1
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
CONTINENTAL AIRLINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4512 74-2099724
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) NUMBER)
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)
------------------------
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
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
------------------------
CALCULATION OF REGISTRATION FEE
====================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) CERTIFICATE(2) PRICE(2) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------
Pass Through Certificates, Series
1997-2A................................ $74,862,000 100% $74,862,000
Pass Through Certificates, Series
1997-2B................................ $25,563,000 100% $25,563,000 $46,970
Pass Through Certificates, Series
1997-2C................................ $27,206,000 100% $27,206,000
Pass Through Certificates, Series
1997-2D................................ $27,369,000 100% $27,369,000
====================================================================================================================
(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.
================================================================================
2
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 OCTOBER , 1997
PROSPECTUS
CONTINENTAL AIRLINES, INC.
OFFER TO EXCHANGE PASS THROUGH CERTIFICATES, SERIES 1997-2,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OUTSTANDING PASS THROUGH CERTIFICATES, SERIES 1997-2
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [ ],
UNLESS EXTENDED.
Pass Through Certificates, Series 1997-2 (the "New Certificates"), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which this Prospectus
is a part, are hereby offered, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying letter of transmittal (the "Letter
of Transmittal" and, together with this Prospectus, the "Exchange Offer"), in
exchange for an equal principal amount of outstanding Pass Through Certificates,
Series 1997-2 (the "Old Certificates"), of which $155,000,000 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 1997-2 Pass Through Trusts (the "Class A Trust", the
"Class B Trust", the "Class C Trust" and the "Class D Trust", and collectively,
the "Trusts") formed pursuant to four separate pass through trust agreements
(the "Pass Through Trust Agreements") between Continental 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, (ii) the Certificates of the Class C Trust
are subordinated in right of payment to the Certificates of the Class B Trust
and (iii) the Certificates of the Class D Trust are subordinated in right of
payment to the Certificates of the Class C Trust. Payments of interest on the
Certificates issued by each Trust (other than the Class D Trust) are supported
by a separate liquidity facility for the benefit of the holders of such
Certificates, each such facility provided initially by Kredietbank N.V., acting
through its New York branch, in an amount sufficient to pay interest thereon at
the applicable interest rate for such Certificates on up to three successive
semiannual distribution dates.
(Continued on the following page.)
------------------------
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PARTICIPANTS IN THE EXCHANGE OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE OF
THIS PROSPECTUS.
PASS THROUGH FINAL EXPECTED
CERTIFICATES PRINCIPAL AMOUNT INTEREST RATE DISTRIBUTION DATE
- ---------------------------------------------------------- ---------------- ------------- -----------------
1997-2A................................................... $ 74,862,000 7.148% June 30, 2007
1997-2B................................................... $ 25,563,000 7.149% June 30, 2005
1997-2C................................................... $ 27,206,000 7.206% June 30, 2004
1997-2D................................................... $ 27,369,000 7.522% June 30, 2001
------------
Total........................................... $155,000,000
============
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1997
3
(Continued from the cover page.)
The property of the Trusts includes, among other things, equipment notes
(the "Equipment Notes") issued on a recourse basis by Continental in connection
with its purchase of six Boeing 737-3T0 aircraft and four McDonnell Douglas
MD-82 aircraft (collectively, the "Aircraft") which were previously leased by
Continental. The Equipment Notes in respect of each Aircraft have been issued in
four series (the "Series A Equipment Notes", the "Series B Equipment Notes", the
"Series C Equipment Notes" and the "Series D Equipment Notes"). The Class A
Trust, the Class B Trust, the Class C Trust and the Class D Trust have purchased
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. The maturity dates of the Equipment Notes acquired by each Trust
will occur on or before the final expected distribution date applicable to the
Certificates issued by such Trust. The Equipment Notes issued with respect to
each Aircraft are secured by a first priority security interest in such Aircraft
and by a second priority security interest in each of the other Aircraft. The
Equipment Notes issued with respect to the Aircraft are direct obligations of
Continental.
All of the Equipment Notes held in each Trust accrue interest at the
applicable rate per annum for the Certificates issued by such Trust, payable on
June 30 and December 30 of each year, commencing on December 30, 1997. Such
interest will be distributed to Certificateholders of such Trust on each such
date, subject 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 date on which the Old Certificates were
originally issued. 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 June 30 of
each year, commencing on June 30, 1998. Such payments will be made 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.
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 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
2
4
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. THE COMPANY IS NOT
AWARE OF ANY JURISDICTION WITHIN THE UNITED STATES IN WHICH THE EXCHANGE OFFER
OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH SUCH LAWS.
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 and Morgan Stanley & Co. Incorporated (the "Initial
Purchasers") have previously made a market in the Old Certificates and
Continental has been advised that both 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."
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.
3
5
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, will provide the Certificateholders of each Trust certain
periodic reports concerning the distributions made from such Trust. See
"Description of New Certificates -- Reports to Certificateholders".
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 0-9781) are
hereby incorporated by reference in this Prospectus: (i) Continental's Annual
Report on Form 10-K for the year ended December 31, 1996 (filed February 24,
1997), (ii) Continental's Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 1997 (filed April 28, 1997) and June 30, 1997 (filed
August 14, 1997) and (iii) Continental's Current Reports on Form 8-K filed on
January 6, March 21, April 18, May 28, June 10, June 25, 1997, October 6, 1997
and October 14 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 [ ].
4
6
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 nine months of 1997) and, together with its wholly owned subsidiary,
Continental Express, Inc. ("Express"), and its wholly owned subsidiary,
Continental Micronesia, Inc. ("CMI"), each a Delaware corporation, serves 198
airports worldwide as of September 18, 1997.
The Company operates its route system primarily through domestic hubs at
Newark, George Bush Intercontinental in Houston and Cleveland Hopkins
("Cleveland"), and a hub on the Pacific 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 57%, 79%, 54% and 70% of
average daily jet departures, respectively.
Continental directly serves 133 U.S. cities, with additional cities
(principally in the western and southwestern United States) connected to
Continental's route system under agreements with America West Airlines, Inc.
("America West"). Internationally, Continental flies to 65 destinations and
offers additional connecting service through alliances with foreign carriers.
Continental operates 104 weekly departures to 10 European cities and markets
service to six other cities through code-sharing agreements. Continental
commenced service from Newark to Dusseldorf, Germany on March 19, 1997, to
Lisbon, Portugal on May 1, 1997, to Vancouver, British Columbia on June 12,
1997, to Birmingham, England on July 1, 1997, to Sao Paulo and Rio de Janeiro,
Brazil on July 10, 1997 and from Houston to Caracas, Venezuela on October 1,
1997. Continental has implemented international code-sharing agreements with
Alitalia Airlines ("Alitalia"), Air Canada, Transavia, CSA Czech Airlines,
Business Air and China Airlines (effective September 20, 1997). Upon receipt of
government approval, Continental will commence code-sharing arrangements with
Aerolineas Centrales de Colombia (ACES), Aeroflot Russian International Airline
("Aeroflot"), Air France, EVA Airways Corporation ("EVA"), an airline based in
Taiwan, and Virgin Atlantic Airways ("Virgin"). Continental's agreement with
Alitalia involves a block-space arrangement pursuant to which the Company and
Alitalia share capacity and bear economic risk for blocks of seats on the
code-shared trans-Atlantic flights.
In addition, the Company has also entered into joint marketing agreements
with other airlines, all of which (except for the agreement with Virgin) are
currently subject to government approval, which will involve block-space
arrangements which management believes are important to Continental's ability to
compete as an international airline. In October 1996, Continental announced a
block-space agreement with Air France which contemplates a future code-share
arrangement on certain flights between Newark and Charles de Gaulle Airport
("CDG") and Houston and CDG (expected to commence in the second quarter of
1998). In January 1997, the Company announced a similar agreement with Aeroflot
which management anticipates will commence in the second quarter of 1998.
Aeroflot will place its code on one daily Continental flight to Moscow and will
market the service throughout the Commonwealth of Independent States. The
Company's agreement with Virgin for a code-share arrangement containing block
space commitments recently received government approvals. The Company
anticipates commencing the code-share arrangement, which involves the carriers'
Newark/New York-London routes and eight other routes flown by Virgin between the
United Kingdom and the United States, in the first quarter of 1998. In August
1997, the Company entered into a code-sharing agreement with EVA that entitles
the Company to place its code on that carrier's flights between Taipei and five
cities in the United States.
5
7
The Company anticipates entering into other code-sharing, joint marketing
and block-space agreements, which may include the Company undertaking the
financial commitment to purchase seats from other carriers.
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.
RECENT DEVELOPMENTS
Third Quarter 1997 Earnings
On October 16, 1997, the Company reported consolidated net income,
including special charges, of $110 million and $18 million for the three months
ended September 30, 1997 and 1996, respectively, and $312 million and $272
million for the nine months ended September 30, 1997 and 1996, respectively.
Special charges included a $128 million fleet disposition charge ($77 million
after taxes) in 1996 and after tax extraordinary losses of $4 million and $6
million in 1997 and 1996, respectively.
For the first nine months of 1997, Continental reported $5.4 billion in
revenue, $584 million in operating income and $518 million in pre-tax income.
This compares to $4.8 billion in revenue, $554 million in operating income and
$476 million in pre-tax income, excluding the $128 million fleet disposition
charge, for the comparable nine-month period in 1996.
6
8
THE EXCHANGE OFFER
Registration Rights
Agreement.................. The Old Certificates were issued on June 25, 1997
(the "Issuance Date") to the Initial Purchasers.
The Initial Purchasers placed the Old Certificates
with institutional investors. In connection
therewith, the Company, 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, $155,000,000 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 (as defined on page 2 of
this Prospectus), 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 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
7
9
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.
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,
8
10
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 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 used to purchase
Equipment Notes issued by Continental to finance
the purchase of the Aircraft.
9
11
TERMS OF CERTIFICATES
The Exchange Offer relates to the exchange of up to $155,000,000 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 1997-2A Pass
Through Trust, the Continental Airlines 1997-2B
Pass Through Trust, the Continental Airlines
1997-2C Pass Through Trust and the Continental
Airlines 1997-2D Pass Through Trust has been formed
pursuant to one of the four separate Pass Through
Trust Agreements that were entered into between the
Company and Wilmington Trust Company, as trustee
under each Trust. Each Trust is a separate entity.
Certificates Offered....... Pass Through Certificates issued by each Trust,
representing fractional undivided interests in such
Trust. The New Certificates issued by the Class A
Trust, the Class B Trust, the Class C Trust and the
Class D Trust are referred to herein as the "Class
A Certificates", the "Class B Certificates", the
"Class C Certificates", and the "Class D
Certificates", respectively.
Subordination Agent,
Trustee, Loan Trustee and
Second Mortgagee......... 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 Loan Trustee, paying agent and
registrar for each series of Equipment Notes, and
(iv) as mortgagee (the "Second Mortgagee") under
the Second Indenture.
Liquidity Provider......... Kredietbank N.V., acting through its New York
branch, (the "Liquidity Provider") has provided a
separate liquidity facility for the benefit of the
holders of Class A Certificates, Class B
Certificates and Class C Certificates.
Trust Property............. The property of each Trust (the "Trust Property")
includes (i) subject to the Intercreditor
Agreement, Equipment Notes issued on a recourse
basis by Continental in connection with each
separate secured loan transaction with respect to
each Aircraft to finance the purchase of the
Aircraft by Continental, (ii) the rights of such
Trust under the Intercreditor Agreement (including
all monies receivable in respect of such rights),
(iii) except for the Class D Trust, all monies
receivable under the Liquidity Facility for such
Trust and (iv) funds from time to time deposited
with the Trustee in accounts relating to such
Trust. The Equipment Notes with respect to each
Aircraft have been issued in four series under an
Indenture (the "Indenture") between Continental and
the mortgagee thereunder (the "Loan Trustee"), and
are entitled to a first priority security interest
in such Aircraft pursuant to such Indenture and to
a second priority security interest in each of the
other Aircraft pursuant to the Second Indenture
(the "Second Indenture") between Continental and
the Second Mortgagee. The Class A Trust, the Class
B Trust, the Class C Trust and the Class D Trust
each have acquired,
10
12
pursuant to a Participation Agreement with respect
to each Aircraft (the "Participation 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 to
be issued by such Trust. The aggregate original
principal amount of the Equipment Notes held in
each Trust is the same as the aggregate original
face amount of the Certificates issued by such
Trust.
SUMMARY OF TERMS OF CERTIFICATES
CLASS A CLASS B CLASS C CLASS D
CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
------------------ ------------------ ------------------ ------------------
Aggregate Face Amount....... $74,862,000 $25,563,000 $27,206,000 $27,369,000
Loan to Aircraft Value
(cumulative)(1)........... 41.00% 55.00% 69.90% 84.89%
Expected Principal
Distribution Window (in
years).................... 1.00-10.00 1.00-8.00 1.00-7.00 1.00-4.00
Expected Initial Average
Life (in years)........... 8.01 6.70 5.07 2.60
Regular Distribution
Dates..................... June 30 & December June 30 & December June 30 & December June 30 & December
30 30 30 30
Final Expected Regular
Distribution Date......... June 30, 2007 June 30, 2005 June 30, 2004 June 30, 2001
Final Maturity Date......... December 30, 2008 December 30, 2006 December 30, 2005 June 30, 2001
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 None
interest payments interest payments interest payments
Liquidity Facility
Amount(3)................. $8,101,025 $2,766,630 $2,967,925 None
- ---------------
(1) Assumes an aggregate appraised Aircraft value of $182,590,000. The appraised
value is only an estimate and reflects certain assumptions. See "Description
of the Aircraft and the Appraisals -- The Appraisals".
(2) The Loan Trustee with respect to each Indenture has received a reasoned
opinion of Milbank, Tweed, Hadley & McCloy, counsel to the Initial
Purchasers, with respect to the application of Section 1110 of the U.S.
Bankruptcy Code to the lien of such Indenture. The benefit of Section 1110
would not be applicable to the lien on the other Aircraft created under the
Second Indenture. See "Description of Equipment Notes -- Remedies".
(3) For each Class of Certificates, other than the Class D Certificates, the
initial amount of the Liquidity Facility covers three consecutive semiannual
interest payments (without regard to any future payments of principal on
such Certificates). In aggregate for Class A, B and C Certificates, the
initial amount of the Liquidity Facilities is $13,835,580.
11
13
EQUIPMENT NOTES AND THE AIRCRAFT
Set forth below is certain information about the Equipment Notes held in
the Trusts and the Aircraft that (under the related Indenture) secure such
Equipment Notes:
ORIGINAL
PRINCIPAL
AMOUNT OF
AIRCRAFT LATEST EQUIPMENT APPRAISED
REGISTRATION YEAR OF EQUIPMENT NOTE NOTES VALUE (IN
AIRCRAFT TYPE NUMBER MANUFACTURE MATURITY DATE (IN MILLIONS) MILLIONS)(1)
- ---------------------------------- ------------ ----------- -------------- ------------- -------------
Boeing 737-3T0.................... N12322 1986 June 30, 2007 $ 16.11 $ 18.98
Boeing 737-3T0.................... N10323 1986 June 30, 2007 16.11 18.98
Boeing 737-3T0.................... N14324 1986 June 30, 2007 16.11 18.98
Boeing 737-3T0.................... N69333 1986 June 30, 2007 16.13 19.00
Boeing 737-3T0.................... N14334 1986 June 30, 2007 16.13 19.00
Boeing 737-3T0.................... N14335 1986 June 30, 2007 16.13 19.00
McDonnell Douglas MD-82........... N12811 1985 June 30, 2007 13.20 15.55
McDonnell Douglas MD-82........... N15820 1986 June 30, 2007 14.43 17.00
McDonnell Douglas MD-82........... N18833 1987 June 30, 2007 15.32 18.05
McDonnell Douglas MD-82........... N10834 1987 June 30, 2007 15.32 18.05
- ---------------
(1) 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 Agnew, Inc. ("MBA")
(collectively, the "Appraisers"), determined as of May 20, May 16 and June
6, 1997, respectively. 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".
LOAN TO AIRCRAFT VALUE RATIOS
The following table sets forth loan to Aircraft value ratios ("LTVs") for
each Class of Certificates as of the Issuance Date and certain subsequent
Regular Distribution Dates. The LTVs for each Class of Certificates were
obtained for each such Regular Distribution Date by dividing (i) the expected
Pool Balance of such Class of Certificates together in each case with the
expected Pool Balance of all other Classes of Certificates senior in right of
payment to such Class of Certificates under the Intercreditor Agreement
determined immediately after giving effect to the distributions expected to be
made on such Regular Distribution Date, by (ii) the assumed value of all of the
Aircraft (the "Assumed Aggregate Aircraft Value") on such Regular Distribution
Date based on the assumptions set forth below.
The 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 varying amounts
per year, depending on aircraft model and year of manufacture. See "Description
of the Equipment Notes -- Loan to Value Ratios of Equipment Notes". 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. 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. 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".
12
14
The following table also assumes that no early redemption or default in
payment of principal of any Equipment Notes shall occur. The Equipment Notes
with respect to an Aircraft are subject to redemption if an Event of Loss occurs
with respect to such Aircraft or otherwise at Continental's election. See
"Description of the Equipment Notes -- Redemption".
The Equipment Notes issued with respect to each Aircraft are entitled to a
second priority security interest on each of the other Aircraft, and the
following table is compiled on an aggregate basis. However, it should be noted
that, since the second priority security interest would not be entitled to the
benefits of Section 1110 in a reorganization under the Bankruptcy Code of
Continental, the excess proceeds realized from the disposition of any particular
Aircraft might not immediately be available to offset shortfalls on the
Equipment Notes relating to any other Aircraft, but rather would be held as cash
collateral securing all of the Equipment Notes subject to the lien of the Second
Indenture. See "Description of the Equipment Notes -- Remedies". For the LTVs
for the Equipment Notes issued in respect of each individual Aircraft, see
"Description of the Equipment Notes -- Loan to Value Ratios of Equipment Notes".
ASSUMED CLASS A CLASS B CLASS C CLASS D
AGGREGATE CERTIFICATES CLASS A CERTIFICATES CLASS B CERTIFICATES CLASS C CERTIFICATES
AIRCRAFT POOL CERTIFICATES POOL CERTIFICATES POOL CERTIFICATES POOL
DATE VALUE BALANCE LTV BALANCE LTV BALANCE LTV BALANCE
- ----------------- ------------ ----------- ------------ ----------- ------------ ----------- ------------ -----------
June 25, 1997.... $182,590,000 $74,862,000 41.00% $25,563,000 55.00% $27,206,000 69.90% $27,369,000
June 30, 1998.... 177,535,510 72,789,660 41.00 24,855,370 55.00 26,005,070 69.65 21,100,424
June 30, 1999.... 172,481,020 70,717,320 41.00 24,147,744 55.00 23,680,240 68.73 14,716,780
June 30, 2000.... 167,426,530 68,644,877 41.00 23,439,713 55.00 20,504,611 67.25 7,569,162
June 30, 2001.... 162,029,940 66,432,273 41.00 22,684,190 55.00 16,879,034 65.42 0
June 30, 2002.... 153,444,850 62,890,431 40.99 20,610,168 54.42 15,368,504 64.43 0
June 30, 2003.... 144,137,760 58,376,498 40.50 18,475,201 53.32 7,889,264 58.79 0
June 30, 2004.... 134,830,670 52,689,000 39.08 11,076,977 47.29 0 NA 0
June 30, 2005.... 125,523,580 44,576,067 35.51 0 NA 0 NA 0
June 30, 2006.... 115,812,190 26,370,969 22.77 0 NA 0 NA 0
CLASS D
CERTIFICATES
DATE LTV
- ----------------- ------------
<
June 25, 1997.... 84.89%
June 30, 1998.... 81.53
June 30, 1999.... 77.26
June 30, 2000.... 71.77
June 30, 2001.... NA
June 30, 2002.... NA
June 30, 2003.... NA
June 30, 2004.... NA
June 30, 2005.... NA
June 30, 2006.... NA
13
15
CASH FLOW STRUCTURE
Set forth below is a diagram illustrating the structure for the offering of
the Certificates and certain cash flows.
[Diagram omitted, which shows that Continental will pay the Payments on
Equipment Notes to the Loan Trustees. From such Payments on Equipment Notes, the
Loan Trustees will make Equipment Note Payments on the Series A Equipment Notes,
the Series B Equipment Notes, the Series C Equipment Notes and the Series D
Equipment Notes with respect to all Aircraft to the Subordination Agent. From
such Equipment Note Payments, the Subordination Agent will pay Principal,
Premium, if any, and Interest Distributions to the Pass Through Trustee for the
Class A Trust, the Pass Through Trustee for the Class B Trust, the Pass Through
Trustee for the Class C Trust and the Pass Through Trustee for the Class D
Trust, who will pay such Principal, Premium, if any, and Interest Distributions
to the Holders of Class A Certificates, the Holders of Class B Certificates, the
Holders of the Class C Certificates and the Holders of Class D Certificates,
respectively. The Subordination Agent may also receive Advances, if any, and pay
Reimbursements, if any, to the Liquidity Providers.]
- ---------------
(1) Each Aircraft is subject to a separate Indenture providing for a first
priority security interest in such Aircraft, and the Equipment Notes issued
with respect to each Aircraft are pursuant to the Second Indenture entitled
to a second priority security interest in each of the other Aircraft.
(2) For the Class A Certificates, the Class B Certificates and the Class C
Certificates, the initial amount of the Liquidity Facility for each such
Class covers three consecutive semiannual interest payments with respect to
such Class. There is no Liquidity Facility for the Class D Certificates.
14
16
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...................... June 30 and December 30, commencing December 30,
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 will be distributed by the
Trustee to the holders of the Certificates (the
"Certificateholders") of such Trust, subject to the
provisions of the Intercreditor Agreement. Such
payments of interest are scheduled to be received
by the Trustee of each Trust on June 30 and
December 30 of each year, commencing on December
30, 1997. Payments of principal of the Equipment
Notes are scheduled to be received on June 30 of
each year, commencing on June 30, 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. 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".
PTC Events of Default...... A "PTC Event of Default" under each Pass Through
Trust Agreement means the failure to pay within 10
Business Days of the due date thereof: (i) the
outstanding Pool Balance of the applicable Class of
Certificates on the Final Maturity Date for such
Class or (ii) interest due on such Certificates on
any distribution date (unless, in the case of the
Class A, B or C Certificates, the Subordination
Agent shall have made Interest Drawings with
respect thereto in an 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 December 30,
2008, for the Class B Certificates is December 30,
2006, for the Class C Certificates is December 30,
2005 and for the Class D Certificates is June 30,
2001. 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, (ii) the Class C Certificateholders
shall have the right to purchase all, but not less
than all, of the Class A Certificates and the Class
B Certificates and (iii) the Class D
Certificateholders shall have the right to purchase
all, but not less than all, of the Class A
Certificates, the Class B Certificates and the
Class C Certificates, in each case at a purchase
price equal to the Pool Balance of
15
17
the relevant Class or Classes of Certificates plus
accrued and unpaid interest thereon to the date of
purchase without premium but including any other
amounts due to the Certificateholders of such Class
or Classes.
"Triggering Event" means (x) the occurrence of an
Indenture Default under all Indentures resulting in
a PTC Event of Default with respect to the most
senior Class of Certificates then outstanding, (y)
the acceleration of all of the outstanding
Equipment Notes or (z) certain bankruptcy or
insolvency events involving Continental.
Equipment Notes
(a) Interest............. The Equipment Notes held in each Trust 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 June 30
and December 30 of each year, commencing on
December 30, 1997, 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 June 30 of
each year, commencing on June 30, 1998, 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 Indenture and Second
Indenture, 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 December 30, 2004
in the case of the Series A Equipment Notes,
December 30, 2003 in the case of the Series B
Equipment Notes, June 30, 2002 in the case of the
Series C Equipment Notes and June 30, 2000 in the
case of the Series D Equipment Notes (with respect
to any such Series, its "Premium Termination
Date"), a Make-Whole Premium. See "Description of
the Equipment Notes -- Redemption" for a
description of the manner of computing such
Make-Whole Premium and the circumstances under
which the Equipment Notes may be so redeemed.
(d) Security............... The Equipment Notes issued with respect to each
Aircraft are secured by a first priority security
interest in such Aircraft and by a second priority
security interest in each of the other Aircraft.
The Indentures include cross-default provisions,
and if an Indenture Default has oc-
16
18
curred for the Equipment Notes issued with respect
to one or more Aircraft, then an Indenture Default
will have occurred for the Equipment Notes issued
with respect to the remaining Aircraft, and
remedies will be exercisable under the Indentures
and the Second Indenture with respect to all
Aircraft. If the Equipment Notes issued under an
Indenture and other obligations secured thereunder
and then due have been paid in full, the applicable
Aircraft will be released from the lien of such
Indenture and, so long as no Indenture Default or
certain other defaults exist under any other
Indenture at such time, will be released from the
lien of the Second Indenture. See "Description of
the Equipment Notes -- Security" and "-- Indenture
Defaults, Notice and Waiver".
The Equipment Notes are direct obligations of
Continental. See "Description of the Equipment
Notes -- General".
(e) Section 1110
Protection................. The Loan Trustee with respect to each Indenture has
received a reasoned opinion of Milbank, Tweed,
Hadley & McCloy, counsel to the Initial Purchasers,
that, subject to the assumptions and qualifications
contained therein, such Loan Trustee would be
entitled to the benefits of Section 1110 of the
U.S. Bankruptcy Code with respect to the airframe
and engines comprising the Aircraft that is subject
to the lien of such Indenture were Continental to
become a debtor in a case under Chapter 11 of the
Bankruptcy Code. See "Description of the Equipment
Notes -- Remedies" for a description of such
opinion and certain assumptions and qualifications
contained therein. The benefits of Section 1110
would not be applicable to the lien on the other
Aircraft created under the Second Indenture.
(f) Ranking................ Series B Equipment Notes issued in respect of any
Aircraft are subordinated in right of payment to
Series A Equipment Notes issued in respect of such
Aircraft; Series C Equipment Notes issued in
respect of such Aircraft are subordinated in right
of payment to such Series B Equipment Notes; and
Series D Equipment Notes issued in respect of such
Aircraft are subordinated in right of payment to
such Series C Equipment Notes. On each Distribution
Date, (i) payments of interest and principal due on
Series A Equipment Notes issued in respect of any
Aircraft will be made prior to payments of interest
and principal due on Series B Equipment Notes
issued in respect of such Aircraft, (ii) payments
of interest and principal due on such Series B
Equipment Notes will be made prior to payments of
interest and principal due on Series C Equipment
Notes issued in respect of such Aircraft and (iii)
payments of interest and principal due on such
Series C Equipment Notes will be made prior to
payments of interest and principal due on Series D
Equipment Notes issued in respect of such Aircraft.
Liquidity Facilities....... The 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 (other than the Class
D Trust). Under the Liquidity Facility with respect
to any Trust (other than the Class D Trust), the
Liquidity Provider 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
17
19
additional margin specified by the Registration
Rights Agreement, if applicable) for such
Certificates (the "Stated Interest Rates"). The
initial Required Amount under the Liquidity
Facilities for the Class A Certificates, the Class
B Certificates, and the Class C Certificates is
$8,101,025, $2,766,630, and $2,967,925,
respectively. Interest Drawings under the relevant
Liquidity Facility will be made promptly after any
Regular Distribution Date if, after giving effect
to the subordination provisions of the
Intercreditor Agreement, there are insufficient
funds available to the Subordination Agent to pay
interest on any Class A, B or C Certificates;
provided, however, that on any date the maximum
amount available under the Liquidity Facility with
respect to any Trust (other than the Class D Trust)
to fund any shortfall in interest due on the
Certificates of such Trust will not exceed the
Maximum Available Commitment under such Liquidity
Facility. The "Maximum Available Commitment" at any
time under each Liquidity Facility is an amount
equal to the then Required Amount of such Liquidity
Facility less the aggregate amount of each Interest
Drawing outstanding under such Liquidity Facility
at such time, provided that following a Downgrade
Drawing (defined below), a Final Drawing (defined
below) or (if applicable with respect to a
Replacement Facility (defined below)) a
Non-Extension Drawing (defined below) under a
Liquidity Facility, the Maximum Available
Commitment shall be zero. The Liquidity Facility
for any Class of Certificates does not provide for
drawings thereunder to pay for principal of or
premium on the Certificates of such Class, any
interest on the Certificates of such Class in
excess of the Stated Interest Rates, or principal
of or interest or premium on the Certificates of
any other Class.
Upon each Interest Drawing under any Liquidity
Facility, the Subordination Agent 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 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
18
20
obligations under the Indenture related to such
Equipment Note and (ii) any payment default
occurring after the date of the order of relief in
such proceeding shall not be taken into
consideration if such payment default is cured
under Section 1110(a)(1)(B) of the 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 the 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
30 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.
Under certain circumstances described in
"Description of the Liquidity
Facilities -- Liquidity Events of Default", the
Liquidity Provider may cause a final drawing (the
"Final Drawing") to be made under a Liquidity
Facility in an amount equal to the then Maximum
Available Commitment thereunder. The Subordination
Agent 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 Provider.
Continental may, at its option subject to certain
limitations, arrange for a Replacement Facility to
replace the Liquidity Facility (or any prior
Replacement 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 (defined below) under such
Liquidity Facility (or prior Replacement Facility),
the funds on deposit with respect to such Liquidity
Facility (or prior Replacement Facility) in the
Cash Collateral Account for such Trust will be
returned to the Liquidity Provider being replaced.
The initial Liquidity Facility for each Class of
Certificates (other than the Class D Certificates)
is scheduled to expire on the fifteenth day after
the Final Maturity Date for such Class of
Certificates. A Replacement Facility may, however,
be scheduled to expire on an earlier date. If a
Replacement Facility for a Class of Certificates is
scheduled to expire prior to the date that is
fifteen days after the Final Maturity Date for such
Class, the Intercreditor Agreement provides for the
replacement or extension of such replacement
facility for 364 days. If such Replacement Facility
cannot be so replaced or extended by the date that
is 25 days prior to the then scheduled expiration
date of such Replacement Facility, such Replacement
Facility will be drawn in full up to the then
maximum
19
21
available commitment thereunder (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 Replacement Facility would be
used.
Notwithstanding the subordination provisions of the
Intercreditor Agreement, the holders of the
Certificates issued by each Trust (other than the
Class D Trust) will be entitled to receive and
retain the proceeds of drawings under the Liquidity
Facility (and any Replacement Facility) for such
Trust. See "Description of the Liquidity
Facilities".
Intercreditor Agreement
(a) Subordination........ The Trustees, the Liquidity Provider 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 (whether under any Indenture or the Second
Indenture) 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; (5) payment of Expected Distributions
to the holders of Class D Certificates and (6)
payment of certain fees and expenses of the
Subordination Agent and the Trustees.
"Expected Distributions" means, with respect to the
Certificates of any Trust on any Distribution Date
(the "Current Distribution Date"), the sum of (x)
accrued and unpaid interest on such Certificates
and (y) the difference between (A) the Pool Balance
of such Certificates as of the immediately
preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date,
the original aggregate face amount of the
Certificates of such Trust), and (B) the Pool
Balance of such Certificates as of the Current
Distribution Date calculated on the basis that (i)
the principal of the Equipment Notes held in such
Trust has been paid when due (whether at stated
maturity, 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.
(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
20
22
certain other parties in payment of the
Administration Expenses and to the Liquidity
Provider in payment of the Liquidity Obligations;
(2) to the holders of Class A Certificates in
payment of Adjusted Expected Distributions; (3) to
the holders of Class B Certificates in payment of
Adjusted Expected Distributions; (4) to the holders
of Class C Certificates in payment of Adjusted
Expected Distributions; and (5) to the holders of
Class D Certificates in payment of Adjusted
Expected Distributions.
"Adjusted Expected Distributions" means, with
respect to the Certificates of any Trust on any
Distribution Date, the sum of (1) accrued and
unpaid interest on such Certificates and (2) the
greater of:
(A) the difference between (x) the Pool Balance of
such Certificates as of the immediately preceding
Distribution Date (or, if the Current Distribution
Date is the first Distribution Date, the original
aggregate face amount of the Certificates of such
Trust) 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 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, and
(B) the amount of the excess, if any, of (i) the
amount described in sub-clause (A)(x), 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.
"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 on such senior
Class or Classes.
"LTV Collateral Amount" of any Aircraft for any
Class of Certificates means, as of any Distribution
Date, the lesser of (i) the LTV Ratio for such
Class of Certificates multiplied by the Appraised
Current Market
21
23
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 Indenture, the
amount of the insurance proceeds paid to the
related Loan Trustee and/or the Second Mortgagee in
respect thereof to the extent then held by such
Loan Trustee and/or the Second Mortgagee (and/or on
deposit in the Special Payments Account) or payable
to such Loan Trustee and/or the Second Mortgagee 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
41.00%, for the Class B Certificates 55.00%, for
the Class C Certificates 69.90% and for the Class D
Certificates 84.89%.
"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 such Aircraft).
(b) Intercreditor Rights... Pursuant to the Intercreditor Agreement, the
Trustees and the Liquidity Provider have agreed
that, with respect to any Indenture and (in the
case of clause (b) below) the Second Indenture at
any given time, the Loan Trustee or the Second
Mortgagee, as the case may be, 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
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 under such
Indenture (including exercising remedies
thereunder, such as acceleration of such Equipment
Notes or foreclosing the lien on the Aircraft
securing such Equipment Notes) or the Second
Indenture, by the Controlling Party insofar as an
Indenture Default under such Indenture has occurred
and is continuing.
"Controlling Party" with respect to any Indenture
and the Second Indenture means: (w) the Trustee for
the Class A Trust (the "Class A Trustee"); (x) upon
payment of Final Distributions to the holders of
Class A Certificates, the Trustee for the Class B
Trust (the "Class B Trustee"); (y) upon payment of
Final Distributions to the holders of Class B
Certificates, the Trustee for the Class C Trust
(the "Class C Trustee"); and (z) upon payment of
Final Distributions to the holders of Class C
Certificates, the Trustee for the Class D Trust
(the "Class D Trustee"). See "Description of the
New Certificates -- Indenture Defaults and Certain
Rights Upon an Indenture Default" for a description
of the rights of the Certificateholders of each
Trust to direct the respective Trustees.
Notwithstanding the foregoing, at any time after 18
22
24
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 (with
respect to any Replacement Facility) a
Non-Extension Drawing) and remain unreimbursed and
(y) the date on which all Equipment Notes shall
have been accelerated, the Liquidity Provider shall
have the right to become the Controlling Party with
respect to such Indenture. 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".
"Final Distributions" means, with respect to the
Certificates of any Trust on any Distribution Date,
the sum of (x) accrued and unpaid interest on such
Certificates and (y) the Pool Balance of such
Certificates as of the immediately preceding
Distribution Date.
(i) Upon the occurrence and during the continuation
of any Indenture Default under any Indenture, the
Controlling Party may accelerate and sell all (but
not less than all) of the Equipment Notes issued
under such Indenture to any person, subject to the
provisions of paragraph (ii) below. The proceeds of
such sale will be distributed pursuant to the
provisions of the Intercreditor Agreement.
(ii) So long as any Certificates are outstanding,
during nine months after the earlier of (x) the
acceleration of the Equipment Notes under any
Indenture or (y) the bankruptcy or insolvency of
Continental, without the consent of each Trustee,
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.
"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
and for all other purposes whatsoever. Therefore,
none of the Trustees, Continental, the Loan
Trustees, the Liquidity Provider or the
Subordination Agent has any direct responsibility
or liability for distributions or payments to
owners of beneficial interests in the Certificates
(the "Certificate Owners"). Distributions by the
Trustee in respect of Certificates registered in
23
25
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".
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, Class C or
Class D Certificates, except that such Certificates
may be acquired with the assets of an insurance
company general account that may be deemed to
constitute Plan assets if the conditions of
Prohibited Transaction Class Exemption ("PTCE")
95-60 are satisfied. By its acceptance of a Class
B, Class C or Class D Certificate, each
Certificateholder will be deemed to have
represented and warranted that either (i) no Plan
assets have been used to purchase such Certificate
or (ii) the purchase and holding of such
Certificate is exempt from the prohibited
transaction restrictions of ERISA and 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 Provider.... Short Term.......................... P-1 A-1+
Threshold Rating.................... Short Term.......................... P-1 A-1
24
26
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 which is derived from the audited
consolidated financial statements incorporated by reference in the Prospectus.
The consolidated financial data of the Company for the three and six months
ended June 30, 1997 and 1996 is derived from its unaudited consolidated
financial statements incorporated by reference in the Prospectus, which include
all adjustments (consisting solely of normal recurring accruals) that the
Company considers necessary for the fair presentation of the financial position
and results of operations for these periods. Operating results for the three and
six months ended June 30, 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.
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------ ------------------ ---------------------------------
1997 1996 1997 1996 1996 1995 1994
------- ------- ------- ------- ------- ------- -------
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA AND RATIOS)
FINANCIAL DATA -- OPERATIONS:
Operating Revenue.............. $ 1,786 $ 1,639 $ 3,484 $ 3,128 $ 6,360 $ 5,825 $ 5,670
Operating Expenses............. 1,555 1,410 3,107 2,779 5,835(1) 5,440(2) 5,681
------- ------- ------- ------- ------- ------- -------
Operating Income (Loss)........ 231 229 377 349 525 385 (11)
Nonoperating Income Expense,
net.......................... (23) (23) (45) (48) (97) (75)(3) (640)(4)
------- ------- ------- ------- ------- ------- -------
Income (Loss) before Income
Taxes, Minority Interest and
Extraordinary Loss........... 208 206 332 301 428 310 (651)
Net Income (Loss).............. $ 128 $ 167 $ 202 $ 255 $ 319 $ 224 $ (613)
======= ======= ======= ======= ======= ======= =======
Earnings (Loss) per Common and
Common Equivalent Share(5)... $ 2.01 $ 2.53 $ 3.13 $ 3.90 $ 4.87 $ 3.60 $(11.88)
======= ======= ======= ======= ======= ======= =======
Earnings (Loss) per Common
Share Assuming Full
Dilution(5).................. $ 1.64 $ 2.04 $ 2.58 $ 3.25 $ 4.11 $ 3.15 $(11.88)
======= ======= ======= ======= ======= ======= =======
Ratio of Earnings to Fixed
Charges(6)................... 2.48 2.57 2.18 2.13 1.81 1.53 --
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------ ------------------ -------------------------------
1997 1996 1997 1996 1996 1995 1994
------- ------- ------- ------- ------- ------- -------
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA AND RATIOS)
OPERATING DATA (JET OPERATIONS
ONLY):(7)
Revenue passenger miles
(millions)(8).................. 11,922 10,527 22,813 20,279 41,914 40,023 41,588
Available seat miles
(millions)(9).................. 16,486 15,152 32,318 29,703 61,515 61,006 65,861
Passenger load factor(10)........ 72.3% 69.5% 70.6% 68.3% 68.1% 65.6% 63.1%
Breakeven passenger load
factor(11)..................... 62.4% 59.4% 62.3% 60.2% 60.7%(14) 60.8% 62.9%
Passenger revenue per available
seat mile (cents)(12).......... 9.31 9.35 9.30 9.13 8.93 8.20 7.22
Operating cost per available seat
mile (cents)(13)............... 8.90 8.81 9.08 8.86 8.77(14) 8.36 7.86
Average yield per revenue
passenger mile (cents)(15)..... 12.87 13.46 13.17 13.37 13.10 12.51 11.44
Average length of aircraft flight
(miles)........................ 944 888 935 882 896 836 727
(See footnotes on the following page.)
25
27
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
(IN MILLIONS OF DOLLARS)
FINANCIAL DATA--BALANCE SHEET:
Assets:
Cash and Cash Equivalents, including restricted cash and
cash equivalents of $74 and $76, respectively(16).................... $ 994 $1,061
Other Current Assets................................................... 685 573
Total Property and Equipment, Net...................................... 1,885 1,596
Routes, Gates and Slots, Net........................................... 1,454 1,473
Other Assets, Net...................................................... 498 503
------ ------
Total Assets................................................. $5,516 $5,206
====== ======
Liabilities and Stockholders' Equity:
Current Liabilities.................................................... $2,324 $2,104
Long-term Debt and Capital Leases...................................... 1,581 1,624
Deferred Credits and Other Long-term Liabilities....................... 655 594
Minority Interest(17).................................................. 15 15
Continental-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust Holding Solely Convertible Subordinated
Debentures(18)....................................................... 242 242
Redeemable Preferred Stock(8).......................................... -- 46
Common Stockholders' Equity............................................ 699 581
------ ------
Total Liabilities and Stockholders' Equity................... $5,516 $5,206
====== ======
- ---------------
(1) The $128 million fleet disposition charge recorded in 1996 is associated
primarily with the Company's 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) In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 -- "Earnings per Share" ("SFAS
128") which specifies the computation, presentation and disclosure
requirements for earnings per share ("EPS"). SFAS 128 replaces the
presentation of primary and fully diluted EPS pursuant to Accounting
Principles Board Opinion No. 15 -- "Earnings per Share" ("APB 15") with the
presentation of basic and diluted EPS. The Company is required to adopt
SFAS 128 with its December 31, 1997 financial statements and restate all
prior period EPS data. The Company will continue to account for EPS
pursuant to APB 15 until that time.
26
28
UNDER SFAS 128, THE COMPANY'S BASIC AND DILUTED EPS WERE:
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30, FOR THE YEARS ENDED
-------------- -------------- -------------------------
1997 1996 1997 1996 1996 1995 1994
----- ----- ----- ----- ----- ----- -------
Basic EPS........................ $2.22 $3.05 $3.50 $4.65 $5.75 $4.07 $(11.88)
Diluted EPS...................... $1.63 $2.09 $2.58 $3.31 $4.17 $3.37 $(11.88)
(6) For purposes of calculating this ratio, earnings consist of earnings before
taxes, minority interest and extraordinary loss plus interest expense (net
of capitalized interest), the portion of rental expense representative of
interest expense and amortization on previously capitalized interest. Fixed
charges consist of interest expense and the portion of rental expense
representative of interest expense. For the year ended December 31, 1994,
earnings were inadequate to cover fixed charges and the coverage deficiency
was $667 million.
(7) Includes operating data for CMI, but does not include operating data for
Express' regional jet operations or turboprop operations.
(8) The number of scheduled miles flown by revenue passengers.
(9) The number of seats available for passengers multiplied by the number of
scheduled miles those seats are flown.
(10) Revenue passenger miles divided by available seat miles.
(11) The percentage of seats that must be occupied by revenue passengers in
order for the airline to break even on an income before income taxes basis,
excluding nonoperating items.
(12) Passenger revenue divided by available seat miles.
(13) Operating expenses divided by available seat miles.
(14) Excluded a $128 million fleet disposition charge. See Note (1) for
description of the fleet disposition charge.
(15) The average revenue received for each mile a revenue passenger is carried.
(16) Restricted cash and cash equivalents agreements relate primarily to
workers' compensation claims and the terms of certain other agreements.
(17) In July 1997, the Company purchased the minority interest holder's 9%
interest in Air Micronesia, Inc., the parent of CMI. See "Risk
Factors -- Risk Factors Relating to the Company".
(18) The sole assets of such 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.
27
29
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 is 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 and may not have the flexibility to respond to changing
economic conditions or to exploit new business opportunities.
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 June 30, 1997, Continental had approximately $1.9 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 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").
As of June 30, 1997, Continental had $920 million in cash and cash
equivalents (excluding restricted cash and cash equivalents of $74 million).
Continental has significant encumbered assets.
For 1997, Continental expects to incur cash expenditures under operating
leases relating to aircraft of approximately $631 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 September 18, 1997, the Company had firm commitments with The Boeing
Company ("Boeing") to take delivery of a total of 122 principally narrowbody jet
aircraft during the years 1997 through 2003 with options for an additional 85
aircraft (exercisable subject to certain conditions). These aircraft will
replace older, less efficient Stage 2 aircraft and allow for growth of
operations. In addition, the Company has recently signed an agreement with
Boeing to purchase 35 new widebody jet aircraft. This new order consists of five
firm Boeing 777-200 aircraft and 30 firm Boeing 767-400ER aircraft, with options
for six additional 777 aircraft. The new widebody aircraft will replace
Continental's fleet of DC10-10 and DC10-30 aircraft, which will be retired as
the new Boeing aircraft are delivered, and will also be used to expand the
airline's international and transcontinental service. The ten firm delivery 777
aircraft (including five aircraft the Company already had on order, the
deliveries of which will be accelerated) will be delivered in September 1998
through May 1999, and the thirty firm delivery 767 aircraft will be delivered
starting in mid-2000 through the end of 2004. In connection with this new order,
the Company will obtain the flexibility to substitute certain aircraft on order
with Boeing and will obtain other benefits. The Company currently anticipates
substituting 777 aircraft for certain of the 767 aircraft. The Company's
agreement with Boeing provides that the Company will purchase from Boeing the
carrier's requirements for new jet aircraft (other than regional jets) over the
next twenty years, subject to certain conditions. However, Boeing has agreed
with the European Commission not to
28
30
enforce such provision. The Company requested a business offer from Boeing which
would include the requirements commitment in order to obtain more favorable
terms and flexibility.
The estimated aggregate cost of the Company's firm commitments for the 122
Boeing aircraft previously ordered and the 35 widebody aircraft included in the
recent Boeing agreement is approximately $7 billion. The Company has completed
or has third party commitments for a total of approximately $548 million in
financing for its future narrowbody Boeing deliveries, and has commitments or
letters of intent from various sources for backstop financing for approximately
one-fourth of the anticipated acquisition cost of its future narrowbody and
widebody Boeing deliveries. The Company currently plans on financing the new
Boeing aircraft with enhanced equipment trust certificates or similar financing
and lease equity, subject to availability and market conditions. However,
further financing will be needed to satisfy the Company's capital commitments
for other aircraft and aircraft-related expenditures such as engines, spare
parts, simulators and related items. 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 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 with
several outside parties to lease three, and purchase one DC-10-30 aircraft and
will take delivery of such aircraft in 1997.
In September 1996, Express placed an order for 25 firm EMB-145ER regional
jets, with options for an additional 175 aircraft. In June 1997, Express
exercised its option to order 25 of such option aircraft. Express now has
options for an additional 150 regional jets exercisable at the election of the
Company over the next 12 years. 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. Express has taken delivery of 12 of the firm aircraft
through September 18, 1997 and will take delivery of the remaining 38 firm
aircraft through the third quarter of 1999. The Company expects to account for
all of these aircraft as operating leases.
In July 1997, Continental entered into a $575 million credit facility (the
"Credit Facility"), including a $275 million five-year term loan. The proceeds
of the term loan were loaned by Continental to its wholly owned subsidiary, Air
Micronesia, Inc. ("AMI"), the parent of CMI, reloaned to CMI and used by CMI to
prepay its existing secured term loan. In connection with this prepayment,
Continental recorded a $4 million after-tax extraordinary charge to consolidated
earnings in the third quarter of 1997. The Credit Facility also includes a $225
million revolving credit facility and a $75 million seven-year term loan for
general corporate purposes.
The Credit Facility is secured by substantially all of CMI's assets (other
than aircraft subject to other financing arrangements) but does not contain any
financial covenants relating to CMI other than covenants restricting CMI's
incurrence of certain indebtedness and pledge or sale 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 and AMI's stock in CMI) are
pledged as collateral for loans to Continental under the Credit Facility. CMI
and AMI have guaranteed Continental's obligations under the Credit Facility. In
addition, the Credit Facility contains certain financial covenants applicable to
Continental comparable to those contained in the Facility discussed below and
prohibits Continental from granting a security interest on certain of its
international route authorities and domestic slots.
In July 1997, the Company purchased the rights of United Micronesia
Development Association, Inc. ("UMDA") to receive future payments under a
services agreement between UMDA and CMI (pursuant to which CMI was to pay UMDA
approximately 1% of the gross revenues of CMI, as defined, through January 1,
2012, which payment by CMI to UMDA totaled $6 million in 1996) and UMDA's 9%
interest in AMI, terminated the Company's obligations to UMDA under a settlement
agreement entered into in 1987, and terminated substantially all of the other
contractual arrangements between the Company, AMI and CMI, on the one hand, and
UMDA on the other hand, for an aggregate consideration of $73 million.
29
31
In April 1997, Continental consummated a $160 million floating rate (LIBOR
plus 1.125% or prime) secured revolving credit facility (the "Facility"). The
revolving loans made under the Facility will be used for the purpose of making
certain predelivery payments to Boeing for new Boeing aircraft to be delivered
through December 1999. The Facility contains certain financial covenants,
including maintenance of a minimum fixed charge ratio, a minimum net worth and a
minimum unrestricted cash balance. Continental is also restricted from making
cash dividends and certain other payments.
In March 1997, Continental completed an offering of $707 million of pass
through certificates. The pass through certificates are not direct obligations
of, or guaranteed by, Continental and are therefore not included in the
consolidated financial statements, incorporated by reference herein. The cash
proceeds from the transaction were deposited with an escrow agent and will be
used to finance (through either leveraged leases or secured debt financings) the
debt portion of the acquisition cost of up to 30 new aircraft from Boeing
scheduled to be delivered to Continental through February 1998. In connection
therewith, owner participants have committed to approximately $184 million of
equity financing to be used in leveraged leases of 27 of such aircraft. If any
funds remain as deposits with the escrow agent for such pass through
certificates at the end of the delivery period (which may be extended to June
1998), such funds will be distributed back to the certificate holders. Such
distribution will include a make-whole premium payable by Continental.
Management believes that the likelihood that the Company would be required to
pay a material make-whole premium is remote.
In June 1997, the Company acquired 10 aircraft previously leased by it. The
debt financing for the acquisition of the six Boeing 737-300 aircraft and the
four McDonnell Douglas MD-82 aircraft was funded by the private placement of
$155 million of pass through certificates. The pass through certificates were
issued by separate pass through trusts that acquired equipment trust notes
issued on a recourse basis by Continental.
The Company has announced plans to expand its facilities at its Hopkins
International Airport hub in Cleveland, which expansion is expected to be
completed in the first quarter of 1999. 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 connection therewith, the Company
expects to enter into long-term leases with the City of Cleveland 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 are being 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.
Continental's History of Operating Losses
Although Continental recorded net income of $202 million for the six months
ended June 30, 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 14.1% for the six months ended June 30, 1997 and
13.3% for the year ended December 31, 1996), significant changes in fuel costs
would materially affect the Company's operating results. Fuel prices continue to
be susceptible to international events, and the Company cannot predict near or
longer-term fuel prices. The Company enters
30
32
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
In April 1997, the Company began collective bargaining agreement
negotiations with its Continental Airlines pilots, whose contract became
amendable in July 1997, and Express pilots, whose contract became amendable in
October 1997. Negotiations are in progress to amend these contracts. The Company
believes that mutually acceptable agreements can be reached with such employees,
although the ultimate outcome of the negotiations is unknown at this time. The
Company's mechanics and related employees recently voted to be represented by
the International Brotherhood of Teamsters (the "Teamsters"). The Company does
not believe that the Teamsters' union representation will be material to the
Company. In September 1997, the Company announced that it intends to bring all
employees to industry standard wages (the average of the top ten air carriers as
ranked by the Department of Transportation excluding Continental) within the
next 36 months. The Company stated that it would phase in wage increases over
the 36-month period as its revenue, interest rates and rental rates reached
industry standards. The Company estimates that the increased wages will
aggregate approximately $500 million over the 36-month period.
Certain Tax Matters
At December 31, 1996 the Company had estimated net operating loss
carryforwards ("NOLs") of $2.3 billion for federal income tax purposes that will
expire through 2009 and federal investment tax credit carry forwards of $45
million that will expire through 2001.
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. The
Company consummated several built-in-gain transactions, which resulted in the
realization of tax benefits related to NOLs and investment tax credit
carryforwards attributable to the Company's predecessor that were previously
recorded. To the extent the Company consummates additional built-in-gain
transactions, such benefits will reduce the valuation allowance and
reorganization value in excess of amounts allocable to identifiable assets. If
such reorganization value is exhausted, reductions in the valuation allowance
would decrease other intangibles.
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 5.33% for October 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
$130 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 and 1997 to date have 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
31
33
past four quarters as compared to similar periods a year ago, and are not
expected to improve materially absent a stronger yen or reduced fuel costs.
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. Such options historically have not had a
material effect on the Company's results of operations or financial condition.
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.
Principal Stockholder
As of September 18, 1997, Air Partners, L.P., a Texas limited partnership
and major stockholder of the Company ("Air Partners"), held approximately 9.4%
of the common equity interest and 40.8% of the general voting power of the
Company. If all the remaining warrants held by Air Partners had been exercised
on September 18, 1997, approximately 13.8% of the common equity interest and
51.7% 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
subsequently, 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.
32
34
Management believes that the Company benefited significantly from the
expiration of the aviation trust fund tax (the "ticket tax") on December 31,
1995. The ticket tax was reinstated on August 27, 1996, expired on December 31,
1996 and was reinstated again on March 7, 1997. Congress recently passed tax
legislation reimposing and significantly modifying the ticket tax. The
legislation includes the imposition of new excise tax and segment fee tax
formulas to be phased in over a multi-year period, an increase in the
international departure tax and the imposition of a new arrivals tax, and the
extension of the ticket tax to cover items such as the sale of frequent flyer
miles. 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 reimposition of the ticket tax, nor the benefit realized by its
expiration, can be precisely determined.
Additional laws and regulations have been proposed from time to time that
could significantly increase the cost of airline operations by imposing
additional requirements or restrictions on operations. 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, excise and similar taxes, 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. 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 and should not in any event be relied upon as a measure of realizable
value; the proceeds
33
35
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 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 Trust Agreement and the
applicable Indenture would be sufficient to satisfy in full payments due on the
Certificates.
Priority of Distributions; Subordination
Certain provisions of the Intercreditor Agreement, which provides for the
subordination of the Class B Certificates to the Class A Certificates, the
subordination of the Class C Certificates to the Class B Certificates and the
subordination of the Class D Certificates to the Class C Certificates, may
result in the holders of subordinated Classes of Certificates receiving less
than the full amount due to them after the occurrence of a Triggering Event even
if all of the Equipment Notes are paid in full.
Pursuant to the Intercreditor Agreement to which the Trustees, the
Subordination Agent and the Liquidity Provider 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 Provider; (2) payment of Expected Distributions to the holders
of Class A Certificates; (3) payment of Expected Distributions to the holders of
Class B Certificates; (4) payment of Expected Distributions to the holders of
Class C Certificates; (5) payment of Expected Distributions to the holders of
Class D Certificates; and (6) payment of certain fees and expenses of the
Subordination Agent and the Trustees.
In addition, upon the occurrence of a Triggering Event and at all times
thereafter, all payments received by the Subordination Agent in respect of the
Equipment Notes and certain other payments will be distributed under the
Intercreditor Agreement in the following order: (1) to the Subordination Agent,
the Trustee and certain other parties in payment of the Administration Expenses
and to the Liquidity Provider in payment of the Liquidity Obligations; (2) to
the holders of Class A Certificates in payment of Adjusted Expected
Distributions; (3) to the holders of Class B Certificates in payment of Adjusted
Expected Distributions; (4) to the holders of Class C Certificates in payment of
Adjusted Expected Distributions; and (5) to the holders of Class D Certificates
in payment of Adjusted Expected Distributions.
Accordingly, the priority of distributions after a payment default under
any Equipment Note will have the effect in certain circumstances of requiring
the distribution to more senior Classes of Certificates of payments received in
respect of one or more junior series of Equipment Notes. If this should occur,
the interest accruing on the remaining Equipment Notes would in the aggregate be
less than the interest accruing on the remaining Certificates because such
Certificates include a relatively greater proportion of junior Classes with
relatively higher interest rates. As a result of this possible interest
shortfall, the holders of one or more junior Classes of Certificates may not
receive the full amount due them after a payment default under any Equipment
Note even if all Equipment Notes are eventually paid in full.
Control over Collateral; Sale of Collateral
Pursuant to the Intercreditor Agreement, the Trustees and the Liquidity
Provider have agreed that, with respect to any Indenture or (in the case of
clause (b) below) the Second 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 under such Indenture (including acceleration of such
Equipment Notes or foreclosing the lien on the Aircraft securing such Equipment
Notes) and the Second Indenture insofar as an Indenture Default has occurred and
is continuing under such Indenture, 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
34
36
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, the
Liquidity Provider will have the right to elect to become the Controlling Party
with respect to such Indenture. For purposes of giving effect to the foregoing,
the Trustees (other than the Controlling Party) shall irrevocably agree, and the
Certificateholders (other than the Certificateholders represented by the
Controlling Party) shall be deemed to agree by virtue of their purchase of
Certificates, to exercise their voting rights as directed by the Controlling
Party. For a description of certain limitations on the Controlling Party's
rights to exercise remedies, see "Description of the Equipment
Notes -- Remedies".
Upon the occurrence and during the continuation of any Indenture Default
under any Indenture, the Controlling Party may accelerate and, subject to the
provisions 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 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, 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.
The Equipment Notes issued with respect to each Aircraft are entitled to a
second priority security interest on each of the other Aircraft as to which
Equipment Notes have been issued. However, since the second priority security
interest would not be entitled to the benefits of Section 1110 in a
reorganization under the Bankruptcy Code of Continental, the excess proceeds
realized from the disposition of any particular Aircraft might not immediately
be available to offset shortfalls on the Equipment Notes relating to any other
Aircraft, but rather would be held as cash collateral securing all of the
Equipment Notes subject to the lien of the Second Indenture. See "Description of
the Equipment Notes -- Remedies".
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 both 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 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 used to purchase Equipment
Notes issued by Continental to finance the purchase of the Aircraft.
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,
35
37
1993 through December 31, 1993, for the years ended December 31, 1994, 1995 and
1996 and for the six months ended June 30, 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 June 30, 1996 and 1997 was
2.57 and 2.48, and for the six months ended June 30, 1996 and 1997 was 2.13 and
2.18, 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
representative of 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 June 17, 1997, between the Company and the
Initial Purchasers, the Initial Purchasers and their respective assignees became
entitled to the benefits of the Registration Rights Agreement.
Under the Registration Rights Agreement, the Company is obligated to use
its best efforts to (i) file the Registration Statement of which this Prospectus
is a part for a registered exchange offer with respect to an issue of new
certificates identical in all material respects to the Old Certificates within
120 days after June 25, 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
36
38
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 (as defined on page 2 of this prospectus), 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."
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 shall be increased by 0.50% from and including such 210th day to
but excluding the earlier
37
39
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 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
January 21, 1998, the interest rate borne by the Equipment Notes is subject to
increase. See "-- General".
In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
record holders of Old Certificates an announcement thereof, each prior to 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Such announcement may state that the Company is
extending the Exchange Offer for a specified period of time.
The Company reserves the right (i) to delay acceptance of any Old
Certificates, to extend the Exchange Offer or to terminate the Exchange Offer
and not permit acceptance of Old Certificates not previously accepted if any of
the conditions set forth herein under "-- Conditions" shall have occurred and
shall not have been waived by the Company, by giving oral or written notice of
such delay, extension or termination to the Exchange Agent, or (ii) to amend the
terms of the Exchange Offer in any manner deemed by it to be advantageous to the
holders of the Old Certificates. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the Exchange Agent. If the Exchange Offer is amended
in a manner determined by the Company to constitute a material change, the
Company will promptly disclose such amendment in a manner reasonably calculated
to inform the holders of the Old Certificates of such amendment.
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, the Company shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
INTEREST ON THE NEW CERTIFICATES
The New Certificates will accrue interest at the applicable per annum rate
for such Trust set forth on the cover page of this Prospectus, from the Issuance
Date. Interest on the New Certificates is payable on June 30 and December 30 of
each year commencing upon the consummation of the Exchange Offer, subject to the
terms of the Intercreditor Agreement.
38
40
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.
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.
39
41
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 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
40
42
"-- 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
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.
41
43
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.
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
42
44
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 all material terms of the
Certificates and the Pass Through Trust Agreements. The summary does not purport
to be complete, and reference is made to all of the provisions of the New
Certificates, the Pass Through Trust 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, the Class C Trust and the Class D 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) subject to the Intercreditor Agreement,
Equipment Notes issued on a recourse basis by Continental in connection with
each separate secured loan transaction with respect to each Aircraft to finance
the purchase of such Aircraft by Continental, (ii) the rights of such Trust
under the Intercreditor Agreement (including all monies receivable in respect of
such rights), (iii) except for the Class D Trust, all monies receivable under
the Liquidity Facility for such Trust and (iv) funds from time to time deposited
with the Trustee in accounts relating to such Trust. The New Certificates
represent pro rata shares of the Equipment Notes and other property held in the
related Trust and will be issued only in minimum denominations of $1,000 and
integral multiples thereof. (Section 3.01).
The Certificates represent interests in the respective Trusts, and all
payments and distributions thereon will be made only from the Trust Property 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 the
Second Mortgagee in their individual capacities, or any affiliate of any
thereof.
SUBORDINATION
Pursuant to the Intercreditor Agreement to which the Trustees, the
Subordination Agent and the Liquidity Provider 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 (whether under any Indenture or the Second Indenture) and
certain other payments will be distributed under the Intercreditor Agreement in
the following order: (1) payment of certain Liquidity Obligations to the
Liquidity Provider; (2) payment of Expected Distributions to the holders of
Class A Certificates; (3) payment of Expected Distributions to the holders of
Class B Certificates; (4) payment of Expected Distributions to the holders of
Class C Certificates; (5) payment of Expected Distributions to the holders of
Class D Certificates; and (6) payment of certain fees and expenses of the
Subordination Agent and the Trustees.
43
45
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 (whether under any Indenture or the Second Indenture) 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 Provider in payment of the Liquidity Obligations; (2) to the holders
of Class A Certificates in payment of Adjusted Expected Distributions; (3) to
the holders of Class B Certificates in payment of Adjusted Expected
Distributions; (4) to the holders of Class C Certificates in payment of Adjusted
Expected Distributions; and (5) to the holders of Class D Certificates in
payment of Adjusted Expected Distributions.
For purposes of calculating Expected Distributions or Adjusted Expected
Distributions 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.
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 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 AND DISTRIBUTIONS
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 Trustee to Certificateholders of such Trust on the date receipt of such
payment is confirmed, except in the case of certain types of Special Payments.
The Equipment Notes held in each Trust 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 June 30 and December 30 of each year,
commencing on December 30, 1997. Such interest payments will be distributed to
Certificateholders of such Trust on each such date until the final Distribution
Date for such Trust, in each case, subject to the Intercreditor Agreement.
Interest is calculated on the basis of a 360-day year consisting of twelve
30-day months. The interest rates for the 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 (other than the Class D Trust) are supported by a separate
Liquidity Facility provided by the Liquidity Provider 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). The Liquidity Facility for any Class of Certificates does
not provide for drawings thereunder to pay for principal of or premium on the
Certificates of such Class, any interest on the Certificates of such Class in
excess of the Stated Interest Rates, or, 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 (other than the Class D Trust)
will be entitled to receive and retain the proceeds of drawings under the
Liquidity Facility for such Trust. See "Description of the Liquidity
Facilities".
Payments of principal of the Equipment Notes held in each Trust are
scheduled to be received by the Trustee on June 30 of each year, commencing on
June 30, 1998. Scheduled payments of interest or principal on the Equipment
Notes are herein referred to as "Scheduled Payments", and June 30 and December
30 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 December 30,
44
46
2008, for the Class B Certificates is December 30, 2006, for the Class C
Certificates is December 30, 2005 and for the Class D Certificates is June 30,
2001.
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 principal of or interest on Equipment Notes held on behalf of such Trust,
subject to the Intercreditor Agreement. Each such distribution of Scheduled
Payments will be made by the applicable 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) If a Scheduled
Payment is not received by the applicable 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
Collateral under (and as defined in) each Indenture and the Second 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. Each Trustee 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 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)) Each distribution of a Special Payment, other than a final
distribution, on a Special Distribution Date for any Trust will be made by the
Trustee to the Certificateholders of record of such Trust on the Record Date
applicable to such Special Payment. (Section 4.02(b)) 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)
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, or
45
47
Wilmington, Delaware (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 other than payments made in respect of
interest or premium 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 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 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)
As of the Issuance Date, assuming that no early redemption or default in
the payment of principal of any Equipment Notes shall occur, the Scheduled
Payments of principal of the Equipment Notes held in each
46
48
Trust, and the resulting Pool Factors for each Trust after taking into account
each such Scheduled Payment, will be as set forth below:
1997-2A 1997-2B 1997-2C 1997-2D
TRUST TRUST TRUST TRUST
EQUIPMENT EQUIPMENT EQUIPMENT EQUIPMENT
NOTES 1997-2A NOTES 1997-2B NOTES 1997-2C NOTES 1997-2D
SCHEDULED TRUST SCHEDULED TRUST SCHEDULED TRUST SCHEDULED TRUST
PAYMENTS OF EXPECTED PAYMENTS OF EXPECTED PAYMENTS OF EXPECTED PAYMENTS OF EXPECTED
DATE PRINCIPAL POOL FACTOR PRINCIPAL POOL FACTOR PRINCIPAL POOL FACTOR PRINCIPAL POOL FACTOR
- --------------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
June 25,
1997......... $ 0 1.0000000 $ 0 1.0000000 $ 0 1.0000000 $ 0 1.0000000
December 30,
1997......... 0 1.0000000 0 1.0000000 0 1.0000000 0 1.0000000
June 30,
1998......... 2,072,340 0.9723179 707,630 0.9723182 1,200,930 0.9558579 6,268,576 0.7709607
December 30,
1998......... 0 0.9723179 0 0.9723182 0 0.9558579 0 0.7709607
June 30,
1999......... 2,072,340 0.9446357 707,626 0.9446365 2,324,830 0.8704051 6,383,644 0.5377171
December 30,
1999......... 0 0.9446357 0 0.9446365 0 0.8704051 0 0.5377171
June 30,
2000......... 2,072,443 0.9169522 708,031 0.9169391 3,175,629 0.7536797 7,147,618 0.2765597
December 30,
2000......... 0 0.9169522 0 0.9169391 0 0.7536797 0 0.2765597
June 30,
2001......... 2,212,604 0.8873964 755,523 0.8873837 3,625,577 0.6204159 7,569,162 0.0000000
December 30,
2001......... 0 0.8873964 0 0.8873837 0 0.6204159 0 0.0000000
June 30,
2002......... 3,541,842 0.8400848 2,074,022 0.8062500 1,510,530 0.5648939 0 0.0000000
December 30,
2002......... 0 0.8400848 0 0.8062500 0 0.5648939 0 0.0000000
June 30,
2003......... 4,513,933 0.7797881 2,134,967 0.7227321 7,479,240 0.2899825 0 0.0000000
December 30,
2003......... 0 0.7797881 0 0.7227321 0 0.2899825 0 0.0000000
June 30,
2004......... 5,687,498 0.7038150 7,398,224 0.4333207 7,889,264 0.0000000 0 0.0000000
December 30,
2004......... 0 0.7038150 0 0.4333207 0 0.0000000 0 0.0000000
June 30,
2005......... 8,112,933 0.5954432 11,076,977 0.0000000 0 0.0000000 0 0.0000000
December 30,
2005......... 0 0.5954432 0 0.0000000 0 0.0000000 0 0.0000000
June 30,
2006......... 18,205,098 0.3522611 0 0.0000000 0 0.0000000 0 0.0000000
December 30,
2006......... 0 0.3522611 0 0.0000000 0 0.0000000 0 0.0000000
June 30,
2007......... 26,370,969 0.0000000 0 0.0000000 0 0.0000000 0 0.0000000
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".
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, the applicable 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 (i) and (ii) below):
(i) the amount of such distribution allocable to principal and the
amount allocable to premium, if any;
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor for such Trust. (Section
4.03)
47
49
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
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, within a reasonable period of time after the end of each
calendar year, the applicable Trustee 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) and (ii) above with
respect to the Trust for such calendar year or, in the event such person was a
Certificateholder during only a portion of such calendar year, for the
applicable portion of such calendar year, and such other items as are readily
available to such Trustee and which a Certificateholder shall reasonably request
as necessary for the purpose of such Certificateholder's preparation of its U.S.
federal income tax returns. (Section 4.03(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
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
Upon the occurrence and continuation of an event of default under an
Indenture (an "Indenture Default"), 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 the
applicable 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 or any Trustee.
The Equipment Notes issued with respect to each Aircraft are entitled to a
second priority security interest on each of the other Aircraft. However, since
the second priority security interest would not be entitled to the benefits of
Section 1110 in a reorganization under the Bankruptcy Code of Continental, the
excess proceeds realized from the disposition of any particular Aircraft might
not immediately be available to offset shortfalls on the Equipment Notes
relating to any other Aircraft, but rather would be held as cash collateral
securing all of the Equipment Notes subject to the lien of the Second Indenture.
See "Description of Equipment Notes -- Remedies". All payments made under the
Second Indenture in respect of the Equipment Notes will be made to the
Subordination Agent which will distribute such payments as provided in the
Intercreditor Agreement. See "Description of the New Certificates -- Payments
and Distributions".
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)
48
50
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 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.
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 will be the initial Trustee under each
Trust.
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 Notes. (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 "event of default" under such Trust (i.e., any Indenture Default
under any Indenture) and its consequences 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 its consequences and thereby
annul any direction given by such holders or Trustee to such Loan Trustee or the
Second Mortgagee 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.
49
51
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, (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 and (iii) the Class D
Certificateholders shall have the right to purchase all, but not less than all,
of the Class A Certificates, the Class B Certificates and the Class C
Certificates, in each case at a purchase price equal to the Pool Balance of the
relevant Class or Classes of Certificates plus accrued and unpaid interest
thereon to the date of purchase without premium but including any other amounts
due to the Certificateholders of such Class or Classes. 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 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 or C
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 Participation Agreements, the Indentures and the Second
Indenture; 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 Indenture Event of Default shall have occurred and be
continuing. (Indenture, Section 4.09)
The Pass Through Trust Agreements, the Participation Agreements, the
Indentures and the Second Indenture 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 Intercreditor Agreement, the
Registration Rights Agreement or the Liquidity Facility for such Trust, without
the consent of the holders of any of the Certificates of such Trust, (i) to
evidence the succession of another
50
52
corporation to Continental and the assumption by such corporation of
Continental's obligations under such Pass Through Trust Agreement, the
Registration Rights Agreement or such 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 Registration Rights Agreement or such Liquidity Facility,
(iii) to correct or supplement any provision of such Pass Through Trust
Agreement, the Intercreditor Agreement, the Registration Rights Agreement or
such Liquidity Facility which may be defective or inconsistent with any other
provision in such Pass Through Trust Agreement, the Intercreditor Agreement, the
Registration Rights Agreement or such 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 Through Trust Agreement,
the Intercreditor Agreement, the Registration Rights Agreement or such Liquidity
Facility, provided such action shall not materially adversely affect the
interests of the holders of such Certificates, or (without limitation of the
foregoing) as provided in the Intercreditor Agreement to give effect to or
provide for Replacement Facilities, (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
modify, eliminate or add to such Pass Through Trust Agreement such other
provisions as may be expressly permitted by the Trust Indenture Act and (vi) to
evidence and 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, 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 Intercreditor Agreement,
the Registration Rights Agreement or the Liquidity Facility with respect to such
Trust 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 of payments with
respect to 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 Equipment Note, the Second
Indenture, any Participation Agreement 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
51
53
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 proportion as that of (x) the aggregate face amount 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. For purposes of the
immediately preceding sentence, a Certificate shall have been "actually voted"
if the Certificateholder has delivered to the Trustee an instrument evidencing
such Certificateholder'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 and/or the
Second Mortgagee, as the case may be, of such consent (or direct the
Subordination Agent to consent and notify the relevant Loan Trustee and/or the
Second Mortgagee, as the case may be, of such consent) to any amendment,
modification, waiver or supplement under the relevant Indenture, any relevant
Equipment Note, the Second Indenture, any Participation Agreement 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)
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 Indentures, the
Participation Agreements 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 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 or with any Loan Trustee with the same rights
they would have if they were not the Trustees. (Section 7.05)
52
54
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 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.
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.
53
55
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 LIQUIDITY FACILITIES
The following summary describes all material 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
The Liquidity Provider has entered into a separate Liquidity Facility with
the Subordination Agent with respect to the Certificates of each of the Trusts
(other than the Class D Trust) pursuant to which the Liquidity Provider will
make one or more advances to the Subordination Agent to pay interest on such
Certificates subject to certain limitations. The Liquidity Facility for each
Trust (other than the Class D Trust) is intended to enhance the likelihood of
timely receipt by the Certificateholders of such Trust of the interest payable
on the Certificates of such Trust at the Stated Interest Rate therefor on up to
three consecutive semiannual Regular Distribution Dates. If interest payment
defaults occur which exceed the amount covered by or available under the
Liquidity Facility for any Trust (other than the Class D 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
Kredietbank N.V., acting through its New York branch, is the initial liquidity
provider for each of the Trusts (other than the Class D Trust), it may be
replaced by one or more other entities with respect to the Trusts under certain
circumstances. Therefore, the liquidity provider for each Trust may differ.
DRAWINGS
The initial amount available under the Liquidity Facilities for the Class A
Trust, the Class B Trust and the Class C Trust is $8,101,025, $2,766,630 and
$2,967,925, respectively. Except as otherwise provided below, the Liquidity
Facility for each of the Class A, Class B and Class C Trusts 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 the 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
Facility for each applicable Trust does not provide for drawings thereunder to
pay for principal of or premium on the Certificates of such Trust or any
interest on the Certificates of such Trust in excess of the
54
56
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)
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 the Liquidity Facility for any Trust, upon reimbursement
of the Liquidity Provider in full for the amount of such Interest Drawings plus
interest thereon, the 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 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 Facility 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.
(Liquidity Facilities, Section 2.04(a); Intercreditor Agreement, Section 3.6(j))
If at any time the short-term unsecured debt rating of the Liquidity
Provider then issued by either Rating Agency is lower than the Threshold Rating,
each Liquidity Facility provided by the Liquidity Provider will be required to
be replaced by a Replacement Facility. In the event that such Liquidity Facility
is not replaced with a Replacement Facility within 30 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))
A "Replacement Facility" for any Liquidity Facility means an irrevocable
liquidity facility (or liquidity facilities) 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 Liquidity Provider), in a face amount (or in an aggregate
face amount) equal to the amount of interest payable on the Certificates of such
Trust (at the Stated Interest Rate for such Trust, and without regard to
expected future principal payments) on the three Regular Distribution Dates
following the date of replacement of such Liquidity Facility and issued by a
Person (or Persons) having unsecured short-term debt ratings issued by both
Rating Agencies which are equal to or higher than the Threshold Rating. Without
limitation of the form that a Replacement Facility otherwise may have pursuant
to the preceding sentence, a Replacement Facility for any Class of Certificates
may have a stated expiration date earlier than 15 days after the Final Maturity
Date of such Class of Certificates so long as such Replacement Facility provides
for the Non-Extension Drawing described below. (Intercreditor Agreement, Section
1.1) The provider of any Replacement Facility will have the same rights
(including, without limitation, priority distribution rights and rights as
"Controlling Party") under the Intercreditor Agreement as the initial Liquidity
Provider.
"Threshold Rating" means the short-term unsecured debt rating of P-1 by
Moody's and A-1 by Standard & Poor's.
The Liquidity Facility for each applicable Trust provides that the
Liquidity Provider's obligations thereunder will expire on the earliest of (i)
15 days later than the Final Maturity Date for the Certificates of such Trust;
(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
55
57
such Liquidity Facility; (iv) the date on which the Liquidity Provider makes a
Final Drawing thereunder (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.
The Intercreditor Agreement provides for the replacement of any Replacement
Facility for any applicable Trust (other than a Replacement Facility which
expires no earlier than 15 days later than the Final Maturity Date for the
Certificates of such Trust) in the event that such Replacement Facility is not
extended at least 25 days prior to its then scheduled expiration date. In the
event such Replacement 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 Replacement Facility would be
used. (Intercreditor Agreement, Section 3.6(d))
Continental may, subject to certain limitations, arrange for a Replacement
Facility at any time to replace the Liquidity Facility for any applicable Trust
(including without limitation any Replacement Facility described in the
following sentence). If any Replacement Facility is provided at any time after
the Downgrade Drawing (or a Non-Extension Drawing in the case of a Replacement
Facility) 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 Subordination Agent will hold the proceeds of a Final Drawing made in
accordance with the provisions set forth under "-- Liquidity Events of Default"
below 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(e))
Drawings under any Liquidity Facility (other than a Final Drawing) 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 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 the 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 or any Replacement Facility
for any Trust by reason of a Downgrade Drawing (or a Non-Extension Drawing in
the case of a Replacement Facility) 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 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. A Downgrade Drawing under any of the initial Liquidity Facilities
(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
56
58
to (but excluding) the third business day following the Liquidity Provider's
receipt of the notice of such Downgrade Drawing, at the Base Rate plus .45% per
annum on the amount of such Downgrade Drawing and (ii) thereafter, at a rate
equal to LIBOR for the applicable Interest Period plus .45% 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
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
Liquidity Provider may, in its discretion, cause a Final Drawing thereunder in
an amount equal to the then Maximum Available Commitment thereunder. After such
Final Drawing, (i) the Liquidity Provider will have no further obligation to
make Drawings under the Liquidity Facility, (ii) any Drawing remaining
unreimbursed will automatically be converted into a Final Drawing under such
Liquidity Facility, and (iii) all amounts owing to the Liquidity Provider will
automatically be accelerated. Notwithstanding the foregoing, the Subordination
Agent will be obligated to pay amounts owing to the Liquidity Provider only to
the extent of funds available therefor after giving effect to the payments in
accordance with the provisions set forth under "Description of the Intercreditor
Agreement -- Priority of Distributions". (Liquidity Facilities, Section 6.01)
Upon the circumstances described below under "Description of the Intercreditor
Agreement -- Intercreditor Rights", 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 PROVIDER
The initial Liquidity Provider for each Trust (other than the Class D
Trust) will be Kredietbank N.V., a bank organized under the laws of Belgium,
acting through its New York branch. Kredietbank N.V. 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 all material 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 the Liquidity
Provider have agreed that, with respect to any Indenture and (in the case of
clause (b) below) the Second Indenture at any given time, the Loan Trustee or
the Second Mortgagee, as the case may be, will be directed (a) in taking, or
refraining from taking, any action thereunder or with respect to the Equipment
Notes issued under such Indenture, by the holders of at least a majority of the
outstanding principal amount of the Equipment Notes issued under such Indenture
(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 shall have occurred and be continuing
thereunder, and (b) after the occurrence and during the continuance of an
Indenture Default under such Indenture, in taking, or refraining from taking,
any action thereunder or with respect to the Equipment Notes
57
59
issued under such Indenture, 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), or under
the Second Indenture, 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, the Liquidity Provider 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".
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, 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.
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 (whether under any Indenture or the Second Indenture) and
certain other payments received on any Distribution Date will be promptly
distributed by the Subordination Agent on such Distribution Date in the
following order of priority:
(i) to pay the Liquidity Obligations (other than any interest accrued
thereon or the principal amount of any Drawing) (the "Liquidity Expenses")
to the Liquidity Provider;
(ii) to pay interest accrued on the Liquidity Obligations to the
Liquidity Provider;
(iii) to pay or reimburse the Liquidity Provider for the Liquidity
Obligations (other than amounts payable pursuant to clauses (i) and (ii)
above) and/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;
(vii) to pay Expected Distributions to the holders of Class D
Certificates; and
(viii) to pay certain fees and expenses of the Subordination Agent and
the Trustees.
58
60
"Expected Distributions" means, with respect to the Certificates of any
Trust on any Current Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates and (y) the difference between (A) the Pool
Balance of such Certificates as of the immediately preceding Distribution Date
(or, if the Current Distribution Date is the first Distribution Date, the
original aggregate face amount of the Certificates of such Trust) and (B) the
Pool Balance of such Certificates as of the Current Distribution Date calculated
on the basis that (i) the principal of the Equipment Notes held in such Trust
has been paid when due (whether at stated maturity, 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.
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 whether under any
Indenture or the Second Indenture and certain other payments will be promptly
distributed by the Subordination Agent in the following order of priority:
(i) to pay certain out-of-pocket costs and expenses actually incurred
by the Subordination Agent or any Trustee or to reimburse any
Certificateholder or the Liquidity Provider in respect of payments made to
the Subordination Agent or any Trustee in connection with the protection or
realization of the value of the Equipment Notes or any Trust Indenture
Estate (the "Administration Expenses");
(ii) to the Liquidity Provider, to pay the Liquidity Expenses;
(iii) to the Liquidity Provider, to pay interest accrued on the
Liquidity Obligations;
(iv) to the Liquidity Provider, to pay the outstanding amount of all
Liquidity Obligations and/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 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;
(viii) to pay Adjusted Expected Distributions to the holders of Class C
Certificates; and
(ix) to pay Adjusted Expected Distributions to the holders of Class D
Certificates.
"Adjusted Expected Distributions" means, with respect to the Certificates
of any Trust on any Current Distribution Date, the sum of (1) accrued and unpaid
interest on such Certificates and (2) the greater of:
(A) the difference between (x) the Pool Balance of such Certificates
as of the immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, the original aggregate
face amount of the Certificates of such Trust) 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, and
59
61
(B) the amount of the excess, if any, of (i) the amount described in
subclause (A)(x), 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.
"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 or
Loss under and as defined in the relevant Indenture, the amount of the insurance
proceeds paid to the related Loan Trustee and/or the Second Mortgagee in respect
thereof to the extent then held by such Loan Trustee and/or the Second Mortgagee
(and/or on deposit in the Special Payments Account) or payable to such Loan
Trustee and/or the Second Mortgagee 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 41.00%, for the Class B
Certificates 55.00%, for the Class C Certificates 69.90% and for the Class D
Certificates 84.89%.
"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 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 such 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.
Interest Drawings under the Liquidity Facility and withdrawals from the
Cash Collateral Account, in each case in respect of interest on the Certificates
of any Trust (other than the Class D Trust), will be distributed to the Trustee
for such Trust, notwithstanding the priority of distributions set forth in the
Intercreditor Agreement and otherwise described herein. All amounts on deposit
in the Cash Collateral Account for any Trust 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, the related Indenture
or the Second Indenture (or, if applicable, the related Participation Agreement
or other related document), (i) if no Indenture Default shall have occurred and
be continuing with respect to such Indenture (or, in the case of the Second
Indenture, any Indenture), the Subordination Agent shall request instructions
from the Trustees and shall vote or consent in accordance with the directions of
the Trustees (in
60
62
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 (or, in the case of the
Second Indenture, with respect to the requisite aggregate principal amount of
Equipment Notes under all of the Indentures) and (ii) if any Indenture Default
shall have occurred and be continuing with respect to such Indenture (or, in the
case of the Second Indenture, any 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 the Liquidity Provider, reduce the amount
of principal or interest payable by Continental under any Equipment Note issued
under any Indenture or have any other effect which would require the consent of
the holder of each Equipment Note as described in "Description of the Equipment
Notes -- Modification of Indentures". (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 six Boeing 737-3T0 aircraft manufactured in 1986
and four McDonnell Douglas MD-82 aircraft, one manufactured in 1985, one in 1986
and two in 1987. All of the Aircraft are currently leased by Continental. 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 737-3T0 Aircraft
The Boeing 737-3T0 aircraft is a medium range aircraft with a seating
capacity of approximately 128 passengers (2-class). The Boeing 737-3T0 Aircraft
are powered by two CFM International CFM56-3B1 engines. Approximately 982 Boeing
737-300 series aircraft have been delivered as of April 30, 1997 (as provided by
Boeing).
McDonnell Douglas MD-82 Aircraft
The McDonnell Douglas MD-82 aircraft is a medium range aircraft with a
seating capacity of approximately 141 passengers (2-class). The McDonnell
Douglas MD-82 Aircraft are powered by two Pratt & Whitney JT8D-217A engines.
Approximately 990 MD-80 series (MD-81, MD-82 and MD-83) aircraft have been
manufactured (as provided by the AISI appraisal letter dated May 20, 1997,
attached in Appendix II hereto).
THE APPRAISALS
The table below sets forth the appraised values and certain additional
information regarding the Aircraft.
61
63
AIRCRAFT APPRAISED VALUE
REGISTRATION ------------------------
AIRCRAFT TYPE ENGINE TYPE NUMBER AISI BK MBA
- ---------------------------------------------- ----------- ------------ ------ ------ ------
(IN MILLIONS OF DOLLARS)
Boeing 737-3T0................................ CFM56-3B1 N12322 $18.98 $18.25 $21.58
Boeing 737-3T0................................ CFM56-3B1 N10323 18.98 18.25 21.58
Boeing 737-3T0................................ CFM56-3B1 N14324 18.98 18.25 21.58
Boeing 737-3T0................................ CFM56-3B1 N69333 18.98 19.00 21.58
Boeing 737-3T0................................ CFM56-3B1 N14334 18.98 19.00 21.58
Boeing 737-3T0................................ CFM56-3B1 N14335 18.98 19.00 21.58
McDonnell Douglas MD-82....................... JT8D-217A N12811 15.30 15.55 19.71
McDonnell Douglas MD-82....................... JT8D-217A N15820 16.10 17.00 20.67
McDonnell Douglas MD-82....................... JT8D-217A N18833 16.90 18.05 21.62
McDonnell Douglas MD-82....................... JT8D-217A N10834 16.90 18.05 21.62
The appraised values set forth in the foregoing chart were determined by
three independent aircraft appraisal and consulting firms, AISI, BK and MBA, as
of May 20, May 16 and June 6, 1997, respectively. 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 and should not be relied upon as
a measure of realizable value; the proceeds realized upon a sale of any Aircraft
may be less than the appraised value thereof. The value of the Aircraft in the
event of the exercise of remedies under the applicable Indenture will depend on
market and economic conditions, the availability of buyers, the condition of the
Aircraft and other similar factors. Accordingly, there can be no assurance that
the proceeds realized upon any such exercise with respect to the Equipment Notes
and the Aircraft pursuant to the applicable Indenture would be as appraised or
sufficient to satisfy in full payments due on the Equipment Notes issued
thereunder or the 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 Second
Indenture and the Participation Agreements. Except as otherwise indicated, the
following summaries relate to the Equipment Notes, the Indenture, the Second
Indenture and the Participation Agreement that may be applicable to each
Aircraft, forms of which are filed as exhibits to the Registration Statement and
are available as set forth under the heading "Available Information".
GENERAL
The Equipment Notes have been issued in four series with respect to each
Aircraft under a separate Indenture between Continental and Wilmington Trust
Company, as Loan Trustee. Continental's obligations under the Equipment Notes
issued with respect to each Aircraft are general obligations of Continental.
SUBORDINATION
Series B Equipment Notes issued in respect of any Aircraft are subordinated
in right of payment to Series A Equipment Notes issued in respect of such
Aircraft, Series C Equipment Notes issued in respect of such Aircraft are
subordinated in right of payment to such Series B Equipment Notes and Series D
Equipment Notes issued in respect of such Aircraft are subordinated in right of
payment to such Series C Equipment Notes. On each Equipment Note payment date,
(i) payments of interest and principal due on Series A Equipment Notes issued in
respect of any Aircraft will be made prior to payments of interest and
62
64
principal due on Series B Equipment Notes issued in respect of such Aircraft,
(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 and
(iii) payments of interest and principal due on Series C Equipment Notes issued
in respect of any Aircraft will be made prior to payments of interest and
principal due on Series D Equipment Notes issued in respect of such Aircraft.
PRINCIPAL AND INTEREST PAYMENTS
Subject to the provisions of the Intercreditor Agreement, interest paid on
the Equipment Notes held in each Trust will be passed through to the
Certificateholders of such Trust on the dates and at the rate per annum set
forth on the cover page of this Prospectus 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.
The aggregate original principal amounts of the Equipment Notes issued with
respect to each Aircraft, as such Equipment Notes are held in each of the
Trusts, are as follows:
AIRCRAFT TRUST 1997-2A TRUST 1997-2B TRUST 1997-2C TRUST 1997-2D
REGISTRATION EQUIPMENT EQUIPMENT EQUIPMENT EQUIPMENT
NUMBER NOTES NOTES NOTES NOTES TOTAL
- ------------------------------ ------------- ------------- ------------- ------------- ------------
N12322........................ $ 7,781,810 $ 2,657,242 $ 2,828,029 $ 2,844,973 $ 16,112,054
N10323........................ 7,781,810 2,657,242 2,828,029 2,844,973 16,112,054
N14324........................ 7,781,810 2,657,242 2,828,029 2,844,973 16,112,054
N69333........................ 7,790,010 2,660,042 2,831,009 2,847,971 16,129,032
N14334........................ 7,790,010 2,660,042 2,831,009 2,847,971 16,129,032
N14335........................ 7,790,010 2,660,042 2,831,009 2,847,971 16,129,032
N12811........................ 6,375,511 2,177,034 2,316,960 2,330,840 13,200,345
N15820........................ 6,970,009 2,380,034 2,533,008 2,548,184 14,431,235
N18833........................ 7,400,510 2,527,040 2,689,459 2,705,572 15,322,581
N10834........................ 7,400,510 2,527,040 2,689,459 2,705,572 15,322,581
----------- ----------- ----------- ----------- ------------
Total.................... $ 74,862,000 $ 25,563,000 $27,206,000 $27,369,000 $155,000,000
Interest will be payable on the unpaid principal amount of each Equipment
Note at the rate applicable to such Equipment Note on June 30 and December 30 of
each year, commencing on December 30, 1997. Such interest will be computed on
the basis of a 360-day year of twelve 30-day months. Under certain circumstances
described in "Exchange Offer; Registration Rights", the interest rates for the
Equipment Notes will be increased to the extent described therein.
The principal of the Equipment Notes purchased by each Trust will be
payable as set forth in Appendix IV.
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 Indenture and Second Indenture,
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 2.09)
63
65
All of the Equipment Notes issued with respect to the 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 2.10)
"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.
SECURITY
The Equipment Notes issued with respect to each Aircraft are secured by a
first priority security interest in such Aircraft and by a second priority
security interest in each of the other Aircraft. If the Equipment Notes issued
under an Indenture and other obligations secured thereunder and then due have
been paid in full, the applicable Aircraft will be released from the lien of
such Indenture and, so long as no Indenture Default or certain other defaults
exist under any other Indenture at such time, will be released from the lien of
the Second Indenture.
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, if any, relating thereto, will be invested and reinvested by such Loan
Trustee, at the direction of Continental, in investments described in the
related Indenture. (Indentures, Section 6.06)
LOAN TO VALUE RATIOS OF EQUIPMENT NOTES
The following tables titled "Loan to Value Ratios" set forth loan to
Aircraft value ratios for the Equipment Notes issued in respect of each Aircraft
as of the specified Regular Distribution Dates obtained by
64
66
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. Differences may occur due to rounding.
The Loan to Value Ratio tables are based on the assumption that the value
of each Aircraft set forth opposite the Issuance Date included in each table
depreciates by the respective percentages indicated in the table titled
"Depreciation Assumptions" below for the Boeing 737-300 Aircraft which were each
manufactured in 1986 (aircraft registration numbers N12322, N10323, N14324,
N69333, N14334 and N14335), and for the McDonnell Douglas MD-82 Aircraft
manufactured in 1985 (aircraft registration number N12811), manufactured in 1986
(aircraft registration number N15820) and manufactured in 1987 (aircraft
registration numbers N18833 and N10834).
Depreciation Assumptions
VALUE DEPRECIATION PERCENTAGES
---------------------------------------
MANUFACTURE YEAR: 1986 1985 1986 1987
AIRCRAFT: B737-300 MD-82 MD-82 MD-82
----------------------------------------------- -------- ------ ----- -----
YEAR BEGINNING
-----------------------------------------------
1997........................................... 2.6% 3.1% 3.1% 3.0%
1998........................................... 2.6 3.1 3.1 3.0
1999........................................... 2.6 3.1 3.1 3.0
2000........................................... 2.6 5.3 3.1 3.0
2001........................................... 5.1 5.3 5.1 3.0
2002........................................... 5.1 5.3 5.1 5.0
2003........................................... 5.1 5.3 5.1 5.0
2004........................................... 5.1 5.3 5.1 5.0
2005........................................... 5.1 7.9 5.1 5.0
2006........................................... 7.7 7.9 7.7 5.0
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.
Loan to Value Ratios
AIRCRAFT REGISTRATION NUMBER AIRCRAFT REGISTRATION NUMBER AIRCRAFT REGISTRATION NUMBER
N12322 N10323 N14324
---------------------------------- ---------------------------------- ----------------------------------
EQUIPMENT EQUIPMENT EQUIPMENT
NOTE ASSUMED LOAN TO NOTE ASSUMED LOAN TO NOTE ASSUMED LOAN TO
OUTSTANDING AIRCRAFT VALUE OUTSTANDING AIRCRAFT VALUE OUTSTANDING AIRCRAFT VALUE
DATE BALANCE VALUE RATIO BALANCE VALUE RATIO BALANCE VALUE RATIO
- -------------------- ----------- ---------- ------- ----------- ---------- ------- ----------- ---------- -------
(MILLIONS) (MILLIONS) (MILLIONS) (MILLIONS) (MILLIONS) (MILLIONS)
June 25, 1997....... $ 16.11 $18.98 84.89% $ 16.11 $18.98 84.89% $ 16.11 $18.98 84.89%
June 30, 1998....... 15.07 18.49 81.53 15.07 18.49 81.53 15.07 18.49 81.53
June 30, 1999....... 13.90 17.99 77.26 13.90 17.99 77.26 13.90 17.99 77.26
June 30, 2000....... 12.56 17.50 71.77 12.56 17.50 71.77 12.56 17.50 71.77
June 30, 2001....... 11.12 17.01 65.42 11.12 17.01 65.42 11.12 17.01 65.42
June 30, 2002....... 10.33 16.04 64.43 10.33 16.04 64.43 10.33 16.04 64.43
June 30, 2003....... 8.86 15.07 58.79 8.86 15.07 58.79 8.86 15.07 58.79
June 30, 2004....... 6.67 14.10 47.29 6.67 14.10 47.29 6.67 14.10 47.29
June 30, 2005....... 4.66 13.13 35.51 4.66 13.13 35.51 4.66 13.13 35.51
June 30, 2006....... 2.77 12.17 22.77 2.77 12.17 22.77 2.77 12.17 22.77
65
67
AIRCRAFT REGISTRATION NUMBER AIRCRAFT REGISTRATION NUMBER AIRCRAFT REGISTRATION NUMBER
N69333 N14334 N14335
---------------------------------- ---------------------------------- ----------------------------------
EQUIPMENT EQUIPMENT EQUIPMENT
NOTE ASSUMED LOAN TO NOTE ASSUMED LOAN TO NOTE ASSUMED LOAN TO
OUTSTANDING AIRCRAFT VALUE OUTSTANDING AIRCRAFT VALUE OUTSTANDING AIRCRAFT VALUE
DATE BALANCE VALUE RATIO BALANCE VALUE RATIO BALANCE VALUE RATIO
- -------------------- ----------- ---------- ------- ----------- ---------- ------- ----------- ---------- -------
(MILLIONS) (MILLIONS) (MILLIONS) (MILLIONS) (MILLIONS) (MILLIONS)
June 25, 1997....... $ 16.13 $19.00 84.89% $ 16.13 $19.00 84.89% $ 16.13 $19.00 84.89%
June 30, 1998....... 15.09 18.51 81.53 15.09 18.51 81.53 15.09 18.51 81.53
June 30, 1999....... 13.92 18.01 77.26 13.92 18.01 77.26 13.92 18.01 77.26
June 30, 2000....... 12.57 17.52 71.77 12.57 17.52 71.77 12.57 17.52 71.77
June 30, 2001....... 11.14 17.02 65.42 11.14 17.02 65.42 11.14 17.02 65.42
June 30, 2002....... 10.34 16.06 64.43 10.34 16.06 64.43 10.34 16.06 64.43
June 30, 2003....... 8.87 15.09 58.79 8.87 15.09 58.79 8.87 15.09 58.79
June 30, 2004....... 6.68 14.12 47.29 6.68 14.12 47.29 6.68 14.12 47.29
June 30, 2005....... 4.67 13.15 35.51 4.67 13.15 35.51 4.67 13.15 35.51
June 30, 2006....... 2.77 12.18 22.77 2.77 12.18 22.77 2.77 12.18 22.77
AIRCRAFT REGISTRATION NUMBER N12811 AIRCRAFT REGISTRATION NUMBER N15820
--------------------------------------------- ---------------------------------------------
EQUIPMENT NOTE EQUIPMENT NOTE
OUTSTANDING ASSUMED LOAN TO OUTSTANDING ASSUMED LOAN TO
DATE BALANCE AIRCRAFT VALUE VALUE RATIO BALANCE AIRCRAFT VALUE VALUE RATIO
- ---------------------------------- -------------- -------------- ----------- -------------- -------------- -----------
(MILLIONS) (MILLIONS) (MILLIONS) (MILLIONS)
June 25, 1997..................... $13.20 $15.55 84.89% $14.43 $17.00 84.89%
June 30, 1998..................... 12.29 15.07 81.53 13.43 16.47 81.53
June 30, 1999..................... 11.27 14.59 77.26 12.32 15.95 77.26
June 30, 2000..................... 10.12 14.10 71.77 11.07 15.42 71.77
June 30, 2001..................... 8.69 13.28 65.42 9.74 14.89 65.42
June 30, 2002..................... 8.03 12.46 64.43 9.04 14.03 64.43
June 30, 2003..................... 6.84 11.63 58.79 7.74 13.16 58.79
June 30, 2004..................... 5.11 10.81 47.29 5.81 12.29 47.29
June 30, 2005..................... 3.55 9.98 35.51 4.06 11.42 35.51
June 30, 2006..................... 1.99 8.75 22.77 2.40 10.56 22.77
AIRCRAFT REGISTRATION NUMBER N18833 AIRCRAFT REGISTRATION NUMBER N10834
--------------------------------------------- ---------------------------------------------
EQUIPMENT NOTE EQUIPMENT NOTE
OUTSTANDING ASSUMED LOAN TO OUTSTANDING ASSUMED LOAN TO
DATE BALANCE AIRCRAFT VALUE VALUE RATIO BALANCE AIRCRAFT VALUE VALUE RATIO
- ---------------------------------- -------------- -------------- ----------- -------------- -------------- -----------
(MILLIONS) (MILLIONS) (MILLIONS) (MILLIONS)
June 25, 1997..................... $15.32 $18.05 84.89% $15.32 $18.05 84.89%
June 30, 1998..................... 14.28 17.51 81.53 14.28 17.51 81.53
June 30, 1999..................... 13.11 16.97 77.26 13.11 16.97 77.26
June 30, 2000..................... 11.79 16.43 71.77 11.79 16.43 71.77
June 30, 2001..................... 10.39 15.88 65.42 10.39 15.88 65.42
June 30, 2002..................... 9.89 15.34 64.43 9.89 15.34 64.43
June 30, 2003..................... 8.49 14.44 58.79 8.49 14.44 58.79
June 30, 2004..................... 6.40 13.54 47.29 6.40 13.54 47.29
June 30, 2005..................... 4.49 12.64 35.51 4.49 12.64 35.51
June 30, 2006..................... 2.67 11.73 22.77 2.67 11.73 22.77
INDENTURE DEFAULTS, NOTICE AND WAIVER
Indenture Defaults under each Indenture will include: (a) the failure by
Continental to pay any interest or principal or premium, if any, when due, under
any Equipment Note issued thereunder that continues for 10 Business Days or
more, or the failure to pay any other amount payable by it thereunder or under
the related Participation Agreement when due, which failure shall continue for
more than 10 Business Days after Continental has received written notice from
the Loan Trustee of the failure to make such payment when due,
66
68
(b) the failure by Continental to maintain certain required insurance, (c) the
failure by Continental to perform or observe in any material respect any other
covenant or obligation under such Indenture or certain related documents that
continues after notice and specified cure periods, (d) the untruth or inaccuracy
in any material respect of any representation or warranty made by Continental in
such Indenture, in the related Participation Agreement or in certain related
documents which is material at the time in question, after notice and a
specified cure period, (e) the occurrence and continuation of an Indenture
Default under any of the other Indentures or (f) the occurrence of certain
events of bankruptcy, reorganization or insolvency of Continental. (Indenture,
Section 5.01)
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.
(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 declare the principal of
all such Equipment Notes issued thereunder immediately due and payable, together
with all accrued but unpaid interest thereon. Since the occurrence and
continuation of an Indenture Default under an Indenture constitutes an Indenture
Default under each other Indenture, remedies will be exercisable under the
Indentures and the Second Indenture with respect to all Aircraft if an Indenture
Default exists under any Indenture. The holders of a majority in principal
amount of Equipment Notes outstanding under an Indenture may rescind any
declaration of acceleration of such Equipment Notes 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 with respect to any covenant or provision of such Indenture have been
cured. (Indenture, Section 5.02(b))
Each Indenture provides that if an Indenture Default under such Indenture
has occurred and is continuing, the related Loan Trustee may exercise certain
rights or remedies available to it under such Indenture or under applicable law,
including one or more of the remedies under such Indenture. The Loan Trustee
will not be entitled to exercise any rights under the Second Indenture in
respect of any Aircraft without the prior written consent of the Loan Trustee
under the related Indenture so long as the lien of such Indenture has not been
discharged and the Loan Trustee has not commenced to foreclose such lien in
respect of such Aircraft thereunder (Second Indenture, Section 5.02(d)). With
respect to each Aircraft, the Second Indenture will be discharged at the time of
discharge of the Indenture relating to such Aircraft so long as no Indenture
Default or certain other defaults exist under any other Indenture at such time
(Second Indenture, Section 11.01).
Section 1110 of the U.S. Bankruptcy Code provides in relevant part that the
right of lessors, conditional vendors and holders of purchase-money equipment
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, in relevant part that the right of a lessor, conditional
vendor or holder of a purchase-money equipment 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
67
69
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 purchase-money equipment 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 purchase-money
equipment 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.
On the Issuance Date, the relevant Loan Trustee has received a reasoned
opinion of Milbank, Tweed, Hadley & McCloy, counsel to the Initial Purchasers,
that, subject to the assumptions and qualifications contained therein, such Loan
Trustee's right to take possession of the Aircraft under the applicable
Indenture would be entitled to the benefits of Section 1110 with respect to the
airframe and engines comprising such 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. In rendering such opinion,
Milbank, Tweed, Hadley & McCloy has relied, among other things, on (i) an
officer's certificate of Continental to the effect that (a) Continental has
never held title to nor claimed to be the owner of the Aircraft, (b) immediately
prior to its purchase of the relevant Aircraft, it was the lessee of such
Aircraft under a lease agreement (the "Existing Lease") designated as such and
(c) the Existing Lease was entered into as part of a settlement of liability
under Title IV of ERISA with the PBGC at a time when Continental was a debtor
under Title 11 of the U.S. Bankruptcy Code, and (ii) the provisions of the
Aircraft Equipment Settlement Leases Act of 1993 (the "Settlement Act"), which
provides in relevant part that if the PBGC as part of a settlement of liability
under ERISA enters into an agreement with a debtor under Title 11 of the U.S.
Bankruptcy Code which agreement provides that it is to be treated as a lease,
then such agreement will be treated as a lease for purposes of Section 1110. The
opinion of Milbank, Tweed, Hadley & McCloy states that, while the residual value
sharing arrangement provided by Continental to the PBGC with respect to the
Aircraft may give rise to questions as to whether each Existing Lease is a "true
lease" for tax purposes and hence for Section 1110 purposes, the plain language
of the Settlement Act effectively eliminates such uncertainty. In the opinion of
Milbank, Tweed, Hadley & McCloy, on the basis that the Existing Lease is a lease
for purposes of Section 1110, and for the reasons noted therein, the purchase of
the relevant Aircraft by Continental would be an acquisition of rights by
Continental in the Aircraft sufficient to support the existence of a purchase
money security interest for purposes of Section 1110, notwithstanding
Continental's prior interest in the Aircraft as lessee under the Existing Lease.
See First National Bank of Geneva v. United States, 13 Cl. Ct. 385 (1987) (lease
of equipment, followed by purchase of equipment, supports existence of purchase
money security interest).
The opinion of Milbank, Tweed, Hadley & McCloy does 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 "-- Agreements Relating to the Aircraft -- Events of Loss". The
opinion of Milbank, Tweed, Hadley & McCloy does also not address the
availability of Section 1110 with respect to any possible lessee of an Aircraft
if it is leased by Continental.
The Second Indenture creates, with respect to the Equipment Notes issued
with respect to each Aircraft, a valid security interest in each of the other
Aircraft, which security interest ranks behind the security interest created by
the applicable Indenture with respect to each such Aircraft. In connection with
a reorganization under the Bankruptcy Code of Continental, the effect of such
additional, second-ranking security interest under the Second Indenture, in
conjunction with Section 1110, would be as follows: if the relevant Loan Trustee
were to repossess and sell an Aircraft in the exercise of its special
repossessory rights under
68
70
Section 1110 with respect to the Aircraft, (a) proceeds up to the amount owing
on the Equipment Notes issued under the Indenture with respect to such Aircraft
would be distributable outside the bankruptcy estate in respect of such
Equipment Notes, and (b) any proceeds in excess of such amount would become part
of the bankruptcy estate subject to a valid security interest that secures all
other Equipment Notes. All payments made under the Second Indenture in respect
of the Equipment Notes will be made to the Subordination Agent which will
distribute such payments as provided in the Intercreditor Agreement. See
"Description of the New Certificates -- Payments and Distribution".
If an Indenture Default under any Indenture occurs and is continuing, any
sums held or received by the related Loan Trustee or the Second Mortgagee may be
applied to reimburse such Loan Trustee or the Second Mortgagee for any tax,
expense or other loss incurred by it and to pay any other amounts due to such
Loan Trustee or the Second Mortgagee prior to any payments to holders of the
Equipment Notes issued under such Indenture or payments under the Second
Indenture. (Indentures, Section 3.03; Second Mortgage, Section 3.01; Second
Mortgage, Section 3.01)
MODIFICATION OF INDENTURES
Without the consent of holders of a majority in principal amount of the
Equipment Notes outstanding under any Indenture, the provisions of such
Indenture and the related Participation Agreement may not be amended or
modified, except to the extent indicated below.
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. (Indenture, Section
10.01(b))
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. (Indenture,
Section 10.01(a))
INDEMNIFICATION
Continental will be required to indemnify each Loan Trustee, the Second
Mortgagee, the Liquidity Provider, the Subordination Agent and each Trustee, but
not the holders of Certificates, for certain losses, claims and other matters.
AGREEMENTS RELATING TO THE AIRCRAFT
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 customary in the commercial airline industry with respect to any
Engine are permitted. Leases are also permitted to U.S. air carriers and foreign
air carriers that have their principal executive office in certain specified
countries. In addition, a lessee may not be subject to insolvency or similar
proceedings at the commencement of such lease. (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, and the Second Mortgagee'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 Default, the ability of
the related Loan Trustee, and the Second Mortgagee, to realize upon its security
interest
69
71
in an Aircraft could be adversely affected as a legal or practical matter if
such Aircraft were registered or located outside the United States.
Registration
Continental is required to keep each Aircraft duly registered under the
Transportation Code with the FAA and to record each Indenture under the
Transportation Code. (Indenture, Section 4.02(e)) Such recordation of the
Indenture and certain 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.
Liens
Continental is required to maintain each Aircraft free of any liens, other
than the rights of the holders of the related Equipment Notes arising under the
applicable Indenture, 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 for more than 60 days or are
being contested in good faith by appropriate proceedings; and (iii) judgment
liens so long as such judgment is discharged or vacated within 60 days or the
execution of such judgment is stayed pending appeal or discharged, vacated or
reversed within 60 days 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 Loan 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 holders of Equipment Notes therein or impair
the lien of the relevant Indenture or Second Indenture. (Indenture, Section 4.01
and Annex A)
Maintenance; Replacement of Parts; Alterations
Continental is required to maintain, service, repair and overhaul the
Aircraft so as to keep them in as good operating condition as on the Issuance
Date, ordinary wear and tear excepted. 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 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 value, utility, or remaining useful life of the related Aircraft,
Airframe or Engine or invalidate the Aircraft's airworthiness certificate.
(Indenture, Section 4.04(d))
Insurance
Continental is required to maintain, at its expense (or at the expense of a
permitted lessee), all-risk aircraft hull insurance covering each Aircraft, at
all times in an amount not less than the aggregate outstanding principal amount
of the Equipment Notes related to such Aircraft, together with six months of
accrued interest thereon (the "Debt Balance"). 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, such proceeds up to the Debt Balance 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, such proceeds will be
payable directly to Continental so long as an Indenture Default or certain other
defaults do not exist with respect to the Indenture. So long as the loss does
not
70
72
constitute an Event of Loss, insurance proceeds will be applied to repair or
replace the property. (Indenture, Section 4.06 and Annex B)
In addition, Continental is obligated to maintain comprehensive airline
liability insurance at its expense (or at the expense of a permitted lessee),
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. (Indenture, Section 4.06 and Annex
B)
Continental is also required to maintain war-risk, hijacking or allied
perils insurance if it (or any permitted lessee) operates any Aircraft, Airframe
or Engine in any area of recognized hostilities or if Continental (or any
permitted lessee) maintains such insurance with respect to other aircraft
operated on the same international routes or areas on or in which the Aircraft
is operated. (Indenture, Section 4.06 and Annex B)
Continental may self-insure under a program applicable to all 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
policy 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. (Indenture, Section 4.06 and Annex B)
In respect of each Aircraft, Continental is required to name as additional
insured parties the relevant Loan Trustee, the Second Mortgagee and holders of
the Equipment Notes and 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 Indenture will be required to provide that, in respect of the
interests of such additional insured persons, the insurance shall not be
invalidated or impaired by any act or omission of Continental or any other
person and to insure the respective interests of such additional insured
persons, regardless of any breach or violation of any representation, warranty,
declaration, term or condition contained in such policies by Continental or any
permitted lessee. (Indenture, Section 4.06 and Annex 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 after such
occurrence either to make payment with respect to such Event of Loss or to
replace such Airframe and any such Engines. If Continental elects to make such
payment, not later than the first Business Day following the earlier of (i) the
120th day following the date of occurrence of such Event of Loss, and (ii) the
fourth Business Day following the receipt of the insurance proceeds in respect
of such Event of Loss, Continental must pay to the Loan Trustee the aggregate
unpaid principal of the related Equipment Notes and accrued interest thereon up
to, but not including, the date of such payment, together with certain
additional amounts, but, in any case, without any Make-Whole Premium.
(Indenture, Sections 2.09 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 will do so
within 120 days after the occurrence of such Event of Loss and will provide to
the relevant Loan Trustee and the Second Mortgagee 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 Loan Trustee 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). (Indenture, Section 4.05(c))
71
73
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, 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 and the related Indenture, the lien of the
Indenture and the obligation of Continental thereafter to make the scheduled
interest and principal payments with respect thereto shall cease. (Indenture,
Sections 2.09 and 4.05(a)(ii)) The Debt Balance and other payments made under
the Indenture by Continental shall be deposited with the applicable Loan
Trustee.
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 Indenture. (Indenture, Section
4.04(e))
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 consecutive 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) for a period exceeding 180 consecutive days (exceeding 90 consecutive
days in the case of a requisition of title); (v) 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 consecutive 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, provided that 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 (vi) with respect to any Engine, any
divestiture of title to such Engine shall be treated as an Event of Loss.
(Indenture, Annex A)
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
EXCHANGE OF OLD CERTIFICATES FOR NEW CERTIFICATES
The following summary describes all material generally applicable 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.
72
74
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.
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, 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
73
75
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 prohibited transaction
provisions of ERISA and 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 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, and generally may not include cash
held for the purpose of acquiring additional receivables after the closing date.
However, the Department of Labor has indicated that in its view this requirement
would be satisfied where the receivables, although specifically identified as of
the closing date, are not all transferred to the trust on the closing date for
administrative or other reasons but will be transferred to the trust shortly
after the closing date. In addition, the Department of Labor has proposed
amendments to the Underwriter Exemption, effective as of January 1, 1992, which
would allow up to 25 percent of the principal amount of the certificates being
offered to be held in a pre-funding account for a period of up to three months
following the
74
76
closing date for the acquisition of additional qualifying receivables, if
certain conditions are satisfied. The proposed amendments were published in the
Federal Register dated May 23, 1997.
The Underwriter Exemption does not apply to the Class B, Class C or Class D
Certificates. Even if all of the conditions of the Underwriter Exemption are
satisfied with respect to the Class A Certificates, no assurance can be given
that the Exemption would apply with respect to all transactions involving the
Class A Certificates or the assets of the Class A Trust. In particular, it
appears that the Underwriter Exemption would not apply to the purchase by Class
B Certificateholders 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, CLASS C AND CLASS D CERTIFICATES
The Underwriter Exemption does not apply to the Class B, Class C or Class D
Certificates. The Class B, Class C and Class D Certificates may not be acquired
with the assets of a Plan, except that such Certificates may be acquired with
the assets of an insurance company general account that may be deemed to
constitute Plan assets, provided that the conditions of PTCE 95-60 are satisfied
at the time of the acquisition (and during the holding) of such Certificates.
Holders of Class B Certificates, Class C Certificates or Class D 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.
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
75
77
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.
EXPERTS
The consolidated financial statements (including financial statement
schedules) 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, and audited consolidated financial statements to be
included in subsequently filed documents will be, incorporated herein by
reference in reliance upon reports of Ernst & Young LLP pertaining to such
consolidated financial statements (to the extent covered by consents filed with
the Commission) 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 May 20, May 16 and June 6, 1997, respectively, 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.
76
78
APPENDIX I -- INDEX OF TERMS
PAGE
-------
Adjusted Expected Distributions,
21................................ 59
Administration Expenses............. 58
Aeroflot............................ 5
Aggregate LTV Collateral Amount,
22................................ 59
Air Partners........................ 33
Aircraft............................ 2
AISI................................ 12
Alitalia............................ 5
America West........................ 5
AMI................................. 30
Appraisal........................... 60
Appraised Current Market Value,
22................................ 60
Appraisers.......................... 12
Assumed Aggregate Aircraft Value.... 12
Assumed Aircraft Value.............. 64
Average Life Date................... 64
BK.................................. 12
Boeing.............................. 29
Book-Entry Confirmation............. 39
Book-Entry Transfer Facility........ 39
Business Day........................ 46
Cash Collateral Account............. 19
CDG................................. 5
Cede................................ 24
Certificate Account................. 46
Certificate Owners.................. 24
Certificateholders.................. 15
Certificates........................ 1
City................................ 31
Class Exemptions.................... 74
Class A Certificates................ 10
Class A Trust....................... 1
Class A Trustee..................... 23
Class B Certificates................ 10
Class B Trust....................... 1
Class B Trustee..................... 23
Class C Certificates................ 10
Class C Trust....................... 1
Class C Trustee..................... 23
Class D Trust....................... 1
Class D Trustee..................... 23
Class D Certificates................ 10
Cleveland........................... 5
CMI................................. 5
Code................................ 25
Commission.......................... 2
Company............................. 1
Continental......................... 1
Controlling Party................... 23
PAGE
-------
Convention.......................... 69
Credit Facility..................... 30
Current Distribution Date........... 21
Debt Balance........................ 70
disqualified persons................ 73
Distribution Date................... 20
Downgrade Drawing................... 19
DTC................................. 24
DTC Participants.................... 24
EDGAR............................... 3
Eligible Institution................ 40
Equipment Notes..................... 2
ERISA............................... 25
ERISA Plans......................... 73
EVA................................. 5
Event of Loss....................... 71
Exchange............................ 73
Exchange Act........................ 3
Exchange Agent...................... 9
Exchange Offer...................... 1
Exchange Offer No-Action Letters.... 2
Existing Lease...................... 68
Expected Distributions.............. 21, 58
Expiration Date..................... 1
Express............................. 5
Exxon Capital Letter................ 2
FAA................................. 33
Facility............................ 30
Final Distributions................. 23
Final Drawing....................... 19
Final Maturity Date................. 45
Global Certificates................. 52
H.15(519)........................... 64
holder.............................. 40
Holdings............................ 3
IAH Bonds........................... 31
Indenture........................... 10
Indenture Default................... 48
indirect participants............... 53
Initial Purchasers.................. 3
Intercreditor Agreement............. 20
Interest Drawings................... 18
Issuance Date....................... 7
Letter of Transmittal............... 1
Liquidity Event of Default.......... 56
Liquidity Expenses.................. 58
Liquidity Facility.................. 18
Liquidity Obligations............... 18
Liquidity Provider.................. 10
I-1
79
PAGE
-------
Loan Trustee........................ 11
LTV Appraisals...................... 22
LTV Collateral Amount............... 22, 59
LTV Ratio........................... 22, 60
LTVs................................ 12
Make-Whole Premium.................. 63
Maximum Available Commitment........ 18
MBA................................. 12
Minimum Sale Price.................. 24
Morgan Stanley Letter............... 2
most recent H.15(519)............... 64
New Certificates.................... 1
NOLs................................ 32
Non-Extension Drawing............... 20
Non-Performing Equipment Notes...... 21
NYSE................................ 41
Old Certificates.................... 1
participants........................ 53
Participating Broker-Dealer......... 2
Participation Agreement............. 11
parties in interest................. 73
Pass Through Trust Agreements....... 1
Performing Equipment Note........... 19
Plan Asset Regulation............... 73
Plans............................... 73
Pool Balance........................ 46
Pool Factor......................... 46
Premium Termination Date............ 17
PTC Event of Default................ 15
PTCE................................ 25
Registration Event.................. 38
Registration Statement.............. 3
Regular Distribution Dates.......... 45
Remaining Weighted Average Life..... 64
PAGE
-------
Replacement Facility................ 55
Required Amount..................... 18
Scheduled Payments.................. 45
Second Indenture.................... 11
Second Mortgagee.................... 10
Section 1110 Period................. 19
Section 382......................... 32
Securities Act...................... 1
Series A Equipment Notes............ 2
Series B Equipment Notes............ 2
Series C Equipment Notes............ 2
Series D Equipment Notes............ 2
Settlement Act...................... 68
Shearman & Sterling Letter.......... 2
Shelf Registration Statement........ 38
SOP 90-7............................ 29, 36
Special Distribution Date........... 45
Special Payment..................... 45
Special Payments Account............ 46
Stated Interest Rates............... 18
Subordination Agent................. 10
Teamsters........................... 32
Threshold Rating.................... 55
ticket tax.......................... 33
Transportation Code................. 50
Treasury Yield...................... 63
Triggering Event.................... 16
Trust Property...................... 10
Trustee............................. 1
Trusts.............................. 1
UMDA................................ 30
Underwriter Exemption............... 74
Virgin.............................. 5
I-2
80
APPENDIX II -- APPRAISAL LETTERS
[AIRCRAFT INFORMATION SERVICES, INC. LETTERHEAD]
20 May 1997
Continental Airlines
2929 Allen Parkway, Suite 1588
Houston, TX 77019
Subject: AISI Report No.: A7D055BVO
AISI Sight Unseen Current Market Half-Life Value Appraisal,
Six B737-300 and Four MD-82 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 half-life value of six B737-300 and four MD-82 aircraft as listed and
defined in Table I.
1. METHODOLOGY AND DEFINITIONS
This 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.
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
81
[AIRCRAFT INFORMATION SERVICES, INC. LOGO]
20 May 1997
AISI File No. A7D055BVO
Page - 2 -
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 B737-300 AND MD-80
B737-300
The B737-300 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 1,600 nautical miles, while
at high MTOW the range increases to approximately 2,600 nautical miles,
sufficient for short range domestic operations.
The B737-300 has a large fleet of 909 active aircraft, with 63 on firm order,
and a very strong customer base of 83 airlines with good representation in
every major geographic area. A significant number of the B737-300 fleet, 521
aircraft, are operated via either a finance lease or operating lease.
The major competitors to the B737-300 are the MD-80/MD-90 and the Airbus A320
even though these aircraft types are larger than the B737-300. The B737-300
also must compete with its larger variant the B737-400 and in some markets with
the older B737-200A. It will also shortly have to compete with the new B737-700
family.
We expect B737-300 production to cease by 1999. The aircraft was first
delivered in 1986, and AISI analysis of the market for the B737-300 indicates
that the present strong demand has stabilized and will continue at least until
the next major economic downturn, and that near term current market purchase
prices are decreasing slightly, while current market lease rates are still
increasing. Over the longer term, the B737-300 faces significant competition
from more advanced aircraft such as the B737-700 and A320 on the high end, and
from still viable B737-200 and MD-80 aircraft on the low end. B737-300 values
will probably decline to meet this challenge. B737-700 orders now equal
B737-300 backlog; we expect B737-300 deliveries to overtake the B737-300
shortly, however 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 limited range, we expect the future potential for freighter conversion to
be confined to the domestic small package carrier market, and then only after
the aircraft has approached the end of its economic useful life as a passenger
aircraft.
82
20 May 1997 [LOGO]
AISI File No. A7D055BVO
Page -3-
Boeing in recent head-to-head B737-300 competition with Airbus A319 and A320
aircraft has shown a willingness to offer B737-300 aircraft at drastically
reduced prices; over 40% less than the so called "list" 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.
MD-80
The McDonnell Douglas MD-80 series aircraft family is a twin JT8D-200 turbofan
engined, narrowbody, stage 3, two man crew aircraft derived from the DC-9
family, intended for short to medium range domestic passenger transport.
The MD-81, -82 and -83 all feature the same typical 135 passenger dual class
configuration, but vary in maximum gross takeoff weights to achieve different
ranges of approximately 1,550, 2,050 and 2,500 nautical miles respectively. The
MD-88 is an MD-82 with a modern 'glass' EFIS cockpit. The MD-87 features a
shorter cabin accommodating 114 passengers in dual class configuration, with
2,350 nautical mile range. Production of the MD-80 began in 1980 and we
forecast termination of production by 1998. In all 114 MD-81's were built,
operating with 10 airlines, with 64 on lease, and none on order. 562 MD-82's
were built, operating with 27 airlines, with 281 on lease and 7 on order. 221
MD-83 were built, operating with 32 airlines, with 162 on lease and 19 on
order. 72 MD-87's were built, operating with 11 airlines, with 21 on lease and
none on order. 152 MD-88's were built, operating with 6 airlines, with 71 on
lease and 5 on order. The operators are reasonably well geographically
distributed.
The MD-80 is a marginal stage 3 noise compliant aircraft, and its JT8D-200
engines are older technology, less fuel efficient than many of its newer
competitors, which include the B737-300/400/500 and soon the B737-600/700/800,
the A319/A320, the Fokker 100, the new MD-90/95 and the Avro RJ family as well
as less expensive older aircraft, including the B737-200, DC-9 family, Fokker
F-28, and Bae 146 family. Prior to the December 1996 announcement of the
acquisition of McDonnell Douglas, we had forecast termination of MD-80
production by 1998. Now, further production of the successor to the MD-80, the
MD-90/95, is also in doubt.
While MD-80 values have been steady in the current high demand market
conditions for narrowbody stage 3 aircraft, the combination of older
technology, minimal noise compliance margin, higher fuel consumption and now,
probability of termination of production of the variant and its high
commonality successor, make the MD-80 family quite vulnerable to reductions in
value with any economic downturn or lessening of demand. However, so long as
stiffer noice regulations are not effected, the aircraft should find a ready
home in startup airline
83
20 May 1997 [LOGO]
AISI File No. A7D055BVO
Page -4-
fleets as it declines in value and drops out of major airline fleets. The MD-87
and MD-81 should be most vulnerable, with the MD-82/88 and MD-83 less
vulnerable to reductions in value. The aircraft should enjoy a long useful life,
with its durable airframe and reliable systems, just as demonstrated by its
predecessor, the DC-9 family.
3. VALUATION
Following in Table I is AISI's opinion of the current market value for the
subject aircraft based on the assumptions, definitions and disclaimers herein.
TABLE I
Aircraft 1997 Current Market
Date of Registration Manufacturer's Half Life Value
Manufacturer Number Serial Number USdollars
- ------------ ------------ -------------- -------------------
B737-300, CFM56-3B1 ENGINES, 135,000LB MTOW
1986 N12322 23373 18,980,000
1986 N10383 23374 18,980,000
1986 N14324 23375 18,980,000
1986 N69333 23571 18,980,000
1986 N14334 23572 18,980,000
1986 N14335 23573 18,980,000
MD-82, JT8D-217A ENGINES, 149,500LB MTOW
1985 N12811 49265 15,300,000
1986 N15820 49480 16,100,000
1987 N18833 49493 16,900,000
1987 N10834 49494 16,900,000
84
[AISI LOGO]
20 May 1997
AISI File No. A7D055KBVO
Page - 5 -
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/ [NEED SIGNATURE]
For: Fred E. Bearden
President
FBI/DMfjm
85
[BK ASSOCIATES, INC. LETTERHEAD]
June 6, 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 June 1997 on each of six Boeing
737-3TO and four McDonnell Douglas DC9-82 (MD82) aircraft (Aircraft). Each of
the B737-3TO aircraft is powered by two CFM International CFM56-3B1 engines with
20,000 pounds thrust, a 135,000 pound maximum takeoff weight and a non-EFIS
(Electronic Flight Instrumentation System) flight deck. Each of the MD82s is
powered by two Pratt & Whitney JT8D-217A engines with 21,000 pounds thrust, has
a 149,500 pound maximum takeoff weight and is also non-EFIS. 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.
86
Continental Airlines, Inc.
June 6, 1997
Page 2
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 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 B737 and
MD82 aircraft to be in reasonable balance at this time but tending to be strong
with demand slightly exceeding supply, and thus, the FMV is equal to or
slightly higher than the base value. In addition, values were adjusted for
engine type, maximum gross takeoff weights (MGTOW), and the absence of EFIS. 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:
87
[BK Associates, Inc. Logo]
Continental Airlines, Inc.
June 6, 1997
Page 3
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.
CONCLUSIONS
Based on the above methodology, considerations and assumptions, it is our
opinion that the current fair market value of each aircraft are as follows:
Date of Serial Registration
Model Delivery Number Number CFMV (Each)
----- -------- ------ ------------ -----------
B737-3TO 02/1986 23373 N12322 18,250,000
B737-3TO 03/1986 23374 N10323 18,250,000
B737-3TO 03/1986 23375 N14324 18,250,000
B737-3TO 10/1986 23571 N69333 19,000,000
B737-3TO 10/1986 23572 N14334 19,000,000
B737-3TO 11/1986 23573 N14335 19,000,000
MD82 03/1985 49265 N12811 15,550,000
MD82 08/1986 49480 N15820 17,000,000
MD82 05/1987 49493 N18833 18,050,000
MD82 05/1987 49494 N10834 18,050,000
88
[BK ASSOCIATES, INC. LOGO]
Continental Airlines, Inc.
June 6, 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
89
[MORTEN BEYER AND AGNEW, INC. LETTERHEAD]
May 16, 1997
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Gentlemen:
Pursuant to your request, Morten Beyer and Agnew (MBA) has set forth
its opinion regarding the value of six B-737-300 and four MD-82 aircraft (as
described in Schedule I herein) being operated by Continental Airlines.
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 Traders (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 transaction would
be negotiated in an open and unrestricted market on an arm's length basis, for
case or equivalent consideration and given an adequate amount of time for
effective exposure to prospective buyers. Fair Market Value (FMV) is synonymous
to MV and Current Fair Market Value is synonymous with CMV because the criteria
90
typically used in those documents that use the term "fair" reflect the same
criteria set forth in the above definition of Market Value.
BV contains the same elements as MV, but the market conditions are
always assumed to be in a reasonable state of equilibrium. Thus, BV pertains to
an idealized aircraft and market combination, but will not necessarily reflect
the actual CMV of the aircraft in question. BV is founded in the historical
trend of values and is generally used to analyze historic values or to project
future values.
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.
In preparing this report, MBA did not inspect the aircraft or their
historical maintenance documentation. Therefore, we used certain assumptions
that are generally accepted industry practice to determine the BV of an
aircraft. The principal assumptions are as follows:
1. The aircraft are in good overall condition.
2. The overhaul status of the airframe, engines, landing gear and other
major components are the equivalent of mid-time/mid-life unless
otherwise specified.
3. The historical maintenance documentation has been maintained to
acceptable international standards.
4. The specifications of the aircraft are those most common for
aircraft of their type and vintage.
5. The aircraft are in standard airline configuration.
6. The aircraft are current as to all Airworthiness Directives and
Service Bulletins.
7. Their modification status is comparable to that most common for
aircraft of their type and vintage.
8. Their utilization is comparable to industry averages.
9. There is no history of accident or incident damage.
[MBA LOGO] 2
91
The aircraft are not encumbered by any attached lease, tax benefit
recapture or any other extraneous factor.
Based on the information set forth in this report the Current Market
Valuations of the subject aircraft, as of the date of this report, are as
follows:
AIRCRAFT REGISTRATION SERIAL MANUFACTURE CURRENT
TYPE NUMBER NUMBER DATE MARKET VALUE
-------- ------------ ------ ----------- ------------
B737-300 N12322 23373 1986 $21.58
B737-300 N10323 23374 1986 21.58
B737-300 N14324 23375 1986 21.58
B737-300 N69333 23571 1986 21.58
B737-300 N14334 23572 1986 21.58
B737-300 N14335 23573 1986 21.58
MD-82 N12811 49265 1985 19.71
MD-82 N15820 49480 1986 20.67
MD-82 N18833 49493 1987 21.62
MD-82 N10834 49494 1987 21.62
The Boeing 737-300 series aircraft is the Stage III upgraded successor to
the Boeing 737-200 series aircraft and has already has a 14-year production run,
with 948 produced to date and 76 more on order. Production is being phased out
over the next three years as the Boeing 737-700 series takes its place.
Nonetheless, we expect the -300 series will retain its value well into the next
century because of its strong market base and good economics. A few of these
aircraft are always in the float simply because there are so many of them, with
some being leased or operated by marginal carriers. Prices for these aircraft
have returned to near original acquisition costs after a dip in the early 1990s.
BACK Information Services currently lists three aircraft available for sale or
lease. MBA is of the opinion that the CMV is 110 percent of the Base Value.
[MBA LOGO] 3
92
The MD-80 series aircraft was the first newly manufactured twin to meet
Stage III noise standards, and featured higher gross weights and greater range.
Almost 1,200 of all models have been built. American Airlines, with orders
totaling 260, literally saved the design in a crucial period when initial
orders declined. There have been surprisingly few new orders in the last four
years although there are almost no aircraft on the market. BACK lists one
MD-82 available for sale or lease. Any aircraft that come on the market are
immediately spoken for. MBA is of the opinion that the CMV of this aircraft is
110 percent of Base Value.
This report has been prepared for the exclusive use of Continental
Airlines, and shall not be provided to other parties by MBA without the express
consent of Continental.
MBA certifies that this report has been prepared independently and that
it fully and accurately represents MBA's opinion, as of the date of this
report, of the Current Market Value of the subject aircraft. MBA further
certifies that it does not have, and does not expect to have, any financial or
other interest in the subject of similar aircraft.
This report represents the opinion of MBA 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
Chairman & CEO
ISTAT Certified Senior Appraiser
[MBA LOGO] 4
93
APPENDIX III -- EQUIPMENT NOTES PRINCIPAL PAYMENT SCHEDULE
SERIES A
AIRCRAFT REGISTRATION NUMBER
REGULAR
DISTRIBUTION DATES N12322 N10323 N14324 N69333 N14334 N14335 N12811
- -------------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
June 25, 1997....... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
December 30, 1997... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 1998....... 215,417.00 215,417.00 215,417.00 215,644.00 215,644.00 215,644.00 176,488.00
December 30, 1998... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 1999....... 215,417.00 215,417.00 215,417.00 215,644.00 215,644.00 215,644.00 176,488.00
December 30, 1999... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2000....... 215,428,00 215,428.00 215,428.00 215,655.00 215,655.00 215,655.00 176,496.00
December 30, 2000... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2001....... 229,997.00 229,997.00 229,997.00 230,240.00 230,240.00 230,240.00 188,433.00
December 30, 2001... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2002....... 368,170.00 368,170.00 368,170.00 368,558.00 368,558.00 368,558.00 301,636.00
December 30, 2002... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2003....... 469,218.00 469,218.00 469,218.00 459,712.00 469,712.00 469,712.00 384,422.00
December 30, 2003... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2004....... 591,208.00 591,208,00 591,208.00 591,831.00 591,831.00 591,831.00 484,368.00
December 30, 2004... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2005....... 843,329.00 843,329.00 843,329.00 844,218.00 844,218.00 844,218.00 690,925.00
December 30, 2005... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2006....... 1,892,397.00 1,892,397.00 1,892,397.00 1,894,391.00 1,894,391.00 1,894,391.00 1,550,411.00
December 30, 2006... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2007....... 2,741,229.00 2,741,229.00 2,741,229.00 2,744,117.00 2,744,117.00 2,744,117.00 2,245,844.00
REGULAR
DISTRIBUTION DATES N15820 N18833 N10834
- -------------------- ------------- ------------- -------------
June 25, 1997....... $ 0.00 $ 0.00 $ 0.00
December 30, 1997... 0.00 0.00 0.00
June 30, 1998....... 192,945.00 204,862.00 204,862.00
December 30, 1998... 0.00 0.00 0.00
June 30, 1999....... 192,945.00 204,862.00 204,862.00
December 30, 1999... 0.00 0.00 0.00
June 30, 2000....... 192,954.00 204,872.00 204,872.00
December 30, 2000... 0.00 0.00 0.00
June 30, 2001....... 206,004.00 218,728.00 218,728.00
December 30, 2001... 0.00 0.00 0.00
June 30, 2002....... 329,762.00 350,130.00 350,130.00
December 30, 2002... 0.00 0.00 0.00
June 30, 2003....... 420,269.00 446,226.00 446,226.00
December 30, 2003... 0.00 0.00 0.00
June 30, 2004....... 529,533.00 562,240.00 562,240.00
December 30, 2004... 0.00 0.00 0.00
June 30, 2005....... 755,353.00 802,007.00 802,007.00
December 30, 2005... 0.00 0.00 0.00
June 30, 2006....... 1,694,981.00 1,799,671.00 1,799,671.00
December 30, 2006... 0.00 0.00 0.00
June 30, 2007....... 2,455,263.00 2,606,912.00 2,606,912.00
SERIES B
AIRCRAFT REGISTRATION NUMBER
REGULAR
DISTRIBUTION DATES N12322 N10323 N14324 N69333 N14334 N14335 N12811
- -------------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
June 25, 1997....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
December 30, 1997... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 1998....... 73,557.00 73,557.00 73,557.00 73,635.00 73,635.00 73,635.00 60,264.00
December 30, 1998... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 1999....... 73,557.00 73,557.00 73,557.00 73,634.00 73,634.00 73,634.00 60,264.00
December 30, 1999... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2000....... 73,599.00 73,599.00 73,599.00 73,677.00 73,677.00 73,677.00 60,298.00
December 30, 2000... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2001....... 78,536.00 78,536.00 78,536.00 78,618.00 78,618.00 78,618.00 64,343.00
December 30, 2001... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2002....... 215,592.00 215,592.00 215,592.00 215,819.00 215,819.00 215,819.00 176,631.00
December 30, 2002... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2003....... 221,927.00 221,927.00 221,927.00 222,161.00 222,161.00 222,161.00 181,822.00
December 30, 2003... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2004....... 769,036.00 769,036.00 769,036.00 769,847.00 769,847.00 769,847.00 630,058.00
December 30, 2004... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2005....... 1,151,438.00 1,151,438.00 1,151,438.00 1,152,651.00 1,152,651.00 1,152,651.00 943,354.00
December 30, 2005... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2006....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
December 30, 2006... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2007....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
REGULAR
DISTRIBUTION DATES N15820 N18833 N10834
- -------------------- ------------- ------------- -------------
June 25, 1997....... 0.00 0.00 0.00
December 30, 1997... 0.00 0.00 0.00
June 30, 1998....... 65,884.00 69,953.00 69,953.00
December 30, 1998... 0.00 0.00 0.00
June 30, 1999....... 65,883.00 69,953.00 69,953.00
December 30, 1999... 0.00 0.00 0.00
June 30, 2000....... 65,921.00 69,992.00 69,992.00
December 30, 2000... 0.00 0.00 0.00
June 30, 2001....... 70,342.00 74,688.00 74,688.00
December 30, 2001... 0.00 0.00 0.00
June 30, 2002....... 193,102.00 205,028.00 205,028.00
December 30, 2002... 0.00 0.00 0.00
June 30, 2003....... 198,775.00 211,053.00 211,053.00
December 30, 2003... 0.00 0.00 0.00
June 30, 2004....... 688,809.00 731,354.00 731,354.00
December 30, 2004... 0.00 0.00 0.00
June 30, 2005....... 1,031,318.00 1,095,019.00 1,095,019.00
December 30, 2005... 0.00 0.00 0.00
June 30, 2006....... 0.00 0.00 0.00
December 30, 2006... 0.00 0.00 0.00
June 30, 2007....... 0.00 0.00 0.00
III-1
94
APPENDIX III -- EQUIPMENT NOTES PRINCIPAL PAYMENT SCHEDULE -- (CONTINUED)
SERIES C
AIRCRAFT REGISTRATION NUMBER
REGULAR
DISTRIBUTION DATES N12322 N10323 N14324 N69333 N14334 N14335 N12811
- -------------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
June 25, 1997....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
December 30, 1997... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 1998 ...... 124,835.00 124,835.00 124,835.00 124,967.00 124,967.00 124,967.00 102,276.00
December 30, 1998... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 1999....... 241,663.00 241,663.00 241,663.00 241,918.00 241,918.00 241,918.00 197,990.00
December 30, 1999... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2000....... 330,103.00 330,103.00 330,103.00 330,450.00 330,450.00 330,450.00 270,448.00
December 30, 2000... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2001....... 376,874.00 376,874.00 376,874.00 377,271.00 377,271.00 377,271.00 308,767.00
December 30, 2001... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2002....... 157,018.00 157,018.00 157,018.00 157,183.00 157,183.00 157,183.00 128,642.00
December 30, 2002... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2003....... 777,457.00 777,457.00 777,457.00 778,277.00 778,277.00 778,277.00 636,959.00
December 30, 2003... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2004....... 820,079.00 820,079.00 820,079.00 820,943.00 820,943.00 820,943.00 671,878.00
December 30, 2004... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2005....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
December 30, 2005... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2006....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
December 30, 2006... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2007....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
REGULAR
DISTRIBUTION DATES N15820 N18833 N10834
- -------------------- ------------- ------------- -------------
June 25, 1997....... 0.00 0.00 0.00
December 30, 1997... 0.00 0.00 0.00
June 30, 1998 ...... 111,812.00 118,718.00 118,718.00
December 30, 1998... 0.00 0.00 0.00
June 30, 1999....... 216,453.00 229,822.00 229,822.00
December 30, 1999... 0.00 0.00 0.00
June 30, 2000....... 295,666.00 313,928.00 313,928.00
December 30, 2000... 0.00 0.00 0.00
June 30, 2001....... 337,559.00 358,408.00 358,408.00
December 30, 2001... 0.00 0.00 0.00
June 30, 2002....... 140,637.00 149,324.00 149,324.00
December 30, 2002... 0.00 0.00 0.00
June 30, 2003....... 696,353.00 739,363.00 739,363.00
December 30, 2003... 0.00 0.00 0.00
June 30, 2004....... 734,528.00 779,896.00 779,896.00
December 30, 2004... 0.00 0.00 0.00
June 30, 2005....... 0.00 0.00 0.00
December 30, 2005... 0.00 0.00 0.00
June 30, 2006....... 0.00 0.00 0.00
December 30, 2006... 0.00 0.00 0.00
June 30, 2007....... 0.00 0.00 0.00
SERIES D
AIRCRAFT REGISTRATION NUMBER
REGULAR
DISTRIBUTION DATES N12322 N10323 N14324 N69333 N14334 N14335 N12811
- -------------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
June 25, 1997....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
December 30, 1997... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 1998....... 651,611.00 651,611.00 651,611.00 652,297.00 652,297.00 652,297.00 533,854.00
December 30, 1998... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 1999....... 663,571.00 663,571.00 663,571.00 664,271.00 664,271.00 664,271.00 543,654.00
December 30, 1999... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2000....... 742,986.00 742,986.00 742,986.00 743,769.00 743,769.00 743,769.00 608,716.00
December 30, 2000... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2001....... 786,805.00 786,805.00 786,805.00 787,634.00 787,634.00 787,634.00 644,616.00
December 30, 2001... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2002....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
December 30, 2002... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2003....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
December 30, 2003... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2004....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
December 30, 2004... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2005....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
December 30, 2005... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2006 0.00 0.00 0.00 0.00 0.00 0.00 0.00
December 30, 2006... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
June 30, 2007....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
REGULAR
DISTRIBUTION DATES N15820 N18833 N10834
- -------------------- ------------- ------------- -------------
June 25, 1997....... 0.00 0.00 0.00
December 30, 1997... 0.00 0.00 0.00
June 30, 1998....... 583,634.00 619,682.00 619,682.00
December 30, 1998... 0.00 0.00 0.00
June 30, 1999....... 594,348.00 631,058.00 631,058.00
December 30, 1999... 0.00 0.00 0.00
June 30, 2000....... 665,477.00 706,580.00 706,580.00
December 30, 2000... 0.00 0.00 0.00
June 30, 2001....... 704,725.00 748,252.00 748,252.00
December 30, 2001... 0.00 0.00 0.00
June 30, 2002....... 0.00 0.00 0.00
December 30, 2002... 0.00 0.00 0.00
June 30, 2003....... 0.00 0.00 0.00
December 30, 2003... 0.00 0.00 0.00
June 30, 2004....... 0.00 0.00 0.00
December 30, 2004... 0.00 0.00 0.00
June 30, 2005....... 0.00 0.00 0.00
December 30, 2005... 0.00 0.00 0.00
June 30, 2006 0.00 0.00 0.00
December 30, 2006... 0.00 0.00 0.00
June 30, 2007....... 0.00 0.00 0.00
III-2
95
======================================================
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................ 3
Reports to Certificateholders........ 4
Incorporation of Certain Documents By
Reference.......................... 4
Prospectus Summary................... 5
Risk Factors......................... 28
Use of Proceeds...................... 35
Ratios of Earnings to Fixed
Charges............................ 35
The Exchange Offer................... 36
Description of the New
Certificates....................... 43
Description of the Liquidity
Facilities......................... 54
Description of the Intercreditor
Agreement.......................... 57
Description of the Aircraft and the
Appraisals......................... 61
Description of the Equipment Notes... 62
Certain U.S. Federal Income Tax
Consequences....................... 72
ERISA Considerations................. 73
Plan of Distribution................. 75
Legal Matters........................ 76
Experts.............................. 76
Index of Terms....................... I-1
Appraisal Letters.................... II-1
Equipment Notes Principal Payment
Schedule........................... III-1
======================================================
======================================================
CONTINENTAL AIRLINES, INC.
OFFER TO EXCHANGE
PASS THROUGH CERTIFICATES, SERIES 1997-2,
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OUTSTANDING
PASS THROUGH CERTIFICATES, SERIES 1997-2
PROSPECTUS
, 1997
======================================================
96
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
II-1
97
advance of the final disposition of such action, suit or proceeding upon
receipt of undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he is not entitled to
be indemnified by the corporation as authorized in this section. Such
expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent for such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine a 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
II-2
98
(iv) for any transaction from which the Director derived any improper personal
benefit. If the GCL is amended to authorize corporate action further eliminating
or limiting the personal liability of Directors, then the liability of Directors
of the Corporation shall be eliminated or limited to the full extent permitted
by the GCL, as so amended".
The Company maintains directors' and officers' liability insurance.
ITEM 21. EXHIBITS.
The Index to Exhibits to this Registration Statement is incorporated herein
by reference.
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
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
II-3
99
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by any such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
or not such indemnification is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
100
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 October 21, 1997.
CONTINENTAL AIRLINES, INC.
By: /s/ JEFFERY A. SMISEK
------------------------------------
Jeffery A. Smisek
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on October 21, 1997.
SIGNATURE TITLE
- -------------------------------------------- --------------------------------------------
* Chairman of the Board, 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.
* Director
- --------------------------------------------
Lloyd M. Bentsen, Jr.
* Director
- --------------------------------------------
David Bonderman
* Director
- --------------------------------------------
Gregory D. Brenneman
* Director
- --------------------------------------------
Patrick Foley
* Director
- --------------------------------------------
Douglas H. McCorkindale
* Director
- --------------------------------------------
George G.C. Parker
II-5
101
SIGNATURE TITLE
- -------------------------------------------- --------------------------------------------
* Director
- --------------------------------------------
Richard W. Pogue
* Director
- --------------------------------------------
William S. Price III
* Director
- --------------------------------------------
Donald L. Sturm
* Director
- --------------------------------------------
Karen Hastie Williams
* Director
- --------------------------------------------
Charles A. Yamarone
*By: /s/ SCOTT R. PETERSON
- --------------------------------------------
Scott R. Peterson
Attorney-in-fact
II-6
102
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -----------------------------------------------------------------------------------
4.1 Form of New 7.148% Exchange Pass Through Certificate Series 1997-2A (included in
Exhibit 4.5)
4.2 Form of New 7.149% Exchange Pass Through Certificate Series 1997-2B (included in
Exhibit 4.6)
4.3 Form of New 7.206% Exchange Pass Through Certificate Series 1997-2C (included in
Exhibit 4.7)
4.4 Form of New 7.522% Exchange Pass Through Certificate Series 1997-2D (included in
Exhibit 4.8)
4.5 Pass Through Trust Agreement, dated as of June 25, 1997, between Continental
Airlines, Inc. and Wilmington Trust Company, as Trustee, made with respect to the
formation of Continental Airlines Pass Through Trust, Series 1997-2A and the
issuance of 7.148% Continental Airlines Pass Through Trust, Series 1997-2A Pass
Through Certificates representing fractional undivided interests in the Trust
4.6 Pass Through Trust Agreement, dated as of June 25, 1997, between Continental
Airlines, Inc. and Wilmington Trust Company, as Trustee, made with respect to the
formation of Continental Airlines Pass Through Trust, Series 1997-2B and the
issuance of 7.149% Continental Airlines Pass Through Trust, Series 1997-2B Pass
Through Certificates representing fractional undivided interests in the Trust
4.7 Pass Through Trust Agreement, dated as of June 25, 1997, between Continental
Airlines, Inc. and Wilmington Trust Company, as Trustee, made with respect to the
formation of Continental Airlines Pass Through Trust, Series 1997-2C and the
issuance of 7.206% Continental Airlines Pass Through Trust, Series 1997-2C Pass
Through Certificates representing fractional undivided interests in the Trust
4.8 Pass Through Trust Agreement, dated as of June 25, 1997, between Continental
Airlines, Inc., and Wilmington Trust Company, as Trustee, made with respect to the
formation of Continental Airlines Pass Through Trust, Series 1997-2D and the
issuance of 7.522% Continental Airlines Pass Through Trust, Series 1997-2D Pass
Through Certificates representing fractional undivided interests in the Trust
4.9 Revolving Credit Agreement, dated June 25, 1997, between Wilmington Trust Company,
as Subordination Agent, as agent and trustee for the Continental Airlines Pass
Through Trust 1997-2A, as Borrower and Kredietbank N.V., New York Branch, as
Liquidity Provider
4.10 Revolving Credit Agreement, dated June 25, 1997, between Wilmington Trust Company,
as Subordination Agent, as agent and trustee for the Continental Airlines Pass
Through Trust 1997-2B, as Borrower and Kredietbank N.V., New York Branch, as
Liquidity Provider
4.11 Revolving Credit Agreement, dated June 25, 1997, between Wilmington Trust Company,
as Subordination Agent, as agent and trustee for the Continental Airlines Pass
Through Trust 1997-2C, as Borrower and Kredietbank N.V., New York Branch, as
Liquidity Provider
4.12 Intercreditor Agreement, dated as of June 25, 1997, among Wilmington Trust Company,
as Trustee under the Continental Airlines Pass Through Trust 1997-2A, Continental
Airlines Pass Through Trust 1997-2B, Continental Airlines Pass Through Trust
1997-2C and Continental Pass Through Trust 1997-2D, Kredietbank N.V., New York
Branch, as Class A Liquidity Provider, Class B Liquidity Provider, Class C
Liquidity Provider, and Wilmington Trust Company, as Subordination Agent and
Trustee
II-7
103
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -----------------------------------------------------------------------------------
4.13 Exchange and Registration Rights Agreement, dated as of June 25, 1997, among
Continental Airlines, Inc., Wilmington Trust Company, as Trustee under Continental
Airlines Pass Through Trust, Series 1997-2A, Continental Airlines Pass Through
Trust, Series 1997-2B, Continental Airlines Pass Through Trust, Series 1997-2C, and
Credit Suisse First Boston Corporation, and Morgan Stanley & Co. Incorporated,
Chase Securities Inc. and Goldman, Sachs & Co.
4.14 Purchase Agreement, dated as of June 17, 1997, among Continental Airlines, Inc.,
Wilmington Trust Company as Trustee under each of the Trusts, Credit Suisse First
Boston Corporation and Morgan Stanley & Co., Incorporated as Purchasers
4.15 Participation Agreement 322, dated as of June 25, 1997, among Continental Airlines,
Inc., and Wilmington Trust Company, not in its individual capacity, but solely as
Mortgagee, Second Mortgagee, Subordination Agent under the Intercreditor Agreement
and Pass Through Trustee under each of the Pass Through Agreements (this instrument
is substantially the same for each Aircraft)
4.16 Trust Indenture and Mortgage 322, dated as of June 25, 1997, between Continental
Airlines, Inc., and Wilmington Trust Company, solely as Mortgagee (this instrument
is substantially the same for each Aircraft)
4.17 Second Trust Indenture and Mortgage, dated as of June 25, 1997, between Continental
Airlines, Inc., Owner and Wilmington Trust Company, not in its individual capacity,
but solely as Mortgagee, Second Mortgagee
5.1 Opinion of Hughes Hubbard & Reed LLP relating to validity of the 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 Agnew, Inc.
24.1 Powers of Attorney
25.1 Statement of Eligibility of Wilmington Trust Company for the 1997-2A Pass Through
Certificates, on Form T-1
25.2 Statement of Eligibility of Wilmington Trust Company for the 1997-2B Pass Through
Certificates, on Form T-1
25.3 Statement of Eligibility of Wilmington Trust Company for the 1997-2C Pass Through
Certificates, on Form T-1
25.4 Statement of Eligibility of Wilmington Trust Company for the 1997-2D Pass Through
Certificates, on Form T-1
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees
99.4 Form of Letter to Clients
- ---------------
* To be filed by amendment
II-8
1
Exhibit 4.5
[EXECUTION COPY]
================================================================================
PASS THROUGH TRUST AGREEMENT
Dated as of June 25, 1997
between
CONTINENTAL AIRLINES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
Continental Airlines Pass Through Trust, Series 1997-2A
7.148% Initial Pass Through Certificates, Series 1997-2A
7.148% Exchange Pass Through Certificates, Series 1997-2A
================================================================================
2
Reconciliation and tie between Continental Airlines Pass Through Trust
Agreement, Series 1997-2A dated as of June 25, 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........................................... 2
Section 1.02. Compliance Certificates and Opinions.................. 15
Section 1.03. Form of Documents Delivered to
Trustee............................................... 16
Section 1.04. Directions of Certificateholders...................... 16
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates;
Acquisition of Equipment Notes........................ 18
Section 2.02. Acceptance by Trustee................................. 22
Section 2.03. Limitation of Powers.................................. 22
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and
Execution of Certificates............................. 23
Section 3.02. Restrictive Legends................................... 25
Section 3.03. Authentication of Certificates........................ 27
Section 3.04. Transfer and Exchange................................. 28
Section 3.05. Book-Entry Provisions for
Restricted Global Certificates and
Regulation S Global Certificates...................... 29
Section 3.06. Special Transfer Provisions........................... 31
Section 3.07. Mutilated, Destroyed, Lost or
Stolen Certificates................................... 36
Section 3.08. Persons Deemed Owners................................. 36
Section 3.09. Cancellation.......................................... 37
Section 3.10. Temporary Certificates................................ 37
Section 3.11. Limitation of Liability for Payments.................. 38
4
Section Page
- ------- ----
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special
Payments Account...................................... 38
Section 4.02. Distributions from Certificate
Account and Special Payments Account.................. 39
Section 4.03. Statements to Certificateholders...................... 41
Section 4.04. Investment of Special Payment Moneys.................. 42
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence.................... 42
Section 5.02. Consolidation, Merger, etc............................ 43
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of
Remedies.............................................. 44
Section 6.02. Incidents of Sale of Equipment Notes.................. 48
Section 6.03. Judicial Proceedings Instituted by
Trustee; Trustee May Bring Suit....................... 48
Section 6.04. Control by Certificateholders......................... 49
Section 6.05. Waiver of Past Defaults............................... 49
Section 6.06. Right of Certificateholders to
Receive Payments Not to Be Impaired................... 50
Section 6.07. Certificateholders May Not Bring
Suit Except Under Certain Conditions.................. 50
Section 6.08. Remedies Cumulative................................... 51
5
Section Page
- ------- ----
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities................... 52
Section 7.02. Notice of Defaults.................................... 52
Section 7.03. Certain Rights of Trustee............................. 53
Section 7.04. Not Responsible for Recitals or
Issuance of Certificates.............................. 54
Section 7.05. May Hold Certificates................................. 55
Section 7.06. Money Held in Trust................................... 55
Section 7.07. Compensation and Reimbursement........................ 55
Section 7.08. Corporate Trustee Required;
Eligibility........................................... 56
Section 7.09. Resignation and Removal;
Appointment of Successor.............................. 56
Section 7.10. Acceptance of Appointment by
Successor............................................. 58
Section 7.11. Merger, Conversion, Consolidation
or Succession to Business............................. 59
Section 7.12. Maintenance of Agencies............................... 60
Section 7.13. Money for Certificate Payments to
Be Held in Trust...................................... 61
Section 7.14. Registration of Equipment Notes in
Name of Subordination Agent........................... 62
Section 7.15. Representations and Warranties of
Trustee............................................... 62
Section 7.16. Withholding Taxes, Information
Reporting............................................. 63
Section 7.17. Trustee's Liens....................................... 64
Section 7.18. Preferential Collection of Claims..................... 64
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with
Names and Addresses of
Certificateholders.................................... 65
6
Section Page
- ------- ----
Section 8.02. Preservation of Information;
Communications to Certificateholders.................. 65
Section 8.03. Reports by Trustee.................................... 65
Section 8.04. Reports by the Company................................ 66
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without
Consent of Certificateholders......................... 67
Section 9.02. Supplemental Agreements with
Consent of Certificateholders......................... 69
Section 9.03. Documents Affecting Immunity or
Indemnity............................................. 70
Section 9.04. Execution of Supplemental Agreements.................. 70
Section 9.05. Effect of Supplemental Agreements..................... 71
Section 9.06. Conformity with Trust Indenture Act................... 71
Section 9.07. Reference in Certificates to
Supplemental Agreements............................... 71
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to
Indentures and Financing Documents.................... 71
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust.............................. 73
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of
Certificateholders.................................... 74
7
Section Page
- ------- ----
Section 12.02. Certificates Nonassessable and
Fully Paid............................................ 74
Section 12.03. Notices............................................... 75
Section 12.04. Governing Law......................................... 76
Section 12.05. Severability of Provisions............................ 76
Section 12.06. Trust Indenture Act Controls.......................... 76
Section 12.07. Effect of Headings and Table of
Contents.............................................. 77
Section 12.08. Successors and Assigns................................ 77
Section 12.09. Benefits of Agreement................................. 77
Section 12.10. Legal Holidays........................................ 77
Section 12.11. Counterparts.......................................... 77
Section 12.12. Intention of Parties.................................. 77
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 Insitutional
Accredited Investor
Schedule I- Aircraft
8
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of June 25, 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 1997-2A and the issuance of
7.148% Continental Airlines Pass Through Trust, Series 1997-2A Pass Through
Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company wishes to purchase the six Boeing 737-3TO
aircraft and four McDonnell Douglas DC-9-82 aircraft listed in Schedule I hereto
(the "Aircraft") and to finance the purchase price of each such Aircraft through
the issuance pursuant to an Indenture, on a recourse basis, of four series of
Equipment Notes relating to such Aircraft;
WHEREAS, the Trustee, upon execution and delivery of this Agreement,
hereby declares the creation of the Trust for the benefit of the
Certificateholders, and the initial Certificateholders, as the grantors of the
Trust, by their respective acceptances of the Certificates, join in the creation
of this Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or interests in respect of any property other than the Trust Property;
WHEREAS, pursuant to the terms and conditions of this Agreement and
each of the Financing Agreements to be entered into by the Trustee
simultaneously with the execution and delivery of this Agreement, the Trustee on
behalf of the Trust shall purchase one or more issues of Equipment Notes having
the same interest rate as, and final maturity dates not later than the final
Regular Distribution Date of, the Certificates issued hereunder and, subject to
the Intercreditor Agreement, shall hold such Equipment Notes in trust for the
benefit of the Certificateholders;
9
-2-
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 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;
10
-3-
(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
(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: Has the meaning specified in the first recital to this
Agreement.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
11
-4-
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 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).
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
Company: Means Continental Airlines, Inc., a Delaware corporation,
or its successor in interest pursuant to Section 5.02, or (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"
(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, the Second
Mortgagee or any Loan Trustee, means the office of such trustee in the
city at which at any particular time
12
-5-
its corporate trust business shall be principally administered.
Cut-off Date: Means August 31, 1997.
Definitive Certificates: Has the meaning specified in Section
3.01(e).
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.
Escrow Account: Has the meaning specified in Section 2.01(b).
Escrowed Funds: Has the meaning specified in Section 2.01(b).
Euroclear: Means the Euroclear System.
Event of Default: Means an Indenture Default under any Indenture
pursuant to which Equipment Notes held by the Trust were issued.
Exchange Certificates: Means the 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.
13
-6-
Final Maturity Date: Means December 30, 2008.
Financing Agreements: Means each of the ten separate Participation
Agreements relating to the Aircraft each dated the date hereof, among the
Company, the Pass Through Trustee, the Other Trustees, the relevant Loan
Trustee, the Second Mortgagee 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.
Financing Documents: With respect to any Equipment Note, means the
related Indenture, the Second Mortgage and the related Financing
Agreement.
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 ten separate trust indentures and
mortgages relating to the Aircraft, 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 and Morgan Stanley & Co. Incorporated.
Institutional Accredited Investor: Means an institutional investor
that is an "accredited investor"
14
-7-
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 June 25, 1997 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers relating to the Certificates issued
under (and as defined in) each of the Other 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.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
Liquidity Facility: Means, initially, the Revolving Credit Agreement
dated as of June 25, 1997 relating to the Certificates, between the
Liquidity Provider and the Subordination Agent, as agent and trustee for
the Trustee, and, from and after the replacement of such Agreement
pursuant to the Intercreditor Agreement, the replacement liquidity
facility (or facilities) therefor, in each case as amended, supplemented
or otherwise modified from time to time in accordance with its terms.
Liquidity Provider: Means, initially, Kredietbank N.V., acting
through its New York Branch, 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
mortgagee under such Indenture, together with any successor to such
mortgagee appointed pursuant thereto.
McDonnell Douglas: Means the McDonnell Douglas Corporation.
Non-U.S. Person: Means a Person that is not a "U.S. person", as
defined in Regulation S.
Officer's Certificate: Means a certificate signed, (a) in the case
of the Company, by (i) the Chairman or Vice Chairman of the Board of
Directors, the President, any Executive Vice President, any Senior Vice
President or the
15
-8-
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, (b) in the case of a
Loan Trustee, a Responsible Officer of such Loan Trustee or (c) in the
case of a Second Mortgagee, a Responsible Officer of such Second
Mortgagee.
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 Loan Trustee or Second Mortgagee 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 1997-2 Pass Through Trust Agreements relating to
Continental Airlines Pass Through Trust, Series 1997-2B, Continental
Airlines Pass Through Trust, Series 1997-2C and Continental Airlines Pass
Through Trust, Series 1997-2D, 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.
Outstanding: When used with respect to Certificates, means, as of
the date of determination, all Certificates theretofore authenticated and
delivered under this Agreement, except:
(i) Certificates theretofore 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
16
-9-
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.
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 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. 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 the Trust and
the distribution thereof to be made on such Distribution Date.
Pool Factor: Means, as of any date, the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance as at
such date by (ii) the original aggregate face amount of the Certificates.
The Pool Factor as of any Distribution Date shall be computed after giving
effect to the payment of principal, if any, on the Equipment Notes or
other Trust Property held in the Trust and the distribution thereof to be
made on such Distribution Date.
17
-10-
Postponed Notes: Means any Equipment Notes to be held in the Trust
as to which a Postponement Notice shall have been delivered pursuant to
Section 2.01(b).
Postponement Notice: Means an Officer's Certificate of the Company
(1) requesting that the Trustee temporarily postpone the purchase pursuant
to one or more of the Financing Agreements of certain of the Equipment
Notes to a date which is later than the Issuance Date, (2) identifying the
amount of the purchase price of each such Equipment Note and the aggregate
purchase price for all such Equipment Notes and (3) with respect to each
such Equipment Note, either (a) setting or resetting a new Transfer Date
for payment by the Trustee of such purchase price and issuance of the
related Equipment Note (subject to subsequent change from time to time in
accordance with the relevant Financing Agreement), or (b) indicating that
such new Transfer Date (which shall be on or prior to the Cut-off Date)
will be set by subsequent written notice not less than one Business Day
prior to such new Transfer Date (subject to subsequent change from time to
time in accordance with the relevant Financing Agreement).
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).
Purchase Agreement: Means the Purchase Agreement dated June 17, 1997
among the Initial Purchasers and the Company, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
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
18
-11-
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 June 25, 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.
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).
Responsible Officer: With respect to the Trustee, the Second
Mortgagee and any Loan Trustee, means any officer in the Corporate Trust
Office of the Trustee, Second Mortgagee or Loan Trustee or any other
officer customarily performing
19
-12-
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.
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 the Liquidity Facility, which payment
represents the installment of principal at the stated maturity of such
installment of principal on such Equipment Note, the payment of regularly
scheduled interest accrued on the unpaid principal amount of such
Equipment Note, or both; provided that any payment of principal, premium,
if any, or interest resulting from the redemption or purchase of any
Equipment Note shall not constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as from time to
time constituted or created under the 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.
20
-13-
Second Mortgage: Means the Second Trust Indenture and Mortgage dated
as of the date hereof between the Company and the Loan Trustees.
Second Mortgagee: Means the bank or trust company designated as
second mortgagee under the Second Mortgage together with any successor to
such second mortgagee appointed pursuant thereto.
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 Payment: Means (i) any payment (other than a Scheduled
Payment) in respect of, or any proceeds of, any Equipment Note, the
Collateral (as defined in each Indenture) or the Collateral (as defined in
the Second Mortgage), (ii) the amounts required to be distributed pursuant
to the last paragraph of Section 2.01(b) or (iii) the amounts required to
be distributed pursuant to the penultimate paragraph of Section 2.01(b).
Special Payments Account: Means the account or accounts created and
maintained pursuant to Section 4.01(b).
Specified Investments: Means, with respect to investments to be made
with Escrowed Funds pursuant to Section 2.01(b) hereof, (i) obligations
of, or guaranteed by, the United States Government or agencies thereof,
(ii) open market commercial paper of any corporation incorporated under
the laws of the United States of America or any State thereof rated at
least P-2 or its equivalent by Moody's Investors Service, Inc. or at least
A-2 or its equivalent by
21
-14-
Standard & Poor's Ratings Group, (iii) certificates of deposit issued by
commercial banks organized under the laws of the United States or of any
political subdivision thereof having a combined capital and surplus in
excess of $100,000,000, which banks or their holding companies have a
short-term deposit rating of Pl by Moody's Investors Service, Inc. or its
equivalent by Standard & Poor's Ratings Group; provided, however, that the
aggregate amount at any one time so invested in certificates of deposit
issued by any one bank shall not exceed 5% of such bank's capital and
surplus, (iv) U.S. dollar denominated offshore certificates of deposit
issued by, or offshore time deposits with, any commercial bank described
in clause (iii) above or any subsidiary thereof and (v) repurchase
agreements with any financial institution having combined capital and
surplus of at least $100,000,000 with respect to any of the obligations
described in clauses (i) through (iv) above as collateral; provided
further that if all of the above investments are unavailable, all amounts
to be invested may be used to purchase Federal Funds from an entity
described in clause (iii) above.
Subordination Agent: Has the meaning specified in the Intercreditor
Agreement.
Transfer Date: Has the meaning assigned to the term "Closing Date"
in each Financing Agreement (as such "Closing Date" may be changed from
time to time in accordance with the terms of such Financing Agreement).
Triggering Event: Has the meaning assigned to such term in the
Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate of
which consists of the Trust Property.
Trust Indenture Act: Means the United States Trust Indenture Act of
1939, as amended from time to time, or any successor thereto.
Trust Property: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Trust and all monies at
any time paid thereon and all monies due and to become due thereunder,
(ii) funds from time to time deposited in the Escrow Account, the
Certificate Account and the Special Payments Account and, subject to the
22
-15-
Intercreditor Agreement, any proceeds from the sale by the Trustee
pursuant to Article VI hereof of any such Equipment Note and (iii) all
rights of the Trust and the Trustee, on behalf of the Trust, under the
Intercreditor Agreement and the Liquidity Facility, including, without
limitation, all rights to receive certain payments thereunder, and all
monies paid to the Trustee on behalf of the Trust pursuant to the
Intercreditor Agreement or the Liquidity Facility.
Trustee: Means Wilmington Trust Company, or its successor in
interest, and any successor or other trustee appointed as provided herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
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 Loan Trustee or the Second Mortgagee to the Trustee to take
any action under any provision of this Agreement, the Company, such Loan Trustee
or such Second Mortgagee, 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
23
-16-
or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters and any such Person may certify or give an opinion as to
such matters in one or several documents.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement 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, any Loan Trustee or the Second Mortgagee. 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, any Loan Trustee
24
-17-
and the Second Mortgagee, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or such other officer and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner
which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the requisite
Fractional Undivided Interests of Certificates Outstanding have given any
Direction under this Agreement, Certificates owned by the Company or any
Affiliate thereof shall be disregarded and deemed not to be Outstanding for
purposes of any such determination. In determining whether the Trustee shall be
protected in relying upon any such Direction, only Certificates which the
Trustee knows to be so owned shall be so disregarded. Notwithstanding the
foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded, and (ii) if any amount of
Certificates so owned by any such Person have been pledged in good faith, such
Certificates shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Company or any Affiliate thereof.
(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
25
-18-
record date shall be the record date specified in such Officer's Certificate,
which shall be a date not more than 30 days prior to the first solicitation of
Certificateholders in connection therewith. If such a record date is fixed, such
Direction may be given before or after such record date, but only the
Certificateholders of record at the close of business on such record date shall
be deemed to be Certificateholders for the purposes of determining whether
Certificateholders of the requisite proportion of Outstanding Certificates have
authorized or agreed or consented to such Direction, and for that purpose the
Outstanding Certificates shall be computed as of such record date; provided that
no such Direction by the Certificateholders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Agreement not later than one year after such record date.
(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 and each of the
Financing Agreements on or prior to the Issuance Date, each in the form
delivered to the Trustee by the Company, and (ii) subject to the respective
terms thereof, to perform its obligations thereunder. Upon request of the
Company and the satisfaction or waiver of the closing conditions specified in
the Purchase Agreement, the Trustee shall execute, deliver, authenticate, issue
and sell Initial Certificates in authorized denominations equalling in the
aggregate the amount set forth, with respect to the Certificates, in Schedule II
to
26
-19-
the 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 Financing Agreements. On
the Issuance Date, the Trustee shall purchase, pursuant to the terms and
conditions of the Financing Agreements, the Equipment Notes (other than the
Postponed Notes) contemplated to be purchased by the Trustee under the Financing
Agreements at a purchase price equal to the consideration so received for the
Certificates (less the aggregate amount of any Escrowed Funds). 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 prior to the Issuance Date, the Company may deliver to the
Trustee a Postponement Notice relating to one or more Postponed Notes. The
Trustee shall postpone the purchase of the Postponed Notes from the
consideration received from the sale of Certificates and shall promptly deposit
funds in an amount equal to the purchase price of such Postponed Notes (the
"Escrowed Funds") into an escrow account (the "Escrow Account") with the Trustee
to be maintained as a part of the Trust. The portion of Escrowed Funds so
deposited with respect to any particular Postponed Notes shall be invested by
the Trustee at the direction and risk of the Company in Specified Investments
(i) maturing no later than any scheduled Transfer Date relating to such
Postponed Notes or (ii) if no such Transfer Date has been scheduled, maturing on
the next Business Day, or (iii) if the Company has given notice to the Trustee
that such Postponed Notes will not be issued, maturing on the next applicable
Special Distribution Date, if such investments are reasonably available for
purchase. The Trustee shall make withdrawals from the Escrow Account only as
provided in this Agreement. Upon request of the Company on one or more occasions
and the satisfaction or waiver of the closing conditions specified in the
applicable Financing Agreement on or prior to the Cut-off Date, the Trustee
shall purchase the applicable Postponed Notes with Escrowed Funds withdrawn from
the Escrow Account. The purchase price shall equal the principal amount of such
Postponed Notes.
The Trustee shall hold all Specified Investments until the maturity
thereof and will not sell or otherwise transfer Specified Investments. If
Specified Investments held in an Escrow Account mature prior to any applicable
Transfer Date, any proceeds received on the maturity of such Specified
Investments
27
-20-
(including any earnings thereon) shall be reinvested by the Trustee at the
direction and risk of the Company in Specified Investments maturing as provided
in the preceding paragraph. The Company shall pay to the Trustee for deposit to
the Escrow Account an amount equal to any losses on such Specified Investments
as incurred.
On the initial Regular Distribution Date, the Company will pay (in
immediately available funds) to the Trustee an amount equal to (i) the sum of
(A) the interest that would have accrued, at a rate equal to the interest rate
applicable to the Certificates, on any Postponed Notes purchased on or prior to
the Cut-Off Date if such Postponed Notes had been issued on the Issuance Date,
from and including the Issuance Date to but excluding the date of such purchase,
and (B) the interest that would have accrued, at a rate equal to the interest
rate applicable to the Certificates, on any Postponed Notes not purchased on or
prior to the Cut-Off Date (other than any Postponed Notes for which a Special
Distribution Date specified in either of the two immediately succeeding
paragraphs has occurred on or prior to the initial Regular Distribution Date) if
such Postponed Notes had been issued on the Issuance Date, from and including
the Issuance Date to but excluding the initial Regular Distribution Date, minus
(ii) the earnings on Specified Investments received (with respect to the portion
of the Escrow Funds deposited with respect to the Postponed Notes described in
sub-clauses (A) and (B) of clause (i) of this paragraph) by the Trustee from and
including the Issuance Date to but excluding the initial Regular Distribution
Date.
If the Company notifies the Trustee prior to the Cut-off Date that
any Postponed Notes will not be issued on or prior to the Cut-off Date for any
reason, on the next Special Distribution Date established pursuant to Section
4.02(c) for the distribution to the Certificateholders of Escrowed Funds with
respect to the Postponed Notes designated in such notice (i) the Company shall
pay to the Trustee for deposit in the Special Payments Account, in immediately
available funds, an amount equal to (A) the interest that would have accrued, on
the Postponed Notes designated in such notice, at a rate equal to the interest
rate applicable to the Certificates from and including the Issuance Date (if
such Special Distribution Date shall occur on or prior to the initial Regular
Distribution Date) or the initial Regular Distribution Date (if such Special
Distribution Date
28
-21-
occurs after the initial Regular Distribution Date) to but excluding such
Special Distribution Date, minus (B) the earnings on Specified Investments
received (with respect to the portion of the Escrowed Funds deposited with
respect to the Postponed Notes designated in such notice) by the Trustee from
and including the Issuance Date (if such Special Distribution Date shall occur
on or prior to the initial Regular Distribution Date) or the initial Regular
Distribution Date (if such Special Distribution Date occurs after the initial
Regular Distribution Date) to but excluding such Special Distribution Date and
(ii) the Trustee shall transfer an amount equal to that amount of Escrowed Funds
that would have been used to purchase the Postponed Notes designated in such
notice (together with the earnings described in clause (i)(B) of this paragraph
above) plus the amount paid by the Company pursuant to clause (i) of this
paragraph to the Special Payments Account for distribution as a Special Payment
in accordance with the provisions hereof.
If, on the Cut-off Date, an amount equal to less than all of the
initial Escrowed Funds (other than Escrowed Funds referred to in the immediately
preceding paragraph) has been used to purchase Postponed Notes, on the Special
Distribution Date established pursuant to Section 4.02(c) for the distribution
to the Certificateholders of Escrowed Funds with respect to all of the Postponed
Notes that have not been purchased on or prior to the Cut-off Date (other than
any Postponed Notes referred to in the immediately preceding paragraph) (i) the
Company shall pay to the Trustee for deposit in the Special Payments Account, in
immediately available funds, an amount equal to (A) the interest that would have
accrued on Postponed Notes originally contemplated to be purchased with such
unused Escrowed Funds (other than Escrowed Funds referred to in the immediately
preceding paragraph) but not so purchased at a rate equal to the interest rate
applicable to the Certificates from and including the Issuance Date (if such
Special Distribution Date shall occur on or prior to the initial Regular
Distribution Date) or the initial Regular Distribution Date (if such Special
Distribution Date occurs after the initial Regular Distribution Date) to but
excluding such Special Distribution Date, minus (B) the earnings on Specified
Investments received (with respect to the portion of the Escrowed Funds
deposited with respect to the Postponed Notes described in this paragraph) by
the Trustee from and including the Issuance Date (if such Special Distribution
Date shall occur on or prior to the initial Regular Distribution Date) or the
29
-22-
initial Regular Distribution Date (if such Special Distribution Date occurs
after the initial Regular Distribution Date) to but excluding such Special
Distribution Date and (ii) the Trustee shall transfer such unused Escrowed Funds
(together with the earnings described in clause (i)(B) of this paragraph above)
and the amount paid by the Company pursuant to the clause (i) of this paragraph
to the Special Payments Account for distribution as a Special Payment in
accordance with the provisions hereof.
Section 2.02. Acceptance by Trustee. The Trustee, upon the execution
and delivery of this Agreement, acknowledges its acceptance of all right, title
and interest in and to the 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 of the Equipment Notes acquired by the Trust in the name
of the Subordination Agent. By its payment for and acceptance of each
Certificate issued to it under this Agreement, each initial Certificateholder as
grantor of the Trust thereby joins in the creation and declaration of the Trust.
Section 2.03. Limitation of Powers. The Trust is constituted solely
for the purpose of making the investment in the Equipment Notes to be held in
the Trust, and, except as set forth herein, the Trustee shall not be authorized
or empowered to acquire any other investments or engage in any other activities
and, in particular, the Trustee shall not be authorized or empowered to do
anything that would cause such Trust to fail to qualify as a "grantor trust" for
federal income tax purposes (including as subject to this restriction, acquiring
any Aircraft (as defined in the respective Indentures) by bidding such Equipment
Notes or otherwise, or taking any action with respect to any such Aircraft once
acquired).
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "7.148% Initial
Pass Through Certificates, Series 1997-2A" and the Exchange Certificates shall
be known as the "7.148% Exchange Pass Through Certificates, Series 1997-2A", in
each
30
-23-
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.
(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 $74,862,000.
(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
31
-24-
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 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".
(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
32
-25-
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 clauses (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 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
33
-26-
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 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
34
-27-
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 Initial
Certificates in authorized denominations equalling in the aggregate the amount
set forth, with respect to the Trust, in Schedule II to the Purchase Agreement,
evidencing the entire ownership of the Trust, which amount equals the aggregate
principal amount of Equipment Notes which have been or may be purchased by the
Trustee pursuant to each Financing Agreement. Thereafter, the Trustee shall duly
execute, authenticate and deliver Certificates as herein provided.
(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")
35
-28-
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 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 (including, without limitation,
subject to the proviso to this sentence, Exchange Certificates) in authorized
denominations and 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 exchanges of Initial
Certificates for Exchange Certificates shall occur only after 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) and otherwise only in
accordance with the terms of the Exchange Offer. 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
36
-29-
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,
authenticate and deliver 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 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
37
-30-
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 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.
38
-31-
(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 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 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
39
-32-
provided in the foregoing sentence, 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 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
40
-33-
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 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
41
-34-
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 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
42
-35-
acknowledges the restrictions on transfer of such Certificate set forth in
such Restricted Legend and otherwise in this Agreement and agrees that it
will transfer such Certificate only as provided in such Restricted Legend
and otherwise 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
Restricted Legend and otherwise 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 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
43
-36-
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 shall require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent may treat the Person in whose name any Certificate is registered
(as of the day of determination) as the owner of such Certificate for the
purpose of receiving distributions pursuant to Article IV and for all other
purposes whatsoever, and none of the Trustee, the Registrar or any Paying Agent
shall be affected by any notice to the contrary.
Section 3.09. Cancellation. All Certificates surrendered for payment
or transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for cancellation
and shall promptly be 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
44
-37-
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 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 Second Mortgagee or the Liquidity Provider, 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).
45
-38-
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, 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
46
-39-
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 such
Special Payment, 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 that the Trustee receives a notice
from the Company that Postponed Notes will not be purchased pursuant to Section
2.01, such notice of Special Payment shall be mailed as soon as practicable
after receipt of such notice from the Company and shall state the Special
Distribution Date for such Special Payment, which shall occur 20 days after the
date of such notice of Special Payment or (if such 20th day is not practicable)
as soon as practicable thereafter. In the event that any Special Payment is to
be made pursuant to the last paragraph of Section 2.01(b) hereof, on the Cut-Off
Date (or, if
47
-40-
such Cut-Off Date is not practicable, as soon as practicable after the Cut-Off
Date), notice of such Special Payment shall be mailed stating the Special
Distribution Date for such Special Payment, which shall occur 20 days after the
date of such notice of such Special Payment (or, if such 20th day is not
practicable, as soon as practicable thereafter). 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 premium, if any, payable upon the redemption or purchase of an
Equipment Note has not been calculated at the time that the Trustee mails notice
of a Special Payment, it shall be sufficient if the notice sets forth the other
amounts to be distributed and states that any premium received will also be
distributed.
If any redemption of the Equipment Notes held in the Trust is
canceled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each 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
48
-41-
the following information (per $1,000 face amount Certificate as to (i) and (ii)
below):
(i) the amount of such distribution allocable to principal and
the amount allocable to premium, if any;
(ii) the amount of such distribution allocable to interest;
and
(iii) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of 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) and (a)(ii) 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).
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
49
-42-
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 state thereof or the District of Columbia, (ii) a
"citizen of the United States" as defined in 49 U.S.C. 40102(a)(15), as
amended, and (iii) a United States certificated air carrier, if and so
long as such status is a condition of entitlement to the benefits of
Section 1110 of the Bankruptcy Reform Act of 1978, as amended (11 U.S.C.
ss. 1110), with respect to the Leases;
50
-43-
(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.
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
51
-44-
extent it is the Controlling Party at such time (as determined pursuant to the
Intercreditor Agreement), direct the exercise of remedies as provided in the
Intercreditor Agreement.
(b) Purchase Rights of Certificateholders. By acceptance of its
Certificate, each Certificateholder agrees that at any time after the occurrence
and during the continuation of a Triggering Event,
(i) each Class B Certificateholder shall have the right to
purchase all, but not less than all, of the Certificates upon ten
days' written notice to the Trustee and each other Class B
Certificateholder, provided that (A) if prior to the end of such
ten-day period any other Class B Certificateholder notifies such
purchasing Class B Certificateholder that such other Class B
Certificateholder wants to participate in such purchase, then such
other Class B Certificateholder may join with the purchasing Class B
Certificateholder to purchase all, but not less than all, of the
Certificates pro rata based on the Fractional Undivided Interest in
the Class B Trust held by each such Class B Certificateholder and
(B) if prior to the end of such ten-day period any other Class B
Certificateholder fails to notify the purchasing Class B
Certificateholder of such other Class B Certificateholder's desire
to participate in such a purchase, then such other Class B
Certificateholder shall lose its right to purchase the Certificates
pursuant to this Section 6.01(b);
(ii) each Class C Certificateholder shall have the right
(which shall not expire upon any purchase of the Certificates
pursuant to clause (i) above) to purchase all, but not less than
all, of the Certificates and the Class B Certificates upon ten days'
written notice to the Trustee, the Class B Trustee and each other
Class C Certificateholder, provided that (A) if prior to the end of
such ten-day period any other Class C Certificateholder notifies
such purchasing Class C Certificateholder that such other Class C
Certificateholder wants to participate in such purchase, then such
other Class C Certificateholder may join with the purchasing Class C
Certificateholder to purchase all, but not less than all, of the
52
-45-
Certificates and the Class B Certificates pro rata based on
the Fractional Undivided Interest in the Class C Trust held by each
such Class C Certificateholder and (B) if prior to the end of such
ten day period any other Class C Certificateholder fails to notify
the purchasing Class C Certificateholder of such other Class C
Certificateholder's desire to participate in such a purchase, then
such other Class C Certificateholder shall lose its right to
purchase the Certificates pursuant to this Section 6.01(b); and
(iii) each Class D Certificateholder shall have the right
(which shall not expire upon any purchase of the Certificates
pursuant to clause (i) above or the purchase of the Certificates and
the Class B Certificates pursuant to clause (ii) above) to purchase
all, but not less than all, of the Certificates, the Class B
Certificates and the Class C Certificates upon ten days' written
notice to the Trustee, the Class B Trustee, the Class C Trustee and
each other Class D Certificateholder, provided that (A) if prior to
the end of such ten-day period any other Class D Certificateholder
notifies such purchasing Class D Certificateholder that such other
Class D Certificateholder wants to participate in such purchase,
then such other Class D Certificateholder may join with the
purchasing Certificateholder to purchase all, but not less than all,
of the Certificates, the Class B Certificates and the Class C
Certificates pro rata based on the Fractional Undivided Interest in
the Class D Trust held by each such Class D Certificateholder and
(B) if prior to the end of such ten day period any other Class D
Certificateholder fails to notify the purchasing Class D
Certificateholder of such other Class D Certificateholder's desire
to participate in such a purchase, then such other Class D
Certificateholder shall lose its right to purchase the Certificates,
the Class B Certificates and the Class C Certificates pursuant to
this Section 6.01(b).
The purchase price with respect to the Certificates shall be equal
to the Pool Balance of the Certificates, together with accrued and unpaid
interest thereon to the date of such purchase, without premium, but including
any other amounts then
53
-46-
due and payable to the Certificateholders under this Agreement, the
Intercreditor Agreement or any other Financing Document or on or in respect of
the Certificates; provided, however, if such purchase occurs after a Record
Date, such purchase price shall be reduced by the amount to be distributed
hereunder on the Distribution Date following such Record Date (which deducted
amounts shall remain distributable to, and may be retained by, the
Certificateholders 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, the Class B Certificates
and the Class C 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 B Certificateholder(s), Class C Certificateholder(s) or Class D
Certificateholder(s), as the case may be, of the purchase price set forth in the
first sentence of this paragraph, forthwith sell, assign, transfer and convey to
the purchaser(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 Intercreditor Agreement, the
Liquidity Facility, the Financing Documents and all Certificates held by such
Certificateholder (excluding all right, title and interest under any of the
foregoing to the extent such right, title or interest is with respect to an
obligation not then due and payable as respects any action or inaction or state
of affairs occurring prior to such sale) and the purchaser shall assume all of
such Certificateholder's obligations under this Agreement, the Intercreditor
Agreement, the Liquidity Facility, the Financing Documents and all such
Certificates. 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
54
-47-
and (ii) if the purchaser(s) shall so request, such Certificateholders will
comply with all the provisions of Section 3.04 hereof to enable new Certificates
to be issued to the purchaser in such denominations as it shall request. All
charges and expenses in connection with the issuance of any such new
Certificates shall be borne by the purchaser thereof.
As used in this Section 6.01(b), the terms "Certificateholder",
"Class", "Class B Certificate", "Class B Certificateholder", "Class B Trust",
"Class B Trustee", "Class C Certificate", "Class C Certificateholder", "Class C
Trust", "Class C Trustee", "Class D Certificate", "Class D Certificateholder",
"Class D Trust" and "Class D Trustee" shall have the respective meanings
assigned to such terms in the Intercreditor Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of
all or any part of the Equipment Notes held in the Trust 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 held
in the Trust, 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.
55
-48-
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 held in the Trust, 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, 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 held
in the Trust, 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
56
-49-
(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 and/or the Second Mortgagee 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 held in the Trust, 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 and/or the Second
Mortgagee 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.
57
-50-
Section 6.07. Certificateholders May Not Bring Suit Except Under
Certain Conditions. A Certificateholder shall not have the right to institute
any suit, action or proceeding at law or in equity or otherwise with respect to
this Agreement, for the appointment of a receiver or for the enforcement of any
other remedy under this Agreement, unless:
(1) such Certificateholder previously shall have given written
notice to the Trustee of a continuing Event of Default;
(2) Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the Trust shall have
requested the Trustee in writing to institute such action, suit or
proceeding and shall have offered to the Trustee indemnity as provided in
Section 7.03(e);
(3) the Trustee shall have refused or neglected to institute such an
action, suit or proceeding for 60 days after receipt of such notice,
request and offer of indemnity; and
(4) no direction inconsistent with such written request shall have
been given to the Trustee during such 60-day period by Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on any
property subject thereto, or the rights of the Certificateholders or the holders
of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder or (iii) enforce any
right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all the Certificateholders subject to the
provisions of this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given hereunder to
the Trustee or to any of the Certificateholders shall not be exclusive of any
other remedy or remedies, and every
58
-51-
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 known to the Trustee, the Trustee shall
transmit by mail to the Company, the Loan Trustees, the Second Mortgagee 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;
59
-52-
provided, however, that, except in the case of a default in 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 Loan Trustee or the Second Mortgagee;
(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
60
-53-
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, the Intercreditor
Agreement, the Certificates or any other Financing Document, except that the
Trustee hereby represents and warrants that this Agreement has been, and the
Intercreditor
61
-54-
Agreement, the Registration Rights 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 Loan Trustees or the Second
Mortgagee 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 the Trustee pursuant to Sections 8.1 and 8.3 of
each Financing Agreement.
62
-55-
The Trustee shall be entitled to reimbursement from, and shall have
a lien prior to the Certificates upon, the Trust Property for any tax incurred
without negligence, bad faith or willful misconduct, on its part, arising out of
or in connection with the acceptance or administration of such Trust (other than
any tax attributable to the Trustee's compensation for serving as such),
including any costs and expenses incurred in contesting the imposition of any
such tax. If the Trustee reimburses itself from the Trust Property of such Trust
for any such tax, it will mail a brief report within 30 days setting forth the
circumstances thereof to all Certificateholders as their names and addresses
appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder which shall be eligible to act as a trustee
under Section 310(a) of the Trust Indenture Act and shall have a combined
capital and surplus of at least $75,000,000 (or a combined capital and surplus
in excess of $5,000,000 and the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed by a corporation
organized and doing business under the laws of the United States, any state or
territory thereof or of the District of Columbia and having a combined capital
and surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 7.08, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of conditions so published.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
Section 7.09. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10.
63
-56-
(b) The Trustee may resign at any time as trustee by giving prior
written notice thereof to the Company, the Authorized Agents, the Loan Trustees
and the Second Mortgagee. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Company, the Authorized Agents, the Loan
Trustees, the Trustee and the Second Mortgagee 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 Loan Trustees and the Second
Mortgagee.
(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 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
64
-57-
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 Loan Trustees, the Second Mortgagee 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 Loan Trustees and the Second Mortgagee 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
65
-58-
Trustee shall execute and deliver an instrument transferring to such successor
Trustee all such rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all Trust Property
held by such retiring Trustee hereunder, subject nevertheless to its lien, if
any, provided for in Section 7.07. Upon request of any such successor Trustee,
the Company, the retiring Trustee and such successor Trustee shall execute and
deliver any and all instruments containing such provisions as shall be necessary
or desirable to transfer and confirm to, and for more fully and certainly
vesting in, such successor Trustee all such rights, powers and trusts.
No institution shall accept its appointment as a Trustee hereunder
unless at the time of such acceptance such institution shall be qualified and
eligible under this Article VII.
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article VII, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Certificates shall have been
executed or authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such execution or authentication and deliver the Certificates so
executed or authenticated with the same effect as if such successor Trustee had
itself executed or authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at all times
be maintained an office or agency in the location set forth in Section 12.03
where Certificates may be presented or surrendered for registration of transfer
or for exchange, and for payment thereof and where notices and demands to or
upon the Trustee in respect of such certificates or this Agreement may be
served; provided, however, that, if it shall be necessary that the Trustee
maintain an office or agency in another location (e.g., the Certificates shall
be represented by Definitive
66
-59-
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 Loan Trustees
and the Second Mortgagee (at their respective addresses 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 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.
67
-60-
(d) Any Authorized Agent may at any time resign by giving written
notice of resignation to the Trustee, the Company, the Loan Trustees and the
Second Mortgagee. 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 Loan Trustees and the Second Mortgagee; 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.
68
-61-
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased
by the Trust shall be issued in the name of the Subordination Agent or its
nominee and held by the Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the Subordination Agent or its nominee
shall be reflected as the owner of such Equipment Notes in the register of the
issuer of such Equipment Notes.
Section 7.15. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation organized and
validly existing in good standing under the laws of the State of Delaware;
(b) the Trustee has full power, authority and legal right to
execute, deliver, and perform this Agreement, the Intercreditor Agreement,
the Registration Rights Agreement and the Financing Agreements and has
taken all necessary action to authorize the execution, delivery, and
performance by it of this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements;
(c) the execution, delivery and performance by the Trustee of this
Agreement, the Intercreditor Agreement, the Registration Rights Agreement
and the Financing Agreements (i) will not violate any provision of United
States federal law or the law of the state of the United States where it
is located governing the banking and trust powers of the 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;
69
-62-
(d) the execution, delivery and performance by the Trustee of this
Agreement, the Intercreditor Agreement, the Registration Rights Agreement
and the Financing Agreements will not require the authorization, consent,
or approval of, the giving of notice to, the filing or registration with,
or the taking of any other action in respect of, any governmental
authority or agency of the United States or the state of the United States
where it is located regulating the banking and corporate trust activities
of the Trustee; and
(e) this Agreement, the Intercreditor Agreement, the Registration
Rights Agreement and the Financing Agreements have been duly executed and
delivered by the Trustee and constitute the legal, valid, and binding
agreements of the Trustee, enforceable against it in accordance with their
respective terms, provided that enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and (ii) general
principles of equity.
Section 7.16. Withholding Taxes, Information Reporting. The Trustee,
as trustee of the grantor trust created by this Agreement, shall exclude and
withhold from each distribution of principal, premium, if any, and interest and
other amounts due under this Agreement or under the Certificates any and all
withholding taxes applicable thereto as required by law. The Trustee agrees to
act as such withholding agent and, in connection therewith, whenever any present
or future taxes or similar charges are required to be withheld with respect to
any amounts payable in respect of the Certificates, to withhold such amounts and
timely pay the same to the appropriate authority in the name of and on behalf of
the Certificateholders, that it will file any necessary withholding tax returns
or statements when due, and that, as promptly as possible after the payment
thereof, it will deliver to each such Certificateholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Certificateholders may reasonably request from time
to time. The Trustee agrees to file any other information reports as it may be
required to file under United States law.
Section 7.17. Trustee's Liens. The Trustee in its individual
capacity agrees that it will at its own cost and
70
-63-
expense promptly take any action as may be necessary to duly discharge and
satisfy in full any mortgage, pledge, lien, charge, encumbrance, security
interest or claim ("Trustee's Liens") on or with respect to the Trust Property
which is attributable to the Trustee either (i) in its individual capacity and
which is unrelated to the transactions contemplated by this Agreement, the
Intercreditor Agreement, the Financing Agreements or the Financing Documents, or
(ii) as Trustee hereunder or in its individual capacity and which arises out of
acts or omissions which are not contemplated by this Agreement.
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
71
-64-
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)
72
-65-
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 Registration Rights Agreement or the Liquidity
Facility in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of
73
-66-
the covenants of the Company herein contained or of the Company's
obligations under the Registration Rights Agreement or the 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 Registration Rights Agreement or the
Liquidity Facility; or
(3) to correct or supplement any provision in this Agreement, the
Intercreditor Agreement, the Registration Rights Agreement or the
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 Intercreditor Agreement, the
Registration Rights Agreement or the Liquidity Facility, provided that any
such action shall not materially adversely affect the interests of the
Certificateholders; or, as provided in the Intercreditor Agreement, to
give effect to or provide for a Replacement Liquidity Facility (as defined
in the Intercreditor Agreement); 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
74
-67-
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 (but shall not be obligated to), and the Trustee (subject to Section 9.03)
shall enter into an agreement or agreements for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, the Intercreditor Agreement, the Liquidity Facility, the
Registration Rights Agreement or any Financing Agreement to the extent
applicable to such Certificateholders or of modifying in any manner the rights
and obligations of such Certificateholders under this Agreement, the
Intercreditor Agreement, the Liquidity Facility or the Registration Rights
Agreement; provided, however, that no such agreement shall, without the consent
of the Certificateholder of each Outstanding Certificate affected thereby:
(1) reduce in any manner the amount of, or delay the timing of, any
receipt by the Trustee of payments on the Equipment Notes held in the
Trust or distributions that are required to be made herein on any
Certificate, or change any
75
-68-
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.
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
76
-69-
indemnity in favor of the Trustee under this Agreement, the Trustee may in its
discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In executing, or
accepting the additional trusts created by, any agreement permitted by this
Article or the modifications thereby of the trusts created by this Agreement,
the Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental agreement is authorized or permitted by this Agreement.
Section 9.05. Effect of Supplemental Agreements. Upon the execution
of any agreement supplemental to this Agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Holder
of a Certificate theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.06. Conformity with Trust Indenture Act. Every
supplemental agreement executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
Section 9.07. Reference in Certificates to Supplemental Agreements.
Certificates authenticated and delivered after the execution of any supplemental
agreement pursuant to this Article may bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental agreement; and, in
such case, suitable notation may be made upon Outstanding Certificates after
proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to Indentures and
Financing Documents. In the event that the Trustee, as holder (or beneficial
owner through the Subordination Agent) of any Equipment Note (or as prospective
purchaser of any Postponed Notes) 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
Equipment Note, any Financing Document
77
-70-
related thereto 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 (or, with respect to
Postponed Notes, a prospective purchaser 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 (or, with respect to Postponed Notes, a prospective
purchaser of) such Equipment Note or a Controlling Party and (c) how to vote (or
direct the Subordination Agent to vote) any Equipment Note (or, with respect to
Postponed Note, its commitment to acquire such Postponed 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 (or Postponed 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 and/or the Second Mortgagee, as the case may be, of such consent (or
direct the Subordination Agent to consent and notify the relevant Loan Trustee
and/or the Second Mortgagee, as the case may be, of such consent) to any
amendment, modification, waiver or supplement under any Equipment Note (or
Postponed Note), any
78
-71-
Financing Document related thereto 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 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 execution of this Trust
Agreement.
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
79
-72-
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 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-
80
-73-
owners, or incurred any obligations of the Trust, directly rather than through
the Trust.
Section 12.03. Notices. (a) Unless otherwise specifically provided
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by United
States mail, courier service or telecopy, and any such notice shall be effective
when delivered or received or, if mailed, three days after deposit in the United
States mail with proper postage for ordinary mail prepaid,
if to the Company, to:
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Attention: Chief Financial Officer and
General Counsel
Facsimile: (713) 523-2831
if to the Trustee, to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Department
Facsimile: (302) 651-8882
Telephone: (302) 651-8584
(b) The Company or the Trustee, by notice to the other, may
designate additional or different addresses for subsequent notices or
communications.
(c) Any notice or communication to Certificateholders shall be
mailed by first-class mail to the addresses for Certificateholders shown on the
Register kept by the Registrar. Failure so to mail a notice or communication or
any defect in such notice or communication shall not affect its sufficiency with
respect to other Certificateholders.
(d) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.
81
-74-
(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, any Loan Trustee or the Second Mortgagee.
Section 12.04. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN
THE STATE OF NEW YORK AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK 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
82
-75-
the Trustee and the Company shall bind and, to the extent permitted hereby,
shall inure to the benefit of and be enforceable by their respective successors
and assigns, whether so expressed or not.
Section 12.09. Benefits of Agreement. Nothing in this Agreement or
in the Certificates, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, and the Certificateholders,
any benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 12.10. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate shall
not be a Business Day, then (notwithstanding any other provision of this
Agreement) payment need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on such
Regular Distribution Date or Special Distribution Date, and no interest shall
accrue during the intervening period.
Section 12.11. Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
Section 12.12. Intention of Parties. The parties hereto intend that
the Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a trust or association taxable as a corporation or as a
partnership. The powers granted and obligations undertaken pursuant to this
Agreement shall be so construed so as to further such intent.
83
-76-
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: /s/
-------------------------------
Name: Gerald Laderman
Title:Vice President
WILMINGTON TRUST COMPANY,
as Trustee
By: _______________________________
Name:
Title:
84
-77-
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:
85
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) 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 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
86
A-2
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.]*
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.]**
- ----------
* Not to be included on the face of the Regulation S Global Certificate.
** To be included on the face of each Global Certificate.
87
A-3
[[REGULATION S] GLOBAL CERTIFICATE]*
CONTINENTAL AIRLINES PASS THROUGH TRUST, SERIES 1997-2A
7.148% Continental Airlines [Initial] [Exchange]
Pass Through Certificate,
Series 1997-2A
Final Maturity Date: December 30, 2008
CUSIP/Common Code No. ____________
evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft owned by
Continental Airlines, Inc.
$74,862,000 Fractional Undivided Interest representing
.001335791% 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 1997-2A (the
"Trust") created pursuant to a Pass Through Trust Agreement, dated as of June
25, 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 "7.148%
Continental Airlines [Initial] [Exchange] Pass Through Certificates, Series
1997-2A" (herein called the "Certificates"). This Certificate is issued under
and is subject to the terms, provisions, and conditions of the Agreement. By
virtue of its acceptance hereof the Certificateholder of this Certificate
assents to and agrees to be bound by the provisions of the Agreement and the
Intercreditor Agreement. The property of the Trust includes an interest in
certain Equipment Notes and all rights of the Trust to receive payments under
the Intercreditor Agreement and the Liquidity Facility (the "Trust Property").
Each issue of the Equipment
- ----------
* To be included on the face of each Global Certificate.
88
A-4
Notes is secured by, among other things, a security interest in the Aircraft
owned by the Company.
The Certificates represent fractional undivided interests in the
Trust and the Trust Property, and have no rights, benefits or interest in
respect of any 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 June 30 and December 30 (a "Regular
Distribution Date"), commencing on December 30, 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
89
A-5
specifically set forth on the face hereof and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Registrar, or
by any successor Registrar, in the Borough of Manhattan, the City of New York,
duly endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Registrar duly executed by the
Certificateholder hereof or such Certificateholder's attorney duly authorized in
writing, and
90
A-6
thereupon one or more new Certificates of authorized denominations evidencing
the same aggregate Fractional Undivided Interest in the Trust will be issued to
the designated transferee or transferees.
[The Holder of this Certificate is entitled to the benefits of the
Exchange and Registration Rights Agreement, dated as of June 25, 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 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 (if it is filed), after being declared effective by the
SEC, 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 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).]*
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.
- ----------
* To be included only on each Initial Certificate.
91
A-7
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of [$100,000]* [$1,000]** Fractional
Undivided Interest and integral multiples of $1,000 in excess thereof except
that one Certificate may be in a 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.
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.
THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
- ----------
* To be included only on each Initial Certificate.
** To be included only on each Initial Certificate.
92
A-8
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: _______________, 1997 CONTINENTAL AIRLINES
PASS THROUGH TRUST, SERIES
1997-2A
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Trustee
By: ____________________________
Name:
Title:
93
A-9
[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
94
A-10
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
95
A-11
[ ] (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.
96
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
1997-2A, Continental Airlines Pass Through Certificates, Series
1997-2A (the "Certificates")
Sirs:
In connection with our proposed sale of $_____ Fractional Undivided
Interest of the Certificates, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended, and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale
97
B-2
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]
98
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 1997-2A (the "Trust")
Pass Through Certificates, Series 1997-2A
(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 June 25, 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.
99
C-2
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.
100
C-3
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:
101
SCHEDULE I
Aircraft
Aircraft Type Registration Number
------------- -------------------
Boeing 737-3T0 N12322
Boeing 737-3T0 N10323
Boeing 737-3T0 N14324
Boeing 737-3T0 N69333
Boeing 737-3T0 N14334
Boeing 737-3T0 N14335
McDonnell Douglas MD-82 N12811
McDonnell Douglas MD-82 N15820
McDonnell Douglas MD-82 N18833
McDonnell Douglas MD-82 N10834
1
Exhibit 4.6
[EXECUTION COPY]
- --------------------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of June 25, 1997
between
CONTINENTAL AIRLINES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
Continental Airlines Pass Through Trust, Series 1997-2B
7.149% Initial Pass Through Certificates, Series 1997-2B
7.149% Exchange Pass Through Certificates, Series 1997-2B
- --------------------------------------------------------------------------------
2
Reconciliation and tie between Continental Airlines Pass Through Trust
Agreement, Series 1997-2B dated as of June 25, 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........................................... 2
Section 1.02. Compliance Certificates and Opinions.................. 15
Section 1.03. Form of Documents Delivered to Trustee................ 16
Section 1.04. Directions of Certificateholders...................... 17
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of
Equipment Notes....................................... 19
Section 2.02. Acceptance by Trustee................................. 22
Section 2.03. Limitation of Powers.................................. 22
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates.......................................... 23
Section 3.02. Restrictive Legends................................... 26
Section 3.03. Authentication of Certificates........................ 27
Section 3.04. Transfer and Exchange................................. 28
Section 3.05. Book-Entry Provisions for Restricted Global
Certificates and Regulation S Global
Certificates.......................................... 29
Section 3.06. Special Transfer Provisions........................... 31
Section 3.07. Mutilated, Destroyed, Lost or Stolen
Certificates.......................................... 36
Section 3.08. Persons Deemed Owners................................. 37
Section 3.09. Cancellation.......................................... 37
Section 3.10. Temporary Certificates................................ 37
Section 3.11. Limitation of Liability for Payments.................. 38
Section 3.12. ERISA Restrictive Legend.............................. 38
i
4
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.............................. 39
Section 4.03. Statements to Certificateholders...................... 41
Section 4.04. Investment of Special Payment Moneys.................. 42
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence.................... 43
Section 5.02. Consolidation, Merger, etc............................ 43
ARTICLE VI
DEFAULT
Section 6.01. Events of Default..................................... 45
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.................................... 50
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............................. 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................................... 55
ii
5
Section Page
- ------- ----
Section 7.07. Compensation and Reimbursement........................ 55
Section 7.08. Corporate Trustee Required; Eligibility............... 56
Section 7.09. Resignation and Removal; Appointment of
Successor............................................. 57
Section 7.10. Acceptance of Appointment by Successor................ 59
Section 7.11. Merger, Conversion, Consolidation or Succession
to Business........................................... 59
Section 7.12. Maintenance of Agencies............................... 60
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................................... 62
Section 7.15. Representations and Warranties of Trustee............. 62
Section 7.16. Withholding Taxes, Information Reporting.............. 64
Section 7.17. Trustee's Liens....................................... 64
Section 7.18. Preferential Collection of Claims..................... 64
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders....................... 65
Section 8.02. Preservation of Information; Communications to
Certificateholders.................................... 65
Section 8.03. Reports by Trustee.................................... 65
Section 8.04. Reports by the Company................................ 66
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders.................................... 67
Section 9.02. Supplemental Agreements with Consent of
Certificateholders.................................... 69
Section 9.03. Documents Affecting Immunity or Indemnity............. 70
Section 9.04. Execution of Supplemental Agreements.................. 71
Section 9.05. Effect of Supplemental Agreements..................... 71
Section 9.06. Conformity with Trust Indenture Act................... 71
Section 9.07. Reference in Certificates to Supplemental
Agreements............................................ 71
iii
6
Section Page
- ------- ----
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to Indentures and
Financing Documents................................... 71
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust.............................. 73
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders............ 74
Section 12.02. Certificates Nonassessable and Fully Paid............. 74
Section 12.03. Notices............................................... 75
Section 12.04. Governing Law......................................... 76
Section 12.05. Severability of Provisions............................ 76
Section 12.06. Trust Indenture Act Controls.......................... 76
Section 12.07. Effect of Headings and Table of Contents.............. 77
Section 12.08. Successors and Assigns................................ 77
Section 12.09. Benefits of Agreement................................. 77
Section 12.10. Legal Holidays........................................ 77
Section 12.11. Counterparts.......................................... 77
Section 12.12. Intention of Parties.................................. 78
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
Schedule I- Aircraft
iv
7
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of June 25, 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 1997-2B and the issuance of
7.149% Continental Airlines Pass Through Trust, Series 1997-2B Pass Through
Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company wishes to purchase the six Boeing 737-3TO
aircraft and four McDonnell Douglas DC-9-82 aircraft listed in Schedule I hereto
(the "Aircraft") and to finance the purchase price of each such Aircraft through
the issuance pursuant to an Indenture, on a recourse basis, of four series of
Equipment Notes relating to such Aircraft;
WHEREAS, the Trustee, upon execution and delivery of this Agreement,
hereby declares the creation of the Trust for the benefit of the
Certificateholders, and the initial Certificateholders, as the grantors of the
Trust, by their respective acceptances of the Certificates, join in the creation
of this Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or interests in respect of any property other than the Trust Property;
WHEREAS, pursuant to the terms and conditions of this Agreement and
each of the Financing Agreements to be entered into by the Trustee
simultaneously with the execution and delivery of this Agreement, the Trustee on
behalf of the Trust shall purchase one or more issues of Equipment Notes having
the same interest rate as, and final maturity dates not later than the final
Regular Distribution Date of, the Certificates issued hereunder and, subject to
the Intercreditor Agreement, shall hold such Equipment Notes in trust for the
benefit of the Certificateholders;
WHEREAS, to facilitate the sale of Equipment Notes to, and the
purchase of Equipment Notes by, the Trustee on behalf of
8
-2-
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 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
9
-3-
therein, or by the rules promulgated under the Trust Indenture Act, have
the meanings assigned to them therein;
(3) all references in this Agreement to designated "Articles",
"Sections", "Subsections" and other subdivisions are to the designated
Articles, Sections, Subsections and other subdivisions of this Agreement;
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section, Subsection or other subdivision; and
(5) unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, it shall be deemed
to be followed by the phrase "without limitation".
Affiliate: Means, with respect to any 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: Has the meaning specified in the first recital to this
Agreement.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w) the Trust,
(x) the Trust Property, (y) Certificateholders or (z) the Trustee for
which the Trustee is entitled to seek
10
-4-
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 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).
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
Company: Means Continental Airlines, Inc., a Delaware corporation,
or its successor in interest pursuant to Section 5.02, or (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"
(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, the Second
Mortgagee 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.
11
-5-
Cut-off Date: Means August 31, 1997.
Definitive Certificates: Has the meaning specified in Section
3.01(e).
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 Account: Has the meaning specified in Section 2.01(b).
Escrowed Funds: Has the meaning specified in Section 2.01(b).
Euroclear: Means the Euroclear System.
Event of Default: Means an Indenture Default under any Indenture
pursuant to which Equipment Notes held by the Trust were issued.
Exchange Certificates: Means the 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.
12
-6-
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 December 30, 2006.
Financing Agreements: Means each of the ten separate Participation
Agreements relating to the Aircraft each dated the date hereof, among the
Company, the Pass Through Trustee, the Other Trustees, the relevant Loan
Trustee, the Second Mortgagee 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.
Financing Documents: With respect to any Equipment Note, means the
related Indenture, the Second Mortgage and the related Financing
Agreement.
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 ten separate trust indentures and
mortgages relating to the Aircraft, 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.
13
-7-
Initial Purchasers: Means, collectively, Credit Suisse First Boston
Corporation and Morgan Stanley & Co. Incorporated.
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 June 25, 1997 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers relating to the Certificates issued
under (and as defined in) each of the Other 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.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
Liquidity Facility: Means, initially, the Revolving Credit Agreement
dated as of June 25, 1997 relating to the Certificates, between the
Liquidity Provider and the Subordination Agent, as agent and trustee for
the Trustee, and, from and after the replacement of such Agreement
pursuant to the Intercreditor Agreement, the replacement liquidity
facility (or facilities) therefor, in each case as amended, supplemented
or otherwise modified from time to time in accordance with its terms.
Liquidity Provider: Means, initially, Kredietbank N.V., acting
through its New York Branch, 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
mortgagee under such Indenture, together with any successor to such
mortgagee appointed pursuant thereto.
McDonnell Douglas: Means the McDonnell Douglas Corporation.
14
-8-
Non-U.S. Person: Means a Person that is not a "U.S. person", as
defined in Regulation S.
Officer's Certificate: Means a certificate signed, (a) in the case
of the Company, by (i) the Chairman or Vice Chairman of the Board of
Directors, the President, any Executive Vice President, any Senior Vice
President or the Treasurer of the Company, signing alone, or (ii) any Vice
President of the Company signing together with the Secretary, the
Assistant Secretary, the Treasurer or any Assistant Treasurer of the
Company, (b) in the case of a Loan Trustee, a Responsible Officer of such
Loan Trustee or (c) in the case of a Second Mortgagee, a Responsible
Officer of such Second Mortgagee.
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 Loan Trustee or Second Mortgagee 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 1997-2 Pass Through Trust Agreements relating to
Continental Airlines Pass Through Trust, Series 1997-2A, Continental
Airlines Pass Through Trust, Series 1997-2C and Continental Airlines Pass
Through Trust, Series 1997-2D, 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.
Outstanding: When used with respect to Certificates, means, as of
the date of determination, all Certificates theretofore authenticated and
delivered under this Agreement, except:
(i) Certificates theretofore canceled by the Registrar or
delivered to the Trustee or the Registrar for cancellation;
15
-9-
(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.
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 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. 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
16
-10-
or other Trust Property held in the Trust and the distribution thereof to
be made on such Distribution Date.
Pool Factor: Means, as of any date, the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance as at
such date by (ii) the original aggregate face amount of the Certificates.
The Pool Factor as of any Distribution Date shall be computed after giving
effect to the payment of principal, if any, on the Equipment Notes or
other Trust Property held in the Trust and the distribution thereof to be
made on such Distribution Date.
Postponed Notes: Means any Equipment Notes to be held in the Trust
as to which a Postponement Notice shall have been delivered pursuant to
Section 2.01(b).
Postponement Notice: Means an Officer's Certificate of the Company
(1) requesting that the Trustee temporarily postpone the purchase pursuant
to one or more of the Financing Agreements of certain of the Equipment
Notes to a date which is later than the Issuance Date, (2) identifying the
amount of the purchase price of each such Equipment Note and the aggregate
purchase price for all such Equipment Notes and (3) with respect to each
such Equipment Note, either (a) setting or resetting a new Transfer Date
for payment by the Trustee of such purchase price and issuance of the
related Equipment Note (subject to subsequent change from time to time in
accordance with the relevant Financing Agreement), or (b) indicating that
such new Transfer Date (which shall be on or prior to the Cut-off Date)
will be set by subsequent written notice not less than one Business Day
prior to such new Transfer Date (subject to subsequent change from time to
time in accordance with the relevant Financing Agreement).
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
17
-11-
interest and shall have distributed such amount to the Trustee).
Purchase Agreement: Means the Purchase Agreement dated June 17, 1997
among the Initial Purchasers and the Company, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
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 June 25, 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.
18
-12-
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).
Responsible Officer: With respect to the Trustee, the Second
Mortgagee and any Loan Trustee, means any officer in the Corporate Trust
Office of the Trustee, Second Mortgagee or Loan 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.
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 the Liquidity Facility, which payment
represents the installment of principal at the stated maturity of such
installment of principal on such Equipment Note, the payment of regularly
scheduled interest accrued on the unpaid principal amount of such
Equipment Note, or both; provided that any payment of principal, premium,
if any, or interest resulting from the
19
-13-
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.
Second Mortgage: Means the Second Trust Indenture and Mortgage dated
as of the date hereof between the Company and the Loan Trustees.
Second Mortgagee: Means the bank or trust company designated as
second mortgagee under the Second Mortgage together with any successor to
such second mortgagee appointed pursuant thereto.
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 Payment: Means (i) any payment (other than a Scheduled
Payment) in respect of, or any proceeds of, any Equipment Note, the
Collateral (as defined in each Indenture) or the Collateral (as defined in
the Second Mortgage), (ii) the amounts required to be distributed pursuant
to the last paragraph of Section 2.01(b) or (iii) the amounts required to
be distributed pursuant to the penultimate paragraph of Section 2.01(b).
20
-14-
Special Payments Account: Means the account or accounts created and
maintained pursuant to Section 4.01(b).
Specified Investments: Means, with respect to investments to be made
with Escrowed Funds pursuant to Section 2.01(b) hereof, (i) obligations
of, or guaranteed by, the United States Government or agencies thereof,
(ii) open market commercial paper of any corporation incorporated under
the laws of the United States of America or any State thereof rated at
least P-2 or its equivalent by Moody's Investors Service, Inc. or at least
A-2 or its equivalent by Standard & Poor's Ratings Group, (iii)
certificates of deposit issued by commercial banks organized under the
laws of the United States or of any political subdivision thereof having a
combined capital and surplus in excess of $100,000,000, which banks or
their holding companies have a short-term deposit rating of Pl by Moody's
Investors Service, Inc. or its equivalent by Standard & Poor's Ratings
Group; provided, however, that the aggregate amount at any one time so
invested in certificates of deposit issued by any one bank shall not
exceed 5% of such bank's capital and surplus, (iv) U.S. dollar denominated
offshore certificates of deposit issued by, or offshore time deposits
with, any commercial bank described in clause (iii) above or any
subsidiary thereof and (v) repurchase agreements with any financial
institution having combined capital and surplus of at least $100,000,000
with respect to any of the obligations described in clauses (i) through
(iv) above as collateral; provided further that if all of the above
investments are unavailable, all amounts to be invested may be used to
purchase Federal Funds from an entity described in clause (iii) above.
Subordination Agent: Has the meaning specified in the Intercreditor
Agreement.
Transfer Date: Has the meaning assigned to the term "Closing Date"
in each Financing Agreement (as such "Closing Date" may be changed from
time to time in accordance with the terms of such Financing Agreement).
Triggering Event: Has the meaning assigned to such term in the
Intercreditor Agreement.
21
-15-
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) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Trust and all monies at
any time paid thereon and all monies due and to become due thereunder,
(ii) funds from time to time deposited in the Escrow Account, the
Certificate Account and the Special Payments Account and, subject to the
Intercreditor Agreement, any proceeds from the sale by the Trustee
pursuant to Article VI hereof of any such Equipment Note and (iii) all
rights of the Trust and the Trustee, on behalf of the Trust, under the
Intercreditor Agreement and the Liquidity Facility, including, without
limitation, all rights to receive certain payments thereunder, and all
monies paid to the Trustee on behalf of the Trust pursuant to the
Intercreditor Agreement or the Liquidity Facility.
Trustee: Means Wilmington Trust Company, or its successor in
interest, and any successor or other trustee appointed as provided herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
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 Loan Trustee or the Second Mortgagee to the Trustee to take
any action under any provision of this Agreement, the Company, such Loan Trustee
or such Second Mortgagee, 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.
22
-16-
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
(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
23
-17-
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, any Loan Trustee or the
Second Mortgagee. 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, any Loan Trustee
and the Second Mortgagee, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or such other officer and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner
which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the requisite
Fractional Undivided Interests of Certificates Outstanding have given any
Direction under this Agreement, Certificates owned by the Company or any
Affiliate thereof shall be disregarded and deemed not to be Outstanding for
purposes of any such determination. In determining whether the Trustee shall be
protected in relying upon any such Direction, only Certificates which the
Trustee knows to be so owned shall be so disregarded. Notwithstanding the
foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded, and (ii) if any amount of
Certificates so owned by any such Person have been pledged in good faith, such
Certificates shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Company or any Affiliate thereof.
24
-18-
(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 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 and each of the
Financing Agreements on or prior
25
-19-
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 Purchase Agreement, the Trustee shall
execute, deliver, authenticate, issue and sell Initial Certificates in
authorized denominations equaling in the aggregate the amount set forth, with
respect to the Certificates, in Schedule II to the 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 Financing Agreements. On the Issuance Date, the Trustee
shall purchase, pursuant to the terms and conditions of the Financing
Agreements, the Equipment Notes (other than the Postponed Notes) contemplated to
be purchased by the Trustee under the Financing Agreements at a purchase price
equal to the consideration so received for the Certificates (less the aggregate
amount of any Escrowed Funds). 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 prior to the Issuance Date, the Company may deliver to the
Trustee a Postponement Notice relating to one or more Postponed Notes. The
Trustee shall postpone the purchase of the Postponed Notes from the
consideration received from the sale of Certificates and shall promptly deposit
funds in an amount equal to the purchase price of such Postponed Notes (the
"Escrowed Funds") into an escrow account (the "Escrow Account") with the Trustee
to be maintained as a part of the Trust. The portion of Escrowed Funds so
deposited with respect to any particular Postponed Notes shall be invested by
the Trustee at the direction and risk of the Company in Specified Investments
(i) maturing no later than any scheduled Transfer Date relating to such
Postponed Notes or (ii) if no such Transfer Date has been scheduled, maturing on
the next Business Day, or (iii) if the Company has given notice to the Trustee
that such Postponed Notes will not be issued, maturing on the next applicable
Special Distribution Date, if such investments are reasonably available for
purchase. The Trustee shall make withdrawals from the Escrow Account only as
provided in this Agreement. Upon request of the Company on one or more occasions
and the satisfaction or waiver of the closing conditions specified in the
applicable Financing Agreement on or prior to the Cut-off Date, the Trustee
shall purchase the applicable Postponed Notes with Escrowed Funds
26
-20-
withdrawn from the Escrow Account. The purchase price shall equal the principal
amount of such Postponed Notes.
The Trustee shall hold all Specified Investments until the maturity
thereof and will not sell or otherwise transfer Specified Investments. If
Specified Investments held in an Escrow Account mature prior to any applicable
Transfer Date, any proceeds received on the maturity of such Specified
Investments (including any earnings thereon) shall be reinvested by the Trustee
at the direction and risk of the Company in Specified Investments maturing as
provided in the preceding paragraph. The Company shall pay to the Trustee for
deposit to the Escrow Account an amount equal to any losses on such Specified
Investments as incurred.
On the initial Regular Distribution Date, the Company will pay (in
immediately available funds) to the Trustee an amount equal to (i) the sum of
(A) the interest that would have accrued, at a rate equal to the interest rate
applicable to the Certificates, on any Postponed Notes purchased on or prior to
the Cut-Off Date if such Postponed Notes had been issued on the Issuance Date,
from and including the Issuance Date to but excluding the date of such purchase,
and (B) the interest that would have accrued, at a rate equal to the interest
rate applicable to the Certificates, on any Postponed Notes not purchased on or
prior to the Cut-Off Date (other than any Postponed Notes for which a Special
Distribution Date specified in either of the two immediately succeeding
paragraphs has occurred on or prior to the initial Regular Distribution Date) if
such Postponed Notes had been issued on the Issuance Date, from and including
the Issuance Date to but excluding the initial Regular Distribution Date, minus
(ii) the earnings on Specified Investments received (with respect to the portion
of the Escrow Funds deposited with respect to the Postponed Notes described in
sub-clauses (A) and (B) of clause (i) of this paragraph) by the Trustee from and
including the Issuance Date to but excluding the initial Regular Distribution
Date.
If the Company notifies the Trustee prior to the Cut-off Date that
any Postponed Notes will not be issued on or prior to the Cut-off Date for any
reason, on the next Special Distribution Date established pursuant to Section
4.02(c) for the distribution to the Certificateholders of Escrowed Funds with
respect to the Postponed Notes designated in such notice (i) the Company shall
pay to the Trustee for deposit in the Special
27
-21-
Payments Account, in immediately available funds, an amount equal to (A) the
interest that would have accrued, on the Postponed Notes designated in such
notice, at a rate equal to the interest rate applicable to the Certificates from
and including the Issuance Date (if such Special Distribution Date shall occur
on or prior to the initial Regular Distribution Date) or the initial Regular
Distribution Date (if such Special Distribution Date occurs after the initial
Regular Distribution Date) to but excluding such Special Distribution Date,
minus (B) the earnings on Specified Investments received (with respect to the
portion of the Escrowed Funds deposited with respect to the Postponed Notes
designated in such notice) by the Trustee from and including the Issuance Date
(if such Special Distribution Date shall occur on or prior to the initial
Regular Distribution Date) or the initial Regular Distribution Date (if such
Special Distribution Date occurs after the initial Regular Distribution Date) to
but excluding such Special Distribution Date and (ii) the Trustee shall transfer
an amount equal to that amount of Escrowed Funds that would have been used to
purchase the Postponed Notes designated in such notice (together with the
earnings described in clause (i)(B) of this paragraph above) plus the amount
paid by the Company pursuant to clause (i) of this paragraph to the Special
Payments Account for distribution as a Special Payment in accordance with the
provisions hereof.
If, on the Cut-off Date, an amount equal to less than all of the
initial Escrowed Funds (other than Escrowed Funds referred to in the immediately
preceding paragraph) has been used to purchase Postponed Notes, on the Special
Distribution Date established pursuant to Section 4.02(c) for the distribution
to the Certificateholders of Escrowed Funds with respect to all of the Postponed
Notes that have not been purchased on or prior to the Cut-off Date (other than
any Postponed Notes referred to in the immediately preceding paragraph) (i) the
Company shall pay to the Trustee for deposit in the Special Payments Account, in
immediately available funds, an amount equal to (A) the interest that would have
accrued on Postponed Notes originally contemplated to be purchased with such
unused Escrowed Funds (other than Escrowed Funds referred to in the immediately
preceding paragraph) but not so purchased at a rate equal to the interest rate
applicable to the Certificates from and including the Issuance Date (if such
Special Distribution Date shall occur on or prior to the initial Regular
Distribution Date) or the initial Regular Distribution Date (if such Special
Distribution Date occurs after the initial Regular Distribution Date) to but
28
-22-
excluding such Special Distribution Date, minus (B) the earnings on Specified
Investments received (with respect to the portion of the Escrowed Funds
deposited with respect to the Postponed Notes described in this paragraph) by
the Trustee from and including the Issuance Date (if such Special Distribution
Date shall occur on or prior to the initial Regular Distribution Date) or the
initial Regular Distribution Date (if such Special Distribution Date occurs
after the initial Regular Distribution Date) to but excluding such Special
Distribution Date and (ii) the Trustee shall transfer such unused Escrowed Funds
(together with the earnings described in clause (i)(B) of this paragraph above)
and the amount paid by the Company pursuant to the clause (i) of this paragraph
to the Special Payments Account for distribution as a Special Payment in
accordance with the provisions hereof.
Section 2.02. Acceptance by Trustee. The Trustee, upon the execution
and delivery of this Agreement, acknowledges its acceptance of all right, title
and interest in and to the 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 of the Equipment Notes acquired by the Trust in the name
of the Subordination Agent. By its payment for and acceptance of each
Certificate issued to it under this Agreement, each initial Certificateholder as
grantor of the Trust thereby joins in the creation and declaration of the Trust.
Section 2.03. Limitation of Powers. The Trust is constituted solely
for the purpose of making the investment in the Equipment Notes to be held in
the Trust, 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).
29
-23-
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "7.149% Initial
Pass Through Certificates, Series 1997-2B" and the Exchange Certificates shall
be known as the "7.149% Exchange Pass Through Certificates, Series 1997-2B", 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.
(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 $25,563,000.
(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
30
-24-
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 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".
(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
31
-25-
"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
clauses (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 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
32
-26-
(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 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
33
-27-
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 Initial
Certificates in authorized denominations equaling in the aggregate the amount
set forth, with respect to the Trust, in Schedule II to the Purchase Agreement,
evidencing the entire ownership of the Trust, which amount equals the aggregate
principal amount of Equipment Notes which have been or may be purchased by the
Trustee pursuant to each Financing Agreement. Thereafter, the Trustee shall duly
execute, authenticate and deliver Certificates as herein provided.
(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
34
-28-
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 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 (including, without limitation,
subject to the proviso to this sentence, Exchange Certificates) in authorized
denominations and 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 exchanges of Initial
Certificates for Exchange Certificates shall occur only after 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) and otherwise only in
accordance with the terms of the Exchange Offer. 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
35
-29-
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,
authenticate and deliver 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 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
36
-30-
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
depository for such Restricted Global Certificate or Regulation S Global
Certificate, as the case may be, and a successor depository 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 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
37
-31-
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 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
38
-32-
affiliate of any of such Persons or (y) the proposed transferor is
an Initial Purchaser who is transferring Certificates purchased
under the 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 sentence, 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 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
39
-33-
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 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
40
-34-
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 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
41
-35-
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 such Restricted Legend and
otherwise in this Agreement and agrees that it will transfer such
Certificate only as provided in such Restricted Legend and otherwise 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 Restricted Legend
and otherwise 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 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
42
-36-
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 shall require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent may treat the Person in whose name any Certificate is registered
(as of the day of determination) as the owner of such Certificate for the
purpose of receiving distributions pursuant to Article IV and for all other
purposes whatsoever, and none of the Trustee, the Registrar or any Paying Agent
shall be affected by any notice to the contrary.
Section 3.09. Cancellation. All Certificates surrendered for payment
or transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for cancellation
and shall promptly be 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
43
-37-
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 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 Second Mortgagee or the Liquidity Provider, 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).
44
-38-
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."
Without limitation of Section 3.06(f), by acceptance of any
Certificate bearing the ERISA Legend, each Holder of such a Certificate
acknowledges the restrictions set forth in such ERISA Legend. The Registrar
shall refuse to register any transfer of any Certificate in violation of the
restrictions set forth in such ERISA 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 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
45
-39-
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, 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 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 such
Special Payment, 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)
46
-40-
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 that the Trustee receives a notice
from the Company that Postponed Notes will not be purchased pursuant to Section
2.01, such notice of Special Payment shall be mailed as soon as practicable
after receipt of such notice from the Company and shall state the Special
Distribution Date for such Special Payment, which shall occur 20 days after the
date of such notice of Special Payment or (if such 20th day is not practicable)
as soon as practicable thereafter. In the event that any Special Payment is to
be made pursuant to the last paragraph of Section 2.01(b) hereof, on the Cut-Off
Date (or, if such Cut-Off Date is not practicable, as soon as practicable after
the Cut-Off Date), notice of such Special Payment shall be mailed stating the
Special Distribution Date for such Special Payment, which shall occur 20 days
after the date of such notice of such Special Payment (or, if such 20th day is
not practicable, as soon as practicable thereafter). 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
47
-41-
(iv) if the Special Distribution Date is the same date as a Regular
Distribution Date, the total amount to be received on such date for each
$1,000 face amount Certificate.
If the amount of premium, if any, payable upon the redemption or purchase of an
Equipment Note has not been calculated at the time that the Trustee mails notice
of a Special Payment, it shall be sufficient if the notice sets forth the other
amounts to be distributed and states that any premium received will also be
distributed.
If any redemption of the Equipment Notes held in the Trust is
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 following information (per $1,000 face amount
Certificate as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal and the
amount allocable to premium, if any;
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of 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
48
-42-
record a statement containing the sum of the amounts determined pursuant to
clauses (a)(i) and (a)(ii) 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).
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
49
-43-
preservation thereof is no longer desirable in the conduct of the business of
the Company.
Section 5.02. Consolidation, Merger, etc. The Company shall not
consolidate with or merge into any other corporation or convey, transfer or
lease substantially all of its assets as an entirety to any Person unless:
(a) the corporation formed by such consolidation or into which the
Company is merged or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety shall
be (i) organized and validly existing under the laws of the United States
of America or any state thereof or the District of Columbia, (ii) a
"citizen of the United States" as defined in 49 U.S.C. 40102(a)(15), as
amended, and (iii) a United States certificated air carrier, if and so
long as such status is a condition of entitlement to the benefits of
Section 1110 of the Bankruptcy Reform Act of 1978, as amended (11 U.S.C.
ss. 1110), with respect to the Leases;
(b) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety shall
execute and deliver to the Trustee a duly authorized, valid, binding and
enforceable agreement in form and substance reasonably satisfactory to the
Trustee containing an assumption by such successor corporation or Person
of the due and punctual performance and observance of each covenant and
condition of this Agreement, the Other Pass Through Trust Agreements 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
50
-44-
Company as an entirety in accordance with this Section 5.02, the successor
corporation or Person formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Agreement with the same effect as if such successor corporation or
Person had been named as the Company herein. No such conveyance, transfer or
lease of substantially all of the assets of the Company as an entirety shall
have the effect of releasing any successor corporation or Person which shall
have become such in the manner prescribed in this Section 5.02 from its
liability in respect of this Agreement and any Financing Document to which it is
a party.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of Remedies. Upon the
occurrence and during the continuation of any Indenture Default under any
Indenture, the Trustee may, to the extent it is the Controlling Party at such
time (as determined pursuant to the Intercreditor Agreement), direct the
exercise of remedies as provided in the Intercreditor Agreement.
(b) Purchase Rights of Certificateholders. (i) At any time after the
occurrence and during the continuation of a Triggering Event, each
Certificateholder shall have the right to purchase all, but not less than
all, of the Class A Certificates upon ten days' written notice to the
Class A Trustee and each other Certificateholder, provided that (A) if
prior to the end of such ten-day period any other Certificateholder
notifies such purchasing Certificateholder that such other
Certificateholder wants to participate in such purchase, then such other
Certificateholder may join with the purchasing Certificateholder to
purchase all, but not less than all, of the Class A Certificates pro rata
based on the outstanding principal amount of the Certificates held by each
such Certificateholder and (B) if prior to the end of such ten-day period
any other Certificateholder fails to notify the purchasing
Certificateholder of such other Certificateholder's desire to participate
in such a purchase, then such other Certificateholder shall lose its right
to purchase the Class A Certificates pursuant to this Section 6.01(b)(i).
51
-45-
(ii) By acceptance of its Certificate, each Certificateholder
agrees that at any time after the occurrence and during the continuation
of a Triggering Event, each Class C Certificateholder shall have the right
(which shall not expire upon any purchase of the Class A Certificates
pursuant to paragraph (i) above) to purchase all, but not less than all,
of the Class A Certificates and the Certificates upon ten days' written
notice to the Class A Trustee, the Trustee and each other Class C
Certificateholder, provided that (A) if prior to the end of such ten-day
period any other Class C Certificateholder notifies such purchasing Class
C Certificateholder that such other Class C Certificateholder wants to
participate in such purchase, then such other Class C Certificateholder
may join with the purchasing Class C Certificateholder to purchase all,
but not less than all, of the Class A Certificates and the Certificates
pro rata based on the Fractional Undivided Interest in the Class C Trust
held by each such Class C Certificateholder and (B) if prior to the end of
such ten-day period any other Class C Certificateholder fails to notify
the purchasing Class C Certificateholder of such other Class C
Certificateholder's desire to participate in such a purchase, then such
other Class C Certificateholder shall lose its right to purchase the Class
A Certificates and the Certificates pursuant to this Section 6.01(b).
(iii) By acceptance of its Certificate, each Certificateholder
agrees that at any time after the occurrence and during the continuation
of a Triggering Event, each Class D Certificateholder shall have the right
(which shall not expire upon any purchase of the Class A Certificates
pursuant to clause (i) above or the purchase of the Class A Certificates
and the Certificates pursuant to clause (ii) above) to purchase all, but
not less than all, of the Class A Certificates, the Certificates and the
Class C Certificates upon ten days' written notice to the Trustee, the
Class B Trustee, the Class C Trustee and each other Class D
Certificateholder, provided that (A) if prior to the end of such ten-day
period any other Class D Certificateholder notifies such purchasing Class
D Certificateholder that such other Class D Certificateholder wants to
participate in such purchase, then such other Class D Certificateholder
may join with the purchasing Certificateholder to purchase all, but not
less than all, of the Class A Certificates, the Certificates and the Class
C
52
-46-
Certificates pro rata based on the Fractional Undivided Interest in the
Class D Trust held by each such Class D Certificateholder and (B) if prior
to the end of such ten day period any other Class D Certificateholder
fails to notify the purchasing Class D Certificateholder of such other
Class D Certificateholder's desire to participate in such a purchase, then
such other Class D Certificateholder shall lose its right to purchase the
Certificates, the Class B Certificates and the Class C Certificates
pursuant to this Section 6.01(b).
The purchase price with respect to the Certificates shall be equal
to the Pool Balance of the Certificates, together with accrued and unpaid
interest thereon to the date of such purchase, without premium, but including
any other amounts then due and payable to the Certificateholders under this
Agreement, the Intercreditor Agreement or any other Financing Document or on or
in respect of the Certificates; provided, however, if such purchase occurs after
a Record Date, such purchase price shall be reduced by the amount to be
distributed hereunder on the Distribution Date following such Record Date (which
deducted amounts shall remain distributable to, and may be retained by, the
Certificateholders 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, the Certificates
and the Class C 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) or Class D Certificateholder(s), as the case may
be, of the purchase price set forth in the first sentence of this paragraph,
forthwith sell, assign, transfer and convey to the purchaser(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 Intercreditor Agreement, the Liquidity Facility, the Financing
Documents and all Certificates held by such Certificateholder (excluding all
right, title and interest under
53
-47-
any of the foregoing to the extent such right, title or interest is with respect
to an obligation not then due and payable as respects any action or inaction or
state of affairs occurring prior to such sale) and the purchaser shall assume
all of such Certificateholder's obligations under this Agreement, the
Intercreditor Agreement, the Liquidity Facility, the Financing Documents and all
such Certificates. 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
Certificateholders 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 Certificate", "Class C
Certificateholder", "Class C Trust", "Class C Trustee", "Class D Certificate",
"Class D Certificateholder", "Class D Trust" and "Class D Trustee" shall have
the respective meanings assigned to such terms in the Intercreditor Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of
all or any part of the Equipment Notes held in the Trust 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 held
in the Trust, 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
54
-48-
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 held in the Trust, 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, 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 held
in the Trust, 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,
55
-49-
(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 and/or the Second Mortgagee 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 held in the Trust, 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 and/or the Second
Mortgagee 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.
56
-50-
Section 6.06. Right of Certificateholders to Receive Payments Not to
Be Impaired. Anything in this Agreement to the contrary notwithstanding,
including, without limitation, Section 6.07 hereof, but subject to the
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
Certificates when due, or to institute suit for the enforcement of any such
payment on or after the applicable Regular Distribution Date or Special
Distribution Date, shall not be impaired or affected without the consent of such
Certificateholder.
Section 6.07. Certificateholders May Not Bring Suit Except Under
Certain Conditions. A Certificateholder shall not have the right to institute
any suit, action or proceeding at law or in equity or otherwise with respect to
this Agreement, for the appointment of a receiver or for the enforcement of any
other remedy under this Agreement, unless:
(1) such Certificateholder previously shall have given written
notice to the Trustee of a continuing Event of Default;
(2) Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the Trust shall have
requested the Trustee in writing to institute such action, suit or
proceeding and shall have offered to the Trustee indemnity as provided in
Section 7.03(e);
(3) the Trustee shall have refused or neglected to institute such an
action, suit or proceeding for 60 days 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
57
-51-
subject thereto, or the rights of the Certificateholders or the holders of the
Equipment Notes, (ii) obtain or seek to obtain priority over or preference with
respect to any other such Certificateholder or (iii) enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all the Certificateholders subject to the provisions of
this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given hereunder to
the Trustee or to any of the Certificateholders shall not be exclusive of any
other remedy or remedies, and every such remedy shall be cumulative and in
addition to every other remedy given hereunder or now or hereafter given by
statute, law, equity or otherwise.
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default, the Trustee undertakes to perform such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of its
own affairs.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful 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
58
-52-
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 known to the Trustee, the Trustee shall
transmit by mail to the Company, the Loan Trustees, the Second Mortgagee 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 in 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
59
-53-
faith on its part, rely upon an Officer's Certificate of the Company, any
Loan Trustee or the Second Mortgagee;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the Direction of any of
the Certificateholders pursuant to this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable security
or indemnity against the cost, expenses and liabilities which might be
incurred by it in compliance with such Direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture or other paper or document;
(g) the Trustee may execute any of the trusts or powers under this
Agreement or perform any duties under this Agreement either directly or by
or through agents or attorneys, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it under this Agreement;
(h) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
Direction of the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the Trust relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement; and
(i) the Trustee shall not be required to expend or risk its own
funds in the performance of any of its duties under this Agreement, or in
the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk is not reasonably assured to it.
60
-54-
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 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 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 Loan Trustees or the Second
Mortgagee 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
61
-55-
in accordance with any provision of this Agreement (including the
reasonable compensation and the expenses and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence, willful misconduct or bad faith or as may
be incurred due to the Trustee's breach of its representations and
warranties set forth in Section 7.15; and
(3) to indemnify the Trustee pursuant to Sections 8.1 and 8.3 of
each Financing Agreement.
The Trustee shall be entitled to reimbursement from, and shall have
a lien prior to the Certificates upon, the Trust Property for any tax incurred
without negligence, bad faith or willful misconduct, on its part, arising out of
or in connection with the acceptance or administration of such Trust (other than
any tax attributable to the Trustee's compensation for serving as such),
including any costs and expenses incurred in contesting the imposition of any
such tax. If the Trustee reimburses itself from the Trust Property of such Trust
for any such tax, it will mail a brief report within 30 days setting forth the
circumstances thereof to all Certificateholders as their names and addresses
appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder which shall be eligible to act as a trustee
under Section 310(a) of the Trust Indenture Act and shall have a combined
capital and surplus of at least $75,000,000 (or a combined capital and surplus
in excess of $5,000,000 and the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed by a corporation
organized and doing business under the laws of the United States, any state or
territory thereof or of the District of Columbia and having a combined capital
and surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 7.08, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of conditions so published.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.08
62
-56-
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 Loan Trustees
and the Second Mortgagee. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Company, the Authorized Agents, the Loan
Trustees, the Trustee and the Second Mortgagee 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 Loan Trustees and the Second
Mortgagee.
(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;
63
-57-
then, in any case, (i) the Company may 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 Loan Trustees, the Second Mortgagee 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.
64
-58-
Section 7.10. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute and deliver to the Company,
the Authorized Agents, the Loan Trustees and the Second Mortgagee and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on request of the Company or the successor Trustee, such retiring Trustee
shall execute and deliver an instrument transferring to such successor Trustee
all such rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all Trust Property held
by such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for in Section 7.07. Upon request of any such successor Trustee, the
Company, the retiring Trustee and such successor Trustee shall execute and
deliver any and all instruments containing such provisions as shall be necessary
or desirable to transfer and confirm to, and for more fully and certainly
vesting in, such successor Trustee all such rights, powers and trusts.
No institution shall accept its appointment as a Trustee hereunder
unless at the time of such acceptance such institution shall be qualified and
eligible under this Article VII.
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article VII, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Certificates shall have been
executed or authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such execution or authentication and deliver the Certificates so
executed or authenticated with the same effect as if such successor Trustee had
itself executed or authenticated such Certificates.
65
-59-
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 Loan Trustees and the Second Mortgagee (at their
respective addresses 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,
66
-60-
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 Loan Trustees and the
Second Mortgagee. 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 Loan Trustees and the Second Mortgagee; 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.
67
-61-
The Trustee may at any time, for the purpose of obtaining the
satisfaction and discharge of this Agreement or for any other purpose, direct
any Paying Agent to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon
which such sums were held by such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased
by the Trust shall be issued in the name of the Subordination Agent or its
nominee and held by the Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the Subordination Agent or its nominee
shall be reflected as the owner of such Equipment Notes in the register of the
issuer of such Equipment Notes.
Section 7.15. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation organized and
validly existing in good standing under the laws of the State of Delaware;
(b) the Trustee has full power, authority and legal right to
execute, deliver, and perform this Agreement, the Intercreditor Agreement,
the Registration Rights Agreement and the Financing Agreements and has
taken all necessary action to authorize the execution, delivery, and
performance by it of this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements;
(c) the execution, delivery and performance by the Trustee of this
Agreement, the Intercreditor Agreement, the Registration Rights Agreement
and the Financing Agreements (i) will not violate any provision of United
States federal law or the law of the state of the United States where it
is located governing the banking and trust powers of the 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
68
-62-
default under, or result in the creation or imposition of any lien on any
properties included in the Trust Property pursuant to the provisions of
any mortgage, indenture, contract, agreement or other undertaking to which
it is a party, which violation, default or lien could reasonably be
expected to have an adverse effect on the Trustee's performance or ability
to perform its duties hereunder or thereunder or on the transactions
contemplated herein or therein;
(d) the execution, delivery and performance by the Trustee of this
Agreement, the Intercreditor Agreement, the Registration Rights Agreement
and the Financing Agreements will not require the authorization, consent,
or approval of, the giving of notice to, the filing or registration with,
or the taking of any other action in respect of, any governmental
authority or agency of the United States or the state of the United States
where it is located regulating the banking and corporate trust activities
of the Trustee; and
(e) this Agreement, the Intercreditor Agreement, the Registration
Rights Agreement and the Financing Agreements have been duly executed and
delivered by the Trustee and constitute the legal, valid, and binding
agreements of the Trustee, enforceable against it in accordance with their
respective terms, provided that enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and (ii) general
principles of equity.
Section 7.16. Withholding Taxes, Information Reporting. The Trustee,
as trustee of the grantor trust created by this Agreement, shall exclude and
withhold from each distribution of principal, premium, if any, and interest and
other amounts due under this Agreement or under the Certificates any and all
withholding taxes applicable thereto as required by law. The Trustee agrees to
act as such withholding agent and, in connection therewith, whenever any present
or future taxes or similar charges are required to be withheld with respect to
any amounts payable in respect of the Certificates, to withhold such amounts and
timely pay the same to the appropriate authority in the name of and on behalf of
the Certificateholders, that it will file any necessary withholding tax returns
or statements when
69
-63-
due, and that, as promptly as possible after the payment thereof, it will
deliver to each such Certificateholder appropriate documentation showing the
payment thereof, together with such additional documentary evidence as such
Certificateholders may reasonably request from time to time. The Trustee agrees
to file any other information reports as it may be required to file under United
States law.
Section 7.17. Trustee's Liens. The Trustee in its individual
capacity agrees that it will at its own cost and expense promptly take any
action as may be necessary to duly discharge and satisfy in full any mortgage,
pledge, lien, charge, encumbrance, security interest or claim ("Trustee's
Liens") on or with respect to the Trust Property which is attributable to the
Trustee either (i) in its individual capacity and which is unrelated to the
transactions contemplated by this Agreement, the Intercreditor Agreement, the
Financing Agreements or the Financing Documents, or (ii) as Trustee hereunder or
in its individual capacity and which arises out of acts or omissions which are
not contemplated by this Agreement.
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
70
-64-
copy of the Register is being furnished to the Trustee pursuant to Section 7.12.
Section 8.02. Preservation of Information; Communications to
Certificateholders. The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Certificateholders contained
in the most recent list furnished to the Trustee as provided in Section 7.12 or
Section 8.01, as the case may be, and the names and addresses of
Certificateholders received by the Trustee in its capacity as Registrar, if so
acting. The Trustee may destroy any list furnished to it as provided in Section
7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.
Section 8.03. Reports by Trustee. Within 60 days after May 15 of
each year commencing with the first full year following the issuance of the
Certificates, the Trustee shall transmit to the Certificateholders, as provided
in Section 313(c) of the Trust Indenture Act, a brief report dated as of such
May 15, if required by Section 313(a) of the Trust Indenture Act.
Section 8.04. Reports by the Company. The Company shall:
(a) file with the Trustee, within 30 days after the Company is
required to file the same with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may from time to time by rules
and regulations prescribe) which the Company is required to file with the
SEC pursuant to section 13 or section 15(d) of the Securities Exchange Act
of 1934, as amended; or, if the Company is not required to file
information, documents or reports pursuant to either of such sections,
then to file with the Trustee and the SEC, in accordance with rules and
regulations prescribed by the SEC, such of the supplementary and periodic
information, documents and reports which may be required pursuant to
section 13 of the Securities Exchange Act of 1934, as amended, in respect
of a security listed and registered on a national securities exchange as
may be prescribed in such rules and regulations;
(b) 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
71
-65-
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).
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
72
-66-
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
Registration Rights Agreement or the Liquidity Facility in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein contained or of the Company's obligations under the Registration
Rights Agreement or the 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 Registration Rights Agreement or the
Liquidity Facility; or
(3) to correct or supplement any provision in this Agreement, the
Intercreditor Agreement, the Registration Rights Agreement or the
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 Intercreditor Agreement, the
Registration Rights Agreement or the Liquidity Facility, provided that any
such action shall not materially adversely affect the interests of the
Certificateholders; or, as provided in the Intercreditor Agreement, to
give effect to or provide for a Replacement Liquidity Facility (as defined
in the Intercreditor Agreement); 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
73
-67-
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 (but shall not be obligated to), and the Trustee (subject to Section 9.03)
shall enter into an agreement or agreements for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, the Intercreditor Agreement, the Liquidity Facility, the
Registration Rights Agreement or any Financing Agreement to the extent
applicable to such Certificateholders or of modifying in any manner the rights
and obligations of such Certificateholders under this Agreement, the
Intercreditor
74
-68-
Agreement, the Liquidity Facility or the Registration Rights Agreement;
provided, however, that no such agreement shall, without the consent of the
Certificateholder of each Outstanding Certificate affected thereby:
(1) reduce in any manner the amount of, or delay the timing of, any
receipt by the Trustee of payments on the Equipment Notes held in the
Trust or distributions that are required to be made herein on any
Certificate, or change any date of payment on any Certificate, or change
the place of payment where, or the coin or currency in which, any
Certificate is payable, or impair the right to institute suit for the
enforcement of any such payment or distribution on or after the Regular
Distribution Date or Special Distribution Date applicable thereto; or
(2) permit the disposition of any Equipment Note included in the
Trust Property except as permitted by this Agreement, or otherwise deprive
such Certificateholder of the benefit of the ownership of the Equipment
Notes in the Trust; or
(3) reduce the 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.
75
-69-
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.
76
-70-
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 (or as prospective
purchaser of any Postponed Notes) 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
Equipment Note, any Financing Document related thereto 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 (or, with respect to Postponed Notes, a prospective
purchaser 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 (or,
with respect to Postponed Notes, a prospective purchaser of) such Equipment Note
or a Controlling Party and (c) how to vote (or direct the Subordination Agent to
vote) any Equipment Note (or, with respect to Postponed Note, its commitment to
acquire such Postponed 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 (or
Postponed 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
77
-71-
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 and/or the Second Mortgagee, as the
case may be, of such consent (or direct the Subordination Agent to consent and
notify the relevant Loan Trustee and/or the Second Mortgagee, as the case may
be, of such consent) to any amendment, modification, waiver or supplement under
any Equipment Note (or Postponed Note), any Financing Document related thereto
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 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 execution of this Trust
Agreement.
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
78
-72-
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 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
79
-73-
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
80
-74-
(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, any Loan Trustee or the Second Mortgagee.
Section 12.04. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN
THE STATE OF NEW YORK AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK 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.
81
-75-
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
82
-76-
Subchapter J of the Internal Revenue Code of 1986, as amended, and
not as a trust or association taxable as a corporation or as a partnership. The
powers granted and obligations undertaken pursuant to this Agreement shall be so
construed so as to further such intent.
83
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: Gerald Laderman
Title: Vice President
WILMINGTON TRUST COMPANY,
as Trustee
By:___________________________
Name:
Title:
84
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:
85
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) 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 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
86
A-2
ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN
VIOLATION OF THE FOREGOING RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) IT IS
AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE
THIS CERTIFICATE, AND THE CONDITIONS OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ISSUED BY THE U.S. DEPARTMENT OF LABOR HAVE BEEN AND WILL
CONTINUE TO BE SATISFIED IN CONNECTION WITH ITS PURCHASE AND HOLDING OF
THIS CERTIFICATE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.]**
- ----------
* Not to be included on the face of the Regulation S Global
Certificate.
** To be included on the face of each Global Certificate.
87
A-3
[[REGULATION S] GLOBAL CERTIFICATE]*
CONTINENTAL AIRLINES PASS THROUGH TRUST, SERIES 1997-2B
7.149% Continental Airlines [Initial] [Exchange]
Pass Through Certificate,
Series 1997-2B
Final Maturity Date: December 30, 2006
CUSIP/Common Code No. ____________
evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft owned by
Continental Airlines, Inc.
$25,563,000 Fractional Undivided Interest representing
.003911904% 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 1997-2B (the
"Trust") created pursuant to a Pass Through Trust Agreement, dated as of June
25, 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 "7.149%
Continental Airlines [Initial] [Exchange] Pass Through Certificates, Series
1997-2B" (herein called the "Certificates"). This Certificate is issued under
and is subject to the terms, provisions, and conditions of the Agreement. By
virtue of its acceptance hereof the Certificateholder of this Certificate
assents to and agrees to be bound by the provisions of the Agreement and the
Intercreditor Agreement. The property of the Trust includes an interest in
certain Equipment Notes and all rights of the Trust to receive payments under
the Intercreditor Agreement and the Liquidity Facility (the "Trust Property").
Each issue of the Equipment
- ----------
* To be included on the face of each Global Certificate.
88
A-4
Notes is secured by, among other things, a security interest in the Aircraft
owned by the Company.
The Certificates represent fractional undivided interests in the
Trust and the Trust Property, and have no rights, benefits or interest in
respect of any 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 June 30 and December 30 (a "Regular
Distribution Date"), commencing on December 30, 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.
89
A-5
All payments or distributions made to Certificateholders under the Agreement
shall be made only from the Trust Property and only to the extent that the
Trustee shall have sufficient income or proceeds from the Trust Property to make
such payments in accordance with the terms of the Agreement. Each
Certificateholder of this Certificate, by its acceptance hereof, agrees that it
will look solely to the income and proceeds from the Trust Property to the
extent available for distribution to such Certificateholder as provided in the
Agreement. This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced hereby.
A copy of the Agreement may be examined during normal business hours at the
principal office of the Trustee, and at such other places, if any, designated by
the Trustee, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Registrar, or
by any successor Registrar, in the Borough of Manhattan, the City of New York,
duly endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Registrar duly executed by the
Certificateholder hereof or such Certificateholder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate Fractional Undivided
90
A-6
Interest in the Trust will be issued to the designated transferee or
transferees.
[The Holder of this Certificate is entitled to the benefits of the
Exchange and Registration Rights Agreement, dated as of June 25, 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 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 (if it is filed), after being declared effective by the
SEC, 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 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).]*
Except as otherwise provided in the Agreement and notwithstanding
the above, the final distribution on this Certificate will be made after notice
mailed by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency of the
Trustee specified in such notice.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of [$100,000]** [$1,000]*** Fractional
Undivided Interest and integral multiples of $1,000 in excess thereof except
that one Certificate may be in a different denomination. As provided in the
Agreement and subject to certain limitations therein set forth, the
- ----------
* To be included only on each Initial Certificate.
** To be included only on each Initial Certificate.
*** To be included only on each Exchange Certificate.
91
A-7
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same aggregate Fractional Undivided Interest in the Trust, as
requested by the Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee shall require payment by the Holder of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and
the Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
92
A-8
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: _______________, 1997 CONTINENTAL AIRLINES
PASS THROUGH TRUST, SERIES
1997-2B
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: ____________________________
Name:
Title:
93
A-9
[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
94
A-10
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.
95
A-11
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.
Dated:__________________ ________________________________
NOTE: To be executed by an
executive officer.
96
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
1997-2B, Continental Airlines Pass Through Certificates, Series
1997-2B (the "Certificates")
Sirs:
In connection with our proposed sale of $_____ Fractional Undivided
Interest of the Certificates, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended, and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of
97
B-2
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]
98
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 1997-2B (the "Trust")
Pass Through Certificates, Series 1997-2B
(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 June 25, 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.
99
C-2
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.
100
C-3
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:
101
SCHEDULE I
Aircraft
Aircraft Type Registration Number
------------- -------------------
Boeing 737-3T0 N12322
Boeing 737-3T0 N10323
Boeing 737-3T0 N14324
Boeing 737-3T0 N69333
Boeing 737-3T0 N14334
Boeing 737-3T0 N14335
McDonnell Douglas MD-82 N12811
McDonnell Douglas MD-82 N15820
McDonnell Douglas MD-82 N18833
McDonnell Douglas MD-82 N10834
1
Exhibit 4.7
[EXECUTION COPY]
- --------------------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of June 25, 1997
between
CONTINENTAL AIRLINES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
Continental Airlines Pass Through Trust, Series 1997-2C
7.206% Initial Pass Through Certificates, Series 1997-2C
7.206% Exchange Pass Through Certificates, Series 1997-2C
- --------------------------------------------------------------------------------
2
Reconciliation and tie between Continental Airlines Pass Through Trust
Agreement, Series 1997-2C dated as of June 25, 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......................................... 2
Section 1.02. Compliance Certificates and Opinions................ 15
Section 1.03. Form of Documents Delivered to Trustee.............. 16
Section 1.04. Directions of Certificateholders.................... 17
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of
Equipment Notes..................................... 19
Section 2.02. Acceptance by Trustee............................... 22
Section 2.03. Limitation of Powers................................ 22
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates........................................ 23
Section 3.02. Restrictive Legends................................. 26
Section 3.03. Authentication of Certificates...................... 27
Section 3.04. Transfer and Exchange............................... 28
Section 3.05. Book-Entry Provisions for Restricted Global
Certificates and Regulation S Global
Certificates........................................ 29
Section 3.06. Special Transfer Provisions......................... 31
Section 3.07. Mutilated, Destroyed, Lost or Stolen
Certificates........................................ 36
Section 3.08. Persons Deemed Owners............................... 36
Section 3.09. Cancellation........................................ 37
Section 3.10. Temporary Certificates.............................. 37
Section 3.11. Limitation of Liability for Payments................ 37
Section 3.12. ERISA Restrictive Legend............................ 38
i
4
Section Page
- ------- ----
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments Account.... 38
Section 4.02. Distributions from Certificate Account and
Special Payments Account............................ 39
Section 4.03. Statements to Certificateholders.................... 41
Section 4.04. Investment of Special Payment Moneys................ 42
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence.................. 43
Section 5.02. Consolidation, Merger, etc.......................... 43
ARTICLE VI
DEFAULT
Section 6.01. Events of Default................................... 44
Section 6.02. Incidents of Sale of Equipment Notes................ 47
Section 6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit.............................. 48
Section 6.04. Control by Certificateholders....................... 48
Section 6.05. Waiver of Past Defaults............................. 48
Section 6.06. Right of Certificateholders to Receive Payments
Not to Be Impaired.................................. 49
Section 6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions............................ 50
Section 6.08. Remedies Cumulative................................. 50
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities................. 51
Section 7.02. Notice of Defaults.................................. 51
Section 7.03. Certain Rights of Trustee........................... 52
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates........................................ 53
Section 7.05. May Hold Certificates............................... 54
Section 7.06. Money Held in Trust................................. 54
ii
5
Section Page
- ------- ----
Section 7.07. Compensation and Reimbursement...................... 54
Section 7.08. Corporate Trustee Required; Eligibility............. 55
Section 7.09. Resignation and Removal; Appointment of
Successor........................................... 55
Section 7.10. Acceptance of Appointment by Successor.............. 57
Section 7.11. Merger, Conversion, Consolidation or Succession
to Business......................................... 58
Section 7.12. Maintenance of Agencies............................. 58
Section 7.13. Money for Certificate Payments to Be Held in
Trust............................................... 60
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent................................. 61
Section 7.15. Representations and Warranties of Trustee........... 61
Section 7.16. Withholding Taxes, Information Reporting............ 62
Section 7.17. Trustee's Liens..................................... 63
Section 7.18. Preferential Collection of Claims................... 63
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND
REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders..................... 63
Section 8.02. Preservation of Information; Communications to
Certificateholders.................................. 63
Section 8.03. Reports by Trustee.................................. 64
Section 8.04. Reports by the Company.............................. 64
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders.................................. 65
Section 9.02. Supplemental Agreements with Consent of
Certificateholders.................................. 67
Section 9.03. Documents Affecting Immunity or Indemnity........... 69
Section 9.04. Execution of Supplemental Agreements................ 69
Section 9.05. Effect of Supplemental Agreements................... 69
Section 9.06. Conformity with Trust Indenture Act................. 69
iii
6
Section Page
- ------- ----
Section 9.07. Reference in Certificates to Supplemental
Agreements.......................................... 69
ARTICLE X
AMENDMENTS TO INDENTURES AND
FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to Indentures and
Financing Documents................................. 69
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust............................ 71
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders.......... 72
Section 12.02. Certificates Nonassessable and Fully Paid........... 72
Section 12.03. Notices............................................. 73
Section 12.04. Governing Law....................................... 74
Section 12.05. Severability of Provisions.......................... 74
Section 12.06. Trust Indenture Act Controls........................ 74
Section 12.07. Effect of Headings and Table of Contents............ 75
Section 12.08. Successors and Assigns.............................. 75
Section 12.09. Benefits of Agreement............................... 75
Section 12.10. Legal Holidays...................................... 75
Section 12.11. Counterparts........................................ 75
Section 12.12. Intention of Parties................................ 75
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
Schedule I- Aircraft
iv
7
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of June 25, 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 1997-2C and the issuance of
7.206% Continental Airlines Pass Through Trust, Series 1997-2C Pass Through
Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company wishes to purchase the six Boeing 737-3TO
aircraft and four McDonnell Douglas DC-9-82 aircraft listed in Schedule I hereto
(the "Aircraft") and to finance the purchase price of each such Aircraft through
the issuance pursuant to an Indenture, on a recourse basis, of four series of
Equipment Notes relating to such Aircraft;
WHEREAS, the Trustee, upon execution and delivery of this Agreement,
hereby declares the creation of the Trust for the benefit of the
Certificateholders, and the initial Certificateholders, as the grantors of the
Trust, by their respective acceptances of the Certificates, join in the creation
of this Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or interests in respect of any property other than the Trust Property;
WHEREAS, pursuant to the terms and conditions of this Agreement and
each of the Financing Agreements to be entered into by the Trustee
simultaneously with the execution and delivery of this Agreement, the Trustee on
behalf of the Trust shall purchase one or more issues of Equipment Notes having
the same interest rate as, and final maturity dates not later than the final
Regular Distribution Date of, the Certificates issued hereunder and, subject to
the Intercreditor Agreement, shall hold such Equipment Notes in trust for the
benefit of the Certificateholders;
WHEREAS, to facilitate the sale of Equipment Notes to, and the
purchase of Equipment Notes by, the Trustee on behalf of
8
-2-
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 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
9
-3-
therein, or by the rules promulgated under the Trust Indenture Act, have
the meanings assigned to them therein;
(3) all references in this Agreement to designated "Articles",
"Sections", "Subsections" and other subdivisions are to the designated
Articles, Sections, Subsections and other subdivisions of this Agreement;
(4) the words "herein", "hereof" and "hereunder" and other words of
similar (import refer to this Agreement as a whole and not to any
particular Article, Section, Subsection or other subdivision; and
(5) unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, it shall be deemed
to be followed by the phrase "without limitation".
Affiliate: Means, with respect to any 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: Has the meaning specified in the first recital to this
Agreement.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w) the Trust,
(x) the Trust Property, (y) Certificateholders or (z) the Trustee for
which the Trustee is entitled to seek
10
-4-
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 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).
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
Company: Means Continental Airlines, Inc., a Delaware corporation,
or its successor in interest pursuant to Section 5.02, or (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"
(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, the Second
Mortgagee 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.
11
-5-
Cut-off Date: Means August 31, 1997.
Definitive Certificates: Has the meaning specified in Section
3.01(e).
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 Account: Has the meaning specified in Section 2.01(b).
Escrowed Funds: Has the meaning specified in Section 2.01(b).
Euroclear: Means the Euroclear System.
Event of Default: Means an Indenture Default under any Indenture
pursuant to which Equipment Notes held by the Trust were issued.
Exchange Certificates: Means the 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.
12
-6-
Final Maturity Date: Means December 30, 2005.
Financing Agreements: Means each of the ten separate Participation
Agreements relating to the Aircraft each dated the date hereof, among the
Company, the Pass Through Trustee, the Other Trustees, the relevant Loan
Trustee, the Second Mortgagee 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.
Financing Documents: With respect to any Equipment Note, means
the related Indenture, the Second Mortgage and the related Financing
Agreement.
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 ten separate trust indentures and
mortgages relating to the Aircraft, 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.
13
-7-
Initial Purchasers: Means, collectively, Credit Suisse First
Boston Corporation and Morgan Stanley & Co. Incorporated.
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 June 25, 1997 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers relating to the Certificates issued
under (and as defined in) each of the Other 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.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
Liquidity Facility: Means, initially, the Revolving Credit Agreement
dated as of June 25, 1997 relating to the Certificates, between the
Liquidity Provider and the Subordination Agent, as agent and trustee for
the Trustee, and, from and after the replacement of such Agreement
pursuant to the Intercreditor Agreement, the replacement liquidity
facility (or facilities) therefor, in each case as amended, supplemented
or otherwise modified from time to time in accordance with its terms.
Liquidity Provider: Means, initially, Kredietbank N.V., acting
through its New York Branch, 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
mortgagee under such Indenture, together with any successor to such
mortgagee appointed pursuant thereto.
McDonnell Douglas: Means the McDonnell Douglas Corporation.
14
-8-
Non-U.S. Person: Means a Person that is not a "U.S. person", as
defined in Regulation S.
Officer's Certificate: Means a certificate signed, (a) in the case
of the Company, by (i) the Chairman or Vice Chairman of the Board of
Directors, the President, any Executive Vice President, any Senior Vice
President or the Treasurer of the Company, signing alone, or (ii) any Vice
President of the Company signing together with the Secretary, the
Assistant Secretary, the Treasurer or any Assistant Treasurer of the
Company, (b) in the case of a Loan Trustee, a Responsible Officer of such
Loan Trustee or (c) in the case of a Second Mortgagee, a Responsible
Officer of such Second Mortgagee.
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 Loan Trustee or Second Mortgagee 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 1997-2 Pass Through Trust Agreements relating to
Continental Airlines Pass Through Trust, Series 1997-2A, Continental
Airlines Pass Through Trust, Series 1997-2B and Continental Airlines Pass
Through Trust, Series 1997-2D, 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.
Outstanding: When used with respect to Certificates, means, as
of the date of determination, all Certificates theretofore
authenticated and delivered under this Agreement, except:
15
-9-
(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.
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 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
16
-10-
Certificates other than payments made in respect of interest or premium
thereon or reimbursement of any costs or expenses incurred in connection
therewith. The Pool Balance as of any Distribution Date shall be computed
after giving effect to the payment of principal, if any, on the Equipment
Notes or other Trust Property held in the Trust and the distribution
thereof to be made on such Distribution Date.
Pool Factor: Means, as of any date, the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance as at
such date by (ii) the original aggregate face amount of the Certificates.
The Pool Factor as of any Distribution Date shall be computed after giving
effect to the payment of principal, if any, on the Equipment Notes or
other Trust Property held in the Trust and the distribution thereof to be
made on such Distribution Date.
Postponed Notes: Means any Equipment Notes to be held in the
Trust as to which a Postponement Notice shall have been delivered
pursuant to Section 2.01(b).
Postponement Notice: Means an Officer's Certificate of the Company
(1) requesting that the Trustee temporarily postpone the purchase pursuant
to one or more of the Financing Agreements of certain of the Equipment
Notes to a date which is later than the Issuance Date, (2) identifying the
amount of the purchase price of each such Equipment Note and the aggregate
purchase price for all such Equipment Notes and (3) with respect to each
such Equipment Note, either (a) setting or resetting a new Transfer Date
for payment by the Trustee of such purchase price and issuance of the
related Equipment Note (subject to subsequent change from time to time in
accordance with the relevant Financing Agreement), or (b) indicating that
such new Transfer Date (which shall be on or prior to the Cut-off Date)
will be set by subsequent written notice not less than one Business Day
prior to such new Transfer Date (subject to subsequent change from time to
time in accordance with the relevant Financing Agreement).
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
17
-11-
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).
Purchase Agreement: Means the Purchase Agreement dated June 17, 1997
among the Initial Purchasers and the Company, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
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 June 25, 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;
18
-12-
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.
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).
Responsible Officer: With respect to the Trustee, the Second
Mortgagee and any Loan Trustee, means any officer in the Corporate Trust
Office of the Trustee, Second Mortgagee or Loan 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.
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 the Liquidity Facility, which payment
represents the installment of
19
-13-
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.
Second Mortgage: Means the Second Trust Indenture and Mortgage
dated as of the date hereof between the Company and the Loan Trustees.
Second Mortgagee: Means the bank or trust company designated as
second mortgagee under the Second Mortgage together with any successor to
such second mortgagee appointed pursuant thereto.
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 Payment: Means (i) any payment (other than a Scheduled
Payment) in respect of, or any proceeds of, any Equipment Note, the
Collateral (as defined in each
20
-14-
Indenture) or the Collateral (as defined in the Second Mortgage), (ii) the
amounts required to be distributed pursuant to the last paragraph of
Section 2.01(b) or (iii) the amounts required to be distributed pursuant
to the penultimate paragraph of Section 2.01(b).
Special Payments Account: Means the account or accounts created
and maintained pursuant to Section 4.01(b).
Specified Investments: Means, with respect to investments to be made
with Escrowed Funds pursuant to Section 2.01(b) hereof, (i) obligations
of, or guaranteed by, the United States Government or agencies thereof,
(ii) open market commercial paper of any corporation incorporated under
the laws of the United States of America or any State thereof rated at
least P-2 or its equivalent by Moody's Investors Service, Inc. or at least
A-2 or its equivalent by Standard & Poor's Ratings Group, (iii)
certificates of deposit issued by commercial banks organized under the
laws of the United States or of any political subdivision thereof having a
combined capital and surplus in excess of $100,000,000, which banks or
their holding companies have a short-term deposit rating of Pl by Moody's
Investors Service, Inc. or its equivalent by Standard & Poor's Ratings
Group; provided, however, that the aggregate amount at any one time so
invested in certificates of deposit issued by any one bank shall not
exceed 5% of such bank's capital and surplus, (iv) U.S. dollar denominated
offshore certificates of deposit issued by, or offshore time deposits
with, any commercial bank described in clause (iii) above or any
subsidiary thereof and (v) repurchase agreements with any financial
institution having combined capital and surplus of at least $100,000,000
with respect to any of the obligations described in clauses (i) through
(iv) above as collateral; provided further that if all of the above
investments are unavailable, all amounts to be invested may be used to
purchase Federal Funds from an entity described in clause (iii) above.
Subordination Agent: Has the meaning specified in the
Intercreditor Agreement.
Transfer Date: Has the meaning assigned to the term "Closing
21
-15-
Date" in each Financing Agreement (as such "Closing Date" may be changed
from time to time in accordance with the terms of such Financing
Agreement).
Triggering Event: Has the meaning assigned to such term in the
Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate of
which consists of the Trust Property.
Trust Indenture Act: Means the United States Trust Indenture Act
of 1939, as amended from time to time, or any successor thereto.
Trust Property: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Trust and all monies at
any time paid thereon and all monies due and to become due thereunder,
(ii) funds from time to time deposited in the Escrow Account, the
Certificate Account and the Special Payments Account and, subject to the
Intercreditor Agreement, any proceeds from the sale by the Trustee
pursuant to Article VI hereof of any such Equipment Note and (iii) all
rights of the Trust and the Trustee, on behalf of the Trust, under the
Intercreditor Agreement and the Liquidity Facility, including, without
limitation, all rights to receive certain payments thereunder, and all
monies paid to the Trustee on behalf of the Trust pursuant to the
Intercreditor Agreement or the Liquidity Facility.
Trustee: Means Wilmington Trust Company, or its successor in
interest, and any successor or other trustee appointed as provided
herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
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 Loan Trustee or the Second Mortgagee to the Trustee to take
any action under any provision of this Agreement, the Company, such Loan Trustee
or such Second Mortgagee, 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
22
-16-
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
(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
23
-17-
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, any Loan Trustee or the Second Mortgagee. 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, any Loan Trustee and the Second Mortgagee, if
made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or such other officer and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner
which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the requisite
Fractional Undivided Interests of Certificates Outstanding have given any
Direction under this Agreement, Certificates owned by the Company or any
Affiliate thereof shall be disregarded and deemed not to be Outstanding for
purposes of any such determination. In determining whether the Trustee shall be
protected in relying upon any such Direction, only Certificates which the
Trustee knows to be so owned shall be so
24
-18-
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 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.
25
-19-
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 and each of the
Financing Agreements on or prior to the Issuance Date, each in the form
delivered to the Trustee by the Company, and (ii) subject to the respective
terms thereof, to perform its obligations thereunder. Upon request of the
Company and the satisfaction or waiver of the closing conditions specified in
the Purchase Agreement, the Trustee shall execute, deliver, authenticate, issue
and sell Initial Certificates in authorized denominations equaling in the
aggregate the amount set forth, with respect to the Certificates, in Schedule II
to the 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 Financing Agreements. On
the Issuance Date, the Trustee shall purchase, pursuant to the terms and
conditions of the Financing Agreements, the Equipment Notes (other than the
Postponed Notes) contemplated to be purchased by the Trustee under the Financing
Agreements at a purchase price equal to the consideration so received for the
Certificates (less the aggregate amount of any Escrowed Funds). 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 prior to the Issuance Date, the Company may deliver to the
Trustee a Postponement Notice relating to one or more Postponed Notes. The
Trustee shall postpone the purchase of the Postponed Notes from the
consideration received from the sale of Certificates and shall promptly deposit
funds in an amount equal to the purchase price of such Postponed Notes (the
"Escrowed Funds") into an escrow account (the "Escrow Account") with the Trustee
to be maintained as a part of the Trust. The portion of Escrowed Funds so
deposited with respect to any particular Postponed Notes shall be invested by
the Trustee at the direction and risk of the Company in Specified Investments
(i) maturing no later than any scheduled Transfer Date relating to such
Postponed Notes or (ii) if no such Transfer Date has been scheduled, maturing on
the next Business Day, or (iii) if the
26
-20-
Company has given notice to the Trustee that such Postponed Notes will not be
issued, maturing on the next applicable Special Distribution Date, if such
investments are reasonably available for purchase. The Trustee shall make
withdrawals from the Escrow Account only as provided in this Agreement. Upon
request of the Company on one or more occasions and the satisfaction or waiver
of the closing conditions specified in the applicable Financing Agreement on or
prior to the Cut-off Date, the Trustee shall purchase the applicable Postponed
Notes with Escrowed Funds withdrawn from the Escrow Account. The purchase price
shall equal the principal amount of such Postponed Notes.
The Trustee shall hold all Specified Investments until the maturity
thereof and will not sell or otherwise transfer Specified Investments. If
Specified Investments held in an Escrow Account mature prior to any applicable
Transfer Date, any proceeds received on the maturity of such Specified
Investments (including any earnings thereon) shall be reinvested by the Trustee
at the direction and risk of the Company in Specified Investments maturing as
provided in the preceding paragraph. The Company shall pay to the Trustee for
deposit to the Escrow Account an amount equal to any losses on such Specified
Investments as incurred.
On the initial Regular Distribution Date, the Company will pay (in
immediately available funds) to the Trustee an amount equal to (i) the sum of
(A) the interest that would have accrued, at a rate equal to the interest rate
applicable to the Certificates, on any Postponed Notes purchased on or prior to
the Cut-Off Date if such Postponed Notes had been issued on the Issuance Date,
from and including the Issuance Date to but excluding the date of such purchase,
and (B) the interest that would have accrued, at a rate equal to the interest
rate applicable to the Certificates, on any Postponed Notes not purchased on or
prior to the Cut-Off Date (other than any Postponed Notes for which a Special
Distribution Date specified in either of the two immediately succeeding
paragraphs has occurred on or prior to the initial Regular Distribution Date) if
such Postponed Notes had been issued on the Issuance Date, from and including
the Issuance Date to but excluding the initial Regular Distribution Date, minus
(ii) the earnings on Specified Investments received (with respect to the portion
of the Escrow Funds deposited with respect to the Postponed Notes described in
sub-clauses (A) and (B) of clause (i) of this paragraph) by the
27
-21-
Trustee from and including the Issuance Date to but excluding the initial
Regular Distribution Date.
If the Company notifies the Trustee prior to the Cut-off Date that
any Postponed Notes will not be issued on or prior to the Cut-off Date for any
reason, on the next Special Distribution Date established pursuant to Section
4.02(c) for the distribution to the Certificateholders of Escrowed Funds with
respect to the Postponed Notes designated in such notice (i) the Company shall
pay to the Trustee for deposit in the Special Payments Account, in
immediately available funds, an amount equal to (A) the interest that would have
accrued, on the Postponed Notes designated in such notice, at a rate equal to
the interest rate applicable to the Certificates from and including the Issuance
Date (if such Special Distribution Date shall occur on or prior to the initial
Regular Distribution Date) or the initial Regular Distribution Date (if such
Special Distribution Date occurs after the initial Regular Distribution Date) to
but excluding such Special Distribution Date, minus (B) the earnings on
Specified Investments received (with respect to the portion of the Escrowed
Funds deposited with respect to the Postponed Notes designated in such notice)
by the Trustee from and including the Issuance Date (if such Special
Distribution Date shall occur on or prior to the initial Regular Distribution
Date) or the initial Regular Distribution Date (if such Special Distribution
Date occurs after the initial Regular Distribution Date) to but excluding such
Special Distribution Date and (ii) the Trustee shall transfer an amount equal to
that amount of Escrowed Funds that would have been used to purchase the
Postponed Notes designated in such notice (together with the earnings described
in clause (i)(B) of this paragraph above) plus the amount paid by the Company
pursuant to clause (i) of this paragraph to the Special Payments Account for
distribution as a Special Payment in accordance with the provisions hereof.
If, on the Cut-off Date, an amount equal to less than all of the
initial Escrowed Funds (other than Escrowed Funds referred to in the immediately
preceding paragraph) has been used to purchase Postponed Notes, on the Special
Distribution Date established pursuant to Section 4.02(c) for the distribution
to the Certificateholders of Escrowed Funds with respect to all of the Postponed
Notes that have not been purchased on or prior to the Cut-off Date (other than
any Postponed Notes referred to in the immediately preceding paragraph) (i) the
Company shall pay to the Trustee for deposit in the Special Payments Account, in
28
-22-
immediately available funds, an amount equal to (A) the interest that would have
accrued on Postponed Notes originally contemplated to be purchased with such
unused Escrowed Funds (other than Escrowed Funds referred to in the immediately
preceding paragraph) but not so purchased at a rate equal to the interest rate
applicable to the Certificates from and including the Issuance Date (if such
Special Distribution Date shall occur on or prior to the initial Regular
Distribution Date) or the initial Regular Distribution Date (if such Special
Distribution Date occurs after the initial Regular Distribution Date) to but
excluding such Special Distribution Date, minus (B) the earnings on Specified
Investments received (with respect to the portion of the Escrowed Funds
deposited with respect to the Postponed Notes described in this paragraph) by
the Trustee from and including the Issuance Date (if such Special Distribution
Date shall occur on or prior to the initial Regular Distribution Date) or the
initial Regular Distribution Date (if such Special Distribution Date occurs
after the initial Regular Distribution Date) to but excluding such Special
Distribution Date and (ii) the Trustee shall transfer such unused Escrowed Funds
(together with the earnings described in clause (i)(B) of this paragraph above)
and the amount paid by the Company pursuant to the clause (i) of this paragraph
to the Special Payments Account for distribution as a Special Payment in
accordance with the provisions hereof.
Section 2.02. Acceptance by Trustee. The Trustee, upon the execution
and delivery of this Agreement, acknowledges its acceptance of all right, title
and interest in and to the 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 of the Equipment Notes acquired by the Trust in the name
of the Subordination Agent. By its payment for and acceptance of each
Certificate issued to it under this Agreement, each initial Certificateholder as
grantor of the Trust thereby joins in the creation and declaration of the Trust.
Section 2.03. Limitation of Powers. The Trust is constituted solely
for the purpose of making the investment in the Equipment Notes to be held in
the Trust, 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
29
-23-
empowered to do anything that would cause such Trust to fail to qualify as a
"grantor trust" for federal income tax purposes (including as subject to this
restriction, acquiring any Aircraft (as defined in the respective Indentures) by
bidding such Equipment Notes or otherwise, or taking any action with respect to
any such Aircraft once acquired).
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "7.206% Initial
Pass Through Certificates, Series 1997-2C" and the Exchange Certificates shall
be known as the "7.206% Exchange Pass Through Certificates, Series 1997-2C", 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.
(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 $27,206,000.
(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
30
-24-
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 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".
(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,
31
-25-
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
clauses (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 in any other manner, all as determined by
the officers executing such Certificates, as evidenced by their execution of
such Certificates.
32
-26-
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 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
33
-27-
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 Initial
Certificates in authorized denominations equaling in the aggregate the amount
set forth, with respect to the Trust, in Schedule II to the Purchase Agreement,
evidencing the entire ownership of the Trust, which amount equals the aggregate
principal amount of Equipment Notes which have been or may be purchased by the
Trustee pursuant to each Financing Agreement. Thereafter, the Trustee shall duly
execute, authenticate and deliver Certificates as herein provided.
34
-28-
(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 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 (including, without limitation,
subject to the proviso to this sentence, Exchange Certificates) in authorized
denominations and 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 exchanges of Initial
Certificates for Exchange Certificates shall occur only after 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) and otherwise only in
accordance with the terms of the Exchange Offer. No such transfer shall be
effected until, and such transferee shall succeed to the rights of a
Certificateholder only upon, final
35
-29-
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,
authenticate and deliver 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 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
36
-30-
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 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
37
-31-
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 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:
38
-32-
(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 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 sentence, 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 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
39
-33-
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 Regulation S Global
Certificate may only be held through Agent Members acting for and on
behalf of Euroclear and Cedel.
40
-34-
(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 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
41
-35-
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 such Restricted Legend and
otherwise in this Agreement and agrees that it will transfer such
Certificate only as provided in such Restricted Legend and otherwise 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 Restricted Legend
and otherwise 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 reasonable time
upon the giving of reasonable written notice to the Registrar.
42
-36-
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 shall require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent may treat the Person in whose name any Certificate is registered
(as of the day of determination) as the owner of such Certificate for the
purpose of receiving distributions pursuant to Article IV and for all other
purposes whatsoever, and none of the Trustee, the Registrar or any Paying Agent
shall be affected by any notice to the contrary.
43
-37-
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 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 Second Mortgagee or the
44
-38-
Liquidity Provider, 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."
Without limitation of Section 3.06(f), by acceptance of any
Certificate bearing the ERISA Legend, each Holder of such a Certificate
acknowledges the restrictions set forth in such ERISA Legend. The Registrar
shall refuse to register any transfer of any Certificate in violation of the
restrictions set forth in such ERISA 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 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
45
-39-
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, 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 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 such
Special Payment, the Trustee shall
46
-40-
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 that the Trustee receives a notice
from the Company that Postponed Notes will not be purchased pursuant to Section
2.01, such notice of Special Payment shall be mailed as soon as practicable
after receipt of such notice from the Company and shall state the Special
Distribution Date for such Special Payment, which shall occur 20 days after the
date of such notice of Special Payment or (if such 20th day is not practicable)
as soon as practicable thereafter. In the event that any Special Payment is to
be made pursuant to the last paragraph of Section 2.01(b) hereof, on the Cut-Off
Date (or, if such Cut-Off Date is not practicable, as soon as practicable after
the Cut-Off Date), notice of such Special Payment shall be mailed stating the
Special Distribution Date for such Special Payment, which shall occur 20 days
after the date of such notice of such Special Payment (or, if such 20th day is
not practicable, as soon as practicable thereafter). 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
47
-41-
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 premium, if any, payable upon the redemption or purchase of an
Equipment Note has not been calculated at the time that the Trustee mails notice
of a Special Payment, it shall be sufficient if the notice sets forth the other
amounts to be distributed and states that any premium received will also be
distributed.
If any redemption of the Equipment Notes held in the Trust is
canceled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the following information (per $1,000 face amount
Certificate as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal
and the amount allocable to premium, if any;
(ii) the amount of such distribution allocable to
interest; and
(iii) the Pool Balance and the Pool Factor.
48
-42-
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) and (a)(ii) 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).
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
49
-43-
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 state thereof or the District of Columbia, (ii) a
"citizen of the United States" as defined in 49 U.S.C. 40102(a)(15), as
amended, and (iii) a United States certificated air carrier, if and so
long as such status is a condition of entitlement to the benefits of
Section 1110 of the Bankruptcy Reform Act of 1978, as amended (11 U.S.C.
ss. 1110), with respect to the Leases;
(b) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety shall
execute and deliver to the Trustee a duly authorized, valid, binding and
enforceable agreement in form and substance reasonably satisfactory to the
Trustee containing an assumption by such successor corporation or Person
of the due and punctual performance and observance of each covenant and
condition of this Agreement, the Other Pass Through Trust Agreements and
50
-44-
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.
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
51
-45-
(A) if prior to the end of such ten-day period any other Certificateholder
notifies such purchasing Certificateholder that such other
Certificateholder wants to participate in such purchase, then such other
Certificateholder may join with the purchasing Certificateholder to
purchase all, but not less than all, of the Class A Certificates pro rata
based on the outstanding principal amount of the Certificates held by each
such Certificateholder and (B) if prior to the end of such ten-day period
any other Certificateholder fails to notify the purchasing
Certificateholder of such other Certificateholder's desire to participate
in such a purchase, then such other Certificateholder shall lose its right
to purchase the Class A Certificates pursuant to this Section 6.01(b)(i).
(ii) By acceptance of its Certificate, each Certificateholder agrees
that at any time after the occurrence and during the continuation of a
Triggering Event, each Class D Certificateholder shall have the right
(which shall not expire upon any purchase of the Class A Certificates
pursuant to the Class B Trust Agreement or the purchase of the Class A
Certificates and the Class B Certificates pursuant to paragraph (i) above)
to purchase all, but not less than all, of the Class A Certificates, the
Class B Certificates and the Certificates upon ten days' written notice to
the Class A Trustee, the Class B Trustee, the Trustee and each other Class
D Certificateholder, provided that (A) if prior to the end of such ten-day
period any other Class D Certificateholder notifies such purchasing Class
D Certificateholder that such other Class D Certificateholder wants to
participate in such purchase, then such other Class D Certificateholder
may join with the purchasing Class D Certificateholder to purchase all,
but not less than all, of the Class A Certificates, the Class B
Certificates and the Certificates pro rata based on the Fractional
Undivided Interest in the Class D Trust held by each such Class D
Certificateholder and (B) if prior to the end of such ten-day period any
other Class D Certificateholder fails to notify the purchasing Class D
Certificateholder of such other Class D Certificateholder's desire to
participate in such a purchase, then such other Class D Certificateholder
shall lose its right to purchase the Class A Certificates, the Class B
Certificates and the Certificates pursuant to this Section 6.01(b).
52
-46-
The purchase price with respect to the Certificates shall be equal
to the Pool Balance of the Certificates, together with accrued and unpaid
interest thereon to the date of such purchase, without premium, but including
any other amounts then due and payable to the Certificateholders under this
Agreement, the Intercreditor Agreement or any other Financing Document or on or
in respect of the Certificates; provided, however, if such purchase occurs after
a Record Date, such purchase price shall be reduced by the amount to be
distributed hereunder on the Distribution Date following such Record Date (which
deducted amounts shall remain distributable to, and may be retained by, the
Certificateholders 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, the Class B
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 D 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 Intercreditor Agreement, the
Liquidity Facility, the Financing Documents and all Certificates held by such
Certificateholder (excluding all right, title and interest under any of the
foregoing to the extent such right, title or interest is with respect to an
obligation not then due and payable as respects any action or inaction or state
of affairs occurring prior to such sale) and the purchaser shall assume all of
such Certificateholder's obligations under this Agreement, the Intercreditor
Agreement, the Liquidity Facility, the Financing Documents and all such
Certificates. 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
53
-47-
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 Certificateholders 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 B Certificate", "Class B Trust
Agreement", "Class B Trustee", "Class D Certificateholder" and "Class D 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 held in the Trust 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 held
in the Trust, 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.
54
-48-
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 held in the Trust, 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, 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 held
in the Trust, 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
55
-49-
(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 and/or the Second Mortgagee 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 held in the Trust, 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 and/or the Second
Mortgagee 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.
56
-50-
Section 6.07. Certificateholders May Not Bring Suit Except Under
Certain Conditions. A Certificateholder shall not have the right to institute
any suit, action or proceeding at law or in equity or otherwise with respect to
this Agreement, for the appointment of a receiver or for the enforcement of any
other remedy under this Agreement, unless:
1) such Certificateholder previously shall have given written
notice to the Trustee of a continuing Event of Default;
2) Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the Trust shall have
requested the Trustee in writing to institute such action, suit or
proceeding and shall have offered to the Trustee indemnity as provided in
Section 7.03(e);
3) the Trustee shall have refused or neglected to institute such an
action, suit or proceeding for 60 days after receipt of such notice,
request and offer of indemnity; and
4) no direction inconsistent with such written request shall have
been given to the Trustee during such 60-day period by Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on any
property subject thereto, or the rights of the Certificateholders or the holders
of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder or (iii) enforce any
right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all the Certificateholders subject to the
provisions of this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given hereunder to
the Trustee or to any of the Certificateholders shall not be exclusive of any
other remedy or remedies, and every
57
-51-
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 willful 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 known to the Trustee, the Trustee shall
transmit by mail to the Company, the Loan Trustees, the Second Mortgagee 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;
58
-52-
provided, however, that, except in the case of a default in 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 Loan Trustee or the Second Mortgagee;
(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
59
-53-
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, the Intercreditor
Agreement, the Certificates or any other Financing Document, except that the
Trustee hereby represents and
60
-54-
warrants that this Agreement has been, and the Intercreditor Agreement, the
Registration Rights 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 Loan Trustees or the Second
Mortgagee 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
61
-55-
(3) to indemnify the Trustee pursuant to Sections 8.1 and 8.3 of
each Financing Agreement.
The Trustee shall be entitled to reimbursement from, and shall have
a lien prior to the Certificates upon, the Trust Property for any tax incurred
without negligence, bad faith or willful misconduct, on its part, arising out of
or in connection with the acceptance or administration of such Trust (other than
any tax attributable to the Trustee's compensation for serving as such),
including any costs and expenses incurred in contesting the imposition of any
such tax. If the Trustee reimburses itself from the Trust Property of such Trust
for any such tax, it will mail a brief report within 30 days setting forth the
circumstances thereof to all Certificateholders as their names and addresses
appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder which shall be eligible to act as a trustee
under Section 310(a) of the Trust Indenture Act and shall have a combined
capital and surplus of at least $75,000,000 (or a combined capital and surplus
in excess of $5,000,000 and the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed by a corporation
organized and doing business under the laws of the United States, any state or
territory thereof or of the District of Columbia and having a combined capital
and surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 7.08, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of conditions so published.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
Section 7.09. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall
62
-56-
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 Loan Trustees
and the Second Mortgagee. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Company, the Authorized Agents, the Loan
Trustees, the Trustee and the Second Mortgagee 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 Loan Trustees and the Second
Mortgagee.
(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 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.
63
-57-
(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 Loan Trustees, the Second Mortgagee 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 Loan Trustees and the Second Mortgagee and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become
64
-58-
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall execute and deliver an instrument
transferring to such successor Trustee all such rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all Trust Property held by such retiring Trustee hereunder, subject
nevertheless to its lien, if any, provided for in Section 7.07. Upon request of
any such successor Trustee, the Company, the retiring Trustee and such successor
Trustee shall execute and deliver any and all instruments containing such
provisions as shall be necessary or desirable to transfer and confirm to, and
for more fully and certainly vesting in, such successor Trustee all such rights,
powers and trusts.
No institution shall accept its appointment as a Trustee hereunder
unless at the time of such acceptance such institution shall be qualified and
eligible under this Article VII.
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article VII, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Certificates shall have been
executed or authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such execution or authentication and deliver the Certificates so
executed or authenticated with the same effect as if such successor Trustee had
itself executed or authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at all times
be maintained an office or agency in the 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
65
-59-
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 Loan Trustees and the Second Mortgagee (at their
respective addresses 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
66
-60-
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 Loan Trustees and the
Second Mortgagee. 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 Loan Trustees and the Second Mortgagee; 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
67
-61-
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased
by the Trust shall be issued in the name of the Subordination Agent or its
nominee and held by the Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the Subordination Agent or its nominee
shall be reflected as the owner of such Equipment Notes in the register of the
issuer of such Equipment Notes.
Section 7.15. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation organized and
validly existing in good standing under the laws of the State of Delaware;
(b) the Trustee has full power, authority and legal right to
execute, deliver, and perform this Agreement, the Intercreditor Agreement,
the Registration Rights Agreement and the Financing Agreements and has
taken all necessary action to authorize the execution, delivery, and
performance by it of this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements;
(c) the execution, delivery and performance by the Trustee of this
Agreement, the Intercreditor Agreement, the Registration Rights Agreement
and the Financing Agreements (i) will not violate any provision of United
States federal law or the law of the state of the United States where it
is located governing the banking and trust powers of the 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
68
-62-
performance or ability to perform its duties hereunder or thereunder or on
the transactions contemplated herein or therein;
(d) the execution, delivery and performance by the Trustee of this
Agreement, the Intercreditor Agreement, the Registration Rights Agreement
and the Financing Agreements will not require the authorization, consent,
or approval of, the giving of notice to, the filing or registration with,
or the taking of any other action in respect of, any governmental
authority or agency of the United States or the state of the United States
where it is located regulating the banking and corporate trust activities
of the Trustee; and
(e) this Agreement, the Intercreditor Agreement, the Registration
Rights Agreement and the Financing Agreements have been duly executed and
delivered by the Trustee and constitute the legal, valid, and binding
agreements of the Trustee, enforceable against it in accordance with their
respective terms, provided that enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and (ii) general
principles of equity.
Section 7.16. Withholding Taxes, Information Reporting. The Trustee,
as trustee of the grantor trust created by this Agreement, shall exclude and
withhold from each distribution of principal, premium, if any, and interest and
other amounts due under this Agreement or under the Certificates any and all
withholding taxes applicable thereto as required by law. The Trustee agrees to
act as such withholding agent and, in connection therewith, whenever any present
or future taxes or similar charges are required to be withheld with respect to
any amounts payable in respect of the Certificates, to withhold such amounts and
timely pay the same to the appropriate authority in the name of and on behalf of
the Certificateholders, that it will file any necessary withholding tax returns
or statements when 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
69
-63-
any other information reports as it may be required to file under United States
law.
Section 7.17. Trustee's Liens. The Trustee in its individual
capacity agrees that it will at its own cost and expense promptly take any
action as may be necessary to duly discharge and satisfy in full any mortgage,
pledge, lien, charge, encumbrance, security interest or claim ("Trustee's
Liens") on or with respect to the Trust Property which is attributable to the
Trustee either (i) in its individual capacity and which is unrelated to the
transactions contemplated by this Agreement, the Intercreditor Agreement, the
Financing Agreements or the Financing Documents, or (ii) as Trustee hereunder or
in its individual capacity and which arises out of acts or omissions which are
not contemplated by this Agreement.
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
70
-64-
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 information
71
-65-
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 Registration Rights Agreement or
72
-66-
the Liquidity Facility in form satisfactory to the Trustee, for any of the
following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein contained or of the Company's obligations under the Registration
Rights Agreement or the 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 Registration Rights Agreement or the
Liquidity Facility; or
(3) to correct or supplement any provision in this Agreement, the
Intercreditor Agreement, the Registration Rights Agreement or the
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 Intercreditor Agreement, the
Registration Rights Agreement or the Liquidity Facility, provided that any
such action shall not materially adversely affect the interests of the
Certificateholders; or, as provided in the Intercreditor Agreement, to
give effect to or provide for a Replacement Liquidity Facility (as defined
in the Intercreditor Agreement); 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
73
-67-
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 (but shall not be obligated to), and the Trustee (subject to Section 9.03)
shall enter into an agreement or agreements for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, the Intercreditor Agreement, the Liquidity Facility, the
Registration Rights Agreement or any Financing Agreement to the extent
applicable to such Certificateholders or of modifying in any manner the rights
and obligations of such Certificateholders under this Agreement, the
Intercreditor Agreement, the Liquidity Facility or the Registration Rights
Agreement; provided, however, that no such agreement shall,
74
-68-
without the consent of the Certificateholder of each Outstanding Certificate
affected thereby:
(1) reduce in any manner the amount of, or delay the timing of, any
receipt by the Trustee of payments on the Equipment Notes held in the
Trust or distributions that are required to be made herein on any
Certificate, or change any date of payment on any Certificate, or change
the place of payment where, or the coin or currency in which, any
Certificate is payable, or impair the right to institute suit for the
enforcement of any such payment or distribution on or after the Regular
Distribution Date or Special Distribution Date applicable thereto; or
(2) permit the disposition of any Equipment Note included in the
Trust Property except as permitted by this Agreement, or otherwise deprive
such Certificateholder of the benefit of the ownership of the Equipment
Notes in the Trust; or
(3) reduce the 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
75
-69-
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.
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
76
-70-
holder (or beneficial owner through the Subordination Agent) of any Equipment
Note (or as prospective purchaser of any Postponed Notes) 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 Equipment Note, any Financing Document related
thereto 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 (or, with respect to
Postponed Notes, a prospective purchaser 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 (or, with respect to Postponed Notes, a prospective
purchaser of) such Equipment Note or a Controlling Party and (c) how to vote (or
direct the Subordination Agent to vote) any Equipment Note (or, with respect to
Postponed Note, its commitment to acquire such Postponed 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 (or Postponed 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
77
-71-
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 and/or the Second Mortgagee, as the case may be, of
such consent (or direct the Subordination Agent to consent and notify the
relevant Loan Trustee and/or the Second Mortgagee, as the case may be, of such
consent) to any amendment, modification, waiver or supplement under any
Equipment Note (or Postponed Note), any Financing Document related thereto 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 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 execution of this Trust
Agreement.
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
78
-72-
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 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
79
-73-
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
(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
80
-74-
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, any Loan Trustee or the Second
Mortgagee.
Section 12.04. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN
THE STATE OF NEW YORK AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK 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
81
-75-
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 Subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a trust or association taxable as a corporation or as a
partnership. The powers granted and obligations undertaken
82
-76-
pursuant to this Agreement shall be so construed so as to further such intent.
83
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: Gerald Laderman
Title: Vice President
WILMINGTON TRUST COMPANY,
as Trustee
By: _______________________________
Name:
Title:
84
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:
85
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) 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 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
86
A-2
TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) IT IS
AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE
THIS CERTIFICATE, AND THE CONDITIONS OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ISSUED BY THE U.S. DEPARTMENT OF LABOR HAVE BEEN AND WILL
CONTINUE TO BE SATISFIED IN CONNECTION WITH ITS PURCHASE AND HOLDING OF
THIS CERTIFICATE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.]**
- ----------
* Not to be included on the face of the Regulation S Global
Certificate.
** To be included on the face of each Global Certificate.
87
A-3
[[REGULATION S] GLOBAL CERTIFICATE]*
CONTINENTAL AIRLINES PASS THROUGH TRUST, SERIES 1997-2C
7.206% Continental Airlines [Initial] [Exchange]
Pass Through Certificate,
Series 1997-2C
Final Maturity Date: December 30, 2005
CUSIP/Common Code No. ____________
evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft owned by
Continental Airlines, Inc.
$27,206,000 Fractional Undivided Interest representing
.003675660% 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 1997-2C (the
"Trust") created pursuant to a Pass Through Trust Agreement, dated as of June
25, 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 "7.206%
Continental Airlines [Initial] [Exchange] Pass Through Certificates, Series
1997-2C" (herein called the "Certificates"). This Certificate is issued under
and is subject to the terms, provisions, and conditions of the Agreement. By
virtue of its acceptance hereof the Certificateholder of this Certificate
assents to and agrees to be bound by the provisions of the Agreement and the
Intercreditor Agreement. The property of the Trust includes an interest in
certain Equipment Notes and all rights of the Trust to receive
- ----------
* To be included on the face of each Global Certificate.
88
A-4
payments under the Intercreditor Agreement and the Liquidity Facility (the
"Trust Property"). Each issue of the Equipment Notes is secured by, among other
things, a security interest in the Aircraft owned by the Company.
The Certificates represent fractional undivided interests in the
Trust and the Trust Property, and have no rights, benefits or interest in
respect of any 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 June 30 and December 30 (a "Regular
Distribution Date"), commencing on December 30, 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.
89
A-5
The Certificates are limited in right or payment, all as more specifically set
forth on the face hereof and in the Agreement. All payments or distributions
made to Certificateholders under the Agreement shall be made only from the Trust
Property and only to the extent that the Trustee shall have sufficient income or
proceeds from the Trust Property to make such payments in accordance with the
terms of the Agreement. Each Certificateholder of this Certificate, by its
acceptance hereof, agrees that it will look solely to the income and proceeds
from the Trust Property to the extent available for distribution to such
Certificateholder as provided in the Agreement. This Certificate does not
purport to summarize the Agreement and reference is made to the Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds, and duties evidenced hereby. A copy of the Agreement may be examined
during normal business hours at the principal office of the Trustee, and at such
other places, if any, designated by the Trustee, by any Certificateholder upon
request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Registrar, or
by any successor Registrar, in the Borough of Manhattan, the City of New York,
duly endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Registrar duly executed by the
Certificateholder hereof or such Certificateholder's attorney duly authorized in
writing, and
90
A-6
thereupon one or more new Certificates of authorized denominations evidencing
the same aggregate Fractional Undivided Interest in the Trust will be issued to
the designated transferee or transferees.
[The Holder of this Certificate is entitled to the benefits of the
Exchange and Registration Rights Agreement, dated as of June 25, 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 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 (if it is filed), after being declared effective by the
SEC, 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 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).]*
Except as otherwise provided in the Agreement and notwithstanding
the above, the final distribution on this Certificate will be made after notice
mailed by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency of the
Trustee specified in such notice.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of
- ----------
* To be included only on each Initial Certificate.
91
A-7
[$100,000]** [$1,000]*** 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.
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.
THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
- ----------
** To be included only on each Initial Certificate.
*** To be included only on each Exchange Certificate.
92
A-8
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: _______________, 1997 CONTINENTAL AIRLINES
PASS THROUGH TRUST, SERIES
1997-2C
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: ____________________________
Name:
Title:
93
A-9
[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
94
A-10
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
95
A-11
[ ] (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.
96
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
1997-2C, Continental Airlines Pass Through Certificates, Series
1997-2C (the "Certificates")
Sirs:
In connection with our proposed sale of $_____ Fractional Undivided
Interest of the Certificates, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended, and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in
the United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale
97
B-2
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]
98
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 1997-2C (the "Trust")
Pass Through Certificates, Series 1997-2C
(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 June 25, 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.
99
C-2
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.
100
C-3
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:
101
SCHEDULE I
Aircraft
Aircraft Type Registration Number
------------- -------------------
Boeing 737-3T0 N12322
Boeing 737-3T0 N10323
Boeing 737-3T0 N14324
Boeing 737-3T0 N69333
Boeing 737-3T0 N14334
Boeing 737-3T0 N14335
McDonnell Douglas MD-82 N12811
McDonnell Douglas MD-82 N15820
McDonnell Douglas MD-82 N18833
McDonnell Douglas MD-82 N10834
1
Exhibit 4.8
[EXECUTION COPY]
- --------------------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of June 25, 1997
between
CONTINENTAL AIRLINES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
Continental Airlines Pass Through Trust, Series 1997-2D
7.522% Initial Pass Through Certificates, Series 1997-2D
7.522% Exchange Pass Through Certificates, Series 1997-2D
- --------------------------------------------------------------------------------
2
Reconciliation and tie between Continental Airlines Pass Through Trust
Agreement, Series 1997-2D dated as of June 25, 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........................................... 2
Section 1.02. Compliance Certificates and Opinions.................. 15
Section 1.03. Form of Documents Delivered to Trustee................ 16
Section 1.04. Directions of Certificateholders...................... 16
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of
Equipment Notes....................................... 18
Section 2.02. Acceptance by Trustee................................. 22
Section 2.03. Limitation of Powers.................................. 22
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates.......................................... 23
Section 3.02. Restrictive Legends................................... 25
Section 3.03. Authentication of Certificates........................ 27
Section 3.04. Transfer and Exchange................................. 28
Section 3.05. Book-Entry Provisions for Restricted Global
Certificates and Regulation S Global
Certificates.......................................... 29
Section 3.06. Special Transfer Provisions........................... 31
Section 3.07. Mutilated, Destroyed, Lost or Stolen
Certificates.......................................... 35
Section 3.08. Persons Deemed Owners................................. 36
Section 3.09. Cancellation.......................................... 36
Section 3.10. Temporary Certificates................................ 36
Section 3.11. Limitation of Liability for Payments.................. 36
Section 3.12. ERISA Restrictive Legend.............................. 37
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments Account...... 38
-i-
4
Section Page
- ------- ----
Section 4.02. Distributions from Certificate Account and
Special Payments Account.............................. 38
Section 4.03. Statements to Certificateholders...................... 40
Section 4.04. Investment of Special Payment Moneys.................. 41
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence.................... 42
Section 5.02. Consolidation, Merger, etc............................ 42
ARTICLE VI
DEFAULT
Section 6.01. Events of Default..................................... 43
Section 6.02. Incidents of Sale of Equipment Notes.................. 45
Section 6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit................................ 46
Section 6.04. Control by Certificateholders......................... 46
Section 6.05. Waiver of Past Defaults............................... 47
Section 6.06. Right of Certificateholders to Receive Payments
Not to Be Impaired.................................... 48
Section 6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions.............................. 48
Section 6.08. Remedies Cumulative................................... 49
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities................... 49
Section 7.02. Notice of Defaults.................................... 50
Section 7.03. Certain Rights of Trustee............................. 50
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates.......................................... 52
Section 7.05. May Hold Certificates................................. 52
Section 7.06. Money Held in Trust................................... 52
Section 7.07. Compensation and Reimbursement........................ 52
Section 7.08. Corporate Trustee Required; Eligibility............... 53
Section 7.09. Resignation and Removal; Appointment of
Successor............................................. 54
Section 7.10. Acceptance of Appointment by Successor................ 56
Section 7.11. Merger, Conversion, Consolidation or Succession
to Business........................................... 56
Section 7.12. Maintenance of Agencies............................... 57
Section 7.13. Money for Certificate Payments to Be Held in
Trust................................................. 58
-ii-
5
Section Page
- ------- ----
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent................................... 59
Section 7.15. Representations and Warranties of Trustee............. 59
Section 7.16. Withholding Taxes, Information Reporting.............. 60
Section 7.17. Trustee's Liens....................................... 61
Section 7.18. Preferential Collection of Claims..................... 61
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY
TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders....................... 61
Section 8.02. Preservation of Information; Communications to
Certificateholders.................................... 62
Section 8.03. Reports by Trustee.................................... 62
Section 8.04. Reports by the Company................................ 62
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders.................................... 63
Section 9.02. Supplemental Agreements with Consent of
Certificateholders.................................... 65
Section 9.03. Documents Affecting Immunity or Indemnity............. 67
Section 9.04. Execution of Supplemental Agreements.................. 67
Section 9.05. Effect of Supplemental Agreements..................... 67
Section 9.06. Conformity with Trust Indenture Act................... 67
Section 9.07. Reference in Certificates to Supplemental
Agreements............................................ 67
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING
DOCUMENTS
Section 10.01. Amendments and Supplements to Indentures and
Financing Documents................................... 68
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust.............................. 69
-iii-
6
Section Page
- ------- ----
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders............ 70
Section 12.02. Certificates Nonassessable and Fully Paid............. 70
Section 12.03. Notices............................................... 71
Section 12.04. Governing Law......................................... 72
Section 12.05. Severability of Provisions............................ 72
Section 12.06. Trust Indenture Act Controls.......................... 73
Section 12.07. Effect of Headings and Table of Contents.............. 73
Section 12.08. Successors and Assigns................................ 73
Section 12.09. Benefits of Agreement................................. 73
Section 12.10. Legal Holidays........................................ 73
Section 12.11. Counterparts.......................................... 73
Section 12.12. Intention of Parties.................................. 73
Exhibit A- Form of Certificate
Exhibit B- Form of Certificate to Request Removal of
Restricted Legend
Schedule I- Aircraft
-iv-
7
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of June 25, 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 1997-2D and the issuance of
7.522% Continental Airlines Pass Through Trust, Series 1997-2D Pass Through
Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company wishes to purchase the six Boeing 737-3TO
aircraft and four McDonnell Douglas DC-9-82 aircraft listed in Schedule I hereto
(the "Aircraft") and to finance the purchase price of each such Aircraft through
the issuance pursuant to an Indenture, on a recourse basis, of four series of
Equipment Notes relating to such Aircraft;
WHEREAS, the Trustee, upon execution and delivery of this Agreement,
hereby declares the creation of the Trust for the benefit of the
Certificateholders, and the initial Certificateholders, as the grantors of the
Trust, by their respective acceptances of the Certificates, join in the creation
of this Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or interests in respect of any property other than the Trust Property;
WHEREAS, pursuant to the terms and conditions of this Agreement and
each of the Financing Agreements to be entered into by the Trustee
simultaneously with the execution and delivery of this Agreement, the Trustee on
behalf of the Trust shall purchase one or more issues of Equipment Notes having
the same interest rate as, and final maturity dates not later than the final
Regular Distribution Date of, the Certificates issued hereunder and, subject to
the Intercreditor Agreement, shall hold such Equipment Notes in trust for the
benefit of the Certificateholders;
WHEREAS, to facilitate the sale of Equipment Notes to, and the
purchase of Equipment Notes by, the Trustee on behalf of the Trust, the Company
has duly authorized the execution and delivery of this Agreement as the
"issuer", as such term is defined in and solely for purposes of the Securities
Act, of the Certificates to be issued pursuant hereto and as the "obligor",
8
-2-
as such term is defined in and solely for purposes of the Trust Indenture Act of
1939, as amended, with respect to all such Certificates and is undertaking to
perform certain administrative and ministerial duties hereunder and is also
undertaking to pay the ongoing fees and expenses of the Trustee;
WHEREAS, all of the conditions and requirements necessary to make
this Agreement, when duly executed and delivered, a valid, binding and legal
instrument, enforceable in accordance with its terms and for the purposes herein
expressed, have been done, performed and fulfilled, and the execution and
delivery of this Agreement in the form and with the terms hereof have been in
all respects duly authorized; and
WHEREAS, upon issuance of the Exchange Certificates, if any, or the
effectiveness of the 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
9
-3-
whole and not to any particular Article, Section, Subsection or other
subdivision; and
(5) unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, it shall be deemed
to be followed by the phrase "without limitation".
Affiliate: Means, with respect to any 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: Has the meaning specified in the first recital to this
Agreement.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w) the Trust,
(x) the Trust Property, (y) Certificateholders or (z) the Trustee for
which the Trustee is entitled to seek reimbursement from the Trust
Property, and (ii) which would be avoided if the Trustee were located in
another state, or jurisdiction within a state, within the United States. A
tax shall not be an Avoidable Tax if the Company 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.
10
-4-
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any one of the Initial Certificates or
Exchange Certificates and any such Certificates issued in exchange
therefor or replacement thereof pursuant to this Agreement.
Certificate Account: Means the account or accounts created and
maintained pursuant to Section 4.01(a).
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
Company: Means Continental Airlines, Inc., a Delaware corporation,
or its successor in interest pursuant to Section 5.02, or (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"
(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, the Second
Mortgagee or any Loan Trustee, means the office of such trustee in the
city at which at any particular time its corporate trust business shall be
principally administered.
Cut-off Date: Means August 31, 1997.
Definitive Certificates: Has the meaning specified in Section
3.01(e).
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.
11
-5-
ERISA Legend: Has the meaning specified in Section 3.12.
Escrow Account: Has the meaning specified in Section 2.01(b).
Escrowed Funds: Has the meaning specified in Section 2.01(b).
Euroclear: Means the Euroclear System.
Event of Default: Means an Indenture Default under any Indenture
pursuant to which Equipment Notes held by the Trust were issued.
Exchange Certificates: Means the 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 June 30, 2001.
Financing Agreements: Means each of the ten separate Participation
Agreements relating to the Aircraft each dated the date hereof, among the
Company, the Pass Through Trustee, the Other Trustees, the relevant Loan
Trustee, the Second Mortgagee 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.
Financing Documents: With respect to any Equipment Note, means
the related Indenture, the Second Mortgage and the related Financing
Agreement.
Fractional Undivided Interest: Means the fractional undivided
interest in the Trust that is evidenced by a Certificate.
12
-6-
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 ten separate trust indentures and
mortgages relating to the Aircraft, 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 and Morgan Stanley & Co. Incorporated.
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 June 25, 1997 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers relating to the Certificates issued
under (and as defined in) each of the Other 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.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
Liquidity Facility: Means, initially, the Revolving Credit Agreement
dated as of June 25, 1997 relating to the Certificates, between the
Liquidity Provider and the Subordination Agent, as agent and trustee for
the Trustee, and, from and after the replacement of such Agreement
pursuant to the Intercreditor Agreement, the replacement liquidity
facility (or facilities) therefor, in each case as amended, supplemented
or otherwise modified from time to time in accordance with its terms.
13
-7-
Liquidity Provider: Means, initially, Kredietbank N.V., acting
through its New York Branch, 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
mortgagee under such Indenture, together with any successor to such
mortgagee appointed pursuant thereto.
McDonnell Douglas: Means the McDonnell Douglas Corporation.
Non-U.S. Person: Means a Person that is not a "U.S. person", as
defined in Regulation S.
Officer's Certificate: Means a certificate signed, (a) in the case
of the Company, by (i) the Chairman or Vice Chairman of the Board of
Directors, the President, any Executive Vice President, any Senior Vice
President or the Treasurer of the Company, signing alone, or (ii) any Vice
President of the Company signing together with the Secretary, the
Assistant Secretary, the Treasurer or any Assistant Treasurer of the
Company, (b) in the case of a Loan Trustee, a Responsible Officer of such
Loan Trustee or (c) in the case of a Second Mortgagee, a Responsible
Officer of such Second Mortgagee.
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 Loan Trustee or Second Mortgagee 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 1997-2 Pass Through Trust Agreements relating to
Continental Airlines Pass Through Trust, Series 1997-2A, Continental
Airlines Pass Through Trust, Series 1997-2B and Continental Airlines Pass
Through Trust, Series 1997-2C, dated the date hereof.
14
-8-
Other Trustees: Means the trustees under the Other Pass Through
Trust Agreements, and any successor or other trustee appointed as
provided therein.
Outstanding: When used with respect to Certificates, means, as
of the date of determination, all Certificates theretofore
authenticated and delivered under this Agreement, except:
(i) Certificates theretofore 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.
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 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.
15
-9-
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Certificates less (ii) the aggregate amount of all payments
made in respect of such Certificates other than payments made in respect
of interest or premium thereon or reimbursement of any costs or expenses
incurred in connection therewith. The Pool Balance as of any Distribution
Date shall be computed after giving effect to the payment of principal, if
any, on the Equipment Notes or other Trust Property held in the Trust and
the distribution thereof to be made on such Distribution Date.
Pool Factor: Means, as of any date, the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance as at
such date by (ii) the original aggregate face amount of the Certificates.
The Pool Factor as of any Distribution Date shall be computed after giving
effect to the payment of principal, if any, on the Equipment Notes or
other Trust Property held in the Trust and the distribution thereof to be
made on such Distribution Date.
Postponed Notes: Means any Equipment Notes to be held in the Trust
as to which a Postponement Notice shall have been delivered pursuant to
Section 2.01(b).
Postponement Notice: Means an Officer's Certificate of the Company
(1) requesting that the Trustee temporarily postpone the purchase pursuant
to one or more of the Financing Agreements of certain of the Equipment
Notes to a date which is later than the Issuance Date, (2) identifying the
amount of the purchase price of each such Equipment Note and the aggregate
purchase price for all such Equipment Notes and (3) with respect to each
such Equipment Note, either (a) setting or resetting a new Transfer Date
for payment by the Trustee of such purchase price and issuance of the
related Equipment Note (subject to subsequent change from time to time in
accordance with the relevant Financing Agreement), or (b) indicating that
such new Transfer Date (which shall be on or prior to the Cut-off Date)
will be set by subsequent written notice not less than one Business Day
prior to such new Transfer Date (subject to subsequent change from time to
time in accordance with the relevant Financing Agreement).
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
16
-10-
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).
Purchase Agreement: Means the Purchase Agreement dated June 17, 1997
among the Initial Purchasers and the Company, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
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 June 25, 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.
17
-11-
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).
Responsible Officer: With respect to the Trustee, the Second
Mortgagee and any Loan Trustee, means any officer in the Corporate Trust
Office of the Trustee, Second Mortgagee or Loan 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.
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 the Liquidity Facility, which payment
represents the installment of principal at the stated maturity of such
installment of principal on such Equipment Note, the payment of regularly
scheduled interest accrued on the unpaid principal amount of such
Equipment Note, or both; provided that any payment of principal, premium,
if any, or interest resulting from the redemption or purchase of any
Equipment Note shall not constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as from time to
time constituted or created under the 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
18
-12-
assigned to it under the Trust Indenture Act, then the body performing
such duties on such date.
Second Mortgage: Means the Second Trust Indenture and Mortgage
dated as of the date hereof between the Company and the Loan Trustees.
Second Mortgagee: Means the bank or trust company designated as
second mortgagee under the Second Mortgage together with any successor to
such second mortgagee appointed pursuant thereto.
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 Payment: Means (i) any payment (other than a Scheduled
Payment) in respect of, or any proceeds of, any Equipment Note, the
Collateral (as defined in each Indenture) or the Collateral (as defined in
the Second Mortgage), (ii) the amounts required to be distributed pursuant
to the last paragraph of Section 2.01(b) or (iii) the amounts required to
be distributed pursuant to the penultimate paragraph of Section 2.01(b).
Special Payments Account: Means the account or accounts created
and maintained pursuant to Section 4.01(b).
Specified Investments: Means, with respect to investments to be made
with Escrowed Funds pursuant to Section 2.01(b) hereof, (i) obligations
of, or guaranteed by, the United States Government or agencies thereof,
(ii) open market commercial paper of any corporation incorporated under
the laws of the United States of America or any State thereof rated at
least P-2 or its equivalent by Moody's Investors Service, Inc. or at least
A-2 or its equivalent by Standard & Poor's Ratings Group, (iii)
certificates of
19
-13-
deposit issued by commercial banks organized under the laws of the United
States or of any political subdivision thereof having a combined capital
and surplus in excess of $100,000,000, which banks or their holding
companies have a short-term deposit rating of Pl by Moody's Investors
Service, Inc. or its equivalent by Standard & Poor's Ratings Group;
provided, however, that the aggregate amount at any one time so invested
in certificates of deposit issued by any one bank shall not exceed 5% of
such bank's capital and surplus, (iv) U.S. dollar denominated offshore
certificates of deposit issued by, or offshore time deposits with, any
commercial bank described in clause (iii) above or any subsidiary thereof
and (v) repurchase agreements with any financial institution having
combined capital and surplus of at least $100,000,000 with respect to any
of the obligations described in clauses (i) through (iv) above as
collateral; provided further that if all of the above investments are
unavailable, all amounts to be invested may be used to purchase Federal
Funds from an entity described in clause (iii) above.
Subordination Agent: Has the meaning specified in the Intercreditor
Agreement.
Transfer Date: Has the meaning assigned to the term "Closing Date"
in each Financing Agreement (as such "Closing Date" may be changed from
time to time in accordance with the terms of such Financing Agreement).
Triggering Event: Has the meaning assigned to such term in the
Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate of
which consists of the Trust Property.
Trust Indenture Act: Means the United States Trust Indenture Act
of 1939, as amended from time to time, or any successor thereto.
Trust Property: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Trust and all monies at
any time paid thereon and all monies due and to become due thereunder,
(ii) funds from time to time deposited in the Escrow Account, the
Certificate Account and the Special Payments Account and, subject to the
Intercreditor Agreement, any proceeds from the sale by the Trustee
pursuant to Article VI hereof of any such Equipment Note and (iii) all
rights of the Trust and the Trustee, on behalf of the Trust, under the
Intercreditor Agreement and the Liquidity Facility, including, without
limitation, all
20
-14-
rights to receive certain payments thereunder, and all monies paid to the
Trustee on behalf of the Trust pursuant to the Intercreditor Agreement or
the Liquidity Facility.
Trustee: Means Wilmington Trust Company, or its successor in
interest, and any successor or other trustee appointed as provided herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
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 Loan Trustee or the Second Mortgagee to the Trustee to take
any action under any provision of this Agreement, the Company, such Loan Trustee
or such Second Mortgagee, 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
21
-15-
(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, any Loan Trustee or the Second Mortgagee. 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, any Loan Trustee and the Second Mortgagee, if
made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or such other officer and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof
22
-16-
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 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,
23
-17-
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 and each of the
Financing Agreements on or prior to the Issuance Date, each in the form
delivered to the Trustee by the Company, and (ii) subject to the respective
terms thereof, to perform its obligations thereunder. Upon request of the
Company and the satisfaction or waiver of the closing conditions specified in
the Purchase Agreement, the Trustee shall execute, deliver, authenticate, issue
and sell Initial Certificates in authorized denominations equalling in the
aggregate the amount set forth, with respect to the Certificates, in Schedule II
to the 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 Financing Agreements. On
the Issuance Date, the Trustee shall purchase, pursuant to the terms and
conditions of the Financing Agreements, the Equipment Notes (other than the
Postponed Notes) contemplated to be purchased by the Trustee under the Financing
Agreements at a purchase price equal to the consideration so received for the
Certificates (less the aggregate amount of any Escrowed Funds). 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 prior to the Issuance Date, the Company may deliver to the
Trustee a Postponement Notice relating to one or more Postponed Notes. The
Trustee shall postpone the purchase of the Postponed Notes from the
consideration received from the sale of Certificates and shall promptly deposit
funds in an amount equal to the purchase price of such Postponed Notes (the
"Escrowed Funds") into an escrow account (the "Escrow Account") with the Trustee
to be maintained as a part of the Trust. The portion of Escrowed Funds so
deposited with respect to any particular Postponed Notes shall be invested by
the Trustee at
24
-18-
the direction and risk of the Company in Specified Investments (i) maturing no
later than any scheduled Transfer Date relating to such Postponed Notes or (ii)
if no such Transfer Date has been scheduled, maturing on the next Business Day,
or (iii) if the Company has given notice to the Trustee that such Postponed
Notes will not be issued, maturing on the next applicable Special Distribution
Date, if such investments are reasonably available for purchase. The Trustee
shall make withdrawals from the Escrow Account only as provided in this
Agreement. Upon request of the Company on one or more occasions and the
satisfaction or waiver of the closing conditions specified in the applicable
Financing Agreement on or prior to the Cut-off Date, the Trustee shall purchase
the applicable Postponed Notes with Escrowed Funds withdrawn from the Escrow
Account. The purchase price shall equal the principal amount of such Postponed
Notes.
The Trustee shall hold all Specified Investments until the maturity
thereof and will not sell or otherwise transfer Specified Investments. If
Specified Investments held in an Escrow Account mature prior to any applicable
Transfer Date, any proceeds received on the maturity of such Specified
Investments (including any earnings thereon) shall be reinvested by the Trustee
at the direction and risk of the Company in Specified Investments maturing as
provided in the preceding paragraph. The Company shall pay to the Trustee for
deposit to the Escrow Account an amount equal to any losses on such Specified
Investments as incurred.
On the initial Regular Distribution Date, the Company will pay (in
immediately available funds) to the Trustee an amount equal to (i) the sum of
(A) the interest that would have accrued, at a rate equal to the interest rate
applicable to the Certificates, on any Postponed Notes purchased on or prior to
the Cut-Off Date if such Postponed Notes had been issued on the Issuance Date,
from and including the Issuance Date to but excluding the date of such purchase,
and (B) the interest that would have accrued, at a rate equal to the interest
rate applicable to the Certificates, on any Postponed Notes not purchased on or
prior to the Cut-Off Date (other than any Postponed Notes for which a Special
Distribution Date specified in either of the two immediately succeeding
paragraphs has occurred on or prior to the initial Regular Distribution Date) if
such Postponed Notes had been issued on the Issuance Date, from and including
the Issuance Date to but excluding the initial Regular Distribution Date, minus
(ii) the earnings on Specified Investments received (with respect to the portion
of the Escrow Funds deposited with respect to the Postponed Notes described in
sub-clauses (A) and (B) of clause (i) of this paragraph) by the Trustee from and
including the Issuance Date to but excluding the initial Regular Distribution
Date.
25
-19-
If the Company notifies the Trustee prior to the Cut-off Date that
any Postponed Notes will not be issued on or prior to the Cut-off Date for any
reason, on the next Special Distribution Date established pursuant to Section
4.02(c) for the distribution to the Certificateholders of Escrowed Funds with
respect to the Postponed Notes designated in such notice (i) the Company shall
pay to the Trustee for deposit in the Special Payments Account, in immediately
available funds, an amount equal to (A) the interest that would have accrued, on
the Postponed Notes designated in such notice, at a rate equal to the interest
rate applicable to the Certificates from and including the Issuance Date (if
such Special Distribution Date shall occur on or prior to the initial Regular
Distribution Date) or the initial Regular Distribution Date (if such Special
Distribution Date occurs after the initial Regular Distribution Date) to but
excluding such Special Distribution Date, minus (B) the earnings on Specified
Investments received (with respect to the portion of the Escrowed Funds
deposited with respect to the Postponed Notes designated in such notice) by the
Trustee from and including the Issuance Date (if such Special Distribution Date
shall occur on or prior to the initial Regular Distribution Date) or the initial
Regular Distribution Date (if such Special Distribution Date occurs after the
initial Regular Distribution Date) to but excluding such Special Distribution
Date and (ii) the Trustee shall transfer an amount equal to that amount of
Escrowed Funds that would have been used to purchase the Postponed Notes
designated in such notice (together with the earnings described in clause (i)(B)
of this paragraph above) plus the amount paid by the Company pursuant to clause
(i) of this paragraph to the Special Payments Account for distribution as a
Special Payment in accordance with the provisions hereof.
If, on the Cut-off Date, an amount equal to less than all of the
initial Escrowed Funds (other than Escrowed Funds referred to in the immediately
preceding paragraph) has been used to purchase Postponed Notes, on the Special
Distribution Date established pursuant to Section 4.02(c) for the distribution
to the Certificateholders of Escrowed Funds with respect to all of the Postponed
Notes that have not been purchased on or prior to the Cut-off Date (other than
any Postponed Notes referred to in the immediately preceding paragraph) (i) the
Company shall pay to the Trustee for deposit in the Special Payments Account, in
immediately available funds, an amount equal to (A) the interest that would have
accrued on Postponed Notes originally contemplated to be purchased with such
unused Escrowed Funds (other than Escrowed Funds referred to in the immediately
preceding paragraph) but not so purchased at a rate equal to the interest rate
applicable to the Certificates from and including the Issuance Date (if such
Special Distribution Date shall occur on or prior to the initial Regular
Distribution Date) or the initial Regular Distribution Date (if such Special
Distribution Date occurs after the initial Regular Distribution Date) to but
excluding such Special Distribution Date, minus (B) the earnings on Specified
Investments received (with respect to the portion of the Escrowed Funds
deposited with respect to the Postponed Notes described in this paragraph) by
the Trustee from and including the Issuance Date (if such Special Distribution
Date shall occur on or prior to the initial Regular Distribution Date) or the
26
-20-
initial Regular Distribution Date (if such Special Distribution Date occurs
after the initial Regular Distribution Date) to but excluding such Special
Distribution Date and (ii) the Trustee shall transfer such unused Escrowed Funds
(together with the earnings described in clause (i)(B) of this paragraph above)
and the amount paid by the Company pursuant to the clause (i) of this paragraph
to the Special Payments Account for distribution as a Special Payment in
accordance with the provisions hereof.
Section 2.02. Acceptance by Trustee. The Trustee, upon the execution
and delivery of this Agreement, acknowledges its acceptance of all right, title
and interest in and to the 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 of the Equipment Notes acquired by the Trust in the name
of the Subordination Agent. By its payment for and acceptance of each
Certificate issued to it under this Agreement, each initial Certificateholder as
grantor of the Trust thereby joins in the creation and declaration of the Trust.
Section 2.03. Limitation of Powers. The Trust is constituted solely
for the purpose of making the investment in the Equipment Notes to be held in
the Trust, and, except as set forth herein, the Trustee shall not be authorized
or empowered to acquire any other investments or engage in any other activities
and, in particular, the Trustee shall not be authorized or empowered to do
anything that would cause such Trust to fail to qualify as a "grantor trust" for
federal income tax purposes (including as subject to this restriction, acquiring
any Aircraft (as defined in the respective Indentures) by bidding such Equipment
Notes or otherwise, or taking any action with respect to any such Aircraft once
acquired).
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as
27
-21-
the "7.522% Initial Pass Through Certificates, Series 1997-2D" and the Exchange
Certificates shall be known as the "7.522% Exchange Pass Through Certificates,
Series 1997-2D", 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.
(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 $27,369,000.
(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
28
-22-
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 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".
(e) Certificates issued pursuant to Section 3.05(b) in exchange for
interests in a Restricted Global Certificate 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"). Certificates issued pursuant to
Section 3.05(b) in exchange for interests in a Regulation S Global Certificate
shall be issued substantially in the form of Exhibit A hereto 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
29
-23-
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 clauses (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 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 (including any
Global Certificate issued upon registration of transfer, in exchange for or in
lieu of such Certificates) or issued pursuant to Section 3.05(b) in exchange for
interests in a Restricted Global Certificate 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) OR (B) 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
30
-24-
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 and deliver Initial
Certificates in authorized denominations equalling in the aggregate the amount
set forth, with respect to the Trust, in Schedule II to the Purchase Agreement,
evidencing the entire ownership of the Trust, which amount equals the aggregate
principal amount of Equipment Notes which have been or
31
-25-
may be purchased by the Trustee pursuant to each Financing Agreement.
Thereafter, the Trustee shall duly execute, authenticate and deliver
Certificates as herein provided.
(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 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 (including, without limitation,
subject to the proviso to this sentence, Exchange Certificates) in authorized
denominations and 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 exchanges of Initial
Certificates for Exchange Certificates shall occur only after 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) and otherwise only in
accordance with the terms of the Exchange Offer. 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
32
-26-
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,
authenticate and deliver 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 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
33
-27-
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 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
34
-28-
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 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
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. Except as provided in the
foregoing sentence, 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.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed
35
-29-
transfer of an Initial Certificate to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists 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 interests in such Regulation
S Global Certificate being transferred, and the Trustee shall
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
36
-30-
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 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
37
-31-
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 such Restricted Legend and
otherwise in this Agreement and agrees that it will transfer such
Certificate only as provided in such Restricted Legend and otherwise 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 Restricted Legend
and otherwise 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 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
38
-32-
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 shall require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent may treat the Person in whose name any Certificate is registered
(as of the day of determination) as the owner of such Certificate for the
purpose of receiving distributions pursuant to Article IV and for all other
purposes whatsoever, and none of the Trustee, the Registrar or any Paying Agent
shall be affected by any notice to the contrary.
Section 3.09. Cancellation. All Certificates surrendered for payment
or transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for cancellation
and shall promptly be 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
39
-33-
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 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 Second Mortgagee or the Liquidity Provider, 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
40
-34-
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."
Without limitation of Section 3.06(f), by acceptance of any
Certificate bearing the ERISA Legend, each Holder of such a Certificate
acknowledges the restrictions set forth in such ERISA Legend. The Registrar
shall refuse to register any transfer of any Certificate in violation of the
restrictions set forth in such ERISA Legend.
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
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, 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.
41
-35-
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 such
Special Payment, 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 that the Trustee receives a notice
from the Company that Postponed Notes will not be purchased pursuant to Section
2.01, such notice of Special Payment shall be mailed as soon as practicable
after receipt of such notice from the Company and shall state the Special
Distribution Date for such Special Payment, which shall occur 20 days after the
date of such
42
-36-
notice of Special Payment or (if such 20th day is not practicable) as soon as
practicable thereafter. In the event that any Special Payment is to be made
pursuant to the last paragraph of Section 2.01(b) hereof, on the Cut-Off Date
(or, if such Cut-Off Date is not practicable, as soon as practicable after the
Cut-Off Date), notice of such Special Payment shall be mailed stating the
Special Distribution Date for such Special Payment, which shall occur 20 days
after the date of such notice of such Special Payment (or, if such 20th day is
not practicable, as soon as practicable thereafter). 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 premium, if any, payable upon the redemption or purchase of an
Equipment Note has not been calculated at the time that the Trustee mails notice
of a Special Payment, it shall be sufficient if the notice sets forth the other
amounts to be distributed and states that any premium received will also be
distributed.
If any redemption of the Equipment Notes held in the Trust is
canceled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the following information (per $1,000 face amount
Certificate as to (i) and (ii) below):
43
-37-
(i) the amount of such distribution allocable to principal and
the amount allocable to premium, if any;
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of 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) and (a)(ii) 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).
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
44
-38-
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 state thereof or the District of Columbia, (ii) a
"citizen of the United States" as defined in 49 U.S.C. 40102(a)(15), as
amended, and (iii) a United States certificated air carrier, if and so
long as such status is a condition of entitlement to the benefits of
Section 1110 of the Bankruptcy Reform Act of 1978, as amended (11 U.S.C.
ss. 1110), with respect to the Leases;
(b) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety shall
execute and deliver to the Trustee a duly authorized, valid, binding and
enforceable agreement in form and substance reasonably satisfactory to the
Trustee containing an assumption by such successor corporation or Person
of the due and punctual performance and observance of each covenant and
condition of this Agreement, the Other Pass Through Trust Agreements and
each Financing Document to be performed or observed by the Company; and
45
-39-
(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.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of Remedies. Upon the
occurrence and during the continuation of any Indenture Default under any
Indenture, the Trustee may, to the extent it is the Controlling Party at such
time (as determined pursuant to the Intercreditor Agreement), direct the
exercise of remedies as provided in the Intercreditor Agreement.
(b) Purchase Rights of Certificateholders. At any time after the
occurrence and during the continuation of a Triggering Event, each
Certificateholder shall have the right (which shall not expire upon any purchase
of the Class A Certificates pursuant to the Class B Trust Agreement or the
purchase of the Class A Certificates and the Class B Certificates pursuant to
the Class C Trust Agreement) to purchase all, but not less than all, of the
Class A Certificates, the Class B Certificates and the Class C Certificates upon
ten days' written notice to the Class A Trustee, the Class B Trustee, the Class
C 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
46
-40-
purchase, then such other Certificateholder may join with the purchasing
Certificateholder to purchase all, but not less than all, of the Class A
Certificates, the Class B Certificates and the Class C Certificates pro rata
based on the Fractional Undivided Interest in the Trust held by each such
Certificateholder and (B) if prior to the end of such ten-day period any other
Certificateholder fails to notify the purchasing Certificateholder of such other
Certificateholder's desire to participate in such a purchase, then such other
Certificateholder shall lose its right to purchase the Class A Certificates, the
Class B Certificates and the Class C Certificates pursuant to this Section
6.01(b).
No such purchase of Class A Certificates, the Class B Certificates
and the Class C 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,
the Class B Certificates and the Class C 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 Other 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, the Class B Certificates and the Class C Certificates will be
deemed to be purchased on the date payment of the purchase price is made
notwithstanding the failure of the Class A Certificateholders, the Class B
Certificateholders or the Class C Certificateholders, as the case may be, 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 Class A Certificateholders, the Class B
Certificateholders or the Class C Certificateholders, as the case may be, will
be to deliver the Class A Certificates, the Class B Certificates or the Class C
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
Class A Certificateholders, Class B Certificateholders or Class C
Certificateholders, as the case may be, will comply with all the provisions of
Section 3.04 of the Other Pass Through Trust Agreement for such Class to enable
new Class A Certificates, Class B Certificates or Class C Certificates, as the
case may be, 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 Class A Certificates, Class B Certificates or Class C Certificates, as the
case may be, shall be borne by the purchaser thereof.
47
-41-
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 Certificate", "Class C Trust Agreement"
and "Class C Trustee" 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 held in the Trust 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 held in the Trust 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 held in the Trust, 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, 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
48
-42-
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 held
in the Trust, 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 and/or the Second Mortgagee 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 held in the Trust, or
49
-43-
(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 and/or the Second
Mortgagee shall be annulled with respect thereto; but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon. Upon any such waiver, the Trustee shall vote the
Equipment Notes issued under the relevant Indenture to waive the corresponding
Indenture Default.
Section 6.06. Right of Certificateholders to Receive Payments Not to
Be Impaired. Anything in this Agreement to the contrary notwithstanding,
including, without limitation, Section 6.07 hereof, but subject to the
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
Certificates when due, or to institute suit for the enforcement of any such
payment on or after the applicable Regular Distribution Date or Special
Distribution Date, shall not be impaired or affected without the consent of such
Certificateholder.
Section 6.07. Certificateholders May Not Bring Suit Except Under
Certain Conditions. A Certificateholder shall not have the right to institute
any suit, action or proceeding at law or in equity or otherwise with respect to
this Agreement, for the appointment of a receiver or for the enforcement of any
other remedy under this Agreement, unless:
(1) such Certificateholder previously shall have given written
notice to the Trustee of a continuing Event of Default;
(2) Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the Trust shall have
requested the Trustee in writing to institute such action, suit or
proceeding and shall have offered to the Trustee indemnity as provided in
Section 7.03(e);
(3) the Trustee shall have refused or neglected to institute such an
action, suit or proceeding for 60 days
50
-44-
after receipt of such notice, request and offer of indemnity; and
(4) no direction inconsistent with such written request shall have
been given to the Trustee during such 60-day period by Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on any
property subject thereto, or the rights of the Certificateholders or the holders
of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder or (iii) enforce any
right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all the Certificateholders subject to the
provisions of this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given hereunder to
the Trustee or to any of the Certificateholders shall not be exclusive of any
other remedy or remedies, and every such remedy shall be cumulative and in
addition to every other remedy given hereunder or now or hereafter given by
statute, law, equity or otherwise.
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default, the Trustee undertakes to perform such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of its
own affairs.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that
51
-45-
(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 known to the Trustee, the Trustee shall
transmit by mail to the Company, the Loan Trustees, the Second Mortgagee 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 in 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;
52
-46-
(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 Loan Trustee or the Second Mortgagee;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the Direction of any of
the Certificateholders pursuant to this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable security
or indemnity against the cost, expenses and liabilities which might be
incurred by it in compliance with such Direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture or other paper or document;
(g) the Trustee may execute any of the trusts or powers under this
Agreement or perform any duties under this Agreement either directly or by
or through agents or attorneys, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it under this Agreement;
(h) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
Direction of the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the Trust relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement; and
(i) the Trustee shall not be required to expend or risk its own
funds in the performance of any of its duties under this Agreement, or in
the exercise of any of its rights or powers, if it shall have reasonable
grounds for
53
-47-
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 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 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 Loan Trustees or the Second
Mortgagee 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
54
-48-
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, willful
misconduct or bad faith or as may be incurred due to the Trustee's breach
of its representations and warranties set forth in Section 7.15; and
(3) to indemnify the Trustee pursuant to Sections 8.1 and 8.3 of
each Financing Agreement.
The Trustee shall be entitled to reimbursement from, and shall have
a lien prior to the Certificates upon, the Trust Property for any tax incurred
without negligence, bad faith or willful misconduct, on its part, arising out of
or in connection with the acceptance or administration of such Trust (other than
any tax attributable to the Trustee's compensation for serving as such),
including any costs and expenses incurred in contesting the imposition of any
such tax. If the Trustee reimburses itself from the Trust Property of such Trust
for any such tax, it will mail a brief report within 30 days setting forth the
circumstances thereof to all Certificateholders as their names and addresses
appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder which shall be eligible to act as a trustee
under Section 310(a) of the Trust Indenture Act and shall have a combined
capital and surplus of at least $75,000,000 (or a combined capital and surplus
in excess of $5,000,000 and the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed by a corporation
organized and doing business under the laws of the United States, any state or
territory thereof or of the District of Columbia and having a combined capital
and surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 7.08, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of conditions so published.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
Section 7.09. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall
55
-49-
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 Loan Trustees
and the Second Mortgagee. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Company, the Authorized Agents, the Loan
Trustees, the Trustee and the Second Mortgagee 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 Loan Trustees and the Second
Mortgagee.
(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 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
56
-50-
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 Loan Trustees, the Second Mortgagee 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 Loan Trustees and the Second Mortgagee 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
57
-51-
Trustee, the Company, the retiring Trustee and such successor Trustee shall
execute and deliver any and all instruments containing such provisions as shall
be necessary or desirable to transfer and confirm to, and for more fully and
certainly vesting in, such successor Trustee all such rights, powers and trusts.
No institution shall accept its appointment as a Trustee hereunder
unless at the time of such acceptance such institution shall be qualified and
eligible under this Article VII.
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article VII, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Certificates shall have been
executed or authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such execution or authentication and deliver the Certificates so
executed or authenticated with the same effect as if such successor Trustee had
itself executed or authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at all times
be maintained an office or agency in the location set forth in Section 12.03
where Certificates may be presented or surrendered for registration of transfer
or for exchange, and for payment thereof and where notices and demands to or
upon the Trustee in respect of such certificates or this Agreement may be
served; provided, however, that, if it shall be necessary that the Trustee
maintain an office or agency in another location (e.g., the Certificates shall
be represented by 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 Loan Trustees and the Second Mortgagee (at their
respective addresses 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
58
-52-
and notices may be served at the Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a Paying Agent
hereunder with respect to the Certificates. Each such Authorized Agent shall be
a bank or trust company, shall be a corporation organized and doing business
under the laws of the United States or any state, with a combined capital and
surplus of at least $75,000,000, or, if the Trustee shall be acting as the
Registrar or Paying Agent hereunder, a corporation having a combined capital and
surplus in excess of $5,000,000, the obligations of which are guaranteed by a
corporation organized and doing business under the laws of the United States or
any state, with a combined capital and surplus of at least $75,000,000, and
shall be authorized under such laws to exercise corporate trust powers, subject
to supervision by Federal or state authorities. The Trustee shall initially be
the Paying Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. Each Registrar shall furnish to the Trustee, at
stated intervals of not more than six months, and at such other times as the
Trustee may request in writing, a copy of the Register maintained by such
Registrar.
(c) Any corporation into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authorized Agent shall
be a party, or any corporation succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent hereunder, if
such successor corporation is otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the parties
hereto or such Authorized Agent or such successor corporation.
(d) Any Authorized Agent may at any time resign by giving written
notice of resignation to the Trustee, the Company, the Loan Trustees and the
Second Mortgagee. 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
59
-53-
appointment made by it to the Trustee, the Loan Trustees and the Second
Mortgagee; and in each case the Trustee shall mail notice of such appointment to
all Certificateholders as their names and addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid, from time to
time to each Authorized Agent reasonable compensation for its services and to
reimburse it for its reasonable expenses.
Section 7.13. Money for Certificate Payments to Be Held in Trust.
All moneys deposited with any Paying Agent for the purpose of any payment on
Certificates shall be deposited and held in trust for the benefit of the
Certificateholders entitled to such payment, subject to the provisions of this
Section. Moneys so deposited and held in trust shall constitute a separate trust
fund for the benefit of the Certificateholders with respect to which such money
was deposited.
The Trustee may at any time, for the purpose of obtaining the
satisfaction and discharge of this Agreement or for any other purpose, direct
any Paying Agent to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon
which such sums were held by such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased
by the Trust shall be issued in the name of the Subordination Agent or its
nominee and held by the Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the Subordination Agent or its nominee
shall be reflected as the owner of such Equipment Notes in the register of the
issuer of such Equipment Notes.
Section 7.15. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation organized and
validly existing in good standing under the laws of the State of Delaware;
(b) the Trustee has full power, authority and legal right to
execute, deliver, and perform this Agreement, the Intercreditor Agreement,
the Registration Rights Agreement and the Financing Agreements and has
taken all necessary action to authorize the execution, delivery, and
performance
60
-54-
by it of this Agreement, the Intercreditor Agreement, the Registration
Rights Agreement and the Financing Agreements;
(c) the execution, delivery and performance by the Trustee of this
Agreement, the Intercreditor Agreement, the Registration Rights Agreement
and the Financing Agreements (i) will not violate any provision of United
States federal law or the law of the state of the United States where it
is located governing the banking and trust powers of the Trustee or any
order, writ, judgment, or decree of any court, arbitrator or governmental
authority applicable to the Trustee or any of its assets, (ii) will not
violate any provision of the articles of association or by-laws of the
Trustee, or (iii) will not violate any provision of, or constitute, with
or without notice or lapse of time, a default under, or result in the
creation or imposition of any lien on any properties included in the Trust
Property pursuant to the provisions of any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation,
default or lien could reasonably be expected to have an adverse effect on
the Trustee's performance or ability to perform its duties hereunder or
thereunder or on the transactions contemplated herein or therein;
(d) the execution, delivery and performance by the Trustee of this
Agreement, the Intercreditor Agreement, the Registration Rights Agreement
and the Financing Agreements will not require the authorization, consent,
or approval of, the giving of notice to, the filing or registration with,
or the taking of any other action in respect of, any governmental
authority or agency of the United States or the state of the United States
where it is located regulating the banking and corporate trust activities
of the Trustee; and
(e) this Agreement, the Intercreditor Agreement, the Registration
Rights Agreement and the Financing Agreements have been duly executed and
delivered by the Trustee and constitute the legal, valid, and binding
agreements of the Trustee, enforceable against it in accordance with their
respective terms, provided that enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and (ii) general
principles of equity.
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
61
-55-
distribution of principal, premium, if any, and interest and other amounts due
under this Agreement or under the Certificates any and all withholding taxes
applicable thereto as required by law. The Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any amounts
payable in respect of the Certificates, to withhold such amounts and timely pay
the same to the appropriate authority in the name of and on behalf of the
Certificateholders, that it will file any necessary withholding tax returns or
statements when due, and that, as promptly as possible after the payment
thereof, it will deliver to each such Certificateholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Certificateholders may reasonably request from time
to time. The Trustee agrees to file any other information reports as it may be
required to file under United States law.
Section 7.17. Trustee's Liens. The Trustee in its individual
capacity agrees that it will at its own cost and expense promptly take any
action as may be necessary to duly discharge and satisfy in full any mortgage,
pledge, lien, charge, encumbrance, security interest or claim ("Trustee's
Liens") on or with respect to the Trust Property which is attributable to the
Trustee either (i) in its individual capacity and which is unrelated to the
transactions contemplated by this Agreement, the Intercreditor Agreement, the
Financing Agreements or the Financing Documents, or (ii) as Trustee hereunder or
in its individual capacity and which arises out of acts or omissions which are
not contemplated by this Agreement.
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
62
-56-
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 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
63
-57-
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).
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 Registration Rights Agreement or
64
-58-
the Liquidity Facility in form satisfactory to the Trustee, for any of the
following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein contained or of the Company's obligations under the Registration
Rights Agreement or the 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 Registration Rights Agreement or the
Liquidity Facility; or
(3) to correct or supplement any provision in this Agreement, the
Intercreditor Agreement, the Registration Rights Agreement or the
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 Intercreditor Agreement, the
Registration Rights Agreement or the Liquidity Facility, provided that any
such action shall not materially adversely affect the interests of the
Certificateholders; or, as provided in the Intercreditor Agreement, to
give effect to or provide for a Replacement Liquidity Facility (as defined
in the Intercreditor Agreement); 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
65
-59-
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 (but shall not be obligated to), and the Trustee (subject to Section 9.03)
shall enter into an agreement or agreements for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, the Intercreditor Agreement, the Liquidity Facility, the
Registration Rights Agreement or any Financing Agreement to the extent
applicable to such Certificateholders or of modifying in any manner the rights
and obligations of such Certificateholders under this Agreement, the
Intercreditor Agreement, the Liquidity Facility or the Registration Rights
Agreement; provided, however, that no such agreement shall, without the consent
of the Certificateholder of each Outstanding Certificate affected thereby:
(1) reduce in any manner the amount of, or delay the timing of, any
receipt by the Trustee of payments on the Equipment Notes held in the
Trust or distributions that are required to be made herein on any
Certificate, or change any date of payment on any Certificate, or change
the place of payment where, or the coin or currency in which, any
Certificate is payable, or impair the right to institute suit for the
enforcement of any such payment or distribution
66
-60-
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.
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
67
-61-
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 (or as prospective
purchaser of any Postponed Notes) 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
Equipment Note, any Financing Document related thereto 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 (or, with respect to Postponed Notes, a prospective
purchaser 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 (or,
with respect to Postponed Notes, a prospective purchaser of) such
68
-62-
Equipment Note or a Controlling Party and (c) how to vote (or direct the
Subordination Agent to vote) any Equipment Note (or, with respect to Postponed
Note, its commitment to acquire such Postponed 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 (or Postponed 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 and/or the Second Mortgagee, as the case may be, of such consent (or
direct the Subordination Agent to consent and notify the relevant Loan Trustee
and/or the Second Mortgagee, as the case may be, of such consent) to any
amendment, modification, waiver or supplement under any Equipment Note (or
Postponed Note), any Financing Document related thereto 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 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
69
-63-
Trust continue beyond one hundred ten (110) years following the date of the
execution of this Trust Agreement.
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 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 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
70
-64-
action or commence any proceeding in any court for a partition or winding up of
the Trust, nor otherwise affect the rights, obligations, and liabilities of the
parties hereto or any of them.
Section 12.02. Certificates Nonassessable and Fully Paid. Except as
set forth in the last sentence of this Section 12.02, Certificateholders shall
not be personally liable for obligations of the Trust, the Fractional Undivided
Interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and Certificates, upon
authentication thereof by the Trustee pursuant to Section 3.03, are and shall be
deemed fully paid. No Certificateholder shall have any right (except as
expressly provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the obligations of
the parties hereto, nor shall anything set forth herein, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association.
Neither the existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise incur if the
Certificateholders owned Trust Property as co-owners, or incurred any
obligations of the Trust, directly rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise specifically provided
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by United
States mail, 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
71
-65-
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, any Loan Trustee or the Second Mortgagee.
Section 12.04. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN
THE STATE OF NEW YORK AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK 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
72
-66-
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.
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
73
-67-
income tax purposes as a grantor trust under Subpart E, Part I of Subchapter J
of the Internal Revenue Code of 1986, as amended, and not as a trust or
association taxable as a corporation or as a partnership. The powers granted and
obligations undertaken pursuant to this Agreement shall be so construed so as to
further such intent.
74
-68-
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: Gerald Laderman
Title: Vice President
WILMINGTON TRUST COMPANY,
as Trustee
By: __________________________
Name:
Title:
75
-69-
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:
76
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) OR (B) 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 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
77
A-2
THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) IT IS
AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE
THIS CERTIFICATE, AND THE CONDITIONS OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ISSUED BY THE U.S. DEPARTMENT OF LABOR HAVE BEEN AND WILL
CONTINUE TO BE SATISFIED IN CONNECTION WITH ITS PURCHASE AND HOLDING OF
THIS CERTIFICATE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.]**
- ----------
* Not to be included on the face of the Regulation S Global
Certificate.
** To be included on the face of each Global Certificate.
78
A-3
[[REGULATION S] GLOBAL CERTIFICATE]*
CONTINENTAL AIRLINES PASS THROUGH TRUST, SERIES 1997-2D
7.522% Continental Airlines [Initial] [Exchange]
Pass Through Certificate,
Series 1997-2D
Final Maturity Date: June 30, 2001
CUSIP/Common Code No. ____________
evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft owned by
Continental Airlines, Inc.
$27,369,000 Fractional Undivided Interest representing
.003653769% 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 1997-2D (the
"Trust") created pursuant to a Pass Through Trust Agreement, dated as of June
25, 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 "7.522%
Continental Airlines [Initial] [Exchange] Pass Through Certificates, Series
1997-2D" (herein called the "Certificates"). This Certificate is issued under
and is subject to the terms, provisions, and conditions of the Agreement. By
virtue of its acceptance hereof the Certificateholder of this Certificate
assents to and agrees to be bound by the provisions of the Agreement and the
Intercreditor Agreement. The property of the Trust includes an interest in
certain Equipment Notes and all rights of the Trust to receive payments under
the Intercreditor Agreement and the Liquidity Facility (the "Trust Property").
Each issue of the Equipment Notes is secured by, among other things, a security
interest in the Aircraft owned by the Company.
- ----------
* To be included on the face of each Global Certificate.
79
A-4
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 June 30 and December 30 (a "Regular
Distribution Date"), commencing on December 30, 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 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
80
A-5
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.
[The Holder of this Certificate is entitled to the benefits of the
Exchange and Registration Rights Agreement, dated as of June 25, 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 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
81
A-6
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 (if it is filed), after being declared
effective by the SEC, 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 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).]*
Except as otherwise provided in the Agreement and notwithstanding
the above, the final distribution on this Certificate will be made after notice
mailed by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency of the
Trustee specified in such notice.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of
- ----------
* To be included only on each Initial Certificate.
82
A-7
[$100,000]** [$1,000]*** 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.
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.
THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
- ----------
** To be included only on each Initial Certificate.
*** To be included only on each Exchange Certificte.
83
A-8
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: _______________, 1997 CONTINENTAL AIRLINES
PASS THROUGH TRUST, SERIES
1997-2D
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: _________________________________
Name:
Title:
84
A-9
[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
85
A-10
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
86
A-11
[ ] (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.
87
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
1997-2D, Continental Airlines Pass Through Certificates, Series
1997-2D (the "Certificates")
Sirs:
In connection with our proposed sale of $_____ Fractional Undivided
Interest of the Certificates, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended, and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and Continental Airlines, Inc. are entitled to rely upon this
letter and are irrevocably authorized to produce this
88
B-2
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]
89
SCHEDULE I
Aircraft
Aircraft Type Registration Number
------------- -------------------
Boeing 737-3T0 N12322
Boeing 737-3T0 N10323
Boeing 737-3T0 N14324
Boeing 737-3T0 N69333
Boeing 737-3T0 N14334
Boeing 737-3T0 N14335
McDonnell Douglas MD-82 N12811
McDonnell Douglas MD-82 N15820
McDonnell Douglas MD-82 N18833
McDonnell Douglas MD-82 N10834
1
Exhibit 4.9
EXECUTION COPY
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1997-2A)
Dated as of June 25, 1997
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines Pass Through Trust 1997-2A
as Borrower
and
KREDIETBANK N.V., NEW YORK BRANCH,
as Liquidity Provider
- --------------------------------------------------------------------------------
Relating to
Continental Airlines Pass Through Trust 1997-2A
7.148% Continental Airlines Pass Through Certificates,
Series 1997-2A
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.............................................. 10
Section 2.02. Making the Advances....................................... 10
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 Downgrade Advances.......................... 14
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
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.................................................. 21
Section 3.05. Computations.............................................. 21
Section 3.06. Payment on Non-Business Days.............................. 21
Section 3.07. Interest.................................................. 21
Section 3.08. Replacement of Borrower................................... 23
Section 3.09. Funding Loss Indemnification.............................. 23
Section 3.10. Illegality................................................ 24
- i -
3
Page
----
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to
Effectiveness of Section 2.01.......................... 25
Section 4.02. Conditions Precedent to Borrowing......................... 27
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the
Borrower .............................................. 28
Section 5.02. Negative Covenants of the
Borrower .............................................. 28
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default............................... 29
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc........................................... 29
Section 7.02. Notices, Etc.............................................. 29
Section 7.03. No Waiver; Remedies....................................... 30
Section 7.04. Further Assurances........................................ 31
Section 7.05. Indemnification; Survival of
Certain Provisions..................................... 31
Section 7.06. Liability of the Liquidity
Provider............................................... 31
Section 7.07. Costs, Expenses and Taxes................................. 32
Section 7.08. Binding Effect; Participations............................ 33
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
Section 7.14. Headings.................................................. 37
- ii -
4
Page
----
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION
TO MAKE ADVANCES ...................................... 37
ANNEX I Interest Advance Notice of Borrowing
ANNEX II Downgrade Advance Notice of Borrowing
ANNEX III Notice of Automatic Reduction or Increase of Commitment
ANNEX IV Notice of Conversion to Final Advance
ANNEX V Notice of Replacement Subordination Agent
-iii-
5
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of June 25, 1997, between
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual
capacity but solely as Subordination Agent under the Intercreditor Agreement
(each as defined below), as agent and trustee for the Class A Trust (as defined
below) (the "Borrower"), and KREDIETBANK N.V., acting through its New York
branch (the "Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class A Trust Agreement (such term and all other
capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class A Trust is issuing the Class A
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a portion
of the interest on the Class A Certificates in accordance with their terms, has
requested the Liquidity Provider to enter into this Agreement, providing in part
for the Borrower to request in specified circumstances that Advances be made
hereunder.
NOW, THEREFORE, in consideration of the premises, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. (a) Definitions. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Additional Cost" has the meaning assigned to such term in Section
3.01.
"Advance" means an Interest Advance, a Final Advance, a Downgrade
Advance, an Applied Downgrade 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(f).
"Applicable Margin" means (v) with respect to any Unpaid Advance or
Applied Downgrade Advance that is a LIBOR Advance, 1.75% per annum, (w)
with respect to any Final Advance that is a Base Rate Advance, 1.75% per
annum, (x) with respect to any Interest Advance or Applied Downgrade
Advance that is a Base Rate Advance, 0.75% per annum, (y) with respect to
any Unapplied Downgrade Advance that is a LIBOR Advance, 0.45% per annum
and (z) with respect to any Unapplied Downgrade Advance that is a Base
Rate Advance, minus 0.55% per annum.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.06(a).
"Base Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall for any day be equal to the
higher of:
(i) the rate per annum announced from time to time by the
Liquidity Provider as its base commercial lending rate, and
(ii) (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, plus one-half
of one percent (1/2 of 1%), or (b) if the rate calculated pursuant
to clause (a) above is not available for such date, the rate quoted
by the Liquidity Provider, at approximately 11:00 A.M., New York
City time on such day (or, if such day is not a Business Day, on the
next preceding Business Day), to dealers in the New York Federal
funds market for overnight Federal funds offerings of dollars by the
Liquidity Provider, plus one-half of one percent (1/2 of 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 or pursuant to Section 6.01.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in
Houston, Texas, New York, New York, or, so long as any Class A Certificate
is outstanding, the city and state in which the Class A Trustee, the
Borrower or any Loan Trustee maintains its Corporate Trust Office or
receives or disburses funds, and, if the applicable Business Day relates
to any Advance or other amount bearing interest based on the LIBOR Rate,
on which dealings are carried on in the London interbank market.
"Downgrade Advance" means an Advance made pursuant to Section
2.02(c).
"Effective Date" has the meaning specified in Section 4.01. The
delivery of the certificate of the Liquidity Provider contemplated by
Section 4.01(e) shall be conclusive evidence that the Effective Date has
occurred.
"Excluded Taxes" means (i) taxes imposed on the overall net income
of the Liquidity Provider or of its Lending Office by the jurisdiction
where such Liquidity Provider's principal office or such Lending Office is
located, and (ii) Excluded Withholding Taxes.
"Excluded Withholding Taxes" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding
Taxes are imposed as a result of any change in applicable law or treaty
(including any change in the official interpretation thereof) after the
date hereof (excluding from change in applicable law or treaty for this
purpose any addition of, or change in, any "anti-treaty shopping",
"limitation on benefits", or similar provision in any treaty or other
applicable law restricting the availability of treaty benefits (including
without limitation any provision similar to the Protocol Amending the
Convention Between the United States of America and the Kingdom of the
Netherlands for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect
8
4
to Taxes on Income, signed at Washington on October 13, 1993)), or in the
case of a successor Liquidity Provider (including a transferee of an
Advance) or Lending Office, after the date on which such successor
Liquidity Provider obtains its interest or on which the Lending Office is
changed, and (ii) any withholding Taxes imposed by the United States which
are imposed or increased as a result of the Liquidity Provider failing to
deliver to the Borrower any certificate or document (which certificate or
document in the good faith judgment of the Liquidity Provider it is
legally entitled to provide) which is reasonably requested by the Borrower
to establish that payments under this Agreement are exempt from (or
entitled to a reduced rate of) withholding Tax.
"Expenses" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses, and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"Expiry Date" means January 14, 2009.
"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 and ending on the next Regular Distribution Date (or
ending, in the case of an Interest Period
9
5
applicable to any Unapplied Downgrade Advance, on the numerically
corresponding day in the third or sixth calendar month after the
first day of the applicable Interest Period and/or on the next
Regular Distribution Date, as Continental may select by providing
notice thereof to the Borrower and the Liquidity Provider no later
than three Business Days prior to the commencement of such Interest
Period, provided that if Continental shall not provide -------- such
a notice at least three Business Days prior to the commencement of
such Interest Period, then Continental shall be deemed to have
selected an Interest Period ending on the next Regular Distribution
Date) ; and
(ii) each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the next Regular
Distribution Date (or ending, in the case of an Interest Period
applicable to any Unapplied Downgrade Advance, on the numerically
corresponding day in the third or sixth calendar month after the
first day of the applicable Interest Period and/or on the next
Regular Distribution Date, as Continental may select by providing
notice thereof to the Borrower and the Liquidity Provider no later
than three Business Days prior to the commencement of such Interest
Period, provided that if Continental shall not provide such a notice
at least three Business Days prior to the commencement of such
Interest Period, then Continental shall be deemed to have selected
an Interest Period ending on the next Regular Distribution Date);
provided, however, that (I) if an Unapplied Downgrade Advance which is a
LIBOR Advance becomes an Applied Downgrade Advance, the Interest Period
then applicable to such Unapplied Downgrade Advance shall be applicable to
such Applied Downgrade Advance, (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
date the Liquidity Provider makes the Final Advance (in the case of clause
(x) above) or the Regular Distribution Date following
10
6
such conversion (in the case of clause (y) above) and (III) in the case of
any Interest Period applicable to a Downgrade Advance, each Interest
Period that would otherwise end on a day that is not a Business Day shall
end on the next succeeding Business Day.
"Lending Office" means the lending office of the Liquidity Provider
presently located at 125 West 55th Street, New York, New York 10019 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:
(i) the rate per annum appearing on display page 3750 (British
Bankers Association-LIBOR) of the Dow Jones Markets Service (or any
successor or substitute therefor) at approximately 11:00 A.M.
(London time) two Business Days before the first day of such
Interest Period, as the rate for dollar deposits with a maturity
comparable to such Interest Period, or
(ii) if (a) the rate calculated pursuant to clause (i) above
is not available or (b) the Liquidity Provider determines in good
faith, and certifies to the Borrower and Continental, prior to two
Business Days prior to the commencement of such Interest Period,
that the rate calculated pursuant to clause (i) above does not
adequately and fairly reflect the cost to the Liquidity Provider of
making and maintaining the relevant Advance during such Interest
Period, the rate per annum at which deposits in dollars are offered
for the relevant Interest Period by the Liquidity Provider to prime
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
11
7
the LIBOR Advance to which such Interest Period is to apply and for
a period of time comparable to such Interest Period, as quoted by
the Liquidity Provider to the Borrower.
"Liquidity Event of Default" means the occurrence of either (a) the
acceleration of all of the Equipment Notes or (b) a Continental Bankruptcy
Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) each
Affiliate of the Liquidity Provider, (iii) the directors, officers,
employees, servants and agents of the Liquidity Provider and its
Affiliates, and (iv) the successors and permitted assigns of the persons
described in clauses (i) through (iii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Maximum Available Commitment" 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 Downgrade Advance or a Final Advance, the
Maximum Available Commitment shall be zero.
"Maximum Commitment" means initially $8,101,025, as the same may be
adjusted from time to time in accordance with Section 2.04(a); provided
that the Maximum Commitment shall at no time exceed an amount equal to
$8,667,689.
"Non-Excluded Taxes" has the meaning specified in Section 3.03.
"Notice of Borrowing" has the meaning specified in Section 2.02(e).
"Notice of Conversion to Final Advance" means the Notice of
Conversion to Final Advance substantially in the form of Annex IV to this
Agreement.
"Notice of Replacement Subordination Agent" has the meaning
specified in Section 3.08.
12
8
"Offering Memorandum" means the Offering Memorandum dated June 17,
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.
"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.
"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 date
on which the Liquidity Provider makes the Final Advance; 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.
13
9
"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.
"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:
"Affiliate", "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
Certificates", "Class D Certificates", "Closing Date", "Continental",
"Continental Bankruptcy Event", "Controlling Party", "Corporate Trust
Office", "Distribution Date", "Downgraded Facility", "Equipment Notes",
"Fee Letter", "Indenture", "Initial Purchasers", "Investment Earnings",
"Liquidity Facility", "Loan Trustee", "Moody's", "Operative Agreements",
"Participation Agreement", "Performing Equipment Note", "Person", "Pool
Balance", "Postponed Notes", "Purchase Agreement", "Rating Agency",
"Registration Rights Agreement", "Regular Distribution Date, "Replacement
Liquidity Facility", "Responsible Officer", "Scheduled Payment", "Special
Payment", "Standard & Poor's", "Stated Interest Rate", "Subordination
Agent", "Taxes", "Threshold Rating", "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
14
10
and to be calculated and allocated in the same manner as interest on the Series
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 interest on the Class A Certificates at
the Stated Interest Rate therefor in accordance with Section 3.6(a) of the
Intercreditor Agreement. Each Interest Advance made hereunder shall
automatically reduce the Maximum Available Commitment and the amount available
to be borrowed hereunder by subsequent Advances by the amount of such Interest
Advance (subject to reinstatement as provided in the next sentence). Upon
repayment to the Liquidity Provider in full of the amount of any Interest
Advance made pursuant to this Section 2.02(a), together with accrued interest
thereon (as provided herein), the Maximum Available Commitment shall be
reinstated by the amount of such repaid Interest Advance, but not to exceed the
Maximum Commitment; provided, however, that the Maximum Available Commitment
shall not be so reinstated at any time if (i) a Liquidity Event of Default shall
have occurred and be continuing and (ii) there is a Performing Note Deficiency.
(b) [Intentionally Omitted].
(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
15
11
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 II attached hereto, signed by a
Responsible Officer of the Borrower, in an amount equal to the Maximum Available
Commitment at such time, and shall be used to fund the Class A Cash Collateral
Account in accordance with said Section 3.6(c).
(d) A Final Advance shall be made by the Liquidity Provider without the
necessity of a Notice of Borrowing at the option of the Liquidity Provider as
provided in Section 6.01 in an amount equal to the Maximum Available Commitment
at such time, and shall be used to fund the Class A Cash Collateral Account (in
accordance with Section 3.6(i) of the Intercreditor Agreement).
(e) Each Borrowing (other than under Section 2.02(d)) shall be made on
notice in writing (a "Notice of --------- Borrowing") in substantially the form
required by Section 2.02(a) or 2.02(c), 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
16
12
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(c) or (d) hereof to fund the Class A Cash
Collateral Account, the Liquidity Provider shall have no interest in or rights
to the Class A Cash Collateral Account, such Advance or any other amounts from
time to time on deposit in the Class A Cash Collateral Account; provided that
the foregoing shall not affect or impair the obligations of the Subordination
Agent to make the distributions contemplated by Section 3.6(e) or (f) of the
Intercreditor Agreement. By paying to the Borrower proceeds of Advances
requested by the Borrower in accordance with the provisions of this Agreement,
the Liquidity Provider makes no representation as to, and assumes no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.
Section 2.03. Fees. The Borrower agrees to pay to the Liquidity Provider
the fees set forth in the Fee Letter.
Section 2.04. 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", the Maximum
Commitment shall automatically be reduced or increased, as the case may be, to
an amount equal to such adjusted Required Amount (as calculated by the
Borrower). The Borrower shall give notice of any such automatic reduction or
increase of the Maximum Commitment (substantially in the form of Annex III
hereto) to the Liquidity Provider within two Business Days thereof. The failure
17
13
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 Downgrade Advance or Final Advance
hereunder or the occurrence of the Termination Date, the obligation of the
Liquidity Provider to make further Advances hereunder shall automatically and
irrevocably terminate, and the Borrower shall not be entitled to request any
further Borrowing hereunder.
Section 2.05. Repayments of Interest Advances or the Final Advance.
Subject to Sections 2.06, 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 Downgrade 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 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 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 Downgrade Advances. (a) Amounts advanced
hereunder in respect of a Downgrade Advance shall be deposited in the Class A
Cash Collateral Account, and invested and withdrawn from the Class A Cash
Collateral Account as set forth in Sections 3.6(c) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date, commencing on the first
18
14
Regular Distribution Date after the making of a Downgrade Advance, interest on
the principal amount of any such Downgrade Advance as provided in Section 3.07;
provided, however, that amounts in respect of a Downgrade Advance withdrawn from
the Class A Cash Collateral Account for the purpose of paying interest on the
Class A Certificates in accordance with Section 3.6(f) of the Intercreditor
Agreement (the amount of any such withdrawal being an "Applied Downgrade
Advance") shall 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 Downgrade Advance, the Liquidity Provider delivers a
Notice of Conversion to Final Advance (substantially in the form of Annex IV to
this Agreement) to the Borrower, such Downgrade Advance shall thereafter be
treated as a Final Advance under this Agreement for purposes of determining the
Applicable Liquidity Rate for interest payable thereon. Subject to Sections 2.07
and 2.09 hereof, immediately upon the withdrawal of any amounts from the Class A
Cash Collateral Account on account of a reduction in the Required Amount, the
Borrower shall repay to the Liquidity Provider a portion of the Downgrade
Advances in a principal amount equal to the amount of such reduction, plus
interest on the principal amount prepaid as provided in Section 3.07 hereof.
(b) At any time when an Applied Downgrade Advance (or any portion thereof)
is outstanding, upon the deposit in the Class A Cash Collateral Account of any
amount pursuant to clause "third" of Section 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 Required Amount at such time, (i) the aggregate
outstanding principal amount of all Applied Downgrade Advances (and of Downgrade
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 Downgrade 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
19
15
on deposit in the Class A Cash Collateral Account after giving effect to any
Applied Downgrade 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 in the order of priority required by
the applicable provisions of Articles II and III of the Intercreditor Agreement.
Section 2.08. Book Entries. The Liquidity Provider shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower resulting from Advances made from time to time and
the amounts of principal and interest payable hereunder and paid from time to
time in respect thereof; provided, however, that the failure by the Liquidity
Provider to maintain such account or accounts shall not affect the obligations
of the Borrower in respect of Advances.
Section 2.09. Payments from Available Funds Only. All payments to be made
by the Borrower under this Agreement shall be made only from amounts that
constitute Scheduled Payments, Special Payments or payments under Section 8.1 of
the Participation Agreements and only to the extent that the Borrower shall have
sufficient income or proceeds therefrom to enable the Borrower to make payments
in accordance with the terms hereof after giving effect to the priority of
payments provisions set forth in the Intercreditor Agreement. The Liquidity
Provider agrees that it will look solely to such amounts to the extent available
for distribution to it as provided in the Intercreditor Agreement and this
Agreement and that the Borrower, in its individual capacity, is not personally
liable to it for any amounts payable or liability under this Agreement except as
expressly provided in this Agreement, the Intercreditor Agreement or any
Participation Agreement. Amounts on deposit in the
20
16
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.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs. The Borrower shall pay to the Liquidity
Provider from time to time such amounts as may be necessary to compensate the
Liquidity Provider for any increased costs incurred by the Liquidity Provider
(or its head office) which are attributable to its making or maintaining any
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"), (A) resulting from any change after the date
of this Agreement in U.S. federal or state, or any 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 or state,
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); (2) imposes on the
Liquidity Provider any other condition regarding this Agreement or any such
Advance (other than with respect to Taxes) or (3) imposes or modifies any
reserve, special deposit or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, the
Liquidity Provider (or its head office) (including any such Advances or any
deposits referred to in the definition of LIBOR Rate) and (B) which the
Liquidity Provider has certified to the Borrower and Continental are not
included or reflected in the determination of the LIBOR Rate or the Base Rate.
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
21
17
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 3.01 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 3.01 and contain a representation of the Liquidity Provider
to the Borrower and to Continental to the effect that it is the customary
practice of the Liquidity Provider to charge its customers for Additional Costs
in respect of such event. Without limiting the Liquidity Provider's notice
obligations under the preceding sentence, the Borrower shall not be required to
compensate the Liquidity Provider pursuant to this Section 3.01 for any
Additional Costs incurred more than sixty days prior to the date that the
Liquidity Provider notifies the Borrower of the Regulatory Change giving rise to
such Additional Costs and of the Liquidity Provider's intention to claim
compensation therefor. Determinations by the Liquidity Provider for purposes of
this Section 3.01 of the effect of any Regulatory Change on its costs of making
or maintaining Advances or on amounts receivable by it in respect of Advances,
and of the additional amounts required to compensate the Liquidity Provider in
respect of any Additional Costs, shall be prima facie evidence of the amount
owed under this Section.
Section 3.02. Capital Adequacy. If (1) the adoption, after the date
hereof, of any applicable governmental law, rule or regulation regarding capital
adequacy of banks or bank holding companies (or any change therein), (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
or comparable agency charged with the interpretation or administration thereof
or (3) compliance by the Liquidity Provider (or its head office) 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
22
18
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 3.02 and contain a representation of the Liquidity Provider
to the Borrower and to Continental to the effect that it is the customary
practice of the Liquidity Provider to charge its customers for compensation in
respect of such event. Without limiting the Liquidity Provider's notice
obligations under the preceding sentence, the Borrower shall not be required to
compensate the Liquidity Provider, in respect of an event described in this
Section 3.02, for any amount attributable to any period which is more than sixty
days prior to the date that the Liquidity Provider notifies the Borrower of such
event and of the Liquidity Provider's intention to claim compensation therefor.
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,
23
19
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 and
any net increase in Taxes imposed on the Liquidity Provider as a result of any
payment made pursuant to this Section 3.03) interest or any other such amounts
payable under this Agreement at the rates or in the amounts specified in this
Agreement.
If as a result of any Tax indemnified or payment made pursuant to this
Section 3.03, the Liquidity Provider shall realize any tax savings, whether by
credit, deduction or refund (including by way of offset), then the Liquidity
Provider shall pay to Borrower an amount which, after subtraction of any further
Tax savings the Liquidity Provider realizes as a result of the payment thereof
and the addition of any Tax detriment suffered by the Liquidity Provider as a
result of such payment, plus, in the case of any refund (including by way of
offset) of any taxes giving rise to a payment hereunder, interest actually
received or credited thereon, provided that if any Tax savings giving rise to a
payment pursuant to this paragraph is subsequently lost or disallowed, the
Borrower shall, upon written notice, repay such amounts to the Liquidity
Provider provided further, that the payment of any amount to the Borrower
pursuant to this Section 3.03(a) shall not be required if a Final Advance has
been made and not yet reimbursed, but shall be deferred until such Final Advance
has been fully reimbursed or shall be credited against the reimbursement
obligation of the Borrower for such Final Advance.
The determination of any amount payable pursuant to this Section 3.03(a)
shall be made by the Liquidity Provider and set forth in a certificate of an
officer of the Liquidity Provider which certificate shall be final and
conclusive, absent error manifest on the face of such certificate, provided that
the Borrower may request verification of such payment amount, in which case the
outside accounting firm regularly employed by the Liquidity Provider shall be
requested to verify the calculation of such payment amount within 30 days, at
the expense of the
24
20
Borrower, unless the payment amount is determined to be in error by more than
five percent, in which case such expense shall be paid by the Liquidity
Provider. The Liquidity Provider shall have sole control over the positions
taken on its tax returns and filings. The Liquidity Provider shall in no event
be required to disclose its tax returns or filings or any related records other
than to the verifying accounting firm.
Whenever any Non-Excluded Tax is payable by the Borrower, promptly
thereafter, the Borrower shall send to the Liquidity Provider copies of tax
receipts evidencing such payment by the Borrower, if reasonably available to it,
or other evidence of payment reasonably requested by the Liquidity Provider.
(b) 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 payable under Section
3.03(a) 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, to the extent the Liquidity Provider
is legally entitled to do so, 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 The Bank of New York, One Wall Street, New
York, New York 10286, ABA No. 021-000-081, for the account of Kredietbank New
York, Account No. 802-3015618, Attention: Loan Administration (referencing
Continental Airlines 1997-2 Liquidity Facility).
Section 3.05. Computations. All computations of interest based on the Base
Rate shall be made on the basis of a
25
21
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 (other than a payment of interest on LIBOR Advances) 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 such extension of time shall in such
case be included in the computation of payment of interest or fees, as the case
may be.
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 Downgrade Advance, from and including the date on
which the amount thereof was withdrawn from the Class A Cash Collateral Account
to pay interest on the Class A Certificates) to but excluding the date such
principal amount shall be paid in full (or, in the case of an Applied Downgrade
Advance, the date on which the Class A Cash Collateral Account is fully
replenished in respect of such Advance) and (ii) any other amount due hereunder
(whether fees, commissions, expenses or other amounts or, to the extent
permitted by law, installments of interest on Advances or any such other amount)
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but excluding the date
such amount is paid in full, in each such case, at a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount as in effect for such day, but in no event
at a rate per annum greater than the maximum rate permitted by applicable law;
provided, however, that, if at any time the otherwise applicable interest rate
as set forth in this Section 3.07 shall exceed the maximum rate permitted by
applicable law, then any subsequent reduction in such interest rate will not
reduce the rate of interest payable pursuant to this Section 3.07 below the
maximum rate permitted by applicable law until the total amount of interest
accrued equals the amount of interest that would have accrued if such otherwise
applicable interest rate as set forth in this Section 3.07 had at all times been
in effect.
26
22
(b) 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 (or, in the case of a Final Advance, three Business Days following the
date of such Final Advance). Thereafter, such Advance shall be a LIBOR Advance;
provided that the Borrower (at the direction of the Controlling Party (so long
as the Controlling Party is not the Liquidity Provider)) 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 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 until paid.
(f) Each change in the Base Rate shall become effective immediately. The
rates of interest specified in this Section 3.07 with respect to any Advance or
other amount shall be referred to as the "Applicable Liquidity Rate".
Section 3.08. Replacement of Borrower. Subject to Section 5.02(b), from
time to time and subject to the successor
27
23
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 V 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, or any conversion of a LIBOR
Advance to a Base Rate 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 each LIBOR Advance shall be
converted to a Base Rate Advance (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 conversion; or (b) at the
28
24
expiration of the last Interest Period for such LIBOR Advance to expire before
the effective date of any such change or request if such notice of the Liquidity
Provider is provided to the Borrower prior to such expiration date, and
otherwise at the expiration of the Interest Period for such LIBOR Advance in
effect on the date of receipt of such notice of the Liquidity Provider. In the
event any change of the nature described in the preceding sentence shall make it
unlawful or impossible for the Liquidity Provider (or its Lending Office) to
maintain or fund its Base Rate Advances, the Liquidity Provider shall have the
right to cause a Replacement Liquidity Facility to be substituted for this
Agreement, subject to (i) the satisfaction of the conditions precedent to the
effectiveness of, and the other provisions regarding, a Replacement Liquidity
Facility set forth in Section 3.6(e) of the Intercreditor Agreement and (ii)
such Replacement Liquidity Facility and Replacement Liquidity Provider being
reasonably acceptable to Continental.
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 (in the case of each document delivered
pursuant to paragraphs (i), (ii) and (iii) below), 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) which
are in full force and effect in accordance with their respective
terms;
29
25
(iv) A copy of the Offering Memorandum, with copies of the
Appraisals attached thereto, and specimen copies of the Class A
Certificates;
(v) Evidence that, on the Effective Date, the Class A
Certificates, the Class B Certificates, the Class C Certificates and
the Class D Certificates will receive long-term credit ratings from
Moody's of not lower than AA, A, BBB- and BB, respectively, and from
Standard & Poor's of not lower than A1, A3, Baa2 and Ba2,
respectively;
(vi) 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);
(vii) 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;
(viii) 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,
30
26
only to the extent that Continental is obligated to provide such
information pursuant to Section 8.04(a) of the Trust Agreements 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
(ix) Such other documents, instruments, opinions and approvals
as the Liquidity Provider shall have reasonably requested.
(b) The following statements shall be true on and as of the
Effective Date:
(i) The representations and warranties contained in the
Participation Agreements (other than the Participation Agreements
with respect to any Postponed Notes) of each party thereto are true
and correct on and as of the Effective Date as though made on and as
of the Effective Date; and
(ii) No event has occurred and is continuing, or would result
from the entering into of this Agreement or the making of any
Advance, which constitutes a Liquidity Event of Default.
(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
31
27
Section 2.01 have been satisfied or waived (other than this Section
4.01(e)).
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, except in the case of a Final Advance, prior to the date of such Borrowing,
the Borrower shall have delivered a Notice of Borrowing which conforms to the
terms and conditions of this Agreement and has been completed as may be required
by the relevant form of the Notice of Borrowing for the type of Advance
requested.
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will, unless the Liquidity
Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay or
cause to be paid all amounts payable by it under this Agreement and the
other Operative Agreements and observe and perform in all material
respects the conditions, covenants and requirements applicable to it
contained in this Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity Provider with
reasonable promptness, such other information and data with respect to the
transactions contemplated by the Operative Agreements as from time to time
may be reasonably requested by the Liquidity Provider; and permit the
Liquidity Provider, upon reasonable notice, to inspect the Borrower's
books and records with respect to such transactions and to meet with
officers and employees of the Borrower to discuss such transactions.
(c) Certain Operative Agreements. Furnish to the Liquidity Provider
with reasonable promptness, such Operative Agreements entered into after
the date hereof as
32
28
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.
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, at its option, make a Final Advance to
the Borrower before 12:00 Noon (New York City time) on a Business Day in
accordance with Section 2.02(d) whereupon (i) the Liquidity Provider shall have
no further obligation to make Advances hereunder, (ii) all other outstanding
Advances shall be automatically converted into Final Advances for purposes of
determining the Applicable Liquidity Rate for interest payable thereon, and
(iii) subject to Sections 2.07 and 2.09 hereof, all Advances (including, without
limitation, any Downgrade Advance and Applied Downgrade Advance), any accrued
interest thereon and any other amounts outstanding hereunder shall become
immediately due and payable to the Liquidity Provider. Any payment in respect of
a Final Advance shall be made in the lawful money of the United States of
America, to the Borrower in immediately available funds, by wire transfer to
Wilmington Trust Company, One Rodney Square, 1100 N. Market Street, Wilmington,
Delaware 19890, ABA No. 031-100-092, Account No. 42214-1, Attention: Corporate
Trust Administration, Reference: Continental 1997-2 Class A Cash Collateral
Account (or to such other account as the Borrower may from time to time
designate to the Liquidity Provider for such purpose).
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement, nor consent to any departure
33
29
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: KREDIETBANK N.V.
New York Branch
125 West 55th Street
New York, NY 10019
Attention: General Manager
Telephone: (212) 541-0600
Telecopy: (212) 956-5580
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
34
30
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 8.1 of the Participation Agreements. In addition,
the Borrower agrees to indemnify, protect, defend and hold harmless the
Liquidity Provider from, against and in respect of, and shall pay on demand, all
Expenses of any kind or nature whatsoever (other than any Expenses of the nature
described in Sections 3.01, 3.02 or 7.07 hereof or in the Fee Letter (regardless
of whether indemnified against pursuant to said Sections or in such Fee
Letter)), that may be imposed, incurred by or asserted against any Liquidity
Indemnitee, in any way relating to, resulting from, or arising out of or in
connection with any action, suit or proceeding by any third party against such
Liquidity Indemnitee and relating to this Agreement, the Fee Letter, the
Intercreditor Agreement or any Participation Agreement; provided, however, that
the Borrower shall not be required to indemnify, protect, defend and hold
harmless any Liquidity Indemnitee in respect of any Expense of such Liquidity
Indemnitee to the extent such Expense is (i) attributable to the gross
negligence or willful misconduct of such Liquidity Indemnitee or any other
Liquidity Indemnitee, (ii) ordinary and usual operating overhead expense or
(iii) attributable to the failure by such Liquidity Indemnitee or any other
Liquidity Indemnitee to perform or observe any agreement, covenant or condition
on its part to be performed or observed in this Agreement, the Intercreditor
Agreement, the Fee Letter or any other Operative Agreement to which it is a
party. The indemnities contained in such Section 8.1, and the provisions of
35
31
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 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
36
32
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 and
security 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
granting of participations by the Liquidity Provider, however, will relieve the
Liquidity Provider of its obligations hereunder. In connection with any
participation or any proposed participation, the Liquidity Provider may disclose
to the participant or the
37
33
proposed participant any information that the Borrower is required to deliver or
to disclose to the Liquidity Provider pursuant to this Agreement. The Borrower
acknowledges and agrees that the Liquidity Provider's source of funds may derive
in part from its participants (other than Continental). Accordingly, references
in this Agreement and the other Operative Agreements to determinations, reserve
and capital adequacy requirements, increased costs, reduced receipts, additional
amounts due pursuant to Section 3.03 and the like as they pertain to the
Liquidity Provider shall be deemed also to include those of each of its
participants (subject, in each case, to the maximum amount that would have been
incurred by or attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider sells any
participation in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such participation,
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld by the
Borrower or the Liquidity Provider 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 of 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
38
34
the Borrower has received forms or other documents reasonably satisfactory to it
(and required by applicable law) indicating that payments hereunder are not
subject to United States federal withholding tax, the Borrower will withhold
taxes as required by law from such payments at the applicable statutory rate.
(c) Notwithstanding the other provisions of this Section 7.08, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.09. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of
Immunity. (a) Each of the parties hereto hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may
39
35
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) if such party does not maintain an office for the transaction
of its business in New York, agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to each party hereto at its address set forth in Section
7.02 hereof, or at such other address of which the Liquidity Provider
shall have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED, including, without limitation, contract claims, tort claims, breach
of duty claims and all other common law and statutory claims. The Borrower and
the Liquidity Provider each warrant and represent that it has reviewed this
waiver with its legal counsel, and that it knowingly and voluntarily waives its
jury trial rights following consultation with such legal counsel. THIS WAIVER IS
IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it may have from the
jurisdiction of the courts of the United States or of any State and waives any
immunity any of its properties located in the United States may have from
attachment or execution upon a judgement entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any similar successor
legislation.
40
36
Section 7.12. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Agreement.
Section 7.13. Entirety. This Agreement, the Intercreditor Agreement and
the other Operative Agreements to which the Liquidity Provider is a party
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior understandings and agreements of
such parties.
Section 7.14. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE LIQUIDITY PROVIDER
TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO DELIVER NOTICES OF
BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL BE UNCONDITIONAL
AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE STRICTLY IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
41
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first set forth above.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as agent and
trustee for the Class B Trust, as
Borrower
By:_____________________________________
Name:
Title:
KREDIETBANK N.V., acting through its New
York branch, as Liquidity Provider
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
42
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first set forth above.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as agent and
trustee for the Class B Trust, as
Borrower
By:_____________________________________
Name:
Title:
KREDIETBANK N.V., acting through its New
York branch, as Liquidity Provider
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
43
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 KREDIETBANK N.V., acting through its New
York branch (the "Liquidity Provider"), with reference to the Revolving Credit
Agreement (1997-2A) dated as of June 25, 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 for the
payment 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
and has not been paid 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
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 Certificates or the Class D Certificates
or interest on the Class B Certificates, the Class C Certificates or the
Class D Certificates, (iii) was computed in accordance with the provisions
of the Class A Certificates, the Class A Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), (iv) does not exceed the Maximum Available Commitment on the
date hereof and (v) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
44
I-2
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.6(b) of the Intercreditor Agreement, (b) no portion
of such amount shall be applied by the Borrower for any other purpose and
(c) no portion of such amount until so applied shall be commingled with
other funds held by the Borrower.
(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, 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.
45
I-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:
46
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest Advance Notice of
Borrowing]
47
Annex II to
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to KREDIETBANK N.V.,
acting through its New York branch (the "Liquidity Provider"), with reference to
the Revolving Credit Agreement (1997-2A) dated as of June 25, 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 Class A Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading
of the short-term unsecured debt rating of the Liquidity Provider issued
by either Rating Agency below the Threshold Rating, which Advance is
requested to be made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the Class A
Cash Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of the principal of, or premium on, the Class A Certificates,
or principal of, or interest or premium on, the Class B Certificates, the
Class C Certificates or the Class D Certificates, (iii) was computed in
accordance with the provisions of the Class A Certificates, the Class A
Trust Agreement and the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I), and (iv) has not been and
is not the subject of a prior or contemporaneous Notice of Borrowing under
the Liquidity Agreement.
48
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 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:
49
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
50
Annex III to
Revolving Credit Agreement
NOTICE OF AUTOMATIC REDUCTION OR INCREASE OF COMMITMENT
[Date]
Ladies and Gentlemen:
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby notifies Kredietbank N.V., acting
through its New York branch (the "Liquidity Provider"), with reference to the
Revolving Credit Agreement dated as of June 25, 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, pursuant to Section 2.04(a) of the Liquidity Agreement, the
Commitment has been automatically reduced or increased to $_________.
IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of
Borrowing as of the _ day of _____________, _____.
WILMINGTONTRUST 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:
51
Annex IV to
Revolving Credit Agreement
NOTICE OF CONVERSION TO FINAL ADVANCE
[Date]
WILMINGTON TRUST COMPANY
as Subordination Agent, as Borrower
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0011
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of June 25, 1997, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Continental
Airlines Pass Through Trust, 1997-2A, as Borrower, and Kredietbank N.V., acting
through its New York branch (the "Liquidity Agreement")
- --------------------------------------------------------------------------------
Ladies and Gentlemen:
You are hereby notified that pursuant to Section 2.06 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 convert the existing Downgrade Advance to
a Final Advance.
52
IV-2
THIS NOTICE IS THE "NOTICE OF CONVERSION TO FINAL ADVANCE" PROVIDED FOR
UNDER THE LIQUIDITY AGREEMENT.
Very truly yours,
KREDIETBANK N.V.,
NEW YORK BRANCH
as Liquidity Provider
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
cc: Wilmington Trust Company,
as Class A Trustee
53
Annex V to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of June 25, 1997, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Continental
Airlines Pass Through Trust, 1997-2A, as Borrower, and Kredietbank N.V., acting
through its New York branch (the "Liquidity Agreement")
- --------------------------------------------------------------------------------
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to:
------------------------------
[Name of Transferee]
------------------------------
[Address of Transferee]
all rights and obligations of the undersigned as Borrower under the Liquidity
Agreement referred to above. The transferee has succeeded the undersigned as
Subordination Agent under the Intercreditor Agreement referred to in the first
paragraph of the Liquidity Agreement, pursuant to the terms of Section 8.1 of
the Intercreditor Agreement.
By this transfer, all rights of the undersigned as Borrower under the
Liquidity Agreement are transferred to the transferee and the transferee shall
hereafter have the sole rights and obligations as Borrower thereunder. The
undersigned shall pay any costs and expenses of such transfer, including, but
not limited to, transfer taxes or governmental charges.
54
V-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 4.10
EXECUTION COPY
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1997-2B)
Dated as of June 25, 1997
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines Pass Through Trust 1997-2B
as Borrower
and
KREDIETBANK N.V., NEW YORK BRANCH,
as Liquidity Provider
- --------------------------------------------------------------------------------
Relating to
Continental Airlines Pass Through Trust 1997-2B
7.149% Continental Airlines Pass Through Certificates,
Series 1997-2B
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 10
Section 2.02. Making the Advances....................................... 10
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 Downgrade 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
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.................................................. 20
Section 3.05. Computations.............................................. 20
Section 3.06. Payment on Non-Business Days.............................. 21
Section 3.07. Interest.................................................. 21
Section 3.08. Replacement of Borrower................................... 22
Section 3.09. Funding Loss Indemnification.............................. 23
Section 3.10. Illegality................................................ 23
- i -
3
Page
----
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness
of Section 2.01........................................ 24
Section 4.02. Conditions Precedent to Borrowing......................... 27
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower..................... 27
Section 5.02. Negative Covenants of the Borrower........................ 28
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.............................................. 29
Section 7.03. No Waiver; Remedies....................................... 29
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................................. 31
Section 7.08. Binding Effect; Participations............................ 32
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................................. 36
Section 7.13. Entirety.................................................. 36
Section 7.14. Headings.................................................. 36
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO
MAKE ADVANCES.......................................... 36
- ii -
4
Page
----
ANNEX I Interest Advance Notice of Borrowing
ANNEX II Downgrade Advance Notice of Borrowing
ANNEX III Notice of Automatic Reduction or Increase of Commitment
ANNEX IV Notice of Conversion to Final Advance
ANNEX V Notice of Replacement Subordination Agent
-iii-
5
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of June 25, 1997, between
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual
capacity but solely as Subordination Agent under the Intercreditor Agreement
(each as defined below), as agent and trustee for the Class B Trust (as defined
below) (the "Borrower"), and KREDIETBANK N.V., acting through its New York
branch (the "Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class B Trust Agreement (such term and all other
capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class B Trust is issuing the Class B
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a portion
of the interest on the Class B Certificates in accordance with their terms, has
requested the Liquidity Provider to enter into this Agreement, providing in part
for the Borrower to request in specified circumstances that Advances be made
hereunder.
NOW, THEREFORE, in consideration of the premises, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. (a) Definitions. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Additional Cost" has the meaning assigned to such term in Section
3.01.
"Advance" means an Interest Advance, a Final Advance, a Downgrade
Advance, an Applied Downgrade 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(f).
"Applicable Margin" means (v) with respect to any Unpaid Advance or
Applied Downgrade Advance that is a LIBOR Advance, 1.75% per annum, (w)
with respect to any Final Advance that is a Base Rate Advance, 1.75% per
annum, (x) with respect to any Interest Advance or Applied Downgrade
Advance that is a Base Rate Advance, 0.75% per annum, (y) with respect to
any Unapplied Downgrade Advance that is a LIBOR Advance, 0.45% per annum
and (z) with respect to any Unapplied Downgrade Advance that is a Base
Rate Advance, minus 0.55% per annum.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.06(a).
"Base Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall for any day be equal to the
higher of:
(i) the rate per annum announced from time to time by the
Liquidity Provider as its base commercial lending rate, and
(ii) (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, plus one-half
of one percent (1/2 of 1%), or (b) if the rate calculated pursuant
to clause (a) above is not available for such date, the rate quoted
by the Liquidity Provider, at approximately 11:00 A.M., New York
City time on such day (or, if such day is not a Business Day, on the
next preceding Business Day), to dealers in the New York Federal
funds market for overnight Federal funds offerings of dollars by the
Liquidity Provider, plus one-half of one percent (1/2 of 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 or pursuant to Section 6.01.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in
Houston, Texas, New York, New York, or, so long as any Class B Certificate
is outstanding, the city and state in which the Class B Trustee, the
Borrower or any Loan Trustee maintains its Corporate Trust Office or
receives or disburses funds, and, if the applicable Business Day relates
to any Advance or other amount bearing interest based on the LIBOR Rate,
on which dealings are carried on in the London interbank market.
"Downgrade Advance" means an Advance made pursuant to Section
2.02(c).
"Effective Date" has the meaning specified in Section 4.01. The
delivery of the certificate of the Liquidity Provider contemplated by
Section 4.01(e) shall be conclusive evidence that the Effective Date has
occurred.
"Excluded Taxes" means (i) taxes imposed on the overall net income
of the Liquidity Provider or of its Lending Office by the jurisdiction
where such Liquidity Provider's principal office or such Lending Office is
located, and (ii) Excluded Withholding Taxes.
"Excluded Withholding Taxes" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding
Taxes are imposed as a result of any change in applicable law or treaty
(including any change in the official interpretation thereof) after the
date hereof (excluding from change in applicable law or treaty for this
purpose any addition of, or change in, any "anti-treaty shopping",
"limitation on benefits", or similar provision in any treaty or other
applicable law restricting the availability of treaty benefits (including
without limitation any provision similar to the Protocol Amending the
Convention Between the United States of America and the Kingdom of the
Netherlands for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect
8
4
to Taxes on Income, signed at Washington on October 13, 1993)), or in the
case of a successor Liquidity Provider (including a transferee of an
Advance) or Lending Office, after the date on which such successor
Liquidity Provider obtains its interest or on which the Lending Office is
changed, and (ii) any withholding Taxes imposed by the United States which
are imposed or increased as a result of the Liquidity Provider failing to
deliver to the Borrower any certificate or document (which certificate or
document in the good faith judgment of the Liquidity Provider it is
legally entitled to provide) which is reasonably requested by the Borrower
to establish that payments under this Agreement are exempt from (or
entitled to a reduced rate of) withholding Tax.
"Expenses" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses, and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"Expiry Date" means January 14, 2007.
"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 and ending on the next Regular Distribution Date (or
ending, in the case of an Interest Period applicable to any
9
5
Unapplied Downgrade Advance, on the numerically corresponding day in
the third or sixth calendar month after the first day of the
applicable Interest Period and/or on the next Regular Distribution
Date, as Continental may select by providing notice thereof to the
Borrower and the Liquidity Provider no later than three Business
Days prior to the commencement of such Interest Period, provided
that if Continental shall not provide such a notice at least three
Business Days prior to the commencement of such Interest Period,
then Continental shall be deemed to have selected an Interest Period
ending on the next Regular Distribution Date); and
(ii) each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the next Regular
Distribution Date (or ending, in the case of an Interest Period
applicable to any Unapplied Downgrade Advance, on the numerically
corresponding day in the third or sixth calendar month after the
first day of the applicable Interest Period and/or on the next
Regular Distribution Date, as Continental may select by providing
notice thereof to the Borrower and the Liquidity Provider no later
than three Business Days prior to the commencement of such Interest
Period, provided that if Continental shall not provide such a notice
at least three Business Days prior to the commencement of such
Interest Period, then Continental shall be deemed to have selected
an Interest Period ending on the next Regular Distribution Date);
provided, however, that (I) if an Unapplied Downgrade Advance which is a
LIBOR Advance becomes an Applied Downgrade Advance, the Interest Period
then applicable to such Unapplied Downgrade Advance shall be applicable to
such Applied Downgrade Advance, (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
date the Liquidity Provider makes the Final Advance (in the case of clause
(x) above) or the Regular Distribution Date following such conversion (in
the case of clause (y) above) and (III) in the case of any Interest Period
applicable to a Downgrade
10
6
Advance, each Interest Period that would otherwise end on a day that is
not a Business Day shall end on the next succeeding Business Day.
"Lending Office" means the lending office of the Liquidity Provider
presently located at 125 West 55th Street, New York, New York 10019 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:
(i) the rate per annum appearing on display page 3750 (British
Bankers Association-LIBOR) of the Dow Jones Markets Service (or any
successor or substitute therefor) at approximately 11:00 A.M.
(London time) two Business Days before the first day of such
Interest Period, as the rate for dollar deposits with a maturity
comparable to such Interest Period, or
(ii) if (a) the rate calculated pursuant to clause (i) above
is not available or (b) the Liquidity Provider determines in good
faith, and certifies to the Borrower and Continental, prior to two
Business Days prior to the commencement of such Interest Period,
that the rate calculated pursuant to clause (i) above does not
adequately and fairly reflect the cost to the Liquidity Provider of
making and maintaining the relevant Advance during such Interest
Period, the rate per annum at which deposits in dollars are offered
for the relevant Interest Period by the Liquidity Provider to prime
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 LIBOR Advance to which such Interest Period is to
apply and for a period of time comparable to such
11
7
Interest Period, as quoted by the Liquidity Provider to the
Borrower.
"Liquidity Event of Default" means the occurrence of either (a) the
acceleration of all of the Equipment Notes or (b) a Continental Bankruptcy
Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) each
Affiliate of the Liquidity Provider, (iii) the directors, officers,
employees, servants and agents of the Liquidity Provider and its
Affiliates, and (iv) the successors and permitted assigns of the persons
described in clauses (i) through (iii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Maximum Available Commitment" 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 Downgrade Advance or a Final Advance, the
Maximum Available Commitment shall be zero.
"Maximum Commitment" means initially $2,766,630, as the same may be
adjusted from time to time in accordance with Section 2.04(a); provided
that the Maximum Commitment shall at no time exceed an amount equal to
$2,960,128.
"Non-Excluded Taxes" has the meaning specified in Section 3.03.
"Notice of Borrowing" has the meaning specified in Section 2.02(e).
"Notice of Conversion to Final Advance" means the Notice of
Conversion to Final Advance substantially in the form of Annex IV to this
Agreement.
"Notice of Replacement Subordination Agent" has the meaning
specified in Section 3.08.
"Offering Memorandum" means the Offering Memorandum dated June 17,
1997 relating to the Certificates, as such Offering Memorandum may be
amended or supplemented.
12
8
"Performing Note Deficiency" means any time that less than 65% of
the then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
"Regulatory Change" has the meaning assigned to such term in Section
3.01.
"Replenishment Amount" has the meaning assigned to such term in
Section 2.06(b).
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class 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.
"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 date
on which the Liquidity Provider makes the Final Advance; 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.
"Transferee" has the meaning assigned to such term in Section
7.08(b).
13
9
"Unapplied Downgrade Advance" means any Downgrade Advance other than
an Applied Downgrade 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:
"Affiliate", "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
Certificates", "Class D Certificates", "Closing Date", "Continental",
"Continental Bankruptcy Event", "Controlling Party", "Corporate Trust
Office", "Distribution Date", "Downgraded Facility", "Equipment Notes",
"Fee Letter", "Indenture", "Initial Purchasers", "Investment Earnings",
"Liquidity Facility", "Loan Trustee", "Moody's", "Operative Agreements",
"Participation Agreement", "Performing Equipment Note", "Person", "Pool
Balance", "Postponed Notes", "Purchase Agreement", "Rating Agency",
"Registration Rights Agreement", "Regular Distribution Date", "Replacement
Liquidity Facility", "Responsible Officer", "Scheduled Payment", "Special
Payment", "Standard & Poor's", "Stated Interest Rate", "Subordination
Agent", "Taxes", "Threshold Rating", "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 Series B
Equipment Notes.
14
10
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 interest on the Class B Certificates at
the Stated Interest Rate therefor in accordance with Section 3.6(a) of the
Intercreditor Agreement. Each Interest Advance made hereunder shall
automatically reduce the Maximum Available Commitment and the amount available
to be borrowed hereunder by subsequent Advances by the amount of such Interest
Advance (subject to reinstatement as provided in the next sentence). Upon
repayment to the Liquidity Provider in full of the amount of any Interest
Advance made pursuant to this Section 2.02(a), together with accrued interest
thereon (as provided herein), the Maximum Available Commitment shall be
reinstated by the amount of such repaid Interest Advance, but not to exceed the
Maximum Commitment; provided, however, that the Maximum Available Commitment
shall not be so reinstated at any time if (i) a Liquidity Event of Default shall
have occurred and be continuing and (ii) there is a Performing Note Deficiency.
(b) [Intentionally Omitted].
(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
15
11
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 II
attached hereto, signed by a Responsible Officer of the Borrower, in an amount
equal to the Maximum Available Commitment at such time, and shall be used to
fund the Class B Cash Collateral Account in accordance with said Section 3.6(c).
(d) A Final Advance shall be made by the Liquidity Provider without the
necessity of a Notice of Borrowing at the option of the Liquidity Provider as
provided in Section 6.01 in an amount equal to the Maximum Available Commitment
at such time, and shall be used to fund the Class B Cash Collateral Account (in
accordance with Section 3.6(i) of the Intercreditor Agreement).
(e) Each Borrowing (other than under Section 2.02(d)) shall be made on
notice in writing (a "Notice of Borrowing") in substantially the form required
by Section 2.02(a) or 2.02(c), 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.
16
12
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(c) or (d) hereof to fund the Class B Cash
Collateral Account, the Liquidity Provider shall have no interest in or rights
to the Class B Cash Collateral Account, such Advance or any other amounts from
time to time on deposit in the Class B Cash Collateral Account; provided that
the foregoing shall not affect or impair the obligations of the Subordination
Agent to make the distributions contemplated by Section 3.6(e) or (f) of the
Intercreditor Agreement. By paying to the Borrower proceeds of Advances
requested by the Borrower in accordance with the provisions of this Agreement,
the Liquidity Provider makes no representation as to, and assumes no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.
Section 2.03. Fees. The Borrower agrees to pay to the Liquidity Provider
the fees set forth in the Fee Letter.
Section 2.04. 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", the Maximum
Commitment shall automatically be reduced or increased, as the case may be, to
an amount equal to such adjusted Required Amount (as calculated by the
Borrower). The Borrower shall give notice of any such automatic reduction or
increase of the Maximum Commitment (substantially in the form of Annex III
hereto) 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.
17
13
(b) Termination. Upon the making of any Downgrade Advance or Final Advance
hereunder or the occurrence of the Termination Date, the obligation of the
Liquidity Provider to make further Advances hereunder shall automatically and
irrevocably terminate, and the Borrower shall not be entitled to request any
further Borrowing hereunder.
Section 2.05. Repayments of Interest Advances or the Final Advance.
Subject to Sections 2.06, 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 Downgrade 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 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 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 Downgrade Advances. (a) Amounts advanced
hereunder in respect of a Downgrade Advance shall be deposited in the Class B
Cash Collateral Account, and invested and withdrawn from the Class B Cash
Collateral Account as set forth in Sections 3.6(c) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date, commencing on the first Regular Distribution Date after the
making of a Downgrade Advance, interest on the principal amount of any such
Downgrade Advance as provided in Section 3.07; provided, however, that
18
14
amounts in respect of a Downgrade Advance withdrawn from the Class B Cash
Collateral Account for the purpose of paying interest on the Class B
Certificates in accordance with Section 3.6(f) of the Intercreditor Agreement
(the amount of any such withdrawal being an "Applied Downgrade Advance") shall
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 Downgrade Advance, the Liquidity Provider delivers a Notice of
Conversion to Final Advance (substantially in the form of Annex IV to this
Agreement) to the Borrower, such Downgrade Advance shall thereafter be treated
as a Final Advance under this Agreement for purposes of determining the
Applicable Liquidity Rate for interest payable thereon. Subject to Sections 2.07
and 2.09 hereof, immediately upon the withdrawal of any amounts from the Class B
Cash Collateral Account on account of a reduction in the Required Amount, the
Borrower shall repay to the Liquidity Provider a portion of the Downgrade
Advances in a principal amount equal to the amount of such reduction, plus
interest on the principal amount prepaid as provided in Section 3.07 hereof.
(b) At any time when an Applied Downgrade Advance (or any portion thereof)
is outstanding, upon the deposit in the Class B Cash Collateral Account of any
amount pursuant to clause "third" of Section 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 Required Amount at such time, (i) the aggregate
outstanding principal amount of all Applied Downgrade Advances (and of Downgrade
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 Downgrade Advances shall be
automatically increased by the amount of such Replenishment Amount.
(c) Upon the provision of a Replacement Liquidity Facility in replacement
of this Agreement in accordance with Section 3.6(e) of the Intercreditor
Agreement, amounts remaining on deposit in the Class B Cash Collateral Account
after giving effect to any Applied Downgrade Advance on the date of such
replacement shall be reimbursed to the Liquidity Provider, but
19
15
only to the extent such amounts are necessary to repay in full to the Liquidity
Provider all amounts owing to it hereunder.
Section 2.07. Payments to the Liquidity Provider Under the Intercreditor
Agreement. In order to provide for payment or repayment to the Liquidity
Provider of any amounts hereunder, the Intercreditor Agreement provides that
amounts available and referred to in Articles II and III of the Intercreditor
Agreement, to the extent payable to the Liquidity Provider pursuant to the terms
of the Intercreditor Agreement (including, without limitation, Section 3.6(f) of
the Intercreditor Agreement), shall be paid to the Liquidity Provider in
accordance with the terms thereof. Amounts so paid to the Liquidity Provider
shall be applied by the Liquidity Provider in the order of priority required by
the applicable provisions of Articles II and III of the Intercreditor Agreement.
Section 2.08. Book Entries. The Liquidity Provider shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower resulting from Advances made from time to time and
the amounts of principal and interest payable hereunder and paid from time to
time in respect thereof; provided, however, that the failure by the Liquidity
Provider to maintain such account or accounts shall not affect the obligations
of the Borrower in respect of Advances.
Section 2.09. Payments from Available Funds Only. All payments to be made
by the Borrower under this Agreement shall be made only from amounts that
constitute Scheduled Payments, Special Payments or payments under Section 8.1 of
the Participation Agreements and only to the extent that the Borrower shall have
sufficient income or proceeds therefrom to enable the Borrower to make payments
in accordance with the terms hereof after giving effect to the priority of
payments provisions set forth in the Intercreditor Agreement. The Liquidity
Provider agrees that it will look solely to such amounts to the extent available
for distribution to it as provided in the Intercreditor Agreement and this
Agreement and that the Borrower, in its individual capacity, is not personally
liable to it for any amounts payable or liability under this Agreement except as
expressly provided in this Agreement, the Intercreditor Agreement or any
Participation Agreement. Amounts on deposit in the Class B Cash Collateral
Account shall be available to the Borrower to make payments under this Agreement
only to the extent
20
16
and for the purposes expressly contemplated in Section 3.6(f) of the
Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs. The Borrower shall pay to the Liquidity
Provider from time to time such amounts as may be necessary to compensate the
Liquidity Provider for any increased costs incurred by the Liquidity Provider
(or its head office) which are attributable to its making or maintaining any
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"), (A) resulting from any change after the date
of this Agreement in U.S. federal or state, or any 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 or state,
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); (2) imposes on the
Liquidity Provider any other condition regarding this Agreement or any such
Advance (other than with respect to Taxes) or (3) imposes or modifies any
reserve, special deposit or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, the
Liquidity Provider (or its head office) (including any such Advances or any
deposits referred to in the definition of LIBOR Rate) and (B) which the
Liquidity Provider has certified to the Borrower and Continental are not
included or reflected in the determination of the LIBOR Rate or the Base Rate.
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,
21
17
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 3.01 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 3.01 and contain a representation of the Liquidity Provider
to the Borrower and to Continental to the effect that it is the customary
practice of the Liquidity Provider to charge its customers for Additional Costs
in respect of such event. Without limiting the Liquidity Provider's notice
obligations under the preceding sentence, the Borrower shall not be required to
compensate the Liquidity Provider pursuant to this Section 3.01 for any
Additional Costs incurred more than sixty days prior to the date that the
Liquidity Provider notifies the Borrower of the Regulatory Change giving rise to
such Additional Costs and of the Liquidity Provider's intention to claim
compensation therefor. Determinations by the Liquidity Provider for purposes of
this Section 3.01 of the effect of any Regulatory Change on its costs of making
or maintaining Advances or on amounts receivable by it in respect of Advances,
and of the additional amounts required to compensate the Liquidity Provider in
respect of any Additional Costs, shall be prima facie evidence of the amount
owed under this Section.
Section 3.02. Capital Adequacy. If (1) the adoption, after the date
hereof, of any applicable governmental law, rule or regulation regarding capital
adequacy of banks or bank holding companies (or any change therein), (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
or comparable agency charged with the interpretation or administration thereof
or (3) compliance by the Liquidity Provider (or its head office) 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
22
18
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 3.02 and contain a representation of the Liquidity Provider
to the Borrower and to Continental to the effect that it is the customary
practice of the Liquidity Provider to charge its customers for compensation in
respect of such event. Without limiting the Liquidity Provider's notice
obligations under the preceding sentence, the Borrower shall not be required to
compensate the Liquidity Provider, in respect of an event described in this
Section 3.02, for any amount attributable to any period which is more than sixty
days prior to the date that the Liquidity Provider notifies the Borrower of such
event and of the Liquidity Provider's intention to claim compensation therefor.
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,
23
19
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 and any net increase in Taxes imposed on the
Liquidity Provider as a result of any payment made pursuant to this Section
3.03) interest or any other such amounts payable under this Agreement at the
rates or in the amounts specified in this Agreement.
If as a result of any Tax indemnified or payment made pursuant to this
Section 3.03, the Liquidity Provider shall realize any tax savings, whether by
credit, deduction or refund (including by way of offset), then the Liquidity
Provider shall pay to Borrower an amount which, after subtraction of any further
Tax savings the Liquidity Provider realizes as a result of the payment thereof
and the addition of any Tax detriment suffered by the Liquidity Provider as a
result of such payment, plus, in the case of any refund (including by way of
offset) of any taxes giving rise to a payment hereunder, interest actually
received or credited thereon, provided that if any Tax savings giving rise to a
payment pursuant to this paragraph is subsequently lost or disallowed, the
Borrower shall, upon written notice, repay such amounts to the Liquidity
Provider provided further, that the payment of any amount to the Borrower
pursuant to this Section 3.03(a) shall not be required if a Final Advance has
been made and not yet reimbursed, but shall be deferred until such Final Advance
has been fully reimbursed or shall be credited against the reimbursement
obligation of the Borrower for such Final Advance.
The determination of any amount payable pursuant to this Section 3.03(a)
shall be made by the Liquidity Provider and set forth in a certificate of an
officer of the Liquidity Provider which certificate shall be final and
conclusive, absent error manifest on the face of such certificate, provided that
the Borrower may request verification of such payment amount, in which case the
outside accounting firm regularly employed by the Liquidity Provider shall be
requested to verify the calculation of such payment amount within 30 days, at
the expense of the Borrower, unless the payment amount is determined to be in
error by more than five percent, in which case such expense shall be
24
20
paid by the Liquidity Provider. The Liquidity Provider shall have sole control
over the positions taken on its tax returns and filings. The Liquidity Provider
shall in no event be required to disclose its tax returns or filings or any
related records other than to the verifying accounting firm.
Whenever any Non-Excluded Tax is payable by the Borrower, promptly
thereafter, the Borrower shall send to the Liquidity Provider copies of tax
receipts evidencing such payment by the Borrower, if reasonably available to it,
or other evidence of payment reasonably requested by the Liquidity Provider.
(b) 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 payable under Section
3.03(a) 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, to the extent the Liquidity Provider
is legally entitled to do so, 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 The Bank of New York, One Wall Street, New
York, New York 10286, ABA No. 021-000-081, for the account of Kredietbank New
York, Account No. 802-3015618, Attention: Loan Administration (referencing
Continental Airlines 1997-2 Liquidity Facility).
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
25
21
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 (other than a payment of interest on LIBOR Advances) 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 such extension of time shall in such
case be included in the computation of payment of interest or fees, as the case
may be.
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 Downgrade Advance, from and including the date on
which the amount thereof was withdrawn from the Class B Cash Collateral Account
to pay interest on the Class B Certificates) to but excluding the date such
principal amount shall be paid in full (or, in the case of an Applied Downgrade
Advance, the date on which the Class B Cash Collateral Account is fully
replenished in respect of such Advance) and (ii) any other amount due hereunder
(whether fees, commissions, expenses or other amounts or, to the extent
permitted by law, installments of interest on Advances or any such other amount)
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but excluding the date
such amount is paid in full, in each such case, at a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount as in effect for such day, but in no event
at a rate per annum greater than the maximum rate permitted by applicable law;
provided, however, that, if at any time the otherwise applicable interest rate
as set forth in this Section 3.07 shall exceed the maximum rate permitted by
applicable law, then any subsequent reduction in such interest rate will not
reduce the rate of interest payable pursuant to this Section 3.07 below the
maximum rate permitted by applicable law until the total amount of interest
accrued equals the amount of interest that would have accrued if such otherwise
applicable interest rate as set forth in this Section 3.07 had at all times been
in effect.
(b) Each Advance will be either a Base Rate Advance or a LIBOR Advance as
provided in this Section. Each such Advance
26
22
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 (or, in the case of a Final
Advance, three Business Days following the date of such Final Advance).
Thereafter, such Advance shall be a LIBOR Advance; provided that the Borrower
(at the direction of the Controlling Party (so long as the Controlling Party is
not the Liquidity Provider)) 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 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 until paid.
(f) Each change in the Base Rate shall become effective immediately. The
rates of interest specified in this Section 3.07 with respect to any Advance or
other amount shall be referred to as the "Applicable Liquidity Rate".
Section 3.08. Replacement of Borrower. Subject to Section 5.02(b), 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
27
23
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 V 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, or any conversion of a LIBOR
Advance to a Base Rate 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 each LIBOR Advance shall be
converted to a Base Rate Advance (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 conversion; or (b) at the expiration of
the last Interest Period for such LIBOR Advance to expire before the effective
date of any such change or request if
28
24
such notice of the Liquidity Provider is provided to the Borrower prior to such
expiration date, and otherwise at the expiration of the Interest Period for such
LIBOR Advance in effect on the date of receipt of such notice of the Liquidity
Provider. In the event any change of the nature described in the preceding
sentence shall make it unlawful or impossible for the Liquidity Provider (or its
Lending Office) to maintain or fund its Base Rate Advances, the Liquidity
Provider shall have the right to cause a Replacement Liquidity Facility to be
substituted for this Agreement, subject to (i) the satisfaction of the
conditions precedent to the effectiveness of, and the other provisions
regarding, a Replacement Liquidity Facility set forth in Section 3.6(e) of the
Intercreditor Agreement and (ii) such Replacement Liquidity Facility and
Replacement Liquidity Provider being reasonably acceptable to Continental.
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 (in the case of each document delivered
pursuant to paragraphs (i), (ii) and (iii) below), 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) which
are in full force and effect in accordance with their respective
terms;
29
25
(iv) A copy of the Offering Memorandum, with copies of the
Appraisals attached thereto, and specimen copies of the Class B
Certificates;
(v) Evidence that, on the Effective Date, the Class A
Certificates, the Class B Certificates, the Class C Certificates and
the Class D Certificates will receive long-term credit ratings from
Moody's of not lower than AA, A, BBB- and BB, respectively, and from
Standard & Poor's of not lower than A1, A3, Baa2 and Ba2,
respectively;
(vi) 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 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);
(vii) 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;
(viii) 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,
30
26
only to the extent that Continental is obligated to provide such
information pursuant to Section 8.04(a) of the Trust Agreements 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
(ix) Such other documents, instruments, opinions and approvals
as the Liquidity Provider shall have reasonably requested.
(b) The following statements shall be true on and as of the
Effective Date:
(i) The representations and warranties contained in the
Participation Agreements (other than the Participation Agreements
with respect to any Postponed Notes) of each party thereto are true
and correct on and as of the Effective Date as though made on and as
of the Effective Date; and
(ii) No event has occurred and is continuing, or would result
from the entering into of this Agreement or the making of any
Advance, which constitutes a Liquidity Event of Default.
(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
31
27
Section 2.01 have been satisfied or waived (other than this Section
4.01(e)).
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, except in the case of a Final Advance, prior to the date of such Borrowing,
the Borrower shall have delivered a Notice of Borrowing which conforms to the
terms and conditions of this Agreement and has been completed as may be required
by the relevant form of the Notice of Borrowing for the type of Advance
requested.
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will, unless the Liquidity
Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay or
cause to be paid all amounts payable by it under this Agreement and the
other Operative Agreements and observe and perform in all material
respects the conditions, covenants and requirements applicable to it
contained in this Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity Provider with
reasonable promptness, such other information and data with respect to the
transactions contemplated by the Operative Agreements as from time to time
may be reasonably requested by the Liquidity Provider; and permit the
Liquidity Provider, upon reasonable notice, to inspect the Borrower's
books and records with respect to such transactions and to meet with
officers and employees of the Borrower to discuss such transactions.
(c) Certain Operative Agreements. Furnish to the Liquidity Provider
with reasonable promptness, such Operative Agreements entered into after
the date hereof as
32
28
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.
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, at its option, make a Final Advance to
the Borrower before 12:00 Noon (New York City time) on a Business Day in
accordance with Section 2.02(d) whereupon (i) the Liquidity Provider shall have
no further obligation to make Advances hereunder, (ii) all other outstanding
Advances shall be automatically converted into Final Advances for purposes of
determining the Applicable Liquidity Rate for interest payable thereon, and
(iii) subject to Sections 2.07 and 2.09 hereof, all Advances (including, without
limitation, any Downgrade Advance and Applied Downgrade Advance), any accrued
interest thereon and any other amounts outstanding hereunder shall become
immediately due and payable to the Liquidity Provider. Any payment in respect of
a Final Advance shall be made in the lawful money of the United States of
America, to the Borrower in immediately available funds, by wire transfer to
Wilmington Trust Company, One Rodney Square, 1100 N. Market Street, Wilmington,
Delaware 19890, ABA No. 031-100-092, Account No. 42215-1, Attention: Corporate
Trust Administration, Reference: Continental 1997-2 Class B Cash Collateral
Account (or to such other account as the Borrower may from time to time
designate to the Liquidity Provider for such purpose).
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement, nor consent to any departure
33
29
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: KREDIETBANK N.V.
New York Branch
125 West 55th Street
New York, NY 10019
Attention: General Manager
Telephone: (212) 541-0600
Telecopy: (212) 956-5580
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
34
30
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 8.1 of the Participation Agreements. In addition,
the Borrower agrees to indemnify, protect, defend and hold harmless the
Liquidity Provider from, against and in respect of, and shall pay on demand, all
Expenses of any kind or nature whatsoever (other than any Expenses of the nature
described in Sections 3.01, 3.02 or 7.07 hereof or in the Fee Letter (regardless
of whether indemnified against pursuant to said Sections or in such Fee
Letter)), that may be imposed, incurred by or asserted against any Liquidity
Indemnitee, in any way relating to, resulting from, or arising out of or in
connection with any action, suit or proceeding by any third party against such
Liquidity Indemnitee and relating to this Agreement, the Fee Letter, the
Intercreditor Agreement or any Participation Agreement; provided, however, that
the Borrower shall not be required to indemnify, protect, defend and hold
harmless any Liquidity Indemnitee in respect of any Expense of such Liquidity
Indemnitee to the extent such Expense is (i) attributable to the gross
negligence or willful misconduct of such Liquidity Indemnitee or any other
Liquidity Indemnitee, (ii) ordinary and usual operating overhead expense or
(iii) attributable to the failure by such Liquidity Indemnitee or any other
Liquidity Indemnitee to perform or observe any agreement, covenant or condition
on its part to be performed or observed in this Agreement, the Intercreditor
Agreement, the Fee Letter or any other Operative Agreement to which it is a
party. The indemnities contained in such Section 8.1, and the provisions of
35
31
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 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
36
32
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 and
security 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
granting of participations by the Liquidity Provider, however, will relieve the
Liquidity Provider of its obligations hereunder. In connection with any
participation or any proposed participation, the Liquidity Provider may disclose
to the participant or the
37
33
proposed participant any information that the Borrower is required to deliver or
to disclose to the Liquidity Provider pursuant to this Agreement. The Borrower
acknowledges and agrees that the Liquidity Provider's source of funds may derive
in part from its participants (other than Continental). Accordingly, references
in this Agreement and the other Operative Agreements to determinations, reserve
and capital adequacy requirements, increased costs, reduced receipts, additional
amounts due pursuant to Section 3.03 and the like as they pertain to the
Liquidity Provider shall be deemed also to include those of each of its
participants (subject, in each case, to the maximum amount that would have been
incurred by or attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider sells any
participation in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such participation,
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld by the
Borrower or the Liquidity Provider 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 of 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
38
34
the Borrower has received forms or other documents reasonably satisfactory to it
(and required by applicable law) indicating that payments hereunder are not
subject to United States federal withholding tax, the Borrower will withhold
taxes as required by law from such payments at the applicable statutory rate.
(c) Notwithstanding the other provisions of this Section 7.08, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.09. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of
Immunity. (a) Each of the parties hereto hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may
39
35
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) if such party does not maintain an office for the transaction
of its business in New York, agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to each party hereto at its address set forth in Section
7.02 hereof, or at such other address of which the Liquidity Provider
shall have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED, including, without limitation, contract claims, tort claims, breach
of duty claims and all other common law and statutory claims. The Borrower and
the Liquidity Provider each warrant and represent that it has reviewed this
waiver with its legal counsel, and that it knowingly and voluntarily waives its
jury trial rights following consultation with such legal counsel. THIS WAIVER IS
IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it may have from the
jurisdiction of the courts of the United States or of any State and waives any
immunity any of its properties located in the United States may have from
attachment or execution upon a judgement entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any similar successor
legislation.
40
36
Section 7.12. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Agreement.
Section 7.13. Entirety. This Agreement, the Intercreditor Agreement and
the other Operative Agreements to which the Liquidity Provider is a party
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior understandings and agreements of
such parties.
Section 7.14. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE LIQUIDITY PROVIDER
TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO DELIVER NOTICES OF
BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL BE UNCONDITIONAL
AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE STRICTLY IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
41
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first set forth above.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as agent and
trustee for the Class B Trust, as
Borrower
By:_____________________________________
Name:
Title:
KREDIETBANK N.V., acting through its New
York branch, as Liquidity Provider
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
42
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first set forth above.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as agent and
trustee for the Class B Trust, as
Borrower
By:_____________________________________
Name:
Title:
KREDIETBANK N.V., acting through its New
York branch, as Liquidity Provider
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
43
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 KREDIETBANK N.V., acting through its New
York branch (the "Liquidity Provider"), with reference to the Revolving Credit
Agreement (1997-2B) dated as of June 25, 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 for the
payment 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
and has not been paid pursuant to clause sixth of Section 3.2 of the
Intercreditor Agreement or clause eighth 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
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 Certificates or the Class D Certificates
or interest on the Class A Certificates, the Class C Certificates or the
Class D Certificates, (iii) was computed in accordance with the provisions
of the Class B Certificates, the Class B Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), (iv) does not exceed the Maximum Available Commitment on the
date hereof and (v) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
44
I-2
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.6(b) of the Intercreditor Agreement, (b) no portion
of such amount shall be applied by the Borrower for any other purpose and
(c) no portion of such amount until so applied shall be commingled with
other funds held by the Borrower.
(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, 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.
45
I-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:
46
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest Advance Notice of
Borrowing]
47
Annex II to
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to KREDIETBANK N.V.,
acting through its New York branch (the "Liquidity Provider"), with reference to
the Revolving Credit Agreement (1997-2B) dated as of June 25, 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 Class B Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading
of the short-term unsecured debt rating of the Liquidity Provider issued
by either Rating Agency below the Threshold Rating, which Advance is
requested to be made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the Class B
Cash Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of the principal of, or premium on, the Class B Certificates,
or principal of, or interest or premium on, the Class A Certificates, the
Class C Certificates or the Class D Certificates, (iii) was computed in
accordance with the provisions of the Class B Certificates, the Class B
Trust Agreement and the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I), and (iv) has not been and
is not the subject of a prior or contemporaneous Notice of Borrowing under
the Liquidity Agreement.
48
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 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:
49
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
50
Annex III to
Revolving Credit Agreement
NOTICE OF AUTOMATIC REDUCTION OR INCREASE OF COMMITMENT
[Date]
Ladies and Gentlemen:
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby notifies Kredietbank N.V., acting
through its New York branch (the "Liquidity Provider"), with reference to the
Revolving Credit Agreement dated as of June 25, 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, pursuant to Section 2.04(a) of the Liquidity Agreement, the
Commitment has been automatically reduced or increased to $_________.
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 B Trust, as
Borrower
By:_____________________________________
Name:
Title:
51
Annex IV to
Revolving Credit Agreement
NOTICE OF CONVERSION TO FINAL ADVANCE
[Date]
WILMINGTON TRUST COMPANY
as Subordination Agent, as Borrower
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0011
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of June 25, 1997, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Continental
Airlines Pass Through Trust, 1997-2B, as Borrower, and Kredietbank N.V., acting
through its New York branch (the "Liquidity Agreement")
- --------------------------------------------------------------------------------
Ladies and Gentlemen:
You are hereby notified that pursuant to Section 2.06 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 convert the existing Downgrade Advance to
a Final Advance.
52
IV-2
THIS NOTICE IS THE "NOTICE OF CONVERSION TO FINAL ADVANCE" PROVIDED FOR
UNDER THE LIQUIDITY AGREEMENT.
Very truly yours,
KREDIETBANK N.V.,
NEW YORK BRANCH
as Liquidity Provider
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
cc: Wilmington Trust Company,
as Class B Trustee
53
Annex V to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of June 25, 1997, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Continental
Airlines Pass Through Trust, 1997-2B, as Borrower, and Kredietbank N.V., acting
through its New York branch (the "Liquidity Agreement")
- --------------------------------------------------------------------------------
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
------------------------------
[Name of Transferee]
------------------------------
[Address of Transferee]
all rights and obligations of the undersigned as Borrower under the Liquidity
Agreement referred to above. The transferee has succeeded the undersigned as
Subordination Agent under the Intercreditor Agreement referred to in the first
paragraph of the Liquidity Agreement, pursuant to the terms of Section 8.1 of
the Intercreditor Agreement.
By this transfer, all rights of the undersigned as Borrower under the
Liquidity Agreement are transferred to the transferee and the transferee shall
hereafter have the sole rights and obligations as Borrower thereunder. The
undersigned shall pay any costs and expenses of such transfer, including, but
not limited to, transfer taxes or governmental charges.
54
V-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 4.11
EXECUTION COPY
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1997-2C)
Dated as of June 25, 1997
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines Pass Through Trust 1997-2C
as Borrower
and
KREDIETBANK N.V., NEW YORK BRANCH,
as Liquidity Provider
- --------------------------------------------------------------------------------
Relating to
Continental Airlines Pass Through Trust 1997-2C
7.206% Continental Airlines Pass Through Certificates,
Series 1997-2C
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.................................................. 10
Section 2.02. Making the Advances........................................... 10
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 Downgrade 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
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...................................................... 20
Section 3.05. Computations.................................................. 20
Section 3.06. Payment on Non-Business Days.................................. 21
Section 3.07. Interest...................................................... 21
Section 3.08. Replacement of Borrower....................................... 22
Section 3.09. Funding Loss Indemnification.................................. 23
Section 3.10. Illegality.................................................... 23
- i -
3
Page
----
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01......... 24
Section 4.02. Conditions Precedent to Borrowing............................. 27
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower......................... 27
Section 5.02. Negative Covenants of the Borrower............................ 28
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.................................................. 29
Section 7.03. No Waiver; Remedies........................................... 29
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..................................... 31
Section 7.08. Binding Effect; Participations................................ 32
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..................................... 36
Section 7.13. Entirety...................................................... 36
Section 7.14. Headings...................................................... 36
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.............. 36
ANNEX I Interest Advance Notice of Borrowing
- ii -
4
Page
----
ANNEX II Downgrade Advance Notice of Borrowing
ANNEX III Notice of Automatic Reduction or Increase of Commitment
ANNEX IV Notice of Conversion to Final Advance
ANNEX V Notice of Replacement Subordination Agent
- iii -
5
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of June 25, 1997, between
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual
capacity but solely as Subordination Agent under the Intercreditor Agreement
(each as defined below), as agent and trustee for the Class C Trust (as defined
below) (the "Borrower"), and KREDIETBANK N.V., acting through its New York
branch (the "Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class C Trust Agreement (such term and all
other capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class C Trust is issuing the Class C
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the Class C Certificates in accordance with their
terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
Advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. (a) Definitions. As used in
this Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Additional Cost" has the meaning assigned to such term in Section
3.01.
"Advance" means an Interest Advance, a Final Advance, a Downgrade
Advance, an Applied Downgrade 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(f).
"Applicable Margin" means (v) with respect to any Unpaid Advance or
Applied Downgrade Advance that is a LIBOR Advance, 1.75% per annum, (w)
with respect to any Final Advance that is a Base Rate Advance, 1.75% per
annum, (x) with respect to any Interest Advance or Applied Downgrade
Advance that is a Base Rate Advance, 0.75% per annum, (y) with respect to
any Unapplied Downgrade Advance that is a LIBOR Advance, 0.45% per annum
and (z) with respect to any Unapplied Downgrade Advance that is a Base
Rate Advance, minus 0.55% per annum.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.06(a).
"Base Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall for any day be equal to the
higher of:
(i) the rate per annum announced from time to time by the
Liquidity Provider as its base commercial lending rate, and
(ii) (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, plus one-half
of one percent (1/2 of 1%), or (b) if the rate calculated pursuant
to clause (a) above is not available for such date, the rate quoted
by the Liquidity Provider, at approximately 11:00 A.M., New York
City time on such day (or, if such day is not a Business Day, on the
next preceding Business Day), to dealers in the New York Federal
funds market for overnight Federal funds offerings of dollars by the
Liquidity Provider, plus one-half of one percent (1/2 of 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 or pursuant to Section 6.01.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in
Houston, Texas, New York, New York, or, so long as any Class C Certificate
is outstanding, the city and state in which the Class C Trustee, the
Borrower or any Loan Trustee maintains its Corporate Trust Office or
receives or disburses funds, and, if the applicable Business Day relates
to any Advance or other amount bearing interest based on the LIBOR Rate,
on which dealings are carried on in the London interbank market.
"Downgrade Advance" means an Advance made pursuant to Section
2.02(c).
"Effective Date" has the meaning specified in Section 4.01. The
delivery of the certificate of the Liquidity Provider contemplated by
Section 4.01(e) shall be conclusive evidence that the Effective Date has
occurred.
"Excluded Taxes" means (i) taxes imposed on the overall net income
of the Liquidity Provider or of its Lending Office by the jurisdiction
where such Liquidity Provider's principal office or such Lending Office is
located, and (ii) Excluded Withholding Taxes.
"Excluded Withholding Taxes" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding
Taxes are imposed as a result of any change in applicable law or treaty
(including any change in the official interpretation thereof) after the
date hereof (excluding from change in applicable law or treaty for this
purpose any addition of, or change in, any "anti-treaty shopping",
"limitation on benefits", or similar provision in any treaty or other
applicable law restricting the availability of treaty benefits (including
without limitation any provision similar to the Protocol Amending the
Convention Between the United States of America and the Kingdom of the
Netherlands for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect
8
4
to Taxes on Income, signed at Washington on October 13, 1993)), or in the
case of a successor Liquidity Provider (including a transferee of an
Advance) or Lending Office, after the date on which such successor
Liquidity Provider obtains its interest or on which the Lending Office is
changed, and (ii) any withholding Taxes imposed by the United States which
are imposed or increased as a result of the Liquidity Provider failing to
deliver to the Borrower any certificate or document (which certificate or
document in the good faith judgment of the Liquidity Provider it is
legally entitled to provide) which is reasonably requested by the Borrower
to establish that payments under this Agreement are exempt from (or
entitled to a reduced rate of) withholding Tax.
"Expenses" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses, and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"Expiry Date" means January 14, 2006.
"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 and ending on the next Regular Distribution
Date (or ending, in the case of an Interest Period
9
5
applicable to any Unapplied Downgrade Advance, on the
numerically corresponding day in the third or sixth calendar
month after the first day of the applicable Interest Period
and/or on the next Regular Distribution Date, as Continental
may select by providing notice thereof to the Borrower and the
Liquidity Provider no later than three Business Days prior to
the commencement of such Interest Period, provided that if
Continental shall not provide such a notice at least three
Business Days prior to the commencement of such Interest
Period, then Continental shall be deemed to have selected an
Interest Period ending on the next Regular Distribution Date);
and
(ii) each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the next
Regular Distribution Date (or ending, in the case of an
Interest Period applicable to any Unapplied Downgrade Advance,
on the numerically corresponding day in the third or sixth
calendar month after the first day of the applicable Interest
Period and/or on the next Regular Distribution Date, as
Continental may select by providing notice thereof to the
Borrower and the Liquidity Provider no later than three
Business Days prior to the commencement of such Interest
Period, provided that if Continental shall not provide such a
notice at least three -------- Business Days prior to the
commencement of such Interest Period, then Continental shall
be deemed to have selected an Interest Period ending on the
next Regular Distribution Date);
provided, however, that (I) if an Unapplied Downgrade Advance which is a
LIBOR Advance becomes an Applied Downgrade Advance, the Interest Period
then applicable to such Unapplied Downgrade Advance shall be applicable to
such Applied Downgrade Advance, (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
date the Liquidity Provider makes the Final Advance (in the case of clause
(x) above) or the Regular Distribution Date following
10
6
such conversion (in the case of clause (y) above) and (III) in the case of
any Interest Period applicable to a Downgrade Advance, each Interest
Period that would otherwise end on a day that is not a Business Day shall
end on the next succeeding Business Day.
"Lending Office" means the lending office of the Liquidity Provider
presently located at 125 West 55th Street, New York, New York 10019 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:
(i) the rate per annum appearing on display page 3750 (British
Bankers Association-LIBOR) of the Dow Jones Markets Service (or any
successor or substitute therefor) at approximately 11:00 A.M.
(London time) two Business Days before the first day of such
Interest Period, as the rate for dollar deposits with a maturity
comparable to such Interest Period, or
(ii) if (a) the rate calculated pursuant to clause (i) above
is not available or (b) the Liquidity Provider determines in good
faith, and certifies to the Borrower and Continental, prior to two
Business Days prior to the commencement of such Interest Period,
that the rate calculated pursuant to clause (i) above does not
adequately and fairly reflect the cost to the Liquidity Provider of
making and maintaining the relevant Advance during such Interest
Period, the rate per annum at which deposits in dollars are offered
for the relevant Interest Period by the Liquidity Provider to prime
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
11
7
the LIBOR Advance to which such Interest Period is to apply and for
a period of time comparable to such Interest Period, as quoted by
the Liquidity Provider to the Borrower.
"Liquidity Event of Default" means the occurrence of either (a) the
acceleration of all of the Equipment Notes or (b) a Continental Bankruptcy
Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) each
Affiliate of the Liquidity Provider, (iii) the directors, officers,
employees, servants and agents of the Liquidity Provider and its
Affiliates, and (iv) the successors and permitted assigns of the persons
described in clauses (i) through (iii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Maximum Available Commitment" 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 Downgrade Advance or a Final Advance, the
Maximum Available Commitment shall be zero.
"Maximum Commitment" means initially $2,967,925, as the same may be
adjusted from time to time in accordance with Section 2.04(a); provided
that the Maximum Commitment shall at no time exceed an amount equal to
$3,173,860.
"Non-Excluded Taxes" has the meaning specified in Section 3.03.
"Notice of Borrowing" has the meaning specified in Section 2.02(e).
"Notice of Conversion to Final Advance" means the Notice of
Conversion to Final Advance substantially in the form of Annex IV to this
Agreement.
"Notice of Replacement Subordination Agent" has the meaning
specified in Section 3.08.
12
8
"Offering Memorandum" means the Offering Memorandum dated June 17,
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.
"Regulatory Change" has the meaning assigned to such term in Section
3.01.
"Replenishment Amount" has the meaning assigned to such term in
Section 2.06(b).
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class C Certificates, that would be payable on the
Class C Certificates on each of the three successive semiannual Regular
Distribution Dates immediately following such day or, if such day is a
Regular Distribution Date, on such day and the succeeding two semiannual
Regular Distribution Dates, in each case calculated on the basis of the
Pool Balance of the Class C Certificates on such day and without regard to
expected future payments of principal on the Class C Certificates.
"Termination Date" means the earliest to occur of the following: (i)
the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class C Certificates have been paid
in full (or provision has been made for such payment in accordance with
the Intercreditor Agreement and the Trust Agreements) or are otherwise no
longer entitled to the benefits of this Agreement; (iii) the date on which
the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full
pursuant to Section 3.6(e) of the Intercreditor Agreement; (iv) the date
on which the Liquidity Provider makes the Final Advance; 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.
13
9
"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.
"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:
"Affiliate", "Certificates", "Class A Certificates", "Class B
Certificates", "Class C Cash Collateral Account", "Class C Certificates",
"Class C Certificateholders", "Class C Trust", "Class C Trust Agreement",
"Class C Trustee", "Class D Certificates", "Closing Date", "Continental",
"Continental Bankruptcy Event", "Controlling Party", "Corporate Trust
Office", "Distribution Date", "Downgraded Facility", "Equipment Notes",
"Fee Letter", "Indenture", "Initial Purchasers", "Investment Earnings",
"Liquidity Facility", "Loan Trustee", "Moody's", "Operative Agreements",
"Participation Agreement", "Performing Equipment Note", "Person", "Pool
Balance", "Postponed Notes", "Purchase Agreement", "Rating Agency",
"Registration Rights Agreement", "Regular Distribution Date, "Replacement
Liquidity Facility", "Responsible Officer", "Scheduled Payment", "Special
Payment", "Standard & Poor's", "Stated Interest Rate", "Subordination
Agent", "Taxes", "Threshold Rating", "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 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
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
14
10
considered payable in arrears on such Regular Distribution Date and to be
calculated and allocated in the same manner as interest on the Series C
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 interest on the Class C Certificates
at the Stated Interest Rate therefor in accordance with Section 3.6(a) of the
Intercreditor Agreement. Each Interest Advance made hereunder shall
automatically reduce the Maximum Available Commitment and the amount available
to be borrowed hereunder by subsequent Advances by the amount of such Interest
Advance (subject to reinstatement as provided in the next sentence). Upon
repayment to the Liquidity Provider in full of the amount of any Interest
Advance made pursuant to this Section 2.02(a), together with accrued interest
thereon (as provided herein), the Maximum Available Commitment shall be
reinstated by the amount of such repaid Interest Advance, but not to exceed the
Maximum Commitment; provided, however, that the Maximum Available Commitment
shall not be so reinstated at any time if (i) a Liquidity Event of Default shall
have occurred and be continuing and (ii) there is a Performing Note Deficiency.
(b) [Intentionally Omitted].
(c) A Downgrade Advance shall be made in a single Borrowing upon a
downgrading of the Liquidity Provider's short-
15
11
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 II attached hereto, signed by a Responsible
Officer of the Borrower, in an amount equal to the Maximum Available Commitment
at such time, and shall be used to fund the Class C Cash Collateral Account in
accordance with said Section 3.6(c).
(d) A Final Advance shall be made by the Liquidity Provider without
the necessity of a Notice of Borrowing at the option of the Liquidity Provider
as provided in Section 6.01 in an amount equal to the Maximum Available
Commitment at such time, and shall be used to fund the Class C Cash Collateral
Account (in accordance with Section 3.6(i) of the Intercreditor Agreement).
(e) Each Borrowing (other than under Section 2.02(d)) shall be made
on notice in writing (a "Notice of Borrowing") in substantially the form
required by Section 2.02(a) or 2.02(c), 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
16
12
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(c) or (d) hereof to fund the Class C Cash
Collateral Account, the Liquidity Provider shall have no interest in or rights
to the Class C Cash Collateral Account, such Advance or any other amounts from
time to time on deposit in the Class C Cash Collateral Account; provided that
the foregoing shall not affect or impair the obligations of the Subordination
Agent to make the distributions contemplated by Section 3.6(e) or (f) of the
Intercreditor Agreement. By paying to the Borrower proceeds of Advances
requested by the Borrower in accordance with the provisions of this Agreement,
the Liquidity Provider makes no representation as to, and assumes no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.
Section 2.03. Fees. The Borrower agrees to pay to the Liquidity
Provider the fees set forth in the Fee Letter.
Section 2.04. 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 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", the
Maximum Commitment shall automatically be reduced or increased, as the case may
be, to an amount equal to such adjusted Required Amount (as calculated by the
Borrower). The Borrower shall give notice of any such automatic reduction or
increase of the Maximum Commitment (substantially in the form of Annex III
hereto) to the Liquidity Provider within two Business Days thereof. The failure
17
13
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 Downgrade Advance or Final
Advance hereunder or the occurrence of the Termination Date, the obligation of
the Liquidity Provider to make further Advances hereunder shall automatically
and irrevocably terminate, and the Borrower shall not be entitled to request any
further Borrowing hereunder.
Section 2.05. Repayments of Interest Advances or the Final Advance.
Subject to Sections 2.06, 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 Downgrade 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 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 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 Downgrade Advances. (a) Amounts advanced
hereunder in respect of a Downgrade Advance shall be deposited in the Class C
Cash Collateral Account, and invested and withdrawn from the Class C Cash
Collateral Account as set forth in Sections 3.6(c) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date, commencing on the first
18
14
Regular Distribution Date after the making of a Downgrade Advance, interest on
the principal amount of any such Downgrade Advance as provided in Section 3.07;
provided, however, that amounts in respect of a Downgrade Advance withdrawn from
the Class C Cash Collateral Account for the purpose of paying interest on the
Class C Certificates in accordance with Section 3.6(f) of the Intercreditor
Agreement (the amount of any such withdrawal being an "Applied Downgrade
Advance") shall 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 Downgrade Advance, the Liquidity Provider delivers a
Notice of Conversion to Final Advance (substantially in the form of Annex IV to
this Agreement) to the Borrower, such Downgrade Advance shall thereafter be
treated as a Final Advance under this Agreement for purposes of determining the
Applicable Liquidity Rate for interest payable thereon. Subject to Sections 2.07
and 2.09 hereof, immediately upon the withdrawal of any amounts from the Class C
Cash Collateral Account on account of a reduction in the Required Amount, the
Borrower shall repay to the Liquidity Provider a portion of the Downgrade
Advances in a principal amount equal to the amount of such reduction, plus
interest on the principal amount prepaid as provided in Section 3.07 hereof.
(b) At any time when an Applied Downgrade Advance (or any portion
thereof) is outstanding, upon the deposit in the Class C Cash Collateral Account
of any amount pursuant to clause "third" of Section 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 Required Amount at such time, (i) the aggregate
outstanding principal amount of all Applied Downgrade Advances (and of Downgrade
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 Downgrade 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
19
15
on deposit in the Class C Cash Collateral Account after giving effect to any
Applied Downgrade 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 in the order of
priority required by the applicable provisions of Articles II and III of the
Intercreditor Agreement.
Section 2.08. Book Entries. The Liquidity Provider shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower resulting from Advances made from time to time and
the amounts of principal and interest payable hereunder and paid from time to
time in respect thereof; provided, however, that the failure by the Liquidity
Provider to maintain such account or accounts shall not affect the obligations
of the Borrower in respect of Advances.
Section 2.09. Payments from Available Funds Only. All payments to be
made by the Borrower under this Agreement shall be made only from amounts that
constitute Scheduled Payments, Special Payments or payments under Section 8.1 of
the Participation Agreements and only to the extent that the Borrower shall have
sufficient income or proceeds therefrom to enable the Borrower to make payments
in accordance with the terms hereof after giving effect to the priority of
payments provisions set forth in the Intercreditor Agreement. The Liquidity
Provider agrees that it will look solely to such amounts to the extent available
for distribution to it as provided in the Intercreditor Agreement and this
Agreement and that the Borrower, in its individual capacity, is not personally
liable to it for any amounts payable or liability under this Agreement except as
expressly provided in this Agreement, the Intercreditor Agreement or any
Participation Agreement. Amounts on deposit in the
20
16
Class C Cash Collateral Account shall be available to the Borrower to make
payments under this Agreement only to the extent and for the purposes expressly
contemplated in Section 3.6(f) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs. The Borrower shall pay to the
Liquidity Provider from time to time such amounts as may be necessary to
compensate the Liquidity Provider for any increased costs incurred by the
Liquidity Provider (or its head office) which are attributable to its making or
maintaining any 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"), (A) resulting from any
change after the date of this Agreement in U.S. federal or state, or any
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 or state, 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); (2) imposes on the Liquidity Provider any other condition
regarding this Agreement or any such Advance (other than with respect to Taxes)
or (3) imposes or modifies any reserve, special deposit or similar requirements
relating to any extensions of credit or other assets of, or any deposits with or
other liabilities of, the Liquidity Provider (or its head office) (including any
such Advances or any deposits referred to in the definition of LIBOR Rate) and
(B) which the Liquidity Provider has certified to the Borrower and Continental
are not included or reflected in the determination of the LIBOR Rate or the Base
Rate. 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
21
17
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 3.01 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 3.01 and contain a representation of the
Liquidity Provider to the Borrower and to Continental to the effect that it is
the customary practice of the Liquidity Provider to charge its customers for
Additional Costs in respect of such event. Without limiting the Liquidity
Provider's notice obligations under the preceding sentence, the Borrower shall
not be required to compensate the Liquidity Provider pursuant to this Section
3.01 for any Additional Costs incurred more than sixty days prior to the date
that the Liquidity Provider notifies the Borrower of the Regulatory Change
giving rise to such Additional Costs and of the Liquidity Provider's intention
to claim compensation therefor. Determinations by the Liquidity Provider for
purposes of this Section 3.01 of the effect of any Regulatory Change on its
costs of making or maintaining Advances or on amounts receivable by it in
respect of Advances, and of the additional amounts required to compensate the
Liquidity Provider in respect of any Additional Costs, shall be prima facie
evidence of the amount owed under this Section.
Section 3.02. Capital Adequacy. If (1) the adoption, after the date
hereof, of any applicable governmental law, rule or regulation regarding capital
adequacy of banks or bank holding companies (or any change therein), (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
or comparable agency charged with the interpretation or administration thereof
or (3) compliance by the Liquidity Provider (or its head office) 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
22
18
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 3.02 and contain a representation of the
Liquidity Provider to the Borrower and to Continental to the effect that it is
the customary practice of the Liquidity Provider to charge its customers for
compensation in respect of such event. Without limiting the Liquidity Provider's
notice obligations under the preceding sentence, the Borrower shall not be
required to compensate the Liquidity Provider, in respect of an event described
in this Section 3.02, for any amount attributable to any period which is more
than sixty days prior to the date that the Liquidity Provider notifies the
Borrower of such event and of the Liquidity Provider's intention to claim
compensation therefor. 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,
23
19
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 and
any net increase in Taxes imposed on the Liquidity Provider as a result of any
payment made pursuant to this Section 3.03) interest or any other such amounts
payable under this Agreement at the rates or in the amounts specified in this
Agreement.
If as a result of any Tax indemnified or payment made pursuant to
this Section 3.03, the Liquidity Provider shall realize any tax savings, whether
by credit, deduction or refund (including by way of offset), then the Liquidity
Provider shall pay to Borrower an amount which, after subtraction of any further
Tax savings the Liquidity Provider realizes as a result of the payment thereof
and the addition of any Tax detriment suffered by the Liquidity Provider as a
result of such payment, plus, in the case of any refund (including by way of
offset) of any taxes giving rise to a payment hereunder, interest actually
received or credited thereon, provided that if any Tax savings giving rise to a
payment pursuant to this paragraph is subsequently lost or disallowed, the
Borrower shall, upon written notice, repay such amounts to the Liquidity
Provider provided further, that the payment of any amount to the Borrower
pursuant to this Section 3.03(a) shall not be required if a Final Advance has
been made and not yet reimbursed, but shall be deferred until such Final Advance
has been fully reimbursed or shall be credited against the reimbursement
obligation of the Borrower for such Final Advance.
The determination of any amount payable pursuant to this Section
3.03(a) shall be made by the Liquidity Provider and set forth in a certificate
of an officer of the Liquidity Provider which certificate shall be final and
conclusive, absent error manifest on the face of such certificate, provided that
the Borrower may request verification of such payment amount, in which case the
outside accounting firm regularly employed by the Liquidity Provider shall be
requested to verify the calculation of such payment amount within 30 days, at
the expense of the
24
20
Borrower, unless the payment amount is determined to be in error by more than
five percent, in which case such expense shall be paid by the Liquidity
Provider. The Liquidity Provider shall have sole control over the positions
taken on its tax returns and filings. The Liquidity Provider shall in no event
be required to disclose its tax returns or filings or any related records other
than to the verifying accounting firm.
Whenever any Non-Excluded Tax is payable by the Borrower, promptly
thereafter, the Borrower shall send to the Liquidity Provider copies of tax
receipts evidencing such payment by the Borrower, if reasonably available to it,
or other evidence of payment reasonably requested by the Liquidity Provider.
(b) 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 payable under
Section 3.03(a) 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, to the
extent the Liquidity Provider is legally entitled to do so, 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 The Bank of New York, One Wall
Street, New York, New York 10286, ABA No. 021-000-081, for the account of
Kredietbank New York, Account No. 802-3015618, Attention: Loan Administration
(referencing Continental Airlines 1997-2 Liquidity Facility).
Section 3.05. Computations. All computations of interest based on
the Base Rate shall be made on the basis of a
25
21
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 (other than a payment of interest on LIBOR Advances) 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 such extension of time shall in such
case be included in the computation of payment of interest or fees, as the case
may be.
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 Downgrade Advance, from and including the
date on which the amount thereof was withdrawn from the Class C Cash Collateral
Account to pay interest on the Class C Certificates) to but excluding the date
such principal amount shall be paid in full (or, in the case of an Applied
Downgrade Advance, the date on which the Class C Cash Collateral Account is
fully replenished in respect of such Advance) and (ii) any other amount due
hereunder (whether fees, commissions, expenses or other amounts or, to the
extent permitted by law, installments of interest on Advances or any such other
amount) which is not paid when due (whether at stated maturity, by acceleration
or otherwise) from and including the due date thereof to but excluding the date
such amount is paid in full, in each such case, at a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount as in effect for such day, but in no event
at a rate per annum greater than the maximum rate permitted by applicable law;
provided, however, that, if at any time the otherwise applicable interest rate
as set forth in this Section 3.07 shall exceed the maximum rate permitted by
applicable law, then any subsequent reduction in such interest rate will not
reduce the rate of interest payable pursuant to this Section 3.07 below the
maximum rate permitted by applicable law until the total amount of interest
accrued equals the amount of interest that would have accrued if such otherwise
applicable interest rate as set forth in this Section 3.07 had at all times been
in effect.
26
22
(b) 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 (or, in the case of a Final Advance, three Business
Days following the date of such Final Advance). Thereafter, such Advance shall
be a LIBOR Advance; provided that the Borrower (at the direction of the
Controlling Party (so long as the Controlling Party is not the Liquidity
Provider)) 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 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 until paid.
(f) Each change in the Base Rate shall become effective immediately.
The rates of interest specified in this Section 3.07 with respect to any Advance
or other amount shall be referred to as the "Applicable Liquidity Rate".
Section 3.08. Replacement of Borrower. Subject to Section 5.02(b),
from time to time and subject to the successor
27
23
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 V 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, or any conversion of a LIBOR
Advance to a Base Rate 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 each LIBOR Advance shall be
converted to a Base Rate Advance (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 conversion; or (b) at the
28
24
expiration of the last Interest Period for such LIBOR Advance to expire before
the effective date of any such change or request if such notice of the Liquidity
Provider is provided to the Borrower prior to such expiration date, and
otherwise at the expiration of the Interest Period for such LIBOR Advance in
effect on the date of receipt of such notice of the Liquidity Provider. In the
event any change of the nature described in the preceding sentence shall make it
unlawful or impossible for the Liquidity Provider (or its Lending Office) to
maintain or fund its Base Rate Advances, the Liquidity Provider shall have the
right to cause a Replacement Liquidity Facility to be substituted for this
Agreement, subject to (i) the satisfaction of the conditions precedent to the
effectiveness of, and the other provisions regarding, a Replacement Liquidity
Facility set forth in Section 3.6(e) of the Intercreditor Agreement and (ii)
such Replacement Liquidity Facility and Replacement Liquidity Provider being
reasonably acceptable to Continental.
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 (in the case of each document delivered
pursuant to paragraphs (i), (ii) and (iii) below), 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) which
are in full force and effect in accordance with their respective
terms;
29
25
(iv) A copy of the Offering Memorandum, with copies of the
Appraisals attached thereto, and specimen copies of the Class C
Certificates;
(v) Evidence that, on the Effective Date, the Class A
Certificates, the Class B Certificates, the Class C Certificates and
the Class D Certificates will receive long-term credit ratings from
Moody's of not lower than AA, A, BBB- and BB, respectively, and from
Standard & Poor's of not lower than A1, A3, Baa2 and Ba2,
respectively;
(vi) An executed copy of each document, instrument,
certificate and opinion delivered on or before the Closing Date
pursuant to the Class C Trust Agreement, the Intercreditor Agreement
and the other Operative Agreements (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);
(vii) 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;
(viii) 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,
30
26
only to the extent that Continental is obligated to provide such
information pursuant to Section 8.04(a) of the Trust Agreements 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
(ix) Such other documents, instruments, opinions and approvals
as the Liquidity Provider shall have reasonably requested.
(b) The following statements shall be true on and as of the
Effective Date:
(i) The representations and warranties contained in the
Participation Agreements (other than the Participation Agreements
with respect to any Postponed Notes) of each party thereto are true
and correct on and as of the Effective Date as though made on and as
of the Effective Date; and
(ii) No event has occurred and is continuing, or would result
from the entering into of this Agreement or the making of any
Advance, which constitutes a Liquidity Event of Default.
(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
31
27
Section 2.01 have been satisfied or waived (other than this Section
4.01(e)).
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, except in the case of a Final Advance, prior to the date of such
Borrowing, the Borrower shall have delivered a Notice of Borrowing which
conforms to the terms and conditions of this Agreement and has been completed as
may be required by the relevant form of the Notice of Borrowing for the type of
Advance requested.
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will, unless the Liquidity
Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay or
cause to be paid all amounts payable by it under this Agreement and the
other Operative Agreements and observe and perform in all material
respects the conditions, covenants and requirements applicable to it
contained in this Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity Provider with
reasonable promptness, such other information and data with respect to the
transactions contemplated by the Operative Agreements as from time to time
may be reasonably requested by the Liquidity Provider; and permit the
Liquidity Provider, upon reasonable notice, to inspect the Borrower's
books and records with respect to such transactions and to meet with
officers and employees of the Borrower to discuss such transactions.
(c) Certain Operative Agreements. Furnish to the Liquidity Provider
with reasonable promptness, such Operative Agreements entered into after
the date hereof as
32
28
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.
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, at its option, make a Final Advance
to the Borrower before 12:00 Noon (New York City time) on a Business Day in
accordance with Section 2.02(d) whereupon (i) the Liquidity Provider shall have
no further obligation to make Advances hereunder, (ii) all other outstanding
Advances shall be automatically converted into Final Advances for purposes of
determining the Applicable Liquidity Rate for interest payable thereon, and
(iii) subject to Sections 2.07 and 2.09 hereof, all Advances (including, without
limitation, any Downgrade Advance and Applied Downgrade Advance), any accrued
interest thereon and any other amounts outstanding hereunder shall become
immediately due and payable to the Liquidity Provider. Any payment in respect of
a Final Advance shall be made in the lawful money of the United States of
America, to the Borrower in immediately available funds, by wire transfer to
Wilmington Trust Company, One Rodney Square, 1100 N. Market Street, Wilmington,
Delaware 19890, ABA No. 031-100-092, Account No. 42216-1, Attention: Corporate
Trust Administration, Reference: Continental 1997-2 Class C Cash Collateral
Account (or to such other account as the Borrower may from time to time
designate to the Liquidity Provider for such purpose).
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure
33
29
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: KREDIETBANK N.V.
New York Branch
125 West 55th Street
New York, NY 10019
Attention: General Manager
Telephone: (212) 541-0600
Telecopy: (212) 956-5580
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
34
30
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 8.1 of the Participation Agreements. In addition,
the Borrower agrees to indemnify, protect, defend and hold harmless the
Liquidity Provider from, against and in respect of, and shall pay on demand, all
Expenses of any kind or nature whatsoever (other than any Expenses of the nature
described in Sections 3.01, 3.02 or 7.07 hereof or in the Fee Letter (regardless
of whether indemnified against pursuant to said Sections or in such Fee
Letter)), that may be imposed, incurred by or asserted against any Liquidity
Indemnitee, in any way relating to, resulting from, or arising out of or in
connection with any action, suit or proceeding by any third party against such
Liquidity Indemnitee and relating to this Agreement, the Fee Letter, the
Intercreditor Agreement or any Participation Agreement; provided, however, that
the Borrower shall not be required to indemnify, protect, defend and hold
harmless any Liquidity Indemnitee in respect of any Expense of such Liquidity
Indemnitee to the extent such Expense is (i) attributable to the gross
negligence or willful misconduct of such Liquidity Indemnitee or any other
Liquidity Indemnitee, (ii) ordinary and usual operating overhead expense or
(iii) attributable to the failure by such Liquidity Indemnitee or any other
Liquidity Indemnitee to perform or observe any agreement, covenant or condition
on its part to be performed or observed in this Agreement, the Intercreditor
Agreement, the Fee Letter or any other Operative Agreement to which it is a
party. The indemnities contained in such Section 8.1, and the provisions of
35
31
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 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
36
32
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 and security 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 granting of participations by the
Liquidity Provider, however, will relieve the Liquidity Provider of its
obligations hereunder. In connection with any participation or any proposed
participation, the Liquidity Provider may disclose to the participant or the
37
33
proposed participant any information that the Borrower is required to deliver or
to disclose to the Liquidity Provider pursuant to this Agreement. The Borrower
acknowledges and agrees that the Liquidity Provider's source of funds may derive
in part from its participants (other than Continental). Accordingly, references
in this Agreement and the other Operative Agreements to determinations, reserve
and capital adequacy requirements, increased costs, reduced receipts, additional
amounts due pursuant to Section 3.03 and the like as they pertain to the
Liquidity Provider shall be deemed also to include those of each of its
participants (subject, in each case, to the maximum amount that would have been
incurred by or attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider
sells any participation in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such participation,
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld by the
Borrower or the Liquidity Provider 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 of 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
38
34
the Borrower has received forms or other documents reasonably satisfactory to it
(and required by applicable law) indicating that payments hereunder are not
subject to United States federal withholding tax, the Borrower will withhold
taxes as required by law from such payments at the applicable statutory rate.
(c) Notwithstanding the other provisions of this Section 7.08, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.09. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity. (a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative
Agreement, or for recognition and enforcement of any judgment in
respect hereof or thereof, to the nonexclusive general jurisdiction
of the courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and the
appellate courts from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection
39
35
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) if such party does not maintain an office for the
transaction of its business in New York, agrees that service of
process in any such action or proceeding may be effected by mailing
a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to each party hereto at its
address set forth in Section 7.02 hereof, or at such other address
of which the Liquidity Provider shall have been notified pursuant
thereto; and
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it may have
from the jurisdiction of the courts of the United States or of any State and
waives any immunity any of its properties located in the United States may have
from attachment or execution upon a judgement entered by any such court under
the United States Foreign Sovereign Immunities Act of 1976 or any similar
successor legislation.
40
36
Section 7.12. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13. Entirety. This Agreement, the Intercreditor Agreement
and the other Operative Agreements to which the Liquidity Provider is a party
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior understandings and agreements of
such parties.
Section 7.14. Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE
LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
41
37
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first set forth above.
WILMINGTON TRUST COMPANY, not in
its individual capacity but
solely as Subordination Agent,
as agent and trustee for the
Class C Trust, as Borrower
By:
---------------------------------
Name:
Title:
KREDIETBANK N.V., acting through
its New York branch,
as Liquidity Provider
By:
---------------------------------
Name:
Title:
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 KREDIETBANK N.V., acting through
its New York branch (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1997-2C) dated as of June 25, 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 for the
payment of the interest on the Class C Certificates which was payable on
____________, ____ (the "Distribution Date") in accordance with the terms
and provisions of the Class C Trust Agreement and the Class C Certificates
and has not been paid pursuant to clause seventh of Section 3.2 of the
Intercreditor Agreement or clause ninth 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
interest which was due and payable on the Class C Certificates on the
Distribution Date, (ii) does not include any amount with respect to the
payment of principal of, or premium on, the Class A Certificates, the
Class B Certificates, the Class C Certificates or the Class D Certificates
or interest on the Class A Certificates, the Class B Certificates or the
Class D Certificates, (iii) was computed in accordance with the provisions
of the Class C Certificates, the Class C Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), (iv) does not exceed the Maximum Available Commitment on the
date hereof and (v) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
43
I-2
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.6(b) of the Intercreditor Agreement, (b) no portion
of such amount shall be applied by the Borrower for any other purpose and
(c) no portion of such amount until so applied shall be commingled with
other funds held by the Borrower.
(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, 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.
44
I-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:
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
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to KREDIETBANK N.V.,
acting through its New York branch (the "Liquidity Provider"), with reference to
the Revolving Credit Agreement (1997-2C) dated as of June 25, 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 Class C Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading
of the short-term unsecured debt rating of the Liquidity Provider issued
by either Rating Agency below the Threshold Rating, which Advance is
requested to be made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the Class C
Cash Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of the principal of, or premium on, the Class C Certificates,
or principal of, or interest or premium on, the Class A Certificates, the
Class B Certificates or the Class D Certificates, (iii) was computed in
accordance with the provisions of the Class C Certificates, the Class C
Trust Agreement and the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I), and (iv) has not been and
is not the subject of a prior or contemporaneous Notice of Borrowing under
the Liquidity Agreement.
47
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 Class C
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(c) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
(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 III to
Revolving Credit Agreement
NOTICE OF AUTOMATIC REDUCTION OR INCREASE OF COMMITMENT
[Date]
Ladies and Gentlemen:
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby notifies Kredietbank N.V., acting
through its New York branch (the "Liquidity Provider"), with reference to the
Revolving Credit Agreement dated as of June 25, 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, pursuant to Section 2.04(a) of the Liquidity Agreement, the
Commitment has been automatically reduced or increased to $_________.
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 Trust, as Borrower
By:
---------------------------------
Name:
Title:
50
Annex IV to
Revolving Credit Agreement
NOTICE OF CONVERSION TO FINAL ADVANCE
[Date]
WILMINGTON TRUST COMPANY
as Subordination Agent, as Borrower
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0011
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of June 25, 1997, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Continental
Airlines Pass Through Trust, 1997-2C, as Borrower, and Kredietbank N.V., acting
through its New York branch (the "Liquidity Agreement")
- --------------------------------------------------------------------------------
Ladies and Gentlemen:
You are hereby notified that pursuant to Section 2.06 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 convert the existing Downgrade Advance
to a Final Advance.
51
IV-2
THIS NOTICE IS THE "NOTICE OF CONVERSION TO FINAL ADVANCE" PROVIDED
FOR UNDER THE LIQUIDITY AGREEMENT.
Very truly yours,
KREDIETBANK N.V.,
NEW YORK BRANCH
as Liquidity Provider
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
cc: Wilmington Trust Company,
as Class C Trustee
52
Annex V to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of June 25, 1997, between
Wilmington Trust Company, as Subordination Agent, as agent and trustee for the
Continental Airlines Pass Through Trust, 1997-2C, as Borrower, and Kredietbank
N.V., acting through its New York branch (the "Liquidity Agreement")
- --------------------------------------------------------------------------------
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
------------------------------
[Name of Transferee]
------------------------------
[Address of Transferee]
all rights and obligations of the undersigned as Borrower under the Liquidity
Agreement referred to above. The transferee has succeeded the undersigned as
Subordination Agent under the Intercreditor Agreement referred to in the first
paragraph of the Liquidity Agreement, pursuant to the terms of Section 8.1 of
the Intercreditor Agreement.
By this transfer, all rights of the undersigned as Borrower under
the Liquidity Agreement are transferred to the transferee and the transferee
shall hereafter have the sole rights and obligations as Borrower thereunder. The
undersigned shall pay any costs and expenses of such transfer, including, but
not limited to, transfer taxes or governmental charges.
53
V-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 4.12
EXECUTION COPY
- --------------------------------------------------------------------------------
INTERCREDITOR AGREEMENT
Dated as of
June 25, 1997
AMONG
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee under the
Continental Airlines Pass Through Trust Series 1997-2A,
Continental Airlines Pass Through Trust Series 1997-2B,
Continental Airlines Pass Through Trust Series 1997-2C,
and
Continental Airlines Pass Through Trust Series 1997-2D
KREDIETBANK N.V., NEW YORK BRANCH
as Class A Liquidity Provider,
as Class B Liquidity Provider and
as Class C Liquidity Provider
AND
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as expressly set forth herein but
solely as Subordination Agent and Trustee
- --------------------------------------------------------------------------------
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................................................. 20
SECTION 2.2. Trust Accounts................................................ 20
SECTION 2.3. Deposits to the Collection Account and Special Payments
Account....................................................... 22
SECTION 2.4. Distributions of Special Payments............................. 22
SECTION 2.5. Designated Representatives.................................... 25
SECTION 2.6. Controlling Party............................................. 25
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED
SECTION 3.1. Written Notice of Distribution................................ 27
SECTION 3.2. Distribution of Amounts on Deposit in the Collection Account.. 29
SECTION 3.3. Distribution of Amounts on Deposit Following a Triggering
Event......................................................... 30
SECTION 3.4. Certain Payments.............................................. 32
SECTION 3.5. Payments to the Trustees and the Liquidity Providers.......... 33
SECTION 3.6. Liquidity Facilities.......................................... 33
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1. Directions from the Controlling Party......................... 39
SECTION 4.2. Remedies Cumulative........................................... 40
SECTION 4.3. Discontinuance of Proceedings................................. 41
SECTION 4.4. Right of Certificateholders to Receive Payments Not to Be
Impaired...................................................... 41
SECTION 4.5. Undertaking for Costs......................................... 41
i
3
Page
----
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF TRUSTEE
SECTION 5.1. Notice of Indenture Default or Triggering Event............... 41
SECTION 5.2. Indemnification............................................... 42
SECTION 5.3. No Duties Except as Specified in Intercreditor Agreement...... 42
SECTION 5.4. Notice from the Liquidity Providers and Trustees.............. 42
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1. Authorization; Acceptance of Trusts and Duties................ 43
SECTION 6.2. Absence of Duties............................................. 43
SECTION 6.3. No Representations or Warranties as to Documents.............. 43
SECTION 6.4. No Segregation of Monies; No Interest......................... 43
SECTION 6.5. Reliance; Agents; Advice of Counsel........................... 44
SECTION 6.6. Capacity in Which Acting...................................... 44
SECTION 6.7. Compensation.................................................. 44
SECTION 6.8. May Become Certificateholder.................................. 44
SECTION 6.9. Subordination Agent Required; Eligibility..................... 44
SECTION 6.10. Money to Be Held in Trust..................................... 45
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1. Scope of Indemnification...................................... 45
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1. Replacement of Subordination Agent; Appointment of Successor.. 45
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1. Amendments, Waivers, etc...................................... 46
SECTION 9.2. Subordination Agent Protected................................. 48
SECTION 9.3. Effect of Supplemental Agreements............................. 48
SECTION 9.4. Notice to Rating Agencies..................................... 48
ii
4
Page
----
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Termination of Intercreditor Agreement........................ 48
SECTION 10.2. Intercreditor Agreement for Benefit of Trustees, Liquidity
Providers and Subordination Agent............................. 48
SECTION 10.3. Notices....................................................... 49
SECTION 10.4. Severability.................................................. 49
SECTION 10.5. No Oral Modifications or Continuing Waivers................... 50
SECTION 10.6. Successors and Assigns........................................ 50
SECTION 10.7. Headings...................................................... 50
SECTION 10.8. Counterpart Form.............................................. 50
SECTION 10.9. Subordination................................................. 50
SECTION 10.10. GOVERNING LAW................................................. 51
SECTION 10.11 Submission to Jurisdiction; Waiver of Jury Trial; Waiver of
Immunity...................................................... 51
iii
5
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of June 25, 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); KREDIETBANK N.V.,
acting through its New York branch, as Class A Liquidity Provider, as Class B
Liquidity Provider and as Class C Liquidity Provider; and WILMINGTON TRUST
COMPANY, not in its individual capacity except as expressly set forth herein,
but solely as Subordination Agent and trustee hereunder (in such capacity,
together with any successor appointed pursuant to Article VIII hereof, the
"Subordination Agent").
WHEREAS, all capitalized terms used herein shall have the respective
meanings referred to in Article I hereof;
WHEREAS, pursuant to each Indenture, Continental proposes to issue
on a recourse basis four series of Equipment Notes to finance the purchase of
the Aircraft;
WHEREAS, pursuant to the Participation Agreements, each Trust will
acquire Equipment Notes having an interest rate equal to the interest rate
applicable to the Certificates to be issued by such Trust;
WHEREAS, pursuant to each Trust Agreement, the Trust created thereby
proposes to issue a single class of Certificates (a "Class") bearing the
interest rate and having the final distribution date described in such Trust
Agreement on the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the 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, the Liquidity Provider proposes to enter into three
separate revolving credit agreements (each, a "Liquidity Facility") with the
Subordination Agent, as agent for the Trustee of each Trust (other than the
Class D 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 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 Provider, by entering into
this Agreement, hereby acknowledge and agree to such terms of subordination and
the other provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
6
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.
"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 (after giving effect to any
Escrowed Funds Interest Distribution to be made on such Current Distribution
Date with respect to such Certificates) and (y) the greater of:
(A) the difference between (x) the Pool Balance of such Certificates
as of the immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, the original aggregate
face amount of the Certificates of such Trust), less (if applicable) the
aggregate amount of Escrowed Funds for such Class of Certificates as of
such immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, as of the Closing Date)
thereafter distributed to the Certificateholders of such Class (instead of
being used to purchase
2
7
Postponed Notes) pursuant to the Trust Agreement for such Class (excluding
the interest component of any such distribution), and (y) the Pool Balance
of such Certificates as of the Current Distribution Date calculated on the
basis that (i) the principal of the Non-Performing Equipment Notes held in
such Trust has been paid in full and such payments have been distributed
to the holders of such Certificates, (ii) the principal of the Performing
Equipment Notes held in such Trust has been paid when due (but without
giving effect to any 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 has been
paid in full and such payments have been distributed to the holders of
such Certificates, and
(B) the amount of the excess, if any, of (i) the Pool Balance of
such Class of Certificates as of the immediately preceding Distribution
Date (or, if the Current Distribution Date is the first Distribution Date,
the original aggregate face amount of the Certificates of such Trust),
less (if applicable) the aggregate amount of Escrowed Funds for such Class
of Certificates as of such immediately preceding Distribution Date (or, if
the Current Distribution Date is the first Distribution Date, as of the
Closing Date) thereafter distributed to the Certificateholders of such
Class (instead of being used to purchase Postponed Notes) pursuant to the
Trust Agreement for such Class (excluding the interest component of any
such distribution), 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 voting securities or by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Aggregate LTV Collateral Amount" for any Class of Certificates for
any Distribution Date means the sum of the applicable LTV Collateral Amounts for
each Aircraft, minus the Pool Balance for each Class of Certificates, if any,
senior to such Class, after giving effect to any distribution of principal on
such Distribution Date on such senior Class or Classes, but in no event in an
amount less than zero.
3
8
"Aircraft" means, with respect to each Indenture, the "Aircraft"
referred to therein.
"Appraisal" means a fair market value appraisal (which may be a
"desktop" appraisal) performed by any Appraiser or any other nationally
recognized appraiser on the basis of an arm's-length transaction between an
informed and willing purchaser under no compulsion to buy and an informed and
willing seller under no compulsion to sell and both having knowledge of all
relevant facts.
"Appraised Current Market Value" of any Aircraft means the lower of
the average and the median of the three most recent Appraisals of such Aircraft.
"Appraisers" means Aircraft Information Services, Inc., BK
Associates, Inc. and Morten Beyer & Agnew.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in Houston,
Texas, New York, New York, or, so long as any Certificate is outstanding, the
city and state in which any Trustee, the Subordination Agent or any Loan Trustee
maintains its Corporate Trust Office or receives and disburses funds, and that,
solely with respect to draws under any Liquidity Facility, also is a "Business
Day" as defined in such Liquidity Facility.
"Cash Collateral Account" means the Class A Cash Collateral
Account, the Class B Cash Collateral Account or the Class C Cash Collateral
Account, as applicable.
"Certificate" means a Class A Certificate, a Class B Certificate, a
Class C Certificate or a Class D Certificate, as applicable.
"Certificateholder" means any holder of one or more Certificates.
"Class" has the meaning assigned to such term in the preliminary
statements to this Agreement.
"Class A Cash Collateral Account" means an Eligible Deposit Account
in the name of the Subordination Agent maintained at an Eligible Institution,
which shall be the Subordination Agent if it shall so qualify, into which all
amounts drawn under the Class A Liquidity Facility pursuant to Section 3.6(c),
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
4
9
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 Facility" means, initially, the Revolving Credit
Agreement dated as of the date hereof, between the Subordination Agent, as agent
and trustee for the Class A Trustee, and the Class A Liquidity Provider, and,
from and after the replacement of such Agreement pursuant hereto, the
Replacement Liquidity Facility therefor, if any, in each case as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Class A Liquidity Provider" means Kredietbank N.V., acting through
its New York branch, together with any Replacement Liquidity Provider which has
issued a Replacement Liquidity Facility to replace the Class A Liquidity
Facility pursuant to Section 3.6(e).
"Class A Trust" means the Continental Airlines Pass Through Trust
Series 1997-2A created and administered pursuant to the Class A Trust Agreement.
"Class A Trust Agreement" means the Pass Through Trust Agreement
dated as of the date hereof, between Continental and the Class A Trustee,
governing the creation and administration of the Continental Airlines Pass
Through Trust Series 1997-2A and the issuance of the Class A Certificates, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class A Trustee" means WTC, not in its individual capacity except
as expressly set forth in the Class A Trust Agreement, but solely as trustee
under the Class A Trust Agreement, together with any successor trustee appointed
pursuant thereto.
"Class B Cash Collateral Account" means an Eligible Deposit Account
in the name of the Subordination Agent maintained at an Eligible Institution,
which shall be the Subordination Agent if it shall so qualify, into which all
amounts drawn under the Class B Liquidity Facility pursuant to Section 3.6(c),
3.6(d) or 3.6(i) shall be deposited.
"Class B Certificateholder" means, at any time, any holder of one or
more Class B Certificates.
"Class B Certificates" means the certificates issued by the Class B
Trust, substantially in the form of Exhibit A to the Class B Trust Agreement,
and authenticated by the Class B Trustee, representing fractional undivided
interests in the Class B Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class B Trust Agreement
and/or the Registration Rights Agreement (including, without limitation, any
Exchange Certificates (as defined in the Class B Trust Agreement)).
"Class B Liquidity Facility" means, initially, the Revolving Credit
Agreement dated as of the date hereof, between the Subordination Agent, as agent
and trustee for the Class B Trustee, and the Class B Liquidity Provider, and,
from and after the replacement of such Agreement pursuant hereto, the
Replacement Liquidity Facility therefor, if any, in each case as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
5
10
"Class B Liquidity Provider" means Kredietbank N.V., acting through
its New York branch, together with any Replacement Liquidity Provider which has
issued a Replacement Liquidity Facility to replace the Class B Liquidity
Facility pursuant to Section 3.6(e).
"Class B Trust" means the Continental Airlines Pass Through Trust
Series 1997-2B created and administered pursuant to the Class B Trust Agreement.
"Class B Trust Agreement" means the Pass Through Trust Agreement
dated as of the date hereof, between Continental and the Class B Trustee,
governing the creation and administration of the Continental Airlines Pass
Through Trust Series 1997-2B and the issuance of the Class B Certificates, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class B Trustee" means WTC, not in its individual capacity except
as expressly set forth in the Class B Trust Agreement, but solely as trustee
under the Class B Trust Agreement, together with any successor trustee appointed
pursuant thereto.
"Class C Cash Collateral Account" means an Eligible Deposit Account
in the name of the Subordination Agent and maintained at an Eligible
Institution, which shall be the Subordination Agent if it shall so qualify, into
which all amounts drawn under the Class C Liquidity Facility pursuant to Section
3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"Class C Certificateholder" means, at any time, any holder of one
or more Class C Certificates.
"Class C Certificates" means the certificates issued by the Class C
Trust, substantially in the form of Exhibit A to the Class C Trust Agreement,
and authenticated by the Class C Trustee, representing fractional undivided
interests in the Class C Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class C Trust Agreement
and/or the Registration Rights Agreement (including, without limitation, any
Exchange Certificates (as defined in the Class C Trust Agreement)).
"Class C Liquidity Facility" means, initially, the Revolving Credit
Agreement dated as of the date hereof, between the Subordination Agent, as agent
and trustee for the Class C Trustee, and the Class C Liquidity Provider, and,
from and after the replacement of such Agreement pursuant hereto, the
Replacement Liquidity Facility therefor, if any, in each case as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Class C Liquidity Provider" means Kredietbank N.V., acting through
its New York branch, together with any Replacement Liquidity Provider which has
issued a Replacement Liquidity Facility to replace the Class C Liquidity
Facility pursuant to Section 3.6(e).
"Class C Trust" means the Continental Airlines Pass Through Trust
Series 1997-2C created and administered pursuant to the Class C Trust Agreement.
6
11
"Class C Trust Agreement" means the Pass Through Trust Agreement
dated as of the date hereof, between Continental and the Class C Trustee,
governing the creation and administration of the Continental Airlines Pass
Through Trust Series 1997-2C and the issuance of the Class C Certificates, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class C Trustee" means WTC, not in its individual capacity except
as expressly set forth in the Class C Trust Agreement, but solely as trustee
under the Class C Trust Agreement, together with any successor trustee appointed
pursuant thereto.
"Class D Certificateholder" means, at any time, any holder of one or
more Class D Certificates.
"Class D Certificates" means the certificates issued by the Class D
Trust, substantially in the form of Exhibit A to the Class D Trust Agreement,
and authenticated by the Class D Trustee, representing fractional undivided
interests in the Class D Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class D Trust Agreement
and/or the Registration Rights Agreement (including, without limitation, any
Exchange Certificates (as defined in the Class D Trust Agreement)).
"Class D Trust" means the Continental Airlines Pass Through Trust
Series 1997-2D created and administered pursuant to the Class D Trust Agreement.
"Class D Trust Agreement" means the Pass Through Trust Agreement
dated as of the date hereof, between Continental and the Class D Trustee,
governing the creation and administration of the Continental Airlines Pass
Through Trust Series 1997-2D and the issuance of the Class D Certificates, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class D Trustee" means WTC, not in its individual capacity except
as expressly set forth in the Class D Trust Agreement, but solely as trustee
under the Class D Trust Agreement, together with any successor trustee appointed
pursuant thereto.
"Closing Date" means June 25, 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.
7
12
"Continental Bankruptcy Event" means the occurrence and
continuation of any of the following:
(a) Continental shall consent to the appointment of or the taking of
possession by a receiver, trustee or liquidator of itself or of a
substantial part of its property, or Continental shall admit in writing
its inability to pay its debts generally as they come due, or does not pay
its debts generally as they become due or shall make a general assignment
for the benefit of creditors, or Continental shall file a voluntary
petition in bankruptcy or a voluntary petition or an answer seeking
reorganization, liquidation or other relief in a case under any bankruptcy
laws or other insolvency laws (as in effect at such time) or an answer
admitting the material allegations of a petition filed against Continental
in any such case, or Continental shall seek relief by voluntary petition,
answer or consent, under the provisions of any other bankruptcy or other
similar law providing for the reorganization or winding-up of corporations
(as in effect at such time) or Continental shall seek an agreement,
composition, extension or adjustment with its creditors under such laws,
or Continental's board of directors shall adopt a resolution authorizing
corporate action in furtherance of any of the foregoing; or
(b) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of Continental, a
receiver, trustee or liquidator of Continental or of any substantial part
of its property, or any substantial part of the property of Continental
shall be sequestered, or granting any other relief in respect of
Continental as a debtor under any bankruptcy laws or other insolvency laws
(as in effect at such time), and any such order, judgment or decree of
appointment or sequestration shall remain in force undismissed, unstayed
and unvacated for a period of 60 days after the date of entry thereof; or
(c) a petition against Continental in a case under any bankruptcy
laws or other insolvency laws (as in effect at such time) is filed and not
withdrawn or dismissed within 60 days thereafter, or if, under the
provisions of any law providing for reorganization or winding-up of
corporations which may apply to Continental, any court of competent
jurisdiction assumes jurisdiction, custody or control of Continental or of
any substantial part of its property and such jurisdiction, custody or
control remains in force unrelinquished, unstayed and unterminated for a
period of 60 days.
"Continental Provisions" has the meaning assigned to such term in
Section 9.1(a).
"Controlling Party" means the Person entitled to act as such
pursuant to the terms of Section 2.6.
"Corporate Trust Office" means, with respect to any Trustee, the
Subordination Agent or any Loan Trustee, the office of such Person in the city
at which, at any particular time, its corporate trust business shall be
principally administered.
8
13
"Current Distribution Date" means a Distribution Date specified as a
reference date for calculating the Expected Distributions or the Adjusted
Expected Distributions with respect to the Certificates of any Trust as of such
Distribution Date.
"Designated Representatives" means the Subordination Agent
Representatives, the Trustee Representatives and the LP Representatives
identified under Section 2.5.
"Distribution Date" means a Regular Distribution Date or a
Special Distribution Date.
"Dollars" or "$" means United States dollars.
"Downgrade Drawing" has the meaning assigned to such term in
Section 3.6(c).
"Downgraded Facility" has the meaning assigned to such term in
Section 3.6(c).
"Drawing" means an Interest Drawing, a Final Drawing, a
Non-Extension Drawing or a Downgrade Drawing, as the case may be.
"Eligible Deposit Account" means either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States of America or any one of the states thereof or the District
of Columbia (or any U.S. branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as any
of the securities of such depository institution has a long-term unsecured debt
rating from each Rating Agency of at least A-3 or its equivalent. An Eligible
Deposit Account may be maintained with a Liquidity Provider so long as such
Liquidity Provider is an Eligible Institution; provided that such Liquidity
Provider shall have waived all rights of set-off and counterclaim with respect
to such account; and provided further that no Cash Collateral Account may be
maintained with a Liquidity Provider at any time Continental holds any
participation in the related Liquidity Facility unless written confirmation
shall have been received from each Rating Agency prior to such time to the
effect that such maintenance of the Cash Collateral Account with the Liquidity
Provider will not result in a withdrawal or downgrading of the ratings of the
Certificates.
"Eligible Institution" means (a) the corporate trust department of
the Subordination Agent or any Trustee, as applicable, or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), which has a long-term unsecured debt rating from each Rating
Agency of at least A-3 or its equivalent; provided that a Liquidity Provider
shall not qualify as an Eligible Institution at any time Continental holds any
participation in the related Liquidity Facility unless written confirmation
shall have been received from each Rating Agency to the effect that such
Liquidity Provider's status as an Eligible Institution will not result in a
withdrawal or downgrading of the ratings of the Certificates.
"Eligible Investments" means (a) investments in obligations of, or
guaranteed by, the United States Government having maturities no later than 90
days following the date of such
9
14
investment, (b) investments in open market commercial paper of any corporation
incorporated under the laws of the United States of America or any state thereof
with a short-term unsecured debt rating issued by Moody's and S&P of at least
A-1 and P-1, respectively, having maturities no later than 90 days following the
date of such investment or (c) investments in negotiable certificates of
deposit, time deposits, banker's acceptances, commercial paper or other direct
obligations of, or obligations guaranteed by, commercial banks organized under
the laws of the United States or of any political subdivision thereof (or any
U.S. branch of a foreign bank) with issuer ratings of at least B/C by Thomson
Bankwatch, having maturities no later than 90 days following the date of such
investment; provided, however, that (x) all Eligible Investments that are bank
obligations shall be denominated in U.S. dollars; and (y) the aggregate amount
of Eligible Investments at any one time that are bank obligations issued by any
one bank shall not be in excess of 5% of such bank's capital surplus; provided
further that (1) any investment of the types described in clauses (a), (b) and
(c) above may be made through a repurchase agreement in commercially reasonable
form with a bank or other financial institution qualifying as an Eligible
Institution so long as such investment is held by a third party custodian also
qualifying as an Eligible Institution, and (2) all such investments set forth in
(a), (b) and (c) above mature no later than the Business Day immediately
preceding the next Regular Distribution Date; provided further, however, that in
the case of any Eligible Investment issued by a domestic branch of a foreign
bank, the income from such investment shall be from sources within the United
States for purposes of the Code. Notwithstanding the foregoing, no investment of
the types described in clauses (b) or (c) above which is issued or guaranteed by
a Liquidity Provider or Continental or any of their respective Affiliates, and
no investment in the obligations of any one bank in excess of $10,000,000, shall
be an Eligible Investment at any time Continental holds any participation in the
related Liquidity Facility unless written confirmation shall have been received
from each Rating Agency that the making of such investment will not result in a
withdrawal or downgrading of the ratings of the Certificates.
"Equipment Notes" means, at any time, the Series A Equipment Notes,
the Series B Equipment Notes, Series C Equipment Notes and the Series D
Equipment Notes, collectively, and in each case, any Equipment Notes issued in
exchange therefor or replacement thereof pursuant to the terms of the
Indentures.
"Escrowed Funds", with respect to the Certificates of any Class, has
the meaning assigned to such term in the Trust Agreement for such Class.
"Escrowed Funds Interest Distribution" means, with respect the
Certificates of any Class, the interest component of any distribution to the
Certificateholders of such Class on account of Escrowed Funds for such Class of
Certificates, earnings thereon or payments by Continental pursuant to Section
2.01 of the Trust Agreement for such Class of Certificates.
"Expected Distributions" means, with respect to the Certificates of
any Trust on any Current Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates (after giving effect to any Escrowed Funds
Interest Distribution to be made on such Current Distribution Date with respect
to such Certificates) and (y) the difference between (A) the Pool Balance of
such Certificates as of the immediately preceding Distribution Date (or, if the
Current
10
15
Distribution Date is the first Distribution Date, the original aggregate face
amount of the Certificates of such Trust), less (if applicable) the aggregate
amount of Escrowed Funds for such Class of Certificates as of such immediately
preceding Distribution Date (or, if the Current Distribution Date is the first
Distribution Date, as of the Closing Date) thereafter distributed to the
Certificateholders of such Class (instead of being used to purchase Postponed
Notes) pursuant to the Trust Agreement for such Class (excluding the interest
component of any such distribution), 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 which have been sold pursuant to the terms hereof has been paid in full
and such payments have been distributed to the holders of such Certificates. For
purposes of calculating Expected Distributions with respect to the Certificates
of any Trust, any premium paid on the Equipment Notes held in such Trust which
has not been distributed to the Certificateholders of such Trust (other than
such premium or a portion thereof applied to the payment of interest on the
Certificates of such Trust or the reduction of the Pool Balance of such Trust)
shall be added to the amount of such Expected Distributions.
"Expiry Date" with respect to any Liquidity Facility, shall have the
meaning set forth in such Liquidity Facility.
"Fee Letter" means the Fee Letter dated June 25, 1997 between
Kredietbank N.V., acting through its New York branch, and the Subordination
Agent with respect to the Liquidity Facilities, 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 and (y) the Pool Balance of
such Certificates as of the immediately preceding Distribution Date. For
purposes of calculating Final Distributions with respect to the Certificates of
any Trust, any premium paid on the Equipment Notes held in such Trust which has
not been distributed to the Certificateholders of such Trust (other than such
premium or a portion thereof applied to the payment of interest on the
Certificates of such Trust or the reduction of the Pool Balance of such Trust)
shall be added to the amount of such Final Distributions.
"Final Maturity Date" means (i) with respect to the Class A
Certificates, December 30, 2008, (ii) with respect to the Class B Certificates,
December 30, 2006, (iii) with respect to the Class C Certificates, December 30,
2005, and (iv) with respect to the Class D Certificates, June 30, 2001.
"Indenture" means each of the Trust Indentures entered into by the
Loan Trustee and Continental, initially with respect to the aircraft set forth
on Schedule I hereto, as the same
11
16
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Indenture Default" means, with respect to any Indenture, any Event
of Default (as such term is defined in such Indenture) thereunder.
"Initial Purchasers" means Credit Suisse First Boston Corporation
and Morgan Stanley & Co. Incorporated.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a).
"Interest Payment Date" means, with respect to any Liquidity
Facility, each date on which interest is due and payable under Section 3.07(c)
or (d) of such Liquidity Facility on a Downgrade Drawing, Non-Extension Drawing
or Final Drawing thereunder.
"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.
"Lien" means any mortgage, pledge, lien, charge, claim, disposition
of title, encumbrance, lease, sublease, sub-sublease or security interest of any
kind, including, without limitation, any thereof arising under any conditional
sales or other title retention agreement.
"Liquidity Event of Default," with respect to any Liquidity
Facility, has the meaning assigned to such term in such Liquidity Facility.
"Liquidity Expenses" means all Liquidity Obligations other than (i)
the principal amount of any Drawings under the Liquidity Facilities and (ii) any
interest accrued on any Liquidity Obligations.
"Liquidity Facility" means, at any time, the Class A Liquidity
Facility, the Class B Liquidity Facility, or the Class C Liquidity Facility, as
applicable.
"Liquidity Obligations" means all principal, interest, fees and
other amounts owing to the Liquidity Providers under the Liquidity Facilities,
Section 8.1 of the Participation Agreements or the Fee Letter.
"Liquidity Provider" means, at any time, the Class A Liquidity
Provider, the Class B Liquidity Provider, or the Class C Liquidity Provider, as
applicable.
"Loan Trustee" means, with respect to any Indenture or the Second
Mortgage, the loan trustee thereunder.
"LP Incumbency Certificate" has the meaning assigned to such term
in Section 2.5(c).
"LP Representatives" has the meaning assigned to such term in
Section 2.5(c).
12
17
"LTV Appraisals" has the meaning assigned to such term in Section
4.1(a).
"LTV Collateral Amount" of any Aircraft for any Class of
Certificates means, as of any Distribution Date, the lesser of (i) the LTV Ratio
for such Class of Certificates multiplied by the Appraised Current Market Value
of such Aircraft (or with respect to any such Aircraft which has suffered an
Event of Loss under and as defined in the relevant Indenture, the amount of the
insurance proceeds paid to the Loan Trustee under the related Indenture and/or
under the Second Mortgage 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 41.00%, for the Class
B Certificates 55.00%, for the Class C Certificates 69.90% and for the Class D
Certificates, 84.89%.
"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).
"Minimum Sale Price" means, with respect to any Aircraft or the
Equipment Notes issued in respect of such Aircraft, at any time, the lesser of
(a) 75% of the Appraised Current Market Value of such Aircraft and (b) the
aggregate outstanding principal amount of such Equipment Notes, plus accrued and
unpaid interest thereon.
"Moody's" means Moody's Investors Service, Inc.
"Non-Controlling Party" means, at any time, any Trustee or Liquidity
Provider which is not the Controlling Party at such time.
"Non-Extended Facility" has the meaning assigned to such term in
Section 3.6(d).
"Non-Extension Drawing" has the meaning assigned to such term in
Section 3.6(d).
"Non-Performing Equipment Note" means an Equipment Note issued
pursuant to an Indenture that is not a Performing Equipment Note.
13
18
"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 Second Mortgage, the Trust Agreements, the
Purchase Agreement, the Participation Agreements, the Fee Letter, the Equipment
Notes and the Certificates, together with all exhibits and schedules included
with any of the foregoing.
"Outstanding" means, when used with respect to each Class of
Certificates, as of the date of determination, all Certificates of such Class
theretofore authenticated and delivered under the related Trust Agreement,
except:
(i) Certificates of such Class theretofore canceled by the Registrar
(as defined in such Trust Agreement) or delivered to the Trustee
thereunder or such Registrar for cancellation;
(ii) Certificates of such Class for which money in the full amount
required to make the final distribution with respect to such Certificates
pursuant to Section 11.01 of such Trust Agreement has been theretofore
deposited with the related Trustee in trust for the holders of such
Certificates as provided in Section 4.01 of such Trust Agreement pending
distribution of such money to such Certificateholders pursuant to such
final distribution payment; and
(iii) Certificates of such Class in exchange for or in lieu of which
other Certificates have been authenticated and delivered pursuant to such
Trust Agreement;
provided, however, that in determining whether the holders of the requisite
Outstanding amount of such Certificates have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, any Certificates
owned by Continental or any of its Affiliates shall be disregarded and deemed
not to be Outstanding, except that, in determining whether such Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Certificates that such Trustee knows to be so
owned shall be so disregarded. Certificates so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the applicable Trustee the pledgee's right so to act with
respect to such Certificates and that the pledgee is not Continental or any of
its Affiliates.
"Overdue Scheduled Payment" means any Scheduled Payment which is not
in fact received by the Subordination Agent within five days after the Scheduled
Payment Date relating thereto.
"Participation Agreement" mean, with respect to each Indenture, the
"Participation Agreement" referred to therein.
"Performing Equipment Note" means an Equipment Note issued pursuant
to an Indenture with respect to which no payment default has occurred and is
continuing; provided that
14
19
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 Indenture related to such
Equipment Note and (ii) any payment default occurring after the date of the
order of relief in such proceeding shall not be taken into consideration if such
payment default is cured under Section 1110(a)(1)(B) of the Bankruptcy Code
before the later of 30 days after the date of such default or the expiration of
the Section 1110 Period.
"Performing Note Deficiency" means any time that less than 65% of
the then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
"Person" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint-stock company, trust,
trustee, unincorporated organization or government or any agency or political
subdivision thereof.
"Pool Balance" means, with respect to each Trust or the Certificates
issued by any Trust, as of any date, (i) the original aggregate face amount of
the Certificates of such Trust less (ii) the aggregate amount of all payments
made in respect of the Certificates of such Trust other than payments made in
respect of interest or premium thereon or reimbursement of any costs and
expenses in connection therewith. The Pool Balance for each Trust or 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.
"Postponed Notes", with respect to the Certificates of any Class,
has the meaning assigned to such term in the Trust Agreement for such Class.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"PTC Event of Default" means, with respect to each Trust Agreement,
the failure to pay within 10 Business Days of the due date thereof: (i) the
outstanding Pool Balance of the applicable Class of Certificates on the Final
Maturity Date for such Class or (ii) interest due on such Certificates on any
Distribution Date (unless, in the case of the Class A, Class B or Class C
Certificates, the Subordination Agent shall have made an Interest Drawing 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 as of June 17,
1997, among the Initial Purchasers and Continental, relating to the purchase of
the Certificates by the
15
20
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 June 30 and December 30,
commencing on December 30, 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.
"Replacement Liquidity Facility" means, for any Liquidity Facility,
one or more irrevocable revolving credit agreements issued by one or more
Persons 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 an aggregate 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 for such Liquidity Facility and issued by a Person(s) having short-term
unsecured debt ratings issued by each Rating Agency which are equal to or higher
than the Threshold Rating. Without limitation of the form that a Replacement
Liquidity Facility otherwise may have pursuant to the preceding sentence, a
Replacement Liquidity Facility for any Class of Certificates may have a stated
expiration date earlier than 15 days after the Final Maturity Date of such Class
of Certificates so long as such Replacement Liquidity Facility provides for a
Non-Extension Drawing as contemplated by Section 3.6(d) hereof.
"Replacement Liquidity Provider" means a Person who issues a
Replacement Liquidity Facility.
"Required Amount" means, with respect to the Liquidity Facility, or
the Cash Collateral Account, for any Class, for any day, the sum of the
aggregate amount of interest, calculated at the rate per annum equal to the
Stated Interest Rate for the related Class of Certificates, that would be
payable on such Class of Certificates on each of the three successive
16
21
Regular Distribution Dates immediately following such day or, if such day is a
Regular Distribution Date, on such day and the succeeding two Regular
Distribution Dates, in each case calculated on the basis of the Pool Balance of
such Class of Certificates on such date and without regard to expected future
payments of principal on such Class of Certificates.
"Responsible Officer" means (i) with respect to the Subordination
Agent and each of the Trustees, any officer in the corporate trust
administration department of the Subordination Agent or such Trustee or any
other officer customarily performing functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with a particular subject, and (ii) with respect to each Liquidity Provider, any
authorized officer of such Liquidity Provider.
"Scheduled Payment" means, with respect to any Equipment Note, (i)
any payment of principal or interest on such Equipment Note (other than an
Overdue Scheduled Payment) due from the obligor thereon or (ii) any payment of
interest on the corresponding Class of Certificates with funds drawn under any
Liquidity Facility, which payment represents the installment of principal at the
stated maturity of such installment of principal on such Equipment Note, the
payment of regularly scheduled interest accrued on the unpaid principal amount
of such Equipment Note, or both; provided that any payment of principal of,
premium, if any, or interest resulting from the redemption or purchase of any
Equipment Note shall not constitute a Scheduled Payment.
"Scheduled Payment Date" means, with respect to any Scheduled
Payment, the date on which such Scheduled Payment is scheduled to be made.
"Second Mortgage" means the Second Mortgage dated as of the date
hereof entered into by the Loan Trustee and Continental, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.
"Series A Equipment Notes" means the 7.148% Series A Equipment Notes
issued pursuant to each Indenture by Continental, 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 7.149% Series B Equipment Notes
issued pursuant to each Indenture by Continental, 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 7.206% Series C Equipment Notes
issued pursuant to each Indenture by Continental, 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.
17
22
"Series D Equipment Notes" means the 7.522% Series D Equipment Notes
issued pursuant to each Indenture by Continental, 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, Trust Indenture Estate
(as defined in each Indenture) or Collateral (as defined in the Second
Mortgage).
"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, 7.148% per annum, (ii) with respect to the Class B Certificates,
7.149% per annum, (iii) with respect to the Class C Certificates, 7.206% per
annum, and (iv) with respect to the Class D Certificates, 7.522% 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 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) (if it is filed) , after being declared
effective by the SEC (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.
"Subordination Agent Incumbency Certificate" has the meaning
assigned to such term in Section 2.5(a).
"Subordination Agent Representatives" has the meaning assigned to
such term in Section 2.5(a).
18
23
"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.
"Threshold Rating" means the short-term unsecured debt rating of P-1
by Moody's and A-1 by Standard & Poor's.
"Treasury Regulations" means regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Triggering Event" means (x) the occurrence of an Indenture Default
under all of the Indentures resulting in a PTC Event of Default with respect to
the most senior Class of Certificates then Outstanding, (y) the Acceleration of
all of the outstanding Equipment Notes or (z) the occurrence of a Continental
Bankruptcy Event.
"Trust" means any of the Class A Trust, the Class B Trust, the Class
C Trust or the Class D Trust.
"Trust Accounts" has the meaning assigned to such term in Section
2.2(a).
"Trust Agreement" means any of the Class A Trust Agreement, the
Class B Trust Agreement, the Class C Trust Agreement or the Class D Trust
Agreement.
"Trustee" means any of the Class A Trustee, the Class B Trustee, the
Class C Trustee or the Class D Trustee.
"Trustee Incumbency Certificate" has the meaning assigned to such
term in Section 2.5(b).
"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(b).
19
24
"Written Notice" means, from the Subordination Agent, any Trustee or
any Liquidity Provider, a written instrument executed by the Designated
Representative of such Person. An invoice delivered by a Liquidity Provider
pursuant to Section 3.1 in accordance with its normal invoicing procedures shall
constitute Written Notice under such Section.
"WTC" has the meaning assigned to such term in the recital of
parties to this Agreement.
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1. Agreement to Terms of Subordination; Payments from
Monies Received Only. (a) 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 or payments under Section 8.1 of the
Participation Agreements, 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 that none of the Trustees, Loan
Trustees, 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
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
20
25
pursuant to and under the circumstances set forth in Section 3.6(f) hereof. Upon
such establishment and maintenance under Section 3.6(f) hereof, the Cash
Collateral Accounts shall, together with the Collection Account, constitute the
"Trust Accounts" hereunder.
(b) Funds on deposit in the Trust Accounts shall be invested and
reinvested by the Subordination Agent in Eligible Investments selected by the
Subordination Agent if such investments are reasonably available and have
maturities no later than the earlier of (i) 90 days following the date of such
investment and (ii) the Business Day immediately preceding the Regular
Distribution Date or the date of the related distribution pursuant to Section
2.4 hereof, as the case may be, next following the date of such investment (or,
in the case of any amount on deposit in the Cash Collateral Account with respect
to any Liquidity Facility (with respect to such Liquidity Facility, the
"Relevant Amount"), (A) in the case of a portion of the Relevant Amount equal to
the amount scheduled to be paid to the Liquidity Provider with respect to such
Liquidity Facility on the Regular Distribution Date next following the date of
such investment in accordance with clause (iv), (v) or (vi) of Section 3.6(f),
the Business Day immediately preceding such Regular Distribution Date, or (B) in
the case of a portion of the Relevant Amount equal to the Relevant Amount minus
the amount described in clause (A) above, the Business Day immediately preceding
the scheduled Interest Payment Date with respect to such Liquidity Facility next
following the date of such investment); provided, however, that following the
making of a Downgrade Drawing or a Non-Extension Drawing under any Liquidity
Facility, the Subordination Agent shall invest and reinvest such amounts at the
direction of Continental (or, if and to the extent so specified to the
Subordination Agent by Continental with respect to any Liquidity Facility, the
Liquidity Provider with respect to such Liquidity Facility); provided further,
however, that following the making of a Downgrade Drawing under any initial
Liquidity Facility (i) the Subordination Agent shall invest and reinvest the
amounts in the Cash Collateral Account with respect to such Liquidity Facility
in Eligible Investments pursuant to the written instructions of the Liquidity
Provider funding such Drawing, which instructions shall be reasonably acceptable
to Continental, and (ii) if the Subordination Agent shall be investing such
amounts in the Cash Collateral Account in Eligible Investments in accordance
with the instructions of such Liquidity Provider pursuant to clause (i) above,
such Liquidity Provider shall use reasonable efforts to cause the amounts in the
Cash Collateral Account with respect to such Liquidity Facility to be invested
in Eligible Investments which yield at least an amount equal to the interest
(excluding the Applicable Margin (as defined in the relevant Liquidity
Facility)) that is payable to such Liquidity Provider in respect of such
Downgrade Drawing pursuant to Section 3.07 of such Liquidity Facility (it being
understood that it may not be feasible to obtain such a yield); provided
further, however, that upon the occurrence and during the continuation of a
Triggering Event, the Subordination Agent shall invest and reinvest such amounts
in accordance with the written instructions of the Controlling Party. Unless
otherwise expressly provided in this Agreement (including, without limitation,
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
21
26
than by reason of its willful misconduct or gross negligence. Eligible
Investments and any other investment required to be made hereunder shall be held
to their maturities except that any such investment may be sold (without regard
to its maturity) by the Subordination Agent without instructions whenever such
sale is necessary to make a distribution required under this Agreement.
Uninvested funds held hereunder shall not earn or accrue interest.
(c) The Subordination Agent shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts and in
all proceeds thereof (including all income thereon). The Trust Accounts shall be
held in trust by the Subordination Agent under the sole dominion and control of
the Subordination Agent for the benefit of the Trustees, the Certificateholders
and the Liquidity Providers, as the case may be. If, at any time, any of the
Trust Accounts ceases to be an Eligible Deposit Account, the Subordination Agent
shall within 10 Business Days (or such longer period, not to exceed 30 calendar
days, to which each Rating Agency may consent) establish a new Collection
Account, Special Payments Account or Cash Collateral Account, as the case may
be, as an Eligible Deposit Account and shall transfer any cash and/or any
investments to such new Collection Account, Special Payments Account or Cash
Collateral Account, as the case may be. So long as WTC is an Eligible
Institution, the Trust Accounts shall be maintained with it as Eligible Deposit
Accounts.
SECTION 2.3. Deposits to the Collection Account and Special Payments
Account. (a) The Subordination Agent shall, upon receipt thereof, deposit in the
Collection Account all Scheduled Payments received by it.
(b) The Subordination Agent shall, on each date when one or more
Special Payments are made to the Subordination Agent as holder of the Equipment
Notes, deposit in the Special Payments Account the aggregate amount of such
Special Payments.
SECTION 2.4. Distributions of Special Payments. (a) Notice of
Special Payment. 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 or the Second Mortgage 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
22
27
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
Downgrade Advance or Applied Non-Extension Advance (if applicable in
connection with a Replacement Liquidity Facility) (each as defined in any
Liquidity Facility)) plus (B) the product of (x) the aggregate amount of
all accrued and unpaid interest on all Liquidity Obligations not in
arrears to such Special Payment Date (at the rate provided in the
applicable Liquidity Facility) multiplied by (y) a fraction, the numerator
of which is the aggregate outstanding principal amount of Equipment Notes
being redeemed, purchased or prepaid on such Special Payment Date and the
denominator of which is the aggregate outstanding principal amount of all
Equipment Notes, shall be distributed to the Liquidity Providers pari
passu on the basis of the amount of such Liquidity Obligations owed to
each Liquidity Provider;
third, such amount as shall be required (A) if any Cash Collateral
Account had been previously funded as provided in Section 3.6(f), to fund
such Cash Collateral Account up to its Required Amount shall be deposited
in such Cash Collateral Account, (B) if any Liquidity Facility shall
become a Downgraded Facility or a Non-Extended Facility at a time when
unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Maximum Available Amount thereunder to zero, to deposit into the
relevant Cash Collateral Account an amount equal to such Cash Collateral
Account's Required Amount shall be deposited in such Cash Collateral
Account, and (C) if, with respect to any particular Liquidity Facility,
neither subclause (A) nor subclause (B) of this clause "third" are
applicable, to pay or reimburse the Liquidity Provider in respect of such
Liquidity Facility in an amount equal to the amount of any unreimbursed
Interest Drawings under such Liquidity Facility shall be distributed to
such Liquidity Provider, pari passu on the basis of the amounts of 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)
23
28
the Required Amount for the relevant Class, pari passu on the basis of
such amounts in respect of each Liquidity Provider;
fifth, such amount as shall be required to pay in full Expected
Distributions to the holders of Class A Certificates on such Special
Distribution Date shall be distributed to the Class A Trustee;
sixth, such amount as shall be required to pay in full Expected
Distributions to the holders of Class B Certificates on such Special
Distribution Date shall be distributed to the Class B Trustee;
seventh, such amount as shall be required to pay in full Expected
Distributions to the holders of Class C Certificates on such Special
Distribution Date shall be distributed to the Class C Trustee;
eighth, such amount as shall be required to pay in full Expected
Distributions to the holders of Class D Certificates on such Special
Distribution Date shall be distributed to the Class D Trustee; and
ninth, 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 (after giving effect to any Escrowed
Funds Interest Distribution to be made on such Current Distribution Date with
respect to such Certificates) 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)".
(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
Continental in respect of any Trustee or any Liquidity Provider (collectively,
the "Payees") and (ii) any compensation (including, without limitation, any fees
payable to any Liquidity Provider under Section 2.03 of
24
29
any Liquidity Facility) received by it from Continental under any Operative
Agreement in respect of any Payee, directly to the Payee entitled thereto.
SECTION 2.5. Designated Representatives. (a) With the delivery of
this Agreement, the Subordination Agent shall furnish to each Liquidity Provider
and each Trustee, and from time to time thereafter may furnish to each Liquidity
Provider and each Trustee, at the Subordination Agent's discretion, or upon any
Liquidity Provider's or Trustee's request (which request shall not be made more
than one time in any 12-month period), a certificate (a "Subordination Agent
Incumbency Certificate") of a Responsible Officer of the Subordination Agent
certifying as to the incumbency and specimen signatures of the officers of the
Subordination Agent and the attorney-in-fact and agents of the Subordination
Agent (the "Subordination Agent Representatives") authorized to give Written
Notices on behalf of the Subordination Agent hereunder. Until each Liquidity
Provider and Trustee receives a subsequent Subordination Agent Incumbency
Certificate, it shall be entitled to rely on the last Subordination Agent
Incumbency Certificate delivered to it hereunder.
(b) With the delivery of this Agreement, each Trustee shall furnish
to the Subordination Agent, and from time to time thereafter may furnish to the
Subordination Agent, at such Trustee's discretion, or upon the Subordination
Agent's request (which request shall not be made more than one time in any
12-month period), a certificate (a "Trustee Incumbency Certificate") of a
Responsible Officer of such Trustee certifying as to the incumbency and specimen
signatures of the officers of such Trustee and the attorney-in-fact and agents
of such Trustee (the "Trustee Representatives") authorized to give Written
Notices on behalf of such Trustee hereunder. Until the Subordination Agent
receives a subsequent Trustee Incumbency Certificate, it shall be entitled to
rely on the last Trustee Incumbency Certificate delivered to it hereunder.
(c) With the delivery of this Agreement, each Liquidity Provider
shall furnish to the Subordination Agent, and from time to time thereafter may
furnish to the Subordination Agent, at such Liquidity Provider's discretion, or
upon the Subordination Agent's request (which request shall not be made more
than one time in any 12-month period), a certificate (an "LP Incumbency
Certificate") of any 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 Subordination Agent Representatives and
the Trustee Representatives, the "Designated Representatives") authorized to
give Written Notices on behalf of such Liquidity Provider hereunder. Until the
Subordination Agent receives a subsequent LP Incumbency Certificate, it shall be
entitled to rely on the last LP Incumbency Certificate delivered to it
hereunder.
SECTION 2.6. Controlling Party. (a) The Trustees and the Liquidity
Providers hereby agree that, with respect to any Indenture and (in the case of
clause (ii) below) the Second Mortgage 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
25
30
(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
under such Indenture, in taking, or refraining from taking, any action (x) 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), or (y) under the Second Mortgage, by the Controlling Party.
(b) The Person who shall be the "Controlling Party" with respect to
any Indenture and the Second Mortgage shall be: (w) the Class A Trustee; (x)
upon payment of Final Distributions to the holders of Class A Certificates, the
Class B Trustee; (y) upon payment of Final Distributions to the holders of Class
B Certificates, the Class C Trustee; and (z) upon payment of Final Distributions
to the holders of Class C Certificates, the Class D Trustee. For purposes of
giving effect to the foregoing, the Trustees (other than the Controlling Party)
irrevocably agree (and the Certificateholders (other than the Certificateholders
represented by the Controlling Party) shall be deemed to agree by virtue of
their purchase of Certificates) that the Subordination Agent, as record holder
of the Equipment Notes, shall exercise its voting rights in respect of the
Equipment Notes as directed by the Controlling Party.
The Subordination Agent shall give written notice to all of the
other parties to this Agreement promptly upon a change in the identity of the
Controlling Party. Each of the parties hereto agrees that it shall not exercise
any of the rights of the Controlling Party at such time as it is not the
Controlling Party hereunder; provided, however, that nothing herein contained
shall prevent or prohibit any Non-Controlling Party from exercising such rights
as shall be specifically granted to such Non-Controlling Party hereunder and
under the other Operative Agreements.
(c) Notwithstanding the foregoing, at any time after 18 months from
the earlier to occur of (i) the date on which the entire 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, the
Liquidity Provider with the highest outstanding amount of Liquidity Obligations
shall have the right to elect, by Written Notice to the Subordination Agent and
each of the Trustees, to become the Controlling Party hereunder with respect to
any Indenture and the Second Mortgage at any time from and including the last
day of such 18-month period.
(d) The exercise of remedies by the Controlling Party under this
Agreement shall be expressly limited by Section 4.1(a)(ii) hereof.
(e) The Controlling Party shall not be entitled to require or
obligate any Non-Controlling Party to provide funds necessary to exercise any
right or remedy hereunder.
26
31
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 Certificates, the Class C Trustee
shall separately set forth the amounts to be paid in accordance with
clause "seventh" of Section 3.2 hereof;
(iv) With respect to the Class D Certificates, the Class D Trustee
shall separately set forth the amounts to be paid in accordance with
clause "eighth" 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 "ninth" of Section 3.2 hereof.
The notices required under this Section 3.1(a) may be in the form of a schedule
or similar document provided to the Subordination Agent by the parties
referenced therein or by any one of them, which schedule or similar document may
state that, unless there has been a prepayment of the Certificates, such
schedule or similar document is to remain in effect until any substitute notice
or amendment shall be given to the Subordination Agent by the party providing
such notice.
(b) Following the occurrence of a Triggering Event, the
Subordination Agent shall request the following information from the following
Persons, and each of the following Persons shall, upon the request of the
Subordination Agent, deliver a Written Notice to the Subordination Agent setting
forth for such Person the following information:
27
32
(i) With respect to the Class A Certificates, the Class A Trustee
shall separately set forth the amounts to be paid in accordance with
clauses "first" (to reimburse payments made by the Class A
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and "seventh" of Section 3.3 hereof;
(ii) With respect to the Class B Certificates, the Class B Trustee
shall separately set forth the amounts to be paid in accordance with
clauses "first" (to reimburse payments made by the Class B
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and "eighth" of Section 3.3 hereof;
(iii) With respect to the Class C Certificates, the Class C Trustee
shall separately set forth the amounts to be paid in accordance with
clauses "first" (to reimburse payments made by the Class C
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and "ninth" of Section 3.3 hereof;
(iv) With respect to the Class D Certificates, the Class D Trustee
shall separately set forth the amounts to be paid in accordance with
clauses "first" (to reimburse payments made by the Class D
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and "tenth" 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.
(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,
28
33
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
"tenth" of Section 3.2 and clauses "first" through "eleventh" 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 and unpaid, and due or to become due
on such Distribution Date, on all Liquidity Obligations (at the rate, or
in the amount, provided in the applicable Liquidity Facility) shall be
distributed to the Liquidity Providers pari passu on the basis of the
amount of such Liquidity Obligations owed to each Liquidity Provider;
third, such amount as shall be required (A) if any Cash Collateral
Account had been previously funded as provided in Section 3.6(f), to fund
such Cash Collateral Account up to its Required Amount shall be deposited
in such Cash Collateral Account, (B) if any Liquidity Facility shall
become a Downgraded Facility or a Non-Extended Facility at a time when
unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Maximum Available Amount thereunder to zero, to deposit into the
relevant Cash Collateral Account an amount equal to such Cash Collateral
Account's Required Amount shall be deposited in such Cash Collateral
Account, and (C) if, with
29
34
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 Required Amount for the relevant Class, pari passu on the basis of
such amounts in respect of each Liquidity Provider;
fifth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class A Certificates on such
Distribution Date shall be distributed to the Class A Trustee;
sixth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class B Certificates on such
Distribution Date shall be distributed to the Class B Trustee;
seventh, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class C Certificates on such
Distribution Date shall be distributed to the Class C Trustee;
eighth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class D Certificates on such
Distribution Date shall be distributed to the Class D Trustee;
ninth, 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
tenth, 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:
30
35
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 Cash Collateral
Account had been previously funded as provided in Section 3.6(f), unless
(i) a Performing Note Deficiency exists and a Liquidity Event of Default
shall have occurred and be continuing with respect to the relevant
Liquidity Facility or (ii) a Final Drawing shall have occurred with
respect to such Liquidity Facility, to fund such Cash Collateral Account
up to its Required Amount (less the amount of any repayments of Interest
Drawings under such Liquidity Facility while subclause (A)(i) above is
applicable) shall be deposited in such Cash Collateral Account, (B) if any
Liquidity Facility shall become a Downgraded Facility or a Non-Extended
Facility at a time when unreimbursed Interest Drawings under such
Liquidity Facility have reduced the 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 relevant Cash
Collateral Account an amount equal to such Cash Collateral Account's
Required Amount (less the amount of any repayments of Interest Drawings
under such Liquidity Facility while subclause (B)(i) above is applicable)
shall be deposited in such Cash Collateral Account, and (C) if, with
respect to any particular Liquidity Facility, neither subclause (A) nor
subclause (B) of this clause "fourth" are applicable, to pay in full the
outstanding amount of all Liquidity Obligations then due under such
Liquidity Facility (other than amounts payable pursuant to clause "second"
or "third" of this Section 3.3) shall be distributed to such Liquidity
Provider, pari passu on the basis of the amounts of such deficiencies
and/or unreimbursed Liquidity Obligations;
31
36
fifth, if, with respect to any particular Liquidity Facility, either
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 Required Amount for the relevant Class (less the amount of any
repayments of Interest Drawings under such Liquidity Facility while
subclause (A)(i) or (B)(i), as the case may be, of clause "fourth" above
is applicable), pari passu on the basis of such amounts in respect of each
Liquidity Provider;
sixth, such amount as shall be required to reimburse or pay (i) the
Subordination Agent for any Tax (other than Taxes imposed on compensation
paid hereunder), expense, fee, charge or other loss incurred by or any
other amount payable to the Subordination Agent in connection with the
transactions contemplated hereby (to the extent not previously
reimbursed), shall be applied by the Subordination Agent in reimbursement
of such amount, (ii) each Trustee for any Tax (other than Taxes imposed on
compensation paid under the applicable Trust Agreement), expense, fee,
charge, loss or any other amount payable to such Trustee under the
applicable Trust Agreements (to the extent not previously reimbursed),
shall be distributed to such Trustee, and (iii) each Certificateholder for
payments, if any, made by it pursuant to Section 5.2 hereof in respect of
amounts described in clause (i) above, shall be distributed to the
applicable Trustee for the account of such Certificateholder, in each such
case, pari passu on the basis of all amounts described in clauses (i)
through (iii) above;
seventh, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class A Certificates shall be
distributed to the Class A Trustee;
eighth, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class B Certificates shall be
distributed to the Class B Trustee;
ninth, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class C Certificates shall be
distributed to the Class C Trustee;
tenth, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class D Certificates shall be
distributed to the Class D Trustee; and
eleventh, 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 3.4. Certain Payments. (a) Any payments received by the
Subordination Agent for which no provision as to the application thereof is made
in this Agreement shall be distributed by the Subordination Agent (i) in the
order of priority specified in Section 3.3 hereof and (ii) to the extent
received or realized at any time after the Final
32
37
Distributions for each Class of Certificates have been made, in the manner
provided in clause "first" of Section 3.3 hereof.
(b) On any Interest Payment Date under each Liquidity Facility which
is not a Distribution Date, the Subordination Agent shall pay to the Liquidity
Provider under such Liquidity Facility from, and to the extent of, amounts on
deposit in the Collection Account, an amount equal to the amount of interest
then due and payable to such Liquidity Provider under such Liquidity Facility.
(c) Except as otherwise provided in Section 3.3 hereof, if the
Subordination Agent receives any Scheduled Payment after the Scheduled Payment
Date relating thereto, but prior to such payment becoming an Overdue Scheduled
Payment, then the Subordination Agent shall deposit such Scheduled Payment in
the Collection Account and promptly distribute such Scheduled Payment in
accordance with the priority of distributions set forth in Section 3.2 hereof;
provided, that for the purposes of this Section 3.4(c) only, each reference in
clause "second" or "ninth" of Section 3.2 to "Distribution Date" shall be deemed
to mean the actual date of payment of such Scheduled Payment and each reference
in clause "fifth", "sixth", "seventh" or "eighth" of Section 3.2 to
"Distribution Date" shall be deemed to refer to such Scheduled Payment Date.
SECTION 3.5. Payments to the Trustees and the Liquidity Providers.
Any amounts distributed hereunder to any Liquidity Provider shall be paid to
such Liquidity Provider by wire transfer of funds to the address such Liquidity
Provider shall provide to the Subordination Agent. The Subordination Agent shall
provide a Written Notice of any such transfer to the applicable Liquidity
Provider, as the case may be, at the time of such transfer. Any amounts
distributed hereunder by the Subordination Agent to any Trustee which shall not
be the same institution as the Subordination Agent shall be paid to such Trustee
by wire transfer funds at the address such Trustee shall provide to the
Subordination Agent.
SECTION 3.6. Liquidity Facilities. (a) Interest Drawings. If on any
Distribution Date, after giving effect to the subordination provisions of this
Agreement, the Subordination Agent shall not have sufficient funds for the
payment of any amounts due and owing in respect of accrued interest on the Class
A Certificates, the Class B Certificates or the Class C Certificates (at the
Stated Interest Rate for such Class of Certificates), then, prior to 12:00 noon
(New York City time) on the Business Day following such Distribution Date, the
Subordination Agent shall request a drawing (each such drawing, an "Interest
Drawing") under the Liquidity Facility with respect to such Class of
Certificates in an amount equal to the lesser of (i) an amount sufficient to pay
the amount of such accrued interest (at the Stated Interest Rate for such Class
of Certificates) and (ii) the 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 Facility and all amounts withdrawn
33
38
by the Subordination Agent from the Class A Cash Collateral Account, and payable
in each case to the Class A Certificateholders, shall be promptly distributed to
the Class A Trustee, (ii) all payments received by the Subordination Agent in
respect of an Interest Drawing under the Class B Liquidity Facility and all
amounts withdrawn by the Subordination Agent from the Class B Cash Collateral
Account, and payable in each case to the Class B Certificateholders, shall be
promptly distributed to the Class B Trustee and (iii) all payments received by
the Subordination Agent in respect of an Interest Drawing under the Class C
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class C Cash Collateral Account, and payable in each case to the Class C
Certificateholders, shall be promptly distributed to the Class C Trustee.
(c) Downgrade Drawings. If at any time the short-term unsecured debt
rating of any Liquidity Provider issued by either Rating Agency is lower than
the Threshold Rating, within 30 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 30th day (or if such 30th
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
34
39
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,
provided that the initial Liquidity Provider shall not be replaced by
Continental as a Liquidity Provider with respect to any Class of Certificates
prior to the fifth anniversary of the Closing Date unless (A) there shall have
become due to the initial Liquidity Provider, or the initial Liquidity Provider
shall have demanded, amounts pursuant to Section 3.01, 3.02 or 3.03 of any
Liquidity Facility and the replacement of the initial Liquidity Provider would
reduce or eliminate the obligation to pay such amounts or, Continental
determines in good faith that there is a substantial likelihood that the initial
Liquidity Provider will have the right to claim any such amounts (unless the
initial Liquidity Provider waives, in writing, any right it may have to claim
such amounts), which determination shall be set forth in a certificate delivered
by Continental to the initial Liquidity Provider setting forth the basis for
such determination and accompanied by an opinion of outside counsel selected by
Continental and reasonably acceptable to the initial Liquidity Provider
verifying the legal conclusions, if any, of such certificate relating to such
basis, provided, that in the case of any likely claim for such amounts based
upon any proposed, or proposed change in, law, rule, regulation, interpretation,
directive, requirement, request or administrative practice, such opinion may
assume the adoption or promulgation of such proposed matter, (B) it shall become
unlawful or impossible for the initial Liquidity Provider (or its Lending
Office) to maintain or fund its LIBOR Advances as described in Section 3.10 of
any Liquidity Facility, (C) the short-term unsecured debt rating of the initial
Liquidity Provider is downgraded by Standard & Poor's from A-1+ to A-1 and there
is a resulting downgrade in the rating by any Rating Agency of any Class of
Certificates, (D) a Downgrade Drawing shall have occurred under any Liquidity
Facility or (E) the initial Liquidity Provider shall have breached any of its
payment (including, without limitation, funding) obligations under any Liquidity
Facility. If such Replacement Liquidity Facility is provided at any time after a
Downgrade Drawing or Non-Extension Drawing has been made, all funds on deposit
in the relevant Cash Collateral Account will be returned to the Liquidity
Provider being replaced.
(ii) If any Liquidity Provider shall determine not to extend any of
its Liquidity Facility in accordance with Section 3.6(d), then such
Liquidity Provider may, at its option, arrange for a Replacement Liquidity
Facility to replace such Liquidity Facility during the period no earlier
than 40 days and no later than 25 days prior to the then effective Stated
Expiration Date of such Liquidity Facility.
(iii) No Replacement Liquidity Facility arranged by Continental or a
Liquidity Provider in accordance with 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 any such Replacement Liquidity Facility shall
materially adversely affect the rights, remedies,
35
40
interests or obligations of the Class A Certificateholders, the Class B
Certificateholders or the Class C Certificateholders under any of the
Operative Agreements, the applicable Trustee shall have consented, in
writing, to the execution and issuance of such Replacement Liquidity
Facility and (C) in the case of a Replacement Liquidity Facility arranged
by a Liquidity Provider under Section 3.6(e)(ii), 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 (vii) of Section 3.6(f)
hereof, pursuant to a drawing under the Replacement Liquidity Facility, or
otherwise) and (z) cause the issuer of the Replacement Liquidity Facility
to deliver the Replacement Liquidity Facility to the Subordination Agent,
together with a legal opinion opining that such Replacement Liquidity
Facility is an enforceable obligation of such Replacement Liquidity
Provider.
(v) Upon satisfaction of the conditions set forth in clauses (iii)
and (iv) of this Section 3.6(e), (w) the replaced Liquidity Facility shall
terminate, (x) the Subordination Agent shall, if and to the extent so
requested by Continental or the Liquidity Provider being replaced, execute
and deliver any certificate or other instrument required in order to
terminate the replaced Liquidity Facility, shall surrender the replaced
Liquidity Facility to the Liquidity Provider being replaced and shall
execute and deliver the Replacement Liquidity Facility and any associated
Fee Letter, (y) each of the parties hereto shall enter into any amendments
to this Agreement necessary to give effect to (1) the replacement of the
applicable Liquidity Provider with the applicable Replacement Liquidity
Provider(s) and (2) the replacement of the applicable Liquidity Facility
with the applicable Replacement Liquidity Facility and (z) each 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 each such Replacement Liquidity
Facility shall be deemed to be a Liquidity Facility hereunder and under
the other Operative Agreements.
(f) Cash Collateral Accounts; Withdrawals; Investments. In the event
the Subordination Agent shall draw all available amounts under the Class A
Liquidity Facility, the Class B Liquidity Facility or the Class C Liquidity
Facility pursuant to Section 3.6(c), 3.6(d) or 3.6(i) hereof, or in the event
amounts are to be deposited in the Cash Collateral Account pursuant to subclause
(B) of clause "third" of Section 2.4(b), subclause (B) of clause "third" of
Section 3.2 or subclause (B) of clause "fourth" of Section 3.3, amounts so drawn
or to be deposited, as the case may be, shall be deposited by the Subordination
Agent in the Class A Cash Collateral Account, the Class B Cash Collateral
Account, or the Class C Cash Collateral Account,
36
41
respectively. All amounts on deposit in any Cash Collateral Account shall be
invested and reinvested in Eligible Investments in accordance with Section
2.2(b) hereof. Investment Earnings on amounts on deposit in the Cash Collateral
Account with respect to each Liquidity Facility shall be deposited in the
Collection Account on each Interest Payment Date under such Liquidity Facility
and applied on such Interest Payment Date in accordance with Section 3.2, 3.3 or
3.4 (as applicable). The Subordination Agent shall deliver a written statement
to Continental and the relevant Liquidity Provider one day prior to each
Distribution Date setting forth the aggregate amount of Investment Earnings held
in each Cash Collateral Account as of such date. In addition, from and after the
date funds are so deposited, the Subordination Agent shall make withdrawals from
such account as follows:
(i) on each Distribution Date, the Subordination Agent shall, to the
extent it shall not have received funds to pay accrued and unpaid interest
due and owing on the Class A Certificates (at the Stated Interest Rate for
the Class A Certificates) from any other source, withdraw from the Class A
Cash Collateral Account, and pay to the Class A Trustee, an amount equal
to the lesser of (x) an amount necessary to pay accrued and unpaid
interest (at the Stated Interest Rate for the Class A Certificates) on
such Class A Certificates and (y) the amount on deposit in the Class A
Cash Collateral Account;
(ii) on each Distribution Date, the Subordination Agent shall, to
the extent it shall not have received funds to pay accrued and unpaid
interest due and owing on the Class B Certificates (at the Stated Interest
Rate for the Class B Certificates) from any other source, withdraw the
Class B Cash Collateral Account, and pay to the Class B Trustee, an amount
equal to the lesser of (x) an amount necessary to pay accrued and unpaid
interest (at the Stated Interest Rate for the Class B Certificates) on
such Class B Certificates and (y) the amount on deposit in the Class B
Cash Collateral Account;
(iii) on each Distribution Date, the Subordination Agent shall, to
the extent it shall not have received funds to pay accrued and unpaid
interest due and owing on the Class C Certificates (at the Stated Interest
Rate for the Class C Certificates) from any other source, withdraw from
the Class C Cash Collateral Account, and pay to the Class C Trustee, an
amount equal to the lesser of (x) an amount necessary to pay accrued and
unpaid interest (at the Stated Interest Rate for the Class C Certificates)
on such Class C Certificates and (y) the amount on deposit in the Class C
Cash Collateral Account;
(iv) on each date on which the Pool Balance of the Class A Trust
shall have been reduced by payments made to the Class A Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent shall
withdraw from the Class A Cash Collateral Account an amount equal to the
excess, if any, of the amount on deposit in the Class A Cash Collateral
Account over the Required Amount for the Class A Cash Collateral Account
and shall first, pay such amount to the 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;
37
42
(v) on each date on which the Pool Balance of the Class B Trust
shall have been reduced by payments made to the Class B Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent shall
withdraw from the Class B Cash Collateral Account an amount equal to the
excess, if any, of the amount on deposit in the Class B Cash Collateral
Account over the Required Amount for the Class B Cash Collateral Account
and shall first, pay such amount to the relevant Class B Liquidity
Provider until the Liquidity Obligations (with respect to the Class B
Certificates) owing to such Liquidity Provider shall have been paid in
full, and second, deposit any remaining amount in the Collection Account;
(vi) on each date on which the Pool Balance of the Class C Trust
shall have been reduced by payments made to the Class C Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent shall
withdraw from the Class C Cash Collateral Account an amount equal to the
excess, if any, of the amount on deposit in the Class C Cash Collateral
Account over the Required Amount for the Class C Cash Collateral Account
and shall first, pay such amount to the relevant Class C Liquidity
Provider until the Liquidity Obligations (with respect to the Class C
Certificates) owing to such Liquidity Provider shall have been paid in
full, and second, deposit any remaining amount in the Collection Account;
and
(vii) if a Replacement Liquidity Facility for any Class of
Certificates shall be delivered to the Subordination Agent following the
date on which funds have been deposited into the Cash Collateral Account
for such Class of Certificates, the Subordination Agent shall withdraw all
amounts on deposit in such Cash Collateral Account and shall pay such
amounts to the replaced Liquidity Provider until all Liquidity Obligations
owed to such Person shall have been paid in full, and shall deposit any
remaining amount in the Collection Account.
(g) Reinstatement. With respect to any Interest Drawing under the
Liquidity Facility for any Trust, upon the reimbursement of the applicable
Liquidity Provider for all or any part of the amount of such Interest Drawing,
together with any accrued interest thereon, the 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
Cash Collateral Account pursuant to clauses (i), (ii) or (iii) of Section 3.6(f)
hereof or (ii) such Liquidity Facility shall become a Downgraded Facility or a
Non-Extended Facility at a time when unreimbursed Interest Drawings under such
Liquidity Facility have reduced the 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 Cash Collateral Account as
provided in clause "third" of Section 2.4(b),
38
43
clause "third" of Section 3.2 or clause "fourth" of Section 3.3, as applicable,
and applied in accordance with Section 3.6(f) hereof.
(h) Reimbursement. The amount of each drawing under the Liquidity
Facilities shall be due and payable, together with interest thereon, on the
dates and at the rates, respectively, provided in the Liquidity Facilities.
(i) Final Drawing. A Liquidity Provider with respect to any
Liquidity Facility may, in accordance with and to the extent permitted by the
terms of such Liquidity Facility, make a drawing in an amount equal to the
Maximum Available Amount with respect to such Liquidity Facility (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 Facility 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 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 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 and (to the
extent applicable) the Second Mortgage, in the exercise of remedies available to
the holders of the Equipment Notes issued pursuant to such Indenture, including,
without limitation, the ability to vote all such Equipment Notes in favor of
Accelerating such Equipment Notes in accordance with the provisions of such
Indenture. Subject to the provisions of the next paragraph, if the Equipment
Notes issued pursuant to any Indenture have been Accelerated following an
Indenture Default with respect thereto, the Controlling Party may sell, assign,
contract to sell or otherwise dispose of and deliver all (but not less than all)
of such Equipment Notes to any Person at public or private sale, at any location
at
39
44
the option of the Controlling Party, all upon such terms and conditions as it
may reasonably deem advisable in accordance with applicable law.
(ii) 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 and (y) the occurrence of a Continental Bankruptcy Event,
without the consent of each Trustee, 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.
(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 and the Second
Mortgage, instruct the Loan Trustee under such Indenture or (to the extent
applicable) the Second Mortgage, as the case may be, to foreclose on the Lien on
the related Aircraft.
SECTION 4.2. Remedies Cumulative. Each and every right, power and
remedy given to the Trustees, the Liquidity Providers, the Controlling Party or
the Subordination Agent specifically or otherwise in this Agreement shall be
cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may, subject always to the terms and conditions
hereof, be exercised from time to time and as often and in such order as may be
deemed expedient by any Trustee, any Liquidity Provider, the Controlling Party
or the Subordination Agent, as appropriate, and the exercise or the beginning of
the exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by any Trustee, any Liquidity Provider, the
Controlling Party or the Subordination Agent in the exercise of any right,
remedy or power or in the pursuit of any
40
45
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.
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
41
46
Indenture Default or Triggering Event unless notified in writing by one or more
Trustees, one or more Liquidity Providers or one or more Certificateholders.
(b) Other Notices. The Subordination Agent will furnish to each
Liquidity Provider and Trustee, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to the Subordination Agent as
registered holder of the Equipment Notes or otherwise in its capacity as
Subordination Agent to the extent the same shall not have been otherwise
directly distributed to such Liquidity Provider or Trustee, as applicable,
pursuant to the express provision of any other Operative Agreement.
SECTION 5.2. Indemnification. The Subordination Agent shall not be
required to take any action or refrain from taking any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof unless the
Subordination Agent shall have been indemnified (to the extent and in the manner
reasonably satisfactory to the Subordination Agent) against any liability, cost
or expense (including counsel fees and expenses) which may be incurred in
connection therewith. The Subordination Agent shall not be under any obligation
to take any action under this Agreement and nothing contained in this Agreement
shall require the Subordination Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. The
Subordination Agent shall not be required to take any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof, nor shall any
other provision of this Agreement be deemed to impose a duty on the
Subordination Agent to take any action, if the Subordination Agent shall have
been advised by counsel that such action is contrary to the terms hereof or is
otherwise contrary to law.
SECTION 5.3. No Duties Except as Specified in Intercreditor
Agreement. The Subordination Agent shall not have any duty or obligation to take
or refrain from taking any action under, or in connection with, this Agreement,
except as expressly provided by the terms of this Agreement; and no implied
duties or obligations shall be read into this Agreement against the
Subordination Agent. The Subordination Agent agrees that it will, in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Section 7.1 hereof)
promptly take such action as may be necessary to duly discharge all Liens on any
of the Trust Accounts or any monies deposited therein which result from claims
against it in its individual capacity not related to its activities hereunder or
any other Operative Agreement.
SECTION 5.4. Notice from the Liquidity Providers and Trustees. If
any Liquidity Provider or Trustee has notice of an Indenture Default or a
Triggering Event, such Person shall promptly give notice thereof to all other
Liquidity Providers and Trustees and to the Subordination Agent, provided,
however, that no such Person shall have any liability hereunder as a result of
its failure to deliver any such notice.
42
47
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1. Authorization; Acceptance of Trusts and Duties. Each of
the Class A Trustee, the Class B Trustee and the Class C Trustee hereby
designates and appoints the Subordination Agent as the agent and trustee of such
Trustee under 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.
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.
43
48
SECTION 6.5. Reliance; Agents; Advice of Counsel. The Subordination
Agent shall not incur liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. As to the Pool
Balance of any Trust as of any date, the Subordination Agent may for all
purposes hereof rely on a certificate signed by any Responsible Officer of the
applicable Trustee, and such certificate shall constitute full protection to the
Subordination Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon. As to any fact or matter relating to the Liquidity
Providers or the Trustees the manner of ascertainment of which is not
specifically described herein, the Subordination Agent may for all purposes
hereof rely on a certificate, signed by any Responsible Officer of the
applicable Liquidity Provider or Trustee, as the case may be, as to such fact or
matter, and such certificate shall constitute full protection to the
Subordination Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon. The Subordination Agent shall assume, and shall be
fully protected in assuming, that each of the Liquidity Providers and each of
the Trustees are authorized to enter into this Agreement and to take all action
to be taken by them pursuant to the provisions hereof, and shall not inquire
into the authorization of each of the Liquidity Providers and each of the
Trustees with respect thereto. In the administration of the trusts hereunder,
the Subordination Agent may execute any of the trusts or powers hereof and
perform its powers and duties hereunder directly or through agents or attorneys
and may consult with counsel, accountants and other skilled persons to be
selected and retained by it, and the Subordination Agent shall not be liable for
the acts or omissions of any agent appointed with due care or for anything done,
suffered or omitted in good faith by it in accordance with the advice or written
opinion of any such counsel, accountants or other skilled persons.
SECTION 6.6. Capacity in Which Acting. The Subordination Agent acts
hereunder solely as agent and trustee herein and not in its individual capacity,
except as otherwise expressly provided in the Operative Agreements.
SECTION 6.7. Compensation. The Subordination Agent shall be entitled
to reasonable compensation, including expenses and disbursements, for all
services rendered hereunder and shall have a priority claim to the extent set
forth in Article III hereof on all monies collected hereunder for the payment of
such compensation, to the extent that such compensation shall not be paid by
others. The Subordination Agent agrees that it shall have no right against any
Trustee or Liquidity Provider for any fee as compensation for its services as
agent under this Agreement. The provisions of this Section 6.7 shall survive the
termination of this Agreement.
SECTION 6.8. May Become Certificateholder. The institution acting as
Subordination Agent hereunder may become a Certificateholder and have all rights
and benefits of a Certificateholder to the same extent as if it were not the
institution acting as the Subordination Agent.
SECTION 6.9. Subordination Agent Required; Eligibility. There shall
at all times be a Subordination Agent hereunder which shall be a corporation
organized and doing business under the laws of the United States of America or
of any State or the District of Columbia having
44
49
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
8.1 of the Participation Agreements. The indemnities contained in such Sections
of such agreements shall survive the termination of this Agreement.
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1. Replacement of Subordination Agent; Appointment of
Successor. The Subordination Agent may resign at any time by so notifying the
Trustees and the Liquidity Providers. The Controlling Party may remove the
Subordination Agent for cause by so notifying the Subordination Agent and may
appoint a successor Subordination Agent. The Controlling Party shall remove the
Subordination Agent if:
(1) the Subordination Agent fails to comply with Section 6.9 hereof;
(2) the Subordination Agent is adjudged bankrupt or insolvent;
45
50
(3) a receiver or other public officer takes charge of the
Subordination Agent or its property; or
(4) the Subordination Agent otherwise becomes incapable of acting.
If the Subordination Agent resigns or is removed or if a vacancy
exists in the office of Subordination Agent for any reason (the Subordination
Agent in such event being referred to herein as the retiring Subordination
Agent), the Controlling Party shall promptly appoint a successor Subordination
Agent.
A successor Subordination Agent shall deliver (x) a written
acceptance of its appointment as Subordination Agent hereunder to the retiring
Subordination Agent and (y) a written assumption of its obligations hereunder
and under each Liquidity Facility to each party hereto, upon which the
resignation or removal of the retiring Subordination Agent shall become
effective, and the successor Subordination Agent shall have all the rights,
powers and duties of the Subordination Agent under this Agreement. The successor
Subordination Agent shall mail a notice of its succession to the Liquidity
Providers and the Trustees. The retiring Subordination Agent shall promptly
transfer its rights under each of the Liquidity Facilities and all of the
property held by it as Subordination Agent to the successor Subordination Agent.
If a successor Subordination Agent does not take office within 60
days after the retiring Subordination Agent resigns or is removed, the retiring
Subordination Agent or one or more of the Trustees may petition any court of
competent jurisdiction for the appointment of a successor Subordination Agent.
If the Subordination Agent fails to comply with Section 6.9 hereof
(to the extent applicable), one or more of the Trustees or one or more of the
Liquidity Providers may petition any court of competent jurisdiction for the
removal of the Subordination Agent and the appointment of a successor
Subordination Agent.
Notwithstanding the foregoing, no resignation or removal of the
Subordination Agent shall be effective unless and until a successor has been
appointed. No appointment of a successor Subordination Agent shall be effective
unless and until the Rating Agencies shall have delivered a Ratings
Confirmation.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1. Amendments, Waivers, etc. (a) This Agreement may not be
supplemented, amended or modified without the consent of each Trustee (acting,
except in the case of any amendment pursuant to Section 3.6(e)(v)(y) hereof and
the last sentence of this Section 9.1(a), with the consent of holders of
Certificates of the related Class evidencing interests in the related Trust
aggregating not less than a majority in interest in such Trust or as otherwise
authorized pursuant to the relevant Trust Agreement), the Subordination Agent
and each Liquidity Provider; provided, however, that this Agreement may be
supplemented, amended or
46
51
modified with the consent of such Trustee (acting without any consent of the
Certificateholders of the related Class) if such supplement, modification or
amendment cures an ambiguity or inconsistency or does not materially adversely
affect such Trustee or the holders of the related Class of Certificates (or as
otherwise permitted under Section 9.01 of the relevant Trust Agreement);
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), the last sentence of this Section 9.1(a) 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
ability to replace any Liquidity Facility or with respect to its payment
obligations under any Participation Agreement or 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. If the Replacement Liquidity Facility for any
Liquidity Facility in accordance with Section 3.6(e) hereof is to be comprised
of more than one instrument as contemplated by the definition of the term
"Replacement Liquidity Facility", then each of the parties hereto agrees to
amend this Agreement to incorporate appropriate mechanics for multiple Liquidity
Facilities for an individual Trust.
(b) In the event that the Subordination Agent, as the registered
holder of any Equipment Notes, receives a request for its consent to any
amendment, modification, consent or waiver under such Equipment Notes, the
Indenture pursuant to which such Equipment Notes were issued, the related
Participation Agreement, or the Second Mortgage or other related document, (i)
if no Indenture Default shall have occurred and be continuing with respect to
such Indenture (or, in the case of the Second Mortgage, any Indenture), 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 (or, in the
case of the Second Mortgage, with respect to the requisite aggregate principal
amount of Equipment Notes under all of the Indentures) and (ii) if any Indenture
Default shall have occurred and be continuing with respect to such Indenture
(or, in the case of the Second Mortgage, any Indenture), the Subordination Agent
will exercise its voting rights as directed by the Controlling Party, subject to
Sections 4.1 and 4.4 hereof; provided that no such amendment, modification or
waiver shall, without the consent of each Liquidity Provider, reduce the amount
of principal or interest payable by Continental under any Equipment Note issued
under any Indenture in respect of an Aircraft; and provided further that no
amendment of or supplement to any Indenture, Participation Agreement or other
Operative Agreement or waiver or modification of the terms of,
47
52
or consent under, any thereof, shall without the consent of each Liquidity
Provider, have any of the effects listed in the proviso to, or the last sentence
of, Section 10.01(a) of the Indentures.
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 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.
48
53
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 the Liquidity Provider, addressed to it at its office
at:
Kredietbank N.V.
New York Branch
125 West 55th Street
New York, New York 10019
Attention: General Manager
Telecopy: (212) 956-5580
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.
49
54
SECTION 10.5. No Oral Modifications or Continuing Waivers. No terms
or provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party or other Person
against whom enforcement of the change, waiver, discharge or termination is
sought and any other party or other Person whose consent is required pursuant to
this Agreement and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.
SECTION 10.6. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the successors and assigns of each, all as herein provided.
In addition, the Continental Provisions shall inure to the benefit of
Continental and its successors and assigns, and (without limitation of the
foregoing) Continental is hereby constituted, and agreed to be, an express third
party beneficiary of the Continental Provisions.
SECTION 10.7. Headings. The headings of the various Articles and
Sections herein and in the table of contents hereto are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 10.8. Counterpart Form. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same agreement.
SECTION 10.9. Subordination. (a) As between the Liquidity Providers,
on the one hand, and the Trustees and the Certificateholders, on the other hand,
this Agreement shall be a subordination agreement for purposes of Section 510 of
the United States Bankruptcy Code, as amended from time to time.
(b) Notwithstanding the provisions of this Agreement, if prior to
the payment in full to the Liquidity Providers of all Liquidity Obligations then
due and payable, any party hereto shall have received any payment or
distribution in respect of Equipment Notes or any other amount under the
Indentures or other Operative Agreements which, had the subordination provisions
of this Agreement been properly applied to such payment, distribution or other
amount, would not have been distributed to such Person, then such payment,
distribution or other amount shall be received and held in trust by such Person
and paid over or delivered to the Subordination Agent for application as
provided herein.
(c) If any Trustee, any Liquidity Provider or the Subordination
Agent receives any payment in respect of any obligations owing hereunder (or, in
the case of the Liquidity Providers, in respect of the Liquidity Obligations),
which is subsequently invalidated, declared preferential, set aside and/or
required to be repaid to a trustee, receiver or other party, then, to the extent
of such payment, such obligations (or, in the case of the Liquidity Providers,
such Liquidity Obligations) intended to be satisfied shall be revived and
continue in full force and effect as if such payment had not been received.
(d) The Trustees (on behalf of themselves and the holders of
Certificates), the Liquidity Providers and the Subordination Agent confirm that
the payment priorities specified in
50
55
Sections 2.4, 3.2 and 3.3 shall apply in all circumstances, notwithstanding the
fact that the obligations owed to the Trustees and the holders of Certificates
are secured by certain assets and the Liquidity Obligations may not be so
secured. The Trustees expressly agree (on behalf of themselves and the holders
of Certificates) not to assert priority over the holders of Liquidity
Obligations due to their status as secured creditors in any bankruptcy,
insolvency or other legal proceeding.
(e) Each of the Trustees (on behalf of themselves and the holders of
Certificates), the Liquidity Providers and the Subordination Agent may take any
of the following actions without impairing its rights under this Agreement:
(i) obtain a Lien on any property to secure any amounts owing to it
hereunder, including, in the case of the Liquidity Providers, the
Liquidity Obligations,
(ii) obtain the primary or secondary obligation of any other obligor
with respect to any amounts owing to it hereunder, including, in the case
of the Liquidity Providers, any of the Liquidity Obligations,
(iii) renew, extend, increase, alter or exchange any amounts owing
to it hereunder, including, in the case of the Liquidity Providers, any of
the Liquidity Obligations, or release or compromise any obligation of any
obligor with respect thereto,
(iv) refrain from exercising any right or remedy, or delay in
exercising such right or remedy, which it may have, or
(v) take any other action which might discharge a subordinated party
or a surety under applicable law;
provided, however, that the taking of any such actions by any of the
Trustees, the Liquidity Providers or the Subordination Agent shall not
prejudice the rights or adversely affect the obligations of any other
party under this Agreement.
SECTION 10.10. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 10.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity.
(a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of
51
56
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.
52
57
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: Roseline K. Maney
Title: Senior Financial
Services Officer
KREDIETBANK N.V., acting through its
New York branch,
as Class A Liquidity Provider,
Class B Liquidity Provider and
Class C Liquidity Provider
By
----------------------------------------
Name:
Title:
By
----------------------------------------
Name:
Title:
58
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized, as of
the day and year first above written, and acknowledge that this Agreement has
been made and delivered in the City of New York, and this Agreement has become
effective only upon such execution and delivery.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Trustee for each of the Trusts
By
----------------------------------------
Name:
Title:
KREDIETBANK N.V., acting through its
New York branch,
as Class A Liquidity Provider,
Class B Liquidity Provider and
Class C Liquidity Provider
By
----------------------------------------
Name: Raymond F. Murray
Title: Vice President
By
----------------------------------------
Name: Robert Snauffer
Title: Vice President
59
WILMINGTON TRUST COMPANY
not in its individual capacity except
as expressly set forth herein but solely as
Subordination Agent and trustee
By
----------------------------------------
Name: Roseline K. Maney
Title: Senior Financial
Services Officer
60
SCHEDULE I to
INTERCREDITOR AGREEMENT
Aircraft
Aircraft Type Registration Number
- ------------- -------------------
Boeing 737-3T0 N12322
Boeing 737-3T0 N10323
Boeing 737-3T0 N14324
Boeing 737-3T0 N69333
Boeing 737-3T0 N14334
Boeing 737-3T0 N14335
McDonnell Douglas MD-82 N12811
McDonnell Douglas MD-82 N15820
McDonnell Douglas MD-82 N18833
McDonnell Douglas MD-82 N10834
1
Exhibit 4.13
[EXECUTION COPY]
================================================================================
Exchange and Registration Rights Agreement
Dated as of June 25, 1997
among
Continental Airlines, Inc.
Wilmington Trust Company
as Trustee under
Continental Airlines
Pass Through Trust, Series 1997-2A
Continental Airlines
Pass Through Trust, Series 1997-2B
Continental Airlines
Pass Through Trust, Series 1997-2C
Continental Airlines
Pass Through Trust, Series 1997-2D
and
Credit Suisse First Boston Corporation
and
Morgan Stanley & Co. Incorporated.
================================================================================
2
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
THIS EXCHANGE AND REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
made and entered into as of June 25, 1997, among (i) Continental Airlines, Inc.,
a Delaware corporation (the "Company"), (ii) Wilmington Trust Company, as
trustee under each of the Trusts (as defined below) and (iii) Credit Suisse
First Boston Corporation and Morgan Stanley & Co. Incorporated (together, the
"Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated June
17, 1997 among the Company and the Purchasers (the "Purchase Agreement"), which
provides that the Trustee will issue and sell $74,862,000 principal amount of
the pass through certificates of the Class A Trust, $25,563,000 principal amount
of the pass through certificates of the Class B Trust, $27,206,000 principal
amount of the pass through certificates of the Class C Trust and $27,369,000
principal amount of the pass through certificates of the Class D Trust (the
Class A Trust, Class B Trust, Class C Trust and Class D Trust together, the
"Trusts" and such pass through certificates of the Trusts, together, the
"Initial Certificates"). In order to induce the Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide to the Purchasers and
their successors, assigns and direct and indirect transferees the 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:
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 1997-2A.
"Class B Trust" shall mean the Continental Airlines Pass Through
Trust, Series 1997-2B.
3
2
"Class C Trust" shall mean the Continental Airlines Pass Through
Trust, Series 1997-2C.
"Class D Trust" shall mean the Continental Airlines Pass Through
Trust, Series 1997-2D.
"Closing Date" shall mean the Closing Date as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble of this
Agreement and shall include the Company's successors.
"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.
"Exchange Certificates" shall mean the pass through certificates
issued under the Pass Through Trust Agreements 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 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.
4
3
"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.
"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.
"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
5
4
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 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 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.
6
5
"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.
"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.
"Trusts" shall have the meaning set forth in the preamble of this
Agreement.
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.
7
6
In connection with the Exchange Offer, the Company shall or shall
cause the Trustees to:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Exchange Offer open for not less than 30 days after
the date notice thereof is mailed to the Holders (or longer if required by
applicable law);
(iii) use the services of 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;
(ii) cancel or cause to be canceled all Registrable Certificates
so accepted for exchange by the Company; and
8
7
(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:
(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
9
8
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 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.
10
9
(d) Effective Registration Statement. (i) The Company will be deemed
not to have used its best efforts to cause the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, to become, or
to remain, effective during the requisite period if the Company voluntarily
takes any action that would result in any such Registration Statement not being
declared effective or in the Holders of Registrable Certificates covered thereby
not being able to exchange or offer and sell such Registrable Certificates
during that period unless (A) such action is required by applicable law or (B)
such action is taken by the Company in good faith and for valid business reasons
(not including avoidance of the Company's obligations hereunder), including,
without limitation, the acquisition or divestiture of assets, so long as the
Company promptly complies with the requirements of Section 3(j) hereof, if
applicable.
(ii) An Exchange Offer Registration Statement pursuant to
Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b)
hereof will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that if, after it has been declared
effective, the offering of Registrable Certificates pursuant to a Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have been effective during the
period of such interference, until the offering of Registrable Certificates
pursuant to such Registration Statement may legally resume.
(e) Increase in Interest Rate. In the event that 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 Equipment Notes 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. In the
event that the Shelf Registration Statement (if it is filed), after it is
declared effective by the SEC, 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 Equipment Notes shall be increased by 0.50% per annum from the 61st day of
the applicable 12-month period such Shelf Registration Statement ceases to be
effective until such time as the Shelf Registration Statement again becomes
effective (or, if earlier, the end of the period specified by Section 2(b)(B)
hereof).
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;
11
10
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary under
applicable law to keep such Registration Statement effective for the
applicable period; cause each Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the 1933 Act;
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Certificates when a Shelf Registration Statement with respect
to the Registrable Certificates has been filed and advise such Holders
that the distribution of Registrable Certificates will be made in
accordance with the method elected by the Majority Holders; (ii) furnish
to each Holder of Registrable Certificates included within the coverage of
the Shelf Registration Statement at least one copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in
writing, all reports, other documents and exhibits (including those
incorporated by reference) at the expense of the Company, (iii) furnish to
each Holder of Registrable Certificates included within the coverage of
the Shelf Registration Statement, to counsel for the Holders and to each
underwriter of an underwritten offering of Registrable Certificates, if
any, without charge, as many copies of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement thereto as such
Holder or underwriter may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Certificates; and (iv)
subject to the last paragraph of Section 3, consent to the use of the
Prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Certificates included in the Shelf Registration
Statement in connection with the offering and sale of the Registrable
Certificates covered by the Prospectus or any amendment or supplement
thereto;
(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
12
11
request by the SEC or any state securities authority for post-effective
amendments and supplements to a Shelf Registration Statement and
Prospectus or for additional information after the Shelf Registration
Statement has become effective, (iii) of the issuance by the SEC or any
state securities authority of any stop order suspending the effectiveness
of a Shelf Registration Statement or the initiation of any proceedings for
that purpose, (iv) at the closing of any sale of Registrable Certificates
if, between the effective date of a Shelf Registration Statement and such
closing, the representations and warranties of the Company contained in
any underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to such offering cease to be true and correct
in all material respects, (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Certificates for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (vi) of the happening of
any material event or the discovery of any material facts during the
period a Shelf Registration Statement is effective which makes any
statement made in such Registration Statement or the related Prospectus
untrue or which requires the making of any changes in such Registration
Statement or Prospectus in order to make the statements therein (in the
case of the Prospectus in light of the circumstances under which they were
made) not misleading and (vii) of any determination by the Company that a
post-effective amendment to a Registration Statement would be appropriate;
(f) (A) in the case of the Exchange Offer, (i) include in the
Exchange Offer Registration Statement a "Plan of Distribution" section
covering the use of the Prospectus included in the Exchange Offer
Registration Statement by broker-dealers who have exchanged their
Registrable Certificates for Exchange Certificates for the resale of such
Exchange Certificates, (ii) furnish to each broker-dealer who desires to
participate in the Exchange Offer, without charge, as many copies of each
Prospectus included in the Exchange Offer Registration Statement,
including any preliminary prospectus, and any amendment or supplement
thereto, as such broker-dealer may reasonably request, (iii) include in
the Exchange Offer Registration Statement a statement that any
broker-dealer who holds Registrable Certificates acquired for its own
account as a result of market-making activities or other trading
activities (a "Participating Broker-Dealer"), and who receives Exchange
Certificates for Registrable Certificates pursuant to the Exchange Offer,
may be a statutory underwriter and must deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale of such
Exchange Certificates, (iv) subject to the last paragraph of Section 3,
hereby consent to the use of the Prospectus forming part of the Exchange
Offer Registration Statement or any amendment or supplement thereto, by
any broker-dealer in connection with the sale or transfer of the Exchange
Certificates covered by the Prospectus or any amendment or supplement
thereto, and (v) include in the transmittal letter or similar
documentation to be executed by an exchange offeree in order to
participate in the Exchange Offer (x) the following provision:
"If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage
in, a distribution of Exchange Certificates. If the undersigned is a
13
12
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;
(B) to the extent any Participating Broker-Dealer participates in
the Exchange Offer, use its best efforts to cause to be delivered at the
request of an entity representing the Participating Broker-Dealers (which
entity shall be one of the Purchasers, unless it elects not to act as such
representative) only one, if any, "cold comfort" letter with respect to
the Prospectus in the form existing on the last date for which exchanges
are accepted pursuant to the Exchange Offer and with respect to each
subsequent amendment or supplement, if any, effected during the period
specified in clause (C) below;
(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;
14
13
(i) unless any Registrable Certificates are in book entry form only,
in the case of a Shelf Registration, cause the Trustees to cooperate with
the selling Holders of Registrable Certificates to facilitate the timely
preparation and delivery of certificates representing Registrable
Certificates to be sold free from any restrictive legends; and cause such
Registrable Certificates to be in such denominations (consistent with the
provisions of the Pass Through Trust Agreements) and registered in such
names as the selling Holders or the underwriters, if any, may reasonably
request at least one Business Day prior to the closing of any sale of
Registrable Certificates;
(j) in the case of a Shelf Registration, upon the occurrence of any
event or the discovery of any facts, each as contemplated by Sections
2(d)(i)(B) or 3(e)(ii)-(vi) hereof, use its best efforts to prepare a
post-effective amendment to a Registration Statement or an amendment or
supplement to the related Prospectus or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Certificates, such Prospectus will not contain at the time of such
delivery any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
agrees to notify each Holder to suspend use of the Prospectus as promptly
as practicable after the occurrence of such an event, and each Holder
hereby agrees to suspend use of the Prospectus as promptly as practicable
upon receipt of such notice until the Company has amended or supplemented
the Prospectus to correct such misstatement or omission, provided that the
Company shall cause such suspension not to last more than 30 days per
occurrence or more than 60 days in aggregate in a calendar year. At such
time as such public disclosure is otherwise made or the Company determines
that such disclosure is not necessary, in each case to correct any
misstatement of a material fact or to include any omitted material fact,
the Company agrees promptly to notify each Holder of such determination
and to furnish each Holder such numbers of copies of the Prospectus, as
amended or supplemented, as such Holder may reasonably request;
(k) obtain a CUSIP number for all Exchange Certificates, or
Registrable Certificates, as the case may be, of each Trust not later than
the effective date of an Exchange Offer Registration Statement or Shelf
Registration Statement, as the case may be, and provide the Trustees with
printed certificates evidencing the Exchange Certificates or the
Registrable Certificates, as the case may be, held in book entry form, in
a form eligible for deposit with DTC;
(l) (i) cause the Pass Through Trust Agreements to be qualified
under the Trust Indenture Act of 1939, as amended (the "TIA"), in
connection with the registration of the Exchange Certificates, or
Registrable Certificates, as the case may be, (ii) cooperate with the
Trustees and the Holders to effect such changes to the Pass Through Trust
Agreements as may be required for the Pass Through Trust Agreements to be
so qualified in accordance with the terms of the TIA and (iii) execute,
and use its best efforts to cause the Trustees to execute, all documents
as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable the Pass Through
Trust Agreements to be so qualified in a timely manner;
15
14
(m) in the case of a Shelf Registration, enter into such customary
agreements (including underwriting agreements in customary form) and take
all other customary and appropriate actions (including those reasonably
requested by the Holders of a majority in principal amount of Registrable
Certificates being sold) in order to expedite or facilitate the
disposition of such Registrable Certificates and in such connection
whether or not an underwriting agreement is entered into and whether or
not the registration is an underwritten registration:
(i) make such representations and warranties to the Holders of
such Registrable Certificates and the underwriters, if any, in form,
substance and scope as are customarily made by the Company to
underwriters in similar underwritten offerings as may be reasonably
requested by them;
(ii) obtain opinions of counsel to the Company (who may be the
general counsel of the Company) and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, or if there are
no such managing underwriters, to the Holders of a majority in
principal amount of the Registrable Certificates being sold)
addressed to each selling Holder and the underwriters, if any,
covering the matters customarily covered in opinions requested in
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.
16
15
The above shall be done at (i) the effectiveness of such Registration
Statement (and, if appropriate, each post-effective amendment thereto) if
appropriate in connection with any particular disposition of Registrable
Certificates and (ii) each closing under any underwriting or similar
agreement as and to the extent required thereunder. In the case of any
underwritten offering, the Company shall provide written notice to the
Holders of all Registrable Certificates of such underwritten offering at
least 30 days prior to the filing of a prospectus supplement for such
underwritten offering. Such notice shall (x) offer each such Holder the
right to participate in such underwritten offering, (y) specify a date,
which shall be no earlier than 10 days following the date of such notice,
by which such Holder must inform the Company of its intent to participate
in such underwritten offering and (z) include the instructions such Holder
must follow in order to participate in such underwritten offering;
(n) in the case of a Shelf Registration, make available for
inspection by representatives of the Holders of the Registrable
Certificates and any underwriters participating in any disposition
pursuant to a Shelf Registration Statement and any counsel or accountant
retained by such Holders or underwriters, all financial and other records,
pertinent corporate documents and properties of the Company reasonably
requested by it, and cause the respective officers, directors, employees,
and any other agents of the Company to make reasonably available all
relevant information reasonably requested by any such representative,
underwriter, counsel or accountant in connection with a Registration
Statement, in each case as is customary for similar due diligence
examinations; provided, however, that any information that is designated
in writing by the Company, in good faith, as confidential at the time of
delivery of such information shall be kept confidential by such
representatives, underwriters, counsel or accountant, unless such
disclosure is made in connection with a court proceeding or required by
law, or such information becomes available to the public generally or
through a third party without an accompanying obligation of
confidentiality; and provided further that the foregoing inspection and
information gathering shall, to the extent reasonably possible, be
coordinated on behalf of the Holders and the other parties entitled
thereto by one counsel designated by and on behalf of such Holders and
other parties;
(o) (i) a reasonable time prior to the filing of any Exchange Offer
Registration Statement, any Prospectus forming a part thereof, any
amendment to an Exchange Offer Registration Statement or amendment or
supplement to a Prospectus, provide copies of such document to the
Purchasers, and use its best efforts to reflect in any such document when
filed such comments as any of the Purchasers or their counsel may
reasonably request; (ii) in the case of a Shelf Registration, a reasonable
time prior to filing any Shelf Registration Statement, any Prospectus
forming a part thereof, any amendment to such Shelf Registration Statement
or amendment or supplement to such Prospectus, provide copies of such
document to the Holders of Registrable Certificates, to the Purchasers, to
counsel on behalf of the Holders and to the underwriter or underwriters of
an underwritten offering of Registrable Certificates, if any, and use its
best efforts to reflect such comments in any such document when filed as
the Holders of Registrable Certificates, their counsel and any underwriter
may reasonably request; and (iii) cause the
17
16
representatives of the Company to be available for discussion of such
document as shall be reasonably requested by the Holders of Registrable
Certificates, the Purchasers on behalf of such Holders or any underwriter
and shall not at any time make any filing of any such document of which
such Holders, the Purchasers on behalf of such Holders, their counsel or
any underwriter shall not have previously been advised and furnished a
copy or to which such Holders, the Purchasers on behalf of such Holders,
their counsel or any underwriter shall reasonably object;
(p) in the case of a Shelf Registration, use its best efforts to
cause the Registrable Certificates to be rated with the appropriate rating
agencies at the time of effectiveness of such Shelf Registration
Statement, unless the Registrable Certificates are already so rated; and
(q) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make generally available to its
security holders, as soon as reasonably practicable after the effective
date of a Registration Statement, an earnings statement which shall
satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158
thereunder.
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Certificates to furnish to the Company such information
regarding such Holder and the proposed distribution by such Holder of such
Registrable Certificates as the Company may from time to time reasonably request
and the Company may exclude from such registration the Registrable Certificates
of any Holder that fails to furnish such information within a reasonable time
after receiving such request.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
or the discovery of any facts, each of the kind described in Sections 2(d)(i)(B)
or 3(e)(ii)-(vi) hereof, such Holder will forthwith discontinue disposition of
Registrable Certificates pursuant to such Shelf Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(j) hereof, and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense) all copies in its
possession other than permanent file copies then in such Holder's possession, of
the Prospectus covering such Registrable Certificates current at the time of
receipt of such notice. If the Company shall give any such notice to suspend the
disposition of Registrable Certificates pursuant to a Shelf Registration
Statement as a result of the happening of any event or the discovery of any
facts, each of the kind described in Sections 2(d)(i)(B) or 3(e)(ii)-(vi)
hereof, the Company shall be deemed to have used its best efforts to keep the
Shelf Registration Statement effective during such period of suspension provided
that the Company shall use its best efforts to file and have declared effective
(if an amendment) as soon as practicable an amendment or supplement to the Shelf
Registration Statement and shall extend the period during which the Registration
Statement shall be maintained effective pursuant to this Agreement by the number
of days during the period from and including the date of the giving of such
notice to and including the date when the
18
17
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
security holders, including underwriting discounts and commissions and fees and
expenses of counsel to the selling security holders.
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, including all
documents incorporated therein by reference, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or caused by any
untrue statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to any Holder furnished to the Company in writing by
any selling Holder expressly for use therein; provided, however, that the
foregoing indemnity agreement with respect to any preliminary Prospectus shall
not inure to the benefit of any Person from whom the Person asserting any such
losses, claims, damages or liabilities purchased Registerable Certificates, or
any person controlling such seller, if a copy of the final Prospectus (as then
amended or supplemented if the Company shall have
19
18
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 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
20
19
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 90 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party for such fees and expenses of
counsel in accordance with such request prior to the date of such settlement,
unless such fees and expenses are being disputed in good faith. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which such
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company and the Holders shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Holders and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Holders' respective obligations to contribute
pursuant to this Section 5(d) are several in proportion to the respective
aggregate principal amount of Registrable Certificates of such Holder that were
registered pursuant to a Registration Statement.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 5, no Holder shall be required to indemnify or contribute any amount in
excess of the amount by which the total price at which Registrable Certificates
were sold by such Holder exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or 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.
21
20
The indemnity and contribution provisions contained in this Section
5 shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Holder or any person controlling any Holder, or by or on behalf of the
Company, its officers or directors or any person controlling the Company, (iii)
acceptance of any of the Exchange Certificates and (iv) any sale of Registrable
Certificates pursuant to a Shelf Registration Statement.
6. Miscellaneous. (a) Rule 144 and Rule 144A. For so long as the
Company is subject to the reporting requirements of Section 13 or 15 of the 1934
Act, the Company covenants that it will file the reports required to be filed by
it under Section 13(a) or 15(d) of the 1934 Act and the rules and regulations
adopted by the SEC thereunder, that if it ceases to be so required to file such
reports, it will upon the request of any Holder of Registrable Certificates (i)
make publicly available such information as is necessary to permit sales
pursuant to Rule 144 under the 1933 Act, (ii) deliver such information to a
prospective purchaser as is necessary to permit sales pursuant to Rule 144A
under the 1933 Act and it will take such further action as any Holder of
Registrable Certificates may reasonably request, and (iii) take such further
action that is reasonable in the circumstances, in each case, to the extent
required from time to time to enable such Holder to sell its Registrable
Certificates without registration under the 1933 Act within the limitation of
the exemptions provided by (x) Rule 144 under the 1933 Act, as such Rule may be
amended from time to time, (y) Rule 144A under the 1933 Act, as such Rule may be
amended from time to time, or (z) any similar rules or regulations hereafter
adopted by the SEC. Upon the request of any Holder of Registrable Certificates,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
(b) Other Registration Rights. The Company may grant registration
rights that would permit any Person the right to 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.
22
21
(e) Amendments and Waivers. Except as otherwise expressly permitted
in the 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
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.
(g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Certificates in violation of the terms hereof or of the Purchase Agreement or
the Pass Through Trust Agreements. If any transferee of any Holder shall acquire
Registrable Certificates, in any manner, whether by operation of law or
otherwise, such Registrable Certificates shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable
Certificates, such Person shall be conclusively deemed to have agreed to be
bound by and to perform all of the terms and provisions of this Agreement,
including the restrictions on resale set forth in this Agreement and, if
applicable, the Purchase Agreement, and such Person shall be entitled to receive
the benefits hereof.
(h) Third Party Beneficiaries. The Holders shall be third party
beneficiaries to the agreements made hereunder and to the obligations of the
Company hereunder and shall have
23
22
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.
(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.
24
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
CONTINENTAL AIRLINES, INC.
By:
-----------------------------------
Name: Gerald Laderman
Title: Vice President
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
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By:
-----------------------------------
Name:
Title:
25
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
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By:
-----------------------------------
Name:
Title:
26
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
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By:
-----------------------------------
Name:
Title:
1
Exhibit 4.14
[EXECUTION COPY]
CONTINENTAL AIRLINES, INC.
$155,000,000
Pass Through Certificates, Series 1997-2A,
1997-2B, 1997-2C and 1997-2D
PURCHASE AGREEMENT
June 17, 1997
CREDIT SUISSE FIRST BOSTON CORPORATION and
MORGAN STANLEY & CO. INCORPORATED
c/o Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010-3629
Ladies and Gentlemen:
1. Introductory. Continental Airlines, Inc., a Delaware corporation
(the "Company"), proposes that Wilmington Trust Company, as trustee under each
of the Trusts (as hereinafter defined) (each a "Trustee"), issue and sell to
Credit Suisse First Boston Corporation ("CSFBC") and Morgan Stanley & Co.
Incorporated (collectively, the "Purchasers") its pass through certificates in
the aggregate principal amounts set forth on Schedule I hereto and with the
interest rates and final distribution dates set forth on Schedule II hereto (the
"Offered Certificates") on the terms and conditions stated herein and in
Schedule III.
The Offered Certificates will be issued under four separate Pass
Through Trust Agreements, each between the Company and the relevant Trustee,
each to be dated as of June 25, 1997 (collectively, the "Pass Through Trust
Agreements") relating to the creation and administration of Continental Airlines
Pass Through Trust 1997-2A (the "Class A Trust"), Continental Airlines Pass
Through Trust 1997-2B (the "Class B Trust"), Continental Airlines Pass Through
Trust 1997-2C (the "Class C Trust") and Continental Airlines Pass Through Trust
2
1997-2D (the "Class D Trust", and, together with the Class A Trust, Class B
Trust and Class C Trust, the "Trusts").
Certain amounts of interest payable on the Offered Certificates will
be entitled to the benefits of separate liquidity facilities. Kredietbank N.V.,
acting through its New York Branch (the "Liquidity Provider"), and Wilmington
Trust Company, as subordination agent and as trustee under the Intercreditor
Agreement referred to hereinbelow (the "Subordination Agent"), will enter into
separate revolving credit agreements with respect to each Trust (other than the
Class D Trust) (each, a "Liquidity Facility") to be dated as of June 25, 1997
for the benefit of the holders of the Offered Certificates. The Liquidity
Provider and the holders of the Offered Certificates will be entitled to the
benefits of an Intercreditor Agreement to be dated as of June 25, 1997 (the
"Intercreditor Agreement") among the Trustees, the Subordination Agent and the
Liquidity Provider.
Capitalized terms used but not defined herein have the meanings
assigned to them in the Pass Through Trust Agreements, or, if not defined
therein, the meanings specified in the Intercreditor Agreement or, if not
defined therein, the meanings specified in the Financing Agreements (as defined
in the Pass Through Trust Agreements); provided that, as used in this Agreement,
the term "Operative Agreements" shall mean the Financing Agreements, the
Registration Rights Agreement (as hereinafter defined), the Pass Through Trust
Agreements, the Second Mortgage and the Indentures.
The Company understands that the Purchasers propose to make an
offering of the Offered Certificates on the terms, subject to the conditions and
in the manner set forth in the Offering Circular (as hereinafter defined) and
Section 4 hereof, as soon as the Purchasers deem advisable after this Agreement
has been executed and delivered.
The holders of the Offered Certificates will be entitled to the
benefits of an Exchange and Registration Rights Agreement, in a form reasonably
satisfactory to the Purchasers (the "Registration Rights Agreement"), pursuant
to which the Company will file a registration statement (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission")
registering the Exchange Certificates referred to in such Registration Rights
Agreement (the "Exchange Certificates") or the Offered Certificates under the
Securities Act of 1933, as amended (the "Securities Act").
The parties hereto agree as follows:
2. Representations and Warranties. (a) The Company represents and
warrants to, and agrees with, the several Purchasers that:
(i) In connection with the sale of the Offered Certificates, the
Company has prepared a preliminary offering circular dated June 13, 1997
(the "Preliminary Offering Circular"), and a final offering circular dated
the date of this Agreement (such final
3
offering circular, in the form first furnished to the Purchasers for use
in connection with the offering of the Offered Certificates, the "Offering
Circular"). The Company hereby confirms that it has authorized the use of
the Preliminary Offering Circular and the Offering Circular in connection
with the offer and resale of the Offered Certificates by the Purchasers.
On the date of this Agreement, the Offering Circular does not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The preceding
sentence does not apply to statements in or omissions from the Offering
Circular made in reliance upon and in conformity with information relating
to any Purchaser furnished to the Company in writing by such Purchaser
through CSFBC ("Purchaser Information") expressly for use therein.
(ii) The Company has been duly incorporated and is a validly
existing corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own, lease and
operate its property and to conduct its business as described in the
Offering Circular; and the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would not
have a material adverse effect on the condition (financial or otherwise),
business, properties or results of operations of the Company and its
consolidated subsidiaries taken as a whole (a "Material Adverse Effect").
All of the outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable.
(iii) Each of Continental Micronesia, Inc., Air Micronesia, Inc. and
Continental Express, Inc. (together, the "Subsidiaries") has been duly
incorporated and is an existing corporation in good standing under the
laws of the jurisdiction of its incorporation, with power and authority
(corporate and other) to own, lease and operate its properties and conduct
its business as described in the Offering Circular; each Subsidiary is
duly qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not have a Material Adverse Effect; all
of the issued and outstanding capital stock of each Subsidiary has been
duly authorized and validly issued and is fully paid and nonassessable;
and except as described in the Offering Circular, each Subsidiary's
capital stock owned by the Company, directly or through subsidiaries, is
owned free from liens, encumbrances and defects.
(iv) Except as described in the Offering Circular, the Company is
not in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which it is a
party or by which it may be bound or to which any of its
-3-
4
properties may be subject, except for such defaults that would not have a
Material Adverse Effect. The execution, delivery and performance of this
Agreement and the Operative Agreements to which the Company is or will be
a party and the consummation of the transactions contemplated herein and
therein have been duly authorized by all necessary corporate action of the
Company and will not result in any breach of any of the terms, conditions
or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance (other than any lien,
charge or encumbrance created under any Indenture or the Second Mortgage)
upon any property or assets of the Company pursuant to, any indenture,
loan agreement, contract or other instrument to which the Company is a
party or by which the Company may be bound or to which any of the property
or assets of the Company is subject, which breach, default, lien, charge
or encumbrance, individually or in the aggregate, would have a Material
Adverse Effect, nor will any such execution, delivery or performance
result in any violation of the provisions of the charter or by-laws of the
Company or any statute, rule, regulation or order of any governmental
agency or body or any court having jurisdiction over the Company.
(v) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
valid authorization, execution and delivery by the Company of this
Agreement and the Operative Agreements to which the Company is or will be
a party and for the consummation of the transactions contemplated herein
and therein, except such as may be required under (A) the securities or
Blue Sky laws of the various states, (B) the Securities Act, the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act") or rules of
the National Association of Securities Dealers, Inc. in connection with
the registration of the Offered Certificates under the Securities Act
pursuant to the Registration Rights Agreement, (C) the Sections of Title
49 of the United States Code relating to aviation, as amended (the
"Aviation Act") and filings or recordings with the Federal Aviation
Administration (the "FAA") and (D) the Uniform Commercial Code as is in
effect in the State of Texas and the State of Utah and filings thereunder,
which filings referred to in the preceding clause (C) and this clause (D)
shall have been made or obtained relating to each Aircraft on or prior to
the Closing Date (except for such filings with respect to the Postponed
Notes which shall have been made or obtained on or prior to the date of
issuance of the Postponed Notes).
(vi) This Agreement has been duly executed and delivered by the
Company, and the other Operative Agreements to which the Company is or
will be a party will be duly executed and delivered by the Company on or
prior to the Closing Date or the applicable Transfer Date, as the case may
be.
(vii) The Operative Agreements to which the Company is or will be a
party will constitute, when duly executed and delivered by the Company,
assuming that such Operative Agreements have been duly authorized,
executed and delivered by, and
-4-
5
constitute the legal, valid and binding obligations of, each other party
thereto, the legal, valid and binding obligations of the Company
enforceable in accordance with their terms, except (A) as enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws now or hereinafter in effect relating to
creditors' rights generally, (B) as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), (C) that the
enforceability of the Indentures and the Second Mortgage may also be
limited by applicable laws which may affect the remedies provided therein
but which do not affect the validity of the Indentures and the Second
Mortgage or make such remedies inadequate for the practical realization of
the benefits intended to be provided thereby and (D) with respect to
indemnification and contribution provisions, as enforcement thereof may be
limited by applicable law.
(viii) The consolidated financial statements of the Company included
in the Offering Circular, together with the related notes thereto, present
fairly in all material respects the financial position of the Company and
its consolidated subsidiaries at the dates indicated and the consolidated
results of operations and cash flows of the Company and its consolidated
subsidiaries for the periods specified. Such financial statements have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved, except as
otherwise stated in the Offering Circular.
(ix) The Company is a "citizen of the United States" within the
meaning of Section 40102(a)(15) of Title 49 of the United States Code, as
amended, holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to Chapter 447 of Title 49 of the
United States Code, as amended, for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo.
(x) On or prior to the Closing Date, the issuance of the Offered
Certificates will be duly authorized by the Trustee. When executed,
authenticated, issued and delivered in the manner provided for in the Pass
Through Trust Agreements and sold and paid for as provided in this
Agreement, the Offered Certificates will be legally and validly issued and
will be entitled to the benefits of the related Pass Through Trust
Agreements.
(xi) On or prior to the Closing Date, the issuance of the Equipment
Notes to be issued under each Indenture will be duly authorized by the
Company and when duly executed and delivered by the Company and duly
authenticated by the related Loan Trustee in accordance with the terms of
such Indenture, will be duly issued under such Indenture and will
constitute the valid and binding obligations of the Company and the
holders thereof will be entitled to the benefits of such Indenture.
-5-
6
(xii) Except as disclosed in the Offering Circular, the Company and
the Subsidiaries have good and marketable title to all real properties and
all other properties and assets owned by them, in each case free from
liens, encumbrances and defects except where the failure to have such
title would not have a Material Adverse Effect; and except as disclosed in
the Offering Circular, the Company and the Subsidiaries hold any leased
real or personal property under valid and enforceable leases with no
exceptions that would have a Material Adverse Effect.
(xiii) Except as disclosed in the Offering Circular, there is no
action, suit or proceeding before or by any governmental agency or body or
court, domestic or foreign, now pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries or any
of their respective properties that could reasonably be expected to result
in a Material Adverse Effect or that could reasonably be expected to
materially and adversely affect the consummation of the transactions
contemplated by this Agreement or the Operative Agreements.
(xiv) Except as disclosed in the Offering Circular, no labor
disputes with the employees of the Company or any Subsidiary exist or to
the knowledge of the Company are imminent that could reasonably be
expected to have a Material Adverse Effect.
(xv) Each of the Company and the Subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from, and has made all declarations and filings with, all federal,
state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease, license
and use its properties and assets and to conduct its business in the
manner described in the Offering Circular, except to the extent that the
failure to so obtain, declare or file would not have a Material Adverse
Effect.
(xvi) The Operative Agreements to which the Company is or will be a
party will, upon execution and delivery thereof, conform in all material
respects to the descriptions thereof contained in the Offering Circular.
(xvii) Except as disclosed in the Offering Circular, neither the
Company nor any of the Subsidiaries is in violation of any statute, rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances (collectively, "environmental laws"), owns
or operates any real property contaminated with any substance that is
subject to any environmental laws, or is subject to any claim relating to
any environmental laws, which violation, contamination, liability or claim
individually or in the aggregate is reasonably expected to have a Material
Adverse Effect; and the Company is not aware of any pending investigation
which might lead to such a claim that is reasonably expected to have a
Material Adverse Effect.
-6-
7
(xviii) The accountants that examined and issued an auditors report
with respect to the consolidated financial statements of the Company
included in the Offering Circular are independent public accountants
within the meaning of the Securities Act and the regulations thereunder.
(xix) Neither the Company nor any of the Trusts is an "investment
company", or an entity "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act"), in each case required to register under the Investment
Company Act; and, after giving effect to the offering and sale of the
Offered Certificates and the application of the proceeds thereof as
described in the Offering Circular, none of the Trusts will be an
"investment company", or an entity "controlled" by an "investment
company", as defined in the Investment Company Act, in each case required
to register under the Investment Company Act.
(xx) The Offered Certificates satisfy the eligibility requirements
of Rule 144A(d)(3) under the Securities Act.
(xxi) Assuming the accuracy of the representations and warranties
and compliance with the agreements made by the Purchasers in this
Agreement, (A) the offer and sale of the Offered Certificates to the
Purchasers in the manner contemplated by this Agreement and (B) any offer
and sale of the Equipment Notes that may be deemed to occur by virtue of
such offer and sale of the Offered Certificates will be exempt from the
registration requirement of the Securities Act by reason of Section 4(2)
thereof and Regulation S thereunder and, except as required under the
Registration Rights Agreement, it is not necessary to qualify any of the
Indentures or Pass Through Trust Agreements under the TIA in respect of
any such offer or sale.
(xxii) Neither the Company nor any of its affiliates, nor any person
acting on their behalf, nor to the Company's knowledge any Trust, (A) has,
within the six-month period prior to the date hereof, offered or sold in
the United States or to any U.S. Person (as such terms are defined in
Regulation S under the Securities Act) the Offered Certificates or any
security of the same class or series as the Offered Certificates or (B)
has offered or will offer or sell the Offered Certificates (x) in the
United States by means of any form of "general solicitation" or "general
advertising" within the meaning of Rule 502(c) under the Securities Act or
(y) with respect to any securities sold in reliance on Rule 903 of
Regulation S under the Securities Act, by means of any "directed selling
efforts" within the meaning of Rule 902(b) of Regulation S; provided,
however, that for purposes of this representation the Continental Airlines
Pass Through Certificates, Series 1997-1 shall not be deemed to be a
security of the same class or series as the Offered Certificates. The
Company has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Certificates
except for this Agreement.
-7-
8
(xxiii) No appraiser providing an appraisal annexed to the Offering
Circular (an "Appraiser") is an affiliate of the Company or, to the
knowledge of the Company, has a substantial interest, direct or indirect,
in the Company. To the knowledge of the Company, none of the officers and
directors of any of such Appraisers are connected with the Company or any
of its affiliates as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
3. Purchase, Sale and Delivery of Offered Certificates. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and the conditions herein set forth, the Company agrees to cause
the Trustees to sell to the Purchasers, and the Purchasers agree, severally and
not jointly, to purchase from the Trustees, the respective principal amounts of
Offered Certificates set forth opposite the names of the Purchasers in Schedule
I hereto, at a purchase price of 100% of the principal amount thereof.
The Company will cause each Trust to issue and deliver against
payment of the purchase price the Offered Certificates purchased by each
Purchaser hereunder and to be offered and sold by the Purchasers in reliance on
Regulation S under the Securities Act (the "Regulation S Securities") in the
form of one or more global securities in definitive, fully registered form
without interest coupons (the "Regulation S Global Securities") which will be
deposited with the related Trustee as custodian for The Depository Trust Company
("DTC") and registered in the name of a nominee of DTC, for the respective
accounts of the DTC participants for Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System ("Euroclear"), and Cedel
Bank societe anonyme ("Cedel"). On or prior to the 40th day after the later of
the day on which the Offered Certificates are first offered to persons other
than distributors (as defined in Regulation S under the Securities Act) and the
Closing Date, beneficial interests in the Regulation S Global Securities may be
held only through Euroclear and Cedel. Regulation S Securities will be available
only in book-entry form, except in the limited circumstances described in the
Offering Circular.
The Company will cause each Trust to issue and deliver against
payment of the purchase price the Offered Certificates to be purchased by each
Purchaser hereunder and to be offered and sold by each Purchaser to "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act)
("QIBs") in reliance on Rule 144A under the Securities Act (the "144A
Securities") in the form of one or more permanent global securities in
definitive, fully registered form without interest coupons (the "Restricted
Global Securities" and, together with the Regulation S Global Securities, the
"Global Securities") which will be deposited with the related Trustee as
custodian for DTC and registered in the name of a nominee of DTC for credit to
the respective accounts of the Purchasers. Each Restricted Global Security shall
include the legend regarding restrictions on transfer set forth under "Transfer
Restrictions" in the Offering Circular. The Regulation S Securities issued by
each Trust and the 144A Securities issued by each Trust shall be assigned
separate CUSIP numbers.
-8-
9
Payment for the Offered Certificates issued by each Trust shall be
made by the Purchasers in federal (same day) funds by official check or checks
or wire transfer to an account previously designated to CSFBC by the Company at
a bank acceptable to CSFBC drawn to the order of the Trustee under such Trust,
at 10:00 A.M. (New York time), on June 25, 1997, or at such other time not later
than seven full business days thereafter as CSFBC and the Company determine,
such time being herein referred to as the "Closing Date", against delivery to
the related Trustee as custodian for DTC, at the offices of Milbank, Tweed,
Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York 10005 (or at such
other location as may be agreed to by CSFBC and the Company) of (i) the
Regulation S Global Securities representing all of the Regulation S Securities
for the respective accounts of the DTC participants for Euroclear and Cedel and
(ii) the Restricted Global Securities representing all of the 144A Securities.
The Regulation S Global Securities and the Restricted Global Securities will be
made available for checking at the office of Milbank, Tweed, Hadley & McCloy (or
at such other location as may be agreed to by CSFBC and the Company) at least 24
hours prior to the Closing Date.
Notwithstanding the foregoing, any Offered Certificates sold by the
Purchasers pursuant to Section 4(c) hereof to Institutional Accredited Investors
(as hereinafter defined) who are not QIBs and are not purchasers of interests in
the Regulation S Global Securities shall be issued in definitive, fully
registered form without interest coupons ("Definitive Securities") and shall
bear the legend relating thereto set forth under "Transfer Restrictions" in the
Offering Circular, but shall be paid for in the manner set forth in the
preceding paragraph. Upon transfer of Definitive Securities to a QIB or in
accordance with Regulation S under the Securities Act, such Definitive
Securities will be exchanged for an interest in the appropriate Global Security.
Definitive Securities shall be registered in such names and in such authorized
denominations as the Purchasers may request not less than two full business days
in advance of the Closing Date.
As compensation for the Purchasers' commitments, the Company will
pay to CSFBC for the accounts of the Purchasers in federal (same day) funds by
official check or checks the amount set forth in Schedule III hereto, as
underwriting commissions and other compensation for the sale of the Offered
Certificates under this Agreement, which amount shall be allocated among the
Purchasers in the manner determined by CSFBC and the other Purchaser. Such
payment will be made on the Closing Date simultaneously with the issuance and
sale of the Offered Certificates to the Purchasers.
4. Representations and Agreements of the Purchasers; Resale by the
Purchasers.
(a) Each Purchaser severally represents and warrants to the Company
that it is an "accredited investor" within the meaning of Regulation D
under the Securities Act.
(b) Each Purchaser severally acknowledges that the Offered
Certificates have not been registered under the Securities Act and may not
be offered or sold within the
-9-
10
United States or to, or for the account or benefit of, U.S. persons except
in accordance with Regulation S under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act. Each
Purchaser severally represents and agrees that it has offered and sold the
Offered Certificates and will offer and sell the Offered Certificates (i)
as part of their distribution at any time only (x) to QIBs in compliance
with Rule 144A under the Securities Act, (y) in the case of CSFBC or any
other Purchaser authorized by CSFBC, to a limited number of Institutional
Accredited Investors in accordance with subsection (c) of this Section 4
(other than the Class D Certificates) and (z) outside the United States to
persons other than U.S. persons ("foreign purchasers") in accordance with
Rule 903 of Regulation S under the Securities Act and (ii) otherwise until
40 days after the later of the commencement of the offering and the
Closing Date only (x) to QIBs in compliance with Rule 144A under the
Securities Act and (y) outside the United States to foreign purchasers in
accordance with Rule 903 of Regulation S under the Securities Act.
Accordingly, neither such Purchaser nor its affiliates, nor any persons
acting on its or their behalf, have engaged or will engage in any directed
selling efforts with respect to the Offered Certificates, and such
Purchaser, its affiliates and all persons acting on its or their behalf
have complied and will comply with the offering restrictions requirements
of Regulation S under the Securities Act. Each Purchaser severally agrees
that, at or prior to confirmation of sale of the Offered Certificates,
other than a sale pursuant to Rule 144A under the Securities Act or to an
Institutional Accredited Investor, such Purchaser will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases the Offered Certificates from it during the
restricted period a confirmation or notice to substantially the following
effect:
The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered or sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at any
time and (ii) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date except in
accordance with Rule 144A under the Securities Act. Terms used above
have the meanings given to them by Regulation S.
Terms used in this subsection (b) have the meanings given to them by
Regulation S under the Securities Act.
(c) CSFBC and any other Purchaser authorized by CSFBC may offer and
sell Offered Certificates (other than the Class D Certificates) in
definitive, fully registered form to a limited number of institutions,
each of which is reasonably believed by the applicable Purchaser to be an
"accredited investor" within the meaning of Rule 501(a)(1), (2), or (3) or
(7) under the Securities Act or an entity in which all of the equity
owners are
-10-
11
accredited investors within the meaning of Rule 501(a)(1), (2) or (3)
under the Securities Act (each, an "Institutional Accredited Investor");
provided that each such Institutional Accredited Investor executes and
delivers to such Purchaser and the Company, prior to the consummation of
any sale of Offered Certificates (other than the Class D Certificates) to
such Institutional Accredited Investor, an Accredited Investor Letter in
substantially the form attached as Appendix III to the Offering Circular
(an "Accredited Investor Letter").
(d) Each Purchaser severally represents and agrees that: (i) it has
not offered or sold and prior to the date six months after the date of
issue of the Offered Certificates will not offer or sell any Offered
Certificates to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995; (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
Offered Certificates in, from or otherwise involving the United Kingdom;
and (iii) it has only issued or passed on, and will only issue or pass on,
in the United Kingdom any document received by it in connection with the
issue of the Offered Certificates to a person who is of a kind described
in Article 11(3) of the Financial Services Act 1986 (Investments
Advertisements) (Exemptions) Order 1996 or is person to whom such document
may otherwise lawfully be issued or passed on.
(e) Each Purchaser severally agrees that it and each of its
affiliates has not entered and will not enter into any contractual
arrangement with any distributor (as that term is defined for purposes of
Regulation S under the Securities Act) with respect to the distribution of
the Offered Certificates except for any such arrangements with the other
Purchasers or affiliates of the other Purchasers or with the prior written
consent of the Company.
(f) Each Purchaser severally represents and agrees that neither it
nor any person acting on its behalf has engaged or will engage in any form
of "general solicitation" or "general advertising" within the meaning of
Rule 502(c) under the Securities Act in connection with any offer or sale
of Offered Certificates in the United States. Each Purchaser severally
agrees, with respect to resales made in reliance on Rule 144A under the
Securities Act of any of the Offered Certificates, to deliver, either with
the confirmation of such resale or otherwise prior to settlement of such
resale, a notice to the effect that the resale of such Offered
Certificates has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.
-11-
12
5. Certain Agreements of the Company. The Company agrees with the
several Purchasers that:
(a) The Company will advise CSFBC promptly of any proposal to amend
or supplement the Offering Circular and will not effect such amendment or
supplementation without CSFBC's consent, which consent will not be
unreasonably withheld. If, at any time prior to the completion of the
resale of the Offered Certificates by the Purchasers any event occurs as a
result of which the Offering Circular as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, the
Company promptly upon obtaining knowledge thereof will notify CSFBC of
each such event and promptly will prepare, at its own expense, an
amendment or supplement which will correct such statement or omission.
Neither CSFBC's consent to, nor the Purchasers' delivery to offerees or
investors of, any such amendment or supplement shall constitute a waiver
of any of the conditions set forth in Section 6.
(b) Notwithstanding any provision of paragraph (a) to the contrary,
the Company's obligations under paragraph (a) shall terminate on the
earlier to occur of (i) the effective date of an exchange offer
registration statement or shelf registration statement with respect to the
Offered Certificates filed pursuant to the Registration Rights Agreement
and (ii) the date upon which the Purchasers and their affiliates cease to
hold Offered Certificates acquired as part of their initial distributions;
provided that the costs and expenses of performing such obligations at any
time after one year from the Closing Date shall be paid by the Purchasers.
(c) The Company will furnish to CSFBC copies of the Preliminary
Offering Circular, the Offering Circular and all amendments and
supplements to such documents, in each case as soon as available and in
such quantities as CSFBC reasonably requests. So long as any of the
Offered Certificates are Registrable Certificates (as defined in the
Registration Rights Agreement), at any time when the Company is not
subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Company will provide to any holder of
such restricted securities, or to any prospective purchaser of such
restricted securities designated by a holder, upon the request of such
holder or prospective purchaser, any information required to be delivered
to holders and prospective purchasers of the Offered Certificates pursuant
to Rule 144A(d)(4) under the Securities Act. This covenant is intended to
be for the benefit of the holders, and prospective purchasers designated
by such holders from time to time, of such restricted securities.
(d) The Company will arrange for the qualification of the Offered
Certificates for sale under the applicable securities or "blue sky" laws
of such jurisdictions in the
-12-
13
United States as CSFBC reasonably designates and will continue such
qualifications in effect so long as required for the resale of the Offered
Certificates by the Purchasers; provided that the Company will not be
required to (i) qualify as a foreign corporation or as a dealer in
securities, (ii) file a general consent to service of process or (iii)
subject itself to taxation in any such jurisdiction.
(e) During the period of ten years hereafter, the Company will
promptly furnish to CSFBC, upon request, and to the other Purchaser, upon
request, a copy of its Annual Report on Form 10-K and any definitive proxy
statement of the Company filed with the Commission under the Exchange Act
or mailed to its stockholders.
(f) During the period of two years after the Closing Date, the
Company will, upon request, furnish to CSFBC, the other Purchaser and any
holder of Offered Certificates a copy of the restrictions on transfer
applicable to such certificates.
(g) During the period of two years after the Closing Date, the
Company will not, and will not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Offered
Certificates that have been reacquired by any of them.
(h) During the period of two years after the Closing Date (or, if
shorter, the period beginning on the Closing Date and ending on the date
on which there ceases to be any Registrable Certificates), the Company
will not be or become an open-end investment company, unit investment
trust or face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act, or a closed-end
investment company required to be registered, but not registered, under
the Investment Company Act.
(i) As between the Company and the Purchasers, the Company will pay
all expenses incident to the performance of its obligations under this
Agreement, including (i) the preparation, printing and distribution of the
Preliminary Offering Circular, the Offering Circular and any amendments
thereof or supplements thereto, (ii) the preparation, printing and
distribution of this Agreement, the Operative Agreements and any Blue Sky
Memorandum or Legal Investment Survey by the Purchasers' counsel, (iii)
the delivery of the Offered Certificates to the Purchasers, (iv) the
reasonable fees and disbursements of the counsel and accountants for the
Company, (v) the expenses of qualifying the Offered Certificates under
state securities laws in accordance with the provisions of paragraph (d)
of this Section, including filing fees and the reasonable fees and
disbursements of counsel for the Purchasers in connection therewith, (vi)
to the extent the Company is so required under any Operative Agreement to
which it is or becomes a party, the fees and expenses of the Loan
Trustees, the Subordination Agent, the Trustees and the Liquidity Provider
and the reasonable fees and disbursements of their respective counsel,
(vii) any fees charged by rating agencies for rating the Offered
-13-
14
Certificates, (viii) the reasonable fees and disbursements of counsel for
the Purchasers in excess of $65,000, (ix) any fees of the National
Association of Securities Dealers, Inc. ("NASD") with respect to admitting
the Class D Certificates for trading in the PORTAL Market, (x) all
reasonable travel, lodging and other expenses of the Purchasers and the
Company's officers and employees and any other expenses in connection with
attending or hosting meetings with prospective purchasers of Offered
Certificates, (xi) all fees and expenses relating to appraisals of the
Aircraft and (xii) all other reasonable out-of-pocket expenses incurred by
the Purchasers in connection with the transactions contemplated by this
Agreement.
(j) In connection with the offering, until CSFBC shall have notified
the Company and the other Purchaser of the completion of the resale of the
Offered Certificates, neither the Company nor any of its affiliates has
bid for or purchased or will bid for or purchase, either alone or with one
or more other persons, for any account in which it or any of its
affiliates has a beneficial interest any Offered Certificates; and neither
it nor any of its affiliates will make bids or purchases for the purpose
of creating actual, or apparent, active trading in, or of raising the
price of, the Offered Certificates.
6. Conditions of the Obligations of the Purchasers. The obligations
of the Purchasers to purchase and pay for the Offered Certificates will be
subject to the accuracy, as of the Closing Date, of the representations
and warranties on the part of the Company, to the accuracy, as of the
Closing Date, of the statements of officers of the Company made in writing
pursuant to the provisions of this Agreement, to the performance by the
Company of its obligations hereunder and to the following additional
conditions precedent:
(a) Subsequent to the date of this Agreement and prior to the
Closing Date,
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities (except for any pass through certificates) by
any "nationally recognized statistical rating organization", as such
term is defined for purposes of Rule 436(g)(2) under the Securities
Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition
(financial or otherwise) business, properties or results of
operations, of the Company and its consolidated subsidiaries, taken
as a whole, from that set forth in the Preliminary Offering Circular
that, in your judgment, is material and adverse and that makes it,
in your judgment, impracticable to market the Offered Certificates
on the terms and in the manner contemplated in the Offering
Circular.
-14-
15
(b) The Purchasers shall have received a letter, dated the date of
this Agreement, of Ernst & Young LLP in form and substance satisfactory to
the Purchasers.
(c) On the Closing Date, the Purchasers shall have received:
(i) The favorable opinion, dated as of the Closing Date, of
Hughes Hubbard & Reed LLP, counsel for the Company, in form and
substance reasonably satisfactory to counsel for the Purchasers.
(ii) The favorable opinion, dated as of the Closing Date from
Jeffery A. Smisek, Executive Vice President and General Counsel of
the Company, in form and substance reasonably satisfactory to
counsel for the Purchasers.
(iii) The favorable opinion, dated as of the Closing Date, of
Richards, Layton & Finger, counsel for Wilmington Trust Company,
individually and as Trustee and Subordination Agent, in form and
substance reasonably satisfactory to counsel for the Purchasers.
(iv) The favorable opinion, dated as of the Closing Date, of
White & Case, special counsel for the Liquidity Provider, in form
and substance reasonably satisfactory to counsel for the Purchasers.
(v) The favorable opinion, dated as of the Closing Date, of
the manager of the legal department of the Liquidity Provider, in
form and substance reasonably satisfactory to counsel for the
Purchasers.
(vi) The favorable opinion, dated as of the Closing Date, of
Milbank, Tweed, Hadley & McCloy, counsel for the Purchasers, with
respect to the validity of the Offered Certificates, the Offering
Circular, the exemption from registration for the offer and sale of
the Offered Certificates to the several Purchasers and the resales
by the several Purchasers as contemplated hereby and other related
matters as CSFBC may require, and the Company shall have furnished
to such counsel such documents as they reasonably request for the
purpose of enabling them to pass upon such matters.
(d) Each of the Appraisers shall have furnished to the Purchasers a
letter from such Appraiser, addressed to the Company and dated the Closing
Date, confirming that such Appraiser and each of its directors and
officers (i) is not an affiliate of the Company or any of its affiliates,
(ii) does not have any substantial interest, direct or indirect, in the
Company or any of its affiliates and (iii) is not connected with the
Company or any of its affiliates as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar
functions.
-15-
16
(e) The Purchasers shall have received a certificate, dated the
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers
shall state that, to the best of their knowledge after reasonable
investigation, the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date as if made on
the Closing Date, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, and that, subsequent to March
31, 1997 there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the condition
(financial or otherwise), business, properties or results of operations of
the Company and its subsidiaries taken as a whole, except as set forth in
or contemplated by the Offering Circular.
(f) The Purchasers shall have received a letter, dated the Closing
Date, of Ernst & Young LLP which meets the requirements of subsection (b)
of this Section, except that the specified date referred to in such
subsection will be a date not more than five days prior to the Closing
Date for the purposes of this subsection.
(g) At the Closing Date, each of the Operative Agreements (other
than any Indenture that may be entered into with respect to a Transfer
Date occurring after the Closing Date) shall have been duly executed and
delivered by each of the parties thereto; the representations and
warranties of the Company contained in the Financing Agreements shall be
true and correct as of the Closing Date (except to the extent that they
relate solely to an earlier date in which case they shall be true and
correct as of such earlier date) and the Purchasers shall have received a
certificate of the President or a Vice President of the Company, dated as
of the Closing Date, to such effect. The Company agrees to furnish to the
Purchasers, promptly after the applicable Transfer Date, a copy of each
opinion required to be delivered under the applicable Financing Agreement
on such Transfer Date addressed to the Purchasers and of such other
documents furnished on such Transfer Date in connection with the
fulfillment of the conditions precedent therein as the Purchasers or
counsel for the Purchasers may reasonably request.
(h) At the Closing Date, the Registration Rights Agreement shall be
in full force and effect.
(i) On the Closing Date, the Offered Certificates shall be rated
"AA", in the case of the Offered Certificates of the Class A Trust, "A",
in the case of the Offered Certificates of the Class B Trust, "BBB-", in
the case of the Offered Certificates of the Class C Trust, and "BB", in
the case of the Offered Certificates of the Class D Trust, by Standard &
Poor's Ratings Services; and "A1", in the case of the Offered Certificates
of the Class A Trust, "A3", in the case of the Offered Certificates of the
Class B Trust,
-16-
17
"Baa2" in the case of the Offered Certificates of the Class C Trust, and
"Ba2", in the case of the Offered Certificates of the Class D Trust, by
Moody's Investors Service, Inc.
(j) On the Closing Date, the Class D Certificates shall have been
designated PORTAL securities in accordance with the rules and regulations
adopted by the NASD relating to trading in the PORTAL Market and to permit
the Offered Certificates to be eligible for clearance and settlement
through DTC.
The Company will furnish the Purchasers with such conformed copies
of such opinions, certificates, letters and documents as the Purchasers
reasonably request. CSFBC may in its sole discretion waive on behalf of the
Purchasers compliance with any conditions to the obligations of the Purchasers
hereunder.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Purchaser, and each Person, if any, who controls such Purchaser within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, or is under common control with, such Purchaser, from and
against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred by any
Purchaser or any such controlling of affiliated person in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Circular or the Offering Circular (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 Purchaser Information provided expressly for use in
the Preliminary Offering Circular or the Offering Circular; provided,
however, that the foregoing indemnity agreement with respect to any
Preliminary Offering Circular shall not inure to the benefit of any
Purchaser from whom the person asserting any such losses, claims, damages
or liabilities purchased Offered Certificates, or to the benefit of any
person controlling such Purchaser, if a copy of the Offering Circular (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 Purchaser to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Offered Certificates to such person, and if the Offering Circular (as so
amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities.
-17-
18
(b) Each Purchaser agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Company to such Purchaser
but only with reference to Purchaser Information furnished expressly for
use in either the Preliminary Offering Circular or the Offering Circular
or any amendments or supplements 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 (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 all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by CSFBC in the case of parties indemnified pursuant
to paragraph (a) above and by the Company in the case of parties
indemnified pursuant to paragraph (b) above. The indemnifying party shall
not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested in writing an indemnifying
party to reimburse the indemnified party for fees and expenses of counsel
as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of
any proceeding effected without its written consent if (i) such settlement
is entered into more than 90 days after receipt by such indemnifying party
of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party 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
-18-
19
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are
the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 7 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 (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company, on the one hand, and the
Purchasers, on the other hand, from the offering of such Offered
Certificates or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Purchasers
on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Purchasers on the other hand in
connection with the offering of such Offered Certificates shall be deemed
to be in the same respective proportions as the net proceeds from the
offering of such Offered Certificates (before deducting expenses) received
by the Company and the total discounts and commissions received by the
Purchasers in respect thereof bear to the aggregate offering price of such
Offered Certificates. The relative fault of the Company on the one hand
and of the Purchasers on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or by the Purchasers
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Purchasers' respective obligations to contribute pursuant to this Section
7 are several in proportion to the respective principal amount of Offered
Certificates they have purchased hereunder, and not joint.
(e) The Company and the Purchasers agree that it would not be just
or equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Purchasers were treated as one entity for
such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or
-19-
20
defending any such action or claim. Notwithstanding the provisions of this
Section 7, no Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Offered
Certificates resold by it in the initial placement of such Offered
Certificates were offered to investors exceeds the amount of any damages
that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution provisions contained in this Section 7 and
the representations and warranties of the Company contained in this
Agreement shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement, (ii) any investigation made by
or on behalf of the Purchasers or any person controlling the Purchasers or
by or on behalf of the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Offered Certificates. The remedies provided for in this Section 7 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.
8. Default of Purchasers. If either Purchaser defaults in its
obligations to purchase Offered Certificates hereunder and the aggregate
principal amount of the Offered Certificates that such defaulting Purchaser
agreed but failed to purchase does not exceed 10% of the total principal amount
of the Offered Certificates, CSFBC may make arrangements satisfactory to the
Company for the purchase of such Offered Certificates by other persons,
including the other Purchaser, but if no such arrangements are made by the
Closing Date, the non-defaulting Purchaser shall be obligated to purchase the
Offered Certificates that such defaulting Purchaser agreed but failed to
purchase. If either Purchaser so defaults and the aggregate principal amount of
the Offered Certificates with respect to which such default or defaults occurs
exceeds 10% of the total principal amount of the Offered Certificates and
arrangements satisfactory to CSFBC and the Company for the purchase of such
Offered Certificates by other persons are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Purchaser or the Company, except as provided in Section 9. As
used in this Agreement, the term "Purchaser" includes any person substituted for
a Purchaser under this Section. Nothing herein will relieve a defaulting
Purchaser from liability for its default.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the parties to this Agreement or their officers set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation, or statement as to the results thereof, made by or on
behalf of any party to this Agreement or any of their respective
representatives, officers or directors or any controlling person and will
survive delivery of and payment for the Offered Certificates. If for any reason
the purchase of the Offered Certificates by the Purchasers is not
-20-
21
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 5 and the respective obligations of the
Company and the Purchasers pursuant to Section 7 shall remain in effect. If the
purchase of the Offered Certificates by the Purchasers is not consummated for
any reason other than solely because of the occurrence of the termination of the
Agreement pursuant to Section 8 or 10, the Company will reimburse the Purchasers
for all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of such
Offered Certificates and comply with its obligations under Section 5(i).
10. Termination. This Agreement shall be subject to termination by
notice given by CSFBC to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange or the National Association
of Securities Dealers, Inc., (ii) trading of any securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in CSFBC's judgment, is
material and adverse and (b) in the case of any of the events specified in
clauses (a)(i) through (iv), such event singly or together with any other such
event makes it, in CSFBC's judgment, impracticable to market the Offered
Certificates on the terms and in the manner contemplated in the Offering
Circular.
11. Notices. All communications hereunder will be in writing and
will be mailed, delivered or sent by facsimile transmission and confirmed:
to the Purchasers at:
c/o Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010-3629
Attention: Transactions Advisory Group
Facsimile number: (212) 325-8278
(provided, however, that any notice to a Purchaser pursuant to Section 7 will be
sent by facsimile transmission, delivered or telegraphed and confirmed to such
Purchaser)
-21-
1
EXHIBIT 4.15
PARTICIPATION AGREEMENT 322
Dated as of June 25, 1997
Among
CONTINENTAL AIRLINES, INC.,
Owner,
and
WILMINGTON TRUST COMPANY,
Not in its individual capacity
except as expressly provided herein,
but solely as Mortgagee, Second Mortgagee, Subordination
Agent under the Intercreditor Agreement and Pass
Through Trustee under each of the Pass Through Agreements
----------------------------
One Boeing Model 737-3T0 Aircraft
Bearing Manufacturer's Serial No. 23373
and U.S. Registration No. N12322
PAGE ;
2
CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION............................................ 2
SECTION 2. SECURED LOANS........................................................... 2
2.1 Making of Loans and Issuance of Equipment Notes.............. 2
2.2 Payments..................................................... 3
SECTION 3. CLOSING; TERMINATIONS................................................... 3
3.1 Closing...................................................... 3
3.2 Termination.................................................. 3
SECTION 4. CONDITIONS PRECEDENT.................................................... 3
4.1 Conditions Precedent to the Obligations of the Pass Through
Trustees..................................................... 3
4.2 Conditions Precedent to Obligations of Mortgagee............. 8
4.3 Conditions Precedent to Obligations of Owner................. 8
4.4 Conditions Precedent to Obligations of Second Mortgagee...... 9
4.5 Post-Registration Opinion.................................... 10
SECTION 5. REPRESENTATIONS AND WARRANTIES.......................................... 10
5.1 Owner's Representations and Warranties....................... 10
5.2 WTC's Representations and Warranties......................... 13
SECTION 6. COVENANTS, UNDERTAKINGS AND AGREEMENTS.................................. 18
6.1 Covenants of Owner........................................... 18
6.2 Covenants of WTC............................................. 19
6.3 Covenants of Note Holders.................................... 21
6.4 Agreements................................................... 22
SECTION 7. CONFIDENTIALITY......................................................... 26
SECTION 8. INDEMNIFICATION AND EXPENSES............................................ 27
8.1 General Indemnity............................................ 27
8.2 Expenses..................................................... 33
8.3 General Tax Indemnity........................................ 34
8.4 Payments..................................................... 45
8.5 Interest..................................................... 45
PAGE i
3
8.6 Benefit of Indemnities....................................... 46
SECTION 9. ASSIGNMENT OR TRANSFER OF INTEREST...................................... 46
9.1 Note Holders................................................. 46
9.2 Effect of Transfer........................................... 46
SECTION 10. SECTION 1110............................................................ 47
SECTION 11. CHANGE OF CITIZENSHIP................................................... 47
11.1 Generally.................................................... 47
11.2 Mortgagee.................................................... 47
SECTION 12. MISCELLANEOUS........................................................... 47
12.1 Amendments................................................... 47
12.2 Severability................................................. 48
12.3 Survival..................................................... 48
12.4 Reproduction of Documents.................................... 48
12.5 Counterparts................................................. 49
12.6 No Waiver.................................................... 49
12.7 Notices...................................................... 49
12.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE............. 50
12.9 Third-Party Beneficiary...................................... 51
12.10 Entire Agreement............................................. 51
12.11 Further Assurances........................................... 52
SCHEDULES AND EXHIBITS
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
SCHEDULE 4 - Permitted Countries
EXHIBIT A - Opinion of special counsel to Owner
EXHIBIT B - Opinion of corporate counsel to Owner
EXHIBIT C - Opinion of special counsel to Mortgagee
EXHIBIT D - Opinion of special counsel to the initial purchasers of the
Pass Through Certificates
EXHIBIT E - Opinion of special counsel in Oklahoma City, Oklahoma
EXHIBIT F - Form of Trust Indenture
PAGE ii
4
PARTICIPATION AGREEMENT 322
PARTICIPATION AGREEMENT 322, dated as of June 25, 1997 (this
"Agreement"), among (a) CONTINENTAL AIRLINES, INC., a Delaware corporation
("Owner"), (b) 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"), (c) Wilmington Trust Company, not in its individual capacity,
except as expressly provided herein, but solely as Second Mortgagee (the "Second
Mortgagee"), (d) WILMINGTON TRUST COMPANY, not in its individual capacity,
except as expressly provided herein, but solely as Pass Through Trustee under
each of the Pass Through Trust Agreements, (each, a "Pass Through Trustee") and
(e) 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, Owner Participant and Owner Trustee have entered into the
Aircraft Purchase Agreement, pursuant to which, among other things, the Owner
Trustee has agreed to sell to Owner and Owner has agreed to purchase from the
Owner Trustee, certain aircraft, including the Aircraft.
B. 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.
C. Each 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 Pass Through Trust to purchase from Owner, on behalf of the related Pass
Through Trust, the Equipment Note bearing the same interest rate as the Pass
Through Certificates issued by such Pass Through Trust.
D. Owner and Mortgagee, at the Closing contemplated by the Agreement,
will enter into the Trust Indenture for the benefit of the Note Holders,
pursuant to which, among other things, Owner agrees (1) to issue Equipment
Notes, in the amounts and otherwise as provided in the Trust Indenture, and (2)
to mortgage, pledge and assign to Mortgagee all of Owner's right, title and
interest
PAGE 1
5
in the Collateral to secure the Secured Obligations, including, without
limitation, Owner's obligations under the Equipment Notes.
E. The Owner shall apply the proceeds of the issuances of the Equipment
Notes to the payment of the purchase price of the Aircraft in the manner
provided herein and for no other purpose.
F. 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 to the Trust Indenture.
SECTION 2. SECURED LOANS
2.1 MAKING OF LOANS AND ISSUANCE OF EQUIPMENT NOTES
Subject to the terms and conditions of this Agreement, at the Closing:
(a) Each Pass Through Trustee shall make a secured loan to the
Owner in the amount in Dollars opposite such Trustee's name on
Schedule 2; and
(b) The Owner shall issue, pursuant to and in accordance with the
provisions of Article II of the Trust Indenture, to the
Subordination Agent as the registered holder on behalf of each
Pass Through Trustee, one or more Equipment Notes, dated the
Closing Date, of the Series set forth opposite such Trustee's
name on Schedule 2, in an aggregate principal amount equal to
the secured loan made by each such Pass Through Trustee.
PAGE 2
6
2.2 PAYMENTS
The proceeds of each secured loan made by each Pass Through Trustee to
the Owner as provided in Section 2.1 shall be made available by such Pass
Through Trustee causing a wire transfer of such proceeds to the account of the
"Applicable Indenture Trustee" (as defined in the Aircraft Purchase Agreement)
with respect to the Aircraft in payment of a portion of the "Net Purchase Price"
(as defined in the Aircraft Purchase Agreement) for the Aircraft.
SECTION 3. CLOSING; TERMINATION
3.1 CLOSING
The Closing of the transactions contemplated hereby shall take place at
the offices of Hughes Hubbard & Reed LLP, One Battery Park Plaza, New York, New
York 10004, or at such other place as the parties shall agree. Owner shall give
to Mortgagee and each Pass Through Trustee at least two Business Days' advance
notice (or, in the case of any adjourned Closing, one Business Days' advance
notice) of the Closing Date. If on a scheduled Closing Date the Closing shall
not occur for any reason, the Closing shall be deemed adjourned to the next
Business Day or to such other Business Day as Owner shall specify by written
notice to the Mortgagee and each Pass Through Trustee prior to 6 P.M. New York
time on the scheduled Closing Date, provided that in no event shall the Closing
Date be adjourned beyond August 31, 1997.
3.2 TERMINATION
This Agreement shall terminate if the Closing shall not have occurred
on or before August 31, 1997.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PASS THROUGH
TRUSTEES
The obligation of each Pass Through Trustee to make the secured loan
described in Section 2.1(a) and to participate in the transactions contemplated
by this Agreement on the Closing Date is subject to the fulfillment, prior to or
on the Closing Date, of the following conditions precedent:
PAGE 3
7
4.1.1 EQUIPMENT NOTES
The Owner shall have tendered the Equipment Notes to the Mortgagee for
authentication and the Mortgagee shall have authenticated such Equipment Notes
and shall have tendered the Equipment Notes to the Subordination Agent on behalf
of such Pass Through Trustee, against confirmation that the loan proceeds have
been made available to Owner, all in accordance with Section 2.
4.1.2 DELIVERY OF DOCUMENTS
The Subordination Agent on behalf of each Pass Through Trustee shall
have received executed counterparts or conformed copies of the following
documents:
(i) this Agreement;
(ii) the Trust Indenture in substantially the form of Exhibit
F hereto;
(iii) the initial Trust Indenture Supplement;
(iv) the Second Mortgage;
(v) the Second Mortgage Supplement No. 1 and any subsequent
Second Mortgage Supplement executed by Owner and the Second Mortgagee
on or prior to the Closing Date;
(vi) the Owner Trustee Bill of Sale and the FAA Bill of Sale;
(vii) (A) a copy of the Certificate of Incorporation and
By-Laws of Owner and resolutions of the board of directors of Owner
and/or the executive committee thereof, in each case certified as of
the Closing Date, by the Secretary or an Assistant Secretary of Owner,
duly authorizing the execution, delivery and performance by Owner of
the Operative Agreements to which it is party required to be executed
and delivered by Owner on or prior to the Closing Date in accordance
with the provisions hereof and thereof; and (B) an incumbency
certificate of Owner as to the person or persons authorized to execute
and deliver the Operative Agreements on behalf of Owner;
(viii) an Officer's Certificate of Owner, dated as of the
Closing Date, stating that its representations and
PAGE 4
8
warranties set forth in this Agreement are true and correct as of the
Closing Date (or, to the extent that any such representation and
warranty expressly relates to an earlier date, true and correct as of
such earlier date);
(ix) the Financing Statements;
(x) the following opinions of counsel, in each case dated the
Closing Date:
(A) an opinion of Hughes Hubbard & Reed LLP, special
counsel to Owner, substantially in the form of Exhibit A;
(B) an opinion of Owner's Legal Department,
substantially in the form of Exhibit B;
(C) an opinion of Richards, Layton & Finger, special
counsel to Mortgagee and Second Mortgagee, substantially in
the form of Exhibit C;
(D) an opinion of Milbank, Tweed, Hadley & McCloy,
special counsel for the initial purchasers of the Pass Through
Certificates, substantially in the form set forth in Exhibit
D; and
(E) an opinion of Lytle Soule & Curlee, special
counsel in Oklahoma City, Oklahoma, substantially in the form
of Exhibit E;
(xi) the broker's report and insurance certificates required
by Section 4.06 of the Trust Indenture;
(xii) the Aircraft Purchase Agreement;
(xiii) the Existing Indenture Release;
(xiv) the Termination of Lease; and
(xv) the acknowledgment of the "Applicable Indenture Trustee"
(as defined in the Aircraft Purchase Agreement) with respect to the
Aircraft of receipt of the proceeds of the secured loan pursuant to
Section 2 and the application thereof to the "Net Purchase Price" (as
defined in the Aircraft Purchase Agreement).
PAGE 5
9
4.1.3 PERFECTED SECURITY INTEREST
On the Closing Date, after giving effect to the filing of the FAA Filed
Documents and the Financing Statements, Mortgagee shall have received a duly
perfected first priority security interest in all of Owner's right, title and
interest in the Aircraft, subject only to Permitted Liens.
4.1.4 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) Owner, any Pass Through
Trustee, Subordination Agent or Mortgagee to execute, deliver and perform the
Operative Agreements to which any of them is a party or (b) any Pass Through
Trustee to make the loan contemplated by Section 2.1, to acquire an Equipment
Note or to realize the benefits of the security afforded by the Trust Indenture.
4.1.5 REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations and warranties of each other party to this
Agreement made, in each case, in this Agreement and in any other Operative
Agreement to which it is a party, shall be true and accurate in all material
respects as of the Closing Date (unless any such representation and warranty
shall have been made with reference to a specified date, in which case such
representation and warranty shall be true and accurate as of such specified
date) and each other party to this Agreement shall have performed and observed,
in all material respects, all of its covenants, obligations and agreements in
this Agreement and in any other Operative Agreement to which it is a party to be
observed or performed by it as of the Closing Date.
4.1.6 NO EVENT OF DEFAULT
On the Closing Date, no event shall have occurred and be continuing, or
would result from the mortgage of the Aircraft, which constitutes a Default or
an Event of Default.
4.1.7 NO EVENT OF LOSS
No Event of Loss with respect to the Aircraft shall have occurred.
PAGE 6
10
4.1.8 TITLE
Owner 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 all Liens,
except Permitted Liens.
4.1.9 CERTIFICATION
The Aircraft shall have been duly certificated by the FAA as to type
and airworthiness.
4.1.10 SECTION 1110
Mortgagee 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 Trust Indenture in the event of a case
under Chapter 11 of the Bankruptcy Code in which Owner is a debtor.
4.1.11 FILING
On the Closing Date (a) the FAA Filed Documents shall have been duly
filed for recordation (or shall be in the process of being so duly filed for
recordation) with the FAA in accordance with the Act and (b) each Financing
Statement shall have been duly filed (or shall be in the process of being so
duly filed) in the appropriate jurisdiction.
4.1.12 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.
4.1.13 GOVERNMENTAL ACTION
All appropriate action required to have been taken prior to the Closing
Date by the FAA, or any governmental or political agency, subdivision or
instrumentality of the United States, in connection with the transactions
contemplated by this Agreement shall have been taken, and all orders, permits,
waivers, authorizations, exemptions and approvals of such entities
PAGE 7
11
required to be in effect on the Closing Date in connection with the transactions
contemplated by this Agreement shall have been issued.
4.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF MORTGAGEE
The obligation of Mortgagee to authenticate the Equipment Notes on the
Closing Date is subject to the satisfaction or waiver by Mortgagee, on or prior
to the Closing Date, of the conditions precedent set forth below in this Section
4.2.
4.2.1 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 4.1.2 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.
4.2.2 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 4.1.4, 4.1.5, 4.1.6 and
4.1.10 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.
4.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER
The obligation of Owner to participate in the transaction contemplated
hereby on the Closing Date is subject to the satisfaction or waiver by Owner, on
or prior to the Closing Date, of the conditions precedent set forth below in
this Section 4.3.
4.3.1 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 4.1.2 shall have been received by Owner, except
as specifically provided therein, and shall be satisfactory to Owner, unless the
failure to receive any such agreement, instrument, certificate or document is
the result of any action or inaction by Owner. In addition, the Owner shall have
received the following:
(i) (A) an incumbency certificate of WTC as to the person or
persons authorized to execute and deliver the
PAGE 8
12
Operative Agreements on behalf of WTC and (B) a copy of the Certificate
of Incorporation and By-Laws and general authorizing resolution of the
board of directors (or executive committee) or other satisfactory
evidence of authorization of WTC, certified as of the Closing Date by
the Secretary or Assistant or Attesting Secretary of WTC, which
authorize the execution, delivery and performance by WTC of the
Operative Agreements to which it is a party; and
(ii) an Officer's Certificate of WTC, dated as of the Closing
Date, stating that its representations and warranties in its individual
capacity or as Mortgagee, Second Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, set forth in this Agreement
are true and correct as of the Closing Date (or, to the extent that any
such representation and warranty expressly relates to an earlier date,
true and correct as of such earlier date);
4.3.2 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 4.1.4, 4.1.5, 4.1.6,
4.1.7, 4.1.8, 4.1.9, 4.1.10, 4.1.11, 4.1.12 and 4.1.13 shall have been satisfied
or waived by Owner, unless the failure of any such condition to be satisfied is
the result of any action or inaction by Owner.
4.4 CONDITIONS PRECEDENT TO OBLIGATIONS OF SECOND MORTGAGEE
The obligation of Second Mortgagee to execute and deliver the Second
Mortgage (if not previously done) and the Second Mortgage Supplement relating to
the Aircraft on the Closing Date is subject to the satisfaction or waiver by
Second Mortgagee, on or prior to the Closing Date, of the conditions precedent
set forth below in this Section 4.4.
4.4.1 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 4.1.2 shall have been received by Second
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 Second Mortgagee.
PAGE 9
13
4.4.2 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 4.1.4, 4.1.5, 4.1.6 and
4.1.10 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Second Mortgagee.
4.5 POST-REGISTRATION OPINION
Promptly upon the registration of the Aircraft and the recordation of
the FAA Filed Documents pursuant to the Act, Owner will cause Lytle Soule &
Curlee, special counsel in Oklahoma City, Oklahoma, to deliver to Owner, each
Pass Through Trustee, Mortgagee and Second Mortgagee a favorable opinion or
opinions addressed to each of them with respect to such registration and
recordation.
SECTION 5. REPRESENTATIONS AND WARRANTIES
5.1 OWNER'S REPRESENTATIONS AND WARRANTIES
Owner represents and warrants to each Applicable Pass Through Trustee,
Subordination Agent, Mortgagee and Second Mortgagee that:
5.1.1 ORGANIZATION; QUALIFICATION
Owner 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 Operative Agreements to which it is party. Owner 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 Owner.
5.1.2 CORPORATE AUTHORIZATION
Owner 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
PAGE 10
14
execution and delivery of each of the Operative Agreements to which it is party,
and the performance of its obligations thereunder.
5.1.3 NO VIOLATION
The execution and delivery by Owner of the Operative Agreements to
which it is party, the performance by Owner of its obligations thereunder and
the consummation by Owner on the Closing Date of the transactions contemplated
thereby, do not and will not (a) violate any provision of the Certificate of
Incorporation or By-Laws of Owner, (b) violate any Law applicable to or binding
on Owner 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), or result in the creation of any Lien (other than as permitted under the
Trust Indenture) 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 Owner is a party or by which
Owner or any of its properties is bound.
5.1.4 APPROVALS
The execution and delivery by Owner of the Operative Agreements to
which Owner is a party, the performance by Owner of its obligations thereunder
and the consummation by Owner on the Closing Date of the transactions
contemplated thereby do not and will not require the consent or approval of, or
the giving of notice to, or the registration with, or the recording or filing of
any documents with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of Owner 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.
5.1.5 VALID AND BINDING AGREEMENTS
The Operative Agreements to which Owner is a party have been duly
authorized, executed and delivered by Owner and, assuming the due authorization,
execution and delivery thereof by the other party or parties thereto, constitute
the legal, valid and binding obligations of Owner and are enforceable against
Owner in
PAGE 11
15
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.
5.1.6 REGISTRATION AND RECORDATION
Except for (a) the registration of the Aircraft with the FAA pursuant
to the Act in the name of Owner, (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),
and (d) the affixation of the nameplates referred to in Section 4.02(f) of the
Trust Indenture, 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 Mortgagee's or Second
Mortgagee's security interest in the Aircraft as against Owner and any other
Person, in each case, in any applicable jurisdictions in the United States. Upon
consummation of the Closing, the Owner will purchase the Aircraft pursuant to
Section 2.01 of the Aircraft Purchase Agreement.
5.1.7 CHIEF EXECUTIVE OFFICE
The chief executive office (as such term is defined in Article 9 of the
UCC) of Owner is located at 2929 Allen Parkway, Houston, Texas 77019.
5.1.8 NO EVENT OF LOSS
No Event of Loss has occurred with respect to the Aircraft.
5.1.9 COMPLIANCE WITH LAWS
(a) Owner is a Citizen of the United States and a U.S. Air Carrier.
(b) Owner holds all licenses, permits and franchises from the
appropriate Government Entities necessary to authorize Owner 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
PAGE 12
16
franchise would not give rise to a Material Adverse Change to Owner.
(c) Owner 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.
(d) The Owner Trustee Bill of Sale and the FAA Bill of Sale are
effective to convey title to the Aircraft to the Owner. Upon consummation of the
Closing, the Owner will have good title to the Aircraft, free and clear of all
Liens, except Permitted Liens.
5.1.10 SECURITIES LAWS
Neither Owner 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 of the Equipment Notes or any other
interest in or security under the Trust Indenture or the Second Mortgage, for
sale to, or solicited any offer to acquire any such interest or security from,
or has sold any such interest or security to, any person in violation of the
Securities Act.
5.1.11 BROKER'S FEES
No Person acting on behalf of Owner is or will be entitled to any
broker's fee, commission or finder's fee in connection with the Transactions,
other than the fees and expenses payable by Owner to the initial purchasers of
the Pass Through Certificates.
5.1.12 SECTION 1110
Mortgagee 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 Trust Indenture in the event of a case under Chapter 11 of
the Bankruptcy Code in which Owner is a debtor.
5.2 WTC'S REPRESENTATIONS AND WARRANTIES
WTC represents and warrants (with respect to Section 5.2.10, solely in
its capacity as Subordination Agent) to Owner that:
PAGE 13
17
5.2.1 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 Pass
Through Trustee Agreements and the Operative Agreements to which it is a party.
5.2.2 CORPORATE AUTHORIZATION
WTC has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by Law or by its Certificate of Incorporation or By-Laws)
to authorize the execution and delivery by WTC, in its individual capacity or as
Mortgagee, Second Mortgagee, a Pass Through Trustee or Subordination Agent, as
the case may be, of the Pass Through Trustee Agreements and the Operative
Agreements to which it is a party and the performance of its obligations
thereunder.
5.2.3 NO VIOLATION
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, Second Mortgagee, a Pass Through Trustee or Subordination Agent, as
the case may be, of the Pass Through Trustee Agreements and the Operative
Agreements to which it is a party, the performance by WTC, in its individual
capacity or as Mortgagee, Second Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, of its obligations thereunder and the
consummation on the Closing Date of the transactions contemplated thereby, do
not and will not (a) violate any provision of the Certificate of Incorporation
or By-Laws of WTC, (b) violate any Law applicable to or binding on WTC, in its
individual capacity or (except in the case of any Law relating to any Plan) as
Mortgagee, Second Mortgagee, a Pass
PAGE 14
18
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, Second
Mortgagee, a Pass Through Trustee or Subordination Agent), or result in the
creation of any Lien (other than the lien of the Trust Indenture and the Second
Mortgage) upon any property of WTC, in its individual capacity or as Mortgagee,
Second 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, Second
Mortgagee, a Pass Through Trustee or Subordination Agent, is a party or by which
WTC, in its individual capacity or as Mortgagee, Second Mortgagee, a Pass
Through Trustee or Subordination Agent, or any of their respective properties is
bound.
5.2.4 APPROVALS
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, Second Mortgagee, a Pass Through Trustee or Subordination Agent, as
the case may be, of the Pass Through Trustee Agreements and the Operative
Agreements to which it is a party, the performance by WTC, in its individual
capacity or as Mortgagee, Second Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, of its obligations thereunder and the
consummation on the Closing Date by WTC, in its individual capacity or as
Mortgagee, Second 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.
5.2.5 VALID AND BINDING AGREEMENTS
The Pass Through Trustee Agreements and the Operative Agreements to
which it is a party 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, Second 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, Second 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
PAGE 15
19
affecting the rights of creditors generally and general principles of equity,
whether considered in a proceeding at law or in equity.
5.2.6 CITIZENSHIP
WTC is a Citizen of the United States.
5.2.7 NO LIENS
On the Closing Date, there are no Liens attributable to WTC in respect
of all or any part of the Collateral.
5.2.8 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,
Second 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, Second Mortgagee, a Pass Through
Trustee or Subordination Agent, as the case may be, would materially adversely
affect the ability of WTC, in its individual capacity or as Mortgagee, Second
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.
5.2.9 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 Collateral or any of the
Equipment Notes or any other interest in or security under the Collateral 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
Subordination Agent and the Pass Through Trustees, except for the offering and
sale of the Pass Through Certificates.
5.2.10 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
PAGE 16
20
resale or distribution thereof, except that, subject to the restrictions on
transfer set forth in Section 9, the disposition by it of its Equipment Notes
shall at all times be within its control.
5.2.11 TAXES
There are no Taxes payable by any Pass Through Trustee or WTC, as the
case may be, imposed by the State of Delaware or any political subdivision or
taxing authority thereof in connection with the execution, delivery and
performance by such Pass Through Trustee or WTC, as the case may be, of this
Agreement or any of the Pass Through Trustee Agreements (other than franchise or
other taxes based on or measured by any fees or compensation received by any
such Pass Through Trustee or WTC, as the case may be, for services rendered in
connection with the transactions contemplated by any of the Pass Through Trust
Agreements), and there are no Taxes payable by any Pass Through Trustee or WTC,
as the case may be, imposed by the State of Delaware or any political
subdivision thereof in connection with the acquisition, possession or ownership
by any such Pass Through Trustee of any of the Equipment Notes (other than
franchise or other taxes based on or measured by any fees or compensation
received by any such Pass Through Trustee or WTC, as the case may be, for
services rendered in connection with the transactions contemplated by any of the
Pass Through Trust Agreements), and, assuming that the trusts created by the
Pass Through Trust Agreements will not be taxable as corporations, but, rather,
each will be characterized as a grantor trust under subpart E, Part I of
Subchapter J of the Code or as a partnership under Subchapter K of the Code,
such trusts will not be subject to any Taxes imposed by the State of Delaware or
any political subdivision thereof;
5.2.12 BROKER'S FEES
No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, Second Mortgagee, any Pass Through Trustee or Subordination Agent, is
or will be entitled to any broker's fee, commission or finder's fee in
connection with the Transactions.
PAGE 17
21
SECTION 6. COVENANTS, UNDERTAKINGS AND AGREEMENTS
6.1 COVENANTS OF OWNER
Owner covenants and agrees, at its own cost and expense, with Note
Holder, Mortgagee and Second Mortgagee as follows:
6.1.1 CORPORATE EXISTENCE; U.S. AIR CARRIER
Owner shall at all times maintain its corporate existence, except as
permitted by Section 4.07 of the Trust Indenture, and shall at all times remain
a U.S. Air Carrier.
6.1.2 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
Owner will give Mortgagee and Second Mortgagee timely written notice
(but in any event within 30 days prior to the expiration of the period of time
specified under applicable Law to prevent lapse of perfection) of any relocation
of its chief executive office (as such term is defined in Article 9 of the UCC)
from its then present location and will promptly take any action required by
Section 6.1.3(c) as a result of such relocation.
6.1.3 CERTAIN ASSURANCES
(a) Owner 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 Mortgagee or Second 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 Owner will not expand any obligations or limit any rights of Owner
in respect of the transactions contemplated by any Operative Agreement.
(b) Owner shall promptly take such action with respect to the
recording, filing, re-recording and refiling of the Trust Indenture, the Second
Mortgage and any supplements thereto, including, without limitation, the Trust
Indenture Supplement and Second Mortgage Supplement No. 1, as shall be necessary
to continue the perfection and priority of the Lien created by the Trust
Indenture and the Second Mortgage in the Collateral.
PAGE 18
22
(c) Owner, 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 of the
Owner, 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 Mortgagee and Second Mortgagee, duly and timely filed and
recorded, or filed for recordation, to the extent permitted under the Act (with
respect to the FAA Filed Documents) or the UCC or similar law of any other
applicable jurisdiction (with respect to such other documents).
(d) If the Aircraft has been registered in a country other than the
United States pursuant to Section 4.02(e) of the Trust Indenture, Owner will
furnish to Mortgagee and Second Mortgagee annually after such registration,
commencing with the calendar year after such registration is effected, an
opinion of special counsel reasonably satisfactory to Mortgagee and Second
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 the Lien created by the Trust
Indenture and the Second Mortgage in the Collateral, reciting the details of
such actions, or (ii) no such action is necessary to maintain the perfection of
such Lien.
6.1.4 SECURITIES LAWS
Neither Owner 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 any interest in any of the Equipment Notes or any
other interest in or security under the Trust Indenture or the Second Mortgage,
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.
6.2 COVENANTS OF WTC
WTC in its individual capacity or as Mortgagee, Second Mortgagee, each
Pass Through Trustee or Subordination Agent, as the case may be, covenants and
agrees with Owner as follows:
PAGE 19
23
6.2.1 LIENS
WTC (a) will not directly or indirectly create, incur, assume or suffer
to exist any Lien attributable to it on or with respect to all or any part of
the Collateral or the Aircraft, (b) will, at its own cost and expense, promptly
take such action as may be necessary to discharge any Lien attributable to WTC
on all or any part of the Collateral or the Aircraft and (c) will personally
hold harmless and indemnify Owner, each Note Holder, each of their respective
Affiliates, successors and permitted assigns, and the Collateral from and
against (i) any and all Expenses, and (ii) 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 Lien.
6.2.2 SECURITIES ACT
WTC in its individual capacity or as Mortgagee, Second Mortgagee, a
Pass Through Trustee or Subordination Agent, will not offer any beneficial
interest or Security relating to the ownership of the Aircraft or any interest
in the Collateral, or any of the Equipment Notes or any other interest in or
security under the Trust Indenture or the Second Mortgage 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.
6.2.3 PERFORMANCE OF AGREEMENTS
WTC, in its individual capacity and as Mortgagee, Second Mortgagee, a
Pass Through Trustee or Subordination Agent, as the case may be, shall perform
its obligations under the Pass Through Trustee Agreements and the Operative
Agreements in accordance with the terms thereof.
6.2.4 WITHHOLDING TAXES
WTC shall indemnify (on an after-tax basis) and hold harmless Owner
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 and Second
PAGE 20
24
Mortgagee necessary certificates or forms to substantiate the right to exemption
from such withholding tax.
6.3 COVENANTS OF NOTE HOLDERS
Each Note Holder (including Subordination Agent) as to itself only
covenants and agrees with Owner, Mortgagee and Second Mortgagee as follows:
6.3.1 WITHHOLDING TAXES
Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on
an after-tax basis) and hold harmless Owner, Mortgagee and Second 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 or Second 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.
6.3.2 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, the form of Equipment Note set
forth in the Trust Indenture and the Second Mortgage.
(b) 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
Owner 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
PAGE 21
25
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 Owner, 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) and the other covenants of the Note Holders contained in the
Operative Agreements.
6.4 AGREEMENTS
6.4.1 QUIET ENJOYMENT
Each Pass Through Trustee, Subordination Agent, each Note Holder,
Mortgagee and Second Mortgagee agrees as to itself with Owner that, so long as
no 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 Owner's rights in accordance with the Trust
Indenture and the Second Mortgage to the quiet enjoyment, possession and use of
the Aircraft.
6.4.2 CONSENTS
Each Pass Through Trustee, Subordination Agent, Mortgagee and Second
Mortgagee covenants and agrees, for the benefit of Owner, that it shall not
unreasonably withhold its consent to any consent or approval requested of it
under the terms of any of the Operative Agreements which by its terms is not to
be unreasonably withheld.
6.4.3 INSURANCE
Each Pass Through Trustee, Subordination Agent, Mortgagee, Second
Mortgagee and each Note Holder agrees not to obtain or maintain insurance for
its own account as permitted by Section 4.06 of the Trust Indenture (or the
provisions thereof to
PAGE 22
26
the extent required to be complied with under the Second Mortgage) if such
insurance would limit or otherwise adversely affect the coverage of any
insurance required to be obtained or maintained by Owner pursuant to Section
4.06 of the Trust Indenture (or the provisions thereof to the extent required to
be complied with under the Second Mortgage).
6.4.4 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 Collateral 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 (other than the Second Mortgage or any
Second Mortgage Supplement), shall have been paid in full.
6.4.5 FOREIGN REGISTRATION
Each Note Holder, Mortgagee and Second Mortgagee hereby agree, for the
benefit of Owner but subject to the provisions of Section 4.02(b) of the Trust
Indenture:
(a) that Owner shall be entitled to register the Aircraft or cause the
Aircraft to be registered in a country other than the United States subject to
compliance with the following:
(i) each of the following requirements is satisfied:
(A) no Special Default or Event of Default shall have
occurred and be continuing at the time of such
registration;
(B) such proposed change of registration is made in
connection with a Permitted Lease to a Permitted Air
Carrier;
(C) 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 Closing Date;
(ii) the Mortgagee and Second Mortgagee shall have received an
opinion of counsel (subject to customary exceptions) reasonably
satisfactory to the Mortgagee and
PAGE 23
27
Second Mortgagee addressed to Mortgagee and Second Mortgagee as to the
effect that:
(A) such country would recognize the Owner's
ownership interest in the Aircraft;
(B) after giving effect to such change in
registration, the Lien of the Trust Indenture and the Second
Mortgagee on the Owner's right, title and interest in and to
the Aircraft shall continue, in the case of the Trust
Indenture, as a valid and duly perfected first priority
security interest and, in the case of the Second Mortgage, as
a valid and duly perfected second priority security interest,
and all filing, recording or other action necessary to protect
the same shall have been accomplished (or, if such opinion
cannot be given at the time of such proposed change in
registration because such change in registration is not yet
effective, (1) the opinion shall detail what filing, recording
or other action is necessary and (2) the Mortgagee and the
Second Mortgagee shall have received a certificate from Owner
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
Mortgagee and the Second Mortgagee on or prior to the
effective date of such change in registration);
(C) unless Owner or the Permitted Air Carrier 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 Owner
prior to such proposed reregistration has obtained such
license or permit) for the taking or requisition by such
government of such use; and
(D) it is not necessary, solely as a consequence of
such change in registration and without giving
PAGE 24
28
effect to any other activity of the Mortgagee or the Second
Mortgagee (or any Affiliate of the Mortgagee or the Second
Mortgagee), for the Mortgagee or the Second 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.
(E) there shall not exist possessory rights in favor
of the government of such country or of the Permitted Air
Carrier (including, without limitation, a defense of sovereign
immunity) that would, upon the bankruptcy of the Permitted Air
Carrier or upon the occurrence of an Event of Default, prevent
the return of the Aircraft pursuant to the Trust Indenture.
(b) In addition, as a condition precedent to any change in registration
Owner shall have given to Mortgagee and the Second Mortgagee assurances
reasonably satisfactory to Mortgagee and the Second Mortgagee:
(i) to the effect that the provisions of Section 4.06 of
the Trust Indenture have been complied with after
giving effect to such change of registration;
(ii) of the payment by Owner of all reasonable
out-of-pocket expenses of each Note Holder, Mortgagee
and the Second Mortgagee in connection with such
change of registry, including, without limitation (1)
the reasonable fees and disbursements of counsel to
Mortgagee and the Second 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 and
the Second 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 in favor of Mortgagee and the Second
Mortgagee for the benefit of Note Holders; and
PAGE 25
29
(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 Owner shall
have agreed upon additional indemnities that,
together with such original indemnities, in the
reasonable judgment of Mortgagee, afford such
protection).
6.4.6 INTEREST IN CERTAIN ENGINES
Each Note Holder, Mortgagee and Second 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, Owner or any Permitted Lessee
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 7. CONFIDENTIALITY
Owner, Note Holders, Mortgagee and Second Mortgagee shall keep the
Participation Agreement and Annex B to the Trust Indenture confidential and
shall not disclose, or cause to be disclosed, the same to any Person, except (A)
to prospective and permitted transferees of Owner's, a Note Holder's, a
Liquidity Provider's, Mortgagee's, Second Mortgagee's or other Indenture
Indemnitee's interest or their respective counsel or special counsel,
independent insurance brokers, auditors, or other agents who agree to hold such
information confidential, (B) to Owner's, a Note Holder's, a Liquidity
Provider's, a Pass Through Trustee's, Mortgagee's, Second 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,
PAGE 26
30
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 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 Certificates or to support an NAIC
rating for the Equipment Notes or (E) 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), or (E)
above shall be made only to the extent necessary to meet the specific
requirements or needs of the Persons making such disclosures.
SECTION 8. INDEMNIFICATION AND EXPENSES
8.1 GENERAL INDEMNITY
8.1.1 INDEMNITY
Whether or not any of the transactions contemplated hereby are
consummated, Owner shall indemnify, protect, defend and hold harmless each
Indemnitee from, against and in respect of, and shall pay on a net after-tax
basis, any and all Expenses of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against any Indemnitee, relating to, resulting from,
or arising out of or in connection with, any one or more of the following:
(a) The Operative Agreements, the Pass Through Agreements, or the
enforcement of any of the terms of any of the Operative Agreements or the Pass
Through Agreements;
(b) The Aircraft, the Airframe, any Engine or any Part, including,
without limitation, with respect thereto, (i) the manufacture, design, purchase,
acceptance, nonacceptance or rejection, ownership, registration, reregistration,
deregistration, delivery, nondelivery, lease, sublease, assignment, possession,
use or non-use, operation, maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment, redelivery or
other disposition of the Aircraft, any Engine or any Part, (ii) any claim or
penalty arising out of violations of applicable Laws by Owner (or any Permitted
Lessee), (iii) tort liability, whether
PAGE 27
31
or not arising out of the negligence of any Indemnitee (whether active, passive
or imputed), (iv) death or property damage of passengers, shippers or others,
(v) environmental control, noise or pollution and (vi) any Liens in respect of
the Aircraft, any Engine or any Part;
(c) The offer, sale, or delivery of any Equipment Notes, Pass Through
Certificates or any interest therein or represented thereby; and
(d) Any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement or other obligation to be
performed by Owner under any Operative Agreement to which it is party or any
Pass Through Agreement or the falsity of any representation or warranty of Owner
in any Operative Agreement to which it is party or any Pass Through Agreement.
8.1.2 EXCEPTIONS
Notwithstanding anything contained in Section 8.1.1, Owner shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 8.1.1 in respect of any Expense of such Indemnitee:
(a) For any Taxes or a loss of Tax benefit, whether or not Owner is
required to indemnify therefor pursuant to Section 8.3;
(b) Except to the extent attributable to acts or events occurring prior
thereto, acts or events (other than acts or events related to the performance by
Owner of its obligations pursuant to the terms of the Operative Agreements) that
occur after the Trust Indenture is required to be terminated in accordance with
Section 11.01 of the Trust Indenture and the Collateral is required to be
released from the Lien of the Second Mortgage pursuant to Section 11.01 of the
Second Mortgage; provided, that nothing in this clause (b) shall be deemed to
exclude or limit any claim that any Indemnitee may have under applicable Law by
reason of an Event of Default or for damages from Owner for breach of Owner's
covenants contained in the Operative Agreements or to release Owner from any of
its obligations under the Operative Agreements that expressly provide for
performance after termination of the Trust Indenture;
(c) To the extent attributable to any Transfer (voluntary or
involuntary) by or on behalf of such Indemnitee of any Equipment Note or
interest therein, except for out-of-pocket
PAGE 28
32
costs and expenses incurred as a result of any such Transfer pursuant to the
exercise of remedies under any Operative Agreement;
(d) To the extent incurred by or asserted against an Indemnitee as a
result of any "prohibited transaction", within the meaning of Section 406 of
ERISA or Section 4975(c)(1) of the Code;
(e) To the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such person by
reason of its interest in the Aircraft or any Operative Agreement);
(f) If another provision of an Operative Agreement or a Pass Through
Agreement specifies the extent of Owner's responsibility or obligation with
respect to such Expense, to the extent arising from other than failure of Owner
to comply with such specified responsibility or obligation;
(g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass Through
Agreement;
(h) To the extent attributable to the failure by such Indemnitee or any
related Indemnitee to perform or observe any agreement, covenant or condition on
its part to be performed or observed in any Operative Agreement or any Pass
Through Agreement;
(i) To the extent attributable to the offer or sale by such Indemnitee
or any related Indemnitee of any interest in the Aircraft, the Equipment Notes,
the Pass Through Certificates, or any similar interest, in violation of the
Securities Act or other applicable federal, state or foreign securities Laws
(other than any thereof caused by acts or omissions of Owner);
(j) (i) With respect to any Indemnitee (other than Mortgagee), to the
extent attributable to the failure of the Mortgagee to distribute funds received
and distributable by it in accordance with the Trust Indenture, (ii) with
respect to any Indemnitee (other than the Second Mortgagee), to the extent
attributable to the failure of the Second Mortgagee to distribute funds received
and distributable by it in accordance with the
PAGE 29
33
Second Mortgage, (iii) with respect to any Indemnitee (other than the
Subordination Agent), to the extent attributable to the failure of the
Subordination Agent to distribute funds received and distributable by it in
accordance with the Intercreditor Agreement, (iv) with respect to any Indemnitee
(other than the Pass Through Trustees), to the extent attributable to the
failure of a Pass Through Trustee to distribute funds received and distributable
by it in accordance with the Pass Through Trust Agreements, (v) with respect to
Mortgagee, to the extent attributable to the negligence or willful misconduct of
Mortgagee in the distribution of funds received and distributable by it in
accordance with the Trust Indenture, (vi) with respect to the Second Mortgagee,
to the extent attributable to the negligence or willful misconduct of the Second
Mortgagee in the distribution of funds received and distributable by it in
accordance with the Second Mortgage, (vii) with respect to the Subordination
Agent, to the extent attributable to the negligence or willful misconduct of the
Subordination Agent in the distribution of funds received and distributable by
it in accordance with the Intercreditor Agreement, and (viii) with respect to
the Pass Through Trustees, to the extent attributable to the negligence or
willful misconduct of a Pass Through Trustee in the distribution of funds
received and distributable by it in accordance with the Pass Through Trust
Agreements;
(k) Other than during the continuation of an Event of Default, to the
extent attributable to the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any Operative
Agreement or Pass Through Agreement other than such as have been requested by
Owner or as are required by or made pursuant to the terms of the Operative
Agreements or Pass Through Agreements (unless such requirement results from the
actions of an Indemnitee not required by or made pursuant to the Operative
Agreements or the Pass Through Agreements);
(l) To the extent attributable to any amount which any Indemnitee
expressly agrees to pay or such Indemnitee expressly agrees shall not be paid by
or be reimbursed by Owner;
(m) To the extent that it is an ordinary and usual operating or
overhead expense; or
(n) For any Lien attributable to such Indemnitee or any related
Indemnitee.
PAGE 30
34
For purposes of this Section 8.1, a Person shall be considered a
"related" Indemnitee with respect to an Indemnitee if such Person is an
Affiliate or employer of such Indemnitee, a director, officer, employee, agent,
or servant of such Indemnitee or any such Affiliate or a successor or permitted
assignee of any of the foregoing.
8.1.3 SEPARATE AGREEMENT
This Agreement constitutes a separate agreement with respect to each
Indemnitee and is enforceable directly by each such Indemnitee.
8.1.4 NOTICE
If a claim for any Expense that an Indemnitee shall be indemnified
against under this Section 8.1 is made, such Indemnitee shall give prompt
written notice thereof to Owner. Notwithstanding the foregoing, the failure of
any Indemnitee to notify Owner as provided in this Section 8.1.4, or in Section
8.1.5, shall not release Owner from any of its obligations to indemnify such
Indemnitee hereunder, except to the extent that such failure results in an
additional Expense to Owner (in which event Owner shall not be responsible for
such additional expense) or materially impairs Owner's ability to contest such
claim.
8.1.5 NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS; LIMITATIONS
(a) In case any action, suit or proceeding shall be brought against any
Indemnitee for which Owner is responsible under this Section 8.1, such
Indemnitee shall notify Owner of the commencement thereof and Owner may, at its
expense, participate in and to the extent that it shall wish (subject to the
provisions of the following paragraph), assume and control the defense thereof
and, subject to Section 8.1.5(c), settle or compromise the same.
(b) Owner or its insurer(s) shall have the right, at its or their
expense, to investigate or, if Owner or its insurer(s) shall agree not to
dispute liability to the Indemnitee giving notice of such action, suit or
proceeding under this Section 8.1.5 for indemnification hereunder or under any
insurance policies pursuant to which coverage is sought, control the defense of,
any action, suit or proceeding, relating to any Expense for which
indemnification is sought pursuant to this
PAGE 31
35
Section 8.1, and each Indemnitee shall cooperate with Owner or its insurer(s)
with respect thereto; provided, that Owner shall not be entitled to control the
defense of any such action, suit, proceeding or compromise any such Expense
during the continuance of any Special Default or Event of Default. In connection
with any such action, suit or proceeding being controlled by Owner, such
Indemnitee shall have the right to participate therein, at its sole cost and
expense, with counsel reasonably satisfactory to Owner; provided, that such
Indemnitee's participation does not, in the reasonable opinion of the
independent counsel appointed by the Owner or its insurers to conduct such
proceedings, interfere with the defense of such case.
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without the prior written consent of
Owner, which consent shall not be unreasonably withheld or delayed, unless such
Indemnitee waives its right to be indemnified with respect to such Expense under
this Section 8.1.
(d) In the case of any Expense indemnified by the Owner hereunder which
is covered by a policy of insurance maintained by Owner pursuant to Section 4.06
of the Indenture or Section 4.01 of the Second Mortgage, at Owner's expense,
each Indemnitee agrees to cooperate with the insurers in the exercise of their
rights to investigate, defend or compromise such Expense as may be required to
retain the benefits of such insurance with respect to such Expense.
(e) If an Indemnitee is not a party to this Agreement, Owner may
require such Indemnitee to agree in writing to the terms of this Section 8 and
Section 12.8 prior to making any payment to such Indemnitee under this Section
8.
(f) Nothing contained in this Section 8.1.5 shall be deemed to require
an Indemnitee to contest any Expense or to assume responsibility for or control
of any judicial proceeding with respect thereto.
8.1.6 INFORMATION
Owner will provide the relevant Indemnitee with such information not
within the control of such Indemnitee, as is in Owner's control or is reasonably
available to Owner, which such Indemnitee may reasonably request and will
otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill
PAGE 32
36
its obligations under Section 8.1.5. The Indemnitee shall supply Owner with such
information not within the control of Owner, as is in such Indemnitee's control
or is reasonably available to such Indemnitee, which Owner may reasonably
request to control or participate in any proceeding to the extent permitted by
Section 8.1.5.
8.1.7 EFFECT OF OTHER INDEMNITIES; SUBROGATION; FURTHER
ASSURANCES
Upon the payment in full by Owner of any indemnity provided for under
this Agreement, Owner, without any further action and to the full extent
permitted by Law, will be subrogated to all rights and remedies of the person
indemnified (other than with respect to any of such Indemnitee's insurance
policies or in connection with any indemnity claim such Indemnitee may have
under Section 6.03 or 8.01 of the Trust Indenture or Section 6.03 or 8.01 of the
Second Mortgage) in respect of the matter as to which such indemnity was paid.
Each Indemnitee will give such further assurances or agreements and cooperate
with Owner to permit Owner to pursue such claims, if any, to the extent
reasonably requested by Owner and at Owner's expense.
8.1.8 REFUNDS
If an Indemnitee receives any refund, in whole or in part, with respect
to any Expense paid by Owner hereunder, it will promptly pay the amount refunded
(but not an amount in excess of the amount Owner or any of its insurers has paid
in respect of such Expense) over to Owner unless a Special Default or an Event
of Default shall have occurred and be continuing, in which case such amounts
shall be paid over to Mortgagee or, if the Lien of the Trust Indenture has been
discharged but the Collateral is not required to be released from the Lien of
the Second Mortgage, to the Second Mortgagee, to hold as security for Owner's
obligations under the Operative Agreements or, if requested by Owner, applied to
satisfy such obligations.
8.2 EXPENSES
8.2.1 INVOICES AND PAYMENT
The Mortgagee, the Second Mortgagee, the Pass Through Trustees and the
Subordination Agent shall promptly submit to Owner for its prompt approval
(which shall not be unreasonably withheld) copies of invoices in reasonable
detail of the
PAGE 33
37
Transaction Expenses for which it is responsible for providing information as
they are received (but in no event later than the 90th day after the Closing
Date). If so submitted and approved, the Owner agrees promptly, but in any event
no later than the 105th day after the Closing Date, to pay Transaction Expenses.
8.2.2 PAYMENT OF OTHER EXPENSES
Owner shall pay (i) the ongoing fees and expenses of Mortgagee and the
Second Mortgagee, and (ii) all reasonable out-of-pocket costs and expenses
(including the reasonable fees and disbursements of counsel) incurred by
Mortgagee, the Second Mortgagee or any Note Holder attributable to any waiver,
amendment or modification of any Operative Agreement to the extent requested by
Owner.
8.3 GENERAL TAX INDEMNITY
8.3.1 GENERAL
Except as provided in Section 8.3.2, Owner agrees that each payment
paid by Owner under the Equipment Notes, and any other payment or indemnity paid
by Owner to a Tax Indemnitee under any Operative Agreement, shall be free of all
withholdings or deductions with respect to Taxes of any nature (other than U.S.
federal, state or local withholding taxes on, based on or measured by gross or
net income), and in the event that Owner shall be required by applicable law to
make any such withholding or deduction for any such payment (x) Owner shall make
all such withholdings or deductions, (y) the amount payable by Owner shall be
increased so that after making all required withholdings or deductions such Tax
Indemnitee receives the same amount that it would have received had no such
withholdings or deductions been made, and (z) Owner shall pay the full amount
withheld or deducted to the relevant Taxing Authority in accordance with
applicable law. Except as provided in Section 8.3.2 and whether or not any of
the transactions contemplated hereby are consummated, Owner shall pay,
indemnify, protect, defend and hold each Tax Indemnitee harmless from all Taxes
imposed by any Taxing Authority that may from time to time be imposed on or
asserted against any Tax Indemnitee or the Aircraft, the Airframe, any Engine or
any Part or any interest in any of the foregoing (whether or not indemnified
against by any other Person), upon or with respect to the Operative Agreements
or the transactions or payments contemplated thereby, including but not limited
to any
PAGE 34
38
Tax imposed upon or with respect to (x) the Aircraft, the Airframe, any Engine,
any Part, any Operative Agreement (including without limitation any Equipment
Notes) or any data or any other thing delivered or to be delivered under an
Operative Agreement, (y) the purchase, manufacture, acceptance, rejection, sale,
transfer of title, return, ownership, mortgaging, delivery, transport, charter,
rental, lease, re-lease, sublease, assignment, possession, repossession,
presence, use, condition, storage, preparation, maintenance, modification,
alteration, improvement, operation, registration, transfer or change of
registration, reregistration, repair, replacement, overhaul, location, control,
the imposition of any Lien, financing, refinancing requested by the Owner,
abandonment or other disposition of the Aircraft, the Airframe, any Engine, any
Part, any data or any other thing delivered or to be delivered under an
Operative Agreement or (z) interest, fees or any other income, proceeds,
receipts or earnings, whether actual or deemed, arising upon, in connection
with, or in respect of, any of the Operative Agreements (including the property
or income or other proceeds with respect to property held as part of the
Collateral) or the transactions contemplated thereby.
8.3.2 CERTAIN EXCEPTIONS
The provisions of Section 8.3.1 shall not apply to, and Owner shall
have no liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the United
States or any Taxing Authority or governmental subdivision of the United States
or therein (including any state or local Taxing Authority) (i) on, based on, or
measured by, gross or net income or gross or net receipts, including capital
gains taxes, excess profits taxes, minimum taxes from tax preferences,
alternative minimum taxes, branch profits taxes, accumulated earnings taxes,
personal holding company taxes, succession taxes and estate taxes, and any
withholding taxes on, based on or measured by gross or net income or receipts or
(ii) on, or with respect to, or measured by, capital or net worth or in the
nature of a franchise tax or a tax for the privilege of doing business (other
than, in the case of clause (i) or (ii), sales, use, license or property Taxes);
(b) imposed on a Tax Indemnitee by any Taxing Authority or governmental
subdivision thereof or therein outside of the United States (including any
Taxing Authority in or of a territory,
PAGE 35
39
possession or commonwealth of the United States) (i) on, based on, or measured
by, gross or net income or gross or net receipts, including capital gains taxes,
excess profits taxes, minimum taxes from tax preferences, alternative minimum
taxes, branch profits taxes, accumulated earnings taxes, personal holding
company taxes, succession taxes and estate taxes, and any withholding taxes on,
based on or measured by gross or net income or receipts or (ii) on, or with
respect to, or measured by, capital or net worth or in the nature of a franchise
tax or a tax for the privilege of doing business (other than, in the case of
clause (i) or (ii), (A) sales, use, license or property Taxes, or (B) any Taxes
imposed by any Taxing Authority (other than a Taxing Authority within whose
jurisdiction such Tax Indemnitee is incorporated or organized or maintains its
principal place of business) if such Tax Indemnitee would not have been subject
to Taxes of such type by such jurisdiction but for (I) the location, use or
operation of the Aircraft, the Airframe, any Engine or any Part thereof by an
Owner Person within the jurisdiction of the Taxing Authority imposing such Tax,
or (II) the activities of any Owner Person in such jurisdiction, including, but
not limited to, use of any other aircraft by Owner in such jurisdiction, (III)
the status of any Owner Person as a foreign entity or as an entity owned in
whole or in part by foreign persons, (IV) Owner having made (or having been
deemed to have made) payments to such Tax Indemnitee from the relevant
jurisdiction or (V) in the case of the Pass Through Trustees, the Note Holders
or any related Tax Indemnitee, the Owner being incorporated or organized or
maintaining a place of business or conducting activities in such jurisdiction);
(c) on, or with respect to, or measured by, any trustee fees,
commissions or compensation received by the Pass Through Trustee, Subordination
Agent, Mortgagee or Second Mortgagee;
(d) that are being contested as provided in Section 8.3.4 hereof;
(e) imposed on any Tax Indemnitee to the extent that such Taxes result
from the gross negligence or willful misconduct of such Tax Indemnitee or any
Affiliate thereof;
(f) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other disposition
(including a deemed
PAGE 36
40
transfer or disposition) by such Tax Indemnitee or a related Tax Indemnitee of
any interest in the Aircraft, the Airframe, any Engine or any Part, any interest
arising under the Operative Agreements or any Equipment Note or as a result of a
transfer or disposition (including a deemed transfer or disposition) of any
interest in a Tax Indemnitee (other than (A) a substitution or replacement of
the Aircraft, the Airframe, any Engine or any Part by an Owner Person that is
treated for Tax purposes as a transfer or disposition, or (B) a transfer
pursuant to an exercise of remedies upon an Event of Default that shall have
occurred and have been continuing);
(g) Taxes in excess of those that would have been imposed had there not
been a transfer or other disposition by or to such Tax Indemnitee or a related
Tax Indemnitee described in paragraph (f) above;
(h) consisting of any interest, penalties or additions to tax imposed
on a Tax Indemnitee as a result of (in whole or in part) failure of such Tax
Indemnitee or a related Tax Indemnitee to file any return properly and timely,
unless such failure shall be caused by the failure of Owner to fulfill its
obligations, if any, under Section 8.3.6 with respect to such return;
(i) resulting from, or that would not have been imposed but for, any
Liens arising as a result of claims against, or acts or omissions of, or
otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee that
the Owner is not obligated to discharge under the Operative Agreements;
(j) imposed on any Tax Indemnitee as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or
any Affiliate thereof contained in any Operative Agreement or the inaccuracy of
any representation or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;
(k) in the nature of an intangible or similar Tax (i) upon or with
respect to the value or principal amount of the interest of any Note Holder in
any Equipment Note or the loan evidenced thereby but only if such Taxes are in
the nature of franchise Taxes or result from the Tax Indemnitee doing business
in the taxing jurisdiction and are imposed because of the place of incorporation
or the activities unrelated to the transactions
PAGE 37
41
contemplated by the Operative Agreements in the taxing jurisdiction of such Tax
Indemnitee;
(l) imposed on a Tax Indemnitee by a Taxing Authority of a jurisdiction
outside the United States to the extent that such Taxes would not have been
imposed but for a connection between the Tax Indemnitee or a related Tax
Indemnitee and such jurisdiction imposing such Tax unrelated to the transactions
contemplated by the Operative Agreements; or
(m) Taxes relating to ERISA or Section 4975 of the Code.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees
that are successors, assigns, agents, servants or Affiliates of such Tax
Indemnitee shall be related Tax Indemnitees.
8.3.3 PAYMENT
(a) Owner's indemnity obligation to a Tax Indemnitee under this Section
8.3 shall equal the amount which, after taking into account any Tax imposed upon
the receipt or accrual of the amounts payable under this Section 8.3 and any tax
benefits actually recognized by such Tax Indemnitee as a result of the
indemnifiable Tax (including, without limitation, any benefits recognized as a
result of an indemnifiable Tax being utilized by such Tax Indemnitee as a credit
against Taxes not indemnifiable under this Section 8.3), shall equal the amount
of the Tax indemnifiable under this Section 8.3.
(b) At Owner's request, the computation of the amount of any indemnity
payment owed by Owner or any amount owed by a Tax Indemnitee to Owner pursuant
to this Section 8.3 shall be verified and certified by an independent public
accounting firm selected by such Tax Indemnitee and reasonably satisfactory to
Owner. Such verification shall be binding. The costs of such verification
(including the fee of such public accounting firm) shall be borne by Owner
unless such verification shall result in an adjustment in Owner's favor of 5% or
more of the net present value of the payment as computed by such Tax Indemnitee,
in which case the costs shall be paid by such Tax Indemnitee.
(c) Each Tax Indemnitee shall provide Owner with such certifications,
information and documentation as shall be in such Tax Indemnitee's possession
and as shall be reasonably requested by Owner to minimize any indemnity payment
pursuant to this
PAGE 38
42
Section 8.3; provided, that notwithstanding anything to the contrary contained
herein, no Tax Indemnitee shall be required to provide Owner with any Tax
returns.
(d) Each Tax Indemnitee shall promptly forward to Owner any written
notice, bill or advice received by it from any Taxing Authority concerning any
Tax for which it seeks indemnification under this Section 8.3. Owner shall pay
any amount for which it is liable pursuant to this Section 8.3 directly to the
appropriate Taxing Authority if legally permissible or upon demand of a Tax
Indemnitee, to such Tax Indemnitee within 30 days of such demand (or, if a
contest occurs in accordance with Section 8.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than one Business Day
prior to the date the Tax to which such amount payable hereunder relates is due.
If requested by a Tax Indemnitee in writing, Owner shall furnish to the
appropriate Tax Indemnitee the original or a certified copy of a receipt for
Owner's payment of any Tax paid by Owner or such other evidence of payment of
such Tax as is acceptable to such Tax Indemnitee. Owner shall also furnish
promptly upon written request such data as any Tax Indemnitee may reasonably
require to enable such Tax Indemnitee to comply with the requirements of any
taxing jurisdiction unless such data is not reasonably available to Owner or,
unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar circumstances. For
purposes of this Section 8.3, a "Final Determination" shall mean (i) a decision,
judgment, decree or other order by any court of competent jurisdiction that
occurs pursuant to the provisions of Section 8.3.4, which decision, judgment,
decree or other order has become final and unappealable, (ii) a closing
agreement or settlement agreement entered into in accordance with Section 8.3.4
that has become binding and is not subject to further review or appeal (absent
fraud, misrepresentation, etc.), or (iii) the termination of administrative
proceedings and the expiration of the time for instituting a claim in a court
proceeding.
(e) If any Tax Indemnitee shall actually realize a tax savings by
reason of any Tax paid or indemnified by Owner pursuant to this Section 8.3
(whether such tax savings shall be by means of a foreign tax credit,
depreciation or cost recovery deduction or otherwise) and such savings is not
otherwise taken into account in computing such payment or indemnity such Tax
Indemnitee shall pay to Owner an amount equal to the lesser of
PAGE 39
43
(i) the amount of such tax savings, plus any additional tax savings recognized
as the result of any payment made pursuant to this sentence, when, as, if, and
to the extent, realized or (ii) the amount of all payments pursuant to this
Section 8.3 by Owner to such Tax Indemnitee (less any payments previously made
by such Tax Indemnitee to Owner pursuant to this Section 8.3.3 (e)) (and the
excess, if any, of the amount described in clause (i) over the amount described
in clause (ii) shall be carried forward and applied to reduce pro tanto any
subsequent obligations of Owner to make payments to such Tax Indemnitee pursuant
to this Section 8.3); provided, that such Tax Indemnitee shall not be required
to make any payment pursuant to this sentence so long as an Event of Default of
a monetary nature has occurred and is continuing. If a tax benefit is later
disallowed or denied, the disallowance or denial shall be treated as a Tax
indemnifiable under Section 8.3.1 without regard to the provisions of Section
8.3.2 (other than Section 8.3.2 (f)). Each such Tax Indemnitee shall in good
faith use reasonable efforts in filing its tax returns and in dealing with
Taxing Authorities to seek and claim any such tax benefit.
8.3.4 CONTEST
(a) If a written claim is made against a Tax Indemnitee for Taxes with
respect to which Owner could be liable for payment or indemnity hereunder, or if
a Tax Indemnitee makes a determination that a Tax is due for which Owner could
have an indemnity obligation hereunder, such Tax Indemnitee shall promptly give
Owner notice in writing of such claim (provided, that failure to so notify Owner
shall not relieve Owner of its indemnity obligations hereunder unless such
failure to notify effectively forecloses Owner's rights to require a contest of
such claim) and shall take no action with respect to such claim without the
prior written consent of Owner for 30 days following the receipt of such notice
by Owner; provided, that, in the case of a claim made against a Tax Indemnitee,
if such Tax Indemnitee shall be required by law to take action prior to the end
of such 30-day period, such Tax Indemnitee shall, in such notice to Owner, so
inform Owner, and such Tax Indemnitee shall take no action for as long as it is
legally able to do so (it being understood that a Tax Indemnitee shall be
entitled to pay the Tax claimed and sue for a refund prior to the end of such
30-day period if (i)(A) the failure to so pay the Tax would result in
substantial penalties (unless immediately reimbursed by Owner) and the act of
paying the Tax would not materially prejudice the right to contest or
PAGE 40
44
(B) the failure to so pay would result in criminal penalties and (ii) such Tax
Indemnitee shall take any action so required in connection with so paying the
Tax in a manner that is the least prejudicial to the pursuit of the contest). In
addition, such Tax Indemnitee shall (provided, that Owner shall have agreed to
keep such information confidential other than to the extent necessary in order
to contest the claim) furnish Owner with copies of any requests for information
from any Taxing Authority relating to such Taxes with respect to which Owner may
be required to indemnify hereunder. If requested by Owner in writing within 30
days after its receipt of such notice, such Tax Indemnitee shall, at the expense
of Owner (including, without limitation, all reasonable costs, expenses and
reasonable attorneys' and accountants' fees and disbursements), in good faith
contest (or, if permitted by applicable law, allow Owner to contest) through
appropriate administrative and judicial proceedings the validity, applicability
or amount of such Taxes by (I) resisting payment thereof, (II) not paying the
same except under protest if protest is necessary and proper or (III) if the
payment is made, using reasonable efforts to obtain a refund thereof in an
appropriate administrative and/or judicial proceeding. If requested to do so by
Owner, the Tax Indemnitee shall appeal any adverse administrative or judicial
decision, except that the Tax Indemnitee shall not be required to pursue any
appeals to the United States Supreme Court. If and to the extent the Tax
Indemnitee is able to separate the contested issue or issues from other issues
arising in the same administrative or judicial proceeding that are unrelated to
the transactions contemplated by the Operative Agreements without, in the good
faith judgment of such Tax Indemnitee, adversely affecting such Tax Indemnitee,
such Tax Indemnitee shall permit Owner to control the conduct of any such
proceeding and shall provide to Owner (at Owner's cost and expense) with such
information or data that is in such Tax Indemnitee's control or possession that
is reasonably necessary to conduct such contest. In the case of a contest
controlled by a Tax Indemnitee, such Tax Indemnitee shall consult with Owner in
good faith regarding the manner of contesting such claim and shall keep Owner
reasonably informed regarding the progress of such contest. A Tax Indemnitee
shall not fail to take any action expressly required by this Section 8.3.4
(including, without limitation, any action regarding any appeal of an adverse
determination with respect to any claim) or settle or compromise any claim
without the prior written consent of the Owner (except as contemplated by
Section 8.3.4(b) or (c)).
PAGE 41
45
(b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee
be required to pursue any contest (or to permit Owner to pursue any contest)
unless (i) Owner shall have agreed to pay such Tax Indemnitee on demand all
reasonable costs and expenses incurred by such Tax Indemnitee in connection with
contesting such Taxes, including, without limitation, all reasonable out of
pocket costs and expenses and reasonable attorneys' and accountants' fees and
disbursements, (ii) if such contest shall involve the payment of the claim,
Owner shall advance the amount thereof (to the extent indemnified hereunder)
plus interest, penalties and additions to tax with respect thereto that are
required to be paid prior to the commencement of such contest on an
interest-free after-Tax basis to such Tax Indemnitee (and such Tax Indemnitee
shall promptly pay to the Owner any net realized tax benefits resulting from
such advance including any tax benefits resulting from making such payment),
(iii) such Tax Indemnitee shall have reasonably determined that the action to be
taken will not result in any material risk of forfeiture, sale or loss of the
Aircraft (unless Owner shall have made provisions to protect the interests of
any such Tax Indemnitee in a manner reasonably satisfactory to such Tax
Indemnitee) (provided, that such Tax Indemnitee agrees to notify Owner in
writing promptly after it becomes aware of any such risk), (iv) no Lease Event
of Default shall have occurred and be continuing unless Owner has provided
security for its obligations hereunder by advancing to such Tax Indemnitee
before proceeding or continuing with such contest, the amount of the Tax being
contested, plus any interest and penalties and an amount estimated in good faith
by such Tax Indemnitee for expenses, and (v) prior to commencing any judicial
action controlled by Owner, Owner shall have acknowledged its liability for such
claim hereunder, provided that Owner shall not be bound by its acknowledgment if
the Final Determination articulates conclusions of law and fact that demonstrate
that Owner has no liability for the contested amounts hereunder. Notwithstanding
the foregoing, if any Tax Indemnitee shall release, waive, compromise or settle
any claim which may be indemnifiable by Owner pursuant to this Section 8.3
without the written permission of Owner, Owner's obligation to indemnify such
Tax Indemnitee with respect to such claim (and all directly related claims and
claims based on the outcome of such claim) shall terminate, subject to Section
8.3.4(c), and subject to Section 8.3.4(c), such Tax Indemnitee shall repay to
Owner any amount previously paid or advanced to such Tax Indemnitee with respect
to such claim, plus interest at the rate that would have
PAGE 42
46
been payable by the relevant Taxing Authority with respect to a refund of such
Tax.
(c) Notwithstanding anything contained in this Section 8.3, a Tax
Indemnitee will not be required to contest the imposition of any Tax and shall
be permitted to settle or compromise any claim without Owner's consent if such
Tax Indemnitee (i) shall waive its right to indemnity under this Section 8.3
with respect to such Tax (and any directly related claim and any claim the
outcome of which is determined based upon the outcome of such claim), (ii) shall
pay to Owner any amount previously paid or advanced by Owner pursuant to this
Section 8.3 with respect to such Tax, plus interest at the rate that would have
been payable by the relevant Taxing Authority with respect to a refund of such
Tax, and (iii) shall agree to discuss with Owner the views or positions of any
relevant Taxing Authority with respect to the imposition of such Tax.
8.3.5 REFUND
(a) If any Tax Indemnitee shall receive a refund of, or be entitled to
a credit against other liability for, all or any part of any Taxes paid,
reimbursed or advanced by Owner, such Tax Indemnitee shall pay to Owner within
30 days of such receipt an amount equal to the lesser of (a) the amount of such
refund or credit plus any net tax benefit (taking into account any Taxes
incurred by such Tax Indemnitee by reason of the receipt of such refund or
realization of such credit) actually realized by such Tax Indemnitee as a result
of any payment by such Tax Indemnitee made pursuant to this sentence (including
this clause (a)) and (b) such tax payment, reimbursement or advance by Owner to
such Tax Indemnitee theretofore made pursuant to this Section 8.3 (and the
excess, if any, of the amount described in clause (a) over the amount described
in clause (b) shall be carried forward and applied to reduce pro tanto any
subsequent obligation of Owner to make payments to such Tax Indemnitee pursuant
to this Section 8.3). If, in addition to such refund or credit, such Tax
Indemnitee shall receive (or be credited with) an amount representing interest
on the amount of such refund or credit, such Tax Indemnitee shall pay to Owner
within 30 days of such receipt or realization of such credit that proportion of
such interest that shall be fairly attributable to Taxes paid, reimbursed or
advanced by Owner prior to the receipt of such refund or realization of such
credit.
PAGE 43
47
(b) Upon the receipt by the Subordination Agent of any payment by a
Liquidity Provider pursuant to the second paragraph of Section 3.03(a) of any
Liquidity Facility, the Subordination Agent shall pay such amount to the Owner.
8.3.6 TAX FILING
If any report, return or statement is required to be filed with respect
to any Tax which is subject to indemnification under this Section 8.3, Owner
shall timely file the same (except for any such report, return or statement
which a Tax Indemnitee has timely notified the Owner in writing that such Tax
Indemnitee intends to file, or for which such Tax Indemnitee is required by law
to file, in its own name); provided, that the relevant Tax Indemnitee shall
furnish Owner with any information in such Tax Indemnitee's possession or
control that is reasonably necessary to file any such return, report or
statement and is reasonably requested in writing by Owner (it being understood
that the Tax Indemnitee shall not be required to furnish copies of its actual
tax returns, although it may be required to furnish relevant information
contained therein). Owner shall either file such report, return or statement and
send a copy of such report, return or statement to such Tax Indemnitee, or,
where Owner is not permitted to file such report, return or statement, it shall
notify such Tax Indemnitee of such requirement and prepare and deliver such
report, return or statement to such Tax Indemnitee in a manner satisfactory to
such Tax Indemnitee within a reasonable time prior to the time such report,
return or statement is to be filed.
8.3.7 FORMS
Each Tax Indemnitee agrees to furnish from time to time to Owner,
Mortgagee or Second Mortgagee or to such other person as Owner, Mortgagee or
Second Mortgagee may designate, at Owner's, Mortgagee's or Second Mortgagee's
request, such duly executed and properly completed forms as may be necessary or
appropriate in order to claim any reduction of or exemption from any withholding
or other Tax imposed by any Taxing Authority, if (x) such reduction or exemption
is available to such Tax Indemnitee and (y) Owner has provided such Tax
Indemnitee with any information necessary to complete such form not otherwise
reasonably available to such Tax Indemnitee.
PAGE 44
48
8.3.8 NON-PARTIES
If a Tax Indemnitee is not a party to this Agreement, Owner may require
the Tax Indemnitee to agree in writing, in a form reasonably acceptable to
Owner, to the terms of this Section 8.3 and Section 15.8 prior to making any
payment to such Tax Indemnitee under this Section 8.3.
8.3.9 SUBROGATION
Upon payment of any Tax by Owner pursuant to this Section 8.3 to or on
behalf of a Tax Indemnitee, Owner, without any further action, shall be
subrogated to any claims that such Tax Indemnitee may have relating thereto.
Such Tax Indemnitee shall cooperate with Owner (to the extent such cooperation
does not result in any unreimbursed cost, expense or liability to such Tax
Indemnitee) to permit Owner to pursue such claims.
8.4 PAYMENTS
Any payments made pursuant to Section 8.1 or 8.3 shall be due on the
30th day after demand therefor and shall be made directly to the relevant
Indemnitee or Tax Indemnitee or to Owner, in immediately available funds at such
bank or to such account as specified by such Indemnitee or Tax Indemnitee or
Owner, as the case may be, in written directives to the payor, or, if no such
direction shall have been given, by check of the payor payable to the order of,
and mailed to, such Indemnitee or Tax Indemnitee or Owner, as the case may be,
by certified mail, postage prepaid, at its address as set forth in this
Agreement.
8.5 INTEREST
If any amount, payable by Owner, any Indemnitee or any Tax Indemnitee
under Section 8.1 or 8.3 is not paid when due, the person obligated to make such
payment shall pay on demand, to the extent permitted by Law, to the person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the same is paid, at the
Payment Due Rate. Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.
PAGE 45
49
8.6 BENEFIT OF INDEMNITIES
The obligations of Owner in respect of all indemnities, obligations,
adjustments and payments in Section 8.1 or 8.3 are expressly made for the
benefit of, and shall be enforceable by, the Indemnitee or Tax Indemnitee
entitled thereto, notwithstanding any provision of the Trust Indenture or the
Second Mortgage.
SECTION 9. ASSIGNMENT OR TRANSFER OF INTEREST
9.1 NOTE HOLDERS
Subject to Section 6.3.2 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 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 the Collateral and Owner 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.
9.2 EFFECT OF TRANSFER
Upon any Transfer in accordance with Section 9.1 (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 a "Note Holder," for all purposes of this Agreement and the other
Operative Agreements, and the transferring Note Holder shall be released 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 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
PAGE 46
50
Agreement vested or relating to circumstances, conditions, acts or events prior
to such Transfer.
SECTION 10. SECTION 1110
It is the intention of each of the Owner, the Note Holders (such
intention being evidenced by each of their acceptance of an Equipment Note), and
Mortgagee that Mortgagee shall be entitled to the benefits of Section 1110 in
the event of a case under Chapter 11 of the Bankruptcy Code in which Owner is a
debtor.
SECTION 11. CHANGE OF CITIZENSHIP
11.1 GENERALLY
Without prejudice to the representations, warranties or covenants
regarding the status of any party hereto as a Citizen of the United States, each
of Owner, WTC, Mortgagee and Second 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.
11.2 MORTGAGEE
Upon WTC giving any notice in accordance with Section 11.1, Mortgagee
and Second 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 or Second Mortgagee's citizenship could have any adverse
effect on Owner, or any Note Holder), subject to Section 9.02 of the Trust
Indenture and Section 9.02 of the Second Mortgage, resign as Mortgagee and
Second Mortgagee promptly upon its ceasing to be such a citizen.
SECTION 12. MISCELLANEOUS
12.1 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
PAGE 47
51
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.
12.2 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.
12.3 SURVIVAL
The indemnities set forth herein shall survive the delivery or return
of the Aircraft, 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.
12.4 REPRODUCTION OF DOCUMENTS
This Agreement, all 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
PAGE 48
52
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.
12.5 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.
12.6 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.
12.7 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
PAGE 49
53
facsimile or telecommunication transmission (which in either case provides
written confirmation to the sender of its delivery), sent by registered mail or
certified mail, return receipt requested, postage prepaid, or sent by overnight
courier service, in each case to the respective address, or facsimile number set
forth for such party in Schedule 1, or to such other address, facsimile or other
number as each party hereto may hereafter specify by notice to the other parties
hereto. Each such notice, request, demand, authorization, direction, consent,
waiver or other communication shall be effective when received or, if made,
given, furnished or filed (a) by facsimile or telecommunication transmission,
when confirmed, or (b) by registered or certified mail, three Business Days
after being deposited, properly addressed, with the U.S. Postal Service.
12.8 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 12.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 12.8(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.
PAGE 50
54
(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.
12.9 THIRD-PARTY BENEFICIARY
This Agreement is not intended to, and shall not, provide any person
not a party hereto (other than the Indenture Indemnitees, each of which is an
intended third party beneficiary with respect to the provisions of Section 8.1,
the Tax Indemnitees, each of which is an intended third party beneficiary with
respect to the provisions of Section 8.3, and the persons referred to in Section
6.4.6, which are intended third party beneficiaries with respect to such
Section) with any rights of any nature whatsoever against any of the parties
hereto and no person not a party hereto (other than the Indenture Indemnitees,
with respect to the provisions of Section 8.1, the Tax Indemnitees with respect
to the provisions of Section 8.3, and the persons referred to in Section 6.4.6
with respect to the provisions of such Section) shall have any right, power or
privilege in respect of any party hereto, or have any benefit or interest,
arising out of this Agreement.
12.10 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.
PAGE 51
55
12.11 FURTHER ASSURANCES
Each party hereto shall execute, acknowledge and deliver or shall cause
to be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as any other party hereto shall reasonably
request in connection with the administration of, or to carry out more
effectually the purposes of, or to better assure and confirm into such other
party the rights and benefits to be provided under this Agreement and the other
Operative Agreements.
[This space intentionally left blank]
PAGE 52
56
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.,
Owner
By______________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Mortgagee
By /s/ John M. Beeson, Jr.
-------------------------------------
Name: John M. Beeson, Jr.
Title: Vice President
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Second
Mortgagee
By /s/ John M. Beeson, Jr.
-------------------------------------
Name: John M. Beeson, Jr.
Title: Vice President
SIGNATURE PAGE
57
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, 1997-2C
By /s/ John M. Beeson, Jr.
-------------------------------------
Name: John M. Beeson, Jr.
Title: Vice President
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, 1997-2D
By /s/ John M. Beeson, Jr.
-------------------------------------
Name: John M. Beeson, Jr.
Title: Vice President
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as
Subordination Agent
By /s/ John M. Beeson, Jr.
-------------------------------------
Name: John M. Beeson, Jr.
Title: Vice President
SIGNATURE PAGE
58
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, 1997-2A
By /s/ John M. Beeson, Jr.
-------------------------------------
Name: John M. Beeson, Jr.
Title: Vice President
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, 1997-2B
By /s/ John M. Beeson, Jr.
-------------------------------------
Name: John M. Beeson, Jr.
Title: Vice President
SIGNATURE PAGE
59
SCHEDULE 1
TO
PARTICIPATION AGREEMENT
- --------------------------------------------------------------------------------
ACCOUNTS; ADDRESSES
ACCOUNT FOR PAYMENTS ADDRESS FOR NOTICES
-------------------- -------------------
CONTINENTAL The Chase Manhattan Bank Continental Airlines, Inc.
AIRLINES, INC. (National Association) 2929 Allen Parkway
New York, New York 10081 Suite 2010
Account No.: 910-2-499291 Houston, Texas 77019
ABA#: 021-000021 Attention: Executive Vice
Attention: Paul Trupia President and Chief
Voice: 212-552-2829 Financial Officer
Facsimile: 212-552-0107 Facsimile: (713) 520-6329
Reference: Continental 322
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS MORTGAGEE (National Association) One Rodney Square
New York, New York 10081 1100 North Market Street
Account No.: 920-1-014363 Wilmington, Delaware 19890
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (302) 651-1576
Reference: Continental 322
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS SECOND MORTGAGEE (National Association) One Rodney Square
New York, New York 10081 1100 North Market Street
Account No.: 920-1-014363 Wilmington, Delaware 19890
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (302) 651-1576
Reference: Continental 322
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS SUBORDINATION AGENT (National Association) One Rodney Square
New York, New York 10081 1100 North Market Street
Account No.: 920-1-014363 Wilmington, Delaware 19890
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (302) 651-1576
Reference: Continental 322
PAGE 1
60
ACCOUNT FOR PAYMENTS ADDRESS FOR NOTICES
-------------------- -------------------
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE (National Association) One Rodney Square
FOR THE 1997-2A PASS New York, New York 10081 1100 North Market Street
THROUGH TRUST Account No.: 920-1-014363 Wilmington, Delaware 19890
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (302) 651-1576
Reference: Continental 322
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE (National Association) One Rodney Square
FOR THE 1997-2B PASS New York, New York 10081 1100 North Market Street
THROUGH TRUST Account No.: 920-1-014363 Wilmington, Delaware 19890
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (302) 651-1576
Reference: Continental 322
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE (National Association) One Rodney Square
FOR THE 1997-2C PASS New York, New York 10081 1100 North Market Street
THROUGH TRUST Account No.: 920-1-014363 Wilmington, Delaware 19890
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (302) 651-1576
Reference: Continental 322
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE (National Association) One Rodney Square
FOR THE 1997-2D PASS New York, New York 10081 1100 North Market Street
THROUGH TRUST Account No.: 920-1-014363 Wilmington, Delaware 19890
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (302) 651-1576
Reference: Continental 322
PAGE 2
61
SCHEDULE 2
TO
PARTICIPATION AGREEMENT
- --------------------------------------------------------------------------------
PASS THROUGH TRUSTEE SERIES OF DOLLAR AMOUNT
EQUIPMENT NOTES OF LOAN
1997 - 2A Series A $7,781,810
1997 - 2B Series B $2,657,242
1997 - 2C Series C $2,828,029
1997 - 2D Series D $2,844,973
PAGE 1
62
SCHEDULE 3 - CERTAIN
TERMS
PARTICIPATION
AGREEMENT
- --------------------------------------------------------------------------------
CERTAIN TERMS
DEFINED TERM DEFINITION
------------ ----------
Minimum Liability Insurance Amount $200,000,000
Threshold Amount $3,500,000
PAGE 1
63
SCHEDULE 4 - PERMITTED
COUNTRIES
PARTICIPATION AGREEMENT
- -------------------------------------------------------------------------------
PERMITTED COUNTRIES
Argentina
Australia
Austria
Bahamas
Belgium
Brazil
Canada
Chile
Denmark
Egypt
Ecuador
Finland
France
Germany
Greece
Hungary
Iceland
India
Indonesia
Ireland
Italy
Japan
Luxembourg
Malaysia
Malta
Mexico
Morocco
Netherlands
New Zealand
Norway
People's Republic of China
Philippines
Portugal
Republic of China (Taiwan)
Singapore
South Africa
South Korea
Spain
Sweden
Switzerland
Thailand
Tobago
Trinidad
United Kingdom
Uruguay
Venezuela
PAGE 1
1
Exhibit 4.16
EXECUTION
- --------------------------------------------------------------------------------
TRUST INDENTURE AND MORTGAGE 322
Dated as of June 25, 1997
Between
CONTINENTAL AIRLINES, INC.,
Owner
and
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Mortgagee,
Mortgagee
- --------------------------------------------------------------------------------
EQUIPMENT NOTES COVERING
ONE BOEING 737-3T0 AIRCRAFT
BEARING U.S. REGISTRATION MARK N12322
AND MANUFACTURER'S SERIAL NO. 23373
- --------------------------------------------------------------------------------
2
TABLE OF CONTENTS Page
GRANTING CLAUSE 1
ARTICLE I DEFINITIONS 5
ARTICLE II THE EQUIPMENT NOTES 5
SECTION 2.01. Form of Equipment Notes 5
SECTION 2.02. Issuance and Terms of Equipment Notes 9
SECTION 2.03. Method of Payment 12
SECTION 2.04. Application of Payments 14
SECTION 2.05. Termination of Interest in Collateral 15
SECTION 2.06. Registration Transfer and Exchange of
Equipment Notes 15
SECTION 2.07. Mutilated, Destroyed, Lost or Stolen
Equipment Notes 17
SECTION 2.08. Payment of Expenses on Transfer;
Cancellation 17
SECTION 2.09. Mandatory Redemptions of Equipment
Notes 17
SECTION 2.10. Voluntary Redemptions of Equipment
Notes 18
SECTION 2.11. Redemptions; Notice of Redemption 18
SECTION 2.12. Subordination 19
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS 20
i
3
SECTION 3.01. Basic Distributions 20
SECTION 3.02. Event of Loss; Replacement; Optional
Redemption 21
SECTION 3.03. Payments After Event of Default 22
SECTION 3.04. Certain Payments 26
SECTION 3.05. Other Payments 26
ARTICLE IV COVENANTS OF THE OWNER 26
SECTION 4.01. Liens 26
SECTION 4.02. Possession, Operation and Use,
Maintenance, Registration and Markings 27
SECTION 4.03. Inspection 33
SECTION 4.04. Replacement and Pooling of Parts, Alterations,
Modifications and Additions; Substitution of Engines 33
SECTION 4.05. Loss, Destruction or Requisition 38
SECTION 4.06. Insurance 43
SECTION 4.07. Merger of Owner 44
ARTICLE V EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE 45
SECTION 5.01. Event of Default 45
SECTION 5.02. Remedies 47
SECTION 5.03. Return of Aircraft, Etc. 48
SECTION 5.04. Remedies Cumulative 49
SECTION 5.05. Discontinuance of Proceedings 50
ii
4
SECTION 5.06. Waiver of Past Defaults 50
SECTION 5.07. Appointment of Receiver 50
SECTION 5.08. Mortgagee Authorized to Execute Bills of Sale, Etc. 51
SECTION 5.09. Rights of Note Holders to Receive Payment 51
ARTICLE VI DUTIES OF THE MORTGAGEE 51
SECTION 6.01. Notice of Event of Default 51
SECTION 6.02. Action Upon Instructions; Certain Rights and Limitations 52
SECTION 6.03. Indemnification 52
SECTION 6.04. No Duties Except as Specified in Trust
Indenture or Instructions 53
SECTION 6.05. No Action Except Under Trust Indenture or Instructions 53
SECTION 6.06. Investment of Amounts Held by Mortgagee 54
ARTICLE VII THE MORTGAGEE 54
SECTION 7.01. Acceptance of Trusts and Duties 54
SECTION 7.02. Absence of Duties 55
SECTION 7.03. No Representations or Warranties as to
Aircraft or Documents 55
SECTION 7.04. No Segregation of Monies; No Interest 55
SECTION 7.05. Reliance; Agreements; Advice of Counsel 56
iii
5
SECTION 7.06. Compensation 56
SECTION 7.07. Instructions from Note Holders 57
ARTICLE VIII INDEMNIFICATION 57
SECTION 8.01. Scope of Indemnification 57
ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES 57
SECTION 9.01. Resignation of Mortgagee; Appointment of Successor 57
SECTION 9.02. Appointment of Additional and Separate Trustees 58
ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS TRUST
INDENTURE AND OTHER DOCUMENTS 60
SECTION 10.01. Instructions of Majority; Limitations 60
SECTION 10.02. Mortgagee Protected 62
SECTION 10.03. Documents Mailed to Note Holders 62
SECTION 10.04. No Request Necessary for Trust Indenture Supplement 62
ARTICLE XI MISCELLANEOUS 62
SECTION 11.01. Termination of Trust Indenture 62
SECTION 11.02. No Legal Title to Collateral in Note Holders 63
SECTION 11.03. Sale of Aircraft by Mortgagee Is Binding 63
SECTION 11.04. Trust Indenture for Benefit of Owner, Mortgagee,
Second Mortgagee, Note Holders and the other Indenture
Indemnitees 63
iv
6
SECTION 11.05. Notices 63
SECTION 11.06. Severability 64
SECTION 11.07. No Oral Modification or Continuing Waivers 64
SECTION 11.08. Successors and Assigns 64
SECTION 11.09. Headings 64
SECTION 11.10. Normal Commercial Relations 65
SECTION 11.11. Governing Law; Counterpart Form 65
SECTION 11.12. Voting By Note Holders 65
SECTION 11.13. Section 1110 65
v
7
TABLE OF CONTENTS
Page
ANNEX A Definitions
ANNEX B Insurance
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization and Interest Rates
vi
8
TRUST INDENTURE AND MORTGAGE 322
TRUST INDENTURE AND MORTGAGE 322, dated as of June 25, 1997 ("Trust
Indenture"), between CONTINENTAL AIRLINES, INC., a Delaware corporation
("Owner"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in
its individual capacity, except as expressly stated herein, but solely as
Mortgagee hereunder (together with its successors hereunder, the "Mortgagee").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the parties hereto desire by this Trust Indenture, among
other things, (i) to provide for the issuance by the Owner of the Equipment
Notes and (ii) to provide for the assignment, mortgage and pledge by the Owner
to the Mortgagee, as part of the Collateral hereunder, among other things, of
all of the Owner's right, title and interest in and to the Aircraft and, except
as hereinafter expressly provided, all payments and other amounts received
hereunder in accordance with the terms hereof, as security for, among other
things, the Owner's obligations to the Note Holders and the Indenture
Indemnitees;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner and authenticated and delivered by the Mortgagee
hereunder, the valid, binding and enforceable obligations of the Owner; and
WHEREAS, all things necessary to make this Trust Indenture the
valid, binding and legal obligation of the Owner for the uses and purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH, that,
to secure the prompt payment of the Original Amount of, interest on, Make-Whole
Amount, if any, and all other amounts due with respect to, all Equipment Notes
from time to time outstanding hereunder according to their tenor and effect and
to secure the performance and observance by the Owner of all
9
the agreements, covenants and provisions contained herein and in the
Participation Agreement and in the Equipment Notes, for the benefit of the Note
Holders and each of the Indenture Indemnitees, and in consideration of the
premises and of the covenants herein contained, and of the acceptance of the
Equipment Notes by the holders thereof, and for other good and valuable
consideration the receipt and adequacy whereof are hereby acknowledged, the
Owner has granted, bargained, sold, assigned, transferred, conveyed, mortgaged,
pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer,
convey, mortgage, pledge and confirm, unto the Mortgagee, its successors in
trust and assigns, for the security and benefit of, the Note Holders and each of
the Indenture Indemnitees, a first priority purchase money security interest in
and mortgage lien on all right, title and interest of the Owner in, to and under
the following described property, rights and privileges, whether now or
hereafter acquired (which, collectively, together with all property hereafter
specifically subject to the Lien of this Trust Indenture by the terms hereof or
any supplement hereto, are included within, and are referred to as, the
"Collateral"), to wit:
(1) The Airframe which is one Boeing 737-3T0 aircraft with the FAA
Registration number of N12322 and the manufacturer's serial number of
23373 and Engines, each of which Engines is a CFM International CFM 56-3
engine with the manufacturer's serial numbers of 721-369 and 721-374, is
of 750 or more rated takeoff horsepower or the equivalent of such
horsepower (such Airframe and Engines more particularly described in the
Trust Indenture Supplement executed and delivered as provided herein) as
the same is now and will hereafter be constituted, whether now owned by
the Owner or hereafter acquired, and in the case of such Engines, whether
or not any such Engine shall be installed in or attached to the Airframe
or any other airframe, together with (a) all Parts of whatever nature,
which are from time to time included within the definitions of "Airframe"
or "Engines", whether now owned or hereafter acquired, including all
substitutions, renewals and replacements of and additions, improvements,
accessions and accumulations to the Airframe and Engines (other than
additions, improvements, accessions and accumulations which constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or
other equipment excluded from the definition of Parts) and (b) all
Aircraft Documents;
(2) The Aircraft Purchase Agreement and the Bills of Sale and (to
the extent assignable without the consent of
2
10
any manufacturer) any other continuing rights of the Owner in respect of
any warranty, indemnity or agreement, express or implied, as to title,
materials, workmanship, design or patent infringement or related matters
with respect to the Airframe or the Engines (reserving to the Owner,
however, all of the Owner's other rights and interest with respect to a
manufacturer), together with all rights, powers, privileges, options and
other benefits of the Owner thereunder (subject to such reservation) with
respect to the Airframe or the Engines, including, without limitation, the
right to make all waivers and agreements, to give and receive all notices
and other instruments or communications, to take such action upon the
occurrence of a default thereunder, including the commencement, conduct
and consummation of legal, administrative or other proceedings, as shall
be permitted thereby or by law, and to do any and all other things which
the Owner is or may be entitled to do thereunder;
(3) All proceeds with respect to the requisition of title to or use
of the Aircraft or any Engine by any Government Entity or from the sale or
other disposition of the Aircraft, the Airframe, any Engine or other
property described in any of these Granting Clauses by the Mortgagee
pursuant to the terms of this Trust Indenture, and all insurance proceeds
with respect to the Aircraft, the Airframe, any Engine or any part
thereof, but excluding any insurance maintained by the Owner and not
required under Section 4.06;
(4) All rents, revenues and other proceeds collected or entitled to
be collected by the Mortgagee pursuant to Section 5.03(b) and all monies
and securities from time to time deposited or required to be deposited
with the Mortgagee by or for the account of the Owner pursuant to any
terms of this Trust Indenture held or required to be held by the Mortgagee
hereunder; and
(5) All proceeds of the foregoing;
PROVIDED, HOWEVER, that notwithstanding any of the foregoing provisions, so long
as no Event of Default shall have occurred and be continuing, (a) the Mortgagee
shall not take or cause to be taken any action contrary to the Owner's right
hereunder to quiet enjoyment of the Airframe and Engines, and to possess, use,
retain and control the Airframe and Engines and all revenues, income and profits
derived therefrom, and (b) the Owner shall have the right, to the exclusion of
the Mortgagee with respect to the Aircraft Purchase Agreement, to exercise in
the Owner's name all rights and powers of the buyer under the Aircraft Purchase
Agreement (other than to amend, modify or waive any of the
3
11
warranties or indemnities contained therein, except in the exercise of the
Owner's reasonable business judgment) and to retain any recovery or benefit
resulting from the enforcement of any warranty or indemnity under the Aircraft
Purchase Agreement; and provided, further, that notwithstanding the occurrence
or continuation of an Event of Default, the Mortgagee shall not enter into any
amendment of the Aircraft Purchase Agreement that would increase the obligations
of Owner thereunder.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, and its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.12 and Article III hereof, without
any preference, distinction or priority of any one Equipment Note over any other
by reason of priority of time of issue, sale, negotiation, date of maturity
thereof or otherwise for any reason whatsoever, and for the uses and purposes
and in all cases and as to all property specified in paragraphs (1) through (5)
inclusive above, subject to the terms and provisions set forth in this Trust
Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner shall remain liable under the Indenture
Agreements to perform all of the obligations assumed by it thereunder, except to
the extent prohibited or excluded from doing so pursuant to the terms and
provisions thereof, and the Mortgagee, the Note Holders and the Indenture
Indemnitees shall have no obligation or liability under the Indenture Agreements
by reason of or arising out of the assignment hereunder, nor shall the
Mortgagee, the Note Holders or the Indenture Indemnitees be required or
obligated in any manner to perform or fulfill any obligations of the Owner under
or pursuant to the Indenture Agreements, or, except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim, or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner does hereby constitute the Mortgagee the true and lawful
attorney of the Owner, irrevocably, granted for good and valuable consideration
and coupled with an interest and with full power of substitution, and with full
power (in the name of the Owner or otherwise) to ask for, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies (in each case including insurance and requisition
4
12
proceeds) due and to become due under or arising out of the Indenture
Agreements, and all other property which now or hereafter constitutes part of
the Collateral, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action or to
institute any proceedings which the Mortgagee may deem to be necessary or
advisable in the premises; provided that the Mortgagee shall not exercise any
such rights except upon the occurrence and during the continuance of an Event of
Default hereunder.
The Owner agrees that at any time and from time to time, upon the
written request of the Mortgagee, the Owner will promptly and duly execute and
deliver or cause to be duly executed and delivered any and all such further
instruments and documents (including without limitation UCC continuation
statements) as the Mortgagee may reasonably deem necessary to perfect, preserve
or protect the mortgage, security interests and assignments created or intended
to be created hereby or to obtain for the Mortgagee the full benefits of the
assignment hereunder and of the rights and powers herein granted.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used but not defined herein shall have the
respective meanings set forth or incorporated by reference, and shall be
construed in the manner described, in Annex A hereto.
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes
The Equipment Notes shall be substantially in the form set forth
below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE
5
13
STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE.
CONTINENTAL AIRLINES, INC.
SERIES [_____] EQUIPMENT NOTE DUE [____] ISSUED IN CONNECTION WITH THE
[BOEING/MCDONNELL DOUGLAS] MODEL _______ AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N_____.
No. ____ Date: [__________, ____]
_______________________
INTEREST RATE MATURITY DATE
[___________] [____________]
CONTINENTAL AIRLINES, INC., a Delaware corporation ("Owner"), hereby
promises to pay to __________________, or the registered assignee thereof, the
principal sum of $____________ (the "Original Amount"), together with interest
on the amount of the Original Amount remaining unpaid from time to time
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) from the date hereof until paid in full at a rate per annum equal to the
Debt Rate. The Original Amount of this Equipment Note shall be payable in
installments on the dates set forth in Schedule I hereto equal to the
corresponding percentage of the Original Amount of this Equipment Note set forth
in Schedule I hereto. Accrued but unpaid interest shall be due and payable in
semiannual installments commencing on December 30, 1997, and thereafter on June
30 and December 30 of each year, to and including _______________.
Notwithstanding the foregoing, the final payment made on this Equipment Note
shall be in an amount sufficient to discharge in full the unpaid Original Amount
and all accrued and unpaid interest on, and any other amounts due under, this
Equipment Note. Notwithstanding anything to the contrary contained herein, if
any date on which a payment under this Equipment Note becomes due and payable is
not a Business Day, then such payment shall not be made on such scheduled date
but shall be made on the next succeeding Business Day and if such payment is
made on such next succeeding Business Day, no interest shall accrue on the
amount of such payment during such extension.
For purposes hereof, the term "Trust Indenture" means the Trust
Indenture and Mortgage 322, dated as of June 25, 1997, between the Owner and
Wilmington Trust Company (the "Mortgagee"), as the same may be amended or
supplemented from time to time.
6
14
All other capitalized terms used in this Equipment Note and not defined herein
shall have the respective meanings assigned in the Trust Indenture.
This Equipment Note shall bear interest, payable on demand, at the
Payment Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Original Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable Law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
The interest rate borne by this Equipment Note shall be subject to
adjustments to the extent, and under the circumstances, specified by the
Registration Rights Agreement.
There shall be maintained an Equipment Note Register for the purpose
of registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.06 of the Trust Indenture.
The Original Amount and interest and other amounts due hereunder
shall be payable in Dollars in immediately available funds at the Corporate
Trust Office of the Mortgagee, or as otherwise provided in the Trust Indenture.
Each such payment shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note, except that in the case of any
final payment with respect to this Equipment Note, the Equipment Note shall be
surrendered promptly thereafter to the Mortgagee for cancellation.
The holder hereof, by its acceptance of this Equipment Note, agrees
that, except as provided in the Trust Indenture, each payment of the Original
Amount, Make-Whole Amount, if any, and interest received by it hereunder shall
be applied, first, to the payment of accrued interest on this Equipment Note (as
well as any interest on any overdue Original Amount, any overdue Make-Whole
Amount, if any, or, to the extent permitted by Law, any overdue interest and
other amounts hereunder) to the date of such payment, second, to the payment of
the Original Amount of this Equipment Note then due, third, to the payment of
Make-Whole Amount, if any, and any other amount due hereunder or under the
7
15
Trust Indenture, and fourth, the balance, if any, remaining thereafter, to the
payment of installments of the Original Amount of this Equipment Note remaining
unpaid in the inverse order of their maturity (provided that this Equipment Note
shall not be subject to redemption except as provided in Sections 2.09, 2.10 and
2.11 of the Trust Indenture).
This Equipment Note is one of the Equipment Notes referred to in the
Trust Indenture which have been or are to be issued by the Owner pursuant to the
terms of the Trust Indenture. The Collateral is held by the Mortgagee as
security, in part, for the Equipment Notes. The provisions of this Equipment
Note are subject to the Trust Indenture. Reference is hereby made to the Trust
Indenture for a complete statement of the rights and obligations of the holder
of, and the nature and extent of the security for, this Equipment Note and the
rights and obligations of the holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the Trust
Indenture, as well as for a statement of the terms and conditions of the Trust
created by the Trust Indenture, to all of which terms and conditions in the
Trust Indenture each holder hereof agrees by its acceptance of this Equipment
Note.
As provided in the Trust Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for a like
aggregate Original Amount of Equipment Notes of different authorized
denominations, as requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner and the Mortgagee shall treat the person in whose name
this Equipment Note is registered as the owner hereof for all purposes, whether
or not this Equipment Note be overdue, and neither the Owner nor the Mortgagee
shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as provided in Sections
2.09, 2.10 and 2.11 of the Trust Indenture but not otherwise. In addition, this
Equipment Note may be accelerated as provided in Section 5.02 of the Trust
Indenture.
[The indebtedness evidenced by this Equipment Note is, to the extent
and in the manner provided in the Trust Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Trust
8
16
Indenture) in respect of [Series A Equipment Notes]1 [Series A and Series B
Equipment Notes]2 [Series A, Series B and Series C Equipment Notes]3 and this
Equipment Note is issued subject to such provisions. The Note Holder of this
Equipment Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Mortgagee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Trust Indenture and (c) appoints the Mortgagee his
attorney-in-fact for such purpose.]4
Unless the certificate of authentication hereon has been executed by
or on behalf of the Mortgagee by manual signature, this Equipment Note shall not
be entitled to any benefit under the Trust Indenture or be valid or obligatory
for any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner has caused this Equipment Note to be
executed in its corporate name by its officer thereunto duly authorized on the
date hereof.
CONTINENTAL AIRLINES, INC.
By:______________________________
Name:
Title:
- ----------
1. To be inserted in the case of a Series B Equipment Note.
2. To be inserted in the case of a Series C Equipment Note.
3. To be inserted in the case of a Series D Equipment Note.
4. To be inserted for each Equipment Note other than any Series A Equipment
Note
9
17
MORTGAGEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Trust Indenture.
WILMINGTON TRUST COMPANY, as
Mortgagee
By:________________________________
Name:
Title:
SCHEDULE I
EQUIPMENT NOTE AMORTIZATION
Payment Date Percentage of Original Amount to Be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes
The Equipment Notes shall be dated the date of issuance thereof,
shall be issued in four separate series consisting of Series A, Series B, Series
C and Series D and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto. On the date thereof, each Equipment
Note shall be issued to the Subordination Agent on behalf of a Pass Through
Trustee under the Pass Through Trust Agreement. The Equipment Notes shall be
issued in registered form only. The Equipment Notes shall be issued in
denominations of $1,000 and integral multiples thereof, except that one
Equipment Note of each Series may be in an amount that is not an integral
multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate (calculated
on the basis of a year of 360 days comprised of twelve 30-day months) on the
unpaid Original Amount thereof from time to time outstanding, payable in arrears
on December 30, 1997, and on each June 30 and December 30 thereafter until
maturity. The Original Amount of each Equipment Note shall be payable on the
dates and in the installments equal to the
10
18
corresponding percentage of the Original Amount as set forth in Schedule I
hereto which shall be attached as Schedule I to the Equipment Notes.
Notwithstanding the foregoing, the final payment made under each Equipment Note
shall be in an amount sufficient to discharge in full the unpaid Original Amount
and all accrued and unpaid interest on, and any other amounts due under, such
Equipment Note. Each Equipment Note shall bear interest at the Payment Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Original Amount, Make-Whole Amount, if any, and, to
the extent permitted by applicable Law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Equipment Note becomes due and payable is not
a Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
The Owner agrees to pay to the Mortgagee for distribution in
accordance with Section 3.04 hereof: (i) an amount equal to the fees payable to
the relevant Liquidity Provider under Section 2.03 of each Liquidity Facility
and the related Fee Letter (as defined in the Intercreditor Agreement)
multiplied by a fraction the numerator of which shall be the then outstanding
aggregate principal amount of the Series A Equipment Notes, Series B Equipment
Notes and Series C Equipment Notes and the denominator of which shall be the
then outstanding aggregate principal amount of all "Series A Equipment Notes,"
"Series B Equipment Notes" and "Series C Equipment Notes" issued under this
Indenture and each of the Related Indentures; (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
foregoing clause (i); (iv) if any payment default shall have occurred and be
continuing with
11
19
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)(i) 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 Owner on 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" issued under this Indenture and
each of the Related Indentures (other than interest becoming due and payable
solely as a result of acceleration of any such "Equipment Notes"); and (v)
Owner'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)
Owner's pro rata share of all compensation and reimbursement of expenses,
disbursements and advances payable by Owner to the Pass Through Trustees under
the Pass Through Trust Agreements, and (d) Owner's pro rata share of all
compensation and reimbursement of expenses and disbursements payable to the
Subordination Agent under the Intercreditor Agreement except with respect to any
income or franchise taxes incurred by the Subordination Agent in connection with
the transactions contemplated by the Intercreditor Agreement. As used herein,
"Owner's pro rata share" means as of any time a fraction, the numerator of which
is the principal balance then outstanding of Equipment Notes (other than the
Series D Equipment Notes) and the denominator of which is the aggregate
principal balance then outstanding of all "Equipment Notes" (other than "Series
D Equipment Notes") (as such terms are defined in this Trust Indenture and each
of the Related Indentures). For purposes of this paragraph, the terms "Applied
Downgrade Advance", "Applied Non-Extension Advance" (if applicable), "Cash
Collateral Account", "Downgrade Advance", "Final Advance", "Investment
Earnings", "Non-Extension Advance"
12
20
(if applicable) and "Unpaid Advance" shall have the meanings specified in each
Liquidity Facility.
The Equipment Notes shall be executed on behalf of the Owner by one
of its authorized officers. Equipment Notes bearing the signatures of
individuals who were at any time the proper officers of the Owner shall bind the
Owner, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Equipment Notes or
did not hold such offices at the respective dates of such Equipment Notes. The
Owner may from time to time execute and deliver Equipment Notes with respect to
the Aircraft to the Mortgagee for authentication upon original issue and such
Equipment Notes shall thereupon be authenticated and delivered by the Mortgagee
upon the written request of the Owner signed by an authorized officer of the
Owner; provided, however, that each such request shall specify the aggregate
Original Amount of all Equipment Notes to be authenticated hereunder on original
issue with respect to the Aircraft. No Equipment Note shall be secured by or
entitled to any benefit under this Trust Indenture or be valid or obligatory for
any purposes, unless there appears on such Equipment Note a certificate of
authentication in the form provided for herein executed by the Mortgagee by the
manual signature of one of its authorized officers and such certificate upon any
Equipment Notes be conclusive evidence, and the only evidence, that such
Equipment Note has been duly authenticated and delivered hereunder.
The aggregate Original Amount of the Equipment Notes issued
hereunder shall not exceed $16,112,054.
SECTION 2.03. Method of Payment
(a) The Original Amount of, interest on, Make-Whole Amount, if any,
and other amounts due under each Equipment Note or hereunder will be payable in
Dollars by wire transfer of immediately available funds not later than 12:30
p.m., New York City time, on the due date of payment to the Mortgagee at the
Corporate Trust Office for distribution among the Note Holders in the manner
provided herein. The Owner shall not have any responsibility for the
distribution of such payment to any Note Holder. Notwithstanding the foregoing
or any provision in any Equipment Note to the contrary, the Mortgagee will use
reasonable efforts to pay or cause to be paid, if so directed in writing by any
Note Holder (with a copy to the Owner), all amounts paid by
13
21
the Owner hereunder and under such holder's Equipment Note or Equipment Notes to
such holder or a nominee therefor (including all amounts distributed pursuant to
Article III of this Trust Indenture) by transferring, or causing to be
transferred, by wire transfer of immediately available funds in Dollars, prior
to 2:00 p.m., New York City time, on the due date of payment, to an account
maintained by such holder with a bank located in the continental United States
the amount to be distributed to such holder, for credit to the account of such
holder maintained at such bank. If the Mortgagee shall fail to make any such
payment as provided in the immediately foregoing sentence after its receipt of
funds at the place and prior to the time specified above, the Mortgagee, in its
individual capacity and not as trustee, agrees to compensate such holders for
loss of use of funds at Debt Rate until such payment is made and the Mortgagee
shall be entitled to any interest earned on such funds until such payment is
made. Any payment made hereunder shall be made without any presentment or
surrender of any Equipment Note, except that, in the case of the final payment
in respect of any Equipment Note, such Equipment Note shall be surrendered to
the Mortgagee for cancellation promptly after such payment. Notwithstanding any
other provision of this Trust Indenture to the contrary, the Mortgagee shall not
be required to make, or cause to be made, wire transfers as aforesaid prior to
the first Business Day on which it is practicable for the Mortgagee to do so in
view of the time of day when the funds to be so transferred were received by it
if such funds were received after 12:30 PM, New York time, at the place of
payment. Prior to the due presentment for registration of transfer of any
Equipment Note, the Owner and the Mortgagee shall deem and treat the Person in
whose name any Equipment Note is registered on the Equipment Note Register as
the absolute owner and holder of such Equipment Note for the purpose of
receiving payment of all amounts payable with respect to such Equipment Note and
for all other purposes, and none of the Owner or the Mortgagee shall be affected
by any notice to the contrary. So long as any signatory to the Participation
Agreement or nominee thereof shall be a registered Note Holder, all payments to
it shall be made to the account of such Note Holder specified in Schedule 1
thereto and otherwise in the manner provided in or pursuant to the Participation
Agreement unless it shall have specified some other account or manner of payment
by notice to the Mortgagee consistent with this Section 2.03.
14
22
(b) The Mortgagee, as agent for the Owner, shall exclude and
withhold at the appropriate rate from each payment of Original Amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or under
each Equipment Note (and such exclusion and withholding shall constitute payment
in respect of such Equipment Note) any and all United States withholding taxes
applicable thereto as required by Law. The Mortgagee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
United States taxes or similar charges are required to be withheld with respect
to any amounts payable hereunder or in respect of the Equipment Notes, to
withhold such amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Note Holders, that it will file any necessary
United States withholding tax returns or statements when due, and that as
promptly as possible after the payment thereof it will deliver to each Note
Holder (with a copy to the Owner) appropriate receipts showing the payment
thereof, together with such additional documentary evidence as any such Note
Holder may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to the
Mortgagee a properly completed, accurate and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such holder
is made (but prior to the making of such payment), or in either of the two
preceding calendar years, and has not notified the Mortgagee of the withdrawal
or inaccuracy of such form prior to the date of such payment (and the Mortgagee
has no reason to believe that any information set forth in such form is
inaccurate), the Mortgagee shall withhold only the amount, if any, required by
Law (after taking into account any applicable exemptions properly claimed by the
Note Holder) to be withheld from payments hereunder or under the Equipment Notes
held by such holder in respect of United States federal income tax. If a Note
Holder (x) which is a Non-U.S. Person has furnished to the Mortgagee a properly
completed, accurate and currently effective U.S. Internal Revenue Service Form
4224 in duplicate (or such successor certificate, form or forms as may be
required by the United States Treasury Department as necessary in order to
properly avoid withholding of United States federal income tax), for each
calendar year in which a payment is made (but prior to
15
23
the making of any payment for such year), and has not notified the Mortgagee of
the withdrawal or inaccuracy of such certificate or form prior to the date of
such payment (and the Mortgagee has no reason to believe that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Mortgagee a properly completed, accurate and currently
effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a
payment hereunder or under the Equipment Notes held by such holder, no amount
shall be withheld from payments in respect of United States federal income tax.
If any Note Holder has notified the Mortgagee that any of the foregoing forms or
certificates is withdrawn or inaccurate, or if such holder has not filed a form
claiming an exemption from United States withholding tax or if the Code or the
regulations thereunder or the administrative interpretation thereof is at any
time after the date hereof amended to require such withholding of United States
federal income taxes from payments under the Equipment Notes held by such
holder, the Mortgagee agrees to withhold from each payment due to the relevant
Note Holder withholding taxes at the appropriate rate under Law and will, on a
timely basis as more fully provided above, deposit such amounts with an
authorized depository and make such returns, statements, receipts and other
documentary evidence in connection therewith as required by Law.
Owner shall not have any liability for the failure of the Mortgagee
to withhold taxes in the manner provided for herein or for any false, inaccurate
or untrue evidence provided by any Note Holder hereunder.
SECTION 2.04. Application of Payments
In the case of each Equipment Note, each payment of Original Amount,
Make-Whole Amount, if any, and interest due thereon shall be applied:
First: to the payment of accrued interest on such Equipment
Note (as well as any interest on any overdue Original Amount, any overdue
Make-Whole Amount, if any, and to the extent permitted by Law, any overdue
interest and any other overdue amounts thereunder) to the date of such
payment;
Second: to the payment of the Original Amount of such
Equipment Note (or a portion thereof) then due thereunder;
16
24
Third: to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under such Equipment Note; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Original Amount of such Equipment Note remaining unpaid
(provided that such Equipment Note shall not be subject to redemption
except as provided in Sections 2.09, 2.10 and 2.11 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Original Amount of such Equipment Note in the inverse order of
their maturity.
SECTION 2.05. Termination of Interest in Collateral
No Note Holder nor any other Indenture Indemnitee shall, as such,
have any further interest in, or other right with respect to, the Collateral
when and if the Original Amount of, Make-Whole Amount, if any, and interest on
and other amounts due under all Equipment Notes held by such Note Holder and all
other sums then due and payable to such Note Holder, such Indenture Indemnitee
or the Mortgagee hereunder (including, without limitation, under the third
paragraph of Section 2.02 hereof and interest accruing on each Equipment Note
after the commencement of a Case) and under the other Operative Agreements
(other than the Related Indentures, the Second Mortgage and any Second Mortgage
Supplement) by the Owner (collectively, the "Secured Obligations") shall have
been paid in full.
SECTION 2.06. Registration Transfer and Exchange of Equipment Notes
The Mortgagee shall keep a register (the "Equipment Note Register")
in which the Mortgagee shall provide for the registration of Equipment Notes and
the registration of transfers of Equipment Notes. No such transfer shall be
given effect unless and until registration hereunder shall have occurred. The
Equipment Note Register shall be kept at the Corporate Trust Office of the
Mortgagee. The Mortgagee is hereby appointed "Equipment Note Registrar" for the
purpose of registering Equipment Notes and transfers of Equipment Notes as
herein provided. A holder of any Equipment Note intending to exchange such
Equipment Note shall surrender such Equipment Note to the Mortgagee at the
Corporate Trust Office, together with a written request from the registered
holder thereof for the issuance of a
17
25
new Equipment Note, specifying, in the case of a surrender for transfer, the
name and address of the new holder or holders. Upon surrender for registration
of transfer of any Equipment Note, the Owner shall execute, and the Mortgagee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Equipment Notes of a like aggregate Original Amount
and of the same series. At the option of the Note Holder, Equipment Notes may be
exchanged for other Equipment Notes of any authorized denominations of a like
aggregate Original Amount, upon surrender of the Equipment Notes to be exchanged
to the Mortgagee at the Corporate Trust Office. Whenever any Equipment Notes are
so surrendered for exchange, the Owner shall execute, and the Mortgagee shall
authenticate and deliver, the Equipment Notes which the Note Holder making the
exchange is entitled to receive. All Equipment Notes issued upon any
registration of transfer or exchange of Equipment Notes (whether under this
Section 2.06 or under Section 2.07 hereof or otherwise under this Trust
Indenture) shall be the valid obligations of the Owner evidencing the same
respective obligations, and entitled to the same security and benefits under
this Trust Indenture, as the Equipment Notes surrendered upon such registration
of transfer or exchange. Every Equipment Note presented or surrendered for
registration of transfer, shall (if so required by the Mortgagee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Mortgagee duly executed by the Note Holder or such holder's
attorney duly authorized in writing, and the Mortgagee shall require evidence
satisfactory to it as to the compliance of any such transfer with the Securities
Act, and the securities Laws of any applicable state. The Mortgagee shall make a
notation on each new Equipment Note of the amount of all payments of Original
Amount previously made on the old Equipment Note or Equipment Notes with respect
to which such new Equipment Note is issued and the date to which interest on
such old Equipment Note or Equipment Notes has been paid. Interest shall be
deemed to have been paid on such new Equipment Note to the date on which
interest shall have been paid on such old Equipment Note, and all payments of
the Original Amount marked on such new Equipment Note, as provided above, shall
be deemed to have been made thereon. The Owner shall not be required to exchange
any surrendered Equipment Notes as provided above during the ten-day period
preceding the due date of any payment on such Equipment Note. The Owner shall in
all cases deem the Person in whose name any Equipment Note shall have been
issued and registered as the absolute owner and holder of such Equipment Note
for the purpose
18
26
of receiving payment of all amounts payable by the Owner with respect to such
Equipment Note and for all purposes until a notice stating otherwise is received
from the Mortgagee and such change is reflected on the Equipment Note Register.
The Mortgagee will promptly notify the Owner of each registration of a transfer
of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of this Trust
Indenture and the Participation Agreement applicable to Note Holders, including
Sections 6.3, 6.4 and 9.1 thereof and shall be deemed to have covenanted to the
parties to the Participation Agreement as to the matters covenanted by the
original Note Holder in the Participation Agreement. Subject to compliance by
the Note Holder and its transferee (if any) of the requirements set forth in
this Section 2.06, Mortgagee and Owner shall use all reasonable efforts to issue
new Equipment Notes upon transfer or exchange within 10 Business Days of the
date an Equipment Note is surrendered for transfer or exchange.
SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Equipment Notes
If any Equipment Note shall become mutilated, destroyed, lost or
stolen, the Owner shall, upon the written request of the holder of such
Equipment Note, execute and the Mortgagee shall authenticate and deliver in
replacement thereof a new Equipment Note, payable in the same Original Amount
dated the same date and captioned as issued in connection with the Aircraft. If
the Equipment Note being replaced has become mutilated, such Equipment Note
shall be surrendered to the Mortgagee and a photocopy thereof shall be furnished
to the Owner. If the Equipment Note being replaced has been destroyed, lost or
stolen, the holder of such Equipment Note shall furnish to the Owner and the
Mortgagee such security or indemnity as may be required by them to save the
Owner and the Mortgagee harmless and evidence satisfactory to the Owner and the
Mortgagee of the destruction, loss or theft of such Equipment Note and of the
ownership thereof. If a "qualified institutional buyer" of the type referred to
in paragraph (a)(1)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act
(a "QIB") is the holder of any such destroyed, lost or stolen Equipment Note,
then the written indemnity of such QIB, signed by an authorized officer thereof,
in favor of, delivered to and in form reasonably satisfactory Owner shall be
accepted as satisfactory indemnity and security and no further indemnity or
security shall be required as a
19
27
condition to the execution and delivery of such new Equipment Note. Subject to
compliance by the Note Holder with the requirements set forth in this Section
2.07, Mortgagee and Owner shall use all reasonable efforts to issue new
Equipment Notes within 10 Business Days of the date of the written request
therefor from the Note Holder.
SECTION 2.08. Payment of Expenses on Transfer; Cancellation
(a) No service charge shall be made to a Note Holder for any
registration of transfer or exchange of Equipment Notes, but the Mortgagee, as
Equipment Note Registrar, may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Equipment Notes.
(b) The Mortgagee shall cancel all Equipment Notes surrendered for
replacement, redemption, transfer, exchange, payment or cancellation and shall
destroy the canceled Equipment Notes.
SECTION 2.09. Mandatory Redemptions of Equipment Notes
On the date on which the Owner is required pursuant to Section 4.05
hereof to make payment for an Event of Loss with respect to the Airframe, all of
the Equipment Notes shall be redeemed in whole at a redemption price equal to
100% of the unpaid Original Amount thereof, together with all accrued interest
thereon to the date of redemption and all other Secured Obligations owed or then
due and payable to the Note Holders but without Make-Whole Amount. On such date
of redemption, all other Secured Obligations then due and payable to each
Indenture Indemnitee shall likewise be paid in full.
SECTION 2.10. Voluntary Redemptions of Equipment Notes
All (but not less than all) of the Equipment Notes may be redeemed
by the Owner upon at least 30 days' revocable prior written notice to the
Mortgagee and the Note Holders, and the Equipment Notes shall be redeemed in
whole at a redemption price equal to 100% of the unpaid Original Amount thereof,
together with accrued interest thereon to the date of redemption and all other
Secured Obligations owed or then due and payable to the Note Holders plus, if
such redemption is made prior to the Premium Termination Date, Make-Whole
Amount, if any. On such
20
28
date of redemption, all other Secured Obligations then due and payable to each
Indenture Indemnitee shall likewise be paid in full.
SECTION 2.11. Redemptions; Notice of Redemption
(a) No redemption of any Equipment Note may be made except to the
extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Equipment Note may be made by the Mortgagee.
(b) Notice of redemption with respect to the Equipment Notes shall
be given by the Mortgagee by first-class mail, postage prepaid, mailed not less
than 25 nor more than 60 days prior to the applicable redemption date, to each
Note Holder of such Equipment Notes to be redeemed, at such Note Holder's
address appearing in the Equipment Note Register; provided that such notice
shall be revocable by written notice from the Owner to Mortgagee given not later
than three days prior to the redemption date. All notices of redemption shall
state: (1) the redemption date, (2) the applicable basis for determining the
redemption price, (3) that on the redemption date, the redemption price will
become due and payable upon each such Equipment Note, and that, if any such
Equipment Notes are then outstanding, interest on such Equipment Notes shall
cease to accrue on and after such redemption date, and (4) the place or places
where such Equipment Notes are to be surrendered for payment of the redemption
price.
(c) On or before the redemption date, the Owner (or any person on
behalf of the Owner) shall, to the extent an amount equal to the redemption
price for the Equipment Notes to be redeemed on the redemption date shall not
then be held by the Mortgagee, deposit or cause to be deposited with the
Mortgagee by 12:30 PM New York time on the redemption date in immediately
available funds the redemption price of the Equipment Notes to be redeemed.
(d) Notice of redemption having been given as aforesaid, the
Equipment Notes to be redeemed shall, on the redemption date, become due and
payable at the Corporate Trust Office of the Mortgagee or at any office or
agency maintained for such purposes pursuant to Section 2.06, and from and after
such redemption date (unless there shall be a default in the payment of the
redemption price) any such Equipment Notes then
21
29
outstanding shall cease to bear interest. Upon surrender of any such Equipment
Note for redemption in accordance with said notice, such Equipment Note shall be
redeemed at the redemption price. If any Equipment Note called for redemption
shall not be so paid upon surrender thereof for redemption, the principal amount
thereof shall, until paid, continue to bear interest from the applicable
redemption date at the interest rate in effect for such Equipment Note as of
such redemption date.
SECTION 2.12. Subordination
(a) The Owner and, by acceptance of its Equipment Notes of any
Series, each Note Holder of such Series, hereby agree that no payment or
distribution shall be made on or in respect of the Secured Obligations owed to
such Note Holder of such Series, including any payment or distribution of cash,
property or securities after the commencement of a proceeding (a "Case") of the
type referred to in Section 5.01(v), (vi) or (vii) hereof, except as expressly
provided in Article III hereof.
(b) By the acceptance of its Equipment Notes of any Series (other
than Series A), each Note Holder of such Series agrees that in the event that
such Note Holder, in its capacity as a Note Holder, shall receive any payment or
distribution on any Secured Obligations in respect of such Series which it is
not entitled to receive under this Section 2.12 or Article III hereof, it will
hold any amount so received in trust for the Senior Holder (as defined in
Section 2.12(c) hereof) and will forthwith turn over such payment to the
Mortgagee in the form received to be applied as provided in Article III hereof.
(c) As used in this Section 2.12, the term "Senior Holder" shall
mean, (i) the Note Holders of Series A until the Secured Obligations in respect
of Series A Equipment Notes have been paid in full (including, without
limitation, interest accruing after the commencement of a Case), (ii) after the
Secured Obligations in respect of Series A Equipment Notes have been paid in
full (including, without limitation, such post-petition interest), the Note
Holders of Series B until the Secured Obligations in respect of Series B
Equipment Notes have been paid in full (including, without limitation, interest
accruing after the commencement of a Case), (iii) after the Secured Obligations
in respect of Series B Equipment Notes have been paid in full (including,
without limitation, such post-petition interest), the Note Holders of Series C
(including,
22
30
without limitation, interest accruing after the commencement of a Case), and
(iv) after the Secured Obligations in respect of the Series C Equipment Notes
have been paid in full (including, without limitation, such post-petition
interest), the Note Holders of Series D.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS
SECTION 3.01. Basic Distributions
Except as otherwise provided in Section 3.03 hereof, each periodic
payment of principal or interest on the Equipment Notes received by the
Mortgagee shall be promptly distributed in the following order of priority:
(i) so much of such payment as shall be required to pay in
full the aggregate amount of the payment or payments of Original Amount
and interest (as well as any interest on any overdue Original Amount and,
to the extent permitted by Law, on any overdue interest) then due under
all Series A Equipment Notes shall be distributed to the Note Holders of
Series A ratably, without priority of one over the other, in the
proportion that the amount of such payment or payments then due under each
Series A Equipment Note bears to the aggregate amount of the payments then
due under all Series A Equipment Notes;
(ii) after giving effect to paragraph (i) above, so much of
such payment remaining as shall be required to pay in full the aggregate
amount of the payment or payments of Original Amount and interest (as well
as any interest on any overdue Original Amount and, to the extent
permitted by Law, on any overdue interest) then due under all Series B
Equipment Notes shall be distributed to the Note Holders of Series B
ratably, without priority of one over the other, in the proportion that
the amount of such payment or payments then due under each Series B
Equipment Note bears to the aggregate amount of the payments then due
under all Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, so much of
such payment remaining as shall be required to pay in full the aggregate
amount of the payment or payments of Original Amount and interest (as well
as any interest on any overdue Original Amount and, to the extent
permitted by Law, on any overdue interest) then due under all Series C
Equipment Notes shall be distributed to the
23
31
Note Holders of Series C ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments then due
under each Series C Equipment Note bears to the aggregate amount of the
payments then due under all Series C Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, so much of
such payment remaining as shall be required to pay in full the aggregate
amount of the payment or payments of Original Amount and interest (as well
as any interest on any overdue Original Amount and, to the extent
permitted by Law, on any overdue interest) then due under all Series D
Equipment Notes shall be distributed to the Note Holders of Series D
ratably, without priority of one over the other, in the proportion that
the amount of such payment or payments then due under each Series D
Equipment Note bears to the aggregate amount of the payments then due
under all Series D Equipment Notes.
SECTION 3.02. Event of Loss; Replacement; Optional Redemption
Except as otherwise provided in Section 3.03 hereof, any payments
received by the Mortgagee (i) with respect to the Airframe or the Airframe and
one or more Engines as the result of an Event of Loss or (ii) pursuant to an
optional redemption of the Equipment Notes pursuant to Section 2.10 hereof shall
be applied to redemption of the Equipment Notes and to all other Secured
Obligations by applying such funds in the following order of priority:
First, (a) to reimburse the Mortgagee and the Note Holders for any
reasonable costs or expenses incurred in connection with
such redemption for which they are entitled to
reimbursement, or indemnity by Owner, under the Operative
Agreements and then (b) to pay any other amounts then due
(except as provided in clause "Second" below) to the
Mortgagee, the Note Holders and the other Indenture
Indemnitees under this Trust Indenture, the Participation
Agreement or the Equipment Notes;
Second, (i) to pay the amounts specified in paragraph (i) of
clause "Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series A Equipment Notes;
24
32
(ii) after giving effect to paragraph (i) above, to pay
the amounts specified in paragraph (ii) of clause
"Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, to pay
the amounts specified in paragraph (iii) of clause
"Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series C Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, to pay
the amounts specified in paragraph (iv) of clause
"Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series D Equipment Notes; and
Third, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 4.05 hereof, any insurance, condemnation or similar proceeds which
result from such Event of Loss and are paid over to the Mortgagee shall be held
by the Mortgagee as permitted by Section 7.04 hereof (provided that such moneys
shall be invested as provided in Section 6.06 hereof) as additional security for
the obligations of Owner under Operative Agreements and such proceeds (and such
investment earnings), to the extent not theretofore applied as provided herein,
shall be released to the Owner at the Owner's written request upon the release
of such Airframe or Engine and the replacement thereof as provided herein.
SECTION 3.03. Payments After Event of Default
Except as otherwise provided in Section 3.04 hereof, all payments
received and amounts held or realized by the Mortgagee (including any amounts
realized by the Mortgagee from the exercise of any remedies pursuant to Article
V hereof) after an Event of Default shall have occurred and be continuing and
after the declaration specified in Section 5.02(b) hereof, as
25
33
well as all payments or amounts then held by the Mortgagee as part of the
Collateral, shall be promptly distributed by the Mortgagee in the following
order of priority:
First, so much of such payments or amounts as shall be required to
(i) reimburse the Mortgagee or WTC for any tax (except to
the extent resulting from a failure of the Mortgagee to
withhold taxes pursuant to Section 2.04(b) hereof), expense
or other loss (including, without limitation, all amounts
to be expended at the expense of, or charged upon the
rents, revenues, issues, products and profits of, the
property included in the Collateral (all such property
being herein called the "Mortgaged Property") pursuant to
Section 5.03(b) hereof) incurred by the Mortgagee or WTC
(to the extent not previously reimbursed), the expenses of
any sale, or other proceeding, reasonable attorneys' fees
and expenses, court costs, and any other expenditures
incurred or expenditures or advances made by the Mortgagee,
WTC or the Note Holders in the protection, exercise or
enforcement of any right, power or remedy or any damages
sustained by the Mortgagee, WTC or any Note Holder,
liquidated or otherwise, upon such Event of Default shall
be applied by the Mortgagee as between itself, WTC and the
Note Holders in reimbursement of such expenses and any
other expenses for which the Mortgagee, WTC or the Note
Holders are entitled to reimbursement under any Operative
Agreement and (ii) pay all amounts payable to the other
Indenture Indemnitees hereunder and under the Participation
Agreement; and in the case the aggregate amount to be so
distributed is insufficient to pay as aforesaid in clauses
(i) and (ii), then ratably, without priority of one over
the other, in proportion to the amounts owed each hereunder;
Second, so much of such payments or amounts remaining as shall be
required to reimburse the then existing or prior Note
Holders for payments made pursuant to Section 6.03 hereof
(to the extent not previously reimbursed) shall be
distributed to such then existing or prior Note Holders
ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made
by each such then existing or prior Note Holder pursuant to
said Section 6.03 hereof;
26
34
Third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate
unpaid Original Amount of all Series A Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and all
other Secured Obligations in respect of the Series
A Equipment Notes (other than Make-Whole Amount)
to the date of distribution, shall be distributed
to the Note Holders of Series A, and in case the
aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other,
in the proportion that the aggregate unpaid
Original Amount of all Series A Equipment Notes
held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any)
to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series A
Equipment Notes held by all such holders plus the
accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Amount) to the date
of distribution;
(ii) after giving effect to paragraph (i) above, so
much of such payments or amounts remaining as
shall be required to pay in full the aggregate
unpaid Original Amount of all Series B Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and all
other Secured Obligations in respect of the Series
B Equipment Notes (other than Make-Whole Amount)
to the date of distribution, shall be distributed
to the Note Holders of Series B, and in case the
aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other,
in the proportion that the aggregate unpaid
Original Amount of all Series B Equipment Notes
held by each holder plus the accrued but unpaid
27
35
interest and other amounts due hereunder or
thereunder (other than the Make-Whole Amount, if
any) to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series B
Equipment Notes held by all such holders plus the
accrued but unpaid interest and other amounts due
thereon (other than the Make-Whole Amount) to the
date of distribution;
(iii) after giving effect to paragraph (ii) above, so much
of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Original
Amount of all Series C Equipment Notes, and the
accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Amount which shall not
be due and payable) and all other Secured Obligations
in respect of the Series C Equipment Notes (other
than Make-Whole Amount) to the date of distribution,
shall be distributed to the Note Holders of Series C,
and in case the aggregate amount so to be distributed
shall be insufficient to pay in full as aforesaid,
then ratably, without priority of one over the other,
in the proportion that the aggregate unpaid Original
Amount of all Series C Equipment Notes held by each
holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than the
Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Original
Amount of all Series C Equipment Notes held by all
such holders plus the accrued but unpaid interest and
other amounts due thereon (other than the Make-Whole
Amount) to the date of distribution; and
(iv) after giving effect to paragraph (iii) above, so
much of such payments or amounts remaining as
shall be required to pay in full the aggregate
unpaid Original Amount of all Series D Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and all
other Secured Obligations in
28
36
respect of the Series D Equipment Notes (other
than Make-Whole Amount) to the date of
distribution, shall be distributed to the Note
Holders of Series D, and in case the aggregate
amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without
priority of one over the other, in the proportion
that the aggregate unpaid Original Amount of all
Series D Equipment Notes held by each holder plus
the accrued but unpaid interest and other amounts
due hereunder or thereunder (other than the
Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid
Original Amount of all Series D Equipment Notes
held by all such holders plus the accrued but
unpaid interest and other amounts due thereon
(other than the Make-Whole Amount) to the date of
distribution; and
Fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be held or distributed in accordance with
Section 3.01 of the Second Mortgage.
No Make-Whole Amount shall be due and payable on the Equipment Notes
as a consequence of the acceleration of the Equipment Notes as a result of an
Event of Default.
SECTION 3.04. Certain Payments
(a) Any payments received by the Mortgagee for which no provision as
to the application thereof is made in this Trust Indenture and for which such
provision is made in any other Operative Agreement shall be applied forthwith to
the purpose for which such payment was made in accordance with the terms of such
other Operative Agreement, as the case may be.
(b) Notwithstanding anything to the contrary contained in this
Article III, the Mortgagee will distribute promptly upon receipt any indemnity
payment received by it from the Owner in respect of the Mortgagee in its
individual capacity, any Note Holder or any other Indenture Indemnitee, in each
case whether or not pursuant to Section 8 of the Participation Agreement,
directly to the Person entitled thereto. Any payment received by the Mortgagee
under the third paragraph of Section 2.02 shall be
29
37
distributed to the Subordination Agent in its capacity as Note Holder to be
distributed in accordance with the terms of the Intercreditor Agreement.
SECTION 3.05. Other Payments
Any payments received by the Mortgagee for which no provision as to
the application thereof is made elsewhere in this Trust Indenture or in any
other Operative Agreement shall be distributed by the Mortgagee to the extent
received or realized at any time, in the order of priority specified in Section
3.01 hereof and thereafter shall be applied to any other Secured Obligations
then due and payable, ratably, without priority of any holder thereof over any
other, and after payment in full of all amounts then due in accordance with
Section 3.01 and such Secured Obligations, and so long as no Special Default or
Event of Default shall have occurred and be continuing, in the manner provided
in clause "Third" of Section 3.02 hereof.
ARTICLE IV
COVENANTS OF THE OWNER
SECTION 4.01. Liens
The Owner will not directly or indirectly create, incur, assume or
suffer to exist any Lien or with respect to the Airframe or any Engine, title to
any of the foregoing or any interest of Owner therein, except Permitted Liens.
The Owner shall promptly, at its own expense, take such action as may be
necessary to duly discharge (by bonding or otherwise) any Lien other than a
Permitted Lien arising at any time.
SECTION 4.02. Possession, Operation and Use, Maintenance,
Registration and Markings
(a) General. Except as otherwise expressly provided herein, the
Owner shall be entitled to operate, use, locate, employ or otherwise utilize or
not utilize the Airframe, any Engine or any Parts in any lawful manner or place
in accordance with the Owner's business judgment.
(b) Possession. The Owner, without the prior consent of Mortgagee,
shall not lease 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
30
38
installed, on any airframe other than the Airframe; except that the Owner may,
without such prior written consent of Mortgagee:
(i) Subject or permit any Permitted Lessee 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 Owner or such Permitted Lessee, as the case may be, in
the ordinary course of business; provided, however, that if Owner'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, and Owner shall comply with Section 4.04(e)
in respect thereof;
(ii) Deliver or permit any Permitted Lessee to deliver
possession of the Aircraft, Airframe, any Engine or any Part (x) 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 Section 4.04, for alterations or modifications in or additions to the
Aircraft, Airframe or any Engine or (y) to any Person for the purpose of
transport to a Person referred to in the preceding clause (x);
(iii) Install or permit any Permitted Lessee to install an
Engine on an airframe owned by Owner or such Permitted Lessee, as the case
may be, free and clear of all Liens, except (x) Permitted Liens and those
that do not apply to the Engines, and (y) the rights of third parties
under normal interchange or pooling agreements and arrangements of the
type that would be permitted under Section 4.02(b)(i);
(iv) Install or permit any Permitted Lessee to install an
Engine on an airframe leased to Owner or such Permitted Lessee, or
purchased by Owner or such Permitted Lessee subject to a mortgage,
security agreement, conditional sale or other secured financing
arrangement, but only if (x) such airframe is free and clear of all Liens,
except (A) the rights of the parties to such lease, or any such secured
financing arrangement, covering such airframe and (B) Liens of the type
permitted by clause (iii) above and (y) Owner or Permitted Lessee, 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
31
39
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 the Lien of this Trust Indenture;
(v) Install or permit any Permitted Lessee to install an
Engine on an airframe owned by Owner or such Permitted Lessee, leased to
Owner or such Permitted Lessee, or purchased by Owner or such Permitted
Lessee subject to a conditional sale or other security agreement under
circumstances where neither clause (iii) or (iv) above is applicable;
provided, however, that any such installation shall be deemed an Event of
Loss with respect to such Engine, and Owner shall comply with Section
4.04(e) hereof in respect thereof;
(vi) Transfer or permit any Permitted Lessee to transfer
possession of the Aircraft, Airframe or any Engine to the U.S. Government,
in which event Owner shall promptly notify 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;
(vii) Enter into a charter or Wet Lease or other similar
arrangement with respect to the Aircraft or any other aircraft on which
any Engine may be installed (which shall not be considered a transfer of
possession hereunder); provided that the Owner's obligations hereunder
shall continue in full force and effect notwithstanding any such charter
or Wet Lease or other similar arrangement;
(viii) So long as no Special Default or Event of Default shall
have occurred and be continuing, and subject to the provisions of the
immediately following paragraph, enter into a lease with respect to the
Aircraft, Airframe or any Engine to any Permitted Air Carrier that is not
then 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; provided that, in the case only of a lease to a Permitted
Foreign Air Carrier, (A) 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 Closing Date) and (B) Owner shall have furnished
32
40
Mortgagee and Second Mortgagee a favorable opinion of counsel, reasonably
satisfactory to Mortgagee and Second Mortgagee, in the country of domicile
of such Permitted Foreign Air Carrier, that (v) the terms of such lease
are the legal, valid and binding obligations of the parties thereto
enforceable under the laws of such jurisdiction, (w) it is not necessary
for Mortgagee or Second 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 lease, (x) Mortgagee's and Second
Mortgagee's Lien in respect of, the Aircraft, Airframe and Engines will be
recognized in such jurisdiction, (y) 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 Owner shall provide insurance in
the amounts required with respect to hull insurance under this Trust
Indenture 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 lease) and (z) the agreement of
such Permitted Air Carrier that its rights under the lease are subject and
subordinate to all the terms of this Trust Indenture is enforceable
against such Permitted Air Carrier under applicable law;
provided that (1) the rights of any transferee who receives possession by reason
of a transfer permitted by this Section 4.02(b) (other than by a transfer of an
Engine which is deemed an Event of Loss) shall be subject and subordinate to all
the terms of this Trust Indenture, (2) the Owner shall remain primarily liable
for the performance of all of the terms of this Trust Indenture and all the
terms and conditions of this Trust Indenture and the other Operative Agreements
shall remain in effect and (3) no lease or transfer of possession otherwise in
compliance with this Section 4.02(b) shall (x) result in any registration or
re-registration of an Aircraft, except to the extent permitted by Section
4.02(e) or the maintenance, operation or use thereof except in compliance with
Sections 4.02(c) and 4.02(d) or (y) permit any action not permitted to the Owner
hereunder.
In the case of any lease permitted under this Section 4.02(b), the
Owner will include in such lease appropriate provisions which (s) make such
lease expressly subject and subordinate to all of the terms of this Trust
Indenture, including the rights of the Mortgagee to avoid such lease in the
exercise of its rights to repossession of the Airframe and
33
41
Engines hereunder; (t) require the Permitted Lessee to comply with the terms of
Section 4.06; (u) expressly prohibit the Permitted Lessee from any further
subleasing of the Airframe or any Engine subject thereto (except for (i)
transfers of the type permitted in Section 4.02(b)(i) through (vii), inclusive
and (ii) subleasing where the head lessee is a person described in clause (i) of
the definition of Permitted Air Carrier (and all other provisions of this
Section 4.02(b) applicable to a lease shall apply to any such sublease)) and (v)
require that the Airframe or any Engine subject thereto be used in accordance
with the limitations applicable to the Owner's possession and use provided in
this Trust Indenture. No lease permitted under this Section 4.02(b) shall be
entered into unless (w) Owner shall provide written notice to Mortgagee (such
notice in the event of a lease to a U.S. Air Carrier to be given promptly after
entering into any such lease or, in the case of a lease to any other Permitted
Air Carrier, 10 days in advance of entering into such lease); (x) Owner shall
furnish to Mortgagee evidence reasonably satisfactory to Mortgagee that the
insurance required by Section 4.06 remains in effect; (y) all necessary
documents shall have been duly filed, registered or recorded in such public
offices as may be required fully to preserve the first priority security
interest (subject to Permitted Liens) of Mortgagee and the second priority
security interest (subject to Permitted Liens) of the Second Mortgagee in the
Aircraft, Airframe and Engines; and (z) Owner shall reimburse Mortgagee and
Second Mortgagee for all of its reasonable out-of-pocket fees and expenses,
including, without limitation, reasonable fees and disbursements of counsel,
incurred by Mortgagee and Second Mortgagee in connection with any such lease.
For all purposes of this Section, the term "lease" shall be deemed to include
interchange agreements with respect to the Aircraft or Airframe. Except as
otherwise provided herein and without in any way relieving the Owner from its
primary obligation for the performance of its obligations under this Trust
Indenture, the Owner may in its sole discretion permit a lessee to exercise any
or all rights which the Owner would be entitled to exercise under Sections 4.02
(other than a change in registration pursuant to Section 4.02(e)) and 4.04, and
may cause a lessee to perform any or all of the Owner's obligations under
Article IV, and the Mortgagee agrees to accept actual and full performance
thereof by a lessee in lieu of performance by the Owner.
Mortgagee hereby agrees, and each Note Holder by acceptance of an
Equipment Note agrees, for the benefit of each
34
42
lessor, conditional seller, indenture trustee or secured party of any engine
leased to, or purchased by, Owner or any Permitted Lessee subject to a lease,
conditional sale, trust indenture or other security agreement that Mortgagee,
each Note Holder and their respective 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 or any airframe subject to the Lien of a Related
Indenture or the Second Mortgage 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.
(c) Operation and Use. So long as the Aircraft, Airframe or any
Engine is subject to the Lien of this Trust Indenture, the Owner shall not
operate, use or locate the Aircraft, Airframe or any Engine, or allow the
Aircraft, Airframe or any Engine to be operated, used or located, (i) in any
area excluded from coverage by any insurance required by the terms of Section
4.06, except in the case of a requisition by the U.S. Government where the Owner
obtains indemnity in lieu of such insurance from the U.S. Government, or
insurance from the U.S. Government, against substantially the same risks and for
at least the amounts of the insurance required by Section 4.06 covering such
area, or (ii) in any recognized area of hostilities unless covered in accordance
with Section 4.06 by war risk insurance, or in either case unless the Aircraft,
the Airframe or any Engine is only temporarily operated, used or located in such
area as a result of an emergency, equipment malfunction, navigational error,
hijacking, weather condition or other similar unforeseen circumstance, so long
as Owner diligently and in good faith proceeds to remove the Aircraft from such
area. So long as the Aircraft, the Airframe or any Engine is subject to the Lien
of this Trust Indenture, the Owner shall not permit such Aircraft, Airframe or
any Engine, as the case may be, to be used, operated, maintained, serviced,
repaired or overhauled (x) in violation of any Law binding on or applicable to
such Aircraft, Airframe or Engine or (y) in violation of any airworthiness
certificate, license or registration of any Government Entity relating to the
Aircraft, the Airframe or any Engine, except (i) immaterial or non-recurring
violations with respect to which corrective measures are taken promptly by Owner
or Permitted Lessee, as the case may be, upon discovery thereof, or (ii) to the
extent the
35
43
validity or application of any such Law or requirement relating to any such
certificate, license or registration is being contested in good faith by Owner
or Permitted Lessee in any reasonable manner which does not involve any material
risk of the sale, forfeiture or loss of the Aircraft, Airframe or any Engine,
any material risk of criminal liability or material civil penalty against
Mortgagee or Second Mortgagee or impair the Mortgagee's or Second Mortgagee's
security interest in the Aircraft, Airframe or any Engine.
(d) Maintenance and Repair. So long as the Aircraft, Airframe or any
Engine is subject to the Lien of this Trust Indenture, the Owner, at its own
cost and expense, shall cause the Aircraft, Airframe and each Engine to be
maintained, serviced, repaired and overhauled in accordance with (i) maintenance
standards required by or substantially equivalent to those required by the FAA
or the central aviation authority of Canada, France, Germany, Japan, the
Netherlands or the United Kingdom for the Aircraft, Airframe and Engines, so as
to (A) keep the Aircraft, the Airframe and each Engine in as good operating
condition as on the Closing Date, ordinary wear and tear excepted, (B) keep the
Aircraft in such operating condition as may be necessary to enable the
applicable airworthiness certification of such Aircraft to be maintained under
the regulations of the FAA or other Aviation Authority then having jurisdiction
over the operation of the Aircraft, except during (x) temporary periods of
storage in accordance with applicable regulations, (y) maintenance and
modification permitted hereunder or (z) periods when the FAA or such other
Aviation Authority has revoked or suspended the airworthiness certificates for
Similar Aircraft; and (ii) except during periods when a Permitted Lease is in
effect, the same standards as Owner uses with respect to similar aircraft of
similar size in its fleet operated by Owner in similar circumstances and, during
any period in which a Permitted Lease is in effect, the same standards used by
the Permitted Lessee with respect to similar aircraft of similar size in its
fleet and operated by the Permitted Lessee in similar circumstances. Owner
further agrees that the Aircraft, Airframe and Engines will be maintained, used,
serviced, repaired, overhauled or inspected in compliance with applicable Laws
with respect to the maintenance of the Aircraft and in compliance with each
applicable airworthiness certificate, license and registration relating to the
Aircraft, Airframe or any Engine issued by the Aviation Authority, other than
minor or nonrecurring violations with respect to which corrective measures
36
44
are taken upon discovery thereof and except to the extent Owner or Permitted
Lessee is contesting in good faith the validity or application of any such Law
or requirement relating to any such certificate, license or registration in any
reasonable manner which does not create a material risk of sale, loss or
forfeiture of the Aircraft, the Airframe or any Engine or the interest of
Mortgagee or Second Mortgagee therein, or any material risk of criminal
liability or material civil liability against Mortgagee or Second Mortgagee. The
Owner shall maintain or cause to be maintained the Aircraft Documents in the
English language.
(e) Registration. The Owner on or prior to the date of the Closing
shall cause the Aircraft to be duly registered in its name under the Act and
except as otherwise permitted by this Section 4.02(e) at all times thereafter
shall cause the Aircraft to remain so registered. So long as no Special Default
or Event of Default shall have occurred and be continuing, Owner may, by written
notice to Mortgagee, 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 6.4.5 of the
Participation Agreement. Unless the Trust Indenture has been discharged, Owner
shall also cause the Trust Indenture and the Second Mortgage to be duly recorded
and at all times maintained of record as a first-priority perfected mortgage and
as a second-priority perfected mortgage, respectively (subject in each case 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 Mortgagee or Second Mortgagee to execute and deliver
any necessary documents).
(f) Markings. If permitted by applicable Law, on or reasonably
promptly after the Closing Date, Owner 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, a placard of a reasonable size and shape bearing the
legend: "Subject to a security interest in favor of Wilmington Trust Company,
not in its individual capacity but solely as Mortgagee." 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, Owner shall
promptly replace it with a placard complying with the requirements of this
Section 4.02(f).
SECTION 4.03. Inspection
37
45
(a) At all reasonable times, so long as the Aircraft is subject to
the Lien of this Trust Indenture, Mortgagee and its authorized representatives
(the "Inspecting Parties") may (not more than once every 12 months unless a
Special Default or an 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 Owner or such Permitted Lessee.
(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 Owner's or any Permitted Lessee's maintenance and operation of the
Aircraft, Airframe and Engines.
(c) With respect to such rights of inspection, 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 4.03(a)).
SECTION 4.04. Replacement and Pooling of Parts, Alterations,
Modifications and Additions; Substitution of Engines
(a) Replacement of Parts. Except as otherwise provided herein, so
long as the Airframe or Engine is subject to the Lien of this Indenture, Owner,
at its own cost and expense, will, or will cause a Permitted Lessee to, at its
own cost and expense, promptly replace (or cause to be replaced) all Parts which
may from time to time be incorporated or installed in or attached to the
Aircraft, Airframe or any Engine and which may from time to time become worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever. In addition, Owner
may, at its own cost and expense, or may permit a Permitted Lessee at its own
cost and expense to, remove (or cause to be removed) in the ordinary course of
maintenance, service, repair, overhaul or testing any Parts, whether or not worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
38
46
permanently rendered unfit for use; provided, however, that Owner, except as
otherwise provided herein, at its own cost and expense, will, or will cause a
Permitted Lessee at its own cost and expense to, replace such Parts as promptly
as practicable. All replacement Parts shall be free and clear of all Liens,
except for Permitted Liens and pooling arrangements to the extent permitted by
Section 4.04(c) below (and except in the case of replacement property
temporarily installed on an emergency basis) and shall be in good operating
condition and have a value and utility not less than the value and utility of
the Parts replaced (assuming such replaced Parts were in the condition required
hereunder).
(b) Parts. Except as otherwise provided herein, any Part at any time
removed from the Airframe or any Engine shall remain subject to the Lien of this
Trust Indenture, no matter where located, until such time as such Part shall be
replaced by a Part that has been incorporated or installed in or attached to
such Airframe or any Engine and that meets the requirements for replacement
Parts specified above. Immediately upon any replacement Part becoming
incorporated or installed in or attached to such Airframe or any Engine as
provided in Section 4.04(a), without further act, (i) the replaced Part shall
thereupon be free and clear of all rights of the Mortgagee and shall no longer
be deemed a Part hereunder, and (ii) such replacement Part shall become subject
to this Trust Indenture and be deemed part of such Airframe or any Engine, as
the case may be, for all purposes hereof to the same extent as the Parts
originally incorporated or installed in or attached to such Airframe or any
Engine.
(c) Pooling of Parts. Any Part removed from the Aircraft, Airframe
or an Engine may be subjected by the Owner or a Permitted Lessee to a normal
pooling arrangement customary in the airline industry and entered into in the
ordinary course of business of Owner or Permitted Lessee provided that the part
replacing such removed Part shall be incorporated or installed in or attached to
such Airframe or any Engine in accordance with Sections 4.04(a) and 4.04(b) as
promptly as practicable after the removal of such removed Part. In addition, any
replacement part when incorporated or installed in or attached to the Airframe
or any Engine may be owned by any third party, subject to a normal pooling
arrangement, so long as the Owner or a Permitted Lessee, at its own cost and
expense, as promptly thereafter as reasonably possible, either (i) causes such
replacement part to become
39
47
subject to the Lien of this Trust Indenture, free and clear of all Liens except
Permitted Liens, at which time such replacement part shall become a Part or (ii)
replaces (or causes to be replaced) such replacement part by incorporating or
installing in or attaching to the Aircraft, Airframe or any Engine a further
replacement Part owned by the Owner free and clear of all Liens except Permitted
Liens and which shall become subject to the Lien of this Trust Indenture in
accordance with Section 4.04(b).
(d) Alterations, Modifications and Additions. The Owner shall, or
shall cause a Permitted Lessee to, make (or cause to be made) alterations and
modifications in and additions to the Aircraft, Airframe and each Engine as may
be required to be made from time to time to meet the applicable standards of the
FAA or other Aviation Authority having jurisdiction over the operation of the
Aircraft, to the extent made mandatory in respect of the Aircraft (a "Mandatory
Modification"); provided however, that the Owner or a Permitted Lessee may, in
good faith and by appropriate procedure, contest the validity or application of
any law, rule, regulation or order in any reasonable manner which does not
materially adversely affect Mortgagee's or Second Mortgagee's interest in the
Aircraft and does not involve any material risk of sale, forfeiture or loss of
the Aircraft or the interest of Mortgagee or Second Mortgagee therein, or any
material risk of civil liability or any material risk of criminal liability
being imposed on Mortgagee or Second Mortgagee or the holder of any Equipment
Note. In addition, the Owner, at its own expense, may, or may permit a Permitted
Lessee at its own cost and expense to, from time to time make or cause to be
made such alterations and modifications in and additions to the Airframe or any
Engine (each an "Optional Modification") as the Owner or such Permitted Lessee
may deem desirable in the proper conduct of its business including, without
limitation, removal of Parts which Owner deems are obsolete or no longer
suitable or appropriate for use in the Aircraft, Airframe or such Engine;
provided, however, that no such Optional Modification shall (i) materially
diminish the value, utility, or remaining useful life of the Aircraft or any
Engine below its value, utility or remaining useful life immediately prior to
such Optional Modification (assuming the Aircraft or such Engine was in the
condition required by the Trust Indenture immediately prior to such Optional
Modification) or (ii) cause the Aircraft to cease to have the applicable
standard certificate of airworthiness. All Parts incorporated or installed in or
attached to any Airframe or any Engine as the result of any alteration,
modification or addition effected by
40
48
the Owner shall be free and clear of any Liens except Permitted Liens and shall
become subject to the Lien of this Trust Indenture; provided that the Owner or
any Permitted Lessee may, at any time so long as the Airframe or any Engine is
subject to the Lien of this Trust Indenture, remove any such Part (such Part
being referred to herein as a "Removable Part") from such Airframe or an Engine
if (i) such Part is in addition to, and not in replacement of or in substitution
for, any Part originally incorporated or installed in or attached to such
Airframe or any Engine at the time of delivery thereof from the manufacturer or
any Part in replacement of, or in substitution for, any such original Part, (ii)
such Part is not required to be incorporated or installed in or attached or
added to such Airframe or any Engine pursuant to the terms of Section 4.02(d) or
the first sentence of this Section 4.04(d), and (iii) such Part can be removed
from such Airframe or any Engine without materially diminishing the value,
utility or remaining useful life which such Airframe or any Engine would have
had at the time of removal had such removal not occurred, assuming the Aircraft
was otherwise maintained in the condition and repair required by this Trust
Indenture. Upon the removal by the Owner of any such Part as above provided,
title thereto shall, without further act, be free and clear of all rights of the
Mortgagee and such Part shall no longer be deemed a Part hereunder. Removable
Parts may be leased from or financed by third parties other than Mortgagee.
(e) Substitution of Engines. 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, Owner shall promptly (and in any event
within 15 days after such occurrence) give the Mortgagee written notice of such
Event of Loss. The Owner shall have the right at its option at any time, on at
least 5 Business Days' prior notice to the Mortgagee, to substitute, and if an
Event of Loss shall have occurred with respect to an Engine under circumstances
in which an Event of Loss with respect to the Airframe has not occurred, shall
within 60 days of the occurrence of such Event of Loss substitute, a Replacement
Engine for any Engine. In such event, immediately upon the effectiveness of such
substitution and without further act, (i) the replaced Engine shall thereupon be
free and clear of all rights of the Mortgagee and the Lien of this Trust
Indenture and shall no longer be deemed an Engine hereunder and (ii) such
Replacement Engine shall become subject to this Trust Indenture and be deemed
part of the Aircraft for all purposes hereof to the same extent as the replaced
Engine.
41
49
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 this
Trust Indenture). The Owner's right to make a replacement hereunder shall be
subject to the fulfillment (which may be simultaneous with such replacement) of
the following conditions precedent at the Owner's sole cost and expense, and the
Mortgagee agrees to cooperate with the Owner to the extent necessary to enable
it to timely satisfy such conditions:
(i) an executed counterpart of each of the following documents
shall be delivered to the Mortgagee:
(A) a Trust Indenture Supplement and a Second Mortgage
Supplement covering the Replacement Engine, which shall have been
duly filed for recordation pursuant to the Act or such other
applicable law of the jurisdiction other than the United States in
which the Aircraft of which such Engine is a part is registered in
accordance with Section 4.02(e), as the case may be;
(B) a full warranty bill of sale (as to title), covering the
Replacement Engine, executed by the former owner thereof in favor of
the Owner (or, at the Owner's option, other evidence of the Owner's
ownership of such Replacement Engine, reasonably satisfactory to the
Mortgagee); and
(C) UCC financing statements covering the security interests
created by this Trust Indenture and the Second Mortgage (or any
similar statements or other documents required to be filed or
delivered pursuant to the laws of the jurisdiction in which such
Aircraft may be registered) as are deemed necessary or desirable by
counsel for the Mortgagee and the Second Mortgagee to protect the
security interests of the Mortgagee and the Second Mortgagee in the
Replacement Engine;
(ii) the Owner shall cause to be delivered to the Mortgagee
and Second Mortgagee an opinion of counsel to the effect that the Lien of
this Trust Indenture and the Second Mortgage continues to be in full force
and effect with respect to the Replacement Engine and such evidence of
compliance with the insurance provisions of Section 4.06
42
50
with respect to such Replacement Engine as Mortgagee and Second Mortgagee
shall reasonably request;
(iii) the Owner shall have furnished to Mortgagee and Second
Mortgagee an opinion of Owner's aviation law counsel reasonably
satisfactory to Mortgagee and Second Mortgagee and addressed to Mortgagee
and Second Mortgagee as to the due filing for recordation of the Trust
Indenture Supplement and the Second Mortgage Supplement with respect to
such Replacement Engine under the Act or such other applicable law of the
jurisdiction other than the United States in which the Aircraft is
registered in accordance with Section 4.02(e), as the case may be; and
(iv) the Owner shall have furnished to Mortgagee a certificate
of a qualified aircraft engineer (who may be an employee of Owner)
certifying that such Replacement Engine has a value and utility and
remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to the Engine so replaced (assuming that such
Engine had been maintained in accordance with this Trust Indenture).
Upon satisfaction of all conditions to such substitution, (x) the
Mortgagee shall execute and deliver to the Owner such documents and instruments,
prepared at the Owner's expense, as the Owner shall reasonably request to
evidence the release of such replaced Engine from the Lien of this Trust
Indenture, (y) the Mortgagee shall assign to the Owner all claims it may have
against any other Person relating to any Event of Loss giving rise to such
substitution and (z) the Owner shall receive all insurance proceeds (other than
those reserved to others under Section 4.06(b)) and proceeds in respect of any
Event of Loss giving rise to such replacement to the extent not previously
applied to the purchase price of the Replacement Engine as provided in Section
4.05(d).
SECTION 4.05. Loss, Destruction or Requisition
(a) Event of Loss With Respect to the Airframe.
Upon the occurrence of an Event of Loss with respect to the
Airframe, the Owner shall promptly (and in any event within 15 days after such
occurrence) give the Mortgagee written notice of such Event of Loss. The Owner
shall, within 45 days after such occurrence, give the Mortgagee written notice
of Owner's election to either replace the Airframe as provided under Section
4.05(a)(i) or to make payment in respect of such Event of Loss as
43
51
provided under Section 4.05(a)(ii) (it being agreed that if Owner shall not have
given the Mortgagee such notice of such election within the above specified time
period, the Owner shall be deemed to have elected to make payment in respect of
such Event of Loss as provided under Section 4.05(a)(ii)):
(i) if Owner elects to replace the Airframe, Owner shall,
subject to the satisfaction of the conditions contained in Section
4.05(c), as promptly as possible and in any event within 120 days after
the occurrence of such Event of Loss, cause to be subjected to the Lien of
this Trust Indenture, in replacement of the Airframe with respect to which
the Event of Loss occurred, a Replacement Airframe and, if any Engine
shall have been installed on the Airframe when it suffered the Event of
Loss, a Replacement Engine therefor, such Replacement Airframe and
Replacement Engines to be free and clear of all Liens except Permitted
Liens and to have a value, utility and remaining useful life (without
regard to hours or cycles remaining until the next regular maintenance
check) at least equal to the Airframe or Engine, as the case may be, to be
replaced thereby (assuming that such Airframe or Engine had been
maintained in accordance with this Trust Indenture); provided that if the
Owner shall not perform its obligation to effect such replacement under
this clause (i) during the 120-day period of time provided herein, it
shall pay the amounts required to be paid pursuant to and within the time
frame specified in clause (ii) below; or
(ii) if Owner elects to make a payment in respect of such
Event of Loss of the Airframe, Owner shall make a payment to the Mortgagee
for purposes of redeeming Equipment Notes in accordance with Section 2.09
hereof on a date 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 Event of Loss (but in any event not earlier
than the date of Owner's election under Section 4.05(a) to make payment
under this Section 4.05(a)(ii)); and upon such payment and payment of all
other Secured Obligations then due and payable, the Mortgagee shall, at
the cost and expense of the Owner, release from the Lien of this Trust
Indenture the Airframe and the Engines, by executing and delivering to the
Owner all documents and instruments as the Owner may reasonably request to
evidence such release.
(b) Effect of Replacement. Should the Owner have provided a
Replacement Airframe and Replacement Engines, if any, as provided for in Section
4.05(a)(i), (i) the Lien of this Trust
44
52
Indenture shall continue with respect to such Replacement Airframe and
Replacement Engines, if any, as though no Event of Loss had occurred; (ii) the
Mortgagee shall, at the cost and expense of the Owner, release from the Lien of
this Trust Indenture the replaced Airframe and Engines, if any, by executing and
delivering to the Owner such documents and instruments as the Owner may
reasonably request to evidence such release; and (iii) in the case of a
replacement upon an Event of Loss, the Mortgagee shall assign to the Owner all
claims the Mortgagee may have against any other Person arising from the Event of
Loss and the Owner shall receive all insurance proceeds (other than those
reserved to others under Section 4.06(b)) and proceeds from any award in respect
of condemnation, confiscation, seizure or requisition, including any investment
interest thereon, to the extent not previously applied to the purchase price of
the Replacement Airframe and Replacement Engines, if any, or payment of all
other Secured Obligations then due and payable, as provided in Section 4.05(d).
(c) Conditions to Airframe and Engine Replacement. The Owner's right
to substitute a Replacement Airframe and Replacement Engines, if any, as
provided in Section 4.05(a)(i) shall be subject to the fulfillment, at the
Owner's sole cost and expense, in addition to the conditions contained in such
Section 4.05(a)(i), of the following conditions precedent:
(i) on the date when the Replacement Airframe and Replacement
Engines, if any, is subjected to the Lien of this Trust Indenture and the
Second Mortgage (such date being referred to in this Section 4.05 as the
"Replacement Closing Date"), an executed counterpart of each of the
following documents (or, in the case of the FAA Bill of Sale and full
warranty bill of sale referred to below, a photocopy thereof) shall have
been delivered to the Mortgagee:
(A) a Trust Indenture Supplement and a Second Mortgage
Supplement covering the Replacement Airframe and Replacement
Engines, if any, which shall have been duly filed for recordation
pursuant to the Act or such other applicable law of such
jurisdiction other than the United States in which the Replacement
Airframe and Replacement Engines, if any, are to be registered in
accordance with Section 4.02(e), as the case may be;
(B) an FAA Bill of Sale (or a comparable document, if any, of
another Aviation Authority, if applicable) covering the Replacement
Airframe and
45
53
Replacement Engines, if any, executed by the former owner thereof in
favor of the Owner;
(C) a full warranty (as to title) bill of sale, covering the
Replacement Airframe and Replacement Engines, if any, executed by
the former owner thereof in favor of the Owner (or, at the Owner's
option, other evidence of the Owner's ownership of such Replacement
Airframe and Replacement Engines, if any, reasonably satisfactory to
the Mortgagee); and
(D) UCC financing statements (or any similar statements or
other documents required to be filed or delivered pursuant to the
laws of the jurisdiction in which the Replacement Airframe and
Replacement Engines, if any, may be registered in accordance with
Section 4.02(e)) as are deemed necessary or desirable by counsel for
the Mortgagee and the Second Mortgagee to protect the security
interests of the Mortgagee and the Second Mortgagee in the
Replacement Airframe and Replacement Engines, if any;
(ii) the Replacement Airframe and Replacement Engines, if any,
shall be of the same model as the Airframe or Engines, as the case may be,
or an improved model of such aircraft or engines of the manufacturer
thereof, shall have a value and utility (without regard to hours or cycles
remaining until the next regular maintenance check) at least equal to, and
be in as good operating condition and repair as, the Airframe and any
Engines replaced (assuming such Airframe and Engines had been maintained
in accordance with this Trust Indenture);
(iii) the Mortgagee (acting directly or by authorization to
its special counsel) shall have received satisfactory evidence as to the
compliance with Section 4.06 with respect to the Replacement Airframe and
Replacement Engines, if any;
(iv) on the Replacement Closing Date, (A) the Owner shall
cause the Replacement Airframe and Replacement Engines, if any, to be
subject to the Lien of this Trust Indenture and the Second Mortgage free
and clear of Liens (other than Permitted Liens), (B) the Replacement
Airframe shall have been duly certified by the FAA as to type and
airworthiness in accordance with the terms of this Trust Indenture and (C)
application for registration of the Replacement Airframe in accordance
with Section 4.02(e) shall have been duly made with the FAA or other
applicable Aviation Authority and the Owner shall have authority to
operate the Replacement Airframe;
46
54
(v) the Mortgagee and the Second Mortgagee at the expense of
the Owner, shall have received (acting directly or by authorization to its
special counsel) (A) an opinion of counsel, addressed to the Mortgagee and
the Second Mortgagee, to the effect that the Replacement Airframe and
Replacement Engine, if any, has or have duly been made subject to the Lien
of this Trust Indenture and the Second Mortgage, and the Mortgagee will be
entitled to the benefits of Section 1110 with respect to the Replacement
Airframe, provided that such opinion with respect to Section 1110 may be
based on the same reasoning, and be subject to the same assumptions and
qualifications as the opinion referred to in Section 4.1.2(D) of the
Participation Agreement and 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 Mortgagee, and (B) an opinion of Owner's aviation law counsel
reasonably satisfactory to and addressed to Mortgagee and Second Mortgagee
as to the due registration of any such Replacement Airframe and the due
filing for recordation of each Trust Indenture Supplement and Second
Mortgage Supplement with respect to such Replacement Airframe or
Replacement Engine under the Act or such other applicable law of the
jurisdiction other than the United States in which the Replacement
Airframe is to be registered in accordance with Section 4.02(e), as the
case may be;
(vi) the Owner shall have furnished to the Mortgagee a
certificate of a qualified aircraft engineer (who may be an employee of
Owner) certifying that the Replacement Airframe and Replacement Engines,
if any, have a value and utility and remaining useful life (without regard
to hours and cycles remaining until overhaul) at least equal to the
Airframe and any Engines so replaced (assuming that such Airframe and
Engines had been maintained in accordance with this Trust Indenture); and
(vii) the Owner shall have furnished to the Mortgagee a
certified report of a qualified independent aircraft appraiser, reasonably
satisfactory to the Mortgagee, certifying that the Replacement Airframe
and Replacement Engines, if any, have a value and utility and remaining
useful life (without regard to hours and cycles remaining until overhaul)
at least equal to the Airframe and any Engines so replaced (assuming that
such Airframe and Engines were in the condition required by the terms
hereof).
47
55
(d) Certain Payments Received on Account of an Event of Loss. Any
insurance proceeds in respect of damage or loss constituting an Event of Loss
and any other amounts received at any time by Mortgagee or Owner from any
Government Entity or any other Person in respect of any Event of Loss will be
applied as follows:
(i) 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 Owner with the applicable terms of Section 4.05(c) with
respect to the Event of Loss for which such amounts are received, such
amounts shall be paid over to, or retained by, Owner;
(ii) 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 Owner with the applicable
terms of Section 4.04(e) with respect to the Event of Loss for which such
amounts are received, such amounts shall be paid over to, or retained by,
Owner;
(iii) If such amounts are received, in whole or in part, with
respect to the Airframe, and Owner makes, has made or is deemed to have
made the election set forth in Section 4.05(a)(ii), such amounts shall be
applied as follows:
first, if the sum described in Section 4.05(a)(ii) has not
then been paid in full by Owner, such amounts shall be paid to Mortgagee
to the extent necessary to pay in full such sum; and
second, the remainder, if any, shall be paid to Owner.
(e) Requisition for Use. In the event of a requisition for use by
any Government Entity of the Airframe and the Engines, if any, or engines
installed on such Airframe while such Airframe is subject to the Lien of this
Trust Indenture, the Owner shall promptly notify the Mortgagee of such
requisition and all of the Owner's obligations under this Trust Indenture shall
continue to the same extent as if such requisition had not occurred except to
the extent that the performance or observance of any obligation by the Owner
shall have been prevented or delayed by such requisition; provided that the
Owner's obligations under this Section 4.05 with respect to the
48
56
occurrence of an Event of Loss for the payment of money and under Section 4.06
(except while an assumption of liability by the U.S. Government of the scope
referred to in Section 4.02(c) is in effect) shall not be reduced or delayed by
such requisition. Any payments received by the Mortgagee or the Owner or
Permitted Lessee from such Government Entity with respect to such requisition of
use shall be paid over to, or retained by, the Owner. In the event of an Event
of Loss of an Engine resulting from the requisition for use by a Government
Entity of such Engine (but not the Airframe), the Owner will replace such Engine
hereunder by complying with the terms of Section 4.04(e) and any payments
received by the Mortgagee or the Owner from such Government Entity with respect
to such requisition shall, upon such replacement and to the extent not
theretofore applied as provided herein, be paid over to, or retained by, the
Owner.
(f) Certain Payments to be Held As Security. Any amount referred to
in this Section 4.05 or in Section 4.06 which is payable or creditable to, or
retainable by, the Owner shall not be paid or credited to, or retained by the
Owner if at the time of such payment, credit or retention a Special Default or
an Event of Default shall have occurred and be continuing, but shall be paid to
and held by the Mortgagee as security for the obligations of the Owner under
this Trust Indenture, the Second Mortgage and the Operative Agreements, and at
such time as there shall not be continuing any such Special Default or Event of
Default such amount and any gain realized as a result of investments required to
be made pursuant to Section 6.06 shall to the extent not theretofore applied as
provided herein and therein, be paid over to the Owner.
SECTION 4.06. Insurance
(a) Owner's Obligation to Insure. Owner shall comply with, or cause
to be complied with, each of the provisions of Annex B, which provisions are
hereby incorporated by this reference as if set forth in full herein.
(b) Insurance for Own Account. Nothing in Section 4.06 shall limit
or prohibit (a) Owner from maintaining the policies of insurance required under
Annex B with higher limits than those specified in Annex B, or (b) Mortgagee
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
49
57
may be obtained or maintained that would limit or otherwise adversely affect the
coverage of any insurance required to be obtained or maintained by Owner
pursuant to this Section 4.06 and Annex B.
(c) Indemnification by Government in Lieu of Insurance. Mortgagee
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft described in Annex B, indemnification from, or insurance provided by,
the U.S. Government, or upon the written consent of Mortgagee, other Government
Entity, against such risk in an amount that, when added to the amount of
insurance (including permitted self-insurance), if any, against such risk that
Owner (or any Permitted Lessee) may continue to maintain, in accordance with
this Section 4.06, 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 4.06.
(d) Application of Insurance Proceeds. As between Owner and
Mortgagee, 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 Owner pursuant to this Section 4.06 and Annex B will be
applied in accordance with Section 4.05(d). All proceeds of insurance required
to be maintained by Owner, in accordance with Section 4.06 and Section B of
Annex B, 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 Owner) 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, Owner.
SECTION 4.07. Merger of Owner
(a) In General. Owner shall not consolidate with or merge into any
other person under circumstances in which Owner 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:
(i) 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 of Columbia and, upon consummation of such transaction, such
person will be a U.S. Air Carrier;
50
58
(ii) such person executes and delivers to Mortgagee a duly
authorized, legal, valid, binding and enforceable agreement, reasonably
satisfactory in form and substance to Mortgagee, containing an effective
assumption by such person of the due and punctual performance and
observance of each covenant, agreement and condition in the Operative
Agreements to be performed or observed by Owner;
(iii) 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
(iv) immediately after giving effect to such consolidation or
merger no Event of Default shall have occurred and be continuing.
(b) Effect of Merger. Upon any such consolidation or merger of Owner
with or into, or the conveyance, transfer or lease by Owner of all or
substantially all of its assets to, any Person in accordance with this Section
4.07, such Person will succeed to, and be substituted for, and may exercise
every right and power of, Owner under the Operative Agreements with the same
effect as if such person had been named as "Owner" therein. No such
consolidation or merger, or conveyance, transfer or lease, shall have the effect
of releasing Owner or such Person from any of the obligations, liabilities,
covenants or undertakings of Owner under the Trust Indenture.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE
SECTION 5.01. Event of Default
"Event of Default" means any of the following events (whatever the
reason for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(i) the failure of the Owner to pay (i) principal of, interest
on or Make-Whole Amount, if any, under any Equipment Note when due, and
such failure shall continue unremedied for a period of 10 Business Days,
or (ii) any other amount payable by it to the Note Holders under this
Trust Indenture or the Participation Agreement when due, and such failure
shall continue for a period in excess of 10
51
59
Business Days after Owner has received written notice from Mortgagee of
the failure to make such payment when due;
(ii) Owner 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 4.06;
(iii) Owner 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 Operative
Agreement to which Owner is a party and such failure shall continue
unremedied for a period of 30 days from and after the date of written
notice thereof to Owner from Mortgagee, unless such failure is capable of
being corrected and Owner shall be diligently proceeding to correct such
failure, in which case there shall be no Event of Default unless and until
such failure shall continue unremedied for a period of 180 days after
receipt of such notice;
(iv) any representation or warranty made by Owner herein, in
the Participation Agreement or in any other Operative Agreement to which
Owner is a party (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 Mortgagee) for a period in excess of
30 days from and after the date of written notice thereof from Mortgagee
to Owner;
(v) the Owner shall consent to the appointment of or taking
possession by a receiver, trustee or liquidator of itself or of a
substantial part of its property, or the Owner shall admit in writing its
inability to pay its debts generally as they come due or shall make a
general assignment for the benefit of its creditors, or the Owner shall
file a voluntary petition in bankruptcy or a voluntary petition or an
answer seeking reorganization, liquidation or other relief under any
bankruptcy laws or insolvency laws (as in effect at such time), or an
answer admitting the material allegations of a petition filed against it
in any such case, or the Owner shall seek relief by voluntary petition,
answer or consent, under the provisions of any other bankruptcy or similar
law providing for the reorganization or winding-up of corporations (as in
effect at such time), or the Owner shall seek an agreement, composition,
extension or adjustment with its creditors under such laws or the Owner's
board of directors shall
52
60
adopt a resolution authorizing corporate action in furtherance of any of
the foregoing;
(vi) an order, judgment or decree shall be entered by any
court of competent jurisdiction appointing, without the consent of the
Owner, a receiver, trustee or liquidator of the Owner or of any
substantial part of its property, or any substantial part of the property
of the Owner shall be sequestered, or granting any other relief in respect
of the Owner as a debtor under any bankruptcy laws or other insolvency
laws (as in effect at such time), and any such order, judgment, decree, or
decree of appointment or sequestration shall remain in force undismissed,
unstayed or unvacated for a period of 90 days after the date of entry
thereof;
(vii) a petition against the Owner in a proceeding under any
bankruptcy laws or other insolvency laws (as in effect at such time) is
filed and not withdrawn or dismissed within 90 days thereafter, or if,
under the provisions of any law providing for reorganization or winding-up
of corporations which may apply to the Owner, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Owner of
any substantial part of its property and such jurisdiction, custody or
control shall remain in force unrelinquished, unstayed or unterminated for
a period of 90 days; or
(viii) an "Event of Default" under any of the Related
Indentures shall have occurred and be continuing.
SECTION 5.02. Remedies
(a) If an Event of Default shall have occurred and be continuing and
so long as the same shall continue unremedied, then and in every such case the
Mortgagee may exercise any or all of the rights and powers and pursue any and
all of the remedies pursuant to this Article V and shall have and may exercise
all of the rights and remedies of a secured party under the Uniform Commercial
Code and may take possession of all or any part of the properties covered or
intended to be covered by the Lien created hereby or pursuant hereto and may
exclude the Owner and all persons claiming under it wholly or partly therefrom;
provided, that the Mortgagee shall give the Owner fifteen days' prior written
notice of its intention to sell the Aircraft. Without limiting any of the
foregoing, it is understood and agreed that the Mortgagee may exercise any right
of sale of the Aircraft available to it, even though it shall not have taken
possession
53
61
of the Aircraft and shall not have possession thereof at the time of such sale.
(b) If an Event of Default shall have occurred and be continuing,
then and in every such case the Mortgagee may (and shall, upon receipt of a
written demand therefor from a Majority in Interest of Note Holders), at any
time, by delivery of written notice or notices to the Owner, declare all the
Equipment Notes to be due and payable, whereupon the unpaid Original Amount of
all Equipment Notes then outstanding, together with accrued but unpaid interest
thereon (without Make-Whole Amount) and other amounts due thereunder or
otherwise payable hereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived; provided
that if an Event of Default referred to in clause (v), (vi) or (vii) of Section
5.01 hereof shall have occurred, then and in every such case the unpaid Original
Amount then outstanding, together with accrued but unpaid interest and all other
amounts due hereunder and under the Equipment Notes shall immediately and
without further act become due and payable without presentment, demand, protest
or notice, all of which are hereby waived.
This Section 5.02(b), however, is subject to the condition that, if
at any time after the Original Amount of the Equipment Notes shall have become
so due and payable, and before any judgment or decree for the payment of the
money so due, or any thereof, shall be entered, all overdue payments of interest
upon the Equipment Notes and all other amounts payable hereunder or under the
Equipment Notes (except the Original Amount of the Equipment Notes which by such
declaration shall have become payable) shall have been duly paid, and every
other Default and Event of Default with respect to any covenant or provision of
this Trust Indenture shall have been cured, then and in every such case a
Majority in Interest of Note Holders may (but shall not be obligated to), by
written instrument filed with the Mortgagee, rescind and annul the Mortgagee's
declaration (or such automatic acceleration) and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Default or
Event of Default or impair any right consequent thereon.
(c) The Note Holders shall be entitled, at any sale pursuant to this
Section 5.02, to credit against any purchase price bid at such sale by such
holder all or any part of the unpaid obligations owing to such Note Holder and
secured by the
54
62
Lien of this Trust Indenture (only to the extent that such purchase price would
have been paid to such Note Holder pursuant to Article III hereof if such
purchase price were paid in cash and the foregoing provisions of this subsection
(c) were not given effect).
(d) In the event of any sale of the Collateral, or any part thereof,
pursuant to any judgment or decree of any court or otherwise in connection with
the enforcement of any of the terms of this Trust Indenture, the unpaid Original
Amount of all Equipment Notes then outstanding, together with accrued interest
thereon (without Make-Whole Amount), and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement (or its designee) is a
Note Holder, the Mortgagee will not be authorized or empowered to acquire title
to any Collateral or take any action with respect to any Collateral so acquired
by it if such acquisition or action would cause any Trust to fail to qualify as
a "grantor trust" for federal income tax purposes.
SECTION 5.03. Return of Aircraft, Etc.
(a) If an Event of Default shall have occurred and be continuing and
the Equipment Notes have been accelerated, at the request of the Mortgagee, the
Owner shall promptly execute and deliver to the Mortgagee such instruments of
title and other documents as the Mortgagee may deem necessary or advisable to
enable the Mortgagee or an agent or representative designated by the Mortgagee,
at such time or times and place or places as the Mortgagee may specify, to
obtain possession of all or any part of the Collateral to which the Mortgagee
shall at the time be entitled hereunder. If the Owner shall for any reason fail
to execute and deliver such instruments and documents after such request by the
Mortgagee, the Mortgagee may (i) obtain a judgment conferring on the Mortgagee
the right to immediate possession and requiring the Owner to execute and deliver
such instruments and documents to the Mortgagee, to the entry of which judgment
the Owner hereby specifically consents to the fullest extent permitted by Law,
and (ii) pursue all or part of such Collateral wherever it may be found and may
enter any of the premises of Owner wherever such Collateral may be or be
supposed to be and
55
63
search for such Collateral and take possession of and remove such Collateral.
All expenses of obtaining such judgment or of pursuing, searching for and taking
such property shall, until paid, be secured by the Lien of this Trust Indenture.
(b) Upon every such taking of possession, the Mortgagee may, from
time to time, at the expense of the Collateral, make all such expenditures for
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modifications or alterations to and of the Collateral, as it may
deem proper. In each such case, the Mortgagee shall have the right to maintain,
use, operate, store, insure, lease, control, manage, dispose of, modify or alter
the Collateral and to exercise all rights and powers of the Owner relating to
the Collateral, as the Mortgagee shall deem best, including the right to enter
into any and all such agreements with respect to the maintenance, use,
operation, storage, insurance, leasing, control, management, disposition,
modification or alteration of the Collateral or any part thereof as the
Mortgagee may determine, and the Mortgagee shall be entitled to collect and
receive directly all rents, revenues and other proceeds of the Collateral and
every part thereof, without prejudice, however, to the right of the Mortgagee
under any provision of this Trust Indenture to collect and receive all cash held
by, or required to be deposited with, the Mortgagee hereunder. Such rents,
revenues and other proceeds shall be applied to pay the expenses of the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, improvement, modification or alteration of the Collateral and of
conducting the business thereof, and to make all payments which the Mortgagee
may be required or may elect to make, if any, for taxes, assessments, insurance
or other proper charges upon the Collateral or any part thereof (including the
employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner), and all other payments
which the Mortgagee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Mortgagee, and of all persons properly engaged and employed by
the Mortgagee with respect hereto.
SECTION 5.04. Remedies Cumulative
Each and every right, power and remedy given to the Mortgagee
specifically or otherwise in this Trust Indenture shall
56
64
be cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at Law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by the Mortgagee, and the exercise or
the beginning of the exercise of any power or remedy shall not be construed to
be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by the Mortgagee in the exercise of
any right, remedy or power or in the pursuance of any remedy shall impair any
such right, power or remedy or be construed to be a waiver of any default on the
part of the Owner or to be an acquiescence therein.
SECTION 5.05. Discontinuance of Proceedings
In case the Mortgagee shall have instituted any proceeding to
enforce any right, power or remedy under this Trust Indenture by foreclosure,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Mortgagee, then and in every such case the Owner and the Mortgagee shall,
subject to any determination in such proceedings, be restored to their former
positions and rights hereunder with respect to the Collateral, and all rights,
remedies and powers of the Owner or the Mortgagee shall continue as if no such
proceedings had been instituted.
SECTION 5.06. Waiver of Past Defaults
Upon written instruction from a Majority in Interest of Note
Holders, the Mortgagee shall waive any past Default hereunder and its
consequences and upon any such waiver such Default shall cease to exist and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Trust Indenture, but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon; provided,
that in the absence of written instructions from all the Note Holders, the
Mortgagee shall not waive any Default (i) in the payment of the Original Amount,
Make-Whole Amount, if any, and interest and other amounts due under any
Equipment Note then outstanding, or (ii) in respect of a covenant or provision
hereof which, under Article X hereof, cannot be modified or amended without the
consent of each Note Holder.
57
65
SECTION 5.07. Appointment of Receiver
The Mortgagee shall, as a matter of right, be entitled to the
appointment of a receiver (who may be the Mortgagee or any successor or nominee
thereof) for all or any part of the Collateral, whether such receivership be
incidental to a proposed sale of the Collateral or the taking of possession
thereof or otherwise, and the Owner hereby consents to the appointment of such a
receiver and will not oppose any such appointment. Any receiver appointed for
all or any part of the Collateral shall be entitled to exercise all the rights
and powers of the Mortgagee with respect to the Collateral.
SECTION 5.08. Mortgagee Authorized to Execute Bills of Sale, Etc.
The Owner irrevocably appoints, while an Event of Default has
occurred and is continuing, the Mortgagee the true and lawful attorney-in-fact
of the Owner (which appointment is coupled with an interest) in its name and
stead and on its behalf, for the purpose of effectuating any sale, assignment,
transfer or delivery for the enforcement of the Lien of this Trust Indenture,
whether pursuant to foreclosure or power of sale, assignments and other
instruments as may be necessary or appropriate, with full power of substitution,
the Owner hereby ratifying and confirming all that such attorney or any
substitute shall do by virtue hereof in accordance with applicable law.
Nevertheless, if so requested by the Mortgagee or any purchaser, the Owner shall
ratify and confirm any such sale, assignment, transfer or delivery, by executing
and delivering to the Mortgagee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 5.09. Rights of Note Holders to Receive Payment
Notwithstanding any other provision of this Trust Indenture, the
right of any Note Holder to receive payment of principal of, and premium, if
any, and interest on an Equipment Note on or after the respective due dates
expressed in such Equipment Note, or to bring suit for the enforcement of any
such payment on or after such respective dates in accordance with the terms
hereof, shall not be impaired or affected without the consent of such Note
Holder.
58
66
ARTICLE VI
DUTIES OF THE MORTGAGEE
SECTION 6.01. Notice of Event of Default
If the Mortgagee shall have Actual Knowledge of an Event of Default
or of a Default arising from a failure to pay any installment of principal and
interest on any Equipment Note, the Mortgagee shall give prompt written notice
thereof to each Note Holder. Subject to the terms of Sections 5.06, 6.02 and
6.03 hereof, the Mortgagee shall take such action, or refrain from taking such
action, with respect to such Event of Default or Default (including with respect
to the exercise of any rights or remedies hereunder) as the Mortgagee shall be
instructed in writing by a Majority in Interest of Note Holders. Subject to the
provisions of Section 6.03, if the Mortgagee shall not have received
instructions as above provided within 20 days after mailing notice of such Event
of Default to the Note Holders, the Mortgagee may, subject to instructions
thereafter received pursuant to the preceding provisions of this Section 6.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall determine advisable in the best interests of the Note
Holders; provided, however, that the Mortgagee may not sell the Aircraft or any
Engine without the consent of a Majority in Interest of Note Holders. For all
purposes of this Trust Indenture, in the absence of Actual Knowledge on the part
of the Mortgagee, the Mortgagee shall not be deemed to have knowledge of a
Default or an Event of Default (except, the failure of Owner to pay any
installment of principal or interest within one Business Day after the same
shall become due, which failure shall constitute knowledge of a Default) unless
notified in writing by the Owner or one or more Note Holders.
SECTION 6.02. Action Upon Instructions; Certain Rights and
Limitations
Subject to the terms of Sections 5.02(a), 5.06, 6.01 and 6.03
hereof, upon the written instructions at any time and from time to time of a
Majority in Interest of Note Holders, the Mortgagee shall, subject to the terms
of this Section 6.02, take such of the following actions as may be specified in
such instructions: (i) give such notice or direction or exercise such
59
67
right, remedy or power hereunder as shall be specified in such instructions and
(ii) give such notice or direction or exercise such right, remedy or power
hereunder with respect to any part of the Collateral as shall be specified in
such instructions; it being understood that without the written instructions of
a Majority in Interest of Note Holders, the Mortgagee shall not, except as
provided in Section 6.01, approve any such matter as satisfactory to the
Mortgagee.
The Mortgagee will execute and the Owner will file such continuation
statements with respect to financing statements relating to the security
interest created hereunder in the Collateral as may be specified from time to
time in written instructions of a Majority in Interest of Note Holders (which
instructions shall be accompanied by the form of such continuation statement so
to be filed). The Mortgagee will furnish to each Note Holder, promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates and other instruments furnished to the Mortgagee hereunder
SECTION 6.03. Indemnification
The Mortgagee shall not be required to take any action or refrain
from taking any action under Section 6.01 (other than the first sentence
thereof), 6.02 or Article V hereof unless the Mortgagee shall have been
indemnified to its reasonable satisfaction against any liability, cost or
expense (including counsel fees) which may be incurred in connection therewith
pursuant to a written agreement with one or more Note Holders. The Mortgagee
agrees that it shall look solely to the Note Holders for the satisfaction of any
indemnity (except expenses for foreclosure of the type referred to in clause
"First" of Section 3.03 hereof) owed to it pursuant to this Section 6.03. The
Mortgagee shall not be under any obligation to take any action under this Trust
Indenture or any other Operative Agreement and nothing herein or therein shall
require the Mortgagee to expend or risk its own funds or otherwise incur the
risk of any financial liability in the performance of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it (the written indemnity of any Note Holder who is a QIB, signed by
an authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Mortgagee shall be accepted
60
68
as reasonable assurance of adequate indemnity). The Mortgagee shall not be
required to take any action under Section 6.01 (other than the first sentence
thereof) or 6.02 or Article V hereof, nor shall any other provision of this
Trust Indenture or any other Operative Agreement be deemed to impose a duty on
the Mortgagee to take any action, if the Mortgagee shall have been advised by
counsel that such action is contrary to the terms hereof or is otherwise
contrary to Law.
SECTION 6.04. No Duties Except as Specified in Trust Indenture or
Instructions
The Mortgagee shall not have any duty or obligation to use, operate,
store, lease, control, manage, sell, dispose of or otherwise deal with the
Aircraft or any other part of the Collateral, or to otherwise take or refrain
from taking any action under, or in connection with, this Trust Indenture or any
part of the Collateral, except as expressly provided by the terms of this Trust
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Trust Indenture; and no implied duties or obligations shall be
read into this Trust Indenture against the Mortgagee. The Mortgagee agrees that
it will in its individual capacity and at its own cost and expense (but without
any right of indemnity in respect of any such cost or expense under Section 8.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Collateral which result from claims
against it in its individual capacity not related to the administration of the
Collateral or any other transaction pursuant to this Trust Indenture or any
document included in the Collateral.
SECTION 6.05. No Action Except Under Trust Indenture or Instructions
The Mortgagee will not use, operate, store, lease, control, manage,
sell, dispose of or otherwise deal with the Aircraft or any other part of the
Collateral except in accordance with the powers granted to, or the authority
conferred upon the Mortgagee pursuant to this Trust Indenture and in accordance
with the express terms hereof.
SECTION 6.06. Investment of Amounts Held by Mortgagee
Any amounts held by the Mortgagee pursuant to the proviso to the
first sentence of Section 3.01, pursuant to
61
69
Section 3.02, or pursuant to any provision of any other Operative Agreement
providing for amounts to be held by the Mortgagee which are not distributed
pursuant to the other provisions of Article III hereof shall be invested by the
Mortgagee from time to time in Cash Equivalents as directed by the Owner so long
as the Mortgagee may acquire the same using its best efforts. Unless otherwise
expressly provided in this Trust Indenture, any income realized as a result of
any such investment, net of the Mortgagee's reasonable fees and expenses in
making such investment, shall be held and applied by the Mortgagee in the same
manner as the principal amount of such investment is to be applied and any
losses, net of earnings and such reasonable fees and expenses, shall be charged
against the principal amount invested. The Mortgagee shall not be liable for any
loss resulting from any investment required to be made by it under this Trust
Indenture other than by reason of its willful misconduct or gross negligence,
and any such investment may be sold (without regard to its maturity) by the
Mortgagee without instructions whenever such sale is necessary to make a
distribution required by this Trust Indenture.
ARTICLE VII
THE MORTGAGEE
SECTION 7.01. Acceptance of Trusts and Duties
The Mortgagee accepts the duties hereby created and applicable to it
and agrees to perform the same but only upon the terms of this Trust Indenture
and agrees to receive and disburse all monies constituting part of the
Collateral in accordance with the terms hereof. The Mortgagee, in its individual
capacity, shall not be answerable or accountable under any circumstances, except
(i) for its own willful misconduct or gross negligence (other than for the
handling of funds, for which the standard of accountability shall be willful
misconduct or negligence), (ii) as provided in the fourth sentence of Section
2.04(a) hereof and the last sentence of Section 6.04 hereof, and (iii) from the
inaccuracy of any representation or warranty of the Mortgagee (in its individual
capacity) in the Participation Agreement or expressly made hereunder.
SECTION 7.02. Absence of Duties
Except in accordance with written instructions furnished pursuant to
Section 6.01 or 6.02 hereof, and except as
62
70
provided in, and without limiting the generality of, Sections 6.03, 6.04 and
7.07 hereof the Mortgagee shall have no duty (i) to see to any registration of
the Aircraft or any recording or filing of this Trust Indenture or any other
document, or to see to the maintenance of any such registration, recording or
filing, (ii) to see to any insurance on the Aircraft or to effect or maintain
any such insurance, whether or not Owner shall be in default with respect
thereto, (iii) to see to the payment or discharge of any lien or encumbrance of
any kind against any part of the Collateral, (iv) to confirm, verify or inquire
into the failure to receive any financial statements from Owner, or (v) to
inspect the Aircraft at any time or ascertain or inquire as to the performance
or observance of any of Owner's covenants herein or any Permitted Lessee's
covenants under any assigned Permitted Lease with respect to the Aircraft.
SECTION 7.03. No Representations or Warranties as to Aircraft or
Documents
THE MORTGAGEE IN ITS INDIVIDUAL OR TRUST CAPACITY DOES NOT MAKE AND
SHALL NOT BE DEEMED TO HAVE MADE AND HEREBY EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS,
VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE
AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR
NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK
OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER. The Mortgagee, in its
individual or trust capacities, does not make or shall not be deemed to have
made any representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Participation Agreement, the
Equipment Notes or the Aircraft Purchase Agreement, or as to the correctness of
any statement contained in any thereof, except for the representations and
warranties of the Owner made in its individual capacity and the representations
and warranties of the Mortgagee in its individual capacity, in each case
expressly made in this Trust Indenture or in the Participation Agreement. The
Note Holders make no representation or warranty hereunder whatsoever.
SECTION 7.04. No Segregation of Monies; No Interest
63
71
Any monies paid to or retained by the Mortgagee pursuant to any
provision hereof and not then required to be distributed to the Note Holders, or
the Owner as provided in Article III hereof need not be segregated in any manner
except to the extent required by Law or Section 6.06 hereof, and may be
deposited under such general conditions as may be prescribed by Law, and the
Mortgagee shall not be liable for any interest thereon (except that the
Mortgagee shall invest all monies held as directed by Owner so long as no Event
of Default has occurred and is continuing (or in the absence of such direction,
by the Majority In Interest of Note Holders) in Cash Equivalents; provided,
however, that any payments received, or applied hereunder, by the Mortgagee
shall be accounted for by the Mortgagee so that any portion thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof.
SECTION 7.05. Reliance; Agreements; Advice of Counsel
The Mortgagee shall not incur any liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Mortgagee may accept a copy of a resolution of the Board of Directors (or
Executive Committee thereof) of the Owner, certified by the Secretary or an
Assistant Secretary thereof as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted and that the same
is in full force and effect. As to the aggregate unpaid Original Amount of
Equipment Notes outstanding as of any date, the Owner may for all purposes
hereof rely on a certificate signed by any Vice President or other authorized
corporate trust officer of the Mortgagee. As to any fact or matter relating to
the Owner the manner of which is not specifically described herein, the
Mortgagee may for all purposes hereof rely on a certificate, signed by a duly
authorized officer of the Owner, as to such fact or matter, and such certificate
shall constitute full protection to the Mortgagee for any action taken or
omitted to be taken by it in good faith in reliance thereon. In the
administration of the trusts hereunder, the Mortgagee may execute any of the
trusts or powers hereof and perform its powers and duties hereunder directly or
through agents or attorneys and may, at the expense of the Collateral, advise
with counsel, accountants and other skilled persons to be selected and retained
by it, and the
64
72
Mortgagee shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the written advice or written opinion of any such
counsel, accountants or other skilled persons.
SECTION 7.06. Compensation
The Mortgagee shall be entitled to reasonable compensation,
including expenses and disbursements (including the reasonable fees and expenses
of counsel), for all services rendered hereunder and shall, on and subsequent to
an Event of Default hereunder, have a priority claim on the Collateral for the
payment of such compensation, to the extent that such compensation shall not be
paid by Owner, and shall have the right, on and subsequent to an Event of
Default hereunder, to use or apply any monies held by it hereunder in the
Collateral toward such payments. The Mortgagee agrees that it shall have no
right against the Note Holders for any fee as compensation for its services as
trustee under this Trust Indenture.
SECTION 7.07. Instructions from Note Holders
In the administration of the trusts created hereunder, the Mortgagee
shall have the right to seek instructions from a Majority in Interest of Note
Holders should any provision of this Trust Indenture appear to conflict with any
other provision herein or should the Mortgagee's duties or obligations hereunder
be unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions. The Mortgagee shall be fully protected for
acting in accordance with any instructions received under this Section 7.07.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Scope of Indemnification
The Mortgagee shall be indemnified by the Owner to the extent and in
the manner provided in Section 8 of the Participation Agreement.
65
73
ARTICLE IX
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. Resignation of Mortgagee; Appointment of Successor
(a) The Mortgagee or any successor thereto may resign at any time
without cause by giving at least 30 days' prior written notice to the Owner and
each Note Holder, such resignation to be effective upon the acceptance of the
trusteeship by a successor Mortgagee. In addition, a Majority in Interest of
Note Holders may at any time (but only with the consent of Owner, which consent
shall not be unreasonably withheld, except that such consent shall not be
necessary if an Event of Default is continuing) remove the Mortgagee without
cause by an instrument in writing delivered to the Owner and the Mortgagee, and
the Mortgagee shall promptly notify each Note Holder thereof in writing, such
removal to be effective upon the acceptance of the trusteeship by a successor
Mortgagee. In the case of the resignation or removal of the Mortgagee, a
Majority in Interest of Note Holders may appoint a successor Mortgagee by an
instrument signed by such holders, which successor, so long as no Event of
Default shall have occurred and be continuing, shall be subject to Owner's
reasonable approval. If a successor Mortgagee shall not have been appointed
within 30 days after such notice of resignation or removal, the Mortgagee, the
Owner or any Note Holder may apply to any court of competent jurisdiction to
appoint a successor Mortgagee to act until such time, if any, as a successor
shall have been appointed as above provided. The successor Mortgagee so
appointed by such court shall immediately and without further act be superseded
by any successor Mortgagee appointed as above provided.
(b) Any successor Mortgagee, however appointed, shall execute and
deliver to the Owner and the predecessor Mortgagee an instrument accepting such
appointment and assuming the obligations of the Mortgagee arising from and after
the time of such appointment, and thereupon such successor Mortgagee, without
further act, shall become vested with all the estates, properties, rights,
powers and duties of the predecessor Mortgagee hereunder in the trust hereunder
applicable to it with like effect as if originally named the Mortgagee herein;
but nevertheless upon the written request of such successor Mortgagee, such
predecessor Mortgagee shall execute and deliver
66
74
an instrument transferring to such successor Mortgagee, upon the trusts herein
expressed applicable to it, all the estates, properties, rights and powers of
such predecessor Mortgagee, and such predecessor Mortgagee shall duly assign,
transfer, deliver and pay over to such successor Mortgagee all monies or other
property then held by such predecessor Mortgagee hereunder.
(c) Any successor Mortgagee, however appointed, shall be a bank or
trust company having its principal place of business in the Borough of
Manhattan, City and State of New York; Chicago, Illinois; Hartford, Connecticut;
Wilmington, Delaware; or Boston, Massachusetts and having (or whose obligations
under the Operative Agreements are guaranteed by an affiliated entity having) a
combined capital and surplus of at least $100,000,000, if there be such an
institution willing, able and legally qualified to perform the duties of the
Mortgagee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Mortgagee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Mortgagee shall be a
party, or any corporation to which substantially all the corporate trust
business of the Mortgagee may be transferred, shall, subject to the terms of
paragraph (c) of this Section 9.01, be a successor Mortgagee and the Mortgagee
under this Trust Indenture without further act.
SECTION 9.02. Appointment of Additional and Separate Trustees
(a) Whenever (i) the Mortgagee shall deem it necessary or desirable
in order to conform to any Law of any jurisdiction in which all or any part of
the Collateral shall be situated or to make any claim or bring any suit with
respect to or in connection with the Collateral, this Trust Indenture, any other
Indenture Agreement, the Equipment Notes or any of the transactions contemplated
by the Participation Agreement, (ii) the Mortgagee shall be advised by counsel
satisfactory to it that it is so necessary or prudent in the interests of the
Note Holders (and the Mortgagee shall so advise the Owner), or (iii) the
Mortgagee shall have been requested to do so by a Majority in Interest of Note
Holders, then in any such case, the Mortgagee and, upon the written request of
the Mortgagee, the Owner, shall execute and deliver an indenture supplemental
hereto and such
67
75
other instruments as may from time to time be necessary or advisable either (1)
to constitute one or more bank or trust companies or one or more persons
approved by the Mortgagee, either to act jointly with the Mortgagee as
additional trustee or trustees of all or any part of the Collateral, or to act
as separate trustee or trustees of all or any part of the Collateral, in each
case with such rights, powers, duties and obligations consistent with this Trust
Indenture as may be provided in such supplemental indenture or other instruments
as the Mortgagee or a Majority in Interest of Note Holders may deem necessary or
advisable, or (2) to clarify, add to or subtract from the rights, powers, duties
and obligations theretofore granted any such additional or separate trustee,
subject in each case to the remaining provisions of this Section 9.02. If the
Owner shall not have taken any action requested of it under this Section 9.02(a)
that is permitted or required by its terms within 15 days after the receipt of a
written request from the Mortgagee so to do, or if an Event of Default shall
have occurred and be continuing, the Mortgagee may act under the foregoing
provisions of this Section 9.02(a) without the concurrence of the Owner, and the
Owner hereby irrevocably appoints (which appointment is coupled with an
interest) the Mortgagee, its agent and attorney-in-fact to act for it under the
foregoing provisions of this Section 9.02(a) in either of such contingencies.
The Mortgagee may, in such capacity, execute, deliver and perform any such
supplemental indenture, or any such instrument, as may be required for the
appointment of any such additional or separate trustee or for the clarification
of, addition to or subtraction from the rights, powers, duties or obligations
theretofore granted to any such additional or separate trustee. In case any
additional or separate trustee appointed under this Section 9.02(a) shall die,
become incapable of acting, resign or be moved, all the assets, property,
rights, powers, trusts, duties and obligations of such additional or separate
trustee shall revert to the Mortgagee until a successor additional or separate
trustee is appointed as provided in this Section 9.02(a).
(b) No additional or separate trustee shall be entitled to exercise
any of the rights, powers, duties and obligations conferred upon the Mortgagee
in respect of the custody, investment and payment of monies and all monies
received by any such additional or separate trustee from or constituting part of
the Collateral or otherwise payable under any Operative Agreement to the
Mortgagee shall be promptly paid over by it to the Mortgagee. All other rights,
powers, duties and obligations
68
76
conferred or imposed upon any additional or separate trustee shall be exercised
or performed by the Mortgagee and such additional or separate trustee jointly
except to the extent that applicable Law of any jurisdiction in which any
particular act is to be performed renders the Mortgagee incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations (including the holding of title to all or part of the Collateral in
any such jurisdiction) shall be exercised and performed by such additional or
separate trustee. No additional or separate trustee shall take any discretionary
action except on the instructions of the Mortgagee or a Majority in Interest of
Note Holders. No trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder, except that the Mortgagee shall
be liable for the consequences of its lack of reasonable care in selecting, and
the Mortgagee's own actions in acting with, any additional or separate trustee.
Each additional or separate trustee appointed pursuant to this Section 9.02
shall be subject to, and shall have the benefit of Articles V through IX and
Article XI hereof insofar as they apply to the Mortgagee. The powers of any
additional or separate trustee appointed pursuant to this Section 9.02 shall not
in any case exceed those of the Mortgagee hereunder.
(c) If at any time the Mortgagee shall deem it no longer necessary
or in order to conform to any such Law or take any such action or shall be
advised by such counsel that it is no longer so necessary or desirable in the
interest of the Note
Holders, or in the event that the Mortgagee shall have been
requested to do so in writing by a Majority in Interest of Note Holders, the
Mortgagee and, upon the written request of the Mortgagee, the Owner, shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional or separate trustee.
The Mortgagee may act on behalf of the Owner under this Section 9.02(c) when and
to the extent it could so act under Section 9.02(a) hereof.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 10.01. Instructions of Majority; Limitations
69
77
(a) The Mortgagee agrees with the Note Holders that it shall not
enter into any amendment, waiver or modification of, supplement or consent to
this Trust Indenture, or any other Operative Agreement to which it is a party,
unless such supplement, amendment, waiver, modification or consent is consented
to in writing by a Majority in Interest of Note Holders, but upon the written
request of a Majority in Interest of Note Holders, the Mortgagee shall from time
to time enter into any such supplement or amendment, or execute and deliver any
such waiver, modification or consent, as may be specified in such request and as
may be (in the case of any such amendment, supplement or modification), to the
extent such agreement is required, agreed to by the Owner; provided, however,
that, without the consent of each holder of an affected Equipment Note then
outstanding and of each Liquidity Provider, no such amendment, waiver or
modification of the terms of, or consent under, any thereof, shall (i) modify
any of the provisions of this Section 10.01, or of Article II or III or Section
5.01, 5.02(c), 5.02(d) and 5.02(e), 6.02, 11.11, 11.12 or 11.13 hereof, the
definitions of "Event of Default," "Default," "Special Default," "Majority in
Interest of Note Holders," "Make-Whole Amount" or "Note Holder," or the
percentage of Note Holders required to take or approve any action hereunder,
(ii) reduce the amount, or change the time of payment or method of calculation
of any amount, of Original Amount, Make-Whole Amount, if any, or interest with
respect to any Equipment Note, (iii) reduce, modify or amend any indemnities in
favor of the Mortgagee or the Note Holders (except that the Mortgagee may
consent to any waiver or reduction of an indemnity payable to it), or (iv)
permit the creation of any Lien on the Trust Indenture Estate or any part
thereof other than Permitted Liens or deprive any Note Holder or other Indenture
Indemnitee of the benefit of the Lien of this Trust Indenture on the Collateral,
except as provided in connection with the exercise of remedies under Article V
hereof. Notwithstanding the foregoing, without the consent of the affected
Liquidity Providers, neither the Owner nor the Mortgagee shall enter into any
amendment, waiver or modification of, supplement or consent to this Trust
Indenture or the other Operative Agreements which shall reduce, modify or amend
any indemnities in favor of such Liquidity Providers.
(b) The Owner and the Mortgagee may enter into one or more
agreements supplemental hereto without the consent of any Note Holder for any
of the following purposes: (i) (a) to cure
70
78
any defect or inconsistency herein or in the Equipment Notes, or to make any
change not inconsistent with the provisions hereof (provided that such change
does not adversely affect the interests of any Note Holder in its capacity
solely as Note Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner in accordance with the
terms hereof or to evidence the succession of a new trustee hereunder pursuant
hereto, the removal of the trustee hereunder or the appointment of any
co-trustee or co-trustees or any separate or additional trustee or trustees;
(iii) to convey, transfer, assign, mortgage or pledge any property to or with
the Mortgagee or to make any other provisions with respect to matters or
questions arising hereunder so long as such action shall not adversely affect
the interests of the Note Holders in its capacity solely as Note Holder; (iv) to
correct or amplify the description of any property at any time subject to the
Lien of this Trust Indenture or better to assure, convey and confirm unto the
Mortgagee any property subject or required to be subject to the Lien of this
Trust Indenture, the Airframe or Engines or any Replacement Airframe or
Replacement Engine; (v) to add to the covenants of the Owner for the benefit of
the Note Holders, or to surrender any rights or power herein conferred upon the
Owner; (vi) to add to the rights of the Note Holders; and (vii) to include on
the Equipment Notes any legend as may be required by Law.
SECTION 10.02. Mortgagee Protected
If, in the opinion of the institution acting as Mortgagee hereunder,
any document required to be executed by it pursuant to the terms of Section
10.01 hereof affects any right, duty, immunity or indemnity with respect to such
institution under this Trust Indenture, such institution may in its discretion
decline to execute such document.
SECTION 10.03. Documents Mailed to Note Holders
Promptly after the execution by the Owner or the Mortgagee of any
document entered into pursuant to Section 10.01 hereof, the Mortgagee shall
mail, by first class mail, postage prepaid, a copy thereof to Owner (if not a
party thereto) and to each Note Holder at its address last set forth in the
Equipment Note Register, but the failure of the Mortgagee to mail such copies
shall not impair or affect the validity of such document.
71
79
SECTION 10.04. No Request Necessary for Trust Indenture Supplement
No written request or consent of the Note Holders pursuant to
Section 10.01 hereof shall be required to enable the Mortgagee to execute and
deliver a Trust Indenture Supplement specifically required by the terms hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Trust Indenture
Upon (or at any time after) payment in full of the Original Amount
of, Make-Whole Amount, if any, and interest on and all other amounts due under
all Equipment Notes and provided that there shall then be no other Secured
Obligations due to the Indenture Indemnitees, the Note Holders and the Mortgagee
hereunder or under the Participation Agreement or other Operative Agreement, the
Owner shall direct the Mortgagee to execute and deliver to or as directed in
writing by the Owner an appropriate instrument releasing the Aircraft and the
Engines and all other Collateral from the Lien of the Trust Indenture and the
Mortgagee shall execute and deliver such instrument as aforesaid; provided,
however, that this Trust Indenture and the trusts created hereby shall earlier
terminate and this Trust Indenture shall be of no further force or effect upon
any sale or other final disposition by the Mortgagee of all property
constituting part of the Collateral and the final distribution by the Mortgagee
of all monies or other property or proceeds constituting part of the Collateral
in accordance with the terms hereof. Except as aforesaid otherwise provided,
this Trust Indenture and the trusts created hereby shall continue in full force
and effect in accordance with the terms hereof.
SECTION 11.02. No Legal Title to Collateral in Note Holders
No holder of an Equipment Note shall have legal title to any part of
the Collateral. No transfer, by operation of law or otherwise, of any Equipment
Note or other right, title and interest of any Note Holder in and to the
Collateral or hereunder shall operate to terminate this Trust Indenture or
entitle such holder or any successor or transferee of such holder to an
72
80
accounting or to the transfer to it of any legal title to any part of the
Collateral.
SECTION 11.03. Sale of Aircraft by Mortgagee Is Binding
Any sale or other conveyance of the Collateral, or any part thereof
(including any part thereof or interest therein), by the Mortgagee made pursuant
to the terms of this Trust Indenture shall bind the Note Holders and shall be
effective to transfer or convey all right, title and interest of the Mortgagee,
the Owner and such holders in and to such Collateral or part thereof. No
purchaser or other grantee shall be required to inquire as to the authorization,
necessity, expediency or regularity of such sale or conveyance or as to the
application of any sale or other proceeds with respect thereto by the Mortgagee.
SECTION 11.04. Trust Indenture for Benefit of Owner,
Mortgagee, Second Mortgagee, Note Holders and the other Indenture Indemnitees
Nothing in this Trust Indenture, whether express or implied, shall
be construed to give any person other than the Owner, the Mortgagee, the Second
Mortgagee, the Note Holders and the other Indenture Indemnitees, any legal or
equitable right, remedy or claim under or in respect of this Trust Indenture,
except that the persons referred to in the last paragraph of Section 4.02(b)
shall be third party beneficiaries of such paragraph.
SECTION 11.05. Notices
Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, authorizations, directions, consents,
waivers or documents provided or permitted by this Trust Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner, addressed to it at 2929 Allan Parkway, Houston, Texas 77019,
Attention: Chief Financial Officer, facsimile number (713) 520-6329, (ii) if to
Mortgagee, addressed to it at its office at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration, facsimile number (302) 651-8882, (iii) if to any Note Holder or
any Indenture Indemnitee, addressed to such party at such address as such party
shall have furnished by notice to the Owner and the Mortgagee, or, until an
address is so
73
81
furnished, addressed to the address of such party (if any) set forth on Schedule
1 to the Participation Agreement or in the Equipment Note Register. Whenever any
notice in writing is required to be given by the Owner or the Mortgagee or any
Note Holder to any of the other of them, such notice shall be deemed given and
such requirement satisfied when such notice is received, or if such notice is
mailed by certified mail, postage prepaid, three Business Days after being
mailed, addressed as provided above. Any party hereto may change the address to
which notices to such party will be sent by giving notice of such change to the
other parties to this Trust Indenture.
SECTION 11.06. Severability
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 11.07. No Oral Modification or Continuing Waivers
No term or provision of this Trust Indenture or the Equipment Notes
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the Owner and the Mortgagee, in compliance with
Section 10.01 hereof. Any waiver of the terms hereof or of any Equipment Note
shall be effective only in the specific instance and for the specific purpose
given.
SECTION 11.08. Successors and Assigns
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Note Holder
shall bind the successors and assigns of such holder. Each Note Holder by its
acceptance of an Equipment Note agrees to be bound by this Trust Indenture and
all provisions of the Operative Agreements applicable to a Note Holder.
74
82
SECTION 11.09. Headings
The headings of the various Articles and sections herein and in the
table of contents hereto are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 11.10. Normal Commercial Relations
Anything contained in this Trust Indenture to the contrary
notwithstanding. Owner and Mortgagee may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with Owner,
fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Owner for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
SECTION 11.11. Governing Law; Counterpart Form
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate counterparts (or upon separate
signature pages bound together into one or more counterparts), each of which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 11.12. Voting By Note Holders
All votes of the Note Holders shall be governed by a vote of a
Majority in Interest of Note Holders, except as otherwise provided herein.
SECTION 11.13. Section 1110
The Mortgagee shall be entitled to the benefits of Section 1110 with
respect to the right to take possession of the Aircraft, Airframe, Engines and
Parts as provided herein in the event of a case under Chapter 11 of the
Bankruptcy Code in which Owner is a debtor, and in any instance where more than
one construction is possible of the terms and conditions hereof or any other
pertinent Operative Agreement, each such party agrees
75
83
that a construction which would preserve such benefits shall control over any
construction which would not preserve such benefits.
76
84
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture and Mortgage to be duly executed by their respective officers thereof
duly authorized as of the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:______________________________
Name: Gerald Laderman
Title: Vice President
WILMINGTON TRUST COMPANY,
as Mortgagee
By:______________________________
Name:
Title:
77
85
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly
provided, a reference to:
(i) each of "Owner," "Mortgagee," "Note Holder" or any other person
includes, without prejudice to the provisions of any Operative
Agreement, any successor in interest to it and any permitted
transferee, permitted purchaser or permitted assignee of it;
(ii) words importing the plural include the singular and words
importing the singular include the plural;
(iii) any agreement, instrument or document, or any annex, schedule or
exhibit thereto, or any other part thereof, includes, without
prejudice to the provisions of any Operative Agreement, that
agreement, instrument or document, or annex, schedule or
exhibit, or part, respectively, as amended, modified or
supplemented from time to time in accordance with its terms and
in accordance with the Operative Agreements, and any agreement,
instrument or document entered into in substitution or
replacement therefor;
(iv) any provision of any Law includes any such provision as amended,
modified, supplemented, substituted, reissued or reenacted prior to
the Closing Date, and thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby," "herein,"
"hereto," "hereof" and "hereunder" and words of similar import when
used in any Operative Agreement refer to such Operative Agreement
as a whole and not to any particular provision of such Operative
Agreement;
(vi) the words "including," "including, without limitation," "including,
but not limited to," and terms or phrases of similar import when
used in any Operative Agreement, with respect to any matter or
thing, mean including, without limitation, such matter or thing;
and
(vii) a "Section," an "Exhibit," an "Annex" or a "Schedule" in any
Operative Agreement, or in any annex thereto,
86
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 Default or Event of Default referred to in Section 5.01(v),(vi)
or (vii) shall not be deemed to prohibit the Owner from taking any action or
exercising any right that is conditioned on no Special Default, Default or Event
of Default having occurred and be continuing if such Special Default, Default or
Event of Default consists of the institution of reorganization proceedings with
respect to Owner under Chapter 11 of the Bankruptcy Code and the trustee or
debtor-in-possession in such proceedings shall have agreed to perform its
obligations under the Trust Indenture with the approval of the applicable court
and thereafter shall have continued to perform such obligations in accordance
with Section 1110.
DEFINED TERMS
"Act" means part A of subtitle VII of title 49, United States Code.
"Actual Knowledge" means (a) as it applies to Mortgagee, actual
knowledge of a responsible officer in the Corporate Trust Office, and (b) as it
applies to Owner, actual knowledge of a Vice President or more senior officer of
Owner or any other officer of Owner having responsibility for the transactions
contemplated by the Operative Agreements; provided that each of Owner and
Mortgagee shall be deemed to have "Actual Knowledge" of any matter as to which
it has received notice from
2
87
Owner, any Note Holder or Mortgagee, such notice having been given pursuant to
Section 11.05 of the Trust Indenture.
"Affiliate" means, with respect to any person, any other person
directly or indirectly controlling, controlled by or under common control with
such person. For purposes of this definition, "control" means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
by contract or otherwise and "controlling," "controlled by" and "under common
control with" have correlative meanings.
"Aircraft" means, collectively, the Airframe and Engines.
"Aircraft Bills of Sale" means, collectively, (i) the full warranty
bill of sale covering the Aircraft executed by Airframe Manufacturer in favor of
Mitsubishi International Corporation, Kawasaki Enterprises Inc., Diamond Lease
(U.S.A.), Inc. and Kyodo Leasing America, Inc. (the "Sellers"), and (ii) the
full warranty bill of sale covering the Aircraft executed by the Sellers to TAC.
"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 Owner (provided, that
all such materials shall be maintained in the English language).
"Aircraft Purchase Agreement" means the Aircraft Purchase Agreement,
dated June 20, 1997 among Owner Trustee, Owner Participant and Owner (including
all exhibits thereto), insofar as it relates to the Aircraft.
"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
3
88
model number, United States registration number and Airframe Manufacturer's
serial number set forth in the initial Trust Indenture Supplement and any
Replacement Airframe and (b) any and all Parts incorporated or installed in or
attached or appurtenant to such airframe, and any and all Parts removed from
such airframe, unless the Lien of the Trust Indenture shall not be applicable to
such Parts in accordance with Section 4.04 of the Trust Indenture. Upon
substitution of a Replacement Airframe under and in accordance with the Trust
Indenture, such Replacement Airframe shall become subject to the Trust Indenture
and shall be the "Airframe" for all purposes of the Trust Indenture and the
other Operative Agreements and thereupon the Airframe for which the substitution
is made shall no longer be subject to the Trust Indenture, and such replaced
Airframe shall cease to be the "Airframe."
"Airframe Manufacturer" means The Boeing Company, a Delaware
corporation.
"Amortization Amount" means, with respect to any Equipment Note, as
of any Payment Date, the amount determined by multiplying the percentage set
forth opposite such Date on the Amortization Schedule by the Original Amount of
such Equipment Note.
"Amortization Schedule" means, with respect to each Equipment Note,
the amortization schedule for such Equipment Note delivered pursuant to Section
2.02 of the Trust Indenture.
"Appraiser" means a firm of internationally recognized, independent
aircraft appraisers.
"Average Life Date" for any Equipment Note shall be the date which
follows the time of determination by a period equal to the Remaining Weighted
Average Life of such Equipment Note. "Remaining Weighted Average Life" on a
given date with respect to any Equipment Note shall be the number of days equal
to the quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining scheduled payment
of principal of such Equipment Note by (ii) the number of days from and
including such determination date to but excluding the date on which such
payment of principal is scheduled to be made, by (b) the then outstanding
principal amount of such Equipment Note.
4
89
"Aviation Authority" means the FAA or, if the Aircraft is permitted
to be, and is, registered with any other Government Entity under and in
accordance with Section 4.02(e) of the Trust Indenture and Section 6.4.5 of the
Participation Agreement, such other Government Entity.
"Bankruptcy Code" means the United States Bankruptcy Code, 11
U.S.C. Sections 101 et seq.
"Beneficial Owner" when used in relation to an Equipment Note means
a Person that, by reason of direct ownership, contract, share ownership or
otherwise, has the right to receive or participate in receiving, directly or
indirectly, payments of principal, interest or Make-Whole Amount in respect of
such Equipment Note; provided that a Person shall not be deemed to be a
Beneficial Owner of an Equipment Note solely because another Person in which
such a Person owns common stock or other equity securities is a registered
holder or Beneficial Owner of such Equipment Note unless such Person is an
Affiliate of such other Person.
"Bills of Sale" means the Aircraft Bills of Sale, the TAC Bill of
Sale, the Owner Trustee Bill of Sale and the FAA Bill of Sale.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks are authorized or required by law to close in New
York, New York, Houston, Texas or Wilmington, Delaware.
"Case" has the meaning attributed thereto in Section 2.12(a) of the
Trust Indenture.
"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, 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
5
90
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.
"Citizen of the United States" is defined in 49 U.S.C. ss.
40102(a)(15).
"Closing" means the occurrence of the following concurrent events
performed in accordance with the Participation Agreement and the Trust
Indenture: (i) the making of the secured loan and issuance of the Equipment
Notes pursuant to Section 2.1 of the Participation Agreement; (ii) the purchase
of the Aircraft by Owner pursuant to the Aircraft Purchase Agreement utilizing,
in part, the proceeds of such secured loan; and (iii) completion of the other
events contemplated by the Operative Agreements to occur at the Closing.
"Closing Date" means the date specified in the initial Trust
Indenture Supplement as the Closing Date, which shall be the date on which the
Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended; provided
that, when used in relation to a Plan, "Code" shall mean the Internal Revenue
Code of 1986 and any regulations and rulings issued thereunder, all as amended
and in effect from time to time.
"Collateral" is defined in the Granting Clause of the Trust
Indenture.
"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 Owner
and each Note Holder.
"CRAF" means the Civil Reserve Air Fleet Program established
pursuant to 10 U.S.C. Section 9511-13 or any similar substitute program.
"Debt Rate" means, with respect to (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) for any other purpose, with respect to any
period, the weighted
6
91
average interest rate per annum during such period borne by the outstanding
Equipment Notes, excluding any interest payable at the Payment Due Rate.
"Default" means any event or condition that with the giving of
notice or the lapse of time or both would become an Event of Default.
"Dollars," "United States Dollars" or "$" means the lawful currency
of the United States.
"DOT" means the Department of Transportation of the United States or
any Government Entity succeeding to the functions of such Department of
Transportation.
"Engine" means (a) each of the engines manufactured by Engine
Manufacturer and identified by Engine Manufacturer's model number and Engine
Manufacturer's serial number set forth in the initial Trust Indenture Supplement
and originally installed on the Airframe on the Closing Date, and any
Replacement Engine, in any case whether or not from time to time installed on
such Airframe or installed on any other airframe or aircraft, and (b) any and
all Parts incorporated or installed in or attached or appurtenant to such
engine, and any and all Parts removed from such engine, unless the Lien of the
Trust Indenture shall not apply to such Parts in accordance with Section 4.04 of
the Trust Indenture. Upon substitution of a Replacement Engine under and in
accordance with the Trust Indenture, such Replacement Engine shall become
subject to the Trust Indenture and shall be an "Engine" for all purposes of the
Trust Indenture and the other Operative Agreements and thereupon the Engine for
which the substitution is made shall no longer be subject to the Trust
Indenture, and such replaced Engine shall cease to be an "Engine."
"Engine Manufacturer" means CFM International.
"Equipment Note Register" is defined in Section 2.06 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.
7
92
"ERISA" means the Employee Retirement Income Security Act of 1974,
and any regulations and rulings issued thereunder all as amended and in effect
from time to time.
"Event of Default" is defined in Section 5.01 of the Trust
Indenture.
"Event of Loss" means, with respect to the Aircraft, Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:
(a) the destruction of such property, damage to such property
beyond economic repair or rendition of such property permanently unfit for
normal use by Owner;
(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, in the case of requisition of title to the Aircraft or Airframe, for a
period in excess of 90 consecutive days;
(e) as a result of any law, rule, regulation, order or other
action by the Aviation Authority or by any Government Entity of the
government of registry of the Aircraft or by any Government Entity
otherwise having jurisdiction over the operation or use of the Aircraft,
the use of such property in the normal course of Owner's business of
passenger air transportation is prohibited for a period of 180 consecutive
days unless Owner, 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
Owner, 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 Owner's
entire U.S. fleet of such property and Owner, prior to the
8
93
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 on the basis of
ownership or otherwise in so conforming such property, steps which are
necessary or desirable to permit the normal use of the Aircraft by Owner,
but in any event if such use shall have been prohibited for a period of
three years;
(f) with respect to any Engine, any divestiture of title to
such engine shall be treated as an Event of Loss.
An Event of Loss with respect to the Aircraft shall be deemed to have occurred
if an Event of Loss occurs with respect to its Airframe. The date of such Event
of Loss shall be the date of such loss, damage, insurance settlement, seizure,
condemnation, confiscation, taking or requisition of title or use or
prohibition, except that for purposes of clause (c), (d) and (e) above, no Event
of Loss shall be deemed to have occurred until the date of expiration of the
applicable period referred to therein.
"Existing Indenture" means the Amended and Restated Trust Indenture
and Mortgage, dated as of April 27, 1993, between Owner Trustee and Wilmington
Trust Company, as indenture trustee, which provides for a security interest in
the Aircraft.
"Existing Indenture Release" means the release executed by the
indenture trustee under the Existing Indenture releasing the Aircraft, the
Aircraft Documents and certain other collateral from the lien of the Existing
Indenture.
"Existing Lease" means the Amended and Restated Lease Agreement,
dated as of April 27, 1993, between Owner Trustee, as lessor, and Owner, as
lessee, providing for the lease of the Aircraft to Owner.
"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).
9
94
"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 on
the Closing Date by the Owner Trustee.
"FAA Filed Documents" means the Trust Indenture, the initial Trust
Indenture Supplement, the Second Mortgage, the Second Mortgage Supplement
relating to the Aircraft, the FAA Bill of Sale, the Termination of Lease, the
Existing Indenture Release and an application for registration of
the Aircraft with the FAA in the name of Owner.
"FAA Regulations" means the Federal Aviation Regulations issued or
promulgated pursuant to the Act from time to time.
"Financing Statements" means, collectively, (a) UCC-1 financing
statements covering the Collateral, by Owner, as debtor, showing Mortgagee and
Second Mortgagee as secured parties, for filing in Texas and each other
jurisdiction that, in the opinion of Mortgagee, is necessary to perfect its Lien
on the Collateral and (b) UCC-3 financing statements (i) evidencing the
termination of the Existing Lease, for filing in Texas and each other
jurisdiction that, in the opinion of Mortgagee, is reasonably desirable and (ii)
evidencing the release of the Aircraft, Aircraft Documents and other collateral
from the Lien of the Existing Indenture for filing in Utah and each other
jurisdiction that, in the opinion of Mortgagee, is reasonably desirable.
"GAAP" means generally accepted accounting principles as set forth
in the statements of financial accounting standards issued by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants, as such principles may at any time or from time to time be varied
by any applicable financial accounting rules or regulations issued by the SEC
and, with respect to any person, shall mean such principles applied on a basis
consistent with prior periods except as may be disclosed in such person's
financial statements.
10
95
"Government Entity" means (a) any federal, state, provincial or
similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Indemnitee" means (i) WTC, Mortgagee and Second Mortgagee, (ii)
each separate or additional trustee appointed pursuant to the Trust Indenture
and Second Mortgage, (iii) the Subordination Agent, (iv) each Liquidity
Provider, (v) the Pass Through Trustees, (vi) each Affiliate of the persons
described in clauses (i) and (ii), (vii) each Affiliate of the persons described
in clauses (iii), (iv) and (v), (viii) the respective directors, officers,
employees, agents and servants of each of the persons described in clauses (i),
(ii) and (vi), (ix) the respective directors, officers, employees, agents and
servants of each of the persons described in clauses (iii), (iv), (v) and (vii),
(x) the successors and permitted assigns of the persons described in clauses
(i), (ii) and (viii), and (xi) the successors and permitted assigns of the
persons described in clauses (iii), (iv), (v) and (ix); provided that the
persons described in clauses (iii), (iv), (v), (vii), (ix) and (xi) are
Indemnitees only for purposes of Section 8.1 of the Participation Agreement.
"Indenture Agreements" means the Aircraft Purchase Agreement and the
Bills of Sale, to the extent included in Granting Clause (2) of the Trust
Indenture, 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 5.01 of the Trust
Indenture.
11
96
"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 and (vi) each of the respective directors, officers, employees, agents
and servants of each of the persons described in clauses (i) through (v)
inclusive above.
"Intercreditor Agreement" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Providers and the Subordination
Agent, dated as of the Issuance Date, provided that, for purposes of any
obligation of Owner, no amendment, modification or supplement to, or
substitution or replacement of, such Intercreditor Agreement shall be effective
unless consented to by Owner.
"IRS" means the Internal Revenue Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.
"Issuance Date" means June 25, 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.
"Lien" means any mortgage, pledge, lien, charge, claim, encumbrance,
lease or security interest affecting the title to or any interest in property.
"Liquidity Facilities" means the three Revolving Credit Agreements
(consisting of a separate Revolving Credit Agreement 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 Owner, no amendment,
modification or supplement to, or substitution or replacement of, any such
Liquidity Facility shall be effective unless consented to by Owner.
"Liquidity Provider" means Kredietbank N.V., acting through its New
York Branch, as a Class A Liquidity Provider, Class B Liquidity Provider and
Class C Liquidity Provider (as
12
97
such terms are defined in the Intercreditor Agreement) under the respective
Liquidity Facilities, or any successor thereto.
"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 or any of its Affiliates (unless all Equipment Notes then
outstanding shall be held by Owner or any Affiliate of Owner); provided that for
the purposes of directing any action or casting any vote or giving any consent,
waiver or instruction hereunder, any Note Holder of an Equipment Note or
Equipment Notes may allocate, in such Note Holder's sole discretion, any
fractional portion of the principal amount of such Equipment Note or Equipment
Notes in favor of or in opposition to any such action, vote, consent, waiver or
instruction.
"Make-Whole Amount" means, with respect to any Equipment Note, an
amount (as determined by an independent investment banker of national standing)
equal to the excess, if any, of (a) the present value of the remaining scheduled
payments of principal and interest to maturity of such Equipment Note computed
by discounting such payments on a 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),
13
98
such weekly average yield to maturity as published in such H.15(519).
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Amount shall be the
third Business Day prior to the applicable payment or redemption date and the
"most recent H.15(519)" means the H.15(519) published prior to the close of
business on the third Business Day prior to the applicable payment or redemption
date.
"Material Adverse Change" means, with respect to any person, any
event, condition or circumstance that materially and adversely affects such
person's business or consolidated financial condition, or its ability to observe
or perform its obligations, liabilities and agreements under the Operative
Agreements.
"Minimum Liability Insurance Amount" means $300,000,000.
"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 mortgagee under the
Trust Indenture.
"Mortgagee Agreements" means, collectively, the Participation
Agreement, the Trust Indenture, the Second Mortgage, and each other agreement
between Mortgagee or Second Mortgagee and any other party to the Participation
Agreement, relating to the Transactions, delivered on the Closing Date.
"Non-U.S. Person" means any Person other than a United States
person, as defined in Section 7701(a)(30) of the Code.
"Note Holder" means at any time each registered holder of one or
more Equipment Notes.
"Officer's Certificate" means, in respect of any party to the
Participation Agreement, a certificate signed by the Chairman, the President,
any Vice President (including those with varying ranks such as Executive,
Senior, Assistant or Staff Vice President), the Treasurer or the Secretary of
such party.
14
99
"Operative Agreements" means, collectively, the Participation
Agreement, the Trust Indenture, the initial Trust Indenture Supplement, the
Second Mortgage, the Second Mortgage Supplement relating to the Aircraft, the
Bills of Sale and the Equipment Notes.
"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 Pension Benefit Guaranty Corporation.
"Owner Person" means Owner, any lessee, assignee, successor or other
user or person in possession of the Aircraft, Airframe or an Engine with or
without color of right, or any Affiliate of any of the foregoing (excluding any
Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any person
using or claiming any rights with respect to the Aircraft, Airframe or an Engine
directly by or through any of the persons in this parenthetical).
"Owner Trustee" means First Security Bank, N.A., not in its
individual capacity, except as expressly provided, but solely as trustee under
its Trust Agreement dated April 27, 1993 with Pension Benefit Guaranty
Corporation, a wholly owned United States Government corporation, relating to
the Aircraft.
"Owner Trustee Bill of Sale" means the full warranty bill of sale
covering the Aircraft executed by the Owner Trustee in favor of Owner.
"Participation Agreement" means the Participation Agreement 322
dated as of June 25, 1997 among Owner, the Pass Through Trustees, the
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 Removable Part leased by
Owner from a third party or subject to a security interest granted to a third
party), that may from time to time be installed or incorporated in or attached
or appurtenant to the Airframe or any Engine.
15
100
"Pass Through Agreements" means the Pass Through Trust Agreements,
the Intercreditor Agreement, the Liquidity Facilities and the Fee Letters
referred to in Section 2.03 of each of the Liquidity Facilities, provided that
no amendment, modification or supplement to, or substitution or replacement of,
any such Fee Letter shall be effective for purposes of any obligation of Owner,
unless consented to by Owner.
"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 relevant Pass Through Trust Agreement.
"Pass Through Trust Agreement" means each of the four separate pass
through trust agreements dated as of the Issuance Date by and between the Owner
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 and the Intercreditor Agreement.
"Payment Date" means each June 30 and December 30, commencing on
December 30, 1997.
"Payment Due Rate" means, with respect to (i) any payment made to a
Note Holder under any Series of Equipment Notes, the lesser of (a) the Debt Rate
applicable to such Series plus 2% and (b) the maximum rate permitted by
applicable law and (ii) any other payment made under any Operative Agreement to
any other Person, 7.522% per annum (computed on the basis of a year of 360 days
comprised of twelve 30-day months).
"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 or (iii) any U.S.
Air Carrier.
16
101
"Permitted Country" means any country listed on Schedule 4 to the
Participation Agreement.
"Permitted Foreign Air Carrier" means any air carrier with its
principal executive offices in any Permitted Country and which is authorized to
conduct commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.
"Permitted Government Entity" means (i) the U.S. Government or (ii)
any Government Entity if the Aircraft is then registered under the laws of the
country of such Government Entity.
"Permitted Lien" means (a) the rights of Mortgagee under the
Operative Agreements, or of WTC as second mortgagee under the Second Mortgage,
or of any Permitted Lessee under any Permitted Lease; (b) Liens attributable to
Mortgagee (both in its capacity as trustee under the Trust Indenture and in its
individual capacity); (c) the rights of others under agreements or arrangements
to the extent expressly permitted by the terms of Section 4.02(b) or 4.04 of the
Trust Indenture or Article IV of the Second Mortgage; (d) Liens of Taxes of
Owner (and its U.S. federal tax law consolidated group), or Liens for Taxes of
any Tax Indemnitee (and its U.S. federal tax law consolidated group) for which
Owner is obligated to indemnify such Tax Indemnitee under any of the Operative
Agreements, in any such case either not yet due or being contested in good faith
by appropriate proceedings so long as such Liens and such proceedings do not
involve any material risk of the sale, forfeiture or loss of the Aircraft, the
Airframe, or any Engine or the interest of Mortgagee or Second Mortgagee therein
or impair the Lien of the Trust Indenture or the Second Mortgage; (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, or any Engine or the interest of Mortgagee or Second Mortgagee
therein or impair the Lien of the Trust Indenture or the Second Mortgage; (f)
Liens arising out of any judgment or award against Owner (or any Permitted
Lessee), so long as such judgment shall, within 60 days after the entry
17
102
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, or any Engine or the
interest of Mortgagee or Second Mortgagee therein or impair the Lien of the
Trust Indenture or the Second Mortgage; (g) any other Lien with respect to which
Owner (or any Permitted Lessee) shall have provided a bond, cash collateral or
other security adequate in the reasonable opinion of Mortgagee.
"Permitted Lease" means a lease permitted under Section 4.02(b) of
the Trust Indenture.
"Permitted Lessee" means the lessee under a Permitted Lease.
"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.
"Premium Termination Date" means December 30, 2004 in the case of
the Series A Equipment Notes, December 30, 2003 in the case of the Series B
Equipment Notes, June 30, 2002 in the case of the Series C Equipment Notes and
June 30, 2000 in the case of the Series D Equipment Notes.
"QIB" is defined in Section 2.07 of the Trust Indenture.
"Registration Rights Agreement" means the Exchange and Registration
Rights Agreement dated the Issuance Date by and among Owner 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.
18
103
"Related Indentures" means, collectively, each Trust Indenture and
Mortgage under which "Equipment Notes" have been issued and acquired by the Pass
Through Trustees on or prior to August 31, 1997 (other than this Trust
Indenture), as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Removable Part" is defined in Section 4.04(d) of the Trust
Indenture.
"Replacement Airframe" means any airframe substituted for the
Airframe pursuant to Article IV of the Trust Indenture.
"Replacement Engine" means an engine substituted for an Engine
pursuant to Article IV of the Trust Indenture.
"SEC" means the Securities and Exchange Commission of the United
States, or any Government Entity succeeding to the functions of such Securities
and Exchange Commission.
"Second Mortgage" means the Second Trust Indenture and Mortgage
dated as of even date with the Participation Agreement between the Owner and
Second Mortgagee.
"Second Mortgagee" means Wilmington Trust Company, not in its
individual capacity, except as expressly stated in the Second Mortgage, but
solely as second mortgagee.
"Second Mortgage Supplement" means any Trust Indenture and Mortgage
Supplement executed by Owner relating to the Second Mortgage, substantially in
the form of Exhibit A to the Second Mortgage, with appropriate modifications to
reflect the purpose for which it is being used.
"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 2.05 of the Trust
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security" means a "security" as defined in Section 2(l) of the
Securities Act.
19
104
"Senior Holder" is defined in Section 2.12(c) of the Trust
Indenture.
"Series" means any of Series A, Series B, Series C or Series D.
"Series A" or "Series A Equipment Notes" means Equipment Notes
issued under the Trust Indenture and designated as "Series A" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued under the Trust Indenture and designated as "Series B" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued under the Trust Indenture and designated as "Series C" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes
issued under the Trust Indenture and designated as "Series D" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series D."
"Similar Aircraft" means a Boeing Model 737-3T0 aircraft.
"Special Default" means (i) the failure by Owner to pay any amount
of principal of or interest on any Equipment Note when due or (ii) the
occurrence of any Default or Event of Default referred to in Section 5.01(v),
(vi) or (vii).
"Subordination Agent" means Wilmington Trust Company, as
subordination agent under the Intercreditor Agreement, or any successor thereto.
"Subordination Agent Agreements" means the Participation Agreement,
the Liquidity Facilities and the Intercreditor Agreement.
20
105
"TAC" means TAC 322 Corp., a Delaware corporation.
"TAC Bill of Sale" means the full warranty bill of sale covering the
Aircraft executed by TAC in favor of the Owner Trustee.
"Tax Indemnitee" means (a) WTC, Mortgagee and Second Mortgagee, (b)
each separate or additional trustee appointed pursuant to the Trust Indenture
and the Second Mortgage, (c) each Note Holder and (d) the respective successors,
assigns, agents and servants of the foregoing.
"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.
"Termination of Lease" means the Termination of Lease dated June 25,
1997, terminating the Existing Lease.
"Threshold Amount" means $3,500,000.
"Transaction Expenses" means all costs and expenses incurred by
Mortgagee and Second Mortgagee in connection with (a) the preparation, execution
and delivery of the Operative Agreements and the recording or filing of any
documents, certificates or instruments in accordance with any Operative
Agreement, including, without limitation, the FAA Filed Documents and the
Financing Statements, (b) the initial fee of Mortgagee and Second Mortgagee
under the Trust Indenture and the Second Mortgage, respectively, and (c) the
reasonable fees and disbursements of counsel for each Mortgagee, the Second
Mortgagee and special counsel in Oklahoma City, Oklahoma, in each case, in
connection with the Closing.
21
106
"Transactions" means the transactions contemplated by the
Participation Agreement.
"Transfer" means the transfer, sale, assignment or other conveyance
of all or any interest in any property, right or interest.
"Transferee" means a person to which any Note Holder purports or
intends to Transfer any or all of its right, title or interest in the Equipment
Note, as described in Section 9 of the Participation Agreement.
"Trust Indenture" means this Trust Indenture and Mortgage 322, dated
as of the date of the Participation Agreement, between Owner and Mortgagee.
"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 pursuant to chapter 447 of title 49 of the
United States Code for aircraft capable of carrying 10 or more individuals or
6000 pounds or more of cargo, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the FAA Regulations, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provisions therefor or in the absence thereof.
"U.S. Government" means the federal government of the United States,
or any instrumentality or agency thereof the obligations of which are guaranteed
by the full faith and credit of the federal government of the United States.
22
107
"U.S. Person" means any Person described in Section 7701(a)(30) of
the Code.
"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 Owner or a Permitted
Lessee 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 Owner or a Permitted Lessee, provided that Owner's
obligations under the Trust Indenture 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.
23
108
ANNEX B
INSURANCE
Capitalized terms used but not defined herein shall have the
respective meanings set forth or incorporated by reference in Annex A to the
Trust Indenture.
A. Liability Insurance
1. Except as provided in Section A.2 below, Owner will carry or
cause to be carried at all times, at no expense to Mortgagee, comprehensive
airline legal liability (including, but not limited to passenger liability,
property damage, baggage liability, cargo and mail liability, hangarkeeper's
liability and contractual liability insurance) with respect to the Aircraft, the
Airframe and the Engines, which is (i) in an amount not less than the greater of
(x) the amount of comprehensive airline legal liability insurance from time to
time applicable to aircraft owned or leased and operated by Owner of the same
type and operating on similar routes as the Aircraft and (y) the Minimum
Liability Insurance Amount per occurrence; (ii) of the type and covering the
same risks as from time to time applicable to aircraft operated by Owner of the
same type as the Aircraft; and (iii) maintained in effect with insurers of
nationally or internationally recognized responsibility (such insurers being
referred to herein as "Approved Insurers").
2. During any period that the Aircraft is on the ground and not in
operation, Owner may carry or cause to be carried, in lieu of the insurance
required by Section A.1 above, insurance otherwise conforming with the
provisions of said Section A.1 except that (i) the amounts of coverage shall not
be required to exceed the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or operated by Owner of
the same type as the Aircraft which are on the ground and not in operation and
(ii) the scope of the risks covered and the type of insurance shall be the same
as from time to time shall be applicable to aircraft owned or operated by Owner
of the same type which are on the ground and not in operation.
B. Hull Insurance
24
109
1. Except as provided in Section B.2 below, Owner will carry or
cause to be carried at all times, at no expense to Mortgagee, with Approved
Insurers "all-risk" ground and flight aircraft hull insurance covering each
Aircraft (including the Engines when they are installed on the Airframe or any
other airframe) which is of the type as from time to time applicable to aircraft
owned by Owner of the same type as the Aircraft for an amount denominated in
United States Dollars not less than the unpaid Original Amount together with six
months of interest accrued thereon (collectively, the "Debt Balance").
Any policies of insurance carried in accordance with this Section
B.1 covering the Aircraft and any policies taken out in substitution or
replacement for any such policies (i) shall name Mortgagee as exclusive loss
payee for any proceeds to be paid under such policies up to an amount equal to
the Debt Balance and (ii) shall provide that (A) in the event of a loss
involving proceeds in excess of the Threshold Amount, the proceeds in respect of
such loss up to an amount equal to the Debt Balance shall be payable to the
Mortgagee, except in the case of a loss with respect to an Engine installed on
an airframe other than the Airframe, in which case Owner (or any Permitted
Lessee) shall endeavor to arrange for any payment of insurance proceeds in
respect of such loss to be held for the account of the Mortgagee whether such
payment is made to Owner (or any Permitted Lessee) or any third party, it being
understood and agreed that in the case of any payment to Mortgagee otherwise
than in respect of an Event of Loss, the Mortgagee shall, upon receipt of
evidence satisfactory to it that the damage giving rise to such payment shall
have been repaired or that such payment shall then be required to pay for
repairs then being made, pay the amount of such payment to Owner or its order,
and (B) the entire amount of any loss involving proceeds of the Threshold Amount
or less or the amount of any proceeds of any loss in excess of the Debt Balance
shall be paid to Owner or its order unless a Event of Default or Special Default
shall have occurred and be continuing and the insurers have been notified
thereof by the Mortgagee. In the case of a loss with respect to an engine (other
than an Engine) installed on the Airframe, Mortgagee shall hold any payment to
it of any insurance proceeds in respect of such loss for the account of Owner or
any other third party that is entitled to receive such proceeds.
25
110
2. During any period that the Aircraft is on the ground and not in
operation, Owner may carry or cause to be carried, in lieu of the insurance
required by Section B.1 above, insurance otherwise conforming with the
provisions of said Section B.1 except that the scope of the risks and the type
of insurance shall be the same as from time to time applicable to aircraft owned
by Owner of the same type similarly on the ground and not in operation, provided
that Owner shall maintain insurance against risk of loss or damage to the
Aircraft in an amount equal to the Debt Balance during such period that the
Aircraft is on the ground and not in operation.
C. War-Risk, Hijacking and Allied Perils Insurance
If Owner (or any Permitted Lessee) shall at any time operate or
propose to operate the Aircraft, Airframe or any Engine (i) in any area of
recognized hostilities or (ii) on international routes and war-risk, hijacking
or allied perils insurance is maintained by Owner (or any Permitted Lessee) with
respect to other aircraft owned or operated by Owner (or any Permitted Lessee)
on such routes or in such areas, Owner shall maintain or cause to be maintained
war-risk, hijacking and related perils insurance of substantially the same type
carried by major United States commercial air carriers operating the same or
comparable models of aircraft on similar routes or in such areas and in no event
in an amount less than the unpaid Original Amount.
D. General Provisions
Any policies of insurance carried in accordance with Sections A, B
and C, including any policies taken out in substitution or replacement for such
policies:
(i) shall name Mortgagee, the Second Mortgagee, each Note Holder and
each Liquidity Provider as an additional insured (collectively, the "Additional
Insureds"), as its interests may appear;
(ii) shall apply worldwide and have no territorial restrictions or
limitations (except only in the case of war, hijacking and related perils
insurance required under Section C, which shall apply to the fullest extent
available in the international insurance market);
26
111
(iii) shall provide that, in respect of the interests of the
Additional Insureds in such policies, the insurance shall not be invalidated or
impaired by any act or omission (including misrepresentation and nondisclosure)
by Owner (or any Permitted Lessee) or any other Person (including, without
limitation, use for illegal purposes of the Aircraft or any Engine) and shall
insure the Additional Insureds regardless of any breach or violation of any
representation, warranty, declaration, term or condition contained in such
policies by Owner (or any Permitted Lessee);
(iv) shall provide that, if the insurers cancel such insurance for
any reason whatsoever, or if the same is allowed to lapse for nonpayment of
premium, or if any material change is made in the insurance which adversely
affects the interest of any of the Additional Insureds, such cancellation, lapse
or change shall not be effective as to the Additional Insureds for 30 (seven
days in the case of war risk, hijacking and allied perils insurance) days after
receipt by the Additional Insureds of written notice by such insurers of such
cancellation, lapse or change, provided that if any notice period specified
above is not reasonably obtainable, such policies shall provide for as long a
period of prior notice as shall then be reasonably obtainable;
(v) shall waive any rights of setoff (including for unpaid
premiums), recoupment, counterclaim or other deduction, whether by attachment or
otherwise, against each Additional Insured;
(vi) shall waive any right of recourse, subrogation, setoff,
recoupment, counterclaim or other deduction against any Additional Insured;
(vii) shall be primary without right of contribution from any other
insurance that may be available to any Additional Insured;
(viii) shall provide that all of the liability insurance provisions
thereof, except the limits of liability, shall operate in all respects as if a
separate policy had been issued covering each party insured thereunder;
(ix) shall provide that none of the Additional Insureds shall be
liable for any insurance premium; and
27
112
(x) shall contain a 50/50% Clause per Lloyd's Aviation Underwriters'
Association Standard Policy Form AVS 103;
E. Reports and Certificates; Other Information
On or prior to the Closing Date and on or prior to each renewal date
of the insurance policies required hereunder, Owner will furnish or cause to be
furnished to Mortgagee insurance certificates describing in reasonable detail
the insurance maintained by Owner hereunder and a report, signed by Owner's
regularly retained independent insurance broker (the "Insurance Broker"),
stating the opinion of such Insurance Broker that (a) all premiums in connection
with the insurance then due have been paid and (b) such insurance complies with
the terms of this Annex B. To the extent such agreement is reasonably obtainable
Owner will also cause the Insurance Broker to agree to advise Mortgagee in
writing of any default in the payment of any premium and of any other act or
omission on the part of Owner of which it has knowledge and which might
invalidate or render unenforceable, in whole or in part, any insurance on the
Aircraft or Engines or cause the cancellation or termination of such insurance,
and to advise Mortgagee in writing at least 30 days (seven days in the case of
war-risk and allied perils coverage or such shorter period as may be available
in the international insurance market, as the case may be) prior to the
cancellation, lapse or material adverse change of any insurance maintained
pursuant to this Annex B.
F. Right to Pay Premiums
The Additional Insureds shall have the rights but not the
obligations of an additional named insured. None of Mortgagee and the other
Additional Insured shall have any obligation to pay any premium, commission,
assessment or call due on any such insurance (including reinsurance).
Notwithstanding the foregoing, in the event of cancellation of any insurance due
to the nonpayment of premiums, Mortgagee shall have the option, in its sole
discretion, to pay any such premium in respect of the Aircraft that is due in
respect of the coverage pursuant to this Trust Indenture and to maintain such
coverage, as Mortgagee may require, until the scheduled expiry date of such
insurance and, in such event, Owner shall, upon demand, reimburse Mortgagee for
amounts so paid by them.
G. Deductibles; Self-insurance
28
113
Owner may self-insure by way of deductible, premium adjustment or
franchise provisions or otherwise (including, with respect to insurance
maintained pursuant to Section B, insuring for a maximum amount which is less
than the Debt Balance) in the insurance covering the risks required to be
insured against pursuant to Section 4.06 and this Annex B under a program
applicable to all aircraft in Owner's fleet, but in no case shall the aggregate
amount of self-insurance in regard to Section 11 and this Annex B exceed during
any policy year, with respect to all of the aircraft in Owner's fleet
(including, without limitation, the Aircraft), the lesser of (a) 50% of the
largest replacement value of any single aircraft in Owner's fleet and (b) 1-1/2%
of the average aggregate insurable value (during the preceding policy year) of
all aircraft (including, without limitation, the Aircraft) on which Owner
carries insurance, 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 Owner may self-insure to such higher level. In
addition, Owner (and any Permitted Lessee) may self-insure to the extent of any
applicable deductible per aircraft that does not exceed industry standards for
major U.S. airlines.
29
114
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
TRUST INDENTURE AND MORTGAGE 322 SUPPLEMENT
This TRUST INDENTURE AND MORTGAGE 322 SUPPLEMENT NO. 1, dated
______________ ___, ____ (herein called this "Trust Indenture Supplement") of
CONTINENTAL AIRLINES, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 322, dated as of June 25,
1997 (as amended and supplemented to the date hereof, the "Trust Indenture")
between the Owner and Wilmington Trust Company, as Mortgagee (the "Mortgagee"),
provides for the execution and delivery of a supplement thereto substantially in
the form hereof, which shall particularly describe the Aircraft, and shall
specifically mortgage such Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture relates to
the Airframe and Engines described below, and a counterpart of the Trust
Indenture is attached hereto and made a part hereof and this Trust Indenture
Supplement, together with such counterpart of the Trust Indenture, is being
filed for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement WITNESSETH that the
Owner hereby confirms that the Lien of the Trust Indenture on the Collateral
covers all of Owner's right, title and interest in and to the following
described property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
The Boeing Company
30
115
together with all of the Owner's right, title and interest in and to
all Parts of whatever nature, whether now owned or hereinafter acquired and
which are from time to time incorporated or installed in or attached to said
airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
CFM International
together with all of Owner's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to either of such
engines.
Together with all of Owner's right, title and interest in and to (a)
all Parts of whatever nature, which from time to time are included within the
definition of "Airframe" or "Engine", whether now owned or hereafter acquired,
including all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and Engines (other
than additions, improvements, accessions and accumulations which constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment excluded from the definition of Parts) and (b) all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, its successors and assigns, in trust for the equal and proportionate
benefit and security of the Note Holders and the Indenture Indemnitees, except
as provided in Section 2.13 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Equipment Note over any other by
reason of priority of time of issue, sale, negotiation, date of maturity thereof
or otherwise for any reason whatsoever, and for the uses and purposes and
subject to the terms and provisions set forth in the Trust Indenture.
This Trust Indenture Supplement shall be construed as supplemental
to the Trust Indenture and shall form a part
31
116
thereof. The Trust Indenture is each hereby incorporated by reference herein and
is hereby ratified, approved and confirmed. The Closing Date is June 25, 1997.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
* * *
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:______________________________
Name:
Title:
32
117
SCHEDULE I
Original Amount Interest Rate
Series A:
Series B:
Series C:
Series D:
[INTENTIONALLY OMITTED FROM THE VERSION
OF THIS DOCUMENT FILED WITH THE FAA AS CONTAINING
CONFIDENTIAL FINANCIAL INFORMATION]
Trust Indenture and Mortgage
Equipment Note Amortization
Percentage of Original
Payment Date Amount to be Paid
EXECUTION
-----------------------------------------------------------------
TRUST INDENTURE AND MORTGAGE 322
Dated as of June 25, 1997
Between
CONTINENTAL AIRLINES, INC.,
Owner
and
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
33
118
but solely as Mortgagee,
Mortgagee
-----------------------------------------------------------------
EQUIPMENT NOTES COVERING
ONE BOEING 737-3T0 AIRCRAFT
BEARING U.S. REGISTRATION MARK N12322
AND MANUFACTURER'S SERIAL NO. 23373
-----------------------------------------------------------------
34
1
Exhibit 4.17
TRUST INDENTURE AND MORTGAGE 322 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 322 SUPPLEMENT NO. 1, dated
June 25, 1997 (herein called this "Trust Indenture Supplement") of CONTINENTAL
AIRLINES, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 322, dated as of
June 25, 1997 (as amended and supplemented to the date hereof, the "Trust
Indenture") between the Owner and Wilmington Trust Company, as Mortgagee (the
"Mortgagee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture
relates to the Airframe and Engines described below, and a counterpart of the
Trust Indenture is attached hereto and made a part hereof and this Trust
Indenture Supplement, together with such counterpart of the Trust Indenture, is
being filed for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement WITNESSETH
that the Owner hereby confirms that the Lien of the Trust Indenture on the
Collateral covers all of Owner's right, title and interest in and to the
following described property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
The Boeing 737-3T0 N12322 23373
Company
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more
rated take-off horsepower or the equivalent thereof, identified as follows:
2
Manufacturer Manufacturer's Model Serial Number
CFM International CFM 56-3 721-369
CFM International CFM 56-3 721-374
together with all of Owner's right, title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.
Together with all of Owner's right, title and interest in and
to (a) all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and (b)
all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Mortgagee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.13 and Article III of the Trust
Indenture without any preference, distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue, sale, negotiation,
date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
The Closing Date is June 25, 1997.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
3
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:______________________________
Name:
Title:
4
TRUST INDENTURE AND MORTGAGE 323 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 323 SUPPLEMENT NO. 1, dated
June 25, 1997 (herein called this "Trust Indenture Supplement") of CONTINENTAL
AIRLINES, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 323, dated as of
June 25, 1997 (as amended and supplemented to the date hereof, the "Trust
Indenture") between the Owner and Wilmington Trust Company, as Mortgagee (the
"Mortgagee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture
relates to the Airframe and Engines described below, and a counterpart of the
Trust Indenture is attached hereto and made a part hereof and this Trust
Indenture Supplement, together with such counterpart of the Trust Indenture, is
being filed for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement WITNESSETH
that the Owner hereby confirms that the Lien of the Trust Indenture on the
Collateral covers all of Owner's right, title and interest in and to the
following described property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
The Boeing 737-3T0 N10323 23374
Company
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more
rated take-off horsepower or the equivalent thereof, identified as follows:
5
Manufacturer Manufacturer's Model Serial Number
CFM International CFM 56-3 721-376
CFM International CFM 56-3 721-389
together with all of Owner's right, title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.
Together with all of Owner's right, title and interest in and
to (a) all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and (b)
all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Mortgagee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.13 and Article III of the Trust
Indenture without any preference, distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue, sale, negotiation,
date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
The Closing Date is June 25, 1997.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
6
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:______________________________
Name:
Title:
7
TRUST INDENTURE AND MORTGAGE 324 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 324 SUPPLEMENT NO. 1, dated
June 25, 1997 (herein called this "Trust Indenture Supplement") of CONTINENTAL
AIRLINES, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 324, dated as of
June 25, 1997 (as amended and supplemented to the date hereof, the "Trust
Indenture") between the Owner and Wilmington Trust Company, as Mortgagee (the
"Mortgagee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture
relates to the Airframe and Engines described below, and a counterpart of the
Trust Indenture is attached hereto and made a part hereof and this Trust
Indenture Supplement, together with such counterpart of the Trust Indenture, is
being filed for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement WITNESSETH
that the Owner hereby confirms that the Lien of the Trust Indenture on the
Collateral covers all of Owner's right, title and interest in and to the
following described property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
The Boeing 737-3T0 N14324 23375
Company
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more
rated take-off horsepower or the equivalent thereof, identified as follows:
8
Manufacturer Manufacturer's Model Serial Number
CFM International CFM 56-3 721-418
CFM International CFM 56-3 721-426
together with all of Owner's right, title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.
Together with all of Owner's right, title and interest in and
to (a) all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and (b)
all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Mortgagee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.13 and Article III of the Trust
Indenture without any preference, distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue, sale, negotiation,
date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
The Closing Date is June 25, 1997.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
9
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:______________________________
Name:
Title:
10
TRUST INDENTURE AND MORTGAGE 333 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 333 SUPPLEMENT NO. 1, dated
June 25, 1997 (herein called this "Trust Indenture Supplement") of CONTINENTAL
AIRLINES, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 333, dated as of
June 25, 1997 (as amended and supplemented to the date hereof, the "Trust
Indenture") between the Owner and Wilmington Trust Company, as Mortgagee (the
"Mortgagee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture
relates to the Airframe and Engines described below, and a counterpart of the
Trust Indenture is attached hereto and made a part hereof and this Trust
Indenture Supplement, together with such counterpart of the Trust Indenture, is
being filed for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement WITNESSETH
that the Owner hereby confirms that the Lien of the Trust Indenture on the
Collateral covers all of Owner's right, title and interest in and to the
following described property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
The Boeing 737-3T0 N69333 23571
Company
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more
rated take-off horsepower or the equivalent thereof, identified as follows:
11
Manufacturer Manufacturer's Model Serial Number
CFM International CFM 56-3 721-521
CFM International CFM 56-3 721-552
together with all of Owner's right, title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.
Together with all of Owner's right, title and interest in and
to (a) all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and (b)
all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Mortgagee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.13 and Article III of the Trust
Indenture without any preference, distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue, sale, negotiation,
date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
The Closing Date is June 25, 1997.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
12
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:______________________________
Name:
Title:
13
TRUST INDENTURE AND MORTGAGE 334 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 334 SUPPLEMENT NO. 1, dated
June 25, 1997 (herein called this "Trust Indenture Supplement") of CONTINENTAL
AIRLINES, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 334, dated as of
June 25, 1997 (as amended and supplemented to the date hereof, the "Trust
Indenture") between the Owner and Wilmington Trust Company, as Mortgagee (the
"Mortgagee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture
relates to the Airframe and Engines described below, and a counterpart of the
Trust Indenture is attached hereto and made a part hereof and this Trust
Indenture Supplement, together with such counterpart of the Trust Indenture, is
being filed for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement WITNESSETH
that the Owner hereby confirms that the Lien of the Trust Indenture on the
Collateral covers all of Owner's right, title and interest in and to the
following described property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
The Boeing 737-3T0 N14334 23572
Company
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more
rated take-off horsepower or the equivalent thereof, identified as follows:
14
Manufacturer Manufacturer's Model Serial Number
CFM International CFM 56-3B1 720-630
CFM International CFM 56-3B1 720-577
together with all of Owner's right, title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.
Together with all of Owner's right, title and interest in and
to (a) all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and (b)
all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Mortgagee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.13 and Article III of the Trust
Indenture without any preference, distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue, sale, negotiation,
date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
The Closing Date is June 25, 1997.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
15
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:________________________
Name:
Title:
16
TRUST INDENTURE AND MORTGAGE 335 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 335 SUPPLEMENT NO. 1, dated
June 25, 1997 (herein called this "Trust Indenture Supplement") of CONTINENTAL
AIRLINES, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 335, dated as of
June 25, 1997 (as amended and supplemented to the date hereof, the "Trust
Indenture") between the Owner and Wilmington Trust Company, as Mortgagee (the
"Mortgagee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture
relates to the Airframe and Engines described below, and a counterpart of the
Trust Indenture is attached hereto and made a part hereof and this Trust
Indenture Supplement, together with such counterpart of the Trust Indenture, is
being filed for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement WITNESSETH
that the Owner hereby confirms that the Lien of the Trust Indenture on the
Collateral covers all of Owner's right, title and interest in and to the
following described property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
The Boeing 737-3T0 N14335 23573
Company
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more
rated take-off horsepower or the equivalent thereof, identified as follows:
17
Manufacturer Manufacturer's Model Serial Number
CFM International CFM 56-3B1 721-590
CFM International CFM 56-3B1 721-567
together with all of Owner's right, title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.
Together with all of Owner's right, title and interest in and
to (a) all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and (b)
all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Mortgagee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.13 and Article III of the Trust
Indenture without any preference, distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue, sale, negotiation,
date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
The Closing Date is June 25, 1997.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
18
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:________________________
Name:
Title:
19
TRUST INDENTURE AND MORTGAGE 811 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 811 SUPPLEMENT NO. 1, dated
June 25, 1997 (herein called this "Trust Indenture Supplement") of CONTINENTAL
AIRLINES, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 811, dated as of
June 25, 1997 (as amended and supplemented to the date hereof, the "Trust
Indenture") between the Owner and Wilmington Trust Company, as Mortgagee (the
"Mortgagee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture
relates to the Airframe and Engines described below, and a counterpart of the
Trust Indenture is attached hereto and made a part hereof and this Trust
Indenture Supplement, together with such counterpart of the Trust Indenture, is
being filed for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement WITNESSETH
that the Owner hereby confirms that the Lien of the Trust Indenture on the
Collateral covers all of Owner's right, title and interest in and to the
following described property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
McDonnell Douglas DC-9-82 N12811 49265
Corporation
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more
rated take-off horsepower or the equivalent thereof, identified as follows:
20
Manufacturer Manufacturer's Model Serial Number
Pratt & Whitney JT8D-217A P709855D
Pratt & Whitney JT8D-217A P709856D
together with all of Owner's right, title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.
Together with all of Owner's right, title and interest in and
to (a) all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and (b)
all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Mortgagee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.13 and Article III of the Trust
Indenture without any preference, distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue, sale, negotiation,
date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
The Closing Date is June 25, 1997.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
21
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:________________________
Name:
Title:
22
TRUST INDENTURE AND MORTGAGE 834 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 834 SUPPLEMENT NO. 1, dated
June 25, 1997 (herein called this "Trust Indenture Supplement") of CONTINENTAL
AIRLINES, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 834, dated as of
June 25, 1997 (as amended and supplemented to the date hereof, the "Trust
Indenture") between the Owner and Wilmington Trust Company, as Mortgagee (the
"Mortgagee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture
relates to the Airframe and Engines described below, and a counterpart of the
Trust Indenture is attached hereto and made a part hereof and this Trust
Indenture Supplement, together with such counterpart of the Trust Indenture, is
being filed for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement WITNESSETH
that the Owner hereby confirms that the Lien of the Trust Indenture on the
Collateral covers all of Owner's right, title and interest in and to the
following described property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
McDonnell Douglas DC-9-82 N10834 49494
Corporation
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more
rated take-off horsepower or the equivalent thereof, identified as follows:
23
Manufacturer Manufacturer's Model Serial Number
Pratt & Whitney JT8D-217A P717413D
Pratt & Whitney JT8D-217A P717414D
together with all of Owner's right, title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.
Together with all of Owner's right, title and interest in and
to (a) all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and (b)
all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Mortgagee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.13 and Article III of the Trust
Indenture without any preference, distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue, sale, negotiation,
date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
The Closing Date is June 25, 1997.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
24
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:________________________
Name:
Title:
25
TRUST INDENTURE AND MORTGAGE 833 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 833 SUPPLEMENT NO. 1, dated
June 25, 1997 (herein called this "Trust Indenture Supplement") of CONTINENTAL
AIRLINES, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 833, dated as of
June 25, 1997 (as amended and supplemented to the date hereof, the "Trust
Indenture") between the Owner and Wilmington Trust Company, as Mortgagee (the
"Mortgagee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture
relates to the Airframe and Engines described below, and a counterpart of the
Trust Indenture is attached hereto and made a part hereof and this Trust
Indenture Supplement, together with such counterpart of the Trust Indenture, is
being filed for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement WITNESSETH
that the Owner hereby confirms that the Lien of the Trust Indenture on the
Collateral covers all of Owner's right, title and interest in and to the
following described property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
McDonnell Douglas DC-9-82 N18833 49493
Corporation
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more
rated take-off horsepower or the equivalent thereof, identified as follows:
26
Manufacturer Manufacturer's Model Serial Number
Pratt & Whitney JT8D-217A P717410D
Pratt & Whitney JT8D-217A P717425D
together with all of Owner's right, title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.
Together with all of Owner's right, title and interest in and
to (a) all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and (b)
all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Mortgagee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.13 and Article III of the Trust
Indenture without any preference, distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue, sale, negotiation,
date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
The Closing Date is June 25, 1997.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
27
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:________________________
Name:
Title:
28
TRUST INDENTURE AND MORTGAGE 820 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 820 SUPPLEMENT NO. 1, dated
June 25, 1997 (herein called this "Trust Indenture Supplement") of CONTINENTAL
AIRLINES, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 820, dated as of
June 25, 1997 (as amended and supplemented to the date hereof, the "Trust
Indenture") between the Owner and Wilmington Trust Company, as Mortgagee (the
"Mortgagee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture
relates to the Airframe and Engines described below, and a counterpart of the
Trust Indenture is attached hereto and made a part hereof and this Trust
Indenture Supplement, together with such counterpart of the Trust Indenture, is
being filed for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement WITNESSETH
that the Owner hereby confirms that the Lien of the Trust Indenture on the
Collateral covers all of Owner's right, title and interest in and to the
following described property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
McDonnell Douglas DC-9-82 N15820 49480
Corporation
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more
rated take-off horsepower or the equivalent thereof, identified as follows:
29
Manufacturer Manufacturer's Model Serial Number
Pratt & Whitney JT8D-217A P717333D
Pratt & Whitney JT8D-217A P717366D
together with all of Owner's right, title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.
Together with all of Owner's right, title and interest in and
to (a) all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and (b)
all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Mortgagee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.13 and Article III of the Trust
Indenture without any preference, distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue, sale, negotiation,
date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part thereof. The Trust
Indenture is each hereby incorporated by reference herein and is hereby
ratified, approved and confirmed.
The Closing Date is June 25, 1997.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
30
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:________________________
Name:
Title:
1
EXHIBIT 5.1
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
October 21, 1997
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
Re: Continental Airlines, Inc. - Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as your counsel in connection with the above-referenced
Registration Statement on Form S-4 (the "Registration Statement") filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
as amended (the "Act"), in respect of the registration under the Act of the
Pass Through Certificates, Series 1997-2 (the "New Certificates"), to be
offered in exchange for all outstanding Pass Through Certificates, Series
1997-2 (the "Old Certificates"). Each of the New Certificates represents a
fractional undivided interest in one of the four Continental Airlines 1997-2
Pass Through Trusts (the "Trusts") formed pursuant to four separate pass
through trust agreements (the "Pass Through Trust Agreements") between
Continental Airlines, Inc. (the "Company") and Wilmington Trust Company, as
pass through trustee (the "Trustee") under each Trust.
In connection with this opinion letter, we have examined: the
Registration Statement, including the Prospectus which forms a part of the
Registration Statement, the Pass Through Trust Agreements, the forms of Old
Certificate and New Certificate, each filed as an exhibit to the Registration
Statement, and originals, or copies certified or otherwise identified to our
satisfaction, of such other documents, records, instruments and certificates of
public officials as we have deemed necessary or appropriate to enable us to
render this opinion. In addition, we have assumed: (i) that all signatures are
genuine, (ii) that all documents submitted to us as originals are genuine,
(iii) that all copies submitted to us conform to the originals, (iv) that each
Pass Through Trust Agreement has been duly authorized, executed and delivered
by the applicable Trustee and is the legal, valid, binding and enforceable
agreement of the applicable Trustee and (v) that the Old Certificates were duly
and validly executed, authenticated and delivered by the Trustees pursuant to
the terms of the Pass Through Trust Agreements.
We are members of the bar of the State of New York, and the opinion set
forth below is restricted to matters controlled by federal laws, the laws of
the State of New York and the laws of the State of Delaware.
2
Based on the foregoing, it is our opinion that, when (1) the applicable
provisions of the Act and such "Blue Sky" or other state securities laws as may
be applicable shall have been complied with and (ii) the New Certificates, in
the forms filed as exhibits to the Registration Statement, have been duly
executed and authenticated in accordance with the Pass Through Trust
Agreements, and duly issued and delivered by the Trusts in exchange for an
equal principal amount of Old Certificates pursuant to the terms of the
Exchange Offer, the New Certificates will be legal, valid, binding and
enforceable obligations of the applicable Trust, subject to (i) limitations
imposed by bankruptcy, reorganization, moratorium, insolvency, fraudulent
conveyance, fraudulent transfer, preferential transfer and other laws of
general application relating to or affecting the enforceability of creditors'
rights and to general principles of equity, including, without limitation,
laches and estoppel as equitable defenses, concepts of materiality,
reasonableness, good faith and fair dealing, and considerations of
impracticability or impossibility or performance and defenses based upon
unconscionability (regardless of whether such enforceability is considered or
applied in a proceeding in equity or at law) and (b) the qualification that the
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.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus included in the Registration Statement. In
giving such consent, we do not thereby admit that we are "experts" within the
meaning of the Act or the rules and regulations of the Securities and Exchange
Commission issued thereunder with respect to any part of the Registration
Statement, including this exhibit.
Very truly yours,
/s/ Hughes Hubbard & Reed LLP
1
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Continental
Airlines, Inc. for the registration of Pass Through Certificates, Series
1997-2, and to the incorporation by reference therein of our reports dated
February 10, 1997, with respect to the consolidated financial statements and
schedules of Continental Airlines, Inc. included in its Annual Report (Form
10-K) for the year ended December 31, 1996 filed with the Securities and
Exchange Commission.
[Ernst & Young LLP Signature]
Houston, Texas
October 14, 1997
1
Exhibit 23.3
AIRCRAFT INFORMATION SERVICES, INC.
23232 Peralta Drive, Suite 115
Laguna Hills, CA 92653
October 10, 1997
CONTINENTAL AIRLINES, INC.
2929 Allen Parkway, Suite 2010
Houston, TX 77019
Re: Registration Statement on Form S-4 of Continental Airlines,
Inc. relating to Pass Through Certificates, Series 1997-2
Ladies and Gentlemen:
We consent to the use of our report and to the reference to our name
in the text under the headings "Prospectus Summary--Equipment Notes and the
Aircraft," "Risk Factors--Risk Factors Relating to the Certificates and the
Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft and the Appraisals--The Appraisals" and "Experts" in the
above-captioned Registration Statement and to the summary contained in the text
under such headings of the report prepared by us with respect to the Aircraft
referred to therein.
Sincerely,
AIRCRAFT INFORMATION SERVICES, INC.
-----------------------------------
Name: Fred Bearden
Title: President
1
Exhibit 23.4
BK ASSOCIATES, INC.
1295 Northern Boulevard
Manhasset, New York 11030
(516)365-6272 Fax (516)365-6287
October 10, 1997
CONTINENTAL AIRLINES, INC.
2929 Allen Parkway, Suite 2010
Houston, TX 77019
Re: Registration Statement on Form S-4 of Continental Airlines,
Inc. relating to Pass Through Certificates, Series 1997-2
Ladies and Gentlemen:
We consent to the use of our report and to the reference to our name
in the text under the headings "Prospectus Summary--Equipment Notes and the
Aircraft," "Risk Factors--Risk Factors Relating to the Certificates and the
Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft and the Appraisals--The Appraisals" and "Experts" in the
above-captioned Registration Statement and to the summary contained in the text
under such headings of the report prepared by us with respect to the Aircraft
referred to therein.
Sincerely,
BK ASSOCIATES, INC.
-----------------------------------
Name: John F. Keitz
Title: President
1
Exhibit 23.5
MORTEN BEYER AND AGNEW, INC.
8180 Greensboro Drive, Suite 1000
McLean, VA 22102
October 10, 1997
CONTINENTAL AIRLINES, INC.
2929 Allen Parkway, Suite 2010
Houston, TX 77019
Re: Registration Statement on Form S-4 of Continental Airlines,
Inc. relating to Pass Through Certificates, Series 1997-2
Ladies and Gentlemen:
We consent to the use of our report and to the reference to our name
in the text under the headings "Prospectus Summary--Equipment Notes and the
Aircraft," "Risk Factors--Risk Factors Relating to the Certificates and the
Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft and the Appraisals--The Appraisals" and "Experts" in the
above-captioned Registration Statement and to the summary contained in the text
under such headings of the report prepared by us with respect to the Aircraft
referred to therein.
Sincerely,
MORTON BEYER AND AGNEW, INC.
-----------------------------------
Name: Clinton B. McCutcheon
Title: Executive Vice President
1
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ Gordon Bethune
-----------------------------
(Signature)
Printed Name: Gordon Bethune
-----------------------------
Dated and effective as of October 8, 1997
2
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ Lawrence W. Kellner
--------------------------------
(Signature)
Printed Name: Lawrence W. Kellner
--------------------------------
Executive Vice President and CEO
Dated and effective as of October 8, 1997
3
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ Michael P. Bonds
-----------------------------
(Signature)
Printed Name: Michael P. Bonds
-----------------------------
Dated and effective as of October 8, 1997
4
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ Thomas J. Barrack, Jr.
-----------------------------
(Signature)
Printed Name: Thomas J. Barrack, Jr.
-----------------------------
Dated and effective as of October 8, 1997
5
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ Gregory D. Brenneman
-----------------------------
(Signature)
Printed Name: Gregory D. Brenneman
-----------------------------
Dated and effective as of October 8, 1997
6
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ Lloyd Bentsen
-----------------------------
(Signature)
Printed Name: L. Bentsen
-----------------------------
Dated and effective as of October 8, 1997
7
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ David Bonderman
-----------------------------
(Signature)
Printed Name: David Bonderman
-----------------------------
Dated and effective as of October 8, 1997
8
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ Douglas McCorkindale
-----------------------------
(Signature)
Printed Name: Douglas McCorkindale
-----------------------------
Dated and effective as of October 8, 1997
9
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ Richard W. Pogue
-----------------------------
(Signature)
Printed Name: Richard W. Pogue
-----------------------------
Dated and effective as of October 8, 1997
10
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ William S. Price
-----------------------------
(Signature)
Printed Name: William S. Price
-----------------------------
Dated and effective as of October 8, 1997
11
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ Donald L. Sturm
-----------------------------
(Signature)
Printed Name: Donald L. Sturm
-----------------------------
Dated and effective as of October 8, 1997
12
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ Karen Hastie Williams
-----------------------------
(Signature)
Printed Name: Karen Hastie Williams
-----------------------------
Dated and effective as of October 8, 1997
13
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ Charles A. Yamarone
-----------------------------
(Signature)
Printed Name: Charles A. Yamarone
-----------------------------
Dated and effective as of October 8, 1997
14
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ Patrick Foley
-----------------------------
(Signature)
Printed Name: Patrick Foley
-----------------------------
Dated and effective as of October 8, 1997
15
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them,
as the undersigned's true and lawful attorneys in-fact and agents to do any
and all things in the undersigned's name and behalf in the undersigned's
capacity as a director and/or officer of the Company, and to execute any and
all instruments for the undersigned and in the undersigned's name and capacity
as a director and/or officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations or requirements of the Securities and
Exchange Commission in connection with that certain Registration Statement on
Form S-4 relating to an exchange offer for the Company's 1997-2 Pass Through
Certificates (the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in the capacity as
a director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the
undersigned does hereby ratify and confirm all that such person or persons
shall do or cause to be done by virtue hereof.
/s/ George G. C. Parker
-----------------------------
(Signature)
Printed Name: George G. C. Parker
-----------------------------
Dated and effective as of October 8, 1997
1
Exhibit 25.1
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
CONTINENTAL AIRLINES, INC.
(Exact name of obligor as specified in its charter)
Delaware 74-2099724
(State of incorporation (I.R.S. employer identification no.)
or formation)
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
Pass Through Certificates, Series 1997-2A
(Title of the indenture securities)
================================================================================
2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee
and upon information furnished by the obligor, the obligor is not
an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to
exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 9th day of September, 1997.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ [ILLEGIBLE] By: /s/ Emmett R. Harmon
------------------------- -------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
3
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
4
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "Wilmington Trust Company" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:
First: - The name of this corporation is Wilmington Trust Company.
Second: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is Wilmington Trust Company whose address
is Rodney Square North, in said City. In addition to such principal
office, the said corporation maintains and operates branch offices in the
City of Newark, New Castle County, Delaware, the Town of Newport, New
Castle County, Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford Cross Roads, New
Castle County, Delaware, and shall be empowered to open, maintain and
operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of Wilmington,
New Castle County, Delaware, and such other branch offices or places of
business as may be authorized from time to time by the agency or agencies
of the government of the State of Delaware empowered to confer such
authority.
Third: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate and property, and to appoint such officers
and agents as the business of the Corporation shall require, to make
by-laws not inconsistent with the Constitution or laws of the
5
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy all
the powers, rights, privileges and franchises incident to a
corporation which are proper or necessary for the transaction of the
business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property,
real or personal, against any claim or claims, adverse to his
interest therein, and to prepare and give certificates of title for
any lands or premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public
officers, courts, receivers, assignees, trustees, and from all
fiduciaries, and from all other persons and individuals, and from
all corporations whether state, municipal, corporate or private, and
to rent boxes, safes, vaults and other receptacles for such
property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation,
association, state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed upon between
the two parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction
with any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or
persons, for the faithful performance of any
2
6
trust, office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law,
judge, officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator, guardian
or bailee by any persons, corporations, court, officer, or
authority, in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation, court,
officer or authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator, guardian,
bailee, or in any other trust capacity, it shall not be required to
give bond with surety, but its capital stock shall be taken and held
as security for the performance of the duties devolving upon it by
such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of the
duties which it may undertake or be called upon to perform, or for
the assumption of any responsibility the said Corporation may be
entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without the
State of Delaware, or of the Government of the United States, or of
any state, territory, colony, or possession thereof, or of any
foreign government or country; to receive, collect, receipt for, and
dispose of interest, dividends and income upon and from any of the
bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness and
other property held and owned by it, and to exercise in respect of
all such bonds, mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and privileges of
individual owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the Corporation
upon such securities and in such manner as it may think fit and
proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds,
3
7
as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property of
any name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that
the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in
any manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the powers necessary
or convenient in and about the conduct and management of such
business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose
of property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and, without
limit as to amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise dispose of,
real and personal property, of every class and description, in any
State, District, Territory or Colony of the United States, and in
any foreign country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except
where otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any other
clause of this or any other paragraph in this charter, but that the
objects, purposes and powers specified in each of the clauses of
this paragraph shall be regarded as independent objects, purposes
and powers.
4
8
Fourth: - (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other special rights
of each such series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article Fourth, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including,
but without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may
be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such
dividends shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of
any other class or classes or of any series of the same or any other
class or classes of stock of the Corporation and the terms and
conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
5
9
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section
(b) of this Article Fourth), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article Fourth), and subject further to any conditions which may
be fixed in accordance with the provisions of section (b) of this Article
Fourth, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article Fourth), to be distributed to the holders of Preferred Stock
in the event of voluntary or involuntary liquidation, distribution
or sale of assets, dissolution or winding-up, of the Corporation,
the holders of the Common Stock shall be entitled to receive all of
the remaining assets of the Corporation, tangible and intangible, of
whatever kind available for distribution to stockholders ratably in
proportion to the number of shares of Common Stock held by them
respectively.
(3) Except as may otherwise be required by law or by the provisions
of such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article Fourth, each
holder of Common Stock shall have one vote in respect of each share
of Common Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
6
10
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any such
unissued stock, additional authorized issue of shares of any class or
series of stock or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of Directors in the
exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article Fourth and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed by the
Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide in the
resolution or resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article Fourth that the consent of the
holders of a majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time
to time by the affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not
7
11
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a majority
of the whole Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the
next succeeding annual meeting, directors of the second class shall be
elected to hold office for a term expiring at the second succeeding annual
meeting and directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any vacancies
in the Board of Directors for any reason, and any newly created
directorships resulting from any increase in the directors, may be filled
by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall
hold office until the next annual election of directors. At such election,
the stockholders shall elect a successor to such director to hold office
until the next election of the class for which such director shall have
been chosen and until his successor shall be elected and qualified. No
decrease in the number of directors shall shorten the term of any
incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the ByLaws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any
time without cause, but only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered
or mailed, as prescribed, to the Secretary of the Corporation not later
than the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such
nominee and (iii) the number of shares of
8
12
stock of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
Sixth: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find
necessary or proper.
Seventh: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized
under the Act entitled "An Act Providing a General Corporation Law",
approved March 10, 1899, as from time to time amended.
Eighth: - This Act shall be deemed and taken to be a private Act.
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
Eleventh: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
Twelfth: - The Corporation may transact business in any part of the world.
Thirteenth: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make, alter
or repeal any By-Law whether or not adopted by them, provided however,
that any such additional By-Laws, alterations or repeal may be adopted
only by the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
9
13
Fourteenth: - Meetings of the Directors may be held outside of the State
of Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
Fifteenth: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article Fifteenth:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions)
to or with any Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the Corporation or any
Subsidiary having an aggregate fair market value of $1,000,000 or
more, or
(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or
more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
10
14
(2) The term "business combination" as used in this Article
Fifteenth shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article Fifteenth shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding voting
Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested
Stockholder, and such assignment or succession shall have occurred
in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act
of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding, or
11
15
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article Fifteenth on the basis of
information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an
Affiliate or Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another as to the
matters referred to in paragraph (3) of section (c), or (4) whether
the assets subject to any business combination or the consideration
received for the issuance or transfer of securities by the
Corporation, or any Subsidiary has an aggregate fair market value of
$1,00,000 or more.
(e) Nothing contained in this Article Fifteenth shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
Sixteenth: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth or
Sixteenth of this Charter or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not be liable to the
Corporation
12
16
or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Laws as
the same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
13
17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on January 16, 1997
18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.
Section 2. Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
Directors
Section 1. The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
19
Section 6. Special meetings of the Board of Directors may be called at any
time by the Chairman of the Board of Directors or by the President, and shall be
called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its election
by the stockholders shall appoint an Executive Committee, a Trust Committee, an
Audit Committee and a Compensation Committee, and shall elect from its own
members a Chairman of the Board of Directors and a President who may be the same
person. The Board of Directors shall also elect at such meeting a Secretary and
a Treasurer, who may be the same person, may appoint at any time such other
committees and elect or appoint such other officers as it may deem advisable.
The Board of Directors may also elect at such meeting one or more Associate
Directors.
Section 11. The Board of Directors may at any time remove, with or without
cause, any member of any Committee appointed by it or any associate director or
officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
Committees
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of
2
20
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Executive Committee may be held at any time
when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.
3
21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.
(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who
4
22
are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the Board
of Directors shall preside at all meetings of the Board of Directors at which
the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform
5
23
such duties as the Board of Directors or the Chairman of the Board may from time
to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.
Section 6. The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
6
24
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the President
or any Vice President, however denominated by the Board of Directors and
countersigned by the Secretary or Treasurer or an Assistant Secretary, and the
seal of the corporation shall be engraved thereon. Each certificate shall recite
that the stock represented thereby is transferrable only upon the books of the
Company by the holder thereof or his attorney, upon surrender of the certificate
properly endorsed. Any certificate of stock surrendered to the Company shall be
cancelled at the time of transfer, and before a new certificate or certificates
shall be issued in lieu thereof. Duplicate certificates of stock shall be issued
only upon giving such security as may be satisfactory to the Board of Directors
or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange
7
25
of capital stock shall go into effect, or a date in connection with obtaining
such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any Vice President,
however denominated by the Board of Directors, shall have full power and
authority to enter into, make, sign, execute, acknowledge and/or deliver and the
Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
26
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses under
applicable law.
9
27
(D) The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such person may have or hereafter
acquire under any statute, provision of the Charter or Act of Incorporation,
these By-Laws, agreement, vote of stockholders or disinterested Directors or
otherwise.
(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special meeting
of the Board of Directors by a vote of the majority of all the members of the
Board of Directors then in office.
10
28
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, Wilmington
Trust Company hereby consents that reports of examinations by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: September 9, 1997 By: /s/ Emmett R. Harmon
----------------------------
Name: Emmett R. Harmon
Title: Vice President
29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------------------- --------------------
Name of Bank City
in the State of DELAWARE, at the close of business on June 30, 1997.
ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins............ 208,942
Interest-bearing balances.......................................... 0
Held-to-maturity securities........................................... 403,700
Available-for-sale securities......................................... 905,200
Federal funds sold and securities purchased under agreements to resell. 151,700
Loans and lease financing receivables:
Loans and leases, net of unearned income....... 3,816,484
LESS: Allowance for loan and lease losses...... 54,535
LESS: Allocated transfer risk reserve......... 0
Loans and leases, net of unearned income,
allowance, and reserve ..................................... 3,761,949
Assets held in trading accounts.............................................. 0
Premises and fixed assets (including capitalized leases)................ 95,762
Other real estate owned.................................................. 1,751
Investments in unconsolidated subsidiaries and associated companies......... 42
Customers' liability to this bank on acceptances outstanding................ 0
Intangible assets........................................................ 3,572
Other assets........................................................... 108,295
Total assets.......................................................... 5,640,913
CONTINUED ON NEXT PAGE
30
LIABILITIES
Deposits:
In domestic offices.................................................. 3,864,774
Noninterest-bearing............................ 875,081
Interest-bearing............................... 2,989,693
Federal funds purchased and Securities sold under agreements to
repurchase ......................................................... 337,784
Demand notes issued to the U.S. Treasury................................ 95,000
Trading liabilities (from Schedule RC-D)..................................... 0
Other borrowed money:.................................................. ///////
With original maturity of one year or less...................... 775,000
With original maturity of more than one year..................... 43,000
Bank's liability on acceptances executed and outstanding..................... 0
Subordinated notes and debentures............................................ 0
Other liabilities (from Schedule RC-G)................................ 84,197
Total liabilities.................................................... 5,199,755
EQUITY CAPITAL
Perpetual preferred stock and related surplus................................ 0
Common Stock............................................................... 500
Surplus (exclude all surplus related to preferred stock)................ 62,118
Undivided profits and capital reserves.................................. 376,212
Net unrealized holding gains (losses) on available-for-sale securities.. (2,328)
Total equity capital................................................... 441,158
Total liabilities, limited-life preferred stock, and equity capital.. 5,640,913
2
1
Exhibit 25.2
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
CONTINENTAL AIRLINES, INC.
(Exact name of obligor as specified in its charter)
Delaware 74-2099724
(State of incorporation (I.R.S. employer identification no.)
or formation)
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
Pass Through Certificates, Series 1997-2B
(Title of the indenture securities)
================================================================================
2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee
and upon information furnished by the obligor, the obligor is not
an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to
exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 9th day of September, 1997.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ [ILLEGIBLE] By: /s/ Emmett R. Harmon
----------------------- -----------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
3
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
4
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "Wilmington Trust Company" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:
First: - The name of this corporation is Wilmington Trust Company.
Second: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is Wilmington Trust Company whose address
is Rodney Square North, in said City. In addition to such principal
office, the said corporation maintains and operates branch offices in the
City of Newark, New Castle County, Delaware, the Town of Newport, New
Castle County, Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford Cross Roads, New
Castle County, Delaware, and shall be empowered to open, maintain and
operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of Wilmington,
New Castle County, Delaware, and such other branch offices or places of
business as may be authorized from time to time by the agency or agencies
of the government of the State of Delaware empowered to confer such
authority.
Third: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate and property, and to appoint such officers
and agents as the business of the Corporation shall require, to make
by-laws not inconsistent with the Constitution or laws of the
5
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy all
the powers, rights, privileges and franchises incident to a
corporation which are proper or necessary for the transaction of the
business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property,
real or personal, against any claim or claims, adverse to his
interest therein, and to prepare and give certificates of title for
any lands or premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public
officers, courts, receivers, assignees, trustees, and from all
fiduciaries, and from all other persons and individuals, and from
all corporations whether state, municipal, corporate or private, and
to rent boxes, safes, vaults and other receptacles for such
property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation,
association, state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed upon between
the two parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction
with any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or
persons, for the faithful performance of any
2
6
trust, office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law,
judge, officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator, guardian
or bailee by any persons, corporations, court, officer, or
authority, in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation, court,
officer or authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator, guardian,
bailee, or in any other trust capacity, it shall not be required to
give bond with surety, but its capital stock shall be taken and held
as security for the performance of the duties devolving upon it by
such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of the
duties which it may undertake or be called upon to perform, or for
the assumption of any responsibility the said Corporation may be
entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without the
State of Delaware, or of the Government of the United States, or of
any state, territory, colony, or possession thereof, or of any
foreign government or country; to receive, collect, receipt for, and
dispose of interest, dividends and income upon and from any of the
bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness and
other property held and owned by it, and to exercise in respect of
all such bonds, mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and privileges of
individual owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the Corporation
upon such securities and in such manner as it may think fit and
proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds,
3
7
as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property of
any name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that
the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in
any manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the powers necessary
or convenient in and about the conduct and management of such
business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose
of property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and, without
limit as to amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise dispose of,
real and personal property, of every class and description, in any
State, District, Territory or Colony of the United States, and in
any foreign country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except
where otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any other
clause of this or any other paragraph in this charter, but that the
objects, purposes and powers specified in each of the clauses of
this paragraph shall be regarded as independent objects, purposes
and powers.
4
8
Fourth: - (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other special rights
of each such series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article Fourth, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including,
but without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may
be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such
dividends shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of
any other class or classes or of any series of the same or any other
class or classes of stock of the Corporation and the terms and
conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
5
9
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section
(b) of this Article Fourth), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article Fourth), and subject further to any conditions which may
be fixed in accordance with the provisions of section (b) of this Article
Fourth, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article Fourth), to be distributed to the holders of Preferred Stock
in the event of voluntary or involuntary liquidation, distribution
or sale of assets, dissolution or winding-up, of the Corporation,
the holders of the Common Stock shall be entitled to receive all of
the remaining assets of the Corporation, tangible and intangible, of
whatever kind available for distribution to stockholders ratably in
proportion to the number of shares of Common Stock held by them
respectively.
(3) Except as may otherwise be required by law or by the provisions
of such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article Fourth, each
holder of Common Stock shall have one vote in respect of each share
of Common Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
6
10
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any such
unissued stock, additional authorized issue of shares of any class or
series of stock or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of Directors in the
exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article Fourth and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed by the
Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide in the
resolution or resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article Fourth that the consent of the
holders of a majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time
to time by the affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not
7
11
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a majority
of the whole Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the
next succeeding annual meeting, directors of the second class shall be
elected to hold office for a term expiring at the second succeeding annual
meeting and directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any vacancies
in the Board of Directors for any reason, and any newly created
directorships resulting from any increase in the directors, may be filled
by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall
hold office until the next annual election of directors. At such election,
the stockholders shall elect a successor to such director to hold office
until the next election of the class for which such director shall have
been chosen and until his successor shall be elected and qualified. No
decrease in the number of directors shall shorten the term of any
incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the ByLaws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any
time without cause, but only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered
or mailed, as prescribed, to the Secretary of the Corporation not later
than the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such
nominee and (iii) the number of shares of
8
12
stock of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
Sixth: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find
necessary or proper.
Seventh: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized
under the Act entitled "An Act Providing a General Corporation Law",
approved March 10, 1899, as from time to time amended.
Eighth: - This Act shall be deemed and taken to be a private Act.
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
Eleventh: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
Twelfth: - The Corporation may transact business in any part of the world.
Thirteenth: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make, alter
or repeal any By-Law whether or not adopted by them, provided however,
that any such additional By-Laws, alterations or repeal may be adopted
only by the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
9
13
Fourteenth: - Meetings of the Directors may be held outside of the State
of Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
Fifteenth: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article Fifteenth:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions)
to or with any Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the Corporation or any
Subsidiary having an aggregate fair market value of $1,000,000 or
more, or
(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or
more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
10
14
(2) The term "business combination" as used in this Article
Fifteenth shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article Fifteenth shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding voting
Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested
Stockholder, and such assignment or succession shall have occurred
in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act
of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding, or
11
15
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article Fifteenth on the basis of
information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an
Affiliate or Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another as to the
matters referred to in paragraph (3) of section (c), or (4) whether
the assets subject to any business combination or the consideration
received for the issuance or transfer of securities by the
Corporation, or any Subsidiary has an aggregate fair market value of
$1,00,000 or more.
(e) Nothing contained in this Article Fifteenth shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
Sixteenth: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth or
Sixteenth of this Charter or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not be liable to the
Corporation
12
16
or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Laws as
the same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
13
17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on January 16, 1997
18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.
Section 2. Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
Directors
Section 1. The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
19
Section 6. Special meetings of the Board of Directors may be called at any
time by the Chairman of the Board of Directors or by the President, and shall be
called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its election
by the stockholders shall appoint an Executive Committee, a Trust Committee, an
Audit Committee and a Compensation Committee, and shall elect from its own
members a Chairman of the Board of Directors and a President who may be the same
person. The Board of Directors shall also elect at such meeting a Secretary and
a Treasurer, who may be the same person, may appoint at any time such other
committees and elect or appoint such other officers as it may deem advisable.
The Board of Directors may also elect at such meeting one or more Associate
Directors.
Section 11. The Board of Directors may at any time remove, with or without
cause, any member of any Committee appointed by it or any associate director or
officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
Committees
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of
2
20
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Executive Committee may be held at any time
when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.
3
21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.
(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who
4
22
are not officers of the Company and who shall hold office during the pleasure of
the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the Board
of Directors shall preside at all meetings of the Board of Directors at which
the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform
5
23
such duties as the Board of Directors or the Chairman of the Board may from time
to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.
Section 6. The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
6
24
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the President
or any Vice President, however denominated by the Board of Directors and
countersigned by the Secretary or Treasurer or an Assistant Secretary, and the
seal of the corporation shall be engraved thereon. Each certificate shall recite
that the stock represented thereby is transferrable only upon the books of the
Company by the holder thereof or his attorney, upon surrender of the certificate
properly endorsed. Any certificate of stock surrendered to the Company shall be
cancelled at the time of transfer, and before a new certificate or certificates
shall be issued in lieu thereof. Duplicate certificates of stock shall be issued
only upon giving such security as may be satisfactory to the Board of Directors
or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange
7
25
of capital stock shall go into effect, or a date in connection with obtaining
such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any Vice President,
however denominated by the Board of Directors, shall have full power and
authority to enter into, make, sign, execute, acknowledge and/or deliver and the
Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
26
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses under
applicable law.
9
27
(D) The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such person may have or hereafter
acquire under any statute, provision of the Charter or Act of Incorporation,
these By-Laws, agreement, vote of stockholders or disinterested Directors or
otherwise.
(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special meeting
of the Board of Directors by a vote of the majority of all the members of the
Board of Directors then in office.
10
28
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, Wilmington
Trust Company hereby consents that reports of examinations by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: September 9, 1997 By: /s/ Emmett R. Harmon
--------------------------
Name: Emmett R. Harmon
Title: Vice President
29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- -------------------------------------------- --------------------
Name of Bank City
in the State of DELAWARE, at the close of business on June 30, 1997.
ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins............. 208,942
Interest-bearing balances........................................... 0
Held-to-maturity securities.......................................... 403,700
Available-for-sale securities.......................................... 905,200
Federal funds sold and securities purchased under agreements to resell. 151,700
Loans and lease financing receivables:
Loans and leases, net of unearned income....... 3,816,484
LESS: Allowance for loan and lease losses...... 54,535
LESS: Allocated transfer risk reserve........ 0
Loans and leases, net of unearned income, allowance,
and reserve ................................................. 3,761,949
Assets held in trading accounts.............................................. 0
Premises and fixed assets (including capitalized leases)................ 95,762
Other real estate owned................................................. 1,751
Investments in unconsolidated subsidiaries and associated companies....... 42
Customers' liability to this bank on acceptances outstanding................. 0
Intangible assets........................................................ 3,572
Other assets........................................................... 108,295
Total assets......................................................... 5,640,913
CONTINUED ON NEXT PAGE
30
LIABILITIES
Deposits:
In domestic offices.................................................. 3,864,774
Noninterest-bearing............................ 875,081
Interest-bearing............................... 2,989,693
Federal funds purchased and Securities sold under agreements to
repurchase ........................................................ 337,784
Demand notes issued to the U.S. Treasury................................ 95,000
Trading liabilities (from Schedule RC-D)..................................... 0
Other borrowed money:.................................................. ///////
With original maturity of one year or less...................... 775,000
With original maturity of more than one year..................... 43,000
Bank's liability on acceptances executed and outstanding..................... 0
Subordinated notes and debentures............................................ 0
Other liabilities (from Schedule RC-G)................................ 84,197
Total liabilities.................................................... 5,199,755
EQUITY CAPITAL
Perpetual preferred stock and related surplus................................ 0
Common Stock............................................................... 500
Surplus (exclude all surplus related to preferred stock)................ 62,118
Undivided profits and capital reserves................................. 376,212
Net unrealized holding gains (losses) on available-for-sale securities (2,328)
Total equity capital................................................... 441,158
Total liabilities, limited-life preferred stock, and equity capital.. 5,640,913
2
1
Exhibit 25.3
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
CONTINENTAL AIRLINES, INC.
(Exact name of obligor as specified in its charter)
Delaware 74-2099724
(State of incorporation (I.R.S. employer identification no.)
or formation)
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
Pass Through Certificates, Series 1997-2C
(Title of the indenture securities)
================================================================================
2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee
and upon information furnished by the obligor, the obligor is not
an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to
exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 9th day of September, 1997.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ [ILLEGIBLE] By: /s/ Emmett R. Harmon
----------------------- -----------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
3
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
4
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "Wilmington Trust Company" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:
First: - The name of this corporation is Wilmington Trust Company.
Second: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is Wilmington Trust Company whose address
is Rodney Square North, in said City. In addition to such principal
office, the said corporation maintains and operates branch offices in the
City of Newark, New Castle County, Delaware, the Town of Newport, New
Castle County, Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford Cross Roads, New
Castle County, Delaware, and shall be empowered to open, maintain and
operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of Wilmington,
New Castle County, Delaware, and such other branch offices or places of
business as may be authorized from time to time by the agency or agencies
of the government of the State of Delaware empowered to confer such
authority.
Third: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate and property, and to appoint such officers
and agents as the business of the Corporation shall require, to make
by-laws not inconsistent with the Constitution or laws of the
5
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy all
the powers, rights, privileges and franchises incident to a
corporation which are proper or necessary for the transaction of the
business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property,
real or personal, against any claim or claims, adverse to his
interest therein, and to prepare and give certificates of title for
any lands or premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public
officers, courts, receivers, assignees, trustees, and from all
fiduciaries, and from all other persons and individuals, and from
all corporations whether state, municipal, corporate or private, and
to rent boxes, safes, vaults and other receptacles for such
property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation,
association, state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed upon between
the two parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction
with any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or
persons, for the faithful performance of any
2
6
trust, office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law,
judge, officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator, guardian
or bailee by any persons, corporations, court, officer, or
authority, in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation, court,
officer or authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator, guardian,
bailee, or in any other trust capacity, it shall not be required to
give bond with surety, but its capital stock shall be taken and held
as security for the performance of the duties devolving upon it by
such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of the
duties which it may undertake or be called upon to perform, or for
the assumption of any responsibility the said Corporation may be
entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without the
State of Delaware, or of the Government of the United States, or of
any state, territory, colony, or possession thereof, or of any
foreign government or country; to receive, collect, receipt for, and
dispose of interest, dividends and income upon and from any of the
bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness and
other property held and owned by it, and to exercise in respect of
all such bonds, mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and privileges of
individual owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the Corporation
upon such securities and in such manner as it may think fit and
proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds,
3
7
as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property of
any name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that
the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in
any manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the powers necessary
or convenient in and about the conduct and management of such
business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose
of property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and, without
limit as to amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise dispose of,
real and personal property, of every class and description, in any
State, District, Territory or Colony of the United States, and in
any foreign country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except
where otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any other
clause of this or any other paragraph in this charter, but that the
objects, purposes and powers specified in each of the clauses of
this paragraph shall be regarded as independent objects, purposes
and powers.
4
8
Fourth: - (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other special rights
of each such series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article Fourth, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including,
but without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may
be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such
dividends shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of
any other class or classes or of any series of the same or any other
class or classes of stock of the Corporation and the terms and
conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
5
9
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section
(b) of this Article Fourth), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article Fourth), and subject further to any conditions which may
be fixed in accordance with the provisions of section (b) of this Article
Fourth, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article Fourth), to be distributed to the holders of Preferred Stock
in the event of voluntary or involuntary liquidation, distribution
or sale of assets, dissolution or winding-up, of the Corporation,
the holders of the Common Stock shall be entitled to receive all of
the remaining assets of the Corporation, tangible and intangible, of
whatever kind available for distribution to stockholders ratably in
proportion to the number of shares of Common Stock held by them
respectively.
(3) Except as may otherwise be required by law or by the provisions
of such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article Fourth, each
holder of Common Stock shall have one vote in respect of each share
of Common Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
6
10
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any such
unissued stock, additional authorized issue of shares of any class or
series of stock or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of Directors in the
exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article Fourth and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed by the
Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide in the
resolution or resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article Fourth that the consent of the
holders of a majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time
to time by the affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not
7
11
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a majority
of the whole Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the
next succeeding annual meeting, directors of the second class shall be
elected to hold office for a term expiring at the second succeeding annual
meeting and directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any vacancies
in the Board of Directors for any reason, and any newly created
directorships resulting from any increase in the directors, may be filled
by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall
hold office until the next annual election of directors. At such election,
the stockholders shall elect a successor to such director to hold office
until the next election of the class for which such director shall have
been chosen and until his successor shall be elected and qualified. No
decrease in the number of directors shall shorten the term of any
incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the ByLaws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any
time without cause, but only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered
or mailed, as prescribed, to the Secretary of the Corporation not later
than the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such
nominee and (iii) the number of shares of
8
12
stock of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
Sixth: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find
necessary or proper.
Seventh: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized
under the Act entitled "An Act Providing a General Corporation Law",
approved March 10, 1899, as from time to time amended.
Eighth: - This Act shall be deemed and taken to be a private Act.
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
Eleventh: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
Twelfth: - The Corporation may transact business in any part of the world.
Thirteenth: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make, alter
or repeal any By-Law whether or not adopted by them, provided however,
that any such additional By-Laws, alterations or repeal may be adopted
only by the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
9
13
Fourteenth: - Meetings of the Directors may be held outside of the State
of Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
Fifteenth: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article Fifteenth:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions)
to or with any Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the Corporation or any
Subsidiary having an aggregate fair market value of $1,000,000 or
more, or
(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or
more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
10
14
(2) The term "business combination" as used in this Article
Fifteenth shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article Fifteenth shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding voting
Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested
Stockholder, and such assignment or succession shall have occurred
in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act
of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding, or
11
15
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article Fifteenth on the basis of
information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an
Affiliate or Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another as to the
matters referred to in paragraph (3) of section (c), or (4) whether
the assets subject to any business combination or the consideration
received for the issuance or transfer of securities by the
Corporation, or any Subsidiary has an aggregate fair market value of
$1,00,000 or more.
(e) Nothing contained in this Article Fifteenth shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
Sixteenth: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth or
Sixteenth of this Charter or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not be liable to the
Corporation
12
16
or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Laws as
the same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
13
17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on January 16, 1997
18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.
Section 2. Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
Directors
Section 1. The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
19
Section 6. Special meetings of the Board of Directors may be called at any
time by the Chairman of the Board of Directors or by the President, and shall be
called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its election
by the stockholders shall appoint an Executive Committee, a Trust Committee, an
Audit Committee and a Compensation Committee, and shall elect from its own
members a Chairman of the Board of Directors and a President who may be the same
person. The Board of Directors shall also elect at such meeting a Secretary and
a Treasurer, who may be the same person, may appoint at any time such other
committees and elect or appoint such other officers as it may deem advisable.
The Board of Directors may also elect at such meeting one or more Associate
Directors.
Section 11. The Board of Directors may at any time remove, with or without
cause, any member of any Committee appointed by it or any associate director or
officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
Committees
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of
2
20
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Executive Committee may be held at any time
when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.
3
21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.
(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who
4
22
are not officers of the Company and who shall hold office during the pleasure of
the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the Board
of Directors shall preside at all meetings of the Board of Directors at which
the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform
5
23
such duties as the Board of Directors or the Chairman of the Board may from time
to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.
Section 6. The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
6
24
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the President
or any Vice President, however denominated by the Board of Directors and
countersigned by the Secretary or Treasurer or an Assistant Secretary, and the
seal of the corporation shall be engraved thereon. Each certificate shall recite
that the stock represented thereby is transferrable only upon the books of the
Company by the holder thereof or his attorney, upon surrender of the certificate
properly endorsed. Any certificate of stock surrendered to the Company shall be
cancelled at the time of transfer, and before a new certificate or certificates
shall be issued in lieu thereof. Duplicate certificates of stock shall be issued
only upon giving such security as may be satisfactory to the Board of Directors
or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange
7
25
of capital stock shall go into effect, or a date in connection with obtaining
such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any Vice President,
however denominated by the Board of Directors, shall have full power and
authority to enter into, make, sign, execute, acknowledge and/or deliver and the
Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
26
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses under
applicable law.
9
27
(D) The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such person may have or hereafter
acquire under any statute, provision of the Charter or Act of Incorporation,
these By-Laws, agreement, vote of stockholders or disinterested Directors or
otherwise.
(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special meeting
of the Board of Directors by a vote of the majority of all the members of the
Board of Directors then in office.
10
28
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, Wilmington
Trust Company hereby consents that reports of examinations by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: September 9, 1997 By: /s/ Emmett R. Harmon
---------------------------
Name: Emmett R. Harmon
Title: Vice President
29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ------------------------------------------ ---------------------
Name of Bank City
in the State of DELAWARE , at the close of business on June 30, 1997.
ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins............. 208,942
Interest-bearing balances........................................... 0
Held-to-maturity securities.......................................... 403,700
Available-for-sale securities.......................................... 905,200
Federal funds sold and securities purchased under agreements to resell. 151,700
Loans and lease financing receivables:
Loans and leases, net of unearned income....... 3,816,484
LESS: Allowance for loan and lease losses...... 54,535
LESS: Allocated transfer risk reserve........ 0
Loans and leases, net of unearned income, allowance,
and reserve ................................................. 3,761,949
Assets held in trading accounts.............................................. 0
Premises and fixed assets (including capitalized leases)................ 95,762
Other real estate owned................................................. 1,751
Investments in unconsolidated subsidiaries and associated companies....... 42
Customers' liability to this bank on acceptances outstanding................. 0
Intangible assets........................................................ 3,572
Other assets........................................................... 108,295
Total assets......................................................... 5,640,913
CONTINUED ON NEXT PAGE
30
LIABILITIES
Deposits:
In domestic offices.................................................. 3,864,774
Noninterest-bearing........................... 875,081
Interest-bearing.............................. 2,989,693
Federal funds purchased and Securities sold under agreements to
repurchase ........................................................ 337,784
Demand notes issued to the U.S. Treasury................................ 95,000
Trading liabilities (from Schedule RC-D)..................................... 0
Other borrowed money:.................................................. ///////
With original maturity of one year or less...................... 775,000
With original maturity of more than one year..................... 43,000
Bank's liability on acceptances executed and outstanding..................... 0
Subordinated notes and debentures............................................ 0
Other liabilities (from Schedule RC-G)................................ 84,197
Total liabilities.................................................... 5,199,755
EQUITY CAPITAL
Perpetual preferred stock and related surplus................................ 0
Common Stock............................................................... 500
Surplus (exclude all surplus related to preferred stock)................ 62,118
Undivided profits and capital reserves................................. 376,212
Net unrealized holding gains (losses) on available-for-sale securities (2,328)
Total equity capital................................................... 441,158
Total liabilities, limited-life preferred stock, and equity capital.. 5,640,913
2
1
Exhibit 25.4
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
CONTINENTAL AIRLINES, INC.
(Exact name of obligor as specified in its charter)
Delaware 74-2099724
(State of incorporation (I.R.S. employer identification no.)
or formation)
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
Pass Through Certificates, Series 1997-2D
(Title of the indenture securities)
================================================================================
2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee
and upon information furnished by the obligor, the obligor is not
an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to
exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 9th day of September, 1997.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /s/ [ILLEGIBLE] By: /s/ Emmett R. Harmon
------------------------- -------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
3
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
4
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an Act of the General
Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware
Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which
company was changed to "Wilmington Trust Company" by an amendment filed in the
Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act
of Incorporation of which company has been from time to time amended and changed
by merger agreements pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend its Charter or
Act of Incorporation so that the same as so altered and amended shall in its
entirety read as follows:
First: - The name of this corporation is Wilmington Trust Company.
Second: - The location of its principal office in the State of Delaware is
at Rodney Square North, in the City of Wilmington, County of New Castle;
the name of its resident agent is Wilmington Trust Company whose address
is Rodney Square North, in said City. In addition to such principal
office, the said corporation maintains and operates branch offices in the
City of Newark, New Castle County, Delaware, the Town of Newport, New
Castle County, Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford Cross Roads, New
Castle County, Delaware, and shall be empowered to open, maintain and
operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of Wilmington,
New Castle County, Delaware, and such other branch offices or places of
business as may be authorized from time to time by the agency or agencies
of the government of the State of Delaware empowered to confer such
authority.
Third: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation are
to do any or all of the things herein mentioned as fully and to the same
extent as natural persons might or could do and in any part of the world,
viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate and property, and to appoint such officers
and agents as the business of the Corporation shall require, to make
by-laws not inconsistent with the Constitution or laws of the
5
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy all
the powers, rights, privileges and franchises incident to a
corporation which are proper or necessary for the transaction of the
business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate or
interests therein, and to guarantee the holder of such property,
real or personal, against any claim or claims, adverse to his
interest therein, and to prepare and give certificates of title for
any lands or premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every description,
and to carry on the business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public
officers, courts, receivers, assignees, trustees, and from all
fiduciaries, and from all other persons and individuals, and from
all corporations whether state, municipal, corporate or private, and
to rent boxes, safes, vaults and other receptacles for such
property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or underwriting
the stock, bonds or other obligations of any corporation,
association, state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed upon between
the two parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction
with any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any contract
or agreement, and the fidelity of persons holding places of
responsibility or trust; to become surety for any person, or
persons, for the faithful performance of any
2
6
trust, office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law,
judge, officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator, guardian
or bailee by any persons, corporations, court, officer, or
authority, in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation, court,
officer or authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator, guardian,
bailee, or in any other trust capacity, it shall not be required to
give bond with surety, but its capital stock shall be taken and held
as security for the performance of the duties devolving upon it by
such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of the
duties which it may undertake or be called upon to perform, or for
the assumption of any responsibility the said Corporation may be
entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without the
State of Delaware, or of the Government of the United States, or of
any state, territory, colony, or possession thereof, or of any
foreign government or country; to receive, collect, receipt for, and
dispose of interest, dividends and income upon and from any of the
bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness and
other property held and owned by it, and to exercise in respect of
all such bonds, mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and privileges of
individual owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the Corporation
upon such securities and in such manner as it may think fit and
proper, and from time to time to vary or realize such investments;
to issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held or
owned by the Corporation, and to sell and pledge such bonds,
3
7
as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell, assign,
transfer, pledge, mortgage and convey real and personal property of
any name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that
the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and to
undertake the whole or any part of the assets and liabilities of any
person, firm, association or corporation, and to pay for the same in
cash, stock of this Corporation, bonds or otherwise; to hold or in
any manner to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the powers necessary
or convenient in and about the conduct and management of such
business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose
of property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and, without
limit as to amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent as
natural persons might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise dispose of,
real and personal property, of every class and description, in any
State, District, Territory or Colony of the United States, and in
any foreign country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except
where otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any other
clause of this or any other paragraph in this charter, but that the
objects, purposes and powers specified in each of the clauses of
this paragraph shall be regarded as independent objects, purposes
and powers.
4
8
Fourth: - (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other special rights
of each such series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article Fourth, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including,
but without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may
be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be
paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes, or
series of the same or other class of stock and whether such
dividends shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of
any other class or classes or of any series of the same or any other
class or classes of stock of the Corporation and the terms and
conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
5
9
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of Directors may
determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section
(b) of this Article Fourth), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section (b)
of this Article Fourth), and subject further to any conditions which may
be fixed in accordance with the provisions of section (b) of this Article
Fourth, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by
the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article Fourth), to be distributed to the holders of Preferred Stock
in the event of voluntary or involuntary liquidation, distribution
or sale of assets, dissolution or winding-up, of the Corporation,
the holders of the Common Stock shall be entitled to receive all of
the remaining assets of the Corporation, tangible and intangible, of
whatever kind available for distribution to stockholders ratably in
proportion to the number of shares of Common Stock held by them
respectively.
(3) Except as may otherwise be required by law or by the provisions
of such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article Fourth, each
holder of Common Stock shall have one vote in respect of each share
of Common Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
6
10
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any such
unissued stock, additional authorized issue of shares of any class or
series of stock or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of Directors in the
exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed
from time to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in section (b) of this
Article Fourth and the consent, by class or series vote or otherwise, of
the holders of such of the series of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed by the
Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide in the
resolution or resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article Fourth that the consent of the
holders of a majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of Directors
of the Corporation shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred Stock
may, without a class or series vote, be increased or decreased from time
to time by the affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors shall not
7
11
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a majority
of the whole Board.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as the then total number of directors constituting the
whole Board permits, with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term expiring at the
next succeeding annual meeting, directors of the second class shall be
elected to hold office for a term expiring at the second succeeding annual
meeting and directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any vacancies
in the Board of Directors for any reason, and any newly created
directorships resulting from any increase in the directors, may be filled
by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall
hold office until the next annual election of directors. At such election,
the stockholders shall elect a successor to such director to hold office
until the next election of the class for which such director shall have
been chosen and until his successor shall be elected and qualified. No
decrease in the number of directors shall shorten the term of any
incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter or
Act of Incorporation or the ByLaws of the Corporation), any director or
the entire Board of Directors of the Corporation may be removed at any
time without cause, but only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting of the
stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing, delivered
or mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor more than 50 days
prior to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be delivered
or mailed, as prescribed, to the Secretary of the Corporation not later
than the close of the seventh day following the day on which notice of the
meeting was mailed to stockholders. Notice of nominations which are
proposed by the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of such
nominee and (iii) the number of shares of
8
12
stock of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with
the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
Sixth: - The Directors shall choose such officers, agent and servants as
may be provided in the By-Laws as they may from time to time find
necessary or proper.
Seventh: - The Corporation hereby created is hereby given the same powers,
rights and privileges as may be conferred upon corporations organized
under the Act entitled "An Act Providing a General Corporation Law",
approved March 10, 1899, as from time to time amended.
Eighth: - This Act shall be deemed and taken to be a private Act.
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a majority of the
whole Board, may designate any of their number to constitute an Executive
Committee, which Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise all of the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of
the Corporation to be affixed to all papers which may require it.
Eleventh: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
Twelfth: - The Corporation may transact business in any part of the world.
Thirteenth: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make, alter
or repeal any By-Law whether or not adopted by them, provided however,
that any such additional By-Laws, alterations or repeal may be adopted
only by the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
9
13
Fourteenth: - Meetings of the Directors may be held outside of the State
of Delaware at such places as may be from time to time designated by the
Board, and the Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to time designated by
them.
Fifteenth: - (a) In addition to any affirmative vote required by law, and
except as otherwise expressly provided in sections (b) and (c) of this
Article Fifteenth:
(A) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with or into (i) any Interested Stockholder
(as hereinafter defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after such merger or
consolidation, would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions)
to or with any Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the Corporation or any
Subsidiary having an aggregate fair market value of $1,000,000 or
more, or
(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or
more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
10
14
(2) The term "business combination" as used in this Article
Fifteenth shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article Fifteenth shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary) who
or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding voting
Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested
Stockholder, and such assignment or succession shall have occurred
in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act
of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding, or
11
15
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any other
Voting Shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect in
December 31, 1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Investment
Stockholder set forth in paragraph (2) of this section (c), the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article Fifteenth on the basis of
information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an
Affiliate or Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another as to the
matters referred to in paragraph (3) of section (c), or (4) whether
the assets subject to any business combination or the consideration
received for the issuance or transfer of securities by the
Corporation, or any Subsidiary has an aggregate fair market value of
$1,00,000 or more.
(e) Nothing contained in this Article Fifteenth shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
Sixteenth: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth or
Sixteenth of this Charter or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not be liable to the
Corporation
12
16
or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Laws as
the same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
13
17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on January 16, 1997
18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.
Section 2. Special meetings of all stockholders may be called at any time
by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
Directors
Section 1. The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
19
Section 6. Special meetings of the Board of Directors may be called at any
time by the Chairman of the Board of Directors or by the President, and shall be
called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its election
by the stockholders shall appoint an Executive Committee, a Trust Committee, an
Audit Committee and a Compensation Committee, and shall elect from its own
members a Chairman of the Board of Directors and a President who may be the same
person. The Board of Directors shall also elect at such meeting a Secretary and
a Treasurer, who may be the same person, may appoint at any time such other
committees and elect or appoint such other officers as it may deem advisable.
The Board of Directors may also elect at such meeting one or more Associate
Directors.
Section 11. The Board of Directors may at any time remove, with or without
cause, any member of any Committee appointed by it or any associate director or
officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
Committees
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of
2
20
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Executive Committee may be held at any time
when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.
3
21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.
(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who
4
22
are not officers of the Company and who shall hold office during the pleasure of
the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the Board
of Directors shall preside at all meetings of the Board of Directors at which
the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform
5
23
such duties as the Board of Directors or the Chairman of the Board may from time
to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.
Section 6. The Secretary shall attend to the giving of notice of meetings
of the stockholders and the Board of Directors, as well as the Committees
thereof, to the keeping of accurate minutes of all such meetings and to
recording the same in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
6
24
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to all
Vice Presidents with such functional titles as shall be determined from time to
time by the Board of Directors, who shall ex officio hold the office Assistant
Secretary of this Company and who may perform such duties as may be prescribed
by the officer in charge of the department or division to whom they are
assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the President
or any Vice President, however denominated by the Board of Directors and
countersigned by the Secretary or Treasurer or an Assistant Secretary, and the
seal of the corporation shall be engraved thereon. Each certificate shall recite
that the stock represented thereby is transferrable only upon the books of the
Company by the holder thereof or his attorney, upon surrender of the certificate
properly endorsed. Any certificate of stock surrendered to the Company shall be
cancelled at the time of transfer, and before a new certificate or certificates
shall be issued in lieu thereof. Duplicate certificates of stock shall be issued
only upon giving such security as may be satisfactory to the Board of Directors
or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange
7
25
of capital stock shall go into effect, or a date in connection with obtaining
such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any Vice President,
however denominated by the Board of Directors, shall have full power and
authority to enter into, make, sign, execute, acknowledge and/or deliver and the
Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
26
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses under
applicable law.
9
27
(D) The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such person may have or hereafter
acquire under any statute, provision of the Charter or Act of Incorporation,
these By-Laws, agreement, vote of stockholders or disinterested Directors or
otherwise.
(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, and any new By-Law or By-Laws adopted at any regular or special meeting
of the Board of Directors by a vote of the majority of all the members of the
Board of Directors then in office.
10
28
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, Wilmington
Trust Company hereby consents that reports of examinations by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: September 9, 1997 By: /s/ Emmett R. Harmon
---------------------------
Name: Emmett R. Harmon
Title: Vice President
29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------------------- ---------------------
Name of Bank City
in the State of DELAWARE, at the close of business on June 30, 1997.
ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins............. 208,942
Interest-bearing balances........................................... 0
Held-to-maturity securities.......................................... 403,700
Available-for-sale securities.......................................... 905,200
Federal funds sold and securities purchased under agreements to resell. 151,700
Loans and lease financing receivables:
Loans and leases, net of unearned income....... 3,816,484
LESS: Allowance for loan and lease losses...... 54,535
LESS: Allocated transfer risk reserve........ 0
Loans and leases, net of unearned income, allowance, and
reserve 3,761,949
Assets held in trading accounts.............................................. 0
Premises and fixed assets (including capitalized leases)................ 95,762
Other real estate owned................................................. 1,751
Investments in unconsolidated subsidiaries and associated companies....... 42
Customers' liability to this bank on acceptances outstanding................. 0
Intangible assets........................................................ 3,572
Other assets........................................................... 108,295
Total assets......................................................... 5,640,913
CONTINUED ON NEXT PAGE
30
LIABILITIES
Deposits:
In domestic offices.................................................. 3,864,774
Noninterest-bearing........................... 875,081
Interest-bearing.............................. 2,989,693
Federal funds purchased and Securities sold under agreements to
repurchase ........................................................ 337,784
Demand notes issued to the U.S. Treasury................................ 95,000
Trading liabilities (from Schedule RC-D)..................................... 0
Other borrowed money:.................................................. ///////
With original maturity of one year or less...................... 775,000
With original maturity of more than one year..................... 43,000
Bank's liability on acceptances executed and outstanding..................... 0
Subordinated notes and debentures............................................ 0
Other liabilities (from Schedule RC-G)................................ 84,197
Total liabilities.................................................... 5,199,755
EQUITY CAPITAL
Perpetual preferred stock and related surplus................................ 0
Common Stock............................................................... 500
Surplus (exclude all surplus related to preferred stock)................ 62,118
Undivided profits and capital reserves................................. 376,212
Net unrealized holding gains (losses) on available-for-sale securities (2,328)
Total equity capital................................................... 441,158
Total liabilities, limited-life preferred stock, and equity capital.. 5,640,913
2
1
LETTER OF TRANSMITTAL
CONTINENTAL AIRLINES, INC.
OFFER TO EXCHANGE
PASS THROUGH CERTIFICATES, SERIES 1997-2,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OUTSTANDING
PASS THROUGH CERTIFICATES, SERIES 1997-2
Pursuant to the Prospectus, dated October , 1997.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON
NOVEMBER , 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"), TENDERS
MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON NOVEMBER , 1997.
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
Delivery of this instrument to an address other than as set forth above, or
transmission of instructions via facsimile other than as set forth above, will
not constitute a valid delivery.
The undersigned acknowledges receipt of the Prospectus, dated October ,
1997 (the "Prospectus"), of Continental Airlines, Inc., a Delaware corporation
(the "Company"), and this Letter of Transmittal (this "Letter"), which together
constitute the offer (the "Exchange Offer") to exchange an aggregate principal
amount of up to $155,000,000 of Pass Through Certificates, Series 1997-2, which
have been registered under the Securities Act of 1933, as amended (the "New
Certificates"), for an equal principal amount of the outstanding Pass Through
Certificates, Series 1997-2 (the "Old Certificates"). The Exchange Offer is
being made in order to satisfy certain obligations of the Company contained in
the Exchange and Registration Rights Agreement, dated as of June 25, 1997,
between the Company and the Initial Purchasers named therein (the "Registration
Rights Agreement").
For each Old Certificate accepted for exchange, the holder of such Old
Certificate will receive a New Certificate having a principal amount equal to
that of the surrendered Old Certificate. New Certificates will accrue interest
at the applicable per annum rate for such New Certificates as set forth on the
cover page of the Prospectus, from the date on which the Old Certificates
surrendered in exchange therefor were originally issued (the "Issuance Date").
Interest on the New Certificates is payable on June 30 and December 30 of each
year, commencing on December 30, 1997, subject to the terms of the Intercreditor
Agreement (as defined in the Prospectus). In the event that neither the
consummation of the Exchange Offer nor the declaration by the Securities and
Exchange Commission of a Shelf Registration Statement relating to the sale of
the Old Certificates to be effective (each a "Registration Event") occurs on or
prior to the 210th calendar day after the Issuance Date, the interest rate per
annum passed through to holders of Old Certificates shall be increased by 0.50%
from and including such 210th day to but excluding the earlier of (i) the date
on which a
2
Registration Event occurs and (ii) the date on which all of the Old 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 such 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 passed through to the holders of Old
Certificates 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 such Shelf Registration Statement again becomes effective (or, if
earlier, the end of such period specified by the Registration Rights Agreement).
The Company reserves the right, at any time or from time to time, to extend the
Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest time and date to which the Exchange Offer is extended. The
Company shall notify the holders of the Old Certificates of any extension by
means of a press release or other public announcement prior to 9:00 A.M., New
York City time, on the next business day after the previously scheduled
Expiration Date.
This Letter is to be completed by a holder of Old Certificates if Old
Certificates are to be forwarded herewith or if a tender of Old Certificates, if
available, is to be made by book-entry transfer to the account maintained by the
Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedure set forth in "The Exchange Offer" section
of the Prospectus. Holders of Old Certificates whose certificates are not
immediately available, or who are unable to deliver their certificates or
confirmation of the book-entry tender of their Old Certificates into the
Exchange Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation") and all other documents required by this Letter to the Exchange
Agent on or prior to the Expiration Date, must tender their Old Certificates
according to the guaranteed delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the Old Certificates to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Old Certificates should be listed on a separate signed schedule affixed hereto.
- ------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD CERTIFICATES
- ------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
AMOUNT PRINCIPAL
CERTIFICATE OF OLD AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) NUMBER(S)* CERTIFICATE(S) TENDERED**
- ------------------------------------------------------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
- ------------------------------------------------------------------------------------------------
* Need not be completed by Holders of Notes being tendered by book-entry
transfer (see below).
** Unless otherwise indicated, it will be assumed that all Notes represented by
certificates delivered to the Depositary are being tendered. See Instruction
1.
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD CERTIFICATES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
2
3
Name of Tendering Institution
------------------------------
Account Number Transaction Code Number
------------------ ----------------------
[ ] CHECK HERE IF TENDERED OLD CERTIFICATES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
-------------------------------------------------
Window Ticket Number (if any)
---------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
------------------------------
Name of Institution which guaranteed delivery
-----------------------------------
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number Transaction Code Number
------------------ ----------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
---------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Certificates indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Certificates tendered hereby, the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to such Old Certificates as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old
Certificates tendered hereby and that the Company will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim when the same are accepted
by the Company. The undersigned hereby further represents that any New
Certificates acquired in exchange for Old Certificates tendered hereby will have
been acquired in the ordinary course of business of the person receiving such
New Certificates, whether or not such person is the undersigned, that neither
the holder of such Old Certificates nor any such other person is engaged in, or
intends to engage in a distribution of such New Certificates, or has an
arrangement or understanding with any person to participate in the distribution
of such New Certificates, and that neither the holder of such Old Certificates
nor any such other person is an "affiliate," as defined in Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act"), of the Company.
The undersigned also acknowledges that this Exchange Offer is being made
based upon the Company's understanding of an interpretation by the staff of the
Securities and Exchange Commission (the "Commission") as set forth in no-action
letters issued to third parties, including Exxon Capital Holdings Corporation,
SEC No-Action Letter (available May 13, 1988) (the "Exxon Capital Letter"),
Morgan Stanley & Co. Incorporated, SEC No-Action Letter (available June 5, 1991)
(the "Morgan Stanley Letter") and Shearman & Sterling, SEC No-Action Letter
(available July 2, 1993) (the "Shearman & Sterling Letter"), that the New
Certificates issued in exchange for the Old Certificates pursuant to the
Exchange Offer may be offered for resale, resold and otherwise transferred by
holders thereof (other than a broker-dealer who acquires such New Certificates
directly from the Company for resale pursuant to Rule 144A under the Securities
Act or any other available exemption under the Securities Act or any such holder
that is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act), without compliance with the registration and
3
4
prospectus delivery provisions of the Securities Act, provided that such New
Certificates are acquired in the ordinary course of such holders' business and
such holders are not engaged in, and do not intend to engage in, a distribution
of such New Certificates and have no arrangement with any person to participate
in the distribution of such New Certificates. If a holder of Old Certificates is
engaged in or intends to engage in a distribution of the New Certificates or has
any arrangement or understanding with respect to the distribution of the New
Certificates to be acquired pursuant to the Exchange Offer, such holder could
not rely on the applicable interpretations of the staff of the Commission and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any secondary resale transaction. If the
undersigned is a broker-dealer that will receive New Certificates for its own
account in exchange for Old Certificates, it represents that the Old
Certificates to be exchanged for the New Certificates were acquired by it as a
result of market-making activities or other trading activities and acknowledges
that it will deliver a prospectus in connection with any resale of such New
Certificates; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Certificates tendered hereby. All
authority conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer -- Withdrawal of Tenders" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Certificates (and, if applicable,
substitute certificates representing Old Certificates for any Old Certificates
not exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Old Certificates, please credit the account indicated above
maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise
indicated under the box entitled "Special Delivery Instructions" below, please
send the New Certificates (and, if applicable, substitute certificates
representing Old Certificates for any Old Certificates not exchanged) to the
undersigned at the address shown above in the box entitled "Description of Old
Certificates."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD
CERTIFICATES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
OLD CERTIFICATES AS SET FORTH IN SUCH BOX ABOVE.
4
5
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Certificates not exchanged
and/or New Certificates are to be issued in the name of and sent to someone
other than the person(s) whose signature(s) appear(s) on this Letter below, or
if Old Certificates delivered by book-entry transfer which are not accepted for
exchange are to be returned by credit to an account maintained at the Book-Entry
Transfer Facility other than the account indicated above.
Issue New Certificates and/or Old Certificates to:
Names(s):
------------------------------------------------------
(Please Type or Print)
------------------------------------------------------
(Please Type or Print)
Address:
----------------------------------------------------------
----------------------------------------------------------
(Including Zip Code)
- ------------------------------------------------------------------
Social Security or Employer Identification Number
Credit unexchanged Old Certificates delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
- ------------------------------------------------------------------
(Book-Entry Transfer Facility Account Number,
if applicable)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Certificates not exchanged
and/or New Certificates are to be sent to someone other than the person(s) whose
signature(s) appear(s) on this letter below, or to the undersigned at an address
other than shown in the box entitled "Description of Old Certificates" on this
Letter above.
Mail New Certificates and/or Old Certificates to:
Names(s):
------------------------------------------------------
(Please Type or Print)
------------------------------------------------------
(Please Type or Print)
Address:
-----------------------------------------------------
-----------------------------------------------------
(Including Zip Code)
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES FOR
OLD CERTIFICATES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS
OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS LETTER OF TRANSMITTAL CAREFULLY
BEFORE COMPLETING ANY BOX ABOVE.
5
6
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
Dated: , 1997
------------------------------
- ------------------------------------------------------------------------------ x
- ------------------------------------------------------------------------------ x
(Signature(s) of Owner) (Date)
Area Code and Telephone Number:
-------------------------------------------------
If a holder is tendering any Old Certificates, this Letter must be signed
by the registered holder(s) as the name(s) appear(s) on the certificate(s) for
the Old Certificates or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith. If signature is by
a trustee, executor, administrator, guardian, officer or other person acting in
a fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s):
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Type or Print)
Capacity:
----------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Including Zip Code)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by an Eligible Institution:
-----------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Title)
- --------------------------------------------------------------------------------
(Name and Firm)
Dated: , 1997
------------------------------
6
7
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer to Exchange Pass
Through Certificates, Series 1997-2, which have been registered under the
Securities Act of 1933, as amended, for any and all outstanding Pass Through
Certificates, Series 1997-2.
1. DELIVERY OF THIS LETTER AND OLD CERTIFICATES; GUARANTEED DELIVERY PROCEDURES.
This Letter is to be completed by holders of Old Certificates if
certificates are to be forwarded herewith or if tenders are to be made pursuant
to the procedures for delivery by book-entry transfer set forth in "The Exchange
Offer -- Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Old Certificates, or Book-Entry Confirmation, as the case
may be, as well as a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other documents required by this Letter, must be
received by the Exchange Agent at the address set forth herein on or prior to
the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Old Certificates tendered hereby must be in
denominations of $100,000 and integral multiples of $1,000 in excess thereof.
Holders of Old Certificates whose certificates for Old Certificates are not
immediately available or who cannot deliver their certificates and all other
required documents to the Exchange Agent on or prior to the Expiration Date, or
who cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Old Certificates pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution (as defined below), (ii) prior to the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Certificates and the amount of Old Certificates
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Certificates, or a Book-Entry Confirmation, as the case
may be, and any other documents required by this Letter will be deposited by the
Eligible Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Old Certificates, in proper form for transfer, or Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter, are received by the Exchange Agent within three NYSE trading days after
the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Certificates and all other
required documents is at the election and risk of the tendering holders, but the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If Old Certificates are sent by mail, it is suggested that the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS OF OLD CERTIFICATES WHO TENDER BY
BOOK-ENTRY TRANSFER).
If less than all of the Old Certificates evidenced by a submitted
certificate are to be tendered, the tendering holder(s) should fill in the
aggregate principal amount of Old Certificates to be tendered in the box above
entitled "Description of Old Certificates -- Principal Amount Tendered." A
reissued certificate representing the balance of nontendered Old Certificates
will be sent to such tendering holder, unless otherwise provided in the
appropriate box on this Letter, promptly after the Expiration Date. All of the
Old Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
7
8
3. SIGNATURES OF THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Old Certificates
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
If any tendered Old Certificates are owned of record by two or more joint
owners, all such owners must sign this Letter.
If any tendered Old Certificates are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter as there are different registrations of
certificates.
When this Letter is signed by the registered holder of the Old Certificates
specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If, however, the New Certificates are to be
issued, or any untendered Old Certificates are to be reissued, to a person other
than the registered holder, then endorsements of any certificates transmitted
hereby or separate bond powers are required. Signatures on such certificates
must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder of
any certificates specified herein, such certificates must be endorsed or
accompanied by appropriate bond powers, in either case signed exactly as the
name of the registered holder appears on the certificates and the signatures on
such certificates must be guaranteed by an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
Endorsements on certificates for Old Certificates or signatures on bond
powers required by this Instruction 3 must be guaranteed by a firm which is a
member of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., by a commercial bank or trust company
having an office or correspondent in the United States or by an "eligible
guarantor" institution within the meaning of Rule 17Ad-15 under the Securities
Exchange Act of 1934 (an "Eligible Institution").
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Old Certificates are tendered: (i) by a registered
holder of Old Certificates (which term, for purposes of the Exchange Offer,
includes any participant in the Book-Entry Transfer Facility system whose name
appears on a security position listing as the holder of such Old Certificates)
tendered who has not completed the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" on this Letter, or (ii) for the account of an
Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Old Certificates should indicate in the applicable box
the name and address to which New Certificates issued pursuant to the Exchange
Offer and/or substitute certificates evidencing Old Certificates not exchanged
are to be issued or sent, if different from the name or address of the person
signing this Letter. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. A holder of Old Certificates tendering Old Certificates by book-entry
transfer may request that Old Certificates not exchanged be credited to such
account maintained at the Book-Entry Transfer Facility as such holder of Old
Certificates may designate hereon. If no such instructions are given, such Old
Certificates not exchanged will be returned to the name or address of the person
signing this Letter.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose Old
Certificates are accepted for exchange must provide the Exchange Agent with such
Holder's correct Taxpayer Identification Number
8
9
("TIN") on Substitute Form W-9 below, which, in the case of a tendering holder
who is an individual, is his or her social security number. If a tendering
holder does not provide the Exchange Agent with its current TIN or an adequate
basis for an exemption, such tendering holder may be subject to backup
withholding in an amount equal to 31% of all reportable payments made after the
exchange. If withholding results in an overpayment of taxes, a refund may be
obtained.
Exempt holders of Old Certificates (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. See the enclosed Guidelines of
Certification of Taxpayer Identification Number on Substitute Form W-9 (the "W-9
Guidelines") for additional instructions.
To prevent backup withholding, each tendering holder of Old Certificates
must provide its correct TIN by completing the "Substitute Form W-9" set forth
below, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN) and that (i) the holder is exempt from backup withholding, (ii)
the holder has not been notified by the Internal Revenue Service that such
holder is subject to a backup withholding as a result of a failure to report all
interest or dividends or (iii) the Internal Revenue Service has notified the
holder that such holder is no longer subject to backup withholding. If the
tendering holder of Old Certificates is a nonresident alien or foreign entity
not subject to backup withholding, such holder must give the Exchange Agent a
completed Form W-8, Certificate of Foreign Status. These forms may be obtained
from the Exchange Agent. If the Old Certificates are in more than one name or
are not in the name of the actual owner, such holder should consult the W-9
Guidelines for information on which TIN to report. If such holder does not have
a TIN, such holder should consult the W-9 Guidelines for instructions on
applying for a TIN, check the box in Part 2 of the Substitute Form W-9 and write
"applied for" in lieu of its TIN. Note: checking this box and writing "applied
for" on the form means that such holder has already applied for a TIN or that
such holder intends to apply for one in the near future. If such holder does not
provide its TIN to the Exchange Agent within 60 days, backup withholding will
begin and continue until such holder furnishes its TIN to the Exchange Agent.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Certificates to it or its order pursuant to the Exchange Offer. If,
however, New Certificates and/or substitute Old Certificates not exchanged are
to be delivered to, or are to be registered or issued in the name of, any person
other than the registered holder of the Old Certificates tendered hereby, or if
tendered Old Certificates are registered in the name of any person other than
the person signing this Letter, or if a transfer tax is imposed for any reason
other than the transfer of Old Certificates to the Company or its order pursuant
to the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted herewith, the amount of such transfer taxes will be billed
directly to such tendering holder.
Except as provided in this Instruction 6, it is not necessary for transfer
tax stamps to be affixed to the Old Certificates specified in this Letter.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Certificates, by execution of this
Letter, shall waive any right to receive notice of the acceptance of their Old
Certificates for exchange.
9
10
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of Old
Certificates nor shall any of them incur any liability for failure to give any
such notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD CERTIFICATES.
Any holder whose Old Certificates have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at the address and telephone number indicated above.
10
11
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
- ------------------------------------------------------------------------------------------------
GIVE FORM TO THE REQUESTER. DO NOT SEND TO THE IRS
- ------------------------------------------------------------------------------------------------
SUBSTITUTE Part I -- Taxpayer -------------------------------
Form W-9 Identification Number (TIN) List account numbers
------------------------------ here (optional)
------------------------------
Part II -- For Payee Exempt From Backup Withholding (See the
(Rev. December 1996) W-9 Guidelines)
Department of the Treasury Social Security Number
Internal Revenue Service ----------------------------------
or
Employer Identification Number
----------------------------------
Enter your TIN in the appropriate box. For individuals, this is
Request for Taxpayer your social security number (SSN). For sole proprietors or
Identification Number resident aliens, see the W-9 Guidelines. For other entities, it
and Certification is your employer identification number (EIN). If you do not
have a number, see the W-9 Guidelines.
NOTE: If the account is in more than one name, see the chart in
the W-9 Guidelines for guidance on whose number to enter.
- ------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------
Name (If a joint account or you changed your name, see the W-9 Guidelines.)
----------------------------------------------------------------------------
Business name, if different from above. (See the W-9 Guidelines.)
----------------------------------------------------------------------------
Please Please check appropriate box: [ ] Individual/Sole Proprietor [ ]
print Corporation
or [ ] Partnership [ ] Other
type ----------------------------------------------------------------------------
Address (number, street, apt. or suite no.) Requester's name and address
(optional)
----------------------------------------------
City, state and ZIP code
- --------------------------------------------------------------------------------
PART III Certification
- --------------------------------------------------------------------------------
Under penalties of perjury, I certify that;
1. The number shown on this form is my correct taxpayer identification (or I am
waiting for number to be issued to me), and
2. I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
that I am subject to backup withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
CERTIFICATION INSTRUCTIONS. You must cross out item 2 above if you have been
notified by the IRS that you are currently subject to backup withholding because
you have failed to report all interest or dividends on your tax return. For real
estate transactions, item 2 does not apply. For mortgage interest paid, the
acquisition or abandonment of secured property, cancellation of debt,
contributions to an individual retirement arrangement (IRA), and generally
payments other than interest and dividends, you are not required to sign the
Certification, but you must provide your correct TIN. (Also, see the W-9
Guidelines.)
- --------------------------------------------------------------------------------
SIGN
HERE SIGNATURE DATE
- ---------- ------------------------------------------------- -------------------------------
- -----------------------------------------------------------------------------------------------
11
1
NOTICE OF GUARANTEED DELIVERY
FOR
CONTINENTAL AIRLINES, INC.
PASS THROUGH CERTIFICATES, SERIES 1997-2
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Continental Airlines, Inc. (the "Company") made pursuant to
the Prospectus, dated October , 1997 (the "Prospectus"), and the enclosed
Letter of Transmittal (the "Letter of Transmittal") if certificates for Old
Certificates are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach Wilmington Trust Company (the "Exchange Agent")
prior to 5:00 P.M., New York City time, on the Expiration Date of the Exchange
Offer. Such form may be delivered or transmitted by facsimile transmission, mail
or hand delivery to the Exchange Agent as set forth below. In addition, in order
to utilize the guaranteed delivery procedure to tender Old Certificates pursuant
to the Exchange Offer, a completed, signed and dated Letter of Transmittal (or
facsimile thereof) must also be received by the Exchange Agent prior to 5:00
P.M., New York City time, on the Expiration Date. Capitalized terms not defined
herein are defined in the Prospectus.
Delivery to: Wilmington Trust Company, Exchange Agent
By Mail 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
Delivery of this instrument to an address other than as set forth above, or
transmission of instructions via facsimile other than as set forth above, will
not constitute a valid delivery.
12
2
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Old Certificates set forth below, pursuant to
the guaranteed delivery procedure described in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of Old Certificates
Tendered: Name(s) of Record Holders(s):
$
- -------------------------------------------- --------------------------------------------
Certificate Nos. (if available):
--------------------------------------------
Address(es):
- --------------------------------------------
--------------------------------------------
- --------------------------------------------
If Old Certificates will be delivered by
book-entry
--------------------------------------------
transfer to The Depositary Trust Company,
provide account number. Area Code and Telephone Number(s):
Account
Number --------------------------------------------
-------------------------------------
--------------------------------------------
Signature(s):
--------------------------------------------
--------------------------------------------
Dated:
--------------------------------------
THE ACCOMPANYING GUARANTEE MUST BE COMPLETED.
13
3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or any "eligible guarantor" institution within the meaning of Rule
17Ad-15 of the Securities Exchange Act of 1934, as amended, hereby guarantees to
deliver to the Exchange Agent, at one of its addresses set forth above, the
certificates representing all tendered Old Certificates, in proper form for
transfer, or a Book-Entry Confirmation, together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, and any other documents required by the Letter of
Transmittal within three New York Stock Exchange, Inc. trading days after the
date of execution of this Notice of Guaranteed Delivery.
Name of Firm:
-------------------------------- --------------------------------------------
(Authorized Signature)
Address:
------------------------------------
- --------------------------------------------
Area Code and
Telephone
Number:
------------------------------------- Title:
-------------------------------------
Name:
---------------------------------------
Date:
---------------------------------------
14
1
CONTINENTAL AIRLINES, INC.
OFFER TO EXCHANGE
PASS THROUGH CERTIFICATES, SERIES 1997-2,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY
AND ALL OUTSTANDING PASS THROUGH CERTIFICATES, SERIES 1997-2
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Upon and subject to the terms and conditions set forth in the Prospectus,
dated October , 1997 (the "Prospectus"), and the enclosed Letter of
Transmittal (the "Letter of Transmittal"), an offer to exchange (the "Exchange
Offer") the registered Pass Through Certificates, Series 1997-2 (the "New
Certificates") for any and all outstanding Pass Through Certificates, Series
1997-1 (the "Old Certificates") (CUSIP Nos. 210805 BH 9, 210805 BK 2, 210805 BL
0, 210805 BM 8, 210805 BP 1, U21096 AE 9, U21096 AF 6, U21096 AG 4 and U21096 AH
2) is being made pursuant to such Prospectus. The Exchange Offer is being made
in order to satisfy certain obligations of Continental Airlines, Inc. (the
"Company") contained in the Exchange and Registration Rights Agreement dated as
of June 25, 1997, between the Company and the Initial Purchasers.
We are requesting that you contact your clients for whom you hold Old
Certificates regarding the Exchange Offer. For your information and for
forwarding to your clients for whom you hold Old Certificates registered in your
name or in the name of your nominee, or who hold Old Certificates registered in
their own names, we are enclosing the following documents:
1. Prospectus dated October , 1997;
2. The Letter of Transmittal for your use and for the information of
your clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if certificates for Old Certificates are not immediately available or
time will not permit all required documents to reach the Exchange Agent
prior to the Expiration Date (as defined below) or if the procedure for
book-entry transfer cannot be completed on a timely basis; and
4. A form of letter which may be sent to your clients for whose
account you hold Old Certificates registered in your name or the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Exchange Offer.
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., New York City time, on November , 1997 (the "Expiration Date") (30
calendar days following the commencement of the Exchange Offer), unless extended
by the Company. The Old Certificates tendered pursuant to the Exchange Offer may
be withdrawn at any time before the Expiration Date.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Exchange Agent and certificates representing the Old Certificates should be
delivered to the Exchange Agent, all in accordance with the instructions set
forth in the Letter of Transmittal and the Prospectus.
If holders of Old Certificates wish to tender, but it is impracticable for
them to forward their certificates for Old Certificates prior to the expiration
of the Exchange Offer or to comply with the book-entry transfer procedures on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures described in the Prospectus under "The Exchange Offer -- Guaranteed
Delivery Procedures."
Additional copies of the enclosed material may be obtained from Wilmington
Trust Company, the Exchange Agent, at 1100 North Market Street, Wilmington,
Delaware 19890-0001, Attention: Jill Rylee, phone (302) 651-8869 and facsimile
(302) 651-1079.
CONTINENTAL AIRLINES, INC.
15
1
CONTINENTAL AIRLINES, INC.
OFFER TO EXCHANGE
PASS THROUGH CERTIFICATES, SERIES 1997-2,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OUTSTANDING
PASS THROUGH CERTIFICATES, SERIES 1997-2
To Our Clients:
Enclosed for your consideration is a Prospectus of Continental Airlines,
Inc., a Delaware corporation (the "Company" or "Continental"), dated October ,
1997 (the "Prospectus"), and the enclosed Letter of Transmittal (the "Letter of
Transmittal") relating to the offer to exchange (the "Exchange Offer") the
registered Pass Through Certificates, Series 1997-2 (the "New Certificates") for
any and all outstanding Pass Through Certificates, Series 1997-2 (the "Old
Certificates") (CUSIP Nos. 210805 BH 9, 210805 BK 2, 210805 BL 0, 210805 BM 8,
210805 BP 1, U21096 AE 9, U21096 AF 6, U21096 AG 4 and U21096 AH 2), upon the
terms and subject to the conditions described in the Prospectus. The Exchange
Offer is being made in order to satisfy certain obligations of Continental
contained in the Exchange and Registration Rights Agreement dated as of June 25,
1997, between the Company and the Initial Purchasers.
This material is being forwarded to you as the beneficial owner of the Old
Certificates carried by us in your account but not registered in your name. A
tender of such Old Certificates may only be made by us as the holder of record
and pursuant to your instructions.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Old Certificates held by us for your account, pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Old Certificates on your behalf in accordance
with the provisions of the Exchange Offer. The Exchange Offer will expire at
5:00 p.m., New York City time, on November , 1997 (the "Expiration Date") (30
calendar days following the commencement of the Exchange Offer), unless extended
by the Company. Any Old Certificates tendered pursuant to the Exchange Offer may
be withdrawn at any time before 5:00 p.m., New York City time on the Expiration
Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Certificates.
2. The Exchange Offer is subject to certain conditions set forth in
the Prospectus in the section captioned "The Exchange Offer -- Conditions."
3. Any transfer taxes incident to the transfer of Old Certificates
from the holder to the Company will be paid by the Company, except as
otherwise provided in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time, on the
Expiration Date unless extended by the Company.
If you wish to have us tender your Old Certificates, please so instruct us
by completing, executing and returning to us the instruction form set forth
below. The Letter of Transmittal is furnished to you for information only and
may not be used directly by you to tender Old Certificates.
