date, "Replacement
Liquidity Facility", "Responsible Officer", "Scheduled
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Payment", "Special Payment", "Standard & Poor's", "Stated Interest Rate",
"Sub-Account", "Subordination Agent", "Taxes", "Threshold Rating",
"Transfer", "Trust Agreements, "Trustee" and "Written Notice".
(c) Interest on Certificates. For all purposes of this Agreement, each
scheduled payment with respect to a Class C-I Certificate shall be deemed to be
comprised of interest and principal components, with the interest component
equalling interest accrued at the Stated Interest Rate for the Class C-I
Certificates from (i) the later of (x) the date of issuance thereof and (y) the
most recent but preceding Regular Distribution Date to (ii) the Regular
Distribution Date on which such Scheduled Payment is being made, such interest
to be considered payable in arrears on such Regular Distribution Date and to be
calculated and allocated in the same manner as interest on the Class C-I
Equipment Notes.
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 the Stated Portion of interest on the Class
C-I 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
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(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 in accordance with
said Section 3.6(d)) 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
ABN AMRO Sub-Account of the Class C-I Cash Collateral Account in accordance
with said Section 3.6(d).
(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 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 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 ABN AMRO Sub-Account of the Class C-I Cash Collateral Account
in accordance with said Section 3.6(c).
(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
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at such time, and shall be used to fund the ABN AMRO Sub-Account of the Class
C-I Cash Collateral Account (in accordance with Section 3.6(i) of the
Intercreditor Agreement).
(e) Each Borrowing shall be made on notice in writing (a "Notice of
Borrowing") in substantially the form required by Section 2.02(a), 2.02(b),
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the 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,
the Liquidity Provider shall, upon satisfaction of the conditions precedent set
forth in Section 4.02 with respect to a requested Borrowing, 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, make available to the Borrower, in accordance with
its payment instructions, in U.S. dollars and immediately available funds, the
amount of such 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, the Liquidity Provider shall, upon satisfaction of the conditions
precedent set forth in Section 4.02 with respect to a requested Borrowing,
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, make
available to the Borrower, in accordance with its payment instructions, in U.S.
dollars and in immediately available funds, the amount of such Borrowing.
Payments of proceeds of a Borrowing shall be made by wire transfer of
immediately available funds to the Borrower in accordance with such wire
transfer instructions as the Borrower shall furnish from time to time to the
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(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 ABN AMRO Sub-Account of the Class C-I Cash Collateral Account, the
Liquidity
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Provider shall have no interest in or rights to the Class C-I Cash Collateral
Account, any Sub-Account thereof, such Advance or any other amounts from time
to time on deposit in the Class C-I Cash Collateral Account or any Sub-Account
thereof; provided that the foregoing shall not affect or impair the obligations
of the Subordination Agent to make the distributions contemplated by Section
3.6(e) or (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 ABN AMRO Fee Letter.
Section 2.04. Adjustments or Termination of the Maximum Commitment. (a)
Automatic Adjustments. Promptly following each date on which the Required
Amount is (1) reduced as a result of a reduction in the Pool Balance of the
Class C-I Certificates or otherwise, (2) increased as a result of an increase
in the Stated Interest Rate or (3) subsequent to such an increase described in
clause (2), reduced pursuant to the definition of "Stated Interest Rate",
clause (y) of the definition of Maximum Commitment shall automatically be
reduced or increased, as the case may be, to an amount equal to the Stated
Portion of the Required Amount (as calculated by the Borrower). The Borrower
shall give notice of any such automatic reduction or increase 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 or increase 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
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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 ABN AMRO
Sub-Account of the Class C-I Cash Collateral Account, invested and withdrawn
from the ABN AMRO Sub-Account of the Class C-I 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 ABN AMRO Sub-Account of the Class C-I Cash
Collateral Account for the purpose of paying interest on the Class C-I
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
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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 ABN AMRO Sub-Account of
the Class C-I 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 the Stated Portion of 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 ABN AMRO Sub-Account of the Class C-I
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 Stated Portion of 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 ABN AMRO Sub-Account of the
Class C-I 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.
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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 such manner as it 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 Stated
Portion of amounts that constitute Scheduled Payments, Special Payments or
payments under Section 9.1 of the Participation Agreements and Sections 6 and 7
of the Note Purchase Agreement and only to the extent that the Borrower shall
have sufficient income or proceeds therefrom to enable the Borrower to make
payments in accordance with the terms hereof after giving effect to the
priority of payments provisions set forth in the Intercreditor Agreement. The
Liquidity Provider agrees that it will look solely to such amounts to the
extent available for distribution to it as provided in the Intercreditor
Agreement and this Agreement and that the Borrower, in its individual capacity,
is not personally liable to it for any amounts payable or liability under this
Agreement except as expressly provided in this Agreement, the Intercreditor
Agreement or any Participation Agreement. Amounts on deposit in the ABN AMRO
Sub-Account of the Class C-I Cash Collateral Account shall be available to the
Borrower to make payments under this Agreement only to the extent and for the
purposes expressly contemplated in Section 3.6(f) of the Intercreditor
Agreement. Amounts on deposit in the other Sub-Account in respect of the
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Class C-I Certificates shall not be available to make payments under this
Agreement.
Section 2.10. Extension of the Expiry Date; Non-Extension Advance. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Maturity Date for the Class C-I 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. Subject to the ABN AMRO Fee Letter, 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
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Regulation D), or the adoption or making after the date of this Agreement of
any interpretations, directives, or requirements applying to a class of banks
including the Liquidity Provider under any U.S. federal, state, municipal, or
any foreign laws or regulations (whether or not having the force of law) by any
court, 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. Subject to the ABN AMRO Fee Letter, 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
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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 bank and of the amount allocable to the
Liquidity Provider's obligations to the Borrower hereunder shall be prima facie
evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. All payments made by the
Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any 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
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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 Forms 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.
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 ABN AMRO Bank N.V., New York,
NY, ABA # 026009580, Account Name: ABN AMRO Bank, N.V. - Chicago Branch,
Account # 651-0-010111-42, Reference: Continental Airlines, Inc.
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
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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 ABN AMRO Sub-Account of the
Class C-I Cash Collateral Account to pay interest on the Class C-I
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 ABN
AMRO Sub-Account of the Class C-I 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
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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) may 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.
(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 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 ABN AMRO
Sub-Account of the Class C-I Cash Collateral Account for such period plus .35%
per annum 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.
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(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
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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 Offering Memorandum and specimen copies of the
Class C-I Certificates;
(v) An executed copy of each document, instrument, certificate and
opinion delivered on or before the Closing Date pursuant to the Class C-I
Trust Agreement, the Intercreditor Agreement and the other Operative
Agreements (together with, in the case of each such opinion, other than
the opinion of counsel for the Initial Purchasers, a letter from the
counsel
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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 (related to
Leased Aircraft) or the corresponding section of the Indentures (related
to Owned Aircraft) to the parties thereto and (ii) Continental agrees to
allow the Liquidity Provider to inspect Continental's books and records
regarding such transactions, and to discuss such transactions with
officers and employees of Continental; and
(viii) Such other documents, instruments, opinions and approvals as
the Liquidity Provider shall have reasonably requested.
(b) The following 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.
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(c) The Liquidity Provider shall have received payment in full of all fees
and other sums required to be paid to or for the account of the Liquidity
Provider on or prior to the Effective Date.
(d) All conditions precedent to the issuance of the Certificates under the
Trust Agreements shall have been satisfied, all conditions precedent to the
effectiveness of the other Liquidity Facilities shall have been satisfied,
and all conditions precedent to the purchase of the Certificates by the
Initial Purchasers under the Purchase Agreement shall have been satisfied
(unless any of such conditions precedent shall have been waived by the
Initial Purchasers).
(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
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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 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) this
Agreement to expire on the fifth Business Day after the date on which such
Termination Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final Advance in
accordance with Section 2.02(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
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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: ABN AMRO BANK N.V.
Aerospace Department
135 South LaSalle Street, #760
Chicago, IL 60674-9135
Attention: Lukas van der Hoef
Telephone: (312) 904-2836
Telecopy: (312) 606-8428
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with a copy to:
ABN AMRO Bank N.V.
135 South LaSalle St., #625
Chicago, IL 60674-9135
Attention: Loan Operations
Telephone: (312) 904-2836
Telecopy: (312) 606-8428
or, as to each of the foregoing, at such other address as shall be designated
by such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.03. No Waiver; Remedies. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 7.04. Further Assurances. The Borrower agrees to do such further
acts and things and to execute and deliver to the Liquidity Provider such
additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.05. Indemnification; Survival of Certain Provisions. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 10.1 of the Participation Agreements and Section 6
of the Note Purchase Agreement. In addition, the Borrower agrees to indemnify,
protect, defend and hold harmless the Liquidity Provider from, against and in
respect of, and shall pay on
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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 ABN
AMRO 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 ABN AMRO Fee Letter, the Intercreditor Agreement or any Financing
Agreement; provided, however, that the Borrower shall not be required to
indemnify, protect, defend and hold harmless any Liquidity Indemnitee in
respect of any Expense of such Liquidity Indemnitee (i) to the extent such
Expense is attributable to the gross negligence or willful misconduct of such
Liquidity Indemnitee or any other Liquidity Indemnitee, (ii) that is ordinary
and usual operating overhead expense, and (iii) to the extent such Expense is
attributable to the failure by such Liquidity Indemnitee or any other Liquidity
Indemnitee to perform or observe any agreement, covenant or condition on its
part to be performed or observed in this Agreement, the Intercreditor
Agreement, the ABN AMRO Fee Letter, the Tax Letter or any other Operative
Document to which it is a party. The indemnities contained in such Section
10.1, 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,
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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,
director 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 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
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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(a) 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 transfer, the
Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no
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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-
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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
-33-
38
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. Transfer. The Liquidity Provider hereby acknowledges and
consents to the Transfer contemplated by the Assignment and Assumption
Agreement.
Section 7.16. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES. EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE
-34-
39
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.
-35-
40
IN WITNESS WHEREOF, the parties have caused this Agreement to be duty
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-I Trust, as
Borrower
By:
----------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
Chicago Branch,
as Liquidity Provider
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
-36-
41
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 ABN AMRO N.V., Chicago Branch
(the "Liquidity Provider"), with reference to the Revolving Credit Agreement
(1997-1C-I) dated as of March 21, 1997, 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 the Stated Portion of
the interest on the Class C-I Certificates which was payable on
____________, ____ (the "Distribution Date") in accordance with the
terms and provisions of the Class C-I Trust Agreement and the Class C-I
Certificates pursuant to clause fifth of Section 3.2 of the Intercreditor
Agreement or clause seventh of Section 3.3 of the Intercreditor
Agreement, which Advance is requested to be made on ____________, ____.
(3) The amount of the Interest Advance requested hereby (i) is
$_______________.__, to be applied in respect of the payment of the
Stated Portion of the interest which was due and payable on the Class C-I
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, the Class C-I Certificates or the
Class C-II Certificates, or interest on the Class A Certificates, the
Class B Certificates or the Class C-II Certificates, (iii) was computed
in accordance with the provisions of the Class C-I Certificates, the
Class C-I Trust Agreement and the Intercreditor Agreement (a copy of
which computation is attached hereto as Schedule I), (iv) does not exceed
the Maximum Available Commitment on the date hereof, (v) does not include
any amount of interest which
42
I-2
was due and payable on the Class C-I Certificates on such Distribution
Date but which remains unpaid due to the failure of the Depositary to pay
any amount of accrued interest on the Certificates of Deposit on such
Distribution Date and (vi) has not been and is not the subject of a prior
or contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.2 or 3.3 of the Intercreditor Agreement, as the
case may be, (b) no portion of such amount shall be applied by the
Borrower for any other purpose and (c) no portion of such amount until so
applied shall be commingled with other funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, the making of the Interest Advance as requested by this Notice of
Borrowing shall automatically reduce, subject to reinstatement in accordance
with the terms of the Liquidity Agreement, the 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:
43
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
44
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 ABN AMRO BANK N.V.,
Chicago Branch (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1997-1C-I) dated as of March 21, 1997, 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 ABN AMRO Sub-Account of the Class C-I 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 ABN
AMRO Sub-Account of the Class C-I 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-I Certificates, or principal of, or interest or premium
on, the Class A Certificates, the Class B Certificates or the Class C-II
Certificates, (iii) was computed in accordance with the provisions of the
Class C-I Certificates, the Class C-I 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.
45
II-2
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the ABN
AMRO Sub-Account of the Class C-I 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.
(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 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:
46
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
47
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 ABN AMRO BANK N.V.,
Chicago Branch (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1997-1C-I) dated as of March 21, 1997, 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 ABN AMRO Sub-Account of the Class C-I 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 ABN
AMRO Sub-Account of the Class C-I 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-I Certificates, or principal of, or interest or premium
on, the Class A Certificates, the Class B Certificates or the Class C-II
Certificates, (iii) was computed in accordance with the provisions of the
Class C-I Certificates, the Class C-I 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.
48
III-2
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the ABN
AMRO Sub-Account of the Class C-I 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.
(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 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:
49
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
50
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 ABN AMRO BANK N.V., Chicago
Branch (the "Liquidity Provider"), with reference to the Revolving Credit
Agreement (1997-1C-I) dated as of March _21, 1997, 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 ABN AMRO Sub-Account of the Class C-I 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 ABN
AMRO Sub-Account of the Class C-I 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-I Certificates, or principal of, or interest or premium on,
the Class A Certificates, the Class B Certificates or the Class C-II
Certificates, (iii) was computed in accordance with the provisions of the
Class C-I Certificates, the Class C-I 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.
51
IV-2
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the ABN
AMRO Sub-Account of the Class C-I 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:
52
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
53
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 March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines Pass Through Trust,
1997-1C-I-[O/S], as Borrower, and ABN AMRO BANK N.V., Chicago
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.
54
V-2
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,
ABN AMRO BANK N.V.,
Chicago Branch,
as Liquidity Provider
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
cc: Wilmington Trust Company,
as Class C-I Trustee
55
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines Pass Through Trust,
1997-1C-I-[O/S], as Borrower, and ABN AMRO BANK N.V., Chicago
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.
56
VI-2
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:
1
EXHIBIT 4.14
- -------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1997-1C-I)
Dated as of March 21, 1997
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines Pass Through Trust 1997-1C-I-O
as Borrower
and
ING Bank N.V.
as Liquidity Provider
- -------------------------------------------------------------------------------
Relating to
Continental Airlines Pass Through Trust 1997-1C-I-O
7.42% Continental Airlines Pass Through Certificates,
Series 1997-1C-I-O
2
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 ........................................... 9
Section 2.02. Making the Advances .................................... 9
Section 2.03. Fees ................................................... 12
Section 2.04. Adjustments or Termination of the Maximum Commitment ... 12
Section 2.05. Repayments of Interest Advances or the Final Advance ... 13
Section 2.06. Repayments of Provider Advances ........................ 13
Section 2.07. Payments to the Liquidity Provider
Under the Intercreditor Agreement....................... 15
Section 2.08. Book Entries ........................................... 15
Section 2.09. Payments from Available Funds Only ..................... 15
Section 2.10. Extension of the Expiry Date; Non-Extension Advance .... 16
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs ........................................ 17
Section 3.02. Capital Adequacy ....................................... 18
Section 3.03. Payments Free of Deductions ............................ 19
Section 3.04. Payments ............................................... 20
Section 3.05. Computations ........................................... 20
Section 3.06. Payment on Non-Business Days ........................... 20
Section 3.07. Interest ............................................... 21
Section 3.08. Replacement of Borrower ................................ 23
i
3
Section 3.09. Funding Loss Indemnification ........................... 23
Section 3.10. Illegality ............................................. 23
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness
of Section 2.01 ........................................ 24
Section 4.02. Conditions Precedent to Borrowing ...................... 26
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower................... 27
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default............................. 28
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc ....................................... 28
Section 7.02. Notices, Etc .......................................... 28
Section 7.03. No Waiver; Remedies ................................... 30
Section 7.04. Further Assurances .................................... 30
Section 7.05. Indemnification; Survival of Certain Provisions ....... 30
Section 7.06. Liability of the Liquidity Provider ................... 31
Section 7.07. Costs, Expenses and Taxes ............................. 32
Section 7.08. Binding Effect; Participations ........................ 32
Section 7.09. Severability .......................................... 35
Section 7.10. GOVERNING LAW ......................................... 35
Section 7.11. Submission to Jurisdiction; Waiver of
Jury Trial; Waiver of Immunity......................... 35
Section 7.12. Execution in Counterparts ............................. 37
Section 7.13. Entirety .............................................. 37
ii
4
Section 7.15. Transfer .............................................. 37
Section 7.16. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES ...... 37
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
iii
5
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of March 21, 1997, 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-I Trust (as
defined below) (the "Borrower", and ING BANK N.V., a bank organized under the
laws of The Netherlands ("ING" or the "Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class C-I 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-I Trust is issuing the Class C-I
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a portion
of the interest on the Class C-I 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.
6
2
"Applicable Liquidity Rate" has the meaning assigned to such term in
Section 3.07(g).
"Applicable Margin" means (w) with respect to any Unpaid Advance or
Applied Provider Advance that is a LIBOR Advance, 1.75%, (x) with respect to
any Unpaid Advance or Applied Provider Advance that is a Base Rate Advance,
1.75%, (y) with respect to any Unapplied Provider Advance that is a LIBOR
Advance, .40% and (z) with respect to any Unapplied Provider Advance that is a
Base Rate 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).
"Assignment and Assumption Agreement" means the Assignment and Assumption
to be entered into between the Borrower and the trustee of the Successor Trust,
substantially in the form of Exhibit D to the Class C-I Trust Agreement.
"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 or 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.
7
3
"Business Day" means any day other than a Saturday or Sunday or a day on
which commercial banks are required or authorized to close in Houston, Texas,
New York, New York, Amsterdam, The Netherlands or, so long as any Class C-I
Certificate is outstanding, the city and state in which the Class C-I 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.
"Certificates of Deposit" has the meaning assigned to such term in the
Deposit Agreement.
"Deposits" has the meaning assigned to such terms in the Deposit
Agreement.
"Depositary" has the meaning assigned to such term in the Deposit
Agreement.
"Deposit Agreement" means the Deposit Agreement dated March 21, 1997
between First Security Bank, National Association, as Escrow Agent and Credit
Suisse First Boston, as Depositary, pertaining to the Class C-I Certificates,
as the same may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
"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.
"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.
"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.
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"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 after the date hereof
(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), 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.
"Expiry Date" means March 19, 1998, 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 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) and ending
on the next Regular Distribution Date; and
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(ii) each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the next
Regular Distribution Date;
provided, however, that (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 Regular
Distribution Date following such conversion (in the case of clause (y)
above).
"Lending Office" means the lending office of the Liquidity Provider
presently located at Amsterdam, The Netherlands, 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 (provided that, with respect to the
period prior to the Delivery Period Expiry Date, such Equipment Notes have an
aggregate
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outstanding principal balance in excess of $280,000,000) or (b) a Continental
Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
directors, officers, employees and agents of the Liquidity Provider, and (iii)
the successors and permitted assigns of the persons described in clauses (i)
and (ii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the recital
of parties to this Agreement.
"Maximum Available Commitment" 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, for any day, the lesser of (x) $6,721,126.50
and (y) the Stated Portion of the Required Amount on such day.
"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.
"Offering Memorandum" means the Offering Memorandum dated March 12, 1997
relating to the Certificates, as such Offering Memorandum may be amended or
supplemented.
"Performing Note Deficiency" means any time that less than 65 % of the
then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
"Provider Advance" means a Downgrade Advance or a Non-Extension Advance.
"Regulatory Change" has the meaning assigned to such term in Section 3.01.
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"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-I Certificates, that would be payable on the Class C-I
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-I
Certificates on such day and without regard to expected future payments of
principal on the Class C-I Certificates.
"Stated Portion" means 50%.
"Successor Trust" means Continental Airlines Pass Through Trust
1997-1C-I-S.
"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-I 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.
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"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 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:
"Certificates", "Class A Certificates", "Class B Certificates",
"Class C-I Cash Collateral Account", "Class C-I Certificates",
"Class C-I Certificateholders", "Class C-I Trust", "Class C-I Trust
Agreement", "Class C-I Trustee", "Class C-II Certificates",
"Closing Date", "Continental", "Continental Bankruptcy Event",
"Controlling Party", "Corporate Trust Office", "Delivery Period
Expiry Date", "Distribution Date", "Downgraded Facility",
"Equipment Notes", "Financing Agreement", "Indenture", "ING Fee
Letter", "ING Sub-Account", "Initial Purchasers", "Investment
Earnings", "Liquidity Facility", "Loan Trustee", "Moody's",
"Non-Extended Facility", "Note Purchase Agreement", "Operative
Agreements", "Performing Equipment Note", "Person", "Pool Balance",
"Purchase Agreement", "Rating Agency", "Registration Rights
Agreement", "Regular Distribution Date, "Replacement Liquidity
Facility", "Responsible Officer", "Scheduled Payment", "Special
Payment", "Standard & Poor's", "Stated Interest Rate",
"Sub-Account", "Subordination Agent", "Taxes", "Threshold Rating",
"Transfer", "Trust Agreements, "Trustee" and "Written Notice".
(c) Interest on Certificates. For all purposes of this Agreement,
each scheduled payment with respect to a Class C-I Certificate shall be
deemed to be comprised of interest and principal components, with the
interest
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component equalling interest accrued at the Stated Interest Rate for the
Class C-I Certificates from (i) the later of (x) the date of issuance
thereof and (y) the most recent but preceding Regular Distribution Date
to (ii) the Regular Distribution Date on which such Scheduled Payment is
being made, such interest to be considered payable in arrears on such
Regular Distribution Date and to be calculated and allocated in the same
manner as interest on the Class C-I Equipment Notes.
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 the Stated Portion of interest on the Class
C-I 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
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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 in
accordance with said Section 3.6(d)) 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 ING Sub-Account of the Class C-I
Cash Collateral Account in accordance with said Section 3.6(d).
(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 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
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
ING Sub-Account of the Class C-I Cash Collateral Account in accordance
with said Section 3.6(c).
(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 ING Sub-Account of the Class C-I
Cash Collateral Account (in accordance with Section 3.6(i) of the
Intercreditor Agreement).
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(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, the Liquidity Provider shall, upon
satisfaction of the conditions precedent set forth in Section 4.02 with
respect to a requested Borrowing, 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, make available to the Borrower, in accordance with
its payment instructions, in U.S. dollars and immediately available
funds, the amount of such 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, the Liquidity Provider shall,
upon satisfaction of the conditions precedent set forth in Section 4.02
with respect to a requested Borrowing, 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, make available to the Borrower, in
accordance with its payment instructions, in U.S. dollars and in
immediately available funds, the amount of such Borrowing. Payments of
proceeds of a Borrowing shall be made by wire transfer of immediately
available funds to the Borrower in accordance with such wire transfer
instructions as the Borrower shall furnish from time to time to the
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(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 ING Sub-Account of the Class C-I
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Cash Collateral Account, the Liquidity Provider shall have no interest in
or rights to the Class C-I Cash Collateral Account, any Sub-Account
thereof, such Advance or any other amounts from time to time on deposit
in the Class C-I Cash Collateral Account or any Sub-Account thereof;
provided that the foregoing shall not affect or impair the obligations of
the Subordination Agent to make the distributions contemplated by Section
3.6(e) or (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 ING Fee Letter.
Section 2.04. Adjustments or Termination of the Maximum Commitment. (a)
Automatic Adjustments. Promptly following each date on which the Required
Amount is (1) reduced as a result of a reduction in the Pool Balance of the
Class C-I Certificates or otherwise, (2) increased as a result of an increase
in the Stated Interest Rate or (3) subsequent to such an increase described in
clause (2), reduced pursuant to the definition of "Stated Interest Rate",
clause (y) of the definition of Maximum Commitment shall automatically be
reduced or increased, as the case may be, to an amount equal to the Stated
Portion of the Required Amount (as calculated by the Borrower). The Borrower
shall give notice of any such automatic reduction or increase 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 or increase 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
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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 ING
Sub-Account of the Class C-I Cash Collateral Account, invested and withdrawn
from the ING Sub-Account of the Class C-I 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 ING Sub-Account of the Class C-I Cash
Collateral Account for the purpose of paying interest on the Class C-I
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
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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
ING Sub-Account of the Class C-I 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 the
Stated Portion of 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 ING Sub-Account of the
Class C-I 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 Stated Portion of 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 ING
Sub-Account of the Class C-I 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
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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 such manner as it 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 Stated Portion
of amounts that constitute Scheduled Payments, Special Payments or payments
under Section 9.1 of the Participation Agreements and Sections 6 and 7 of the
Note Purchase Agreement and only to the extent that the Borrower shall have
sufficient income or proceeds therefrom to enable the Borrower to make payments
in accordance with the terms hereof after giving effect to the priority of
payments provisions set forth in the Intercreditor Agreement. The Liquidity
Provider agrees that it will look solely to such amounts to the extent
available for distribution to it as provided in the Intercreditor Agreement and
this Agreement and that the Borrower, in its individual capacity, is not
personally liable to it for any amounts payable or liability under this
Agreement except as expressly provided in this Agreement, the Intercreditor
Agreement or any Participation Agreement. Amounts on deposit in the ING
Sub-Account of the Class C-I Cash Collateral Account shall be available to the
Borrower to make payments under this Agreement
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only to the extent and for the purposes expressly contemplated in Section
3.6(f) of the Intercreditor Agreement. Amounts on deposit in the other
Sub-Account in respect of the Class C-I Certificates shall not be available to
make payments under this Agreement.
Section 2.10. Extension of the Expiry Date; Non-Extension Advance. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Maturity Date for the Class C-I 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. Subject to the ING Fee Letter, 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
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receivable being herein called "Additional Costs"), resulting from any change
after the date of this Agreement in U.S. federal, state, municipal, or foreign
laws or regulations (including Regulation D), or the adoption or making after
the date of this Agreement of any interpretations, directives, or requirements
applying to a class of banks including the Liquidity Provider under any U.S.
federal, state, municipal, or any foreign laws or regulations (whether or not
having the force of law) by any court, 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. Subject to the ING Fee Letter, 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
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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 bank and of the amount allocable to the
Liquidity Provider's obligations to the Borrower hereunder shall be prima facie
evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. (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
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(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 Forms 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
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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 Northern Trust Company of New
York, One World Trade Center, Suite 3941, New York, New York 10048, Account No.
105981-20010, Account Name: ING Lease (Ireland) B.V., as agent for ING Bank
N.V.
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 ING Sub-Account of the Class
C-I Cash Collateral Account to pay interest on the Class C-I 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 ING Sub-Account of
the Class C-I Cash Collateral Account is fully replenished in
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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) may 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.
(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).
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(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 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 ING Sub-Account of the Class C-I Cash Collateral Account
for such period plus .35% per annum 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
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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.
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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 Offering Memorandum and specimen
copies of the Class C-I Certificates;
(v) An executed copy of each document, instrument,
certificate and opinion delivered on or before the Closing
Date pursuant to the Class C-I Trust Agreement, the
Intercreditor Agreement and the other Operative Agreements
(together with, in the case of each such opinion, other than
the opinion of counsel for the Initial Purchasers, a letter
from the counsel rendering such opinion to the effect that
the Liquidity Provider is entitled to rely on such opinion as
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
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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 (related to Leased Aircraft) or the corresponding
section of the Indentures (related to Owned Aircraft) to the
parties thereto and (ii) Continental agrees to allow the
Liquidity Provider to inspect Continental's books and records
regarding such transactions, and to discuss such transactions
with officers and employees of Continental; and
(viii) Such other documents, instruments, opinions and
approvals as the Liquidity Provider shall have reasonably
requested.
(b) The following 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.
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(d) All conditions precedent to the issuance of the Certificates
under the Trust Agreements shall have been satisfied, all conditions
precedent to the effectiveness of the other Liquidity Facilities shall
have been satisfied, and all conditions precedent to the purchase of the
Certificates by the Initial Purchasers under the Purchase Agreement shall
have been satisfied (unless any of such conditions precedent shall have
been waived by the Initial Purchasers).
(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.
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(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 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) this
Agreement to expire on the fifth Business Day after the date on which such
Termination Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final Advance in
accordance with Section 2.02(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
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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: ING Bank N.V.
Department of Bankgarantie Zaken -
Juridische Zaken
Location code HG 01.06
P.O. Box 1800
1000 B.V. Amsterdam
by courier:
Amsterdamse Poort
Bijlmer plein 888
1102 MG Amsterdam
The Netherlands
Telephone: 011-31-20-652-3260
Telecopy: 011-31-20-652-3235
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with a copy to:
ING Lease (Ireland) B.V.
49 St. Stephen's Green
Dublin 2, Ireland
Telephone: 011-353-1-662-2211
Telecopy: 011-353-1-662-2240
or, as to each of the foregoing, at such other address as shall be
designated by such Person in a written notice to the others. All such
notices and communications shall be effective (i) if given by telecopier,
when transmitted to the telecopier number specified above, (ii) if given
by mail, when deposited in the mails addressed as specified above, and
(iii) if given by other means, when delivered at the address specified
above, except that written notices to the Liquidity Provider pursuant to
the provisions of Articles II and III hereof shall not be effective until
received by the Liquidity Provider. A copy of all notices delivered
hereunder to either party shall in addition be delivered to each of the
parties to the Participation Agreements at their respective addresses set
forth therein.
Section 7.03. No Waiver; Remedies. No failure on the part of the Liquidity
Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 7.04. Further Assurances. The Borrower agrees to do such further
acts and things and to execute and deliver to the Liquidity Provider such
additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.05. Indemnification; Survival of Certain Provisions. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 10.1 of the Participation Agreements and Section 6
of the Note Purchase Agreement. In addition, the Borrower agrees to
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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 ING 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 ING Fee Letter, the Intercreditor Agreement
or any Financing Agreement; provided, however, that the Borrower shall not be
required to indemnify, protect, defend and hold harmless any Liquidity
Indemnitee in respect of any Expense of such Liquidity Indemnitee (i) to the
extent such Expense is attributable to the gross negligence or willful
misconduct of such Liquidity Indemnitee or any other Liquidity Indemnitee, (ii)
that is ordinary and usual operating overhead expense, and (iii) to the extent
such Expense is attributable to the failure by such Liquidity Indemnitee or any
other Liquidity Indemnitee to perform or observe any agreement, covenant or
condition on its part to be performed or observed in this Agreement, the
Intercreditor Agreement, the ING Fee Letter, the Tax Letter or any other
Operative Document to which it is a party. The indemnities contained in such
Section 10.1, 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
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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, director 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 Cash Collateral Accounts. In addition, the Borrower
shall pay any and all recording, stamp and other similar taxes and fees payable
or
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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(a) 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
transfer, the
37
33
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
38
34
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.
(d) Notwithstanding the other provisions of this Section 7.08, if at
any time after the date hereof the Borrower shall withhold taxes as
required by law from any payments made to the Liquidity Provider, the
Liquidity Provider may assign all (but not less than all) of its rights
and obligations under this Agreement to the New York Branch of ING Bank
N.V. ( the "ING Transferee"); provided, that it shall be a condition to
any such transfer that (i) the ING Transferee enters into an agreement in
form and substance reasonably satisfactory to the Borrower pursuant to
which the ING Transferee assumes all of the obligations of the Liquidity
Provider hereunder, under the Intercreditor Agreement, the ING Fee Letter
and the Tax Letter, (ii) the ING Transferee delivers an opinion to the
Borrower and each of the Rating Agencies in form and substance reasonably
satisfactory to the Borrower opining that this Agreement, the
Intercreditor Agreement, the ING Fee Letter and the Tax Letter are
enforceable obligations of the ING Transferee, (iii) the Liquidity
Provider shall have delivered to the Borrower a Ratings Confirmation with
respect to such transfer from each Rating Agency, (iv) the ING Transferee
shall satisfy each of the requirements in respect of a Transferee set
forth in Section 7.08(b) and (v) the Liquidity Provider shall pay all
fees and expenses (including, without limitation, legal fees and
disbursements) of the Borrower in connection with such transfer. Upon the
satisfaction of the conditions set forth in this Section 7.08(d), the ING
Transferee shall be deemed to be the Liquidity Provider with the rights
and obligations of the Liquidity Provider hereunder and under the other
Operative Agreements.
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.
39
35
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
40
36
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. Transfer. The Liquidity Provider hereby acknowledges and
consents to the Transfer contemplated by the Assignment and Assumption
Agreement.
Section 7.16. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES. EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE
41
37
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 duty
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-I Trust, as Borrower
By:
------------------------------------
Name:
Title:
ING BANK N.V., as Liquidity Provider
By:
------------------------------------
Name:
Title:
42
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 ING BANK N.V. (the "Liquidity Provider"),
with reference to the Revolving Credit Agreement (1997-1C-I) dated as of March
21, 1997, 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 the Stated Portion of
the interest on the Class C-I Certificates which was payable on
____________, ____ (the "Distribution Date") in accordance with the terms
and provisions of the Class C-I Trust Agreement and the Class C-I
Certificates pursuant to clause fifth of Section 3.2 of the Intercreditor
Agreement or clause seventh of Section 3.3 of the Intercreditor
Agreement, which Advance is requested to be made on ____________, ____.
(3) The amount of the Interest Advance requested hereby (i) is
$_______________.__, to be applied in respect of the payment of the
Stated Portion of the interest which was due and payable on the Class C-I
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, the Class C-I Certificates or the
Class C-II Certificates, or interest on the Class A Certificates, the
Class B Certificates or the Class C-II Certificates, (iii) was computed
in accordance with the provisions of the Class C-I Certificates, the
Class C-I 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
43
I-2
hereof, (v) does not include any amount of interest which was due and
payable on the Class C-I Certificates on such Distribution Date but which
remains unpaid due to the failure of the Depositary to pay any amount of
accrued interest on the Certificates of Deposit on such Distribution Date
and (vi) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.2 or 3.3 of the Intercreditor Agreement, as the
case may be, (b) no portion of such amount shall be applied by the
Borrower for any other purpose and (c) no portion of such amount until so
applied shall be commingled with other funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, the making of the Interest Advance as requested by this Notice of
Borrowing shall automatically reduce, subject to reinstatement in accordance
with the terms of the Liquidity Agreement, the 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:
44
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance
with Interest Advance Notice of Borrowing]
45
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 ING BANK N.V. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1997-1C-I) dated as of March 21, 1997, 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 ING Sub-Account of the Class C-I 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 ING
Sub-Account of the Class C-I 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-I Certificates, or principal of, or interest or premium on,
the Class A Certificates, the Class B Certificates or the Class C-II
Certificates, (iii) was computed in accordance with the provisions of the
Class C-I Certificates, the Class C-I 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
46
II-2
such amount in the ING Sub-Account of the Class C-I 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.
(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 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:
47
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
48
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 ING BANK N.V. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1997-1C-I) dated as of March 21, 1997, 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 ING Sub-Account of the Class C-I 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 ING
Sub-Account of the Class C-I 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-I Certificates, or principal of, or interest or premium on,
the Class A Certificates, the Class B Certificates or the Class C-II
Certificates, (iii) was computed in accordance with the provisions of the
Class C-I Certificates, the Class C-I 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.
49
III-2
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the ING
Sub-Account of the Class C-I 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.
(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 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:
50
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
51
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 ING BANK N.V. (the "Liquidity Provider"),
with reference to the Revolving Credit Agreement (1997-1C-I) dated as of March
_21, 1997, 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 ING Sub-Account of the Class C-I 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 ING
Sub-Account of the Class C-I 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-I Certificates, or principal of, or interest or premium on, the
Class A Certificates, the Class B Certificates or the Class C-II
Certificates, (iii) was computed in accordance with the provisions of the
Class C-I Certificates, the Class C-I 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.
52
IV-2
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the ING
Sub-Account of the Class C-I 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:
53
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
54
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 March 21, 1997,
between Wilmington Trust Company, as Subordination Agent,
as agent and trustee for the Continental Airlines Pass
Through Trust, 1997-1C-I-[O/S], as Borrower, and ING BANK
N.V. (the "Liquidity Agreement")
Ladies and Gentlemen:
You are hereby notified that pursuant to Section 6.01 of the Liquidity
Agreement, by reason of the occurrence of a Liquidity Event of Default and 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.
55
V-2
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,
ING BANK N.V.,
as Liquidity Provider
By:
--------------------------------
Name:
Title:
cc: Wilmington Trust Company,
as Class C-I Trustee
56
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of March 21, 1997,
between Wilmington Trust Company, as Subordination Agent,
as agent and trustee for the Continental Airlines Pass
Through Trust, 1997-1C-I-[O/S], as Borrower, and ING BANK
N.V. (the "Liquidity Agreement")
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
------------------------------
[Name of Transferee]
------------------------------
[Address of Transferee]
all rights 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.
57
VI-2
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:
1
EXHIBIT 4.15
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1997-1C-II)
Dated as of March 21, 1997
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines Pass Through Trust 1997-1C-II-O
as Borrower
and
ABN AMRO BANK N.V., CHICAGO BRANCH
as Liquidity Provider
- --------------------------------------------------------------------------------
Relating to
Continental Airlines Pass Through Trust 1997-1C-II-O
7.42% Continental Airlines Pass Through Certificates,
Series 1997-1C-II-O
2
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 . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.02. Making the Advances . . . . . . . . . . . . . . . . . . . . . 9
Section 2.03. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.04. Adjustments or Termination of the Maximum Commitment . . . . . 12
Section 2.05. Repayments of Interest Advances or the Final Advance . . . . . 12
Section 2.06. Repayments of Provider Advances . . . . . . . . . . . . . . . 13
Section 2.07. Payments to the Liquidity Provider Under the Intercreditor
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.08. Book Entries . .
Section 2.09. Payments from Available Funds Only . . . . . . . . . . . . . . 15
Section 2.10. Extension of the Expiry Date; Non-Extension Advance . . . . . 16
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.02. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.03. Payments Free of Deductions . . . . . . . . . . . . . . . . . 18
Section 3.04. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.05. Computations . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.06. Payment on Non-Business Days . . . . . . . . . . . . . . . . . 19
3
TABLE OF CONTENTS
(Continued)
Page
Section 3.07. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.08. Replacement of Borrower . . . . . . . . . . . . . . . . . . . . 21
Section 3.09. Funding Loss Indemnification . . . . . . . . . . . . . . . . . . 22
Section 3.10. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01 . . . . . 23
Section 4.02. Conditions Precedent to Borrowing . . . . . . . . . . . . . . . 25
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower . . . . . . . . . . . . . 25
Section 5.02. Negative Covenants of the Borrower . . . . . . . . . . . . . . . 26
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default . . . . . . . . . . . . . . . . . . 26
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.04. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.05. Indemnification; Survival of Certain Provisions . . . . . . . . 28
Section 7.06. Liability of the Liquidity Provider . . . . . . . . . . . . . . 29
Section 7.07. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . 29
4
TABLE OF CONTENTS
(Continued)
Page
Section 7.08. Binding Effect; Participations . . . . . . . . . . . . 30
Section 7.09. Severability . . . . . . . . . . . . . . . . . . . . . 32
Section 7.10. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 32
Section 7.11. Submission to Jurisdiction; Waiver
of Jury Trial; Waiver of Immunity . . . . . . . . . 32
Section 7.12. Execution in Counterparts . . . . . . . . . . . . . . 34
Section 7.13. Entirety . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.14. Headings . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.15. Transfer . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.16. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES . . . 34
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
5
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of March 21, 1997,
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-II Trust (as
defined below) (the "Borrower"), and ABN AMRO BANK N.V., a bank organized under
the laws of The Netherlands, acting through its Chicago Branch ("ABN AMRO" or
the "Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class C-II 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-II Trust is issuing the
Class C-II Certificates; and
WHEREAS, the Borrower, in order to support the timely payment
of a portion of the interest on the Class C-II 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.
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2
"Applicable Liquidity Rate" has the meaning assigned to such
term in Section 3.07(g).
"Applicable Margin" means (w) with respect to any Unpaid
Advance or Applied Provider Advance that is a LIBOR Advance, 1.75%,
(x) with respect to any Unpaid Advance or Applied Provider Advance
that is a Base Rate Advance, 1.75%, (y) with respect to any Unapplied
Provider Advance that is a LIBOR Advance, .40% and (z) with respect
to any Unapplied Provider Advance that is a Base Rate 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).
"Assignment and Assumption Agreement" means the Assignment and
Assumption to be entered into between the Borrower and the trustee of
the Successor Trust, substantially in the form of Exhibit D to the
Class C-II Trust Agreement.
"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 or 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.
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3
"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, Chicago, Illinois or, so long
as any Class C-II Certificate is outstanding, the city and state in
which the Class C-II 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.
"Certificates of Deposit" has the meaning assigned to such
term in the Deposit Agreement.
"Deposits" has the meaning assigned to such terms in the
Deposit Agreement.
"Depositary" has the meaning assigned to such term in the
Deposit Agreement.
"Deposit Agreement" means the Deposit Agreement dated March
21, 1997 between First Security Bank, National Association, as Escrow
Agent and Credit Suisse First Boston, as Depositary, pertaining to the
Class C- II Certificates, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"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.
"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.
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"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 after the date hereof (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), 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.
"Expiry Date" means March 19, 1998, 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:
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5
(i) the period beginning on the third Business Day
following 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) and ending on
the next Regular Distribution Date; and
(ii) each subsequent period commencing on the last day of
the immediately preceding Interest Period and ending
on the next Regular Distribution Date;
provided, however, that (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 Regular Distribution Date following such conversion (in the
case of clause (y) above).
"Lending Office" means the lending office of the Liquidity
Provider presently located at Chicago, Illinois, 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
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6
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 (provided that, with
respect to the period prior to the Delivery Period Expiry Date, such
Equipment Notes have an aggregate outstanding principal balance in
excess of $280,000,000) or (b) a Continental Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii)
the directors, officers, employees and agents of the Liquidity
Provider, and (iii) the successors and permitted assigns of the
persons described in clauses (i) and (ii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in
the recital of parties to this Agreement.
"Maximum Available Commitment" 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, for any day, the lesser of (x)
$605,000.00 and (y) the Stated Portion of the Required Amount on such
day.
"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.
"Offering Memorandum" means the Offering Memorandum dated
March 12, 1997 relating to the Certificates, as such Offering
Memorandum may be amended or supplemented.
11
7
"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.
"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-II Certificates, that would be
payable on the Class C-II 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- II
Certificates on such day and without regard to expected future
payments of principal on the Class C-II Certificates.
"Stated Portion" means 50%.
"Successor Trust" means Continental Airlines Pass Through
Trust 1997-1C-II-S.
"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-II 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
12
8
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 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:
"ABN AMRO Fee Letter", "ABN AMRO Sub-Account", "Certificates", "Class
A Certificates", "Class B Certificates", "Class C-I Certificates",
"Class C-II Cash Collateral Account", "Class C-II Certificateholders",
"Class C-II Certificates", "Class C-II Trust", "Class C-II Trust
Agreement", "Class C-II Trustee", "Closing Date", "Continental",
"Continental Bankruptcy Event", "Controlling Party", "Corporate Trust
Office", "Delivery Period Expiry Date", "Distribution Date",
"Downgraded Facility", "Equipment Notes", "Financing Agreement",
"Indenture", "Initial Purchasers", "Investment Earnings", "Liquidity
Facility", "Loan Trustee", "Moody's", "Non-Extended Facility", "Note
Purchase Agreement", "Operative Agreements", "Performing Equipment
Note", "Person", "Pool Balance", "Purchase Agreement", "Rating
Agency", "Registration Rights Agreement", "Regular Distribution Date,
"Replacement Liquidity Facility", "Responsible Officer",
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9
"Scheduled Payment", "Special Payment", "Standard & Poor's", "Stated
Interest Rate", "Sub-Account", "Subordination Agent", "Taxes",
"Threshold Rating", "Transfer", "Trust Agreements, "Trustee" and
"Written Notice".
(c) Interest on Certificates. For all purposes of this
Agreement, each scheduled payment with respect to a Class C-II Certificate
shall be deemed to be comprised of interest and principal components, with the
interest component equaling interest accrued at the Stated Interest Rate for
the Class C-II Certificates from (i) the later of (x) the date of issuance
thereof and (y) the most recent but preceding Regular Distribution Date to (ii)
the Regular Distribution Date on which such Scheduled Payment is being made,
such interest to be considered payable in arrears on such Regular Distribution
Date and to be calculated and allocated in the same manner as interest on the
Class C-II Equipment Notes.
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 the Stated Portion of interest on the
Class C-II 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
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(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 in accordance
with said Section 3.6(d)) 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 ABN AMRO Sub-Account of the Class C-II Cash Collateral Account in
accordance with said Section 3.6(d).
(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 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
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 ABN AMRO Sub-Account of the Class
C-II Cash Collateral Account in accordance with said Section 3.6(c).
(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 ABN AMRO Sub-Account
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of the Class C-II Cash Collateral Account (in accordance with Section 3.6(i) of
the Intercreditor Agreement).
(e) Each Borrowing shall be made on notice in writing (a
"Notice of Borrowing") in substantially the form required by Section 2.02(a),
2.02(b), 2.02(c) or 2.02(d), as the case may be, given by the Borrower to the
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, the Liquidity Provider shall, upon satisfaction of the conditions
precedent set forth in Section 4.02 with respect to a requested Borrowing,
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, make available to the Borrower, in
accordance with its payment instructions, in U.S. dollars and immediately
available funds, the amount of such 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, the Liquidity Provider shall, upon
satisfaction of the conditions precedent set forth in Section 4.02 with respect
to a requested Borrowing, 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, make available to the Borrower, in accordance with its payment
instructions, in U.S. dollars and in immediately available funds, the amount of
such Borrowing. Payments of proceeds of a Borrowing shall be made by wire
transfer of immediately available funds to the Borrower in accordance with such
wire transfer instructions as the Borrower shall furnish from time to time to
the Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(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 ABN AMRO Sub-Account of the Class C-II Cash Collateral Account, the
Liquidity Provider shall have no interest in or rights to the Class C-II
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Cash Collateral Account, any Sub-Account thereof, such Advance or any other
amounts from time to time on deposit in the Class C-II Cash Collateral Account
or any Sub-Account thereof; provided that the foregoing shall not affect or
impair the obligations of the Subordination Agent to make the distributions
contemplated by Section 3.6(e) or (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 ABN AMRO Fee Letter.
Section 2.04. Adjustments or Termination of the Maximum
Commitment. (a) Automatic Adjustments. Promptly following each date on which
the Required Amount is (1) reduced as a result of a reduction in the Pool
Balance of the Class C-II Certificates or otherwise, (2) increased as a result
of an increase in the Stated Interest Rate or (3) subsequent to such an
increase described in clause (2), reduced pursuant to the definition of "Stated
Interest Rate", clause (y) of the definition of Maximum Commitment shall
automatically be reduced or increased, as the case may be, to an amount equal
to the Stated Portion of the Required Amount (as calculated by the Borrower).
The Borrower shall give notice of any such automatic reduction or increase 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 or increase 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
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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
ABN AMRO Sub-Account of the Class C-II Cash Collateral Account, invested and
withdrawn from the ABN AMRO Sub-Account of the Class C-II 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 ABN AMRO
Sub-Account of the Class C-II Cash Collateral Account for the purpose of paying
interest on the Class C-II 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
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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
ABN AMRO Sub- Account of the Class C-II 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 the
Stated Portion of 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 ABN AMRO Sub-Account
of the Class C-II 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
Stated Portion of 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 ABN AMRO
Sub-Account of the Class C-II 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
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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 such manner as it 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
Stated Portion of amounts that constitute Scheduled Payments, Special Payments
or payments under Section 9.1 of the Participation Agreements and Sections 6
and 7 of the Note Purchase Agreement and only to the extent that the Borrower
shall have sufficient income or proceeds therefrom to enable the Borrower to
make payments in accordance with the terms hereof after giving effect to the
priority of payments provisions set forth in the Intercreditor Agreement. The
Liquidity Provider agrees that it will look solely to such amounts to the
extent available for distribution to it as provided in the Intercreditor
Agreement and this Agreement and that the Borrower, in its individual capacity,
is not personally liable to it for any amounts payable or liability under this
Agreement except as expressly provided in this Agreement, the Intercreditor
Agreement or any Participation Agreement. Amounts on deposit in the ABN AMRO
Sub-Account of the Class C-II Cash Collateral Account shall be available to the
Borrower to make payments under this Agreement only to the extent and for the
purposes expressly contemplated in Section 3.6(f) of the Intercreditor
Agreement. Amounts on deposit in the other Sub-Account in respect of the Class
C-II Certificates shall not be available to make payments under this Agreement.
Section 2.10. Extension of the Expiry Date; Non-Extension
Advance. No earlier than the 60th day and no later
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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 Maturity Date for
the Class C-II 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. Subject to the ABN AMRO Fee
Letter, 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), 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
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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. Subject to the ABN AMRO Fee
Letter, 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
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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 bank and of the amount
allocable to the Liquidity Provider's obligations to the Borrower hereunder
shall be prima facie evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. All payments made
by the Borrower under this Agreement shall be made free and clear of, and
without reduction for or on account of, any 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
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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 Forms 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.
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 ABN AMRO Bank
N.V., New York, NY, ABA # 026009580, Account Name: ABN AMRO Bank, N.V. -
Chicago Branch, Account # 651-0-010111-42, Reference: Continental Airlines,
Inc.
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.
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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 ABN AMRO
Sub-Account of the Class C-II Cash Collateral Account to pay interest on the
Class C-II 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 ABN AMRO Sub-Account of the Class C-II 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) may 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.
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(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 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 ABN AMRO Sub-Account of the Class C-II Cash Collateral Account for such
period plus .35% per annum 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
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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.
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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 Offering Memorandum and specimen copies
of the Class C-II Certificates;
(v) An executed copy of each document, instrument,
certificate and opinion delivered on or before the
Closing Date pursuant to the Class C-II Trust
Agreement, the Intercreditor Agreement and the other
Operative Agreements (together with, in the case of
each such opinion, other than the opinion of counsel
for the Initial Purchasers, a letter from the counsel
rendering such opinion to the effect that the
Liquidity Provider is entitled to rely on such
opinion as 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,
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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 (related to Leased
Aircraft) or the corresponding section of the
Indentures (related to Owned Aircraft) to the parties
thereto and (ii) Continental agrees to allow the
Liquidity Provider to inspect Continental's books and
records regarding such transactions, and to discuss
such transactions with officers and employees of
Continental; and
(viii) Such other documents, instruments, opinions and
approvals as the Liquidity Provider shall have
reasonably requested.
(b) The following 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, all
conditions precedent to the effectiveness of the other Liquidity
Facilities shall have been
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satisfied, and all conditions precedent to the purchase of the
Certificates by the Initial Purchasers under the Purchase Agreement
shall have been satisfied (unless any of such conditions precedent
shall have been waived by the Initial Purchasers).
(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
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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 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) this Agreement to expire on the fifth Business Day after the date on
which such Termination Notice is received by the Borrower, (ii) the Borrower to
promptly request, and the Liquidity Provider to promptly make, a Final Advance
in accordance with Section 2.02(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.
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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: ABN AMRO BANK N.V.
135 South LaSalle Street, #760
Chicago, IL 60674-9135
Attention: Aerospace Department
Telephone: (312) 904-2900
Telecopy: (312) 606-8428
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
32
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delivered hereunder to either party shall in addition be delivered to each of
the parties to the Participation Agreements at their respective addresses set
forth therein.
Section 7.03. No Waiver; Remedies. No failure on the part of
the Liquidity Provider to exercise, and no delay in exercising, any right under
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 7.04. Further Assurances. The Borrower agrees to do
such further acts and things and to execute and deliver to the Liquidity
Provider such additional assignments, agreements, powers and instruments as the
Liquidity Provider may reasonably require or deem advisable to carry into
effect the purposes of this Agreement and the other Operative Agreements or to
better assure and confirm unto the Liquidity Provider its rights, powers and
remedies hereunder and under the other Operative Agreements.
Section 7.05. Indemnification; Survival of Certain Provisions.
The Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 10.1 of the Participation Agreements and Section 6
of the Note Purchase Agreement. In addition, the Borrower agrees to indemnify,
protect, defend and hold harmless the Liquidity Provider from, against and in
respect of, and shall pay on demand, all Expenses of any kind or nature
whatsoever (other than any Expenses of the nature described in Sections 3.01,
3.02 or 7.07 hereof or in the ABN AMRO 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 ABN AMRO Fee Letter, the Intercreditor
Agreement or any Financing Agreement; provided, however, that the Borrower
shall not be required to indemnify, protect, defend and hold harmless any
Liquidity Indemnitee in respect of any Expense of such Liquidity Indemnitee (i)
to the extent such Expense is attributable to the gross negligence or willful
misconduct of such Liquidity Indemnitee or any other Liquidity Indemnitee, (ii)
that is ordinary and usual operating overhead expense, and (iii) to the extent
such Expense is attributable to the failure by such Liquidity Indemnitee or any
33
29
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 ABN AMRO Fee Letter, the Tax Letter or any other
Operative Document to which it is a party. The indemnities contained in such
Section 10.1, 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, director 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
34
30
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 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
35
31
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(a) 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
transfer, the Transferee shall (i) represent to the Liquidity Provider (for the
benefit of the Liquidity Provider and the Borrower) either (A) that it is
incorporated under the laws of the United States or a state thereof or (B) that
under applicable law and treaties, no taxes will be required to be withheld
with respect to any payments to be made to such Transferee in respect of this
Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a
state thereof or (y) if it is not so incorporated, two copies of a properly
completed United States Internal Revenue Service Form 4224 or Form 1001, as
appropriate, or other applicable form, certificate or document prescribed by
the Internal Revenue Service certifying, in each case, such Transferee's
entitlement to a complete exemption from United States federal withholding tax
in respect to any and all payments to be made hereunder, and (iii) agree (for
the benefit of the Liquidity Provider and the Borrower) to provide the
Liquidity Provider and the Borrower a new Form 4224 or
36
32
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
37
33
for the Southern District of New York, and the
appellate courts from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection that
it may now or hereafter have to the venue of any such
action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof
by registered or certified mail (or any substantially
similar form and mail), postage prepaid, to each
party hereto at its address set forth in Section 7.02
hereof, or at such other address of which the
Liquidity Provider shall have been notified pursuant
thereto; and
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner
permitted by law or shall limit the right to sue in
any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it
may have from the jurisdiction of the courts of the United States or of any
State and waives any immunity any of its properties located in the United
States may have from attachment or execution upon a judgement entered by any
such court under the
38
34
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. Transfer. The Liquidity Provider hereby
acknowledges and consents to the Transfer contemplated by the Assignment and
Assumption Agreement.
Section 7.16. 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.
39
35
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duty 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-II Trust, as Borrower
By:
----------------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
Chicago Branch, as Liquidity Provider
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
40
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 ABN AMRO N.V.,
Chicago Branch (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1997-1C-II) dated as of March 21, 1997, 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 the Stated
Portion of the interest on the Class C-II Certificates which was
payable on ____________, ____ (the "Distribution Date") in accordance
with the terms and provisions of the Class C-II Trust Agreement and
the Class C-II Certificates pursuant to clause fifth of Section 3.2 of
the Intercreditor Agreement or clause seventh of Section 3.3 of the
Intercreditor Agreement, which Advance is requested to be made on
____________, ____.
(3) The amount of the Interest Advance requested hereby
(i) is $_______________.__, to be applied in respect of the payment of
the Stated Portion of the interest which was due and payable on the
Class C-II 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, the
Class C-I Certificates or the Class C-II Certificates, or interest on
the Class A Certificates, the Class B Certificates or the Class C-I
Certificates, (iii) was computed in accordance with the provisions of
the Class C-II Certificates, the Class C- II Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), (iv) does not exceed the Maximum Available
Commitment on the date hereof, (v) does not include any amount of
interest which was due and payable on the Class C-II Certificates on
41
such Distribution Date but which remains unpaid due to the failure of
the Depositary to pay any amount of accrued interest on the
Certificates of Deposit on such Distribution Date and (vi) has not
been and is not the subject of a prior or contemporaneous Notice of
Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the
amount requested hereby, (a) the Borrower will apply the same in
accordance with the terms of Section 3.2 or 3.3 of the Intercreditor
Agreement, as the case may be, (b) no portion of such amount shall be
applied by the Borrower for any other purpose and (c) no portion of
such amount until so applied shall be commingled with other funds held
by the Borrower.
The Borrower hereby acknowledges that, pursuant to the
Liquidity Agreement, the making of the Interest Advance as requested by this
Notice of Borrowing shall automatically reduce, subject to reinstatement in
accordance with the terms of the Liquidity Agreement, the 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.
I-2
42
IN WITNESS WHEREOF, the Borrower has executed and delivered
this Notice of Borrowing as of the ____ day of _________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:
---------------------------------
Name:
Title:
I-3
43
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest Advance Notice of
Borrowing]
44
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 ABN AMRO
BANK N.V., Chicago Branch (the "Liquidity Provider"), with reference to the
Revolving Credit Agreement (1997-1C-II) dated as of March 21, 1997, 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 ABN AMRO Sub-Account of the Class
C-II 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 ABN AMRO Sub-Account of the Class C-II 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-II
Certificates, or principal of, or interest or premium on, the Class A
Certificates, the Class B Certificates or the Class C-I Certificates,
(iii) was computed in accordance with the provisions of the Class C-II
Certificates, the Class C-II 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
45
such amount in the ABN AMRO Sub-Account of the Class C-II 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.
(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 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 agent and trustee for the Class C-II
Trust, as Borrower
By:
---------------------------------------------
Name:
Title:
II-2
46
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
II-3
47
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 ABN AMRO
BANK N.V., Chicago Branch (the "Liquidity Provider"), with reference to the
Revolving Credit Agreement (1997-1C-II) dated as of March 21, 1997, 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 ABN AMRO Sub-Account of the Class C-II
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 ABN AMRO Sub-Account of the Class C-II 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-II
Certificates, or principal of, or interest or premium on, the Class A
Certificates, the Class B Certificates or the Class C-I Certificates,
(iii) was computed in accordance with the provisions of the Class C-II
Certificates, the Class C-II 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.
48
(4) Upon receipt by or on behalf of the Borrower of the
amount requested hereby, (a) the Borrower will deposit such amount in
the ABN AMRO Sub-Account of the Class C-II 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.
(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 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 agent and trustee
for the Class C-II Trust, as Borrower
By:
-------------------------------------------
Name:
Title:
III-2
49
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 ABN AMRO BANK N.V.,
Chicago Branch (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1997-1C-II) dated as of March 21, 1997, 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 ABN AMRO Sub-Account of the Class C-II
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 ABN AMRO Sub-Account of the Class C-II 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-II Certificates,
or principal of, or interest or premium on, the Class A Certificates,
the Class B Certificates or the Class C-I Certificates, (iii) was
computed in accordance with the provisions of the Class C-II
Certificates, the Class C-II 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.
50
(4) Upon receipt by or on behalf of the Borrower of the
amount requested hereby, (a) the Borrower will deposit such amount in
the ABN AMRO Sub-Account of the Class C-II 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 agent and trustee
for the Class C-II Trust, as Borrower
By:
-------------------------------------------
Name:
Title:
IV-2
51
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
IV-3
52
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 March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines Pass Through Trust,
1997-1C-II- [O/S], as Borrower, and ABN AMRO BANK N.V.,
Chicago 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.
53
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,
ABN AMRO BANK N.V.,
Chicago Branch,
as Liquidity Provider
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
cc: Wilmington Trust Company,
as Class C-II Trustee
V-2
54
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of March 21, 1997, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines Pass Through Trust,
1997-1C-II-[O/S], as Borrower, and ABN AMRO BANK N.V.,
Chicago 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.
55
We ask that this transfer be effective as of _______________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:
--------------------------------------
Name:
Title
VI-2
1
EXHIBIT 4.16
_________________________________________________________________
REVOLVING CREDIT AGREEMENT
(1997-1C-II)
Dated as of March 21, 1997
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines Pass Through Trust 1997-1C-II-O
as Borrower
and
ING Bank N.V.
as Liquidity Provider
_________________________________________________________________
Relating to
Continental Airlines Pass Through Trust 1997-1C-II-O
7.42% Continental Airlines Pass Through Certificates,
Series 1997-1C-II-O
2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS ...................................................... 1
Section 1.01. Certain Defined Terms ....................................... 1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT .............................. 9
Section 2.01. The Advances ................................................ 9
Section 2.02. Making the Advances ......................................... 9
Section 2.03. Fees ........................................................ 12
Section 2.04. Adjustments or Termination of the Maximum Commitment......... 12
Section 2.05. Repayments of Interest Advances or the Final Advance......... 12
Section 2.06. Repayments of Provider Advances ............................. 13
Section 2.07. Payments to the Liquidity Provider Under the
Intercreditor Agreement...................................... 15
Section 2.08. Book Entries................................................. 15
Section 2.09. Payments from Available Funds Only .......................... 15
Section 2.10. Extension of the Expiry Date; Non-Extension Advance.......... 16
ARTICLE III
OBLIGATIONS OF THE BORROWER ....................................... 16
Section 3.01. Increased Costs ............................................ 16
Section 3.02. Capital Adequacy ........................................... 17
Section 3.03. Payments Free of Deductions ................................ 18
Section 3.04. Payments ................................................... 19
Section 3.05. Computations ............................................... 20
Section 3.06. Payment on Non-Business Days ............................... 20
Section 3.07. Interest ................................................... 20
Section 3.08. Replacement of Borrower .................................... 22
Section 3.09. Funding Loss Indemnification ............................... 22
Section 3.10. Illegality ................................................. 23
i
3
ARTICLE IV
CONDITIONS PRECEDENT ............................................. 23
Section 4.01. Conditions Precedent to
Effectiveness of Section 2.01................................ 23
Section 4.02. Conditions Precedent to Borrowing ........................... 25
ARTICLE V
COVENANTS ...................................................... 26
Section 5.01. Affirmative Covenants of the Borrower ..................... 26
Section 5.02. Negative Covenants of the Borrower ........................ 26
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT .................................... 27
Section 6.01. Liquidity Events of Default ............................... 27
ARTICLE VII
MISCELLANEOUS .................................................. 27
Section 7.01. Amendments, Etc ........................................... 27
Section 7.02. Notices, Etc .............................................. 27
Section 7.03. No Waiver; Remedies ....................................... 29
Section 7.04. Further Assurances ........................................ 29
Section 7.05. Indemnification; Survival of Certain Provisions ........... 29
Section 7.06. Liability of the Liquidity Provider ....................... 30
Section 7.07. Costs, Expenses and Taxes ................................. 31
Section 7.08. Binding Effect; Participations ............................ 31
Section 7.09. Severability .............................................. 34
Section 7.10. GOVERNING LAW ............................................. 34
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity......................................... 34
Section 7.12. Execution in Counterparts ................................. 35
Section 7.13. Entirety .................................................. 35
Section 7.14. Headings .................................................. 36
Section 7.15. Transfer .................................................. 36
Section 7.16. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES .......... 36
ANNEX I Interest Advance Notice of Borrowing
ii
4
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
iii
5
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of March 21, 1997, 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-II Trust (as
defined below) (the "Borrower"), and ING BANK N.V., a bank organized under the
laws of The Netherlands ("ING" or the "Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class C-II 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-II Trust is issuing the Class C-II
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a portion
of the interest on the Class C-II 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.
6
2
"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 (w) with respect to any Unpaid Advance or
Applied Provider Advance that is a LIBOR Advance, 1.75%, (x) with respect
to any Unpaid Advance or Applied Provider Advance that is a Base Rate
Advance, 1.75%, (y) with respect to any Unapplied Provider Advance that
is a LIBOR Advance, .40% and (z) with respect to any Unapplied Provider
Advance that is a Base Rate 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).
"Assignment and Assumption Agreement" means the Assignment and
Assumption to be entered into between the Borrower and the trustee of the
Successor Trust, substantially in the form of Exhibit D to the Class C-II
Trust Agreement.
"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 or 1%).
"Base Rate Advance" means an Advance that bears interest at a rate
based upon the Base Rate.
7
3
"Borrower" has the meaning assigned to such term in the recital of
parties to this Agreement.
"Borrowing" means the making of Advances requested by delivery of a
Notice of Borrowing.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in
Houston, Texas, New York, New York, Amsterdam, The Netherlands or, so
long as any Class C-II Certificate is outstanding, the city and state in
which the Class C-II 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.
"Certificates of Deposit" has the meaning assigned to such term in
the Deposit Agreement.
"Deposits" has the meaning assigned to such terms in the Deposit
Agreement.
"Depositary" has the meaning assigned to such term in the Deposit
Agreement.
"Deposit Agreement" means the Deposit Agreement dated March 21, 1997
between First Security Bank, National Association, as Escrow Agent and
Credit Suisse First Boston, as Depositary, pertaining to the Class C-II
Certificates, as the same may be amended, modified or supplemented from
time to time in accordance with the terms thereof.
"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.
"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
8
4
of investigation), provided that Expenses shall not include any Taxes.
"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
after the date hereof (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), 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.
"Expiry Date" means March 19, 1998, 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).
9
5
"Interest Period" means, with respect to any LIBOR Advance, each of
the following periods:
(i) the period beginning on the third Business Day
following the Liquidity Provider's receipt of the Notice of
Borrowing for such LIBOR Advance (or, in the case of an
Unapplied Downgrade Advance, the period beginning on the
Expiry Date) and ending on the next Regular Distribution Date;
and
(ii) each subsequent period commencing on the last day
of the immediately preceding Interest Period and ending on the
next Regular Distribution Date;
provided, however, thatE(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 Regular Distribution Date following such conversion
(in the case of clause (y) above).
"Lending Office" means the lending office of the Liquidity Provider
presently located at Amsterdam, The Netherlands, 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
10
6
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 (provided that, with respect
to the period prior to the Delivery Period Expiry Date, such Equipment
Notes have an aggregate outstanding principal balance in excess of
$280,000,000) or (b) a Continental Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
directors, officers, employees and agents of the Liquidity Provider, and
(iii) the successors and permitted assigns of the persons described in
clauses (i) and (ii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Maximum Available Commitment" 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, for any day, the lesser of (x)
$605,000.00 and (y) the Stated Portion of the Required Amount on such
day.
"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.
"Offering Memorandum" means the Offering Memorandum dated March 12,
1997 relating to the Certificates, as such Offering Memorandum may be
amended or supplemented.
11
7
"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.
"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-II Certificates, that would be payable on
the Class C-II 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-II Certificates on such day and
without regard to expected future payments of principal on the Class C-II
Certificates.
"Stated Portion" means 50%.
"Successor Trust" means Continental Airlines Pass Through Trust
1997-1C-II-S.
"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-II 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
12
8
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 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:
"Certificates", "Class A Certificates", "Class B Certificates",
"Class C-I Certificates", "Class C-II Cash Collateral Account",
"Class C-II Certificates", "Class C-II Certificateholders", "Class
C-II Trust", "Class C-II Trust Agreement", "Class C-II Trustee",
"Closing Date", "Continental", "Continental Bankruptcy Event",
"Controlling Party", "Corporate Trust Office", "Delivery Period
Expiry Date", "Distribution Date", "Downgraded Facility",
"Equipment Notes", "Financing Agreement", "Indenture", "ING Fee
Letter", "ING Sub-Account", "Initial Purchasers", "Investment
Earnings", "Liquidity Facility", "Loan Trustee", "Moody's",
"Non-Extended Facility", "Note Purchase Agreement", "Operative
Agreements", "Performing Equipment Note", "Person", "Pool
Balance", "Purchase Agreement", "Rating Agency", "Registration
Rights Agreement", "Regular Distribution Date, "Replacement
Liquidity Facility",
13
9
"Responsible Officer", "Scheduled Payment", "Special Payment",
"Standard & Poor's", "Stated Interest Rate", "Sub-Account",
"Subordination Agent", "Taxes", "Threshold Rating", "Transfer",
"Trust Agreements, "Trustee" and "Written Notice".
(c) Interest on Certificates. For all purposes of this Agreement, each
scheduled payment with respect to a Class C-II Certificate shall be deemed to
be comprised of interest and principal components, with the interest component
equalling interest accrued at the Stated Interest Rate for the Class C-II
Certificates from (i) the later of (x) the date of issuance thereof and (y) the
most recent but preceding Regular Distribution Date to (ii) the Regular
Distribution Date on which such Scheduled Payment is being made, such interest
to be considered payable in arrears on such Regular Distribution Date and to be
calculated and allocated in the same manner as interest on the Class C-II
Equipment Notes.
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 the Stated Portion of interest on the Class
C-II 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
14
10
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 in accordance with
said Section 3.6(d)) 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
ING Sub-Account of the Class C-II Cash Collateral Account in accordance with
said Section 3.6(d).
(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 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 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 ING Sub-Account of the Class C-II Cash Collateral Account in
accordance with said Section 3.6(c).
(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
15
11
Borrower, in an amount equal to the Maximum Available Commitment at such time,
and shall be used to fund the ING Sub-Account of the Class C-II Cash Collateral
Account (in accordance with Section 3.6(i) of the Intercreditor Agreement).
(e) Each Borrowing shall be made on notice in writing (a "Notice of
Borrowing") in substantially the form required by Section 2.02(a), 2.02(b),
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the 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,
the Liquidity Provider shall, upon satisfaction of the conditions precedent set
forth in Section 4.02 with respect to a requested Borrowing, 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, make available to the Borrower, in accordance with
its payment instructions, in U.S. dollars and immediately available funds, the
amount of such 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, the Liquidity Provider shall, upon satisfaction of the conditions
precedent set forth in Section 4.02 with respect to a requested Borrowing,
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, make
available to the Borrower, in accordance with its payment instructions, in U.S.
dollars and in immediately available funds, the amount of such Borrowing.
Payments of proceeds of a Borrowing shall be made by wire transfer of
immediately available funds to the Borrower in accordance with such wire
transfer instructions as the Borrower shall furnish from time to time to the
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(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 ING Sub-Account of
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the Class C-II Cash Collateral Account, the Liquidity Provider shall have no
interest in or rights to the Class C-II Cash Collateral Account, any
Sub-Account thereof, such Advance or any other amounts from time to time on
deposit in the Class C-II Cash Collateral Account or any Sub-Account thereof;
provided that the foregoing shall not affect or impair the obligations of the
Subordination Agent to make the distributions contemplated by Section 3.6(e) or
(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 ING Fee Letter.
Section 2.04. Adjustments or Termination of the Maximum Commitment. (a)
Automatic Adjustments. Promptly following each date on which the Required
Amount is (1) reduced as a result of a reduction in the Pool Balance of the
Class C-II Certificates or otherwise, (2) increased as a result of an increase
in the Stated Interest Rate or (3) subsequent to such an increase described in
clause (2), reduced pursuant to the definition of "Stated Interest Rate",
clause (y) of the definition of Maximum Commitment shall automatically be
reduced or increased, as the case may be, to an amount equal to the Stated
Portion of the Required Amount (as calculated by the Borrower). The Borrower
shall give notice of any such automatic reduction or increase 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 or increase 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
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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)EAmounts advanced
hereunder in respect of a Provider Advance shall be deposited in the ING
Sub-Account of the Class C-II Cash Collateral Account, invested and withdrawn
from the ING Sub-Account of the Class C-II 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 ING Sub-Account of the Class C-II Cash
Collateral Account for the purpose of paying interest on the Class C-II
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
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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 ING Sub-Account of the Class C-II 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 the Stated Portion of 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 ING Sub-Account of the Class C-II 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 Stated Portion of 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 ING Sub-Account of the Class
C-II 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.
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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 such manner as it 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 Stated
Portion of amounts that constitute Scheduled Payments, Special Payments or
payments under Section 9.1 of the Participation Agreements and Sections 6 and 7
of the Note Purchase Agreement and only to the extent that the Borrower shall
have sufficient income or proceeds therefrom to enable the Borrower to make
payments in accordance with the terms hereof after giving effect to the
priority of payments provisions set forth in the Intercreditor Agreement. The
Liquidity Provider agrees that it will look solely to such amounts to the
extent available for distribution to it as provided in the Intercreditor
Agreement and this Agreement and that the Borrower, in its individual capacity,
is not personally liable to it for any amounts payable or liability under this
Agreement except as expressly provided in this Agreement, the Intercreditor
Agreement or any Participation Agreement. Amounts on deposit in the ING
Sub-Account of the Class C-II Cash Collateral Account shall be available to the
Borrower to make payments under this Agreement only to the extent and for the
purposes expressly contemplated in Section 3.6(f) of the Intercreditor
Agreement. Amounts on deposit in the other Sub-Account in respect of the Class
C-II
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Certificates shall not be available to make payments under this Agreement.
Section 2.10. Extension of the Expiry Date; Non-Extension Advance. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Maturity Date for the Class C-II 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. Subject to the ING Fee Letter, 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,
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state, municipal, or foreign laws or regulations (including Regulation D), or
the adoption or making after the date of this Agreement of any interpretations,
directives, or requirements applying to a class of banks including the
Liquidity Provider under any U.S. federal, state, municipal, or any foreign
laws or regulations (whether or not having the force of law) by any court,
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. Subject to the ING Fee Letter, 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
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(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 bank and of the amount allocable to the
Liquidity Provider's obligations to the Borrower hereunder shall be prima facie
evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. (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
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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 Forms 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
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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 Northern Trust Company of New York, One World Trade Center, Suite
3941, New York, New York 10048, Account No. 105981-20010, Account Name: ING
Lease (Ireland) B.V., as agent for ING Bank N.V.
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 ING Sub-Account of the Class
C-II Cash Collateral Account to pay interest on the Class C-II 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 ING Sub-Account of
the Class C-II 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
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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) may 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.
(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).
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(e) Each 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 ING Sub-Account
of the Class C-II Cash Collateral Account for such period plus .35% per annum
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:
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(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;
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(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 Offering Memorandum and specimen copies of
the Class C-II Certificates;
(v) An executed copy of each document, instrument, certificate
and opinion delivered on or before the Closing Date pursuant to the
Class C-II Trust Agreement, the Intercreditor Agreement and the
other Operative Agreements (together with, in the case of each such
opinion, other than the opinion of counsel for the Initial
Purchasers, a letter from the counsel rendering such opinion to the
effect that the Liquidity Provider is entitled to rely on such
opinion as 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
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provide such information pursuant to Section 8.2.1 of the Leases
(related to Leased Aircraft) or the corresponding section of the
Indentures (related to Owned Aircraft) to the parties thereto and
(ii) Continental agrees to allow the Liquidity Provider to inspect
Continental's books and records regarding such transactions, and to
discuss such transactions with officers and employees of
Continental; and
(viii) Such other documents, instruments, opinions and
approvals as the Liquidity Provider shall have reasonably
requested.
(b) The following 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, all conditions
precedent to the effectiveness of the other Liquidity Facilities shall
have been satisfied, and all conditions precedent to the purchase of the
Certificates by the Initial Purchasers under the Purchase Agreement shall
have been satisfied (unless any of such conditions precedent shall have
been waived by the Initial Purchasers).
(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
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26
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 written consent
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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) this
Agreement to expire on the fifth Business Day after the date on which such
Termination Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final Advance in
accordance with Section 2.02(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):
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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: ING Bank N.V.
Department of Bankgarantie Zaken -Juridische
Zaken
Location code HG 01.06
P.O. Box 1800
1000 B.V. Amsterdam
by courier:
Amsterdamse Poort
Bijlmer plein 888
1102 MG Amsterdam
The Netherlands
Telephone: 011-31-20-652-3260
Telecopy: 011-31-20-652-3235
with a copy to:
ING Lease (Ireland) B.V.
49 St. Stephen's Green
Dublin 2, Ireland
Telephone: 011-353-1-662-2211
Telecopy: 011-353-1-662-2240
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
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delivered hereunder to either party shall in addition be delivered to each of
the parties to the Participation Agreements at their respective addresses set
forth therein.
Section 7.03. No Waiver; Remedies. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 7.04. Further Assurances. The Borrower agrees to do such further
acts and things and to execute and deliver to the Liquidity Provider such
additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.05. Indemnification; Survival of Certain Provisions. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 10.1 of the Participation Agreements and Section 6
of the Note Purchase Agreement. In addition, the Borrower agrees to indemnify,
protect, defend and hold harmless the Liquidity Provider from, against and in
respect of, and shall pay on demand, all Expenses of any kind or nature
whatsoever (other than any Expenses of the nature described in Sections 3.01,
3.02 or 7.07 hereof or in the ING 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 ING Fee Letter, the Intercreditor Agreement or any
Financing Agreement; provided, however, that the Borrower shall not be required
to indemnify, protect, defend and hold harmless any Liquidity Indemnitee in
respect of any Expense of such Liquidity Indemnitee (i) to the extent such
Expense is attributable to the gross negligence or willful misconduct of such
Liquidity Indemnitee or any other Liquidity Indemnitee, (ii)Ethat is ordinary
and usual operating
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overhead expense, and (iii)Eto the extent such Expense is attributable to the
failure by such Liquidity Indemnitee or any other Liquidity Indemnitee to
perform or observe any agreement, covenant or condition on its part to be
performed or observed in this Agreement, the Intercreditor Agreement, the ING
Fee Letter, the Tax Letter or any other Operative Document to which it is a
party. The indemnities contained in such Section 10.1, 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)ENeither 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,
director 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.
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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 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)EEThis 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
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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(a) 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 transfer, the
Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld with
respect to any payments to be made to such Transferee in respect of this
Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a
state thereof or (y) if it is not so incorporated, two copies of a properly
completed United States Internal Revenue Service Form 4224 or Form 1001, as
appropriate, or other applicable form, certificate or document prescribed by
the Internal Revenue Service certifying, in each case, such Transferee's
entitlement to a complete exemption from United States federal withholding tax
in respect to any and all payments to be made hereunder, and (iii) agree (for
the benefit of the Liquidity Provider and the Borrower) to provide the
Liquidity Provider and the Borrower a new Form 4224 or Form 1001, as
appropriate, (A) on or before the date that any such form expires or becomes
obsolete or (B) after the occurrence of any event
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33
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.
(d) Notwithstanding the other provisions of this Section 7.08, if at any
time after the date hereof the Borrower shall withhold taxes as required by law
from any payments made to the Liquidity Provider, the Liquidity Provider may
assign all (but not less than all) of its rights and obligations under this
Agreement to the New York Branch of ING Bank N.V. ( the "ING Transferee");
provided, that it shall be a condition to any such transfer that (i) the ING
Transferee enters into an agreement in form and substance reasonably
satisfactory to the Borrower pursuant to which the ING Transferee assumes all
of the obligations of the Liquidity Provider hereunder, under the Intercreditor
Agreement, the ING Fee Letter and the Tax Letter, (ii) the ING Transferee
delivers an opinion to the Borrower and each of the Rating Agencies in form and
substance reasonably satisfactory to the Borrower opining that this Agreement,
the Intercreditor Agreement, the ING Fee Letter and the Tax Letter are
enforceable obligations of the ING Transferee, (iii) the Liquidity Provider
shall have delivered to the Borrower a Ratings Confirmation with respect to
such transfer from each Rating Agency, (iv) the ING Transferee shall satisfy
each of the
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requirements in respect of a Transferee set forth in Section 7.08(b) and (v)
the Liquidity Provider shall pay all fees and expenses (including, without
limitation, legal fees and disbursements) of the Borrower in connection with
such transfer. Upon the satisfaction of the conditions set forth in this
Section 7.08(d), the ING Transferee shall be deemed to be the Liquidity
Provider with the rights and obligations of the Liquidity Provider hereunder
and under the other Operative Agreements.
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,
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to each party hereto at its address set forth in Section 7.02
hereof, or at such other address of which the Liquidity Provider
shall have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR
IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it may have from the
jurisdiction of the courts of the United States or of any State and waives any
immunity any of its properties located in the United States may have from
attachment or execution upon a judgement entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any similar successor
legislation.
Section 7.12. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
Section 7.13. Entirety. This Agreement, 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
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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. Transfer. The Liquidity Provider hereby acknowledges and
consents to the Transfer contemplated by the Assignment and Assumption
Agreement.
Section 7.16. 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.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duty
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-II Trust, as
Borrower
By:
---------------------------------------
Name:
Title:
ING BANK N.V., as as Liquidity Provider
By:
---------------------------------------
Name:
Title:
42
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 ING BANK N.V. (the "Liquidity Provider"),
with reference to the Revolving Credit Agreement (1997-1C-II) dated as of
March 21, 1997, 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 the Stated Portion of
the interest on the ClassEC-II Certificates which was payable on
____________, ____ (the "Distribution Date") in accordance with the
terms and provisions of the ClassEC-II Trust Agreement and the ClassEC-II
Certificates pursuant to clause fifth of Section 3.2 of the Intercreditor
Agreement or clause seventh of Section 3.3 of the Intercreditor
Agreement, which Advance is requested to be made on ____________, ____.
(3) The amount of the Interest Advance requested hereby (i) is
$_______________.__, to be applied in respect of the payment of the
Stated Portion of the interest which was due and payable on the Class
C-II 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, the Class C-I
Certificates or the Class C-II Certificates, or interest on the Class A
Certificates, the Class B Certificates or the Class C-I Certificates,
(iii) was computed in accordance with the provisions of the Class C-II
Certificates, the Class C-II Trust Agreement and the Intercreditor
Agreement (a copy of which computation is attached hereto as Schedule I),
(iv) does not exceed the Maximum Available Commitment on the date hereof,
(v) does not include any amount of interest
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2
which was due and payable on the Class C-II Certificates on such
Distribution Date but which remains unpaid due to the failure of the
Depositary to pay any amount of accrued interest on the Certificates of
Deposit on such Distribution Date and (vi) has not been and is not the
subject of a prior or contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.2 or 3.3 of the Intercreditor Agreement, as the
case may be, (b)Eno 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.
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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 agent and
trustee for the Class C-II Trust, as
Borrower
By:
---------------------------------------
Name:
Title:
45
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest Advance
Notice of Borrowing]
46
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 ING BANK N.V. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1997-1C-II) dated as of March 21, 1997, 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 ING Sub-Account of the Class C-II 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 ING
Sub-Account of the Class C-II 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-II Certificates, or principal of, or interest or premium on,
the Class A Certificates, the Class B Certificates or the Class C-I
Certificates, (iii) was computed in accordance with the provisions of the
Class C-II Certificates, the Class C-II 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.
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2
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the ING
Sub-Account of the Class C-II 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.
(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 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.
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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:
49
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with Non-Extension Advance Notice of
Borrowing]
50
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 ING BANK N.V. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1997-1C-II) dated as of March 21, 1997, 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 ING Sub-Account of the Class C-II 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 ING
Sub-Account of the Class C-II 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-II Certificates, or principal of, or interest or premium on,
the Class A Certificates, the Class B Certificates or the Class C-I
Certificates, (iii) was computed in accordance with the provisions of the
Class C-II Certificates, the Class C-II 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.
51
2
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the ING
Sub-Account of the Class C-II 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.
(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 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.
52
3
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:
53
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
54
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 ING BANK N.V. (the "Liquidity Provider"),
with reference to the Revolving Credit Agreement (1997-1C-II) dated as of
MarchE_21, 1997, 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 ING Sub-Account of the Class C-II 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 ING
Sub-Account of the Class C-II 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-II Certificates, or principal of, or interest or premium on, the
Class A Certificates, the Class B Certificates or the Class C-I
Certificates, (iii) was computed in accordance with the provisions of the
Class C-II Certificates, the Class C-II 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.
55
2
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the ING
Sub-Account of the Class C-II 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.
56
3
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:
57
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
58
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 March 21, 1997, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Continental
Airlines Pass Through Trust, 1997-1C-II-[O/S], as Borrower, and ING BANK N.V.
(the "Liquidity Agreement")
_________________________________________________________________
Ladies and Gentlemen:
You are hereby notified that pursuant to Section 6.01 of the Liquidity
Agreement, by reason of the occurrence of a Liquidity Event of Default and 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.
59
2
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,
ING BANK N.V., as Liquidity Provider
By:
----------------------------------------
Name:
Title:
cc: Wilmington Trust Company,
as Class C-II Trustee
60
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of March 21, 1997, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Continental
Airlines Pass Through Trust, 1997-1C-II-[O/S], as Borrower, and ING BANK N.V.
(the "Liquidity Agreement")
- -------------------------------------------------------------------------------
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
______________________________
[Name of Transferee]
______________________________
[Address of Transferee]
all rights 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.
61
2
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:
1
EXHIBIT 4.17
- --------------------------------------------------------------------------------
INTERCREDITOR AGREEMENT
Dated as of
March 21, 1997
AMONG
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee under the
Continental Airlines Pass Through Trust 1997-1A-O,
Continental Airlines Pass Through Trust 1997-1B-O,
Continental Airlines Pass Through Trust 1997-1C-I-O,
and
Continental Airlines Pass Through Trust 1997-1C-II-O
ABN AMRO BANK N.V.,
Chicago Branch
and
ING BANK N.V.,
as Class A Liquidity Providers,
as Class B Liquidity Providers,
as Class C-I Liquidity Providers,
and
as Class C-II Liquidity Providers,
AND
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as expressly set forth herein but
solely as Subordination Agent and Trustee
- --------------------------------------------------------------------------------
2
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 ................................. 23
SECTION 2.2. Trust Accounts ............................................ 23
SECTION 2.3. Deposits to the Collection Account
and Special Payments Account .............................. 24
SECTION 2.4. Distributions of Special Payments ......................... 25
SECTION 2.5. Designated Representatives ................................ 27
SECTION 2.6. Controlling Party ......................................... 28
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED
SECTION 3.1. Written Notice of Distribution ............................ 29
SECTION 3.2. Distribution of Amounts on Deposit
in the Collection Account ................................. 31
SECTION 3.3. Distribution of Amounts on Deposit
Following a Triggering Event .............................. 33
SECTION 3.4. Other Payments ............................................ 35
SECTION 3.5. Payments to the Trustees and the Liquidity Providers ...... 35
SECTION 3.6. Liquidity Facilities ...................................... 35
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1. Directions from the Controlling Party ..................... 41
SECTION 4.2. Remedies Cumulative ....................................... 42
SECTION 4.3. Discontinuance of Proceedings ............................. 43
SECTION 4.4. Right of Certificateholders to Receive
Payments Not to Be Impaired ............................... 43
SECTION 4.5. Undertaking for Costs ..................................... 43
i
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TABLE OF CONTENTS
Page
----
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF TRUSTEE
SECTION 5.1. Notice of Indenture Default or Triggering Event ........... 44
SECTION 5.2. Indemnification ........................................... 44
SECTION 5.3. No Duties Except as Specified
in Intercreditor Agreement ................................ 44
SECTION 5.4. Notice from the Liquidity Providers and Trustees .......... 45
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1. Authorization; Acceptance of Trusts and Duties ............ 45
SECTION 6.2. Absence of Duties ......................................... 45
SECTION 6.3. No Representations or Warranties as to Documents .......... 45
SECTION 6.4. No Segregation of Monies; No Interest ..................... 46
SECTION 6.5. Reliance; Agents; Advice of Counsel ....................... 46
SECTION 6.6. Capacity in Which Acting .................................. 46
SECTION 6.7. Compensation .............................................. 46
SECTION 6.8. May Become Certificateholder .............................. 47
SECTION 6.9. Subordination Agent Required; Eligibility ................. 47
SECTION 6.10. Money to Be Held in Trust ................................. 47
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1. Scope of Indemnification.................................... 47
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1. Replacement of Subordination Agent;
Appointment of Successor.................................... 48
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1. Amendments, Waivers, etc ................................... 49
SECTION 9.2. Subordination Agent Protected .............................. 50
SECTION 9.3. Effect of Supplemental Agreements .......................... 50
SECTION 9.4. Notice to Rating Agencies .................................. 50
ii
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TABLE OF CONTENTS
Page
----
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Termination of Intercreditor Agreement ................... 50
SECTION 10.2. Intercreditor Agreement for Benefit
of Trustees, Liquidity Providers and
Subordination Agent....................................... 50
SECTION 10.3. Notices .................................................. 51
SECTION 10.4. Severability ............................................. 52
SECTION 10.5. No Oral Modifications or Continuing Waivers .............. 52
SECTION 10.6. Successors and Assigns ................................... 53
SECTION 10.7. Headings ................................................. 53
SECTION 10.8. Counterpart Form ......................................... 53
SECTION 10.9. Subordination ............................................ 53
SECTION 10.10. GOVERNING LAW ............................................ 54
SECTION 10.11. Submission to Jurisdiction; Waiver of
Jury Trial; Waiver of Immunity ........................... 54
iii
5
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of March 21, 1997, among WILMINGTON TRUST
COMPANY, a Delaware corporation ("WTC"), not in its individual capacity but
solely as Trustee of each Trust (each as defined below); ABN AMRO BANK N.V., a
bank organized under the laws of The Netherlands, acting through its Chicago
Branch ("ABN AMRO"), as a Class A Liquidity Provider, as a Class B Liquidity
Provider, as a Class C-I Liquidity Provider and as a Class C-II Liquidity
Provider; ING BANK N.V., a bank organized under the laws of The Netherlands
("ING"), as a Class A Liquidity Provider, as a Class B Liquidity Provider, as a
Class C-I Liquidity Provider and as a Class C-II Liquidity Provider; and
WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly
set forth herein, but solely as Subordination Agent and trustee hereunder (in
such capacity, together with any successor appointed pursuant to Article VIII
hereof, the "Subordination Agent").
WHEREAS, all capitalized terms used herein shall have the respective
meanings referred to in Article I hereof;
WHEREAS, pursuant to each Indenture (i) in the case of each Aircraft that
is owned by Continental at the time such Indenture is entered into (the "Owned
Aircraft"), Continental will issue on a recourse basis three series of
Equipment Notes to finance the purchase of such Aircraft, and (ii) in the case
of each Aircraft that is leased to Continental pursuant to a related Lease at
the time such Indenture is entered into (the "Leased Aircraft"), the related
Owner Trustee will issue on a nonrecourse basis three series of Equipment Notes
to finance the purchase of such Aircraft;
WHEREAS, pursuant to the Financing 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 Purchase Agreement, the Initial Purchasers
propose to purchase the Certificates issued by each Trust in the aggregate face
amount set forth opposite the name of such Trust on Schedule I thereto;
WHEREAS, each Liquidity Provider proposes to enter into four 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 Initial
Purchasers under the Purchase Agreement that the Subordination Agent, the
Trustees and the Liquidity
6
2
Providers agree to the terms of subordination set forth in this Agreement in
respect of each Class of Certificates, and the Subordination Agent, the
Trustees and the Liquidity Providers, by entering into this Agreement, hereby
acknowledge and agree to such terms of subordination and the other provisions
of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms used herein that are defined in this Article have the
meanings assigned to them in this Article, and include the plural as well
as the singular;
(2) all references in this Agreement to designated "Articles",
"Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of this Agreement;
(3) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision;
(4) the term "including" shall mean "including without limitation";
and
(5) each scheduled payment with respect to the Certificates of any
Class shall be deemed to be comprised of interest and principal
components, with the interest component equaling interest accrued at the
Stated Interest Rate for such Class of Certificates from (i) the later of
(x) the date of the issuance thereof and (y) the most recent but
preceding Regular Distribution Date to (ii) the Regular Distribution Date
on which such Scheduled Payment is being made, such interest to be
considered payable in arrears on such Regular Distribution Date and to be
calculated and allocated in the same manner as interest on the Equipment
Notes.
"ABN AMRO" has the meaning assigned to such term in the recital of parties
to this Agreement.
"ABN AMRO Fee Letter" means the Fee Letter dated March 21, 1997, between
ABN AMRO and the Subordination Agent with respect to the Liquidity Facilities.
"ABN AMRO Sub-Account" means, with respect to any Cash Collateral Account,
a sub-ledger account to such Cash Collateral Account designated the "ABN AMRO
Sub-Account".
7
3
"Acceleration" means, with respect to the amounts payable in respect of
the Equipment Notes issued under any Indenture, the declaration of such amounts
to be immediately due and payable. "Accelerate", "Accelerated" and
"Accelerating" have meanings correlative to the foregoing.
"Adjusted Expected Distributions" means, with respect to the Certificates
of any Trust on any Current Distribution Date, the sum of (x) accrued and
unpaid interest on such Certificates (excluding interest, if any, payable with
respect to the Deposits related to such Trust) and (y) the greater of:
(A) the difference between (x) the Pool Balance of such Certificates
as of the immediately preceding Distribution Date and (y) the Pool
Balance of such Certificates as of the Current Distribution Date
calculated on the basis that (i) the principal of the Non-Performing
Equipment Notes held in such Trust has been paid in full and such
payments have been distributed to the holders of such Certificates, (ii)
the principal of the Performing Equipment Notes held in such Trust has
been paid when due (but without giving effect to any unpaid 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 which have been sold pursuant to the
terms hereof have been paid in full and such payments have been
distributed to the holders of such Certificates, but without giving
effect to any reduction in the Pool Balance as a result of any
distribution attributable to the Deposits, and
(B) the amount of the excess, if any, of (i) the Pool Balance of
such Class of Certificates as of the immediately preceding Distribution
Date (less the amount of the Deposits for such Class of Certificates as
of such preceding Distribution Date other than any portion of such
Deposits thereafter used to acquire Equipments Notes pursuant to the Note
Purchase Agreement), 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 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 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
8
4
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 Leased Aircraft and Owned Aircraft, minus the Pool Balance for each Class
of Certificates, if any, senior to such Class, after giving effect to any
distribution of principal on such Distribution Date on such senior Class or
Classes.
"Aircraft" means, with respect to each Indenture, the "Aircraft" referred
to therein.
"Appraisal" means a fair market value appraisal (which may be a "desktop"
appraisal) performed by any Appraiser or any other nationally recognized
appraiser on the basis of an arm's-length transaction between an informed and
willing purchaser under no compulsion to buy and an informed and willing seller
under no compulsion to sell and both having knowledge of all relevant facts.
"Appraised Current Market Value" of any Leased Aircraft or Owned Aircraft
means the lower of the average and the median of the three most recent
Appraisals of such Aircraft.
"Appraisers" means Aircraft Information Services, Inc., BK Associates,
Inc. and Morten Beyer and Associates, Inc.
"Assignment and Assumption Agreements" means each of the Assignment and
Assumption Agreements to be executed among a Trustee and trustee of the
relevant Successor Trust in accordance with the relevant Trust Agreement, as
the same may be amended, modified or supplemented from time to time.
"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, the Class C-I Cash Collateral Account or the
Class C-II Cash Collateral Account, as applicable.
"Certificate" means a Class A Certificate, a Class B Certificate, a Class
C-I Certificate or a Class C-II Certificate, as applicable.
"Certificateholder" means any holder of one or more Certificates.
9
5
"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 and/or the Registration Rights Agreement (including, without
limitation, any Exchange Certificates (as defined in the Class A Trust
Agreement)).
"Class A Liquidity Facilities" means, initially, (i) the Revolving Credit
Agreement dated as of the date hereof, between the Subordination Agent, as
agent and trustee for the Class A Trustee, and ABN AMRO and (ii) the Revolving
Credit Agreement dated as of the date hereof, between the Subordination Agent,
as agent and trustee for the Class A Trustee, and ING, and, from and after the
replacement of either 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 Providers" means each of ABN AMRO and ING, 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 (i) prior to the Transfer, the Continental Airlines
Pass Through Trust 1997-1A-O created and administered pursuant to the Class A
Trust Agreement and (ii) after the Transfer, the Continental Airlines Pass
Through Trust 1997-1A-S created and administered pursuant to the Class A Trust
Agreement.
"Class A Trust Agreement" means (i) prior to the Transfer, the Pass
Through Trust Agreement dated as of the date hereof, between Continental and
the Class A Trustee, governing the creation and administration of the
Continental Airlines Pass Through Trust 1997-1A-O 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, and (ii) after the Transfer,
the Pass Through Trust Agreement entered into between Continental and the Class
A Trustee, governing the creation and administration of the Continental
Airlines Pass Through Trust 1997-1A-S 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.
10
6
"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 and/or the Registration Rights Agreement (including, without
limitation, any Exchange Certificates (as defined in the Class B Trust
Agreement)).
"Class B Liquidity Facilities" means, initially, (i) the Revolving Credit
Agreement dated as of the date hereof, between the Subordination Agent, as
agent and trustee for the Class B Trustee, and ABN AMRO and (ii) the Revolving
Credit Agreement dated as of the date hereof, between the Subordination Agent,
as agent and trustee for the Class B Trustee, and ING, and, from and after the
replacement of either 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 Providers" means each of ABN AMRO and ING, 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 (i) prior to the Transfer, the Continental Airlines
Pass Through Trust 1997-1B-O created and administered pursuant to the Class B
Trust Agreement and (ii) after the Transfer, the Continental Airlines Pass
Through Trust 1997-1B-S created and administered pursuant to the Class B Trust
Agreement.
"Class B Trust Agreement" means (i) prior to the Transfer, the Pass
Through Trust Agreement dated as of the date hereof, between Continental and
the Class B Trustee, governing the creation and administration of the
Continental Airlines Pass Through Trust 1997-1B-O 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, and (ii) after the Transfer,
the Pass Through Trust Agreement entered into between Continental and the Class
B Trustee, governing the creation and administration of the Continental
Airlines Pass Through Trust 1997-1B-S 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.
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"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 Certificates" means, collectively, the Class C-I Certificates and
the Class C-II Certificates.
"Class C-I 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-I Liquidity Facility pursuant to Section
3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"Class C-I Certificateholder" means, at any time, any holder of one or
more Class C-I Certificates.
"Class C-I Certificates" means the certificates issued by the Class C-I
Trust, substantially in the form of Exhibit A to the Class C-I Trust Agreement,
and authenticated by the Class C-I Trustee, representing fractional undivided
interests in the Class C-I Trust, and any certificates issued in exchange
therefor or replacement thereof pursuant to the terms of the Class C-I Trust
Agreement and/or the Registration Rights Agreement (including, without
limitation, any Exchange Certificates (as defined in the Class C-I Trust
Agreement) but excluding the Class C-I Certificates).
"Class C-I Liquidity Facilities" means, initially, (i) the Revolving
Credit Agreement dated as of the date hereof, between the Subordination Agent,
as agent and trustee for the Class C-I Trustee, and ABN AMRO and (ii) the
Revolving Credit Agreement dated as of the date hereof, between the
Subordination Agent, as agent and trustee for the Class C-I Trustee, and ING,
and, from and after the replacement of either 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-I Liquidity Providers" means each of ABN AMRO and ING, together
with any Replacement Liquidity Provider which has issued a Replacement
Liquidity Facility to replace any Class C-I Liquidity Facility pursuant to
Section 3.6(e).
"Class C-I Trust" means (i) prior to the Transfer, the Continental
Airlines Pass Through Trust 1997-1C-I-O created and administered pursuant to
the Class C-I Trust Agreement and (ii) after the Transfer, the Continental
Airlines Pass Through Trust 1997-1C-I-S created and administered pursuant to
the Class C-I Trust Agreement.
"Class C-I Trust Agreement" means (i) prior to the Transfer, the Pass
Through Trust Agreement dated as of the date hereof, between Continental and
the Class C-I Trustee, governing the creation and administration of the
Continental Airlines Pass Through Trust 1997-1C-I-O and the issuance of the
Class C-I Certificates, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms, and (ii) after the
Transfer, the Pass Through Trust Agreement entered into between Continental and
the Class
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C-I Trustee, governing the creation and administration of the Continental
Airlines Pass Through Trust 1997-1C-I-S and the issuance of the Class C-I
Certificates, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
"Class C-I Trustee" means WTC, not in its individual capacity except as
expressly set forth in the Class C-I Trust Agreement, but solely as trustee
under the Class C-I Trust Agreement, together with any successor trustee
appointed pursuant thereto.
"Class C-II 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-II Liquidity Facility pursuant to Section
3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"Class C-II Certificateholder" means, at any time, any holder of one or
more Class C-II Certificates.
"Class C-II Certificates" means the certificates issued by the Class C-II
Trust, substantially in the form of Exhibit A to the Class C-II Trust
Agreement, and authenticated by the Class C-II Trustee, representing fractional
undivided interests in the Class C-II Trust, and any certificates issued in
exchange therefor or replacement thereof pursuant to the terms of the Class
C-II Trust Agreement and/or the Registration Rights Agreement (including,
without limitation, any Exchange Certificates (as defined in the Class C-II
Trust Agreement) but excluding the Class C-I Certificates).
"Class C-II Liquidity Facilities" means, initially, (i) the Revolving
Credit Agreement dated as of the date hereof, between the Subordination Agent,
as agent and trustee for the Class C-II Trustee, and ABN AMRO and (ii) the
Revolving Credit Agreement dated as of the date hereof, between the
Subordination Agent, as agent and trustee for the Class C-II Trustee, and ING,
and, from and after the replacement of either 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-II Liquidity Providers" means each of ABN AMRO and ING, together
with any Replacement Liquidity Provider which has issued a Replacement
Liquidity Facility to replace any Class C-II Liquidity Facility pursuant to
Section 3.6(e).
"Class C-II Trust" means (i) prior to the Transfer, the Continental
Airlines Pass Through Trust 1997-1C-II-O created and administered pursuant to
the Class C-II Trust Agreement and (ii) after the Transfer, the Continental
Airlines Pass Through Trust 1997-1C-II-S created and administered pursuant to
the Class C-II Trust Agreement.
"Class C-II Trust Agreement" means (i) prior to the Transfer, the Pass
Through Trust Agreement dated as of the date hereof, between Continental and
the Class C-II Trustee, governing the creation and administration of the
Continental Airlines Pass Through Trust 1997-1C-II-O and the issuance of the
Class C-II Certificates, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms, and (ii) after
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the Transfer, the Pass Through Trust Agreement entered into between Continental
and the Class C-II Trustee, governing the creation and administration of the
Continental Airlines Pass Through Trust 1997-1C-II-S and the issuance of the
Class C-II Certificates, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class C-II Trustee" means WTC, not in its individual capacity except as
expressly set forth in the Class C-II Trust Agreement, but solely as trustee
under the Class C-II Trust Agreement, together with any successor trustee
appointed pursuant thereto.
"Closing Date" means March 21, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the Eligible Deposit Account established by the
Subordination Agent pursuant to Section 2.2 which the Subordination Agent shall
make deposits in and withdrawals from in accordance with this Agreement.
"Continental" means Continental Airlines, Inc., a Delaware corporation,
and its successors and assigns.
"Continental Bankruptcy Event" means the occurrence and continuation of
any of the following:
(a) Continental shall consent to the appointment of or the taking of
possession by a receiver, trustee or liquidator of itself or of a
substantial part of its property, or Continental shall admit in writing
its inability to pay 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
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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.
"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.
"Delivery Period Expiry Date" means the earlier of (a) March 31, 1998, or,
if the Equipment Notes relating to all the New Aircraft (or Substitute Aircraft
in lieu thereof) have not been purchased by the Trusts on or prior to such date
due to any reason beyond the control of Continental and not occasioned by
Continental's fault or negligence, June 30, 1998 and (b) the date on which
Equipment Notes with respect to all New Aircraft (or Substitute Aircraft in
lieu thereof) have been purchased by the Trusts in accordance with the Note
Purchase Agreement.
"Deposits" with respect to any Class, shall have the meaning set forth in
the Deposit Agreement pertaining to such Class.
"Deposit Agreement" shall mean, with respect to any Class, the Deposit
Agreement pertaining to such Class dated the date hereof between the Escrow
Agent, and the Depositary, as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof.
"Depositary" means Credit Suisse First Boston, as depositary under each
Deposit Agreement.
"Designated Representatives" means the Trustee Representatives and the LP
Representatives identified under Section 2.5.
"Distribution Date" means a Regular Distribution Date or a Special
Distribution Date.
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"Dollars" means United States dollars.
"Downgrade Drawing" has the meaning assigned to such term in Section
3.6(c).
"Downgraded Facility" has the meaning assigned to such term in Section
3.6(c).
"Drawing" means an Interest Drawing, a Final Drawing, 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 S&P of at least A-1 and P-1, respectively, having
maturities no later than 90 days following the date of such investment or (c)
investments in negotiable certificates of deposit, time deposits, banker's
acceptances, commercial paper or other direct obligations of, or obligations
guaranteed by, commercial banks organized under the laws of the United States
or of any political subdivision thereof (or any U.S. branch of a foreign bank)
with issuer ratings of at least B/C by Thomson Bankwatch, having maturities no
later than 90 days following the date of such investment; provided, however,
that (x) all Eligible Investments that are bank obligations shall be
denominated in U.S. dollars; and (y) the aggregate amount of
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Eligible Investments at any one time that are bank obligations issued by any
one bank shall not be in excess of 5% of such bank's capital surplus; provided
further that (1) any investment of the types described in clauses (a), (b) and
(c) above may be made through a repurchase agreement in commercially reasonable
form with a bank or other financial institution qualifying as an Eligible
Institution so long as such investment is held by a third party custodian also
qualifying as an Eligible Institution, and (2) all such investments set forth
in (a), (b) and (c) above mature no later than the Business Day immediately
preceding the next Regular Distribution Date; provided further, however, that
in the case of any Eligible Investment issued by a domestic branch of a foreign
bank, the income from such investment shall be from sources within the United
States for purposes of the Code. Notwithstanding the foregoing, no investment
of the types described in clauses (b) or (c) above which is issued or
guaranteed by a Liquidity Provider or Continental or any of their respective
Affiliates, and no investment in the obligations of any one bank in excess of
$10,000,000, shall be an Eligible Investment at any time Continental holds any
participation in the related Liquidity Facility unless written confirmation
shall have been received from each Rating Agency that the making of such
investment will not result in a withdrawal or downgrading of the ratings of the
Certificates.
"Equipment Notes" means, at any time, the Series A Equipment Notes, the
Series B Equipment Notes 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.
"Escrow Agent" means First Security Bank, National Association, as escrow
agent under each Escrow and Paying Agent Agreement, together with its
successors in such capacity.
"Escrow and Paying Agent Agreement" shall mean, with respect to any Class,
the Escrow and Paying Agent Agreement pertaining to such Class dated the date
hereof between the Escrow Agent, the Initial Purchasers, the Trustee for such
Class and the Paying Agent, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"Expected Distributions" means, with respect to the Certificates of any
Trust on any Current Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates (excluding interest, if any, payable with respect
to the Deposits related to such Trust) and (y) the difference between (A) the
Pool Balance of such Certificates as of the immediately preceding Distribution
Date and (B) the Pool Balance of such Certificates as of the Current
Distribution Date calculated on the basis that (i) the principal of the
Equipment Notes held in such Trust has been paid when due (whether at stated
maturity or upon redemption, prepayment or Acceleration or otherwise) and such
payments have been distributed to the holders of such Certificates and (ii) the
principal of any Equipment Notes formerly held in such Trust which have been
sold pursuant to the terms hereof have been paid in full and such payments have
been distributed to the holders of such Certificates, but without giving effect
to any reduction in the Pool Balance as a result of any distribution
attributable to the Deposits. For purposes of calculating Expected
Distributions with respect to the Certificates of any Trust, any premium paid
on the Equipment Notes held in
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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, collectively, the ABN AMRO Fee Letter and the ING Fee
Letter and any fee letter entered into between the Subordination Agent and any
Replacement Liquidity Provider.
"Final Drawing" has the meaning assigned to such term in Section 3.6(i).
"Final Distributions" means, with respect to the Certificates of any Trust
on any Distribution Date, the sum of (x) the aggregate amount of all accrued
and unpaid interest on such Certificates (excluding interest, if any, payable
with respect to the Deposits relating to such Trust) and (y) the Pool Balance
of such Certificates as of the immediately preceding Distribution Date (less
the amount of the Deposits for such Class of Certificates as of such preceding
Distribution Date other than any portion of such Deposits thereafter used to
acquire Equipment Notes pursuant to the Note Purchase Agreement). 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 Maturity Date" means (i) with respect to the Class A Certificates,
October 1, 2016, (ii) with respect to the Class B Certificates, October 1,
2014, and (iii) with respect to the Class C Certificates, October 1, 2008.
"Financing Agreement" means each of the Participation Agreements and the
Note Purchase Agreement.
"Indenture" means each of the Trust Indentures entered into by the Loan
Trustee, and the Owner Trustee or Continental, pursuant to the Note Purchase
Agreement, in each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Indenture Default" means, with respect to any Indenture, any Event of
Default (as such term is defined in such Indenture) thereunder.
"ING" has the meaning assigned to such term in the recital of parties to
this Agreement.
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"ING Fee Letter" means the Fee Letter dated March 21, 1997, between ING
and the Subordination Agent with respect to the Liquidity Facilities.
"ING Sub-Account" means, with respect to any Cash Collateral Account, a
sub-ledger account to such Cash Collateral Account designated the "ING
Sub-Account".
"Initial Purchasers" means Credit Suisse First Boston Corporation, Morgan
Stanley & Co. Incorporated, Chase Securities Inc. and Goldman Sachs & Co.
"Interest Drawing" has the meaning assigned to such term in Section
3.6(a).
"Investment Earnings" means investment earnings on funds on deposit in the
Trust Accounts net of losses and investment expenses of the Subordination Agent
in making such investments.
"Lease" means, with respect to each Indenture pertaining to a Leased
Aircraft, the "Lease" referred to therein.
"Leased Aircraft" has the meaning assigned to such term in the preliminary
statements of this Agreement.
"Lien" means any mortgage, pledge, lien, charge, claim, disposition of
title, encumbrance, lease, sublease, sub-sublease or security interest of any
kind, including, without limitation, any thereof arising under any conditional
sales or other title retention agreement.
"Liquidity Event of Default," with respect to any Liquidity Facility, has
the meaning assigned to such term in such Liquidity Facility.
"Liquidity Expenses" means all Liquidity Obligations other than (i) the
principal amount of any Drawings under the Liquidity Facilities and (ii) any
interest accrued on any Liquidity Obligations.
"Liquidity Facilities" means, at any time, the Class A Liquidity
Facilities, the Class B Liquidity Facilities, the Class C-I Liquidity
Facilities and the Class C-II Liquidity Facilities.
"Liquidity Obligations" means all principal, interest, fees and other
amounts owing to the Liquidity Providers under the Liquidity Facilities,
Section 9.1 of the Participation Agreements or the Fee Letter.
"Liquidity Provider" means, at any time, any Class A Liquidity Provider,
any Class B Liquidity Provider, any Class C-I Liquidity Provider or any Class
C-II Liquidity Provider, as applicable.
"Loan Trustee" means, with respect to any Indenture, the loan trustee
thereunder.
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"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 Leased Aircraft or Owned 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 (in the
case of a Leased Aircraft) or Indenture (in the case of an Owned Aircraft), 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 40.36%, for the Class B
Certificates 54.03%, for the Class C-I Certificates 65.19% and for the Class
C-II Certificates, 65.19%.
"Majority Liquidity Providers" means, at any time, Liquidity Providers
holding at least 66-2/3% of the aggregate outstanding Liquidity Obligations at
such time.
"Maximum Available Amount" means, with respect to any Liquidity Facility
at any time of determination, subject to the proviso contained in the first
sentence of Section 3.6(g) hereof, an amount equal to (a) the Maximum Stated
Amount of such Liquidity Facility, less (b) the aggregate amount of each
Interest Drawing outstanding at such time; provided that, following a Downgrade
Drawing, a Non-Extension Drawing or a Final Drawing under such Liquidity
Facility, the Maximum Available Amount of such Liquidity Facility shall be
zero.
"Maximum Stated Amount" with respect to any Liquidity Facility, means the
Maximum Commitment (as defined in such Liquidity Facility) of the applicable
Liquidity Provider thereunder.
"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.
"New Aircraft" shall have the meaning set forth in the Note Purchase
Agreement.
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"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
2.6(d).
"Non-Performing Equipment Note" means an Equipment Note issued pursuant to
an Indenture that is not a Performing Equipment Note.
"Note Purchase Agreement" means the Note Purchase Agreement dated as of
the date hereof, among Continental, each Trustee, the Escrow Agent, the
Subordination Agent and the Paying Agent.
"Officer's Certificate" of any Person means a certification signed by a
Responsible Officer of such Person.
"Operative Agreements" means this Agreement, the Liquidity Facilities, the
Indentures, the Trust Agreements, the Purchase Agreement, the Financing
Agreements, the Leases, the Participation Agreements, the Fee Letter, the
Equipment Notes and the Certificates, together with all exhibits and schedules
included with any of the foregoing.
"Outstanding" means, when used with respect to each Class of Certificates,
as of the date of determination, all Certificates of such Class theretofore
authenticated and delivered under the related Trust Agreement, except:
(i) Certificates of such Class theretofore canceled by the Registrar
(as defined in such Trust Agreement) or delivered to the Trustee
thereunder or such Registrar for cancellation;
(ii) Certificates of such Class for which money in the full amount
required to make the final distribution with respect to such Certificates
pursuant to Section 11.01 of such Trust Agreement has been theretofore
deposited with the related Trustee in trust for the holders of such
Certificates as provided in Section 4.01 of such Trust Agreement pending
distribution of such money to such Certificateholders pursuant to such
final distribution payment; and
(iii) Certificates of such Class in exchange for or in lieu of which
other Certificates have been authenticated and delivered pursuant to such
Trust Agreement;
provided, however, that in determining whether the holders of the requisite
Outstanding amount of such Certificates have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, any Certificates
owned by Continental or any of its Affiliates shall be disregarded and deemed
not to be Outstanding, except that, in determining whether such Trustee shall
be protected in relying upon any such request, demand, authorization,
direction, notice,
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consent or waiver, only Certificates that such Trustee knows to be so owned
shall be so disregarded. Certificates so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the applicable Trustee the pledgee's right so to act with
respect to such Certificates and that the pledgee is not Continental or any of
its Affiliates.
"Overdue Scheduled Payment" means any Scheduled Payment which is not in
fact received by the Subordination Agent within five days after the Scheduled
Payment Date relating thereto.
"Owned Aircraft" has the meaning assigned to such term in the preliminary
statements of this Agreement.
"Owner Trustee" means, with respect to any Indenture pertaining to a
Leased Aircraft, the Owner Trustee (as defined therein) not in its individual
capacity but solely as trustee under the related owner trust agreement,
together with any successor trustee appointed pursuant to such owner trust
agreement.
"Participation Agreement" mean, with respect to each Indenture, the
"Participation Agreement" referred to therein.
"Paying Agent" means Wilmington Trust Company, as paying agent under each
Escrow and Paying Agent Agreement, together with its successors in such
capacity.
"Performing Equipment Note" means an Equipment Note issued pursuant to an
Indenture with respect to which no payment default has occurred and is
continuing; provided that in the event of a bankruptcy proceeding involving
Continental under Title 11 of the United States Code (the "Bankruptcy Code"),
(i) any payment default existing during the 60-day period under Section
1110(a)(1)(A) of the Bankruptcy Code (or such longer period as may apply under
Section 1110(b) of the Bankruptcy Code) (the "Section 1110 Period") shall not
be taken into consideration, unless during the Section 1110 Period the trustee
in such proceeding or Continental refuses to assume or agree to perform its
obligations under the Lease related to such Equipment Note (in the case of a
Leased Aircraft) or under the Indenture related to such Equipment Note (in the
case of an Owned Aircraft) and (ii) any payment default occurring after the
date of the order of relief in such proceeding shall not be taken into
consideration if such payment default is cured under Section 1110(a)(1)(B) of
the Bankruptcy Code before the later of 30 days after the date of such default
or the expiration of the Section 1110 Period.
"Performing Note Deficiency" means any time that less than 65% of the then
aggregate outstanding principal amount of all Equipment Notes are Performing
Equipment Notes.
"Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust, trustee,
unincorporated organization or government or any agency or political
subdivision thereof.
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"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 less (iii) the aggregate amount of unused
Deposits with respect to such Trust distributed as a Final Withdrawal (as
defined in the Escrow and Paying Agent Agreement related to such Trust) other
than payments in respect of interest or premium thereon. The Pool Balance for
each Trust or the Certificates issued by any Trust as of any Distribution Date
shall be computed after giving effect to the payment of principal, if any, on
the Equipment Notes or other Trust Property held in such Trust and the
distribution thereof to be made on such date and the distribution of unused
Deposits to be made on such date.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"PTC Event of Default" means, with respect to each Trust Agreement, the
failure to pay within 10 Business Days of the due date thereof: (i) the
outstanding Pool Balance of the applicable Class of Certificates on the Final
Maturity Date for such Class or (ii) interest due on such Certificates on any
Distribution Date (unless, in the case of the Class A, Class B, Class C-I or
Class C-II Certificates, the Subordination Agent shall have made an Interest
Drawing or Drawings, or withdrawal or withdrawals pursuant to Section 3.6(f),
with respect thereto in an aggregate amount sufficient to pay such interest and
shall have distributed such amount to the Trustee entitled thereto).
"Purchase Agreement" means the Purchase Agreement dated March 12, 1997,
among the Initial Purchasers and Continental, relating to the purchase of the
Certificates by the Initial Purchasers, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Rating Agencies" means, collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the
Certificates and which shall then be rating the Certificates. The initial
Rating Agencies will be Moody's and Standard & Poor's.
"Ratings Confirmation" means, with respect to any action proposed to be
taken, a written confirmation from each of the Rating Agencies that such action
would not result in (i) a reduction of the rating for any Class of Certificates
below the then current rating for such Class of Certificates or (ii) a
withdrawal or suspension of the rating of any Class of Certificates.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement dated as of the date hereof, among the Initial Purchasers, the
Trustees and Continental, as amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Regular Distribution Dates" means, each April 1 and October 1, commencing
on October 1, 1997; 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.
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"Replacement Liquidity Facility" means, for any Liquidity Facility, an
irrevocable revolving credit agreement issued by a Replacement Liquidity
Provider in substantially the form of the replaced Liquidity Facility,
including reinstatement provisions, or in such other form (which may include a
letter of credit) as shall permit the Rating Agencies to confirm in writing
their respective ratings then in effect for each Class of Certificates (before
the downgrading of such ratings, if any, as a result of the downgrading of the
replaced Liquidity Provider), in a face amount (together with the face amount
of any Liquidity Facility of the same Class which will continue to be
outstanding after the issuance of such Replacement Liquidity Facility and the
amount in the Cash Collateral Account of such Class) equal to the Required
Amount (without giving effect to the proviso to the definition thereof) for
such Liquidity Facility and issued by a Replacement Liquidity Provider having
short-term unsecured debt ratings issued by each Rating Agency which are equal
to or higher than the Threshold Rating.
"Replacement Liquidity Provider" means a Person having short-term
unsecured debt ratings issued by each Rating Agency which are equal to or
higher than the Threshold Rating.
"Replacement Liquidity Provider Sub-Account" means, with respect to any
Cash Collateral Account, a sub-ledger account to such Cash Collateral Account
having a designation indicating that it is a Sub-Account with respect to such
Replacement Liquidity Provider.
"Required Amount" means, with respect to Liquidity Facilities of 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. The
Required Amount for any Sub-Account of any Cash Collateral Account of any Class
shall be equal to the Stated Portion (under the related Liquidity Facility) of
the Required Amount for such Class.
"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 in the aerospace department of such Liquidity Provider, or,
if none, any other authorized officer of such Liquidity Provider.
"Scheduled Payment" means, with respect to any Equipment Note, (i) any
payment of principal 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
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installment of principal at the stated maturity of such installment of
principal on such Equipment Note, the payment of regularly scheduled interest
accrued on the unpaid principal amount of such Equipment Note, or both;
provided that any payment of principal of, premium, if any, or interest
resulting from the redemption or purchase of any Equipment Note shall not
constitute a Scheduled Payment.
"Scheduled Payment Date" means, with respect to any Scheduled Payment, the
date on which such Scheduled Payment is scheduled to be made.
"Series A Equipment Notes" means the 7.461% Series A Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or Continental,
as the case may be, and authenticated by the Loan Trustee thereunder, and any
such Equipment Notes issued in exchange therefor or replacement thereof
pursuant to the terms of such Indenture.
"Series B Equipment Notes" means the 7.461% Series B Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or Continental,
as the case may be, and authenticated by the Loan Trustee thereunder, and any
such Equipment Notes issued in exchange therefor or replacement thereof
pursuant to the terms of such Indenture.
"Series C Equipment Notes" means the 7.42% Series C Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or Continental,
as the case may be, and authenticated by the Loan Trustee thereunder, and any
such Equipment Notes issued in exchange therefor or replacement thereof
pursuant to the terms of such Indenture.
"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 Rating Group, a division of
McGraw-Hill Inc.
"Stated Interest Rate" means (i) with respect to the Class A Certificates,
7.461% per annum, (ii) with respect to the Class B Certificates, 7.461% per
annum, and (iii) with respect to the Class C-I Certificates and the Class C-II
Certificates, 7.42% per annum (such rate with respect to each Class of
Certificates, the "Initial Stated Interest Rate" for such Class), plus, in each
case, solely in the event no Registration Event (as defined in the Registration
Rights Agreement) occurs on or prior to the 210th day after the Closing Date,
an additional margin equal to 0.50% per annum, from and including such 210th
day (provided that any such additional margin shall cease to be in effect from
and including the earlier of (i) the date on which such
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Registration Event occurs and (ii) the date on which there ceases to be any
Registrable Certificates (as defined in the Registration Rights Agreement));
provided that if the Shelf Registration Statement (as defined in the
Registration Rights Agreement) ceases to be effective at any time during the
period specified by Section 2(b)(B) of the Registration Rights Agreement for
more than 60 days, whether or not consecutive, during any 12-month period, the
Stated Interest Rate shall be increased by 0.50% per annum from the 61st day of
the applicable 12-month period such Shelf Registration Statement ceases to be
effective until such time as the Shelf Registration Statement again becomes
effective (or, if earlier, the end of the period specified by Section 2(b)(B)
of the Registration Rights Agreement). For the avoidance of doubt, the Stated
Interest Rate for any Class of Certificates shall never exceed 0.50% per annum
over the Initial Stated Interest Rate for such Class of Certificates.
"Stated Portion" with respect to any Liquidity Facility, means the Stated
Portion (as defined in such Liquidity Facility).
"Sub-Account" means, collectively, the ABN AMRO Sub-Account, the ING
Sub-Account and any Replacement Liquidity Provider Sub-Account.
"Substitute Aircraft" shall have the meaning set forth in the Note
Purchase Agreement.
"Successor Trusts" means, collectively, Continental Airlines Pass Through
Trust 1997-1A-S, Continental Airlines Pass Through Trust 1997-1B-S, Continental
Airlines Pass Through Trust 1997-1C-I-S and Continental Airlines Pass Through
Trust 1997-1C-II-S.
"Tax" and "Taxes" mean any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, loss, damage, liability, expense, additions to tax and additional
amounts or costs incurred or imposed with respect thereto) imposed or otherwise
assessed by the United States or by any state, local or foreign government (or
any subdivision or agency thereof) or other taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth and similar charges; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value added, taxes on goods and services, gains taxes, license, registration
and documentation fees, customs duties, tariffs, and similar charges.
"Termination Notice" with respect to any Liquidity Facility has the
meaning assigned to such term in such Liquidity Facility.
"Threshold Rating" means the short-term unsecured debt rating of P-1 by
Moody's and A-1+ by Standard & Poor's.
"Transfer" means the transfers contemplated by the Assignment and
Assumption Agreements.
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"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 (provided that, with respect to the period
prior to the Delivery Period Expiry Date, the such Equipment Notes have an
aggregate outstanding principal balance of in excess of $280,000,000) or (z)
the occurrence of a Continental Bankruptcy Event.
"Trust" means any of the Class A Trust, the Class B Trust, the Class C-I
Trust or the Class C-II 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, the Class C-I Trust Agreement or the Class C-II Trust
Agreement.
"Trustee" means any of the Class A Trustee, the Class B Trustee, the Class
C-I Trustee or the Class C-II Trustee.
"Trustee Incumbency Certificate" has the meaning assigned to such term in
Section 2.5(a).
"Trust Property" with respect to any Trust, has the meaning set forth in
the Trust Agreement for such Trust.
"Trustee Representatives" has the meaning assigned to such term in Section
2.5(a).
"Written Notice" means, from (i) any Trustee or Liquidity Provider, a
written instrument executed by the Designated Representative of such Person,
and (ii) the Subordination Agent, a written instrument executed by a Person
designated in the Officer's Certificate of the Subordination Agent delivered on
the Closing Date. An invoice delivered by a Liquidity Provider pursuant to
Section 3.1 in accordance with its normal invoicing procedures shall constitute
Written Notice under such Section.
"WTC" has the meaning assigned to such term in the recital of parties to
this Agreement.
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ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1. Agreement to Terms of Subordination; Payments from Monies
Received Only. (a) Each Trustee hereby acknowledges and agrees to the terms
of subordination set forth in this Agreement in respect of each Class of
Certificates and agrees to enforce such provisions and cause all payments in
respect of the Equipment Notes and the Liquidity Facilities to be applied in
accordance with the terms of this Agreement. In addition, each Trustee hereby
agrees to cause the Equipment Notes purchased by the related Trust to be
registered in the name of the Subordination Agent, as nominee of such Trustee,
to be held in trust by the Subordination Agent solely for the purpose of
facilitating the enforcement of the subordination and other provisions of this
Agreement.
(b) Except as otherwise expressly provided in the next succeeding sentence
of this Section 2.1, all payments to be made by the Subordination Agent
hereunder shall be made only from amounts received by it that constitute
Scheduled Payments, Special Payments, payments under Section 9.1 of the
Participation Agreements or payments under Sections 6 and 7 of the Note
Purchase Agreement, and only to the extent that the Subordination Agent shall
have received 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 to the relevant Deposits 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
(and the ABN AMRO Sub-Accounts, the ING Sub-Accounts and any Replacement
Liquidity Provider Sub-Accounts related thereto) pursuant to and under the
circumstances set forth in Section 3.6(f) hereof. Upon such establishment and
maintenance under Section 3.6(f) hereof, the Cash Collateral Accounts shall,
together with the Collection Account, constitute the "Trust Accounts"
hereunder.
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(b) Funds on deposit in the Trust Accounts shall be invested and
reinvested by the Subordination Agent in Eligible Investments selected by the
Subordination Agent if such investments are reasonably available and have
maturities no later than the earlier of (i) 90 days following the date of such
investment and (ii) the Business Day immediately preceding the Regular
Distribution Date or the date of the related distribution pursuant to Section
2.4 hereof, as the case may be, next following the date of such investment;
provided, however, that following the making of a Downgrade Drawing or a
Non-Extension Drawing under any Liquidity Facility, the Subordination Agent
shall invest and reinvest such amounts in the Sub-Account related to such
Liquidity Facility at the direction of (x) in the case of a Downgrade Drawing
with respect to such Liquidity Facility, until the Expiry Date of such
Liquidity Facility, the Liquidity Provider with respect to such Liquidity
Facility, and (y) otherwise, Continental; provided further, however, that upon
the occurrence and during the continuation of a Triggering Event, the
Subordination Agent shall invest and reinvest such amounts in accordance with
the written instructions of the Controlling Party. Unless otherwise expressly
provided in this Agreement (including, without limitation, Section 3.6(f)
hereof), any Investment Earnings shall be deposited in the Collection Account
when received by the Subordination Agent and shall be applied by the
Subordination Agent in the same manner as the 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). 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.
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(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. Such Written Notice shall also set the distribution date for such
Special Payment (a "Special Distribution Date"), which shall be a Business Day
which immediately follows the later to occur of (x) the 20th day after the date
of such Written Notice or (y) the date the Subordination Agent has received or
expects to receive such Special Payment.
(b) Redemptions and Purchases of Equipment Notes. So long as no
Triggering Event shall have occurred (whether or not continuing), the
Subordination Agent shall make distributions pursuant to this Section 2.4(b) of
amounts on deposit in the Special Payments Account on account of the redemption
or purchase (including, without limitation, a purchase resulting from a sale of
the Equipment Notes permitted by Article IV hereof) of all of the Equipment
Notes issued pursuant to an Indenture on the Special Distribution Date for such
Special Payment in the following order of priority:
first, such amount as shall be required to pay (A) all accrued and
unpaid Liquidity Expenses then in arrears plus (B) the product of (x) the
aggregate amount of all accrued and unpaid Liquidity Expenses not in
arrears to such Special Payment Date multiplied by (y) a fraction, the
numerator of which is the aggregate outstanding principal amount of
Equipment Notes being redeemed, purchased or prepaid on such Special
Payment Date and the denominator of which is the aggregate outstanding
principal amount of all Equipment Notes, shall be distributed to the
Liquidity Providers pari passu on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
second, such amount as shall be required to pay (A) all accrued and
unpaid interest then in arrears on all Liquidity Obligations (including
interest accrued 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
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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 Sub-Account of
any Cash Collateral Account had been previously funded as provided in
Section 3.6(f), fund such Sub-Account up to its Required Amount shall be
deposited in such Sub-Account, (B) if any Liquidity Facility shall become
a Downgraded Facility or a Non-Extended Facility at a time when
unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Maximum Available Amount thereunder to zero, to deposit into the
related Sub-Account of the related Cash Collateral Account an amount
equal to such Sub-Account's Required Amount shall be deposited in such
Sub-Account, and (C) if, with respect to any particular Liquidity
Facility, neither subclause (A) nor subclause (B) of this clause "third"
are applicable, to pay or reimburse the Liquidity Provider in respect of
such Liquidity Facility 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 such deficiencies and/or unreimbursed Interest Drawings;
fourth, if, with respect to any particular Liquidity Facility,
either subclause (A) or (B) of clause "third" above is applicable, 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 Stated Portion of 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, (x) such amount as shall be required to pay in full
Expected Distributions to the holders of Class C-I Certificates on such
Special Distribution Date shall be distributed to the Class C-I Trustee
and (y) such amount as shall be required to pay in full Expected
Distributions to the holders of Class C-II Certificates on such Special
Distribution Date shall be distributed to the Class C-II Trustee; such
distributions to the Class C-I Trustee and the Class C-II Trustee to be
made pari passu on the basis of the amount of such Expected Distributions
for the Class C-I Certificates and the Class C-II Certificates; 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), clause (x) of the definition of
"Expected Distributions" shall be deemed to read as follows: "(x) accrued, due
and unpaid interest on such Certificates
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together with 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) (excluding interest, if any, payable with respect to the Deposits
related to such Trust)".
(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, any
Liquidity Provider, any Paying Agent, any Depositary or any Escrow Agent
(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, each Trustee shall furnish to the Subordination Agent, and from time
to time thereafter may furnish to the Subordination Agent, at such Trustee's
discretion, or upon the Subordination Agent's request (which request shall not
be made more than one time in any 12-month period), a certificate (a "Trustee
Incumbency Certificate") of a Responsible Officer of such Trustee certifying as
to the incumbency and specimen signatures of the officers of such Trustee and
the attorney-in-fact and agents of such Trustee (the "Trustee Representatives")
authorized to give Written Notices on behalf of such Trustee hereunder. Until
the Subordination Agent receives a subsequent Trustee Incumbency Certificate,
it shall be entitled to rely on the last Trustee Incumbency Certificate
delivered to it hereunder.
(b) With the delivery of this Agreement, each Liquidity Provider shall
furnish to the Subordination Agent, and from time to time thereafter may
furnish to the Subordination Agent, at such Liquidity Provider's discretion, or
upon the Subordination Agent's request (which request shall not be made more
than one time in any 12-month period), a certificate (an "LP Incumbency
Certificate") of any authorized officer in the aerospace department or any
other authorized signatory of such Liquidity Provider certifying as to the
incumbency and specimen signatures of any officer, attorney-in-fact, agent or
other designated representative of such Liquidity Provider (the "LP
Representatives" and, together with the Trustee Representatives, the
"Designated Representatives") authorized to give Written Notices on behalf of
such Liquidity Provider hereunder. Until the Subordination Agent receives a
subsequent LP Incumbency
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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, in the case
of an Indenture pertaining to a Leased Aircraft, has not been cured by the
applicable Owner Trustee or the applicable Owner Participant, if applicable,
pursuant to Section 4.03 of such Indenture), in taking, or refraining from
taking, any action under such Indenture or with respect to such Equipment
Notes, including exercising remedies thereunder (including Accelerating the
Equipment Notes issued thereunder or foreclosing the Lien on the Aircraft
securing such Equipment Notes), by the Controlling Party.
(b) The Person who shall be the "Controlling Party" with respect to any
Indenture shall be: (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-I Trustee and the C-II Trustee, collectively (who agree to act
collectively in accordance with the instructions of the holders of at least a
majority of the outstanding principal amount of Class C Certificates). For
purposes of giving effect to the foregoing, the Trustees (other than the
Controlling Party) irrevocably agree (and the Certificateholders (other than
the Certificateholders represented by the Controlling Party) shall be deemed to
agree by virtue of their purchase of Certificates) that the Subordination
Agent, as record holder of the Equipment Notes, shall exercise its voting
rights in respect of the Equipment Notes as directed by the Controlling Party.
The Subordination Agent shall give written notice to all of the other
parties to this Agreement promptly upon a change in the identity of the
Controlling Party. Each of the parties hereto agrees that it shall not
exercise any of the rights of the Controlling Party at such time as it is not
the Controlling Party hereunder; provided, however, that nothing herein
contained shall prevent or prohibit any Non-Controlling Party from exercising
such rights as shall be specifically granted to such Non-Controlling Party
hereunder and under the other Operative Agreements.
(c) Notwithstanding the foregoing, at any time after 18 months from the
earlier to occur of (i) the date on which the entire Maximum 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, and (ii)
the date on which all Equipment Notes shall have been Accelerated (provided
that, with respect to the period prior to the Delivery
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Period Expiry Date, such Equipment Notes have an aggregate outstanding
principal balance of in excess of $280,000,000), the Liquidity Provider shall
have the right to elect, by Written Notice to the Subordination Agent and each
of the Trustees, to become the Controlling Party hereunder with respect to any
Indenture at any time from and including the last day of such 18-month period.
If there is more than one Liquidity Provider, the Required Liquidity Providers
shall have such right.
(d) The exercise of remedies by the Controlling Party under this Agreement
shall be expressly limited by Section 4.1(a)(ii) hereof.
(e) The Controlling Party shall not be entitled to require or obligate any
Non-Controlling Party to provide funds necessary to exercise any right or
remedy hereunder.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
SECTION 3.1. Written Notice of Distribution. (a) No later than 3:00
P.M. (New York City time) on the Business Day immediately preceding each
Regular Distribution Date, each of the following Persons shall deliver to the
Subordination Agent a Written Notice setting forth the following information as
at the close of business on such Business Day:
(i) With respect to the Class A Certificates, the Class A Trustee
shall separately set forth the amounts to be paid in accordance with
clause "fifth" of Section 3.2 hereof;
(ii) With respect to the Class B Certificates, the Class B Trustee
shall separately set forth the amounts to be paid in accordance with
clause "sixth" of Section 3.2 hereof;
(iii) With respect to the Class C-I Certificates, the Class C-I
Trustee shall separately set forth the amounts to be paid in accordance
with subclause (a) of clause "seventh" of Section 3.2 hereof;
(iv) With respect to the Class C-II Certificates, the Class C-II
Trustee shall separately set forth the amounts to be paid in accordance
with subclause (b) of clause "seventh" of Section 3.2 hereof;
(v) With respect to each Liquidity Facility, the Liquidity Provider
thereunder shall separately set forth the amounts to be paid in
accordance with clauses "first", "second", "third" and "fourth" of
Section 3.2 hereof; and
(vi) Each Trustee shall set forth the amounts to be paid in
accordance with clause "eighth" of Section 3.2 hereof.
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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-I Certificates, the Class C-I
Trustee shall separately set forth the amounts to be paid in accordance
with clause "first" (to reimburse payments made by the Class C-I
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and subclause (i) of clause "ninth" of Section 3.3
hereof;
(iv) With respect to the Class C-II Certificates, the Class C-II
Trustee shall separately set forth the amounts to be paid in accordance
with clause "first" (to reimburse payments made by the Class C-II
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and subclause (ii) of clause "ninth" of Section 3.3
hereof;
(v) With respect to each Liquidity Facility, the Liquidity Provider
thereunder shall separately set forth the amounts to be paid to it in
accordance with subclause (iii) of clause "first" of Section 3.3 hereof
and clauses "second", "third", "fourth" and "fifth" of Section 3.3
hereof; and
(vi) 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.
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(d) As provided in Section 6.5 hereof, the Subordination Agent shall be
fully protected in relying on any of the information set forth in a Written
Notice provided by any Trustee or any Liquidity Provider pursuant to paragraphs
(a) through (c) above and shall have no independent obligation to verify,
calculate or recalculate any amount set forth in any Written Notice delivered
in accordance with such paragraphs.
(e) Any Written Notice delivered by a Trustee or a Liquidity Provider, as
applicable, pursuant to Section 3.1(a), 3.1(b) or 3.1(c) hereof, if made prior
to 10:00 A.M. (New York City time) shall be effective on the date delivered (or
if delivered later shall be effective as of the next Business Day). Subject to
the terms of this Agreement, the Subordination Agent shall as promptly as
practicable comply with any such instructions; provided, however, that any
transfer of funds pursuant to any instruction received after 10:00 A.M. (New
York City time) on any Business Day may be made on the next succeeding Business
Day.
(f) In the event the Subordination Agent shall not receive from any Person
any information set forth in paragraphs (a) or (b) above which is required to
enable the Subordination Agent to make a distribution to such Person pursuant
to Section 3.2 or 3.3 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, 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
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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 Sub-Account of
any Cash Collateral Account had been previously funded as provided in
Section 3.6(f), to fund such Sub-Account up to its Required Amount shall
be deposited in such Sub-Account, (B) if any Liquidity Facility shall
become a Downgraded Facility or a Non-Extended Facility at a time when
unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Maximum Available Amount thereunder to zero, to deposit into the
related Sub-Account of the related Cash Collateral Account an amount
equal to such Sub-Account's Required Amount shall be deposited in such
Sub-Account, and (C) if, with respect to any particular Liquidity
Facility, neither subclause (A) nor subclause (B) of this clause "third"
is applicable, to pay or reimburse the Liquidity Provider in respect of
such Liquidity Facility 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 such deficiencies and/or unreimbursed Liquidity Obligations;
fourth, if, with respect to any particular Liquidity Facility,
either subclause (A) or (B) of clause "third" above is applicable, 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 Stated Portion of 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, (a) such amount as shall be required to pay in full
Expected Distributions to the holders of the Class C-I Certificates on
such Distribution Date shall be distributed to the Class C-I Trustee and
(b) such amount as shall be required to pay in full Expected
Distributions to the holders of the Class C-II Certificates on such
Distribution Date shall be distributed to the Class C-II Trustee, pari
passu on the basis of the amount of such Expected Distributions for the
Class C-I Certificates and the Class C-II Certificates;
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
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ninth, the balance, if any, of any such payment remaining thereafter
shall be held in the Collection Account for later distribution in
accordance with this Article III.
SECTION 3.3. Distribution of Amounts on Deposit Following a Triggering
Event. Except as otherwise provided in Sections 3.1(f) and 3.6(b) hereof, upon
the occurrence of a Triggering Event and at all times thereafter, all funds in
the Collection Account or the Special Payments Account shall be promptly
distributed by the Subordination Agent in the following order of priority:
first, such amount as shall be required 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 as shall be required (A) if any Sub-Account of
any Cash Collateral Account had been previously funded as provided in
Section 3.6(f), 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
Sub-Account up to its Required Amount (less the amount of any repayments
of Interest Drawings under such Liquidity Facility while subclause (A)(i)
above is applicable) shall be deposited in such Sub-Account, (B) if any
Liquidity Facility shall become a Downgraded Facility or a Non-Extended
Facility at a time when unreimbursed Interest Drawings under such
Liquidity Facility have reduced the Maximum 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 Sub-Account of the related Cash Collateral Account an amount
equal to such
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Sub-Account's Required Amount (less the amount of any repayments of
Interest Drawings under such Liquidity Facility while subclause (B)(i)
above is applicable) shall be deposited in such Sub-Account, and (C) if,
with respect to any particular Liquidity Facility, neither subclause (A)
nor subclause (B) of this clause "fourth" are applicable, to pay in full
the outstanding amount of all Liquidity Obligations then due under such
Liquidity Facility (other than amounts payable pursuant to clause
"second" or "third" of this Section 3.3) shall be distributed to such
Liquidity Provider, pari passu on the basis of the amounts of such
deficiencies and/or unreimbursed Liquidity Obligations;
fifth, if subclause (A) or (B) of clause "fourth" above is
applicable, 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 Stated Portion of the Required Amount for the
relevant Class (less the amount of any 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, (i) such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class C-I Certificates shall be
distributed to the Class C-I Trustee and (ii) such amount remaining as
shall be required to pay in full Adjusted Expected Distributions on the
Class C-II Certificates shall be distributed to the Class C-II Trustee,
pari passu on the basis of the amount of such Adjusted Expected
Distributions for the Class C-I Certificates and the Class C-II
Certificates.
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SECTION 3.4. Other Payments. Any payments received by the Subordination
Agent for which no provision as to the application thereof is made in this
Agreement shall be distributed by the Subordination Agent (i) in the order of
priority specified in Section 3.3 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.
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, the Class C-I Certificates or
the Class C-II 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 each Liquidity
Facility with respect to such Class of Certificates in an amount equal to the
lesser of (i) the Stated Portion (with respect to such Liquidity Facility) of
an amount sufficient to pay the amount of such accrued interest (at the Stated
Interest Rate for such Class of Certificates) and (ii) the Maximum 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 Facilities 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 Facilities 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, (iii) all payments received by the Subordination Agent in
respect of an Interest Drawing under the Class C-I Liquidity Facilities and all
amounts withdrawn by the Subordination Agent from the Class C-I Cash Collateral
Account, and payable in each case to the Class C-I Certificateholders, shall be
promptly distributed to the Class C-I Trustee, and (iv) all payments received
by the Subordination Agent in respect of an Interest Drawing under the Class
C-II Liquidity Facilities and all amounts withdrawn by the Subordination Agent
from the Class C-II Cash Collateral Account, and payable in each case to the
Class C-II Certificateholders, shall be promptly distributed to the Class C-II
Trustee.
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(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 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 Maturity 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, arrange for a Replacement Liquidity Facility to
replace any Liquidity Facility (including any Replacement Liquidity Facility
provided pursuant to Section 3.6(e)(ii) hereof) for any Class of Certificates
with cause or without cause, provided that neither ABN AMRO nor ING shall be
replaced by Continental as a Liquidity Provider with respect to any Class of
Certificates prior to the fourth anniversary of the Closing Date except for
cause, for its ceasing to meet the Threshold Ratings or for any failure to
extend the Expiry Date of any Liquidity Facility in accordance with Section
2.10 of such Liquidity Facility and Section 3.6(d) hereof. If such
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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 Sub-Account of 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 clauses (i) or (ii) above,
respectively, shall become effective and no such Replacement Liquidity
Facility shall be deemed a "Liquidity Facility" under the Operative
Agreements (in each case other than insofar as necessary to permit the
repayment of amounts owed to the replaced Liquidity Provider), unless and
until (A) each of the conditions referred to in clause (iv) 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, the Class C-I Certificateholders or the Class C-II
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), 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 (including, without limitation, any
unreimbursed Advances) then owing to the replaced Liquidity Provider
(which payment may be made as provided in clause (ix) of Section 3.6(f)
hereof, pursuant to a drawing under the Replacement Liquidity Facility,
or otherwise) and (z) cause the issuer of the Replacement Liquidity
Facility to deliver the Replacement Liquidity Facility to the
Subordination Agent, together with a legal opinion opining that such
Replacement Liquidity Facility is an enforceable obligation of such
Replacement Liquidity Provider.
(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 so requested by
Continental or the Liquidity Provider being replaced, 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
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Facility with the applicable Replacement Liquidity Facility and (z) such
Replacement Liquidity Provider shall be deemed to be a Liquidity Provider
with the rights and obligations of a Liquidity Provider hereunder and
under the other Operative Agreements and such Replacement Liquidity
Facility shall be deemed to be a Liquidity Facility hereunder and under
the other Operative Agreements.
(f) Cash Collateral Accounts; Withdrawals; Investments. In the event the
Subordination Agent shall draw all available amounts under any Class A
Liquidity Facility, any Class B Liquidity Facility, any Class C-I Liquidity
Facility or any Class C-II 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 into a
Sub-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 relevant Sub-Account
of the Class A Cash Collateral Account, the Class B Cash Collateral Account,
the Class C-I Cash Collateral Account or the Class C-II Cash Collateral
Account, respectively. All amounts on deposit in any such Sub-Account shall be
invested and reinvested in Eligible Investments in accordance with Section
2.2(b) hereof. Investment Earnings on amounts on deposit in each Sub-Account
of the Cash Collateral Accounts shall be deposited in the Collection Account
prior to giving effect to the distributions below on each Distribution Date
commencing on the first Distribution Date after any such deposit into such
Sub-Account. The Subordination Agent shall deliver a written statement to
Continental and the relevant Liquidity Provider one day prior to each
Distribution Date setting forth the aggregate amount of Investment Earnings
held in each Sub-Account of 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 each Sub-Account of the Class A Cash Collateral Account,
and pay to the Class A Trustee, an amount equal to the lesser of (x) the
Stated Portion of 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 such Sub-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 each Sub-Account of the Class B Cash Collateral Account,
and pay to the Class B Trustee, an amount equal to the lesser of (x) the
Stated Portion of 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 such Sub-Account;
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(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-I Certificates (at the Stated
Interest Rate for the Class C-I Certificates) from any other source,
withdraw from each Sub-Account of the Class C-I Cash Collateral Account,
and pay to the Class C-I Trustee, an amount equal to the lesser of (x)
the Stated Portion of an amount necessary to pay accrued and unpaid
interest (at the Stated Interest Rate for the Class C-I Certificates) on
such Class C-I Certificates and (y) the amount on deposit in such
Sub-Account;
(iv) 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-II Certificates (at the Stated
Interest Rate for the Class C-II Certificates) from any other source,
withdraw from each Sub-Account of the Class C-II Cash Collateral Account,
and pay to the Class C-II Trustee, an amount equal to the lesser of (x)
the Stated Portion of an amount necessary to pay accrued and unpaid
interest (at the Stated Interest Rate for the Class C-II Certificates) on
such Class C-II Certificates and (y) the amount on deposit in such
Sub-Account;
(v) 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 or pursuant
to Section 2.03 of the Escrow and Paying Agent Agreement for such Class,
the Subordination Agent shall withdraw from each Sub-Account of the Class
A Cash Collateral Account an amount equal to the excess, if any, of the
amount on deposit in such Sub-Account over the Required Amount for such
Sub-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;
(vi) 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 or pursuant
to Section 2.03 of the Escrow and Paying Agent Agreement of such Class,
the Subordination Agent shall withdraw from each Sub-Account of the Class
B Cash Collateral Account an amount equal to the excess, if any, of the
amount on deposit in such Sub-Account over the Required Amount for such
Sub-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;
(vii) on each date on which the Pool Balance of the Class C-I Trust
shall have been reduced by payments made to the Class C-I
Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant
to Section 2.03 of the Escrow and Paying Agent Agreement for such Class,
the Subordination Agent shall withdraw from each Sub-Account of the Class
C-I Cash Collateral Account an amount equal to the excess, if any,
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of the amount on deposit in such Sub-Account over the Required Amount for
such Sub-Account and shall first, pay such amount to the relevant Class
C-I Liquidity Provider until the Liquidity Obligations (with respect to
the Class C-I Certificates) owing to such Liquidity Provider shall have
been paid in full, and second, deposit any remaining amount in the
Collection Account;
(viii) on each date on which the Pool Balance of the Class C-II
Trust shall have been reduced by payments made to the Class C-II
Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant
to Section 2.03 of the Escrow and Paying Agent Agreement for such Class,
the Subordination Agent shall withdraw from each Sub-Account of the Class
C-II Cash Collateral Account an amount equal to the excess, if any, of
the amount on deposit in such Sub-Account over the Required Amount for
such Sub-Account and shall first, pay such amount to the relevant Class
C-II Liquidity Provider until the Liquidity Obligations (with respect to
the Class C-II Certificates) owing to such Liquidity Provider shall have
been paid in full, and second, deposit any remaining amount in the
Collection Account; and
(ix) 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 any Sub-Account of the Cash
Collateral Account for such Class of Certificates, the Subordination
Agent shall withdraw all amounts on deposit in such Sub-Account and
shall pay such amounts to the replaced Liquidity Provider until all
Liquidity Obligations owed to such Person shall have been paid in full,
and shall deposit any remaining amount in the Collection Account.
(g) Reinstatement. With respect to any Interest Drawing under any
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 Maximum 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 Maximum 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 (i) a Liquidity Event of Default shall have occurred and be
continuing and (ii) a Performing Note Deficiency exists. In the event that,
with respect to any particular Liquidity Facility, (i) funds are withdrawn from
the related Sub-Account pursuant to clauses (i), (ii), (iii) or (iv) 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 Maximum 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 (or the applicable) Sub-Account as 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.
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(h) Reimbursement. The amount of each drawing under the Liquidity
Facilities shall be due and payable, together with interest thereon, on the
dates and at the rates, respectively, provided in the Liquidity Facilities.
(i) Final Drawing Upon Termination Notice. Upon receipt from a Liquidity
Provider of a Termination Notice with respect to any Liquidity Facility, the
Subordination Agent shall, not later than the date specified in such
Termination Notice, in accordance with and to the extent permitted by the terms
of such Liquidity Facility, request a drawing under such Liquidity Facility of
all available and undrawn amounts thereunder (a "Final Drawing"). Amounts
drawn pursuant to a Final Drawing shall be maintained and invested in
accordance with Section 3.6(f) hereof.
(j) Reduction or Increase of Maximum Stated Amount. Promptly following
each date on which the Required Amount of the Liquidity Facilities for a Class
of Certificates is (i) reduced as a result of a reduction in the Pool Balance
with respect to such Certificates, (ii) increased as a result of an increase in
the Stated Interest Rate or (iii) subsequent to such an increase, reduced
pursuant to the definition of "Stated Interest Rate", the Subordination Agent
shall, if any such Liquidity Facility provides for reductions of the Maximum
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 Maximum Stated Amount to an amount equal to its Stated Portion of
the Required Amount with respect to such Liquidity Facility (as calculated by
the Subordination Agent after giving effect to such payment). Each such
request shall be made in accordance with the provisions of the applicable
Liquidity Facility.
(k) Relation to Subordination Provisions. Interest Drawings under the
Liquidity Facilities and withdrawals from the Cash Collateral Accounts, in each
case, in respect of interest on the Certificates of any Class, will be
distributed to the Trustee for such Class of Certificates, notwithstanding
Sections 3.2, 3.3 and 3.6(h) hereof.
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1. Directions from the Controlling Party. (a) (i) Following
the occurrence and during the continuation of an Indenture Default under any
Indenture, the Controlling Party shall direct the Subordination Agent, which in
turn shall direct the Loan Trustee under such Indenture, in the exercise of
remedies available to the holders of the Equipment Notes issued pursuant to
such Indenture, including, without limitation, the ability to vote all such
Equipment Notes in favor Accelerating such Equipment Notes in accordance with
the provisions of such Indenture. Subject to the Owner Trustees' and the Owner
Participants' rights, if any, set forth in the Indentures with respect to
Leased Aircraft to purchase the Equipment Notes and the provisions of the next
paragraph, if the Equipment Notes issued pursuant to any Indenture have been
Accelerated following an Indenture Default with respect thereto, the
Controlling Party may sell, assign, contract to sell or otherwise dispose of
and deliver all (but not less than all) of such Equipment Notes to any Person
at public or private sale, at any
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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, set forth in the Indentures with respect to Leased
Aircraft to purchase the Equipment Notes, and notwithstanding the
foregoing, so long as any Certificates remain Outstanding, during the
period ending on the date which is nine months after the earlier of (x)
the Acceleration of the Equipment Notes issued pursuant to any Indenture
or (y) the occurrence of a Continental Bankruptcy Event, without the
consent of each Trustee, (A) no Aircraft subject to the Lien of such
Indenture or such Equipment Notes may be sold if the net proceeds from
such sale would be less than the Minimum Sale Price for such Aircraft or
such Equipment Notes, and (B) with respect to any Leased Aircraft, the
amount and payment dates of rentals payable by Continental under the
Lease for such Aircraft may not be adjusted, if, as a result of such
adjustment, the discounted present value of all such rentals would be
less than 75% of the discounted present value of the rentals payable by
Continental under such Lease before giving effect to such adjustment, in
each case, using the weighted average interest rate of the Equipment
Notes issued pursuant to such Indenture as the discount rate.
(iii) At the request of the Controlling Party, the Subordination
Agent may from time to time during the continuance of an Indenture
Default (and before the occurrence of a Triggering Event) commission
Appraisals with respect to the Aircraft subject to such Indenture.
(iv) After a Triggering Event occurs and any Equipment Note becomes
a Non-Performing Equipment Note, the Subordination Agent shall obtain
Appraisals with respect to all of the Aircraft (the "LTV Appraisals") as
soon as practicable and additional LTV Appraisals on or prior to each
anniversary of the date of such initial LTV Appraisals; provided that if
the Controlling Party reasonably objects to the appraised value of the
Aircraft shown in such LTV Appraisals, the Controlling Party shall have
the right to obtain or cause to be obtained substitute LTV Appraisals
(including LTV Appraisals based upon physical inspection of the
Aircraft).
(b) The Controlling Party shall take such actions as it may reasonably
deem most effectual to complete the sale or other disposition of such Aircraft
or Equipment Notes. In addition, in lieu of any sale, assignment, contract to
sell or other disposition, the Controlling Party may maintain possession of
such Equipment Notes and continue to apply monies received in respect of such
Equipment Notes in accordance with Article III hereof. In addition, in lieu of
such sale, assignment, contract to sell or other disposition, or in lieu of
such maintenance of possession, the Controlling Party may, 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
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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 Proceedings shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Person instituting such Proceeding, then and in every such
case each such party shall, subject to any determination in such proceedings,
be restored to its former position and rights hereunder, and all rights,
remedies and powers of such party shall continue as if no such Proceedings had
been instituted.
SECTION 4.4. Right of Certificateholders to Receive Payments Not to Be
Impaired. Anything in this Agreement to the contrary notwithstanding but
subject to each Trust Agreement, the right of any Certificateholder or any
Liquidity Provider, respectively, to receive payments hereunder (including
without limitation pursuant to Section 2.4, 3.2 or 3.3 hereof) when due, or to
institute suit for the enforcement of any such payment on or after the
applicable Distribution Date, shall not be impaired or affected without the
consent of such Certificateholder or such Liquidity Provider, respectively.
SECTION 4.5. Undertaking for Costs. In any 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.
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ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEE
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
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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, the Class C-I Trustee and the Class C-II
Trustee hereby designates and appoints the Subordination Agent as the agent and
trustee of such Trustee under each applicable Liquidity Facility and authorizes
the Subordination Agent to enter into each 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.
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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 either 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
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any Trustee or Liquidity Provider for any fee as compensation for its services
as agent under this Agreement. The provisions of this Section 6.7 shall
survive the termination of this Agreement.
SECTION 6.8. May Become Certificateholder. The institution acting as
Subordination Agent hereunder may become a Certificateholder and have all
rights and benefits of a Certificateholder to the same extent as if it were not
the institution acting as the Subordination Agent.
SECTION 6.9. Subordination Agent Required; Eligibility. There shall at
all times be a Subordination Agent hereunder which shall be a corporation
organized and doing business under the laws of the United States of America or
of any State or the District of Columbia having a combined capital and surplus
of at least $100,000,000 (or the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed by a
corporation organized and doing business under the laws of the United States,
any State thereof or of the District of Columbia and having a combined capital
and surplus of at least $100,000,000), if there is such an institution willing
and able to perform the duties of the Subordination Agent hereunder upon
reasonable or customary terms. Such corporation shall be a citizen of the
United States and shall be authorized under the laws of the United States or
any State thereof or of the District of Columbia to exercise corporate trust
powers and shall be subject to supervision or examination by federal, state or
District of Columbia authorities. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of any of
the aforesaid supervising or examining authorities, then, for the purposes of
this Section 6.9, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
In case at any time the Subordination Agent shall cease to be eligible in
accordance with the provisions of this Section, the Subordination Agent shall
resign immediately in the manner and with the effect specified in Section 8.1.
SECTION 6.10. Money to Be Held in Trust. All Equipment Notes, monies and
other property deposited with or held by the Subordination Agent pursuant to
this Agreement shall be held in trust for the benefit of the parties entitled
to such Equipment Notes, monies and other property. All such Equipment Notes,
monies or other property shall be held in the Trust Department of the
institution acting as Subordination Agent hereunder.
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1. Scope of Indemnification. The Subordination Agent shall be
indemnified hereunder to the extent and in the manner described in Section 9.1
of the Participation Agreements and Section 7 of the Note Purchase Agreement.
The indemnities contained in such Sections of such agreements shall survive the
termination of this Agreement.
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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
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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,
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, modification or amendment cures
an ambiguity or inconsistency or does not materially adversely affect such
Trustee, the Liquidity Providers 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), or the second sentence of Section 10.6 (collectively,
together with this proviso, the "Continental Provisions") or (y) otherwise
adversely affect the interests of a potential Replacement Liquidity Provider or
of Continental with respect to its payment obligations under any Lease or Owned
Aircraft Indenture, 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.
(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 Lease, Participation
Agreement or other related document, (i) if no Indenture Default shall have
occurred and be continuing, the Subordination Agent shall request instructions
from the applicable Trustee(s) and shall vote or consent in accordance with the
directions of such Trustee(s) (in the case of each such Trustee, with respect
to the Equipment Notes held in such Trust) constituting, in the aggregate,
directions with respect to the requisite principal amount of Equipment Notes
under such Indenture and (ii) if any Indenture Default (which, in the case of
any Indenture pertaining to a Leased Aircraft, has not been cured by the
applicable Owner Trustee or the applicable Owner Participant, if applicable,
pursuant to Section 4.03 of such Indenture) shall have occurred and be
continuing with respect to such Indenture, the
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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 or reduce the amount of
principal or interest payable by Continental under any Equipment Note issued
under any Indenture in respect of an Owned Aircraft.
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. Subject to the second sentence of Section
10.6 and the
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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 ABN AMRO as any Liquidity Provider, addressed to it at
its office at:
ABN AMRO BANK N.V.
Aerospace Department
135 South LaSalle Street, #760
Chicago, IL 60674-9135
Attention: Lukas van der Hoef
Telephone: (312) 904-2900
Telecopy: (312) 606-8428
with a copy to:
ABN AMRO Bank N.V.
135 South LaSalle St., #625
Chicago, IL 60674-9135
Attention: Loan Operations
Telephone: (312) 904-2836
Telecopy: (312) 606-8428
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(iv) if to ING as any Liquidity Provider, addressed to it at its
office at:
ING BANK N.V.
Department of Bankgarantie Zaken-Juridische Zaken
Location code HG 01.06
P.O. Box 1800
1000 B.V. Amsterdam
by courier:
Amsterdamse Poort
Bijlmer plein 888
1102 MG Amsterdam
The Netherlands
Telephone: 011-31-20-652-3260
Telecopy: 011-31-20-652-3235
with a copy to:
ING Lease (Ireland) B.V.
49 St. Stephen's Green
Dublin 2, Ireland
Telephone: 011-353-1-662-2211
Telecopy: 011-353-1-662-2240
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
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consent is required pursuant to this Agreement and any waiver of the terms
hereof shall be effective only in the specific instance and for the specific
purpose given.
SECTION 10.6. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of
the parties hereto and the successors and assigns of each, all as herein
provided. In addition, the Continental Provisions shall inure to the benefit
of Continental and its successors and assigns, and (without limitation of the
foregoing) Continental is hereby constituted, and agreed to be, an express
third party beneficiary of the Continental Provisions. Upon the occurrence of
the Transfers contemplated by the Assignment and Assumption Agreements, the
Trustee of each Class shall (without any further act) be deemed to have
transferred all of its rights, title and interest in and to this Agreement to
the trustee of the Successor Trust of the same Class and, thereafter, the
trustee of each Successor Trust shall be deemed to be the "Trustee" of such
Successor Trust with the rights and obligations of a "Trustee" hereunder and
under the other Operative Agreements and each reference to a Trust of any Class
herein shall be deemed a reference to the Successor Trust of such Class.
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.
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(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
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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 or of any State and waives any
immunity any of its properties located in the United States may have from
attachment or execution upon a judgement entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any similar successor
legislation.
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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: Bruce Bisson
Title: Vice President
ABN AMRO BANK N.V.,
Chicago Branch
as a Class A Liquidity Provider,
a Class B Liquidity Provider, a
Class C-I
Liquidity Provider and
a Class C-II Liquidity Provider
By
-----------------------------------
Name:
Title:
By
-----------------------------------
Name:
Title:
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ING BANK N.V.,
as a Class A Liquidity Provider,
a Class B Liquidity Provider,
a Class C-I Liquidity Provider and
a Class C-II 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: Bruce Bisson
Title: Vice President
1
EXHIBIT 4.18
Exchange and Registration Rights Agreement
Dated as of March 21, 1997
among
Continental Airlines, Inc.
Wilmington Trust Company
as Trustee under
Continental Airlines
Pass Through Trust, Series 1997-1A-O
Continental Airlines
Pass Through Trust, Series 1997-1B-O
Continental Airlines
Pass Through Trust, Series 1997-1C-I-O
Continental Airlines
Pass Through Trust, Series 1997-1C-II-O
and
Credit Suisse First Boston Corporation,
Morgan Stanley & Co. Incorporated,
Chase Securities Inc.
and
Goldman, Sachs & Co.
2
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
THIS EXCHANGE AND REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of March 21, 1997, among Continental Airlines, Inc., a
Delaware corporation (the "Company"), Wilmington Trust Company, as trustee
under each of the Original Trusts (as defined below), Credit Suisse First
Boston Corporation, Morgan Stanley & Co. Incorporated, Chase Securities Inc.
and Goldman, Sachs & Co. (collectively, the "Purchasers").
This Agreement is made pursuant to the Certificate Purchase Agreement
dated March 12, 1997 among the Company, the Depositary (as defined below), and
the Purchasers (the "Purchase Agreement"), which provides that the Trustee will
issue and sell $437,876,000 principal amount of the pass through certificates
of the Class A Trust, $148,333,000 principal amount of the pass through
certificates of the Class B Trust, $111,093,000 principal amount of the pass
through certificates of the Class C-I Trust and $10,000,000 principal amount of
the pass through certificates of the Class C-II Trust (the Class A Trust, Class
B Trust, Class C-I Trust and Class C-II Trust together, the "Original Trusts"
and such pass through certificates of the Original Trusts, together, the
"Initial Certificates"), in each case with Escrow Receipts (as defined below)
attached thereto. On the Transfer Date (as defined below), and after
satisfaction of the conditions set forth in the Pass Through Trust Agreements
(as defined below), each of the Original Trusts will transfer and assign all of
its assets and rights to a newly-created successor trust with substantially
identical terms (together, the "Successor Trusts") and the Initial Certificates
will be deemed for all purposes of the Original Trusts and the Successor Trusts
to be certificates representing fractional undivided interests in the Successor
Trusts and their respective trust properties. In order to induce the
Purchasers to enter into the Purchase Agreement, the Company has agreed to
provide to the Purchasers and their successors, assigns and direct and indirect
transferees the exchange and registration rights set forth in this Agreement.
The execution and delivery of this Agreement is a condition to the closing
under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
3
2
1. Definitions. The definitions set forth in this Agreement shall apply
equally to both singular and plural forms of the terms defined. As used in
this Agreement, the following capitalized defined terms shall have the
following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from
time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Agreement" shall have the meaning set forth in the preamble of this
Agreement.
"Business Day" shall mean any day on which the New York Stock
Exchange, Inc. is open for trading and banks in The City of New York are
open for business; references to "day" shall mean a calendar day.
"Class A Trust" shall mean the Continental Airlines Pass Through
Trust, Series 1997-1A-O.
"Class B Trust" shall mean the Continental Airlines Pass Through
Trust, Series 1997-1B-O.
"Class C-I Trust" shall mean the Continental Airlines Pass Through
Trust, Series 1997-1C-I-O.
"Class C-II Trust" shall mean the Continental Airlines Pass Through
Trust, Series 1997-1C-II-O.
"Closing Date" shall mean the Closing Date as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble of this
Agreement and shall include the Company's successors.
"Depositary" shall mean, initially, Credit Suisse First Boston, New
York Branch and any replacement or successor therefor appointed in
accordance with the Depositary Agreement.
"Depositary Agreement" shall have the meaning set forth in the
Purchase Agreement.
4
3
"Depositary Information" shall mean information relating to the
Depositary furnished to the Company in writing by the Depositary
expressly for use in any Exchange Offer Registration Statement or Shelf
Registration Statement.
"Deposits" shall have the meaning set forth in the Purchase
Agreement.
"DTC" shall mean the Depository Trust Company or any other
depositary appointed by the Company; provided, however, that any such
depositary must have an address in the Borough of Manhattan, in The City
of New York.
"Equipment Notes" shall mean the equipment notes that are the
property of the Trusts.
"Escrow Receipts" shall have the meaning set forth in the Purchase
Agreement.
"Exchange Certificates" shall mean the pass through certificates
issued under the Pass Through Trust Agreements or the Successor Pass
Through Trust Agreements, as the case may be, and otherwise containing
terms identical in all material respects to the Initial Certificates
(except that, with respect to the Exchange Certificates of each Trust,
(i) interest thereon shall accrue as set forth in Section 2(a) hereof,
(ii) the transfer restrictions thereon shall be eliminated, (iii) certain
provisions relating to an increase in the stated rate of interest thereon
shall be eliminated and (iv) such Exchange Certificates shall initially
be available only in book-entry form) to be offered to Holders of Initial
Certificates in exchange for Initial Certificates pursuant to the
Exchange Offer.
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Certificates for Registrable Certificates pursuant to Section
2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
1933 Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean a Registration
Statement on Form S-4 (or, if applicable, on another appropriate form)
filed with the SEC pursuant to Section 2(a) of this Agreement, and all
amendments and
5
4
supplements to such Registration Statement, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Holders" shall mean each of the Purchasers, for so long as they own
any Registrable Certificates, and each of their successors, assigns and
direct and indirect transferees who become registered owners of
Registrable Certificates.
"Initial Certificates" has the meaning set forth in the preamble of
this Agreement.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Certificates;
provided that whenever the consent or approval of Holders of a specified
percentage of Registrable Certificates is required hereunder, Registrable
Certificates held by the Company or any of its "affiliates" (as such term
is defined in Rule 405 under the 1933 Act) (other than the Purchasers or
subsequent holders of Registrable Certificates if such subsequent holders
are deemed to be affiliates solely by reason of their holding of such
Registrable Certificates) shall be disregarded in determining whether
such consent or approval was given by the Holders of such required
percentage or amount.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"Original Trusts" shall have the meaning set forth in the preamble
of this Agreement.
"Participating Broker-Dealer" shall have the meaning set forth in
Section 3(f) of this Agreement.
"Pass Through Trust Agreements" shall mean each of the Pass Through
Trust Agreements relating to the Initial Certificates between the Company
and each Trustee, as may be amended from time to time in accordance with
the terms thereof.
"Person" shall mean an individual, partnership, corporation, trust
or unincorporated organization, or a government or agency or political
subdivision thereof.
6
5
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Certificates covered by a Shelf Registration
Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble of this Agreement.
"Purchasers" shall have the meaning set forth in the preamble of
this Agreement.
"Registrable Certificates" shall mean the Initial Certificates;
provided, however, that the Initial Certificates shall cease to be
Registrable Certificates when (i) a Shelf Registration Statement with
respect to such Initial Certificates shall have been declared effective
under the 1933 Act and such Initial Certificates shall have been disposed
of pursuant to such Shelf Registration Statement, (ii) such Initial
Certificates shall have been sold to the public pursuant to Rule 144 (or
any similar provision then in force, but not Rule 144A) under the 1933
Act or may then be sold to the public pursuant to paragraph (k) of said
Rule 144 (or any similar provision then in force) by Holders other than
"affiliates" or former "affiliates" (as such term is defined in paragraph
(a) of Rule 144) of the Company, (iii) such Initial Certificates shall
have ceased to be outstanding or (iv) such Initial Certificates have been
exchanged for Exchange Certificates upon consummation of the Exchange
Offer.
"Registration Default" shall have the meaning set forth in Section
2(b) of this Agreement.
"Registration Event" shall mean the declaration of the effectiveness
by the SEC of an Exchange Offer Registration Statement or a Shelf
Registration Statement.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company and the Trustees with this
Agreement, including without
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6
limitation: (i) all SEC, stock exchange or NASD registration and filing
fees, (ii) all fees and expenses incurred in connection with compliance
with state or other securities or blue sky laws and compliance with the
rules of the NASD (including reasonable fees and disbursements of counsel
for any underwriters or Holders in connection with state or other
securities or blue sky qualification of any of the Exchange Certificates
or Registrable Certificates), (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments
or supplements thereto, any underwriting agreements, securities sales
agreements and other documents relating to the performance of and
compliance with this Agreement, (iv) all rating agency fees, (v) all fees
and expenses incurred in connection with the listing, if any, of any of
the Registrable Certificates on any securities exchange or exchanges,
(vi) all fees and disbursements relating to the qualification of the Pass
Through Trust Agreements and the Successor Pass Through Trust Agreements
under applicable securities laws, (vii) the fees and disbursements of
counsel for the Company and of the independent public accountants of the
Company, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance,
(viii) the fees and expenses of the Trustees, including their counsel,
and any escrow agent or custodian, and (ix) any reasonable fees and
disbursements of the underwriters, if any, and the reasonable fees and
expenses of any special experts retained by the Company in connection
with any Registration Statement, in each case as are customarily required
to be paid by issuers or sellers of securities, but excluding fees of
counsel to the underwriters or the Holders and underwriting discounts and
commissions and transfer taxes, if any relating to the sale or
disposition of Registrable Certificates by a Holder.
"Registration Statement" shall mean any registration statement of
the Company which covers any of the Exchange Certificates or Registrable
Certificates pursuant to the provisions of this Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
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"SEC" shall mean the Securities and Exchange Commission, as from
time to time constituted or created under the United States Securities
Exchange Act of 1934, as amended, or, if at any time after the execution
of this instrument such Commission is not existing and performing the
duties now assigned to it under the TIA, then the body performing such
duties on such date.
"Shelf Registration" shall mean a registration under the 1933 Act
effected pursuant to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) of
this Agreement which covers some or all of the Registrable Certificates
on an appropriate form under Rule 415 under the 1933 Act, or any similar
rule that may be adopted by the SEC, and all amendments and supplements
to such registration statement, including post-effective amendments, in
each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"Staff" shall mean the Staff of the Division of Corporation Finance
of the SEC.
"Successor Pass Through Trust Agreements" shall mean each of the
Successor Pass Through Trust Agreements entered into on the date hereof
between the Company and each Trustee forming the Successor Trusts, as may
be amended from time to time in accordance with the terms thereof.
"Successor Trusts" shall have the meaning set forth in the preamble
of this Agreement.
"TIA" shall have the meaning set forth in Section 3(l) of this
Agreement.
"Transfer Date" shall have the meaning set forth in the Purchase
Agreement.
"Trustees" shall mean the trustees under the Pass Through Trust
Agreements or the Successor Pass Through Trust Agreements, as the case
may be.
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"Trusts" shall mean the Class A Trust, the Class B Trust, the Class
C-I Trust and the Class C-II Trust, or the Successor Trusts, as the case
may be.
2. Registration under the 1933 Act. (a) Exchange Offer Registration. To
the extent not prohibited by any applicable law or applicable interpretation of
the Staff, the Company shall use its best efforts (A) to file with the SEC
within 120 days after the Closing Date an Exchange Offer Registration Statement
covering the offer by the Company to the Holders to exchange all of the
Registrable Certificates for Exchange Certificates, (B) to cause such Exchange
Offer Registration Statement to be declared effective by the SEC within 180
days after the Closing Date, (C) to cause such Registration Statement to remain
effective until the closing of the Exchange Offer and (D) to consummate the
Exchange Offer within 210 days after the Closing Date. Upon the effectiveness
of the Exchange Offer Registration Statement, the Company shall promptly
commence the Exchange Offer, it being the objective of such Exchange Offer to
enable each Holder (other than Participating Broker-Dealers) eligible and
electing to exchange Registrable Certificates for Exchange Certificates
(assuming that such Holder is not an affiliate of the Company within the
meaning of Rule 405 under the 1933 Act, acquires the Exchange Certificates in
the ordinary course of such Holder's business and has no arrangements or
understandings with any person to participate in the Exchange Offer for the
purpose of distributing the Exchange Certificates) to trade such Exchange
Certificates from and after their receipt without any limitations or
restrictions under the 1933 Act and without material restrictions under the
securities laws of a substantial proportion of the several states of the United
States.
In connection with the Exchange Offer, the Company shall or shall cause
the Trustees to:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) keep the Exchange Offer open for not less than 30 days after
the date notice thereof is mailed to the Holders (or longer if required
by applicable law);
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(iii) use the services of DTC for the Exchange Offer with respect to
Initial Certificates evidenced by global certificates;
(iv) permit Holders to withdraw tendered Registrable Certificates at
any time prior to the close of business, New York City time, on the last
Business Day on which the Exchange Offer shall remain open, by sending to
the institution specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the
principal amount of Registrable Certificates delivered for exchange, and
a statement that such Holder is withdrawing its election to have such
Registrable Certificates exchanged;
(v) use its best efforts to ensure that (i) any Exchange Offer
Registration Statement and any amendment thereto and any Prospectus
forming part thereof and any supplement thereto complies in all material
respects with the 1933 Act and the rules and regulations thereunder, (ii)
any Exchange Offer Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Exchange Offer Registration Statement, and
any supplement to such Prospectus (as amended or supplemented from time
to time), does not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements, in
light of the circumstances under which they were made, not misleading;
and
(vi) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer, the Company
shall or shall cause the Trustees to:
(i) accept for exchange Registrable Certificates duly tendered and
not validly withdrawn pursuant to the Exchange Offer in accordance with
the terms of the Exchange Offer Registration Statement and the letter of
transmittal which is an exhibit thereto;
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(ii) cancel or cause to be canceled all Registrable Certificates so
accepted for exchange by the Company; and
(iii) promptly cause to be authenticated and delivered Exchange
Certificates to each Holder of Registrable Certificates equal in amount
to the Registrable Certificates of such Holder so accepted for exchange.
Interest on each Exchange Certificate will accrue from the last date on
which interest was paid on the Registrable Certificates surrendered in exchange
therefor or, if no interest has been paid on the Registrable Certificates, from
the Closing Date. The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer, or the making of any exchange by a Holder,
does not violate applicable law or any applicable interpretation of the Staff.
Each Holder of Registrable Certificates (other than Participating
Broker-Dealers) who wishes to exchange such Registrable Certificates for
Exchange Certificates in the Exchange Offer shall represent that (i) it is not
an "affiliate" of the Company within the meaning of Rule 405 under the 1933
Act, (ii) any Exchange Certificates to be received by it were acquired in the
ordinary course of business and (iii) it has no arrangement with any Person to
participate in the distribution (within the meaning of the 1933 Act) of the
Exchange Certificates.
(b) Shelf Registration. (i) If, because of any change in law or
applicable interpretations thereof by the Staff, the Company is not permitted
to effect the Exchange Offer as contemplated by Section 2(a) hereof, or (ii) if
for any other reason the Exchange Offer Registration Statement is not declared
effective within 180 days after the Closing Date or the Exchange Offer is not
consummated within 210 days after the Closing Date (a "Registration Default"),
or (iii) if any Holder (other than a Purchaser) is not eligible to participate
in the Exchange Offer or (iv) upon the request of any Purchaser (with respect
to any Registrable Certificates which it acquired directly from the Company)
following the consummation of the Exchange Offer if such Purchaser shall hold
Registrable Certificates which it acquired directly from the Company and if
such Purchaser is not permitted, in the opinion of counsel to such Purchaser,
pursuant to applicable law or applicable interpretation of the Staff to
participate in the Exchange Offer, the Company shall, at its cost:
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(A) as promptly as practicable, file with the SEC a Shelf
Registration Statement relating to the offer and sale of the Registrable
Certificates by the Holders from time to time in accordance with the
methods of distribution elected by the Majority Holders of such
Registrable Certificates and set forth in such Shelf Registration
Statement, and use its best efforts to cause such Shelf Registration
Statement to be declared effective by the SEC by the 180th day after the
Closing Date (or promptly in the event of a request by any Holder
pursuant to clause (iii) above or any Purchaser pursuant to clause (iv)
above). In the event that the Company is required to file a Shelf
Registration Statement upon the request of any Holder (other than a
Purchaser) not eligible to participate in the Exchange Offer pursuant to
clause (iii) above or upon the request of any Purchaser pursuant to
clause (iv) above, the Company shall file and have declared effective by
the SEC both an Exchange Offer Registration Statement pursuant to Section
2(a) with respect to all Registrable Certificates and a Shelf
Registration Statement (which may be a combined Registration Statement
with the Exchange Offer Registration Statement) with respect to offers
and sales of Registrable Certificates held by such Holder or such
Purchaser after completion of the Exchange Offer. If the Company files a
Shelf Registration Statement pursuant to Section 2(b)(i) or (ii) hereof,
the Company will no longer be required to effect the Exchange Offer;
(B) use its best efforts to keep the Shelf Registration Statement
continuously effective, in order to permit the Prospectus forming part
thereof to be usable by Holders, until the end of the period referred to
in Rule 144(k) (or one year from the Closing Date if such Shelf
Registration Statement is filed upon the request of any Purchaser
pursuant to clause (iv) above) or such shorter period as shall end when
all of the Registrable Certificates covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement;
and
(C) notwithstanding any other provisions hereof, use its best
efforts to ensure that (i) any Shelf Registration Statement and any
amendment thereto and any Prospectus forming part thereof and any
supplement thereto complies in all material respects with the 1933 Act
and the rules and regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it
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becomes effective, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any Prospectus
forming part of any Shelf Registration Statement, and any supplement to
such Prospectus (as amended or supplemented from time to time), does not
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements, in light of the
circumstances under which they were made, not misleading.
The Company further agrees, if necessary, to supplement or amend the Shelf
Registration Statement if reasonably requested by the Majority Holders with
respect to information relating to the Holders and otherwise as required by
Section 3(b) below, to use all reasonable efforts to cause any such amendment
to become effective and such Shelf Registration Statement to become usable as
soon as practicable thereafter and to furnish to the Holders of Registrable
Certificates copies of any such supplement or amendment promptly after its
being used or filed with the SEC.
The Company shall be allowed a period of five days, beginning on the first
day a Registration Default occurs, to cure such Registration Default before the
Company will be required to comply with the requirements of Section 2(b).
(c) Expenses. The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) or 2(b) and, in the
case of any Shelf Registration Statement, will reimburse the Holders or
Purchasers for the reasonable fees and disbursements of one firm or counsel
designated in writing by the Majority Holders to act as counsel for the Holders
of the Registrable Certificates in connection therewith. Each Holder shall pay
all expenses of its counsel, other than as set forth in the preceding sentence,
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Certificates pursuant to
the Shelf Registration Statement.
(d) Effective Registration Statement. (i) The Company will be deemed not
to have used its best efforts to cause the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, to become,
or to remain, effective during the requisite period if the Company voluntarily
takes any action that would result in any such
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Registration Statement not being declared effective or in the Holders of
Registrable Certificates covered thereby not being able to exchange or offer
and sell such Registrable Certificates during that period unless (A) such
action is required by applicable law or (B) such action is taken by the Company
in good faith and for valid business reasons (not including avoidance of the
Company's obligations hereunder), including, without limitation, the
acquisition or divestiture of assets, so long as the Company promptly complies
with the requirements of Section 3(j) hereof, if applicable.
(ii) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided, however, that if, after it has been declared effective, the
offering of Registrable Certificates pursuant to a Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to have been effective during the period of such
interference, until the offering of Registrable Certificates pursuant to such
Registration Statement may legally resume.
(e) Increase in Interest Rate. In the event that no Registration Event
has occurred on or prior to the 210th day after the Closing Date, the interest
rate per annum payable in respect of the Initial Certificates shall be
increased by 0.50%, effective from and including such 210th day, to but
excluding the earlier of (i) the date on which a Registration Event occurs and
(ii) the date on which there cease to be any Registrable Certificates, which
additional interest shall be paid through a combination of an increase in the
interest rate per annum borne by the Equipment Notes of 0.50% and, if
applicable, an increase in the interest rate per annum payable on the Deposits
of 0.50% pursuant to the Depositary Agreements. In the event that the Shelf
Registration Statement ceases to be effective at any time during the period
specified by Section 2(b)(B) hereof for more than 60 days, whether or not
consecutive, during any 12-month period, the interest rate payable in respect
of the Initial Certificates shall be increased by 0.50% per annum from the 61st
day of the applicable 12-month period such Shelf Registration Statement ceases
to be effective until such time as the Shelf Registration Statement again
becomes effective (or, if earlier, the end of the period specified by Section
2(b)(B) hereof), which
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additional interest shall be paid through a combination of an increase in the
interest rate per annum borne by the Equipment Notes of 0.50% and, if
applicable, an increase in the interest rate per annum payable on the Deposits
of 0.50% pursuant to the Depositary Agreements.
3. Registration Procedures. In connection with the obligations of the
Company with respect to the Registration Statements pursuant to Sections 2(a)
and 2(b) hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement, within
the time period specified in Section 2, on the appropriate form under the
1933 Act, which form (i) shall be selected by the Company, (ii) shall, in
the case of a Shelf Registration, be available for the sale of the
Registrable Certificates by the selling Holders thereof and (iii) shall
comply as to form in all material respects with the requirements of the
applicable form;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary under
applicable law to keep such Registration Statement effective for the
applicable period; cause each Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the 1933 Act;
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Certificates when a Shelf Registration Statement with respect
to the Registrable Certificates has been filed and advise such Holders
that the distribution of Registrable Certificates will be made in
accordance with the method elected by the Majority Holders; (ii) furnish
to each Holder of Registrable Certificates included within the coverage
of the Shelf Registration Statement at least one copy of such Shelf
Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so
requests in writing, all reports, other documents and exhibits (including
those incorporated by reference) at the expense of the Company, (iii)
furnish to each Holder of Registrable Certificates included within the
coverage of the Shelf Registration Statement, to counsel for the Holders
and to each underwriter of an underwritten offering of
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Registrable Certificates, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto as such Holder or underwriter may reasonably request
in order to facilitate the public sale or other disposition of the
Registrable Certificates; and (iv) subject to the last paragraph of
Section 3, consent to the use of the Prospectus or any amendment or
supplement thereto by each of the selling Holders of Registrable
Certificates included in the Shelf Registration Statement in connection
with the offering and sale of the Registrable Certificates covered by the
Prospectus or any amendment or supplement thereto;
(d) use its best efforts to register or qualify the Registrable
Certificates or cooperate with the Holders of Registrable Certificates
and their counsel in the registration or qualification of such
Registrable Certificates under all applicable state securities or "blue
sky" laws of such jurisdictions as any Holder of Registrable Certificates
covered by a Registration Statement and each underwriter of an
underwritten offering of Registrable Certificates shall reasonably
request in writing to cooperate with the Holders in connection with any
filings required to be made with the NASD, and do any and all other acts
and things which may be reasonably necessary or advisable to enable such
Holders to consummate the disposition in each such jurisdiction of such
Registrable Certificates owned by such Holders; provided, however, that
in no event shall the Company be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d) or
(ii) take any action which would subject it to general service of process
or taxation in any such jurisdiction if it is not then so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Certificates promptly and, if requested by such Holder or
counsel, confirm such advice in writing promptly (i) when a Shelf
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request
by the SEC or any state securities authority for post-effective
amendments and supplements to a Shelf Registration Statement and
Prospectus or for additional information after the Shelf
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Registration Statement has become effective, (iii) of the issuance by the
SEC or any state securities authority of any stop order suspending the
effectiveness of a Shelf Registration Statement or the initiation of any
proceedings for that purpose, (iv) at the closing of any sale of
Registrable Certificates if, between the effective date of a Shelf
Registration Statement and such closing, the representations and
warranties of the Company contained in any underwriting agreement,
securities sales agreement or other similar agreement, if any, relating
to such offering cease to be true and correct in all material respects,
(v) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Certificates for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose, (vi) of the happening of any material event or the
discovery of any material facts during the period a Shelf Registration
Statement is effective which makes any statement made in such
Registration Statement or the related Prospectus untrue or which requires
the making of any changes in such Registration Statement or Prospectus in
order to make the statements therein (in the case of the Prospectus in
light of the circumstances under which they were made) not misleading and
(vii) of any determination by the Company that a post-effective amendment
to a Registration Statement would be appropriate;
(f) (A) in the case of the Exchange Offer, (i) include in the
Exchange Offer Registration Statement a "Plan of Distribution" section
covering the use of the Prospectus included in the Exchange Offer
Registration Statement by broker-dealers who have exchanged their
Registrable Certificates for Exchange Certificates for the resale of such
Exchange Certificates, (ii) furnish to each broker-dealer who desires to
participate in the Exchange Offer, without charge, as many copies of each
Prospectus included in the Exchange Offer Registration Statement,
including any preliminary prospectus, and any amendment or supplement
thereto, as such broker-dealer may reasonably request, (iii include in
the Exchange Offer Registration Statement a statement that any
broker-dealer who holds Registrable Certificates acquired for its own
account as a result of market-making activities or other trading
activities (a "Participating Broker-Dealer"), and who receives Exchange
Certificates for Registrable Certificates pursuant to the
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Exchange Offer, may be a statutory underwriter and must deliver a
prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Certificates, (iv) subject to the last
paragraph of Section 3, hereby consent to the use of the Prospectus
forming part of the Exchange Offer Registration Statement or any
amendment or supplement thereto, by any broker-dealer in connection with
the sale or transfer of the Exchange Certificates covered by the
Prospectus or any amendment or supplement thereto, and (v) include in the
transmittal letter or similar documentation to be executed by an exchange
offeree in order to participate in the Exchange Offer (x) the following
provision:
"If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to
engage in, a distribution of Exchange Certificates. If the
undersigned is a broker-dealer that will receive Exchange
Certificates for its own account in exchange for Registrable
Certificates, it represents that the Registrable
Certificates to be exchanged for Exchange Certificates were
acquired by it as a result of market-making activities or
other trading activities and acknowledges that it will
deliver a prospectus meeting the requirements of the 1933
Act in connection with any resale of such Exchange
Certificates pursuant to the Exchange Offer; however, by so
acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the 1933 Act"; and
(y) a statement to the effect that by a broker-dealer making the
acknowledgment described in subclause (x) and by delivering a Prospectus
in connection with the exchange of Registrable Certificates, the
broker-dealer will not be deemed to admit that it is an underwriter
within the meaning of the 1933 Act; and
(B) to the extent any Participating Broker-Dealer participates in
the Exchange Offer, use its best efforts to cause to be delivered at the
request of an entity representing the Participating Broker-Dealers (which
entity shall be one of the Purchasers, unless it elects not to act
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as such representative) only one, if any, "cold comfort" letter with
respect to the Prospectus in the form existing on the last date for which
exchanges are accepted pursuant to the Exchange Offer and with respect to
each subsequent amendment or supplement, if any, effected during the
period specified in clause (C) below; and
(C) to the extent any Participating Broker-Dealer participates in
the Exchange Offer, use its best efforts to maintain the effectiveness of
the Exchange Offer Registration Statement for the 180-day period
specified in clause (D) below; and
(D) not be required to amend or supplement the Prospectus contained
in the Exchange Offer Registration Statement as would otherwise be
contemplated by Section 3(b), or take any other action as a result of
this Section 3(f), for a period exceeding 180 days after the last date
for which exchanges are accepted pursuant to the Exchange Offer (as such
period may be extended by the Company) and Participating Broker-Dealers
shall not be authorized by the Company to, and shall not, deliver such
Prospectus after such period in connection with resales contemplated by
this Section 3;
(g) (A) in the case of an Exchange Offer, furnish counsel for the
Purchasers and (B) in the case of a Shelf Registration, furnish counsel
for the Holders of Registrable Certificates copies of any request by the
SEC or any state securities authority for amendments or supplements to a
Registration Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement as soon as
practicable and provide immediate notice to each Holder of the withdrawal
of any such order;
(i) unless any Registrable Certificates are in book entry form only,
in the case of a Shelf Registration, cause the Trustees to cooperate with
the selling Holders of Registrable Certificates to facilitate the timely
preparation and delivery of certificates representing Registrable
Certificates to be sold free from any
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restrictive legends; and cause such Registrable Certificates to be in
such denominations (consistent with the provisions of the Pass Through
Trust Agreements or the Successor Pass Through Trust Agreements, as the
case may be) and registered in such names as the selling Holders or the
underwriters, if any, may reasonably request at least one Business Day
prior to the closing of any sale of Registrable Certificates;
(j) in the case of a Shelf Registration, upon the occurrence of any
event or the discovery of any facts, each as contemplated by Sections
2(d)(i)(B) or 3(e)(ii)-(vi) hereof, use its best efforts to prepare a
post-effective amendment to a Registration Statement or an amendment or
supplement to the related Prospectus or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Certificates, such Prospectus will not contain at the time of such
delivery any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
agrees to notify each Holder to suspend use of the Prospectus as promptly
as practicable after the occurrence of such an event, and each Holder
hereby agrees to suspend use of the Prospectus as promptly as practicable
upon receipt of such notice until the Company has amended or supplemented
the Prospectus to correct such misstatement or omission, provided that
the Company shall cause such suspension not to last more than 30 days per
occurrence or more than 60 days in aggregate in a calendar year. At such
time as such public disclosure is otherwise made or the Company
determines that such disclosure is not necessary, in each case to correct
any misstatement of a material fact or to include any omitted material
fact, the Company agrees promptly to notify each Holder of such
determination and to furnish each Holder such numbers of copies of the
Prospectus, as amended or supplemented, as such Holder may reasonably
request;
(k) obtain a CUSIP number for all Exchange Certificates, or
Registrable Certificates, as the case may be, of each Trust not later
than the effective date of an Exchange Offer Registration Statement or
Shelf Registration Statement, as the case may be, and provide the
Trustees with printed certificates evidencing the Exchange Certificates
or
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the Registrable Certificates, as the case may be, held in book entry
form, in a form eligible for deposit with DTC;
(l) (i) cause the Pass Through Trust Agreements or Successor Pass
Through Trust Agreements, as the case may be, to be qualified under the
Trust Indenture Act of 1939, as amended (the "TIA"), in connection with
the registration of the Exchange Certificates, or Registrable
Certificates, as the case may be, (ii) cooperate with the Trustees and
the Holders to effect such changes to the Pass Through Trust Agreements
or Successor Pass Through Trust Agreements as may be required for the
Pass Through Trust Agreements or Successor Pass Through Trust Agreements,
as the case may be, to be so qualified in accordance with the terms of
the TIA and (iii) execute, and use its best efforts to cause the Trustees
to execute, all documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to enable
the Pass Through Trust Agreements or Successor Pass Through Trust
Agreements, as the case may be, to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, enter into such customary
agreements (including underwriting agreements in customary form) and take
all other customary and appropriate actions (including those reasonably
requested by the Holders of a majority in principal amount of Registrable
Certificates being sold) in order to expedite or facilitate the
disposition of such Registrable Certificates and in such connection
whether or not an underwriting agreement is entered into and whether or
not the registration is an underwritten registration:
(i) make such representations and warranties to the Holders of
such Registrable Certificates and the underwriters, if any, in
form, substance and scope as are customarily made by the Company to
underwriters in similar underwritten offerings as may be reasonably
requested by them;
(ii) obtain opinions of counsel to the Company (who may be the
general counsel of the Company) and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, or if there are
no such managing underwriters, to the Holders of a
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majority in principal amount of the Registrable Certificates being
sold) addressed to each selling Holder and the underwriters, if
any, covering the matters customarily covered in opinions requested
in sales of securities or underwritten offerings and such other
matters as may be reasonably requested by such Holders and
underwriters;
(iii) obtain a "cold comfort" letter and updates thereof from
the Company's independent certified public accountants addressed to
the underwriters, if any, and will use its best efforts to have
such letter addressed to the selling Holders of Registrable
Certificates, such letter to be in customary form and covering such
matters of the type customarily covered in "cold comfort" letters
in connection with similar underwritten offerings as the Holders of
a majority in principal amount of the Registration Certificates
being sold shall request;
(iv) enter into a securities sales agreement with the Holders
and an agent of the Holders providing for, among other things, the
appointment of such agent for the selling Holders for the purpose
of soliciting purchases of Registrable Certificates, which
agreement shall be in form, substance and scope customary for
similar offerings;
(v) if an underwriting agreement is entered into, cause the
same to set forth indemnification provisions and procedures
substantially equivalent to the indemnification provisions and
procedures set forth in Section 5 hereof with respect to all
parties to be indemnified pursuant to said Section; and
(vi) deliver such other documents and certificates as may be
reasonably requested by Holders of a majority in principal amount
of Registrable Certificates being sold, and as are customarily
delivered in similar offerings.
The above shall be done at (i) the effectiveness of such Registration
Statement (and, if appropriate, each post-effective amendment thereto) if
appropriate in connection with any particular disposition of Registrable
Certificates
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22
and (ii) each closing under any underwriting or similar agreement as and
to the extent required thereunder. In the case of any underwritten
offering, the Company shall provide written notice to the Holders of all
Registrable Certificates of such underwritten offering at least 30 days
prior to the filing of a prospectus supplement for such underwritten
offering. Such notice shall (x) offer each such Holder the right to
participate in such underwritten offering, (y) specify a date, which
shall be no earlier than 10 days following the date of such notice, by
which such Holder must inform the Company of its intent to participate in
such underwritten offering and (z) include the instructions such Holder
must follow in order to participate in such underwritten offering;
(n) in the case of a Shelf Registration, make available for
inspection by representatives of the Holders of the Registrable
Certificates and any underwriters participating in any disposition
pursuant to a Shelf Registration Statement and any counsel or accountant
retained by such Holders or underwriters, all financial and other
records, pertinent corporate documents and properties of the Company
reasonably requested by it, and cause the respective officers, directors,
employees, and any other agents of the Company to make reasonably
available all relevant information reasonably requested by any such
representative, underwriter, counsel or accountant in connection with a
Registration Statement, in each case as is customary for similar due
diligence examinations; provided, however, that any information that is
designated in writing by the Company, in good faith, as confidential at
the time of delivery of such information shall be kept confidential by
such representatives, underwriters, counsel or accountant, unless such
disclosure is made in connection with a court proceeding or required by
law, or such information becomes available to the public generally or
through a third party without an accompanying obligation of
confidentiality; and provided further that the foregoing inspection and
information gathering shall, to the extent reasonably possible, be
coordinated on behalf of the Holders and the other parties entitled
thereto by one counsel designated by and on behalf of such Holders and
other parties;
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23
(o) (i) a reasonable time prior to the filing of any Exchange Offer
Registration Statement, any Prospectus forming a part thereof, any
amendment to an Exchange Offer Registration Statement or amendment or
supplement to a Prospectus, provide copies of such document to the
Purchasers, and use its best efforts to reflect in any such document when
filed such comments as any of the Purchasers or their counsel may
reasonably request; (ii) in the case of a Shelf Registration, a
reasonable time prior to filing any Shelf Registration Statement, any
Prospectus forming a part thereof, any amendment to such Shelf
Registration Statement or amendment or supplement to such Prospectus,
provide copies of such document to the Holders of Registrable
Certificates, to the Purchasers, to counsel on behalf of the Holders and
to the underwriter or underwriters of an underwritten offering of
Registrable Certificates, if any, and use its best efforts to reflect
such comments in any such document when filed as the Holders of
Registrable Certificates, their counsel and any underwriter may
reasonably request; and (iii) cause the representatives of the Company to
be available for discussion of such document as shall be reasonably
requested by the Holders of Registrable Certificates, the Purchasers on
behalf of such Holders or any underwriter and shall not at any time make
any filing of any such document of which such Holders, the Purchasers on
behalf of such Holders, their counsel or any underwriter shall not have
previously been advised and furnished a copy or to which such Holders,
the Purchasers on behalf of such Holders, their counsel or any
underwriter shall reasonably object;
(p) in the case of a Shelf Registration, use its best efforts to
cause the Registrable Certificates to be rated with the appropriate
rating agencies at the time of effectiveness of such Shelf Registration
Statement, unless the Registrable Certificates are already so rated; and
(q) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make generally available to its
security holders, as soon as reasonably practicable after the effective
date of a Registration Statement, an earnings statement which shall
satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158
thereunder.
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In the case of an Exchange Offer Registration Statement or Shelf
Registration Statement, the Company may request the Depositary to furnish to
the Company such information regarding the Depositary as the Company may from
time to time reasonably request, and the Company may (as a condition to the
inclusion of any such information in a Registration Statement) require the
Depositary to provide written representations as to the accuracy in all
material respects of any such information so furnished.
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require
each Holder of Registrable Certificates to furnish to the Company such
information regarding such Holder and the proposed distribution by such Holder
of such Registrable Certificates as the Company may from time to time
reasonably request and the Company may exclude from such registration the
Registrable Certificates of any Holder that fails to furnish such information
within a reasonable time after receiving such request.
In the case of a Shelf Registration Statement, each Holder agrees that,
upon receipt of any notice from the Company of the happening of any event or
the discovery of any facts, each of the kind described in Sections 2(d)(i)(B)
or 3(e)(ii)-(vi) hereof, such Holder will forthwith discontinue disposition of
Registrable Certificates pursuant to such Shelf Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(j) hereof, and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense) all copies in its
possession other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Certificates current at the time of
receipt of such notice. If the Company shall give any such notice to suspend
the disposition of Registrable Certificates pursuant to a Shelf Registration
Statement as a result of the happening of any event or the discovery of any
facts, each of the kind described in Sections 2(d)(i)(B) or 3(e)(ii)-(vi)
hereof, the Company shall be deemed to have used its best efforts to keep the
Shelf Registration Statement effective during such period of suspension
provided that the Company shall use its best efforts to file and have declared
effective (if an amendment) as soon as practicable an amendment or supplement
to the Shelf Registration Statement and shall extend the period during which
the Registration Statement shall be maintained effective pursuant to this
Agreement by the
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number of days during the period from and including the date of the giving of
such notice to and including the date when the Holders shall have received
copies of the supplemented or amended Prospectus necessary to resume such
dispositions.
4. Underwritten Offering. The Holders of Registrable Certificates covered
by a Shelf Registration Statement who desire to do so may sell such Registrable
Certificates in an underwritten offering. In any such underwritten offering,
the investment banker or bankers and manager or managers that will administer
the offering will be selected by, and the underwriting arrangements with
respect thereto will be approved by, the Holders of a majority of the
Registrable Securities to be included in such offering; provided, however, that
(i) such investment bankers and managers and underwriting arrangements must be
reasonably satisfactory to the Company and (ii) the Company shall not be
obligated to arrange for more than one underwritten offering during the period
such Shelf Registration Statement is required to be effective pursuant to
Section 2(b)(B) hereof. No Holder may participate in any underwritten offering
contemplated hereby unless such Holder (a) agrees to sell such Holder's
Registrable Certificates in accordance with any approved underwriting
arrangements, (b) completes and executes all reasonable questionnaires, powers
of attorney, indemnities, underwriting agreements, lock-up letters and other
documents required under the terms of such approved underwriting arrangements
and (c) at least 20% of the outstanding Registrable Certificates are included
in such underwritten offering. The Holders participating in any underwritten
offering shall be responsible for any expenses customarily borne by selling
securityholders, including underwriting discounts and commissions and fees and
expenses of counsel to the selling securityholders.
5. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Holder and each person, if any, who controls any Holder
within the meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act, from and against all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
by any Holder or any such controlling person in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which Exchange Certificates or
Registrable Certificates were registered under the 1933 Act,
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26
including all documents incorporated therein by reference, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material fact necessary to make
the statements therein in light of the circumstances under which they were made
not misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon Depositary Information or based upon information
relating to any Holder furnished to the Company in writing by any selling
Holder expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any preliminary Prospectus shall not inure
to the benefit of any Person from whom the Person asserting any such losses,
claims, damages or liabilities purchased Registerable Certificates, or any
person controlling such seller, if a copy of the final Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such seller to
such purchaser with or prior to the written confirmation of the sale of the
Registerable Certificates to such Person, and if the final Prospectus (as so
amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities. In connection with any underwritten
offering permitted by Section 4, the Company will also indemnify the
underwriters participating in the distribution, their officers and directors
and each Person who controls such Persons (within the meaning of the 1933 Act
and the 1934 Act) to the same extent as provided above with respect to the
indemnification of the Holders, if requested in connection with any
Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company and the other selling Holders, and each of their
respective directors, officers who sign the Registration Statement and each
Person, if any, who controls the Company and any other selling Holder within
the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act
to the same extent as the foregoing indemnity from the Company to the Holders,
but only with reference to information relating to such Holder furnished to the
Company in writing by
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27
such Holder expressly for use in any Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or paragraph (b) above, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties and that such fees and expenses shall
be reimbursed as they are incurred. Such firm shall be designated in writing
by the Majority Holders in the case of parties indemnified pursuant to
paragraph (a) above and by the Company in the case of parties indemnified
pursuant to paragraph (b) above. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent but,
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested in writing an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the
second and third sentences of this paragraph, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected
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28
without its written consent if (i) such settlement is entered into more than 90
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party for
such fees and expenses of counsel in accordance with such request prior to the
date of such settlement, unless such fees and expenses are being disputed in
good faith. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which such indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) If the indemnification provided for in paragraph (a) or paragraph (b)
of this Section 5 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Holders shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Holders and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this Section 5(d) are several
in proportion to the respective aggregate principal amount of Registrable
Certificates of such Holder that were registered pursuant to a Registration
Statement.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in paragraph (d) above. The amount
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29
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Holder shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at which
Registrable Certificates were sold by such Holder exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Holder or any person controlling any Holder, or by or on behalf of the
Company, its officers or directors or any person controlling the Company, (iii)
acceptance of any of the Exchange Certificates and (iv) any sale of Registrable
Certificates pursuant to a Shelf Registration Statement.
6. Miscellaneous. (a) Rule 144 and Rule 144A. For so long as the
Company is subject to the reporting requirements of Section 13 or 15 of the
1934 Act, the Company covenants that it will file the reports required to be
filed by it under Section 13(a) or 15(d) of the 1934 Act and the rules and
regulations adopted by the SEC thereunder, that if it ceases to be so required
to file such reports, it will upon the request of any Holder of Registrable
Certificates (i) make publicly available such information as is necessary to
permit sales pursuant to Rule 144 under the 1933 Act, (ii) deliver such
information to a prospective purchaser as is necessary to permit sales pursuant
to Rule 144A under the 1933 Act and it will take such further action as any
Holder of Registrable Certificates may reasonably request, and (iii) take such
further action that is reasonable in the circumstances, in each case, to the
extent required from time to
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30
time to enable such Holder to sell its Registrable Certificates without
registration under the 1933 Act within the limitation of the exemptions
provided by (x) Rule 144 under the 1933 Act, as such Rule may be amended from
time to time, (y) Rule 144A under the 1933 Act, as such Rule may be amended
from time to time, or (z) any similar rules or regulations hereafter adopted by
the SEC. Upon the request of any Holder of Registrable Certificates, the
Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
(b) Other Registration Rights. The Company may grant registration rights
that would permit any Person the right to piggyback on any Shelf Registration
Statement, provided that if the managing underwriter, if any, of an offering
pursuant to such Shelf Registration Statement delivers an opinion of the
selling Holders that the total amount of securities which they and the holders
of such piggyback rights intend to include in any Shelf Registration Statement
materially adversely affects the success of such offering (including the price
at which such securities can be sold), then the amount, number or kind of
securities to be offered for the account of holders of such piggyback rights
will be reduced to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount, number or kind
recommended by such managing underwriter; and provided further that such
piggyback registration rights shall in no event materially adversely affect the
interests of any Holder.
(c) Trustees. The Trustees shall take such action as may be reasonably
requested by the Company in connection with the Company satisfying its
obligations arising under this Agreement.
(d) No Inconsistent Agreements. The Company has not entered into nor will
the Company on or after the date of this Agreement enter into any agreement
which is inconsistent with the rights granted to the Holders of Registrable
Certificates in this Agreement or otherwise conflicts with the provisions
hereof.
(e) Amendments and Waivers. Except as otherwise expressly permitted in
the Pass Through Trust Agreements or the Successor Pass Through Trust
Agreements, the provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given unless the Company
has obtained the written consent of Holders of at least a majority in aggregate
principal amount of the outstanding
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31
Registrable Certificates affected by such amendment, modification, supplement,
waiver or departure; provided, however, that no amendment, modification,
supplement or waiver or consent to any departure from the provisions of Section
5 hereof shall be effective as against any Holder of Registrable Certificates
unless consented to in writing by such Holder.
(f) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder
to the Company by means of a notice given in accordance with the provisions of
this Section 6(f), which address initially is, with respect to the Purchasers,
the address set forth in the Purchase Agreement; and (ii) if to the Company,
initially at the Company's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 6(f).
All such notices and communications shall be deemed to have been duly
given; at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to the Trustees, at the
address specified in the Pass Through Trust Agreements or the Successor Pass
Through Trust Agreements, as the case may be.
(g) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable
Certificates in violation of the terms hereof or of the Purchase Agreement or
the Pass Through Trust Agreements or Successor Pass Through Trust Agreements.
If any transferee of any Holder shall acquire Registrable Certificates, in any
manner, whether by operation of law or otherwise, such
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32
Registrable Certificates shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Certificates, such Person
shall be conclusively deemed to have agreed to be bound by and to perform all
of the terms and provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and, if applicable, the Purchase Agreement,
and such Person shall be entitled to receive the benefits hereof. Upon the
occurrence of the transfers contemplated by the Assignment and Assumption
Agreements (as defined in the Pass Through Trust Agreements), the trustee of
each Original Trust shall (without any further act) be deemed to have
transferred all of its rights, title and interest in and to this Agreement to
the trustee of the corresponding Successor Trust and, thereafter, the trustee
of each Successor Trust shall be deemed to be the "Trustee" of such Successor
Trust with the rights and obligations of a "Trustee" hereunder.
(h) Third Party Beneficiaries. The Holders shall be third party
beneficiaries to the agreements made hereunder and to the obligations of the
Company hereunder and shall have the right to enforce such agreements and
obligations directly to the extent any such Holder deems such enforcement
necessary or advisable to protect its rights hereunder.
(i) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(j) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(k) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(l) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
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33
(m) Termination. This Agreement shall terminate and be of no further
force or effect when there shall not be any Registrable Certificates
outstanding, except that the provisions of Sections 2(c), 2(e), 5, 6(h) and
6(k) hereof shall survive any such termination.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CONTINENTAL AIRLINES, INC.
By:
---------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Trustee under each
of the Original Trusts
By:
---------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
CREDIT SUISSE FIRST BOSTON CORPORATION
MORGAN STANLEY & CO. INCORPORATED
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
By: CREDIT SUISSE FIRST
BOSTON CORPORATION
By:
-----------------------------------
Name:
Title:
1
EXHIBIT 4.19
================================================================================
DEPOSIT AGREEMENT
(Class A)
Dated as of March 21, 1997
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
and
CREDIT SUISSE FIRST BOSTON,
New York Branch
as Depositary
================================================================================
2
TABLE OF CONTENTS
Page
----
SECTION 1.1 Acceptance of Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Establishment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.3 Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.4 Other Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5. Representation and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 6. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 7. Amendment, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 9. Obligations Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 10. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 12. Waiver of Jury Trial Right . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 14. Head Office Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 15. Last Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(i)
3
TABLE OF CONTENTS
Schedule I
EXHIBIT A
EXHIBIT B
(ii)
4
DEPOSIT AGREEMENT (Class A) dated as of March 21, 1997 (as
amended, modified or supplemented from time to time, this "Agreement") between
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, as
Escrow Agent under the Escrow and Paying Agent Agreement referred to below (in
such capacity, together with its successors in such capacity, the "Escrow
Agent"), and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, a banking institution
organized under the laws of Switzerland acting through its New York Branch, as
depositary bank (the "Depositary").
W I T N E S S E T H
WHEREAS, Continental Airlines, Inc. ("Continental") and
Wilmington Trust Company, not in its individual capacity except as otherwise
expressly provided therein, but solely as trustee (in such capacity, together
with its successors in such capacity, the "Pass Through Trustee") have entered
into a Pass Through Trust Agreement dated as of March 21, 1997 (as amended,
modified or supplemented from time to time in accordance with the terms
thereof, the "Pass Through Trust Agreement") relating to Continental Airlines
Pass Through Trust 1997-1A-O pursuant to which the Continental Airlines Pass
Through Trust, Series 1997-1A-O Certificates referred to therein (the
"Certificates") are being issued;
WHEREAS, Continental and Credit Suisse First Boston
Corporation, Morgan Stanley & Co., Incorporated, Chase Securities Inc. and
Goldman, Sachs & Co. (collectively, the "Initial Purchasers" and, together with
their respective transferees and assigns as registered owners of the
Certificates, the "Investors") have entered into a Certificate Purchase
Agreement dated as of March 12, 1997 (the "Certificate Purchase Agreement")
pursuant to which the Pass Through Trustee will issue and sell the Certificates
to the Initial Purchasers;
WHEREAS, Continental, the Pass Through Trustee, certain other
pass through trustees and certain other persons concurrently herewith are
entering into the Note Purchase Agreement, dated as of the date hereof (the
"Note Purchase Agreement"), pursuant to which the Pass Through Trustee has
agreed to acquire from time to time on or prior to the Delivery Period
Termination Date (as defined in the Note Purchase Agreement) equipment notes
(the "Equipment Notes") issued to finance the acquisition of aircraft by
Continental, as lessee or as owner, utilizing a portion of the proceeds from
the sale of the Certificates (the "Net Proceeds");
WHEREAS, the Escrow Agent, the Initial Purchasers, the Pass
Through Trustee and Wilmington Trust Company, as paying agent for the Escrow
Agent (in such capacity, together with its successors in such capacity, the
"Paying Agent") concurrently herewith are entering into an Escrow and Paying
Agent Agreement, dated as of the date hereof (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Escrow and Paying Agent Agreement"); and
WHEREAS, the Initial Purchasers and the Pass Through Trustee
intend that the Net Proceeds be held in escrow by the Escrow Agent on behalf of
the Investors pursuant to the Escrow and Paying Agent Agreement, subject to
withdrawal upon request of and proper certification by the Pass Through Trustee
for the purpose of purchasing Equipment Notes, and
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that pending such withdrawal the Net Proceeds be deposited by the Escrow Agent
with the Depositary pursuant to this Agreement, which provides for the
Depositary to pay interest for distribution to the Investors and to establish
accounts from which the Escrow Agent shall make withdrawals upon request of and
proper certification by the Pass Through Trustee.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1.1 Acceptance of Depositary. The Depositary hereby
agrees to act as depositary bank as provided herein and in connection therewith
to accept all amounts to be delivered to or held by the Depositary pursuant to
the terms of this Agreement. The Depositary further agrees to hold, maintain
and safeguard the Deposits and the Accounts (as defined below) during the term
of this Agreement in accordance with the provisions of this Agreement. The
Escrow Agent shall not have any right to withdraw, assign or otherwise transfer
moneys held in the Accounts except as permitted by this Agreement.
SECTION 1.2 Establishment of Accounts. The Escrow Agent
hereby instructs the Depositary, and the Depositary agrees, to establish the
separate deposit accounts listed on Schedule I hereto and to establish such
additional separate deposit accounts as may be required in connection with the
deposits contemplated by Section 2.4 hereof (each, an "Account" and
collectively, the "Accounts"), each in the name of the Escrow Agent and all on
the terms and conditions set forth in this Agreement.
SECTION 2.1 Deposits. The Escrow Agent shall direct the
Initial Purchasers to deposit with the Depositary on the date of this Agreement
(the "Deposit Date") in Federal (same day) funds by official check or checks or
wire or other transfer to: Credit Suisse First Boston, New York Branch,
Reference: Continental 1997-1, and the Depositary shall accept from the
Initial Purchasers, on behalf of the Escrow Agent, the sum of US$437,876,000.
Upon acceptance of such sum, the Depositary shall (i) establish each of the
deposits specified in Schedule I hereto maturing on the respective dates set
forth therein (including any deposit made pursuant to Section 2.4 hereof,
individually, a "Deposit" and, collectively, the "Deposits") and (ii) credit
each Deposit to the related Account as set forth therein. No amount shall be
deposited in any Account other than the related Deposit.
SECTION 2.2 Interest. (a) Each Deposit shall bear interest
from and including the date of deposit to but excluding the date of withdrawal
at the rate of 7.461% per annum (computed on the basis of a year of twelve
30-day months) payable to the Paying Agent on behalf of the Escrow Agent
semi-annually in arrears on each April 1 and October 1, and on the date of the
Final Withdrawal (as defined below), commencing on October 1, 1997 (each, an
"Interest Payment Date"), all in accordance with the terms of this Agreement
(whether or not any such Deposit is withdrawn on an Interest Payment Date).
Interest accrued on any Deposit that is withdrawn pursuant to a Notice of
Purchase Withdrawal (as defined below) shall be paid on the next Interest
Payment Date, notwithstanding any intervening Final Withdrawal (as defined
below).
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(b) The parties hereto further acknowledge and agree that
upon any increase in the rate of interest on the Equipment Notes (as defined in
the Pass Through Trust Agreement) (such increase referred to as a "Rate
Increase") pursuant to the terms of the Registration Rights Agreement (as
defined below), the rate of interest borne by each Deposit in accordance with
Section 2.2(a) above shall increase by the amount of such Rate Increase, and
upon any subsequent decrease in the rate of interest on the Equipment Notes
(such decrease referred to as a "Rate Decrease") pursuant to the terms of the
Registration Rights Agreement, the rate of interest borne by such Deposit shall
decrease by the amount of such Rate Decrease. For the purposes of this Section
2.2(b), "Registration Rights Agreement" means the Exchange and Registration
Rights Agreement dated the date hereof among Continental, the Pass Through
Trustee, certain other pass through trustees and the Initial Purchasers.
SECTION 2.3 Withdrawals. (a) On and after the date seven
days after the establishment of any Deposit, the Escrow Agent may, by providing
at least one Business Day's prior notice of withdrawal to the Depositary in the
form of Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw not less
than the entire balance of such Deposit, except that at any time prior to the
actual withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee
may, by notice to the Depositary, cancel such withdrawal (including on the
scheduled date therefor), and thereafter such Deposit shall continue to be
maintained by the Depositary in accordance with the original terms thereof.
Following such withdrawal the balance in the related Account shall be zero and
the Depositary shall close such Account. As used herein, "Business Day" means
any day, other than a Saturday, Sunday or other day on which commercial banks
are authorized or required by law to close in New York, New York, Houston,
Texas, Wilmington, Delaware or Salt Lake City, Utah.
(b) The Escrow Agent may, by providing at least 20 days'
prior notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"Notice of Final Withdrawal"), withdraw the entire amount of all of the
remaining Deposits together with the payment by the Depositary of all accrued
and unpaid interest on such Deposits to but excluding the specified date of
withdrawal (a "Final Withdrawal"), on such date as shall be specified in such
Notice of Final Withdrawal. If a Notice of Final Withdrawal has not been given
to the Depositary on or before July 6, 1998 and there are unwithdrawn Deposits
on such date, the Depositary shall pay the amount of the Final Withdrawal to
the Paying Agent on July 31, 1998.
(c) If the Depositary receives a duly completed Notice of
Purchase Withdrawal or Notice of Final Withdrawal complying with the provisions
of this Agreement, it shall make the payments specified therein in accordance
with the provisions of this Agreement.
SECTION 2.4 Other Accounts. On the date of withdrawal of any
Deposit, the Escrow Agent, or the Pass Through Trustee on behalf of the Escrow
Agent, shall be entitled to re-deposit with the Depositary any portion thereof
and the Depositary shall accept the same for deposit hereunder. Any sums so
received for deposit shall be established as a new Deposit and credited to a
new Account, all as more fully provided in Section 2.1 hereof, and thereafter
the provisions of this Agreement shall apply thereto as fully and with the same
force and effect as if such Deposit had been established on the Deposit Date
except that (i) such Deposit may not be
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withdrawn prior to the date seven days after the establishment thereof and (ii)
such Deposit shall mature on July 31, 1998 and bear interest as provided in
Section 2.2. The Depositary shall promptly give notice to the Escrow Agent of
receipt of each such re-deposit and the Account Number assigned thereto.
SECTION 3. Termination. This Agreement shall terminate on
the fifth Business Day after the later of the date on which (i) all of the
Deposits shall have been withdrawn and paid as provided herein without any
re-deposit and (ii) all accrued and unpaid interest on the Deposits shall have
been paid as provided herein, but in no event prior to the date on which the
Depositary shall have performed in full its obligation hereunder.
SECTION 4. Payments. All payments (including, without
limitation, those payments made in respect of Taxes (as defined and provided
for below)) made by the Depositary hereunder shall be paid in United States
Dollars and immediately available funds by wire transfer (i) in the case of
accrued interest on the Deposits payable under Section 2.2 hereof or any Final
Withdrawal, directly to the Paying Agent at Wilmington Trust Company,
Wilmington, DE, ABA# 031- 100-092, Account No. 41605-0, Attention: Monica
Henry, Reference: Continental 1997-1A, or to such other account as the Paying
Agent may direct from time to time in writing to the Depositary and the Escrow
Agent and (ii) in the case of any withdrawal of one or more Deposits pursuant
to a Notice of Purchase Withdrawal, directly to or as directed by the Pass
Through Trustee as specified and in the manner provided in such Notice of
Purchase Withdrawal. The Depositary hereby waives any and all rights of
set-off, combination of accounts, right of retention or similar right (whether
arising under applicable law, contract or otherwise) it may have against the
Deposits howsoever arising. All payments on or in respect of each Deposit
shall be made free and clear of and without reduction for or on account of any
and all taxes, levies or other impositions or charges (collectively, "Taxes").
However, if the Depositary or the Paying Agent (pursuant to Section 2.04 of the
Escrow and Paying Agent Agreement) shall be required by law to deduct or
withhold any Taxes from or in respect of any sum payable hereunder, the
Depositary shall (i) make such deductions or withholding, (ii) pay the full
amount deducted or withheld (including in respect of such additional amounts)
to the competent taxation authority and (iii) if the Taxes required to be
deducted or withheld are imposed by Switzerland or any political subdivision
thereof, pay such additional amounts as may be necessary in order that the
actual amount received by the designated recipient of such sum under this
Agreement or the Escrow and Paying Agent Agreement after such deduction or
withholding equals the sum it would have received had no such deduction or
withholding been required. If the date on which any payment due on any Deposit
would otherwise fall on a day which is not a Business Day, such payment shall
be made on the next succeeding Business Day, and no additional interest shall
accrue in respect of such extension.
SECTION 5. Representation and Warranties. The Depositary
hereby represents and warrants to Continental, the Escrow Agent, the Pass
Through Trustee and the Paying Agent that:
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(a) it is a bank duly organized and validly
existing in good standing under the laws of its jurisdiction of
organization and is duly qualified to conduct banking business in the
State of New York through its New York Branch;
(b) it has full power, authority and legal right
to conduct its business and operations as currently conducted and to
enter into and perform its obligations under this Agreement;
(c) the execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate
action on the part of it and do not require any stockholder approval,
or approval or consent of any trustee or holder of any indebtedness or
obligations of it, and such document has been duly executed and
delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms
hereof;
(d) no authorization, consent or approval of or
other action by, and no notice to or filing with, any United States
federal or state governmental authority or regulatory body is required
for the execution, delivery or performance by it of this Agreement;
(e) neither the execution, delivery or
performance by it of this Agreement, nor compliance with the terms and
provisions hereof, conflicts or will conflict with or results or will
result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended,
or bylaws, as amended, of it or any similar instrument binding on it
or any order, writ, injunction or decree of any court or governmental
authority against it or by which it or any of its properties is bound
or any indenture, mortgage or contract or other agreement or
instrument to which it is a party or by which it or any of its
properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(f) there are no pending or, to its knowledge,
threatened actions, suits, investigations or proceedings (whether or
not purportedly on behalf of it) against or affecting it or any of its
property before or by any court or administrative agency which, if
adversely determined, (i) would adversely affect the ability of it to
perform its obligations under this Agreement or (ii) would call into
question or challenge the validity of this Agreement or the
enforceability hereof in accordance with the terms hereof, nor is the
Depositary in default with respect to any order of any court,
governmental authority, arbitration board or administrative agency so
as to adversely affect its ability to perform its obligations under
this Agreement.
SECTION 6. Transfer. Neither party hereto shall be entitled
to assign or otherwise transfer this Agreement (or any interest herein) other
than (in the case of the Escrow Agent) to a successor escrow agent under the
Escrow and Paying Agent Agreement, and any purported assignment in violation
thereof shall be void. This Agreement shall be binding upon
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the parties hereto and their respective successors and (in the case of the
Escrow Agent) permitted assigns. Upon the occurrence of the Transfer (as
defined below) contemplated by the Assignment and Assumption Agreement (as
defined below), the Pass Through Trustee shall (without further act) be deemed
to have transferred all of its right, title and interest in and to this
Agreement to the trustee of the Successor Trust (as defined below) and,
thereafter, the trustee of the Successor Trust shall be deemed to be the "Pass
Through Trustee" hereunder with the rights of the "Pass Through Trustee"
hereunder, and each reference herein to "Continental Airlines Pass Through
Trust 1997-1A-O" shall be deemed to be a reference to "Continental Airlines
Pass Through Trust 1997-1A-S". The Escrow Agent and the Depositary hereby
acknowledge and consent to the Transfer contemplated by the Assignment and
Assumption Agreement. For the purposes of this Section 6, "Transfer" means the
transfer contemplated by the Assignment and Assumption Agreement; "Assignment
and Assumption Agreement" means the Assignment and Assumption Agreement to be
entered into between the Pass Through Trustee and the trustee of the Successor
Trust, substantially in the form of Exhibit D to the Pass Through Trust
Agreement; and "Successor Trust" means the Continental Airlines Pass Through
Trust 1997-1A-S.
SECTION 7. Amendment, Etc. This Agreement may not be
amended, waived or otherwise modified except by an instrument in writing signed
by the party against whom the amendment, waiver or other modification is sought
to be enforced and by the Pass Through Trustee.
SECTION 8. Notices. Unless otherwise expressly provided
herein, any notice or other communication under this Agreement shall be in
writing (including by facsimile) and shall be deemed to be given and effective
upon receipt thereof. All notices shall be sent to (x) in the case of the
Depositary, Credit Suisse First Boston, 11 Madison Avenue, New York, NY 10010,
Attention Robert Finney and Kevin Kappell (Telecopier: (212) 325-8319) or (y)
in the case of the Escrow Agent, First Security Bank, National Association, 79
South Main Street, Salt Lake City, UT 84111, Attention: Corporate Trust
Services (Telecopier: (801) 246-5053), in each case, with a copy to the Pass
Through Trustee, Wilmington Trust Company, 1100 North Market Street,
Wilmington, DE 19890, Attention: Corporate Trust Administration (Telecopier:
(302) 651-8882) and to Continental, Continental Airlines, Inc., 2929 Allen
Parkway, Suite 2010, Houston, TX 77019, Attention: Executive Vice President and
Chief Financial Officer (Telecopier: (713) 520-6329) (or at such other address
as any such party may specify from time to time in a written notice to the
parties hereto). On or prior to the execution of this Agreement, the Escrow
Agent has delivered to the Depositary a certificate containing specimen
signatures of the representatives of the Escrow Agent who are authorized to
give notices and instructions with respect to this Agreement. The Depositary
may conclusively rely on such certificate until the Depositary receives written
notice from the Escrow Agent to the contrary.
SECTION 9. Obligations Unconditional. The Depositary hereby
acknowledges and agrees that its obligation to repay each Deposit together with
interest thereon as provided herein is absolute, irrevocable and unconditional
and constitutes a full recourse obligation of the Depositary enforceable
against it to the full extent of all of its assets and properties.
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SECTION 10. Entire Agreement. This Agreement (including all
attachments hereto) sets forth all of the promises, covenants, agreements,
conditions and understandings between the Depositary and the Escrow Agent with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 11. Governing Law. This Agreement, and the rights
and obligations of the Depositary and the Escrow Agent with respect to the
Deposits, shall be governed by, and construed in accordance with, the laws of
the State of New York and subject to the provisions of Regulation D of the
Board of Governors of the Federal Reserve System (or any successor), as the
same may be modified and supplemented and in effect from time to time.
SECTION 12. Waiver of Jury Trial Right. EACH OF THE
DEPOSITARY AND THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY
IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 13. Counterparts. This Agreement may be executed in
one or more counterparts, all of which taken together shall constitute one
instrument.
SECTION 14. Head Office Obligation. Credit Suisse First
Boston hereby agrees that the obligations of the Depositary hereunder are also
the obligations of Credit Suisse First Boston's Head Office in Zurich,
Switzerland. Accordingly, any beneficiary of this Agreement will be able to
proceed directly against Credit Suisse First Boston's Head Office in Zurich,
Switzerland if Credit Suisse First Boston's New York Branch defaults in its
obligation to such beneficiary under this Agreement.
SECTION 15. Last Deposit. Notwithstanding anything to the
contrary in this Agreement, (i) the last Deposit listed on Schedule I hereto
("Last Deposit") shall not bear interest, but otherwise shall be treated as a
"Deposit" for all purposes of this Agreement, (ii) the Escrow Agent may not
withdraw any Deposit (other than the Last Deposit) unless the Last Deposit
shall have been withdrawn prior to or concurrently with such Deposit and (iii)
for so long as the Last Deposit shall not have been withdrawn in accordance
with Section 2.3 hereof, the other Deposits shall be deemed to bear additional
interest from and including the date hereof to but excluding the date of
withdrawal of the Last Deposit in an amount equal to $4,564.72 per day
(computed on the basis of a year of twelve 30-day months).
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IN WITNESS WHEREOF, the Escrow Agent and the Depositary have
caused this Deposit Agreement to be duly executed as of the day and year first
above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By
----------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON, New York Branch,
as Depositary
By
----------------------------------
Name:
Title:
By
----------------------------------
Name:
Title:
12
Schedule I
Schedule of Deposits
(Class A)
Date Deposit Amount Account No. Maturity Date
---- -------------- ----------- -------------
3/21/97 $22,058,000 4-97 7/31/98
3/21/97 22,127,700 6-97 7/31/98
3/21/97 44,014,670 7-97 7/31/98
3/21/97 54,677,600 8-97 7/31/98
3/21/97 22,820,600 9-97 7/31/98
3/21/97 22,902,600 10-97 7/31/98
3/21/97 22,992,800 11-97 7/31/98
3/21/97 55,342,441 12-97 7/31/98
3/21/97 96,013,776 1-98 7/31/98
3/21/97 52,900,613 2-98 7/31/98
3/21/97 22,025,200 3-97 7/31/98
13
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, N.Y. 10010
Attention: Robert Finney and
Kevin Kappell
Telecopier: (212) 325-8319
Gentlemen:
Reference is made to (i) the Deposit Agreement (Class A) dated
as of March 21, 1997 (the "Deposit Agreement") between First Security Bank,
National Association, as Escrow Agent, and Credit Suisse First Boston, New York
Branch, as Depositary (the "Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement,
the undersigned hereby requests the withdrawal of the entire amount of the
Deposit, $_______, Account No. ____________.
The undersigned hereby directs the Depositary to pay the
proceeds of the Deposit to [________________, Account No. _____, Reference:
_________] on _________ __, 199_, upon the telephonic request of a
representative of the Pass Through Trustee.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By
---------------------------------------
Name:
Title:
Dated: , 199
------------ ---- ---
14
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, N.Y. 10010
Attention: Robert Finney and
Kevin Kappell
Telecopier: (212) 325-8319
Gentlemen:
Reference is made to (i) the Deposit Agreement (Class A) dated
as of March 21, 1997 (the "Deposit Agreement") between First Security Bank,
National Association, as Escrow Agent, and Credit Suisse First Boston, New York
Branch, as Depositary (the "Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement,
the undersigned hereby requests the withdrawal of the entire amount of all
Deposits.
The undersigned hereby directs the Depositary to pay the
proceeds of the Deposits and accrued interest thereon to the Paying Agent at
Wilmington Trust Company, ABA# 031-100-092, Account No. _____________,
Reference: Continental 1997-1.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By
---------------------------------------
Name:
Title:
Dated: , 199
------------ ---- ---
1
EXHBIT 4.20
================================================================================
DEPOSIT AGREEMENT
(Class B)
Dated as of March 21, 1997
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
and
CREDIT SUISSE FIRST BOSTON,
New York Branch
as Depositary
================================================================================
2
TABLE OF CONTENTS
Page
SECTION 1.1 Acceptance of Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Establishment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.3 Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.4 Other Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5. Representation and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 6. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 7. Amendment, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 9. Obligations Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 10. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 12. Waiver of Jury Trial Right . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 14. Head Office Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 15. Last Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
i
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DEPOSIT AGREEMENT (Class B) dated as of March 21, 1997 (as
amended, modified or supplemented from time to time, this "Agreement") between
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, as
Escrow Agent under the Escrow and Paying Agent Agreement referred to below (in
such capacity, together with its successors in such capacity, the "Escrow
Agent"), and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, a banking institution
organized under the laws of Switzerland acting through its New York Branch, as
depositary bank (the "Depositary").
W I T N E S S E T H
WHEREAS, Continental Airlines, Inc. ("Continental") and
Wilmington Trust Company, not in its individual capacity except as otherwise
expressly provided therein, but solely as trustee (in such capacity, together
with its successors in such capacity, the "Pass Through Trustee") have entered
into a Pass Through Trust Agreement dated as of March 21, 1997 (as amended,
modified or supplemented from time to time in accordance with the terms
thereof, the "Pass Through Trust Agreement") relating to Continental Airlines
Pass Through Trust 1997-1B-O pursuant to which the Continental Airlines Pass
Through Trust, Series 1997-1B-O Certificates referred to therein (the
"Certificates") are being issued;
WHEREAS, Continental and Credit Suisse First Boston
Corporation, Morgan Stanley & Co., Incorporated, Chase Securities Inc. and
Goldman, Sachs & Co. (collectively, the "Initial Purchasers" and, together with
their respective transferees and assigns as registered owners of the
Certificates, the "Investors") have entered into a Certificate Purchase
Agreement dated as of March 12, 1997 (the "Certificate Purchase Agreement")
pursuant to which the Pass Through Trustee will issue and sell the Certificates
to the Initial Purchasers;
WHEREAS, Continental, the Pass Through Trustee, certain other
pass through trustees and certain other persons concurrently herewith are
entering into the Note Purchase Agreement, dated as of the date hereof (the
"Note Purchase Agreement"), pursuant to which the Pass Through Trustee has
agreed to acquire from time to time on or prior to the Delivery Period
Termination Date (as defined in the Note Purchase Agreement) equipment notes
(the "Equipment Notes") issued to finance the acquisition of aircraft by
Continental, as lessee or as owner, utilizing a portion of the proceeds from
the sale of the Certificates (the "Net Proceeds");
WHEREAS, the Escrow Agent, the Initial Purchasers, the Pass
Through Trustee and Wilmington Trust Company, as paying agent for the Escrow
Agent (in such capacity, together with its successors in such capacity, the
"Paying Agent") concurrently herewith are entering into an Escrow and Paying
Agent Agreement, dated as of the date hereof (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Escrow and Paying Agent Agreement"); and
WHEREAS, the Initial Purchasers and the Pass Through Trustee
intend that the Net Proceeds be held in escrow by the Escrow Agent on behalf of
the Investors pursuant to the Escrow and Paying Agent Agreement, subject to
withdrawal upon request of and proper certification by the Pass Through Trustee
for the purpose of purchasing Equipment Notes, and
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that pending such withdrawal the Net Proceeds be deposited by the Escrow Agent
with the Depositary pursuant to this Agreement, which provides for the
Depositary to pay interest for distribution to the Investors and to establish
accounts from which the Escrow Agent shall make withdrawals upon request of and
proper certification by the Pass Through Trustee.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1.1 Acceptance of Depositary. The Depositary hereby
agrees to act as depositary bank as provided herein and in connection therewith
to accept all amounts to be delivered to or held by the Depositary pursuant to
the terms of this Agreement. The Depositary further agrees to hold, maintain
and safeguard the Deposits and the Accounts (as defined below) during the term
of this Agreement in accordance with the provisions of this Agreement. The
Escrow Agent shall not have any right to withdraw, assign or otherwise transfer
moneys held in the Accounts except as permitted by this Agreement.
SECTION 1.2 Establishment of Accounts. The Escrow Agent
hereby instructs the Depositary, and the Depositary agrees, to establish the
separate deposit accounts listed on Schedule I hereto and to establish such
additional separate deposit accounts as may be required in connection with the
deposits contemplated by Section 2.4 hereof (each, an "Account" and
collectively, the "Accounts"), each in the name of the Escrow Agent and all on
the terms and conditions set forth in this Agreement.
SECTION 2.1 Deposits. The Escrow Agent shall direct the
Initial Purchasers to deposit with the Depositary on the date of this Agreement
(the "Deposit Date") in Federal (same day) funds by official check or checks or
wire or other transfer to: Credit Suisse First Boston, New York Branch,
Reference: Continental 1997-1, and the Depositary shall accept from the
Initial Purchasers, on behalf of the Escrow Agent, the sum of US$148,333,000.
Upon acceptance of such sum, the Depositary shall (i) establish each of the
deposits specified in Schedule I hereto maturing on the respective dates set
forth therein (including any deposit made pursuant to Section 2.4 hereof,
individually, a "Deposit" and, collectively, the "Deposits") and (ii) credit
each Deposit to the related Account as set forth therein. No amount shall be
deposited in any Account other than the related Deposit.
SECTION 2.2 Interest. (a) Each Deposit shall bear interest
from and including the date of deposit to but excluding the date of withdrawal
at the rate of 7.461% per annum (computed on the basis of a year of twelve
30-day months) payable to the Paying Agent on behalf of the Escrow Agent
semi-annually in arrears on each April 1 and October 1, and on the date of the
Final Withdrawal (as defined below), commencing on October 1, 1997 (each, an
"Interest Payment Date"), all in accordance with the terms of this Agreement
(whether or not any such Deposit is withdrawn on an Interest Payment Date).
Interest accrued on any Deposit that is withdrawn pursuant to a Notice of
Purchase Withdrawal (as defined below) shall be paid on the next Interest
Payment Date, notwithstanding any intervening Final Withdrawal (as defined
below).
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(b) The parties hereto further acknowledge and agree that
upon any increase in the rate of interest on the Equipment Notes (as defined in
the Pass Through Trust Agreement) (such increase referred to as a "Rate
Increase") pursuant to the terms of the Registration Rights Agreement (as
defined below), the rate of interest borne by each Deposit in accordance with
Section 2.2(a) above shall increase by the amount of such Rate Increase, and
upon any subsequent decrease in the rate of interest on the Equipment Notes
(such decrease referred to as a "Rate Decrease") pursuant to the terms of the
Registration Rights Agreement, the rate of interest borne by such Deposit shall
decrease by the amount of such Rate Decrease. For the purposes of this Section
2.2(b), "Registration Rights Agreement" means the Exchange and Registration
Rights Agreement dated the date hereof among Continental, the Pass Through
Trustee, certain other pass through trustees and the Initial Purchasers.
SECTION 2.3 Withdrawals. (a) On and after the date seven
days after the establishment of any Deposit, the Escrow Agent may, by providing
at least one Business Day's prior notice of withdrawal to the Depositary in the
form of Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw not less
than the entire balance of such Deposit, except that at any time prior to the
actual withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee
may, by notice to the Depositary, cancel such withdrawal (including on the
scheduled date therefor), and thereafter such Deposit shall continue to be
maintained by the Depositary in accordance with the original terms thereof.
Following such withdrawal the balance in the related Account shall be zero and
the Depositary shall close such Account. As used herein, "Business Day" means
any day, other than a Saturday, Sunday or other day on which commercial banks
are authorized or required by law to close in New York, New York, Houston,
Texas, Wilmington, Delaware or Salt Lake City, Utah.
(b) The Escrow Agent may, by providing at least 20 days'
prior notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"Notice of Final Withdrawal"), withdraw the entire amount of all of the
remaining Deposits together with the payment by the Depositary of all accrued
and unpaid interest on such Deposits to but excluding the specified date of
withdrawal (a "Final Withdrawal"), on such date as shall be specified in such
Notice of Final Withdrawal. If a Notice of Final Withdrawal has not been given
to the Depositary on or before July 6, 1998 and there are unwithdrawn Deposits
on such date, the Depositary shall pay the amount of the Final Withdrawal to
the Paying Agent on July 31, 1998.
(c) If the Depositary receives a duly completed Notice of
Purchase Withdrawal or Notice of Final Withdrawal complying with the provisions
of this Agreement, it shall make the payments specified therein in accordance
with the provisions of this Agreement.
SECTION 2.4 Other Accounts. On the date of withdrawal of any
Deposit, the Escrow Agent, or the Pass Through Trustee on behalf of the Escrow
Agent, shall be entitled to re-deposit with the Depositary any portion thereof
and the Depositary shall accept the same for deposit hereunder. Any sums so
received for deposit shall be established as a new Deposit and credited to a
new Account, all as more fully provided in Section 2.1 hereof, and thereafter
the provisions of this Agreement shall apply thereto as fully and with the same
force and effect as if such Deposit had been established on the Deposit Date
except that (i) such Deposit may not be
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4
withdrawn prior to the date seven days after the establishment thereof and (ii)
such Deposit shall mature on July 31, 1998 and bear interest as provided in
Section 2.2. The Depositary shall promptly give notice to the Escrow Agent of
receipt of each such re-deposit and the Account Number assigned thereto.
SECTION 3. Termination. This Agreement shall terminate on
the fifth Business Day after the later of the date on which (i) all of the
Deposits shall have been withdrawn and paid as provided herein without any
re-deposit and (ii) all accrued and unpaid interest on the Deposits shall have
been paid as provided herein, but in no event prior to the date on which the
Depositary shall have performed in full its obligation hereunder.
SECTION 4. Payments. All payments (including, without
limitation, those payments made in respect of Taxes (as defined and provided
for below)) made by the Depositary hereunder shall be paid in United States
Dollars and immediately available funds by wire transfer (i) in the case of
accrued interest on the Deposits payable under Section 2.2 hereof or any Final
Withdrawal, directly to the Paying Agent at Wilmington Trust Company,
Wilmington, DE, ABA# 031- 100-092, Account No. 41606-0, Attention: Monica
Henry, Reference: Continental 1997-1B, or to such other account as the Paying
Agent may direct from time to time in writing to the Depositary and the Escrow
Agent and (ii) in the case of any withdrawal of one or more Deposits pursuant
to a Notice of Purchase Withdrawal, directly to or as directed by the Pass
Through Trustee as specified and in the manner provided in such Notice of
Purchase Withdrawal. The Depositary hereby waives any and all rights of
set-off, combination of accounts, right of retention or similar right (whether
arising under applicable law, contract or otherwise) it may have against the
Deposits howsoever arising. All payments on or in respect of each Deposit
shall be made free and clear of and without reduction for or on account of any
and all taxes, levies or other impositions or charges (collectively, "Taxes").
However, if the Depositary or the Paying Agent (pursuant to Section 2.04 of the
Escrow and Paying Agent Agreement) shall be required by law to deduct or
withhold any Taxes from or in respect of any sum payable hereunder, the
Depositary shall (i) make such deductions or withholding, (ii) pay the full
amount deducted or withheld (including in respect of such additional amounts)
to the competent taxation authority and (iii) if the Taxes required to be
deducted or withheld are imposed by Switzerland or any political subdivision
thereof, pay such additional amounts as may be necessary in order that the
actual amount received by the designated recipient of such sum under this
Agreement or the Escrow and Paying Agent Agreement after such deduction or
withholding equals the sum it would have received had no such deduction or
withholding been required. If the date on which any payment due on any Deposit
would otherwise fall on a day which is not a Business Day, such payment shall
be made on the next succeeding Business Day, and no additional interest shall
accrue in respect of such extension.
SECTION 5. Representation and Warranties. The Depositary
hereby represents and warrants to Continental, the Escrow Agent, the Pass
Through Trustee and the Paying Agent that:
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(a) it is a bank duly organized and validly
existing in good standing under the laws of its jurisdiction of
organization and is duly qualified to conduct banking business in the
State of New York through its New York Branch;
(b) it has full power, authority and legal right
to conduct its business and operations as currently conducted and to
enter into and perform its obligations under this Agreement;
(c) the execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate
action on the part of it and do not require any stockholder approval,
or approval or consent of any trustee or holder of any indebtedness or
obligations of it, and such document has been duly executed and
delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms
hereof;
(d) no authorization, consent or approval of or
other action by, and no notice to or filing with, any United States
federal or state governmental authority or regulatory body is required
for the execution, delivery or performance by it of this Agreement;
(e) neither the execution, delivery or
performance by it of this Agreement, nor compliance with the terms and
provisions hereof, conflicts or will conflict with or results or will
result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended,
or bylaws, as amended, of it or any similar instrument binding on it
or any order, writ, injunction or decree of any court or governmental
authority against it or by which it or any of its properties is bound
or any indenture, mortgage or contract or other agreement or
instrument to which it is a party or by which it or any of its
properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(f) there are no pending or, to its knowledge,
threatened actions, suits, investigations or proceedings (whether or
not purportedly on behalf of it) against or affecting it or any of its
property before or by any court or administrative agency which, if
adversely determined, (i) would adversely affect the ability of it to
perform its obligations under this Agreement or (ii) would call into
question or challenge the validity of this Agreement or the
enforceability hereof in accordance with the terms hereof, nor is the
Depositary in default with respect to any order of any court,
governmental authority, arbitration board or administrative agency so
as to adversely affect its ability to perform its obligations under
this Agreement.
SECTION 6. Transfer. Neither party hereto shall be entitled
to assign or otherwise transfer this Agreement (or any interest herein) other
than (in the case of the Escrow Agent) to a successor escrow agent under the
Escrow and Paying Agent Agreement, and any purported assignment in violation
thereof shall be void. This Agreement shall be binding upon
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6
the parties hereto and their respective successors and (in the case of the
Escrow Agent) permitted assigns. Upon the occurrence of the Transfer (as
defined below) contemplated by the Assignment and Assumption Agreement (as
defined below), the Pass Through Trustee shall (without further act) be deemed
to have transferred all of its right, title and interest in and to this
Agreement to the trustee of the Successor Trust (as defined below) and,
thereafter, the trustee of the Successor Trust shall be deemed to be the "Pass
Through Trustee" hereunder with the rights of the "Pass Through Trustee"
hereunder, and each reference herein to "Continental Airlines Pass Through
Trust 1997-1B-O" shall be deemed to be a reference to "Continental Airlines
Pass Through Trust 1997-1B-S". The Escrow Agent and the Depositary hereby
acknowledge and consent to the Transfer contemplated by the Assignment and
Assumption Agreement. For the purposes of this Section 6, "Transfer" means the
transfer contemplated by the Assignment and Assumption Agreement; "Assignment
and Assumption Agreement" means the Assignment and Assumption Agreement to be
entered into between the Pass Through Trustee and the trustee of the Successor
Trust, substantially in the form of Exhibit D to the Pass Through Trust
Agreement; and "Successor Trust" means the Continental Airlines Pass Through
Trust 1997-1B-S.
SECTION 7. Amendment, Etc. This Agreement may not be
amended, waived or otherwise modified except by an instrument in writing signed
by the party against whom the amendment, waiver or other modification is sought
to be enforced and by the Pass Through Trustee.
SECTION 8. Notices. Unless otherwise expressly provided
herein, any notice or other communication under this Agreement shall be in
writing (including by facsimile) and shall be deemed to be given and effective
upon receipt thereof. All notices shall be sent to (x) in the case of the
Depositary, Credit Suisse First Boston, 11 Madison Avenue, New York, NY 10010,
Attention Robert Finney and Kevin Kappell (Telecopier: (212) 325-8319) or (y)
in the case of the Escrow Agent, First Security Bank, National Association, 79
South Main Street, Salt Lake City, UT 84111, Attention: Corporate Trust
Services (Telecopier: (801) 246-5053), in each case, with a copy to the Pass
Through Trustee, Wilmington Trust Company, 1100 North Market Street,
Wilmington, DE 19890, Attention: Corporate Trust Administration (Telecopier:
(302) 651-8882) and to Continental, Continental Airlines, Inc., 2929 Allen
Parkway, Suite 2010, Houston, TX 77019, Attention: Executive Vice President and
Chief Financial Officer (Telecopier: (713) 520-6329) (or at such other address
as any such party may specify from time to time in a written notice to the
parties hereto). On or prior to the execution of this Agreement, the Escrow
Agent has delivered to the Depositary a certificate containing specimen
signatures of the representatives of the Escrow Agent who are authorized to
give notices and instructions with respect to this Agreement. The Depositary
may conclusively rely on such certificate until the Depositary receives written
notice from the Escrow Agent to the contrary.
SECTION 9. Obligations Unconditional. The Depositary hereby
acknowledges and agrees that its obligation to repay each Deposit together with
interest thereon as provided herein is absolute, irrevocable and unconditional
and constitutes a full recourse obligation of the Depositary enforceable
against it to the full extent of all of its assets and properties.
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7
SECTION 10. Entire Agreement. This Agreement (including all
attachments hereto) sets forth all of the promises, covenants, agreements,
conditions and understandings between the Depositary and the Escrow Agent with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 11. Governing Law. This Agreement, and the rights
and obligations of the Depositary and the Escrow Agent with respect to the
Deposits, shall be governed by, and construed in accordance with, the laws of
the State of New York and subject to the provisions of Regulation D of the
Board of Governors of the Federal Reserve System (or any successor), as the
same may be modified and supplemented and in effect from time to time.
SECTION 12. Waiver of Jury Trial Right. EACH OF THE
DEPOSITARY AND THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY
IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 13. Counterparts. This Agreement may be executed in
one or more counterparts, all of which taken together shall constitute one
instrument.
SECTION 14. Head Office Obligation. Credit Suisse First
Boston hereby agrees that the obligations of the Depositary hereunder are also
the obligations of Credit Suisse First Boston's Head Office in Zurich,
Switzerland. Accordingly, any beneficiary of this Agreement will be able to
proceed directly against Credit Suisse First Boston's Head Office in Zurich,
Switzerland if Credit Suisse First Boston's New York Branch defaults in its
obligation to such beneficiary under this Agreement.
SECTION 15. Last Deposit. Notwithstanding anything to the
contrary in this Agreement, (i) the last Deposit listed on Schedule I hereto
("Last Deposit") shall not bear interest, but otherwise shall be treated as a
"Deposit" for all purposes of this Agreement, (ii) the Escrow Agent may not
withdraw any Deposit (other than the Last Deposit) unless the Last Deposit
shall have been withdrawn prior to or concurrently with such Deposit and (iii)
for so long as the Last Deposit shall not have been withdrawn in accordance
with Section 2.3 hereof, the other Deposits shall be deemed to bear additional
interest from and including the date hereof to but excluding the date of
withdrawal of the Last Deposit in an amount equal to $1,558.69 per day
(computed on the basis of a year of 12 thirty-day months).
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IN WITNESS WHEREOF, the Escrow Agent and the Depositary have
caused this Deposit Agreement to be duly executed as of the day and year first
above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By
----------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON, New York Branch,
as Depositary
By
----------------------------------------
Name:
Title:
By
----------------------------------------
Name:
Title:
11
Schedule I
Schedule of Deposits
(Class B)
Date Deposit Amount Account No. Maturity Date
---- -------------- ----------- -------------
3/21/97 $7,532,000 4-97 7/31/98
3/21/97 7,555,800 6-97 7/31/98
3/21/97 14,961,800 7-97 7/31/98
3/21/97 18,670,400 8-97 7/31/98
3/21/97 7,665,755 9-97 7/31/98
3/21/97 7,771,288 10-97 7/31/98
3/21/97 7,851,200 11-97 7/31/98
3/21/97 18,857,650 12-97 7/31/98
3/21/97 31,882,284 1-98 7/31/98
3/21/97 18,064,023 2-98 7/31/98
3/21/97 7,520,800 3-97 7/31/98
12
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, N.Y. 10010
Attention: Robert Finney and
Kevin Kappell
Telecopier: (212) 325-8319
Gentlemen:
Reference is made to (i) the Deposit Agreement (Class B) dated
as of March 21, 1997 (the "Deposit Agreement") between First Security Bank,
National Association, as Escrow Agent, and Credit Suisse First Boston, New York
Branch, as Depositary (the "Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement,
the undersigned hereby requests the withdrawal of the entire amount of the
Deposit, $_______, Account No. ____________.
The undersigned hereby directs the Depositary to pay the
proceeds of the Deposit to [________________, Account No. _____, Reference:
_________] on _________ __, 199_, upon the telephonic request of a
representative of the Pass Through Trustee.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By
-----------------------------------------
Name:
Title:
Dated: , 199
------------ -- --
13
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, N.Y. 10010
Attention: Robert Finney and
Kevin Kappell
Telecopier: (212) 325-8319
Gentlemen:
Reference is made to (i) the Deposit Agreement (Class B) dated
as of March 21, 1997 (the "Deposit Agreement") between First Security Bank,
National Association, as Escrow Agent, and Credit Suisse First Boston, New York
Branch, as Depositary (the "Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement,
the undersigned hereby requests the withdrawal of the entire amount of all
Deposits.
The undersigned hereby directs the Depositary to pay the
proceeds of the Deposits and accrued interest thereon to the Paying Agent at
Wilmington Trust Company, ABA# 031-100-092, Account No. _____________,
Reference: Continental 1997-1.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By
-----------------------------------------
Name:
Title:
Dated: , 199
------------ -- --
1
EXHIBIT 4.21
================================================================================
DEPOSIT AGREEMENT
(Class C-I)
Dated as of March 21, 1997
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
and
CREDIT SUISSE FIRST BOSTON,
New York Branch
as Depositary
================================================================================
2
TABLE OF CONTENTS
Page
----
SECTION 1.1 Acceptance of Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Establishment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.3 Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.4 Other Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5. Representation and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 6. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 7. Amendment, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 9. Obligations Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 10. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 12. Waiver of Jury Trial Right . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 14. Head Office Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 15. Last Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3
DEPOSIT AGREEMENT (Class C-I) dated as of March 21, 1997 (as
amended, modified or supplemented from time to time, this "Agreement") between
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, as
Escrow Agent under the Escrow and Paying Agent Agreement referred to below (in
such capacity, together with its successors in such capacity, the "Escrow
Agent"), and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, a banking institution
organized under the laws of Switzerland acting through its New York Branch, as
depositary bank (the "Depositary").
W I T N E S S E T H
WHEREAS, Continental Airlines, Inc. ("Continental") and
Wilmington Trust Company, not in its individual capacity except as otherwise
expressly provided therein, but solely as trustee (in such capacity, together
with its successors in such capacity, the "Pass Through Trustee") have entered
into a Pass Through Trust Agreement dated as of March 21, 1997 (as amended,
modified or supplemented from time to time in accordance with the terms
thereof, the "Pass Through Trust Agreement") relating to Continental Airlines
Pass Through Trust 1997-1C-I-O pursuant to which the Continental Airlines Pass
Through Trust, Series 1997-1C-I-O Certificates referred to therein (the
"Certificates") are being issued;
WHEREAS, Continental and Credit Suisse First Boston
Corporation, Morgan Stanley & Co., Incorporated, Chase Securities Inc. and
Goldman, Sachs & Co. (collectively, the "Initial Purchasers" and, together with
their respective transferees and assigns as registered owners of the
Certificates, the "Investors") have entered into a Certificate Purchase
Agreement dated as of March 12, 1997 (the "Certificate Purchase Agreement")
pursuant to which the Pass Through Trustee will issue and sell the Certificates
to the Initial Purchasers;
WHEREAS, Continental, the Pass Through Trustee, certain other
pass through trustees and certain other persons concurrently herewith are
entering into the Note Purchase Agreement, dated as of the date hereof (the
"Note Purchase Agreement"), pursuant to which the Pass Through Trustee has
agreed to acquire from time to time on or prior to the Delivery Period
Termination Date (as defined in the Note Purchase Agreement) equipment notes
(the "Equipment Notes") issued to finance the acquisition of aircraft by
Continental, as lessee or as owner, utilizing a portion of the proceeds from
the sale of the Certificates (the "Net Proceeds");
WHEREAS, the Escrow Agent, the Initial Purchasers, the Pass
Through Trustee and Wilmington Trust Company, as paying agent for the Escrow
Agent (in such capacity, together with its successors in such capacity, the
"Paying Agent") concurrently herewith are entering into an Escrow and Paying
Agent Agreement, dated as of the date hereof (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Escrow and Paying Agent Agreement"); and
WHEREAS, the Initial Purchasers and the Pass Through Trustee
intend that the Net Proceeds be held in escrow by the Escrow Agent on behalf of
the Investors pursuant to the Escrow and Paying Agent Agreement, subject to
withdrawal upon request of and proper certification by the Pass Through Trustee
for the purpose of purchasing Equipment Notes, and
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2
that pending such withdrawal the Net Proceeds be deposited by the Escrow Agent
with the Depositary pursuant to this Agreement, which provides for the
Depositary to pay interest for distribution to the Investors and to establish
accounts from which the Escrow Agent shall make withdrawals upon request of and
proper certification by the Pass Through Trustee.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1.1 Acceptance of Depositary. The Depositary hereby
agrees to act as depositary bank as provided herein and in connection therewith
to accept all amounts to be delivered to or held by the Depositary pursuant to
the terms of this Agreement. The Depositary further agrees to hold, maintain
and safeguard the Deposits and the Accounts (as defined below) during the term
of this Agreement in accordance with the provisions of this Agreement. The
Escrow Agent shall not have any right to withdraw, assign or otherwise transfer
moneys held in the Accounts except as permitted by this Agreement.
SECTION 1.2 Establishment of Accounts. The Escrow Agent
hereby instructs the Depositary, and the Depositary agrees, to establish the
separate deposit accounts listed on Schedule I hereto and to establish such
additional separate deposit accounts as may be required in connection with the
deposits contemplated by Section 2.4 hereof (each, an "Account" and
collectively, the "Accounts"), each in the name of the Escrow Agent and all on
the terms and conditions set forth in this Agreement.
SECTION 2.1 Deposits. The Escrow Agent shall direct the
Initial Purchasers to deposit with the Depositary on the date of this Agreement
(the "Deposit Date") in Federal (same day) funds by official check or checks or
wire or other transfer to: Credit Suisse First Boston, New York Branch,
Reference: Continental 1997-1, and the Depositary shall accept from the
Initial Purchasers, on behalf of the Escrow Agent, the sum of US$111,093,000.
Upon acceptance of such sum, the Depositary shall (i) establish each of the
deposits specified in Schedule I hereto maturing on the respective dates set
forth therein (including any deposit made pursuant to Section 2.4 hereof,
individually, a "Deposit" and, collectively, the "Deposits") and (ii) credit
each Deposit to the related Account as set forth therein. No amount shall be
deposited in any Account other than the related Deposit.
SECTION 2.2 Interest. (a) Each Deposit shall bear interest
from and including the date of deposit to but excluding the date of withdrawal
at the rate of 7.42% per annum (computed on the basis of a year of twelve
30-day months) payable to the Paying Agent on behalf of the Escrow Agent
semi-annually in arrears on each April 1 and October 1, and on the date of the
Final Withdrawal (as defined below), commencing on October 1, 1997 (each, an
"Interest Payment Date"), all in accordance with the terms of this Agreement
(whether or not any such Deposit is withdrawn on an Interest Payment Date).
Interest accrued on any Deposit that is withdrawn pursuant to a Notice of
Purchase Withdrawal (as defined below) shall be paid on the next Interest
Payment Date, notwithstanding any intervening Final Withdrawal (as defined
below).
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(b) The parties hereto further acknowledge and agree that
upon any increase in the rate of interest on the Equipment Notes (as defined in
the Pass Through Trust Agreement) (such increase referred to as a "Rate
Increase") pursuant to the terms of the Registration Rights Agreement (as
defined below), the rate of interest borne by each Deposit in accordance with
Section 2.2(a) above shall increase by the amount of such Rate Increase, and
upon any subsequent decrease in the rate of interest on the Equipment Notes
(such decrease referred to as a "Rate Decrease") pursuant to the terms of the
Registration Rights Agreement, the rate of interest borne by such Deposit shall
decrease by the amount of such Rate Decrease. For the purposes of this Section
2.2(b), "Registration Rights Agreement" means the Exchange and Registration
Rights Agreement dated the date hereof among Continental, the Pass Through
Trustee, certain other pass through trustees and the Initial Purchasers.
SECTION 2.3 Withdrawals. (a) On and after the date seven
days after the establishment of any Deposit, the Escrow Agent may, by providing
at least one Business Day's prior notice of withdrawal to the Depositary in the
form of Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw not less
than the entire balance of such Deposit, except that at any time prior to the
actual withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee
may, by notice to the Depositary, cancel such withdrawal (including on the
scheduled date therefor), and thereafter such Deposit shall continue to be
maintained by the Depositary in accordance with the original terms thereof.
Following such withdrawal the balance in the related Account shall be zero and
the Depositary shall close such Account. As used herein, "Business Day" means
any day, other than a Saturday, Sunday or other day on which commercial banks
are authorized or required by law to close in New York, New York, Houston,
Texas, Wilmington, Delaware or Salt Lake City, Utah.
(b) The Escrow Agent may, by providing at least 20 days'
prior notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"Notice of Final Withdrawal"), withdraw the entire amount of all of the
remaining Deposits together with the payment by the Depositary of all accrued
and unpaid interest on such Deposits to but excluding the specified date of
withdrawal (a "Final Withdrawal"), on such date as shall be specified in such
Notice of Final Withdrawal. If a Notice of Final Withdrawal has not been given
to the Depositary on or before July 6, 1998 and there are unwithdrawn Deposits
on such date, the Depositary shall pay the amount of the Final Withdrawal to
the Paying Agent on July 31, 1998.
(c) If the Depositary receives a duly completed Notice of
Purchase Withdrawal or Notice of Final Withdrawal complying with the provisions
of this Agreement, it shall make the payments specified therein in accordance
with the provisions of this Agreement.
SECTION 2.4 Other Accounts. On the date of withdrawal of any
Deposit, the Escrow Agent, or the Pass Through Trustee on behalf of the Escrow
Agent, shall be entitled to re-deposit with the Depositary any portion thereof
and the Depositary shall accept the same for deposit hereunder. Any sums so
received for deposit shall be established as a new Deposit and credited to a
new Account, all as more fully provided in Section 2.1 hereof, and thereafter
the provisions of this Agreement shall apply thereto as fully and with the same
force and effect as if such Deposit had been established on the Deposit Date
except that (i) such Deposit may not be
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withdrawn prior to the date seven days after the establishment thereof and (ii)
such Deposit shall mature on July 31, 1998 and bear interest as provided in
Section 2.2. The Depositary shall promptly give notice to the Escrow Agent of
receipt of each such re-deposit and the Account Number assigned thereto.
SECTION 3. Termination. This Agreement shall terminate on
the fifth Business Day after the later of the date on which (i) all of the
Deposits shall have been withdrawn and paid as provided herein without any
re-deposit and (ii) all accrued and unpaid interest on the Deposits shall have
been paid as provided herein, but in no event prior to the date on which the
Depositary shall have performed in full its obligation hereunder.
SECTION 4. Payments. All payments (including, without
limitation, those payments made in respect of Taxes (as defined and provided
for below)) made by the Depositary hereunder shall be paid in United States
Dollars and immediately available funds by wire transfer (i) in the case of
accrued interest on the Deposits payable under Section 2.2 hereof or any Final
Withdrawal, directly to the Paying Agent at Wilmington Trust Company,
Wilmington, DE, ABA# 031- 100-092, Account No. 41607-0, Attention: Monica
Henry, Reference: Continental 1997-1C-I, or to such other account as the Paying
Agent may direct from time to time in writing to the Depositary and the Escrow
Agent and (ii) in the case of any withdrawal of one or more Deposits pursuant
to a Notice of Purchase Withdrawal, directly to or as directed by the Pass
Through Trustee as specified and in the manner provided in such Notice of
Purchase Withdrawal. The Depositary hereby waives any and all rights of
set-off, combination of accounts, right of retention or similar right (whether
arising under applicable law, contract or otherwise) it may have against the
Deposits howsoever arising. All payments on or in respect of each Deposit
shall be made free and clear of and without reduction for or on account of any
and all taxes, levies or other impositions or charges (collectively, "Taxes").
However, if the Depositary or the Paying Agent (pursuant to Section 2.04 of the
Escrow and Paying Agent Agreement) shall be required by law to deduct or
withhold any Taxes from or in respect of any sum payable hereunder, the
Depositary shall (i) make such deductions or withholding, (ii) pay the full
amount deducted or withheld (including in respect of such additional amounts)
to the competent taxation authority and (iii) if the Taxes required to be
deducted or withheld are imposed by Switzerland or any political subdivision
thereof, pay such additional amounts as may be necessary in order that the
actual amount received by the designated recipient of such sum under this
Agreement or the Escrow and Paying Agent Agreement after such deduction or
withholding equals the sum it would have received had no such deduction or
withholding been required. If the date on which any payment due on any Deposit
would otherwise fall on a day which is not a Business Day, such payment shall
be made on the next succeeding Business Day, and no additional interest shall
accrue in respect of such extension.
SECTION 5. Representation and Warranties. The Depositary
hereby represents and warrants to Continental, the Escrow Agent, the Pass
Through Trustee and the Paying Agent that:
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(a) it is a bank duly organized and
validly existing in good standing under the laws of its
jurisdiction of organization and is duly qualified to conduct
banking business in the State of New York through its New
York Branch;
(b) it has full power, authority and
legal right to conduct its business and operations as
currently conducted and to enter into and perform its
obligations under this Agreement;
(c) the execution, delivery and
performance of this Agreement have been duly authorized by
all necessary corporate action on the part of it and do not
require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of
it, and such document has been duly executed and delivered by
it and constitutes its legal, valid and binding obligations
enforceable against it in accordance with the terms hereof;
(d) no authorization, consent or
approval of or other action by, and no notice to or filing
with, any United States federal or state governmental
authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or
performance by it of this Agreement, nor compliance with the
terms and provisions hereof, conflicts or will conflict with
or results or will result in a breach or violation of any of
the terms, conditions or provisions of, or will require any
consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws,
as amended, of it or any similar instrument binding on it or
any order, writ, injunction or decree of any court or
governmental authority against it or by which it or any of
its properties is bound or any indenture, mortgage or
contract or other agreement or instrument to which it is a
party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or
results or will result in the imposition of any lien upon any
of its properties; and
(f) there are no pending or, to its
knowledge, threatened actions, suits, investigations or
proceedings (whether or not purportedly on behalf of it)
against or affecting it or any of its property before or by
any court or administrative agency which, if adversely
determined, (i) would adversely affect the ability of it to
perform its obligations under this Agreement or (ii) would
call into question or challenge the validity of this
Agreement or the enforceability hereof in accordance with the
terms hereof, nor is the Depositary in default with respect
to any order of any court, governmental authority,
arbitration board or administrative agency so as to adversely
affect its ability to perform its obligations under this
Agreement.
SECTION 6. Transfer. Neither party hereto shall be entitled
to assign or otherwise transfer this Agreement (or any interest herein) other
than (in the case of the Escrow Agent) to a successor escrow agent under the
Escrow and Paying Agent Agreement, and any purported assignment in violation
thereof shall be void. This Agreement shall be binding upon
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the parties hereto and their respective successors and (in the case of the
Escrow Agent) permitted assigns. Upon the occurrence of the Transfer (as
defined below) contemplated by the Assignment and Assumption Agreement (as
defined below), the Pass Through Trustee shall (without further act) be deemed
to have transferred all of its right, title and interest in and to this
Agreement to the trustee of the Successor Trust (as defined below) and,
thereafter, the trustee of the Successor Trust shall be deemed to be the "Pass
Through Trustee" hereunder with the rights of the "Pass Through Trustee"
hereunder, and each reference herein to "Continental Airlines Pass Through
Trust 1997-1C-I-O" shall be deemed to be a reference to "Continental Airlines
Pass Through Trust 1997-1C-I-S". The Escrow Agent and the Depositary hereby
acknowledge and consent to the Transfer contemplated by the Assignment and
Assumption Agreement. For the purposes of this Section 6, "Transfer" means the
transfer contemplated by the Assignment and Assumption Agreement; "Assignment
and Assumption Agreement" means the Assignment and Assumption Agreement to be
entered into between the Pass Through Trustee and the trustee of the Successor
Trust, substantially in the form of Exhibit D to the Pass Through Trust
Agreement; and "Successor Trust" means the Continental Airlines Pass Through
Trust 1997-1C-I-S.
SECTION 7. Amendment, Etc. This Agreement may not be
amended, waived or otherwise modified except by an instrument in writing signed
by the party against whom the amendment, waiver or other modification is sought
to be enforced and by the Pass Through Trustee.
SECTION 8. Notices. Unless otherwise expressly provided
herein, any notice or other communication under this Agreement shall be in
writing (including by facsimile) and shall be deemed to be given and effective
upon receipt thereof. All notices shall be sent to (x) in the case of the
Depositary, Credit Suisse First Boston, 11 Madison Avenue, New York, NY 10010,
Attention Robert Finney and Kevin Kappell (Telecopier: (212) 325-8319) or (y)
in the case of the Escrow Agent, First Security Bank, National Association, 79
South Main Street, Salt Lake City, UT 84111, Attention: Corporate Trust
Services (Telecopier: (801) 246-5053), in each case, with a copy to the Pass
Through Trustee, Wilmington Trust Company, 1100 North Market Street,
Wilmington, DE 19890, Attention: Corporate Trust Administration (Telecopier:
(302) 651-8882) and to Continental, Continental Airlines, Inc., 2929 Allen
Parkway, Suite 2010, Houston, TX 77019, Attention: Executive Vice President and
Chief Financial Officer (Telecopier: (713) 520-6329) (or at such other address
as any such party may specify from time to time in a written notice to the
parties hereto). On or prior to the execution of this Agreement, the Escrow
Agent has delivered to the Depositary a certificate containing specimen
signatures of the representatives of the Escrow Agent who are authorized to
give notices and instructions with respect to this Agreement. The Depositary
may conclusively rely on such certificate until the Depositary receives written
notice from the Escrow Agent to the contrary.
SECTION 9. Obligations Unconditional. The Depositary hereby
acknowledges and agrees that its obligation to repay each Deposit together with
interest thereon as provided herein is absolute, irrevocable and unconditional
and constitutes a full recourse obligation of the Depositary enforceable
against it to the full extent of all of its assets and properties.
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SECTION 10. Entire Agreement. This Agreement (including all
attachments hereto) sets forth all of the promises, covenants, agreements,
conditions and understandings between the Depositary and the Escrow Agent with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 11. Governing Law. This Agreement, and the rights
and obligations of the Depositary and the Escrow Agent with respect to the
Deposits, shall be governed by, and construed in accordance with, the laws of
the State of New York and subject to the provisions of Regulation D of the
Board of Governors of the Federal Reserve System (or any successor), as the
same may be modified and supplemented and in effect from time to time.
SECTION 12. Waiver of Jury Trial Right. EACH OF THE
DEPOSITARY AND THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY
IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 13. Counterparts. This Agreement may be executed in
one or more counterparts, all of which taken together shall constitute one
instrument.
SECTION 14. Head Office Obligation. Credit Suisse First
Boston hereby agrees that the obligations of the Depositary hereunder are also
the obligations of Credit Suisse First Boston's Head Office in Zurich,
Switzerland. Accordingly, any beneficiary of this Agreement will be able to
proceed directly against Credit Suisse First Boston's Head Office in Zurich,
Switzerland if Credit Suisse First Boston's New York Branch defaults in its
obligation to such beneficiary under this Agreement.
SECTION 15. Last Deposit. Notwithstanding anything to the
contrary in this Agreement, (i) the last Deposit listed on Schedule I hereto
("Last Deposit") shall not bear interest, but otherwise shall be treated as a
"Deposit" for all purposes of this Agreement, (ii) the Escrow Agent may not
withdraw any Deposit (other than the Last Deposit) unless the Last Deposit
shall have been withdrawn prior to or concurrently with such Deposit and (iii)
for so long as the Last Deposit shall not have been withdrawn in accordance
with Section 2.3 hereof, the other Deposits shall be deemed to bear additional
interest from and including the date hereof to but excluding the date of
withdrawal of the Last Deposit in an amount equal to $1,577.57 per day
(computed on the basis of a year of twelve 30-day months).
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IN WITNESS WHEREOF, the Escrow Agent and the Depositary have
caused this Deposit Agreement to be duly executed as of the day and year first
above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
-------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
New York Branch,
as Depositary
By
-------------------------------------
Name:
Title:
By
-------------------------------------
Name:
Title:
11
Schedule I
Schedule of Deposits
(Class C-I)
Date Deposit Amount Account No. Maturity Date
---- -------------- ----------- -------------
3/21/97 $ 7,610,000 4-97 7/31/98
3/21/97 7,516,500 6-97 7/31/98
3/21/97 12,330,856 7-97 7/31/98
3/21/97 14,485,034 8-97 7/31/98
3/21/97 6,313,645 9-97 7/31/98
3/21/97 6,126,112 10-97 7/31/98
3/21/97 5,956,000 11-97 7/31/98
3/21/97 14,374,549 12-97 7/31/98
3/21/97 26,835,940 1-98 7/31/98
3/21/97 1,890,364 2-98 7/31/98
3/21/97 7,654,000 3-97 7/31/98
12
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, N.Y. 10010
Attention: Robert Finney and
Kevin Kappell
Telecopier: (212) 325-8319
Gentlemen:
Reference is made to (i) the Deposit Agreement (Class C-I) dated as of
March 21, 1997 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and Credit Suisse First Boston, New York Branch,
as Depositary (the "Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$_______, Account No. ____________.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to [________________, Account No. _____, Reference: _________] on
_________ __, 199_, upon the telephonic request of a representative of the Pass
Through Trustee.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
-------------------------------------
Name:
Title:
Dated: , 199
-------------- ---- ---
13
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, N.Y. 10010
Attention: Robert Finney and
Kevin Kappell
Telecopier: (212) 325-8319
Gentlemen:
Reference is made to (i) the Deposit Agreement (Class C-I) dated as of
March 21, 1997 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and Credit Suisse First Boston, New York Branch,
as Depositary (the "Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of all
Deposits.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposits and accrued interest thereon to the Paying Agent at Wilmington
Trust Company, ABA# 031-100-092, Account No. _____________, Reference:
Continental 1997-1.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
-------------------------------------
Name:
Title:
Dated: , 199
-------------- ---- ---
1
EXHIBIT 4.22
================================================================================
DEPOSIT AGREEMENT
(Class C-II)
Dated as of March 21, 1997
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
and
CREDIT SUISSE FIRST BOSTON,
New York Branch
as Depositary
================================================================================
2
TABLE OF CONTENTS
PAGE
SECTION 1.1 Acceptance of Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Establishment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.3 Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.4 Other Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5. Representation and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 6. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 7. Amendment, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 9. Obligations Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 10. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 12. Waiver of Jury Trial Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 14. Head Office Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule I Schedule of Deposits
EXHIBIT A NOTICE OF PURCHASE WITHDRAWAL
EXHIBIT B NOTICE OF FINAL WITHDRAWAL
3
DEPOSIT AGREEMENT (Class C-II) dated as of March 21, 1997 (as
amended, modified or supplemented from time to time, this "Agreement") between
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, as
Escrow Agent under the Escrow and Paying Agent Agreement referred to below (in
such capacity, together with its successors in such capacity, the "Escrow
Agent"), and CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, a banking institution
organized under the laws of Switzerland acting through its New York Branch, as
depositary bank (the "Depositary").
W I T N E S S E T H
WHEREAS, Continental Airlines, Inc. ("Continental") and
Wilmington Trust Company, not in its individual capacity except as otherwise
expressly provided therein, but solely as trustee (in such capacity, together
with its successors in such capacity, the "Pass Through Trustee") have entered
into a Pass Through Trust Agreement dated as of March 21, 1997 (as amended,
modified or supplemented from time to time in accordance with the terms
thereof, the "Pass Through Trust Agreement") relating to Continental Airlines
Pass Through Trust 1997-1C-II-O pursuant to which the Continental Airlines Pass
Through Trust, Series 1997-1C-II-O Certificates referred to therein (the
"Certificates") are being issued;
WHEREAS, Continental and Credit Suisse First Boston
Corporation, Morgan Stanley & Co., Incorporated, Chase Securities Inc. and
Goldman, Sachs & Co. (collectively, the "Initial Purchasers" and, together with
their respective transferees and assigns as registered owners of the
Certificates, the "Investors") have entered into a Certificate Purchase
Agreement dated as of March 12, 1997 (the "Certificate Purchase Agreement")
pursuant to which the Pass Through Trustee will issue and sell the Certificates
to the Initial Purchasers;
WHEREAS, Continental, the Pass Through Trustee, certain other
pass through trustees and certain other persons concurrently herewith are
entering into the Note Purchase Agreement, dated as of the date hereof (the
"Note Purchase Agreement"), pursuant to which the Pass Through Trustee has
agreed to acquire from time to time on or prior to the Delivery Period
Termination Date (as defined in the Note Purchase Agreement) equipment notes
(the "Equipment Notes") issued to finance the acquisition of aircraft by
Continental, as lessee or as owner, utilizing a portion of the proceeds from
the sale of the Certificates (the "Net Proceeds");
WHEREAS, the Escrow Agent, the Initial Purchasers, the Pass
Through Trustee and Wilmington Trust Company, as paying agent for the Escrow
Agent (in such capacity, together with its successors in such capacity, the
"Paying Agent") concurrently herewith are entering into an Escrow and Paying
Agent Agreement, dated as of the date hereof (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Escrow and Paying Agent Agreement"); and
WHEREAS, the Initial Purchasers and the Pass Through Trustee
intend that the Net Proceeds be held in escrow by the Escrow Agent on behalf of
the Investors pursuant to the Escrow and Paying Agent Agreement, subject to
withdrawal upon request of and proper certification by the Pass Through Trustee
for the purpose of purchasing Equipment Notes, and
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that pending such withdrawal the Net Proceeds be deposited by the Escrow Agent
with the Depositary pursuant to this Agreement, which provides for the
Depositary to pay interest for distribution to the Investors and to establish
accounts from which the Escrow Agent shall make withdrawals upon request of and
proper certification by the Pass Through Trustee.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1.1 Acceptance of Depositary. The Depositary hereby
agrees to act as depositary bank as provided herein and in connection therewith
to accept all amounts to be delivered to or held by the Depositary pursuant to
the terms of this Agreement. The Depositary further agrees to hold, maintain
and safeguard the Deposits and the Accounts (as defined below) during the term
of this Agreement in accordance with the provisions of this Agreement. The
Escrow Agent shall not have any right to withdraw, assign or otherwise transfer
moneys held in the Accounts except as permitted by this Agreement.
SECTION 1.2 Establishment of Accounts. The Escrow Agent hereby
instructs the Depositary, and the Depositary agrees, to establish the separate
deposit accounts listed on Schedule I hereto and to establish such additional
separate deposit accounts as may be required in connection with the deposits
contemplated by Section 2.4 hereof (each, an "Account" and collectively, the
"Accounts"), each in the name of the Escrow Agent and all on the terms and
conditions set forth in this Agreement.
SECTION 2.1 Deposits. The Escrow Agent shall direct the Initial
Purchasers to deposit with the Depositary on the date of this Agreement (the
"Deposit Date") in Federal (same day) funds by official check or checks or wire
or other transfer to: Credit Suisse First Boston, New York Branch, Reference:
Continental 1997-1, and the Depositary shall accept from the Initial
Purchasers, on behalf of the Escrow Agent, the sum of US$10,000,000. Upon
acceptance of such sum, the Depositary shall (i) establish each of the deposits
specified in Schedule I hereto maturing on the respective dates set forth
therein (including any deposit made pursuant to Section 2.4 hereof,
individually, a "Deposit" and, collectively, the "Deposits") and (ii) credit
each Deposit to the related Account as set forth therein. No amount shall be
deposited in any Account other than the related Deposit.
SECTION 2.2 Interest. (a) Each Deposit shall bear interest from
and including the date of deposit to but excluding the date of withdrawal at
the rate of 7.42% per annum (computed on the basis of a year of twelve 30-day
months) payable to the Paying Agent on behalf of the Escrow Agent semi-annually
in arrears on each April 1 and October 1, and on the date of the Final
Withdrawal (as defined below), commencing on October 1, 1997 (each, an
"Interest Payment Date"), all in accordance with the terms of this Agreement
(whether or not any such Deposit is withdrawn on an Interest Payment Date).
Interest accrued on any Deposit that is withdrawn pursuant to a Notice of
Purchase Withdrawal (as defined below) shall be paid on the next Interest
Payment Date, notwithstanding any intervening Final Withdrawal (as defined
below).
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3
(b) The parties hereto further acknowledge and agree that
upon any increase in the rate of interest on the Equipment Notes (as defined in
the Pass Through Trust Agreement) (such increase referred to as a "Rate
Increase") pursuant to the terms of the Registration Rights Agreement (as
defined below), the rate of interest borne by each Deposit in accordance with
Section 2.2(a) above shall increase by the amount of such Rate Increase, and
upon any subsequent decrease in the rate of interest on the Equipment Notes
(such decrease referred to as a "Rate Decrease") pursuant to the terms of the
Registration Rights Agreement, the rate of interest borne by such Deposit shall
decrease by the amount of such Rate Decrease. For the purposes of this Section
2.2(b), "Registration Rights Agreement" means the Exchange and Registration
Rights Agreement dated the date hereof among Continental, the Pass Through
Trustee, certain other pass through trustees and the Initial Purchasers.
SECTION 2.3 Withdrawals. (a) On and after the date seven days
after the establishment of any Deposit, the Escrow Agent may, by providing at
least one Business Day's prior notice of withdrawal to the Depositary in the
form of Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw not less
than the entire balance of such Deposit, except that at any time prior to the
actual withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee
may, by notice to the Depositary, cancel such withdrawal (including on the
scheduled date therefor), and thereafter such Deposit shall continue to be
maintained by the Depositary in accordance with the original terms thereof.
Following such withdrawal the balance in the related Account shall be zero and
the Depositary shall close such Account. As used herein, "Business Day" means
any day, other than a Saturday, Sunday or other day on which commercial banks
are authorized or required by law to close in New York, New York, Houston,
Texas, Wilmington, Delaware or Salt Lake City, Utah.
(b) The Escrow Agent may, by providing at least 20 days'
prior notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"Notice of Final Withdrawal"), withdraw the entire amount of all of the
remaining Deposits together with the payment by the Depositary of all accrued
and unpaid interest on such Deposits to but excluding the specified date of
withdrawal (a "Final Withdrawal"), on such date as shall be specified in such
Notice of Final Withdrawal. If a Notice of Final Withdrawal has not been given
to the Depositary on or before July 6, 1998 and there are unwithdrawn Deposits
on such date, the Depositary shall pay the amount of the Final Withdrawal to
the Paying Agent on July 31, 1998.
(c) If the Depositary receives a duly completed Notice of
Purchase Withdrawal or Notice of Final Withdrawal complying with the provisions
of this Agreement, it shall make the payments specified therein in accordance
with the provisions of this Agreement.
SECTION 2.4 Other Accounts. On the date of withdrawal of any
Deposit, the Escrow Agent, or the Pass Through Trustee on behalf of the Escrow
Agent, shall be entitled to re-deposit with the Depositary any portion thereof
and the Depositary shall accept the same for deposit hereunder. Any sums so
received for deposit shall be established as a new Deposit and credited to a
new Account, all as more fully provided in Section 2.1 hereof, and thereafter
the provisions of this Agreement shall apply thereto as fully and with the same
force and effect as if such Deposit had been established on the Deposit Date
except that (i) such Deposit may not be
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withdrawn prior to the date seven days after the establishment thereof and (ii)
such Deposit shall mature on July 31, 1998 and bear interest as provided in
Section 2.2. The Depositary shall promptly give notice to the Escrow Agent of
receipt of each such re-deposit and the Account Number assigned thereto.
SECTION 3. Termination. This Agreement shall terminate on the
fifth Business Day after the later of the date on which (i) all of the Deposits
shall have been withdrawn and paid as provided herein without any re-deposit
and (ii) all accrued and unpaid interest on the Deposits shall have been paid
as provided herein, but in no event prior to the date on which the Depositary
shall have performed in full its obligation hereunder.
SECTION 4. Payments. All payments (including, without
limitation, those payments made in respect of Taxes (as defined and provided for
below)) made by the Depositary hereunder shall be paid in United States Dollars
and immediately available funds by wire transfer (i) in the case of accrued
interest on the Deposits payable under Section 2.2 hereof or any Final
Withdrawal, directly to the Paying Agent at Wilmington Trust Company,
Wilmington, DE, ABA# 031-100-092, Account No. 41608-0, Attention: Monica Henry,
Reference: Continental 1997-1C-II, or to such other account as the Paying Agent
may direct from time to time in writing to the Depositary and the Escrow Agent
and (ii) in the case of any withdrawal of one or more Deposits pursuant to a
Notice of Purchase Withdrawal, directly to or as directed by the Pass Through
Trustee as specified and in the manner provided in such Notice of Purchase
Withdrawal. The Depositary hereby waives any and all rights of set-off,
combination of accounts, right of retention or similar right (whether arising
under applicable law, contract or otherwise) it may have against the Deposits
howsoever arising. All payments on or in respect of each Deposit shall be made
free and clear of and without reduction for or on account of any and all taxes,
levies or other impositions or charges (collectively, "Taxes"). However, if the
Depositary or the Paying Agent (pursuant to Section 2.04 of the Escrow and
Paying Agent Agreement) shall be required by law to deduct or withhold any Taxes
from or in respect of any sum payable hereunder, the Depositary shall (i) make
such deductions or withholding, (ii) pay the full amount deducted or withheld
(including in respect of such additional amounts) to the competent taxation
authority and (iii) if the Taxes required to be deducted or withheld are imposed
by Switzerland or any political subdivision thereof, pay such additional amounts
as may be necessary in order that the actual amount received by the designated
recipient of such sum under this Agreement or the Escrow and Paying Agent
Agreement after such deduction or withholding equals the sum it would have
received had no such deduction or withholding been required. If the date on
which any payment due on any Deposit would otherwise fall on a day which is not
a Business Day, such payment shall be made on the next succeeding Business Day,
and no additional interest shall accrue in respect of such extension.
SECTION 5. Representation and Warranties. The Depositary hereby
represents and warrants to Continental, the Escrow Agent, the Pass Through
Trustee and the Paying Agent that:
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(a) it is a bank duly organized and validly
existing in good standing under the laws of its jurisdiction of
organization and is duly qualified to conduct banking business in the
State of New York through its New York Branch;
(b) it has full power, authority and legal right
to conduct its business and operations as currently conducted and to
enter into and perform its obligations under this Agreement;
(c) the execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate
action on the part of it and do not require any stockholder approval,
or approval or consent of any trustee or holder of any indebtedness or
obligations of it, and such document has been duly executed and
delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms
hereof;
(d) no authorization, consent or approval of or
other action by, and no notice to or filing with, any United States
federal or state governmental authority or regulatory body is required
for the execution, delivery or performance by it of this Agreement;
(e) neither the execution, delivery or
performance by it of this Agreement, nor compliance with the terms and
provisions hereof, conflicts or will conflict with or results or will
result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended,
or bylaws, as amended, of it or any similar instrument binding on it
or any order, writ, injunction or decree of any court or governmental
authority against it or by which it or any of its properties is bound
or any indenture, mortgage or contract or other agreement or
instrument to which it is a party or by which it or any of its
properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(f) there are no pending or, to its knowledge,
threatened actions, suits, investigations or proceedings (whether or
not purportedly on behalf of it) against or affecting it or any of its
property before or by any court or administrative agency which, if
adversely determined, (i) would adversely affect the ability of it to
perform its obligations under this Agreement or (ii) would call into
question or challenge the validity of this Agreement or the
enforceability hereof in accordance with the terms hereof, nor is the
Depositary in default with respect to any order of any court,
governmental authority, arbitration board or administrative agency so
as to adversely affect its ability to perform its obligations under
this Agreement.
SECTION 6. Transfer. Neither party hereto shall be entitled to
assign or otherwise transfer this Agreement (or any interest herein) other than
(in the case of the Escrow Agent) to a successor escrow agent under the Escrow
and Paying Agent Agreement, and any purported assignment in violation thereof
shall be void. This Agreement shall be binding upon
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the parties hereto and their respective successors and (in the case of the
Escrow Agent) permitted assigns. Upon the occurrence of the Transfer (as
defined below) contemplated by the Assignment and Assumption Agreement (as
defined below), the Pass Through Trustee shall (without further act) be deemed
to have transferred all of its right, title and interest in and to this
Agreement to the trustee of the Successor Trust (as defined below) and,
thereafter, the trustee of the Successor Trust shall be deemed to be the "Pass
Through Trustee" hereunder with the rights of the "Pass Through Trustee"
hereunder, and each reference herein to "Continental Airlines Pass Through
Trust 1997-1C-II-O" shall be deemed to be a reference to "Continental Airlines
Pass Through Trust 1997-1C-II-S". The Escrow Agent and the Depositary hereby
acknowledge and consent to the Transfer contemplated by the Assignment and
Assumption Agreement. For the purposes of this Section 6, "Transfer" means the
transfer contemplated by the Assignment and Assumption Agreement; "Assignment
and Assumption Agreement" means the Assignment and Assumption Agreement to be
entered into between the Pass Through Trustee and the trustee of the Successor
Trust, substantially in the form of Exhibit D to the Pass Through Trust
Agreement; and "Successor Trust" means the Continental Airlines Pass Through
Trust 1997-1C-II-S.
SECTION 7. Amendment, Etc. This Agreement may not be amended,
waived or otherwise modified except by an instrument in writing signed by the
party against whom the amendment, waiver or other modification is sought to be
enforced and by the Pass Through Trustee.
SECTION 8. Notices. Unless otherwise expressly provided
herein, any notice or other communication under this Agreement shall be in
writing (including by facsimile) and shall be deemed to be given and effective
upon receipt thereof. All notices shall be sent to (x) in the case of the
Depositary, Credit Suisse First Boston, 11 Madison Avenue, New York, NY 10010,
Attention Robert Finney and Kevin Kappell (Telecopier: (212) 325-8319) or (y)
in the case of the Escrow Agent, First Security Bank, National Association, 79
South Main Street, Salt Lake City, UT 84111, Attention: Corporate Trust
Services (Telecopier: (801) 246-5053), in each case, with a copy to the Pass
Through Trustee, Wilmington Trust Company, 1100 North Market Street,
Wilmington, DE 19890, Attention: Corporate Trust Administration (Telecopier:
(302) 651-8882) and to Continental, Continental Airlines, Inc., 2929 Allen
Parkway, Suite 2010, Houston, TX 77019, Attention: Executive Vice President and
Chief Financial Officer (Telecopier: (713) 520-6329) (or at such other address
as any such party may specify from time to time in a written notice to the
parties hereto). On or prior to the execution of this Agreement, the Escrow
Agent has delivered to the Depositary a certificate containing specimen
signatures of the representatives of the Escrow Agent who are authorized to
give notices and instructions with respect to this Agreement. The Depositary
may conclusively rely on such certificate until the Depositary receives written
notice from the Escrow Agent to the contrary.
SECTION 9. Obligations Unconditional. The Depositary hereby
acknowledges and agrees that its obligation to repay each Deposit together with
interest thereon as provided herein is absolute, irrevocable and unconditional
and constitutes a full recourse obligation of the Depositary enforceable
against it to the full extent of all of its assets and properties.
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SECTION 10. Entire Agreement. This Agreement (including all
attachments hereto) sets forth all of the promises, covenants, agreements,
conditions and understandings between the Depositary and the Escrow Agent with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 11. Governing Law. This Agreement, and the rights and
obligations of the Depositary and the Escrow Agent with respect to the
Deposits, shall be governed by, and construed in accordance with, the laws of
the State of New York and subject to the provisions of Regulation D of the
Board of Governors of the Federal Reserve System (or any successor), as the
same may be modified and supplemented and in effect from time to time.
SECTION 12. Waiver of Jury Trial Right. EACH OF THE DEPOSITARY
AND THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY IRREVOCABLY
WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 13. Counterparts. This Agreement may be executed in one
or more counterparts, all of which taken together shall constitute one
instrument.
SECTION 14. Head Office Obligation. Credit Suisse First Boston
hereby agrees that the obligations of the Depositary hereunder are also the
obligations of Credit Suisse First Boston's Head Office in Zurich, Switzerland.
Accordingly, any beneficiary of this Agreement will be able to proceed directly
against Credit Suisse First Boston's Head Office in Zurich, Switzerland if
Credit Suisse First Boston's New York Branch defaults in its obligation to such
beneficiary under this Agreement.
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have
caused this Deposit Agreement to be duly executed as of the day and year first
above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
-------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
New York Branch, as Depositary
By
-------------------------------------
Name:
Title:
By
-------------------------------------
Name:
Title:
10
Schedule I
Schedule of Deposits
(Class C-II)
Date Deposit Amount Account No. Maturity Date
---- -------------- ----------- -------------
3/21/97 $10,000,000 2-98 7/31/98
11
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, N.Y. 10010
Attention: Robert Finney and
Kevin Kappell
Telecopier: (212) 325-8319
Gentlemen:
Reference is made to (i) the Deposit Agreement (Class C-II)
dated as of March 21, 1997 (the "Deposit Agreement") between First Security
Bank, National Association, as Escrow Agent, and Credit Suisse First Boston,
New York Branch, as Depositary (the "Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement,
the undersigned hereby requests the withdrawal of the entire amount of the
Deposit, $_______, Account No. ____________.
The undersigned hereby directs the Depositary to pay the
proceeds of the Deposit to [________________, Account No. _____, Reference:
_________] on _________ __, 199_, upon the telephonic request of a
representative of the Pass Through Trustee.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
-------------------------------------
Name:
Title:
Dated: , 199
------- --- --
12
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, N.Y. 10010
Attention: Robert Finney and
Kevin Kappell
Telecopier: (212) 325-8319
Gentlemen:
Reference is made to (i) the Deposit Agreement (Class C-II)
dated as of March 21, 1997 (the "Deposit Agreement") between First Security
Bank, National Association, as Escrow Agent, and Credit Suisse First Boston,
New York Branch, as Depositary (the "Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement,
the undersigned hereby requests the withdrawal of the entire amount of all
Deposits.
The undersigned hereby directs the Depositary to pay the
proceeds of the Deposits and accrued interest thereon to the Paying Agent at
Wilmington Trust Company, ABA# 031-100-092, Account No. _____________,
Reference: Continental 1997-1.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
-------------------------------------
Name:
Title:
Dated: , 199
------- --- --
1
EXHIBIT 4.23
================================================================================
ESCROW AND PAYING AGENT AGREEMENT
(Class A)
Dated as of March 21, 1997
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
CREDIT SUISSE FIRST BOSTON CORPORATION
MORGAN STANLEY & CO. INCORPORATED
CHASE SECURITIES INC.
and
GOLDMAN, SACHS & CO.
as Initial Purchasers
WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Continental Airlines Pass Through Trust 1997-1A-O
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
================================================================================
2
TABLE OF CONTENTS
Page
----
SECTION 1. Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.01. Appointment of Escrow Agent . . . . . . . . . . . . . . . . . . . 2
Section 1.02. Instruction; Etc. . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts . . . . . . . 4
Section 1.04. Payments to Receiptholders . . . . . . . . . . . . . . . . . . . 5
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt . . . . . . . 5
Section 1.06. Additional Escrow Amounts . . . . . . . . . . . . . . . . . . . . 6
Section 1.07. Resignation or Removal of Escrow Agent . . . . . . . . . . . . . 6
Section 1.08. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.09. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2. Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.01. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . 7
Section 2.02. Establishment of Paying Agent Account . . . . . . . . . . . . . . 8
Section 2.03. Payments from Paying Agent Account . . . . . . . . . . . . . . . 8
Section 2.04. Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.05. Resignation or Removal of Paying Agent . . . . . . . . . . . . . 10
Section 2.06. Notice of Final Withdrawal . . . . . . . . . . . . . . . . . . . 11
SECTION 3. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4. Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5. Representations and Warranties of the Escrow Agent . . . . . . . . . . . 12
SECTION 6. Representations and Warranties of the Paying Agent . . . . . . . . . . . 14
SECTION 7. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8. Amendment, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 10. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 13. Waiver of Jury Trial Right . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 14. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3
ESCROW AND PAYING AGENT AGREEMENT (Class A) dated as of March
21, 1997 (as amended, modified or supplemented from time to time, this
"Agreement") among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, as Escrow Agent (in such capacity, together with its
successors in such capacity, the "Escrow Agent"); CREDIT SUISSE FIRST BOSTON
CORPORATION, MORGAN STANLEY & CO. INCORPORATED, CHASE SECURITIES INC. and
GOLDMAN, SACHS & CO., as Initial Purchasers of the below referred to
Certificates (the "Initial Purchasers" and together with their respective
transferees and assigns as registered owners of the Certificates, the
"Investors") under the Certificate Purchase Agreement referred to below;
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual
capacity except as otherwise expressly provided herein, but solely as trustee
(in such capacity, together with its successors in such capacity, the "Pass
Through Trustee") under the Pass Through Trust Agreement referred to below; and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as paying agent
hereunder (in such capacity, together with its successors in such capacity, the
"Paying Agent").
W I T N E S S E T H
WHEREAS, Continental Airlines, Inc. ("Continental") and the
Pass Through Trustee have entered into a Pass Through Trust Agreement, dated as
of March 21, 1997 (as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Pass Through Trust Agreement") relating
to Continental Airlines Pass Through Trust 1997-1A-O (the "Pass Through Trust")
pursuant to which the Continental Airlines Pass Through Trust, Series 1997-
1A-O Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Continental and the Initial Purchasers have entered
into a Certificate Purchase Agreement dated as of March 12, 1997 (as amended,
modified or supplemented from time to time in accordance with the terms
thereof, the "Certificate Purchase Agreement") pursuant to which the Pass
Through Trustee will issue and sell the Certificates to the Initial Purchasers;
WHEREAS, Continental, the Pass Through Trustee, certain other
pass through trustees and certain other persons concurrently herewith are
entering into the Note Purchase Agreement, dated as of the date hereof (the
"Note Purchase Agreement"), pursuant to which the Pass Through Trustee has
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agreed to acquire from time to time on or prior to the Delivery Period
Termination Date (as defined in the Note Purchase Agreement) equipment notes
(the "Equipment Notes") issued to finance the acquisition of aircraft by
Continental, as lessee or as owner, utilizing a portion of the proceeds from
the sale of the Certificates (the "Net Proceeds");
WHEREAS, the Initial Purchasers and the Pass Through Trustee
intend that the Net Proceeds be held in escrow by the Escrow Agent on behalf of
the Investors, subject to withdrawal upon request by the Pass Through Trustee
and satisfaction of the conditions set forth in the Note Purchase Agreement for
the purpose of purchasing Equipment Notes, and that pending such withdrawal the
Net Proceeds be deposited on behalf of the Escrow Agent with Credit Suisse
First Boston, a Swiss bank acting through its New York branch, as Depositary
(the "Depositary") under the Deposit Agreement, dated as of the date hereof
between the Depositary and the Escrow Agent relating to the Pass Through Trust
(as amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Deposit Agreement") pursuant to which, among other things,
the Depositary will pay interest for distribution to the Investors and
establish accounts from which the Escrow Agent shall make withdrawals upon
request of and proper certification by the Pass Through Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent
to pay amounts required to be distributed to the Investors in accordance with
this Agreement; and
WHEREAS, capitalized terms used but not defined herein shall
have the meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Escrow Agent.
Section 1.01. Appointment of Escrow Agent. Each of the
Initial Purchasers, for and on behalf of each of the Investors, hereby
irrevocably appoints, authorizes and directs the Escrow Agent to act as escrow
agent and fiduciary hereunder and under the Deposit Agreement for such specific
purposes and with such powers as are specifically delegated to the Escrow
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3
Agent by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto. Any and all money received and held by the
Escrow Agent under this Agreement or the Deposit Agreement shall be held in
escrow by the Escrow Agent in accordance with the terms of this Agreement.
This Agreement is irrevocable and the Investors' rights with respect to any
monies received and held in escrow by the Escrow Agent under this Agreement or
the Deposit Agreement shall only be as provided under the terms and conditions
of this Agreement and the Deposit Agreement. The Escrow Agent (which term as
used in this sentence shall include reference to its affiliates and its own and
its affiliates' officers, directors, employees and agents): (a) shall have no
duties or responsibilities except those expressly set forth in this Agreement;
(b) shall not be responsible to the Pass Through Trustee or the Investors for
any recitals, statements, representations or warranties of any person other
then itself contained in this Agreement or the Deposit Agreement or for the
failure by the Pass Through Trustee, Investors or any other person or entity
(other than the Escrow Agent) to perform any of its obligations hereunder
(whether or not the Escrow Agent shall have any knowledge thereof); and (c)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or provided for herein or in connection herewith, except for its own
willful misconduct or gross negligence (or simple negligence in connection with
the handling of funds).
Section 1.02. Instruction; Etc. The Initial Purchasers,
for and on behalf of each of the Investors, hereby irrevocably instruct the
Escrow Agent, and the Escrow Agent agrees, (a) to enter into the Deposit
Agreement, (b) to appoint the Paying Agent as provided in this Agreement, (c)
upon receipt at any time and from time to time prior to the Termination Date
(as defined below) of a certificate substantially in the form of Exhibit B
hereto (a "Withdrawal Certificate") executed by the Pass Through Trustee,
together with an attached Notice of Purchase Withdrawal in substantially the
form of Exhibit A to the Deposit Agreement duly completed by the Pass Through
Trustee (the "Applicable Notice of Purchase Withdrawal" and the withdrawal to
which it relates, a "Purchase Withdrawal"), immediately to execute the
Applicable Notice of Purchase Withdrawal as Escrow Agent and transmit it to the
Depositary by facsimile transmission in accordance with the Deposit Agreement;
provided that, upon the request of the Pass Through Trustee after such
transmission, the Escrow Agent shall cancel such Applicable Notice of Purchase
Withdrawal, and (d) if there are any undrawn Deposits (as defined
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4
in the Deposit Agreement) on the "Termination Date", which shall mean the
earlier of (i) July 1, 1998 and (ii) the day on which the Escrow Agent receives
notice from the Pass Through Trustee that the Pass Through Trustee's obligation
to purchase Equipment Notes under the Note Purchase Agreement has terminated,
to give notice to the Depositary (with a copy to the Paying Agent)
substantially in the form of Exhibit B to the Deposit Agreement requesting a
withdrawal of all of the remaining Deposits, together with accrued and unpaid
interest on such Deposits to the date of withdrawal, on the 35th day after the
date that such notice of withdrawal is given to the Depositary (or, if not a
Business Day, on the next succeeding Business Day) (a "Final Withdrawal"),
provided that if the day scheduled for the Final Withdrawal in accordance with
the foregoing is within 10 days before or after a Regular Distribution Date,
then the Escrow Agent shall request that such requested Final Withdrawal be
made on such Regular Distribution Date (the date of such requested withdrawal,
the "Final Withdrawal Date"). If for any reason the Escrow Agent shall have
failed to give the Final Withdrawal Notice to the Depositary on or before July
6, 1998, and there are unwithdrawn Deposits on such date, the Final Withdrawal
Date shall be deemed to be July 31, 1998.
Section 1.03. Initial Escrow Amount; Issuance of Escrow
Receipts. The Escrow Agent hereby directs the Initial Purchasers to, and the
Initial Purchasers hereby acknowledge that on the date hereof they shall,
irrevocably deliver to the Depositary on behalf of the Escrow Agent, an amount
in U.S. dollars ("Dollars") and immediately available funds equal to
$437,876,000 for deposit on behalf of the Escrow Agent with the Depositary in
accordance with Section 2.1 of the Deposit Agreement. The Initial Purchasers
hereby instruct the Escrow Agent, upon receipt of such sum from the Initial
Purchasers, to confirm such receipt by executing and delivering to the Pass
Through Trustee an Escrow Receipt in the form of Exhibit A hereto (an "Escrow
Receipt"), (a) to be affixed by the Pass Through Trustee to each Certificate
and (b) to evidence the same percentage interest (the "Escrow Interest") in the
Account Amounts as the Fractional Undivided Interest in the Pass Through Trust
evidenced by the Certificate to which it is to be affixed. The Escrow Agent
shall provide to the Pass Through Trustee for attachment to each Certificate
newly issued under and in accordance with the Pass Through Trust Agreement an
executed Escrow Receipt as the Pass Through Trustee may from time to time
request of the Escrow Agent. Each Escrow Receipt shall be
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registered by the Escrow Agent in a register (the "Register") maintained by the
Escrow Agent in the same name and same manner as the Certificate to which it is
attached and may not thereafter be detached from such Certificate to which it
is to be affixed prior to the distribution of the Final Withdrawal (the "Final
Distribution"). After the Final Distribution, no Escrow Receipts shall be
issued and the Pass Through Trustee shall request the return to the Escrow
Agent for cancellation of all outstanding Escrow Receipts.
Section 1.04. Payments to Receiptholders. All payments and
distributions made to holders of an Escrow Receipt (collectively
"Receiptholders") in respect of the Escrow Receipt shall be made only from
amounts deposited in the Paying Agent Account ("Account Amounts"). Each
Receiptholder, by its acceptance of an Escrow Receipt, agrees that (a) it will
look solely to the Account Amounts for any payment or distribution due to such
Receiptholder pursuant to the terms of the Escrow Receipt and this Agreement
and (b) it will have no recourse to Continental, the Pass Through Trustee, the
Paying Agent or the Escrow Agent, except as expressly provided herein or in the
Pass Through Trust Agreement. No Receiptholder shall have any right to vote or
in any manner otherwise control the operation and management of the Paying
Agent Account or the obligations of the parties hereto, nor shall anything set
forth herein, or contained in the terms of the Escrow Receipt, be construed so
as to constitute the Receiptholders from time to time as partners or members of
an association.
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow
Receipt. If (a) any mutilated Escrow Receipt is surrendered to the Escrow
Agent or the Escrow Agent receives evidence to its satisfaction of the
destruction, loss or theft of any Escrow Receipt and (b)Ethere is delivered to
the Escrow Agent and the Pass Through Trustee such security, indemnity or bond,
as may be required by them to hold each of them harmless, then, absent notice
to the Escrow Agent or the Pass Through Trustee that such destroyed, lost or
stolen Escrow Receipt has been acquired by a bona fide purchaser, and provided
that the requirements of Section 8-405 of the Uniform Commercial Code in effect
in any applicable jurisdiction are met, the Escrow Agent shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Escrow Receipt, a new Escrow Receipt or Escrow
Receipts and of like Escrow Interest and bearing a number not contemporaneously
outstanding.
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In connection with the issuance of any new Escrow Receipt
under this Section 1.05, the Escrow Agent may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Pass Through Trustee and the Escrow Agent) connected therewith.
Any duplicative Escrow Receipt issued pursuant to this Section
1.05 shall constitute conclusive evidence of the appropriate Escrow Interest in
the Account Amounts, as if originally issued, whether or not the lost, stolen
or destroyed Escrow Receipt shall be found at any time.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Escrow
Receipts.
Section 1.06. Additional Escrow Amounts. On the date of
any Purchase Withdrawal, the Pass Through Trustee may re-deposit with the
Depositary some or all of the amounts so withdrawn in accordance with Section
2.4 of the Deposit Agreement.
Section 1.07. Resignation or Removal of Escrow Agent.
Subject to the appointment and acceptance of a successor Escrow Agent as
provided below, the Escrow Agent may resign at any time by giving 30 days'
prior written notice thereof to the Investors, but may not otherwise be removed
except for cause by the written consent of the Investors with respect to
Investors representing Escrow Interests aggregating not less than a majority in
interest in the Account Amounts (an "Action of Investors"). Upon any such
resignation or removal, the Investors, by an Action of Investors, shall have
the right to appoint a successor Escrow Agent. If no successor Escrow Agent
shall have been so appointed and shall have accepted such appointment within 30
days after the retiring Escrow Agent's giving of notice of resignation or the
removal of the retiring Escrow Agent, then the retiring Escrow Agent may
appoint a successor Escrow Agent, which shall be a bank which has an office in
the United States with a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Escrow Agent hereunder by a successor
Escrow Agent, such successor Escrow
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Agent shall enter into such documents as the Pass Through Trustee shall require
and shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Escrow Agent, and the retiring Escrow
Agent shall be discharged from its duties and obligations hereunder. No
resignation or removal of the Escrow Agent shall be effective unless a written
confirmation shall have been obtained from each of Moody's Investors Service,
Inc. and Standard & Poor's Rating Group, a division of McGraw-Hill Inc., that
the replacement of the Escrow Agent with the successor Escrow Agent will not
result in (a) a reduction of the rating for the Certificates below the then
current rating for the Certificates or (b) a withdrawal or suspension of the
rating of the Certificates.
Section 1.08. Persons Deemed Owners. Prior to due
presentment of a Certificate for registration of transfer, the Escrow Agent and
the Paying Agent may treat the Person in whose name any Escrow Receipt is
registered (as of the day of determination) as the owner of such Escrow Receipt
for the purpose of receiving distributions pursuant to this Agreement and for
all other purposes whatsoever, and none of the Escrow Agent or the Paying Agent
shall be affected by any notice to the contrary.
Section 1.09. Further Assurances. The Escrow Agent agrees
to take such actions, and execute such other documents, as may be reasonably
requested by the Pass Through Trustee in order to effectuate the purposes of
this Agreement and the performance by the Escrow Agent of its obligations
hereunder.
SECTION 2. Paying Agent.
Section 2.01. Appointment of Paying Agent. The Escrow
Agent hereby irrevocably appoints and authorizes the Paying Agent to act as its
paying agent hereunder, for the benefit of the Investors, for such specific
purposes and with such powers as are specifically delegated to the Paying Agent
by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto. Any and all money received and held by the
Paying Agent under this Agreement or the Deposit Agreement shall be held in the
Paying Agent Account (as defined below) for the benefit of the Investors. The
Paying Agent (which term as used in this sentence shall include reference to
its affiliates and its own and its affiliates' officers, directors, employees
and
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agents): (a) shall have no duties or responsibilities except those expressly
set forth in this Agreement, and shall not by reason of this Agreement be a
trustee for the Escrow Agent; (b) shall not be responsible to the Escrow Agent
for any recitals, statements, representations or warranties of any person other
then itself contained in this Agreement or for the failure by the Escrow Agent
or any other person or entity (other than the Paying Agent) to perform any of
its obligations hereunder (whether or not the Paying Agent shall have any
knowledge thereof); and (c) shall not be responsible for any action taken or
omitted to be taken by it hereunder or provided for herein or in connection
herewith, except for its own willful misconduct or gross negligence (or simple
negligence in connection with the handling of funds).
Section 2.02. Establishment of Paying Agent Account. The
Paying Agent shall establish a deposit account (the "Paying Agent Account") at
Wilmington Trust Company in the name of the Escrow Agent. It is expressly
understood by the parties hereto that the Paying Agent is acting as the paying
agent of the Escrow Agent hereunder and that no amounts on deposit in the
Paying Agent Account constitute part of the Trust Property.
Section 2.03. Payments from Paying Agent Account. The
Escrow Agent hereby irrevocably instructs the Paying Agent, and the Paying
Agent agrees to act, as follows:
(a) on each Interest Payment Date (as defined in
the Deposit Agreement) or as soon thereafter as the Paying Agent has confirmed
receipt in the Paying Agent Account from the Depositary of any amount in
respect of accrued interest on the Deposits, the Paying Agent shall distribute
out of the Paying Agent Account the entire amount deposited therein by the
Depositary. There shall be so distributed to each Receiptholder of record on
the 15th day (whether or not a Business Day) preceding such Interest Payment
Date by check mailed to such Receiptholder, at the address appearing in the
Register, such Receiptholder's pro rata share (based on the Escrow Interest in
the Account Amounts held by such Receiptholder) of the total amount of interest
deposited by the Depositary in the Paying Agent Account on such date, except
that, with respect to Escrow Receipts registered on the Record Date in the name
of DTC, such distribution shall be made by wire transfer in immediately
available funds to the account designated by DTC.
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(b) upon the confirmation by the Paying Agent of
receipt in the Paying Agent Account from the Depositary of any amount in
respect of the Final Withdrawal, the Paying Agent shall forthwith distribute
the entire amount of the Final Withdrawal deposited therein by the Depositary.
There shall be so distributed to each Receiptholder of record on the 15th day
(whether or not a Business Day) preceding the Final Withdrawal Date by check
mailed to such Receiptholder, at the address appearing in the Register, such
Receiptholder's pro rata share (based on the Escrow Interest in the Account
Amounts held by such Receiptholder) of the total amount in the Paying Agent
Account on account of such Final Withdrawal, except that, with respect to
Escrow Receipts registered on the Record Date in the name of DTC, such
distribution shall be made by wire transfer in immediately available funds to
the account designated by DTC.
(c) If any payment of interest or principal in
respect of the Final Withdrawal is not received by the Paying Agent within five
days of the applicable date when due, then it shall be distributed to
Receiptholders after actual receipt by the Paying Agent on the same basis as a
Special Payment is distributed under the Pass Through Trust Agreement.
(d) the Paying Agent shall include with any check
mailed pursuant to this Section any notice required to be distributed under the
Pass Through Trust Agreement that is furnished to the Paying Agent by the Pass
Through Trustee.
Section 2.04. Withholding Taxes. The Paying Agent shall
exclude and withhold from each distribution of accrued interest on the Deposits
and any amount in respect of the Final Withdrawal any and all withholding taxes
applicable thereto as required by law. In addition, the Paying Agent shall
remit or cause to be remitted such amounts as would be required by Section 1446
of the Internal Revenue Code of 1986, as amended, as if the agreements of the
Initial Purchasers set forth in this Agreement were characterized as a
partnership engaged in a U.S. trade or business for U.S. federal income tax
purposes and shall withhold or cause to be withheld such amounts from amounts
distributable to or for the benefit of Receiptholders or beneficial owners of
interests in Escrow Receipts that are not United States persons within the
meaning of section 7701(a)(30) of the Internal Revenue Code of 1986, as amended
("Non-U.S. Persons"). In this regard, the Paying Agent shall cause the
appropriate withholding agent to withhold with respect to such distributions in
the manner
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contemplated by Section 10.04 of Revenue Procedure 89-31 and Treasury
Regulation 1.1445-8(b)(3)) by filing a notice with the National Association of
Securities Dealers, Inc. substantially in the form of Exhibits C and D on or
before the date 10 days prior to the Record Date. The Paying Agent shall mail
such notice to the National Association of Securities Dealers no later than the
date 15 days prior to the Record Date. Investors that are not United States
Persons agree to furnish a taxpayer identification number ("TIN") to the Paying
Agent and the Paying Agent shall provide such TINs to the appropriate U.S.
withholding agent. The Paying Agent agrees to act as such withholding agent
(except to the extent contemplated above with respect to withholding amounts as
if the agreements of the Initial Purchasers as set forth in this Agreement were
characterized as a business engaged in a U.S. trade or business for U.S.
federal income tax purposes) and, in connection therewith, whenever any present
or future taxes or similar charges are required to be withheld with respect to
any amounts payable in respect of the Deposits or the escrow amounts, to
withhold such amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Receiptholders, that it will file any
necessary withholding tax returns or statements when due, and that, as promptly
as possible after the payment thereof, it will deliver to each such
Receiptholder appropriate documentation showing the payment thereof, together
with such additional documentary evidence as such Receiptholder may reasonably
request from time to time. The Paying Agent agrees to file any other
information reports as it may be required to file under United States law.
Each Receiptholder or beneficial owner of an interest in an Escrow Receipt that
is a Non-U.S. Person, by its acceptance of an Escrow Receipt or a beneficial
interest therein, agrees to indemnify and hold harmless the Escrow Agent and
the Paying Agent from and against any improper failure to withhold Taxes from
amounts payable to it or for its benefit other than an improper failure
attributable to the gross negligence or willful misconduct of the Escrow Agent
or the Paying Agent, as the case may be.
Section 2.05. Resignation or Removal of Paying Agent.
Subject to the appointment and acceptance of a successor Paying Agent as
provided below, the Paying Agent may resign at any time by giving 30 days'
prior written notice thereof to the Escrow Agent, but may not otherwise be
removed except for cause by the Escrow Agent. Upon any such resignation or
removal, the Escrow Agent shall have the right to appoint a successor Paying
Agent. If no successor Paying Agent shall have been so appointed and
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shall have accepted such appointment within 30 days after the retiring Paying
Agent's giving of notice of resignation or the removal of the retiring Paying
Agent, then the retiring Paying Agent may appoint a successor Paying Agent,
which shall be a bank which has an office in the United States with a combined
capital and surplus of at least $100,000,000. Upon the acceptance of any
appointment as Paying Agent hereunder by a successor Paying Agent, such
successor Paying Agent shall enter into such documents as the Escrow Agent
shall require and shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Paying Agent, and the
retiring Paying Agent shall be discharged from its duties and obligations
hereunder.
Section 2.06. Notice of Final Withdrawal. Promptly after
receipt by the Paying Agent of notice that the Escrow Agent has requested a
Final Withdrawal or that a Final Withdrawal will be made, the Paying Agent
shall cause notice of the distribution of the Final Withdrawal to be mailed to
each of the Receiptholders at its address as it appears in the Register. Such
notice shall be mailed not less than 20 days prior to the Final Withdrawal
Date. Such notice shall set forth:
(i) the Final Withdrawal Date and the date for
determining Receiptholders of record who shall be
entitled to receive distributions in respect of the
Final Withdrawal,
(ii) the amount of the payment in respect of the Final
Withdrawal for each $1,000 face amount Certificate
(based on information provided by the Pass Through
Trustee) and the amount thereof constituting unused
Deposits and interest thereon, and
(iii) if the Final Withdrawal Date is the same date as a
Regular Distribution Date, the total amount to be
received on such date for each $1,000 face amount
Certificate (based on information provided by the
Pass Through Trustee).
Such mailing may include any notice required to be given to
Certificateholders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the
instructions in Section 4 of the Deposit Agreement that all
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amounts payable to the Escrow Agent under the Deposit Agreement be paid by the
Depositary directly to the Paying Agent or the Pass Through Trustee (depending
on the circumstances), the Escrow Agent receives any payment thereunder, then
the Escrow Agent shall forthwith pay such amount in Dollars and in immediately
available funds by wire transfer to (a) in the case of a payment of accrued
interest on the Deposits or any Final Withdrawal, directly to the Paying Agent
Account and (b) in the case of any Purchase Withdrawal, directly to the Pass
Through Trustee or its designee as specified and in the manner provided in the
Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives any
and all rights of set-off, combination of accounts, right of retention or
similar right (whether arising under applicable law, contract or otherwise) it
may have against amounts payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take
such other actions under or in respect of the Deposit Agreement (including,
without limitation, the enforcement of the obligations of the Depositary
thereunder) as the Investors, by an Action of Investors, may from time to time
request.
SECTION 5. Representations and Warranties of the Escrow
Agent. The Escrow Agent represents and warrants to Continental, the Investors,
the Paying Agent and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized
and validly existing in good standing under the laws
of the United States of America;
(ii) it has full power, authority and legal right to
conduct its business and operations as currently
conducted and to enter into and perform its
obligations under this Agreement and the Deposit
Agreement;
(iii) the execution, delivery and performance of each of
this Agreement and the Deposit Agreement have been
duly authorized by all necessary corporate action on
the part of it and do not require any stockholder
approval, or approval or consent of any trustee or
holder of any indebtedness or obligations of it, and
each such document has been duly executed and
delivered by
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it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with
the terms hereof or thereof except as such
enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other
similar laws or equitable principles of general
application to or affecting the enforcement of
creditors' rights generally (regardless of whether
such enforceability is considered in a proceeding in
equity or at law);
(iv) no authorization, consent or approval of or other
action by, and no notice to or filing with, any
United States federal or state governmental authority
or regulatory body is required for the execution,
delivery or performance by it of this Agreement or
the Deposit Agreement;
(v) neither the execution, delivery or performance by it
of this Agreement or the Deposit Agreement, nor
compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results
or will result in a breach or violation of any of the
terms, conditions or provisions of, or will require
any consent or approval under, any law, governmental
rule or regulation or the charter documents, as
amended, or bylaws, as amended, of it or any similar
instrument binding on it or any order, writ,
injunction or decree of any court or governmental
authority against it or by which it or any of its
properties is bound or any indenture, mortgage or
contract or other agreement or instrument to which it
is a party or by which it or any of its properties is
bound, or constitutes or will constitute a default
thereunder or results or will result in the
imposition of any lien upon any of its properties;
and
(vi) there are no pending or, to its knowledge, threatened
actions, suits, investigations or proceedings
(whether or not purportedly on behalf of it) against
or affecting it or any of its property before or by
any court or administrative agency which, if
adversely determined, (A) would
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adversely affect the ability of it to perform its
obligations under this Agreement or the Deposit
Agreement or (B) would call into question or
challenge the validity of this Agreement or the
Deposit Agreement or the enforceability hereof or
thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with
respect to any order of any court, governmental
authority, arbitration board or administrative agency
so as to adversely affect its ability to perform its
obligations under this Agreement or the Deposit
Agreement.
SECTION 6. Representations and Warranties of the Paying
Agent. The Paying Agent represents and warrants to Continental, the Investors,
the Escrow Agent and the Pass Through Trustee as follows:
(i) it is a Delaware banking company duly organized and
validly existing in good standing under the laws of
its jurisdiction of incorporation;
(ii) it has full power, authority and legal right to
conduct its business and operations as currently
conducted and to enter into and perform its
obligations under this Agreement;
(iii) the execution, delivery and performance of this
Agreement has been duly authorized by all necessary
corporate action on the part of it and does not
require any stockholder approval, or approval or
consent of any trustee or holder of any indebtedness
or obligations of it, and such document has been duly
executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable
against it in accordance with the terms hereof except
as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other
similar laws or equitable principles of general
application to or affecting the enforcement of
creditors' rights generally (regardless of whether
such enforceability is considered in a proceeding in
equity or at law);
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(iv) no authorization, consent or approval of or other
action by, and no notice to or filing with, any
United States federal or state governmental authority
or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(v) neither the execution, delivery or performance by it
of this Agreement, nor compliance with the terms and
provisions hereof, conflicts or will conflict with or
results or will result in a breach or violation of
any of the terms, conditions or provisions of, or
will require any consent or approval under, any law,
governmental rule or regulation or the charter
documents, as amended, or bylaws, as amended, of it
or any similar instrument binding on it or any order,
writ, injunction or decree of any court or
governmental authority against it or by which it or
any of its properties is bound or any indenture,
mortgage or contract or other agreement or instrument
to which it is a party or by which it or any of its
properties is bound, or constitutes or will
constitute a default thereunder or results or will
result in the imposition of any lien upon any of its
properties; and
(vi) there are no pending or, to its knowledge, threatened
actions, suits, investigations or proceedings
(whether or not purportedly on behalf of it) against
or affecting it or any of its property before or by
any court or administrative agency which, if
adversely determined, (A) would adversely affect the
ability of it to perform its obligations under this
Agreement or (B) would call into question or
challenge the validity of this Agreement or the
enforceability hereof in accordance with the terms
hereof, nor is the Paying Agent in default with
respect to any order of any court, governmental
authority, arbitration board or administrative agency
so as to adversely affect its ability to perform its
obligations under this Agreement.
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SECTION 7. Indemnification. Except for actions
expressly required of the Escrow Agent or the Paying Agent hereunder, each of
the Escrow Agent and the Paying Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall have been indemnified by
the party requesting such action in a manner reasonably satisfactory to it
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. In the event Continental
requests any amendment to any Operative Agreement (as defined in the Note
Purchase Agreement), the Pass Through Trustee agrees to pay all reasonable fees
and expenses (including, without limitation, fees and disbursements of counsel)
of the Escrow Agent and the Paying Agent in connection therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass
Through Trustee and approval by an Action of Investors, the Escrow Agent shall
enter into an amendment to this Agreement, so long as such amendment does not
adversely affect the rights or obligations of the Escrow Agent or the Paying
Agent, provided that upon request of the Pass Through Trustee and without any
consent of the Investors, the Escrow Agent shall enter into an amendment to
this Agreement for any of the following purposes:
(1) to correct or supplement any provision in this
Agreement which may be defective or inconsistent with any other provision
herein or to cure any ambiguity or correct any mistake or to modify any other
provision with respect to matters or questions arising under this Agreement,
provided that any such action shall not materially adversely affect the
interests of the Investors; or
(2) to comply with any requirement of the SEC, applicable
law, rules or regulations of any exchange or quotation system on which the
Certificates are listed, any regulatory body or the Registration Rights
Agreement to effectuate the Exchange Offer; or
(3) to evidence and provide for the acceptance of
appointment under this Agreement of a successor Escrow Agent, successor Paying
Agent or successor Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided
herein, any notice or other communication under this Agreement shall be in
writing (including by facsimile) and shall
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be deemed to be given and effective upon receipt thereof. All notices shall be
sent to (a) in the case of the Investors, as their respective addresses shall
appear in the Register, (b)Ein the case of the Escrow Agent, First Security
Bank, National Association, 79 South Main Street, Salt Lake City, UT 84111,
Attention: Corporate Trust Services (Telecopier: (801) 246-5053), (c)Ein the
case of the Pass Through Trustee, Wilmington Trust Company, 1100 North Market
Street, Wilmington, DE 19890, Attention: Corporate Trust Administration
(Telecopier: (302) 651-8882) or (d) in the case of the Paying Agent, Wilmington
Trust Company, 1100 North Market Street, Wilmington, DE 19890, Attention:
Corporate Trust Administration (Telecopier: (302) 651-8882), in each case with
a copy to Continental, Continental Airlines, Inc., 2929 Allen Parkway, Suite
2010, Houston, TX 77019, Attention: Executive Vice President and Chief
Financial Officer (Telecopier: (713) 520-6329) (or at such other address as
any such party may specify from time to time in a written notice to the other
parties). On or prior to the execution of this Agreement, the Pass Through
Trustee has delivered to the Escrow Agent a certificate containing specimen
signatures of the representatives of the Pass Through Trustee who are
authorized to give notices and instructions with respect to this Agreement.
The Escrow Agent may conclusively rely on such certificate until the Escrow
Agent receives written notice from the Pass Through Trustee to the contrary.
SECTION 10. Transfer. No party hereto shall be entitled
to assign or otherwise transfer this Agreement (or any interest herein) other
than (in the case of the Escrow Agent) to a successor escrow agent under
Section 1.06 hereof or (in the case of the Paying Agent) to a successor paying
agent under Section 2.04 hereof, and any purported assignment in violation
thereof shall be void. This Agreement shall be binding upon the parties hereto
and their respective successors and (in the case of the Escrow Agent and the
Paying Agent) their respective permitted assigns. Upon the occurrence of the
Transfer (as defined below) contemplated by the Assignment and Assumption
Agreement (as defined below), the Pass Through Trustee shall (without further
act) be deemed to have transferred all of its right, title and interest in and
to this Agreement to the trustee of the Successor Trust (as defined below) and,
thereafter, the trustee of the Successor Trust shall be deemed to be the "Pass
Through Trustee" hereunder with the rights and obligations of the "Pass Through
Trustee" hereunder and each reference herein to "Continental Airlines Pass
Through Trust 1997-1A-O" shall be
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deemed to be a reference to "Continental Airlines Pass Through Trust
1997-1A-S". The parties hereto hereby acknowledge and consent to the Transfer
contemplated by the Assignment and Assumption Agreement. As used herein,
"Transfer" means the transfers of the assets to the Successor Trust
contemplated by the Assignment and Assumption Agreement; "Assignment and
Assumption Agreement" means the Assignment and Assumption Agreement to be
entered into between the Pass Through Trustee and the trustee of the Successor
Trust, substantially in the form of Exhibit D to the Pass Through Trust
Agreement; "Successor Trust" means the Continental Airlines Pass Through Trust
1997-1A-S.
SECTION 11. Entire Agreement. This Agreement sets forth
all of the promises, covenants, agreements, conditions and understandings among
the Escrow Agent, the Paying Agent, the Initial Purchasers and the Pass Through
Trustee with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 13. Waiver of Jury Trial Right. EACH OF THE
ESCROW AGENT, THE PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE
ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A
TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed
in one or more counterparts, all of which taken together shall constitute one
instrument.
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the
Initial Purchasers and the Pass Through Trustee have caused this Escrow and
Paying Agent Agreement (Class A) to be duly executed as of the day and year
first above written.
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FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON CORPORATION;
MORGAN STANLEY & CO. INCORPORATED;
CHASE SECURITIES INC.; and
GOLDMAN, SACHS & CO.,
as Initial Purchasers
By: CREDIT SUISSE FIRST
BOSTON CORPORATION
By
------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as
Pass Through Trustee for and on
behalf of Continental Airlines Pass
Through Trust 1997-1A-O
By
------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Paying Agent By
By
------------------------------------
Name:
Title:
22
EXHIBIT A
CONTINENTAL AIRLINES 1997-1A ESCROW RECEIPT
No. __
This Escrow Receipt evidences a fractional undivided interest
in amounts ("Account Amounts") from time to time deposited into a certain
paying agent account (the "Paying Agent Account") described in the Escrow and
Paying Agent Agreement (Class A) dated as of March 21, 1997 (as amended,
modified or supplemented from time to time, the "Escrow and Paying Agent
Agreement") among First Security Bank, National Association, as Escrow Agent
(in such capacity, together with its successors in such capacity, the "Escrow
Agent"), Credit Suisse First Boston Corporation, Morgan Stanley & Co.
Incorporated, Chase Securities Inc. and Goldman, Sachs & Co., as Initial
Purchasers, Wilmington Trust Company, as Pass Through Trustee (in such
capacity, together with its successors in such capacity, the "Pass Through
Trustee") and Wilmington Trust Company, as paying agent (in such capacity,
together with its successors in such capacity, the "Paying Agent").
Capitalized terms not defined herein shall have the meanings assigned to them
in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the
terms, provisions and conditions of the Escrow and Paying Agent Agreement. By
virtue of its acceptance hereof the holder of this Escrow Receipt assents and
agrees to be bound by the provisions of the Escrow and Paying Agent Agreement
and this Escrow Receipt.
This Escrow Receipt represents a fractional undivided interest
in amounts deposited from time to time in the Paying Agent Account, and grants
or represents no rights, benefits or interests of any kind in respect of any
assets or property other than such amounts. This Escrow Receipt evidences the
same percentage interest in the Account Amounts as the Fractional Undivided
Interest in the Pass Through Trust evidenced by the Certificate to which this
Escrow Receipt is affixed.
All payments and distributions made to Receiptholders in
respect of the Escrow Receipt shall be made only from Account Amounts deposited
in the Paying Agent Account. The holder of this Escrow Receipt, by its
acceptance of this Escrow Receipt, agrees that it will look solely to the
Account Amounts for any
23
2
payment or distribution due to it pursuant to this Escrow Receipt and that it
will not have any recourse to Continental, the Pass Through Trustee, the Paying
Agent or the Escrow Agent, except as expressly provided herein or in the Pass
Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have
any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account, nor shall anything set forth herein, or
contained in the terms of this Escrow Receipt, be construed so as to constitute
the Receiptholders from time to time as partners or members of an association.
This Escrow Receipt may not be assigned or transferred except
in connection with the assignment or transfer of the Certificate to which this
Escrow Receipt is affixed. After payment to the holder hereof of its Escrow
Interest in the Final Distribution, upon the request of the Pass Through
Trustee, the holder hereof will return this Escrow Receipt to the Pass Through
Trustee.
The Paying Agent may treat the person in whose name the
Certificate to which this Escrow Receipt is attached as the owner hereof for
all purposes, and the Paying Agent shall not be affected by any notice to the
contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow
Receipt to be duly executed. Dated: ______________, 1997
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By
------------------------------------
Name:
Title:
24
EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class A)
First Security Bank, National Association,
as Escrow Agent
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement,
dated as of March 21, 1997 (the "Agreement"). We hereby certify to you that
the conditions to the obligations of the undersigned to execute a Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied.
Pursuant to Section 1.02(c) of the Agreement, please execute the attached
Notice of Withdrawal and immediately transmit by facsimile to the Depositary,
at (212) 325-8319, Attention: Robert Finney and Kevin Kappell.
Very truly yours,
WILMINGTON TRUST COMPANY
not in its individual capacity by
solely as Pass Through
Trustee
By
------------------------------------
Name:
Title:
Date: , , 199
-------------- ---- ---
1
EXHIBIT 4.24
================================================================================
ESCROW AND PAYING AGENT AGREEMENT
(Class B)
Dated as of March 21, 1997
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
CREDIT SUISSE FIRST BOSTON CORPORATION
MORGAN STANLEY & CO. INCORPORATED
CHASE SECURITIES INC.
and
GOLDMAN, SACHS & CO.
as Initial Purchasers
WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Continental Airlines Pass Through Trust 1997-1B-O
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
================================================================================
2
TABLE OF CONTENTS
Page
----
SECTION 1. Escrow Agent ................................................. 2
Section 1.01. Appointment of Escrow Agent ................................ 2
Section 1.02. Instruction; Etc ........................................... 3
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts ......... 4
Section 1.04. Payments to Receiptholders ................................. 5
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt ........ 5
Section 1.06. Additional Escrow Amounts .................................. 6
Section 1.07. Resignation or Removal of Escrow Agent ..................... 6
Section 1.08. Persons Deemed Owners ...................................... 7
Section 1.09. Further Assurances ......................................... 7
SECTION 2. Paying Agent ................................................. 7
Section 2.01. Appointment of Paying Agent ................................ 7
Section 2.02. Establishment of Paying Agent Account ...................... 8
Section 2.04. Withholding Taxes .......................................... 9
Section 2.05. Resignation or Removal of Paying Agent ..................... 10
Section 2.06. Notice of Final Withdrawal ................................. 11
SECTION 3. Payments ..................................................... 11
SECTION 4. Other Actions ................................................ 12
SECTION 5. Representations and Warranties of the Escrow Agent ........... 12
SECTION 6. Representations and Warranties of the Paying Agent ........... 14
SECTION 7. Indemnification .............................................. 15
SECTION 8. Amendment, Etc ............................................... 16
SECTION 9. Notices ...................................................... 16
SECTION 10. Transfer ..................................................... 17
SECTION 11. Entire Agreement ............................................. 17
SECTION 12. Governing Law ................................................ 18
3
TABLE OF CONTENTS
(Continued)
Page
----
SECTION 13. Waiver of Jury Trial Right ................................... 18
SECTION 14. Counterparts ................................................. 18
ii
4
ESCROW AND PAYING AGENT AGREEMENT (Class B) dated as of March 21, 1997 (as
amended, modified or supplemented from time to time, this "Agreement") among
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, as
Escrow Agent (in such capacity, together with its successors in such capacity,
the "Escrow Agent"); CREDIT SUISSE FIRST BOSTON CORPORATION, MORGAN STANLEY &
CO. INCORPORATED, CHASE SECURITIES INC. and GOLDMAN, SACHS & CO., as Initial
Purchasers of the below referred to Certificates (the "Initial Purchasers" and
together with their respective transferees and assigns as registered owners of
the Certificates, the "Investors") under the Certificate Purchase Agreement
referred to below; WILMINGTON TRUST COMPANY, a Delaware banking corporation,
not in its individual capacity except as otherwise expressly provided herein,
but solely as trustee (in such capacity, together with its successors in such
capacity, the "Pass Through Trustee") under the Pass Through Trust Agreement
referred to below; and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as paying agent hereunder (in such capacity, together with its
successors in such capacity, the "Paying Agent").
W I T N E S S E T H
WHEREAS, Continental Airlines, Inc. ("Continental") and the Pass Through
Trustee have entered into a Pass Through Trust Agreement, dated as of March 21,
1997 (as amended, modified or supplemented from time to time in accordance with
the terms thereof, the "Pass Through Trust Agreement") relating to Continental
Airlines Pass Through Trust 1997-1B-O (the "Pass Through Trust") pursuant to
which the Continental Airlines Pass Through Trust, Series 1997-1B-O
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Continental and the Initial Purchasers have entered into a
Certificate Purchase Agreement dated as of March 12, 1997 (as amended, modified
or supplemented from time to time in accordance with the terms thereof, the
"Certificate Purchase Agreement") pursuant to which the Pass Through Trustee
will issue and sell the Certificates to the Initial Purchasers;
WHEREAS, Continental, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
5
2
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire
from time to time on or prior to the Delivery Period Termination Date (as
defined in the Note Purchase Agreement) equipment notes (the "Equipment Notes")
issued to finance the acquisition of aircraft by Continental, as lessee or as
owner, utilizing a portion of the proceeds from the sale of the Certificates
(the "Net Proceeds");
WHEREAS, the Initial Purchasers and the Pass Through Trustee intend that
the Net Proceeds be held in escrow by the Escrow Agent on behalf of the
Investors, subject to withdrawal upon request by the Pass Through Trustee and
satisfaction of the conditions set forth in the Note Purchase Agreement for the
purpose of purchasing Equipment Notes, and that pending such withdrawal the Net
Proceeds be deposited on behalf of the Escrow Agent with Credit Suisse First
Boston, a Swiss bank acting through its New York branch, as Depositary (the
"Depositary") under the Deposit Agreement, dated as of the date hereof between
the Depositary and the Escrow Agent relating to the Pass Through Trust (as
amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Deposit Agreement") pursuant to which, among other things,
the Depositary will pay interest for distribution to the Investors and
establish accounts from which the Escrow Agent shall make withdrawals upon
request of and proper certification by the Pass Through Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay
amounts required to be distributed to the Investors in accordance with this
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Escrow Agent.
Section 1.01. Appointment of Escrow Agent. Each of the Initial
Purchasers, for and on behalf of each of the Investors, hereby irrevocably
appoints, authorizes and directs the Escrow Agent to act as escrow agent and
fiduciary hereunder and under the Deposit Agreement for such specific purposes
and
6
3
with such powers as are specifically delegated to the Escrow Agent by the terms
of this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Escrow Agent under this
Agreement or the Deposit Agreement shall be held in escrow by the Escrow Agent
in accordance with the terms of this Agreement. This Agreement is irrevocable
and the Investors' rights with respect to any monies received and held in
escrow by the Escrow Agent under this Agreement or the Deposit Agreement shall
only be as provided under the terms and conditions of this Agreement and the
Deposit Agreement. The Escrow Agent (which term as used in this sentence shall
include reference to its affiliates and its own and its affiliates' officers,
directors, employees and agents): (a) shall have no duties or responsibilities
except those expressly set forth in this Agreement; (b) shall not be
responsible to the Pass Through Trustee or the Investors for any recitals,
statements, representations or warranties of any person other then itself
contained in this Agreement or the Deposit Agreement or for the failure by the
Pass Through Trustee, Investors or any other person or entity (other than the
Escrow Agent) to perform any of its obligations hereunder (whether or not the
Escrow Agent shall have any knowledge thereof); and (c) shall not be
responsible for any action taken or omitted to be taken by it hereunder or
provided for herein or in connection herewith, except for its own willful
misconduct or gross negligence (or simple negligence in connection with the
handling of funds).
Section 1.02. Instruction; Etc. The Initial Purchasers, for and on behalf
of each of the Investors, hereby irrevocably instruct the Escrow Agent, and the
Escrow Agent agrees, (a) to enter into the Deposit Agreement, (b) to appoint
the Paying Agent as provided in this Agreement, (c) upon receipt at any time
and from time to time prior to the Termination Date (as defined below) of a
certificate substantially in the form of Exhibit B hereto (a "Withdrawal
Certificate") executed by the Pass Through Trustee, together with an attached
Notice of Purchase Withdrawal in substantially the form of Exhibit A to the
Deposit Agreement duly completed by the Pass Through Trustee (the "Applicable
Notice of Purchase Withdrawal" and the withdrawal to which it relates, a
"Purchase Withdrawal"), immediately to execute the Applicable Notice of
Purchase Withdrawal as Escrow Agent and transmit it to the Depositary by
facsimile transmission in accordance with the Deposit Agreement; provided that,
upon the request of the Pass Through Trustee after such transmission, the
Escrow Agent shall cancel such Applicable Notice of Purchase
7
4
Withdrawal, and (d) if there are any undrawn Deposits (as defined in the
Deposit Agreement) on the "Termination Date", which shall mean the earlier of
(i) July 1, 1998 and (ii) the day on which the Escrow Agent receives notice
from the Pass Through Trustee that the Pass Through Trustee's obligation to
purchase Equipment Notes under the Note Purchase Agreement has terminated, to
give notice to the Depositary (with a copy to the Paying Agent) substantially
in the form of Exhibit B to the Deposit Agreement requesting a withdrawal of
all of the remaining Deposits, together with accrued and unpaid interest on
such Deposits to the date of withdrawal, on the 35th day after the date that
such notice of withdrawal is given to the Depositary (or, if not a Business
Day, on the next succeeding Business Day) (a "Final Withdrawal"), provided that
if the day scheduled for the Final Withdrawal in accordance with the foregoing
is within 10 days before or after a Regular Distribution Date, then the Escrow
Agent shall request that such requested Final Withdrawal be made on such
Regular Distribution Date (the date of such requested withdrawal, the "Final
Withdrawal Date"). If for any reason the Escrow Agent shall have failed to
give the Final Withdrawal Notice to the Depositary on or before July 6, 1998,
and there are unwithdrawn Deposits on such date, the Final Withdrawal Date
shall be deemed to be July 31, 1998.
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts. The
Escrow Agent hereby directs the Initial Purchasers to, and the Initial
Purchasers hereby acknowledge that on the date hereof they shall, irrevocably
deliver to the Depositary on behalf of the Escrow Agent, an amount in U.S.
dollars ("Dollars") and immediately available funds equal to $148,333,000 for
deposit on behalf of the Escrow Agent with the Depositary in accordance with
Section 2.1 of the Deposit Agreement. The Initial Purchasers hereby instruct
the Escrow Agent, upon receipt of such sum from the Initial Purchasers, to
confirm such receipt by executing and delivering to the Pass Through Trustee an
Escrow Receipt in the form of Exhibit A hereto (an "Escrow Receipt"), (a) to be
affixed by the Pass Through Trustee to each Certificate and (b) to evidence the
same percentage interest (the "Escrow Interest") in the Account Amounts as the
Fractional Undivided Interest in the Pass Through Trust evidenced by the
Certificate to which it is to be affixed. The Escrow Agent shall provide to
the Pass Through Trustee for attachment to each Certificate newly issued under
and in accordance with the Pass Through Trust Agreement an executed Escrow
Receipt as the Pass Through Trustee may from time to time
8
5
request of the Escrow Agent. Each Escrow Receipt shall be registered by the
Escrow Agent in a register (the "Register") maintained by the Escrow Agent in
the same name and same manner as the Certificate to which it is attached and
may not thereafter be detached from such Certificate to which it is to be
affixed prior to the distribution of the Final Withdrawal (the "Final
Distribution"). After the Final Distribution, no Escrow Receipts shall be
issued and the Pass Through Trustee shall request the return to the Escrow
Agent for cancellation of all outstanding Escrow Receipts.
Section 1.04. Payments to Receiptholders. All payments and distributions
made to holders of an Escrow Receipt (collectively "Receiptholders") in respect
of the Escrow Receipt shall be made only from amounts deposited in the Paying
Agent Account ("Account Amounts"). Each Receiptholder, by its acceptance of an
Escrow Receipt, agrees that (a) it will look solely to the Account Amounts for
any payment or distribution due to such Receiptholder pursuant to the terms of
the Escrow Receipt and this Agreement and (b) it will have no recourse to
Continental, the Pass Through Trustee, the Paying Agent or the Escrow Agent,
except as expressly provided herein or in the Pass Through Trust Agreement. No
Receiptholder shall have any right to vote or in any manner otherwise control
the operation and management of the Paying Agent Account or the obligations of
the parties hereto, nor shall anything set forth herein, or contained in the
terms of the Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt. If (a)
any mutilated Escrow Receipt is surrendered to the Escrow Agent or the Escrow
Agent receives evidence to its satisfaction of the destruction, loss or theft
of any Escrow Receipt and (b)Ethere is delivered to the Escrow Agent and the
Pass Through Trustee such security, indemnity or bond, as may be required by
them to hold each of them harmless, then, absent notice to the Escrow Agent or
the Pass Through Trustee that such destroyed, lost or stolen Escrow Receipt has
been acquired by a bona fide purchaser, and provided that the requirements of
Section 8-405 of the Uniform Commercial Code in effect in any applicable
jurisdiction are met, the Escrow Agent shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Escrow Receipt, a new Escrow Receipt or Escrow Receipts and of like
9
6
Escrow Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Escrow Receipt under this
Section 1.05, the Escrow Agent may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicative Escrow Receipt issued pursuant to this Section 1.05 shall
constitute conclusive evidence of the appropriate Escrow Interest in the
Account Amounts, as if originally issued, whether or not the lost, stolen or
destroyed Escrow Receipt shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Escrow Receipts.
Section 1.06. Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.07. Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving 30 days' prior written notice
thereof to the Investors, but may not otherwise be removed except for cause by
the written consent of the Investors with respect to Investors representing
Escrow Interests aggregating not less than a majority in interest in the
Account Amounts (an "Action of Investors"). Upon any such resignation or
removal, the Investors, by an Action of Investors, shall have the right to
appoint a successor Escrow Agent. If no successor Escrow Agent shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Escrow Agent's giving of notice of resignation or the removal of the
retiring Escrow Agent, then the retiring Escrow Agent may appoint a successor
Escrow Agent, which shall be a bank which has an office in the United States
with a combined capital and surplus of at least $100,000,000. Upon the
acceptance of any appointment as Escrow Agent hereunder by a successor Escrow
10
7
Agent, such successor Escrow Agent shall enter into such documents as the Pass
Through Trustee shall require and shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations hereunder. No resignation or removal of the Escrow Agent shall be
effective unless a written confirmation shall have been obtained from each of
Moody's Investors Service, Inc. and Standard & Poor's Rating Group, a division
of McGraw-Hill Inc., that the replacement of the Escrow Agent with the
successor Escrow Agent will not result in (a) a reduction of the rating for the
Certificates below the then current rating for the Certificates or (b) a
withdrawal or suspension of the rating of the Certificates.
Section 1.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and none of the Escrow Agent or the Paying Agent shall be affected
by any notice to the contrary.
Section 1.09. Further Assurances. The Escrow Agent agrees to take such
actions, and execute such other documents, as may be reasonably requested by
the Pass Through Trustee in order to effectuate the purposes of this Agreement
and the performance by the Escrow Agent of its obligations hereunder.
SECTION 2. Paying Agent.
Section 2.01. Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and
with such powers as are specifically delegated to the Paying Agent by the terms
of this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account
(as defined below) for the benefit of the Investors. The Paying Agent (which
term as used in this sentence shall include reference to its affiliates and its
own and its affiliates' officers, directors, employees and
11
8
agents): (a) shall have no duties or responsibilities except those expressly
set forth in this Agreement, and shall not by reason of this Agreement be a
trustee for the Escrow Agent; (b) shall not be responsible to the Escrow Agent
for any recitals, statements, representations or warranties of any person other
then itself contained in this Agreement or for the failure by the Escrow Agent
or any other person or entity (other than the Paying Agent) to perform any of
its obligations hereunder (whether or not the Paying Agent shall have any
knowledge thereof); and (c) shall not be responsible for any action taken or
omitted to be taken by it hereunder or provided for herein or in connection
herewith, except for its own willful misconduct or gross negligence (or simple
negligence in connection with the handling of funds).
Section 2.02. Establishment of Paying Agent Account. The Paying Agent
shall establish a deposit account (the "Paying Agent Account") at Wilmington
Trust Company in the name of the Escrow Agent. It is expressly understood by
the parties hereto that the Paying Agent is acting as the paying agent of the
Escrow Agent hereunder and that no amounts on deposit in the Paying Agent
Account constitute part of the Trust Property.
Section 2.03. Payments from Paying Agent Account. The Escrow Agent hereby
irrevocably instructs the Paying Agent, and the Paying Agent agrees to act, as
follows:
(a) on each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt in
the Paying Agent Account from the Depositary of any amount in respect of
accrued interest on the Deposits, the Paying Agent shall distribute out of the
Paying Agent Account the entire amount deposited therein by the Depositary.
There shall be so distributed to each Receiptholder of record on the 15th day
(whether or not a Business Day) preceding such Interest Payment Date by check
mailed to such Receiptholder, at the address appearing in the Register, such
Receiptholder's pro rata share (based on the Escrow Interest in the Account
Amounts held by such Receiptholder) of the total amount of interest deposited
by the Depositary in the Paying Agent Account on such date, except that, with
respect to Escrow Receipts registered on the Record Date in the name of DTC,
such distribution shall be made by wire transfer in immediately available funds
to the account designated by DTC.
12
9
(b) upon the confirmation by the Paying Agent of receipt in the
Paying Agent Account from the Depositary of any amount in respect of the Final
Withdrawal, the Paying Agent shall forthwith distribute the entire amount of
the Final Withdrawal deposited therein by the Depositary. There shall be so
distributed to each Receiptholder of record on the 15th day (whether or not a
Business Day) preceding the Final Withdrawal Date by check mailed to such
Receiptholder, at the address appearing in the Register, such Receiptholder's
pro rata share (based on the Escrow Interest in the Account Amounts held by
such Receiptholder) of the total amount in the Paying Agent Account on account
of such Final Withdrawal, except that, with respect to Escrow Receipts
registered on the Record Date in the name of DTC, such distribution shall be
made by wire transfer in immediately available funds to the account designated
by DTC.
(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five days of the
applicable date when due, then it shall be distributed to Receiptholders after
actual receipt by the Paying Agent on the same basis as a Special Payment is
distributed under the Pass Through Trust Agreement.
(d) the Paying Agent shall include with any check mailed pursuant to
this Section any notice required to be distributed under the Pass Through Trust
Agreement that is furnished to the Paying Agent by the Pass Through Trustee.
Section 2.04. Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits and any
amount in respect of the Final Withdrawal any and all withholding taxes
applicable thereto as required by law. In addition, the Paying Agent shall
remit or cause to be remitted such amounts as would be required by Section 1446
of the Internal Revenue Code of 1986, as amended, as if the agreements of the
Initial Purchasers set forth in this Agreement were characterized as a
partnership engaged in a U.S. trade or business for U.S. federal income tax
purposes and shall withhold or cause to be withheld such amounts from amounts
distributable to or for the benefit of Receiptholders or beneficial owners of
interests in Escrow Receipts that are not United States persons within the
meaning of section 7701(a)(30) of the Internal Revenue Code of 1986, as amended
("Non-U.S. Persons"). In this regard, the Paying Agent shall cause the
appropriate withholding agent to withhold with respect to such distributions in
the manner
13
10
contemplated by Section 10.04 of Revenue Procedure 89-31 and Treasury
Regulation 1.1445-8(b)(3)) by filing a notice with the National Association of
Securities Dealers, Inc. substantially in the form of Exhibits C and D on or
before the date 10 days prior to the Record Date. The Paying Agent shall mail
such notice to the National Association of Securities Dealers no later than the
date 15 days prior to the Record Date. Investors that are not United States
Persons agree to furnish a taxpayer identification number ("TIN") to the Paying
Agent and the Paying Agent shall provide such TINs to the appropriate U.S.
withholding agent. The Paying Agent agrees to act as such withholding agent
(except to the extent contemplated above with respect to withholding amounts as
if the agreements of the Initial Purchasers as set forth in this Agreement were
characterized as a business engaged in a U.S. trade or business for U.S.
federal income tax purposes) and, in connection therewith, whenever any present
or future taxes or similar charges are required to be withheld with respect to
any amounts payable in respect of the Deposits or the escrow amounts, to
withhold such amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Receiptholders, that it will file any
necessary withholding tax returns or statements when due, and that, as promptly
as possible after the payment thereof, it will deliver to each such
Receiptholder appropriate documentation showing the payment thereof, together
with such additional documentary evidence as such Receiptholder may reasonably
request from time to time. The Paying Agent agrees to file any other
information reports as it may be required to file under United States law.
Each Receiptholder or beneficial owner of an interest in an Escrow Receipt that
is a Non-U.S. Person, by its acceptance of an Escrow Receipt or a beneficial
interest therein, agrees to indemnify and hold harmless the Escrow Agent and
the Paying Agent from and against any improper failure to withhold Taxes from
amounts payable to it or for its benefit other than an improper failure
attributable to the gross negligence or willful misconduct of the Escrow Agent
or the Paying Agent, as the case may be.
Section 2.05. Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to the Escrow Agent, but may not otherwise be removed except for cause
by the Escrow Agent. Upon any such resignation or removal, the Escrow Agent
shall have the right to appoint a successor Paying Agent. If no successor
Paying Agent shall have been so appointed and
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shall have accepted such appointment within 30 days after the retiring Paying
Agent's giving of notice of resignation or the removal of the retiring Paying
Agent, then the retiring Paying Agent may appoint a successor Paying Agent,
which shall be a bank which has an office in the United States with a combined
capital and surplus of at least $100,000,000. Upon the acceptance of any
appointment as Paying Agent hereunder by a successor Paying Agent, such
successor Paying Agent shall enter into such documents as the Escrow Agent
shall require and shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Paying Agent, and the
retiring Paying Agent shall be discharged from its duties
and obligations hereunder.
Section 2.06. Notice of Final Withdrawal. Promptly after receipt by the
Paying Agent of notice that the Escrow Agent has requested a Final Withdrawal
or that a Final Withdrawal will be made, the Paying Agent shall cause notice of
the distribution of the Final Withdrawal to be mailed to each of the
Receiptholders at its address as it appears in the Register. Such notice shall
be mailed not less than 20 days prior to the Final Withdrawal Date. Such
notice shall set forth:
(i) the Final Withdrawal Date and the date for determining Receiptholders
of record who shall be entitled to receive distributions in respect of the
Final Withdrawal,
(ii) the amount of the payment in respect of the Final Withdrawal for each
$1,000 face amount Certificate (based on information provided by the Pass
Through Trustee) and the amount thereof constituting unused Deposits and
interest thereon, and
(iii) if the Final Withdrawal Date is the same date as a Regular
Distribution Date, the total amount to be received on such date for each
$1,000 face amount Certificate (based on information provided by the Pass
Through Trustee).
Such mailing may include any notice required to be given to
Certificateholders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Section 4
of the Deposit Agreement that all
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amounts payable to the Escrow Agent under the Deposit Agreement be paid by the
Depositary directly to the Paying Agent or the Pass Through Trustee (depending
on the circumstances), the Escrow Agent receives any payment thereunder, then
the Escrow Agent shall forthwith pay such amount in Dollars and in immediately
available funds by wire transfer to (a) in the case of a payment of accrued
interest on the Deposits or any Final Withdrawal, directly to the Paying Agent
Account and (b) in the case of any Purchase Withdrawal, directly to the Pass
Through Trustee or its designee as specified and in the manner provided in the
Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives any
and all rights of set-off, combination of accounts, right of retention or
similar right (whether arising under applicable law, contract or otherwise) it
may have against amounts payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other actions
under or in respect of the Deposit Agreement (including, without limitation,
the enforcement of the obligations of the Depositary thereunder) as the
Investors, by an Action of Investors, may from time to time request.
SECTION 5. Representations and Warranties of the Escrow Agent. The
Escrow Agent represents and warrants to Continental, the Investors, the Paying
Agent and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America;
(ii) it has full power, authority and legal right to conduct its business
and operations as currently conducted and to enter into and perform its
obligations under this Agreement and the Deposit Agreement;
(iii) the execution, delivery and performance of each of this Agreement
and the Deposit Agreement have been duly authorized by all necessary
corporate action on the part of it and do not require any stockholder
approval, or approval or consent of any trustee or holder of any indebtedness
or obligations of it, and each such document has been duly executed and
delivered by it and constitutes its legal, valid and binding obligations
enforceable against it in
16
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accordance with the terms hereof or thereof except as such enforceability may
be limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws or equitable principles of general application to or affecting
the enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by, and no
notice to or filing with, any United States federal or state governmental
authority or regulatory body is required for the execution, delivery or
performance by it of this Agreement or the Deposit Agreement;
(v) neither the execution, delivery or performance by it of this Agreement
or the Deposit Agreement, nor compliance with the terms and provisions hereof
or thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or will
require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of it
or any similar instrument binding on it or any order, writ, injunction or
decree of any court or governmental authority against it or by which it or
any of its properties is bound or any indenture, mortgage or contract or
other agreement or instrument to which it is a party or by which it or any of
its properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any lien upon any
of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions, suits,
investigations or proceedings (whether or not purportedly on behalf of it)
against or affecting it or any of its property before or by any court or
administrative agency which, if adversely determined, (A) would adversely
affect the ability of it to perform its obligations under this Agreement or
the Deposit Agreement or (B) would call into question or challenge the
validity of this Agreement or the Deposit Agreement or the enforceability
hereof or thereof in accordance with the
17
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terms hereof or thereof, nor is the Escrow Agent in default with respect
to any order of any court, governmental authority, arbitration board or
administrative agency so as to adversely affect its ability to perform its
obligations under this Agreement or the Deposit Agreement.
SECTION 6. Representations and Warranties of the Paying Agent. The
Paying Agent represents and warrants to Continental, the Investors, the Escrow
Agent and the Pass Through Trustee as follows:
(i) it is a Delaware banking company duly organized and validly existing
in good standing under the laws of its jurisdiction of incorporation;
(ii) it has full power, authority and legal right to conduct its business
and operations as currently conducted and to enter into and perform its
obligations under this Agreement;
(iii) the execution, delivery and performance of this Agreement has been
duly authorized by all necessary corporate action on the part of it and does
not require any stockholder approval, or approval or consent of any trustee
or holder of any indebtedness or obligations of it, and such document has
been duly executed and delivered by it and constitutes its legal, valid and
binding obligations enforceable against it in accordance with the terms
hereof except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by, and no
notice to or filing with, any United States federal or state governmental
authority or regulatory body is required for the execution, delivery or
performance by it of this Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts or
will
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conflict with or results or will result in a breach or violation of any of
the terms, conditions or provisions of, or will require any consent or
approval under, any law, governmental rule or regulation or the charter
documents, as amended, or bylaws, as amended, of it or any similar instrument
binding on it or any order, writ, injunction or decree of any court or
governmental authority against it or by which it or any of its properties is
bound or any indenture, mortgage or contract or other agreement or instrument
to which it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will result
in the imposition of any lien upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions, suits,
investigations or proceedings (whether or not purportedly on behalf of it)
against or affecting it or any of its property before or by any court or
administrative agency which, if adversely determined, (A) would adversely
affect the ability of it to perform its obligations under this Agreement or
(B) would call into question or challenge the validity of this Agreement or
the enforceability hereof in accordance with the terms hereof, nor is the
Paying Agent in default with respect to any order of any court, governmental
authority, arbitration board or administrative agency so as to adversely
affect its ability to perform its obligations under this Agreement.
SECTION 7. Indemnification. Except for actions expressly required of the
Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to
act hereunder unless it shall have been indemnified by the party requesting
such action in a manner reasonably satisfactory to it against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. In the event Continental requests any
amendment to any Operative Agreement (as defined in the Note Purchase
Agreement), the Pass Through Trustee agrees to pay all reasonable fees and
expenses (including, without limitation, fees and disbursements of counsel) of
the Escrow Agent and the Paying Agent in connection therewith.
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SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee and
approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely
affect the rights or obligations of the Escrow Agent or the Paying Agent,
provided that upon request of the Pass Through Trustee and without any consent
of the Investors, the Escrow Agent shall enter into an amendment to this
Agreement for any of the following purposes:
(1) to correct or supplement any provision in this Agreement which
may be defective or inconsistent with any other provision herein or to cure any
ambiguity or correct any mistake or to modify any other provision with respect
to matters or questions arising under this Agreement, provided that any such
action shall not materially adversely affect the interests of the Investors; or
(2) to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the Certificates
are listed, any regulatory body or the Registration Rights Agreement to
effectuate the Exchange Offer; or
(3) to evidence and provide for the acceptance of appointment under
this Agreement of a successor Escrow Agent, successor Paying Agent or successor
Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (a) in the case of the
Investors, as their respective addresses shall appear in the Register, (b)Ein
the case of the Escrow Agent, First Security Bank, National Association, 79
South Main Street, Salt Lake City, UT 84111, Attention: Corporate Trust
Services (Telecopier: (801) 246-5053), (c)Ein the case of the Pass Through
Trustee, Wilmington Trust Company, 1100 North Market Street, Wilmington, DE
19890, Attention: Corporate Trust Administration (Telecopier: (302) 651-8882)
or (d) in the case of the Paying Agent, Wilmington Trust Company, 1100 North
Market Street, Wilmington, DE 19890, Attention: Corporate Trust Administration
(Telecopier: (302) 651-8882), in each case with a copy to Continental,
Continental Airlines, Inc., 2929 Allen Parkway, Suite 2010, Houston, TX
20
17
77019, Attention: Executive Vice President and Chief Financial Officer
(Telecopier: (713) 520-6329) (or at such other address as any such party may
specify from time to time in a written notice to the other parties). On or
prior to the execution of this Agreement, the Pass Through Trustee has
delivered to the Escrow Agent a certificate containing specimen signatures of
the representatives of the Pass Through Trustee who are authorized to give
notices and instructions with respect to this Agreement. The Escrow Agent may
conclusively rely on such certificate until the Escrow Agent receives written
notice from the Pass Through Trustee to the contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.06 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.04 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns. Upon the occurrence of the Transfer (as defined
below) contemplated by the Assignment and Assumption Agreement (as defined
below), the Pass Through Trustee shall (without further act) be deemed to have
transferred all of its right, title and interest in and to this Agreement to
the trustee of the Successor Trust (as defined below) and, thereafter, the
trustee of the Successor Trust shall be deemed to be the "Pass Through Trustee"
hereunder with the rights and obligations of the "Pass Through Trustee"
hereunder and each reference herein to "Continental Airlines Pass Through Trust
1997-1B-O" shall be deemed to be a reference to "Continental Airlines Pass
Through Trust 1997-1B-S". The parties hereto hereby acknowledge and consent to
the Transfer contemplated by the Assignment and Assumption Agreement. As used
herein, "Transfer" means the transfers of the assets to the Successor Trust
contemplated by the Assignment and Assumption Agreement; "Assignment and
Assumption Agreement" means the Assignment and Assumption Agreement to be
entered into between the Pass Through Trustee and the trustee of the Successor
Trust, substantially in the form of Exhibit D to the Pass Through Trust
Agreement; "Successor Trust" means the Continental Airlines Pass Through Trust
1997-1B-S.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and
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understandings among the Escrow Agent, the Paying Agent, the Initial Purchasers
and the Pass Through Trustee with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and undertakings,
inducements or conditions, express or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 13. Waiver of Jury Trial Right. EACH OF THE ESCROW AGENT, THE
PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the Initial
Purchasers and the Pass Through Trustee have caused this Escrow and Paying
Agent Agreement (Class B) to be duly executed as of the day and year first
above written.
---------------------------------
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By
-------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON
CORPORATION;
MORGAN STANLEY & CO. INCORPORATED;
CHASE SECURITIES INC.; and
GOLDMAN, SACHS & CO.,
as Initial Purchasers
By: CREDIT SUISSE FIRST BOSTON
CORPORATION
By
-------------------------------
Name:
Title:
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WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as
Pass Through Trustee for and on
behalf of Continental Airlines Pass
Through Trust 1997-1B-O
By
-------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Paying Agent
By
-------------------------------
Name:
Title:
23
EXHIBIT A
CONTINENTAL AIRLINES 1997-1B ESCROW RECEIPT
No. __
This Escrow Receipt evidences a fractional undivided interest in amounts
("Account Amounts") from time to time deposited into a certain paying agent
account (the "Paying Agent Account") described in the Escrow and Paying Agent
Agreement (Class B) dated as of March 21, 1997 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Security Bank, National Association, as Escrow Agent (in such capacity,
together with its successors in such capacity, the "Escrow Agent"), Credit
Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial Purchasers, Wilmington
Trust Company, as Pass Through Trustee (in such capacity, together with its
successors in such capacity, the "Pass Through Trustee") and Wilmington Trust
Company, as paying agent (in such capacity, together with its successors in
such capacity, the "Paying Agent"). Capitalized terms not defined herein shall
have the meanings assigned to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue
of its acceptance hereof the holder of this Escrow Receipt assents and agrees
to be bound by the provisions of the Escrow and Paying Agent Agreement and this
Escrow Receipt.
This Escrow Receipt represents a fractional undivided interest in amounts
deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any
assets or property other than such amounts. This Escrow Receipt evidences the
same percentage interest in the Account Amounts as the Fractional Undivided
Interest in the Pass Through Trust evidenced by the Certificate to which this
Escrow Receipt is affixed.
All payments and distributions made to Receiptholders in respect of the
Escrow Receipt shall be made only from Account Amounts deposited in the Paying
Agent Account. The holder of this Escrow Receipt, by its acceptance of this
Escrow Receipt, agrees that it will look solely to the Account Amounts for any
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2
payment or distribution due to it pursuant to this Escrow Receipt and that it
will not have any recourse to Continental, the Pass Through Trustee, the Paying
Agent or the Escrow Agent, except as expressly provided herein or in the Pass
Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have
any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account, nor shall anything set forth herein, or
contained in the terms of this Escrow Receipt, be construed so as to constitute
the Receiptholders from time to time as partners or members of an association.
This Escrow Receipt may not be assigned or transferred except in
connection with the assignment or transfer of the Certificate to which this
Escrow Receipt is affixed. After payment to the holder hereof of its Escrow
Interest in the Final Distribution, upon the request of the Pass Through
Trustee, the holder hereof will return this Escrow Receipt to the Pass Through
Trustee.
The Paying Agent may treat the person in whose name the Certificate to
which this Escrow Receipt is attached as the owner hereof for all purposes, and
the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt to be
duly executed.
Dated: ______________, 1997
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
as Escrow Agent
By
-------------------------------
Name:
Title:
25
EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class B)
First Security Bank, National Association,
as Escrow Agent
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as of
March 21, 1997 (the "Agreement"). We hereby certify to you that the conditions
to the obligations of the undersigned to execute a Participation Agreement
pursuant to the Note Purchase Agreement have been satisfied. Pursuant to
Section 1.02(c) of the Agreement, please execute the attached Notice of
Withdrawal and immediately transmit by facsimile to the Depositary, at (212)
325-8319, Attention: Robert Finney and Kevin Kappell.
Very truly yours,
WILMINGTON TRUST COMPANY
not in its individual capacity by
Solely as Pass Through Trustee
By
-------------------------------
Name
Dated: ____________, 199_
1
EXHIBIT 4.25
===============================================================================
ESCROW AND PAYING AGENT AGREEMENT
(Class C-I)
Dated as of March 21, 1997
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
CREDIT SUISSE FIRST BOSTON CORPORATION
MORGAN STANLEY & CO. INCORPORATED
CHASE SECURITIES INC.
and
GOLDMAN, SACHS & CO.
as Initial Purchasers
WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Continental Airlines Pass Through Trust 1997-lC-I-O
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
===============================================================================
2
TABLE OF CONTENTS
Page
----
SECTION 1. Escrow Agent. .......................................... 2
Section 1.01. Appointment of Escrow Agent .......................... 2
Section 1.02. Instruction: Etc. .................................... 2
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts ... 3
Section 1.04. Payments to Receiptholders ........................... 4
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt .. 4
Section 1.06. Additional Escrow Amounts ............................ 4
Section 1.07. Resignation or Removal of Escrow Agent ............... 5
Section 1.08. Persons Deemed Owners ................................ 5
Section 1.09. Further Assurances ................................... 5
SECTION 2. Paying Agent ........................................... 5
Section 2.01. Appointment of Paying Agent .......................... 5
Section 2.02. Establishment of Paying Agent Account ................ 6
Section 2.03. Payments from Paying Agent Account ................... 6
Section 2.04. Withholding Taxes .................................... 7
Section 2.05. Resignation or Removal of Paying Agent ............... 8
Section 2.06. Notice of Final Withdrawal ........................... 8
SECTION 3. Payments ............................................... 8
SECTION 4. Other Actions .......................................... 9
SECTION 5. Representations and Warranties of the Escrow Agent ..... 9
SECTION 6. Representations and Warranties of the Paying Agent ..... 10
SECTION 7. Indemnification ........................................ 11
SECTION 8. Amendment, Etc. ........................................ 11
SECTION 9. Notices ................................................ 12
SECTION 10. Transfer ............................................... 12
SECTION 11. Entire Agreement ....................................... 13
SECTION 12. Governing Law .......................................... 13
SECTION 13. Waiver of Jury Trial Right ............................. 13
SECTION 14. Counterparts ........................................... 13
3
ESCROW AND PAYING AGENT AGREEMENT (Class C-l) dated as of March 21, 1997
(as amended, modified or supplemented from time to time, this "Agreement")
among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, as Escrow Agent (in such capacity, together with its successors in
such capacity, the "Escrow Agent"); CREDIT SUISSE FIRST BOSTON CORPORATION,
MORGAN STANLEY & CO. INCORPORATED, CHASE SECURITIES INC. and GOLDMAN, SACHS &
CO., as Initial Purchasers of the below referred to Certificates (the "Initial
Purchasers" and together with their respective transferees and assigns as
registered owners of the Certificates, the "Investors") under the Certificate
Purchase Agreement referred to below; WILMINGTON TRUST COMPANY, a Delaware
banking corporation, not in its individual capacity except as otherwise
expressly provided herein, but solely as trustee (in such capacity, together
with its successors in such capacity, the "Pass Through Trustee") under the
Pass Through Trust Agreement referred to below; and WILMINGTON TRUST COMPANY, a
Delaware banking corporation, as paying agent hereunder (in such capacity,
together with its successors in such capacity, the "Paying Agent").
W I T N E S S E T H
WHEREAS, Continental Airlines, Inc. ("Continental") and the Pass Through
Trustee have entered into a Pass Through Trust Agreement, dated as of March 21,
1997 (as amended, modified or supplemented from time to time in accordance with
the terms thereof, the "Pass Through Trust Agreement") relating to Continental
Airlines Pass Through Trust 1997-lC-I-O (the "Pass Through Trust") pursuant to
which the Continental Airlines Pass Through Trust, Series 1997-lC-I-O
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Continental and the Initial Purchasers have entered into a
Certificate Purchase Agreement dated as of March 12, 1997 (as amended, modified
or supplemented from time to time in accordance with the terms thereof, the
"Certificate Purchase Agreement") pursuant to which the Pass Through Trustee
will issue and sell the Certificates to the Initial Purchasers;
WHEREAS, Continental, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire
from time to time on or prior to the Delivery Period Termination Date (as
defined in the Note Purchase Agreement) equipment notes (the "Equipment Notes")
issued to finance the acquisition of aircraft by Continental, as lessee or as
owner, utilizing a portion of the proceeds from the sale of the Certificates
(the "Net Proceeds");
WHEREAS, the Initial Purchasers and the Pass Through Trustee intend that
the Net Proceeds be held in escrow by the Escrow Agent on behalf of the
Investors, subject to withdrawal upon request by the Pass Through Trustee and
satisfaction of the conditions set forth in the Note Purchase Agreement for the
purpose of purchasing Equipment Notes, and that pending such withdrawal the Net
Proceeds be deposited on behalf of the Escrow Agent with
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2
Credit Suisse First Boston, a Swiss bank acting through its New York branch, as
Depositary (the "Depositary") under the Deposit Agreement, dated as of the date
hereof between the Depositary and the Escrow Agent relating to the Pass Through
Trust (as amended, modified or supplemented from time to time in accordance
with the terms thereof, the "Deposit Agreement") pursuant to which, among other
things, the Depositary will pay interest for distribution to the Investors and
establish accounts from which the Escrow Agent shall make withdrawals upon
request of and proper certification by the Pass Through Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay
amounts required to be distributed to the Investors in accordance with this
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Escrow Agent.
Section 1.01. Appointment of Escrow Agent. Each of the Initial
Purchasers, for and on behalf of each of the Investors, hereby irrevocably
appoints, authorizes and directs the Escrow Agent to act as escrow agent and
fiduciary hereunder and under the Deposit Agreement for such specific purposes
and with such powers as are specifically delegated to the Escrow Agent by the
terms of this Agreement, together with such other powers as are reasonably
incidental thereto. Any and all money received and held by the Escrow Agent
under this Agreement or the Deposit Agreement shall be held in escrow by the
Escrow Agent in accordance with the terms of this Agreement. This Agreement is
irrevocable and the Investors' rights with respect to any monies received and
held in escrow by the Escrow Agent under this Agreement or the Deposit
Agreement shall only be as provided under the terms and conditions of this
Agreement and the Deposit Agreement. The Escrow Agent (which term as used in
this sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents): (a) shall have no
duties or responsibilities except those expressly set forth in this Agreement;
(b) shall not be responsible to the Pass Through Trustee or the Investors for
any recitals, statements, representations or warranties of any person other
then itself contained in this Agreement or the Deposit Agreement or for the
failure by the Pass Through Trustee, Investors or any other person or entity
(other than the Escrow Agent) to perform any of its obligations hereunder
(whether or not the Escrow Agent shall have any knowledge thereof); and (c)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or provided for herein or in connection herewith, except for its own
willful misconduct or gross negligence (or simple negligence in connection with
the handling of funds).
Section 1.02. Instruction: Etc. The Initial Purchasers, for and on
behalf of each of the Investors, hereby irrevocably instruct the Escrow Agent,
and the Escrow Agent agrees, (a) to enter into the Deposit Agreement, (b) to
appoint the Paying Agent as provided in this Agreement, (c) upon receipt at any
time and from time to time prior to the Termination Date (as
5
3
defined below) of a certificate substantially in the form of Exhibit B hereto
(a "Withdrawal Certificate") executed by the Pass Through Trustee, together
with an attached Notice of Purchase Withdrawal in substantially the form of
Exhibit A to the Deposit Agreement duly completed by the Pass Through Trustee
(the "Applicable Notice of Purchase Withdrawal" and the withdrawal to which it
relates, a "Purchase Withdrawal"), immediately to execute the Applicable Notice
of Purchase Withdrawal as Escrow Agent and transmit it to the Depositary by
facsimile transmission in accordance with the Deposit Agreement; provided that,
upon the request of the Pass Through Trustee after such transmission, the
Escrow Agent shall cancel such Applicable Notice of Purchase Withdrawal, and
(d) if there are any undrawn Deposits (as defined in the Deposit Agreement) on
the "Termination Date", which shall mean the earlier of (i) July 1, 1998 and
(ii) the day on which the Escrow Agent receives notice from the Pass Through
Trustee that the Pass Through Trustee's obligation to purchase Equipment Notes
under the Note Purchase Agreement has terminated, to give notice to the
Depositary (with a copy to the Paying Agent) substantially in the form of
Exhibit B to the Deposit Agreement requesting a withdrawal of all of the
remaining Deposits, together with accrued and unpaid interest on such Deposits
to the date of withdrawal, on the 35th day after the date that such notice of
withdrawal is given to the Depositary (or, if not a Business Day, on the next
succeeding Business Day) (a "Final Withdrawal"), provided that if the day
scheduled for the Final Withdrawal in accordance with the foregoing is within
10 days before or after a Regular Distribution Date, then the Escrow Agent
shall request that such requested Final Withdrawal be made on such Regular
Distribution Date (the date of such requested withdrawal, the "Final Withdrawal
Date"). If for any reason the Escrow Agent shall have failed to give the Final
Withdrawal Notice to the Depositary on or before July 6, 1998, and there are
unwithdrawn Deposits on such date, the Final Withdrawal Date shall be deemed to
be July 31, 1998.
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts. The
Escrow Agent hereby directs the Initial Purchasers to, and the Initial
Purchasers hereby acknowledge that on the date hereof they shall, irrevocably
deliver to the Depositary on behalf of the Escrow Agent, an amount in U.S.
dollars ("Dollars") and immediately available funds equal to $111,093,000 for
deposit on behalf of the Escrow Agent with the Depositary in accordance with
Section 2.1 of the Deposit Agreement. The Initial Purchasers hereby instruct
the Escrow Agent, upon receipt of such sum from the Initial Purchasers, to
confirm such receipt by executing and delivering to the Pass Through Trustee an
Escrow Receipt in the form of Exhibit A hereto (an "Escrow Receipt"), (a) to be
affixed by the Pass Through Trustee to each Certificate and (b) to evidence the
same percentage interest (the "Escrow Interest") in the Account Amounts as the
Fractional Undivided Interest in the Pass Through Trust evidenced by the
Certificate to which it is to be affixed. The Escrow Agent shall provide to
the Pass Through Trustee for attachment to each Certificate newly issued under
and in accordance with the Pass Through Trust Agreement an executed Escrow
Receipt as the Pass Through Trustee may from time to time request of the Escrow
Agent. Each Escrow Receipt shall be registered by the Escrow Agent in a
register (the "Register") maintained by the Escrow Agent in the same name and
same manner as the Certificate to which it is attached and may not thereafter
be detached from such Certificate to which it is to be affixed prior to the
distribution of the Final Withdrawal (the "Final Distribution"). After the
Final Distribution, no Escrow Receipts shall be issued and the Pass
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Through Trustee shall request the return to the Escrow Agent for cancellation
of all outstanding Escrow Receipts.
Section 1.04. Payments to Receiptholders. All payments and distributions
made to holders of an Escrow Receipt (collectively "Receiptholders") in respect
of the Escrow Receipt shall be made only from amounts deposited in the Paying
Agent Account ("Account Amounts"). Each Receiptholder, by its acceptance of an
Escrow Receipt, agrees that (a) it will look solely to the Account Amounts for
any payment or distribution due to such Receiptholder pursuant to the terms of
the Escrow Receipt and this Agreement and (b) it will have no recourse to
Continental, the Pass Through Trustee, the Paying Agent or the Escrow Agent,
except as expressly provided herein or in the Pass Through Trust Agreement. No
Receiptholder shall have any right to vote or in any manner otherwise control
the operation and management of the Paying Agent Account or the obligations of
the parties hereto, nor shall anything set forth herein, or contained in the
terms of the Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt. If
(a) any mutilated Escrow Receipt is surrendered to the Escrow Agent or the
Escrow Agent receives evidence to its satisfaction of the destruction, loss or
theft of any Escrow Receipt and (b) there is delivered to the Escrow Agent and
the Pass Through Trustee such security, indemnity or bond, as may be required
by them to hold each of them harmless, then, absent notice to the Escrow Agent
or the Pass Through Trustee that such destroyed, lost or stolen Escrow Receipt
has been acquired by a bona fide purchaser, and provided that the requirements
of Section 8-405 of the Uniform Commercial Code in effect in any applicable
jurisdiction are met, the Escrow Agent shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Escrow Receipt, a new Escrow Receipt or Escrow Receipts and of like Escrow
Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Escrow Receipt under this
Section 1.05, the Escrow Agent may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicative Escrow Receipt issued pursuant to this Section 1.05 shall
constitute conclusive evidence of the appropriate Escrow Interest in the
Account Amounts, as if originally issued, whether or not the lost, stolen or
destroyed Escrow Receipt shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Escrow Receipts.
Section 1.06. Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
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Section 1.07. Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving 30 days' prior written notice
thereof to the Investors, but may not otherwise be removed except for cause by
the written consent of the Investors with respect to Investors representing
Escrow Interests aggregating not less than a majority in interest in the
Account Amounts (an "Action of Investors"). Upon any such resignation or
removal, the Investors, by an Action of Investors, shall have the right to
appoint a successor Escrow Agent. If no successor Escrow Agent shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Escrow Agent's giving of notice of resignation or the removal of the
retiring Escrow Agent, then the retiring Escrow Agent may appoint a successor
Escrow Agent, which shall be a bank which has an office in the United States
with a combined capital and surplus of at least $100,000,000. Upon the
acceptance of any appointment as Escrow Agent hereunder by a successor Escrow
Agent, such successor Escrow Agent shall enter into such documents as the Pass
Through Trustee shall require and shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations hereunder. No resignation or removal of the Escrow Agent shall be
effective unless a written confirmation shall have been obtained from each of
Moody's Investors Service, Inc. and Standard & Poor's Rating Group, a division
of McGraw-Hill Inc., that the replacement of the Escrow Agent with the
successor Escrow Agent will not result in (a) a reduction of the rating for the
Certificates below the then current rating for the Certificates or (b) a
withdrawal or suspension of the rating of the Certificates.
Section 1.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and none of the Escrow Agent or the Paying Agent shall be affected
by any notice to the contrary.
Section 1.09. Further Assurances. The Escrow Agent agrees to take such
actions, and execute such other documents, as may be reasonably requested by
the Pass Through Trustee in order to effectuate the purposes of this Agreement
and the performance by the Escrow Agent of its obligations hereunder.
SECTION 2. Paying Agent.
Section 2.01. Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and
with such powers as are specifically delegated to the Paying Agent by the terms
of this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account
(as defined below) for the benefit of the Investors. The Paying Agent (which
term as used in this sentence shall include reference to its affiliates and its
own and its affiliates' officers, directors,
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employees and agents): (a) shall have no duties or responsibilities except
those expressly set forth in this Agreement, and shall not by reason of this
Agreement be a trustee for the Escrow Agent; (b) shall not be responsible to
the Escrow Agent for any recitals, statements, representations or warranties of
any person other then itself contained in this Agreement or for the failure by
the Escrow Agent or any other person or entity (other than the Paying Agent) to
perform any of its obligations hereunder (whether or not the Paying Agent shall
have any knowledge thereof); and (c) shall not be responsible for any action
taken or omitted to be taken by it hereunder or provided for herein or in
connection herewith, except for its own willful misconduct or gross negligence
(or simple negligence in connection with the handling of funds).
Section 2.02. Establishment of Paying Agent Account. The Paying Agent
shall establish a deposit account (the "Paying Agent Account") at Wilmington
Trust Company in the name of the Escrow Agent. It is expressly understood by
the parties hereto that the Paying Agent is acting as the paying agent of the
Escrow Agent hereunder and that no amounts on deposit in the Paying Agent
Account constitute part of the Trust Property.
Section 2.03. Payments from Paying Agent Account. The Escrow Agent
hereby irrevocably instructs the Paying Agent, and the Paying Agent agrees to
act, as follows:
(a) on each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed
receipt in the Paying Agent Account from the Depositary of any amount in
respect of accrued interest on the Deposits, the Paying Agent shall
distribute out of the Paying Agent Account the entire amount deposited
therein by the Depositary. There shall be so distributed to each
Receiptholder of record on the 15th day (whether or not a Business Day)
preceding such Interest Payment Date by check mailed to such
Receiptholder, at the address appearing in the Register, such
Receiptholder's pro rata share (based on the Escrow Interest in the
Account Amounts held by such Receiptholder) of the total amount of
interest deposited by the Depositary in the Paying Agent Account on such
date, except that, with respect to Escrow Receipts registered on the
Record Date in the name of DTC, such distribution shall be made by wire
transfer in immediately available funds to the account designated by DTC.
(b) upon the confirmation by the Paying Agent of receipt in the
Paying Agent Account from the Depositary of any amount in respect of the
Final Withdrawal, the Paying Agent shall forthwith distribute the entire
amount of the Final Withdrawal deposited therein by the Depositary.
There shall be so distributed to each Receiptholder of record on the 15th
day (whether or not a Business Day) preceding the Final Withdrawal Date
by check mailed to such Receiptholder, at the address appearing in the
Register, such Receiptholder's pro rata share (based on the Escrow
Interest in the Account Amounts held by such Receiptholder) of the total
amount in the Paying Agent Account on account of such Final Withdrawal,
except that, with respect to Escrow Receipts registered on the Record
Date in the name of DTC, such distribution shall be made by wire transfer
in immediately available funds to the account designated by DTC.
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(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five days of the
applicable date when due, then it shall be distributed to Receiptholders
after actual receipt by the Paying Agent on the same basis as a Special
Payment is distributed under the Pass Through Trust Agreement.
(d) the Paying Agent shall include with any check mailed pursuant to
this Section any notice required to be distributed under the Pass Through
Trust Agreement that is furnished to the Paying Agent by the Pass Through
Trustee.
Section 2.04. Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits and any
amount in respect of the Final Withdrawal any and all withholding taxes
applicable thereto as required by law. In addition, the Paying Agent shall
remit or cause to be remitted such amounts as would be required by Section 1446
of the Internal Revenue Code of 1986, as amended, as if the agreements of the
Initial Purchasers set forth in this Agreement were characterized as a
partnership engaged in a U.S. trade or business for U.S. federal income tax
purposes and shall withhold or cause to be withheld such amounts from amounts
distributable to or for the benefit of Receiptholders or beneficial owners of
interests in Escrow Receipts that are not United States persons within the
meaning of section 7701 (a)(30) of the Internal Revenue Code of 1986, as
amended ("Non-U.S. Persons"). In this regard, the Paying Agent shall cause the
appropriate withholding agent to withhold with respect to such distributions in
the manner contemplated by Section 10.04 of Revenue Procedure 89-31 and
Treasury Regulation 1.1445-8(b)(3)) by filing a notice with the National
Association of Securities Dealers, Inc. substantially in the form of Exhibits C
and D on or before the date 10 days prior to the Record Date. The Paying Agent
shall mail such notice to the National Association of Securities Dealers no
later than the date 15 days prior to the Record Date. Investors that are not
United States Persons agree to furnish a taxpayer identification number ("TIN")
to the Paying Agent and the Paying Agent shall provide such TINs to the
appropriate U.S. withholding agent. The Paying Agent agrees to act as such
withholding agent (except to the extent contemplated above with respect to
withholding amounts as if the agreements of the Initial Purchasers as set forth
in this Agreement were characterized as a business engaged in a U.S. trade or
business for U.S. federal income tax purposes) and, in connection therewith,
whenever any present or future taxes or similar charges are required to be
withheld with respect to any amounts payable in respect of the Deposits or the
escrow amounts, to withhold such amounts and timely pay the same to the
appropriate authority in the name of and on behalf of the Receiptholders, that
it will file any necessary withholding tax returns or statements when due, and
that, as promptly as possible after the payment thereof, it will deliver to
each such Receiptholder appropriate documentation showing the payment thereof,
together with such additional documentary evidence as such Receiptholder may
reasonably request from time to time. The Paying Agent agrees to file any
other information reports as it may be required to file under United States
law. Each Receiptholder or beneficial owner of an interest in an Escrow
Receipt that is a Non-U.S. Person, by its acceptance of an Escrow Receipt or a
beneficial interest therein, agrees to indemnify and hold harmless the Escrow
Agent and the Paying Agent from and against any improper failure to withhold
Taxes from amounts payable to it or for its benefit other
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than an improper failure attributable to the gross negligence or willful
misconduct of the Escrow Agent or the Paying Agent, as the case may be.
Section 2.05. Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to the Escrow Agent, but may not otherwise be removed except for cause
by the Escrow Agent. Upon any such resignation or removal, the Escrow Agent
shall have the right to appoint a successor Paying Agent. If no successor
Paying Agent shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Paying Agent's giving of notice
of resignation or the removal of the retiring Paying Agent, then the retiring
Paying Agent may appoint a successor Paying Agent, which shall be a bank which
has an office in the United States with a combined capital and surplus of at
least $ 100,000,000. Upon the acceptance of any appointment as Paying Agent
hereunder by a successor Paying Agent, such successor Paying Agent shall enter
into such documents as the Escrow Agent shall require and shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Paying Agent, and the retiring Paying Agent shall be discharged
from its duties and obligations hereunder.
Section 2.06. Notice of Final Withdrawal. Promptly after receipt by the
Paying Agent of notice that the Escrow Agent has requested a Final Withdrawal
or that a Final Withdrawal will be made, the Paying Agent shall cause notice of
the distribution of the Final Withdrawal to be mailed to each of the
Receiptholders at its address as it appears in the Register. Such notice shall
be mailed not less than 20 days prior to the Final Withdrawal Date. Such
notice shall set forth
(i) the Final Withdrawal Date and the date for determining
Receiptholders of record who shall be entitled to receive
distributions in respect of the Final Withdrawal,
(ii) the amount of the payment in respect of the Final
Withdrawal for each $ 1,000 face amount Certificate (based on
information provided by the Pass Through Trustee) and the amount
thereof constituting unused Deposits and interest thereon, and
(iii) if the Final Withdrawal Date is the same date as a
Regular Distribution Date, the total amount to be received on such
date for each $ 1,000 face amount Certificate (based on information
provided by the Pass Through Trustee).
Such mailing may include any notice required to be given to
Certificateholders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Section 4
of the Deposit Agreement that all amounts payable to the Escrow Agent under the
Deposit Agreement be paid by the Depositary directly to the Paying Agent or the
Pass Through Trustee (depending on the circumstances), the Escrow
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Agent receives any payment thereunder, then the Escrow Agent shall forthwith
pay such amount in Dollars and in immediately available funds by wire transfer
to (a) in the case of a payment of accrued interest on the Deposits or any
Final Withdrawal, directly to the Paying Agent Account and (b) in the case of
any Purchase Withdrawal, directly to the Pass Through Trustee or its designee
as specified and in the manner provided in the Applicable Notice of Purchase
Withdrawal. The Escrow Agent hereby waives any and all rights of set-off,
combination of accounts, right of retention or similar right (whether arising
under applicable law, contract or otherwise) it may have against amounts
payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other actions
under or in respect of the Deposit Agreement (including, without limitation,
the enforcement of the obligations of the Depositary thereunder) as the
Investors, by an Action of Investors, may from time to time request.
SECTION 5. Representations and Warranties of the Escrow Agent. The
Escrow Agent represents and warrants to Continental, the Investors, the Paying
Agent and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United
States of America;
(ii) it has full power, authority and legal right to conduct
its business and operations as currently conducted and to enter
into and perform its obligations under this Agreement and the
Deposit Agreement;
(iii) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by
all necessary corporate action on the part of it and do not require
any stockholder approval, or approval or consent of any trustee or
holder of any indebtedness or obligations of it, and each such
document has been duly executed and delivered by it and constitutes
its legal, valid and binding obligations enforceable against it in
accordance with the terms hereof or thereof except as such
enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement
of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action
by, and no notice to or filing with, any United States federal or
state governmental authority or regulatory body is required for the
execution, delivery or performance by it of this Agreement or the
Deposit Agreement;
(v) neither the execution, delivery or performance by it of
this Agreement or the Deposit Agreement, nor compliance with the
terms and provisions hereof or thereof, conflicts or will conflict
with or results or will result in a breach or violation of any of
the terms, conditions or provisions of, or will
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require any consent or approval under, any law, governmental rule
or regulation or the charter documents, as amended, or bylaws, as
amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental
authority against it or by which it or any of its properties is
bound or any indenture, mortgage contract or other agreement or
instrument to which it is a party or by which it or any of its
properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened
actions, suits, investigations or proceedings (whether or not
purportedly on behalf of it) against or affecting it or any of its
property before or by any court or administrative agency which, if
adversely determined, (A) would adversely affect the ability of it
to perform its obligations under this Agreement or the Deposit
Agreement or (B) would call into question or challenge the validity
of this Agreement or the Deposit Agreement or the enforceability
hereof or thereof in accordance with the terms hereof or thereof,
nor is the Escrow Agent in default with respect to any order of any
court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its
obligations under this Agreement or the Deposit Agreement.
SECTION 6. Representations and Warranties of the Paying Agent. The
Paying Agent represents and warrants to Continental, the Investors, the Escrow
Agent and the Pass Through Trustee as follows:
(i) it is a Delaware banking company duly organized and
validly existing in good standing under the laws of its
jurisdiction of incorporation;
(ii) it has full power, authority and legal right to conduct
its business and operations as currently conducted and to enter
into and perform its obligations under this Agreement;
(iii) the execution, delivery and performance of this
Agreement has been duly authorized by all necessary corporate
action on the part of it and does not require any stockholder
approval, or approval or consent of any trustee or holder of any
indebtedness or obligations of it, and such document has been duly
executed and delivered by it and constitutes its legal, valid and
binding obligations enforceable against it in accordance with the
terms hereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar
laws or equitable principles of general application to or affecting
the enforcement of creditors' rights generally (regardless of
whether such enforceability is considered in a proceeding in equity
or at law);
(iv) no authorization, consent or approval of or other action
by, and no notice to or filing with, any United States federal or
state governmental authority
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or regulatory body is required for the execution, delivery or
performance by it of this Agreement;
(v) neither the execution, delivery or performance by it of
this Agreement, nor compliance with the terms and provisions
hereof, conflicts or will conflict with or results or will result
in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any
law, governmental rule or regulation or the charter documents, as
amended, or bylaws, as amended, of it or any similar instrument
binding on it or any order, writ, injunction or decree of any court
or governmental authority against it or by which it or any of its
properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or
any of its properties is bound, or constitutes or will constitute a
default thereunder or results or will result in the imposition of
any lien upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened
actions, suits, investigations or proceedings (whether or not
purportedly on behalf of it) against or affecting it or any of its
property before or by any court or administrative agency which, if
adversely determined, (A) would adversely affect the ability of it
to perform its obligations under this Agreement or (B) would call
into question or challenge the validity of this Agreement or the
enforceability hereof in accordance with the terms hereof, nor is
the Paying Agent in default with respect to any order of any court,
governmental authority, arbitration board or administrative agency
so as to adversely affect its ability to perform its obligations
under this Agreement.
SECTION 7. Indemnification. Except for actions expressly required of the
Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to
act hereunder unless it shall have been indemnified by the party requesting
such action in a manner reasonably satisfactory to it against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. In the event Continental requests any
amendment to any Operative Agreement (as defined in the Note Purchase
Agreement), the Pass Through Trustee agrees to pay all reasonable fees and
expenses (including, without limitation, fees and disbursements of counsel) of
the Escrow Agent and the Paying Agent in connection therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee and
approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely
affect the rights or obligations of the Escrow Agent or the Paying Agent,
provided that upon request of the Pass Through Trustee and without any consent
of the Investors, the Escrow Agent shall enter into an amendment to this
Agreement for any of the following purposes:
(1) to correct or supplement any provision in this Agreement which may be
defective or inconsistent with any other provision herein or to cure any
ambiguity or
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correct any mistake or to modify any other provision with respect to matters or
questions arising under this Agreement, provided that any such action shall not
materially adversely affect the interests of the Investors; or
(2) to comply with any requirement of the SEC, applicable law, rules or
regulations of any exchange or quotation system on which the Certificates are
listed, any regulatory body or the Registration Rights Agreement to effectuate
the Exchange Offer; or
(3) to evidence and provide for the acceptance of appointment under this
Agreement of a successor Escrow Agent, successor Paying Agent or successor Pass
Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (a) in the case of the
Investors, as their respective addresses shall appear in the Register, (b) in
the case of the Escrow Agent, First Security Bank, National Association, 79
South Main Street, Salt Lake City, UT 84111, Attention: Corporate Trust
Services (Telecopier: (801) 246-5053), (c) in the case of the Pass Through
Trustee, Wilmington Trust Company, 1100 North Market Street, Wilmington, DE
19890, Attention: Corporate Trust Administration (Telecopier: (302) 651-8882)
or (d) in the case of the Paying Agent, Wilmington Trust Company, 1100 North
Market Street, Wilmington, DE 19890, Attention: Corporate Trust Administration
(Telecopier: (302) 651-8882), in each case with a copy to Continental,
Continental Airlines, Inc., 2929 Allen Parkway, Suite 2010, Houston, TX 77019,
Attention: Executive Vice President and Chief Financial Officer (Telecopier:
(713) 520-6329) (or at such other address as any such party may specify from
time to time in a written notice to the other parties). On or prior to the
execution of this Agreement, the Pass Through Trustee has delivered to the
Escrow Agent a certificate containing specimen signatures of the
representatives of the Pass Through Trustee who are authorized to give notices
and instructions with respect to this Agreement. The Escrow Agent may
conclusively rely on such certificate until the Escrow Agent receives written
notice from the Pass Through Trustee to the contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.06 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.04 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns. Upon the occurrence of the Transfer (as defined
below) contemplated by the Assignment and Assumption Agreement (as defined
below), the Pass Through Trustee shall (without further act) be deemed to have
transferred all of its right, title and interest in and to this Agreement to
the trustee of the Successor Trust (as defined below) and, thereafter, the
trustee of the Successor Trust shall be deemed to be the "Pass Through Trustee"
hereunder with the rights and obligations of the "Pass Through Trustee"
hereunder and each reference herein to "Continental Airlines Pass Through Trust
1997- 1 C-I-O" shall be deemed to
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be a reference to "Continental Airlines Pass Through Trust 1997-lC-I-S". The
parties hereto hereby acknowledge and consent to the Transfer contemplated by
the Assignment and Assumption Agreement. As used herein, "Transfer" means the
transfers of the assets to the Successor Trust contemplated by the Assignment
and Assumption Agreement; "Assignment and Assumption Agreement" means the
Assignment and Assumption Agreement to be entered into between the Pass Through
Trustee and the trustee of the Successor Trust, substantially in the form of
Exhibit D to the Pass Through Trust Agreement; "Successor Trust" means the
Continental Airlines Pass Through Trust 1997-IC-I-S.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Initial Purchasers and the Pass Through Trustee
with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 13. Waiver of Jury Trial Right. EACH OF THE ESCROW AGENT, THE
PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
16
14
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the Initial
Purchasers and the Pass Through Trustee have caused this Escrow and Paying
Agent Agreement (Class C-l) to be duly executed as of the day and year first
above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By
---------------------------------------
Name:
Title
CREDIT SUISSE FIRST BOSTON CORPORATION;
MORGAN STANLEY & CO. INCORPORATED;
CHASE SECURITIES INC.; and
GOLDMAN, SACHS & CO.,
as Initial Purchasers
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By
---------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Pass
Through Trustee for and on behalf of
Continental Airlines Pass Through
Trust 1997-1C-I-O
By
---------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Paying Agent
By
---------------------------------------
Name:
Title:
17
EXHIBIT A
CONTINENTAL AIRLINES 1997- I C-l ESCROW RECEIPT
No. ___
This Escrow Receipt evidences a fractional undivided interest in amounts
("Account Amounts") from time to time deposited into a certain paying agent
account (the "Paying Agent Account") described in the Escrow and Paying Agent
Agreement (Class C-l) dated as of March 21, 1997 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Security Bank, National Association, as Escrow Agent (in such capacity,
together with its successors in such capacity, the "Escrow Agent"), Credit
Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial Purchasers, Wilmington
Trust Company, as Pass Through Trustee (in such capacity, together with its
successors in such capacity, the "Pass Through Trustee") and Wilmington Trust
Company, as paying agent (in such capacity, together with its successors in
such capacity, the "Paying Agent"). Capitalized terms not defined herein shall
have the meanings assigned to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue
of its acceptance hereof the holder of this Escrow Receipt assents and agrees
to be bound by the provisions of the Escrow and Paying Agent Agreement and this
Escrow Receipt.
This Escrow Receipt represents a fractional undivided interest in amounts
deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any
assets or property other than such amounts. This Escrow Receipt evidences the
same percentage interest in the Account Amounts as the Fractional Undivided
Interest in the Pass Through Trust evidenced by the Certificate to which this
Escrow Receipt is affixed.
All payments and distributions made to Receiptholders in respect of the
Escrow Receipt shall be made only from Account Amounts deposited in the Paying
Agent Account. The holder of this Escrow Receipt, by its acceptance of this
Escrow Receipt, agrees that it will look solely to the Account Amounts for any
payment or distribution due to it pursuant to this Escrow Receipt and that it
will not have any recourse to Continental, the Pass Through Trustee, the Paying
Agent or the Escrow Agent, except as expressly provided herein or in the Pass
Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have
any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account, nor shall anything set forth herein, or
contained in the terms of this Escrow Receipt, be construed so as to constitute
the Receiptholders from time to time as partners or members of an association.
This Escrow Receipt may not be assigned or transferred except in
connection with the assignment or transfer of the Certificate to which this
Escrow Receipt is affixed. After payment to the holder hereof of its Escrow
Interest in the Final Distribution, upon the request of
18
2
the Pass Through Trustee, the holder hereof will return this Escrow Receipt to
the Pass Through Trustee.
The Paying Agent may treat the person in whose name the Certificate to
which this Escrow Receipt is attached as the owner hereof for all purposes, and
the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt to be
duly executed.
Dated: __________________, 1997
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
----------------------------------------
Name:
Title:
19
EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class C-I)
First Security Bank, National Association, as Escrow Agent
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as of
March 21, 1997 (the "Agreement"). We hereby certify to you that the conditions
to the obligations of the undersigned to execute a Participation Agreement
pursuant to the Note Purchase Agreement have been satisfied. Pursuant to
Section 1.02(c) of the Agreement, please execute the attached Notice of
Withdrawal and immediately transmit by facsimile to the Depositary, at (212)
325-8319, Attention: Robert Finney and Kevin Kappell.
Very truly yours,
WILMINGTON TRUST COMPANY
not in its individual capacity by
solely as Pass Through Trustee
By
----------------------------------------
Name:
Title:
Dated: ________________ ___, 199_
1
EXHIBIT 4.26
===============================================================================
ESCROW AND PAYING AGENT AGREEMENT
(Class C-II)
Dated as of March 21, 1997
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
CREDIT SUISSE FIRST BOSTON CORPORATION
MORGAN STANLEY & CO. INCORPORATED
CHASE SECURITIES INC.
and
GOLDMAN, SACHS & CO.
as Initial Purchasers
WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Continental Airlines Pass Through Trust 1997-1C-II-O
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
===============================================================================
2
TABLE OF CONTENTS
Page
----
SECTION 1. Escrow Agent ................................................. 2
Section 1.01. Appointment of Escrow Agent ............................. 2
Section 1.02. Instruction; Etc. ....................................... 3
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts....... 4
Section 1.04. Payments to Receiptholders .............................. 5
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt...... 5
Section 1.06. Additional Escrow Amounts ............................... 6
Section 1.07. Resignation or Removal of Escrow Agent .................. 6
Section 1.08. Persons Deemed Owners ................................... 7
Section 1.09. Further Assurances ...................................... 7
SECTION 2. Paying Agent ................................................. 7
Section 2.01. Appointment of Paying Agent ............................. 7
Section 2.02. Establishment of Paying Agent Account ................... 8
Section 2.03. Payments from Paying Agent Account ...................... 8
Section 2.04. Withholding Taxes ....................................... 9
Section 2.05. Resignation or Removal of Paying Agent .................. 10
Section 2.06. Notice of Final Withdrawal .............................. 11
SECTION 3. Payments ..................................................... 11
SECTION 4. Other Actions ................................................ 12
SECTION 5. Representations and Warranties of the Escrow Agent ........... 12
SECTION 6. Representations and Warranties of the Paying Agent ........... 14
SECTION 7. Indemnification .............................................. 15
SECTION 8. Amendment, Etc. .............................................. 15
SECTION 9. Notices ...................................................... 16
SECTION 10. Transfer ..................................................... 17
SECTION 11. Entire Agreement ............................................. 17
3
TABLE OF CONTENTS
(CONTINUED)
Page
----
SECTION 12. Governing Law ................................................ 17
SECTION 13. Waiver of Jury Trial Right ................................... 18
SECTION 14. Counterparts ................................................. 18
4
ESCROW AND PAYING AGENT AGREEMENT (Class C-II) dated as of March 21, 1997
(as amended, modified or supplemented from time to time, this "Agreement")
among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, as Escrow Agent (in such capacity, together with its successors in
such capacity, the "Escrow Agent"); CREDIT SUISSE FIRST BOSTON CORPORATION,
MORGAN STANLEY & CO. INCORPORATED, CHASE SECURITIES INC. and GOLDMAN, SACHS &
CO., as Initial Purchasers of the below referred to Certificates (the "Initial
Purchasers" and together with their respective transferees and assigns as
registered owners of the Certificates, the "Investors") under the Certificate
Purchase Agreement referred to below; WILMINGTON TRUST COMPANY, a Delaware
banking corporation, not in its individual capacity except as otherwise
expressly provided herein, but solely as trustee (in such capacity, together
with its successors in such capacity, the "Pass Through Trustee") under the
Pass Through Trust Agreement referred to below; and WILMINGTON TRUST COMPANY, a
Delaware banking corporation, as paying agent hereunder (in such capacity,
together with its successors in such capacity, the "Paying Agent").
W I T N E S S E T H
WHEREAS, Continental Airlines, Inc. ("Continental") and the Pass Through
Trustee have entered into a Pass Through Trust Agreement, dated as of March 21,
1997 (as amended, modified or supplemented from time to time in accordance with
the terms thereof, the "Pass Through Trust Agreement") relating to Continental
Airlines Pass Through Trust 1997-1C-II-O (the "Pass Through Trust") pursuant to
which the Continental Airlines Pass Through Trust, Series 1997-1C-II-O
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Continental and the Initial Purchasers have entered into a
Certificate Purchase Agreement dated as of March 12, 1997 (as amended, modified
or supplemented from time to time in accordance with the terms thereof, the
"Certificate Purchase Agreement") pursuant to which the Pass Through Trustee
will issue and sell the Certificates to the Initial Purchasers;
WHEREAS, Continental, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
5
2
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire
from time to time on or prior to the Delivery Period Termination Date (as
defined in the Note Purchase Agreement) equipment notes (the "Equipment Notes")
issued to finance the acquisition of aircraft by Continental, as lessee or as
owner, utilizing a portion of the proceeds from the sale of the Certificates
(the "Net Proceeds");
WHEREAS, the Initial Purchasers and the Pass Through Trustee intend that
the Net Proceeds be held in escrow by the Escrow Agent on behalf of the
Investors, subject to withdrawal upon request by the Pass Through Trustee and
satisfaction of the conditions set forth in the Note Purchase Agreement for the
purpose of purchasing Equipment Notes, and that pending such withdrawal the Net
Proceeds be deposited on behalf of the Escrow Agent with Credit Suisse First
Boston, a Swiss bank acting through its New York branch, as Depositary (the
"Depositary") under the Deposit Agreement, dated as of the date hereof between
the Depositary and the Escrow Agent relating to the Pass Through Trust (as
amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Deposit Agreement") pursuant to which, among other things,
the Depositary will pay interest for distribution to the Investors and
establish accounts from which the Escrow Agent shall make withdrawals upon
request of and proper certification by the Pass Through Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay
amounts required to be distributed to the Investors in accordance with this
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Escrow Agent.
Section 1.01. Appointment of Escrow Agent. Each of the Initial
Purchasers, for and on behalf of each of the Investors, hereby irrevocably
appoints, authorizes and directs the Escrow Agent to act as escrow agent and
fiduciary hereunder and under the Deposit Agreement for such specific purposes
and
6
3
with such powers as are specifically delegated to the Escrow Agent by the terms
of this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Escrow Agent under this
Agreement or the Deposit Agreement shall be held in escrow by the Escrow Agent
in accordance with the terms of this Agreement. This Agreement is irrevocable
and the Investors' rights with respect to any monies received and held in
escrow by the Escrow Agent under this Agreement or the Deposit Agreement shall
only be as provided under the terms and conditions of this Agreement and the
Deposit Agreement. The Escrow Agent (which term as used in this sentence shall
include reference to its affiliates and its own and its affiliates' officers,
directors, employees and agents): (a) shall have no duties or responsibilities
except those expressly set forth in this Agreement; (b) shall not be
responsible to the Pass Through Trustee or the Investors for any recitals,
statements, representations or warranties of any person other then itself
contained in this Agreement or the Deposit Agreement or for the failure by the
Pass Through Trustee, Investors or any other person or entity (other than the
Escrow Agent) to perform any of its obligations hereunder (whether or not the
Escrow Agent shall have any knowledge thereof); and (c) shall not be
responsible for any action taken or omitted to be taken by it hereunder or
provided for herein or in connection herewith, except for its own willful
misconduct or gross negligence (or simple negligence in connection with the
handling of funds).
Section 1.02. Instruction; Etc. The Initial Purchasers, for and on behalf
of each of the Investors, hereby irrevocably instruct the Escrow Agent, and the
Escrow Agent agrees, (a) to enter into the Deposit Agreement, (b) to appoint
the Paying Agent as provided in this Agreement, (c) upon receipt at any time
and from time to time prior to the Termination Date (as defined below) of a
certificate substantially in the form of Exhibit B hereto (a "Withdrawal
Certificate") executed by the Pass Through Trustee, together with an attached
Notice of Purchase Withdrawal in substantially the form of Exhibit A to the
Deposit Agreement duly completed by the Pass Through Trustee (the "Applicable
Notice of Purchase Withdrawal" and the withdrawal to which it relates, a
"Purchase Withdrawal"), immediately to execute the Applicable Notice of
Purchase Withdrawal as Escrow Agent and transmit it to the Depositary by
facsimile transmission in accordance with the Deposit Agreement; provided that,
upon the request of the Pass Through Trustee after such transmission, the
Escrow Agent shall cancel such Applicable Notice of Purchase
7
4
Withdrawal, and (d) if there are any undrawn Deposits (as defined in the
Deposit Agreement) on the "Termination Date", which shall mean the earlier of
(i) July 1, 1998 and (ii) the day on which the Escrow Agent receives notice
from the Pass Through Trustee that the Pass Through Trustee's obligation to
purchase Equipment Notes under the Note Purchase Agreement has terminated, to
give notice to the Depositary (with a copy to the Paying Agent) substantially
in the form of Exhibit B to the Deposit Agreement requesting a withdrawal of
all of the remaining Deposits, together with accrued and unpaid interest on
such Deposits to the date of withdrawal, on the 35th day after the date that
such notice of withdrawal is given to the Depositary (or, if not a Business
Day, on the next succeeding Business Day) (a "Final Withdrawal"), provided that
if the day scheduled for the Final Withdrawal in accordance with the foregoing
is within 10 days before or after a Regular Distribution Date, then the Escrow
Agent shall request that such requested Final Withdrawal be made on such
Regular Distribution Date (the date of such requested withdrawal, the "Final
Withdrawal Date"). If for any reason the Escrow Agent shall have failed to
give the Final Withdrawal Notice to the Depositary on or before July 6, 1998,
and there are unwithdrawn Deposits on such date, the Final Withdrawal Date
shall be deemed to be July 31, 1998.
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts. The
Escrow Agent hereby directs the Initial Purchasers to, and the Initial
Purchasers hereby acknowledge that on the date hereof they shall, irrevocably
deliver to the Depositary on behalf of the Escrow Agent, an amount in U.S.
dollars ("Dollars") and immediately available funds equal to $10,000,000.00 for
deposit on behalf of the Escrow Agent with the Depositary in accordance with
Section 2.1 of the Deposit Agreement. The Initial Purchasers hereby instruct
the Escrow Agent, upon receipt of such sum from the Initial Purchasers, to
confirm such receipt by executing and delivering to the Pass Through Trustee an
Escrow Receipt in the form of Exhibit A hereto (an "Escrow Receipt"), (a) to be
affixed by the Pass Through Trustee to each Certificate and (b) to evidence the
same percentage interest (the "Escrow Interest") in the Account Amounts as the
Fractional Undivided Interest in the Pass Through Trust evidenced by the
Certificate to which it is to be affixed. The Escrow Agent shall provide to
the Pass Through Trustee for attachment to each Certificate newly issued under
and in accordance with the Pass Through Trust Agreement an executed Escrow
Receipt as the Pass Through Trustee may from time to time
8
5
request of the Escrow Agent. Each Escrow Receipt shall be registered by the
Escrow Agent in a register (the "Register") maintained by the Escrow Agent in
the same name and same manner as the Certificate to which it is attached and
may not thereafter be detached from such Certificate to which it is to be
affixed prior to the distribution of the Final Withdrawal (the "Final
Distribution"). After the Final Distribution, no Escrow Receipts shall be
issued and the Pass Through Trustee shall request the return to the Escrow
Agent for cancellation of all outstanding Escrow Receipts.
Section 1.04. Payments to Receiptholders. All payments and distributions
made to holders of an Escrow Receipt (collectively "Receiptholders") in respect
of the Escrow Receipt shall be made only from amounts deposited in the Paying
Agent Account ("Account Amounts"). Each Receiptholder, by its acceptance of an
Escrow Receipt, agrees that (a) it will look solely to the Account Amounts for
any payment or distribution due to such Receiptholder pursuant to the terms of
the Escrow Receipt and this Agreement and (b) it will have no recourse to
Continental, the Pass Through Trustee, the Paying Agent or the Escrow Agent,
except as expressly provided herein or in the Pass Through Trust Agreement. No
Receiptholder shall have any right to vote or in any manner otherwise control
the operation and management of the Paying Agent Account or the obligations of
the parties hereto, nor shall anything set forth herein, or contained in the
terms of the Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt. If (a)
any mutilated Escrow Receipt is surrendered to the Escrow Agent or the Escrow
Agent receives evidence to its satisfaction of the destruction, loss or theft
of any Escrow Receipt and (b)Ethere is delivered to the Escrow Agent and the
Pass Through Trustee such security, indemnity or bond, as may be required by
them to hold each of them harmless, then, absent notice to the Escrow Agent or
the Pass Through Trustee that such destroyed, lost or stolen Escrow Receipt has
been acquired by a bona fide purchaser, and provided that the requirements of
Section 8-405 of the Uniform Commercial Code in effect in any applicable
jurisdiction are met, the Escrow Agent shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Escrow Receipt, a new Escrow Receipt or Escrow Receipts and of like
9
6
Escrow Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Escrow Receipt under this
Section 1.05, the Escrow Agent may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicative Escrow Receipt issued pursuant to this Section 1.05 shall
constitute conclusive evidence of the appropriate Escrow Interest in the
Account Amounts, as if originally issued, whether or not the lost, stolen or
destroyed Escrow Receipt shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Escrow Receipts.
Section 1.06. Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.07. Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving 30 days' prior written notice
thereof to the Investors, but may not otherwise be removed except for cause by
the written consent of the Investors with respect to Investors representing
Escrow Interests aggregating not less than a majority in interest in the
Account Amounts (an "Action of Investors"). Upon any such resignation or
removal, the Investors, by an Action of Investors, shall have the right to
appoint a successor Escrow Agent. If no successor Escrow Agent shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Escrow Agent's giving of notice of resignation or the removal of the
retiring Escrow Agent, then the retiring Escrow Agent may appoint a successor
Escrow Agent, which shall be a bank which has an office in the United States
with a combined capital and surplus of at least $100,000,000. Upon the
acceptance of any appointment as Escrow Agent hereunder by a successor Escrow
10
7
Agent, such successor Escrow Agent shall enter into such documents as the Pass
Through Trustee shall require and shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations hereunder. No resignation or removal of the Escrow Agent shall be
effective unless a written confirmation shall have been obtained from each of
Moody's Investors Service, Inc. and Standard & Poor's Rating Group, a division
of McGraw-Hill Inc., that the replacement of the Escrow Agent with the
successor Escrow Agent will not result in (a) a reduction of the rating for the
Certificates below the then current rating for the Certificates or (b) a
withdrawal or suspension of the rating of the Certificates.
Section 1.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and none of the Escrow Agent or the Paying Agent shall be affected
by any notice to the contrary.
Section 1.09. Further Assurances. The Escrow Agent agrees to take such
actions, and execute such other documents, as may be reasonably requested by
the Pass Through Trustee in order to effectuate the purposes of this Agreement
and the performance by the Escrow Agent of its obligations hereunder.
SECTION 2. Paying Agent.
Section 2.01. Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and
with such powers as are specifically delegated to the Paying Agent by the terms
of this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account
(as defined below) for the benefit of the Investors. The Paying Agent (which
term as used in this sentence shall include reference to its affiliates and its
own and its affiliates' officers, directors, employees and
11
8
agents): (a) shall have no duties or responsibilities except those expressly
set forth in this Agreement, and shall not by reason of this Agreement be a
trustee for the Escrow Agent; (b) shall not be responsible to the Escrow Agent
for any recitals, statements, representations or warranties of any person other
then itself contained in this Agreement or for the failure by the Escrow Agent
or any other person or entity (other than the Paying Agent) to perform any of
its obligations hereunder (whether or not the Paying Agent shall have any
knowledge thereof); and (c) shall not be responsible for any action taken or
omitted to be taken by it hereunder or provided for herein or in connection
herewith, except for its own willful misconduct or gross negligence (or simple
negligence in connection with the handling of funds).
Section 2.02. Establishment of Paying Agent Account. The Paying Agent
shall establish a deposit account (the "Paying Agent Account") at Wilmington
Trust Company in the name of the Escrow Agent. It is expressly understood by
the parties hereto that the Paying Agent is acting as the paying agent of the
Escrow Agent hereunder and that no amounts on deposit in the Paying Agent
Account constitute part of the Trust Property.
Section 2.03. Payments from Paying Agent Account. The Escrow Agent hereby
irrevocably instructs the Paying Agent, and the Paying Agent agrees to act, as
follows:
(a) on each Interest Payment Date (as defined in the Deposit Agreement) or
as soon thereafter as the Paying Agent has confirmed receipt in the Paying
Agent Account from the Depositary of any amount in respect of accrued interest
on the Deposits, the Paying Agent shall distribute out of the Paying Agent
Account the entire amount deposited therein by the Depositary. There shall be
so distributed to each Receiptholder of record on the 15th day (whether or not
a Business Day) preceding such Interest Payment Date by check mailed to such
Receiptholder, at the address appearing in the Register, such Receiptholder's
pro rata share (based on the Escrow Interest in the Account Amounts held by
such Receiptholder) of the total amount of interest deposited by the Depositary
in the Paying Agent Account on such date, except that, with respect to Escrow
Receipts registered on the Record Date in the name of DTC, such distribution
shall be made by wire transfer in immediately available funds to the account
designated by DTC.
12
9
(b) upon the confirmation by the Paying Agent of receipt in the Paying
Agent Account from the Depositary of any amount in respect of the Final
Withdrawal, the Paying Agent shall forthwith distribute the entire amount of
the Final Withdrawal deposited therein by the Depositary. There shall be so
distributed to each Receiptholder of record on the 15th day (whether or not a
Business Day) preceding the Final Withdrawal Date by check mailed to such
Receiptholder, at the address appearing in the Register, such Receiptholder's
pro rata share (based on the Escrow Interest in the Account Amounts held by
such Receiptholder) of the total amount in the Paying Agent Account on account
of such Final Withdrawal, except that, with respect to Escrow Receipts
registered on the Record Date in the name of DTC, such distribution shall be
made by wire transfer in immediately available funds to the account designated
by DTC.
(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five days of the
applicable date when due, then it shall be distributed to Receiptholders after
actual receipt by the Paying Agent on the same basis as a Special Payment is
distributed under the Pass Through Trust Agreement.
(d) the Paying Agent shall include with any check mailed pursuant to this
Section any notice required to be distributed under the Pass Through Trust
Agreement that is furnished to the Paying Agent by the Pass Through Trustee.
Section 2.04. Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits and any
amount in respect of the Final Withdrawal any and all withholding taxes
applicable thereto as required by law. In addition, the Paying Agent shall
remit or cause to be remitted such amounts as would be required by Section 1446
of the Internal Revenue Code of 1986, as amended, as if the agreements of the
Initial Purchasers set forth in this Agreement were characterized as a
partnership engaged in a U.S. trade or business for U.S. federal income tax
purposes and shall withhold or cause to be withheld such amounts from amounts
distributable to or for the benefit of Receiptholders or beneficial owners of
interests in Escrow Receipts that are not United States persons within the
meaning of section 7701(a)(30) of the Internal Revenue Code of 1986, as amended
("Non-U.S. Persons"). In this regard, the Paying Agent shall cause the
appropriate withholding agent to withhold with respect to such distributions in
the manner
13
10
contemplated by Section 10.04 of Revenue Procedure 89-31 and Treasury
Regulation 1.1445-8(b)(3)) by filing a notice with the National Association of
Securities Dealers, Inc. substantially in the form of Exhibits C and D on or
before the date 10 days prior to the Record Date. The Paying Agent shall mail
such notice to the National Association of Securities Dealers no later than the
date 15 days prior to the Record Date. Investors that are not United States
Persons agree to furnish a taxpayer identification number ("TIN") to the Paying
Agent and the Paying Agent shall provide such TINs to the appropriate U.S.
withholding agent. The Paying Agent agrees to act as such withholding agent
(except to the extent contemplated above with respect to withholding amounts as
if the agreements of the Initial Purchasers as set forth in this Agreement were
characterized as a business engaged in a U.S. trade or business for U.S.
federal income tax purposes) and, in connection therewith, whenever any present
or future taxes or similar charges are required to be withheld with respect to
any amounts payable in respect of the Deposits or the escrow amounts, to
withhold such amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Receiptholders, that it will file any
necessary withholding tax returns or statements when due, and that, as promptly
as possible after the payment thereof, it will deliver to each such
Receiptholder appropriate documentation showing the payment thereof, together
with such additional documentary evidence as such Receiptholder may reasonably
request from time to time. The Paying Agent agrees to file any other
information reports as it may be required to file under United States law.
Each Receiptholder or beneficial owner of an interest in an Escrow Receipt that
is a Non-U.S. Person, by its acceptance of an Escrow Receipt or a beneficial
interest therein, agrees to indemnify and hold harmless the Escrow Agent and
the Paying Agent from and against any improper failure to withhold Taxes from
amounts payable to it or for its benefit other than an improper failure
attributable to the gross negligence or willful misconduct of the Escrow Agent
or the Paying Agent, as the case may be.
Section 2.05. Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to the Escrow Agent, but may not otherwise be removed except for cause
by the Escrow Agent. Upon any such resignation or removal, the Escrow Agent
shall have the right to appoint a successor Paying Agent. If no successor
Paying Agent shall have been so appointed and
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shall have accepted such appointment within 30 days after the retiring Paying
Agent's giving of notice of resignation or the removal of the retiring Paying
Agent, then the retiring Paying Agent may appoint a successor Paying Agent,
which shall be a bank which has an office in the United States with a combined
capital and surplus of at least $100,000,000. Upon the acceptance of any
appointment as Paying Agent hereunder by a successor Paying Agent, such
successor Paying Agent shall enter into such documents as the Escrow Agent
shall require and shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Paying Agent, and the
retiring Paying Agent shall be discharged from its duties and obligations
hereunder.
Section 2.06. Notice of Final Withdrawal. Promptly after receipt by the
Paying Agent of notice that the Escrow Agent has requested a Final Withdrawal
or that a Final Withdrawal will be made, the Paying Agent shall cause notice of
the distribution of the Final Withdrawal to be mailed to each of the
Receiptholders at its address as it appears in the Register. Such notice shall
be mailed not less than 20 days prior to the Final Withdrawal Date. Such
notice shall set forth:
(i) the Final Withdrawal Date and the date for determining
Receiptholders of record who shall be entitled to receive distributions
in respect of the Final Withdrawal,
(ii) the amount of the payment in respect of the Final Withdrawal
for each $1,000 face amount Certificate (based on information provided by
the Pass Through Trustee) and the amount thereof constituting unused
Deposits and interest thereon, and
(iii) if the Final Withdrawal Date is the same date as a Regular
Distribution Date, the total amount to be received on such date for each
$1,000 face amount Certificate (based on information provided by the Pass
Through Trustee).
Such mailing may include any notice required to be given to Certificateholders
in connection with such distribution pursuant to the Pass Through Trust
Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Section 4
of the Deposit Agreement that all amounts payable to the Escrow Agent under the
Deposit Agreement
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be paid by the Depositary directly to the Paying Agent or the Pass Through
Trustee (depending on the circumstances), the Escrow Agent receives any payment
thereunder, then the Escrow Agent shall forthwith pay such amount in Dollars
and in immediately available funds by wire transfer to (a) in the case of a
payment of accrued interest on the Deposits or any Final Withdrawal, directly
to the Paying Agent Account and (b) in the case of any Purchase Withdrawal,
directly to the Pass Through Trustee or its designee as specified and in the
manner provided in the Applicable Notice of Purchase Withdrawal. The Escrow
Agent hereby waives any and all rights of set-off, combination of accounts,
right of retention or similar right (whether arising under applicable law,
contract or otherwise) it may have against amounts payable to the Paying Agent
howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other actions
under or in respect of the Deposit Agreement (including, without limitation,
the enforcement of the obligations of the Depositary thereunder) as the
Investors, by an Action of Investors, may from time to time request.
SECTION 5. Representations and Warranties of the Escrow Agent. The
Escrow Agent represents and warrants to Continental, the Investors, the Paying
Agent and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(iii) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been
duly executed and delivered by it and constitutes its legal, valid and
binding obligations enforceable against it in accordance with the terms
hereof or thereof except as such enforceability may be limited by
bankruptcy,
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insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by,
and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement or the Deposit Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results
or will result in a breach or violation of any of the terms, conditions
or provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on
behalf of it) against or affecting it or any of its property before or by
any court or administrative agency which, if adversely determined, (A)
would adversely affect the ability of it to perform its obligations under
this Agreement or the Deposit Agreement or (B) would call into question
or challenge the validity of this Agreement or the Deposit Agreement or
the enforceability hereof or thereof in accordance with the terms hereof
or thereof, nor is the Escrow Agent in default with respect to any order
of any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
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SECTION 6. Representations and Warranties of the Paying Agent. The
Paying Agent represents and warrants to Continental, the Investors, the Escrow
Agent and the Pass Through Trustee as follows:
(i) it is a Delaware banking company duly organized and validly
existing in good standing under the laws of its jurisdiction of
incorporation;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(iii) the execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on the part of it
and does not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by,
and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation
of any of the terms, conditions or provisions of, or will require any
consent or approval under, any law, governmental rule or regulation or
the charter documents, as amended, or bylaws, as amended, of it or any
similar instrument binding on it or any order, writ, injunction or decree
of any court or governmental authority against it or by which it or any
of
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15
its properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of
its properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any lien upon
any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on
behalf of it) against or affecting it or any of its property before or by
any court or administrative agency which, if adversely determined, (A)
would adversely affect the ability of it to perform its obligations under
this Agreement or (B) would call into question or challenge the validity
of this Agreement or the enforceability hereof in accordance with the
terms hereof, nor is the Paying Agent in default with respect to any
order of any court, governmental authority, arbitration board or
administrative agency so as to adversely affect its ability to perform
its obligations under this Agreement.
SECTION 7. Indemnification. Except for actions expressly required of the
Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to
act hereunder unless it shall have been indemnified by the party requesting
such action in a manner reasonably satisfactory to it against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. In the event Continental requests any
amendment to any Operative Agreement (as defined in the Note Purchase
Agreement), the Pass Through Trustee agrees to pay all reasonable fees and
expenses (including, without limitation, fees and disbursements of counsel) of
the Escrow Agent and the Paying Agent in connection therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee and
approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely
affect the rights or obligations of the Escrow Agent or the Paying Agent,
provided that upon request of the Pass Through Trustee and without any consent
of the Investors, the Escrow Agent shall enter into an amendment to this
Agreement for any of the following purposes:
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(1) to correct or supplement any provision in this Agreement which
may be defective or inconsistent with any other provision herein or to
cure any ambiguity or correct any mistake or to modify any other
provision with respect to matters or questions arising under this
Agreement, provided that any such action shall not materially adversely
affect the interests of the Investors; or
(2) to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed, any regulatory body or the Registration Rights
Agreement to effectuate the Exchange Offer; or
(3) to evidence and provide for the acceptance of appointment under
this Agreement of a successor Escrow Agent, successor Paying Agent or
successor Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (a) in the case of the
Investors, as their respective addresses shall appear in the Register, (b)Ein
the case of the Escrow Agent, First Security Bank, National Association, 79
South Main Street, Salt Lake City, UT 84111, Attention: Corporate Trust
Services (Telecopier: (801) 246-5053), (c)Ein the case of the Pass Through
Trustee, Wilmington Trust Company, 1100 North Market Street, Wilmington, DE
19890, Attention: Corporate Trust Administration (Telecopier: (302) 651-8882)
or (d) in the case of the Paying Agent, Wilmington Trust Company, 1100 North
Market Street, Wilmington, DE 19890, Attention: Corporate Trust Administration
(Telecopier: (302) 651-8882), in each case with a copy to Continental,
Continental Airlines, Inc., 2929 Allen Parkway, Suite 2010, Houston, TX 77019,
Attention: Executive Vice President and Chief Financial Officer (Telecopier:
(713) 520-6329) (or at such other address as any such party may specify from
time to time in a written notice to the other parties). On or prior to the
execution of this Agreement, the Pass Through Trustee has delivered to the
Escrow Agent a certificate containing specimen signatures of the
representatives of the Pass Through Trustee who are authorized to give notices
and instructions with respect to this Agreement. The Escrow Agent may
conclusively rely on such certificate until
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17
the Escrow Agent receives written notice from the Pass Through Trustee to the
contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.06 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.04 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns. Upon the occurrence of the Transfer (as defined
below) contemplated by the Assignment and Assumption Agreement (as defined
below), the Pass Through Trustee shall (without further act) be deemed to have
transferred all of its right, title and interest in and to this Agreement to
the trustee of the Successor Trust (as defined below) and, thereafter, the
trustee of the Successor Trust shall be deemed to be the "Pass Through Trustee"
hereunder with the rights and obligations of the "Pass Through Trustee"
hereunder and each reference herein to "Continental Airlines Pass Through Trust
1997-1C-II-O" shall be deemed to be a reference to "Continental Airlines Pass
Through Trust 1997-1C-II-S". The parties hereto hereby acknowledge and consent
to the Transfer contemplated by the Assignment and Assumption Agreement. As
used herein, "Transfer" means the transfers of the assets to the Successor
Trust contemplated by the Assignment and Assumption Agreement; "Assignment and
Assumption Agreement" means the Assignment and Assumption Agreement to be
entered into between the Pass Through Trustee and the trustee of the Successor
Trust, substantially in the form of Exhibit D to the Pass Through Trust
Agreement; "Successor Trust" means the Continental Airlines Pass Through Trust
1997-1C-II-S.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Initial Purchasers and the Pass Through Trustee
with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
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SECTION 13. Waiver of Jury Trial Right. EACH OF THE ESCROW AGENT, THE
PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the Initial
Purchasers and the Pass Through Trustee have caused this Escrow and Paying
Agent Agreement (Class C-II) to be duly executed as of the day and year first
above written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By
----------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON
CORPORATION; MORGAN STANLEY & CO.
INCORPORATED; CHASE SECURITIES INC.;
and GOLDMAN, SACHS & CO., as Initial
Purchasers
By: CREDIT SUISSE FIRST BOSTON
CORPORATION
By
----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as
Pass Through Trustee for and on behalf of Continental Airlines Pass Through
Trust 1997-1C-II-O
By
----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, as Paying
Agent
By
----------------------------------
Name:
Title:
22
EXHIBIT A
CONTINENTAL AIRLINES 1997-1C-II ESCROW RECEIPT
No. __
This Escrow Receipt evidences a fractional undivided interest in amounts
("Account Amounts") from time to time deposited into a certain paying agent
account (the "Paying Agent Account") described in the Escrow and Paying Agent
Agreement (Class C-II) dated as of March 21, 1997 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Security Bank, National Association, as Escrow Agent (in such capacity,
together with its successors in such capacity, the "Escrow Agent"), Credit
Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial Purchasers, Wilmington
Trust Company, as Pass Through Trustee (in such capacity, together with its
successors in such capacity, the "Pass Through Trustee") and Wilmington Trust
Company, as paying agent (in such capacity, together with its successors in
such capacity, the "Paying Agent"). Capitalized terms not defined herein shall
have the meanings assigned to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue
of its acceptance hereof the holder of this Escrow Receipt assents and agrees
to be bound by the provisions of the Escrow and Paying Agent Agreement and this
Escrow Receipt.
This Escrow Receipt represents a fractional undivided interest in amounts
deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any
assets or property other than such amounts. This Escrow Receipt evidences the
same percentage interest in the Account Amounts as the Fractional Undivided
Interest in the Pass Through Trust evidenced by the Certificate to which this
Escrow Receipt is affixed.
All payments and distributions made to Receiptholders in respect of the
Escrow Receipt shall be made only from Account Amounts deposited in the Paying
Agent Account. The holder of this Escrow Receipt, by its acceptance of this
Escrow Receipt, agrees that it will look solely to the Account Amounts for any
payment or distribution due to it pursuant to this Escrow Receipt
23
2
and that it will not have any recourse to Continental, the Pass Through
Trustee, the Paying Agent or the Escrow Agent, except as expressly provided
herein or in the Pass Through Trust Agreement. No Receiptholder of this Escrow
Receipt shall have any right to vote or in any manner otherwise control the
operation and management of the Paying Agent Account, nor shall anything set
forth herein, or contained in the terms of this Escrow Receipt, be construed so
as to constitute the Receiptholders from time to time as partners or members of
an association.
This Escrow Receipt may not be assigned or transferred except in
connection with the assignment or transfer of the Certificate to which this
Escrow Receipt is affixed. After payment to the holder hereof of its Escrow
Interest in the Final Distribution, upon the request of the Pass Through
Trustee, the holder hereof will return this Escrow Receipt to the Pass Through
Trustee.
The Paying Agent may treat the person in whose name the Certificate to
which this Escrow Receipt is attached as the owner hereof for all purposes, and
the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt to be
duly executed.
Dated: ______________, 1997
FIRST SECURITY BANK, NATIONAL
ASSOCIATION as Escrow Agent
By
----------------------------------
Name:
Title:
24
EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class C-II)
First Security Bank, National Association,
as Escrow Agent
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as of
March 21, 1997 (the "Agreement"). We hereby certify to you that the conditions
to the obligations of the undersigned to execute a Participation Agreement
pursuant to the Note Purchase Agreement have been satisfied. Pursuant to
Section 1.02(c) of the Agreement, please execute the attached Notice of
Withdrawal and immediately transmit by facsimile to the Depositary, at (212)
325-8319, Attention: Robert Finney and Kevin Kappell.
Very truly yours,
WILMINGTON TRUST COMPANY not in its
individual capacity by solely as
Pass Through Trustee
By
----------------------------------
Name:
Title:
1
EXHIBIT 4.27
- --------------------------------------------------------------------------------
NOTE PURCHASE AGREEMENT
Dated as of March 21, 1997
Among
CONTINENTAL AIRLINES, INC.,
WILMINGTON TRUST COMPANY,
as Pass Through Trustee under each of the
Pass Through Trust Agreements
WILMINGTON TRUST COMPANY,
as Subordination Agent
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
and
WILMINGTON TRUST COMPANY,
as Paying Agent
- --------------------------------------------------------------------------------
2
INDEX TO NOTE PURCHASE AGREEMENT
Page
SECTION 1. Financing of New Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Schedules
Schedule I New Aircraft and Scheduled Delivery Months
Schedule II Pass Through Trust Agreements
Schedule III Deposit Agreements
Schedule IV Escrow and Paying Agent Agreements
Schedule V Mandatory Document Terms
Schedule VI Mandatory Economic Terms
Schedule VII Aggregate Amortization Schedule
Annex
Annex A Definitions
Exhibits
Exhibit A-1 Form of Leased Aircraft Participation Agreement
Exhibit A-2 Form of Lease
Exhibit A-3 Form of Leased Aircraft Indenture
Exhibit A-4 Form of Aircraft Purchase Agreement Assignment
Exhibit A-5 Form of Leased Aircraft Trust Agreement
Exhibit B Form of Delivery Notice
Exhibit C-1 Form of Owned Aircraft Participation Agreement
Exhibit C-2 Form of Owned Aircraft Indenture
Exhibit D-1 Form of Special Participation Agreement
Exhibit D-2 Form of Special Lease
Exhibit D-3 Form of Special Indenture
Exhibit D-4 Form of Special Trust Agreement
3
NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT, dated as of March 21, 1997,
among (i)CONTINENTAL AIRLINES, INC., a Delaware corporation (the "Company"),
(ii)WILMINGTON TRUST COMPANY ("WTC"), a Delaware banking corporation, not in
its individual capacity except as otherwise expressly provided herein, but
solely as trustee (in such capacity together with its successors in such
capacity, the "Pass Through Trustee") under each of the four separate Pass
Through Trust Agreements (as defined below), (iii)WILMINGTON TRUST COMPANY, a
Delaware banking corporation, as subordination agent and trustee (in such
capacity together with its successors in such capacity, the "Subordination
Agent") under the Intercreditor Agreement (as defined below), (iv)FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, as Escrow
Agent (in such capacity together with its successors in such capacity, the
"Escrow Agent"), under each of the Escrow and Paying Agent Agreements (as
defined below) and (v) WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as Paying Agent (in such capacity together with its successors in
such capacity, the "Paying Agent") under each of the Escrow and Paying Agent
Agreements.
W I T N E S S E T H:
WHEREAS, capitalized terms used but not defined herein shall
have the meanings ascribed to such terms in Annex A hereto;
WHEREAS, the Company has obtained commitments from the
Manufacturer pursuant to the Aircraft Purchase Agreement for the delivery of
the 30 aircraft listed in Schedule I hereto (together with any aircraft
substituted therefor in accordance with the Aircraft Purchase Agreement upon a
total loss of an aircraft prior to the delivery thereof, the "New Aircraft");
WHEREAS, pursuant to each of the Pass Through Trust Agreements
set forth in Schedule II hereto (the "Pass Through Trust Agreements"), and
concurrently with the execution and delivery of this Agreement, separate
grantor trusts (collectively, the "Pass Through Trusts" and, individually, a
"Pass Through Trust") have been created to facilitate certain of the
transactions contemplated hereby, including, without limitation, the issuance
and sale of pass through certificates
3
4
pursuant thereto (collectively, the "Certificates") to provide for a portion of
the financing of the New Aircraft;
WHEREAS, the Company has entered into the Certificate Purchase
Agreement dated as of March 12, 1997 (the "Certificate Purchase Agreement")
with the several purchasers (the "Initial Purchasers") named therein, which
provides that each Pass Through Trustee will issue and sell the Certificates to
the Initial Purchasers;
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) the Escrow Agents and the Depositary entered into the Deposit
Agreements set forth in Schedule III hereto (the "Deposit Agreements") whereby
the applicable Escrow Agent agreed to direct the Initial Purchasers to make
certain deposits referred to therein on the Issuance Date (as defined in the
Certificate Purchase Agreement) (the "Initial Deposits") and to permit the
applicable Pass Through Trustee to make additional deposits from time to time
thereafter (the Initial Deposits together with such additional deposits are
collectively referred to as the "Deposits") and (ii) the Pass Through Trustees,
the Initial Purchasers, the Paying Agents and the Escrow Agents entered into
the Escrow and Paying Agent Agreements set forth in Schedule IV hereto (the
"Escrow and Paying Agent Agreements") whereby, among other things, (a) the
Initial Purchasers agreed to deliver an amount equal to the amount of the
Initial Deposits to the Depositary on behalf of the applicable Escrow Agent and
(b) the applicable Escrow Agent, upon the Depositary receiving such amount, has
agreed to deliver escrow receipts to be affixed to each Certificate;
WHEREAS, prior to the delivery of each New Aircraft, the
Company will determine whether to enter into a leveraged lease transaction as
lessee with respect to such New Aircraft (a "Leased Aircraft") or to purchase
as owner such New Aircraft (an "Owned Aircraft") and will give to the Pass
Through Trustee a Delivery Notice (as defined below) specifying its election;
WHEREAS, upon receipt of a Delivery Notice with respect to a
New Aircraft, subject to the terms and conditions of this Agreement, the
applicable Pass Through Trustees will enter into the applicable Financing
Agreements relating to such New Aircraft;
4
5
WHEREAS, upon the delivery of each New Aircraft, each Pass
Through Trustee will fund its purchase of Equipment Notes with the proceeds of
one or more Deposits withdrawn by the applicable Escrow Agent under the related
Deposit Agreement bearing the same interest rate as the Certificates issued by
such Pass Through Trust; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i)ABN AMRO Bank N.V., a bank organized under the laws of The
Netherlands acting through its Chicago Branch and ING Bank N.V., a bank
organized under the laws of The Netherlands (collectively, the "Liquidity
Providers"), each has entered into four revolving credit agreements (each, a
"Liquidity Facility"), one each for the benefit of the Certificateholders of
each Pass Through Trust, with the Subordination Agent, as agent for the Pass
Through Trustee on behalf of each such Pass Through Trust and (ii)the Pass
Through Trustee, the Liquidity Providers and the Subordination Agent have
entered into the Intercreditor Agreement, dated as of the date hereof (the
"Intercreditor Agreement");
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Financing of New Aircraft. (a) The Company
confirms that it has entered into the Aircraft Purchase Agreements with the
Manufacturer pursuant to which the Company has agreed to purchase, and the
Manufacturer has agreed to deliver, the New Aircraft in the months specified in
Schedule I hereto, all on and subject to terms and conditions specified in the
applicable Aircraft Purchase Agreement. The Company agrees to finance the New
Aircraft in the manner provided herein, all on and subject to the terms and
conditions hereof and of the relevant Financing Agreements.
(b) In furtherance of the foregoing, the Company agrees
to give the parties hereto, the Depositary and each of the Rating Agencies not
less than two Business Days' prior notice (a "Delivery Notice") of the
scheduled delivery date (the "Scheduled Delivery Date") (or, in the case of a
substitute Delivery Notice under Section 1(e) or (f) hereof, one Business Day's
prior
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notice) in respect of each New Aircraft under the Aircraft Purchase Agreement,
which notice shall:
(i) specify whether the Company has elected to treat such
New Aircraft as a Leased Aircraft or an Owned Aircraft;
(ii) specify the Scheduled Delivery Date of such New
Aircraft (which shall be a Business Day before the Cut-off Date and,
except as provided in Section 1(f) hereof, the date (the "Funding
Date") on which the financing therefore in the manner provided herein
shall be consummated);
(iii) instruct the Pass Through Trustee to instruct the
Escrow Agent to provide a Notice of Purchase Withdrawal to the
Depositary with respect to the Equipment Notes to be issued in
connection with the financing of such New Aircraft;
(iv) instruct the Pass Through Trustee to enter into the
Participation Agreement included in the Financing Agreements with
respect to such Aircraft in such form and at such a time on or before
the Funding Date specified in such Delivery Notice and to perform its
obligations thereunder;
(v) specify the aggregate principal amount of each series
of Equipment Notes to be issued, and purchased by the Pass Through
Trustees, in connection with the financing of such New Aircraft
scheduled to be delivered on such Funding Date (which shall in all
respects comply with the Mandatory Economic Terms); and
(vi) if such New Aircraft is to be a Leased Aircraft,
certify that the related Owner Participant is (A) not an Affiliate of
the Company and (B) either (1) a Qualified Owner Participant or (2)
any other person the obligations of which under the Owner Participant
Agreements (as defined in the applicable Participation Agreement) are
guaranteed by a Qualified Owner Participant.
Notwithstanding the foregoing, in the event the date of issuance of the
Certificates coincides with the Scheduled Delivery Date of the first Aircraft
to be financed pursuant to the terms hereof, the Delivery Notice therefor may
be delivered to the parties hereto on such Scheduled Delivery Date.
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(c) Upon receipt of a Delivery Notice, the Pass Through
Trustees (subject to Section 1(d)) shall, and shall cause the Subordination
Agent to, enter into and perform their obligations under the Participation
Agreement specified in such Delivery Notice, provided that such Participation
Agreement and the other Lease Financing Agreements, Special Financing
Agreements or Owner Financing Agreements to be entered into pursuant to such
Participation Agreement shall be in the forms thereof annexed hereto in all
material respects with such changes therein as shall have been requested by the
related Owner Participant, agreed to by the Company and, if modified in any
material respect, as to which Rating Agency Confirmation shall have been
obtained from each Rating Agency by the Company (to be delivered by the Company
to the applicable Pass Through Trustee on or before the relevant Delivery Date,
it being understood that if Rating Agency Confirmation shall have been received
with respect to any Financing Agreements and such Financing Agreements are
utilized for subsequent New Aircraft (or Substitute Aircraft) without material
modifications, no additional Rating Agency Conformation shall be required);
provided, however, that the relevant Financing Agreements as executed and
delivered shall not vary the Mandatory Economic Terms and shall contain the
Mandatory Document Terms. Notwithstanding the foregoing, (i) if The Boeing
Company or any of its Affiliates is the Owner Participant with respect to any
Leased Aircraft, the Lease Financing Agreements to be entered into pursuant to
the Delivery Notice with respect to such Leased Aircraft may be modified from
the forms annexed hereto to exclude from amounts secured under the applicable
Indenture the "Additional Excluded Amounts," as such term was defined in the
Lease Agreement 116, between the Company, as Lessee and First Security Bank of
Utah, National Association, Owner Trustee, as Lessor, dated as of March 15,
1996, as amended by Lease Agreement 116 Amendment No. 1, dated as of May 20,
1996, and such Lease Financing Agreements, as so modified, shall be deemed (A)
to be substantially in forms thereof annexed hereto and (B)by virtue of such
modification not to be inconsistent with the Mandatory Document Terms and (ii)
if any Financing Document annexed hereto shall not have been reviewed by either
Rating Agency prior to the Issuance Date, then, prior to the use thereof in
connection with the financing of any Aircraft hereunder, the Company shall
obtain from each Rating Agency a confirmation that the use of such Financing
Documents would not result in (i) a reduction of the rating for any Class of
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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.
With respect to each New Aircraft, the Company shall cause WTC (or such other
person that meets the eligibility requirements to act as loan trustee under the
Leased Aircraft Indenture, Owned Aircraft Indenture or Special Indenture) to
execute as Loan Trustee the Financing Agreements relating to such Aircraft to
which such Loan Trustee is intended to be a party, and shall concurrently
therewith execute such Financing Agreements to which the Company is intended to
be a party and perform its respective obligations thereunder. Upon the request
of either Rating Agency, the Company shall deliver or cause to be delivered to
each Rating Agency a true and complete copy of each Financing Agreement
relating to the financing of each New Aircraft together with a true and
complete set of the closing documentation (including legal opinions) delivered
to the related Loan Trustee, Subordination Agent and Pass Through Trustee under
the related Participation Agreement.
(d) Notwithstanding the provisions of Section 2.01 of
each of the C-I Pass Through Trust Agreement and C-II Pass Through Trust
Agreement, the parties hereto agree that the C-II Trustee shall not use (and
the Company will not request the C-II Trustee to use) the proceeds of any of
the C-II Deposits to purchase any Series C Equipment Notes in connection with
the financing hereunder of a New Aircraft unless and until the C-I Trustee has
used (or, simultaneously therewith, will use) the proceeds of all C-I Deposits
to purchase Series C Equipment Notes.
(e) If after giving any Delivery Notice, there shall be a
delay in the delivery of a New Aircraft, or if on the Scheduled Delivery Date
of a New Aircraft the financing thereof in the manner contemplated hereby shall
not be consummated for whatever reason, the Company shall give the parties
hereto prompt notice thereof. The Company shall, concurrently with the giving
of such notice of postponement or subsequently, give the parties hereto a
substitute Delivery Notice specifying the date to which such delivery and
related financing shall have been re-scheduled (which shall be a Business Day
before the Cut-off Date on which the Escrow Agents shall be entitled to
withdraw one or more Deposits under each of the applicable Deposit Agreements
to enable each applicable Pass Through Trustee to fund its purchase of the
related Equipment Notes). Upon receipt of any such notice of postponement,
each applicable Pass Through Trustee shall comply with its obligations under
Section 2.01(b) of each of the Pass Through Trust Agreements and thereafter the
financing of the
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relevant New Aircraft shall take place on the re-scheduled Delivery Date
therefor (all on and subject to the terms and conditions of the relevant
Financing Agreements) unless further postponed as provided herein.
(f) Anything in this Section 1 to the contrary
notwithstanding, the Company shall have the right at any time on or before the
Scheduled Delivery Date of any New Aircraft, and subsequent to its giving a
Delivery Notice therefor, to postpone the Scheduled Delivery Date of such New
Aircraft so as to enable the Company to change its election to treat such New
Aircraft as a Leased Aircraft or an Owned Aircraft by written notice of such
postponement to the other parties hereto. The Company shall subsequently give
the parties hereto a substitute Delivery Notice complying with the provisions
of Section 1(b) hereof and specifying the new Funding Date therefor (which
shall be a Business Day occurring before the Cut-off Date and on which the
Escrow Agents shall be entitled to withdraw Deposits under each of the
applicable Deposit Agreements sufficient to enable each applicable Pass Through
Trustee to fund its purchase of the related Equipment Notes). In addition, the
Company shall have the further right, anything in this Section 1 to the
contrary notwithstanding, to accept delivery of a New Aircraft under the
applicable Aircraft Purchase Agreement on the Delivery Date thereof by
utilization of bridge financing of such New Aircraft and promptly thereafter
give the parties hereto a Delivery Notice specifying a Funding Date not later
than 30 days after the Delivery Date of such New Aircraft and otherwise
complying with the provisions of Section 1(a) hereof. All other terms and
conditions of this Note Purchase Agreement shall apply to the financing of any
such New Aircraft on the re-scheduled Funding Date therefor except (i)the
re-scheduled Funding Date shall be deemed the Delivery Date of such New
Aircraft for all purposes of this Section 1 and (ii)The related Financing
Agreements shall be amended to reflect the original delivery of such New
Aircraft to the Company.
(g) If the Scheduled Delivery Date for any New Aircraft
is delayed (a) more than 30 days beyond the last day of the month set forth
opposite such Aircraft under the heading "Scheduled Delivery Months" in
Schedule I hereto or (b) beyond June 30, 1998, the Company may identify for
delivery a substitute aircraft therefor meeting the following conditions (a
"Substitute Aircraft"): (i) a Substitute Aircraft must be a Boeing 757-200,
737-500 or 737-700 aircraft manufactured after the date of this
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Agreement, (ii) one or more Substitute Aircraft of the same or different types
may be substituted for one or more New Aircraft of the same or different types
so long as after giving effect thereto such substitution does not vary the
Mandatory Economic Terms and (iii) the Company shall be obligated to obtain
Rating Agency Confirmation in respect of the replacement of any New Aircraft by
Substitute Aircraft. Upon the satisfaction of the conditions set forth above
with respect to a Substitute Aircraft, the New Aircraft to be replaced shall
cease to be subject to this Agreement and all rights and obligations of the
parties hereto concerning such New Aircraft shall cease, and such Substitute
Aircraft shall become and thereafter be subject to the terms and conditions of
this Agreement to the same extent as such New Aircraft.
(h) The Company shall have no liability for the failure
of the Pass Through Trustees to purchase Equipment Notes with respect to any
New Aircraft or Substitute Aircraft, other than the Company's obligation, if
any, to pay the Deposit Make-Whole Premium and the Class II Premium pursuant to
Section 4(a)(i) of this Agreement.
(i) The Company agrees that if, in connection with the
delivery of a New Aircraft or Substitute Aircraft, any Owner Participant who is
to be a party to any Lease Financing Agreement or Special Financing Agreement
shall not be a "Citizen of the United States" within the meaning of Section
40102(a)(15) of the Act, then the applicable Leased Aircraft Participation
Agreement or Special Participation Agreement shall be modified, consistent with
the Mandatory Document Terms, to require such Owner Participant to enter into a
voting trust, voting powers or similar arrangement satisfactory to the Company
that (A) enables such New Aircraft or Substitute Aircraft to be registered in
the United States and (B) complies with the FAA regulations issued under the
Act applicable thereto.
(j) Anything herein to the contrary notwithstanding,
(i)The Company shall not have the right, and shall not be entitled, at any time
to request the issuance of Equipment Notes of any series to any Pass Through
Trustee in an aggregate principal amount in excess of the amount of the
Deposits then available for withdrawal by the Escrow Agent under and in
accordance with the provisions of the related Deposit Agreement; and (ii)if any
New Aircraft is not delivered and financed by the Company under the Financing
Agreements in its respective
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Scheduled Delivery Months, then the Company shall use reasonable efforts to
assure that the aggregate amortization schedule of the Equipment Notes will
correspond as closely as reasonably practicable to the aggregate amortization
schedule set forth in Schedule VII hereto.
SECTION 2. Conditions Precedent. The obligation of the Pass
Through Trustees to enter into, and to cause the Subordination Agent to enter
into, any Participation Agreement as directed pursuant to a Delivery Notice and
to perform its obligations under such Participation Agreement is subject to
satisfaction of the following conditions:
(a) no Triggering Event shall have occurred; and
(b) the Company shall have delivered a certificate to
each such Pass Through Trustee and each Liquidity Provider stating
that (i) such Participation Agreement and the other Financing
Agreements to be entered into pursuant to such Participation Agreement
do not vary the Mandatory Economic Terms and contain the Mandatory
Document Terms and (ii)any substantive modification of such Financing
Agreements from the forms thereof attached to this Agreement do not
materially and adversely affect the Certificateholders, and such
certification shall be true and correct.
Anything herein to the contrary notwithstanding, the
obligation of each Pass Through Trustee to purchase Equipment Notes shall
terminate on the Cut-off Date.
SECTION 3. Representations and Warranties. (a) The Company
represents and warrants that:
(i) the Company is duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware and is a "citizen of the United States" as defined in
49 U.S.C. Section 40102, and has the full corporate power,
authority and legal right under the laws of the State of
Delaware to execute and deliver this Agreement and each
Financing Agreement to which it will be a party and to carry
out the obligations of the Company under this Agreement and
each Financing Agreement to which it will be a party;
(ii) the execution and delivery by the Company of
this Agreement and the performance by the Company of
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its obligations under this Agreement have been duly authorized
by the Company and will not violate its Certificate of
Incorporation or by-laws or the provisions of any indenture,
mortgage, contract or other agreement to which it is a party
or by which it is bound; and
(iii) this Agreement constitutes the legal, valid
and binding obligation of the Company enforceable against it
in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity.
(b) WTC represents and warrants that:
(i) WTC is duly incorporated, validly existing
and in good standing under the laws of the State of Delaware
and is a "citizen of the United States" as defined in 49
U.S.C. Section 40102, and has the full corporate power,
authority and legal right under the laws of the State of
Delaware and the United States pertaining to its banking,
trust and fiduciary powers to execute and deliver this
Agreement and each Financing Agreement to which it will be a
party and to carry out the obligations of WTC, in its capacity
as Subordination Agent, Pass Through Trustee or Paying Agent,
as the case may be, under this Agreement and each Financing
Agreement to which it will be a party;
(ii) the execution and delivery by WTC, in its
capacity as Subordination Agent, Pass Through Trustee or
Paying Agent, as the case may be, of this Agreement and the
performance by WTC, in its capacity as Subordination Agent,
Pass Through Trustee or Paying Agent, as the case may be, of
its obligations under this Agreement have been duly authorized
by WTC, in its capacity as Subordination Agent, Pass Through
Trustee or Paying Agent, as the case may be, and will not
violate its articles of association or by-laws or the
provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound; and
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(iii) this Agreement constitutes the legal, valid
and binding obligations of WTC, in its capacity as
Subordination Agent, Pass Through Trustee or Paying Agent, as
the case may be, enforceable against it in accordance with its
terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a
proceeding at law or in equity.
(c) The Pass Through Trustee hereby confirms to each of
the other parties hereto that its representations and warranties set forth in
Section 7.15 of each Pass Through Trust Agreement are true and correct as of
the date hereof.
(d) The Subordination Agent represents and warrants that:
(i) the Subordination Agent is duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware, and has the full corporate power, authority
and legal right under the laws of the State of Delaware and
the United States pertaining to its banking, trust and
fiduciary powers to execute and deliver this Agreement and
each Financing Agreement to which it is or will be a party and
to perform its obligations under this Agreement and each
Financing Agreement to which it is or will be a party;
(ii) this Agreement has been duly authorized,
executed and delivered by the Subordination Agent; this
Agreement constitutes the legal, valid and binding obligations
of the Subordination Agent enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(iii) none of the execution, delivery and
performance by the Subordination Agent of this Agreement
contravenes any law, rule or regulation of the State of
Delaware or any United States governmental
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authority or agency regulating the Subordination Agent's
banking, trust or fiduciary powers or any judgment or order
applicable to or binding on the Subordination Agent and do not
contravene or result in any breach of, or constitute a default
under, the Subordination Agent's articles of association or
by-laws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its
properties may be bound;
(iv) neither the execution and delivery by the
Subordination Agent of this Agreement nor the consummation by
the Subordination Agent of any of the transactions
contemplated hereby requires the consent or approval of, the
giving of notice to, the registration with, or the taking of
any other action with respect to, any Delaware governmental
authority or agency or any federal governmental authority or
agency regulating the Subordination Agent's banking, trust or
fiduciary powers;
(v) there are no Taxes payable by the
Subordination Agent imposed by the State of Delaware or any
political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by the
Subordination Agent of this Agreement (other than franchise or
other taxes based on or measured by any fees or compensation
received by the Subordination Agent for services rendered in
connection with the transactions contemplated by the
Intercreditor Agreement or any of the Liquidity Facilities),
and there are no Taxes payable by the Subordination Agent
imposed by the State of Delaware or any political subdivision
thereof in connection with the acquisition, possession or
ownership by the Subordination Agent of any of the Equipment
Notes (other than franchise or other taxes based on or
measured by any fees or compensation received by the
Subordination Agent for services rendered in connection with
the transactions contemplated by the Intercreditor Agreement
or any of the Liquidity Facilities); and
(vi) there are no pending or threatened actions or
proceedings against the Subordination Agent before any court
or administrative agency which individually or in
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the aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement.
(e) The Escrow Agent represents and warrants that:
(i) the Escrow Agent is a national banking
association duly incorporated, validly existing and in good
standing under the laws of the United States and has the full
corporate power, authority and legal right under the laws of
the United States pertaining to its banking, trust and
fiduciary powers to execute and deliver this Agreement, each
Deposit Agreement and each Escrow and Paying Agent Agreement
(collectively, the "Escrow Agent Agreements") and to carry out
the obligations of the Escrow Agent under each of the Escrow
Agent Agreements;
(ii) the execution and delivery by the Escrow
Agent of each of the Escrow Agent Agreements and the
performance by the Escrow Agent of its obligations hereunder
and thereunder have been duly authorized by the Escrow Agent
and will not violate its articles of association or by-laws or
the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound; and
(iii) each of the Escrow Agent Agreements
constitutes the legal, valid and binding obligations of the
Escrow Agent enforceable against it in accordance with its
terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a
proceeding at law or in equity.
(f) The Paying Agent represents and warrants that:
(i) the Paying Agent is duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware and has the full corporate power, authority
and legal right under the laws of the United States pertaining
to its banking, trust and fiduciary powers to execute and
deliver this Agreement and the
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Escrow and Paying Agent Agreement (collectively, the "Paying
Agent Agreements") and to carry out the obligations of the
Paying Agent under each of the Paying Agent Agreements;
(ii) the execution and delivery by the Paying
Agent of each of the Paying Agent Agreements and the
performance by the Paying Agent of its obligations hereunder
and thereunder have been duly authorized by the Paying Agent
and will not violate its articles of association or by-laws or
the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound; and
(iii) each of the Paying Agent Agreements
constitutes the legal, valid and binding obligations of the
Paying Agent enforceable against it in accordance with its
terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a
proceeding at law or in equity.
SECTION 4. Covenants. (a) The Company covenants with each
of the other parties hereto that:
(i) on the date that the Depositary is obligated to pay
the amount of the Final Withdrawal to the Paying Agent pursuant to a
Deposit Agreement relating to any Trust, the Company shall pay to the
Pass Through Trustee of such Trust no later than 12:30 p.m. (New York
time) an amount equal to (i) in the case of the Class C-II Trust, the
Class C-II Premium to be paid in respect of such Final Withdrawal
amount and (ii) in the case of each other Trust, the Deposit
Make-Whole Premium to be paid in respect of such Final Withdrawal
amount;
(ii) subject to Section 4(a)(iv) of this Agreement, the
Company shall at all times maintain its corporate existence and shall
not wind-up, liquidate or dissolve or take any action, or fail to take
any action, that would have the effect of any of the foregoing;
(iii) the Company shall at all times remain a U.S. Air
Carrier and shall at all times be otherwise certificated
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and registered to the extent necessary to entitle (i) in the case of
Leased Aircraft, the Owner Trustee (and the Loan Trustee as assignee
of the Owner Trustee's rights under each Lease) to the rights afforded
to lessors of aircraft equipment under Section 1110 and (ii) in the
case of Owned Aircraft, the Loan Trustee to the rights afforded to
secured parties of aircraft equipment under Section 1110;
(iv) Section 13.2.2 of each Lease is hereby incorporated
by reference herein; and
(v) the Company agrees to provide written notice to each
of the parties hereto of the occurrence of the Cut-off Date no later
than one Business Day after the date thereof; such notice to
specifically refer to the Pass Through Trustee's obligation to assign,
transfer and deliver all of it's right, title and interest to the
Trust Property (as defined in each Pass Through Trust Agreement) to
the trustee of the Related Trust (as defined in each Pass Through
Trust Agreement) in accordance with Section 11.01 of each of the Pass
Through Trust Agreements.
(b) WTC, in its individual capacity, covenants with each
of the other parties to this Agreement that it will, immediately upon obtaining
knowledge of any facts that would cast doubt upon its continuing status as a
"citizen of the United States" as defined in 49 U.S.C. Section 40102 and
promptly upon public disclosure of negotiations in respect of any transaction
which would or might adversely affect such status, notify in writing all
parties hereto of all relevant matters in connection therewith. Upon WTC
giving any such notice, WTC shall, subject to Section 8.02 of any Indenture
then entered into, resign as Loan Trustee in respect of such Indenture.
SECTION 5. Notices. Unless otherwise specifically provided
herein, all notices required or permitted by the terms of this Agreement shall
be in English and in writing, and any such notice shall become effective upon
being delivered personally or, if promptly confirmed by mail, when dispatched
by facsimile or other written telecommunication, addressed to such party hereto
at its address or facsimile number set forth below the signature of such party
at the foot of this Agreement.
SECTION 6. Expenses. (a) The Company agrees to pay an
amount or amounts equal to the fees payable to the relevant
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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 amount
of the Deposits under the Deposit Agreements and the denominator of which shall
be the sum of (x) the then outstanding aggregate principal amount of the Series
A Equipment Notes, Series B Equipment Notes and Series C Equipment Notes issued
under all of the Indentures and (y) the then outstanding aggregate amount of
the Deposits under the Deposit Agreements.
(b) So long as no Equipment Notes have been issued in
respect of any Aircraft, the Company agrees to pay (i) (A) the amount equal to
interest on any Downgrade Advance (other than any Applied Downgrade Advance)
payable under Section 3.07(e) of each Liquidity Facility minus Investment
Earnings while such Downgrade Advance shall be outstanding, (B) the amount
equal to interest on any Non-Extension Advance (other than any Applied
Non-Extension Advance) payable under Section 3.07(a)(i) of each Liquidity
Facility minus Investment Earnings while such Non-Extension Advance shall be
outstanding and (C) 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 (A) or (B)), (ii) all
compensation and reimbursement of expenses, disbursements and advances payable
by the Company under the Pass Through Trust Agreements, (iii) all compensation
and reimbursement of expenses and disbursements payable to the Subordination
Agent under the Intercreditor Agreement except with respect to any income or
franchise taxes incurred by the Subordination Agent in connection with the
transactions contemplated by the Intercreditor Agreement and (iv) in the event
the Company requests any amendment to any Operative Agreement, all reasonable
fees and expenses (including, without limitation, fees and disbursements of
counsel) of the Escrow Agent and/or the Paying Agent in connection therewith.
For purposes of this Section 6(b), the terms "Applied Downgrade Advance",
"Applied Non-Extension Advance", "Downgrade Advance", "Investment Earnings" and
"Non- Extension Advance" shall have the meanings specified in each Liquidity
Facility.
SECTION 7. Further Assurances. Each party hereto shall duly
execute, acknowledge and deliver, or shall cause to be executed, acknowledged
and delivered, all such further agreements, instruments, certificates or
documents, and shall do
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and cause to be done such further acts and things, in any case, as any other
party hereto shall reasonably request in connection with its administration of,
or to carry out more effectually the purposes of, or to better assure and
confirm unto it the rights and benefits to be provided under, this Agreement.
SECTION 8. Miscellaneous. (a) Provided that the
transactions contemplated hereby have been consummated, and except as otherwise
provided for herein, the representations, warranties and agreements herein of
the Company, the Subordination Agent, the Escrow Agent, the Paying Agent and
the Pass Through Trustee, and the Company's, the Subordination Agent's, the
Escrow Agent's, the Paying Agent's and the Pass Through Trustee's obligations
under any and all thereof, shall survive the expiration or other termination of
this Agreement and the other agreements referred to herein.
(b) This Agreement may be executed in any number of
counterparts (and each of the parties hereto shall not be required to execute
the same counterpart). Each counterpart of this Agreement, including a
signature page executed by each of the parties hereto, shall be an original
counterpart of this Agreement, but all of such counterparts together shall
constitute one instrument. Neither this Agreement nor any of the terms hereof
may be terminated, amended, supplemented, waived or modified orally, but only
by an instrument in writing signed by the party against which the enforcement
of the termination, amendment, supplement, waiver or modification is sought.
The index preceding this Agreement and the headings of the various Sections of
this Agreement are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof. The terms of
this Agreement shall be binding upon, and shall inure to the benefit of, the
Company and its successors and permitted assigns, the Pass Through Trustee and
its successors as Pass Through Trustee (and any additional trustee appointed)
under any of the Pass Through Trust Agreements, the Escrow Agent and its
successors as Escrow Agent under the Escrow and Paying Agent Agreements, the
Paying Agent and its successors as Paying Agent under the Escrow and Paying
Agent Agreement and the Subordination Agent and its successors as Subordination
Agent under the Intercreditor Agreement.
(c) This Agreement is not intended to, and shall not,
provide any person not a party hereto (other than the Initial Purchasers and
each of the beneficiaries of Section 6 hereof)
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with any rights of any nature whatsoever against any of the parties hereto, and
no person not a party hereto (other than the Initial Purchasers and each of the
beneficiaries of Section 6 hereof) shall have any right, power or privilege in
respect of, or have any benefit or interest arising out of, this Agreement.
SECTION 9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THIS
AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
CONTINENTAL AIRLINES, INC.
By
-----------------------------------------
Name:
Title:
Address: 2929 Allen Parkway
Suite 2010
Houston, TX 77019
Attention: Executive Vice
President and Chief
Financial Officer
Facsimile: (713) 520-6329
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
otherwise provided herein, but solely as
Pass Through Trustee
By
------------------------------------------
Name: Bruce Bisson
Title: Vice President
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Facsimile: (302) 651-1576
21
22
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
otherwise provided herein, but solely as
Subordination Agent
By
------------------------------------------
Name: Bruce Bisson
Title: Vice President
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention:Corporate Trust
Administration
Facsimile: (302) 651-1576
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By
------------------------------------------
Name:
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust
Department
Facsimile: (801) 246-5053
22
23
WILMINGTON TRUST COMPANY,
as Paying Agent
By
-----------------------------------------
Name: Bruce Bisson
Title: Vice President
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Facsimile: (302) 651-1576
23
24
SCHEDULE I to
Note Purchase Agreement
NEW AIRCRAFT AND SCHEDULED DELIVERY MONTHS
Manufacturer's Serial Scheduled Delivery
New Aircraft Type Aircraft Tail Number Number Months
- ----------------- -------------------- --------------------- ------------------
Boeing 757-224 118 27560 March 1997
Boeing 757-224 119 27561 May 1997
Boeing 757-224 120 27562 June 1997
Boeing 757-224 121 27563 July 1997
Boeing 757-224 122 27564 August 1997
Boeing 757-224 126 28966 December 1997
Boeing 757-224 123 27565 January 1998
Boeing 757-224 127 28967 January 1998
Boeing 737-524 638 28899 July 1997
Boeing 737-524 639 28900 July 1997
Boeing 737-524 640 28901 August 1997
Boeing 737-524 641 28902 August 1997
Boeing 737-524 642 28903 August 1997
Boeing 737-524 643 28904 September 1997
Boeing 737-524 644 28905 September 1997
Boeing 737-524 645 28906 October 1997
Boeing 737-524 646 28907 October 1997
Boeing 737-524 647 28908 November 1997
Boeing 737-524 648 28909 November 1997
Boeing 737-524 649 28910 December 1997
Boeing 737-524 650 28911 December 1997
Boeing 737-524 651 28912 December 1997
Boeing 737-524 652 28913 January 1998
Boeing 737-524 653 28914 January 1998
Boeing 737-524 654 28915 February 1998
Boeing 737-524 655 28916 February 1998
Boeing 737-724 701 28762 January 1998
Boeing 737-724 702 28763 January 1998
Boeing 737-724 703 28764 February 1998
Boeing 737-724 704 28765 February 1998
25
SCHEDULE II to
Note Purchase Agreement
PASS THROUGH TRUST AGREEMENTS
Pass Through Trust Agreement, dated as of March 21, 1997, between
Continental Airlines, Inc., and Wilmington Trust Company, as Trustee, made
with respect to the formation of Continental Airlines Pass Through Trust,
Series 1997-1A-0 and the issuance of 7.461% Continental Airlines Pass
Through Trust, Series 1997-1A-0 Pass Through Certificates representing
fractional undivided interests in the Trust
Pass Through Trust Agreement, dated as of March 21, 1997, between
Continental Airlines, Inc., and Wilmington Trust Company, as Trustee, made
with respect to the formation of Continental Airlines Pass Through Trust,
Series 1997-1B-0 and the issuance of 7.461% Continental Airlines Pass
Through Trust, Series 1997-1B-0 Pass Through Certificates representing
fractional undivided interests in the Trust
Pass Through Trust Agreement, dated as of March 21, 1997, between
Continental Airlines, Inc., and Wilmington Trust Company, as Trustee, made
with respect to the formation of Continental Airlines Pass Through Trust,
Series 1997-1C-I-0 and the issuance of 7.420% Continental Airlines Pass
Through Trust, Series 1997-1C-I-0 Pass Through Certificates representing
fractional undivided interests in the Trust
Pass Through Trust Agreement, dated as of March 21, 1997, between
Continental Airlines, Inc., and Wilmington Trust Company, as Trustee, made
with respect to the formation of Continental Airlines Pass Through Trust,
Series 1997-1C-II-0 and the issuance of 7.420% Continental Airlines Pass
Through Trust, Series 1997-1C-II-0 Pass Through Certificates representing
fractional undivided interests in the Trust
26
SCHEDULE III to
Note Purchase Agreement
DEPOSIT AGREEMENTS
Deposit Agreement (Class A) dated as of March 21, 1997 between First
Security Bank, National Association as Escrow Agent under the Escrow and
Paying Agent Agreement, and Credit Suisse First Boston, New York Branch,
as Depositary
Deposit Agreement (Class B) dated as of March 21, 1997 between First
Security Bank, National Association as Escrow Agent under the Escrow and
Paying Agent Agreement, and Credit Suisse First Boston, New York Branch,
as Depositary
Deposit Agreement (Class C-I) dated as of March 21, 1997 between First
Security Bank, National Association as Escrow Agent under the Escrow and
Paying Agent Agreement, and Credit Suisse First Boston, New York Branch,
as Depositary
Deposit Agreement (Class C-II) dated as of March 21, 1997 between First
Security Bank, National Association as Escrow Agent under the Escrow and
Paying Agent Agreement, and Credit Suisse First Boston, New York Branch,
as Depositary
27
SCHEDULE IV to
Note Purchase Agreement
ESCROW AND PAYING AGENT AGREEMENTS
Escrow and Paying Agent Agreement (Class A) dated as of March 21, 1997
among First Security Bank, National Association as Escrow Agent; Credit
Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial Purchasers under the
Certificate Purchase Agreement; Wilmington Trust Company, not in its
individual capacity, but solely as Pass Through Trustee for and on behalf
of Continental Airlines Pass Through Trust 1997-1A-0 as Pass Through
Trustee; and Wilmington Trust Company as Paying Agent
Escrow and Paying Agent Agreement (Class B) dated as of March 21, 1997
among First Security Bank, National Association as Escrow Agent; Credit
Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial Purchasers under the
Certificate Purchase Agreement; Wilmington Trust Company, not in its
individual capacity, but solely as Pass Through Trustee for and on behalf
of Continental Airlines Pass Through Trust 1997-1B-0 as Pass Through
Trustee; and Wilmington Trust Company as Paying Agent
Escrow and Paying Agent Agreement (Class C-I) dated as of March 21, 1997
among First Security Bank, National Association as Escrow Agent; Credit
Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial Purchasers under the
Certificate Purchase Agreement; Wilmington Trust Company, not in its
individual capacity, but solely as Pass Through Trustee for and on behalf
of Continental Airlines Pass Through Trust 1997-1C-I-0 as Pass Through
Trustee; and Wilmington Trust Company as Paying Agent
Escrow and Paying Agent Agreement (Class C-II) dated as of March 21, 1997
among First Security Bank, National Association as Escrow Agent; Credit
Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated, Chase
Securities Inc. and Goldman, Sachs & Co., as Initial Purchasers under the
Certificate Purchase Agreement; Wilmington Trust Company, not in its
individual capacity, but solely as Pass Through Trustee for and on behalf
of Continental Airlines Pass Through Trust 1997-1C-II-0 as Pass Through
Trustee; and Wilmington Trust Company as Paying Agent
28
SCHEDULE V to
Note Purchase Agreement
MANDATORY DOCUMENT TERMS
1. May not modify in any material adverse respect the Granting Clause of the
Trust Indenture Form so as to deprive the Note Holders of a first priority
security interest in and mortgage lien on the Aircraft and the Lease or to
eliminate any of the obligations secured thereby or otherwise modify in
any material adverse respect as regards the interests of the Note Holders,
the Subordination Agent, the Liquidity Providers or the Mortgagee the
provisions of Article II or III or Section 4.02, 4.03, 4.04, 5.02, 5.06,
9.01(b), 10.04 or 10.12 of the Trust Indenture Form.
2. May not modify in any material adverse respect as regards the interests
of the Note Holders, the Subordination Agent, the Liquidity Providers or
the Mortgagee the provisions of Section 3.2.1(e), 3.3(c), 4.7, the final
sentence of 7.1.1, 10.3.1(d)(ii), 13.3, 16, 18.3 or 18.7(a) of the Lease
Form or otherwise modify the terms of the Lease Form so as to deprive the
Mortgagee of rights expressly granted to the "Mortgagee" therein.
3. May not modify in any material adverse respect as regards the interests
of the Note Holders, the Subordination Agent, the Liquidity Providers or
the Mortgagee the provisions of Section 5.1.9, 5.1.10, 5.1.11, 5.1.12,
7.5, 12, 15.8(a) or 15.9 of the Participation Agreement Form or of the
provisions of Section 5.1.2(xxiv) or 10.1.1(a)(iv) of the Participation
Agreement Form so as to eliminate the requirement to deliver to the Loan
Participant or the Mortgagee, as the case may be, the legal opinions to be
provided to such Persons thereunder (recognizing that the lawyers
rendering such opinions may be changed) or of the provisions of Section
7.6.11(ii) of the Participation Agreement Form as regards the rights of
the Mortgagee thereunder or otherwise modify the terms of the
Participation Agreement Form to deprive the Trustees, the Subordination
Agent, the Liquidity Providers or the Mortgagee of any indemnity or right
of reimbursement in its favor for Expenses or Taxes.
29
4. May not modify, in any material adverse respect as regards the interests
of the Note Holders, the Subordination Agent, the Liquidity Providers or
the Mortgagee, the definition of "Make Whole Amount" in Annex A to the
Note Purchase Agreement.
Notwithstanding the foregoing, any such Mandatory Document Term may be
modified to correct or supplement any such provision which may be
defective or to cure any ambiguity or correct any mistake, provided that
any such action shall not materially adversely affect the interests of the
Note Holders, the Subordination Agent, the Liquidity Providers, the
Mortgagee or the Certificateholders.
30
SCHEDULE VI to
Note Purchase Agreement
MANDATORY ECONOMIC TERMS
Equipment Notes
Obligor: Continental or an Owner Trust
Maximum Principal Amount:
For each Boeing 757-224 Aircraft $37,600,000
For each Boeing 737-524 Aircraft $18,400,000
For each Boeing 737-724 Aircraft $24,400,000
Aggregate Maximum Principal Amount:
For all Boeing 757-224 Aircraft $300,800,000
For all Boeing 737-524 Aircraft $331,200,000
For all Boeing 737-724 Aircraft $97,600,000
The aggregate original principal amount of all Equipment Notes for all Aircraft
shall not exceed the aggregate face amount of all Certificates issued on the
Issuance Date. The aggregate original principal amount of all Equipment Notes
of any series shall not exceed the aggregate face amount of all Certificates of
the related class issued on the Issuance Date.
Initial Loan to Aircraft Value (with the value of any Aircraft equal to the
value for such Aircraft set forth in the Offering Circular in "Offering
Circular Summary--The Offering--Equipment Notes and the Aircraft" under the
column "Appraised Value"):
Series A: not in excess of 41%
Series B: not in excess of 55%
Series C: For each Boeing 757-224 Aircraft: not in excess of
69.99%
For each Boeing 737-524 Aircraft: not in excess of 66.19%
For each Boeing 737-724 Aircraft: not in excess of 66.25%
31
2
Initial Average Life (in years)
For each Boeing 757-224 Aircraft
Series A: not less than 11.75 nor more than 12.60
years
Series B: not less than 9.00 nor more than 9.75 years
Series C: not less than 4.50 nor more than 5.55 years
For each Boeing 737-524 Aircraft
Series A: not less than 11.00 nor more than 12.55
years
Series B: not less than 6.90 nor more than 10.52 years
Series C: not less than 3.50 nor more than 7.60 years
For each Boeing 737-724 Aircraft
Series A: not less than 12.25 nor more than 12.55
years
Series B: not less than 9.75 nor more than 10.05 years
Series C: not less than 5.25 nor more than 5.55 years
Average Life (in years)
As of the Delivery Period Termination Date (or if earlier, the date of the
occurrence of a Triggering Event), the average life of the Class A
Certificates, the Class B Certificates, the Class C-I Certificates and the
Class C-II Certificates shall not exceed, respectively, 12.91 years, 10.15
years, 6.00 years and 6.00 years (computed without regard to the acceleration
of any Equipment Notes and after giving effect to any special distribution on
the Certificates thereafter required in respect of unused Deposits).
Amortization Schedule
The amortization schedule for each Series of Equipment Notes, assuming the
maximum amount thereof in respect of all of the Aircraft are purchased by the
Pass Through Trusts and all New
32
3
Aircraft are delivered as currently scheduled shall be as set forth in Schedule
VII of the Note Purchase Agreements.
Final Maturity Date
Series A: not in excess of 18.025 years from the date
of issuance of the Certificates (the "Date of
Issuance")
Series B: not in excess of 16.025 years from the Date
of Issuance
Series C: not in excess of 10.025 years from the Date
of Issuance
Debt Rate (computed on the basis of a 360-day year consisting of twelve 30-day
months, payable semi-annually in arrears)
Series A: 7.461%
Series B: 7.461%
Series C: 7.420%
Payment Due Rate: Debt Rate plus 2% per annum
Payment Dates: April 1 and October 1
Make-Whole Premiums: as provided in Article II of the form of
Trust Indenture marked as Exhibit A-3 or D-3
(whichever shall be utilized for a Leased
Aircraft) of the Note Purchase Agreement
(the "Trust Indenture Form")
Redemption and Purchase: as provided in Article II of the Trust
Indenture Form
Lease
Term: The Base Lease Term shall expire by its
terms on or after final maturity date of
the related Series A Equipment Notes
Lease Payment Dates: April 1 and October 1
Minimum Rent: Basic Rent due and payable on each Payment
Date shall be at least
33
4
sufficient to pay in full, as of such
Payment Date (assuming timely payment of
the related Equipment Notes prior to such
Date), the aggregate principal amount of
scheduled installments due on the related
Equipment Notes outstanding on such Payment
Date
Supplemental Rent: Sufficient to cover the sums described in
clauses (a) through (d) of such term as
defined in Annex A to the form of Lease
(the "Lease Form") marked as Exhibit A-2 or
D-2 (whichever shall be utilized for a
Leased Aircraft) of the Note Purchase
Agreement
Stipulated Loss Value: At all times equal to or greater than
the then outstanding principal amount of
the related Equipment Notes together with
accrued interest thereon
Termination Value: At all times equal to or greater than the
then outstanding principal amount of the
related Equipment Notes together with
accrued interest thereon
All-risk hull insurance: not less than Stipulated Loss Value, subject
to Lessee's right to self-insure on terms
no more favorable to Lessee in any material
respect than those set forth in Section G
of Annex D to the form of Lease marked as
Exhibit A-2.
Minimum Liability
Insurance Amount: as set forth in Schedule 1 to the form of
Lease marked as Exhibit A-2.
Payment Due Rate: as set forth in Schedule 1 to the form of
Lease marked as Exhibit A-2.
SLV Rate: as set forth in Schedule 1 to the form of
Lease marked as Exhibit A-2.
34
5
Participation Agreement
Mortgagee, Subordination Agent, Liquidity Providers, Pass Through Trustees,
Escrow Agents and Note Holders indemnified against Expenses and Taxes to the
extent set forth in Section 9 of the form of the Participation Agreement (the
"Participation Form") marked as Exhibit A-1 to the Note Purchase Agreement
35
SCHEDULE VII to
Note Purchase Agreement
AGGREGATE AMORTIZATION SCHEDULE
1997-1A Trust
Scheduled 1997-1B Trust 1997-1C-I Trust 1997-1C-II Trust
Date Payment Scheduled Payment Scheduled Payment Scheduled Payment
---- ------------- ----------------- ----------------- -----------------
[OMITTED]
36
ANNEX A to
Note Purchase Agreement
DEFINITIONS
"Act" means 49 U.S.C. Sections 40101-46507.
"Adjusted Treasury Yield" means, as of any date of determination, the sum of
the Treasury Yield plus 42 basis points.
"Affiliate" means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with such person.
For purposes of this definition, "control" means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities or by contract
or otherwise and "controlling," "controlled by" and "under common control with"
have correlative meanings.
"Aircraft Purchase Agreement" means, in the case of the Boeing 757-224
Aircraft, the Purchase Agreement No. 1783 dated March 18, 1993, or, in the case
of the Boeing 737-524 Aircraft and the Boeing 737-724 Aircraft, the Purchase
Agreement No. 1951 dated July 23, 1996, each between the Company and the
Manufacturer (including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of any such
Purchase Agreement).
"Aircraft Purchase Agreement Assignment" means the CFM International Aircraft
Purchase Agreement Assignment or the Rolls-Royce Aircraft Purchase Agreement
Assignment.
"Assumed Amortization Schedule" means Schedule VII to the Note Purchase
Agreement.
"Average Life Date" means, for any Equipment Note, the date which follows the
time of determination by a period equal to the Remaining Weighted Average Life
of such Equipment Note.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C. Sections
102 et seq.
"Business Day" means any day, other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by
37
2
law to close in New York, New York, Houston, Texas, Wilmington, Delaware or
Salt Lake City, Utah.
"C-I Deposits" means the Deposits under the Deposit Agreement relating to the
Class C-I Certificates (as defined in the Intercreditor Agreement).
"C-I Pass Through Trust Agreement" means the Pass Through Trust Agreement
relating to the Pass Through Trust designated as 1997-1-I.
"C-II Deposits" means the Deposits under the Deposit Agreement relating to the
Class C-II Certificates (as defined in the Intercreditor Agreement).
"C-II Pass Through Trust Agreement" means the Pass Through Trust Agreement
relating to the Pass Through Trust designated as 1997-1C-II.
"C-II Trustee" means the Pass Through Trustee for the Pass Through Trust
designated as 1997-1C-II.
"Certificate" has the meaning set forth in the third recital to the Note
Purchase Agreement.
"Certificateholder" means the Person in whose name a Certificate is registered
in the Register.
"CFM International Aircraft Purchase Agreement Assignment" means a Purchase
Agreement and Engine Warranties Assignment substantially in the form of Exhibit
A-4-a to the Note Purchase Agreement.
"Class" means the class of Certificates issued by each Pass Through Trust.
"Class C-II Premium" means, as of any date of determination, with respect to
the distribution of unused Deposits to holders of Class C-II Certificates, (a)
if Equipment Notes with respect to all of New Aircraft (or Substitute Aircraft
in lieu thereof) have been purchased by the Pass Through Trusts prior to such
date of determination, an amount equal to the excess, if any, of (i) the
present value of the excess of (x) the scheduled payment of principal and
interest to maturity of the Equipment Notes on each remaining Regular
Distribution Date for the Class C-II Certificates under the Assumed
Amortization Schedule over (y) the
38
3
scheduled payment of principal and interest to maturity of the Equipment Notes
actually acquired by the Pass Through Trustee for such Class on each such
Regular Distribution Date, such present value computed by discounting such
excess on a semiannual basis on each Regular Distribution Date (assuming a 360-
day year of twelve 30-day months) using a discount rate equal to the Adjusted
Treasury Yield over (ii) the amount of such unused Deposits to be distributed
to the holders of such Certificates plus accrued and unpaid interest to but
excluding such date of determination from and including the preceding Regular
Distribution Date (or if such date of determination precedes the first Regular
Distribution Date, the Issuance Date), or (b) in any other case, an amount
equal to the sum of (i) a premium calculated pursuant to the preceding clause
(a) determined with respect to the portion of such unused Deposits that would
have remained unused had the maximum principal amount of the Series C Equipment
Notes been purchased with respect to each of the New Aircraft as to which such
Equipment Notes were not actually purchased by any of the Pass Through Trusts
and as to which no replacement by a Substitute Aircraft was made and (ii) the
Deposit Make-Whole Premium determined with respect to the balance of such
unused Deposits.
"Company" means Continental Airlines, Inc., a Delaware corporation.
"Corporate Trust Office" with respect to any Pass Through Trustee or any Loan
Trustee, means the office of such trustee in the city at which at any
particular time its corporate trust business shall be principally administered.
"Cut-off Date" means the earlier of (a) the day after the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
"Delivery Period Termination Date" means the earlier of (a) March 31, 1998, or,
if the Equipment Notes relating to all of the New Aircraft (or Substitute
Aircraft in lieu thereof) have not been purchased by the Pass Through Trustees
on or prior to such date due to any reason beyond the control of the Company
and not occasioned by the Company's fault or negligence, June 30, 1998 and (b)
the date on which Equipment Notes issued with respect to all of the New
Aircraft (or Substitute Aircraft in lieu thereof) have been purchased by the
Pass Through Trustees in accordance with the Note Purchase Agreement.
39
4
"Delivery Date" means the Business Day on which a New Aircraft is delivered to
and accepted by the Company.
"Deposit" has the meaning set forth in the fifth recital to the Note Purchase
Agreement.
"Deposit Agreement" has the meaning set forth in the fifth recital to the Note
Purchase Agreement.
"Deposit Make-Whole Premium" means, with respect to the distribution of unused
Deposits to holders of any Class of Certificates, as of any date of
determination, an amount equal to the excess, if any, of (a) the present value
of the excess of (i) the scheduled payment of principal and interest to
maturity of the Equipment Notes, assuming the maximum principal amount thereof
were issued, on each remaining Regular Distribution Date for such Class under
the Assumed Amortization Schedule over (ii) the scheduled payment of principal
and interest to maturity of the Equipment Notes actually acquired by the Pass
Through Trustee for such Class on each such Regular Distribution Date, such
present value computed by discounting such excess on a semiannual basis on each
Regular Distribution Date (assuming a 360-day year of twelve 30-day months)
using a discount rate equal to the Treasury Yield over (b) the amount of such
unused Deposits to be distributed to the holders of such Certificates plus
accrued and unpaid interest to but excluding such date of determination from
and including the preceding Regular Distribution Date (or if such date of
determination precedes the first Regular Distribution Date, the Issuance Date).
"Depositary" means Credit Suisse First Boston, New York Branch, a banking
institution organized under the laws of Switzerland.
"Equipment Notes" means and includes any equipment notes issued under any
Indenture in the form specified in Section 2.01 thereof (as such form may be
varied pursuant to the terms of such Indenture) and any Equipment Note issued
under any Indenture in exchange for or replacement of any other Equipment Note.
"Escrow Agent" has the meaning set forth in the first paragraph of the Note
Purchase Agreement.
"Escrow and Paying Agent Agreement" has the meaning set forth in the fifth
recital to the Note Purchase Agreement.
40
5
"FAA" means the Federal Aviation Administration of the United States.
"Final Withdrawal" with respect to each Escrow and Paying Agent Agreement, has
the meaning set forth in Section 1.02 thereof.
"Financing Agreements" means, collectively, the Lease Financing Agreements, the
Special Financing Agreements and the Owner Financing Agreements.
"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.
"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.
"Indentures" means, collectively, the Leased Aircraft Indentures, the Special
Indentures and the Owned Aircraft Indentures.
"Initial Purchasers" has the meaning set forth in the fourth recital to the
Note Purchase Agreement.
"Intercreditor Agreement" has the meaning set forth in the ninth recital to the
Note Purchase Agreement.
"Issuance Date" means the date of the original issuance of the Certificates.
"Law" means (a) any constitution, treaty, statute, law, decree, regulation,
order, rule or directive of any Government Entity, and (b) any judicial or
administrative interpretation or application of, or decision under, any of the
foregoing.
"Lease" means a Lease Agreement substantially in the form of Exhibit A-2 to the
Note Purchase Agreement.
"Lease Financing Agreements" means, collectively, the Aircraft Purchase
Agreement Assignment, the Leased Aircraft Participation
41
6
Agreement, the Lease, the Leased Aircraft Indenture, the Equipment Notes issued
thereunder and the Trust Agreement relating to the financing of a Leased
Aircraft.
"Leased Aircraft" means a New Aircraft subject to a Lease or Special Lease.
"Leased Aircraft Indenture" means a Trust Indenture and Mortgage substantially
in the form of Exhibit A-3 to the Note Purchase Agreement.
"Leased Aircraft Participation Agreement" means a Participation Agreement
substantially in the form of Exhibit A-1 to the Note Purchase Agreement.
"Liquidity Facility" has the meaning set forth in the ninth recital to the Note
Purchase Agreement.
"Liquidity Provider" has the meaning set forth in the ninth recital to the Note
Purchase Agreement.
"Loan Trustee" means (i) in the case of the Lease Financing Agreements, the
"Mortgagee" as defined therein, (ii) in the case of the Special Financing
Agreements, the "Loan Trustee" as defined therein and (iii) in the case of the
Owner Financing Agreements, the "Mortgagee" as defined therein.
"Mandatory Document Terms" means the terms set forth on Schedule V to the Note
Purchase Agreement.
"Mandatory Economic Terms" means the terms set forth on Schedule VI to the Note
Purchase Agreement.
"Manufacturer" means The Boeing Company, a Delaware corporation, solely in its
capacity as manufacturer or seller of New Aircraft.
"New Aircraft" has the meaning set forth in the second recital to the Note
Purchase Agreement.
"Note Purchase Agreement" means the Note Purchase Agreement to which this Annex
A is attached.
"Notice of Purchase Withdrawal" with respect to each Deposit Agreement, has the
meaning set forth in Section 2.3 thereof.
"Operative Agreements" means, collectively, the Pass Through Trust Agreements,
the Escrow and Paying Agent Agreements, the
42
7
Deposit Agreements, the Liquidity Facilities, the Intercreditor Agreement, the
Registration Rights Agreements, the Trust Agreements, the Equipment Notes, the
Certificates and the Financing Agreements.
"Owned Aircraft Indenture" means a Trust Indenture and Mortgage substantially
in the form of Exhibit C-2 to the Note Purchase Agreement.
"Owned Aircraft Participation Agreement" means a Participation Agreement
substantially in the form of Exhibit C-1 to the Note Purchase Agreement.
"Owner Financing Agreements" means, collectively, the Owned Aircraft
Participation Agreement, the Owned Aircraft Indenture and the Equipment Notes
issued thereunder.
"Owner Participant" means, with respect to any Leased Aircraft, the Person
named as the Owner Participant in the Participation Agreement with respect to
such Leased Aircraft.
"Owner Trust" means with respect to any Leased Aircraft, the trust created by
the "Trust Agreement" referred to in the Leased Aircraft Indenture or Special
Indenture related thereto.
"Owner Trustee" means with respect to any Leased Aircraft, the "Owner Trustee"
party to the "Trust Agreement" referred to in the Leased Aircraft Indenture or
Special Indenture related thereto.
"Participation Agreements" means, collectively, the Leased Aircraft
Participation Agreements, the Special Participation Agreements and the Owned
Aircraft Participation Agreements.
"Pass Through Trust" has the meaning set forth in the third recital to the Note
Purchase Agreement.
"Pass Through Trust Agreement" has the meaning set forth in the third recital
to the Note Purchase Agreement.
"Pass Through Trustee" has the meaning set forth in the first paragraph of the
Note Purchase Agreement.
"Paying Agent" has the meaning set forth in the first paragraph of the Note
Purchase Agreement.
"Person" means any individual, firm, partnership, joint venture, trust,
trustee, Government Entity, organization, association,
43
8
corporation, government agency, committee, department, authority and other
body, corporate or incorporate, whether having distinct legal status or not, or
any member of any of the same.
"Qualified Owner Participant" means any bank, trust company, insurance company,
financial institution or corporation (other than, without the Company's
consent, a commercial air carrier, a commercial aircraft operator, a freight
forwarder or Affiliate of any of the foregoing), in each case with a combined
capital and surplus or net worth of at least $50,000,000.
"Rating Agencies" means, collectively, at any time, each nationally recognized
rating agency which shall have been requested to rate the Certificates and
which shall then be rating the Certificates. The initial Rating Agencies will
be Moody's Investors Service, Inc. and Standard & Poor's Rating Group, a
division of McGraw-Hill Inc.
"Rating Agency Confirmation" means, with respect to any Financing Agreement
that has been modified in any material respect from the forms thereof attached
to the Note Purchase Agreement or with respect to Substitute Aircraft, a
written confirmation from each of the Rating Agencies that the use of such
Financing Agreement with such modifications or the substituting of such
Substitute Aircraft for a New Aircraft, whichever of the foregoing shall in a
particular case require Rating Agency Confirmation, 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.
"Register" means the register maintained pursuant to Sections 3.04 and 7.12 of
each Pass Through Trust Agreement.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement dated as of the Issuance Date, among the Initial Purchasers, the Pass
Through Trustees and the Company, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Regular Distribution Dates" shall mean April 1 and October 1 of each year,
commencing October 1, 1997.
"Remaining Weighted Average Life" means, on a given date with respect to any
Equipment Note, the number of days equal to the quotient obtained by dividing
(a) the sum of each of the products
44
9
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.
"Rolls-Royce Aircraft Purchase Agreement Assignment" means a Purchase Agreement
and Engine Warranties Assignment substantially in the form of Exhibit A-4-b to
the Note Purchase Agreement.
"Section 1110" means 11 U.S.C. Section 1110 of the Bankruptcy Code or any
successor or analogous Section of the federal bankruptcy Law in effect from
time to time.
"Series A Equipment Notes" means Equipment Notes issued under an Indenture and
designated as "Series A" thereunder.
"Series B Equipment Notes" means Equipment Notes issued under an Indenture and
designated as "Series B" thereunder.
"Series C Equipment Notes" means Equipment Notes issued under an Indenture and
designated as "Series C" thereunder.
"Special Financing Agreements" means, collectively, the Aircraft Purchase
Agreement Assignment, the Special Participation Agreement, the Special Lease,
the Special Indenture, the Equipment Notes issued thereunder and the Trust
Agreement relating to the financing of a Leased Aircraft.
"Special Indenture" means a Trust Indenture and Mortgage substantially in the
form of Exhibit D-3 to the Note Purchase Agreement.
"Special Lease" means a Lease Agreement substantially in the form of Exhibit D-
2 to the Note Purchase Agreement.
"Special Participation Agreement" means a Participation Agreement substantially
in the form of Exhibit D-1 to the Note Purchase Agreement.
"Subordination Agent" has the meaning set forth in the first paragraph of the
Note Purchase Agreement.
"Substitute Aircraft" has the meaning set forth in Section 1(g) of the Note
Purchase Agreement.
45
10
"Taxes" means all license, recording, documentary, registration and other
similar fees and all taxes, levies, imposts, duties, charges, assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority, together
with any penalties, additions to tax, fines or interest thereon or additions
thereto.
"Taxing Authority" means any federal, state or local government or other taxing
authority in the United States, any foreign government or any political
subdivision or taxing authority thereof, any international taxing authority or
any territory or possession of the United States or any taxing authority
thereof.
"Treasury Yield" means, as of any date of determination, with respect to any
Equipment Note (utilizing the Assumed Amortization Schedule applicable
thereto), the interest rate (expressed as a decimal and, in the case of United
States Treasury bills, converted to a bond equivalent yield) determined to be
the per annum rate equal to the 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).
"Triggering Event" has the meaning assigned to such term in the Intercreditor
Agreement.
"Trust Agreement" means a Trust Agreement substantially in the form of Exhibit
E to the Note Purchase Agreement.
"WTC" has the meaning set forth in the first paragraph of the Note Purchase
Agreement.
46
EXHIBIT A-1 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT PARTICIPATION AGREEMENT
47
- --------------------------------------------------------------------------------
CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION
SET FORTH IN SECTION 8 OF THIS AGREEMENT
- --------------------------------------------------------------------------------
================================================================================
PARTICIPATION AGREEMENT
Dated as of
Among
CONTINENTAL AIRLINES, INC.,
Lessee,
[ ],
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 Applicable Pass Through Agreements,
Mortgagee and Loan Participant
------------------------------
One Boeing Model ___________ Aircraft
Bearing Manufacturer's Serial No. ____
================================================================================
PARTICIPATION AGREEMENT BASE PAGE i
48
CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION .......................................................2
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE
OF EQUIPMENT NOTES; TERMINATION OF
OBLIGATION TO PARTICIPATE ..........................................................3
2.1 Participation in Lessor's Cost .....................................................3
2.2 Nature of Obligations of Participants ..............................................3
2.3 Termination of Obligation to Participate ...........................................4
SECTION 3. COMMITMENT TO LEASE AIRCRAFT .......................................................4
SECTION 4. PROCEDURE FOR PARTICIPATION IN
PAYMENT OF LESSOR'S COST;
POSTPONEMENT OF SCHEDULED DELIVERY DATE ............................................4
4.1 Notices of Scheduled Delivery Date .................................................4
4.2 Payment of Lessor's Cost ...........................................................5
4.3 Postponement of Scheduled Delivery Date ............................................6
4.4 Closing ............................................................................7
SECTION 5. CONDITIONS PRECEDENT ...............................................................7
5.1 Conditions Precedent to Obligations of Participants ................................7
5.2 Conditions Precedent to Obligations
of Owner Trustee ...................................................................15
5.3 Conditions Precedent to Obligations
of Mortgagee .......................................................................15
5.4 Conditions Precedent to Obligations
of Lessee ..........................................................................16
5.5 Post-Registration Opinion ..........................................................17
SECTION 6. REPRESENTATIONS AND WARRANTIES .....................................................18
6.1 Lessee's Representations and
Warranties .........................................................................18
6.2 Owner Participant's Representations
and Warranties .....................................................................22
6.3 First Security's Representations and
Warranties .........................................................................25
6.4 WTC's Representations and Warranties ...............................................28
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS .............................................32
7.1 Covenants of Lessee ................................................................32
7.2 Covenants of Owner Participant .....................................................34
PARTICIPATION AGREEMENT BASE PAGE ii
49
7.3 Covenants of First Security and Owner
Trustee ......................................................................................37
7.4 Covenants of WTC .............................................................................40
7.5 Covenants of Note Holders ....................................................................41
7.6 Agreements ...................................................................................42
SECTION 8. CONFIDENTIALITY ..............................................................................51
SECTION 9. INDEMNIFICATION AND EXPENSES .................................................................52
9.1 General Indemnity ............................................................................52
9.2 Expenses .....................................................................................59
9.3 General Tax Indemnity ........................................................................61
9.4 Payments .....................................................................................73
9.5 Interest .....................................................................................73
9.6 Benefit of Indemnities .......................................................................74
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS ..........................................................74
10.1 Participants, Owner Trustee and Note
Holders ......................................................................................74
10.2 Effect of Transfer ...........................................................................76
SECTION 11. REFUNDING AND CERTAIN OTHER MATTERS ..........................................................77
11.1 Refunding Generally ..........................................................................77
11.2 Limitations on Obligation to Refund ..........................................................79
11.3 Execution of Certain Documents ...............................................................80
11.4 ERISA ........................................................................................80
11.5 Consent to Optional Redemptions ..............................................................80
SECTION 12. SECTION 1110 .................................................................................81
SECTION 13. CHANGE OF CITIZENSHIP ........................................................................81
13.1 Generally ....................................................................................81
13.2 Owner Participant ............................................................................81
13.3 Owner Trustee ................................................................................82
13.4 Mortgagee ....................................................................................82
SECTION 14. CONCERNING OWNER TRUSTEE .....................................................................82
SECTION 15. MISCELLANEOUS ................................................................................83
15.1 Amendments ...................................................................................83
15.2 Severability .................................................................................83
15.3 Survival .....................................................................................84
15.4 Reproduction of Documents ....................................................................84
15.5 Counterparts .................................................................................84
15.6 No Waiver ....................................................................................85
15.7 Notices ......................................................................................85
PARTICIPATION AGREEMENT BASE PAGE iii
50
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE ........................................................................................86
15.9 Third-Party Beneficiary ......................................................................87
15.10 Entire Agreement .............................................................................87
15.11 Further Assurances ...........................................................................87
ANNEX, SCHEDULES AND EXHIBITS
ANNEX A - Definitions
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
EXHIBIT A - Opinion of special counsel to Lessee
EXHIBIT B - Opinion of corporate counsel to Lessee
EXHIBIT C - Opinion of corporate counsel to Airframe
Manufacturer
EXHIBIT D - Opinion of special counsel to Owner
Trustee
EXHIBIT E - Opinion of special counsel to Mortgagee
EXHIBIT F - Opinion of special counsel to Owner
Participant and Owner Participant Parent
EXHIBIT G - Opinion of corporate counsel to Owner
Participant and Owner Participant Parent
EXHIBIT H - Opinion of special counsel in Oklahoma
City, Oklahoma
PARTICIPATION AGREEMENT BASE PAGE iv
51
PARTICIPATION AGREEMENT
______
PARTICIPATION AGREEMENT ________ , dated as of __________ (this
"Agreement"), among (a) CONTINENTAL AIRLINES, INC., a Delaware corporation
("Lessee"), (b) [ ] ("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 Applicable Pass Through Trust Agreements, (each, an "Applicable
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. Owner Participant and First Security, concurrently herewith, are
entering into the Trust Agreement, pursuant to which, among other things, Owner
Trustee agrees to hold the Trust Estate for the use and benefit of Owner
Participant upon and subject to the terms and conditions set forth therein.
B. Lessee and Airframe Manufacturer have entered into the Purchase
Agreement, pursuant to which, among other things, Airframe Manufacturer has
agreed to manufacture and sell to Lessee and Lessee has agreed to purchase from
Airframe Manufacturer, certain aircraft, including the Aircraft.
C. On the Delivery Date, Lessee and Owner Trustee will enter into the
Purchase Agreement Assignment, pursuant to which, among other things, Lessee
will assign to Owner Trustee its right to purchase the Aircraft from Airframe
Manufacturer upon and subject to the terms and conditions set forth in the
Purchase Agreement and the Purchase Agreement Assignment.
PARTICIPATION AGREEMENT BASE PAGE 1
52
D. Pursuant to each of the Pass Through Trust Agreements, on the Issuance
Date the Pass Through Trusts were created and the Pass Through Certificates
were issued and sold.
E. Pursuant to the Note Purchase Agreement, each Applicable Pass Through
Trustee has agreed to use a portion of the proceeds from the issuance and sale
of the Pass Through Certificates issued by each Applicable Pass Through Trust
to purchase from the Owner Trustee, on behalf of the related Applicable Pass
Through Trust, the Equipment Note bearing the same interest rate as the Pass
Through Certificates issued by such Pass Through Trust.
F. Owner Trustee and Mortgagee, concurrently with the execution and
delivery hereof, have entered into the Trust Indenture for the benefit of the
Note Holders, pursuant to which, among other things, Owner Trustee agrees (1)
to issue Equipment Notes, in the amounts and otherwise as provided in the Trust
Indenture, the proceeds of which will be used to pay a portion of Lessor's Cost
and (2) to 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.
G. On the Delivery Date, Lessor and Lessee will enter into the Lease,
pursuant to which, among other things, Lessor shall lease the Aircraft to
Lessee and Lessee shall lease the Aircraft from Lessor upon and subject to the
terms and conditions set forth therein.
H. 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.
PARTICIPATION AGREEMENT BASE PAGE 2
53
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 Delivery
Date, Owner Participant and each Applicable 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 Applicable 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 Delivery Date, issued to the Subordination Agent
as the registered holder on behalf of each such Applicable Pass
Through Trustee for the related Applicable 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 Applicable Pass Through Trustee.
2.2 Nature of Obligations of Participants
The obligations hereunder of each Participant are several, and not joint,
and a Participant shall have no obligation to make available to Owner Trustee
any portion of any amount not paid hereunder by any other Participant. The
failure by either Participant to perform its obligations hereunder shall not
affect the obligations of Lessee toward the other Participant, except to the
extent provided in Section 5.4.
2.3 Termination of Obligation to Participate
Notwithstanding any other provision of this Agreement, if the Closing does
not occur on or before the Commitment
PARTICIPATION AGREEMENT BASE PAGE 3
54
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. COMMITMENT TO LEASE AIRCRAFT
Subject to the terms and conditions of this Agreement, concurrently with
the issuance of the Equipment Notes on the Delivery Date, Owner Trustee shall
purchase and accept delivery of the Aircraft under and pursuant to the Purchase
Agreement and the Purchase Agreement Assignment, and thereupon Owner Trustee
shall lease the Aircraft to Lessee, and Lessee shall lease the Aircraft from
Owner Trustee, under the Lease.
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST;
POSTPONEMENT OF SCHEDULED DELIVERY DATE
4.1 Notices of Scheduled Delivery Date
Without limiting its obligations to the Loan Participant under Section 1(b)
of the Note Purchase Agreement, Lessee agrees to give Participants, Owner
Trustee, and Mortgagee at least one Business Day's written notice of the
Scheduled Delivery 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. 920-1-014363
at The Chase Manhattan Bank (National Association), New York, New York ABA#
021000021 (contact: Emma Budget, tel. (718) 242- 3795), reference Continental
Lease ___, at or before 12:00 Noon, New York City time, on the Scheduled
Delivery Date. All such funds made available by each Participant to WTC shall,
until payment thereof to Airframe Manufacturer and Lessee as provided in
Section 4.2(b)(ii) or return thereof to the respective
PARTICIPATION AGREEMENT BASE PAGE 4
55
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 Delivery
Date pursuant to this Section 4.2, Owner Trustee shall:
(i) purchase, take title to, and accept delivery of,the Aircraft;
(ii) in consideration of the transfer of title to the Aircraft to
Owner Trustee, direct WTC to pay, from the funds made available to WTC
hereunder by the Participants, all or a specified portion of its
Commitment either to (A) Airframe Manufacturer, which payments in the
aggregate shall be equal to Manufacturer's Purchase Price, by wire
transfer of immediately available funds to Airframe Manufacturer's
account set forth in Schedule 1 and (B) Lessee, which payments in the
aggregate shall be equal to Lessor's Cost minus Manufacturer's Purchase
Price, 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 Delivery Date by the terms of any Operative
Agreement.
PARTICIPATION AGREEMENT BASE PAGE 5
56
4.3 Postponement of Scheduled Delivery Date
4.3.1 POSTPONEMENT
If for any reason whatsoever the Closing is not consummated on the
Scheduled Delivery Date, Lessee may, subject to the provisions of 1(e) of the
Note Purchase Agreement, by telephonic notice, given by 5:00 p.m., New York
City time (such telephonic notice to be promptly confirmed in writing by
personal delivery or facsimile), on the Scheduled Delivery Date to each
Participant, Owner Trustee and Mortgagee, designate a Delayed Delivery Date, in
which case the Owner Participant will keep its funds available, and the Loan
Participant shall comply with its obligations under Section 2.01 of each
applicable Pass Through Trust Agreement.
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 Delivery
Date, provided that any funds made available by the Loan Participant shall be
returned on such Scheduled Delivery Date.
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 Delivery Date is subject to satisfaction or waiver by each such
Participant, on or prior to the Delivery Date, 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 Sections 5.1.2(iii),
(xv) and (xxiii) (H) shall not be conditions precedent to the obligation of
Loan
PARTICIPATION AGREEMENT BASE PAGE 6
57
Participant and Sections 5.1.15 and 5.1.16 shall not be conditions 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 Delivery 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 Purchase Agreement Assignment;
(viii) the Consent and Agreement and the Engine Consent and
Agreement;
(ix) the Equipment Notes dated the Delivery Date; provided, that
only the Subordination Agent shall receive the authenticated Equipment
Notes;
(x) an excerpted copy of the Purchase Agreement to the extent
relating to Airframe Manufacturer's or Engine
PARTICIPATION AGREEMENT BASE PAGE 7
58
Manufacturer's respective warranties or related obligations or any
right in the Purchase Agreement assigned to Owner Trustee pursuant to
the Purchase Agreement Assignment; provided, that only Owner Trustee
and Mortgagee shall receive copies of such agreements (copies of which
may be inspected by Participants and their respective special counsel
on the Delivery Date, but after the Delivery Date such copies shall be
retained by Owner Trustee and Mortgagee and may be inspected and
reviewed by Owner Participant or Loan Participant or their respective
counsel if and only if there shall have occurred and be continuing a
Lease Default or Lease Event of Default);
(xi) the Bills of Sale;
(xii) an invoice from Airframe Manufacturer to Owner Trustee in
respect of the Aircraft (except for the BFE) specifying the amount of
the Manufacturer's Purchase Price and an invoice from Lessee
specifying the amount due to Lessee in respect of the Aircraft and the
BFE, which amounts, in the aggregate, shall equal Lessor's Cost of the
Aircraft;
(xiii) an appointment of authorized representatives by
Owner Trustee, and an acceptance thereof by such representatives in
each case, dated the Delivery Date;
(xiv) the broker's report and insurance certificates
required by Section 11 of the Lease;
(xv) an appraisal or appraisals from an Appraiser, which
appraisal or appraisals shall be reasonably satisfactory in form and
substance to Owner Participant; provided, that only Owner Participant
and Lessee shall receive copies of such appraisal or appraisals;
(xvi) (A) a copy of the Certificate of Incorporation and
By-Laws of Lessee and resolutions of the board of directors of Lessee
and/or the executive committee thereof, in each case certified as of
the Delivery 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 Delivery 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; and (C) a copy of the Certificate
of Incorporation or Articles of Incorporation and By-Laws and general
authorizing resolutions of the boards of directors (or executive
committees) or other satisfactory evidence of authorization of Owner
Participant, First Security and
PARTICIPATION AGREEMENT BASE PAGE 8
59
WTC, certified as of the Delivery Date by the Secretary or an
Assistant or Attesting Secretary of Owner Participant, First Security
and WTC, respectively, which authorize the execution, delivery and
performance by Owner Participant, 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;
(xvii) an Officer's Certificate of Lessee, dated as of the
Delivery Date, stating that its representations and warranties set
forth in this Agreement are true and correct as of the Delivery Date
(or, to the extent that any such representation and warranty expressly
relates to an earlier date, true and correct as of such earlier date);
(xviii) an Officer's Certificate of First Security, dated as of
the Delivery 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 Delivery Date (or, to the
extent that any such representation and warranty expressly relates to
an earlier date, true and correct as of such earlier date);
(xix) an Officer's Certificate of Owner Participant, dated as
of the Delivery Date, stating that its representations and warranties
set forth in this Agreement are true and correct as of the Delivery
Date (or, to the extent that any such representation and warranty
expressly relates to an earlier date, true and correct as of such
earlier date);
(xx) an Officer's Certificate of WTC, dated as of the
Delivery Date, stating that its representations and warranties in its
individual capacity or as Mortgagee, a
PARTICIPATION AGREEMENT BASE PAGE 9
60
Pass Through Trustee or Subordination Agent, as the case may be, set
forth in this Agreement are true and correct as of the Delivery Date
(or, to the extent that any such representation and warranty expressly
relates to an earlier date, true and correct as of such earlier date);
(xxi) an 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;
(xxii) the Financing Statements;
(xxiii) the following opinions of counsel, in each case
dated the Delivery Date:
(A) an opinion of Hughes Hubbard & Reed LLP, special
counsel to Lessee, substantially in the form of Exhibit A;
(B) an opinion of Lessee's Legal Department,
substantially in the form of Exhibit B;
(C) an opinion of _________________, corporate
counsel to Airframe Manufacturer, substantially in the
form of Exhibit C;
(D) an opinion of Ray, Quinney & Nebeker, special
counsel to Owner Trustee, substantially in the form of
Exhibit D;
(E) an opinion of Richards, Layton & Finger, special
counsel to Mortgagee, substantially in the form of Exhibit E;
(F) an opinion of ____________, special counsel to
Owner Participant, substantially in the form of Exhibit F;
(G) an opinion of Richards, Layton & Finger, special
counsel for the Loan Participant, substantially in the form
set forth in Exhibit G;
(H) an opinion of ___________, special tax counsel to
Owner Participant, with respect to certain
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61
tax consequences of the transactions contemplated hereby;
provided, that only Owner Participant shall receive such
opinion; and
(I) an opinion of Lytle Soule & Curlee, special
counsel in Oklahoma City, Oklahoma, substantially in the form
of Exhibit H;
(xxiv) a copy of a current, valid Standard Certificate of
Airworthiness for the Aircraft duly issued by the FAA;
(xxv) the Participants and their respective counsel shall have
received copies of such documents and papers as such Participants may
reasonably request, other than (A) in the case of Loan Participant,
copies of the Purchase Agreement, provided that special counsel for
Loan Participant may inspect the Purchase Agreement in connection with
the transactions contemplated hereby or as a basis for such counsel's
closing opinion, and (B) in the case of parties other than Owner
Participant and its special counsel, the Tax Indemnity Agreement.
5.1.3 OTHER COMMITMENTS
Each other 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 Delivery Date. Owner
Participant agrees to consider promptly, and to consult with Lessee concerning
any such Adverse
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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 Delivery 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 Delivery Date, specifying such
Adverse Change in Tax Law; and failure to give such notice on or
before the Delivery 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 Delivery 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 Delivery Date.
5.1.7 NO EVENT OF DEFAULT
On the Delivery 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.
PARTICIPATION AGREEMENT BASE PAGE 12
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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 in accordance with the terms of the Purchase Agreement.
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 Delivery Date (a) the FAA Filed Documents shall have been duly filed
for recordation (or shall be in the process of being so duly filed for
recordation) with the FAA in accordance with the Act and (b) each Financing
Statement shall have been duly filed (or shall be in the process of being so
duly filed) in the appropriate jurisdiction.
5.1.13 NO PROCEEDINGS
No action or proceeding shall have been instituted, nor shall any action be
threatened in writing, before any Government Entity, nor shall any order,
judgment or decree have been issued or proposed to be issued by any Government
Entity, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or any other Operative Agreement or the
transactions contemplated hereby or thereby.
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64
5.1.14 GOVERNMENTAL ACTION
All appropriate action required to have been taken prior to the Delivery
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 Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued.
5.1.15 NOTE PURCHASE AGREEMENT
The conditions precedent to the obligations of the Loan Participants and
the other requirements relating to the Aircraft and the Equipment Notes set
forth in the Note Purchase Agreement shall have been satisfied.
5.1.16 PERFECTED SECURITY INTEREST
On the Delivery 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.
5.2 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 Delivery Date is subject to
satisfaction or waiver by Owner Trustee, on or prior to the Delivery Date, 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 Delivery 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
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65
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
Delivery Date is subject to the satisfaction or waiver by Mortgagee, on or
prior to the Delivery Date, 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 Delivery Date, 4.3, when and as required thereby, or
shall have waived such notice.
5.3.2 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Mortgagee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Mortgagee.
5.3.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and 5.1.11
shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.
5.4 Conditions Precedent to Obligations of Lessee
The obligation of Lessee to lease the Aircraft on the Delivery Date is
subject to the satisfaction or waiver by Lessee, on or prior to the Delivery
Date, of the conditions precedent set forth below in this Section 5.4.
PARTICIPATION AGREEMENT BASE PAGE 15
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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 Delivery 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 Delivery 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
Delivery 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 Delivery Date, specifying such Adverse
Change in Tax Law.
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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 Delivery Date of the transactions contemplated thereby, do not
and will not
PARTICIPATION AGREEMENT BASE PAGE 17
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(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 Delivery Date of the transactions contemplated thereby do not and
will not require the consent or approval of, or the giving of notice to, or the
registration with, or the recording or filing of any documents with, or the
taking of any other action in respect of, (a) any trustee or other holder of
any Debt of Lessee and (b) any Government Entity, other than the filing of (x)
the FAA Filed Documents and the Financing Statements (and continuation
statements periodically) and (y) filings, recordings, notices or other
ministerial actions pursuant to any routine recording, contractual or
regulatory requirements applicable to it.
6.1.5 VALID AND BINDING AGREEMENTS
The Lessee Operative Agreements have been duly authorized, executed and
delivered by Lessee and, assuming the due authorization, execution and delivery
thereof by the other party or parties thereto, constitute the legal, valid and
binding obligations of Lessee and are enforceable against Lessee in accordance
with the respective terms thereof, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar Laws affecting the rights of creditors generally and general principles
of equity, whether considered in a proceeding at law or in equity.
6.1.6 LITIGATION
Except as set forth in Lessee's most recent Annual Report on Form 10-K, as
amended, filed by Lessee with the SEC on or prior to the Delivery Date, or in
any Quarterly Report on Form 10-Q or
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Current Report on Form 8-K filed by Lessee with the SEC subsequent to such Form
10-K and on or prior to the Delivery Date, no action, claim or proceeding is
now pending or, to the Actual Knowledge of Lessee, threatened, against Lessee,
before any court, governmental body, arbitration board, tribunal or
administrative agency, which is reasonably likely to be determined adversely to
Lessee and if determined adversely to Lessee would result in a Material Adverse
Change.
6.1.7 FINANCIAL CONDITION
The audited consolidated balance sheet of Lessee with respect to Lessee's
most recent fiscal year included in Lessee's most recent Annual Report on Form
10-K, as amended, filed by Lessee with the SEC, and the related consolidated
statements of operations and cash flows for the period then ended have been
prepared in accordance with GAAP and fairly present in all material respects
the financial condition of Lessee and its consolidated subsidiaries as of such
date and the results of its operations and cash flows for such period, and
since the date of such balance sheet, there has been no material adverse change
in such financial condition or operations of Lessee, except for matters
disclosed in (a) the financial statements referred to above or (b) any
subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by
Lessee with the SEC on or prior to the date hereof.
6.1.8 REGISTRATION AND RECORDATION
Except for (a) the registration of the Aircraft with the FAA pursuant to
the Act in the name of Owner Trustee, (b) the filing for recordation (and
recordation) of the FAA Filed Documents, (c) the filing of the Financing
Statements (and continuation statements relating thereto at periodic
intervals), (d) the taking of possession and retention by Mortgagee of the
original counterparts of the Lease and Lease Supplement No. 1 and (e) the
affixation of the nameplates referred to in Section 7.1.3 of the Lease, no
further action, including any filing or recording of any document (including
any financing statement in respect thereof under Article 9 of the UCC) is
necessary in order to establish and perfect the right, title or interest of
Owner Trustee, and the Mortgagee's security interest, in the Aircraft and the
Lease, as against Lessee and any other Person, in each case, in any applicable
jurisdictions in the United States.
PARTICIPATION AGREEMENT BASE PAGE 19
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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
PARTICIPATION AGREEMENT BASE PAGE 20
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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.
6.2 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 corporation duly incorporated, validly existing and
in good standing under the Laws of the OP Jurisdiction, has the corporate power
and authority to conduct the business in which it is currently engaged and to
own or hold under lease its properties and to enter into, and perform its
obligations under the Owner Participant Agreements, and has a tangible net
worth (exclusive of goodwill) greater than $75,000,000.
6.2.2 CORPORATE AUTHORIZATION
Owner Participant has taken, or caused to be taken, all necessary corporate
action (including, without limitation, the obtaining of any consent or approval
of stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery of each of the Owner Participant
Agreements, and the performance of its obligations thereunder.
PARTICIPATION AGREEMENT BASE PAGE 21
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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 Delivery Date of the
transactions contemplated thereby, do not and will not (a) violate any
provision of the Certificate of Incorporation or By-Laws of Owner Participant,
(b) violate any Law applicable to or binding on Owner Participant or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Owner Participant), or
result in the creation of any Lien (other than as provided for or otherwise
permitted in the Operative Agreements) upon the Trust Estate under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, lease, loan or other material agreement, instrument or document to
which Owner Participant is a party or by which Owner Participant or any of its
properties is bound.
6.2.4 APPROVALS
The execution and delivery by Owner Participant of the Owner Participant
Agreements, the performance by Owner Participant of its obligations thereunder
and the consummation by Owner Participant on the Delivery 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
PARTICIPATION AGREEMENT BASE PAGE 22
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generally and general principles of equity, whether considered in a proceeding
at law or in equity.
6.2.6 CITIZENSHIP
On the Delivery Date, Owner Participant is a Citizen of the United States.
6.2.7 NO LIENS
On the Delivery Date, there are no Lessor Liens attributable to Owner
Participant in respect of all or any part of the Trust Estate.
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 before any court,
governmental body, arbitration board, administrative agency or tribunal which,
if determined adversely to Owner Participant, would materially adversely affect
the ability of Owner Participant to perform its obligations under 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
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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
Participant, 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 Delivery 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
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Security, (b) violate any 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 Delivery Date of the transactions contemplated
thereby do not and will not require the consent, approval or authorization of,
or the giving of notice to, or the registration with, or the recording or
filing of any documents with, or the taking of any other action in respect of,
(a) any trustee or other holder of any Debt of First Security or (b) any
Government Entity, 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
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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 Delivery 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 Delivery Date, Owner Trustee shall have received whatever title (a)
to the Aircraft (other than the BFE) as was conveyed to it by Airframe
Manufacturer and (b) to the BFE as was conveyed to it by Lessee.
6.3.9 NO LIENS; FINANCING STATEMENTS
On the Delivery Date, there are no Lessor Liens attributable to First
Security or Owner Trustee in respect of all or any part of the Aircraft, Trust
Estate or the Trust Indenture Estate. Except for the Financing Statements, it
has not, either in its individual capacity or as Owner Trustee, executed any
UCC financing statements relating to the Aircraft or the Lease.
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
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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 Applicable 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
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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 Delivery
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
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consummation on the Delivery 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 Delivery Date, there are no Lessor Liens attributable to WTC in
respect of all or any part of the Trust Estate or the Trust Indenture Estate.
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
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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 Applicable 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 Applicable 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
Applicable 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
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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 Applicable 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
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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 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 thereof (including, without limitation, reasonable
attorneys' fees and disbursements).
(c) Lessee, at its sole cost and expense, will cause the FAA Filed
Documents, the Financing Statements and all continuation statements (and any
amendments necessitated by any combination, consolidation or merger pursuant to
Section 13.2 of the Lease, or any relocation of its chief executive office) in
respect of the Financing Statements to be prepared and, subject only to the
execution and delivery thereof by Owner Trustee and 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
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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
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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
Lessee and Mortgagee and will not amend, modify or supplement the Trust
Agreement, or waive any of the provisions thereof, if such amendment,
modification, supplement or waiver would have a material adverse effect on
Lessee, without the consent of Lessee, or on Mortgagee or any Note Holder,
without the consent of Mortgagee.
(b) Notwithstanding Section 7.2.2(a), Owner Participant may at any time
remove Owner Trustee pursuant to Section 9.1 of the Trust Agreement or
terminate the Trust Agreement pursuant to Section 11.2 of the Trust Agreement.
7.2.3 CHANGE OF SITUS OF OWNER TRUST
If, at any time, any Tax Indemnitee or the Trust Estate becomes subject to
any Taxes for which it is indemnified pursuant to Section 9.3 of this Agreement
and if, as a consequence thereof, Lessee should request that the situs of the
Trust be moved to another state in the United States from the state in which it
is then located, the situs of the Trust may be moved with the written consent
of Owner Participant (which consent shall not be unreasonably withheld) and
Owner Participant will take whatever action may be reasonably necessary to
accomplish such removal; provided, that, in any event, (a) Lessee shall provide
such additional tax indemnification as Owner Participant and the Note Holders
or the Pass Through Trustees may reasonably request to cover any additional
unindemnified Taxes or loss of Tax benefits described in the assumptions in the
Tax Indemnity Agreement resulting from such change in the situs of the Trust,
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(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(xxiii)(D) 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.
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7.2.5 SECURITIES ACT
Owner Participant will not directly or indirectly offer any beneficial
interest or security relating to the ownership of the Aircraft or any interest
in the Trust Estate or any of the Equipment Notes or any other interest in or
security under the Trust Indenture for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any Person in violation of the Securities Act or applicable state or foreign
securities Laws, provided that the foregoing shall not be deemed to impose on
Owner Participant any responsibility with respect to any such offer, sale or
solicitation by any other party hereto.
7.2.6 REGARDING THE OWNER TRUSTEE
Owner Participant will cause 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.
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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.
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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 Delivery Date, Owner Trustee shall duly execute and deliver to
Lessee all filings and recordings (including, without limitation, all filings
and UCC financing statements under the Act and the UCC and any amendments to
UCC financing statements necessitated by any relocation of its chief executive
office), prepared and delivered to it by Lessee required to perfect Owner
Trustee's title to the Aircraft and the liens of and security interests granted
by the Trust Indenture (or to maintain such perfection) and to make such title,
liens and security interests valid and enforceable.
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 Applicable Pass
Through Trustee or Subordination Agent, as the case may be, covenants and
agrees with Lessee, Owner Participant and Owner Trustee as follows:
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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, an Applicable 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, an Applicable 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.
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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 for the transfer of the interests of each Applicable Pass
Through Trustee in the Equipment Notes to the trustee of the Related Trust (as
defined in each Applicable Pass Through Trust Agreement) in accordance with the
Applicable Pass Through Trust Agreement and except as otherwise required by the
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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.
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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.
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7.6.4 QUIET ENJOYMENT; SALE BY OWNER TRUSTEE BINDING
(a) Owner Participant, each Applicable 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 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
PARTICIPATION AGREEMENT BASE PAGE 43
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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 (A) 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) any other provision of the Trust Indenture or Equipment Notes in
a manner that could 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
PARTICIPATION AGREEMENT BASE PAGE 44
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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 Applicable 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 Applicable 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 if such
insurance would limit or otherwise adversely affect the coverage of any
insurance required to be obtained or maintained by Lessee pursuant to Section
11 and Annex D of the Lease.
7.6.10 EXTENT OF INTEREST OF NOTE HOLDERS
A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Estate or the Trust Indenture Estate when and
if the principal and Make-Whole Amount, if any, of and interest on the
Equipment Note held by such Holder, and all other sums, then due and payable to
such Holder hereunder and under any other Operative Agreement, shall have been
paid in full.
7.6.11 FOREIGN REGISTRATION
Each Participant, Owner Trustee and Mortgagee hereby agree, for the benefit
of Lessee but subject to the provisions of Section 7.1.2 of the Lease:
(a) that Lessee shall be entitled to register the Aircraft or cause the
Aircraft to be registered in a country other than the United States subject to
compliance with the following:
(i) each of the following requirements is satisfied:
PARTICIPATION AGREEMENT BASE PAGE 45
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(A) such registration shall be made only after the Tax
Attribute Period, unless Lessee prepays on a lump
sum basis any liability due under the Tax Indemnity
Agreement as a result of such 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 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 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 Delivery Date;
(ii) the Owner Trustee and Mortgagee shall have received an
opinion of counsel (subject to customary exceptions) reasonably
satisfactory to the Owner Participant addressed to each such party as
to the effect that:
(A) such country would recognize the Owner
Trustee's ownership interest in the Aircraft;
(B) the obligations of Lessee, and the rights and
remedies of Owner Trustee, under the Lease are valid, binding
and enforceable under the laws of such 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
PARTICIPATION AGREEMENT BASE PAGE 46
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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;
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(b) In addition, as a condition precedent to any change in
registration Lessee shall have given to Lessor and Mortgagee
assurances reasonably satisfactory to each of them:
(i) to the effect that the provisions of Section 11
of the Lease have been complied with after giving
effect to such change of registration;
(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 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
and Mortgagee, afford such protection).
7.6.12 OTHER COMMERCIAL RELATIONS UNAFFECTED
Notwithstanding anything to the contrary set forth in any Operative
Agreement: (a) Except as set forth in the Purchase Agreement Assignment,
nothing contained in the Operative Agreements shall constitute or be deemed to
be a waiver by Lessee of any rights, remedies or claims it may have against
Airframe Manufacturer or Engine Manufacturer or any subcontractor or supplier
of either;
PARTICIPATION AGREEMENT BASE PAGE 48
99
and the Operative Agreements do not and shall not be construed or deemed to
create any rights, waivers, immunities or indemnities in favor of Airframe
Manufacturer, Engine Manufacturer or any subcontractor or supplier of either
with respect to any such rights, remedies or claims of Lessee; and
(b) None of Airframe Manufacturer, by its execution and delivery of the
Consent and Agreement, and Engine Manufacturer, by its execution and delivery
of the Engine Consent and Agreement, shall be deemed to have waived any rights,
remedies or claims which Airframe Manufacturer or Engine Manufacturer (or any
subcontractor or supplier of either), as the case may be, may have against
Lessee; and the Operative Agreements do not and shall not be construed or
deemed to create any rights, waivers, immunities or indemnities in favor of
Lessee with respect to any such rights, remedies or claims of Airframe
Manufacturer or Engine Manufacturer (or any subcontractor or supplier of
either).
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
keep Annexes B, C and D and Schedules 1, 2, 3 and 4 to the Lease, the
Participation Agreement, the Purchase Agreement Assignment and the Tax
Indemnity Agreement confidential and shall not disclose, or cause to be
disclosed, the same to any Person, except (A) to prospective and permitted
transferees of Lessee's, Owner Participant's, a Note Holder's, a Liquidity
Provider's, Owner Trustee's, Mortgagee's or other Indenture Indemnitee's
interest or their respective counsel or special
PARTICIPATION AGREEMENT BASE PAGE 49
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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 or (F) such other Persons as are reasonably deemed
necessary by the disclosing party in order to protect the interests of such
party or for the purposes of enforcing such documents by such party; provided,
that any and all disclosures permitted by clauses (C), (D), (E) or (F) above
shall be made only to the extent necessary to meet the specific requirements or
needs of the Persons making such disclosures.
SECTION 9. INDEMNIFICATION AND EXPENSES
9.1 General Indemnity
[INTENTIONALLY OMITTED]
PARTICIPATION AGREEMENT BASE PAGE 50
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9.2.1 INVOICES AND PAYMENT
Each of the Owner Trustee, Mortgagee, the Owner Participant, Lessee, the
Applicable 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 Delivery Date). If so submitted
and approved, the Owner Participant agrees promptly, but in any event no later
than the 105th day after the Delivery Date, to pay (but not in excess of 2% of
Lessor's Cost) Transaction Expenses. Notwithstanding the foregoing, Lessee at
its sole option shall have the right to pay directly any and all Transaction
Expenses. Lessee shall be obligated to pay directly any and all Transaction
Expenses which are in excess of 2% 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, 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
PARTICIPATION AGREEMENT BASE PAGE 58
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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.
9.2.3 PAYMENTS IF TRANSACTIONS DO NOT CLOSE
In the event that the transaction contemplated by this Agreement fails to
close as a result of the Owner Participant's failure to comply with its
obligations under this Agreement or any breach of a representation or warranty
of Owner Participant made in or pursuant to any Operative Agreement,
notwithstanding any other rights and remedies that the parties hereto shall
have against Owner Participant, the Owner Participant will be responsible for
all of its fees and expenses, including but not limited to the fees, expenses
and disbursements of its special counsel and the fees of the Appraiser referred
to in Section 5.1.2(xv).
9.3 General Tax Indemnity
[INTENTIONALLY OMITTED]
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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;
PARTICIPATION AGREEMENT BASE PAGE 72
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(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) Lessee shall not be obligated to pay any greater amount or
incur any greater obligation than that which it would have been
obliged to pay or incur under the Lease or other Lessee Operative
Agreement if no transfer or assignment had taken place, and the terms
and conditions of 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 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 that
such transfer will not violate applicable securities laws, the Act or
any other applicable law and is in accordance with this Section 10.1.1;
(v) The Transferee is a Citizen of the United States (it being
understood that the existence of any such requirement is to be
determined without giving consideration to Section 47.9 of the FAA
Regulations), or shall use a voting powers trust or similar
arrangement in order to hold an interest in the Trust Estate such that
the Aircraft can be registered in the United States (without giving
consideration to Section 47.9 of the FAA Regulations); and
(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, a commercial air carrier, a commercial
aircraft operator, a freight forwarder or an Affiliate of any of the
foregoing) the obligations of which under the Owner Participant
Agreements are guaranteed by a Permitted Institution in any case,
PARTICIPATION AGREEMENT BASE PAGE 73
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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.
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10.2 Effect of Transfer
Upon any Transfer in accordance with Section 10.1.1, 10.1.2 or 10.1.3
(other than any Transfer by any Note Holder, to the extent it only grants
participations in Equipment Notes or in its beneficial interest therein),
Transferee shall be deemed an "Owner Participant," "Owner Trustee" or a "Note
Holder," respectively, for all purposes of this Agreement and the other
Operative Agreements and, in the case of a Transferee of any Participant or
Note Holder, shall be deemed to have paid its ratable portion of Lessor's Cost
previously made by Owner Participant or Loan Participant, respectively, making
such conveyance and represented by the interest being conveyed, and each
reference herein to Owner Participant, Owner Trustee or Note Holder,
respectively, shall thereafter be deemed a reference to such Transferee for all
purposes, and the transferring Owner Participant, Owner Trustee, Loan
Participant or Note Holder shall be released (except, in the case of Owner
Participant, to the extent of any guaranty provided by it under Section
10.1.1(a)(vi)) from all of its liabilities and obligations under this Agreement
and any other Operative Agreements to the extent such liabilities and
obligations arise after such Transfer and, in each case, to the extent such
liabilities and obligations are assumed by the transferee; provided, that such
transferring Owner Participant, Owner Trustee or Note Holder (and its
respective Affiliates, successors, assigns, agents, servants, representatives,
directors and officers) will continue to have the benefit of any rights or
indemnities under any Operative Agreement vested or relating to circumstances,
conditions, acts or events prior to such Transfer.
SECTION 11. 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
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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.
PARTICIPATION AGREEMENT BASE PAGE 76
108
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 foregoing, Owner Participant shall have no obligation
to proceed with any refunding transaction as contemplated by this Section 11:
PARTICIPATION AGREEMENT BASE PAGE 77
109
(a) If such transaction would have, or creates a material risk of, an
adverse tax consequence to Owner Participant unless Lessee agrees to indemnify
Owner Participant against such adverse tax consequence;
(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 shall have occurred and be continuing; or
(d) If there shall have previously been consummated three refunding
transactions at Lessee's request pursuant to this Section 11.
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 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 Offering Circular relating to the initial issuance and sale of the Pass
Through Certificates.
PARTICIPATION AGREEMENT BASE PAGE 78
110
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.
PARTICIPATION AGREEMENT BASE PAGE 79
111
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.
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.
PARTICIPATION AGREEMENT BASE PAGE 80
112
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.
PARTICIPATION AGREEMENT BASE PAGE 81
113
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
PARTICIPATION AGREEMENT BASE PAGE 82
114
(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,
PARTICIPATION AGREEMENT BASE PAGE 83
115
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
PARTICIPATION AGREEMENT BASE PAGE 84
116
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, the Escrow Agent and the
Paying Agent, each of which is an intended third party beneficiary with respect
to the provisions of Section 9.1) with any rights of any nature whatsoever
against any of the parties hereto and no person not a party hereto (other than
the Liquidity Provider, the Escrow Agent and the Paying Agent, with respect to
the provisions of Section 9.1) 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]
PARTICIPATION AGREEMENT BASE PAGE 85
117
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:
-------------------------------------
Owner Participant
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:
118
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,
1997-1A-0
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,
1997-1B-0
By
---------------------------------
Name:
Title:
119
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,
1997-[1C-I][1C-II]-0
By
---------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as
Subordination Agent
By
---------------------------------
Name:
Title:
120
------------------------
ANNEX A - DEFINITIONS___
------------------------
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly provided, a
reference to:
(i) each of "Lessee," "Lessor," "Loan Participant,"
"Owner Trustee," "Owner Participant," "Mortgagee," "Note Holder" or
any other person includes, without prejudice to the provisions of any
Operative Agreement, any successor in interest to it and any permitted
transferee, permitted purchaser or permitted assignee of it;
(ii) words importing the plural include the singular and
words importing the singular include the plural;
(iii) any agreement, instrument or document, or any annex,
schedule or exhibit thereto, or any other part thereof, includes,
without prejudice to the provisions of any Operative Agreement, that
agreement, instrument or document, or annex, schedule or exhibit, or
part, respectively, as amended, modified or supplemented from time to
time in accordance with its terms and in accordance with the Operative
Agreements, and any agreement, instrument or document entered into in
substitution or replacement therefor (including, without limitation,
in the case of each Pass Through Trust Agreement, the "Related Pass
Through Trust Agreement" as defined therein);
(iv) any provision of any Law includes any such provision
as amended, modified, supplemented, substituted, reissued or reenacted
prior to the Delivery Date, and thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby,"
"herein," "hereto," "hereof" and "hereunder" and words of similar
import when used in any Operative Agreement refer to such Operative
Agreement as a whole and not to any particular provision of such
Operative Agreement;
ANNEX A BASE
121
2
(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 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.
ANNEX A BASE
122
3
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 Owner Participant or Lessee, respectively,
or any other officer 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.
ANNEX A BASE
123
4
"Affiliate" means, with respect to any person, any other person
directly or indirectly controlling, controlled by or under common control with
such person. For purposes of this definition, "control" means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
by contract or otherwise and "controlling," "controlled by" and "under common
control with" have correlative meanings.
"Aircraft" means, collectively, the Airframe and Engines.
"Aircraft Bill of Sale" means the full warranty bill of sale covering
the Aircraft delivered by Airframe Manufacturer to Owner Trustee on the
Delivery Date.
"Aircraft Documents" means all technical data, manuals and log books,
and all inspection, modification and overhaul records and other service,
repair, maintenance and technical records that are required by the FAA (or the
relevant Aviation Authority), to be maintained with respect to the Aircraft,
Airframe, Engines or Parts; and such term shall include all additions,
renewals, revisions and replacements of any such materials from time to time
made, or required to be made, by the FAA (or other Aviation Authority)
regulations, and in each case in whatever form and by whatever means or medium
(including, without limitation, microfiche, microfilm, paper or computer disk)
such materials may be maintained or retained by or on behalf of Lessee
(provided, that all such materials shall be maintained in the English
language).
"Airframe" means (a) the aircraft (excluding Engines or engines from
time to time installed thereon) manufactured by Airframe Manufacturer and
identified by Airframe Manufacturer's model number, United States registration
number and Airframe Manufacturer's serial number set forth in Lease Supplement
No. 1 and any Replacement Airframe and (b) any and all Parts incorporated or
installed in or attached or appurtenant to such airframe, and any and all Parts
removed from such airframe, unless title to such Parts shall not be vested in
Lessor in accordance with Section 8.1 and Annex C of the Lease. Upon
substitution of a Replacement Airframe under and in accordance with the Lease,
such Replacement Airframe shall become subject to the Lease and shall be the
"Airframe" for all purposes of the Lease and the other Operative Agreements and
thereupon the Airframe for which the substitution is made shall no longer be
subject to the Lease, and such replaced Airframe shall cease to be the
"Airframe."
ANNEX A BASE
124
5
"Airframe Manufacturer" means 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 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.
"Applicable Pass Through Trust" means each of the separate pass
through trusts created under the Applicable Pass Through Trust Agreements.
"Applicable Pass Through Trust Agreement" means each of the separate
Pass Through Trust Agreements by and between the Lessee and an Applicable Pass
Through Trustee.
"Applicable Pass Through Trustee" means each Pass Through Trustee that
is a party to the Participation Agreement.
"Appraiser" means a firm of internationally recognized, independent
aircraft appraisers.
"Average Life Date" for any Equipment Note shall be the date which
follows the time of determination by a period equal to the Remaining Weighted
Average Life of such Equipment Note. "Remaining Weighted Average Life" on a
given date with respect to any Equipment Note shall be the number of days equal
to the quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining scheduled payment
of principal of such Equipment Note by (ii) the number of days from and
including such determination date to but excluding the date on which such
payment of principal is scheduled to be made, by (b) the then outstanding
principal amount of such Equipment Note.
"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.
ANNEX A BASE
125
6
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C.
Section 101 et seq.
"Base Lease Term" means the period beginning on and including the
Commencement Date and ending on the Scheduled Expiration Date, or such earlier
date on which the Term terminates in accordance with the provisions of the
Lease.
"Basic Rent" means the rent payable for the Aircraft pursuant to
Section 3.2.1(a) of the Lease.
"Beneficial Owner" when used in relation to an Equipment Note means a
Person that, by reason of direct ownership, contract, share ownership or
otherwise, has the right to receive or participate in receiving, directly or
indirectly, payments of principal, interest or Make-Whole Amount in respect of
such Equipment Note; provided that a Person shall not be deemed to be a
Beneficial Owner of an Equipment Note solely because another Person in which
such a Person owns common stock or other equity securities is a registered
holder or Beneficial Owner of such Equipment Note unless such Person is an
Affiliate of such other Person.
"BFE" means all appliances, parts, instruments, appurtenances,
accessories, furnishings or other equipment of whatever nature sold by Lessee
to Owner Trustee pursuant to the BFE Bill of Sale.
"BFE Amount" means the amount paid by Owner Trustee to Lessee to
purchase the BFE, and is designated by Dollar amount in Schedule 3 to the
Participation Agreement.
"BFE Bill of Sale" means the full warranty bill of sale executed by
Lessee in favor of Owner Trustee, dated the Delivery Date, identifying and
covering the BFE.
"Bills of Sale" means the FAA Bill of Sale, the Aircraft Bill of Sale
and the BFE Bill of Sale.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks are authorized or required by law to close in New
York, New York, Houston, Texas, Wilmington, Delaware, or Salt Lake City, Utah.
ANNEX A BASE
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"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 Corporation or Moody's Investors Service, Inc. 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 closing of the transactions contemplated by the
Participation Agreement on the Delivery Date.
"Code" means the Internal Revenue Code of 1986, as amended; provided,
that when used in relation to a Plan, "Code" shall mean the Internal Revenue
Code of 1986 and any regulations and rulings issued thereunder, all as amended
and in effect from time to time.
"Commencement Date" is defined in Schedule 1 to the Lease.
ANNEX A BASE
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"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.
"Consent and Agreement" means the Manufacturer Consent and Agreement
________, dated as of even date with the Participation Agreement, of Airframe
Manufacturer.
"Continuous Stay Period" is defined in Section 4.04(a) of the Trust
Indenture.
"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of Owner Trustee located from time to time at Owner
Trustee's address for notices under the Participation Agreement or such other
office at which Owner Trustee's corporate trust business shall be administered
which Owner Trustee shall have specified by notice in writing to Lessee,
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. Section 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.
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"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 Delivery Date" means a delayed Delivery Date notified to each
Participant, Owner Trustee and Mortgagee by Lessee pursuant to Section 4.3 of
the Participation Agreement, which delayed Delivery Date shall be a Business
Day not later than the Commitment Termination Date.
"Delivery Date" means the Business Day specified in Lease Supplement
No. 1 as the date on which, among other things, the Aircraft is delivered to
and accepted by Lessee under the Lease and the Closing occurs.
"Deposit Agreement" means each of the four Deposit Agreements between
the Depositary and the Escrow Agent, dated as of the Issuance Date, each of
which relates to one of the Pass Through Trusts, provided that, for purposes of
any obligation of Lessee, no amendment, modification or supplement to, or
substitution or replacement of, any such Deposit Agreement shall be effective
unless consented to by Lessee.
"Depositary" means Credit Suisse First Boston, New York Branch, as
Depositary under each Deposit Agreement.
"Dollars," "United States Dollars" or "$" means the lawful currency of
the United States.
"DOT" means the Department of Transportation of the United States or
any Government Entity succeeding to the functions of such Department of
Transportation.
"Engine" means (a) each of the engines manufactured by Engine
Manufacturer and identified by Engine Manufacturer's model number and Engine
Manufacturer's serial number set forth in 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
ANNEX A BASE
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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."
"Enforcement Date" is defined in Section 4.03 of the Trust Indenture.
"Engine Consent and Agreement" means the Engine Manufacturer Consent
and Agreement dated as of even date with the Participation Agreement, of Engine
Manufacturer.
"Engine Manufacturer" means [CFM INTERNATIONAL, A DELAWARE
CORPORATION.] [ROLLS-ROYCE PLC, A CORPORATION ORGANIZED UNDER THE LAWS OF
ENGLAND.]
"Equipment Note Register" is defined in Section 2.07 of the Trust
Indenture.
"Equipment Notes" means and includes any equipment notes issued under
the Trust Indenture in the form specified in Section 2.01 thereof (as such form
may be varied pursuant to the terms of the Trust Indenture) and any Equipment
Note issued under the Trust Indenture in exchange for or replacement of any
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.
"Escrow Agent" means First Security Bank, National Association, as
Escrow Agent under each of the Escrow Agreements.
"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial
purchasers of the Pass Through Certificates named therein and one of the Pass
Through Trustees, dated as of the Issuance Date, each of which relates to one
of the Pass Through Trusts, provided that, for purposes of any obligation of
Lessee, no amendment, modification or supplement to, or substitution or
replacement of, any such Escrow Agreement shall be effective unless consented
to by Lessee.
"Event of Default" is defined in Section 4.02 of the Trust Indenture.
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"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 Permitted 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
ANNEX A BASE
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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 two consecutive
years, 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 two-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 three years or such use shall be prohibited at the
expiration of the Term.
"Excluded Payments" means (i) indemnity payments paid or payable by
Lessee to or in respect of Owner Participant, or Owner Trustee in its
individual capacity, their respective Affiliates, successors and permitted
assigns and their directors, officers, employees, servants and agents pursuant
to Section 9 of the Participation Agreement or any corresponding payments under
the Lease, (ii) proceeds of public liability insurance paid or payable as a
result of insurance claims made, or losses suffered, by Owner Trustee in its
individual capacity or by Owner Participant, that are payable directly to Owner
Trustee in its individual capacity, or Owner Participant, respectively, for
their own account, (iii) proceeds of insurance maintained with respect to the
Aircraft by Owner Participant or any Affiliate thereof for its or their own
account or benefit (whether directly or through Owner Trustee) and permitted
under Section 11.2 of the Lease, (iv) all payments required to be made under
the Tax Indemnity Agreement by Lessee whether or not denominated as
Supplemental Rent, (v) any 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
ANNEX A BASE
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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.
"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).
"FAA" means the Federal Aviation Administration of the United States
or any Government Entity succeeding to the functions of such Federal Aviation
Administration.
"FAA Bill of Sale" means a bill of sale for the Aircraft on AC Form
8050-2 (or such other form as may be approved by the FAA) delivered to Owner
Trustee on the Delivery Date by Airframe Manufacturer.
"FAA Filed Documents" means the Lease, Lease Supplement No. 1, the
Trust Indenture, the Trust Agreement, the Trust Indenture Supplement, the FAA
Bill of Sale and an application for registration of the Aircraft with the FAA
in the name of Owner Trustee.
"FAA Regulations" means the Federal Aviation Regulations issued or
promulgated pursuant to the Act from time to time.
"Fair Market Rental Value" means the fair market rental value in
Dollars for the Aircraft that would apply in an arm's-length transaction
between an informed and willing lessee under
ANNEX A BASE
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14
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, and (c) the Aircraft would be leased during any such Renewal Term
on the same terms and conditions as are set forth in the Lease with respect to
the Base Lease Term.
"Fair Market Sales Value" means the fair market sales value in Dollars
for the Aircraft that would apply in an arm's-length transaction between an
informed and willing buyer under no compulsion to buy, and an informed and
willing seller under no compulsion to sell, the Aircraft, in a transaction that
would close on or about the relevant time of determination, assuming that (a)
the Aircraft has been maintained in accordance with, and is in the condition
required by, the Lease and (b) the Aircraft would be delivered to such informed
and willing buyer in the return condition required by the Lease.
"Financing Statements" means, collectively, UCC-1 (and, where
appropriate, UCC-3) financing statements (a) covering the Trust Indenture
Estate, by Owner Trustee, as debtor, showing 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.
"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.
"Fixed 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.
"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
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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) the Subordination Agent, the Paying
Agent and the Escrow Agent, (vii) the Liquidity Providers, (viii) the Pass
Through Trustees, (ix) each Affiliate of the persons described in clauses (i)
through (iv), inclusive, (x) each Affiliate of the persons described in clauses
(vi), (vii) and (viii), (xi) the respective directors, officers, employees,
agents and servants of each of the persons described in clauses (i) through
(iv) inclusive and in clause (ix), (xii) the respective directors, officers,
employees, agents and servants of each of the persons described in clauses
(vi), (vii), (viii), and (x), (xiii) the successors and permitted assigns of
the persons described in clauses (i) through (iv), inclusive, and in clauses
(ix) and (xi), and (xiv) the successors and permitted assigns of the persons
described in clauses (vi), (vii), (viii), (x) and (xii); provided that the
persons described in clauses (vi), (vii), (viii), (x), (xii) and (xiv) 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
ANNEX A BASE
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an Indemnitee only in its capacity as Owner Participant, Loan Participant or
Note Holder.
"Indenture Agreements" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Engine Consent and Agreement, the Bills of Sale and any other
contract, agreement or instrument from time to time assigned or pledged under
the Trust Indenture.
"Indenture Default" means any condition, circumstance, act or event
that, with the giving of notice, the lapse of time or both, would constitute an
Indenture Event of Default.
"Indenture Event of Default" means any one or more of the conditions,
circumstances, acts or events set forth in Section 4.02 of the Trust Indenture.
"Indenture Indemnitee" means (i) WTC and the Mortgagee, (ii) each
separate or additional trustee appointed pursuant to the Trust Indenture, (iii)
the Subordination Agent, (iv) each Liquidity Provider, (v) each Pass Through
Trustee, (vi) the Paying Agent, (vii) the Escrow Agent and (viii) each of the
respective directors, officers, employees, agents and servants of each of the
persons described in clauses (i) through (vii) inclusive above.
"Intercreditor Agreement" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Providers 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.
"Interim Lease Term" means the period commencing on and including the
Delivery Date, and ending on and including the day immediately preceding the
Commencement Date or such earlier date on which the Term terminates in
accordance with the provisions of the Lease.
"Interim Rent" is defined in Schedule 1 to the Lease.
ANNEX A BASE
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17
"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 March 21, 1997.
"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
Delivery Date.
"Lessee" means Continental Airlines, Inc., a Delaware corporation.
"Lessee Operative Agreements" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the BFE Bill of
Sale, the Purchase Agreement Assignment and each other agreement between Lessee
and any other party to the Participation Agreement, relating to the
Transactions, delivered on the Delivery Date.
"Lessee Person" means Lessee, any sublessee, assignee, successor or
other user or person in possession of the Aircraft, Airframe or an Engine with
or without color of right, or any Affiliate of any of the foregoing (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
ANNEX A BASE
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18
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 Airframe Manufacturer and Lessee to purchase the Aircraft and BFE
pursuant to the Purchase Agreement Assignment and 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.
"Liquidity Facilities" means the eight Revolving Credit Agreements
(consisting of a separate Revolving Credit Agreement
ANNEX A BASE
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with each Liquidity Provider with respect to each Pass Through Trust) between
the Subordination Agent, as borrower, and a 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 ABN AMRO Bank N.V., acting through its
Chicago branch, or ING Bank N.V., each as a Class A Liquidity Provider, Class B
Liquidity Provider, Class C-I Liquidity Provider and Class C-II 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 Applicable 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 banker of national standing)
equal to the excess, if any, of
ANNEX A BASE
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20
(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.
"Manufacturer's Purchase Price" means the amount required to be paid
to the Airframe Manufacturer to purchase the Aircraft pursuant to the Purchase
Agreement Assignment.
"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.
ANNEX A BASE
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21
"Minimum Liability Insurance Amount" is defined in Schedule 1 to the
Lease.
"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 Delivery 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 assume such obligations, such
trustee or the Lessee ceasing to perform or assuming 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 Delivery Date, as such assumptions may be adjusted
for events that have been the basis for
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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.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as
of the Issuance Date, among Continental Airlines, Inc., the Subordination
Agent, the Escrow Agent, the Paying Agent and the Pass Through Trustee under
each Pass Through Trust Agreement providing for, among other things, the
issuance and sale of certain equipment notes.
"Officer's Certificate" means, in respect of any party to the
Participation Agreement, a certificate signed by the Chairman, the President,
any Vice President (including those with
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varying ranks such as Executive, Senior, Assistant or Staff Vice President),
the Treasurer or the Secretary of such party.
"Operative Agreements" means, collectively, the Participation
Agreement, the Trust Agreement, the Purchase Agreement Assignment, the Consent
and Agreement, the Engine Consent and Agreement, the Lease, Lease Supplement
No. 1, the Trust Indenture, the initial Trust Indenture Supplement, the Bills
of Sale, the Tax Indemnity Agreement and the Equipment Notes.
"Operative Indentures" means each of the indentures under which notes
have been issued and purchased by the Pass Through Trustees pursuant to the
Note Purchase Agreement.
"OP Jurisdiction" is defined in Schedule 3 to the Participation
Agreement.
"Original Amount," with respect to an Equipment Note, means the stated
original principal amount of such Equipment Note and, with respect to all
Equipment Notes, means the aggregate stated original principal amounts of all
Equipment Notes.
"Owner Participant" means the person executing the Participation
Agreement as "Owner Participant" or, if a second person becomes an "Owner
Participant" pursuant to Section 10.1.1 of the Participation Agreement, both of
such persons; provided that if an Owner Participant Transfers 100% of its
interest to a successor Owner Participant, such transferring Owner Participant
shall thereafter no longer be considered an "Owner Participant".
"Owner Participant Agreements" means, collectively, the Participation
Agreement, the Tax Indemnity Agreement, the Trust Agreement and each other
agreement between Owner Participant and any other party to the Participation
Agreement relating to the Transactions, delivered on the Delivery Date.
"Owner Participant'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
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Operative Agreement, but solely as Owner Trustee under the Trust Agreement.
"Owner Trustee Agreements" means, collectively, the Participation
Agreement, the Lease, Lease Supplement No. 1, the Trust Agreement, the Trust
Indenture, the initial Trust Indenture Supplement, the Equipment Notes, the
Purchase Agreement Assignment, and each other agreement between Owner Trustee
and any other party to the Participation Agreement, relating to the
Transactions, delivered on the Delivery Date.
"Participants" means, collectively, Owner Participant and each Loan
Participant and "Participant" means Owner Participant or a Loan Participant,
individually.
"Participation Agreement" means the Participation Agreement dated as
of _____________ among Lessee, Owner Participant, Owner Trustee, the Applicable
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
Note Purchase Agreement, the Deposit Agreements, the Escrow 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 Trust" means each of the four separate pass through
trusts created under the Pass Through Trust Agreements.
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"Pass Through Trust Agreement" means each of the four separate pass
through trust agreements dated as of the Issuance Date by and between the
Lessee and a Pass Through Trustee.
"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, the Note Purchase Agreement, the Deposit
Agreements, the Escrow Agreements, and the Intercreditor Agreement.
"Payment Date" means each April 1 and October 1 during the Term,
commencing with the first such date to occur after the Commencement Date.
"Payment Due Rate" is defined in Schedule 1 to the Lease.
"Payment Period" means each of the consecutive semiannual periods
during the Term ending on a Payment Date, the first such period commencing on
and including the Commencement Date.
"Paying Agent" means Wilmington Trust Company, as Paying Agent under
each of the Escrow Agreements.
"Permitted Air Carrier" means (i) any manufacturer of airframes or
aircraft engines, or any Affiliate of a manufacturer of airframes or aircraft
engines, (ii) any Permitted Foreign Air Carrier, (iii) any person approved in
writing by Lessor or (iv) any U.S. Air Carrier.
"Permitted Country" means any country listed on Schedule 5 to the
Lease.
"Permitted Foreign Air Carrier" means any air carrier with its
principal executive offices in any Permitted Country and which is authorized to
conduct commercial airline operations and to operate jet aircraft similar to
the Aircraft under the applicable Laws of such Permitted Country.
"Permitted Government Entity" means (i) the U.S. Government or (ii)
any Government Entity if the Aircraft is then registered under the laws of the
country of such Government Entity.
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"Permitted Institution" means (a) any bank, trust company, insurance
company, financial institution or corporation (other than, without Lessee's
consent, a commercial air carrier, a commercial aircraft operator, a freight
forwarder or Affiliate of any of the foregoing), in each case with a combined
capital and surplus or net worth of at least $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 1, 2010 in the case of the
Series A Equipment Notes, April 1, 2007 in the case of the Series B Equipment
Notes and April 1, 2003 in the case of the Series C Equipment Notes.
"PTT Percentage" means, with respect to each Applicable Pass Through
Trustee, the percentage of Lessor's Cost allocated to such Pass Through Trustee
in Schedule 2 to the Participation Agreement.
"Purchase Agreement" means the Purchase Agreement between Airframe
Manufacturer and Lessee (including all exhibits thereto, together with all
letter agreements entered into that by their terms constitute part of such
Purchase Agreement), to the extent assigned pursuant to the Purchase Agreement
Assignment.
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"Purchase Agreement Assignment" means the Purchase Agreement and
Engine Warranties Assignment , dated as of even date with the Participation
Agreement, between Lessee and Owner Trustee.
"Purchase Date" means the last Business Day of the Base Lease Term or
any Renewal Lease Term, as specified in any Purchase Notice.
"Purchase Notice" is defined in Section 17.3.1 of the Lease.
"QIB" is defined in Section 2.08 of the Trust Indenture.
"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.
"Registration Rights Agreement" means the Exchange and Registration
Rights Agreement dated the Issuance Date by and among the Lessee and certain
initial purchasers of the Pass Through Certificates named therein, providing
for, among other things, the exchange offer with respect to such Pass Through
Certificates to be registered under the Securities Act or the shelf
registration of such Pass Through Certificates for a period specified therein.
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"Renewal Lease Term" means, collectively, the Fixed Renewal Lease
Terms and the Subsequent Renewal Lease Terms, in each case, if any.
"Renewal Notice" is defined in Section 17.2.1 of the Lease.
"Renewal Rent" for the Aircraft means the rent payable therefor in
respect of a Renewal Lease Term determined pursuant to Section 17.2.2 of the
Lease.
"Rent" means, collectively, Interim Rent, 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 Delivery Date" means the expected Delivery Date notified to
each Participant, Owner Trustee and Mortgagee by Lessee pursuant to Section 4.1
of the Participation Agreement, which expected Delivery Date shall be a
Business Day not later than the Commitment Termination Date.
"Scheduled Expiration Date" is defined in Schedule 1 to the Lease.
"Scheduled Renewal Term Expiration Date" means, in the case of the
first Fixed Renewal Lease Term, the second anniversary of the Scheduled
Expiration Date, in the case of the second Fixed Renewal Lease Term, the fourth
anniversary of the Scheduled Expiration Date and, in the case of any Subsequent
Renewal Lease Term, the day preceding the first anniversary of the commencement
date of such Subsequent Renewal Lease Term.
"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.
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"Section 1110" means 11 U.S.C. Section 1110 of the Bankruptcy Code or
any successor or analogous section of the federal bankruptcy Law in effect from
time to time.
"Secured Obligations" is defined in Section 2.06 of the Trust
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security" means a "security" as defined in Section 2(1) of the
Securities Act.
"Senior Holder" is defined in Section 2.14(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
Interim Rent, 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.
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"Stipulated Loss Value" means, with respect to the Aircraft, (a)
during the Base Lease Term, the amount determined by multiplying (i) the
percentage set forth in Schedule 3 to the Lease (as adjusted from time to time
in accordance with Section 3.2.1 of the Lease) opposite the Stipulated Loss
Value Date by (ii) Lessor's Cost and (b) during any Renewal Term, the amount
determined pursuant to Section 17.2.3 of the Lease. Notwithstanding anything to
the contrary in any Operative Agreement, Stipulated Loss Value shall always be
sufficient to pay in full, as of the date of payment thereof (assuming timely
payment of the Equipment Notes prior to such date), the aggregate unpaid
principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.
"Stipulated Loss Value Date" means, for any month, the day in such
month specified in Schedule 3 to the Lease or, if such day is not a Business
Day, the immediately succeeding Business Day.
"Subordination Agent" means Wilmington Trust Company, as subordination
agent under the Intercreditor Agreement.
"Subordination Agent Agreements" means the Participation Agreement,
the Liquidity Facilities and the Intercreditor Agreement.
"Subsequent Renewal Lease Term" means each term for which the Lease is
extended by Lessee, if any, after the second Fixed Renewal Lease Term.
"Supplemental Rent" means, without duplication (a) all amounts,
liabilities, indemnities and obligations (other than Interim Rent, Basic Rent
or Renewal Rent but including Make-Whole Amount, if any) that Lessee assumes or
becomes obligated to or agrees to pay under any Lessee Operative Agreement to
or on behalf of Lessor or any other person, including, without limitation,
payments of Stipulated Loss Value, Termination Value and payments of
indemnities under Section 9 of the Participation Agreement, (b) (i) to the
extent not payable (whether or not in fact paid) under Section 6(a) of the Note
Purchase Agreement (as originally in effect or amended with the consent of the
Owner Participant), an amount or amounts equal to the fees payable to the
relevant Liquidity Provider under Section 2.03 of each Liquidity Facility and
the related Fee Letter (as defined in the
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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 the Note Purchase Agreement); (ii) (x) the
amount equal to interest on any Downgrade Advance (other than any Applied
Downgrade Advance) payable under Section 3.07(e) 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(a)(i) 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(a) 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 the Note Purchase Agreement)
(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 Providers by the Subordination Agent as
borrower under each Liquidity Facility (other than amounts due as repayment of
advances thereunder or as interest on such advances), except to the extent
payable pursuant to clause (ii), (iii) or (iv) above, (c) Lessee's pro rata
share of all compensation and reimbursement
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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) in the event
Lessee requests any amendment to any Operative Agreement or Pass Through
Agreement, Lessee's pro rata share of all reasonable fees and expenses
(including, without limitation, fees and disbursements of counsel) of the
Escrow Agents and the Paying Agents in connection therewith payable by the Pass
Through Trustees under the Escrow Agreements. 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.
"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. For purposes of this
definition, the term "Owner Participant" shall include any member of an
affiliated group (within the meaning of Section 1504 of the Code) of which
Owner Participant is, or may become, a member if consolidated, joint or
combined returns are filed for such affiliated group for federal, state or
local income tax purposes.
"Tax Indemnity Agreement" means the Tax Indemnity Agreement, 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,
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imposts, duties, charges, assessments or withholdings of any nature whatsoever
imposed by any Taxing Authority, together with any penalties, additions to tax,
fines or interest thereon or additions thereto.
"Taxing Authority" means any federal, state or local government or
other taxing authority in the United States, any foreign government or any
political subdivision or taxing authority thereof, any international taxing
authority or any territory or possession of the United States or any taxing
authority thereof.
"Term" means the term, commencing on the Delivery Date, for which the
Aircraft is leased pursuant to Section 3 of the Lease, and shall include the
Interim Lease Term, the Base Lease Term and, if applicable, any Renewal Lease
Term; 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 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.
"Termination Date" means any Payment Date occurring after the fifth
anniversary of the Delivery 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.
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"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.
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Agreements.
"Transaction Expenses" means: (i) the reasonable and actual fees,
expenses and disbursements of (1) Richards, Layton & Finger, special counsel
for Mortgagee, such information to be furnished by Mortgagee, (2) Ray, Quinney
& Nebeker, special counsel for the Owner Trustee under the Trust Agreement,
such information to be furnished by Owner Trustee, (3) Richards, Layton &
Finger, special counsel to the Loan Participants, such information to be
furnished by the Subordination Agent, (4) 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, (v) the fee of the Appraiser with respect to the
appraisal of the Aircraft referred to in Section 5.1.2(xv) of the Participation
Agreement, such information to be furnished by the Owner Participant, (vi) the
reasonable and actual fees, out-of-pocket expenses and disbursements of special
counsel to the Owner Participant (as defined in Schedule 3 to the Participation
Agreement), such information to be furnished by the Owner Participant, and
(vii) the equity placement fee and reasonable disbursements of Lessee's
Advisor, such information to be furnished by Lessee.
"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
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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 (other than
insurance proceeds payable to or for the benefit of Owner Participant, Note
Holders or WTC) and requisition, indemnity or other payments of any kind for of
with respect to the Aircraft (except amounts owing to Owner Participant, Note
Holders or WTC, or to any of their respective directors, officers, employees,
servants and agents, pursuant to Section 10 of the Participation Agreement).
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.
"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
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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.
ANNEX A BASE
156
-----------------------
SCHEDULE 1
TO
PARTICIPATION AGREEMENT
-----------------------
ACCOUNTS; ADDRESSES
ADDRESS FOR NOTICES
-------------------
CONTINENTAL Continental Airlines, Inc.
AIRLINES, 2929 Allen Parkway
INC. Suite 2010
Houston, Texas 77019
Attention: Executive Vice
President and Chief
Financial Officer
Facsimile: (713) 520-6329
OWNER
PARTICIPANT
THE BOEING The Boeing Company
COMPANY P.O. Box 3707
Seattle, Washington
98124-3707
Attention: Treasurer
M/S 68-34
Facsimile: (206) 237-8746
FIRST SECURITY First Security Bank
BANK, National Association
NATIONAL 79 South Main Street
ASSOCIATION Salt Lake City, Utah 84111
Attention: Corporate Trust
Department
Facsimile: (801) 246-5053
SCHEDULE 1 TO PARTICIPATION AGREEMENT BASE PAGE 1
157
WILMINGTON Wilmington Trust Company
TRUST One Rodney Square
COMPANY, AS 1100 North Market Street
MORTGAGEE Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Facsimile: (302) 651-1576
WILMINGTON Wilmington Trust Company
TRUST One Rodney Square
COMPANY, AS 1100 North Market Street
SUBORDINATION Wilmington, Delaware 19890
AGENT Attention: Corporate Trust
Administration
Facsimile: (302) 651-1576
WILMINGTON Wilmington Trust Company
TRUST One Rodney Square
COMPANY, AS 1100 North Market Street
PASS THROUGH Wilmington, Delaware 19890
TRUSTEE FOR Attention: Corporate Trust
THE 1997-1A Administration
PASS THROUGH Facsimile: (302) 651-1576
TRUST
WILMINGTON Wilmington Trust Company
TRUST One Rodney Square
COMPANY, AS 1100 North Market Street
PASS THROUGH Wilmington, Delaware 19890
TRUSTEE FOR Attention: Corporate Trust
THE 1997-1B Administration
PASS THROUGH Facsimile: (302) 651-1576
TRUST
WILMINGTON Wilmington Trust Company
TRUST One Rodney Square
COMPANY, AS 1100 North Market Street
PASS THROUGH Wilmington, Delaware 19890
TRUSTEE FOR Attention: Corporate Trust
THE 1997-[1C-I] Administration
[1C-II] Facsimile: (302) 651-1576
PASS THROUGH
TRUST
SCHEDULE 1 TO PARTICIPATION AGREEMENT BASE PAGE 2
158
-----------------------
SCHEDULE 2
TO
PARTICIPATION AGREEMENT
-----------------------
COMMITMENTS
PARTICIPANT PERCENTAGE OF LESSOR'S DOLLAR AMOUNT
----------- ---------------------- -------------
COST
----
OWNER PARTICIPANT OWNER PARTICIPANT'S
PERCENTAGE
PASS THROUGH TRUSTEE LOAN PARTICIPANT'S
PTT PERCENTAGE
TOTAL 100%
SCHEDULE 2 TO PARTICIPATION AGREEMENT BASE PAGE 1
159
-----------------------
SCHEDULE 3
TO
PARTICIPATION AGREEMENT
-----------------------
CERTAIN TERMS
DEFINED TERM DEFINITION
BFE Amount
----------------
Commitment Termination Date
----------------
Lessor's Cost
----------------
Lessee's Advisor
----------------
OP Jurisdiction
----------------
Special counsel to the Owner Participant
----------------
SCHEDULE 3 TO PARTICIPATION AGREEMENT BASE PAGE 1
160
EXHIBIT A
[Form of Opinion of Lessee's Special Counsel]
_________________
To the Persons Listed on Schedule I
Attached Hereto
Re: Lease of Boeing Model _________Aircraft with Manufacturer's
Serial Number _______ _ and U.S. Registration
Number N______________________________________________
Gentlemen:
We have been requested by Continental Airlines, Inc., a
Delaware corporation (the "Company"), to act as special counsel with respect
to, and to render this opinion letter in connection with, the transactions
contemplated by the Participation Agreement ________, dated as of __________
________________(the "Participation Agreement"), among , as Owner Participant
(the "Owner Participant"), First Security Bank, National Association, a
national banking association ("First Security"), as Owner Trustee (the "Owner
Trustee"), Wilmington Trust Company, a Delaware banking corporation ("WTC"), as
Mortgagee (the "Mortgagee"), the Company as Lessee (the "Lessee"), and WTC, in
its capacity as Subordination Agent under the Intercreditor Agreement (as
defined in the Participation Agreement) and Pass Through Trustee under the
Applicable Pass Through Trust Agreements (as defined in the Participation
Agreement), as Loan Participant (the "Loan Participant"). Capitalized terms
used herein and not otherwise defined herein have the respective meanings given
those terms in the Participation Agreement.
In connection with this opinion letter we have examined, among
other things, originals or copies certified or otherwise identified to our
satisfaction of the following documents:
(i) Participation Agreement;
(ii) Lease;
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(iii) Lease Supplement No. 1;
(iv) Tax Indemnity Agreement;
(v) Trust Agreement;
(vi) Trust Indenture;
(vii) Trust Indenture Supplement No. 1;
(viii) Purchase Agreement Assignment;
(ix) Airframe Manufacturer Consent and Agreement;
(x) Engine Manufacturer Consent and Agreement;
(xi) Forms of the Equipment Notes; and
(xii) Bills of Sale.
We have also examined and relied upon such other documents and
such other corporate records, certificates and other statements of governmental
officials and corporate officers and other representatives of the Company as we
have deemed necessary or appropriate for the purposes of this opinion. As to
certain facts material to the opinions expressed herein, we have relied upon
representations and warranties contained in the Operative Agreements. The
opinions expressed herein are subject to the following exceptions, assumptions,
qualifications and limitations:
A. The opinions set forth below are limited to the laws
of the State of New York, the federal laws of the United States of America and
the General Corporation Law of the State of Delaware, except that we express no
opinion with respect to (i) the laws, regulations or ordinances of any county,
town or municipality or governmental subdivision or agency thereof, (ii) state
securities or blue sky laws or federal securities laws, including the
Securities Act and the Investment Company Act of 1940, (iii) any federal or
state tax, antitrust or fraudulent transfer or conveyance laws, (iv) the
Employee Retirement Income Security Act of 1974, as amended, or (v) the Act
(except as expressly provided in paragraph 5 below), or any other laws, rules
or regulations governing, regulating or relating to the acquisition, ownership,
registration, use or sale of an aircraft, airframe or aircraft engine or to the
particular nature of the equipment to be acquired by the Owner Trustee. In
addition, our opinions are based upon a review of those laws, statutes, rules
and regulations which, in our experience, are normally applicable to
transactions of the type contemplated by the Participation Agreement.
B. The opinions set forth in paragraphs 3 and 6 below
are subject to (i) limitations on enforceability arising from applicable
bankruptcy, insolvency, reorganization, moratorium, receivership, fraudulent
conveyance, fraudulent transfer, preferential transfer and similar laws
relating to or affecting the rights and remedies of creditors or lessors
generally and the effect of general principles of equity, including, without
limitation, laches and estoppel as equitable defenses and concepts of
materiality, reasonableness, good faith and fair dealing (regardless of whether
such enforceability is considered or applied in a proceeding in equity or at
law) and considerations of impracticability or impossibility of performance,
and defenses based upon unconscionability of otherwise enforceable obligations
in the context of the factual circumstances under which enforcement thereof is
sought and (ii) the qualification that the
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remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought. In addition, certain
remedial and procedural provisions of the Company Documents (as defined in
paragraph 2 below) and the Trust Indenture are or may be unenforceable in whole
or in part, but the inclusion of such provisions does not affect the validity
of those agreements and does not, in our opinion, make the remedies provided in
those agreements, or otherwise available under applicable law, inadequate for
the practical realization of the substantive benefits purported to be provided
thereby, except for the economic consequences resulting from any delay imposed
by, or any procedure required by, applicable laws, rules, regulations and by
constitutional requirements. We express no opinion as to (i) any provision
contained in any Operative Agreement (a) providing for indemnification or
exculpation of any Person for such Person's gross negligence, willful
misconduct, recklessness or unlawful conduct or in respect of liabilities under
the Securities Act, (b) providing for late payment charges or an increase in
interest rate upon delinquency in payment or the occurrence of a default or
other specified event but only to the extent such provision is deemed to
constitute a penalty or liquidated damages provision, (c) as such provision
relates to the subject matter jurisdiction of federal courts or the waiver of
inconvenient forum with respect to proceedings in federal courts, (d) that
purports to establish (or may be construed to establish) evidentiary standards
or (e) providing for the waiver of any statutory right or any broadly or
vaguely stated rights or unknown future rights, or any waiver which is against
public policy considerations or (ii) Section 15.8(c) of the Participation
Agreement or any comparable provision of any other Operative Agreement. Under
certain circumstances the requirement that the provisions of an Operative
Agreement may be modified or waived only in writing or only in a specific
instance and provisions to the effect that failure or delay in exercising any
right, remedy, power and/or privilege will not impair or waive such right,
remedy, power and/or privilege may be unenforceable to the extent that an oral
agreement has been effected or a course of dealing has occurred modifying such
provisions. A court may modify or limit contractual agreements regarding
attorneys' fees.
C. To the extent that our opinions expressed herein
involve conclusions as to the matters set forth in the opinions dated the date
hereof of Richards, Layton & Finger, Ray, Quinney & Nebeker or Lytle, Soule &
Curlee being delivered to you on the date hereof, we have assumed, without
independent investigation, the correctness of the matters set forth in such
opinions.
D. We have assumed the due authorization, execution and
delivery of the Operative Agreements by each of the parties thereto, that each
of such parties (other than the Company) has the power and authority to
execute, deliver and perform each such Operative Agreement and has obtained or
made all necessary consents, approvals, filings and registrations in connection
therewith (except any required under New York law by the Company), that such
execution, delivery and performance does not violate its charter, by-laws or
similar instrument, that the Trust Agreement constitutes the valid, binding and
enforceable obligations of the parties thereto and duly creates the trust it
purports to create, that the Owner Trustee for purposes of Section 9-103(3) of
the Uniform Commercial Code of the State of New York (the "UCC") is
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4
located in Utah and that, under applicable law, the Owner Trustee would be
deemed to be the owner of the Trust Estate and Trust Indenture Estate, that
First Security has the legal ability to exercise its trust powers with respect
to the Trust Estate in the State of New York, that value has been given by the
Loan Participant to the Owner Trustee under the Trust Indenture, that the Owner
Trustee has rights in the Trust Indenture Estate, that each of First Security
and WTC is duly organized, validly existing and in good standing in its
jurisdiction of organization and qualified to transact business in each other
jurisdiction where such qualification is required.
E. We have assumed the due authorization, execution and
issuance of the Equipment Notes by the Owner Trustee and the due authentication
of the Equipment Notes by the Mortgagee and the delivery thereof against
payment therefor, all in accordance with the Participation Agreement and the
Trust Indenture, and that the Equipment Notes conform to the forms thereof
examined by us.
F. We have assumed that all signatures on documents
examined by us are genuine, that all persons signing such documents have legal
capacity, that all documents submitted to us as originals are authentic and
that all documents submitted to us as copies or specimens conform with the
originals, which facts we have not independently verified.
G. We express no opinion as to (i) any provision in any
Operative Agreement that is contrary to Section 2A-303, Section 9-311, or Part
V of Article 9, of the UCC, or (ii) whether or not the Lease constitutes a
"security interest" within the meaning of Section 1-201(37) of the UCC. We
express no opinion as to whether or not the Lease constitutes a "Finance Lease"
within the meaning of Section 2A-103(g) of the UCC and we express no opinion as
to the enforceability of any provision of any Operative Agreement which
purports to categorize the Lease as such.
H. We have not made any examination of, and express no
opinion with respect to (and to the extent relevant have assumed the accuracy
and sufficiency of), (i) descriptions of, the legal or beneficial ownership of,
or the title or condition of title to, the Trust Estate or the Trust Indenture
Estate or any other property covered by any of the Operative Agreements, (ii)
except as expressly set forth in paragraphs 5 and 8 below, the existence,
creation, validity or attachment of any Lien thereon, (iii) except as expressly
set forth in paragraph 5 below, the perfection of any Lien thereon and (iv) the
priority or enforcement of any Lien thereon.
I. In giving an opinion regarding the valid existence
and good standing of the Company, we have relied solely upon certificates of
public officials.
J. The opinions expressed herein are given as of the
date hereof. We assume no obligation to advise you of any facts or
circumstance that may come to our attention, or any changes in law that may
occur after the date hereof, which may affect the opinion expressed herein.
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5
Based on and subject to the foregoing, we are of the opinion
that:
1. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
2. The Company has all necessary corporate power to
execute, deliver and perform its obligations under the Participation Agreement,
the Lease, the Lease Supplement No. 1, the Purchase Agreement Assignment, the
BFE Bill of Sale and the Tax Indemnity Agreement (collectively, the "Company
Documents"). Neither the execution nor delivery of the Company Documents by
the Company nor the consummation of the transactions contemplated thereby will
result in any violation of (a) its Restated Certificate of Incorporation or
By-laws or (b) any law, governmental rule or regulation known to us to be
applicable to, or binding on, the Company, or requires the approval of the
stockholders of the Company.
3. Each Company Document constitutes the valid and
binding obligation of the Company and is enforceable against the Company in
accordance with its terms.
4. Except for the matters referred to in clauses (i)
through (iv) of paragraph 5 below, no approval, authorization or other action
by or filing with any governmental authority is required for the execution and
delivery by the Company of the Company Documents or the consummation of the
transactions contemplated thereby to occur at the Closing.
5. Except for (i) the registration of the Aircraft with
the FAA pursuant to the Act, (ii) the filing and recordation in accordance with
the Act of the FAA Filed Documents, and assuming that at the time of such
filing no other unrecorded document relating to the Aircraft has been filed
pursuant to the Act, (iii) the filing of Financing Statements referred to in
Section 5.1.12 of the Participation Agreement, and the filing of periodic
continuation statements with respect thereto, and (iv) the taking of possession
by the Mortgagee of the original counterparts of the Lease and Lease Supplement
No. 1, (a) no further filing or recording of any document is necessary (x) to
establish the Owner Trustee's title to the Airframe and Engines, and (y) to
create a valid security interest in the Owner Trustee's interest as owner of
the Airframe and Engines, the Lease and the Lease Supplement No. 1 covering the
Aircraft, the Purchase Agreement (to the extent assigned by the Purchase
Agreement Assignment) and the Purchase Agreement Assignment in favor of the
Mortgagee pursuant to the Trust Indenture and (b) no further filing or
recording of any document in the State of New York or under the Act is required
to perfect a security interest in the Owner Trustee's interest as owner of the
Airframe and Engines, the Lease and Lease Supplement No. 1 covering the
Aircraft, the Purchase Agreement (to the extent assigned by the Purchase
Agreement Assignment) and the Purchase Agreement Assignment in favor of the
Mortgagee pursuant to the Trust Indenture.
6. Each of the Participation Agreement, the Trust
Indenture, the Lease and the Equipment Notes constitutes the valid and binding
obligation of First Security, in its individual capacity (but only to the
extent expressly stated in such document that First Security is entering into
such document in its individual capacity) and otherwise solely as Owner
Trustee,
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6
enforceable against First Security in its individual capacity (but only to the
extent expressly stated in such document that First Security is entering into
such document in its individual capacity) and otherwise solely as Owner Trustee
in accordance with its terms.
7. So long as the Company continues to be a "citizen of
the United States", as defined in section 40102 of Title 49 of the United
States Code, 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 6,000
pounds or more of cargo, the Owner Trustee, as lessor under the Lease, and the
Mortgagee, as assignee of Owner Trustee's rights under the Lease pursuant to
the Trust Indenture, will be entitled to the benefits of Section 1110 of Title
11 of the United States Code with respect to the Airframe and Engines delivered
on the date hereof in connection with any case commenced by or against the
Company under Chapter 11 of Title 11 of the United States Code.
8. Upon issuance, execution, authentication and delivery
of the Equipment Notes at the Closing, the Trust Indenture creates the security
interest in favor of the Mortgagee, as trustee for the benefit of the holders
of the Equipment Notes, in the Trust Indenture Estate it purports to create to
the extent that the UCC applies to a security interest in such property.
This opinion is being delivered pursuant to Section
5.1.2(xxiii)(A) of the Participation Agreement. This opinion may be relied
upon by you (and any permitted Transferee under Section 10.1.1(a) or 10.1.3 of
the Participation Agreement) in connection with the matters set forth herein
and, without our prior written consent, may not be relied upon for any other
purpose and may not be furnished to any other Person for any purpose.
Very truly yours,
166
SCHEDULE I
__________________________, as Owner Participant
First Security Bank, National Association, individually and as Owner Trustee
Wilmington Trust Company, individually, as Mortgagee, and as Loan Participant
ABN AMRO Bank N.V., Chicago Branch as Liquidity Provider
ING Bank N.V., as Liquidity Provider
Moody's Investors Service, Inc.
Standard & Poor's Ratings Group
167
EXHIBIT B
[Form of Opinion of Lessee's Legal Department]
--------------------
To the Persons
Listed on
Schedule I Hereto
Re: Lease of Boeing Model ____________Aircraft with Manufacturer's
Serial Number and U.S. Registration Number N
Ladies and Gentlemen:
This opinion letter is being delivered by Continental Airlines,
Inc., a Delaware corporation ("Continental"), through its Legal Department in
connection with the transactions contemplated by the Participation Agreement
___ ___ dated as of ____________, among ___________________, as Owner
Participant, First Security Bank, National Association, a national banking
corporation, as Owner Trustee (the "Owner Trustee"), Wilmington Trust Company,
a Delaware banking corporation, as Mortgagee, Subordination Agent under the
Intercreditor Agreement (as defined in the Participation Agreement) and as Pass
Through Trustee under the Applicable Pass Through Trust Agreements (as defined
in the Participation Agreement) (the "Mortgagee and Loan Participant"), and
Continental, as Lessee (the "Participation Agreement"). All capitalized terms
used herein and not otherwise defined herein shall have the respective meanings
given those terms in the Participation Agreement. This opinion letter is being
furnished to you pursuant to Section 5.1.2 (xxiii)(B) of the Participation
Agreement.
In giving the following opinions, members of Continental's Legal
Department or lawyers retained by Continental's Legal Department have reviewed
the Participation Agreement and the other Operative Agreements to which
Continental is a party and have relied upon originals, or copies certified or
otherwise identified to our satisfaction, of such records, documents,
certificates and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinions expressed below. In addition,
Continental's Legal Department has assumed and has not verified the accuracy as
to factual matters of each document reviewed. As used herein, the phrase "to
our knowledge" or words of similar import shall mean to actual knowledge of
Continental's Legal Department after reasonable investigation, but shall not be
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2
interpreted to impute knowledge of others (other than members of Continental's
Legal Department).
Based on the foregoing, and subject to the assumptions and
limitations contained herein, Continental's Legal Department is of the opinion
that:
(a) Continental is an "air carrier" within the meaning of
Section 40102 of the Act, operating under a certificate issued pursuant to
Chapter 447 of the Act, is a "citizen of the United States" as such term is
defined in Section 40102 of such Act and holds all authority, necessary
licenses and certificates under such Act and the rules and regulations
promulgated thereunder necessary for the conduct of its business and to perform
its obligations under the Participation Agreement, the Lease, the Lease
Supplement No. 1, the Purchase Agreement Assignment, the BFE Bill of Sale and
the Tax Indemnity Agreement (collectively, the "Agreements").
(b) The execution, delivery and performance by Continental of
each of the Agreements do not, to our knowledge, breach or result in a default
under any indenture, mortgage, deed of trust, credit agreement, conditional
sale contract or other loan agreement to which Continental is a party or by
which Continental or its property may be bound.
(c) The execution, delivery and performance of each of the
Agreements has been duly authorized by all necessary corporate action on the
part of Continental, and each of the Agreements has been duly executed and
delivered by Continental.
(d) There are no pending or, to our knowledge, threatened
actions, suits or proceedings before any court or administrative agency or
arbitrator that question the validity of any of the Agreements or that would
have been required to be disclosed in Continental's Annual Report on Form 10-K
filed for the year ended ____________, on any subsequent Quarterly Report on
Form 10-Q or Current Report on Form 8-K, except such as are therein disclosed.
The foregoing opinions are limited to the federal law of the
United States of America (other than (i) the Act (except as expressly provided
in paragraph 1 above) or any other laws, rules or regulations governing,
regulating or relating to the acquisition, ownership, registration, use or sale
of an aircraft, airframe or aircraft engine or to the particular nature of the
equipment to be acquired by Continental, (ii) state securities or blue sky
laws, or federal securities laws, (iii) federal or state tax, antitrust or
fraudulent transfer or conveyance laws, as to which we express no opinion), the
General Corporation Law of the State of Delaware and the law of the State of
Texas.
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3
This opinion letter is furnished to you for the purpose indicated
above, and may not be relied upon by any other Person (except any permitted
Transferee under Sections 10.1.1(a) or 10.1.3 of the Participation Agreement)
or for any other purpose without our written consent.
Very truly yours,
Continental Airlines, Inc.
Legal Department
170
SCHEDULE I
_____________________, as Owner Participant
First Security Bank, National Association, individually and as Owner Trustee
Wilmington Trust Company, individually and as Mortgagee and Loan Participant
ABN AMRO Bank N.V., as a Liquidity Provider
ING Bank N.V., as a Liquidity Provider
Moody's Investors Service, Inc.
Standard & Poor's Ratings Group
171
EXHIBIT D
[Form of Owner Trustee Counsel's Opinion]
TO EACH OF THE PARTIES SET FORTH
IN SCHEDULE A HERETO:
Re: Continental Airlines, Inc. 1997-1 Pass
Through Certificates
Dear Sir or Madam:
We have acted as special counsel for First Security Bank, National
Association, a national banking association, in its individual capacity ("First
Security") and in its capacity as trustee (the "Owner Trustee") under Trust
Agreement ____ dated as of ____________ (the "Trust Agreement") between it and
___________________, as beneficiary (the "Owner Participant"), in connection
with the transactions contemplated by the Participation Agreement (as defined
below). Except as otherwise defined herein, the terms used herein shall have
the meanings set forth in Annex A to the Participation Agreement ____, dated as
of __________ among Continental Airlines, Inc., the Owner Participant, First
Security, not in its individual capacity except as provided therein, and as
Owner Trustee, and Wilmington Trust Company, not in its individual capacity
except as expressly provided therein, but solely as Mortgagee, Subordination
Agent under the Intercreditor Agreement (as defined in the Participation
Agreement) and as Pass Through Trustee under the Applicable Pass Through Trust
Agreements (as defined in the Participation Agreement) (the "Participation
Agreement"). This opinion is furnished pursuant to Section 5.1.2 (xxiii)(D) of
the Participation Agreement.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records and other instruments
as we have deemed necessary or advisable for the purpose of rendering this
opinion.
Based upon the foregoing, we are of the opinion that:
(1) First Security is a national banking association duly organized,
validly existing and in good standing under the laws of the United States, is a
"citizen of the United States" within the meaning of Section 40102(a)(15) of
the Act and has the full power and authority to enter into and perform its
obligations under the Trust Agreement and each other Operative
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2
Agreement to which it, in its individual capacity or as Owner Trustee, as the
case may be, is a party and, as Owner Trustee, to issue, execute, and deliver
and perform the Equipment Notes.
(2) The Owner Trustee is the duly appointed trustee under the Trust
Agreement and the Trust Agreement creates a legal and valid trust under the
laws of the State of Utah; the trust created by the Trust Agreement has been
duly created and exists for the benefit of the Owner Participant, and the Trust
Agreement creates for the benefit of the Owner Participant the rights and
interests in the Trust Estate which the Trust Agreement by its terms purports
to create; and assuming the Trust Agreement was properly authorized, executed
and delivered by the Owner Participant and that the terms of the Trust
Agreement are not in violation of any laws, documents, judgments, regulations
or other provisions applicable to the Owner Participant, the Trust Agreement
constitutes, under the laws of the State of Utah, a legal, valid and binding
obligation of the Owner Participant enforceable against the Owner Participant
in accordance with its terms.
(3) The Trust Agreement, the Participation Agreement, and each other
Operative Agreement to which First Security or the Owner Trustee, as the case
may be, is a party, and the Equipment Notes, have been duly authorized,
executed and delivered by First Security, or the Owner Trustee, as the case may
be, and assuming due authorization, execution and delivery by the other parties
thereto is a legal, valid and binding obligation of First Security, or the
Owner Trustee, as the case may be, enforceable in accordance with their
respective terms.
(4) The execution and delivery by First Security of the Trust
Agreement and the Participation Agreement and the execution and delivery by the
Owner Trustee of the Operative Agreements to which it is a party is not, and
the performance by First Security, or the Owner Trustee, as the case may be, of
its respective obligations under each such agreements will not be, inconsistent
with the articles of association or by-laws of First Security, do not and will
not contravene any State of Utah or federal law, or any State of Utah or
federal governmental rule or regulation or any judgment or order of which we
have knowledge and which is applicable to it and do not and will not contravene
any provision of, or result in the creation of any lien upon any property of
First Security, or constitute a default under, any indenture, mortgage,
contract or other instrument of which we have knowledge and to which First
Security or the Owner Trustee is a party or by which either is bound or require
the consent or approval of, the giving of notice to, or the registration with,
or the taking of any action in respect of, or under federal law or the laws of
the State of Utah or any subdivision or agency thereof.
(5) There are no fees, taxes or other charges, except taxes imposed
on fees payable to First Security, required to be paid under the laws,
ordinances or regulations of the State of Utah or any political subdivision
thereof, including, without limitation, Salt Lake City, in connection with the
execution, delivery or performance by the Lessee, Owner Trustee, Mortgagee or
any Participant of the Operative Agreements solely because First Security, or
the Owner Trustee as
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3
the case may be, performs certain of its obligations under the Operative
Documents in the State of Utah.
(6) There are no pending or threatened actions or proceedings against
or affecting First Security or the Owner Trustee, as the case may be, before
any court, governmental authority or administrative agency which, if adversely
determined, could materially adversely affect the right, power or ability,
either in its individual capacity or as Owner Trustee, or both, as the case may
be, to enter into or perform its obligations under the Operative Agreements.
(7) The Trust Indenture (or financing statements or other notices
with respect thereto) has been filed for record or recorded with the Division
of Corporations and Commercial Code in the State of Utah and such offices are
all the places in the State of Utah wherein such filing or recordation is
necessary and no other actions or filings are necessary in the State of Utah to
perfect the lien and security interest of the Mortgagee in the Trust Estate as
against creditors of or purchasers from the Owner Trustee or the Lessee, or
both.
(8) The Owner Trustee has received such right, title and interest in
and to the Aircraft as was conveyed to the Owner Trustee on the date hereof,
subject to (i) the rights of the Lessee under the Lease and the Lease
Supplement; (ii) the beneficial interest of the Owner Participant in the
Aircraft; and (iii) the Lien created pursuant to the Trust Indenture and the
Trust Indenture Supplement; and to our knowledge there exist no Liens affecting
the right, title or interest of the Owner Trustee in and to the Trust Estate
resulting from claims against First Security, not related to the ownership of
the Trust Estate or the administration of the Trust Estate or any other
transaction contemplated by the Operative Agreements.
(9) Assuming that (i) the Aircraft is not physically located in the
State of Utah at the commencement or termination of the Term, (ii) in
connection with any sale of the Aircraft, such Aircraft will not be physically
delivered in the State of Utah to a buyer, and (iii) the trust created by the
Trust Agreement is treated as a grantor trust for federal income tax purposes
in accordance with Sections 671 through 678 of the Internal Revenue Code of
1986, as amended, there are no fees, taxes or other charges (except taxes
imposed on fees payable to the Owner Trustee) payable to the State of Utah or
any political subdivision thereof in connection with the execution, delivery or
performance by the Owner Trustee, the Mortgagee, the Lessee or any Participant
of the Operative Agreements or in connection with the making by the Owner
Participant of its investment in the Aircraft or its acquisition of the
beneficial interest in the Trust Estate or in connection with the issuance and
acquisition of the Equipment Notes, and neither the Owner Trustee, the Trust
Estate nor the trust created by the Trust Agreement will be subject to any fee,
tax or other governmental charge (except taxes on fees payable to the Owner
Trustee) under the laws of the State of Utah or any political subdivision
thereof on, based on or measured by, directly or indirectly, the gross
receipts, net income or value of the Trust Estate by reason of the creation or
continued existence of the trust under the terms of the Trust Agreement
pursuant to
174
4
the laws of the State of Utah or the Owner Trustee's performance of its duties
under the Trust Agreement within such State.
(10) Neither a Utah court nor a federal court applying Utah law or
federal law, if properly presented with the issue and after having properly
considered such issue, would permit the Owner Participant to terminate the
Trust Agreement, except in accordance with its terms
(11) Although there is no Utah case directly on point, under the laws
of the State of Utah, so long as the Trust Agreement has not been terminated in
accordance with its terms, creditors of any person that is an Owner
Participant, holders of a lien against the assets of any such person that is an
Owner Participant, such as trustees, receivers or liquidators (whether or not
an insolvency proceeding has been commenced) (collectively the "Creditors") may
acquire valid claims and liens, as to the Trust Estate, only against the rights
of such Owner Participant under the Trust Agreement or in the Trust Estate, and
do not have, and may not through the enforcement of such Creditors' rights
acquire, any greater rights than such Owner Participant with respect to the
Trust Agreement or the Trust Estate.
The foregoing opinions are subject to the following assumptions, exception and
qualifications:
A. The foregoing opinions are limited to the laws of the State of
Utah and the federal laws of the United States of America governing the banking
and trust powers of First Security and Title 11 of the United States Code
entitled "Bankruptcy". In addition, we express no opinion with respect to (i)
federal securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended; (ii) the Federal Aviation Act of 1958, as amended (except
with respect to the opinion set forth in paragraph 1 above concerning the
citizenship of First Security); or (iii) state securities or blue sky laws.
Insofar as the foregoing opinions relate to the legality, validity, binding
effect and enforceability of the documents involved in these transactions,
which by their terms are governed by the laws of a state other than Utah, we
have assumed that such documents constitute legal, valid, binding and
enforceable agreements under the laws of such state, as to which we express no
opinion.
B. The foregoing opinions regarding enforceability of any document
or instrument are subject (i) except as otherwise set forth in the opinions in
paragraphs 10 and 11, to applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights and remedies
of creditors generally, and (ii) general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
We call to your attention that bankruptcy courts are courts in equity with wide
discretion in applying the provisions of the Bankruptcy Code.
175
5
C. As to the documents involved in these transactions, we have
assumed that each is a legal, valid and binding obligation of each party
thereto, other than First Security or the Owner Trustee, and is enforceable
against each such party in accordance with their respective terms.
D. The opinion in paragraph 1 above concerning the citizenship of
First Security is based upon the facts contained in an affidavit of First
Security, made by its authorized officer, which facts we have not independently
verified.
E. We have assumed that all signatures, other than those of the
Owner Trustee or First Security, on documents and instruments involved in these
transactions are genuine, that all documents and instruments submitted to us as
originals are authentic, and that all documents and instruments submitted to us
conform with the originals, which facts we have not independently verified.
F. We do not purport to be experts in respect of, or express any
opinion concerning laws, rules or regulations applicable to the particular
nature of the equipment involved in these transactions.
G. We have made no investigation of, and express no opinion
concerning, the nature of the title to any part of the equipment involved in
these transactions or the priority of any mortgage or security interest.
H. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
I. In addition to any other limitation by operation of law upon the
scope, meaning or purpose of this opinion, this opinion speaks only as of the
date hereof. We have no obligation to advise the recipients of this opinion (or
any third party) of changes of law or fact that may occur after the date
hereof, even though the change may effect the legal analysis, a legal
conclusion or any information contained herein.
176
6
J. The opinions expressed in this letter are solely for the use of
the parties which it is addressed in matters directly related to the
Participation Agreement and the transactions contemplated thereunder and these
opinions may not be relied on by any other persons or for any other purpose
without our prior written approval. The opinions expressed in this letter are
limited to the matters set forth in this letter and no other opinions should be
inferred beyond the matters expressly stated.
Very truly yours,
177
7
SCHEDULE A
First Security Bank, National Association
Continental Airlines, Inc.
Wilmington Trust Company, individually and as Loan Participant and
Mortgagee
[Owner Participant]
Standard & Poor's Rating Services
Moody's Investors Services, Inc.
ABN AMRO Bank N.V.
ING Bank N.V.
178
EXHIBIT E
[FORM OF WTC COUNSEL'S OPINION]
-------------------------
To Each of the Parties Listed
on Schedule A Hereto
Re: Continental Airlines, Inc. - Financing of One Boeing Model
Aircraft Bearing Manufacturer's Serial Number
Ladies and Gentlemen:
We have acted as counsel to Wilmington Trust Company, a Delaware
banking corporation ("WTC"), in connection with the Trust Indenture and
Mortgage ____, dated as of ____________ (the "Trust Indenture"), between WTC,
as mortgagee (the "Mortgagee"), and First Security Bank, National Association
(the "Owner Trustee"). Pursuant to Participation Agreement ____, dated as of
___________ (the "Participation Agreement"), among Continental Airlines, Inc.,
as Lessee, _______________, as Owner Participant, the Owner Trustee and WTC, as
Mortgagee, Subordination Agent under the Intercreditor Agreement (as defined in
the Participation Agreement) and as Applicable Pass Through Trustee (as defined
in the Participation Agreement), financing is being provided for the
acquisition of one Boeing Model __________ aircraft bearing manufacturer's
serial number _______. This opinion is furnished pursuant to Section 5.1.2
(xxiii)(E) of the Participation Agreement. Capitalized terms used herein and
not otherwise defined are used as defined in Annex A to the Participation
Agreement or as defined in the Trust Indenture, except that reference herein to
any document shall mean such document as in effect on the date hereof.
We have examined originals or copies of the following documents:
(a) The Trust Indenture and the initial Trust Indenture Supplement;
(b) The Participation Agreement (the documents referred to in
paragraphs (a) and (b) above being collectively referred to as
the "Mortgagee Documents"); and
(c) The Equipment Notes being issued today and authenticated by the
Mortgagee (the "Equipment Notes").
We have also examined originals or copies of such other documents and such
corporate records, certificates and other
179
To Each of the Parties Listed
on Schedule A Hereto
- ------------------
Page 2
statements of governmental officials and corporate officers and other
representatives of the corporations or entities referred to herein as we have
deemed necessary or appropriate for the purposes of this opinion. Moreover, as
to certain facts material to the opinions expressed herein, we have relied upon
representations and warranties contained in the documents referred to in this
paragraph.
Based upon the foregoing and upon an examination of such questions of
law as we have considered necessary or appropriate, and subject to the
assumptions, exceptions and qualifications set forth below, we advise you that,
in our opinion:
1. WTC has been duly incorporated and is validly existing in good
standing as a banking corporation under the laws of the State of Delaware, is a
"citizen of the United States" within the meaning of Section 40102(a)(15) of
Title 49 of the United States Code, as amended, and has full power, authority
and legal right to execute, deliver and perform its obligations under the
Mortgagee Documents and to authenticate the Equipment Notes.
2. The Mortgagee, the Subordination Agent, the Applicable Pass
Through Trustee or WTC, as the case may be, has duly authorized, executed and
delivered each Mortgagee Document to which it is party, and each such document
constitutes a legal, valid and binding obligation of the Mortgagee, the
Subordination Agent, the Applicable Pass Through Trustee or WTC, as the case
may be, enforceable against the Mortgagee, the Subordination Agent, the
Applicable Pass Through Trustee or WTC, as the case may be, in accordance with
its terms.
3. The execution, delivery and performance by the Mortgagee,
Subordination Agent, Applicable Pass Through Trustee or WTC, as the case may
be, of the Mortgagee Documents to which it is a party, the authentication by
the Mortgagee of the Equipment Notes and the consummation by the Mortgagee, the
Subordination Agent, the Applicable Pass Through Trustee or WTC, as the case
may be, of any of the transactions contemplated thereby are not in violation of
the charter or by-laws of WTC or of any law, governmental rule or regulation of
the State of Delaware or the United States governing the banking or trust
powers of WTC or, to our knowledge, any indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term lease, license or other
agreement or instrument to which WTC is a party or by which it is bound or, to
our knowledge, any judgment or order applicable to WTC.
4. None of the execution and delivery by the Mortgagee, the
Subordination Agent, the Applicable Pass Through Trustee or WTC, as the case
may be, of the Mortgagee Documents to which it is a party, the authentication
of the Equipment Notes or the consummation of any of the transactions by the
Mortgagee, the Subordination Agent, the Applicable Pass Through Trustee or WTC,
as the case may be, contemplated thereby, requires the consent or approval of,
the giving of notice to, the registration with, or the taking of any other
action in respect of, any governmental authority or agency of the State of
Delaware or the United States governing the banking or trust powers of WTC or
under any Delaware law.
180
To Each of the Parties Listed
on Schedule A Hereto
- ------------------
Page 3
5. No taxes, fees or other charges (other than taxes payable by WTC
on or measured by any compensation received by WTC for its services as
Mortgagee, Subordination Agent or Applicable Pass Through Trustee) are required
to be paid by the Subordination Agent, the Applicable Pass Through Trustee or
the Mortgagee or the trust created by the Indenture under the laws of the State
of Delaware, or any political subdivision thereof, in connection with the
execution, delivery or performance of the Mortgagee Documents to which the
Mortgagee, the Subordination Agent or the Applicable Pass Through Trustee is
party and the Equipment Notes, which taxes, fees or other charges would not be
required to be paid if WTC were not a Delaware banking corporation and did not
perform its obligations as Mortgagee under the Indenture in the State of
Delaware.
6. The Equipment Notes have been duly and validly authenticated by
the Mortgagee in accordance with the Trust Indenture.
7. To our knowledge, there are no proceedings pending or threatened
against or affecting the Mortgagee, the Subordination Agent, the Applicable
Pass Through Trustee or WTC in any court or before any governmental authority,
agency, arbitration board or tribunal which, if adversely determined,
individually or in the aggregate, would materially and adversely affect the
Mortgaged Property or the right, power and authority of the Mortgagee, the
Subordination Agent, the Applicable Pass Through Trustee or WTC, as the case
may be, to enter into or perform its obligations under the Mortgagee Documents
to which is party.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Delaware and we
do not hold ourselves out as being experts on the law of any other
jurisdiction. The foregoing opinions are limited to the laws of the State of
Delaware (and its political subdivisions to the extent set forth in paragraph
5, above) and the federal laws of the United States of America governing the
banking or trust powers of WTC, except that we express no opinion with respect
to (i) federal securities laws, including the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the Investment
Company Act of 1940, as amended, and the Trust Indenture Act of 1939, as
amended, (ii) Part A of Subtitle VII of Title 49 of the United States Code, as
amended (except with respect to the opinion set forth in paragraph 1 above
concerning the citizenship of WTC), (iii) the Federal Communications Act of
1934, as amended, (iv) state securities or blue sky laws, or (v) laws, rules
and regulations applicable to the particular nature of the equipment acquired
by the Company. Insofar as the foregoing opinions relate to the validity and
enforceability of the Mortgagee Documents expressed to be governed by the laws
of the State of New York, we have assumed that each such document is legal,
valid, binding and enforceable in accordance with its terms under such laws (as
to which we express no opinion).
181
To Each of the Parties Listed
on Schedule A Hereto
- ------------------
Page 4
B. The foregoing opinions regarding enforceability are subject to
(i) applicable bankruptcy, insolvency, moratorium, reorganization,
receivership, fraudulent conveyance and similar laws relating to or affecting
the enforcement of the rights and remedies of creditors generally, and (ii)
principles of equity (regardless of whether considered and applied in a
proceeding in equity or at law).
C. We have assumed that each of the parties to the Mortgagee
Documents and the Equipment Notes (except the Mortgagee, the Subordination
Agent, the Applicable Pass Through Trustee or WTC, as the case may be) has full
power, authority and legal right to execute, deliver and perform each such
document and that each such document has been duly authorized, executed and
delivered by each such party.
D. We have assumed that all signatures (other than signatures of
officers of WTC) on documents examined by us are genuine, that all documents
submitted to us as originals are authentic and that all documents submitted to
us as copies conform with the originals, which facts we have not independently
verified.
E. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
F. No opinion is expressed as to the creation, attachment,
perfection or priority of any mortgage or security interests or as to the
nature or validity of title to any part of the Mortgaged Property.
G. The opinion set forth in paragraph (1) above concerning the
citizenship of WTC is based upon an affidavit of WTC, made by one of its Vice
Presidents, the facts set forth in which we have not independently verified.
This opinion may be relied upon by you in connection with the matters
set forth herein. This opinion may also be relied upon by any transferee of a
Note Holder, subject to the understanding that the opinions expressed herein
are rendered as of the date hereof and only with respect to the laws, rules and
regulations in effect as of such date. Otherwise, without our prior written
consent, this opinion may not be relied upon by any other person or entity for
any purpose.
Very truly yours,
182
SCHEDULE A
Mortgagee
- ---------
Wilmington Trust Company
Loan Participant
- ----------------
Wilmington Trust Company
Owner Trustee
- -------------
First Security Bank, National Association
Owner Participant
- -----------------
- -----------------
Lessee
- ------
Continental Airlines, Inc.
Liquidity Providers
- -------------------
ABN AMRO Bank N.V., Chicago Branch
ING Bank N.V.
Rating Agencies
- ---------------
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
183
EXHIBIT H
[Form of FAA Counsel Opinion]
______________
Re: Continental Airlines. Inc. (the "Lessee")
To the Addressees on
Exhibit A Attached Hereto
Ladies and Gentlemen:
Pursuant to Section 5.1.2(xxiii)(I) of Participation Agreement
____ dated as of _______________ (the "Participation Agreement") among the
Lessee, ___________________ as Owner Participant (the "Owner Participant"), the
Loan Participant named therein, First Security Bank, National Association, as
Owner Trustee (the "Owner Trustee") under Trust Agreement ____ dated as of
______________ (the "Trust Agreement") with the Owner Participant, and
Wilmington Trust Company, not in its individual capacity, except as expressly
provided therein but solely as Mortgagee (the "Mortgagee"), which provides for
the financing of the purchase today by the Owner Trustee of the Boeing model
_________ aircraft with manufacturer's serial number _________ and United
States nationality and registration marks N________ (the "Aircraft") and two
Rolls Royce model __________________ aircraft engines with manufacturer's
serial numbers ________ and ________ (the "Engines") and the leasing of the
Aircraft and the Engines by the Owner Trustee to the Lessee, this opinion is
rendered with respect to matters arising under that portion of Title 49 of the
United States Code (the "Transportation Code") relating to the recordation of
the instruments hereinafter described and the registration of the Aircraft
pursuant to the Transportation Code. As contemplated by the Participation
Agreement, title to the Aircraft has been conveyed by The Boeing Company to the
Owner Trustee by an AC Form 8050-2 Aircraft Bill of Sale (the "FAA Bill of
Sale"), the registration of the Aircraft will be accomplished by the filing
with the Federal Aviation Administration (the "FAA") of an AC Form 8050-1
Aircraft Registration Application in the name of the Owner Trustee (the
"Aircraft Registration Application"), the leasing of the Aircraft and the
Engines is pursuant to Lease Agreement ____ dated as of ____________ (the
"Lease") between the Owner Trustee and the Lessee, as supplemented by Lease
Supplement No. 1 dated this date (the "Lease Supplement"), and the creation of
a security interest in the Aircraft and the Engines is pursuant to the Trust
Indenture and Mortgage _____ dated as of _____________ (the "Trust Indenture")
between the Owner Trustee and the Mortgagee, as supplemented by Trust Indenture
and Mortgage ____ Supplement No. 1 dated this date (the "Trust Supplement").
184
2
Based upon our examination of the above described instruments
and of such records of the FAA as we deemed necessary to express the following
opinion and as were made available to us by the FAA, it is our opinion that:
(a) the FAA Bill of Sale, the Trust Indenture with the Trust
Supplement attached and the Lease with the Lease Supplement,
the Trust Indenture and the Trust Supplement attached are in
due form for recording and have been duly filed for
recordation with the FAA pursuant to and in accordance with
the provisions of the Transportation Code today at
_____________, _____________, and _____________, respectively;
(b) the Aircraft Registration Application, to which were attached
the Affidavits of the Owner Trustee and the Owner Participant
required by Section 47.7(c)(2)(ii) of Part 47 of the Federal
Aviation Regulations, and the Trust Agreement were duly filed
with the FAA today at ________________;
(c) the Owner Trustee is the owner of legal title to the Aircraft,
and the Aircraft and the Engines are free and clear of all
Liens (as such term is defined in the Lease) except the
security interest created by the Trust Indenture, as
supplemented by the Trust Supplement, and the interests of the
parties created by the Lease, as supplemented by the Lease
Supplement;
(d) the Aircraft is eligible for registration in the name of the
Owner Trustee under the Transportation Code, and the Aircraft
will be duly registered by the FAA in the name of the Owner
Trustee in due course pursuant to and in accordance with the
provisions of the Transportation Code;
(e) the rights of the Owner Trustee and the Lessee under the
Lease, as supplemented by the Lease Supplement, with respect
to the Aircraft and the Engines are perfected;
(f) the Trust Indenture, as supplemented by the Trust Supplement,
constitutes a valid, duly perfected first priority mortgage
and security interest in favor of the Mortgagee, as trustee
for the benefit of the Note Holders (as such term is defined
in the Trust Indenture), in the Aircraft and the Engines and a
valid, duly perfected first priority security interest in and
collateral assignment of all of the right, title and interest
of the Owner Trustee in, to and under the Lease, as
supplemented by the Lease Supplement (insofar as such security
interest and collateral assignment affect an interest covered
by the recording system established by the FAA pursuant to
Section 44107(a) of the Transportation Code), subject only to
the Lease, as supplemented by the Lease Supplement;
185
3
(g) none of the Trust Indenture, the Trust Agreement, the Trust
Supplement, the Lease or the Lease Supplement is required to
be filed or recorded in any other place within the United
States in order to perfect the mortgage and security interest
in the Aircraft and the Engines or the security interest in
and collateral assignment of the Lease, as supplemented by the
Lease Supplement (insofar as such security interest and
collateral assignment affect an interest covered by the
recording system established by the FAA pursuant to Section
44107(a) of the Transportation Code) under the applicable laws
of any jurisdiction within the United States;
(h) no other registration of the Aircraft and no filings or
recordings (other than the filings and recordings with the FAA
which have been effected) are necessary to perfect in any
jurisdiction within the United States the Owner Trustee's
title to the Aircraft, the first priority security interest
and collateral assignment created by the Trust Indenture and
the Trust Supplement in the Aircraft and the Engines and in
all right, title and interest of the Owner Trustee in and to
the Lease, as supplemented by the Lease Supplement (insofar as
such security interest and collateral assignment affect an
interest covered by the recording system established by the
FAA pursuant to Section 44107(a) of the Transportation Code);
and
(i) no authorization, approval, consent, license or order of, or
registration or filing with, or the giving of notice to, the
FAA Aircraft Registry is required for the valid authorization,
delivery or performance of the Lease, the Lease Supplement,
the Trust Agreement, the Trust Indenture and the Trust
Supplement except for such authorizations, approvals,
consents, licenses, orders, registrations, and notices as have
been effected.
No opinion is herein expressed as to: (i) laws other than the
federal laws of the United States; (ii) the validity or enforceability under
local law of the Trust Indenture, as supplemented by the Trust Supplement; or
(iii) the recognition of the perfection of the security interest and collateral
assignment created by the Trust Indenture, as supplemented by the Trust
Supplement, as against third parties in any legal proceedings outside the
United States. Since our examination was limited to records maintained by the
FAA Aircraft Registry, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under Section 1368(a) of Title 29 of the United States Code and
possessory artisans' liens, and was subject to the accuracy of FAA personnel in
the filing, indexing and recording of instruments filed with the FAA and in the
search for encumbrance cross-reference index cards for the Engines. In
rendering this opinion, we have relied upon the opinion of the Assistant Chief
Counsel for the Aeronautical Center dated __________________ (a copy of which
is attached hereto) and upon the past practice of the FAA which is consistent
with said opinion.
186
4
Although this opinion is not addressed to special counsel for
the Loan Participant, special counsel for the Owner Participant or counsel for
the Lessee, they may rely upon it as though addressed to them.
Very truly yours,
Patricia J. Hanson
187
5
EXHIBIT A
MORTGAGEE, SUBORDINATION AGENT
AND LOAN PARTICIPANT
------------------------------
Wilmington Trust Company
OWNER TRUSTEE
-------------
First Security Bank, National Association
OWNER PARTICIPANT
-----------------
----------------------
LESSEE
------
Continental Airlines, Inc.
LIQUIDITY PROVIDERS
-------------------
ABN AMRO Bank, N.V., Chicago Branch
ING Bank, N.V.
RATING ENTITIES
---------------
Moody's Investors Service, Inc.
Standard & Poor's Ratings Group
188
EXHIBIT A-2 to
Note Purchase Agreement
FORM OF LEASE
189
- --------------------------------------------------------------------------------
***************************************************************************
* *
* 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 _______________
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 Boeing Model [737-524] [737-724] [757-224] Aircraft
Bearing United States Registration No. N______ and
Bearing Manufacturer's Serial No. ______ with two
[CFM MODEL 56-3-B1] [CFM MODEL 56-____]
[ROLLS-ROYCE MODEL RB211-535E4-B-37] 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
_______________, 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.
LEASE AGREEMENT BASE
190
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR;
SECTION 1110 MATTERS . . . . . . . . . . . . . . . . . . . . . 7
4.1 Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Certain Agreements of Lessor . . . . . . . . . . . . . . . . . 8
4.3 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Investment of Funds Held as Security . . . . . . . . . . . . . 8
4.5 Title Transfers by Lessor . . . . . . . . . . . . . . . . . . 9
4.6 Lessor's Interest in Certain Engines . . . . . . . . . . . . . 10
4.7 Lease For U.S. Federal Income Tax Law Purposes;
Section 1110 of Bankruptcy Code . . . . . . . . . . . . . . . 10
SECTION 5. RETURN OF AIRCRAFT . . . . . . . . . . . . . . . . . . . . . . 10
5.1 Compliance with Annex B . . . . . . . . . . . . . . . . . . . 10
5.2 Storage and Related Matters . . . . . . . . . . . . . . . . . 10
5.3 Return of Other Engines . . . . . . . . . . . . . . . . . . . 11
5.4 Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 6. LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 7. REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND RECORDS . . 13
7.1 Registration and Operation . . . . . . . . . . . . . . . . . . 13
7.2 Possession . . . . . . . . . . . . . . . . . . . . . . . . . . 15
LEASE AGREEMENT BASE PAGE i
191
7.3 Certain Limitations on Subleasing or Other
Relinquishment of Possession . . . . . . . . . . . . . . . . . 19
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF
PARTS; ALTERATIONS, MODIFICATIONS AND
ADDITIONS; OTHER LESSEE COVENANTS . . . . . . . . . . . . . . 20
8.1 Maintenance; Replacement and Pooling of Parts;
Alterations, Modifications and Additions . . . . . . . . . . . 20
8.2 Information, Certificates, Notices and Reports . . . . . . . . 20
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 . . . . . . . . . . . . . . . 25
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 . . . . . . . . . . . . . . . . 30
10.4 Conveyance to Lessee . . . . . . . . . . . . . . . . . . . . . 32
10.5 Application of Payments . . . . . . . . . . . . . . . . . . . 32
10.6 Requisition of Aircraft for Use . . . . . . . . . . . . . . . 33
10.7 Requisition of an Engine for Use . . . . . . . . . . . . . . . 34
10.8 Application of Payments . . . . . . . . . . . . . . . . . . . 34
10.9 Application of Payments During
Existence of a Lease Event of Default . . . . . . . . . . . . 34
SECTION 11. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.1 Lessee's Obligation to Insure . . . . . . . . . . . . . . . . 35
11.2 Insurance for Own Account . . . . . . . . . . . . . . . . . . 35
11.3 Indemnification by Government in Lieu of Insurance . . . . . . 35
11.4 Application of Insurance Proceeds . . . . . . . . . . . . . . 36
11.5 Application of Payments During Existence of Default . . . . . 36
LEASE AGREEMENT BASE PAGE ii
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SECTION 12. INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE . . . . . . . . . 37
13.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.2 Merger of Lessee . . . . . . . . . . . . . . . . . . . . . . . 38
13.3 Assignment Security for Lessor's Obligations . . . . . . . . . 39
13.4 Successor Owner Trustee . . . . . . . . . . . . . . . . . . . 39
SECTION 14. LEASE EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . 39
14.1 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.2 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.3 Other Covenants . . . . . . . . . . . . . . . . . . . . . . . 40
14.4 Representations and Warranties . . . . . . . . . . . . . . . . 41
14.5 Bankruptcy and Insolvency . . . . . . . . . . . . . . . . . . 41
SECTION 15. REMEDIES AND WAIVERS . . . . . . . . . . . . . . . . . . . . . 42
15.1 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
15.2 Limitations Under CRAF . . . . . . . . . . . . . . . . . . . . 45
15.3 Right to Perform for Lessee . . . . . . . . . . . . . . . . . 46
15.4 Determination of Fair Market Rental
Value and Fair Market Sales Value . . . . . . . . . . . . . . 46
15.5 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . 47
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC. . . . . . 47
SECTION 17. RENEWAL AND PURCHASE OPTIONS . . . . . . . . . . . . . . . . . 48
17.1 Notices Generally . . . . . . . . . . . . . . . . . . . . . . 48
17.2 Renewal Options . . . . . . . . . . . . . . . . . . . . . . . 48
17.3 Purchase Option . . . . . . . . . . . . . . . . . . . . . . . 50
17.4 Appraisals . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 18. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 52
18.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.2 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.3 Third-Party Beneficiary . . . . . . . . . . . . . . . . . . . 53
18.4 Reproduction of Documents . . . . . . . . . . . . . . . . . . 53
18.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 54
18.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
LEASE AGREEMENT BASE PAGE iii
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18.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE . . . . . . . 54
18.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 55
ANNEXES, EXHIBITS AND SCHEDULES
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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
SCHEDULE 6 Placards
LEASE AGREEMENT BASE PAGE iv
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LEASE AGREEMENT ______
LEASE AGREEMENT ______, dated as of _______________ (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, commencing immediately
LEASE AGREEMENT BASE PAGE 1
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upon acquisition of the Aircraft by Lessor pursuant to the Purchase Agreement
Assignment.
2.2 ACCEPTANCE BY LESSEE
(a) By executing and delivering Lease Supplement No. 1, Lessee
confirms to Lessor that Lessee has duly and irrevocably accepted delivery of
the Aircraft for all purposes of this Agreement.
(b) Lessor has authorized one or more employees of Lessee, designated
by Lessee in writing, as the authorized representative or representatives of
Lessor to accept delivery of the Aircraft on behalf of Lessor pursuant to the
Purchase Agreement Assignment and the Participation Agreement. Lessee hereby
agrees that if delivery of the Aircraft shall be accepted by an employee or
employees of Lessee pursuant to such authorization by Lessor, such acceptance
of delivery by such employee or employees on behalf of Lessor shall, without
further act, irrevocably constitute acceptance by Lessee of the Aircraft for
all purposes of this Agreement.
SECTION 3. TERM AND RENT
3.1 TERM
The Aircraft shall be leased hereunder for the Term, unless this
Agreement or the leasing of the Aircraft is earlier terminated in accordance
with any provision of this Agreement. Lessee shall have the option to renew
the leasing of the Aircraft hereunder pursuant to, and subject to the terms and
conditions of, Section 17, for the Renewal Lease Term.
3.2 RENT
3.2.1 INTERIM RENT; BASIC RENT; ADJUSTMENTS TO BASIC RENT AND
CERTAIN OTHER AMOUNTS
(a) Lessee shall pay Interim Rent to Lessor on the last day of the
Interim Lease Term, which shall be allocated to the Interim Lease Term. During
the Base Lease Term, Lessee shall pay to Lessor, on each Payment Date, 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
LEASE AGREEMENT BASE PAGE 2
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Payment Date, if designated as a payment in advance, in each case as specified
in Schedule 2, as such amount may be (i) adjusted pursuant to Section 3.2.1(b)
or (ii) increased in an amount equal to any increase in the amount of interest
due on the Equipment Notes on the relevant Payment Date pursuant to Section
2(e) of the Registration Rights Agreement.
(b) Basic Rent, Stipulated Loss Values and Termination Values, shall
be subject to adjustment as follows:
(i) In the event that Transaction Expenses paid by Lessor
pursuant to Section 9.2 of the Participation Agreement are determined to
be other than 1.0% of Lessor's Cost, then in each case 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 or downwards) by the Owner
Participant, on or prior to the 120th day after the Delivery Date using
the same methods and assumptions used to calculate original Basic Rent,
Stipulated Loss Value and Termination Value percentages in order to (1)
maintain the Owner Participant's Net Economic Return and (2) minimize
the Net Present Value of Rents to Lessee to the extent possible
consistent with clause (1) hereof.
(ii) 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.
(iii) In the event that Lessee is required to indemnify the
Owner Participant under the Tax Indemnity Agreement, then (A) in the
event that the Lessee agrees to satisfy such indemnity obligation
pursuant to SECTION __ OF THE TAX INDEMNITY AGREEMENT, the Basic Rent
percentages set forth in Schedule 2, and (B) in any event, the
Stipulated Loss Value percentages set forth in Schedule 3 and the
Termination Value percentages set forth in Schedule 4 shall be
LEASE AGREEMENT BASE PAGE 3
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recalculated (upwards or downwards) by Owner Participant, using the same
methods and assumptions (except to the extent such assumptions shall be
varied to take into account the Loss or Foreign Tax Credit Loss (as each
such term is defined in the Tax Indemnity Agreement) that is the subject
of such indemnification and any prior or contemporaneous Loss or Foreign
Tax Credit Loss) used to calculate the Basic Rent percentages, the
Stipulated Loss Value percentages and the Termination Value percentages
on the Delivery 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 verification at the request of Lessee in accordance
with this Section 3.2.1(c), on the basis of the same methodology and
assumptions used by Owner Participant in determining the percentages of Basic
Rent, Stipulated Loss Value and Termination Value as of the Delivery Date,
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
reflects the effect of such characterization and (ii) be in compliance with the
requirements of Sections 4.02(5), 4.07(l) and, on a prospective basis, 4.08(1)
of Revenue Procedure 75-28, except to the extent that on the Delivery 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.
LEASE AGREEMENT BASE PAGE 4
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(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 pay to Lessor, or to whosoever shall be entitled thereto,
any and all Supplemental Rent when and as the
LEASE AGREEMENT BASE PAGE 5
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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 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.
LEASE AGREEMENT BASE PAGE 6
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(d) Excluded Payments shall be paid by wire transfer of immediately
available Dollars to the account of the person specified in the Participation
Agreement or, if not so specified, to such account in the United States as may
be specified by such person by written notice to Lessor and Lessee from time to
time at least 10 Business Days prior to the date such payment is required to be
made.
(e) All computations of interest under this Agreement shall be made
on the basis of a year of 360 days comprised of twelve 30-day months.
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS
4.1 DISCLAIMER
LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS." LESSEE
ACKNOWLEDGES AND AGREES THAT AS BETWEEN LESSEE AND EACH OF LESSOR, MORTGAGEE
AND ANY PARTICIPANT (i) LESSEE HAS SELECTED THE AIRCRAFT AND MANUFACTURER
THEREOF AND (ii) NONE OF LESSOR, MORTGAGEE AND ANY PARTICIPANT MAKES, HAS MADE
OR SHALL BE DEEMED TO HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY
DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO:
(v) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY
PARTICULAR PURPOSE OF THE AIRFRAME, ANY ENGINE OR ANY PART
THEREOF;
(w) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE
AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(x) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY
ENGINE OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE;
(y) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR THE LIKE; OR
(z) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR
ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART
THEREOF.
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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, pursuant to and in accordance with the terms
of the Purchase Agreement Assignment.
4.3 QUIET ENJOYMENT
So long as no Lease Event of Default shall have occurred and be
continuing, Lessor shall not interfere with Lessee's rights hereunder to
continued possession, use and operation of, and quiet enjoyment of, the
Aircraft during the Term.
4.4 INVESTMENT OF FUNDS HELD AS SECURITY
4.4.1 INVESTMENT
Any moneys required to be paid to or retained by Lessor that are
required to be paid to Lessee or applied as provided herein shall, until paid
to Lessee as provided herein or applied as provided herein, be invested by
Lessor from time to time as directed in writing by Lessee (or, if Lessee fails
to so direct, by or as directed by Lessor in its sole discretion) and at the
expense and risk of Lessee in Cash Equivalents so long as such Cash Equivalents
specified by Lessee or Lessor, as the case may be, can be acquired by Lessor
using its best efforts; provided, that so long as the Lien of the Trust
Indenture shall not have been discharged, such moneys shall be invested and
held by Mortgagee, as assignee of Lessor, in accordance with this Lease and
upon discharge of such Lien, Mortgagee shall pay any such money held by it to
Lessor to be held and invested in accordance with this Section.
4.4.2 PAYMENT OF GAIN OR LOSS
Any net gain (including interest received) realized as the result of
investments pursuant to Section 4.4.1 (net of any fees, commissions and other
reasonable expenses, if any, incurred in connection with such investment) shall
be held and applied in the same manner as the principal amount is to be held
and applied hereunder. Lessee will promptly pay to Lessor, on demand, the
amount of any loss realized as the result of any such investment
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(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, (2) so
long as the Lien of the Trust Indenture has not been discharged, comply with
the Trust Indenture relating to the release of the Aircraft, Airframe or such
Engine, (3) assign to Lessee or such other person, as the case may be, if and
to the extent permitted under the Purchase Agreement, all warranties of
Airframe Manufacturer 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, 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.
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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 120 days prior to the end of the Term requesting storage of the Aircraft
upon its return hereunder, Lessee will provide Lessor, or cause Lessor to be
provided, with outdoor parking facilities for the Aircraft for a period up to
30 days, commencing on the date of such return, and upon request of Lessor to
Lessee made at least 10 days prior to the end of such
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initial 30 day period, for an additional 30 day period commencing upon
expiration of such initial period, 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 Lessor
entering into an agreement prior to the commencement of the storage period with
the storage facility providing, among other things, that Lessor shall bear all
maintenance charges and other costs (other than parking fees for the initial 30
day period) incurred.
5.3 RETURN OF OTHER ENGINES
In the event that any Engine owned by Lessor shall not be installed on
the Airframe at the time of return hereunder, Lessee shall be required to
return the Airframe hereunder with a Replacement Engine meeting the
requirements of, and in accordance with, Section 10 hereof and Annex B hereto.
Thereupon, Lessor will transfer to Lessee the Engine constituting part of such
Aircraft but not installed on such Airframe at the time of the return of the
Airframe.
5.4 FUEL
Upon the return of the Airframe upon any termination of this Lease,
Lessor shall pay Lessee, as compensation for any fuel or oil contained in the
fuel or oil tanks of such Airframe, the value of such fuel or oil at the price
paid by Lessee for such fuel or oil, provided that if the Aircraft is being
returned in connection with the exercise of remedies pursuant to Section 15,
Lessor shall have no obligation to make such payment to Lessee until Lessor
shall have been paid all amounts due to it pursuant to Section 15.
SECTION 6. LIENS
Lessee shall not, directly or indirectly, create, incur, assume or
suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any
Engine or any Part, title to any of the foregoing or any interest of Lessee
therein, or the Lessee's
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rights in and to this Lease or any Permitted Sublease, except (a) the
respective rights of Lessor, Mortgagee, the Participants or Lessee under the
Operative Agreements, or of any Permitted Sublessee under any Permitted
Sublease; (b) Lessor Liens; (c) the rights of others under agreements or
arrangements to the extent permitted by the terms of Sections 7.2 and 7.3;
(d) Liens for Taxes of Lessee (and its U.S. federal tax law consolidated
group), or Liens for Taxes of any Tax Indemnitee (and its U.S. federal tax law
consolidated group) for which Lessee is obligated to indemnify such Tax
Indemnitee under any of the Lessee Operative Agreements, in any such case
either not yet due or being contested in good faith by appropriate proceedings
so long as such Liens and such proceedings do not involve any material risk of
the sale, forfeiture or loss of the Aircraft, the Airframe, any Engine or the
interest of any Participant therein or impair the lien of the Trust Indenture;
(e) materialmen's, mechanics', workers', repairers', employees' or other like
Liens arising in the ordinary course of business for amounts the payment of
which is either not yet delinquent for more than 60 days or is being contested
in good faith by appropriate proceedings, so long as such Liens and such
proceedings do not involve any material risk of the sale, forfeiture or loss of
the Aircraft, the Airframe, any Engine or the interest of any Participant
therein or impair the lien of the Trust Indenture; (f) Liens arising out of any
judgment or award against Lessee (or against any Permitted Sublessee), so long
as such judgment shall, within 60 days after the entry thereof, have been
discharged or vacated, or execution thereof stayed pending appeal or shall have
been discharged, vacated or reversed within 60 days after the expiration of
such stay, and so long as during any such 60-day period there is not, or any
such judgment or award does not involve, any material risk of the sale,
forfeiture or loss of the Aircraft, the Airframe, any Engine or the interest of
any Participant therein or impair the lien of the Trust Indenture, and (g) any
other Lien with respect to which Lessee (or any Permitted Sublessee) shall have
provided a bond, cash collateral or other security adequate in the reasonable
opinion of Lessor. Lessee shall promptly take (or cause to be taken) such
action as may be necessary duly to discharge (by bonding or otherwise) any Lien
not excepted above if the same shall at any time arise in respect of the
Aircraft, the Airframe, any Engine or any Part during the Term.
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SECTION 7. REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND RECORDS
7.1 REGISTRATION AND OPERATION
7.1.1 REGISTRATION AND RECORDATION
Subject to the compliance by Lessor and Owner Participant with their
respective obligations under Section 13 of the Participation Agreement, Lessee
shall cause the Aircraft to be, and at all times during the Term to remain,
duly registered with the FAA under the Act or with such other country of
registry as shall be permitted under Section 7.1.2 below, in the name of Lessor
as owner and lessor (except to the extent that such registration under the Act
cannot be effected with the FAA because of Lessor's or Owner Participant's
failure to comply with the citizenship requirements for registration of the
Aircraft under the Act). Lessor shall execute and all such documents as Lessee
(or any Permitted Sublessee) may reasonably request for the purpose of
effecting and continuing such registration. Unless Mortgagee has given Lessee
notice that the Trust Indenture has been discharged, Lessee shall also cause
the Trust Indenture to be duly recorded and at all times maintained of record
as a first-priority perfected mortgage (subject to Permitted Liens) on the
Aircraft, the Airframe and each of the Engines (except to the extent such
perfection or priority cannot be maintained solely as a result of the failure
by Lessor or Mortgagee to execute and deliver any necessary documents).
7.1.2 REREGISTRATION
So long as no Lease Event of Default shall have occurred and be
continuing, Lessee may, by written notice to Lessor, request to change the
country of registration of the Aircraft. Any such change in registration shall
be effected only in compliance with, and subject to all of the conditions set
forth in, Section 7.6.11 of the Participation Agreement.
7.1.3 MARKINGS
If permitted by applicable Law, on or reasonably promptly after the
Delivery Date, Lessee will cause to be affixed to, and maintained in, the
cockpit of the Airframe and on each Engine, in each case, in a clearly visible
location (it being understood that the location of such placards, as identified
to the Owner Participant prior to the Delivery Date, shall be deemed to be in
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compliance with this requirement), a placard of a reasonable size and shape
bearing the legend, in English, set forth in Schedule 6. Such placards may be
removed temporarily, if necessary, in the course of maintenance of the Airframe
or Engines. If any such placard is damaged or becomes illegible, Lessee shall
promptly replace it with a placard complying with the requirements of this
Section 7.1.3.
7.1.4 COMPLIANCE WITH LAWS
Lessee shall not, and shall not allow any other person to, operate, use,
maintain, service, repair or overhaul the Aircraft (a) in violation of any Law
binding on or applicable to the Aircraft, the Airframe or any Engine, or (b) in
violation of any airworthiness certificate, license or registration of any
Government Entity relating to the Aircraft, the Airframe or any Engine, except
(1) immaterial or non-recurring violations with respect to which corrective
measures are taken promptly by Lessee or a Permitted Sublessee, as the case may
be, upon discovery thereof, and (2) to the extent Lessee or any Permitted
Sublessee is contesting the validity or application of any such Law or
requirement relating to any such certificate, license or registration in good
faith in any reasonable manner which does not involve any material risk of the
sale, forfeiture or loss of the Aircraft, the Airframe, any Engine or the
interest of any Participant therein, any material risk of criminal liability or
of material civil penalty against Lessor, Mortgagee or any Participant or
impair the lien of the Trust Indentures.
7.1.5 OPERATION
Lessee agrees not to operate, use or locate the Aircraft, the Airframe
or any Engine, or allow the Aircraft, the Airframe or any Engine to be
operated, used or located (a) in any area excluded from coverage by any
insurance required by the terms of Section 11, except in the case of a
requisition by the U.S. Government where Lessee obtains an indemnity in lieu of
such insurance from the U.S. Government, or insurance from the U.S. Government,
covering such area, in accordance with Section 11.3 or (b) in any recognized
area of hostilities unless fully covered in accordance with Annex D by war-risk
insurance as required by the terms of Section 11 (including, without
limitation, Section 11.3), unless in any case referred to in this Section 7.1.5
the Aircraft is only temporarily operated, used or located in such area as a
result of an emergency, equipment malfunction,
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navigational error, hijacking, weather condition or other similar unforeseen
circumstances, so long as Lessee diligently and in good faith proceeds to
remove the Aircraft from such area.
7.2 POSSESSION
Lessee will not, without the prior written consent of Lessor, sublease
or otherwise in any manner deliver, transfer or relinquish possession of the
Aircraft, the Airframe or any Engine or install any Engine, or permit any
Engine to be installed, on any airframe other than the Airframe; provided,
however, subject to the provisions of Section 7.3, that if and for so long as
no Lease Event of Default shall have occurred and be continuing, then Lessee
may, without such prior written consent:
7.2.1 INTERCHANGE AND POOLING
Subject or permit any Permitted Sublessee to subject any Engine to
normal interchange agreements or pooling agreements or arrangements, in each
case customary in the commercial airline industry and entered into by Lessee or
such Permitted Sublessee, as the case may be, in the ordinary course of
business; provided, however, that if Lessor's title to any such Engine is
divested under any such agreement or arrangement, then such Engine shall be
deemed to have suffered an Event of Loss as of the date of such divestiture,
with the effect that Lessee shall be required to replace such Engine with a
Replacement Engine meeting the requirements of, and in accordance with,
Section 10.
7.2.2 TESTING AND SERVICE
Deliver or permit any Permitted Sublessee to deliver possession of the
Aircraft, Airframe, any Engine or any Part (i) to the manufacturer thereof or
to any third-party maintenance provider, for testing, service, repair,
maintenance or overhaul work on the Aircraft, Airframe, any Engine or any Part,
or, to the extent required or permitted by the terms of Annex C, for
alterations or modifications in or additions to the Aircraft, Airframe or any
Engine or (ii) to any Person for the purpose of transport to a Person referred
to in the preceding clause (i).
7.2.3 TRANSFER TO U.S. GOVERNMENT
Transfer or permit any Permitted Sublessee to transfer possession of the
Aircraft, Airframe or any Engine to the U.S. Government, in which event Lessee
shall promptly notify Lessor
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and Mortgagee in writing of any such transfer of possession and, in the case of
any transfer pursuant to CRAF, in such notification shall identify by name,
address and telephone numbers the Contracting Office Representative or
Representatives for the Military Airlift Command of the United States Air Force
to whom notices must be given and to whom requests or claims must be made to
the extent applicable under CRAF.
7.2.4 INSTALLATION OF ENGINES ON OWNED AIRCRAFT
Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, as the case may be, free
and clear of all Liens, except (a) Permitted Liens and those that do not apply
to the Engines and (b) the rights of third parties under normal interchange or
pooling agreements and arrangements of the type that would be permitted under
Section 7.2.1.
7.2.5 INSTALLATION OF ENGINES ON OTHER AIRFRAMES
Install or permit any Permitted Sublessee to install an Engine on an
airframe leased to Lessee or such Permitted Sublessee, or purchased by Lessee
or such Permitted Sublessee subject to a mortgage, security agreement,
conditional sale or other secured financing arrangement, but only if (a) such
airframe is free and clear of all Liens, except (i) the rights of the parties
to such lease, or any such secured financing arrangement, covering such
airframe and (ii) Liens of the type permitted by clauses (a) and (b) of Section
7.2.4 and (b) Lessee or Permitted Sublessee, as the case may be, shall have
received from the lessor, mortgagee, secured party or conditional seller, in
respect of such airframe, a written agreement (which may be a copy of the
lease, mortgage, security agreement, conditional sale or other agreement
covering such airframe), whereby such Person agrees that it will not acquire or
claim any right, title or interest in, or Lien on, such Engine by reason of
such Engine being installed on such airframe at any time while such Engine is
subject to this Lease or is owned by Lessor.
7.2.6 INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT
Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, leased to Lessee or such
Permitted Sublessee, or
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purchased by Lessee or such Permitted Sublessee subject to a conditional sale
or other security agreement under circumstances where neither Section 7.2.4 or
7.2.5 is applicable; provided, however, that any such installation shall be
deemed an Event of Loss with respect to such Engine, and Lessee shall comply
with Section 10.2 hereof in respect thereof.
7.2.7 SUBLEASING
With respect to the Aircraft, Airframe or any Engine, enter into a
sublease with any Permitted Air Carrier, but only if:
(a) Lessee shall provide written notice to Lessor and Mortgagee (such
notice in the event of a sublease to a U.S. Air Carrier to be given promptly
after entering into any such sublease or, in the case of a sublease to any
other Permitted Air Carrier, 10 days in advance of entering into such
sublease);
(b) At the time that Lessee enters into such sublease, such Permitted
Air Carrier shall not be subject to any bankruptcy, insolvency, liquidation,
reorganization, dissolution or similar proceeding, and shall not have
substantially all of its property in the possession of any liquidator, trustee,
receiver or similar person;
(c) Any such sublease (i) shall not extend beyond the expiration of
the Basic Term or any Renewal Term then in effect unless Lessee shall have
irrevocably committed to purchase the Aircraft, (ii) shall include provisions
for the maintenance, operation, possession, inspection and insurance of the
Aircraft that are the same in all material respects as the applicable
provisions of this Lease and (iii) shall be expressly subject and subordinate
to all the terms of this Agreement and to the rights, powers and remedies of
Lessor hereunder, including, without limitation, Lessor's rights under Section
15 to repossess the Aircraft, Airframe and Engines and to terminate such
sublease upon the occurrence of a Lease Event of Default;
(d) In connection with a sublease to a Permitted Foreign Air Carrier,
(1) the United States maintains diplomatic relations with the country of
domicile of such Permitted Foreign Air Carrier (or, in the case of Taiwan,
diplomatic relations at least as good as those in effect on the Delivery Date)
and (2) Lessee shall have furnished Lessor and Mortgagee a favorable opinion of
counsel, reasonably satisfactory to Lessor, in the country of
LEASE AGREEMENT BASE PAGE 17
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domicile of such Permitted Foreign Air Carrier, that (i) the terms of such
sublease are the legal, valid and binding obligations of the parties thereto
enforceable under the laws of such jurisdiction, (ii) it is not necessary for
Owner Participant, Lessor or Mortgagee to register or qualify to do business in
such jurisdiction, if not already so registered or qualified, as a result, in
whole or in part, of the proposed sublease, (iii) Lessor's title to, and
Mortgagee's Lien in respect of, the Aircraft, Airframe and Engines will be
recognized in such jurisdiction, (iv) the Laws of such jurisdiction of domicile
require fair compensation by the government of such jurisdiction, payable in a
currency freely convertible into Dollars, for the loss of title to the
Aircraft, Airframe or Engines in the event of the requisition by such
government of such title (unless Lessee shall provide insurance in the amounts
required with respect to hull insurance under Section 11 covering the
requisition of title to the Aircraft, Airframe or Engines by the government of
such jurisdiction so long as the Aircraft, Airframe or Engines are subject to
such sublease) and (v) the agreement of such Permitted Air Carrier that its
rights under the sublease are subject and subordinate to all the terms of this
Lease is enforceable against such Permitted Air Carrier under applicable law;
(e) Lessee shall furnish to Lessor, Mortgagee and Owner Participant
evidence reasonably satisfactory to Lessor that the insurance required by
Section 11 remains in effect;
(f) All necessary documents shall have been duly filed, registered or
recorded in such public offices as may be required fully to preserve the title
of Lessor, and the first priority security interest (subject to Permitted
Liens) of Mortgagee, in the Aircraft, Airframe and Engines;
(g) Lessee shall reimburse Lessor, Mortgagee and Owner Participant
for all of their reasonable out-of-pocket fees and expenses, including, without
limitation, reasonable fees and disbursements of counsel, incurred by Lessor,
Mortgagee and Owner Participant in connection with any such sublease;
(h) For all purposes of this Section 7.2.7, the term "sublease" shall
be deemed to include interchange agreements with respect to the Aircraft or
Airframe; and
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(i) No such sublease shall be made to a Permitted Foreign Air Carrier
prior to the close of the Tax Attribute Period, unless Lessee prepays on a
lump-sum basis any liability due under the Tax Indemnity Agreement as a result
of such sublease based upon the assumption that such sublease were to continue
for the remainder of the term of such sublease.
7.3 CERTAIN LIMITATIONS ON SUBLEASING OR OTHER RELINQUISHMENT OF
POSSESSION
Notwithstanding anything to the contrary in Section 7.2:
(a) The rights of any person that receives possession of the Aircraft
in accordance with Section 7.2 shall be subject and subordinate to all the
terms of this Lease, and to Lessor's rights, powers and remedies hereunder,
including, without limitation (i) Lessor's right to repossess the Aircraft
pursuant to Section 15, (ii) Lessor's right to terminate and avoid such
sublease, delivery, transfer or relinquishment of possession upon the
occurrence of a Lease Event of Default and (iii) the right to require such
person to forthwith deliver the Aircraft, the Airframe and Engines subject to
such transfer upon the occurrence of a Lease Event of Default;
(b) Lessee shall remain primarily liable hereunder for the
performance of all the terms of this Lease to the same extent as if such
transfer had not occurred, and no transfer of possession of the Aircraft, the
Airframe, any Engine or any Part shall in any way discharge or diminish any of
Lessee's obligations to Lessor hereunder or under any Operative Agreement;
(c) Lessee shall ensure that no sublease, delivery, transfer or
relinquishment permitted under Section 7.2 shall affect the United States
registration of the Aircraft, unless also made in accordance with the
provisions of Section 7.1.2.
(d) Any event that constitutes or would, with the passage of time,
constitute an Event of Loss under paragraph (c), (d), or (e) of the definition
of such term (as set forth in Annex A) shall not be deemed to violate the
provisions of Section 7.2; and
(e) Any Wet Lease shall not constitute a delivery, transfer or
relinquishment of possession for purposes of Section 7.2 and shall not be
prohibited by the terms hereof.
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SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS; OTHER LESSEE COVENANTS
8.1 MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS
At all times during the Term, Lessee shall comply with, or cause to be
complied with, each of the provisions of Annex C, which provisions are hereby
incorporated by this reference as if set forth in full herein.
8.2 INFORMATION, CERTIFICATES, NOTICES AND REPORTS
8.2.1 FINANCIAL INFORMATION
Lessee will furnish to Lessor:
(a) Within 90 days after the end of each of the first three fiscal
quarters in each fiscal year of Lessee, a consolidated balance
sheet of Lessee as of the end of such quarter and related
statements of income and cash flows for the period commencing at
the end of the previous fiscal year and ending with the end of
such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period in the
preceding fiscal year, prepared in accordance with GAAP; provided
that so long as Lessee is subject to the reporting requirements
of the Securities Exchange Act of 1934, a copy of Lessee's report
on Form 10-Q for such fiscal quarter (excluding exhibits) will
satisfy this paragraph (a).
(b) Within 120 days after the end of each fiscal year of Lessee, a
consolidated balance sheet of Lessee as of the end of such fiscal
year and related statements of income and cash flows of Lessee
for such fiscal year, in comparative form with the preceding
fiscal year, prepared in accordance with GAAP, together with a
report of Lessee's independent certified public accountants with
respect to their audit of such financial statements; provided
that so long as Lessee is subject to the reporting requirements
of the Securities Exchange Act of 1934, a copy of Lessee's report
on Form 10-K for such fiscal year (excluding exhibits) will
satisfy this paragraph (b).
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8.2.2 ANNUAL CERTIFICATE
Within 120 days after the close of each fiscal year of Lessee, Lessee
shall deliver to Lessor and Mortgagee an Officer's Certificate of Lessee to the
effect that such officer is familiar with or has reviewed or caused to be
reviewed the relevant terms of this Lease and the other Lessee Operative
Agreements and that such officer does not have knowledge of the existence as at
the date of such certificate of any Lease Event of Default.
8.2.3 INFORMATION FOR FILINGS
Lessee shall promptly furnish to Owner Participant or Lessor such
information (other than with respect to the citizenship of Owner Participant
and Lessor) within Lessee's or any Permitted Sublessee's possession, or
reasonably available to or obtainable by Lessee or such Permitted Sublessee, as
may be required to enable Lessor timely to file any reports required to be
filed by it as lessor under the Lease or to enable Owner Participant to timely
file any reports required to be filed by it, as the beneficiary of the Trust
Estate, in either case, with any Government Entity because of, or in connection
with, the interest of Owner Participant or Lessor in the Aircraft, Airframe or
Engines, this Lease or any other part of the Trust Estate; provided, however,
that with respect to any such information which Lessee reasonably deems
commercially sensitive or confidential, Owner Participant or Lessor, as the
case may be, shall afford Lessee a reasonable opportunity to seek from any such
Government Entity a waiver of the obligation of Owner Participant or Lessor to
file any such information, or shall consent to the filing of such information
directly by Lessee in lieu of filing by Owner Participant or Lessor, and if any
such waiver or consent is evidenced to the reasonable satisfaction of Owner
Participant or Lessor, as the case may be, then Lessee shall not be required to
furnish such information to Owner Participant or Lessor.
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE
9.1 RIGHT OF TERMINATION
(a) Lessee shall have the right at its option to terminate this Lease
during the Base Lease Term, effective only on a Termination Date occurring on
or after the fifth anniversary of the Delivery Date, if:
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(i) Lessee makes a good faith determination that the Aircraft
either has become economically obsolete or is surplus to Lessee's
requirements and the Chief Financial Officer or Treasurer of Lessee so
certifies in writing to Lessor; and
(ii) written notice of Lessee's exercise of its option to
terminate this Agreement shall be given to Lessor not less than 90 days
prior to the proposed Termination Date specified in such notice.
(b) Lessor shall notify Lessee and Mortgagee of Lessor's intention to
sell or retain the Aircraft, as provided in this Section 9, no less than 30
days after Lessee gives Lessor written notice pursuant to Section 9.1(a)(ii).
Any failure by Lessor to give such notice of its election shall be deemed to be
an election to sell the Aircraft, as provided in this Section 9.
(c) Any termination pursuant to this Section 9 shall become effective
on the date of the sale, if any, pursuant to Section 9.2 or upon the date of
termination and payment by Lessee and Lessor in accordance with Section 9.3 if
Lessor elects to retain the Aircraft.
9.2 ELECTION BY LESSOR TO SELL
9.2.1 BIDS; CLOSING OF SALE
Unless Lessor has given Lessee notice of Lessor's election to retain the
Aircraft, Lessee, as agent for Lessor, shall, until the date ten Business Days
prior to the proposed Termination Date, use commercially reasonable efforts to
obtain bids for a cash purchase of the Aircraft and Lessor may, if it desires
to do so, also seek to obtain such bids. In the event Lessee receives any bid,
Lessee shall promptly, and in any event at least ten Business Days prior to the
proposed date of sale, certify to Lessor in writing the amount and terms of
such bid, the proposed date of such sale and the name and address of the person
(who shall not be Lessee or any Affiliate of Lessee or any person with whom
Lessee or any such Affiliate has an arrangement for the future use of the
Aircraft by Lessee or any such Affiliate) submitting such bid. In the event
Lessor receives any bid on or prior to the date ten Business Days prior to the
proposed Termination Date, Lessor shall, at least ten Business Days prior to
the proposed date of sale, certify to Lessee in writing the
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amount and terms of such bid, the proposed date of such sale and the name and
address of the person submitting such bid.
9.2.2 CLOSING OF SALE
(a) On the proposed Termination Date (i) Lessee shall deliver the
Airframe and Engines or engines constituting part of the Aircraft to the
bidder, if any, which shall have submitted the highest cash bid on or before
the date ten Business Days prior to such Termination Date, in the same manner
as if delivery were made to Lessor pursuant to Section 5 and Annex B and in
full compliance with the terms thereof, and shall duly transfer to Lessor title
to any such engines not owned by Lessor, all in accordance with the terms of
Section 5 and Annex B, and (ii) Lessor shall simultaneously therewith transfer
the Airframe and Engines or engines to such bidder, in the manner described in
Section 4.5, against cash paid to Lessor in the amount of such highest bid and
in the manner and in funds of the type specified in Section 3.3.
(b) All proceeds of any sale described in Section 9.2.2(a) shall be
paid to and retained by Lessor and, on such Termination Date, and as a
condition precedent to such sale and the delivery of the Aircraft and Engines
or engines to such bidder, Lessee shall pay to Lessor, in the manner and in
funds of the type specified in Section 3.3:
(i) all unpaid Basic Rent due at any time prior to such
Termination Date; plus
(ii) an amount equal to the excess, if any, of the Termination
Value for the Aircraft, computed as of such Termination Date, over the
proceeds of such sale; plus
(iii) as provided in Section 3.2.2, interest on the amounts
specified in the foregoing clause (i) at the Payment Due Rate from and
including the date on which any such amount was due to the date of
payment of such amount in full.
As a further condition precedent to such sale and delivery, Lessee shall
pay all Supplemental Rent due by Lessee to Lessor, Mortgagee or the
Participants under this Lease (including, without limitation, (A) Supplemental
Rent in respect of Make-Whole Amount, if any, payable pursuant to Section
2.10(b) of the Trust Indenture in connection with a prepayment of the Equipment
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Notes upon such sale, (B) all interest charges provided for hereunder or under
any other Lessee Operative Agreement with respect to the late payment of any
amounts so payable, and (C) the reasonable out-of-pocket fees and expenses
incurred by Lessor, Mortgagee and Owner Participant in connection with such
termination and sale).
(c) Upon and subject to any such sale and receipt of proceeds by
Lessor, and full and final payment of all amounts described in
Section 9.2.2(b), and compliance by Lessee with all the other provisions of
this Section 9.2,
(i) Lessor will transfer to Lessee, in accordance with
Section 4.5, any Engines constituting part of the Aircraft but which
were not then installed on the Airframe and sold therewith; and
(ii) the obligation of Lessee to pay Basic Rent, on or after
the Payment Date with reference to which Termination Value is computed,
shall cease, and the Term for the Aircraft shall end effective as of the
date of such sale.
(d) A sale of the Aircraft pursuant to this Section 9.2.2 shall take
place only on a Termination Date. Subject to Section 9.3, if no sale shall
have occurred on or as of the proposed Termination Date, this Agreement shall
continue in full force and effect, and all of Lessee's obligations shall
continue, including, without limitation, its obligation to pay Rent, in each
case, as if the notice under Section 9.1 shall not have been given and, subject
to Section 9.2.3(b), Lessee may give another notice pursuant to Section 9.1.
9.2.3 WITHDRAWAL OF NOTICE OF TERMINATION
(a) Lessee may withdraw any notice given pursuant to Section 9.1 at
any time on or before the date ten Business Days prior to the proposed
Termination Date, whereupon this Agreement shall continue in full force and
effect and all of Lessee's obligations shall continue, including, without
limitation, its obligation to pay Rent, in each case, as if the notice under
Section 9.1 shall not have been given and Lessee may give another notice
pursuant to Section 9.1; provided that Lessee shall not be entitled to give
more than five notices pursuant to Section 9.1.
(b) Lessee shall pay all reasonable out-of-pocket fees and expenses
of Lessor, Mortgagee and Owner Participant in connection with any notice of
termination withdrawn by Lessee or in connection
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with any notice of termination pursuant to which a sale of the Aircraft fails
to occur.
9.3 RETENTION OF AIRCRAFT BY LESSOR
(a) If Lessor shall elect to retain the Aircraft in accordance with
Section 9.1, on the proposed Termination Date:
(i) Lessor shall pay, or cause to be paid, in the manner and
in funds of the type specified in Section 3.3, to the Mortgagee an
amount sufficient to prepay all outstanding Equipment Notes pursuant to
Section 2.10(b) of the Trust Indenture;
(ii) subject to receipt by Mortgagee of the funds described in
paragraph (i) above, Lessee shall deliver the Airframe and Engines or
engines constituting part of the Aircraft to Lessor pursuant to
Section 5 and Annex B and in full compliance with the terms thereof, and
shall duly transfer to Lessor title to any such engines not owned by
Lessor, all in accordance with the terms of Section 5 and Annex B;
(iii) Lessee shall pay to Lessor, in the manner and in funds of
the type specified in Section 3.3:
(1) all unpaid Basic Rent due at any time prior to such
Termination Date and all Basic Rent due on such
Termination Date if payable in arrears with respect to the
Payment Period then ended; plus
(2) as provided in Section 3.2.2, interest on the amounts
specified in the foregoing clause (1) at the Payment Due
Rate from and including the date on which any such amount
was due to the date of payment of such amount in full; and
(iv) Lessee shall also pay all Supplemental Rent due and
payable by Lessee to Lessor, Mortgagee or the other Participants under
this Lease (other than any Supplemental Rent in respect of Make-Whole
Amount, if any, payable pursuant to Section 2.10(b) of the Trust
Indenture in connection with a prepayment of the Equipment Notes upon
such sale), including without limitation all interest charges provided
for hereunder or under any other Lessee
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Operative Agreement with respect to the late payment of any amounts, so
payable, and the reasonable out-of-pocket fees and expenses incurred by
Lessor, Mortgagee and Owner Participant in connection with such
termination and sale.
(b) Upon full and final payment to Lessor, Mortgagee and the
Participants of the amounts described in Section 9.3(a), and compliance by
Lessee with all the other applicable provisions of this Section 9.3,
(i) Lessor will transfer to Lessee, in accordance with
Section 4.5, any Engines constituting part of the Aircraft but which
were not then installed on the Airframe and sold therewith; and
(ii) The obligation of Lessee to pay Basic Rent otherwise due
on or after the Termination Date shall cease, and the Term for the
Aircraft shall end effective as of such Termination Date.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.
10.1 EVENT OF LOSS WITH RESPECT TO AIRCRAFT
10.1.1 NOTICE AND ELECTION
(a) Upon the occurrence of an Event of Loss with respect to the
Airframe, and any Engine or Engines installed thereon at the time of such Event
of Loss, Lessee shall promptly (and in any event within 15 days after such
occurrence) give Lessor and Mortgagee written notice of such Event of Loss.
Within 45 days after such occurrence, Lessee shall give Lessor and Mortgagee
written notice of Lessee's election to make payment in respect of such Event of
Loss, as provided in Section 10.1.2, or to replace the Airframe, and any such
Engines, as provided in Section 10.1.3.
(b) Any failure by Lessee to give such notice of its election shall
be deemed to be an election of the option set forth in Section 10.1.2. In
addition, Lessee shall not be entitled to elect the option set forth in Section
10.1.3 if, at the time Lessor receives such notice from Lessee, there shall
have occurred and be continuing a Special Default.
(c) For purposes of Section 10.1.2, an Event of Loss with respect to
the Airframe shall be deemed to constitute an Event of
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Loss with respect to the Aircraft. For purposes of Section 10.1.3, any Engine
not actually suffering an Event of Loss shall not be required to be replaced.
10.1.2 PAYMENT OF LOSS AND TERMINATION OF LEASE
(a) If Lessee elects, in accordance with Section 10.1.1, to make
payment in respect of any such Event of Loss, then Lessee shall pay, in the
manner and in funds of the type specified in Section 3.3, the following
amounts:
(i) on or before the Business Day next following the earlier
of (x) the 120th day following the date of the occurrence of such Event
of Loss, and (y) the fourth Business Day following the receipt of
insurance proceeds with respect to such occurrence (but in any event not
earlier than the date of Lessee's election under Section 10.1.1 to make
payment under this Section 10.1.2), Lessee shall pay to Lessor:
(1) all unpaid Interim Rent, Basic Rent or Renewal Rent, as
the case may be, due at any time prior to the Stipulated
Loss Value Date that is on or immediately preceding the
Loss Payment Date; plus
(2) the Stipulated Loss Value of the Aircraft computed as of
the Stipulated Loss Value Date used in the foregoing
clause (1) for the computation of unpaid Rent; plus
(3) if the Stipulated Loss Value Date used in the foregoing
clause (1) is a Payment Date on which Basic Rent payable
in arrears is due, the amount of such Basic Rent; plus
(4) as provided in Section 3.2.2, interest on the amount
specified in the foregoing clause (1) at the Payment Due
Rate from and including the date on which any such amount
was due to the date of payment of such amount in full;
plus
(5) interest on the amounts specified in the foregoing clauses
(2) and (3) at the SLV Rate from and including the
Stipulated Loss Value Date used in the foregoing clause
(1) for the computation of unpaid Rent to the date such
amount is due, and
LEASE AGREEMENT BASE PAGE 27
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thereafter at the Payment Due Rate to the date of payment
of such amounts in full;
provided that, in the event that the Commencement Date or a Payment Date
shall occur (x) on or after the Stipulated Loss Value Date used in the
foregoing clause (1) for the computation of unpaid Rent, and (y) on or
before the date of payment of the amounts specified above in this
subparagraph (i), then Lessee shall pay the Interim Rent, Basic Rent or
the Renewal Rent, as the case may be, due on such Commencement Date or
Payment Date, and thereupon such amounts payable under this subparagraph
(i) shall be reduced by the amount of such payment of Interim Rent,
Basic Rent or Renewal Rent, as the case may be; and
(ii) on or before the date required for payment of the amounts
specified in paragraph (i) above, Lessee shall also pay to Lessor,
Mortgagee and the other Participants all other amounts due and payable
by Lessee to Lessor, Mortgagee and the other Participants under this
Lease, the Participation Agreement or any other Lessee Operative
Agreement.
(b) Upon payment in full of all amounts described in the
foregoing paragraph (a),(i) the obligation of Lessee to pay Interim Rent, Basic
Rent or Renewal Rent hereunder with respect to the Aircraft shall terminate,
(ii) the Term for the Aircraft shall end and (iii) Lessor will transfer the
Aircraft to Lessee, as-is and where-is, and subject to any insurer's salvage
rights, but otherwise in the manner described in Section 4.5.
10.1.3 REPLACEMENT OF AIRFRAME AND ENGINES
(a) If Lessee elects, in accordance with Section 10.1.1, to replace
the Airframe, and any Engines actually suffering the Event of Loss, then Lessee
shall, as promptly as possible and in any event within 120 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with Section 10.3 and as replacement for the Airframe, and any such
Engine, title to a Replacement Airframe (which shall comply with paragraph (b)
below), and for each such Engine a Replacement Engine, in each case free and
clear of all Liens other than Permitted Liens. If Lessee makes such election,
but for any reason fails or is unable to effect such replacement within such
time period and in compliance with the requirements set forth in
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Section 10.3, then Lessee shall be deemed to have initially made the election
set forth in Section 10.1.2 with the effect that Lessee shall immediately pay,
in the manner and in funds of the type specified in Section 3.3, the amounts
required under, and in accordance with, Section 10.1.2.
(b) Any such Replacement Airframe shall be an airframe that is the
same model as the Airframe to be replaced thereby, or an improved model, and
that has a value, utility and remaining useful life (without regard to hours or
cycles remaining until the next regular maintenance check), at least equal to
the Airframe to be replaced thereby (assuming that such Airframe had been
maintained in accordance with the Lease). Any such Replacement Engine shall
meet the requirements of, and be conveyed by Lessee to Lessor in accordance
with, Section 10.2 (other than the notice requirement set forth in
Section 10.2.1).
10.2 EVENT OF LOSS WITH RESPECT TO AN ENGINE
10.2.1 NOTICE
Upon the occurrence of an Event of Loss with respect to an Engine under
circumstances in which an Event of Loss with respect to the Airframe has not
occurred, Lessee shall promptly (and in any event within 15 days after such
occurrence) give Lessor written notice of such Event of Loss.
10.2.2 REPLACEMENT OF ENGINE
Lessee shall, promptly and in any event within 60 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with Section 10.3 and as replacement for the Engine with respect to
which any Event of Loss occurred, title to a Replacement Engine free and clear
of all Liens other than Permitted Liens. Such Replacement Engine shall be an
engine manufactured by Engine Manufacturer that is the same model as the Engine
to be replaced thereby, or an improved model, and that is suitable for
installation and use on the Airframe, and that has a value, utility and
remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to the Engine to be replaced thereby (assuming that
such Engine had been maintained in accordance with the Lease).
LEASE AGREEMENT BASE PAGE 29
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10.2.3 ENGINE EXCHANGE
Upon not less than five (5) Business Days' prior written notice to
Lessor, Lessee may replace any Engine leased hereunder with another engine (the
"Exchanged Engine") meeting the requirements of Section 10.2.2. Such Exchanged
Engine shall be deemed to be a "Replacement Engine" and Lessor and Lessee shall
comply with the provisions of Section 10.3 with regard to the Exchanged Engine
and the Engine so replaced.
10.3 CONDITIONS TO ANY REPLACEMENT
10.3.1 DOCUMENTS
Prior to or at the time of conveyance of title to any Replacement
Airframe or Replacement Engine to Lessor, Lessee shall take each of the
following actions:
(a) furnish Lessor with a full warranty bill of sale duly conveying
to Lessor such Replacement Airframe or Replacement Engine, in form and
substance reasonably satisfactory to Lessor and cause such Replacement Airframe
to be duly registered in the name of Lessor pursuant to the Act;
(b) cause (i) a Lease Supplement subjecting such Replacement Airframe
or Replacement Engine to this Lease, duly executed by Lessee, to be delivered
to Lessor for execution and, upon such execution, to be filed for recordation
with the FAA pursuant to the Act, (ii) a Trust Indenture Supplement, subjecting
such Replacement Airframe or Replacement Engine to the Trust Indenture, to be
delivered to Lessor for execution and, upon execution, to be filed for
recordation with the FAA pursuant to the Act and (iii) such Financing
Statements and other filings, as Lessor or Mortgagee may reasonably request,
duly executed by Lessee and, to the extent applicable, Lessor and Mortgagee
(and Lessor and Mortgagee shall execute and deliver the same), to be filed in
such locations as any such party may reasonably request;
(c) furnish such evidence of compliance with the insurance provisions
of Section 11 with respect to such Replacement Airframe or Replacement Engine
as Lessor may reasonably request;
(d) furnish an opinion or opinions of Lessee's counsel (which may be
Lessee's legal department) reasonably satisfactory to Lessor and addressed to
Lessor and Mortgagee to the effect that (i) such full warranty bill of sale
referred to in
LEASE AGREEMENT BASE PAGE 30
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Section 10.3.1(a) constitutes an effective instrument for the conveyance of
title to the Replacement Airframe or Replacement Engine and (ii) in the case of
a Replacement Airframe, Lessor and Mortgagee, as assignee of Lessor, will be
entitled to the benefits of Section 1110 with respect to the Replacement
Airframe, provided that such opinion referred to in this clause (ii) need not
be delivered to the extent that immediately prior to such replacement the
benefits of Section 1110 were not, solely by reason of a change in law or court
interpretation thereof, available to Lessor or Mortgagee, as assignee of
Lessor;
(e) furnish an opinion of Lessee's aviation law counsel reasonably
satisfactory to Lessor and addressed to Lessor and Mortgagee as to the due
registration of any such Replacement Airframe and the due filing for
recordation of each Lease Supplement and Trust Indenture Supplement with
respect to such Replacement Airframe or Replacement Engine under the Act;
(f) with respect to any Replacement Airframe, furnish an opinion of
tax counsel, selected by Owner Participant and reasonably satisfactory to
Lessee, as to the federal income tax consequences (without any requirement as
to the nature of such Federal income tax consequences) to Lessor and Owner
Participant of any such replacement;
(g) with respect to the replacement of the Airframe, and any Engine
installed thereon at the time of the subject Event of Loss, if requested by
Lessor and at Lessor's expense, furnish a certified report of a qualified
independent aircraft appraiser, reasonably satisfactory to Lessor, certifying
that such Replacement Airframe and any such Replacement Engine complies with
the value, utility and remaining useful life requirements set forth in
Section 10.1.3(b).
Lessor and Lessee understand and agree that if at the time of any
replacement of the Airframe or any Engine, as contemplated in this Section 10,
the Airframe was registered in a jurisdiction other than the United States,
then the requirements set forth above in this Section 10.3.1 relating to
compliance with the requirements of the Act or the FAA, shall be deemed to
refer to the comparable applicable Law of, and the Aviation Authority of, such
other jurisdiction.
LEASE AGREEMENT BASE PAGE 31
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10.3.2 OTHER OBLIGATIONS
(a) Lessor and Lessee agree that, upon any Replacement Airframe
becoming the Airframe hereunder, and upon any Replacement Engine becoming an
Engine hereunder, this Lease shall continue to be, and shall be treated as, a
lease for U.S. federal income tax purposes of, among other things, such
Replacement Airframe and such Replacement Engine. Without limiting the
foregoing, Lessee and Lessor intend that Lessor shall, in all events, be
entitled to the benefits of Section 1110 with respect to any Replacement
Airframe or Replacement Engine and Lessee and Lessor shall cooperate and take
such action as the other may reasonably request so as to ensure that Lessor
shall be entitled to such benefits.
(b) No Event of Loss with respect to an Engine, or with respect to an
Airframe, shall result in, or otherwise allow or permit (other than as provided
in Section 10.1.2(b)), any reduction, deferral, discharge or other change in
the timing or amount of any Rent payable by Lessee hereunder, and (subject to
such Section 10.1.2(b)) Lessee shall pay all such Rent and other amounts as
though such Event of Loss had not occurred.
10.4 CONVEYANCE TO LESSEE
Upon compliance by Lessee with the applicable terms of Sections 10.1.3,
10.2 and 10.3.1, Lessor will transfer to Lessee the Airframe or Engine, as the
case may be, with respect to which such Event of Loss occurred, in accordance
with Section 4.5.
10.5 APPLICATION OF PAYMENTS
Any amounts, other than insurance proceeds in respect of damage or loss
not constituting an Event of Loss (the application of which is provided for in
Section 11), received at any time by Lessor, Lessee or any Permitted Sublessee
from any Government Entity or any other Person in respect of any Event of Loss
will be applied as follows:
10.5.1 REPLACEMENT OF AIRFRAME AND ENGINES
If such amounts are received with respect to the Airframe, and any
Engine installed thereon at the time of such Event of Loss, upon compliance by
Lessee with the applicable terms of Section 10.1.3 with respect to the Event of
Loss for which such
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amounts are received, such amounts shall be paid over to, or retained by,
Lessee.
10.5.2 LOSS OF ENGINE
If such amounts are received with respect to an Engine (other than an
Engine installed on the Airframe at the time such Airframe suffers an Event of
Loss), upon compliance by Lessee with the applicable terms of Section 10.2.2
with respect to the Event of Loss for which such amounts are received, such
amounts shall be paid over to, or retained by, Lessee.
10.5.3 PAYMENT OF LOSS
If such amounts are received, in whole or in part, with respect to the
Airframe, and Lessee makes, has made or is deemed to have made the election set
forth in Section 10.1.2, such amounts shall be applied as follows:
(a) first, if the sum described in Section 10.1.2 has not then been
paid in full by Lessee, such amounts shall be paid to Lessor (or to Mortgagee
so long as Mortgagee has not given notice to Lessee that the Trust Indenture
has been duly discharged, except with respect to Excluded Payments) to the
extent necessary to pay in full such sum;
(b) second, the remainder, if any, shall be paid to Lessee.
10.6 REQUISITION OF AIRCRAFT FOR USE
If any Government Entity shall requisition for use the Airframe and the
Engines or engines installed thereon, and if the same does not constitute an
Event of Loss, Lessee shall promptly notify Lessor and Mortgagee of such
requisition and all of Lessee's obligations under this Agreement shall continue
to the same extent as if such requisition had not occurred; provided, however,
that if the Airframe and Engines or engines installed thereon are not returned
to Lessor by Lessee at the end of the Term or within 30 days thereafter, and
Lessor, upon notice given not less than 30 days nor more than 120 days before
the end of the Term, shall have elected to treat such event as constituting an
Event of Loss with respect to the Aircraft, Lessee shall then be deemed to have
made the election set forth in Section 10.1.2 with the effect that Lessee shall
be obligated to pay the Stipulated Loss Value and all other amounts payable
pursuant to Section 10.1.2 with respect to the Aircraft as if an Event of
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Loss had occurred as of the end of the Term. If Lessor shall not have elected
to treat such event as an Event of Loss, Lessee shall be obligated to return
the Airframe and Engines or engines to Lessor pursuant to, and in all other
respects to comply with the provisions of, Section 5 promptly upon their return
by such Government Entity, and Lessee shall pay to Lessor upon such return an
amount equal to the average daily Basic Rent payable by Lessee during the Term
for each day after the end of the Term to but excluding the day of such return,
up to a maximum of 30 days.
10.7 REQUISITION OF AN ENGINE FOR USE
If any Government Entity shall requisition for use any Engine but not
the Airframe, Lessee will replace such Engine by complying with the applicable
terms of Sections 10.2 and 10.3 to the same extent as if an Event of Loss had
occurred with respect to such Engine, and any payments received by Lessor or
Lessee from such Government Entity with respect to such requisition shall be
paid or retained in accordance with Section 10.5.2.
10.8 APPLICATION OF PAYMENTS
All payments received by Lessor or Lessee, or any Permitted Sublessee,
from any Government Entity for the use of the Airframe and Engines or engines
installed thereon during the Term shall be paid over to, or retained by, Lessee
and all payments received by Lessor or Lessee from any Government Entity for
the use of the Airframe and Engines or engines installed thereon after the Term
shall be paid over to, or retained by, Lessor; provided that, if such
requisition constitutes an Event of Loss, or Lessor has elected under Section
10.6 to treat such requisition as an Event of Loss, then all such payments
shall be paid over to Lessor (or to Mortgagee so long as Mortgagee has not
given notice to Lessee that the Trust Indenture has been duly discharged), and
held as provided in Section 10.5.
10.9 APPLICATION OF PAYMENTS DURING EXISTENCE OF A LEASE EVENT OF
DEFAULT
Any amount described in this Section 10 that is payable or creditable
to, or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if at the time such payment, credit or retention would otherwise occur a
Special Default shall have occurred and be continuing, but shall instead be
held by or paid over to Lessor (or to Mortgagee so long as Mortgagee has not
LEASE AGREEMENT BASE PAGE 34
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given notice to Lessee that the Trust Indenture has been duly discharged) as
security for the obligations of Lessee under this Lease and the other Lessee
Operative Agreements and shall be invested pursuant to Section 4.4 hereof
unless and until Lessor shall have demanded liquidated damages pursuant to
Section 15.1.3 or 15.1.4 and such amount is applied, at the option of Lessor,
or upon the written request of Lessee to Lessor, from time to time during the
continuance of a Lease Event of Default, to Lessee's obligations under this
Lease as and when due, it being understood that any such application shall be
made to such obligations of Lessee as Lessor may determine in its sole
discretion. At such time as there shall not be continuing any Special Default,
such amount shall be paid to Lessee to the extent not previously applied in
accordance with this Section 10.9.
SECTION 11. INSURANCE
11.1 LESSEE'S OBLIGATION TO INSURE
Lessee shall comply with, or cause to be complied with, each of the
provisions of Annex D, which provisions are hereby incorporated by this
reference as if set forth in full herein.
11.2 INSURANCE FOR OWN ACCOUNT
Nothing in Section 11 shall limit or prohibit (a) Lessee from
maintaining the policies of insurance required under Annex D with higher limits
than those specified in Annex D, or (b) Lessor, Mortgagee or Owner Participant
from obtaining insurance for its own account (and any proceeds payable under
such separate insurance shall be payable as provided in the policy relating
thereto); provided, however, that no insurance may be obtained or maintained
that would limit or otherwise adversely affect the coverage of any insurance
required to be obtained or maintained by Lessee pursuant to this Section 11 and
Annex D.
11.3 INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE
Lessor agrees to accept, in lieu of insurance against any risk with
respect to the Aircraft described in Annex D, indemnification from, or
insurance provided by, the U.S. Government, or upon the written consent of
Lessor, other Government Entity, against such risk in an amount that, when
added to the amount of insurance (including permitted self-insurance), if any,
against such risk that Lessee (or any Permitted Sublessee) may continue to
maintain, in accordance with
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this Section 11, during the period of such requisition or transfer, shall be at
least equal to the amount of insurance against such risk otherwise required by
this Section 11.
11.4 APPLICATION OF INSURANCE PROCEEDS
As between Lessor and Lessee, all insurance proceeds received as a
result of the occurrence of an Event of Loss with respect to the Aircraft or
any Engine under policies required to be maintained by Lessee pursuant to this
Section 11 will be applied in accordance with Section 10.5. All proceeds of
insurance required to be maintained by Lessee, in accordance with Section 11
and Section B of Annex D, in respect of any property damage or loss not
constituting an Event of Loss with respect to the Aircraft, Airframe or any
Engine will be applied in payment (or to reimburse Lessee) for repairs or for
replacement property, and any balance remaining after such repairs or
replacement with respect to such damage or loss shall be paid over to, or
retained by, Lessee.
11.5 APPLICATION OF PAYMENTS DURING EXISTENCE OF DEFAULT
Any amount described in this Section 11 that is payable or creditable
to, or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if at the time such payment, credit or retention would otherwise occur a
Special Default shall have occurred and be continuing, but shall instead be
held by or paid over to Lessor (or to Mortgagee so long as Mortgagee has not
given notice to Lessee that the Trust Indenture has been duly discharged) as
security for the obligations of Lessee under this Lease and shall be invested
pursuant to Section 4.4 hereof unless and until Lessor shall have demanded
liquidated damages pursuant to Section 15.1.3 or 15.1.4 and such amount is
applied, at the option of Lessor, or upon the written request of Lessee to
Lessor, from time to time during the continuance of a Lease Event of Default,
to Lessee's obligations under this Lease and the other Lessee Operative
Agreements as and when due, it being understood that any such application shall
be made to such obligations of Lessee as Lessor may determine in its sole
discretion. At such time as there shall not be continuing any Special Default,
such amount shall be paid to Lessee to the extent not previously applied in
accordance with this Section 11.5.
LEASE AGREEMENT BASE PAGE 36
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SECTION 12. INSPECTION
(a) At all reasonable times Lessor, Mortgagee or the Owner
Participant, and their respective authorized representatives (the "Inspecting
Parties") may (not more than once every 12 months unless a Lease Event of
Default has occurred and is continuing then such inspection right shall not be
so limited) inspect the Aircraft, Airframe and Engines (including, without
limitation, the Aircraft Documents) and any such Inspecting Party may make
copies of such Aircraft Documents not reasonably deemed confidential by Lessee
or such Permitted Sublessee.
(b) Any inspection of the Aircraft hereunder shall be limited to a
visual, walk-around inspection and shall not include the opening of any panels,
bays or other components of the Aircraft, and no such inspection shall
interfere with Lessee's or any Permitted Sublessee's maintenance and operation
of the Aircraft, Airframe and Engines.
(c) With respect to such rights of inspection, Lessor, Owner
Participant and Mortgagee shall not have any duty or liability to make, or any
duty or liability by reason of not making, any such visit, inspection or
survey.
(d) Each Inspecting Party shall bear its own expenses in connection
with any such inspection (including the cost of any copies made in accordance
with Section 12(a)).
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE
13.1 IN GENERAL
This Lease and the other Lessee Operative Agreements shall be binding
upon and inure to the benefit of Lessor and Lessee and their respective
successors and permitted assigns. Except as otherwise expressly permitted by
the terms of the Lease or any other Lessee Operative Agreement, Lessee will
not, without the prior written consent of Lessor and Mortgagee, assign any of
its rights under this Lease. Except as otherwise provided herein (including,
without limitation, under the provisions of Section 15 hereof), Lessor and
Mortgagee may not assign or convey any of its right, title and interest in and
to this Lease or the Aircraft without the prior written consent of Lessee, such
consent not to be unreasonably withheld.
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13.2 MERGER OF LESSEE
13.2.1 IN GENERAL
Lessee shall not consolidate with or merge into any other person under
circumstances in which Lessee is not the surviving corporation, or convey,
transfer or lease in one or more transactions all or substantially all of its
assets to any other person, unless:
(a) such person is organized, existing and in good standing under the
Laws of the United States, any State of the United States or the District
Columbia and, upon consummation of such transaction, such person will be a U.S.
Air Carrier;
(b) such person executes and delivers to Lessor and Mortgagee a duly
authorized, legal, valid, binding and enforceable agreement, reasonably
satisfactory in form and substance to Lessor, containing an effective
assumption by such person of the due and punctual performance and observance of
each covenant, agreement and condition in the Lessee Operative Agreements to be
performed or observed by Lessee;
(c) such person makes such filings and recordings with the FAA
pursuant to the Act as shall be necessary to evidence such consolidation or
merger; and
(d) immediately after giving effect to such consolidation or merger
no Lease Event of Default shall have occurred and be continuing.
13.2.2 EFFECT OF MERGER
Upon any such consolidation or merger of Lessee with or into, or the
conveyance, transfer or lease by Lessee of all or substantially all of its
assets to, any Person in accordance with this Section 13.2, such Person will
succeed to, and be substituted for, and may exercise every right and power of,
Lessee under the Lessee Operative Agreements with the same effect as if such
person had been named as "Lessee" therein. No such consolidation or merger, or
conveyance, transfer or lease, shall have the effect of releasing Lessee or
such Person from any of the obligations, liabilities, covenants or undertakings
of Lessee under the Lease.
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13.3 ASSIGNMENT SECURITY FOR LESSOR'S OBLIGATIONS
In order to secure the indebtedness evidenced by the Equipment Notes,
Lessor has agreed in the Trust Indenture, among other things, to assign to
Mortgagee this Lease and to mortgage the Aircraft, Airframe and Engines in
favor of Mortgagee, subject to the reservations and conditions therein set
forth. Lessee hereby accepts and consents to the assignment of all Lessor's
right, title and interest in and to this Lease pursuant to the terms of the
Trust Indenture. In accordance with Section 3.3(c), Lessee agrees to pay
directly to Mortgagee (or, after receipt by Lessee of notice from Mortgagee of
the discharge of the Trust Indenture, to Lessor), all amounts of Rent (other
than Excluded Payments) due or to become due hereunder and assigned to
Mortgagee and Lessee agrees that Mortgagee's right to such payments hereunder
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, the circumstances set forth in
Section 16 hereof. Notwithstanding the foregoing assignment of this Lease,
the obligations of Lessee to Lessor to perform the terms and conditions of this
Lease shall remain in full force and effect.
13.4 SUCCESSOR OWNER TRUSTEE
Lessee agrees that in the case of the appointment of any successor Owner
Trustee pursuant to the terms of the Participation Agreement and the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee to Lessee, succeed to all the rights, powers and title
of Lessor hereunder and shall be deemed to be Lessor and the owner of the
Aircraft and the other assets of the Trust Estate for all purposes hereof
without the necessity of any consent or approval by Lessee and without in any
way altering the terms of this Lease or Lessee's obligations hereunder. An
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor or additional Owner Trustees
pursuant to the Participation Agreement and the Trust Agreement, and such right
may be exercised repeatedly as long as this Lease shall be in effect.
SECTION 14. LEASE EVENTS OF DEFAULT
The occurrence of any one or more of the following circumstances,
conditions, acts or events, for any reason whatsoever and whether any such
circumstance, condition, act or
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event shall be voluntary or involuntary or come about or be effected by
operation of Law or pursuant to or in compliance with any judgment, decree,
order, rule or regulation of any Government Entity, shall constitute a Lease
Event of Default so long as it shall not have been remedied:
14.1 PAYMENTS
Lessee shall fail to pay any amount of Interim Rent, Basic Rent, Renewal
Rent, Stipulated Loss Value or Termination Value within ten (10) Business Days
after the same shall have become due; or Lessee shall fail to pay any
Supplemental Rent (other than Stipulated Loss Value or Termination Value) when
due and such failure shall continue for a period in excess of ten (10) Business
Days from and after the date of any written notice to Lessee from Lessor of the
failure to make such payment when due; provided that any such failure to pay
any Excluded Payment shall not constitute a Lease Event of Default until
written notice is given by the Owner Participant to Lessee and Mortgagee that
such failure constitutes a Lease Event of Default and such failure shall have
continued for a period in excess of ten (10) Business Days after such notice.
14.2 INSURANCE
Lessee shall fail to carry and maintain, or cause to be carried and
maintained, insurance on and in respect of the Aircraft, Airframe and Engines
in accordance with the provisions of Section 11.
14.3 OTHER COVENANTS
Lessee shall fail to observe or perform (or caused to be observed and
performed) in any material respect any other covenant, agreement or obligation
set forth herein or in any other Lessee Operative Agreement (other than the
covenants, agreements and obligations set forth in the Tax Indemnity
Agreement), and such failure shall continue unremedied for a period of 30 days
from and after the date of written notice thereof to Lessee from Lessor or
Mortgagee, unless such failure is capable of being corrected and Lessee shall
be diligently proceeding to correct such failure, in which case there shall be
no Lease Event of Default unless and until such failure shall continue
unremedied for a period of 180 days after receipt of such notice.
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14.4 REPRESENTATIONS AND WARRANTIES
Any representation or warranty made by Lessee herein, in the
Participation Agreement or in any other Lessee Operative Agreement (other than
the representations and warranties of Lessee in the Tax Indemnity Agreement)
(a) shall prove to have been untrue or inaccurate in any material respect as of
the date made, (b) such untrue or inaccurate representation or warranty is
material at the time in question, (c) and the same shall remain uncured (to the
extent of the adverse impact of such incorrectness on the interest of the
Participants or Lessor) for a period in excess of 30 days from and after the
date of written notice thereof from Lessor or Mortgagee to Lessee.
14.5 BANKRUPTCY AND INSOLVENCY
(a) Lessee shall consent to the appointment of or the taking of
possession by a receiver, trustee or liquidator of itself or of substantially
all of its property, or Lessee shall admit in writing its inability to pay its
debts generally as they come due, or does not pay its debts generally as they
become due or shall make a general assignment for the benefit of creditors, or
Lessee shall file a voluntary petition in bankruptcy or a voluntary petition or
an answer seeking reorganization, liquidation or other relief in a case under
any bankruptcy Laws or other insolvency Laws (as in effect at such time), or
Lessee shall seek relief by voluntary petition, answer or consent, under the
provisions of any other bankruptcy or other similar Law providing for the
reorganization or winding-up of corporations (as in effect at such time) or
Lessee's board of directors shall adopt a resolution authorizing any of the
foregoing; or
(b) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of Lessee, a receiver,
trustee or liquidator of Lessee or of substantially all of its property, or
substantially all of the property of Lessee shall be sequestered, and any such
order, judgment or decree of appointment or sequestration shall remain in force
undismissed, unstayed and unvacated for a period of 90 days after the date of
entry thereof; or
(c) a petition against Lessee in a case under any bankruptcy Laws or
other insolvency Laws (as in effect at such time) is filed and not withdrawn or
dismissed within 90 days thereafter, or if, under the provisions of any Law
providing for
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reorganization or winding-up of corporations which may apply to Lessee, any
court of competent jurisdiction assumes jurisdiction, custody or control of
Lessee or of substantially all of its property and such jurisdiction, custody
or control remains in force unrelinquished, unstayed and unterminated for a
period of 90 days.
SECTION 15. REMEDIES AND WAIVERS
15.1 REMEDIES
If any Lease Event of Default shall occur and be continuing, Lessor may,
at its option and at any time and from time to time, exercise any one or more
of the following remedies as Lessor in its sole discretion shall elect:
15.1.1 RETURN AND REPOSSESSION
Lessor may cause Lessee, upon giving written notice to Lessee, to return
promptly, and Lessee shall return promptly, the Airframe and Engines as Lessor
may so demand, to Lessor or its order in the manner and condition required by,
and otherwise in accordance with, all the provisions of Section 5 as if the
Airframe or Engine were being returned at the end of the Base Lease Term or any
Renewal Lease Term or Lessor, at its option, may enter upon the premises where
the Airframe or any Engine, or any Part thereof, are located and take immediate
possession of and remove the same by summary proceedings or otherwise, all
without liability accruing to Lessor for or by reason of such entry or taking
of possession, whether for the restoration of damage to property caused by such
taking or otherwise.
15.1.2 SALE AND USE
Lessor may sell the Airframe and/or any Engine at public or private
sale, at such times and places, and to such Persons (including Lessor,
Mortgagee or any Participant), as Lessor may determine; or Lessor may otherwise
dispose of, hold, use, operate, lease to others or keep idle the Airframe
and/or any Engine, as Lessor, in its sole discretion, may determine, all free
and clear of any rights of Lessee and without any duty to account to Lessee
with respect to such action or inaction or for any proceeds with respect
thereto, except as hereinafter set forth in this Section 15, and except to the
extent that such proceeds would constitute, under applicable Law, a mitigation
of Lessor's damages suffered or incurred as a result of the subject
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Lease Event of Default. Lessor shall give Lessee at least 15 days prior
written notice of the date fixed for any public sale of the Airframe and/or any
Engine or of the date on or after which will occur the execution of any
contract providing for any private sale.
15.1.3 CERTAIN LIQUIDATED DAMAGES
Whether or not Lessor shall have exercised, or shall thereafter at any
time exercise, any of its rights under Section 15.1.1 or 15.1.2 with respect to
the Airframe and/or any Engine, or any Part thereof, Lessor, by written notice
to Lessee specifying a payment date (which shall be the Stipulated Loss Value
Date next occurring not less than 10 days after the date of such notice), may
demand Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the payment
date so specified and in the manner and in funds of the type specified in
Section 3.3, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Interim Rent, Basic Rent or Renewal Rent, as the case may be,
for the Aircraft in respect of all periods commencing on or after the date
specified for payment in such notice), the following amounts:
(a) all unpaid Interim Rent, Basic Rent or Renewal Rent, as the case
may be, due at any time prior to the Stipulated Loss Value Date specified in
such notice; plus
(b) whichever of the following amounts Lessor, in its sole discretion
shall specify in such notice:
(i) an amount equal to the excess, if any, of the present
value, computed as of the Stipulated Loss Value Date specified in such
notice, discounted to such date at a rate per annum equal to the Debt
Rate, compounded semiannually, of all unpaid Interim Rent and Basic Rent
during the then remaining portion of the Base Lease Term or, if a
Renewal Term has commenced, of all unpaid Renewal Rent during the
remaining portion of such Renewal Term, over the Fair Market Rental
Value of the Aircraft for the remainder of the Term, after discounting
such Fair Market Rental Value to its then present value (at a rate per
annum equal to the Debt Rate, compounded semiannually) as of the
Stipulated Loss Value Date specified in such notice, or
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(ii) an amount equal to the excess, if any, of the Stipulated
Loss Value for the Aircraft, computed as of the Stipulated Loss Value
Date specified in such notice, over the Fair Market Sales Value of the
Aircraft, as of the Stipulated Loss Value Date specified in such notice;
plus
(c) interest on the amounts specified in the foregoing clause (a) at the
Payment Due Rate from and including the date on which any such amount was due
to the date of payment of such amount; plus
(d) interest on the amount specified in the foregoing clause (b)(i) or
(b)(ii), according to Lessor's election, at the Payment Due Rate from and
including the Stipulated Loss Value Date specified in such notice to the date
of payment of such amount.
15.1.4 LIQUIDATED DAMAGES UPON SALE
If Lessor, pursuant to Section 15.1.2 or applicable Law, shall have sold
the Airframe and/or any Engine, Lessor, in lieu of exercising its rights under
Section 15.1.3 with respect to the Aircraft, Airframe or any Engine, as the
case may be, may, if Lessor shall so elect, upon giving written notice to
Lessee, demand Lessee to pay Lessor, and Lessee shall pay to Lessor, on the
date of such sale and in the manner and in funds of the type specified in
Section 3.3, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Interim Rent, Basic Rent or Renewal Rent, as the case may be,
for the Aircraft in respect of all periods commencing on or after the date of
such sale), the following amounts:
(a) all unpaid Interim Rent, Basic Rent or Renewal Rent, as the case
may be, due at any time prior to the Stipulated Loss Value Date
on or immediately preceding the date of such sale; plus
(b) an amount equal to the excess, if any, of (i) the Stipulated Loss
Value of the Airframe and/or any Engine, as the case may be,
computed as of the Stipulated Loss Value Date used in the
foregoing clause (a) for the computation of unpaid Rent, over
(ii) the proceeds of such sale, minus all reasonable costs of
Lessor and Mortgagee in connection with the sale; plus
(c) if the date of such sale is not a Stipulated Loss Value Date, an
amount equal to interest on the outstanding
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principal amount of the Equipment Notes at the rate per annum
borne thereby from and including the Stipulated Loss Value Date
used in the foregoing clause (a) for the computation of unpaid
Rent to the date of such sale; plus
(d) interest on the amounts specified in the foregoing clause (a) at
the Payment Due Rate from and including the date on which any
such amount was due to the date of payment of such amount; plus
(e) interest on the sum of the amounts specified in the foregoing
clause (b) at the Payment Due Rate from and including the date of
such sale to the date of payment of such amounts.
15.1.5 RESCISSION
Lessor may (i) at its option, rescind or terminate this Lease as to the
Aircraft, Airframe or any Engine, or any Part thereof, or (ii) exercise any
other right or remedy that may be available to it under applicable Law or
proceed by appropriate court action to enforce the terms hereof.
15.1.6 OTHER REMEDIES
In addition to the foregoing remedies (but without duplication of
amounts otherwise paid under this Section 15), Lessee shall be liable for any
and all unpaid Rent due hereunder before, during or after (except as otherwise
provided herein) the exercise of any of the foregoing remedies and for all
reasonable attorneys' fees and other costs and expenses of Lessor, Mortgagee
the Owner Participant and the Note Holders, including, without limitation,
interest on overdue Rent at the rate as herein provided, incurred by reason of
the occurrence of any Lease Event of Default or the exercise of Lessor's
remedies with respect thereto, including all reasonable costs and expenses
incurred in connection with the return of the Airframe or any Engine, in
accordance with the terms of Section 5 or in placing the Airframe or any
Engine, in the condition and airworthiness required by Section 5.
15.2 LIMITATIONS UNDER CRAF
Notwithstanding the provisions of Section 15.1, during any period that
the Aircraft, Airframe or any Engine is subject to
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CRAF in accordance with the provisions of Section 7.2.3 and in the possession
of the U.S. Government, Lessor shall not, as a result of any Lease Event of
Default, exercise its remedies hereunder in such manner as to limit Lessee's
control under this Lease (or any Permitted Sublessee's control under any
Permitted Sublease) of the Aircraft, Airframe or such Engine, unless at least
30 days' (or such other period as may then be applicable under CRAF) written
notice of default hereunder shall have been given by Lessor or Mortgagee by
registered or certified mail to Lessee (and any Permitted Sublessee) with a
copy to the Contracting Officer Representative or Representatives for the
Military Airlift Command of the United States Air Force to whom notices must be
given under the contract governing Lessee's (or any Permitted Sublessee's)
participation in CRAF with respect to the Aircraft, Airframe or any Engine.
15.3 RIGHT TO PERFORM FOR LESSEE
If Lessee (i) fails to make any payment of Rent required to be made by
it hereunder or (ii) fails to perform or comply with any of its agreements
contained herein and such failure continues for a period of thirty days after
written notice thereof is given by Lessor or Mortgagee to Lessee, Lessor or
Mortgagee may (but shall not be obligated to) make such payment or perform or
comply with such agreement, and the amount of such payment and the amount of
the expenses of Lessor or Mortgagee incurred in connection with such payment or
the performance of or compliance with such agreement, as the case may be,
together with interest thereon at the Payment Due Rate, shall be deemed
Supplemental Rent, payable by Lessee upon demand by Lessor or Mortgagee,
whichever is entitled thereto. No such payment, performance or compliance
shall be deemed to cure any Lease Default or Lease Event of Default or
otherwise relieve Lessee of its obligations with respect thereto.
15.4 DETERMINATION OF FAIR MARKET RENTAL VALUE AND FAIR MARKET SALES
VALUE
For the purpose of this Section 15, the "Fair Market Rental Value" or
the "Fair Market Sales Value" of the Aircraft, Airframe or any Engine, shall be
determined on an "as is, where is" basis and shall take into account customary
brokerage and other out-of-pocket fees and expenses which typically would be
incurred in connection with a re-lease or sale of the Aircraft, Airframe or any
Engine. Any such determination shall be made by an Appraiser
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selected by Lessor and the costs and expenses associated therewith shall be
borne by Lessee, unless Lessor does not obtain possession of the Aircraft,
Airframe and Engines pursuant to this Section 15, in which case an Appraiser
shall not be appointed and Fair Market Rental Value and Fair Market Sales Value
for purposes of this Section 15 shall be zero.
15.5 REMEDIES CUMULATIVE
Nothing contained in this Lease shall be construed to limit in any way
any right, power, remedy or privilege of Lessor hereunder or under any other
Operative Agreement or now or hereafter existing at law or in equity. Each and
every right, power, remedy and privilege hereby given to, or retained by,
Lessor in this Lease shall be in addition to and not in limitation of every
other right, power, remedy and privilege given under the Operative Agreements
or now or hereafter existing at law or in equity. Each and every right, power,
remedy and privilege of Lessor under this Lease and any other Operative
Agreement may be exercised from time to time or simultaneously and as often and
in such order as may be deemed expedient by Lessor. All such rights, powers,
remedies and privileges shall be cumulative and not mutually exclusive, and the
exercise of one shall not be deemed a waiver of the right to exercise any
other. Lessee hereby waives to the extent permitted by applicable Law any
right which it may have to require Lessor to choose or elect remedies.
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.
(a) Lessee's obligation to pay Rent hereunder shall be absolute and
unconditional, and shall not be affected by any event or circumstance,
including, without limitation: (i) any setoff, counterclaim, recoupment,
defense or other right that Lessee may have against Lessor, Mortgagee, any
Participant, any Note Holder, or any other Person for any reason whatsoever;
(ii) any defect in the title, airworthiness, condition, design, operation or
fitness for use of, or any damage to or loss or destruction of, the Aircraft,
Airframe or any Engine, or any interruption or cessation in the use or
possession thereof by Lessee for any reason whatsoever; (iii) any insolvency,
bankruptcy, reorganization or similar proceedings by or against Lessee or any
other Person; or (iv) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
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(b) If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of law or otherwise except as specifically
provided herein, Lessee nonetheless agrees to pay an amount equal to each Rent
payment at the time such payment would have become due and payable in
accordance with the terms hereof had this Agreement not been terminated in
whole or in part. Lessee hereby waives, to the extent permitted by applicable
law, any and all rights that it may now have or that at any time hereafter may
be conferred upon it, by statute or otherwise, to terminate, cancel, quit or
surrender this Agreement, except in accordance with the express terms hereof.
(c) Nothing set forth in this Section 16 shall be construed to
prohibit Lessee from separately pursuing any claim that it may have from time
to time against Lessor or any other Person with respect to any matter (other
than the absolute and unconditional nature of Lessee's obligations hereunder to
pay Rent, and other than the matters specified in paragraphs (a) and (b)
above).
SECTION 17. RENEWAL AND PURCHASE OPTIONS
17.1 NOTICES GENERALLY
(a) At least 120 days prior to the Scheduled Expiration Date or, if a
Renewal Lease Term is then in effect, prior to the Scheduled Renewal Term
Expiration Date of such Renewal Lease Term, Lessee may provide notice to Lessor
that Lessee may exercise either the option to extend the leasing of the
Aircraft for a Renewal Lease Term pursuant to Section 17.2 or the option to
purchase the Aircraft on the Scheduled Expiration Date or Scheduled Renewal
Term Expiration Date of such Renewal Lease Term, as the case may be, pursuant
to Section 17.3 (a "Preliminary Notice").
(b) If any such Preliminary Notice is given by Lessee, then Lessee
may provide a further notice specifying which option it intends to elect, with
respect to the relevant period, pursuant to Section 17.2.1 or 17.3.1, as the
case may be.
17.2 RENEWAL OPTIONS
17.2.1 RENEWAL NOTICE
(a) If Lessee has given a Preliminary Notice, as specified in
Section 17.1, and subject to the terms and conditions of this Section 17.2,
Lessee may exercise its option to extend the
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leasing of the Aircraft hereunder until the next Scheduled Renewal Term
Expiration Date, on the same terms, provisions and conditions (except as
contemplated by this Section 17) set forth herein and in the other Lessee
Operative Agreements with respect to the Base Lease Term, by delivery of a
notice (a "Renewal Notice") to Lessor not less than 90 days prior to (i) if the
Base Lease Term is then in effect, the Scheduled Expiration Date, or (ii) if a
Renewal Lease Term is then in effect, the Scheduled Renewal Term Expiration
Date for such Renewal Lease Term.
(b) Notwithstanding anything to the contrary in this Agreement or any
other Operative Agreement:
(i) No Preliminary Notice or Renewal Notice shall be binding
on Lessor or oblige Lessor to extend the leasing of the Aircraft
hereunder for a Renewal Lease Term if any Lease Event of Default shall
have occurred and be continuing on and as of the date that such Renewal
Lease Term would otherwise commence.
(ii) Any Renewal Notice shall be revocable by Lessee until 10
Business Days after the Renewal Rent is determined in accordance with
Sections 17.2.2 and unless revoked by written notice by Lessee to Lessor
shall thereafter become irrevocable and shall constitute an
unconditional obligation of Lessee to extend the leasing of the Aircraft
hereunder for the Renewal Lease Term to which such Renewal Notice
relates.
(iii) Lessee shall not be entitled to give any Renewal Notice if
it has (x) not delivered a Preliminary Notice or (y) delivered a
Purchase Notice to Lessor.
17.2.2 RENEWAL RENT
(a) During the Renewal Lease Term, Lessee shall pay to Lessor on each
Payment Date, in the manner and in the funds of the type specified in Section
3.3, Renewal Rent in arrears.
(b) The Renewal Rent payable by Lessee on each Payment Date during
any Fixed Renewal Lease Term shall be the lower of (i) an amount equal to one-
half of the average of the semiannual Basic Rent amounts payable during the
Base Lease Term and(ii) the Fair Market Rental Value of the Aircraft for such
Renewal Lease Term. The Renewal Rent payable by Lessee on each Payment Date
during any Subsequent Renewal Lease Term shall be the Fair Market Rental
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Value of the Aircraft for such Renewal Lease Term. Any such Fair Market Rental
Value shall be determined not more than 120 days and not less than 100 days
prior to the date of commencement of such Renewal Lease Term by mutual
agreement of Lessor and Lessee or, if they shall be unable to agree, by an
appraisal in accordance with Section 17.4.
17.2.3 STIPULATED LOSS AND TERMINATION VALUES
(a) For any Renewal Lease Term, Stipulated Loss Value Dates and
Termination Value Dates shall be extended throughout such Renewal Lease Term on
the same days and for the same months as during the Base Lease Term.
(b) Stipulated Loss Value and Termination Value amounts that are
payable during any such Renewal Lease Term shall be determined at the same time
that the Renewal Rent for such Renewal Lease Term is determined under
Section 17.2.2. Stipulated Loss Values and Termination Values for any such
Renewal Lease Term shall, commencing on the first day of such Renewal Lease
Term, be equal to the Fair Market Sales Value of the Aircraft, computed as of
the first day of such Renewal Lease Term, and shall decline ratably on a
monthly basis to the Fair Market Sales Value of the Aircraft as of the last day
of such Renewal Lease Term.
(c) Any Fair Market Sales Value of the Aircraft, for purposes of
calculating Stipulated Loss Value and Termination Value amounts applicable
during any such Renewal Lease Term, shall be determined by mutual agreement of
Lessor and Lessee or, if they shall be unable to agree, by an appraisal in
accordance with Section 17.4.
17.3 PURCHASE OPTION
17.3.1 PURCHASE NOTICE
(a) Subject to Section 17.1 and the terms and conditions of this
Section 17.3, Lessee may elect to purchase the Aircraft, on any Purchase Date,
at a purchase price equal to the lesser of 50% of Lessor's Cost and the Fair
Market Sales Value of the Aircraft computed as of the Purchase Date.
(b) Lessee may exercise such option to purchase the Aircraft, by
delivery of a notice (a "Purchase Notice") to Lessor
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not less than 90 days prior to the Purchase Date specified in such Purchase
Notice.
(c) Notwithstanding anything to the contrary in this Agreement or any
other Operative Agreement:
(i) Any Purchase Notice (whether delivered or deemed to have
been delivered) shall be revocable until 10 Business Days after the
determination of the Fair Market Sales Value in accordance with Section
17.3.2 and unless revoked by written notice by Lessee to Lessor shall
thereafter become irrevocable and shall constitute an unconditional
obligation of Lessee to purchase the Aircraft under this Section 17.3.
(ii) Lessee shall not be entitled to give any Purchase Notice
in respect of any Purchase Date if it has delivered a Renewal Notice for
a Renewal Lease Term that would commence immediately following such
Purchase Date.
17.3.2 DETERMINATION OF FAIR MARKET SALES VALUE
The Fair Market Sales Value of the Aircraft shall be determined not more
than 120 days and not less than 100 days prior to the applicable Purchase Date
by mutual agreement of Lessor and Lessee or, if they shall be unable to agree,
by an appraisal in accordance with Section 17.4.
17.3.3 TITLE
Upon full and final payment by Lessee of (a) the applicable purchase
price of the Aircraft, (b) all unpaid Rent due and payable through and
including the Purchase Date and (c) all other amounts due and payable by Lessee
under this Agreement, Lessor will transfer to Lessee title to the Aircraft in
accordance with Section 4.5.
17.4 APPRAISALS
Whenever Fair Market Rental Value or Fair Market Sales Value of the
Aircraft is required to be determined by an appraisal under this Section 17,
Lessee and Lessor shall appoint a mutually satisfactory Appraiser to conduct
such appraisal. If Lessee and Lessor fail to agree upon a satisfactory
Appraiser then each shall promptly appoint a separate Appraiser and such
Appraisers shall jointly determine such amount. If either Lessee or Lessor
fails to so appoint an Appraiser, the determination of the single
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Appraiser appointed shall be final. If two Appraisers are appointed and within
7 days after the appointment of the latter of such two Appraisers, they cannot
agree upon such amount, such two Appraisers shall, within 8 days after such
latter appointment, appoint a third Appraiser and such amount shall be
determined by such three Appraisers, who shall make their separate appraisals
within 7 days following the appointment of the third Appraiser, and any
determination so made shall be conclusive and binding upon Lessor and Lessee.
If no such third Appraiser is appointed within such 8-day period, either Lessor
or Lessee may apply to the American Arbitration Association to make such
appointment, and both parties shall be bound by such appointment. The
foregoing appraisal procedure shall in any event be completed no less than 125
days before the end of the Base Lease Term or the current Renewal Lease Term,
as the case may be. If three Appraisers are appointed and the difference
between the determination which is farther from the middle determination and
the middle determination is more than 125% of the difference between the middle
determination and the third determination, then such farther determination
shall be excluded, the remaining two determinations shall be averaged and such
average shall be final and binding upon Lessor and Lessee. Otherwise, the
average of all three determinations shall be final and binding upon Lessor and
Lessee. The fees and expenses of all such Appraisers and such appraisal
procedure shall be borne equally by Lessee and Lessor, provided that if Lessee
elects not to renew this Lease or purchase the Aircraft following the
conclusion of such appraisal, Lessee shall pay all expenses of such appraisal.
SECTION 18. MISCELLANEOUS
18.1 AMENDMENTS
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by Lessor and Lessee. 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
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manner not set forth in an agreement, document or instrument in writing and
signed by Lessor and Lessee.
18.2 SEVERABILITY
If any provision hereof shall be held invalid, illegal or unenforceable
in any respect in any jurisdiction, then, to the extent permitted by Law
(a) all other provisions hereof shall remain in full force and effect in such
jurisdiction and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. If, however, any Law pursuant to which such provisions are held
invalid, illegal or unenforceable may be waived, such Law is hereby waived by
the parties hereto to the full extent permitted, to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects,
enforceable in accordance with its terms.
18.3 THIRD-PARTY BENEFICIARY
This Agreement is not intended to, and shall not, provide any person not
a party hereto (other than Mortgagee, the Participants, the Indenture
Indemnitees and the Persons referred to in Section 4.6) with any rights of any
nature whatsoever against either of the parties hereto, and no person not a
party hereto (other than Mortgagee, the Participants, the Indenture Indemnitees
and the Persons referred to in Section 4.6) shall have any right, power or
privilege in respect of, or have any benefit or interest arising out of, this
Agreement.
18.4 REPRODUCTION OF DOCUMENTS
This Agreement, all annexes, schedules and exhibits hereto and all
agreements, instruments and documents relating hereto, including, without
limitation (a) consents, waivers and modifications that may hereafter be
executed and (b) financial statements, certificates and other information
previously or hereafter furnished to any party hereto, may be reproduced by
such party by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such party may destroy any original
documents so reproduced. Any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such reproduction was made
by such party in the regular course of
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business) and any enlargement, facsimile or further reproduction of such
reproduction likewise is admissible in evidence.
18.5 COUNTERPARTS
This Agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts (or upon separate
signature pages bound together into one or more counterparts), each of which
when so executed shall be deemed to be an original, and all of which
counterparts, taken together, shall constitute one and the same instrument.
18.6 NOTICES
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement and shall be personally delivered, sent by facsimile or
telecommunication transmission (which in either case provides written
confirmation to the sender of its delivery), sent by registered mail or
certified mail, return receipt requested, postage prepaid, or sent by overnight
courier service, in each case to the respective address or facsimile number set
forth for such party in Schedule 1 to the Participation Agreement, or to such
other address or number as either party hereto may hereafter specify by notice
to the other party hereto. Each such notice, request, demand, authorization,
direction, consent, waiver or other communication shall be effective when
received or, if made, given, furnished or filed (a) by facsimile or
telecommunication transmission, when confirmed, or (b) by registered or
certified mail, three Business Days after being deposited, properly addressed,
with the U.S. Postal Service.
18.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(a) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
LEASE AGREEMENT BASE PAGE 54
248
(b) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING
WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 18.7. EACH PARTY HERETO HEREBY AGREES
THAT SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH
THIS SECTION 18.8(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.
18.8 ENTIRE AGREEMENT
This Agreement, together with the other Operative Agreements, on and as
of the date hereof constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, between the parties
hereto with respect to such subject matter are hereby superseded in their
entireties.
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LEASE AGREEMENT BASE PAGE 55
249
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Agreement to be duly executed as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
as Lessor, not in its individual
capacity, except as expressly
provided herein, but solely as
Owner Trustee under the Trust
Agreement
By
-------------------------------------
Name:
Title:
CONTINENTAL AIRLINES, INC.,
as Lessee
By
-------------------------------------
Name:
Title:
Receipt of this original counterpart of the foregoing Lease Agreement is
hereby acknowledged on this ____ day of _________, _______.
WILMINGTON TRUST COMPANY,
as Mortgagee
By
-------------------------------------
Name:
Title:
LEASE AGREEMENT BASE PAGE 56
250
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Agreement to be duly executed as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
as Lessor, not in its
individual capacity, except as
expressly provided herein, but
solely as Owner Trustee under the
Trust Agreement
By
-------------------------------------
Name:
Title:
CONTINENTAL AIRLINES, INC.,
as Lessee
By
-------------------------------------
Name:
Title:
LEASE AGREEMENT BASE PAGE 57
ANNEX A
[SEE PARTICIPATION AGREEMENT ANNEX A]
ANNEXES B-D
[INTENTIONALLY OMITTED]
251
EXHIBIT A - LEASE SUPPLEMENT
LEASE AGREEMENT __
LEASE SUPPLEMENT NO.__
LEASE SUPPLEMENT No. __, dated ________, 199_, between FIRST SECURITY
BANK, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, but solely as Owner Trustee under the Trust Agreement
_____, dated as of _____________, with the Owner Participant named therein
(such Owner Trustee, in its capacity as such Owner Trustee being herein called
"Lessor"), and CONTINENTAL AIRLINES, INC., a Delaware corporation, as Lessee
("Lessee").
Lessor and Lessee have heretofore entered into that certain Lease
Agreement ______, dated as of ______________, relating to one Boeing Model
__________ aircraft (herein called the "Lease" and the defined terms therein
being hereinafter used with the same meanings). The Lease provides for the
execution and delivery of this Lease Supplement for the purpose of leasing the
Airframe and Engines under the Lease as and when delivered by Lessor to Lessee
in accordance with the terms thereof.
The Lease relates to the Airframe and Engines described below, and a
counterpart of the Lease to which this Lease Supplement is attached and of
which this Lease Supplement is a part, is being filed for recordation on the
date hereof with the Federal Aviation Administration as one document.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessee has been duly authorized by Lessor to accept, and does
hereby irrevocably accept on behalf of Lessor delivery of the Aircraft from
Airframe Manufacturer under, and for all purposes of, the Aircraft Bill of
Sale, the Participation Agreement and the Purchase Agreement Assignment.
2. Lessor hereby delivers and leases to Lessee under the Lease and
Lessee hereby accepts and leases from Lessor under the Lease the following
described Boeing __________ aircraft (the "Aircraft"), which Aircraft as of the
date hereof consists of the following components:
EXHIBIT A TO LEASE AGREEMENT BASE PAGE 1
