DEPOSIT AGREEMENT
(Class C)
Dated as of June 26, 2001
between
WELLS FARGO BANK NORTHWEST, N.A.
as Escrow Agent
and
CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH
as Depositary
TABLE OF CONTENTS
Page
SECTION 1.1 Acceptance of Depositary..........................................2
SECTION 1.2 Establishment of Accounts........................................ 2
SECTION 2.1 Deposits..........................................................2
SECTION 2.2 Interest..........................................................2
SECTION 2.3 Withdrawals.......................................................3
SECTION 2.4 Other Accounts....................................................3
SECTION 3. Termination.......................................................4
SECTION 4. Payments..........................................................4
SECTION 5. Representation and Warranties.....................................4
SECTION 6. Transfer..........................................................5
SECTION 7. Amendment, Etc....................................................6
SECTION 8. Notices...........................................................6
SECTION 9. Obligations Unconditional.........................................6
SECTION 10. Entire Agreement..................................................6
SECTION 11. Governing Law.....................................................7
SECTION 12. Waiver of Jury Trial Right....................................... 7
SECTION 13. Counterparts..................................................... 7
SECTION 14. Head Office Obligation............................................7
DEPOSIT AGREEMENT (Class C) dated as of June 26, 2001 (as amended,
modified or supplemented from time to time, this "AGREEMENT") between WELLS
FARGO BANK NORTHWEST, N.A, a national banking association, as Escrow Agent under
the Escrow and Paying Agent Agreement referred to below (in such capacity,
together with its successors in such capacity, the "ESCROW AGENT"), and CREDIT
SUISSE FIRST BOSTON, a banking institution organized under the laws of
Switzerland, acting through its New York branch, as depositary bank (the
"DEPOSITARY").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Continental Airlines, Inc. ("CONTINENTAL") and Wilmington
Trust Company, not in its individual capacity except as otherwise expressly
provided therein, but solely as trustee (in such capacity, together with its
successors in such capacity, the "PASS THROUGH TRUSTEE") have entered into a
Trust Supplement, dated as of June 26, 2001, to the Pass Through Trust Agreement
dated as of September 25, 1997 (together, as amended, modified or supplemented
from time to time in accordance with the terms thereof, the "PASS THROUGH TRUST
AGREEMENT") relating to Continental Airlines Pass Through Trust 2001-1C-O
pursuant to which the Continental Airlines Pass Through Trust, Series 2001-1C-O
Certificates referred to therein (the "CERTIFICATES") are being issued (the date
of such issuance, the "ISSUANCE DATE");
WHEREAS, Continental and Morgan Stanley & Co. Incorporated, (the
"UNDERWRITER" and, together with its transferees and assigns as registered
owners of the Certificates, the "INVESTORS") have entered into an Underwriting
Agreement dated as of June 12, 2001 pursuant to which the Pass Through Trustee
will issue and sell the Certificates to the Underwriter;
WHEREAS, Continental, the Pass Through Trustee, certain other pass
through trustees and certain other persons concurrently herewith are entering
into an Amended and Restated Note Purchase Agreement, dated as of the date
hereof (the "NOTE PURCHASE AGREEMENT"), pursuant to which the Pass Through
Trustee has agreed to acquire from time to time on or prior to the Delivery
Period Termination Date (as defined in the Note Purchase Agreement) equipment
notes (the "EQUIPMENT NOTES") issued to finance the acquisition of aircraft by
Continental, as lessee or as owner, utilizing a portion of the proceeds from the
sale of the Certificates (the "NET PROCEEDS");
WHEREAS, the Escrow Agent, the Underwriter, the Pass Through Trustee
and Wilmington Trust Company, as paying agent for the Escrow Agent (in such
capacity, together with its successors in such capacity, the "PAYING AGENT")
concurrently herewith are entering into an Escrow and Paying Agent Agreement,
dated as of the date hereof (as amended, modified or supplemented from time to
time in accordance with the terms thereof, the "ESCROW AND PAYING AGENT
AGREEMENT"); and
WHEREAS, the Underwriter and the Pass Through Trustee intend that
the Net Proceeds (excluding any amount used to purchase Equipment Notes on the
Issuance Date) be held in escrow by the Escrow Agent on behalf of the Investors
pursuant to the Escrow and Paying Agent Agreement, subject to withdrawal upon
request of and proper certification by the Pass Through Trustee for the purpose
of purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds
be deposited by the Escrow Agent with the Depositary pursuant to this Agreement,
which provides for the Depositary to pay interest for distribution to the
Investors and to establish accounts from which the Escrow Agent shall make
withdrawals upon request of and proper certification by the Pass Through
Trustee.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1.1 ACCEPTANCE OF DEPOSITARY. The Depositary hereby agrees
to act as depositary bank as provided herein and in connection therewith to
accept all amounts to be delivered to or held by the Depositary pursuant to the
terms of this Agreement. The Depositary further agrees to hold, maintain and
safeguard the Deposits and the Accounts (as defined below) during the term of
this Agreement in accordance with the provisions of this Agreement. The Escrow
Agent shall not have any right to withdraw, assign or otherwise transfer moneys
held in the Accounts except as permitted by this Agreement.
SECTION 1.2 ESTABLISHMENT OF ACCOUNTS. The Escrow Agent hereby
instructs the Depositary, and the Depositary agrees, to establish the separate
deposit accounts listed on Schedule I hereto and to establish such additional
separate deposit accounts as may be required in connection with the deposits
contemplated by Section 2.4 hereof (each, an "ACCOUNT" and collectively, the
"ACCOUNTS"), each in the name of the Escrow Agent and all on the terms and
conditions set forth in this Agreement.
SECTION 2.1 DEPOSITS. The Escrow Agent shall direct the Underwriter
to deposit with the Depositary on the date of this Agreement (the "DEPOSIT
DATE") in Federal (same day) funds by wire transfer to: Credit Suisse First
Boston, New York branch, Reference: Continental 2001-1C, and the Depositary
shall accept from the Underwriter, on behalf of the Escrow Agent, the sum of
US$191,764,000 (or such lesser amount equal to the Net Proceeds less amounts
used to purchase Equipment Notes on the Issuance Date). Upon acceptance of such
sum, the Depositary shall (i) establish each of the deposits specified in
Schedule I hereto maturing on January 31, 2003 (including any deposit made
pursuant to Section 2.4 hereof, individually, a "DEPOSIT" and, collectively, the
"DEPOSITS") and (ii) credit each Deposit to the related Account as set forth
therein. No amount shall be deposited in any Account other than the related
Deposit.
SECTION 2.2 INTEREST. Each Deposit shall bear interest from and
including the date of deposit to but excluding the date of withdrawal at the
rate of 7.033% per annum (computed on the basis of a year of twelve 30-day
months) payable to the Paying Agent on behalf of the Escrow Agent semi-annually
in arrears on each June 15 and December 15 commencing on December 15, 2001
(each, an "INTEREST PAYMENT DATE"), and on the date of the Final Withdrawal (as
defined below), all in accordance with the terms of this Agreement (whether or
not any such Deposit is withdrawn on an Interest Payment Date). Interest accrued
on any Deposit that is withdrawn pursuant to a Notice of Purchase Withdrawal (as
defined below) shall be paid on the next Interest Payment Date, notwithstanding
any intervening Final Withdrawal (as such term is defined below).
SECTION 2.3 WITHDRAWALS. (a) On and after the date seven days after
the establishment of any Deposit, the Escrow Agent may, by providing at least
one Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "NOTICE OF PURCHASE WITHDRAWAL"), withdraw not less than the
entire balance of such Deposit, except that at any time prior to the actual
withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee may, by
notice to the Depositary, cancel such withdrawal (including on the scheduled
date therefor), and thereafter such Deposit shall continue to be maintained by
the Depositary in accordance with the original terms thereof. Following such
withdrawal the balance in the related Account shall be zero and the Depositary
shall close such Account. As used herein, "BUSINESS DAY" means any day, other
than a Saturday, Sunday or other day on which commercial banks are authorized or
required by law to close in New York, New York, Houston, Texas, Wilmington,
Delaware or Salt Lake City, Utah. The Depositary reserves the right, upon at
least 14 days' prior written notice to Continental, the Escrow Agent and the
Pass Through Trustee, to require seven days' notice for any withdrawal.
(b) The Escrow Agent may, by providing at least 15 days' prior
notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"NOTICE OF FINAL WITHDRAWAL"), withdraw the entire amount of all of the
remaining Deposits together with the payment by the Depositary of all accrued
and unpaid interest on such Deposits to but excluding the specified date of
withdrawal (a "FINAL WITHDRAWAL"), on such date as shall be specified in such
Notice of Final Withdrawal. If a Notice of Final Withdrawal has not been given
to the Depositary on or before January 8, 2003 (provided that, if a labor strike
occurs or continues at The Boeing Company after the Issuance Date and prior to
December 31, 2002 (a "LABOR STRIKE"), such date shall be extended by adding
thereto the number of days that such strike continued in effect after the
Issuance Date (the "ADDITIONAL DAYS")) and there are unwithdrawn Deposits on
such date, the Depositary shall pay the amount of the Final Withdrawal to the
Paying Agent on January 31, 2003 (provided that if a Labor Strike occurs or
continues, such date shall be extended by the Additional Days).
(c) If the Depositary receives a duly completed Notice of Purchase
Withdrawal or Notice of Final Withdrawal complying with the provisions of this
Agreement, it shall make the payments specified therein in accordance with the
provisions of this Agreement.
SECTION 2.4 OTHER ACCOUNTS. On the date of withdrawal of any Deposit
(other than the date of the Final Withdrawal), the Escrow Agent, or the Pass
Through Trustee on behalf of the Escrow Agent, shall re-deposit with the
Depositary any portion thereof not used to acquire Equipment Notes and the
Depositary shall accept the same for deposit hereunder. On the date the
Certificates are issued, the Escrow Agent, or the Underwriter, on behalf of the
Escrow Agent, shall be entitled to deposit with the Depositary any portion of
the Net Proceeds not theretofore deposited hereunder and not used to purchase
Equipment Notes on the Issuance Date (the "UNUSED PROCEEDS") and the Depositary
shall accept the Unused Proceeds for deposit hereunder. Any sums so received for
deposit shall be established as a new Deposit and credited to a new Account, all
as more fully provided in Section 2.1 hereof, and thereafter the provisions of
this Agreement shall apply thereto as fully and with the same force and effect
as if such Deposit had been established on the Deposit Date except that (i) such
Deposit may not be withdrawn prior to the date seven days after the
establishment thereof and (ii) such Deposit shall mature on January 31, 2003
(provided that if a Labor Strike occurs or continues, such date shall be
extended by the Additional Days) and bear interest as provided in Section 2.2.
The Depositary shall promptly give notice to the Escrow Agent of receipt of each
such re-deposit and the account number assigned thereto.
SECTION 3. TERMINATION. This Agreement shall terminate on the fifth
Business Day after the later of the date on which (i) all of the Deposits shall
have been withdrawn and paid as provided herein without any re-deposit and (ii)
all accrued and unpaid interest on the Deposits shall have been paid as provided
herein, but in no event prior to the date on which the Depositary shall have
performed in full its obligations hereunder.
SECTION 4. PAYMENTS. All payments (including, without limitation,
those payments made in respect of Taxes (as defined and provided for below))
made by the Depositary hereunder shall be paid in United States Dollars and
immediately available funds by wire transfer (i) in the case of accrued interest
on the Deposits payable under Section 2.2 hereof or any Final Withdrawal,
directly to the Paying Agent at Wilmington Trust Company, Wilmington, DE, ABA#
031100092, Account No. 54661-0, Attention: Monica Henry, Telephone No.: (302)
651-8813, Reference: Continental Airlines PTT, Series 2001-1C, or to such other
account as the Paying Agent may direct from time to time in writing to the
Depositary and the Escrow Agent and (ii) in the case of any withdrawal of one or
more Deposits pursuant to a Notice of Purchase Withdrawal, directly to or as
directed by the Pass Through Trustee as specified and in the manner provided in
such Notice of Purchase Withdrawal. The Depositary hereby waives any and all
rights of set-off, combination of accounts, right of retention or similar right
(whether arising under applicable law, contract or otherwise) it may have
against the Deposits howsoever arising. All payments on or in respect of each
Deposit shall be made free and clear of and without reduction for or on account
of any and all taxes, levies or other impositions or charges (collectively,
"TAXES"). However, if the Depositary or the Paying Agent (pursuant to Section
2.04 of the Escrow and Paying Agent Agreement) shall be required by law to
deduct or withhold any Taxes from or in respect of any sum payable hereunder,
the Depositary shall (i) make such deductions or withholding, (ii) pay the full
amount deducted or withheld (including in respect of such additional amounts) to
the competent taxation authority and (iii) if the Taxes required to be deducted
or withheld are imposed by Switzerland or any political subdivision thereof, pay
such additional amounts as may be necessary in order that the actual amount
received by the designated recipient of such sum under this Agreement or the
Escrow and Paying Agent Agreement after such deduction or withholding equals the
sum it would have received had no such deduction or withholding been required.
If the date on which any payment due on any Deposit would otherwise fall on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day, and no additional interest shall accrue in respect of
such extension.
SECTION 5. REPRESENTATION AND WARRANTIES. The Depositary hereby
represents and warrants to Continental, the Escrow Agent, the Pass Through
Trustee and the Paying Agent that:
(a) it is a bank duly organized and validly existing in good
standing under the laws of its jurisdiction of organization and is duly
qualified to conduct banking business in the State of New York through its
New York branch;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part of
it and do not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof;
(d) no authorization, consent or approval of or other action
by, and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of
this Agreement, nor compliance with the terms and provisions hereof,
conflicts or will conflict with or results or will result in a breach or
violation of any of the terms, conditions or provisions of, or will require
any consent or approval under, any law, governmental rule or regulation or
the charter documents, as amended, or bylaws, as amended, of it or any
similar instrument binding on it or any order, writ, injunction or decree
of any court or governmental authority against it or by which it or any of
its properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, or constitutes or will constitute a default thereunder
or results or will result in the imposition of any lien upon any of its
properties; and
(f) there are no pending or, to its knowledge, threatened
actions, suits, investigations or proceedings (whether or not purportedly
on behalf of it) against or affecting it or any of its property before or
by any court or administrative agency which, if adversely determined, (i)
would adversely affect the ability of it to perform its obligations under
this Agreement or (ii) would call into question or challenge the validity
of this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Depositary in default with respect to any order of any
court, governmental authority, arbitration board or administrative agency
so as to adversely affect its ability to perform its obligations under this
Agreement.
SECTION 6. TRANSFER. Neither party hereto shall be entitled to
assign or otherwise transfer this Agreement (or any interest herein) other than
(in the case of the Escrow Agent) to a successor escrow agent under the Escrow
and Paying Agent Agreement, and any purported assignment in violation thereof
shall be void. This Agreement shall be binding upon the parties hereto and their
respective successors and (in the case of the Escrow Agent) permitted assigns.
Upon the occurrence of the Transfer (as defined below) contemplated by the
Assignment and Assumption Agreement (as defined below), the Pass Through Trustee
shall (without further act) be deemed to have transferred all of its right,
title and interest in and to this Agreement to the trustee of the Successor
Trust (as defined below) and, thereafter, the trustee of the Successor Trust
shall be deemed to be the "Pass Through Trustee" hereunder with the rights of
the "Pass Through Trustee" hereunder, and each reference herein to "Continental
Airlines Pass Through Trust 2001-1C-O" shall be deemed to be a reference to
"Continental Airlines Pass Through Trust 2001-1C-S". The Escrow Agent and the
Depositary hereby acknowledge and consent to the Transfer contemplated by the
Assignment and Assumption Agreement. For the purposes of this Section 6,
"TRANSFER" means the transfer contemplated by the Assignment and Assumption
Agreement; "ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreement to be entered into between the Pass Through Trustee and the
trustee of the Successor Trust, substantially in the form of Exhibit C to the
Pass Through Trust Agreement; and "SUCCESSOR TRUST" means the Continental
Airlines Pass Through Trust 2001-1C-S.
SECTION 7. AMENDMENT, ETC. This Agreement may not be amended, waived
or otherwise modified except by an instrument in writing signed by the party
against whom the amendment, waiver or other modification is sought to be
enforced and by the Pass Through Trustee.
SECTION 8. NOTICES. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (x) in the case of the Depositary,
Credit Suisse First Boston, 11 Madison Avenue, New York, New York 10010,
Attention: Robert Finney and Mark Verbitsky (Telecopier: (212) 325-8319) or (y)
in the case of the Escrow Agent, Wells Fargo Bank Northwest, N.A., 79 South Main
Street, Third Floor, Salt Lake City, UT 84111, Attention: Corporate Trust
Services (Telecopier: (801) 246-5053), in each case, with a copy to the Pass
Through Trustee, Wilmington Trust Company, 1100 North Market Street, Wilmington,
DE 19890, Attention: Corporate Trust Administration (Telecopier: (302) 651-8882)
and to Continental, Continental Airlines, Inc., 1600 Smith Street, Dept. HQS-FN,
Houston, TX 77002, Attention: Treasurer (Telecopier: (713) 324-2447) (or at such
other address as any such party may specify from time to time in a written
notice to the parties hereto). On or prior to the execution of this Agreement,
the Escrow Agent has delivered to the Depositary a certificate containing
specimen signatures of the representatives of the Escrow Agent who are
authorized to give notices and instructions with respect to this Agreement. The
Depositary may conclusively rely on such certificate until the Depositary
receives written notice from the Escrow Agent to the contrary.
SECTION 9. OBLIGATIONS UNCONDITIONAL. The Depositary hereby
acknowledges and agrees that its obligation to repay each Deposit together with
interest thereon as provided herein is absolute, irrevocable and unconditional
and constitutes a full recourse obligation of the Depositary enforceable against
it to the full extent of all of its assets and properties.
SECTION 10. ENTIRE AGREEMENT. This Agreement (including all
attachments hereto) sets forth all of the promises, covenants, agreements,
conditions and understandings between the Depositary and the Escrow Agent with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 11. GOVERNING LAW. This Agreement, and the rights and
obligations of the Depositary and the Escrow Agent with respect to the Deposits,
shall be governed by, and construed in accordance with, the laws of the State of
New York and subject to the provisions of Regulation D of the Board of Governors
of the Federal Reserve System (or any successor), as the same may be modified
and supplemented and in effect from time to time.
SECTION 12. WAIVER OF JURY TRIAL RIGHT. EACH OF THE DEPOSITARY AND
THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS
RIGHT TO A TRIAL BY JURY.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
SECTION 14. HEAD OFFICE OBLIGATION. Credit Suisse First Boston
hereby agrees that the obligations of the Depositary hereunder are also the
obligations of Credit Suisse First Boston's Head Office in Zurich, Switzerland.
Accordingly, any beneficiary of this Agreement will be able to proceed directly
against Credit Suisse First Boston's Head Office in Zurich, Switzerland if
Credit Suisse First Boston's New York branch defaults in its obligation to such
beneficiary under this Agreement.
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused
this Deposit Agreement to be duly executed as of the day and year first above
written.
WELLS FARGO BANK NORTHWEST, N.A.,
as Escrow Agent
By
------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
NEW YORK BRANCH,
as Depositary
By
------------------------------
Name:
Title:
Schedule I
SCHEDULE OF DEPOSITS
Class C
AIRCRAFT TYPE DEPOSIT AMOUNT ACCOUNT NO.
------------- -------------- -----------
737-824 $2,039,720.20 00C1
737-824 $8,710,540.02 00C2
737-824 $8,710,539.97 51C1
737-824 $4,896,666.70 51C2
737-824 $8,710,539.97 43C1
737-824 $4,931,000.00 35C1
737-824 $8,710,540.01 27C1
737-824 $4,939,666.70 27C2
737-824 $8,710,540.02 19C1
737-924 $9,777,699.03 00C3
737-924 $4,539,899.97 51C3
737-924 $9,638,010.26 43C2
737-924 $4,566,600.00 35C2
737-924 $6,726,693.57 19C2
767-424ER $8,015,200.00 35C3
767-424ER $8,015,200.00 35C4
767-424ER $19,069,020.00 27C3
767-424ER $8,032,000.00 27C4
767-424ER $8,048,800.00 19C3
767-424ER $19,069,020.00 19C4
777-224ER $25,906,103.58 19C5
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, New York 10010
Attention: Robert Finney and Mark Verbitsky
Telecopier: (212) 325-8319
Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
June 26, 2001 (the "DEPOSIT AGREEMENT") between Wells Fargo Bank Northwest,
N.A., as Escrow Agent, and Credit Suisse First Boston, New York Branch, as
Depositary (the "DEPOSITARY").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$[_______], Account No. ____________.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to ________________, Account No. _____, Reference: _________] on
_________ __, 200__, upon the telephonic request of a representative of the Pass
Through Trustee.
WELLS FARGO BANK NORTHWEST, N.A.,
as Escrow Agent
By
------------------------------
Name:
Title:
Dated: _______ __, 200_
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Mark Verbitsky
Telecopier: 212-325-8319
Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
June 26, 2001 (the "DEPOSIT AGREEMENT") between Wells Fargo Bank Northwest,
N.A., as Escrow Agent, and Credit Suisse First Boston, New York Branch, as
Depositary (the "DEPOSITARY").
In accordance with Section 2.3(b) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of all Deposits.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposits and accrued interest thereon to the Paying Agent at Wilmington
Trust Company, ABA# 031100092, Account No. _____________, Reference: Continental
2001-1C on ________.
WELLS FARGO BANK NORTHWEST, N.A.,
as Escrow Agent
By
------------------------------
Name:
Title:
Dated: _________, 200_
CONTINENTAL AIRLINES, INC., ISSUER
Class C Pass Through Certificates, Series 2001-1
UNDERWRITING AGREEMENT
June 12, 2001
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs:
Continental Airlines, Inc., a Delaware corporation (the "Company"),
proposes that Wilmington Trust Company, as trustee (the "Trustee") under the
Original Trust (as defined below), issue and sell to Morgan Stanley & Co.
Incorporated (the "Underwriter") pass through certificates (the "Class C
Certificates") in the aggregate principal amount and with the interest rate and
final distribution date set forth on Schedule I hereto on the terms and
conditions stated herein. On April 19, 2001, the Company caused the trustee
under the Continental Airlines Pass Through Trusts 2001-1A-1, 2001-1A-2 and
2001-1B (the "Other Trusts") to issue and sell Class A-1 Certificates (the
"Class A-1 Certificates"), Class A-2 Certificates (the "Class A-2 Certificates")
and Class B Certificates (the "Class B Certificates") of the same series as the
Class C Certificates pursuant to a separate underwriting agreement dated April
4, 2001 (the "April Underwriting Agreement") between the Company and the
underwriters named therein.
The Class C Certificates will be issued pursuant to a Pass Through
Trust Agreement, dated as of September 25, 1997 (the "Basic Agreement"), between
the Company and the Trustee, as supplemented with respect to the issuance of the
Class C Certificates by a separate Pass Through Trust Supplement to be dated as
of the Closing Date (as defined below) (the "Original Trust Supplement"),
between the Company and the Trustee (the Basic Agreement as supplemented by the
Original Trust Supplement being referred to herein as the "Original Pass Through
Trust Agreement"). The Original Trust Supplement is related to the creation and
administration of Continental Airlines Pass Through Trust 2001-1C-O (the
"Original Trust"). As used herein, unless the context otherwise requires, the
term the "Underwriter" and "you" shall mean Morgan Stanley & Co. Incorporated.
The cash proceeds of the offering of the Class C Certificates by the
Original Trust, to the extent not used to purchase Equipment Notes (as defined
in the Amended and Restated Note Purchase Agreement (as defined below)) on the
Closing Date, will be paid to Wells Fargo Bank Northwest, National Association,
as escrow agent (the "Escrow Agent"), under an Escrow and Paying Agent Agreement
among the Escrow Agent, the Underwriter, the Trustee and Wilmington Trust
Company, as paying agent (the "Paying Agent"), for the benefit of the holders of
Class C Certificates issued by the Original Trust (each, an "Escrow Agreement").
The Escrow Agent will deposit such cash proceeds (the "Deposits") with Credit
Suisse First Boston, New York Branch (the "Depositary"), in accordance with a
Deposit Agreement relating to the Original Trust (the "Deposit Agreement"), and,
subject to the fulfillment of certain conditions, will withdraw Deposits upon
request to allow the Trustee to purchase Equipment Notes from time to time
pursuant to an Amended and Restated Note Purchase Agreement dated as of the
Closing Date (the "Amended and Restated Note Purchase Agreement") among the
Company, Wilmington Trust Company, as Trustee of the Original Trust and each of
the Other Trusts, as Subordination Agent (as hereinafter defined) and as Paying
Agent, and the Escrow Agent, amending and restating that certain Note Purchase
Agreement dated as of April 19, 2001 among the parties thereto. The Escrow Agent
will issue receipts to be attached to each Class C Certificate ("Escrow
Receipts") representing each holder's fractional undivided interest in amounts
deposited with such Escrow Agent with respect to the Class C Certificates and
will pay to such holders through the Paying Agent interest accrued on the
Deposits and received by such Paying Agent pursuant to the Deposit Agreement at
a rate per annum equal to the interest rate applicable to the Class C
Certificates.
On the earlier of (i) the first Business Day following September 30,
2002 or, if later, the fifth Business Day following the Delivery Period
Termination Date (as defined in the Amended and Restated Note Purchase
Agreement) and (ii) the fifth Business Day following the occurrence of a
Triggering Event (as defined in the Intercreditor Agreement) (such Business Day,
the "Trust Transfer Date"), the Original Trust will transfer and assign all of
its assets and rights to a newly-created successor trust (the "Successor Trust")
with substantially identical terms except as described in the Prospectus
Supplement (as hereinafter defined) governed by the Basic Agreement, as
supplemented with respect to the Class C Certificates by a separate Pass Through
Trust Supplement (the "Successor Trust Supplement"), between the Company and the
Trustee (the Basic Agreement, as supplemented by such Successor Trust
Supplement, being referred to herein as the "Successor Pass Through Trust
Agreement" and, together with the Original Pass Through Trust Agreement, the
"Designated Agreements"). Each Class C Certificate outstanding on the Trust
Transfer Date will represent the same interest in the Successor Trust as such
Class C Certificate represented in the Original Trust. Wilmington Trust Company
initially will also act as trustee of the Successor Trust (the "Successor
Trustee").
Certain amounts of interest payable on the Class C Certificates will
be entitled to the benefits of a liquidity facility. Landesbank Hessen-Thuringen
Girozentrale (the "Liquidity Provider") will enter into a revolving credit
agreement with respect to the Original Trust (the "Liquidity Facility") to be
dated as of the Closing Date for the benefit of the holders of the Class C
Certificates issued by the Original Trust. The Liquidity Provider and the
holders of the Class C Certificates will be entitled to the benefits of an
Intercreditor Agreement dated as of April 19, 2001 (the "Intercreditor
Agreement") among the trustees named therein, Wilmington Trust Company, as
subordination agent and trustee thereunder (the "Subordination Agent") and the
liquidity provider named therein, as amended by Amendment No. 1 to Intercreditor
Agreement dated as of the Closing Date (the "Intercreditor Amendment") among the
parties to the Intercreditor Agreement, the Company, the Trustee and the
Liquidity Provider. The Intercreditor Agreement, as amended by the Intercreditor
Amendment, shall be referred to herein as the "Amended Intercreditor Agreement".
The Company has filed with the Securities and Exchange Commission
(the "Commission") a shelf registration statement on Form S-3 (File No.
333-57188) relating to pass through certificates (such registration statement
(including the respective exhibits thereto and the respective documents filed by
the Company with the Commission pursuant to the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act"), that are incorporated by reference therein),
as amended at the date hereof, being herein referred to as the "Registration
Statement") and the offering thereof from time to time in accordance with Rule
415 of the Securities Act of 1933, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "Securities Act"). The Registration
Statement has been declared effective by the Commission. A final prospectus
supplement reflecting the terms of the Class C Certificates, the terms of the
offering thereof and other matters relating to the Class C Certificates, as
further specified in Section 4(d) hereof, will be prepared and filed together
with the basic prospectus referred to below pursuant to Rule 424 under the
Securities Act (such prospectus supplement, in the form first filed on or after
the date hereof pursuant to Rule 424, being herein referred to as the
"Prospectus Supplement" and any such prospectus supplement in the form or forms
filed prior to the filing of the Prospectus Supplement being herein referred to
as a "Preliminary Prospectus Supplement"). The basic prospectus included in the
Registration Statement and relating to all offerings of pass through
certificates under the Registration Statement, as supplemented by the Prospectus
Supplement, and including the documents incorporated by reference therein, is
herein called the "Prospectus", except that, if such basic prospectus is amended
or supplemented on or prior to the date on which the Prospectus Supplement is
first filed pursuant to Rule 424, the term "Prospectus" shall refer to such
basic prospectus as so amended or supplemented and as supplemented by the
Prospectus Supplement. Any reference herein to the terms "amendment" or
"supplement" with respect to the Prospectus or any Preliminary Prospectus
Supplement shall be deemed to refer to and include any documents filed with the
Commission under the Exchange Act after the date the Prospectus is filed with
the Commission, or the date of such Preliminary Prospectus Supplement, as the
case may be, and incorporated therein by reference pursuant to Item 12 of Form
S-3 under the Securities Act.
Capitalized terms not otherwise defined in this Underwriting
Agreement (the "Agreement") shall have the meanings specified therefor in the
Original Pass Through Trust Agreement, in the Amended and Restated Note Purchase
Agreement or in the Amended Intercreditor Agreement; PROVIDED that, as used in
this Agreement, the term "Class C Operative Agreements" shall mean the Deposit
Agreement, the Escrow Agreement, the Intercreditor Amendment, the Liquidity
Facility, the Designated Agreements, the Assignment and Assumption Agreement,
the Financing Agreements (as defined in the Amended and Restated Note Purchase
Agreement) and the Operative Agreements (as defined in the April Underwriting
Agreement).
1. REPRESENTATIONS AND WARRANTIES. (a) The Company represents and
warrants to, and agrees with the Underwriter that:
(i) The Company meets the requirements for use of Form S-3 under the
Securities Act; the Registration Statement has become effective; and, on
the original effective date of the Registration Statement, the
Registration Statement complied in all material respects with the
requirements of the Securities Act. On the original effective date of the
Registration Statement, the Registration Statement did not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and on the date hereof and on the Closing Date, the
Prospectus, as amended and supplemented, if the Company shall have
furnished any amendment or supplement thereto, does not and will not
include an untrue statement of a material fact and does not and will not
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The preceding sentence does not apply to (x) statements in or
omissions from the Registration Statement, the Preliminary Prospectus or
the Prospectus based upon (A) written information furnished to the Company
by the Underwriter expressly for use therein ("Underwriter Information")
or (B) the Depositary Information (as hereinafter defined) or (y)
statements or omissions in that part of each Registration Statement which
shall constitute the Statement of Eligibility of the Trustee under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), on
Form T-1.
(ii) The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3 under the Securities Act, at the time they
were or hereafter, during the period mentioned in paragraph 4(a) below,
are filed with the Commission, complied or will comply, as the case may
be, in all material respects with the requirements of the Exchange Act.
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own, lease and operate its property and
to conduct its business as described in the Prospectus; and the Company is
duly qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
condition (financial or otherwise), business, properties or results of
operations of the Company and its consolidated subsidiaries taken as a
whole (a "Continental Material Adverse Effect").
(iv) Each of Continental Micronesia, Inc., 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 corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus; and each Subsidiary is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not have a Continental Material Adverse
Effect; all of the issued and outstanding capital stock of each Subsidiary
has been duly authorized and validly issued and is fully paid and
nonassessable; and, except as described in the Prospectus, each
Subsidiary's capital stock owned by the Company, directly or through
subsidiaries, is owned free from liens, encumbrances and defects.
(v) Except as described in the Prospectus, the Company is not in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or by
which it may be bound or to which any of its properties may be subject,
except for such defaults that would not have a Continental Material
Adverse Effect. The execution, delivery and performance of this Agreement
and the Class C Operative Agreements to which the Company is or will be a
party and the consummation of the transactions contemplated herein,
therein and in the Amended Intercreditor Agreement 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 Class C Operative Agreement or the Amended Intercreditor
Agreement) upon any property or assets of the Company pursuant to any
indenture, loan agreement, contract, mortgage, note, lease or other
instrument to which the Company is a party or by which the Company may be
bound or to which any of the property or assets of the Company is subject,
which breach, default, lien, charge or encumbrance, individually or in the
aggregate, would have a Continental Material Adverse Effect, nor will any
such execution, delivery or performance result in any violation of the
provisions of the charter or by-laws of the Company or any statute, any
rule, regulation or order of any governmental agency or body or any court
having jurisdiction over the Company.
(vi) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
valid authorization, execution and delivery by the Company of this
Agreement and the Class C Operative Agreements to which it is or will be a
party and for the consummation of the transactions contemplated herein,
therein and in the Amended Intercreditor Agreement, except (x) such as may
be required under the Securities Act, the Trust Indenture Act, the
securities or "blue sky" or similar laws of the various states and of
foreign jurisdictions or rules and regulations of the National Association
of Securities Dealers, Inc., and (y) filings or recordings with the
Federal Aviation Administration (the "FAA") and under the Uniform
Commercial Code as is in effect in the State of Texas, the State of
Delaware and the State of Utah, which filings or recordings referred to in
this clause (y), with respect to any particular set of Financing
Agreements, shall have been made, or duly presented for filing or
recordation, or shall be in the process of being duly filed or filed for
recordation, on or prior to the applicable Funding Date for the Aircraft
related to such Financing Agreements.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company and the Class C Operative Agreements to which the
Company will be a party will be duly executed and delivered by the Company
on or prior to the Closing Date or the applicable Funding Date, as the
case may be.
(viii) The Class C Operative Agreements to which the Company is or
will be a party, when duly executed and delivered by the Company, assuming
that such Class C Operative Agreements have been duly authorized, executed
and delivered by, and constitute the legal, valid and binding obligations
of, each other party thereto, will constitute valid and binding
obligations of the Company enforceable in accordance with their terms,
except (w) as enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (x) as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law),
(y) that the enforceability of the Leases may also be limited by
applicable laws which may affect the remedies provided therein but which
do not affect the validity of the Leases or make such remedies inadequate
for the practical realization of the benefits intended to be provided
thereby and (z) with respect to indemnification and contribution
provisions, as enforcement thereof may be limited by applicable law, and
subject, in the case of the Successor Pass Through Trust Agreement, to the
delayed effectiveness thereof as set forth therein. The Basic Agreement as
executed is substantially in the form filed as an exhibit to the Company's
current report on Form 8-K dated September 25, 1997 and has been duly
qualified under the Trust Indenture Act. The Class C Certificates and the
Designated Agreements to which the Company is, or is to be, a party will
conform in all material respects to the descriptions thereof in the
Prospectus.
(ix) The consolidated financial statements incorporated by reference
in the Prospectus, together with the related notes thereto, present fairly
in all material respects the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the consolidated
results of operations and cash flows of the Company and its consolidated
subsidiaries for the periods specified. Such financial statements have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved, except as
otherwise stated therein and except that the unaudited financial
statements do not have all required footnotes. The financial statement
schedules, if any, incorporated by reference in the Prospectus present the
information required to be stated therein.
(x) The Company is a "citizen of the United States" within the
meaning of Section 40102(a)(15) of Title 49 of the United States Code, as
amended, and holds an air carrier operating certificate issued pursuant to
Chapter 447 of Title 49 of the United States Code, as amended, for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or
more of cargo. All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable.
(xi) On or prior to the Closing Date, the issuance of the Class C
Certificates will be duly authorized by the Trustee. When duly executed,
authenticated, issued and delivered in the manner provided for in the
Original Pass Through Trust Agreement and sold and paid for as provided in
this Agreement, the Class C Certificates will be legally and validly
issued and will be entitled to the benefits of the Original Pass Through
Trust Agreement; based on applicable law as in effect on the date hereof,
upon the execution and delivery of the Assignment and Assumption Agreement
in accordance with the Original Pass Through Trust Agreement, the Class C
Certificates will be legally and validly outstanding under the Successor
Pass Through Trust Agreement; and when executed, authenticated, issued and
delivered in the manner provided for in the Escrow Agreement, the Escrow
Receipts will be legally and validly issued and will be entitled to the
benefits of the related Escrow Agreement.
(xii) Except as disclosed in the Prospectus, the Company and the
Subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects except where the failure to have such title would
not have a Continental Material Adverse Effect; and except as disclosed in
the Prospectus, the Company and the Subsidiaries hold any leased real or
personal property under valid and enforceable leases with no exceptions
that would have a Continental Material Adverse Effect.
(xiii) Except as disclosed in the Prospectus, there is no action,
suit or proceeding before or by any governmental agency or body or court,
domestic or foreign, now pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries or any of their
respective properties that individually (or in the aggregate in the case
of any class of related lawsuits), could reasonably be expected to result
in a Continental Material Adverse Effect or that could reasonably be
expected to materially and adversely affect the consummation of the
transactions contemplated by this Agreement, the Class C Operative
Agreements or the Amended Intercreditor Agreement.
(xiv) Except as disclosed in the Prospectus, no labor dispute with
the employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent that could reasonably be expected to have a
Continental Material Adverse Effect.
(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 Prospectus, except to the extent that the failure
to so obtain, declare or file would not have a Continental Material
Adverse Effect.
(xvi) Except as disclosed in the Prospectus, (x) neither the Company
nor any of the Subsidiaries is in violation of any statute, rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances (collectively, "environmental laws"), owns
or operates any real property contaminated with any substance that is
subject to any environmental laws, or is subject to any claim relating to
any environmental laws, which violation, contamination, liability or claim
individually or in the aggregate is reasonably expected to have a
Continental Material Adverse Effect, and (y) the Company is not aware of
any pending investigation which might lead to such a claim that is
reasonably expected to have a Continental Material Adverse Effect.
(xvii) The accountants that examined and issued an auditors' report
with respect to the consolidated financial statements of the Company and
the financial statement schedules, if any, included or incorporated by
reference in the Registration Statement are independent public accountants
within the meaning of the Securities Act.
(xviii) Neither the Company nor the Original Trust is, nor (based on
applicable law as in effect on the date hereof) will the Successor Trust
be, as of the execution and delivery of the Assignment and Assumption
Agreement in accordance with the Original Pass Through Trust Agreement, 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 Class C Certificates and the application of the proceeds
thereof as described in the Prospectus, neither the Original Trust will
be, nor (based on applicable law as in effect on the date hereof) will the
Successor Trust be, as of the execution and delivery of the Assignment and
Assumption Agreement in accordance with the Original Pass Through Trust
Agreement, nor will the escrow arrangements contemplated by the Escrow
Agreement result in the creation of, an "investment company", or an entity
"controlled" by an "investment company", as defined in the Investment
Company Act, in each case required to register under the Investment
Company Act.
(xix) This Agreement, the other Class C Operative Agreements to
which the Company is or will be a party (upon execution and delivery
thereof) and the Amended Intercreditor Agreement will conform in all
material respects to the descriptions thereof contained in the Prospectus
(other than, in the case of the Financing Agreements, as described in the
Prospectus).
(xx) No Appraiser is an affiliate of the Company or, to the
knowledge of the Company, has a substantial interest, direct or indirect,
in the Company. To the knowledge of the Company, none of the officers and
directors of any of such Appraisers are connected with the Company or any
of its affiliates as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
(b) The Depositary represents and warrants to, and agrees with, the
Underwriter and the Company that:
(i) The information pertaining to the Depositary set forth under the
caption "Description of the Deposit Agreements -- Depositary"
(collectively, the "Depositary Information") in the Prospectus, as amended
and supplemented, if the Company shall have furnished any amendment or
supplement thereto, does not, and will not as of the Closing Date, contain
any untrue statement of a material fact.
(ii) The Depositary has been duly organized and is validly existing
in good standing under the laws of Switzerland and is duly qualified to
conduct banking business in the State of New York through its New York
branch, with corporate power and authority to own, lease and operate its
property, to conduct its business as described in the Depositary
Information and to enter into and perform its obligations under this
Agreement and the Deposit Agreement.
(iii) No consent, approval, authorization, or order of, or filing
with any governmental agency or body or any court is required for the
valid authorization, execution and delivery by the Depositary of this
Agreement and the Deposit Agreement and for the consummation of the
transactions contemplated herein and therein, except such as may have been
obtained.
(iv) The execution and delivery by the Depositary of this Agreement
and the Deposit Agreement and the consummation of the transactions
contemplated herein and therein have been duly authorized by the
Depositary and will not violate any law, governmental rule or regulation
or any of its organizational documents or any order, writ, injunction or
decree of any court or governmental agency against it or the provisions of
any indenture, loan agreement, contract or other instrument to which it is
a party or is bound.
(v) This Agreement has been duly executed and delivered by the
Depositary, and the Deposit Agreement will be duly executed and delivered
by the Depositary on or prior to the Closing Date.
(vi) The Deposit Agreement, when duly executed and delivered by the
Depositary, assuming that such Deposit Agreement has been duly authorized,
executed and delivered by, and constitutes the legal, valid and binding
obligation of, the Escrow Agent, will constitute the legal, valid and
binding obligation of the Depositary enforceable in accordance with its
terms, except (x) as enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws now or
hereinafter in effect relating to creditors' rights generally and (y) as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(vii) Payments of interest and principal in respect of the Deposits
are not subject under the laws of Switzerland or any political subdivision
thereof to any withholdings or similar charges or deductions.
(c) The parties agree that any certificate signed by a duly
authorized officer of the Company and delivered to the Underwriter, or to
counsel for the Underwriter, on the Closing Date and in connection with this
Agreement or the offering of the Class C Certificates, shall be deemed a
representation and warranty by (and only by) the Company to the Underwriter as
to the matters covered thereby.
2. PURCHASE, SALE AND DELIVERY OF CLASS C CERTIFICATES. (a) On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and the conditions herein set forth, the Company agrees to
cause the Trustee to sell to the Underwriter, and the Underwriter agrees to
purchase from the Trustee, at a purchase price of 100% of the principal amount
thereof, the aggregate principal amount of Class C Certificates set forth in
Schedule I. Concurrently with the issuance of the Class C Certificates, the
Escrow Agent shall issue and deliver to the Trustee the Escrow Receipts in
accordance with the terms of the Escrow Agreement, which Escrow Receipts shall
be attached to the Class C Certificates.
(b) The Company is advised by you that the Underwriter proposes to
make a public offering of the Class C Certificates as set forth in the
Prospectus Supplement as soon after this Agreement has been entered into as in
your judgment is advisable. The Company is further advised by you that the Class
C Certificates are to be offered to the public initially at 100% of their
principal amount -- the public offering price -- plus accrued interest, if any,
and to certain dealers selected by the Underwriter at concessions not in excess
of the concessions set forth in the Prospectus, and that the Underwriter may
allow, and such dealers may reallow, concessions not in excess of the
concessions set forth in the Prospectus to certain other dealers.
(c) As underwriting commission and other compensation to the
Underwriter for its commitments and obligations hereunder in respect of the
Class C Certificates, including its undertaking to distribute the Class C
Certificates, the Company will pay to the Underwriter for its account the amount
set forth in Schedule II hereto. Such payment will be made on the Closing Date
simultaneously with the issuance and sale of the Class C Certificates (with
attached Escrow Receipts) to the Underwriter. Payment of such compensation shall
be made by Federal funds check or by wire transfer of immediately available
funds.
(d) Delivery of and payment for the Class C Certificates (with
attached Escrow Receipts) shall be made at the offices of Hughes Hubbard & Reed
LLP at One Battery Park Plaza, New York, New York 10004 at 10:00 A.M. on June
26, 2001 or such other date, time and place as may be agreed upon by the Company
and you (such date and time of delivery and payment for the Class C Certificates
(with attached Escrow Receipts) being herein called the "Closing Date").
Delivery of the Class C Certificates (with attached Escrow Receipts) issued by
the Original Trust shall be made to the Underwriter's account at The Depository
Trust Company ("DTC") for the account of the Underwriter against payment by the
Underwriter of the purchase price thereof. Payment for the Class C Certificates
issued by the Original Trust and the related Escrow Receipts attached thereto
shall be made by the Underwriter by wire transfer of immediately available funds
to the accounts and in the manner specified in the Escrow Agreement (PROVIDED,
that if the Company notifies you that a Delivery Date is occurring on the
Closing Date, a portion of such payment in the amount specified by the Company
shall be paid to the accounts and in the manner specified in the related
Participation Agreement). The Class C Certificates (with attached Escrow
Receipts) issued by the Original Trust shall be in the form of one or more fully
registered global Class C Certificates, and shall be deposited with the Trustee
as custodian for DTC and registered in the name of Cede & Co.
(e) The Company agrees to have the Class C Certificates (with
attached Escrow Receipts) available for inspection and checking by you in New
York, New York not later than 1:00 P.M. on the business day prior to the Closing
Date.
3. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The obligation of the
Underwriter to purchase and pay for the Class C Certificates pursuant to this
Agreement is subject to the following conditions:
(a) On the Closing Date, no stop order suspending the effectiveness
of the Registration Statement shall have been issued under the Securities
Act and no proceedings therefor shall have been instituted or threatened
by the Commission.
(b) On the Closing Date, you shall have received an opinion of
Hughes Hubbard & Reed LLP, as counsel for the Company, dated the Closing
Date, in form and substance reasonably satisfactory to you and
substantially to the effect set forth in Exhibit A hereto.
(c) On the Closing Date, you shall have received an opinion of the
General Counsel of the Company, dated the Closing Date, in form and
substance reasonably satisfactory to you and substantially to the effect
set forth in Exhibit B hereto.
(d) On the Closing Date, you shall have received an opinion of
Richards, Layton & Finger, P.A., counsel for Wilmington Trust Company,
individually and as Trustee, Subordination Agent and Paying Agent, dated
the Closing Date, in form and substance reasonably satisfactory to you and
substantially to the effect set forth in Exhibit C hereto.
(e) On the Closing Date, you shall have received an opinion of Ray,
Quinney & Nebeker, counsel for the Escrow Agent, dated the Closing Date,
in form and substance reasonably satisfactory to you and substantially to
the effect set forth in Exhibit D hereto.
(f) On the Closing Date, you shall have received an opinion of
Katrin Schutz and Jurgen Necker, German in-house counsel for the Liquidity
Provider, dated the Closing Date, in form and substance reasonably
satisfactory to you and substantially to the effect set forth in Exhibit E
hereto.
(g) On the Closing Date, you shall have received an opinion of
Pillsbury Winthrop LLP, special New York counsel to the Liquidity
Provider, dated the Closing Date, in form and substance reasonably
satisfactory to you and substantially to the effect set forth in Exhibit F
hereto.
(h) On the Closing Date, you shall have received an opinion of Roger
Wiegley, New York in-house counsel for the Depositary, dated the Closing
Date, in form and substance reasonably satisfactory to you and
substantially to the effect set forth in Exhibit G hereto.
(i) On the Closing Date, you shall have received an opinion of
Giovanni Peditto, Swiss in-house counsel for the Depositary, dated the
Closing Date, in form and substance reasonably satisfactory to you and
substantially to the effect set forth in Exhibit H hereto.
(j) On the Closing Date, you shall have received an opinion of
Milbank, Tweed, Hadley & McCloy LLP, counsel for the Underwriter, dated as
of the Closing Date, with respect to the issuance and sale of the Class C
Certificates, the Registration Statement, the Prospectus and other related
matters as the Underwriter may reasonably require.
(k) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries considered as one enterprise that, in your judgment, is
material and adverse and that makes it, in your judgment, impracticable to
proceed with the completion of the public offering of the Class C
Certificates on the terms and in the manner contemplated by the
Prospectus.
(l) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by the President or any Vice President of the
Company, to the effect that the representations and warranties of the
Company contained in this Agreement are true and correct as of the Closing
Date as if made on the Closing Date (except to the extent that they relate
solely to an earlier date, in which case they shall be true and accurate
as of such earlier date), that the Company has performed all its
obligations to be performed hereunder on or prior to the Closing Date and
that, subsequent to the execution and delivery of this Agreement, there
shall not have occurred any material adverse change, or any development or
event involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries considered as one enterprise, except as set
forth in or contemplated by the Prospectus.
(m) You shall have received from Ernst & Young LLP a letter, dated
the date hereof, in form and substance satisfactory to you.
(n) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have been any downgrading in
the rating accorded any of the Company's securities (except for any pass
through certificates by any "nationally recognized statistical rating
organization", as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act, or any public announcement that any such
organization has under surveillance or review, in each case for possible
change, its ratings of any such securities other than pass through
certificates (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating).
(o) Each of the Appraisers shall have furnished to the Underwriter 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.
(p) At the Closing Date, each of the Class C Operative Agreements
(other than the Assignment and Assumption Agreement and the Financing
Agreements) shall have been duly executed and delivered by each of the
parties thereto; and the representations and warranties of the Company
contained in each of such executed Class C Operative Agreements (other
than the Operative Agreements (as defined in the April Underwriting
Agreement)) 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 Underwriter
shall have received a certificate of the President or a Vice President of
the Company, dated as of the Closing Date, to such effect.
(q) On the Closing Date, the Class C Certificates shall be rated (x)
not lower than "A-" by Standard & Poor's Ratings Services ("S&P") and (y)
not lower than "Baa1" by Moody's Investors Service, Inc. ("Moody's").
(r) On the Closing Date, the representations and warranties of the
Depositary contained in this Agreement shall be true and correct as if
made on the Closing Date (except to the extent that they relate solely to
an earlier date, in which case they shall be true and correct as of such
earlier date).
(s) You shall have received from Ernst & Young LLP a letter, dated
the Closing Date, which meets the requirements of subsection (m) of this
Section, except that the specified date referred to in such subsection
will be a date not more than three business days prior to the Closing Date
for the purposes of this subsection.
(t) You shall have received a written confirmation from Moody's and
S&P, dated the Closing Date, that the terms of the Class C Certificates
will not result in a withdrawal, suspension or downgrading of the ratings
of the Class A-1 Certificates, the Class A-2 Certificates or the Class B
Certificates.
The Company will furnish the Underwriter with such conformed copies
of such opinions, certificates, letters and documents as the Underwriter
reasonably requests.
4. CERTAIN COVENANTS OF THE COMPANY. The Company covenants with the
Underwriter as follows:
(a) During the period described in the following sentence of this
Section 4(a), the Company shall advise you promptly of any proposal to
amend or supplement the Registration Statement or the Prospectus (except
by documents filed under the Exchange Act) and will not effect such
amendment or supplement (except by documents filed under the Exchange Act)
without your consent, which consent will not be unreasonably withheld. If,
at any time after the public offering of the Class C Certificates as the
Prospectus is required by law to be delivered in connection with sales of
the Class C Certificates by the Underwriter or a dealer, any event shall
occur as a result of which it is necessary to amend the Registration
Statement or amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading in any material respect, or if
it is necessary to amend the Registration Statement or amend or supplement
the Prospectus to comply with law, the Company shall prepare and furnish,
at its own expense, to the Underwriter and to the dealers (whose names and
addresses you will furnish to the Company) to which Class C Certificates
may have been sold by you and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading in any material respect or amendments or supplements to the
Registration Statement or the Prospectus so that the Registration
Statement or the Prospectus, as so amended or supplemented, will comply
with law and cause such amendments or supplements to be filed promptly
with the Commission.
(b) During the period mentioned in paragraph (a) above, the Company
shall notify the Underwriter immediately of (i) the effectiveness of any
amendment to the Registration Statement, (ii) the transmittal to the
Commission for filing of any supplement to the Prospectus or any document
that would as a result thereof be incorporated by reference in the
Prospectus, (iii) the receipt of any comments from the Commission with
respect to the Registration Statement, the Prospectus or the Prospectus
Supplement, (iv) any request by the Commission for any amendment to the
Registration Statement or any supplement to the Prospectus or for
additional information relating thereto or to any document incorporated by
reference in the Prospectus and (v) receipt by the Company of any notice
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, the suspension of the
qualification of the Class C Certificates for offering or sale in any
jurisdiction, or the institution or threatening of any proceeding for any
of such purposes; and the Company agrees to use every reasonable effort to
prevent the issuance of any such stop order and, if any such order is
issued, to obtain the lifting thereof at the earliest possible moment and
the Company shall (subject to the proviso to Section 4(e)) endeavor, in
cooperation with the Underwriter, to prevent the issuance of any such stop
order suspending such qualification and, if any such order is issued, to
obtain the lifting thereof at the earliest possible moment.
(c) During the period mentioned in paragraph (a) above, the Company
will furnish to the Underwriter as many conformed copies of the
Registration Statement (as originally filed) and all amendments and
supplements to such documents (excluding all exhibits and documents filed
therewith or incorporated by reference therein) and as many conformed
copies of all consents and certificates of experts, in each case as soon
as available and in such quantities as the Underwriter reasonably
requests.
(d) Promptly following the execution of this Agreement, the Company
will prepare a Prospectus Supplement that complies with the Securities Act
and that sets forth the principal amount of the Class C Certificates and
their terms (including, without limitation, terms of the Escrow Receipts
attached to the Class C Certificates) not otherwise specified in the
Preliminary Prospectus Supplement or the basic prospectus included in the
Registration Statement, the name of the Underwriter and the principal
amount of the Class C Certificates that it has agreed to purchase, the
price at which the Class C Certificates are to be purchased by the
Underwriter from the Trustee, any initial public offering price, any
selling concession and reallowance and any delayed delivery arrangements,
and such other information as you and the Company deem appropriate in
connection with the offering of the Class C Certificates. The Company will
timely transmit copies of the Prospectus Supplement to the Commission for
filing pursuant to Rule 424 under the Securities Act.
(e) The Company shall, in cooperation with the Underwriter, endeavor
to arrange for the qualification of the Class C Certificates for offer and
sale under the applicable securities or "blue sky" laws of such
jurisdictions in the United States as you reasonably designate and will
endeavor to maintain such qualifications in effect so long as required for
the distribution of the Class C Certificates; PROVIDED that the Company
shall not be required to (i) qualify as a foreign corporation or as a
dealer in securities, (ii) file a general consent to service of process or
(iii) subject itself to taxation in any such state.
(f) During the period of ten years after the Closing Date, the
Company will promptly furnish to the Underwriter, upon request, copies of
all Annual Reports on Form 10-K and any definitive proxy statement of the
Company filed with the Commission; PROVIDED THAT providing a website
address at which such Annual Reports and any such definitive proxy
statements may be accessed will satisfy this clause (f).
(g) Between the date of this Agreement and the Closing Date, the
Company shall not, without your prior written consent, offer, sell, or
enter into any agreement to sell (as public debt securities registered
under the Securities Act (other than the Class C Certificates) or as debt
securities which may be resold in a transaction exempt from the
registration requirements of the Securities Act in reliance on Rule 144A
thereunder and which are marketed through the use of a disclosure document
containing substantially the same information as a prospectus for similar
debt securities registered under the Securities Act), any equipment notes,
pass through certificates, equipment trust certificates or equipment
purchase certificates secured by aircraft owned or leased by the Company
(or rights relating thereto).
5. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless the Underwriter, and each Person, if any, who
controls the Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by the Underwriter or any such
controlling person in connection with defending or investigating any such action
or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
the Preliminary Prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon Underwriter Information or Depositary Information; PROVIDED, HOWEVER, that
the foregoing indemnity agreement with respect to the Preliminary Prospectus
shall not inure to the benefit of the Underwriter, or to the benefit of any
person controlling the Underwriter, if a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of the Underwriter to
such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Class C Certificates to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities unless such failure
to deliver the Prospectus was a result of noncompliance by the Company with its
delivery requirements set forth in Section 4(a).
(b) The Underwriter agrees to indemnify and hold harmless the
Company, its directors, each of the officers who signed the Registration
Statement 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 the Underwriter
but only with reference to Underwriter Information provided by the Underwriter.
(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. The
indemnifying party, upon request of the indemnified party, shall, and the
indemnifying party may elect to, 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 the indemnifying party
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, (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them, or (iii) the indemnifying party shall have
failed to retain counsel as required by the prior sentence to represent the
indemnified party within a reasonable amount of time. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by you in the case
of parties indemnified pursuant to paragraph (a) above and by the Company in the
case of parties indemnified pursuant to paragraph (b) above. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested in writing an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 90
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement, unless such
fees and expenses are being disputed in good faith. The indemnifying party at
any time may, subject to the last sentence of this Section 5(c), settle or
compromise any proceeding described in this paragraph at the expense of the
indemnifying party. 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 any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act by or on behalf of an indemnified party.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 5 is required to be made but is unavailable to an
indemnified party or insufficient in respect of any losses, claims, damages or
liabilities, then the applicable indemnifying party under such paragraph, in
lieu of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
Underwriter, on the other hand, from the offering of the Class C 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 Underwriter 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 Underwriter on
the other hand in connection with the offering of the Class C Certificates shall
be deemed to be in the same respective proportions as the proceeds from the
offering of the Class C Certificates received by the Original Trust (before
deducting expenses) less total underwriting discounts and commissions paid to
the Underwriter by the Company, and the total underwriting discounts and
commissions paid to the Underwriter by the Company, as set forth on the cover of
the Prospectus, bear to the aggregate public offering price of the Class C
Certificates. The relative fault of the Company on the one hand and of the
Underwriter 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 information supplied by the Underwriter , and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The Company and the Underwriter 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, the Underwriter shall not be required to contribute any amount in
excess of the amount by which the total price at which the Class C Certificates
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that the Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The indemnity and contribution provisions contained in this
Section 5 and the representations and warranties of the Company 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 Underwriter or any person controlling the Underwriter 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 Class C
Certificates. The remedies provided for in this Section 5 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
6. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the Underwriter set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any termination of this Agreement, any investigation, or statement as to the
results thereof, made by or on behalf of the Underwriter, the Company or any of
their respective representatives, officers or directors or any controlling
person and will survive delivery of and payment for the Class C Certificates. If
for any reason the purchase of the Class C Certificates by the Underwriter is
not consummated, the Company shall remain responsible for the expenses to be
paid or reimbursed by it pursuant to Section 8 and the respective obligations of
the Company and the Underwriter pursuant to Section 5 shall remain in effect. If
the purchase of the Class C Certificates by the Underwriter is not consummated
for any reason other than solely because of the occurrence of the termination of
the Agreement pursuant to Section 7, the Company will reimburse the Underwriter
for all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Class C Certificates and comply with its obligations under Section 8.
7. TERMINATION. This Agreement shall be subject to termination by
notice given by you 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 your 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 your judgment, impracticable to market the Class C Certificates on the terms
and in the manner contemplated in the Prospectus.
8. PAYMENT OF EXPENSES. As between the Company and the Underwriter,
the Company shall pay all expenses incident to the performance of the Company's
obligations under this Agreement, including the following:
(i) expenses incurred in connection with (A) qualifying the Class C
Certificates for offer and sale under the applicable securities or "blue
sky" laws of such jurisdictions in the United States as you reasonably
designate (including filing fees and fees and disbursements of counsel for
the Underwriter in connection therewith), (B) endeavoring to maintain such
qualifications in effect so long as required for the distribution of the
Class C Certificates, (C) the review (if any) of the offering of the Class
C Certificates by the National Association of Securities Dealers, Inc.,
(D) the determination of the eligibility of the Class C Certificates for
investment under the laws of such jurisdictions as the Underwriter may
designate and (E) the preparation and distribution of any blue sky or
legal investment memorandum by Underwriter's counsel;
(ii) expenses incurred in connection with the preparation and
distribution to the Underwriter and the dealers (whose names and addresses
the Underwriter will furnish to the Company) to which Class C Certificates
may have been sold by the Underwriter on its behalf and to any other
dealers upon request, either of (A) amendments to the Registration
Statement or amendments or supplements to the Prospectus in order to make
the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not materially misleading or (B)
amendments or supplements to the Registration Statement or the Prospectus
so that the Registration Statement or the Prospectus, as so amended or
supplemented, will comply with law and the expenses incurred in connection
with causing such amendments or supplements to be filed promptly with the
Commission, all as set forth in Section 4(a) hereof;
(iii) expenses incurred in connection with the preparation, printing
and filing of the Registration Statement (including financial statements
and exhibits), as originally filed and as amended, the Preliminary
Prospectus and the Prospectus and any amendments thereof and supplements
thereto, and the cost of furnishing copies thereof to the Underwriter;
(iv) expenses incurred in connection with the preparation, printing
and distribution of this Agreement, the Class C Certificates and the Class
C Operative Agreements;
(v) expenses incurred in connection with the delivery of the Class C
Certificates to the Underwriter;
(vi) reasonable fees and disbursements of the counsel and
accountants for the Company;
(vii) to the extent the Company is so required under any Class C
Operative Agreement to which it is a party, the fees and expenses of the
Loan Trustees, the Subordination Agent, the Paying Agents, the Trustees,
the Escrow Agents, the Depositary, the Liquidity Provider and the
reasonable fees and disbursements of their respective counsel;
(viii) fees charged by rating agencies for rating the Class C
Certificates (including annual surveillance fees related to the Class C
Certificates as long as they are outstanding);
(ix) 50% of all reasonable fees and disbursements of counsel for the
Underwriter;
(x) all fees and expenses relating to appraisals of the Aircraft;
and
(xi) all other reasonable out-of-pocket expenses incurred by the
Underwriter in connection with the transactions contemplated by this
Agreement;
PROVIDED, however, that the Underwriter agrees to reimburse the Company for the
foregoing costs and expenses in an amount not to exceed $623,233.
9. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriter, will be mailed, delivered or sent by facsimile
transmission and confirmed to the Underwriter, c/o Morgan Stanley & Co.
Incorporated, 1585 Broadway, New York, NY 10036, Attention: Equipment Finance
Group, facsimile number (212) 761-0786 and if sent to the Company, will be
mailed, delivered or sent by facsimile transmission and confirmed to it at 1600
Smith Street, HQSEO, Houston, TX 77002, Attention: Treasurer, facsimile number
(713) 324-2447; PROVIDED, HOWEVER, that any notice to the Underwriter pursuant
to Section 5 will be sent by facsimile transmission or delivered and confirmed
to the Underwriter.
10. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 5, and no other person will have any
right or obligation hereunder.
11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
12. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
13. JURISDICTION. Each of the parties hereto agrees that any legal
suit, action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby may be instituted in any U.S. federal or New
York State court in the Borough of Manhattan in the City of New York and each of
the parties hereto hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any such proceeding, and irrevocably
submits to the jurisdiction of such courts, with respect to actions brought
against it as defendant, in any suit, action or proceeding. Each of the parties
to this Agreement agrees that a final judgment in any such suit, action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law in accordance with
applicable law.
If the foregoing is in accordance with the Underwriter's
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement among the
Underwriter, the Depositary and the Company in accordance with its terms.
Very truly yours,
CONTINENTAL AIRLINES, INC.
By:
--------------------------------------
Name: Gerald Laderman
Title: Senior Vice President-Finance
& Treasurer
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written
MORGAN STANLEY & CO. INCORPORATED
By:
--------------------------------
Name: Patrick Kaufer
Title: Principal
CREDIT SUISSE FIRST BOSTON, New York Branch
as Depositary
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
SCHEDULE I
(Pass Through Certificates, Series 2001-1)
CONTINENTAL AIRLINES, INC.
Pass Through Aggregate Final
Certificate Principal Maturity
DESIGNATION AMOUNT INTEREST RATE DATE
---------------- ---------------- ----------------- -------------
2001-1C $191,764,000 7.033% December 15, 2012
SCHEDULE II
CONTINENTAL AIRLINES, INC.
Underwriting commission
and other compensation: $1,246,466
Closing date, time and location: June 26, 2001
10:00 A.M.,
New York time
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
DEPOSIT AGREEMENT
(Class C)
Dated as of June 26, 2001
between
WELLS FARGO BANK NORTHWEST, N.A.
as Escrow Agent
and
CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH
as Depositary
TABLE OF CONTENTS
Page
SECTION 1.1 Acceptance of Depositary..........................................2
SECTION 1.2 Establishment of Accounts........................................ 2
SECTION 2.1 Deposits..........................................................2
SECTION 2.2 Interest..........................................................2
SECTION 2.3 Withdrawals.......................................................3
SECTION 2.4 Other Accounts....................................................3
SECTION 3. Termination.......................................................4
SECTION 4. Payments..........................................................4
SECTION 5. Representation and Warranties.....................................4
SECTION 6. Transfer..........................................................5
SECTION 7. Amendment, Etc....................................................6
SECTION 8. Notices...........................................................6
SECTION 9. Obligations Unconditional.........................................6
SECTION 10. Entire Agreement..................................................6
SECTION 11. Governing Law.....................................................7
SECTION 12. Waiver of Jury Trial Right....................................... 7
SECTION 13. Counterparts..................................................... 7
SECTION 14. Head Office Obligation............................................7
DEPOSIT AGREEMENT (Class C) dated as of June 26, 2001 (as amended,
modified or supplemented from time to time, this "AGREEMENT") between WELLS
FARGO BANK NORTHWEST, N.A, a national banking association, as Escrow Agent under
the Escrow and Paying Agent Agreement referred to below (in such capacity,
together with its successors in such capacity, the "ESCROW AGENT"), and CREDIT
SUISSE FIRST BOSTON, a banking institution organized under the laws of
Switzerland, acting through its New York branch, as depositary bank (the
"DEPOSITARY").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Continental Airlines, Inc. ("CONTINENTAL") and Wilmington
Trust Company, not in its individual capacity except as otherwise expressly
provided therein, but solely as trustee (in such capacity, together with its
successors in such capacity, the "PASS THROUGH TRUSTEE") have entered into a
Trust Supplement, dated as of June 26, 2001, to the Pass Through Trust Agreement
dated as of September 25, 1997 (together, as amended, modified or supplemented
from time to time in accordance with the terms thereof, the "PASS THROUGH TRUST
AGREEMENT") relating to Continental Airlines Pass Through Trust 2001-1C-O
pursuant to which the Continental Airlines Pass Through Trust, Series 2001-1C-O
Certificates referred to therein (the "CERTIFICATES") are being issued (the date
of such issuance, the "ISSUANCE DATE");
WHEREAS, Continental and Morgan Stanley & Co. Incorporated, (the
"UNDERWRITER" and, together with its transferees and assigns as registered
owners of the Certificates, the "INVESTORS") have entered into an Underwriting
Agreement dated as of June 12, 2001 pursuant to which the Pass Through Trustee
will issue and sell the Certificates to the Underwriter;
WHEREAS, Continental, the Pass Through Trustee, certain other pass
through trustees and certain other persons concurrently herewith are entering
into an Amended and Restated Note Purchase Agreement, dated as of the date
hereof (the "NOTE PURCHASE AGREEMENT"), pursuant to which the Pass Through
Trustee has agreed to acquire from time to time on or prior to the Delivery
Period Termination Date (as defined in the Note Purchase Agreement) equipment
notes (the "EQUIPMENT NOTES") issued to finance the acquisition of aircraft by
Continental, as lessee or as owner, utilizing a portion of the proceeds from the
sale of the Certificates (the "NET PROCEEDS");
WHEREAS, the Escrow Agent, the Underwriter, the Pass Through Trustee
and Wilmington Trust Company, as paying agent for the Escrow Agent (in such
capacity, together with its successors in such capacity, the "PAYING AGENT")
concurrently herewith are entering into an Escrow and Paying Agent Agreement,
dated as of the date hereof (as amended, modified or supplemented from time to
time in accordance with the terms thereof, the "ESCROW AND PAYING AGENT
AGREEMENT"); and
WHEREAS, the Underwriter and the Pass Through Trustee intend that
the Net Proceeds (excluding any amount used to purchase Equipment Notes on the
Issuance Date) be held in escrow by the Escrow Agent on behalf of the Investors
pursuant to the Escrow and Paying Agent Agreement, subject to withdrawal upon
request of and proper certification by the Pass Through Trustee for the purpose
of purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds
be deposited by the Escrow Agent with the Depositary pursuant to this Agreement,
which provides for the Depositary to pay interest for distribution to the
Investors and to establish accounts from which the Escrow Agent shall make
withdrawals upon request of and proper certification by the Pass Through
Trustee.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1.1 ACCEPTANCE OF DEPOSITARY. The Depositary hereby agrees
to act as depositary bank as provided herein and in connection therewith to
accept all amounts to be delivered to or held by the Depositary pursuant to the
terms of this Agreement. The Depositary further agrees to hold, maintain and
safeguard the Deposits and the Accounts (as defined below) during the term of
this Agreement in accordance with the provisions of this Agreement. The Escrow
Agent shall not have any right to withdraw, assign or otherwise transfer moneys
held in the Accounts except as permitted by this Agreement.
SECTION 1.2 ESTABLISHMENT OF ACCOUNTS. The Escrow Agent hereby
instructs the Depositary, and the Depositary agrees, to establish the separate
deposit accounts listed on Schedule I hereto and to establish such additional
separate deposit accounts as may be required in connection with the deposits
contemplated by Section 2.4 hereof (each, an "ACCOUNT" and collectively, the
"ACCOUNTS"), each in the name of the Escrow Agent and all on the terms and
conditions set forth in this Agreement.
SECTION 2.1 DEPOSITS. The Escrow Agent shall direct the Underwriter
to deposit with the Depositary on the date of this Agreement (the "DEPOSIT
DATE") in Federal (same day) funds by wire transfer to: Credit Suisse First
Boston, New York branch, Reference: Continental 2001-1C, and the Depositary
shall accept from the Underwriter, on behalf of the Escrow Agent, the sum of
US$191,764,000 (or such lesser amount equal to the Net Proceeds less amounts
used to purchase Equipment Notes on the Issuance Date). Upon acceptance of such
sum, the Depositary shall (i) establish each of the deposits specified in
Schedule I hereto maturing on January 31, 2003 (including any deposit made
pursuant to Section 2.4 hereof, individually, a "DEPOSIT" and, collectively, the
"DEPOSITS") and (ii) credit each Deposit to the related Account as set forth
therein. No amount shall be deposited in any Account other than the related
Deposit.
SECTION 2.2 INTEREST. Each Deposit shall bear interest from and
including the date of deposit to but excluding the date of withdrawal at the
rate of 7.033% per annum (computed on the basis of a year of twelve 30-day
months) payable to the Paying Agent on behalf of the Escrow Agent semi-annually
in arrears on each June 15 and December 15 commencing on December 15, 2001
(each, an "INTEREST PAYMENT DATE"), and on the date of the Final Withdrawal (as
defined below), all in accordance with the terms of this Agreement (whether or
not any such Deposit is withdrawn on an Interest Payment Date). Interest accrued
on any Deposit that is withdrawn pursuant to a Notice of Purchase Withdrawal (as
defined below) shall be paid on the next Interest Payment Date, notwithstanding
any intervening Final Withdrawal (as such term is defined below).
SECTION 2.3 WITHDRAWALS. (a) On and after the date seven days after
the establishment of any Deposit, the Escrow Agent may, by providing at least
one Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "NOTICE OF PURCHASE WITHDRAWAL"), withdraw not less than the
entire balance of such Deposit, except that at any time prior to the actual
withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee may, by
notice to the Depositary, cancel such withdrawal (including on the scheduled
date therefor), and thereafter such Deposit shall continue to be maintained by
the Depositary in accordance with the original terms thereof. Following such
withdrawal the balance in the related Account shall be zero and the Depositary
shall close such Account. As used herein, "BUSINESS DAY" means any day, other
than a Saturday, Sunday or other day on which commercial banks are authorized or
required by law to close in New York, New York, Houston, Texas, Wilmington,
Delaware or Salt Lake City, Utah. The Depositary reserves the right, upon at
least 14 days' prior written notice to Continental, the Escrow Agent and the
Pass Through Trustee, to require seven days' notice for any withdrawal.
(b) The Escrow Agent may, by providing at least 15 days' prior
notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"NOTICE OF FINAL WITHDRAWAL"), withdraw the entire amount of all of the
remaining Deposits together with the payment by the Depositary of all accrued
and unpaid interest on such Deposits to but excluding the specified date of
withdrawal (a "FINAL WITHDRAWAL"), on such date as shall be specified in such
Notice of Final Withdrawal. If a Notice of Final Withdrawal has not been given
to the Depositary on or before January 8, 2003 (provided that, if a labor strike
occurs or continues at The Boeing Company after the Issuance Date and prior to
December 31, 2002 (a "LABOR STRIKE"), such date shall be extended by adding
thereto the number of days that such strike continued in effect after the
Issuance Date (the "ADDITIONAL DAYS")) and there are unwithdrawn Deposits on
such date, the Depositary shall pay the amount of the Final Withdrawal to the
Paying Agent on January 31, 2003 (provided that if a Labor Strike occurs or
continues, such date shall be extended by the Additional Days).
(c) If the Depositary receives a duly completed Notice of Purchase
Withdrawal or Notice of Final Withdrawal complying with the provisions of this
Agreement, it shall make the payments specified therein in accordance with the
provisions of this Agreement.
SECTION 2.4 OTHER ACCOUNTS. On the date of withdrawal of any Deposit
(other than the date of the Final Withdrawal), the Escrow Agent, or the Pass
Through Trustee on behalf of the Escrow Agent, shall re-deposit with the
Depositary any portion thereof not used to acquire Equipment Notes and the
Depositary shall accept the same for deposit hereunder. On the date the
Certificates are issued, the Escrow Agent, or the Underwriter, on behalf of the
Escrow Agent, shall be entitled to deposit with the Depositary any portion of
the Net Proceeds not theretofore deposited hereunder and not used to purchase
Equipment Notes on the Issuance Date (the "UNUSED PROCEEDS") and the Depositary
shall accept the Unused Proceeds for deposit hereunder. Any sums so received for
deposit shall be established as a new Deposit and credited to a new Account, all
as more fully provided in Section 2.1 hereof, and thereafter the provisions of
this Agreement shall apply thereto as fully and with the same force and effect
as if such Deposit had been established on the Deposit Date except that (i) such
Deposit may not be withdrawn prior to the date seven days after the
establishment thereof and (ii) such Deposit shall mature on January 31, 2003
(provided that if a Labor Strike occurs or continues, such date shall be
extended by the Additional Days) and bear interest as provided in Section 2.2.
The Depositary shall promptly give notice to the Escrow Agent of receipt of each
such re-deposit and the account number assigned thereto.
SECTION 3. TERMINATION. This Agreement shall terminate on the fifth
Business Day after the later of the date on which (i) all of the Deposits shall
have been withdrawn and paid as provided herein without any re-deposit and (ii)
all accrued and unpaid interest on the Deposits shall have been paid as provided
herein, but in no event prior to the date on which the Depositary shall have
performed in full its obligations hereunder.
SECTION 4. PAYMENTS. All payments (including, without limitation,
those payments made in respect of Taxes (as defined and provided for below))
made by the Depositary hereunder shall be paid in United States Dollars and
immediately available funds by wire transfer (i) in the case of accrued interest
on the Deposits payable under Section 2.2 hereof or any Final Withdrawal,
directly to the Paying Agent at Wilmington Trust Company, Wilmington, DE, ABA#
031100092, Account No. 54661-0, Attention: Monica Henry, Telephone No.: (302)
651-8813, Reference: Continental Airlines PTT, Series 2001-1C, or to such other
account as the Paying Agent may direct from time to time in writing to the
Depositary and the Escrow Agent and (ii) in the case of any withdrawal of one or
more Deposits pursuant to a Notice of Purchase Withdrawal, directly to or as
directed by the Pass Through Trustee as specified and in the manner provided in
such Notice of Purchase Withdrawal. The Depositary hereby waives any and all
rights of set-off, combination of accounts, right of retention or similar right
(whether arising under applicable law, contract or otherwise) it may have
against the Deposits howsoever arising. All payments on or in respect of each
Deposit shall be made free and clear of and without reduction for or on account
of any and all taxes, levies or other impositions or charges (collectively,
"TAXES"). However, if the Depositary or the Paying Agent (pursuant to Section
2.04 of the Escrow and Paying Agent Agreement) shall be required by law to
deduct or withhold any Taxes from or in respect of any sum payable hereunder,
the Depositary shall (i) make such deductions or withholding, (ii) pay the full
amount deducted or withheld (including in respect of such additional amounts) to
the competent taxation authority and (iii) if the Taxes required to be deducted
or withheld are imposed by Switzerland or any political subdivision thereof, pay
such additional amounts as may be necessary in order that the actual amount
received by the designated recipient of such sum under this Agreement or the
Escrow and Paying Agent Agreement after such deduction or withholding equals the
sum it would have received had no such deduction or withholding been required.
If the date on which any payment due on any Deposit would otherwise fall on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day, and no additional interest shall accrue in respect of
such extension.
SECTION 5. REPRESENTATION AND WARRANTIES. The Depositary hereby
represents and warrants to Continental, the Escrow Agent, the Pass Through
Trustee and the Paying Agent that:
(a) it is a bank duly organized and validly existing in good
standing under the laws of its jurisdiction of organization and is duly
qualified to conduct banking business in the State of New York through its
New York branch;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part of
it and do not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof;
(d) no authorization, consent or approval of or other action
by, and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of
this Agreement, nor compliance with the terms and provisions hereof,
conflicts or will conflict with or results or will result in a breach or
violation of any of the terms, conditions or provisions of, or will require
any consent or approval under, any law, governmental rule or regulation or
the charter documents, as amended, or bylaws, as amended, of it or any
similar instrument binding on it or any order, writ, injunction or decree
of any court or governmental authority against it or by which it or any of
its properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, or constitutes or will constitute a default thereunder
or results or will result in the imposition of any lien upon any of its
properties; and
(f) there are no pending or, to its knowledge, threatened
actions, suits, investigations or proceedings (whether or not purportedly
on behalf of it) against or affecting it or any of its property before or
by any court or administrative agency which, if adversely determined, (i)
would adversely affect the ability of it to perform its obligations under
this Agreement or (ii) would call into question or challenge the validity
of this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Depositary in default with respect to any order of any
court, governmental authority, arbitration board or administrative agency
so as to adversely affect its ability to perform its obligations under this
Agreement.
SECTION 6. TRANSFER. Neither party hereto shall be entitled to
assign or otherwise transfer this Agreement (or any interest herein) other than
(in the case of the Escrow Agent) to a successor escrow agent under the Escrow
and Paying Agent Agreement, and any purported assignment in violation thereof
shall be void. This Agreement shall be binding upon the parties hereto and their
respective successors and (in the case of the Escrow Agent) permitted assigns.
Upon the occurrence of the Transfer (as defined below) contemplated by the
Assignment and Assumption Agreement (as defined below), the Pass Through Trustee
shall (without further act) be deemed to have transferred all of its right,
title and interest in and to this Agreement to the trustee of the Successor
Trust (as defined below) and, thereafter, the trustee of the Successor Trust
shall be deemed to be the "Pass Through Trustee" hereunder with the rights of
the "Pass Through Trustee" hereunder, and each reference herein to "Continental
Airlines Pass Through Trust 2001-1C-O" shall be deemed to be a reference to
"Continental Airlines Pass Through Trust 2001-1C-S". The Escrow Agent and the
Depositary hereby acknowledge and consent to the Transfer contemplated by the
Assignment and Assumption Agreement. For the purposes of this Section 6,
"TRANSFER" means the transfer contemplated by the Assignment and Assumption
Agreement; "ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreement to be entered into between the Pass Through Trustee and the
trustee of the Successor Trust, substantially in the form of Exhibit C to the
Pass Through Trust Agreement; and "SUCCESSOR TRUST" means the Continental
Airlines Pass Through Trust 2001-1C-S.
SECTION 7. AMENDMENT, ETC. This Agreement may not be amended, waived
or otherwise modified except by an instrument in writing signed by the party
against whom the amendment, waiver or other modification is sought to be
enforced and by the Pass Through Trustee.
SECTION 8. NOTICES. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (x) in the case of the Depositary,
Credit Suisse First Boston, 11 Madison Avenue, New York, New York 10010,
Attention: Robert Finney and Mark Verbitsky (Telecopier: (212) 325-8319) or (y)
in the case of the Escrow Agent, Wells Fargo Bank Northwest, N.A., 79 South Main
Street, Third Floor, Salt Lake City, UT 84111, Attention: Corporate Trust
Services (Telecopier: (801) 246-5053), in each case, with a copy to the Pass
Through Trustee, Wilmington Trust Company, 1100 North Market Street, Wilmington,
DE 19890, Attention: Corporate Trust Administration (Telecopier: (302) 651-8882)
and to Continental, Continental Airlines, Inc., 1600 Smith Street, Dept. HQS-FN,
Houston, TX 77002, Attention: Treasurer (Telecopier: (713) 324-2447) (or at such
other address as any such party may specify from time to time in a written
notice to the parties hereto). On or prior to the execution of this Agreement,
the Escrow Agent has delivered to the Depositary a certificate containing
specimen signatures of the representatives of the Escrow Agent who are
authorized to give notices and instructions with respect to this Agreement. The
Depositary may conclusively rely on such certificate until the Depositary
receives written notice from the Escrow Agent to the contrary.
SECTION 9. OBLIGATIONS UNCONDITIONAL. The Depositary hereby
acknowledges and agrees that its obligation to repay each Deposit together with
interest thereon as provided herein is absolute, irrevocable and unconditional
and constitutes a full recourse obligation of the Depositary enforceable against
it to the full extent of all of its assets and properties.
SECTION 10. ENTIRE AGREEMENT. This Agreement (including all
attachments hereto) sets forth all of the promises, covenants, agreements,
conditions and understandings between the Depositary and the Escrow Agent with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 11. GOVERNING LAW. This Agreement, and the rights and
obligations of the Depositary and the Escrow Agent with respect to the Deposits,
shall be governed by, and construed in accordance with, the laws of the State of
New York and subject to the provisions of Regulation D of the Board of Governors
of the Federal Reserve System (or any successor), as the same may be modified
and supplemented and in effect from time to time.
SECTION 12. WAIVER OF JURY TRIAL RIGHT. EACH OF THE DEPOSITARY AND
THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS
RIGHT TO A TRIAL BY JURY.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
SECTION 14. HEAD OFFICE OBLIGATION. Credit Suisse First Boston
hereby agrees that the obligations of the Depositary hereunder are also the
obligations of Credit Suisse First Boston's Head Office in Zurich, Switzerland.
Accordingly, any beneficiary of this Agreement will be able to proceed directly
against Credit Suisse First Boston's Head Office in Zurich, Switzerland if
Credit Suisse First Boston's New York branch defaults in its obligation to such
beneficiary under this Agreement.
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused
this Deposit Agreement to be duly executed as of the day and year first above
written.
WELLS FARGO BANK NORTHWEST, N.A.,
as Escrow Agent
By
------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
NEW YORK BRANCH,
as Depositary
By
------------------------------
Name:
Title:
Schedule I
SCHEDULE OF DEPOSITS
Class C
AIRCRAFT TYPE DEPOSIT AMOUNT ACCOUNT NO.
------------- -------------- -----------
737-824 $2,039,720.20 00C1
737-824 $8,710,540.02 00C2
737-824 $8,710,539.97 51C1
737-824 $4,896,666.70 51C2
737-824 $8,710,539.97 43C1
737-824 $4,931,000.00 35C1
737-824 $8,710,540.01 27C1
737-824 $4,939,666.70 27C2
737-824 $8,710,540.02 19C1
737-924 $9,777,699.03 00C3
737-924 $4,539,899.97 51C3
737-924 $9,638,010.26 43C2
737-924 $4,566,600.00 35C2
737-924 $6,726,693.57 19C2
767-424ER $8,015,200.00 35C3
767-424ER $8,015,200.00 35C4
767-424ER $19,069,020.00 27C3
767-424ER $8,032,000.00 27C4
767-424ER $8,048,800.00 19C3
767-424ER $19,069,020.00 19C4
777-224ER $25,906,103.58 19C5
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, New York 10010
Attention: Robert Finney and Mark Verbitsky
Telecopier: (212) 325-8319
Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
June 26, 2001 (the "DEPOSIT AGREEMENT") between Wells Fargo Bank Northwest,
N.A., as Escrow Agent, and Credit Suisse First Boston, New York Branch, as
Depositary (the "DEPOSITARY").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$[_______], Account No. ____________.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to ________________, Account No. _____, Reference: _________] on
_________ __, 200__, upon the telephonic request of a representative of the Pass
Through Trustee.
WELLS FARGO BANK NORTHWEST, N.A.,
as Escrow Agent
By
------------------------------
Name:
Title:
Dated: _______ __, 200_
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Mark Verbitsky
Telecopier: 212-325-8319
Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
June 26, 2001 (the "DEPOSIT AGREEMENT") between Wells Fargo Bank Northwest,
N.A., as Escrow Agent, and Credit Suisse First Boston, New York Branch, as
Depositary (the "DEPOSITARY").
In accordance with Section 2.3(b) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of all Deposits.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposits and accrued interest thereon to the Paying Agent at Wilmington
Trust Company, ABA# 031100092, Account No. _____________, Reference: Continental
2001-1C on ________.
WELLS FARGO BANK NORTHWEST, N.A.,
as Escrow Agent
By
------------------------------
Name:
Title:
Dated: _________, 200_
TRUST SUPPLEMENT No. 2001-1C-O
Dated June 26, 2001
between
WILMINGTON TRUST COMPANY
as Trustee,
and
CONTINENTAL AIRLINES, INC.
to
PASS THROUGH TRUST AGREEMENT
Dated as of September 25, 1997
$191,764,000
Continental Airlines Pass Through Trust 2001-1C-O
7.033% Continental Airlines
Pass Through Certificates,
Series 2001-1C-O
This Trust Supplement No. 2001-1C-O, dated as of June 26, 2001
(herein called the "TRUST SUPPLEMENT"), between Continental Airlines, Inc., a
Delaware corporation (the "COMPANY"), and Wilmington Trust Company (the
"TRUSTEE"), to the Pass Through Trust Agreement, dated as of September 25, 1997,
between the Company and the Trustee (the "BASIC AGREEMENT").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Basic Agreement, unlimited as to the aggregate
principal amount of Certificates (unless otherwise specified herein, capitalized
terms used herein without definition having the respective meanings specified in
the Basic Agreement) which may be issued thereunder, has heretofore been
executed and delivered;
WHEREAS, the Company has obtained commitments from Boeing for the
delivery of certain Aircraft;
WHEREAS, the Company intends to finance the acquisition of each such
Aircraft either (i) through separate leveraged lease transactions, in which case
the Company will lease such Aircraft (collectively, the "LEASED AIRCRAFT"), or
(ii) through separate secured loan transactions, in which case the Company will
own such Aircraft (collectively, the "OWNED AIRCRAFT");
WHEREAS, in the case of each Leased Aircraft, each Owner Trustee,
acting on behalf of the corresponding Owner Participant, will issue pursuant to
an Indenture, on a non-recourse basis, Equipment Notes in order to finance a
portion of its purchase price of such Leased Aircraft;
WHEREAS, in the case of each Owned Aircraft, the Company will issue
pursuant to an Indenture, on a recourse basis, Equipment Notes to finance a
portion of the purchase price of such Owned Aircraft;
WHEREAS, the Trustee hereby declares the creation of this
Continental Airlines Pass Through Trust 2001-1C-O (the "APPLICABLE TRUST") for
the benefit of the Applicable Certificateholders, and the initial Applicable
Certificateholders as the grantors of the Applicable Trust, by their respective
acceptances of the Applicable Certificates, join in the creation of the
Applicable Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Applicable Trust will
evidence fractional undivided interests in the Applicable Trust and will convey
no rights, benefits or interests in respect of any property other than the Trust
Property except for those Certificates to which an Escrow Receipt has been
affixed;
WHEREAS, the Escrow Agent and the Underwriter have contemporaneously
herewith entered into an Escrow Agreement with the Escrow Paying Agent pursuant
to which the Underwriter has delivered to the Escrow Agent the proceeds from the
sale of the Applicable Certificates, to the extent not used to purchase
Equipment Notes on the Issuance Date, and has irrevocably instructed the Escrow
Agent to withdraw and pay funds from such proceeds upon request and proper
certification by the Trustee to purchase Equipment Notes as the Aircraft are
delivered by Boeing under the Aircraft Purchase Agreement from time to time
prior to the Delivery Period Termination Date;
WHEREAS, the Escrow Agent on behalf of the Applicable
Certificateholders has contemporaneously herewith entered into a Deposit
Agreement with the Depositary under which the Deposits referred to therein will
be made and from which it will withdraw funds to allow the Trustee to purchase
Equipment Notes from time to time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement
as supplemented by this Trust Supplement (the "AGREEMENT") and the NPA, upon the
financing of an Aircraft, the Trustee on behalf of the Applicable Trust, using
funds withdrawn under the Escrow Agreement (or, if financed on the Issuance
Date, using a portion of the proceeds of the sale of the Applicable
Certificates), shall purchase one or more Equipment Notes having the same
interest rate as, and final maturity date not later than the final Regular
Distribution Date of, the Applicable Certificates issued hereunder and shall
hold such Equipment Notes in trust for the benefit of the Applicable
Certificateholders;
WHEREAS, all of the conditions and requirements necessary to make
this Trust Supplement, when duly executed and delivered, a valid, binding and
legal instrument in accordance with its terms and for the purposes herein
expressed, have been done, performed and fulfilled, and the execution and
delivery of this Trust Supplement in the form and with the terms hereof have
been in all respects duly authorized;
WHEREAS, this Trust Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
ARTICLE I
THE CERTIFICATES
Section 1.01. THE CERTIFICATES. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"7.033% Continental Airlines Pass Through Certificates, Series 2001-1C-O"
(hereinafter defined as the "APPLICABLE CERTIFICATES"). Each Applicable
Certificate represents a fractional undivided interest in the Applicable Trust
created hereby. The Applicable Certificates shall be the only instruments
evidencing a fractional undivided interest in the Applicable Trust.
The terms and conditions applicable to the Applicable Certificates
are as follows:
(a) The aggregate principal amount of the Applicable Certificates
that shall be authenticated under the Agreement (except for Applicable
Certificates authenticated and delivered pursuant to Sections 3.03, 3.04,
3.05 and 3.06 of the Basic Agreement) is $191,764,000.
(b) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means June 15 and December 15 of each year, commencing
on December 15, 2001, until payment of all of the Scheduled Payments to be
made under the Equipment Notes has been made.
(c) The Special Distribution Dates with respect to the Applicable
Certificates means any Business Day on which a Special Payment is to be
distributed pursuant to the Agreement.
(d) At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Applicable
Certificate. In any event, any transfer or exchange of any Applicable
Certificate shall also effect a transfer or exchange of the related Escrow
Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of
any Applicable Certificate shall be permitted unless the corresponding
Escrow Receipt is attached thereto and also is so transferred or
exchanged. By acceptance of any Applicable Certificate to which an Escrow
Receipt is attached, each Holder of such an Applicable Certificate
acknowledges and accepts the restrictions on transfer of the Escrow
Receipt set forth herein and in the Escrow Agreement.
(e) (i) The Applicable Certificates shall be in the form attached
hereto as Exhibit A. Any Person acquiring or accepting an Applicable
Certificate or an interest therein will, by such acquisition or
acceptance, be deemed to represent and warrant to and for the benefit of
each Owner Participant and the Company that either (i) the assets of an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or of a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the
"CODE"), have not been used to purchase Applicable Certificates or an
interest therein or (ii) the purchase and holding of Applicable
Certificates or an interest therein is exempt from the prohibited
transaction restrictions of ERISA and the Code pursuant to one or more
prohibited transaction statutory or administrative exemptions.
(ii) The Applicable Certificates shall be Book-Entry Certificates
and shall be subject to the conditions set forth in the Letter of
Representations between the Company and the Clearing Agency attached
hereto as Exhibit B.
(f) The "Participation Agreements" as defined in this Trust
Supplement are the "Note Purchase Agreements" referred to in the Basic
Agreement.
(g) The Applicable Certificates are subject to the Intercreditor
Agreement, the Deposit Agreement and the Escrow Agreement.
(h) The Applicable Certificates are entitled to the benefits of the
Liquidity Facility.
(i) The Responsible Party is the Company.
(j) The date referred to in clause (i) of the definition of the term
"PTC Event of Default" in the Basic Agreement is the Final Maturity Date.
(k) The "particular sections of the Note Purchase Agreement", for
purposes of clause (3) of Section 7.07 of the Basic Agreement, are Section
8.1 (with respect to Owned Aircraft) and Section 9.1 (with respect to
Leased Aircraft) of each Participation Agreement.
(l) The Equipment Notes to be acquired and held in the Applicable
Trust, and the related Aircraft and Note Documents, are described in the
NPA.
ARTICLE II
DEFINITIONS
Section 2.01. DEFINITIONS. For all purposes of the Basic Agreement
as supplemented by this Trust Supplement, the following capitalized terms have
the following meanings (any term used herein which is defined in both this Trust
Supplement and the Basic Agreement shall have the meaning assigned thereto in
this Trust Supplement for purposes of the Basic Agreement as supplemented by
this Trust Supplement):
AGREEMENT: Has the meaning specified in the recitals hereto.
AIRCRAFT: Means each of the New Aircraft or Substitute Aircraft in
respect of which a Participation Agreement is to be or is, as the case may
be, entered into in accordance with the NPA (or any substitute aircraft,
including engines therefor, owned by or leased to the Company and securing
one or more Equipment Notes).
AIRCRAFT PURCHASE AGREEMENT: Has the meaning specified in the NPA.
AMENDMENT NO. 1 TO INTERCREDITOR AGREEMENT: Means Amendment No. 1 to
Intercreditor Agreement dated as of June 26, 2001 among the Company, the
Trustee, the Other Trustees, the Liquidity Provider, the liquidity
providers relating to the Certificates issued under each of the Other
Agreements and Wilmington Trust Company, as Subordination Agent and as
trustee under the Intercreditor Agreement.
APPLICABLE CERTIFICATE: Has the meaning specified in Section 1.01 of
this Trust Supplement.
APPLICABLE CERTIFICATEHOLDER: Means the Person in whose name an
Applicable Certificate is registered on the Register for the Applicable
Certificates.
APPLICABLE DELIVERY DATE: Has the meaning specified in Section
5.01(b) of this Trust Supplement.
APPLICABLE PARTICIPATION AGREEMENT: Has the meaning specified in
Section 5.01(b) of this Trust Supplement.
APPLICABLE TRUST: Has the meaning specified in the recitals hereto.
ASSIGNMENT AND ASSUMPTION AGREEMENT: Means the assignment and
assumption agreement substantially in the form of Exhibit C hereto
executed and delivered in accordance with Section 7.01 of this Trust
Supplement.
BASIC AGREEMENT: Has the meaning specified in the first paragraph of
this Trust Supplement.
BOEING: Means The Boeing Company.
BUSINESS DAY: Means any day other than a Saturday, a Sunday or a day
on which commercial banks are required or authorized to close in Houston,
Texas, New York, New York, Salt Lake City, Utah or, so long as any
Applicable Certificate is Outstanding, the city and state in which the
Trustee or any Loan Trustee maintains its Corporate Trust Office or
receives and disburses funds.
CLASS D CERTIFICATEHOLDER: Has the meaning specified in Section
4.01(b) of this Trust Supplement.
COMPANY: Has the meaning specified in the first paragraph of this
Trust Supplement.
CONTROLLING PARTY: Has the meaning specified in the Intercreditor
Agreement.
CUT-OFF DATE: Means the earlier of (a) the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
DELIVERY NOTICE: Has the meaning specified in the NPA.
DELIVERY PERIOD TERMINATION DATE: Means the earlier of (a) September
30, 2002, or, if the Equipment Notes relating to all of the New Aircraft
(or Substitute Aircraft in lieu thereof) have not been purchased by the
Applicable Trust and the Other Trusts on or prior to such date due to any
reason beyond the control of the Company and not occasioned by the
Company's fault or negligence, December 31, 2002 (provided that, if a
labor strike occurs at Boeing on or prior to either or both of such dates
referred to in this clause (a), such date or dates on or following the
commencement of such strike shall be extended by adding thereto the number
of days that such strike continued in effect), and (b) the date on which
Equipment Notes issued with respect to all of the New Aircraft (or
Substitute Aircraft in lieu thereof) have been purchased by the Applicable
Trust and the Other Trusts in accordance with the NPA.
DEPOSIT AGREEMENT: Means the Deposit Agreement dated as of June 26,
2001 relating to the Applicable Certificates between the Depositary and
the Escrow Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
DEPOSITARY: Means Credit Suisse First Boston, a banking institution
organized under the laws of Switzerland, acting through its New York
branch.
DEPOSITS: Has the meaning specified in the Deposit Agreement.
DISTRIBUTION DATE: Means any Regular Distribution Date or Special
Distribution Date as the context requires.
ESCROW AGENT: Means, initially, Wells Fargo Bank Northwest, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
ESCROW AGREEMENT: Means the Escrow and Paying Agent Agreement dated
as of June 26, 2001 relating to the Applicable Certificates, among the
Escrow Agent, the Escrow Paying Agent, the Trustee and the Underwriter, as
the same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms.
ESCROW PAYING AGENT: Means the Person acting as paying agent under
the Escrow Agreement.
ESCROW RECEIPT: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in escrow thereunder.
FINAL MATURITY DATE: Means December 15, 2012.
FINAL WITHDRAWAL: Has the meaning specified in the Escrow Agreement.
FINAL WITHDRAWAL DATE: Has the meaning specified in the Escrow
Agreement.
FINAL WITHDRAWAL NOTICE: Has the meaning specified in Section 5.02
of this Trust Supplement.
INDENTURE: Means each of the separate trust indentures and mortgages
relating to the Aircraft, each as specified or described in a Delivery
Notice delivered pursuant to the NPA or the related Participation
Agreement, in each case as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated as
of April 19, 2001 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers relating to the Certificates issued
under each of the Other Agreements and Wilmington Trust Company, as
Subordination Agent and as trustee thereunder, as amended by Amendment No.
1 to Intercreditor Agreement, as further amended, supplemented or
otherwise modified from time to time in accordance with its terms.
INVESTORS: Means the Underwriter together with all subsequent
beneficial owners of the Applicable Certificates.
LEASE: Means, with respect to each Leased Aircraft, the lease
between an Owner Trustee, as the lessor, and the Company, as the lessee,
referred to in the related Indenture, as such lease may be amended,
supplemented or otherwise modified in accordance with its terms.
LEASED AIRCRAFT: Has the meaning specified in the third recital to
this Trust Supplement.
LEASED AIRCRAFT INDENTURE: Has the meaning specified in the
Intercreditor Agreement.
LIQUIDITY FACILITY: Means, initially, the Revolving Credit Agreement
dated as of June 26, 2001 relating to the Applicable Certificates, between
the Liquidity Provider and Wilmington Trust Company, as Subordination
Agent, as agent and trustee for the Applicable Trust, and, from and after
the replacement of such agreement pursuant to the Intercreditor Agreement,
the replacement liquidity facility therefor, in each case as amended,
supplemented or otherwise modified from time to time in accordance with
their respective terms.
LIQUIDITY PROVIDER: Means, initially, Landesbank Hessen-Thuringen
Girozentrale, a German public law institution duly established under the
Treaty on the Formation of a Joint Savings Banks Organization
Hessen-Thuringen, and any replacements or successors therefor appointed in
accordance with the Intercreditor Agreement.
NEW AIRCRAFT: Has the meaning specified in the NPA.
NOTE DOCUMENTS: Means the Equipment Notes with respect to the
Applicable Certificates and, with respect to any such Equipment Note, (i)
the Indenture and the Participation Agreement relating to such Equipment
Note, and (ii) in the case of any Equipment Note related to a Leased
Aircraft, the Lease relating to such Leased Aircraft.
NOTICE OF PURCHASE WITHDRAWAL: Has the meaning specified in the
Deposit Agreement.
NPA: Means the Amended and Restated Note Purchase Agreement dated as
of June 26, 2001 among the Trustee, the Other Trustees, the Company, the
Escrow Agent, the Escrow Paying Agent and the Subordination Agent,
providing for, among other things, the purchase of Equipment Notes by the
Trustee on behalf of the Trust, as the same may be further amended,
supplemented or otherwise modified from time to time, in accordance with
its terms.
OTHER AGREEMENTS: Means (i) the Basic Agreement as supplemented by
Trust Supplement No. 2001-1A-1-O dated April 19, 2001 relating to
Continental Airlines Pass Through Trust 2001-1A-1-O, (ii) the Basic
Agreement as supplemented by Trust Supplement No. 2001-1A-2-O dated April
19, 2001 relating to Continental Airlines Pass Through Trust 2001-1A-2-O
and (iii) the Basic Agreement as supplemented by Trust Supplement No.
2001-1B-O dated April 19, 2001 relating to Continental Airlines Pass
Through Trust 2001-1B-O.
OTHER TRUSTEES: Means the trustees under the Other Agreements, and
any successor or other trustee appointed as provided therein.
OTHER TRUSTS: Means the Continental Airlines Pass Through Trust
2001-1A-1-O, the Continental Airlines Pass Through Trust 2001-1A-2-O and
the Continental Airlines Pass Through Trust 2001-1B-O, created by the
Other Agreements.
OWNED AIRCRAFT: Has the meaning specified in the third recital to
this Trust Supplement.
OWNED AIRCRAFT INDENTURE: Has the meaning specified in the
Intercreditor Agreement.
OWNER PARTICIPANT: With respect to any Equipment Note relating to a
Leased Aircraft, means the "Owner Participant" as referred to in the
Indenture pursuant to which such Equipment Note is issued and any
permitted successor or assign of such Owner Participant; and OWNER
PARTICIPANTS at any time of determination means all of the Owner
Participants thus referred to in the Indentures.
OWNER TRUSTEE: With respect to any Equipment Note relating to a
Leased Aircraft, means the "Owner Trustee", as referred to in the
Indenture pursuant to which such Equipment Note is issued, not in its
individual capacity but solely as trustee; and OWNER TRUSTEES means all of
the Owner Trustees party to any of the Indentures.
OWNER TRUSTEE'S PURCHASE AGREEMENT: Means, with respect to any
Leased Aircraft, the agreement between the Company and the relevant Owner
Trustee pursuant to which, INTER ALIA, the Company assigns to the Owner
Trustee certain rights of the Company under the aircraft purchase
agreement with respect to such Leased Aircraft.
PARTICIPATION AGREEMENT: Means each Participation Agreement to be
entered into, or entered into (as the case may be), by the Trustee
pursuant to the NPA, as the same may be amended, supplemented or otherwise
modified in accordance with its terms.
POOL BALANCE: Means, as of any date, (i) the original aggregate face
amount of the Applicable Certificates less (ii) the aggregate amount of
all payments made in respect of such Applicable Certificates or in respect
of Deposits other than payments made in respect of interest or premium
thereon or reimbursement of any costs or expenses incurred in connection
therewith. The Pool Balance as of any Distribution Date shall be computed
after giving effect to any special distribution with respect to unused
Deposits, payment of principal of the Equipment Notes or payment with
respect to other Trust Property and the distribution thereof to be made on
that date.
POOL FACTOR: Means, as of any Distribution Date, the quotient
(rounded to the seventh decimal place) computed by dividing (i) the Pool
Balance by (ii) the original aggregate face amount of the Applicable
Certificates. The Pool Factor as of any Distribution Date shall be
computed after giving effect to any special distribution with respect to
unused Deposits, payment of principal of the Equipment Notes or payments
with respect to other Trust Property and the distribution thereof to be
made on that date.
PROSPECTUS SUPPLEMENT: Means the final Prospectus Supplement dated
June 12, 2001 relating to the offering of the Applicable Certificates.
RELATED PASS THROUGH TRUST AGREEMENT: Means the Basic Agreement as
supplemented by the Trust Supplement No. 2001-1C-S dated the date hereof
relating to the Continental Airlines Pass Through Trust 2001-1C-S and
entered into by the Company and the Trustee, which agreement becomes
effective upon the execution and delivery of the Assignment and Assumption
Agreement pursuant to Section 7.01 of this Trust Supplement.
RELATED TRUST: Means the Continental Pass Through Trust 2001-1C-S,
to be formed under the Related Pass Through Trust Agreement.
RELATED TRUSTEE: Means the trustee under the Related Pass Through
Trust Agreement.
SCHEDULED DELIVERY DATE: Has the meaning specified in the NPA.
SPECIAL PAYMENT: Means any payment (other than a Scheduled Payment)
in respect of, or any proceeds of, any Equipment Note, Trust Indenture
Estate (as defined in each Leased Aircraft Indenture) or Collateral (as
defined in each Owned Aircraft Indenture).
SUBSTITUTE AIRCRAFT: Has the meaning specified in the NPA.
TRANSFER DATE: Has the meaning specified in Section 7.01 of this
Trust Supplement.
TRIGGERING EVENT: Has the meaning assigned to such term in the
Intercreditor Agreement.
TRUST PROPERTY: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Applicable Trust, all
monies at any time paid thereon and all monies due and to become due
thereunder, (ii) funds from time to time deposited in the Certificate
Account and the Special Payments Account and, subject to the Intercreditor
Agreement, any proceeds from the sale by the Trustee pursuant to Article
VI of the Basic Agreement of any Equipment Note and (iii) all rights of
the Applicable Trust and the Trustee, on behalf of the Applicable Trust,
under the Intercreditor Agreement, the Escrow Agreement, the NPA and the
Liquidity Facility, including, without limitation, all rights to receive
certain payments thereunder, and all monies paid to the Trustee on behalf
of the Applicable Trust pursuant to the Intercreditor Agreement or the
Liquidity Facility, PROVIDED that rights with respect to the Deposits or
under the Escrow Agreement, except for the right to direct withdrawals for
the purchase of Equipment Notes to be held herein, will not constitute
Trust Property.
TRUST SUPPLEMENT: Has the meaning specified in the first paragraph
of this trust supplement.
UNDERWRITER: Means Morgan Stanley & Co. Incorporated.
UNDERWRITING AGREEMENT: Means the Underwriting Agreement dated June
12, 2001 among the Underwriter, the Company and the Depositary, as the
same may be amended, supplemented or otherwise modified from time to time
in accordance with its terms.
ARTICLE III
STATEMENTS TO CERTIFICATEHOLDERS
Section 3.01. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS. (a) On
each Distribution Date, the Trustee will include with each distribution to
Applicable Certificateholders of a Scheduled Payment or Special Payment, as the
case may be, a statement setting forth the information provided below (in the
case of a Special Payment, reflecting in part the information provided by the
Escrow Paying Agent under the Escrow Agreement). Such statement shall set forth
(per $1,000 face amount Applicable Certificate as to (ii), (iii), (iv) and (v)
below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium, if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
(v) the amount of such distribution under the Escrow Agreement
allocable to unused Deposits, if any; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Applicable Certificates registered in the name
of a Clearing Agency, on the Record Date prior to each Distribution Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Applicable Certificates on
such Record Date. On each Distribution Date, the Trustee will mail to each such
Clearing Agency Participant the statement described above and will make
available additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Applicable Certificates.
(b) Within a reasonable period of time after the end of each
calendar year but not later than the latest date permitted by law, the Trustee
shall furnish to each Person who at any time during such calendar year was an
Applicable Certificateholder of record a statement containing the sum of the
amounts determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and
(a)(v) above for such calendar year or, in the event such Person was an
Applicable Certificateholder of record during a portion of such calendar year,
for such portion of such year, and such other items as are readily available to
the Trustee and which an Applicable Certificateholder shall reasonably request
as necessary for the purpose of such Applicable Certificateholder's preparation
of its federal income tax returns. Such statement and such other items shall be
prepared on the basis of information supplied to the Trustee by the Clearing
Agency Participants and shall be delivered by the Trustee to such Clearing
Agency Participants to be available for forwarding by such Clearing Agency
Participants to the holders of interests in the Applicable Certificates in the
manner described in Section 3.01(a) of this Trust Supplement.
(c) If the aggregate principal payments scheduled for a Regular
Distribution Date prior to the Delivery Period Termination Date differ from the
amount thereof set forth for the Applicable Certificates on page S-31 of the
Prospectus Supplement, by no later than the 15th day prior to such Regular
Distribution Date, the Trustee shall mail written notice of the actual amount of
such scheduled payments to the Applicable Certificateholders of record as of a
date within 15 Business Days prior to the date of mailing.
(d) Promptly following (i) the Delivery Period Termination Date, if
there has been any change in the information set forth in clauses (y) and (z)
below from that set forth in page S-31 of the Prospectus Supplement, and (ii)
the date of any early redemption or purchase of, or any default in the payment
of principal or interest in respect of, any of the Equipment Notes held in the
Applicable Trust, or any Final Withdrawal, the Trustee shall furnish to
Applicable Certificateholders of record on such date a statement setting forth
(x) the expected Pool Balances for each subsequent Regular Distribution Date
following the Delivery Period Termination Date, (y) the related Pool Factors for
such Regular Distribution Dates and (z) the expected principal distribution
schedule of the Equipment Notes, in the aggregate, held as Trust Property at the
date of such notice. With respect to the Applicable Certificates registered in
the name of a Clearing Agency, on the Delivery Period Termination Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Applicable Certificates on
such date. The Trustee will mail to each such Clearing Agency Participant the
statement described above and will make available additional copies as requested
by such Clearing Agency Participant for forwarding to holders of interests in
the Applicable Certificates.
(e) This Section 3.01 supersedes and replaces Section 4.03 of the
Basic Agreement, with respect to the Applicable Trust.
ARTICLE IV
DEFAULT
Section 4.01. PURCHASE RIGHTS OF CERTIFICATEHOLDERS. (a) At any time
after the occurrence and during the continuation of a Triggering Event, each
Applicable Certificateholder shall have the right (which shall not expire upon
any purchase of the Class A-2 Certificates pursuant to the Class A-1 Trust
Agreement, any purchase of the Class A-1 Certificates pursuant to the Class A-2
Trust Agreement or any purchase of the Class A-1 Certificates and the Class A-2
Certificates pursuant to the Class B Trust Agreement) to purchase, for the
purchase prices set forth in the Class A-1 Trust Agreement, the Class A-2 Trust
Agreement and the Class B Trust Agreement, respectively, all, but not less than
all, of the Class A-1 Certificates, the Class A-2 Certificates and the Class B
Certificates upon ten days' written notice to the Class A-1 Trustee, the Class
A-2 Trustee, the Class B Trustee and each other Applicable Certificateholder,
PROVIDED that (i) if prior to the end of such ten-day period any other
Applicable Certificateholder notifies such purchasing Applicable
Certificateholder that such other Applicable Certificateholder wants to
participate in such purchase, then such other Applicable Certificateholder may
join with the purchasing Applicable Certificateholder to purchase all, but not
less than all, of the Class A-1 Certificates, the Class A-2 Certificates and the
Class B Certificates pro rata based on the Fractional Undivided Interest in the
Applicable Trust held by each such Applicable Certificateholder and (ii) if
prior to the end of such ten-day period any other Applicable Certificateholder
fails to notify the purchasing Applicable Certificateholder of such other
Applicable Certificateholder's desire to participate in such a purchase, then
such other Applicable Certificateholder shall lose its right to purchase the
Class A-1 Certificates, the Class A-2 Certificates and the Class B Certificates
pursuant to this Section 4.01(a).
(b) By acceptance of its Applicable Certificate, each Applicable
Certificateholder agrees that at any time after the occurrence and during the
continuation of a Triggering Event, each holder of a Class D Certificate (a
"CLASS D CERTIFICATEHOLDER") shall have the right (which shall not expire upon
any purchase of the Class A-2 Certificates pursuant to the Class A-1 Trust
Agreement, any purchase of the Class A-1 Certificates pursuant to the Class A-2
Trust Agreement, any purchase of the Class A-1 Certificates and the Class A-2
Certificates pursuant to the Class B Trust Agreement or any purchase of
Certificates pursuant to clause (a) above) to purchase all, but not less than
all, of the Class A-1 Certificates, the Class A-2 Certificates, the Class B
Certificates and the Applicable Certificates upon ten days' written notice to
the Class A-1 Trustee, the Class A-2 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-1 Certificates, the Class A-2 Certificates, the
Class B Certificates and the Applicable 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-1 Certificates, the Class A-2
Certificates, the Class B Certificates and the Applicable Certificates pursuant
to this Section 4.01(b).
The purchase price with respect to the Applicable Certificates shall
be equal to the Pool Balance of the Applicable 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 Applicable
Certificateholders under the Agreement, the Intercreditor Agreement, the Escrow
Agreement or any Note Document or on or in respect of the Applicable
Certificates; PROVIDED, HOWEVER, that no such purchase of Applicable
Certificates shall be effective unless the purchaser(s) shall certify to the
Trustee that contemporaneously with such purchase, such purchaser(s) is (are)
purchasing, pursuant to the terms of the Agreement and the Other Agreements, the
Class A-1 Certificates, the Class A-2 Certificates, the Class B Certificates and
the Applicable Certificates that are senior to the securities held by such
purchaser(s). Each payment of the purchase price of the Applicable 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 4.01(b). Each Applicable Certificateholder agrees by its
acceptance of its Applicable Certificate that (at any time after the occurrence
and during the continuation of a Triggering Event) it will, upon payment from
such Class D Certificateholder(s) of the purchase price set forth in the first
sentence of this paragraph, (i) 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 Applicable Certificateholder in the Agreement, the Escrow Agreement, the
Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the NPA,
the Note Documents and all Applicable Certificates and Escrow Receipts held by
such Applicable 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 Applicable Certificateholder's obligations under the Agreement, the
Escrow Agreement, the Deposit Agreement, the Intercreditor Agreement, the
Liquidity Facility, the NPA, the Note Documents and all such Applicable
Certificates and Escrow Receipts), (ii) if such purchase occurs after a record
date specified in Section 2.03 of the Escrow Agreement relating to the
distribution of unused Deposits and/or accrued and unpaid interest on Deposits
and prior to or on the related distribution date thereunder, forthwith turn over
to the purchaser(s) of its Applicable Certificate all amounts, if any, received
by it on account of such distribution, and (iii) if such purchase occurs after a
Record Date relating to any distribution and prior to or on the related
Distribution Date, forthwith turn over to the purchaser(s) of its Applicable
Certificate all amounts, if any, received by it on account of such distribution.
The Applicable Certificates will be deemed to be purchased on the date payment
of the purchase price is made notwithstanding the failure of the Applicable
Certificateholders to deliver any Applicable Certificates and, upon such a
purchase, (I) the only rights of the Applicable Certificateholders will be to
deliver the Applicable Certificates to the purchaser(s) and receive the purchase
price for such Applicable Certificates and (II) if the purchaser(s) shall so
request, such Applicable Certificateholder will comply with all the provisions
of Section 3.04 of the Basic Agreement to enable new Applicable 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 Applicable
Certificates shall be borne by the purchaser thereof.
As used in this Section 4.01 and elsewhere in this Trust Supplement,
the terms "Class A-1 Certificate", "Class A-1 Trust", "Class A-1 Trust
Agreement", "Class A-1 Trustee", "Class A-2 Certificate", "Class A-2 Trust",
"Class A-2 Trust Agreement", "Class A-2 Trustee", "Class B Certificate", "Class
B Trust", "Class B Trust Agreement", "Class B Trustee", "Class D Certificate"
and "Class D Trust", shall have the respective meanings assigned to such terms
in the Intercreditor Agreement.
(c) This Section 4.01 supersedes and replaces Section 6.01(b) of the
Basic Agreement, with respect to the Applicable Trust.
Section 4.02. AMENDMENT OF SECTION 6.05 OF THE BASIC AGREEMENT.
Section 6.05 of the Basic Agreement shall be amended, with respect to the
Applicable Trust, by deleting the phrase "and thereby annul any Direction given
by such Certificateholders or the Trustee to such Loan Trustee with respect
thereto," set forth in the first sentence thereof.
ARTICLE V
THE TRUSTEE
Section 5.01. DELIVERY OF DOCUMENTS; DELIVERY DATES. (a) The Trustee
is hereby directed (i) to execute and deliver the Amendment No. 1 to
Intercreditor Agreement, the Escrow Agreement and the NPA on or prior to the
Issuance Date, each in the form delivered to the Trustee by the Company, and
(ii) subject to the respective terms thereof, to perform its obligations
thereunder. Upon request of the Company and the satisfaction or waiver of the
closing conditions specified in the Underwriting Agreement, the Trustee shall
execute, deliver, authenticate, issue and sell Applicable Certificates in
authorized denominations equaling in the aggregate the amount set forth, with
respect to the Applicable Trust, in Schedule I to the Underwriting Agreement
evidencing the entire ownership interest in the Applicable Trust, which amount
equals the maximum aggregate principal amount of Equipment Notes which may be
purchased by the Trustee pursuant to the NPA. Except as provided in Sections
3.03, 3.04, 3.05 and 3.06 of the Basic Agreement, the Trustee shall not execute,
authenticate or deliver Applicable Certificates in excess of the aggregate
amount specified in this paragraph. The provisions of this Section 5.01(a)
supersede and replace the first sentence of Section 3.02(a) of the Basic
Agreement, with respect to the Applicable Trust.
(b) On or after the Issuance Date, the Company may deliver from time
to time to the Trustee a Delivery Notice relating to one or more Equipment
Notes. After receipt of a Delivery Notice and in any case no later than one
Business Day prior to a Scheduled Delivery Date as to which such Delivery Notice
relates (the "APPLICABLE DELIVERY DATE"), the Trustee shall (as and when
specified in the Delivery Notice) instruct the Escrow Agent to provide a Notice
of Purchase Withdrawal to the Depositary requesting (A) the withdrawal of one or
more Deposits on the Applicable Delivery Date in accordance with and to the
extent permitted by the terms of the Escrow Agreement and the Deposit Agreement
and (B) the payment of all, or a portion, of such Deposit or Deposits in an
amount equal in the aggregate to the purchase price of such Equipment Notes to
or on behalf of the Owner Trustee or the Company, as the case may be, issuing
such Equipment Notes, all as shall be described in the Delivery Notice; PROVIDED
that, if the Issuance Date is an Applicable Delivery Date, the Trustee shall not
so instruct the Escrow Agent, and the purchase price of such Equipment Notes
shall be paid from a portion of the proceeds of the sale of the Applicable
Certificates. The Trustee shall (as and when specified in such Delivery Notice),
subject to the conditions set forth in Section 2 of the NPA, enter into and
perform its obligations under the Participation Agreement specified in such
Delivery Notice (the "APPLICABLE PARTICIPATION AGREEMENT") and cause such
certificates, documents and legal opinions relating to the Trustee to be duly
delivered as required by the Applicable Participation Agreement. If at any time
prior to the Applicable Delivery Date, the Trustee receives a notice of
postponement pursuant to Section 1(e) or 1(f) of the NPA, then the Trustee shall
give the Depositary (with a copy to the Escrow Agent) a notice of cancellation
of such Notice of Purchase Withdrawal relating to such Deposit or Deposits on
such Applicable Delivery Date. Upon satisfaction of the conditions specified in
the NPA and the Applicable Participation Agreement, the Trustee shall purchase
the applicable Equipment Notes with the proceeds of the withdrawals of one or
more Deposits made on the Applicable Delivery Date in accordance with the terms
of the Deposit Agreement and the Escrow Agreement (or, if the Issuance Date is
the Applicable Delivery Date with respect to such Applicable Participation
Agreement, from a portion of the proceeds of the sale of the Applicable
Certificates). The purchase price of such Equipment Notes shall equal the
principal amount of such Equipment Notes. Amounts withdrawn from such Deposit or
Deposits in excess of the purchase price of the Equipment Notes or to the extent
not applied on the Applicable Delivery Date to the purchase price of the
Equipment Notes, shall be re-deposited by the Trustee with the Depositary on the
Applicable Delivery Date in accordance with the terms of the Deposit Agreement.
The provisions of this Section 5.01(b) supersede and replace the provisions of
Section 2.02 of the Basic Agreement with respect to the Applicable Trust, and
all provisions of the Basic Agreement relating to Postponed Notes and Section
2.02 of the Basic Agreement shall not apply to the Applicable Trust.
(c) The Trustee acknowledges its acceptance of all right, title and
interest in and to the Trust Property to be acquired pursuant to Section 5.01(b)
of this Trust Supplement, the NPA and each Applicable Participation Agreement,
and declares that it holds and will hold such right, title and interest for the
benefit of all present and future Applicable Certificateholders, upon the trusts
set forth in the Agreement. By its acceptance of an Applicable Certificate, each
initial Applicable Certificateholder, as a grantor of the Applicable Trust,
joins with the Trustee in the creation of the Applicable Trust. The provisions
of this Section 5.01(c) supersede and replace the provisions of Section 2.03 of
the Basic Agreement, with respect to the Applicable Trust.
Section 5.02. WITHDRAWAL OF DEPOSITS. If any Deposits remain
outstanding on the Business Day next succeeding the Cut-off Date, the Trustee
shall give the Escrow Agent notice that the Trustee's obligation to purchase
Equipment Notes under the NPA has terminated and instruct the Escrow Agent to
provide a notice of Final Withdrawal to the Depositary substantially in the form
of Exhibit B to the Deposit Agreement (the "FINAL WITHDRAWAL NOTICE").
Section 5.03. THE TRUSTEE. (a) Subject to Section 5.04 of this Trust
Supplement and Section 7.15 of the Basic Agreement, the Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement, the Deposit Agreement, the NPA or the
Escrow Agreement or the due execution hereof or thereof by the Company or the
other parties thereto (other than the Trustee), or for or in respect of the
recitals and statements contained herein or therein, all of which recitals and
statements are made solely by the Company, except that the Trustee hereby
represents and warrants that each of this Trust Supplement, the Basic Agreement,
each Applicable Certificate, the Intercreditor Agreement, the Amendment No. 1 to
Intercreditor Agreement, the NPA and the Escrow Agreement has been executed and
delivered by one of its officers who is duly authorized to execute and deliver
such document on its behalf.
(b) Except as herein otherwise provided and except during the
continuation of an Event of Default in respect of the Applicable Trust created
hereby, no duties, responsibilities or liabilities are assumed, or shall be
construed to be assumed, by the Trustee by reason of this Trust Supplement other
than as set forth in the Agreement, and this Trust Supplement is executed and
accepted on behalf of the Trustee, subject to all the terms and conditions set
forth in the Agreement, as fully to all intents as if the same were herein set
forth at length.
Section 5.04. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The
Trustee hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to
execute, deliver and perform this Trust Supplement, the Intercreditor
Agreement, the Amendment No. 1 to Intercreditor Agreement, the Escrow
Agreement, the NPA and the Note Documents to which it is or is to become a
party and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Supplement, the Intercreditor
Agreement, the Amendment No. 1 to Intercreditor Agreement, the Escrow
Agreement, the NPA and the Note Documents to which it is or is to become a
party;
(b) the execution, delivery and performance by the Trustee of this
Trust Supplement, the Intercreditor Agreement, the Amendment No. 1 to
Intercreditor Agreement, the Escrow Agreement, the NPA and the Note
Documents to which it is or is to become a party (i) will not violate any
provision of any United States federal law or the law of the state of the
United States where it is located governing the banking and trust powers
of the Trustee or any order, writ, judgment, or decree of any court,
arbitrator or governmental authority applicable to the Trustee or any of
its assets, (ii) will not violate any provision of the articles of
association or by-laws of the Trustee, and (iii) will not violate any
provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of any lien on any
properties included in the Trust Property pursuant to the provisions of
any mortgage, indenture, contract, agreement or other undertaking to which
it is a party, which violation, default or lien could reasonably be
expected to have an adverse effect on the Trustee's performance or ability
to perform its duties hereunder or thereunder or on the transactions
contemplated herein or therein;
(c) the execution, delivery and performance by the Trustee of this
Trust Supplement, the Intercreditor Agreement, the Amendment No. 1 to
Intercreditor Agreement, the Escrow Agreement, the NPA and the Note
Documents to which it is or is to become a party will not require the
authorization, consent, or approval of, the giving of notice to, the
filing or registration with, or the taking of any other action in respect
of, any governmental authority or agency of the United States or the state
of the United States where it is located regulating the banking and
corporate trust activities of the Trustee; and
(d) this Trust Supplement, the Intercreditor Agreement, the
Amendment No. 1 to Intercreditor Agreement, the Escrow Agreement, the NPA
and the Note Documents to which it is or is to become a party have been,
or will be, as applicable, duly executed and delivered by the Trustee and
constitute, or will constitute, as applicable, the legal, valid and
binding agreements of the Trustee, enforceable against it in accordance
with their respective terms; PROVIDED, HOWEVER, that enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and
(ii) general principles of equity.
Section 5.05. TRUSTEE LIENS. The Trustee in its individual capacity
agrees, in addition to the agreements contained in Section 7.17 of the Basic
Agreement, that it will at its own cost and expense promptly take any action as
may be necessary to duly discharge and satisfy in full any Trustee's Liens on or
with respect to the Trust Property which is attributable to the Trustee in its
individual capacity and which is unrelated to the transactions contemplated by
the Intercreditor Agreement or the NPA.
ARTICLE VI
ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS
Section 6.01. AMENDMENT OF SECTION 5.02 OF THE BASIC AGREEMENT.
Section 5.02 of the Basic Agreement shall be amended, with respect to the
Applicable Trust, by (i) replacing the phrase "of the Note Documents and of this
Agreement" set forth in paragraph (b) thereof with the phrase "of the Note
Documents, of the NPA and of this Agreement" and (ii) replacing the phrase "of
this Agreement and any Note Document" set forth in the last paragraph of Section
5.02 with the phrase "of this Agreement, the NPA and any Note Document".
Section 6.02. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.01 of the Basic Agreement,
under the terms of, and subject to the limitations contained in, Section 9.01 of
the Basic Agreement, the Company may (but will not be required to), and the
Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request, at any time and from time to time, (i) enter into one or more
agreements supplemental to the Escrow Agreement, the NPA or the Deposit
Agreement, for any of the purposes set forth in clauses (1) through (9) of such
Section 9.01, and (without limitation of the foregoing or Section 9.01 of the
Basic Agreement) (a) clauses (2) and (3) of such Section 9.01 shall also be
deemed to include the Company's obligations under (in the case of clause (2)),
and the Company's rights and powers conferred by (in the case of clause (3)),
the NPA, and (b) references in clauses (4), (6) and (7) of such Section 9.01 to
"any Intercreditor Agreement or any Liquidity Facility" shall also be deemed to
refer to "the Intercreditor Agreement, the Liquidity Facility, the Escrow
Agreement, the NPA or the Deposit Agreement" and (ii) enter into one or more
agreements supplemental to the Agreement to provide for the formation of a Class
D Trust, the issuance of Class D Certificates, the purchase by the Class D Trust
of Equipment Notes and other matters incidental thereto or otherwise
contemplated by Section 2.01(b) of the Basic Agreement.
Section 6.03. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.02 of the Basic Agreement,
the provisions of Section 9.02 of the Basic Agreement shall apply to agreements
or amendments for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement or the NPA or modifying in any manner the rights and obligations of
the Applicable Certificateholders under the Escrow Agreement, the Deposit
Agreement or the NPA; provided that the provisions of Section 9.02(1) of the
Basic Agreement shall be deemed to include reductions in any manner of, or delay
in the timing of, any receipt by the Applicable Certificateholders of payments
upon the Deposits.
ARTICLE VII
TERMINATION OF TRUST
Section 7.01. TERMINATION OF THE APPLICABLE TRUST. (a) The
respective obligations and responsibilities of the Company and the Trustee with
respect to the Applicable Trust shall terminate upon the earlier of (A) the
completion of the assignment, transfer and discharge described in the first
sentence of the immediately following paragraph and (B) distribution to all
Applicable Certificateholders and the Trustee 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; PROVIDED, HOWEVER, that in no event
shall the Applicable Trust continue beyond one hundred ten (110) years following
the date of the execution of this Trust Supplement.
Upon the earlier of (i) the first Business Day following September
30, 2002 or, if later, the fifth Business Day following the Delivery Period
Termination Date and (ii) the fifth Business Day following the date on which a
Triggering Event occurs (such date, the "TRANSFER DATE"), or, if later, the date
on which all of the conditions set forth in the immediately following sentence
have been satisfied, the Trustee is hereby directed (subject only to the
immediately following sentence) to, and the Company shall direct the institution
that will serve as the Related Trustee under the Related Pass Through Trust
Agreement to, execute and deliver the Assignment and Assumption Agreement,
pursuant to which the Trustee shall assign, transfer and deliver all of the
Trustee's right, title and interest to the Trust Property to the Related Trustee
under the Related Pass Through Trust Agreement. The Trustee and the Related
Trustee shall execute and deliver the Assignment and Assumption Agreement upon
the satisfaction of the following conditions:
(i) The Trustee, the Related Trustee and each of the Rating Agencies
then rating the Applicable Certificates shall have received an Officer's
Certificate and an Opinion of Counsel dated the date of the Assignment and
Assumption Agreement and each satisfying the requirements of Section 1.02
of the Basic Agreement, which Opinion of Counsel shall be substantially to
the effect set forth below and may be relied upon by the Beneficiaries (as
defined in the Assignment and Assumption Agreement):
(I) Upon the execution and delivery thereof by the parties
thereto in accordance with the terms of the Agreement and the
Related Pass Through Trust Agreement, the Assignment and Assumption
Agreement will constitute the valid and binding obligation of each
of the parties thereto enforceable against each such party in
accordance with its terms;
(II) Upon the execution and delivery of the Assignment and
Assumption Agreement in accordance with the terms of the Agreement
and the Related Pass Through Trust Agreement, each of the Applicable
Certificates then Outstanding will be entitled to the benefits of
the Related Pass Through Trust Agreement;
(III) The Related Trust is not required to be registered as an
investment company under the Investment Company Act of 1940, as
amended;
(IV) The Related Pass Through Trust Agreement constitutes the
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms; and
(V) Neither the execution and delivery of the Assignment and
Assumption Agreement in accordance with the terms of the Agreement
and the Related Pass Through Trust Agreement, nor the consummation
by the parties thereto of the transactions contemplated to be
consummated thereunder on the date thereof, will violate any law or
governmental rule or regulation of the State of New York or the
United States of America known to such counsel to be applicable to
the transactions contemplated by the Assignment and Assumption
Agreement.
(ii) The Trustee and the Company shall have received (x) a copy of
the articles of incorporation and bylaws of the Related Trustee certified
as of the Transfer Date by the Secretary or Assistant Secretary of such
institution and (y) a copy of the filing (including all attachments
thereto) made by the institution serving as the Related Trustee with the
Office of the Superintendent, State of New York Banking Department for the
qualification of the Related Trustee under Section 131(3) of the New York
Banking Law.
Upon the execution of the Assignment and Assumption Agreement by the parties
thereto, the Applicable Trust shall be terminated, the Applicable
Certificateholders shall receive beneficial interests in the Related Trust in
exchange for their interests in the Applicable Trust equal to their respective
beneficial interests in the Applicable Trust, and the Outstanding Applicable
Certificates representing Fractional Undivided Interests in the Applicable Trust
shall be deemed for all purposes of the Agreement and the Related Pass Through
Trust Agreement, without further signature or action of any party or Applicable
Certificateholder, to be certificates representing the same fractional undivided
interests in the Related Trust and its trust property. By acceptance of its
Applicable Certificate, each Applicable Certificateholder consents to such
assignment, transfer and delivery of the Trust Property to the trustee of the
Related Trust upon the execution and delivery of the Assignment and Assumption
Agreement.
In connection with the occurrence of the event set forth in clause
(B) above, notice of such termination, specifying the Distribution Date upon
which the Applicable Certificateholders may surrender their Applicable
Certificates to the Trustee for payment of the final distribution and
cancellation, shall be mailed promptly by the Trustee to Applicable
Certificateholders not earlier than the 60th day and not later than the 15th day
next preceding such final Distribution Date specifying (A) the Distribution Date
upon which the proposed final payment of the Applicable Certificates will be
made upon presentation and surrender of Applicable 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 Applicable 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 Applicable Certificateholders. Upon
presentation and surrender of the Applicable Certificates in accordance with
such notice, the Trustee shall cause to be distributed to Applicable
Certificateholders such final payments.
In the event that all of the Applicable Certificateholders shall not
surrender their Applicable 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 Applicable Certificateholders to
surrender their Applicable Certificates for cancellation and receive the final
distribution with respect thereto. No additional interest shall accrue on the
Applicable 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 Applicable Certificates shall remain unclaimed for two
years (or such lesser time as the Trustee shall be satisfied, after sixty days'
notice from the Company, is one month prior to the escheat period provided under
applicable law) after the final distribution date with respect thereto, the
Trustee shall pay to each Loan Trustee the appropriate amount of money relating
to such Loan Trustee and shall give written notice thereof to the related Owner
Trustees, the Owner Participants and the Company.
(b) The provisions of this Section 7.01 supersede and replace the
provisions of Section 11.01 of the Basic Agreement in its entirety, with respect
to the Applicable Trust.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. BASIC AGREEMENT RATIFIED. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument. All replacements of provisions of, and other modifications of the
Basic Agreement set forth in this Trust Supplement are solely with respect to
the Applicable Trust.
SECTION 8.02. GOVERNING LAW. THE AGREEMENT AND, UNTIL THE TRANSFER
DATE, THE APPLICABLE CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. THIS SECTION 8.02 SUPERSEDES
AND REPLACES SECTION 12.05 OF THE BASIC AGREEMENT, WITH RESPECT TO THE
APPLICABLE TRUST.
Section 8.03. EXECUTION IN COUNTERPARTS. This Trust Supplement may
be executed in any number of counterparts, each of which shall be an original,
but such counterparts shall together constitute but one and the same instrument.
Section 8.04. INTENTION OF PARTIES. The parties hereto intend that
the Applicable Trust be classified for U.S. federal income tax purposes as a
grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue
Code of 1986, as amended, and not as a trust or association taxable as a
corporation or as a partnership. Each Applicable Certificateholder and Investor,
by its acceptance of its Applicable Certificate or a beneficial interest
therein, agrees to treat the Applicable Trust as a grantor trust for all U.S.
federal, state and local income tax purposes. The powers granted and obligations
undertaken pursuant to the Agreement shall be so construed so as to further such
intent.
IN WITNESS WHEREOF, the Company and the Trustee have caused this
Trust Supplement to be duly executed by their respective officers thereto duly
authorized, as of the day and year first written above.
CONTINENTAL AIRLINES, INC.
By:
-----------------------------------------
Name: Jennifer L. Vogel
Title: Vice President and General Counsel
WILMINGTON TRUST COMPANY,
as Trustee
By:
-----------------------------------------
Name:
Title:
EXHIBIT A
FORM OF CERTIFICATE
Certificate
No.___
[Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the registered owner hereof,
Cede & Co., has an interest herein.]
CONTINENTAL AIRLINES PASS THROUGH TRUST 2001-1C-O
7.033% Continental Airlines Pass Through Certificate, Series 2001-1C-O
Issuance Date: June 26, 2001
Final Maturity Date: December 15, 2012
Evidencing A Fractional Undivided Interest In The Continental
Airlines Pass Through Trust 2001-1C-O, The Property Of Which Shall
Include Certain Equipment Notes Each Secured By An Aircraft Leased
To Or Owned By Continental Airlines, Inc.
$____________ Fractional Undivided Interest
representing .0005214743% 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 2001-1C-O (the "TRUST") created by Wilmington Trust Company, as trustee
(the "TRUSTEE"), pursuant to a Pass Through Trust Agreement, dated as of
September 25, 1997 (the "BASIC Agreement"), between the Trustee and Continental
Airlines, Inc., a Delaware corporation (the "COMPANY"), as supplemented by Trust
Supplement No. 2001-1C-O thereto, dated as of June 26, 2001 (the "TRUST
- ----------------
This legend to appear on Book-Entry Certificates to be deposited with the
Depository Trust Company.
SUPPLEMENT" and, together with the Basic Agreement, the "AGREEMENT"), between
the Trustee and the Company, a summary of certain of the pertinent provisions of
which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Certificates
designated as "7.033% Continental Airlines Pass Through Certificates, Series
2001-1C-O" (herein called the "CERTIFICATES"). This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement. By
virtue of its acceptance hereof, the holder of this Certificate (the
"CERTIFICATEHOLDER" and, together with all other holders of Certificates issued
by the Trust, the "CERTIFICATEHOLDERS") assents to and agrees to be bound by the
provisions of the Agreement and the Intercreditor Agreement. The property of the
Trust includes certain Equipment Notes and all rights of the Trust to receive
payments under the Intercreditor Agreement and the Liquidity Facility (the
"TRUST PROPERTY"). Each issue of the Equipment Notes is secured by, among other
things, a security interest in an Aircraft leased to or 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 other separate trust established pursuant to the terms of the Basic
Agreement for any other series of certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed on each June 15 and December 15 (a "REGULAR DISTRIBUTION DATE")
commencing December 15, 2001, to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement and the Intercreditor Agreement, in the event that Special Payments on
the Equipment Notes are received by the Trustee, from funds then available to
the Trustee, there shall be distributed on the applicable Special Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Equipment Notes, the receipt of which
has been confirmed by the Trustee, equal to the product of the percentage
interest in the Trust evidenced by this Certificate and an amount equal to the
sum of such Special Payments so received. If a Regular Distribution Date or
Special Distribution Date is not a Business Day, distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the intervening period. The Trustee shall mail notice of
each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee by
check mailed to the Person entitled thereto, without presentation or surrender
of this Certificate or the making of any notation hereon, except that with
respect to Certificates registered on the Record Date in the name of a Clearing
Agency (or its nominee), such distribution shall be made by wire transfer.
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Certificate will be made after notice mailed by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency of the Trustee specified
in such notice.
The Certificates do not represent a direct obligation of, or an
obligation guaranteed by, or an interest in, the Company or the Trustee or any
affiliate thereof. The Certificates are limited in right of payment, all as more
specifically set forth on the face hereof and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, privileges, and duties evidenced hereby. A copy of the Agreement
may be examined during normal business hours at the principal office of the
Trustee, and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the Register
upon surrender of this Certificate for registration of transfer at the offices
or agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar, duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust will be issued to the designated transferee or transferees.
Under certain circumstances set forth in Section 7.01 of the Trust
Supplement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the Related
Trust pursuant to the Assignment and Assumption Agreement. Upon the
effectiveness of such Assignment and Assumption Agreement (the "TRANSFER"), the
Trust shall be terminated, the Certificateholders shall receive beneficial
interests in the Related Trust in exchange for their interests in the Trust
equal to their respective beneficial interests in the Trust, the Certificates
representing Fractional Undivided Interests in the Trust shall be deemed for all
purposes of the Agreement and the Related Pass Through Trust Agreement to be
certificates representing the same fractional undivided interests in the Related
Trust and its trust property. Each Certificateholder, by its acceptance of this
Certificate or a beneficial interest herein, agrees to be bound by the
Assignment and Assumption Agreement and subject to the terms of the Related Pass
Through Trust Agreement as a Certificateholder thereunder. From and after the
Transfer, unless and to the extent the context otherwise requires, references
herein to the Trust, the Agreement and the Trustee shall constitute references
to the Related Trust, the Related Pass Through Trust Agreement and trustee of
the Related Trust, respectively.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $1,000 Fractional Undivided Interest
and integral multiples thereof except that one Certificate may be issued in a
different denomination. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Trust, as requested by the
Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee shall require payment of a sum sufficient to cover
any tax or governmental charge payable in connection therewith.
Each Certificateholder and Investor, by its acceptance of this
Certificate or a beneficial interest herein, agrees to treat the Trust as a
grantor trust for all U.S. federal, state and local income tax purposes.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and
the Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
Any Person acquiring or accepting this Certificate or an interest
herein will, by such acquisition or acceptance, be deemed to have represented
and warranted to and for the benefit of each Owner Participant and the Company
that either: (i) the assets of an employee benefit plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of
a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended
(the "CODE"), have not been used to purchase this Certificate or an interest
herein or (ii) the purchase and holding of this Certificate or an interest
herein are exempt from the prohibited transaction restrictions of ERISA and the
Code pursuant to one or more prohibited transaction statutory or administrative
exemptions.
THE AGREEMENT AND, UNTIL THE TRANSFER, THIS CERTIFICATE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS. THE RELATED PASS THROUGH TRUST
AGREEMENT AND, FROM AND AFTER THE TRANSFER, THIS CERTIFICATE SHALL BE GOVERNED
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
CONTINENTAL AIRLINES PASS THROUGH
TRUST 2001-1C-O
By:WILMINGTON TRUST COMPANY,
as Trustee
By:
---------------------------------------
Name:
Title:
FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
WILMINGTON TRUST COMPANY,
as Trustee
By:
-----------------------------------------
EXHIBIT B
[DTC Letter of Representations]
EXHIBIT C
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
Continental Airlines Pass Through Trust 2001-1C-O
ASSIGNMENT AND ASSUMPTION AGREEMENT (2001-1C-O), dated___________,
______ (the "ASSIGNMENT AGREEMENT"), between Wilmington Trust Company, a
Delaware banking corporation ("WTC"), not in its individual capacity except as
expressly provided herein, but solely as trustee under the Pass Through Trust
Agreement dated as of September 25, 1997 (as amended or modified from time to
time, the "BASIC AGREEMENT"), as supplemented by the Trust Supplement No.
2001-1C-O dated June 26, 2001 (the "TRUST SUPPLEMENT" and together with the
Basic Agreement, the "AGREEMENT") in respect of the Continental Airlines Pass
Through Trust 2001-1C-O (the "ASSIGNOR"), and Wilmington Trust Company, a
Delaware banking corporation, not in its individual capacity except as expressly
provided herein, but solely as trustee under the Basic Agreement as supplemented
by the Trust Supplement No. 2001-1C-S dated June 26, 2001 (the "NEW SUPPLEMENT",
and, together with the Basic Agreement, the "NEW AGREEMENT") in respect of the
Continental Airlines Pass Through Trust 2001-1C-S (the "ASSIGNEE").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to effect on the date hereof (the
"TRANSFER DATE") (a) the transfer by the Assignor to the Assignee of all of the
right, title and interest of the Assignor in, under and with respect to, among
other things, the Trust Property and each of the documents listed in Schedule I
hereto (the "SCHEDULED DOCUMENTS") and (b) the assumption by the Assignee of the
obligations of the Assignor (i) under the Scheduled Documents and (ii) in
respect of the Applicable Certificates issued under the Agreement; and
WHEREAS, the Scheduled Documents permit such transfer upon
satisfaction of certain conditions heretofore or concurrently herewith being
complied with;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree as
follows (capitalized terms used herein without definition having the meaning
ascribed thereto in the Agreement):
1. ASSIGNMENT. The Assignor does hereby sell, assign, convey,
transfer and set over unto the Assignee as of the Transfer Date all of its
present and future right, title and interest in, under and with respect to the
Trust Property and the Scheduled Documents and each other contract, agreement,
document or instrument relating to the Trust Property or the Scheduled Documents
(such other contracts, agreements, documents or instruments, together with the
Scheduled Documents, to be referred to as the "ASSIGNED DOCUMENTS"), and any
proceeds therefrom, together with all documents and instruments evidencing any
of such right, title and interest.
2. ASSUMPTION. The Assignee hereby assumes for the benefit of the
Assignor and each of the parties listed in Schedule II hereto (collectively, the
"BENEFICIARIES") all of the duties and obligations of the Assignor, whenever
accrued, pursuant to the Assigned Documents and hereby confirms that it shall be
deemed a party to each of the Assigned Documents to which the Assignor is a
party and shall be bound by all the terms thereof (including the agreements and
obligations of the Assignor set forth therein) as if therein named as the
Assignor. Further, the Assignee hereby assumes for the benefit of the Assignor
and the Beneficiaries all of the duties and obligations of the Assignor under
the Outstanding Applicable Certificates and hereby confirms that the Applicable
Certificates representing Fractional Undivided Interests under the Agreement
shall be deemed for all purposes of the Agreement and the New Agreement to be
certificates representing the same fractional undivided interests under the New
Agreement equal to their respective beneficial interests in the trust created
under the Agreement.
3. EFFECTIVENESS. This Assignment Agreement shall be effective upon
the execution and delivery hereof by the parties hereto, and each Applicable
Certificateholder, by its acceptance of its Applicable Certificate or a
beneficial interest therein, agrees to be bound by the terms of this Assignment
Agreement.
4. PAYMENTS. The Assignor hereby covenants and agrees to pay over to
the Assignee, if and when received following the Transfer Date, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of the Assignor that, under Section 1 hereof, belong to the Assignee.
5. FURTHER ASSURANCES. The Assignor shall, at any time and from time
to time, upon the request of the Assignee, promptly and duly execute and deliver
any and all such further instruments and documents and take such further action
as the Assignee may reasonably request to obtain the full benefits of this
Assignment Agreement and of the right and powers herein granted. The Assignor
agrees to deliver any Applicable Certificates, and all Trust Property, if any,
then in the physical possession of the Assignor, to the Assignee.
6. REPRESENTATIONS AND WARRANTIES. (a) The Assignee represents and
warrants to the Assignor and each of the Beneficiaries that:
(i) it has all requisite power and authority and legal right to
enter into and carry out the transactions contemplated hereby and to carry
out and perform the obligations of the "Pass Through Trustee" under the
Assigned Documents;
(ii) on and as of the date hereof, the representations and
warranties of the Assignee set forth in Section 7.15 of the Basic
Agreement and Section 5.04 of the New Supplement are true and correct.
(b) The Assignor represents and warrants to the Assignee that:
(i) it is duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and has the full trust power,
authority and legal right under the laws of the State of Delaware and the
United States pertaining to its trust and fiduciary powers to execute and
deliver this Assignment Agreement;
(ii) the execution and delivery by it of this Assignment Agreement
and the performance by it of its obligations hereunder have been duly
authorized by it and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound; and
(iii) this Assignment Agreement constitutes the legal, valid and
binding obligations of it enforceable against it in accordance with its
terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity.
7. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
8. COUNTERPARTS. This Assignment Agreement may be executed in any
number of counterparts, all of which together shall constitute a single
instrument. It shall not be necessary that any counterpart be signed by both
parties so long as each party shall sign at least one counterpart.
9. THIRD PARTY BENEFICIARIES. The Assignee hereby agrees, for the
benefit of the Beneficiaries, that its representations, warranties and covenants
contained herein are also intended to be for the benefit of each Beneficiary,
and each Beneficiary shall be deemed to be an express third party beneficiary
with respect thereto, entitled to enforce directly and in its own name any
rights or claims it may have against such party as such beneficiary.
IN WITNESS WHEREOF, the parties hereto, through their respective
officers thereunto duly authorized, have duly executed this Assignment Agreement
as of the day and year first above written.
ASSIGNOR:
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
provided herein, but solely as trustee
under the Pass Through Trust Agreement
and Trust Supplement in respect of the
Continental Airlines Pass Through Trust
2001-1C-O
By:
-----------------------------------------
Title:
ASSIGNEE:
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
provided herein, but solely as trustee
under the Pass Through Trust Agreement
and Trust Supplement in respect of the
Continental Airlines Pass Through Trust
2001-1C-S
By:
-----------------------------------------
Title:
Schedule I
Schedule of Assigned Documents
(1) Intercreditor Agreement dated as of April 19, 2001 among the
Trustee, the Other Trustees, the Liquidity Provider, the liquidity provider, if
any, relating to the Certificates issued under (and as defined in) each of the
Other Agreements and the Subordination Agent, as amended by Amendment No. 1 to
Intercreditor Agreement dated as of June 26, 2001 among the Company, the
Trustee, the Other Trustees, the Liquidity Provider, the liquidity providers
relating to the Certificates issued under each of the Other Agreements and
Wilmington Trust Company, as Subordination Agent and as trustee under the
Intercreditor Agreement.
(2) Amendment No. 1 to Intercreditor Agreement dated as of June 26,
2001 among the Company, the Trustee, the other Trustees, the Liquidity Provider,
the liquidity providers relating to the Certificates issued under each of the
Other Agreements and Wilmington Trust Company, as Subordination Agent and as
trustee under the Intercreditor Agreement.
(3) Escrow and Paying Agent Agreement (Class C) dated as of June 26,
2001 among the Escrow Agent, the Underwriter, the Trustee and the Paying Agent.
(4) Amended and Restated Note Purchase Agreement dated as of June
26, 2001 among the Company, the Trustee, the Other Trustees, the Depositary, the
Escrow Agent, the Paying Agent and the Subordination Agent.
(5) Deposit Agreement (Class C) dated as of June 26, 2001 between
the Escrow Agent and the Depositary.
(6) Each of the Operative Agreements (as defined in the
Participation Agreement for each Aircraft) in effect as of the Transfer Date.
Schedule II
Schedule of Beneficiaries
Wilmington Trust Company, not in its individual capacity but solely as
Subordination Agent
Wilmington Trust Company, not in its individual capacity but solely as Paying
Agent
Landesbank Hessen-Thuringen Girozentrale, as Liquidity Provider
Credit Suisse First Boston, New York Branch, as Depositary
Continental Airlines, Inc.
Morgan Stanley & Co. Incorporated, as Underwriter
Wells Fargo Bank Northwest, National Association, as Escrow Agent
Each of the other parties to the Assigned Documents
TRUST SUPPLEMENT No. 2001-1C-S
Dated June 26, 2001
between
WILMINGTON TRUST COMPANY
as Trustee,
and
CONTINENTAL AIRLINES, INC.
to
PASS THROUGH TRUST AGREEMENT
Dated as of September 25, 1997
$191,764,000
Continental Airlines Pass Through Trust 2001-1C-S
7.033% Continental Airlines
Pass Through Certificates,
Series 2001-1C-S
This Trust Supplement No. 2001-1C-S, dated as of June 26, 2001
(herein called the "TRUST SUPPLEMENT"), between Continental Airlines, Inc., a
Delaware corporation (the "COMPANY"), and Wilmington Trust Company (the
"TRUSTEE"), to the Pass Through Trust Agreement, dated as of September 25, 1997,
between the Company and the Trustee (the "BASIC AGREEMENT").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Basic Agreement, unlimited as to the aggregate
principal amount of Certificates (unless otherwise specified herein, capitalized
terms used herein without definition having the respective meanings specified in
the Basic Agreement) which may be issued thereunder, has heretofore been
executed and delivered;
WHEREAS, the Company has obtained commitments from Boeing for the
delivery of certain Aircraft;
WHEREAS, as of the Transfer Date (as defined below), the Company
will have financed the acquisition of all or a portion of such Aircraft either
(i) through separate leveraged lease transactions, in which case the Company
leases such Aircraft (collectively, the "LEASED AIRCRAFT"), or (ii) through
separate secured loan transactions, in which case the Company owns such Aircraft
(collectively, the "OWNED AIRCRAFT");
WHEREAS, as of the Transfer Date, in the case of each Leased
Aircraft, each Owner Trustee, acting on behalf of the corresponding Owner
Participant, will have issued pursuant to an Indenture, on a non-recourse basis,
Equipment Notes in order to finance a portion of its purchase price of such
Leased Aircraft;
WHEREAS, as of the Transfer Date, in the case of each Owned
Aircraft, the Company will have issued pursuant to an Indenture, on a recourse
basis, Equipment Notes to finance a portion of the purchase price of such Owned
Aircraft;
WHEREAS, as of the Transfer Date, the Related Trustee will assign,
transfer and deliver all of such trustee's right, title and interest to the
trust property held by the Related Trustee to the Trustee pursuant to the
Assignment and Assumption Agreement (as defined below);
WHEREAS, the Trustee, effective only, but automatically, upon
execution and delivery of the Assignment and Assumption Agreement, will be
deemed to have declared the creation of the Continental Airlines Pass Through
Trust 2001-1C-S (the "APPLICABLE TRUST") for the benefit of the Applicable
Certificateholders, and each Holder of Applicable Certificates outstanding as of
the Transfer Date, as the grantors of the Applicable Trust, by their respective
acceptances of such Applicable Certificates, will join in the creation of this
Applicable Trust with the Trustee;
WHEREAS, all Applicable Certificates (as defined below) deemed
issued by the Applicable Trust will evidence fractional undivided interests in
the Applicable Trust and will convey no rights, benefits or interests in respect
of any property other than the Trust Property except for those Applicable
Certificates to which an Escrow Receipt (as defined below) has been affixed;
WHEREAS, upon the execution and delivery of the Assignment and
Assumption Agreement, all of the conditions and requirements necessary to make
this Trust Supplement, when duly executed and delivered, a valid, binding and
legal instrument in accordance with its terms and for the purposes herein
expressed, have been done, performed and fulfilled, and the execution and
delivery of this Trust Supplement in the form and with the terms hereof have
been in all respects duly authorized;
WHEREAS, this Trust Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
ARTICLE I
THE CERTIFICATES
Section 1.01. THE CERTIFICATES. The Applicable Certificates shall be
known as "7.033% Continental Airlines Pass Through Certificates, Series
2001-1C-S". Each Applicable Certificate represents a fractional undivided
interest in the Applicable Trust created hereby. The Applicable Certificates
shall be the only instruments evidencing a fractional undivided interest in the
Applicable Trust.
The terms and conditions applicable to the Applicable Certificates
are as follows:
(a) The aggregate principal amount of the Applicable Certificates
that shall be initially deemed issued under the Agreement shall be equal
to the aggregate principal amount of "Outstanding" pass through
certificates representing fractional undivided interests in the Related
Trust on the Transfer Date. Subject to the preceding sentence and Section
5.01 of this Trust Supplement and except for Applicable Certificates
authenticated and delivered under Sections 3.03, 3.04, 3.05 and 3.06 of
the Basic Agreement, no Applicable Certificates shall be authenticated
under the Agreement.
(b) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means June 15 and December 15 of each year, commencing
on December 15, 2001, until payment of all of the Scheduled Payments to be
made under the Equipment Notes has been made.
(c) The Special Distribution Dates with respect to the Applicable
Certificates means any Business Day on which a Special Payment is to be
distributed pursuant to the Agreement.
(d) At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Applicable
Certificate. In any event, any transfer or exchange of any Applicable
Certificate shall also effect a transfer or exchange of the related Escrow
Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of
any Applicable Certificate shall be permitted unless the corresponding
Escrow Receipt is attached thereto and also is so transferred or
exchanged. By acceptance of any Applicable Certificate to which an Escrow
Receipt is attached, each Holder of such an Applicable Certificate
acknowledges and accepts the restrictions on transfer of the Escrow
Receipt set forth herein and in the Escrow Agreement.
(e) (i) The Applicable Certificates shall be in the form attached as
Exhibit A to the Related Pass Through Trust Supplement, with such
appropriate insertions, omissions, substitutions and other variations as
are required or permitted by the Related Pass Through Trust Agreement or
the Agreement, as the case may be, or as the Trustee may deem appropriate,
to reflect the fact that the Applicable Certificates are being issued
under the Agreement as opposed to under the Related Pass Through Trust
Agreement. Any Person acquiring or accepting an Applicable Certificate or
an interest therein will, by such acquisition or acceptance, be deemed to
represent and warrant to and for the benefit of each Owner Participant and
the Company that either (i) the assets of an employee benefit plan subject
to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or of a plan subject to Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code"), have not been used to
purchase Applicable Certificates or an interest therein or (ii) the
purchase and holding of Applicable Certificates or an interest therein is
exempt from the prohibited transaction restrictions of ERISA and the Code
pursuant to one or more prohibited transaction statutory or administrative
exemptions.
(ii) The Applicable Certificates shall be Book-Entry
Certificates and shall be subject to the conditions set forth in the
Letter of Representations between the Company and the Clearing Agency
attached as Exhibit B to the Related Pass Through Trust Supplement.
(f) The "Participation Agreements" as defined in this Trust
Supplement are the "Note Purchase Agreements" referred to in the Basic
Agreement.
(g) The Applicable Certificates are subject to the Intercreditor
Agreement, the Deposit Agreement and the Escrow Agreement.
(h) The Applicable Certificates are entitled to the benefits of the
Liquidity Facility.
(i) The Responsible Party is the Company.
(j) The date referred to in clause (i) of the definition of the term
"PTC Event of Default" in the Basic Agreement is the Final Maturity Date.
(k) The "particular sections of the Note Purchase Agreement", for
purposes of clause (3) of Section 7.07 of the Basic Agreement, are Section
8.1 (with respect to Owned Aircraft) and Section 9.1 (with respect to
Leased Aircraft) of each Participation Agreement.
(l) The Equipment Notes to be acquired and held in the Applicable
Trust, and the related Aircraft and Note Documents, are described in the
NPA.
ARTICLE II
DEFINITIONS
Section 2.01. DEFINITIONS. For all purposes of the Basic Agreement
as supplemented by this Trust Supplement, the following capitalized terms have
the following meanings (any term used herein which is defined in both this Trust
Supplement and the Basic Agreement shall have the meaning assigned thereto in
this Trust Supplement for purposes of the Basic Agreement as supplemented by
this Trust Supplement):
AGREEMENT: Means the Basic Agreement, as supplemented by this Trust
Supplement.
AIRCRAFT: Means each of the New Aircraft or Substitute Aircraft in
respect of which a Participation Agreement is entered into in accordance
with the NPA (or any substitute aircraft, including engines therefor,
owned by or leased to the Company and securing one or more Equipment
Notes).
AIRCRAFT PURCHASE AGREEMENT: Has the meaning specified in the NPA.
AMENDMENT NO. 1 TO INTERCREDITOR AGREEMENT: Means Amendment No. 1 to
Intercreditor Agreement dated as of June 26, 2001 among the Company, the
Related Trustee, the Related Other Trustees, the Liquidity Provider, the
liquidity providers relating to the Certificates issued under each of the
Related Other Pass Through Trust Agreements and Wilmington Trust Company,
as Subordination Agent and as trustee under the Intercreditor Agreement.
APPLICABLE CERTIFICATE: Means any of the "Applicable Certificates"
issued by the Related Trust and that are "Outstanding" (as defined in the
Related Pass Through Trust Agreement) as of the Transfer Date (the
"TRANSFER DATE CERTIFICATES") and any Certificate issued in exchange
therefor or replacement thereof pursuant to the Agreement.
APPLICABLE CERTIFICATEHOLDER: Means the Person in whose name an
Applicable Certificate is registered on the Register for the Applicable
Certificates.
APPLICABLE TRUST: Has the meaning specified in the recitals hereto.
ASSIGNMENT AND ASSUMPTION AGREEMENT: Means the assignment and
assumption agreement substantially in the form of Exhibit C to the Related
Pass Through Trust Supplement executed and delivered in accordance with
Section 7.01 of the Related Trust Supplement.
BASIC AGREEMENT: Has the meaning specified in the first paragraph of
this Trust Supplement.
BOEING: Means The Boeing Company.
BUSINESS DAY: Means any day other than a Saturday, a Sunday or a day
on which commercial banks are required or authorized to close in Houston,
Texas, New York, New York, Salt Lake City, Utah or, so long as any
Applicable Certificate is Outstanding, the city and state in which the
Trustee or any Loan Trustee maintains its Corporate Trust Office or
receives and disburses funds.
CLASS D CERTIFICATEHOLDER: Has the meaning specified in Section
4.01(b) of this Trust Supplement.
COMPANY: Has the meaning specified in the first paragraph of this
Trust Supplement.
CONTROLLING PARTY: Has the meaning specified in the Intercreditor
Agreement.
DELIVERY NOTICE: Has the meaning specified in the NPA.
DELIVERY PERIOD TERMINATION DATE: Has the meaning specified in the
Related Pass Through Trust Supplement.
DEPOSIT AGREEMENT: Means the Deposit Agreement dated as of June 26,
2001 relating to the Applicable Certificates between the Depositary and
the Escrow Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
DEPOSITARY: Means Credit Suisse First Boston, a banking institution
organized under the laws of Switzerland, acting through its New York
branch.
DEPOSITS: Has the meaning specified in the Deposit Agreement.
DISTRIBUTION DATE: Means any Regular Distribution Date or Special
Distribution Date as the context requires.
ESCROW AGENT: Means, initially, Wells Fargo Bank Northwest, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
ESCROW AGREEMENT: Means the Escrow and Paying Agent Agreement dated
as of June 26, 2001 relating to the Applicable Certificates, among the
Escrow Agent, the Escrow Paying Agent, the Related Trustee (and after the
Transfer Date, the Trustee) and the Underwriter, as the same may be
amended, supplemented or otherwise modified from time to time in
accordance with its terms.
ESCROW PAYING AGENT: Means the Person acting as paying agent under
the Escrow Agreement.
ESCROW RECEIPT: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in escrow thereunder.
FINAL MATURITY DATE: Means December 15, 2012.
FINAL WITHDRAWAL: Has the meaning specified in the Escrow Agreement.
FINAL WITHDRAWAL DATE: Has the meaning specified in the Escrow
Agreement.
INDENTURE: Means each of the separate trust indentures and mortgages
relating to the Aircraft, each as specified or described in a Delivery
Notice delivered pursuant to the NPA or the related Participation
Agreement, in each case as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated as
of April 19, 2001 among the Related Trustee (and after the Transfer Date,
the Trustee), the Related Other Trustees (and after the Transfer Date, the
Other Trustees), the Liquidity Provider, the liquidity providers relating
to the Certificates issued under each of the Related Other Pass Through
Trust Agreements, and Wilmington Trust Company, as Subordination Agent and
as trustee thereunder, as amended by Amendment No. 1 to Intercreditor
Agreement and as further amended, supplemented or otherwise modified from
time to time in accordance with its terms.
INVESTORS: Means the Underwriter together with all subsequent
beneficial owners of the Applicable Certificates.
LEASE: Means, with respect to each Leased Aircraft, the lease
between an Owner Trustee, as the lessor, and the Company, as the lessee,
referred to in the related Indenture, as such lease may be amended,
supplemented or otherwise modified in accordance with its terms.
LEASED AIRCRAFT: Has the meaning specified in the third recital to
this Trust Supplement.
LEASED AIRCRAFT INDENTURE: Has the meaning specified in the
Intercreditor Agreement.
LIQUIDITY FACILITY: Means, initially, the Revolving Credit Agreement
dated as of June 26, 2001 relating to the Applicable Certificates, between
the Liquidity Provider and Wilmington Trust Company, as Subordination
Agent, as agent and trustee for the Applicable Trust, and, from and after
the replacement of such agreement pursuant to the Intercreditor Agreement,
the replacement liquidity facility therefor, in each case as amended,
supplemented or otherwise modified from time to time in accordance with
their respective terms.
LIQUIDITY PROVIDER: Means, initially, Landesbank Hessen-Thuringen
Girozentrale, a German public law institution duly established under the
Treaty on the Formation of a Joint Savings Banks Organization
Hessen-Thuringen, and any replacements or successors therefor appointed in
accordance with the Intercreditor Agreement.
NEW AIRCRAFT: Has the meaning specified in the NPA.
NOTE DOCUMENTS: Means the Equipment Notes with respect to the
Applicable Certificates and, with respect to any such Equipment Note, (i)
the Indenture and the Participation Agreement relating to such Equipment
Note, and (ii) in the case of any Equipment Note related to a Leased
Aircraft, the Lease relating to such Leased Aircraft.
NPA: Means the Amended and Restated Note Purchase Agreement dated as
of June 26, 2001 among the Related Trustee (and after the Transfer Date,
the Trustee), the Related Other Trustees (and after the Transfer Date, the
Other Trustees), the Company, the Escrow Agent, the Escrow Paying Agent
and the Subordination Agent, as the same may be further amended,
supplemented or otherwise modified from time to time, in accordance with
its terms.
OTHER AGREEMENTS: Means (i) the Basic Agreement as supplemented by
Trust Supplement No. 2001-1A-1-S dated April 19, 2001 relating to
Continental Airlines Pass Through Trust 2001-1A-1-S, (ii) the Basic
Agreement as supplemented by Trust Supplement No. 2001-1A-2-S dated April
19, 2001 relating to Continental Airlines Pass Through Trust 2001-1A-2-S
and (iii) the Basic Agreement as supplemented by Trust Supplement No.
2001-1B-S dated April 19, 2001 relating to Continental Airlines Pass
Through Trust 2001-1B-S.
OTHER TRUSTEES: Means the trustees under the Other Agreements, and
any successor or other trustee appointed as provided therein.
OTHER TRUSTS: Means the Continental Airlines Pass Through Trust
2001-1A-1-S, the Continental Airlines Pass Through Trust 2001-1A-2-S and
the Continental Airlines Pass Through Trust 2001-1B-S, created by the
Other Agreements.
OUTSTANDING: When used with respect to Applicable Certificates,
means, as of the date of determination, all Transfer Date Certificates,
and all other Applicable Certificates theretofore authenticated and
delivered under the Agreement, in each case except:
(i) Applicable Certificates theretofore canceled by the
Registrar or delivered to the Trustee or the Registrar for
cancellation;
(ii) Applicable Certificates for which money in the full
amount required to make the final distribution with respect to such
Applicable Certificates pursuant to Section 11.01 of the Basic
Agreement has been theretofore deposited with the Trustee in trust
for the Applicable Certificateholders as provided in Section 4.01 of
the Basic Agreement pending distribution of such money to such
Applicable Certificateholders pursuant to payment of such final
distribution; and
(iii) Applicable Certificates in exchange for or in lieu of
which other Applicable Certificates have been authenticated and
delivered pursuant to this Agreement.
OWNED AIRCRAFT: Has the meaning specified in the third recital to
this Trust Supplement.
OWNED AIRCRAFT INDENTURE: Has the meaning specified in the
Intercreditor Agreement.
OWNER PARTICIPANT: With respect to any Equipment Note relating to a
Leased Aircraft, means the "Owner Participant" as referred to in the
Indenture pursuant to which such Equipment Note is issued and any
permitted successor or assign of such Owner Participant; and OWNER
PARTICIPANTS at any time of determination means all of the Owner
Participants thus referred to in the Indentures.
OWNER TRUSTEE: With respect to any Equipment Note relating to a
Leased Aircraft, means the "Owner Trustee", as referred to in the
Indenture pursuant to which such Equipment Note is issued, not in its
individual capacity but solely as trustee; and OWNER TRUSTEES means all of
the Owner Trustees party to any of the Indentures.
OWNER TRUSTEE'S PURCHASE AGREEMENT: Means, with respect to any
Leased Aircraft, the agreement between the Company and the relevant Owner
Trustee pursuant to which, INTER ALIA, the Company assigns to the Owner
Trustee certain rights of the Company under the aircraft purchase
agreement with respect to such Leased Aircraft.
PARTICIPATION AGREEMENT: Means each Participation Agreement entered
into by the Related Trustee pursuant to the NPA, as the same may be
amended, supplemented or otherwise modified in accordance with its terms.
POOL BALANCE: Means, as of any date, (i) the original aggregate face
amount of the "Applicable Certificates" as defined in the Related Pass
Through Trust Agreement, less (ii) the aggregate amount of all payments
made in respect of such Certificates, the Applicable Certificates (as
defined in the Related Pass Through Trust Agreement) or the Deposits,
other than payments made in respect of interest or premium thereon or
reimbursement of any costs or expenses incurred in connection therewith.
The Pool Balance as of any Distribution Date shall be computed after
giving effect to any special distribution with respect to unused Deposits,
payment of principal of the Equipment Notes or payment with respect to
other Trust Property and the distribution thereof to be made on that date.
POOL FACTOR: Means, as of any Distribution Date, the quotient
(rounded to the seventh decimal place) computed by dividing (i) the Pool
Balance by (ii) the original aggregate face amount of the "Applicable
Certificates" as defined in the Related Pass Through Trust Agreement. The
Pool Factor as of any Distribution Date shall be computed after giving
effect to any special distribution with respect to unused Deposits,
payment of principal of the Equipment Notes or payments with respect to
other Trust Property and the distribution thereof to be made on that date.
PROSPECTUS SUPPLEMENT: Means the final Prospectus Supplement dated
June 12, 2001 relating to the offering of the Applicable Certificates.
RELATED OTHER PASS THROUGH TRUST AGREEMENTS: Means the "Other
Agreements" as defined in the Related Pass Through Trust Agreement.
RELATED OTHER TRUSTEES: Means the "Other Trustees" as defined in the
Related Pass Through Trust Agreement.
RELATED OTHER TRUSTS: Means the "Other Trusts" as defined in the
Related Pass Through Trust Agreement.
RELATED PASS THROUGH TRUST AGREEMENT: Means the Basic Agreement as
supplemented by the Trust Supplement No. 2001-1C-O dated the date hereof
(the "RELATED PASS THROUGH TRUST SUPPLEMENT"), relating to the Continental
Airlines Pass Through Trust 2001-1C-O and entered into by the Company and
the Related Trustee, as amended, supplemented or otherwise modified from
time to time in accordance with its terms.
RELATED TRUST: Means the Continental Pass Through Trust 2001-1C-O,
formed under the Related Pass Through Trust Agreement.
RELATED TRUSTEE: Means the trustee under the Related Pass Through
Trust 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 Leased Aircraft Indenture) or Collateral (as
defined in each Owned Aircraft Indenture).
SUBSTITUTE AIRCRAFT: Has the meaning specified in the NPA.
TRANSFER DATE: Means the moment of execution and delivery of the
Assignment and Assumption Agreement by each of the parties thereto.
TRANSFER DATE CERTIFICATES: Has the meaning specified in the
definition of "Applicable Certificates".
TRIGGERING EVENT: Has the meaning assigned to such term in the
Intercreditor Agreement.
TRUST PROPERTY: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Applicable Trust, all
monies at any time paid thereon and all monies due and to become due
thereunder, (ii) funds from time to time deposited in the Certificate
Account and the Special Payments Account and, subject to the Intercreditor
Agreement, any proceeds from the sale by the Trustee pursuant to Article
VI of the Basic Agreement of any Equipment Note and (iii) all rights of
the Applicable Trust and the Trustee, on behalf of the Applicable Trust,
under the Intercreditor Agreement, the Escrow Agreement, the NPA and the
Liquidity Facility, including, without limitation, all rights to receive
certain payments thereunder, and all monies paid to the Trustee on behalf
of the Applicable Trust pursuant to the Intercreditor Agreement or the
Liquidity Facility, PROVIDED that rights with respect to the Deposits or
under the Escrow Agreement will not constitute Trust Property.
TRUST SUPPLEMENT: Has the meaning specified in the first paragraph
of this trust supplement.
UNDERWRITER: Means Morgan Stanley & Co. Incorporated.
UNDERWRITING AGREEMENT: Means the Underwriting Agreement dated June
12, 2001 among the Underwriter, the Company and the Depositary, as the
same may be amended, supplemented or otherwise modified from time to time
in accordance with its terms.
ARTICLE III
STATEMENTS TO CERTIFICATEHOLDERS
Section 3.01. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS. (a) On
each Distribution Date, the Trustee will include with each distribution to
Applicable Certificateholders of a Scheduled Payment or Special Payment, as the
case may be, a statement setting forth the information provided below (in the
case of a Special Payment, reflecting in part the information provided by the
Escrow Paying Agent under the Escrow Agreement). Such statement shall set forth
(per $1,000 face amount Applicable Certificate as to (ii), (iii), (iv) and (v)
below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium, if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
(v) the amount of such distribution under the Escrow Agreement
allocable to unused Deposits, if any; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Applicable Certificates registered in the name
of a Clearing Agency, on the Record Date prior to each Distribution Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Applicable Certificates on
such Record Date. On each Distribution Date, the Trustee will mail to each such
Clearing Agency Participant the statement described above and will make
available additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Applicable Certificates.
(b) Within a reasonable period of time after the end of each
calendar year but not later than the latest date permitted by law, the Trustee
shall furnish to each Person who at any time during such calendar year was an
Applicable Certificateholder of record a statement containing the sum of the
amounts determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and
(a)(v) above for such calendar year or, in the event such Person was an
Applicable Certificateholder of record during a portion of such calendar year,
for such portion of such year, and such other items as are readily available to
the Trustee and which an Applicable Certificateholder shall reasonably request
as necessary for the purpose of such Applicable Certificateholder's preparation
of its federal income tax returns. Such statement and such other items shall be
prepared on the basis of information supplied to the Trustee by the Clearing
Agency Participants and shall be delivered by the Trustee to such Clearing
Agency Participants to be available for forwarding by such Clearing Agency
Participants to the holders of interests in the Applicable Certificates in the
manner described in Section 3.01(a) of this Trust Supplement.
(c) If the aggregate principal payments scheduled for a Regular
Distribution Date prior to the Delivery Period Termination Date differ from the
amount thereof set forth for the Applicable Certificates on page S-31 of the
Prospectus Supplement, by no later than the 15th day prior to such Regular
Distribution Date, the Trustee (if the Related Trustee has not already done so)
shall mail written notice of the actual amount of such scheduled payments to the
Applicable Certificateholders of record as of a date within 15 Business Days
prior to the date of mailing.
(d) Promptly following (i) the Delivery Period Termination Date, if
there has been any change in the information set forth in clauses (y) and (z)
below from that set forth in page S-31 of the Prospectus Supplement, and (ii)
the date of any early redemption or purchase of, or any default in the payment
of principal or interest in respect of, any of the Equipment Notes held in the
Applicable Trust, or any Final Withdrawal, the Trustee (if the Related Trustee
has not already done so) shall furnish to Applicable Certificateholders of
record on such date a statement setting forth (x) the expected Pool Balances for
each subsequent Regular Distribution Date following the Delivery Period
Termination Date, (y) the related Pool Factors for such Regular Distribution
Dates and (z) the expected principal distribution schedule of the Equipment
Notes, in the aggregate, held as Trust Property at the date of such notice. With
respect to the Applicable Certificates registered in the name of a Clearing
Agency, on the Transfer Date, the Trustee (if the Related Trustee has not
already done so) will request from such Clearing Agency a securities position
listing setting forth the names of all Clearing Agency Participants reflected on
such Clearing Agency's books as holding interests in the "Applicable
Certificates" (as defined in the Related Pass Through Trust Agreement) on the
Delivery Period Termination Date. The Trustee (if the Related Trustee has not
already done so) will mail to each such Clearing Agency Participant the
statement described above and will make available additional copies as requested
by such Clearing Agency Participant for forwarding to holders of interests in
the Applicable Certificates.
(e) This Section 3.01 supersedes and replaces Section 4.03 of the
Basic Agreement, with respect to the Applicable Trust.
ARTICLE IV
DEFAULT
Section 4.01. PURCHASE RIGHTS OF CERTIFICATEHOLDERS. (a) At any time
after the occurrence and during the continuation of a Triggering Event, each
Applicable Certificateholder shall have the right (which shall not expire upon
any purchase of the Class A-2 Certificates pursuant to the Class A-1 Trust
Agreement, any purchase of the Class A-1 Certificates pursuant to the Class A-2
Trust Agreement or any purchase of the Class A-1 Certificates and the Class A-2
Certificates pursuant to the Class B Trust Agreement) to purchase, for the
purchase prices set forth in the Class A-1 Trust Agreement, the Class A-2 Trust
Agreement and the Class B Trust Agreement, respectively, all, but not less than
all, of the Class A-1 Certificates, the Class A-2 Certificates and the Class B
Certificates upon ten days' written notice to the Class A-1 Trustee, the Class
A-2 Trustee, the Class B Trustee and each other Applicable Certificateholder,
PROVIDED that (i) if prior to the end of such ten-day period any other
Applicable Certificateholder notifies such purchasing Applicable
Certificateholder that such other Applicable Certificateholder wants to
participate in such purchase, then such other Applicable Certificateholder may
join with the purchasing Applicable Certificateholder to purchase all, but not
less than all, of the Class A-1 Certificates, the Class A-2 Certificates and the
Class B Certificates pro rata based on the Fractional Undivided Interest in the
Applicable Trust held by each such Applicable Certificateholder and (ii) if
prior to the end of such ten-day period any other Applicable Certificateholder
fails to notify the purchasing Applicable Certificateholder of such other
Applicable Certificateholder's desire to participate in such a purchase, then
such other Applicable Certificateholder shall lose its right to purchase the
Class A-1 Certificates, the Class A-2 Certificates and the Class B Certificates
pursuant to this Section 4.01(a).
(b) By acceptance of its Applicable Certificate, each Applicable
Certificateholder agrees that at any time after the occurrence and during the
continuation of a Triggering Event, each holder of a Class D Certificate (a
"CLASS D CERTIFICATEHOLDER") shall have the right (which shall not expire upon
any purchase of the Class A-2 Certificates pursuant to the Class A-1 Trust
Agreement, any purchase of the Class A-1 Certificates pursuant to the Class A-2
Trust Agreement, any purchase of the Class A-1 Certificates and the Class A-2
Certificates pursuant to the Class B Trust Agreement or any purchase of
Certificates pursuant to clause (a) above) to purchase all, but not less than
all, of the Class A-1 Certificates, the Class A-2 Certificates, the Class B
Certificates and the Applicable Certificates upon ten days' written notice to
the Class A-1 Trustee, the Class A-2 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-1 Certificates, the Class A-2 Certificates, the
Class B Certificates and the Applicable 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-1 Certificates, the Class A-2
Certificates, the Class B Certificates and the Applicable Certificates pursuant
to this Section 4.01(b).
The purchase price with respect to the Applicable Certificates shall
be equal to the Pool Balance of the Applicable 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 Applicable
Certificateholders under the Agreement, the Intercreditor Agreement, the Escrow
Agreement or any Note Document or on or in respect of the Applicable
Certificates; PROVIDED, HOWEVER, that no such purchase of Applicable
Certificates shall be effective unless the purchaser(s) shall certify to the
Trustee that contemporaneously with such purchase, such purchaser(s) is (are)
purchasing, pursuant to the terms of the Agreement and the Other Agreements, the
Class A-1 Certificates, the Class A-2 Certificates, the Class B Certificates and
the Applicable Certificates that are senior to the securities held by such
purchaser(s). Each payment of the purchase price of the Applicable 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 4.01(b). Each Applicable Certificateholder agrees by its
acceptance of its Applicable Certificate that (at any time after the occurrence
and during the continuation of a Triggering Event) it will, upon payment from
such Class D Certificateholder(s) of the purchase price set forth in the first
sentence of this paragraph, (i) 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 Applicable Certificateholder in the Agreement, the Escrow Agreement, the
Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note
Documents, the NPA and all Applicable Certificates and Escrow Receipts held by
such Applicable 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 Applicable Certificateholder's obligations under the Agreement, the
Escrow Agreement, the Deposit Agreement, the Intercreditor Agreement, the
Liquidity Facility, the NPA, the Note Documents and all such Applicable
Certificates and Escrow Receipts), (ii) if such purchase occurs after a record
date specified in Section 2.03 of the Escrow Agreement relating to the
distribution of unused Deposits and/or accrued and unpaid interest on Deposits
and prior to or on the related distribution date thereunder, forthwith turn over
to the purchaser(s) of its Applicable Certificate all amounts, if any, received
by it on account of such distribution, and (iii) if such purchase occurs after a
Record Date relating to any distribution and prior to or on the related
Distribution Date, forthwith turn over to the purchaser(s) of its Applicable
Certificate all amounts, if any, received by it on account of such distribution.
The Applicable Certificates will be deemed to be purchased on the date payment
of the purchase price is made notwithstanding the failure of the Applicable
Certificateholders to deliver any Applicable Certificates and, upon such a
purchase, (I) the only rights of the Applicable Certificateholders will be to
deliver the Applicable Certificates to the purchaser(s) and receive the purchase
price for such Applicable Certificates and (II) if the purchaser(s) shall so
request, such Applicable Certificateholder will comply with all the provisions
of Section 3.04 of the Basic Agreement to enable new Applicable 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 Applicable
Certificates shall be borne by the purchaser thereof.
As used in this Section 4.01 and elsewhere in this Trust Supplement,
the terms "Class A-1 Certificate", "Class A-1 Trust", "Class A-1 Trust
Agreement", "Class A-1 Trustee", "Class A-2 Certificate", "Class A-2 Trust",
"Class A-2 Trust Agreement", "Class A-2 Trustee", "Class B Certificate", "Class
B Trust", "Class B Trust Agreement", "Class B Trustee", "Class D Certificate"
and "Class D Trust", shall have the respective meanings assigned to such terms
in the Intercreditor Agreement.
(c) This Section 4.01 supersedes and replaces Section 6.01(b) of the
Basic Agreement, with respect to the Applicable Trust.
Section 4.02. AMENDMENT OF SECTION 6.05 OF THE BASIC AGREEMENT.
Section 6.05 of the Basic Agreement shall be amended, with respect to the
Applicable Trust, by deleting the phrase "and thereby annul any Direction given
by such Certificateholders or the Trustee to such Loan Trustee with respect
thereto," set forth in the first sentence thereof.
ARTICLE V
THE TRUSTEE
Section 5.01. ACQUISITION OF TRUST PROPERTY. (a) The Trustee is
hereby irrevocably authorized and directed to execute and deliver the Assignment
and Assumption Agreement on the date specified in Section 7.01 of the Related
Pass Through Trust Supplement, subject only to the satisfaction of the
conditions set forth in said Section 7.01. The Agreement (except only for this
sentence and the immediately preceding sentence hereof, which are effective upon
execution and delivery hereof) shall become effective upon the execution and
delivery of the Assignment and Assumption Agreement by the Trustee and the
Related Trustee, automatically and without any further signature or action on
the part of the Company and the Trustee, and shall thereupon constitute the
legal, valid and binding obligation of the parties hereto enforceable against
each of the parties hereto in accordance with its terms. Upon such execution and
delivery of the Assignment and Assumption Agreement, the Related Trust shall be
terminated, the Applicable Certificateholders shall receive beneficial interests
in the Applicable Trust in exchange for their interests in the Related Trust
equal to their respective beneficial interests in the Related Trust and the
"Outstanding" (as defined in the Related Pass Through Trust Agreement) pass
through certificates representing fractional undivided interests in the Related
Trust shall be deemed for all purposes of the Agreement, without further
signature or action of any party or Certificateholder, to be Certificates
representing the same Fractional Undivided Interests in the Trust and Trust
Property. By acceptance of its Applicable Certificate, each Applicable
Certificateholder consents to and ratifies such assignment, transfer and
delivery of the trust property of the Related Trust to the Trustee upon the
execution and delivery of the Assignment and Assumption Agreement. The
provisions of this Section 5.01(a) supersede and replace the provisions of
Section 2.02 of the Basic Agreement with respect to the Applicable Trust, and
all provisions of the Basic Agreement relating to Postponed Notes or Section
2.02 of the Basic Agreement shall not apply to the Applicable Trust.
(b) The Trustee, upon the execution and delivery of the Assignment
and Assumption 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 Applicable Certificateholders, upon the trusts herein and in the Basic
Agreement set forth. By the acceptance of each Applicable Certificate issued to
it under the Related Pass Through Trust Agreement and deemed issued under the
Agreement, each Holder of any such Applicable Certificate as grantor of the
Applicable Trust thereby joins in the creation and declaration of the Applicable
Trust. The provisions of this Section 5.01(b) supersede and replace the
provisions of Section 2.03 of the Basic Agreement, with respect to the
Applicable Trust.
Section 5.02. [Intentionally Omitted]
Section 5.03. THE TRUSTEE. (a) Subject to Section 5.04 of this Trust
Supplement and Section 7.15 of the Basic Agreement, the Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement, the Deposit Agreement, the NPA or the
Escrow Agreement or the due execution hereof or thereof by the Company or the
other parties thereto (other than the Trustee), or for or in respect of the
recitals and statements contained herein or therein, all of which recitals and
statements are made solely by the Company, except that the Trustee hereby
represents and warrants that each of this Trust Supplement, the Basic Agreement,
each Applicable Certificate, the Intercreditor Agreement, Amendment No. 1 to
Intercreditor Agreement, the NPA and the Escrow Agreement has been executed and
delivered by one of its officers who is duly authorized to execute and deliver
such document on its behalf.
(b) Except as herein otherwise provided and except during the
continuation of an Event of Default in respect of the Applicable Trust created
hereby, no duties, responsibilities or liabilities are assumed, or shall be
construed to be assumed, by the Trustee by reason of this Trust Supplement other
than as set forth in the Agreement, and this Trust Supplement is executed and
accepted on behalf of the Trustee, subject to all the terms and conditions set
forth in the Agreement, as fully to all intents as if the same were herein set
forth at length.
Section 5.04. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The
Trustee hereby represents and warrants, on the Transfer Date, that:
(a) the Trustee has full power, authority and legal right to receive
the Trust Property assigned by the Related Trustee, assume the obligations
under, and perform, the Assignment and Assumption Agreement, this Trust
Supplement, the Intercreditor Agreement, the Amendment No. 1 to
Intercreditor Agreement, the Escrow Agreement, the NPA and the Note
Documents to which it is a party and has taken all necessary action to
authorize such receipt, assumption and performance by it of this Trust
Supplement, the Intercreditor Agreement, the Amendment No. 1 to
Intercreditor Agreement, the Escrow Agreement, the NPA and the Note
Documents to which it is a party;
(b) the receipt of the Trust Property under the Assignment and
Assumption Agreement and the performance by the Trustee of the Assignment
and Assumption Agreement, this Trust Supplement, the Intercreditor
Agreement, the Amendment No. 1 to Intercreditor Agreement, the Escrow
Agreement, the NPA and the Note Documents to which it is a party (i) will
not violate any provision of any United States federal law or the law of
the state of the United States where it is located governing the banking
and trust powers of the Trustee or any order, writ, judgment, or decree of
any court, arbitrator or governmental authority applicable to the Trustee
or any of its assets, (ii) will not violate any provision of the articles
of association or by-laws of the Trustee, and (iii) will not violate any
provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of any lien on any
properties included in the Trust Property pursuant to the provisions of
any mortgage, indenture, contract, agreement or other undertaking to which
it is a party, which violation, default or lien could reasonably be
expected to have an adverse effect on the Trustee's performance or ability
to perform its duties hereunder or thereunder or on the transactions
contemplated herein or therein;
(c) the receipt of the Trust Property under the Assignment and
Assumption Agreement and the performance by the Trustee of the Assignment
and Assumption Agreement, this Trust Supplement, the Intercreditor
Agreement, the Amendment No. 1 to Intercreditor Agreement, the Escrow
Agreement, the NPA and the Note Documents to which it is a party will not
require the authorization, consent, or approval of, the giving of notice
to, the filing or registration with, or the taking of any other action in
respect of, any governmental authority or agency of the United States or
the state of the United States where it is located regulating the banking
and corporate trust activities of the Trustee; and
(d) the Assignment and Assumption Agreement has been duly executed
and delivered by the Trustee and this Trust Supplement, the Intercreditor
Agreement, the Amendment No. 1 to Intercreditor Agreement, the Escrow
Agreement, the NPA and the Note Documents to which it is a party have
been, or will be, as applicable, duly executed and delivered by the
Trustee and constitute, or will constitute, as applicable, the legal,
valid and binding agreements of the Trustee, enforceable against it in
accordance with their respective terms; PROVIDED, HOWEVER, that
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and (ii) general principles of equity.
Section 5.05. TRUSTEE LIENS. The Trustee in its individual capacity
agrees, in addition to the agreements contained in Section 7.17 of the Basic
Agreement, that it will at its own cost and expense promptly take any action as
may be necessary to duly discharge and satisfy in full any Trustee's Liens on or
with respect to the Trust Property which is attributable to the Trustee in its
individual capacity and which is unrelated to the transactions contemplated by
the Intercreditor Agreement or the NPA.
ARTICLE VI
ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS
Section 6.01. AMENDMENT OF SECTION 5.02 OF THE BASIC AGREEMENT.
Section 5.02 of the Basic Agreement shall be amended, with respect to the
Applicable Trust, by (i) replacing the phrase "of the Note Documents and of this
Agreement" set forth in paragraph (b) thereof with the phrase "of the Note
Documents, of the NPA and of this Agreement" and (ii) replacing the phrase "of
this Agreement and any Note Document" set forth in the last paragraph of Section
5.02 with the phrase "of this Agreement, the NPA and any Note Document".
Section 6.02. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.01 of the Basic Agreement,
under the terms of, and subject to the limitations contained in, Section 9.01 of
the Basic Agreement, the Company may (but will not be required to), and the
Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request, at any time and from time to time, (i) enter into one or more
agreements supplemental to the Escrow Agreement, the NPA or the Deposit
Agreement, for any of the purposes set forth in clauses (1) through (9) of such
Section 9.01, and (without limitation of the foregoing or Section 9.01 of the
Basic Agreement) (a) clauses (2) and (3) of such Section 9.01 shall also be
deemed to include the Company's obligations under (in the case of clause (2)),
and the Company's rights and powers conferred by (in the case of clause (3)),
the NPA, and (b) references in clauses (4), (6) and (7) of such Section 9.01 to
"any Intercreditor Agreement or any Liquidity Facility" shall also be deemed to
refer to "the Intercreditor Agreement, the Liquidity Facility, the Escrow
Agreement, the NPA or the Deposit Agreement" and (ii) enter into one or more
agreements supplemental to the Agreement to provide for the formation of a Class
D Trust, the issuance of Class D Certificates, the purchase by the Class D Trust
of Equipment Notes and other matters incidental thereto or otherwise
contemplated by Section 2.01(b) of the Basic Agreement.
Section 6.03. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.02 of the Basic Agreement,
the provisions of Section 9.02 of the Basic Agreement shall apply to agreements
or amendments for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement or the NPA or modifying in any manner the rights and obligations of
the Applicable Certificateholders under the Escrow Agreement, the Deposit
Agreement or the NPA; provided that the provisions of Section 9.02(1) of the
Basic Agreement shall be deemed to include reductions in any manner of, or delay
in the timing of, any receipt by the Applicable Certificateholders of payments
upon the Deposits.
ARTICLE VII
TERMINATION OF TRUST
Section 7.01. TERMINATION OF THE APPLICABLE TRUST. (a) The
respective obligations and responsibilities of the Company and the Trustee with
respect to the Applicable Trust shall terminate upon the distribution to all
Applicable Certificateholders and the Trustee 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; PROVIDED, HOWEVER, that in no event
shall the Applicable Trust continue beyond one hundred ten (110) years following
the date of the execution of this Trust Supplement.
Notice of any termination, specifying the Distribution Date upon
which the Applicable Certificateholders may surrender their Applicable
Certificates to the Trustee for payment of the final distribution and
cancellation, shall be mailed promptly by the Trustee to Applicable
Certificateholders not earlier than the 60th day and not later than the 15th day
next preceding such final Distribution Date specifying (A) the Distribution Date
upon which the proposed final payment of the Applicable Certificates will be
made upon presentation and surrender of Applicable 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 Applicable 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 Applicable Certificateholders. Upon
presentation and surrender of the Applicable Certificates in accordance with
such notice, the Trustee shall cause to be distributed to Applicable
Certificateholders such final payments.
In the event that all of the Applicable Certificateholders shall not
surrender their Applicable 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 Applicable Certificateholders to
surrender their Applicable Certificates for cancellation and receive the final
distribution with respect thereto. No additional interest shall accrue on the
Applicable 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 Applicable Certificates shall remain unclaimed for two
years (or such lesser time as the Trustee shall be satisfied, after sixty days'
notice from the Company, is one month prior to the escheat period provided under
applicable law) after the final distribution date with respect thereto, the
Trustee shall pay to each Loan Trustee the appropriate amount of money relating
to such Loan Trustee and shall give written notice thereof to the related Owner
Trustees, the Owner Participants and the Company.
(b) The provisions of this Section 7.01 supersede and replace the
provisions of Section 11.01 of the Basic Agreement in its entirety, with respect
to the Applicable Trust.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. BASIC AGREEMENT RATIFIED. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument. All replacements of provisions of, and other modifications of the
Basic Agreement set forth in this Trust Supplement are solely with respect to
the Applicable Trust.
SECTION 8.02. GOVERNING LAW. THE AGREEMENT AND THE APPLICABLE
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. THIS SECTION 8.02 SUPERSEDES AND REPLACES SECTION 12.05
OF THE BASIC AGREEMENT, WITH RESPECT TO THE APPLICABLE TRUST.
Section 8.03. EXECUTION IN COUNTERPARTS. This Trust Supplement may
be executed in any number of counterparts, each of which shall be an original,
but such counterparts shall together constitute but one and the same instrument.
Section 8.04. INTENTION OF PARTIES. The parties hereto intend that
the Applicable Trust be classified for U.S. federal income tax purposes as a
grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue
Code of 1986, as amended, and not as a trust or association taxable as a
corporation or as a partnership. Each Applicable Certificateholder and Investor,
by its acceptance of its Applicable Certificate or a beneficial interest
therein, agrees to treat the Applicable Trust as a grantor trust for all U.S.
federal, state and local income tax purposes. The powers granted and obligations
undertaken pursuant to the Agreement shall be so construed so as to further such
intent.
IN WITNESS WHEREOF, the Company and the Trustee have caused this
Trust Supplement to be duly executed by their respective officers thereto duly
authorized, as of the day and year first written above.
CONTINENTAL AIRLINES, INC.
By:
-----------------------------------------
Name: Jennifer L. Vogel
Title: Vice President and General Counsel
WILMINGTON TRUST COMPANY,
as Trustee
By:
-----------------------------------------
Name:
Title:
AMENDMENT NO. 1 TO INTERCREDITOR AGREEMENT
AMENDMENT NO. 1 TO INTERCREDITOR AGREEMENT (this "Amendment No. 1")
dated as of June 26, 2001, among CONTINENTAL AIRLINES, INC., a Delaware
corporation ("CONTINENTAL"); WILMINGTON TRUST COMPANY, a Delaware corporation,
not in its individual capacity but solely as Trustee under the Continental
Airlines Pass Through Trust 2001-1A-1-O (the "CLASS A-1 TRUSTEE"), as Trustee
under the Continental Airlines Pass Through Trust 2001-1A-2-O (the "CLASS A-2
TRUSTEE"), as Trustee under the Continental Airlines Pass Through Trust
2001-1B-O (the "CLASS B TRUSTEE") and as Trustee under the Continental Airlines
Pass Through Trust 2001-1C-O (the "CLASS C TRUSTEE"); LANDESBANK
HESSEN-THURINGEN GIROZENTRALE, a public-law banking institution organized under
the laws of Germany, as Class A-1 Liquidity Provider (the "CLASS A-1 LIQUIDITY
PROVIDER"), Class A-2 Liquidity Provider (the "CLASS A-2 LIQUIDITY PROVIDER"),
Class B Liquidity Provider (the "CLASS B LIQUIDITY PROVIDER") and Class C
Liquidity Provider (the "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 under the Intercreditor Agreement
referred to below (in such capacity, together with any duly appointed successor,
the "SUBORDINATION AGENT").
WHEREAS, Wilmington Trust Company, not in its individual capacity,
but solely as Class A-1 Trustee, Class A-2 Trustee and Class B Trustee,
Landesbank Hessen-Thuringen Girozentrale, as Class A-1 Liquidity Provider, Class
A-2 Liquidity Provider and Class B Liquidity Provider, and Wilmington Trust
Company, not in its individual capacity except as expressly set forth therein,
but solely as Subordination Agent and trustee thereunder, have entered into the
Intercreditor Agreement dated as of April 19, 2001 (as amended by this Amendment
No. 1 and as the same may be further amended, supplemented or otherwise modified
from time to time in accordance with its terms, the "INTERCREDITOR AGREEMENT");
WHEREAS, on the date hereof, a Continental Airlines Pass Through
Trust 2001-1C-O will be created to issue Class C Certificates pursuant to a Pass
Through Trust Agreement dated as of September 25, 1997 between Continental and
Wilmington Trust Company, as supplemented by Supplement No. 2001-1C-O thereto
dated as of the date hereof;
WHEREAS, in connection with the issuance of such Class C
Certificates, the parties hereto wish to amend the Intercreditor Agreement in
accordance with Section 9.1(c) of the Intercreditor Agreement.
WHEREAS, the Ratings Confirmation for the Class A-1 Certificates,
the Class A-2 Certificates and the Class B Certificates referred to in Section
9.1(c)(i) of the Intercreditor Agreement has been obtained.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Except as otherwise defined in this
Amendment No. 1, terms defined in Section 1.1 of the Intercreditor Agreement are
used herein as defined therein.
ARTICLE II
AMENDMENTS TO THE INTERCREDITOR AGREEMENT
SECTION 2.1. ADDITIONAL PARTIES. Pursuant to Section 9.1(c) of the
Intercreditor Agreement, the Intercreditor Agreement is hereby amended by adding
each of the Class C Trustee and the Class C Liquidity Provider as a party to the
Intercreditor Agreement, and the parties hereto confirm and agree that, upon
execution and delivery of this Amendment No. 1 by Continental and the
Subordination Agent, the Class C Trustee and the Class C Liquidity Provider
shall each be a party to the Intercreditor Agreement as fully and with the same
force and effect as if each such Person had originally executed and delivered a
counterpart thereof.
SECTION 2.2. CERTAIN DEFINED TERMS. (a) Pursuant to Section 9.1(c)
of the Intercreditor Agreement, the following shall apply to the Class C
Certificates for all purposes under the Intercreditor Agreement and all other
Operative Agreements:
Regular Distribution Dates: June 15 and December 15, commencing on
December 15, 2001.
Final Legal Distribution Date: December 15, 2012
LTV Ratio: 62.0%
Stated Interest Rate: 7.033%
(b) The Intercreditor Agreement is further amended as follows:
(i) The term "Class C Underwriting Agreement" is added in
alphabetical order to Section 1.1 reading as follows: "CLASS C
UNDERWRITING AGREEMENT" means the Underwriting Agreement dated
June 12, 2001 among Morgan Stanley & Co. Incorporated, the
Depositary and Continental, relating to the purchase of the Class
C Certificates by Morgan Stanley & Co. Incorporated, as the same
may be amended, supplemented or otherwise modified from time to
time in accordance with its terms.
(ii) The term "Class C Closing Date" is added in
alphabetical order to Section 1.1 reading as follows: "CLASS C
CLOSING DATE" means June 26, 2001.
(iii) The term "ESCROW AGENT" means Wells Fargo Bank
Northwest, N.A., as escrow agent under each Escrow and Paying
Agent Agreement, together with its successors in such capacity.
(iv) The term "Escrow and Paying Agent Agreement" appearing
in Section 1.1 is amended to read as follows: "ESCROW AND PAYING
AGENT AGREEMENT" shall mean, with respect to any applicable
Class, the Escrow and Paying Agent Agreement pertaining to such
Class dated as of the date of the issuance of such Class between
the Escrow Agent, the applicable underwriters or underwriter, as
the case may be, the Trustee for such Class and the Paying Agent,
as the same may be amended, modified or supplemented from time to
time in accordance with the terms thereof.
(v) The term "Note Purchase Agreement" appearing in Section
1.1 is amended to read as follows: "Note Purchase Agreement"
means the Amended and Restated Note Purchase Agreement dated as
of June 26, 2001 among Continental, each Trustee, the Escrow
Agent, the Subordination Agent and the Paying Agent, as further
amended, supplemented or otherwise modified from time to time in
accordance with its terms.
(vi) The term "Operative Agreements" appearing in Section
1.1 is amended by adding thereto the term "Class C Underwriting
Agreement," immediately following the term "Underwriting
Agreement" appearing therein.
(vii) The term "Tax Letter" appearing in Section 1.1 is
amended to read as follows: "Tax Letter" means, collectively,
each of the four Tax Letters, between Continental and Helaba,
with respect to the Class A-1 Liquidity Facility, the Class A-2
Liquidity Facility, the Class B Liquidity Facility and the Class
C Liquidity Facility, each dated the date of issue of the related
Class of Certificates, and all tax letters entered into between
Continental and any Replacement Liquidity Provider.
(viii) Section 3.6(e)(i) is amended by deleting the words
"relating to an Offered Certificate Trust" from the proviso to
the first sentence thereof.
(ix) Section 3.6(e)(ii) is amended by deleting the words
"relating to an Offered Certificate Trust" from the second
sentence thereof.
(x) Section 10.3(iii) is amended by restating the first
three lines thereof to read as follows: "if to the initial Class
A-1 Liquidity Provider, initial Class A-2 Liquidity Provider,
initial Class B Liquidity Provider and initial Class C Liquidity
Provider, addressed to it at its office at:"
ARTICLE III
MISCELLANEOUS
SECTION 3.1. CONSENT OF LIQUIDITY PROVIDER. Pursuant to Section
9.1(c)(ii) of the Intercreditor Agreement, by executing this Amendment No. 1,
each of the Class A-1 Liquidity Provider, the Class A-2 Liquidity Provider and
the Class B Liquidity Provider hereby consents and agrees to the amendments
contained herein.
SECTION 3.2 MISCELLANEOUS. The amendments to the Intercreditor
Agreement contained in Article II hereof shall become effective as of the date
hereof, and from and after the date hereof, each reference in the Intercreditor
Agreement to "this Agreement", and each reference in the Intercreditor Agreement
or in any other Operative Agreement to the "Intercreditor Agreement" or any like
expression referring to the Intercreditor Agreement, shall be deemed to refer to
the Intercreditor Agreement as amended by this Amendment No. 1. The
Intercreditor Agreement, as amended hereby, shall remain unchanged and in full
force and effect. This Amendment No. 1 may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Amendment No. 1 by
signing any such counterpart. This Amendment No. 1 shall be governed by, and
construed in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 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.
CONTINENTAL AIRLINES, INC.
By
-----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Trustee for each of the
Trusts
By
-----------------------------------
Name:
Title:
LANDESBANK HESSEN-THURINGEN
GIROZENTRALE, as Class A-1 Liquidity
Provider, Class A-2 Liquidity
Provider, Class B Liquidity Provider
and Class C Liquidity Provider
By
-----------------------------------
Name:
Title:
By
-----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity except as
expressly set forth herein but solely
as Subordination Agent and Trustee
By
-----------------------------------
Name:
Title:
DEPOSIT AGREEMENT
(Class C)
Dated as of June 26, 2001
between
WELLS FARGO BANK NORTHWEST, N.A.
as Escrow Agent
and
CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH
as Depositary
TABLE OF CONTENTS
Page
SECTION 1.1 Acceptance of Depositary..........................................2
SECTION 1.2 Establishment of Accounts........................................ 2
SECTION 2.1 Deposits..........................................................2
SECTION 2.2 Interest..........................................................2
SECTION 2.3 Withdrawals.......................................................3
SECTION 2.4 Other Accounts....................................................3
SECTION 3. Termination.......................................................4
SECTION 4. Payments..........................................................4
SECTION 5. Representation and Warranties.....................................4
SECTION 6. Transfer..........................................................5
SECTION 7. Amendment, Etc....................................................6
SECTION 8. Notices...........................................................6
SECTION 9. Obligations Unconditional.........................................6
SECTION 10. Entire Agreement..................................................6
SECTION 11. Governing Law.....................................................7
SECTION 12. Waiver of Jury Trial Right....................................... 7
SECTION 13. Counterparts..................................................... 7
SECTION 14. Head Office Obligation............................................7
DEPOSIT AGREEMENT (Class C) dated as of June 26, 2001 (as amended,
modified or supplemented from time to time, this "AGREEMENT") between WELLS
FARGO BANK NORTHWEST, N.A, a national banking association, as Escrow Agent under
the Escrow and Paying Agent Agreement referred to below (in such capacity,
together with its successors in such capacity, the "ESCROW AGENT"), and CREDIT
SUISSE FIRST BOSTON, a banking institution organized under the laws of
Switzerland, acting through its New York branch, as depositary bank (the
"DEPOSITARY").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Continental Airlines, Inc. ("CONTINENTAL") and Wilmington
Trust Company, not in its individual capacity except as otherwise expressly
provided therein, but solely as trustee (in such capacity, together with its
successors in such capacity, the "PASS THROUGH TRUSTEE") have entered into a
Trust Supplement, dated as of June 26, 2001, to the Pass Through Trust Agreement
dated as of September 25, 1997 (together, as amended, modified or supplemented
from time to time in accordance with the terms thereof, the "PASS THROUGH TRUST
AGREEMENT") relating to Continental Airlines Pass Through Trust 2001-1C-O
pursuant to which the Continental Airlines Pass Through Trust, Series 2001-1C-O
Certificates referred to therein (the "CERTIFICATES") are being issued (the date
of such issuance, the "ISSUANCE DATE");
WHEREAS, Continental and Morgan Stanley & Co. Incorporated, (the
"UNDERWRITER" and, together with its transferees and assigns as registered
owners of the Certificates, the "INVESTORS") have entered into an Underwriting
Agreement dated as of June 12, 2001 pursuant to which the Pass Through Trustee
will issue and sell the Certificates to the Underwriter;
WHEREAS, Continental, the Pass Through Trustee, certain other pass
through trustees and certain other persons concurrently herewith are entering
into an Amended and Restated Note Purchase Agreement, dated as of the date
hereof (the "NOTE PURCHASE AGREEMENT"), pursuant to which the Pass Through
Trustee has agreed to acquire from time to time on or prior to the Delivery
Period Termination Date (as defined in the Note Purchase Agreement) equipment
notes (the "EQUIPMENT NOTES") issued to finance the acquisition of aircraft by
Continental, as lessee or as owner, utilizing a portion of the proceeds from the
sale of the Certificates (the "NET PROCEEDS");
WHEREAS, the Escrow Agent, the Underwriter, the Pass Through Trustee
and Wilmington Trust Company, as paying agent for the Escrow Agent (in such
capacity, together with its successors in such capacity, the "PAYING AGENT")
concurrently herewith are entering into an Escrow and Paying Agent Agreement,
dated as of the date hereof (as amended, modified or supplemented from time to
time in accordance with the terms thereof, the "ESCROW AND PAYING AGENT
AGREEMENT"); and
WHEREAS, the Underwriter and the Pass Through Trustee intend that
the Net Proceeds (excluding any amount used to purchase Equipment Notes on the
Issuance Date) be held in escrow by the Escrow Agent on behalf of the Investors
pursuant to the Escrow and Paying Agent Agreement, subject to withdrawal upon
request of and proper certification by the Pass Through Trustee for the purpose
of purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds
be deposited by the Escrow Agent with the Depositary pursuant to this Agreement,
which provides for the Depositary to pay interest for distribution to the
Investors and to establish accounts from which the Escrow Agent shall make
withdrawals upon request of and proper certification by the Pass Through
Trustee.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1.1 ACCEPTANCE OF DEPOSITARY. The Depositary hereby agrees
to act as depositary bank as provided herein and in connection therewith to
accept all amounts to be delivered to or held by the Depositary pursuant to the
terms of this Agreement. The Depositary further agrees to hold, maintain and
safeguard the Deposits and the Accounts (as defined below) during the term of
this Agreement in accordance with the provisions of this Agreement. The Escrow
Agent shall not have any right to withdraw, assign or otherwise transfer moneys
held in the Accounts except as permitted by this Agreement.
SECTION 1.2 ESTABLISHMENT OF ACCOUNTS. The Escrow Agent hereby
instructs the Depositary, and the Depositary agrees, to establish the separate
deposit accounts listed on Schedule I hereto and to establish such additional
separate deposit accounts as may be required in connection with the deposits
contemplated by Section 2.4 hereof (each, an "ACCOUNT" and collectively, the
"ACCOUNTS"), each in the name of the Escrow Agent and all on the terms and
conditions set forth in this Agreement.
SECTION 2.1 DEPOSITS. The Escrow Agent shall direct the Underwriter
to deposit with the Depositary on the date of this Agreement (the "DEPOSIT
DATE") in Federal (same day) funds by wire transfer to: Credit Suisse First
Boston, New York branch, Reference: Continental 2001-1C, and the Depositary
shall accept from the Underwriter, on behalf of the Escrow Agent, the sum of
US$191,764,000 (or such lesser amount equal to the Net Proceeds less amounts
used to purchase Equipment Notes on the Issuance Date). Upon acceptance of such
sum, the Depositary shall (i) establish each of the deposits specified in
Schedule I hereto maturing on January 31, 2003 (including any deposit made
pursuant to Section 2.4 hereof, individually, a "DEPOSIT" and, collectively, the
"DEPOSITS") and (ii) credit each Deposit to the related Account as set forth
therein. No amount shall be deposited in any Account other than the related
Deposit.
SECTION 2.2 INTEREST. Each Deposit shall bear interest from and
including the date of deposit to but excluding the date of withdrawal at the
rate of 7.033% per annum (computed on the basis of a year of twelve 30-day
months) payable to the Paying Agent on behalf of the Escrow Agent semi-annually
in arrears on each June 15 and December 15 commencing on December 15, 2001
(each, an "INTEREST PAYMENT DATE"), and on the date of the Final Withdrawal (as
defined below), all in accordance with the terms of this Agreement (whether or
not any such Deposit is withdrawn on an Interest Payment Date). Interest accrued
on any Deposit that is withdrawn pursuant to a Notice of Purchase Withdrawal (as
defined below) shall be paid on the next Interest Payment Date, notwithstanding
any intervening Final Withdrawal (as such term is defined below).
SECTION 2.3 WITHDRAWALS. (a) On and after the date seven days after
the establishment of any Deposit, the Escrow Agent may, by providing at least
one Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "NOTICE OF PURCHASE WITHDRAWAL"), withdraw not less than the
entire balance of such Deposit, except that at any time prior to the actual
withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee may, by
notice to the Depositary, cancel such withdrawal (including on the scheduled
date therefor), and thereafter such Deposit shall continue to be maintained by
the Depositary in accordance with the original terms thereof. Following such
withdrawal the balance in the related Account shall be zero and the Depositary
shall close such Account. As used herein, "BUSINESS DAY" means any day, other
than a Saturday, Sunday or other day on which commercial banks are authorized or
required by law to close in New York, New York, Houston, Texas, Wilmington,
Delaware or Salt Lake City, Utah. The Depositary reserves the right, upon at
least 14 days' prior written notice to Continental, the Escrow Agent and the
Pass Through Trustee, to require seven days' notice for any withdrawal.
(b) The Escrow Agent may, by providing at least 15 days' prior
notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"NOTICE OF FINAL WITHDRAWAL"), withdraw the entire amount of all of the
remaining Deposits together with the payment by the Depositary of all accrued
and unpaid interest on such Deposits to but excluding the specified date of
withdrawal (a "FINAL WITHDRAWAL"), on such date as shall be specified in such
Notice of Final Withdrawal. If a Notice of Final Withdrawal has not been given
to the Depositary on or before January 8, 2003 (provided that, if a labor strike
occurs or continues at The Boeing Company after the Issuance Date and prior to
December 31, 2002 (a "LABOR STRIKE"), such date shall be extended by adding
thereto the number of days that such strike continued in effect after the
Issuance Date (the "ADDITIONAL DAYS")) and there are unwithdrawn Deposits on
such date, the Depositary shall pay the amount of the Final Withdrawal to the
Paying Agent on January 31, 2003 (provided that if a Labor Strike occurs or
continues, such date shall be extended by the Additional Days).
(c) If the Depositary receives a duly completed Notice of Purchase
Withdrawal or Notice of Final Withdrawal complying with the provisions of this
Agreement, it shall make the payments specified therein in accordance with the
provisions of this Agreement.
SECTION 2.4 OTHER ACCOUNTS. On the date of withdrawal of any Deposit
(other than the date of the Final Withdrawal), the Escrow Agent, or the Pass
Through Trustee on behalf of the Escrow Agent, shall re-deposit with the
Depositary any portion thereof not used to acquire Equipment Notes and the
Depositary shall accept the same for deposit hereunder. On the date the
Certificates are issued, the Escrow Agent, or the Underwriter, on behalf of the
Escrow Agent, shall be entitled to deposit with the Depositary any portion of
the Net Proceeds not theretofore deposited hereunder and not used to purchase
Equipment Notes on the Issuance Date (the "UNUSED PROCEEDS") and the Depositary
shall accept the Unused Proceeds for deposit hereunder. Any sums so received for
deposit shall be established as a new Deposit and credited to a new Account, all
as more fully provided in Section 2.1 hereof, and thereafter the provisions of
this Agreement shall apply thereto as fully and with the same force and effect
as if such Deposit had been established on the Deposit Date except that (i) such
Deposit may not be withdrawn prior to the date seven days after the
establishment thereof and (ii) such Deposit shall mature on January 31, 2003
(provided that if a Labor Strike occurs or continues, such date shall be
extended by the Additional Days) and bear interest as provided in Section 2.2.
The Depositary shall promptly give notice to the Escrow Agent of receipt of each
such re-deposit and the account number assigned thereto.
SECTION 3. TERMINATION. This Agreement shall terminate on the fifth
Business Day after the later of the date on which (i) all of the Deposits shall
have been withdrawn and paid as provided herein without any re-deposit and (ii)
all accrued and unpaid interest on the Deposits shall have been paid as provided
herein, but in no event prior to the date on which the Depositary shall have
performed in full its obligations hereunder.
SECTION 4. PAYMENTS. All payments (including, without limitation,
those payments made in respect of Taxes (as defined and provided for below))
made by the Depositary hereunder shall be paid in United States Dollars and
immediately available funds by wire transfer (i) in the case of accrued interest
on the Deposits payable under Section 2.2 hereof or any Final Withdrawal,
directly to the Paying Agent at Wilmington Trust Company, Wilmington, DE, ABA#
031100092, Account No. 54661-0, Attention: Monica Henry, Telephone No.: (302)
651-8813, Reference: Continental Airlines PTT, Series 2001-1C, or to such other
account as the Paying Agent may direct from time to time in writing to the
Depositary and the Escrow Agent and (ii) in the case of any withdrawal of one or
more Deposits pursuant to a Notice of Purchase Withdrawal, directly to or as
directed by the Pass Through Trustee as specified and in the manner provided in
such Notice of Purchase Withdrawal. The Depositary hereby waives any and all
rights of set-off, combination of accounts, right of retention or similar right
(whether arising under applicable law, contract or otherwise) it may have
against the Deposits howsoever arising. All payments on or in respect of each
Deposit shall be made free and clear of and without reduction for or on account
of any and all taxes, levies or other impositions or charges (collectively,
"TAXES"). However, if the Depositary or the Paying Agent (pursuant to Section
2.04 of the Escrow and Paying Agent Agreement) shall be required by law to
deduct or withhold any Taxes from or in respect of any sum payable hereunder,
the Depositary shall (i) make such deductions or withholding, (ii) pay the full
amount deducted or withheld (including in respect of such additional amounts) to
the competent taxation authority and (iii) if the Taxes required to be deducted
or withheld are imposed by Switzerland or any political subdivision thereof, pay
such additional amounts as may be necessary in order that the actual amount
received by the designated recipient of such sum under this Agreement or the
Escrow and Paying Agent Agreement after such deduction or withholding equals the
sum it would have received had no such deduction or withholding been required.
If the date on which any payment due on any Deposit would otherwise fall on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day, and no additional interest shall accrue in respect of
such extension.
SECTION 5. REPRESENTATION AND WARRANTIES. The Depositary hereby
represents and warrants to Continental, the Escrow Agent, the Pass Through
Trustee and the Paying Agent that:
(a) it is a bank duly organized and validly existing in good
standing under the laws of its jurisdiction of organization and is duly
qualified to conduct banking business in the State of New York through its
New York branch;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part of
it and do not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof;
(d) no authorization, consent or approval of or other action
by, and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of
this Agreement, nor compliance with the terms and provisions hereof,
conflicts or will conflict with or results or will result in a breach or
violation of any of the terms, conditions or provisions of, or will require
any consent or approval under, any law, governmental rule or regulation or
the charter documents, as amended, or bylaws, as amended, of it or any
similar instrument binding on it or any order, writ, injunction or decree
of any court or governmental authority against it or by which it or any of
its properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, or constitutes or will constitute a default thereunder
or results or will result in the imposition of any lien upon any of its
properties; and
(f) there are no pending or, to its knowledge, threatened
actions, suits, investigations or proceedings (whether or not purportedly
on behalf of it) against or affecting it or any of its property before or
by any court or administrative agency which, if adversely determined, (i)
would adversely affect the ability of it to perform its obligations under
this Agreement or (ii) would call into question or challenge the validity
of this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Depositary in default with respect to any order of any
court, governmental authority, arbitration board or administrative agency
so as to adversely affect its ability to perform its obligations under this
Agreement.
SECTION 6. TRANSFER. Neither party hereto shall be entitled to
assign or otherwise transfer this Agreement (or any interest herein) other than
(in the case of the Escrow Agent) to a successor escrow agent under the Escrow
and Paying Agent Agreement, and any purported assignment in violation thereof
shall be void. This Agreement shall be binding upon the parties hereto and their
respective successors and (in the case of the Escrow Agent) permitted assigns.
Upon the occurrence of the Transfer (as defined below) contemplated by the
Assignment and Assumption Agreement (as defined below), the Pass Through Trustee
shall (without further act) be deemed to have transferred all of its right,
title and interest in and to this Agreement to the trustee of the Successor
Trust (as defined below) and, thereafter, the trustee of the Successor Trust
shall be deemed to be the "Pass Through Trustee" hereunder with the rights of
the "Pass Through Trustee" hereunder, and each reference herein to "Continental
Airlines Pass Through Trust 2001-1C-O" shall be deemed to be a reference to
"Continental Airlines Pass Through Trust 2001-1C-S". The Escrow Agent and the
Depositary hereby acknowledge and consent to the Transfer contemplated by the
Assignment and Assumption Agreement. For the purposes of this Section 6,
"TRANSFER" means the transfer contemplated by the Assignment and Assumption
Agreement; "ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreement to be entered into between the Pass Through Trustee and the
trustee of the Successor Trust, substantially in the form of Exhibit C to the
Pass Through Trust Agreement; and "SUCCESSOR TRUST" means the Continental
Airlines Pass Through Trust 2001-1C-S.
SECTION 7. AMENDMENT, ETC. This Agreement may not be amended, waived
or otherwise modified except by an instrument in writing signed by the party
against whom the amendment, waiver or other modification is sought to be
enforced and by the Pass Through Trustee.
SECTION 8. NOTICES. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (x) in the case of the Depositary,
Credit Suisse First Boston, 11 Madison Avenue, New York, New York 10010,
Attention: Robert Finney and Mark Verbitsky (Telecopier: (212) 325-8319) or (y)
in the case of the Escrow Agent, Wells Fargo Bank Northwest, N.A., 79 South Main
Street, Third Floor, Salt Lake City, UT 84111, Attention: Corporate Trust
Services (Telecopier: (801) 246-5053), in each case, with a copy to the Pass
Through Trustee, Wilmington Trust Company, 1100 North Market Street, Wilmington,
DE 19890, Attention: Corporate Trust Administration (Telecopier: (302) 651-8882)
and to Continental, Continental Airlines, Inc., 1600 Smith Street, Dept. HQS-FN,
Houston, TX 77002, Attention: Treasurer (Telecopier: (713) 324-2447) (or at such
other address as any such party may specify from time to time in a written
notice to the parties hereto). On or prior to the execution of this Agreement,
the Escrow Agent has delivered to the Depositary a certificate containing
specimen signatures of the representatives of the Escrow Agent who are
authorized to give notices and instructions with respect to this Agreement. The
Depositary may conclusively rely on such certificate until the Depositary
receives written notice from the Escrow Agent to the contrary.
SECTION 9. OBLIGATIONS UNCONDITIONAL. The Depositary hereby
acknowledges and agrees that its obligation to repay each Deposit together with
interest thereon as provided herein is absolute, irrevocable and unconditional
and constitutes a full recourse obligation of the Depositary enforceable against
it to the full extent of all of its assets and properties.
SECTION 10. ENTIRE AGREEMENT. This Agreement (including all
attachments hereto) sets forth all of the promises, covenants, agreements,
conditions and understandings between the Depositary and the Escrow Agent with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 11. GOVERNING LAW. This Agreement, and the rights and
obligations of the Depositary and the Escrow Agent with respect to the Deposits,
shall be governed by, and construed in accordance with, the laws of the State of
New York and subject to the provisions of Regulation D of the Board of Governors
of the Federal Reserve System (or any successor), as the same may be modified
and supplemented and in effect from time to time.
SECTION 12. WAIVER OF JURY TRIAL RIGHT. EACH OF THE DEPOSITARY AND
THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS
RIGHT TO A TRIAL BY JURY.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
SECTION 14. HEAD OFFICE OBLIGATION. Credit Suisse First Boston
hereby agrees that the obligations of the Depositary hereunder are also the
obligations of Credit Suisse First Boston's Head Office in Zurich, Switzerland.
Accordingly, any beneficiary of this Agreement will be able to proceed directly
against Credit Suisse First Boston's Head Office in Zurich, Switzerland if
Credit Suisse First Boston's New York branch defaults in its obligation to such
beneficiary under this Agreement.
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused
this Deposit Agreement to be duly executed as of the day and year first above
written.
WELLS FARGO BANK NORTHWEST, N.A.,
as Escrow Agent
By
------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
NEW YORK BRANCH,
as Depositary
By
------------------------------
Name:
Title:
Schedule I
SCHEDULE OF DEPOSITS
Class C
AIRCRAFT TYPE DEPOSIT AMOUNT ACCOUNT NO.
------------- -------------- -----------
737-824 $2,039,720.20 00C1
737-824 $8,710,540.02 00C2
737-824 $8,710,539.97 51C1
737-824 $4,896,666.70 51C2
737-824 $8,710,539.97 43C1
737-824 $4,931,000.00 35C1
737-824 $8,710,540.01 27C1
737-824 $4,939,666.70 27C2
737-824 $8,710,540.02 19C1
737-924 $9,777,699.03 00C3
737-924 $4,539,899.97 51C3
737-924 $9,638,010.26 43C2
737-924 $4,566,600.00 35C2
737-924 $6,726,693.57 19C2
767-424ER $8,015,200.00 35C3
767-424ER $8,015,200.00 35C4
767-424ER $19,069,020.00 27C3
767-424ER $8,032,000.00 27C4
767-424ER $8,048,800.00 19C3
767-424ER $19,069,020.00 19C4
777-224ER $25,906,103.58 19C5
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, New York 10010
Attention: Robert Finney and Mark Verbitsky
Telecopier: (212) 325-8319
Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
June 26, 2001 (the "DEPOSIT AGREEMENT") between Wells Fargo Bank Northwest,
N.A., as Escrow Agent, and Credit Suisse First Boston, New York Branch, as
Depositary (the "DEPOSITARY").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$[_______], Account No. ____________.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to ________________, Account No. _____, Reference: _________] on
_________ __, 200__, upon the telephonic request of a representative of the Pass
Through Trustee.
WELLS FARGO BANK NORTHWEST, N.A.,
as Escrow Agent
By
------------------------------
Name:
Title:
Dated: _______ __, 200_
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Mark Verbitsky
Telecopier: 212-325-8319
Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
June 26, 2001 (the "DEPOSIT AGREEMENT") between Wells Fargo Bank Northwest,
N.A., as Escrow Agent, and Credit Suisse First Boston, New York Branch, as
Depositary (the "DEPOSITARY").
In accordance with Section 2.3(b) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of all Deposits.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposits and accrued interest thereon to the Paying Agent at Wilmington
Trust Company, ABA# 031100092, Account No. _____________, Reference: Continental
2001-1C on ________.
WELLS FARGO BANK NORTHWEST, N.A.,
as Escrow Agent
By
------------------------------
Name:
Title:
Dated: _________, 200_
ESCROW AND PAYING AGENT AGREEMENT
(Class C)
Dated as of June 26, 2001
among
WELLS FARGO BANK NORTHWEST, N.A.
as Escrow Agent
MORGAN STANLEY & CO. INCORPORATED,
as Underwriter
WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Continental Airlines Pass Through Trust 2001-1C-O
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
TABLE OF CONTENTS
PAGE
SECTION 1. Escrow Agent.......................................................2
Section 1.01.Appointment of Escrow Agent..................................2
Section 1.02.Instruction; Etc.............................................2
Section 1.03.Initial Escrow Amount; Issuance of Escrow Receipts...........3
Section 1.04.Payments to Receiptholders...................................4
Section 1.05.Mutilated, Destroyed, Lost or Stolen Escrow Receipt..........4
Section 1.06.Additional Escrow Amounts....................................4
Section 1.07.Resignation or Removal of Escrow Agent.......................5
Section 1.08.Persons Deemed Owners........................................5
Section 1.09.Further Assurances...........................................5
SECTION 2. Paying Agent.......................................................5
Section 2.01.Appointment of Paying Agent..................................5
Section 2.02.Establishment of Paying Agent Account........................6
Section 2.03.Payments from Paying Agent Account...........................6
Section 2.04.Withholding Taxes............................................7
Section 2.05.Resignation or Removal of Paying Agent.......................7
Section 2.06.Notice of Final Withdrawal...................................7
SECTION 3. Payments...........................................................8
SECTION 4. Other Actions......................................................8
SECTION 5. Representations and Warranties of the Escrow Agent.................8
SECTION 6. Representations and Warranties of the Paying Agent.................9
SECTION 7. Indemnification...................................................10
SECTION 8. Amendment, Etc....................................................11
SECTION 9. Notices...........................................................11
SECTION 10. Transfer..........................................................11
SECTION 11. Entire Agreement..................................................12
SECTION 12. Governing Law.....................................................12
SECTION 13. Waiver of Jury Trial Right........................................12
SECTION 14. Counterparts......................................................12
Exhibit A Escrow Receipt
Exhibit B Withdrawal Certificate
ESCROW AND PAYING AGENT AGREEMENT (Class C) dated as of June 26,
2001 (as amended, modified or supplemented from time to time, this "AGREEMENT")
among WELLS FARGO BANK NORTHWEST, N.A., a national banking association, as
Escrow Agent (in such capacity, together with its successors in such capacity,
the "ESCROW AGENT"); MORGAN STANLEY & CO. INCORPORATED, as Underwriter of the
Certificates referred to below (the "Underwriter" and together with its
transferees and assigns as registered owners of the Certificates, the
"INVESTORS") under the Underwriting Agreement referred to below; WILMINGTON
TRUST COMPANY, a Delaware banking corporation, not in its individual capacity
except as otherwise expressly provided herein, but solely as trustee (in such
capacity, together with its successors in such capacity, the "PASS THROUGH
TRUSTEE") under the Pass Through Trust Agreement referred to below; and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as paying agent
hereunder (in such capacity, together with its successors in such capacity, the
"PAYING AGENT").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Continental Airlines, Inc. ("CONTINENTAL") and the Pass
Through Trustee have entered into a Trust Supplement, dated as of June 26, 2001
(the "TRUST SUPPLEMENT"), to the Pass Through Trust Agreement, dated as of
September 25, 1997 (together, as amended, modified or supplemented from time to
time in accordance with the terms thereof, the "PASS THROUGH TRUST AGREEMENT")
relating to Continental Airlines Pass Through Trust 2001-1C-O (the "PASS THROUGH
TRUST") pursuant to which the Continental Airlines Pass Through Trust, Series
2001-1C-O Certificates referred to therein (the "CERTIFICATES") are being issued
(the date of such issuance, the "ISSUANCE DATE");
WHEREAS, Continental and the Underwriter have entered into an
Underwriting Agreement dated as of June 12, 2001 (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"UNDERWRITING AGREEMENT") pursuant to which the Pass Through Trustee will issue
and sell the Certificates to the Underwriter;
WHEREAS, Continental, the Pass Through Trustee, certain other pass
through trustees and certain other persons concurrently herewith are entering
into an Amended and Restated Note Purchase Agreement, dated as of the date
hereof (the "NOTE PURCHASE AGREEMENT"), pursuant to which the Pass Through
Trustee has agreed to acquire from time to time on or prior to the Delivery
Period Termination Date (as defined in the Note Purchase Agreement) equipment
notes (the "EQUIPMENT NOTES") issued to finance the acquisition of aircraft by
Continental, as lessee or as owner, utilizing a portion of the proceeds from the
sale of the Certificates (the "NET PROCEEDS");
WHEREAS, the Underwriter and the Pass Through Trustee intend that
the Net Proceeds (excluding any amount used to purchase Equipment Notes on the
Issuance Date) be held in escrow by the Escrow Agent on behalf of the Investors,
subject to withdrawal upon request by the Pass Through Trustee and satisfaction
of the conditions set forth in the Note Purchase Agreement for the purpose of
purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds be
deposited on behalf of the Escrow Agent with Credit Suisse First Boston, acting
through its New York branch, as Depositary (the "DEPOSITARY") under the Deposit
Agreement, dated as of the date hereof between the Depositary and the Escrow
Agent relating to the Pass Through Trust (as amended, modified or supplemented
from time to time in accordance with the terms thereof, the "DEPOSIT AGREEMENT")
pursuant to which, among other things, the Depositary will pay interest for
distribution to the Investors and establish accounts from which the Escrow Agent
shall make withdrawals upon request of and proper certification by the Pass
Through Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay
amounts required to be distributed to the Investors in accordance with this
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. ESCROW AGENT.
Section 1.01. APPOINTMENT OF ESCROW AGENT. The Underwriter, for
and on behalf of each of the Investors, hereby irrevocably appoints, authorizes
and directs the Escrow Agent to act as escrow agent and fiduciary hereunder and
under the Deposit Agreement for such specific purposes and with such powers as
are specifically delegated to the Escrow Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto. Any and
all money received and held by the Escrow Agent under this Agreement or the
Deposit Agreement shall be held in escrow by the Escrow Agent in accordance with
the terms of this Agreement. This Agreement is irrevocable and the Investors'
rights with respect to any monies received and held in escrow by the Escrow
Agent under this Agreement or the Deposit Agreement shall only be as provided
under the terms and conditions of this Agreement and the Deposit Agreement. The
Escrow Agent (which term as used in this sentence shall include reference to its
affiliates and its own and its affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except those expressly set
forth in this Agreement; (b) shall not be responsible to the Pass Through
Trustee or the Investors for any recitals, statements, representations or
warranties of any person other then itself contained in this Agreement or the
Deposit Agreement or for the failure by the Pass Through Trustee, the Investors
or any other person or entity (other than the Escrow Agent) to perform any of
its obligations hereunder (whether or not the Escrow Agent shall have any
knowledge thereof); and (c) shall not be responsible for any action taken or
omitted to be taken by it hereunder or provided for herein or in connection
herewith, except for its own willful misconduct or gross negligence (or simple
negligence in connection with the handling of funds).
Section 1.02. INSTRUCTION; ETC. The Underwriter, for and on behalf
of each of the Investors, hereby irrevocably instruct the Escrow Agent, and the
Escrow Agent agrees, (a) to enter into the Deposit Agreement, (b) to appoint the
Paying Agent as provided in this Agreement, (c) upon receipt at any time and
from time to time prior to the Termination Date (as defined below) of a
certificate substantially in the form of Exhibit B hereto (a "WITHDRAWAL
CERTIFICATE") executed by the Pass Through Trustee, together with an attached
Notice of Purchase Withdrawal in substantially the form of Exhibit A to the
Deposit Agreement duly completed by the Pass Through Trustee (the "APPLICABLE
NOTICE OF PURCHASE WITHDRAWAL" and the withdrawal to which it relates, a
"PURCHASE WITHDRAWAL"), immediately to execute the Applicable Notice of Purchase
Withdrawal as Escrow Agent and transmit it to the Depositary by facsimile
transmission in accordance with the Deposit Agreement; PROVIDED that, upon the
request of the Pass Through Trustee after such transmission, the Escrow Agent
shall cancel such Applicable Notice of Purchase Withdrawal, and (d) if there are
any undrawn Deposits (as defined in the Deposit Agreement) on the "TERMINATION
DATE", which shall mean the earlier of (i) December 31, 2002 (PROVIDED that, if
a labor strike occurs or continues at The Boeing Company after the Issuance Date
and prior to December 31, 2002 (a "LABOR STRIKE"), such date shall be extended
by adding thereto the number of days that such strike continued in effect after
the Issuance Date (the "ADDITIONAL DAYS")) and (ii) the day on which the Escrow
Agent receives notice from the Pass Through Trustee that the Pass Through
Trustee's obligation to purchase Equipment Notes under the Note Purchase
Agreement has terminated, to give notice to the Depositary (with a copy to the
Paying Agent) substantially in the form of Exhibit B to the Deposit Agreement
requesting a withdrawal of all of the remaining Deposits, together with accrued
and unpaid interest on such Deposits to the date of withdrawal, on the 25th day
after the date that such notice of withdrawal is given to the Depositary (or, if
not a Business Day, on the next succeeding Business Day) (a "FINAL WITHDRAWAL"),
PROVIDED that if the day scheduled for the Final Withdrawal in accordance with
the foregoing is within 10 days before or after a Regular Distribution Date,
then the Escrow Agent shall request that such requested Final Withdrawal be made
on such Regular Distribution Date (the date of such requested withdrawal, the
"FINAL WITHDRAWAL DATE"). If for any reason the Escrow Agent shall have failed
to give the Final Withdrawal Notice to the Depositary on or before January 8,
2003 (PROVIDED that if a Labor Strike occurs or continues, such date shall be
extended by the Additional Days), and there are unwithdrawn Deposits on such
date, the Final Withdrawal Date shall be deemed to be January 31, 2003 (PROVIDED
that if a Labor Strike occurs or continues, such date shall be extended by the
Additional Days).
Section 1.03. INITIAL ESCROW AMOUNT; ISSUANCE OF ESCROW RECEIPTS.
The Escrow Agent hereby directs the Underwriter to, and the Underwriter hereby
acknowledges that on the date hereof it shall, irrevocably deliver to the
Depositary on behalf of the Escrow Agent, an amount in U.S. dollars ("DOLLARS")
and immediately available funds equal to $191,764,000 (or such lesser amount
equal to the Net Proceeds less amounts used to purchase Equipment Notes on the
Issuance Date) for deposit on behalf of the Escrow Agent with the Depositary in
accordance with Section 2.1 of the Deposit Agreement. The Underwriter hereby
instructs the Escrow Agent, upon receipt of such sum from the Underwriter, to
confirm such receipt by executing and delivering to the Pass Through Trustee an
Escrow Receipt in the form of Exhibit A hereto (an "ESCROW RECEIPT"), (a) to be
affixed by the Pass Through Trustee to each Certificate and (b) to evidence the
same percentage interest (the "ESCROW INTEREST") in the Account Amounts (as
defined below) as the Fractional Undivided Interest in the Pass Through Trust
evidenced by the Certificate to which it is to be affixed. The Escrow Agent
shall provide to the Pass Through Trustee for attachment to each Certificate
newly issued under and in accordance with the Pass Through Trust Agreement an
executed Escrow Receipt as the Pass Through Trustee may from time to time
request of the Escrow Agent. Each Escrow Receipt shall be registered by the
Escrow Agent in a register (the "REGISTER") maintained by the Escrow Agent in
the same name and same manner as the Certificate to which it is attached and may
not thereafter be detached from such Certificate to which it is to be affixed
prior to the distribution of the Final Withdrawal (the "FINAL DISTRIBUTION").
After the Final Distribution, no additional Escrow Receipts shall be issued and
the Pass Through Trustee shall request the return to the Escrow Agent for
cancellation of all outstanding Escrow Receipts.
Section 1.04. PAYMENTS TO RECEIPTHOLDERS. All payments and
distributions made to holders of an Escrow Receipt (collectively
"RECEIPTHOLDERS") in respect of the Escrow Receipt shall be made only from
amounts deposited in the Paying Agent Account (as defined below) ("ACCOUNT
AMOUNTS"). Each Receiptholder, by its acceptance of an Escrow Receipt, agrees
that (a) it will look solely to the Account Amounts for any payment or
distribution due to such Receiptholder pursuant to the terms of the Escrow
Receipt and this Agreement and (b) it will have no recourse to Continental, the
Pass Through Trustee, the Paying Agent or the Escrow Agent, except as expressly
provided herein or in the Pass Through Trust Agreement. No Receiptholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account or the obligations of the parties hereto,
nor shall anything set forth herein, or contained in the terms of the Escrow
Receipt, be construed so as to constitute the Receiptholders from time to time
as partners or members of an association.
Section 1.05. MUTILATED, DESTROYED, LOST OR STOLEN ESCROW RECEIPT.
If (a) any mutilated Escrow Receipt is surrendered to the Escrow Agent or the
Escrow Agent receives evidence to its satisfaction of the destruction, loss or
theft of any Escrow Receipt and (b) there is delivered to the Escrow Agent and
the Pass Through Trustee such security, indemnity or bond, as may be required by
them to hold each of them harmless, then, absent notice to the Escrow Agent or
the Pass Through Trustee that such destroyed, lost or stolen Escrow Receipt has
been acquired by a bona fide purchaser, and provided that the requirements of
Section 8-405 of the Uniform Commercial Code in effect in any applicable
jurisdiction are met, the Escrow Agent shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Escrow Receipt, a new Escrow Receipt or Escrow Receipts and of like Escrow
Interest in the Account Amounts and bearing a number not contemporaneously
outstanding.
In connection with the issuance of any new Escrow Receipt under this
Section 1.05, the Escrow Agent may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section 1.05
shall constitute conclusive evidence of the appropriate Escrow Interest in the
Account Amounts, as if originally issued, whether or not the lost, stolen or
destroyed Escrow Receipt shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Escrow Receipts.
Section 1.06. ADDITIONAL ESCROW AMOUNTS. On the date of any
Purchase Withdrawal, the Pass Through Trustee may re-deposit with the Depositary
some or all of the amounts so withdrawn in accordance with Section 2.4 of the
Deposit Agreement.
Section 1.07. RESIGNATION OR REMOVAL OF ESCROW AGENT. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving 30 days' prior written notice
thereof to the Investors, but may not otherwise be removed except for cause by
the written consent of the Investors with respect to Investors representing
Escrow Interests aggregating not less than a majority in interest in the Account
Amounts (an "ACTION OF INVESTORS"). Upon any such resignation or removal, the
Investors, by an Action of Investors, shall have the right to appoint a
successor Escrow Agent. If no successor Escrow Agent shall have been so
appointed and shall have accepted such appointment within 30 days after the
retiring Escrow Agent's giving of notice of resignation or the removal of the
retiring Escrow Agent, then the retiring Escrow Agent may appoint a successor
Escrow Agent. Any successor Escrow Agent shall be a bank which has an office in
the United States with a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Escrow Agent hereunder by a successor
Escrow Agent, such successor Escrow Agent shall enter into such documents as the
Pass Through Trustee shall require and shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations hereunder. No resignation or removal of the Escrow Agent shall be
effective unless a written confirmation shall have been obtained from each of
Moody's Investors Service, Inc. and Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., that the replacement of the Escrow
Agent with the successor Escrow Agent will not result in (a) a reduction of the
rating for the Certificates below the then current rating for the Certificates
or (b) a withdrawal or suspension of the rating of the Certificates.
Section 1.08. PERSONS DEEMED OWNERS. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and neither the Escrow Agent nor the Paying Agent shall be affected
by any notice to the contrary.
Section 1.09. FURTHER ASSURANCES. The Escrow Agent agrees to take
such actions, and execute such other documents, as may be reasonably requested
by the Pass Through Trustee in order to effectuate the purposes of this
Agreement and the performance by the Escrow Agent of its obligations hereunder.
SECTION 2. PAYING AGENT.
Section 2.01. APPOINTMENT OF PAYING AGENT. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and with
such powers as are specifically delegated to the Paying Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account for
the benefit of the Investors. The Paying Agent (which term as used in this
sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents): (a) shall have no duties
or responsibilities except those expressly set forth in this Agreement, and
shall not by reason of this Agreement be a trustee for the Escrow Agent; (b)
shall not be responsible to the Escrow Agent for any recitals, statements,
representations or warranties of any person other then itself contained in this
Agreement or for the failure by the Escrow Agent or any other person or entity
(other than the Paying Agent) to perform any of its obligations hereunder
(whether or not the Paying Agent shall have any knowledge thereof); and (c)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or provided for herein or in connection herewith, except for its own
willful misconduct or gross negligence (or simple negligence in connection with
the handling of funds).
Section 2.02. ESTABLISHMENT OF PAYING AGENT ACCOUNT. The Paying
Agent shall establish a deposit account (the "PAYING AGENT ACCOUNT") at
Wilmington Trust Company in the name of the Escrow Agent. It is expressly
understood by the parties hereto that the Paying Agent is acting as the paying
agent of the Escrow Agent hereunder and that no amounts on deposit in the Paying
Agent Account constitute part of the Trust Property.
Section 2.03. PAYMENTS FROM PAYING AGENT ACCOUNT. The Escrow Agent
hereby irrevocably instructs the Paying Agent, and the Paying Agent agrees to
act, as follows:
(a) On each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt
in the Paying Agent Account from the Depositary of any amount in respect
of accrued interest on the Deposits, the Paying Agent shall distribute out
of the Paying Agent Account the entire amount deposited therein by the
Depositary. There shall be so distributed to each Receiptholder of record
on the 15th day (whether or not a Business Day) preceding such Interest
Payment Date by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata share (based on
the Escrow Interest in the Account Amounts held by such Receiptholder) of
the total amount of interest deposited by the Depositary in the Paying
Agent Account on such date, except that, with respect to Escrow Receipts
registered on the Record Date in the name of The Depository Trust Company
("DTC"), such distribution shall be made by wire transfer in immediately
available funds to the account designated by DTC.
(b) Upon the confirmation by the Paying Agent of receipt in
the Paying Agent Account from the Depositary of any amount in respect of
the Final Withdrawal, the Paying Agent shall forthwith distribute the
entire amount of the Final Withdrawal deposited therein by the Depositary.
There shall be so distributed to each Receiptholder of record on the 15th
day (whether or not a Business Day) preceding the Final Withdrawal Date by
check mailed to such Receiptholder, at the address appearing in the
Register, such Receiptholder's pro rata share (based on the Escrow
Interest in the Account Amounts held by such Receiptholder) of the total
amount in the Paying Agent Account on account of such Final Withdrawal,
except that, with respect to Escrow Receipts registered on the Record Date
in the name of DTC, such distribution shall be made by wire transfer in
immediately available funds to the account designated by DTC.
(c) If any payment of interest or principal in respect of
the Final Withdrawal is not received by the Paying Agent within five days
of the applicable date when due, then it shall be distributed to
Receiptholders after actual receipt by the Paying Agent on the same basis
as a Special Payment is distributed under the Pass Through Trust
Agreement.
(d) The Paying Agent shall include with any check mailed
pursuant to this Section any notice required to be distributed under the
Pass Through Trust Agreement that is furnished to the Paying Agent by the
Pass Through Trustee.
Section 2.04. WITHHOLDING TAXES. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits (as defined
in the Deposit Agreement) and any amount in respect of any Final Withdrawal any
and all withholding taxes applicable thereto as required by law. The Paying
Agent agrees to act as such withholding agent and, in connection therewith,
whenever any present or future taxes or similar charges are required to be
withheld with respect to any amounts payable in respect of the Deposits (as
defined in the Deposit Agreement) or the escrow amounts, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the Receiptholders, that it will file any necessary withholding tax
returns or statements when due, and that, as promptly as possible after the
payment thereof, it will deliver to each such Receiptholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Receiptholder may reasonably request from time to
time. The Paying Agent agrees to file any other information reports as it may be
required to file under United States law.
Section 2.05. RESIGNATION OR REMOVAL OF PAYING AGENT. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to the Escrow Agent, but may not otherwise be removed except for cause
by the Escrow Agent. Upon any such resignation or removal, the Escrow Agent
shall have the right to appoint a successor Paying Agent. If no successor Paying
Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Paying Agent's giving of notice of resignation
or the removal of the retiring Paying Agent, then the retiring Paying Agent may
appoint a successor Paying Agent. Any Successor Paying Agent shall be a bank
which has an office in the United States with a combined capital and surplus of
at least $100,000,000. Upon the acceptance of any appointment as Paying Agent
hereunder by a successor Paying Agent, such successor Paying Agent shall enter
into such documents as the Escrow Agent shall require and shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Paying Agent, and the retiring Paying Agent shall be discharged
from its duties and obligations hereunder.
Section 2.06. NOTICE OF FINAL WITHDRAWAL. Promptly after receipt by
the Paying Agent of notice that the Escrow Agent has requested a Final
Withdrawal or that a Final Withdrawal will be made, the Paying Agent shall cause
notice of the distribution of the Final Withdrawal to be mailed to each of the
Receiptholders at its address as it appears in the Register. Such notice shall
be mailed not less than 15 days prior to the Final Withdrawal Date. Such notice
shall set forth:
(i) the Final Withdrawal Date and the date for determining
Receiptholders of record who shall be entitled to receive distributions in
respect of the Final Withdrawal,
(ii) the amount of the payment in respect of the Final
Withdrawal for each $1,000 face amount Certificate (based on information
provided by the Pass Through Trustee) and the amount thereof constituting
unused Deposits (as defined in the Deposit Agreement) and interest
thereon, and
(iii) if the Final Withdrawal Date is the same date as a
Regular Distribution Date, the total amount to be received on such date
for each $1,000 face amount Certificate (based on information provided by
the Pass Through Trustee).
Such mailing may include any notice required to be given to
Certificateholders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. PAYMENTS. If, notwithstanding the instructions in Section
4 of the Deposit Agreement that all amounts payable to the Escrow Agent under
the Deposit Agreement be paid by the Depositary directly to the Paying Agent or
the Pass Through Trustee (depending on the circumstances), the Escrow Agent
receives any payment thereunder, then the Escrow Agent shall forthwith pay such
amount in Dollars and in immediately available funds by wire transfer to (a) in
the case of a payment of accrued interest on the Deposits (as defined in the
Deposit Agreement) or any Final Withdrawal, directly to the Paying Agent Account
and (b) in the case of any Purchase Withdrawal, directly to the Pass Through
Trustee or its designee as specified and in the manner provided in the
Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives any and
all rights of set-off, combination of accounts, right of retention or similar
right (whether arising under applicable law, contract or otherwise) it may have
against amounts payable to the Paying Agent howsoever arising.
SECTION 4. OTHER ACTIONS. The Escrow Agent shall take such other
actions under or in respect of the Deposit Agreement (including, without
limitation, the enforcement of the obligations of the Depositary thereunder) as
the Investors, by an Action of Investors, may from time to time request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE ESCROW AGENT. The
Escrow Agent represents and warrants to Continental, the Investors, the Paying
Agent and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States of
America;
(ii) it has full power, authority and legal right to conduct
its business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(iii) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been
duly executed and delivered by it and constitutes its legal, valid and
binding obligations enforceable against it in accordance with the terms
hereof or thereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action
by, and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement or the Deposit Agreement;
(v) neither the execution, delivery or performance by it of
this Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results
or will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened
actions, suits, investigations or proceedings (whether or not purportedly
on behalf of it) against or affecting it or any of its property before or
by any court or administrative agency which, if adversely determined, (A)
would adversely affect the ability of it to perform its obligations under
this Agreement or the Deposit Agreement or (B) would call into question or
challenge the validity of this Agreement or the Deposit Agreement or the
enforceability hereof or thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE PAYING AGENT. The
Paying Agent represents and warrants to Continental, the Investors, the Escrow
Agent and the Pass Through Trustee as follows:
(i) it is a Delaware banking company duly organized and
validly existing in good standing under the laws of its jurisdiction of
incorporation;
(ii) it has full power, authority and legal right to conduct
its business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(iii) the execution, delivery and performance of this
Agreement has been duly authorized by all necessary corporate action on
the part of it and does not require any stockholder approval, or approval
or consent of any trustee or holder of any indebtedness or obligations of
it, and such document has been duly executed and delivered by it and
constitutes its legal, valid and binding obligations enforceable against
it in accordance with the terms hereof except as such enforceability may
be limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights generally (regardless of
whether such enforceability is considered in a proceeding in equity or at
law);
(iv) no authorization, consent or approval of or other action
by, and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(v) neither the execution, delivery or performance by it of
this Agreement, nor compliance with the terms and provisions hereof,
conflicts or will conflict with or results or will result in a breach or
violation of any of the terms, conditions or provisions of, or will
require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of
it or any similar instrument binding on it or any order, writ, injunction
or decree of any court or governmental authority against it or by which it
or any of its properties is bound or any indenture, mortgage or contract
or other agreement or instrument to which it is a party or by which it or
any of its properties is bound, or constitutes or will constitute a
default thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened
actions, suits, investigations or proceedings (whether or not purportedly
on behalf of it) against or affecting it or any of its property before or
by any court or administrative agency which, if adversely determined, (A)
would adversely affect the ability of it to perform its obligations under
this Agreement or (B) would call into question or challenge the validity
of this Agreement or the enforceability hereof in accordance with the
terms hereof, nor is the Paying Agent in default with respect to any order
of any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement.
SECTION 7. INDEMNIFICATION. Except for actions expressly required of
the Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have been indemnified by the party requesting such
action in a manner reasonably satisfactory to it against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. In the event Continental requests any amendment to any
Operative Agreement (as defined in the Note Purchase Agreement), the Pass
Through Trustee agrees to pay all reasonable fees and expenses (including,
without limitation, fees and disbursements of counsel) of the Escrow Agent and
the Paying Agent in connection therewith.
SECTION 8. AMENDMENT, ETC. Upon request of the Pass Through Trustee
and approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, PROVIDED that
upon request of the Pass Through Trustee and without any consent of the
Investors, the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:
(1) to correct or supplement any provision in this Agreement
which may be defective or inconsistent with any other provision herein or
to cure any ambiguity or correct any mistake or to modify any other
provision with respect to matters or questions arising under this
Agreement, PROVIDED that any such action shall not materially adversely
affect the interests of the Investors; or
(2) to comply with any requirement of the SEC, applicable law,
rules or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body; or
(3) to evidence and provide for the acceptance of appointment
under this Agreement of a successor Escrow Agent, successor Paying Agent
or successor Pass Through Trustee.
SECTION 9. NOTICES. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (a) in the case of the Investors,
as their respective addresses shall appear in the Register, (b) in the case of
the Escrow Agent, Wells Fargo Bank Northwest, N.A., 79 South Main Street, Third
Floor, Salt Lake City, UT 84111, Attention: Corporate Trust Services
(Telecopier: (801) 246-5053), (c) in the case of the Pass Through Trustee,
Wilmington Trust Company, 1100 North Market Street, Wilmington, DE 19890,
Attention: Corporate Trust Administration (Telecopier: (302) 651-8882) or (d) in
the case of the Paying Agent, Wilmington Trust Company, 1100 North Market
Street, Wilmington, DE 19890, Attention: Corporate Trust Administration
(Telecopier: (302) 651-8882), in each case with a copy to Continental,
Continental Airlines, Inc., 1600 Smith Street, Dept. HQS-FN, Houston, TX 77002,
Attention: Treasurer (Telecopier: (713) 324-2447) (or at such other address as
any such party may specify from time to time in a written notice to the other
parties). On or prior to the execution of this Agreement, the Pass Through
Trustee has delivered to the Escrow Agent a certificate containing specimen
signatures of the representatives of the Pass Through Trustee who are authorized
to give notices and instructions with respect to this Agreement. The Escrow
Agent may conclusively rely on such certificate until the Escrow Agent receives
written notice from the Pass Through Trustee to the contrary.
SECTION 10. TRANSFER. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.06 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.04 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns. Upon the occurrence of the Transfer (as defined
below) contemplated by the Assignment and Assumption Agreement (as defined
below), the Pass Through Trustee shall (without further act) be deemed to have
transferred all of its right, title and interest in and to this Agreement to the
trustee of the Successor Trust (as defined below) and, thereafter, the trustee
of the Successor Trust shall be deemed to be the "Pass Through Trustee"
hereunder with the rights and obligations of the "Pass Through Trustee"
hereunder and each reference herein to "Continental Airlines Pass Through Trust
2001-1C-O" shall be deemed to be a reference to "Continental Airlines Pass
Through Trust 2001-1C-S". The parties hereto hereby acknowledge and consent to
the Transfer contemplated by the Assignment and Assumption Agreement. As used
herein, "TRANSFER" means the transfers of the assets to the Successor Trust
contemplated by the Assignment and Assumption Agreement; "ASSIGNMENT AND
ASSUMPTION AGREEMENT" means the Assignment and Assumption Agreement to be
entered into between the Pass Through Trustee and the trustee of the Successor
Trust, substantially in the form of Exhibit C to the Trust Supplement;
"SUCCESSOR TRUST" means the Continental Airlines Pass Through Trust 2001-1C-S.
SECTION 11. ENTIRE AGREEMENT. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Underwriter and the Pass Through Trustee with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 13. WAIVER OF JURY TRIAL RIGHT. EACH OF THE ESCROW AGENT,
THE PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the
Underwriter and the Pass Through Trustee have caused this Escrow and Paying
Agent Agreement (Class C) to be duly executed as of the day and year first above
written.
WELLS FARGO BANK NORTHWEST, N.A.,
as Escrow Agent
By
-------------------------------
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED,
as Underwriter
By
-------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in
its individual capacity, but
solely as Pass Through Trustee
for and on behalf of Continental
Airlines Pass Through Trust
2001-1C-O
By
-------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Paying Agent
By
-------------------------------
Name:
Title:
EXHIBIT A
CONTINENTAL AIRLINES 2001-1C ESCROW RECEIPT
No. __
This Escrow Receipt evidences a fractional undivided interest in
amounts ("ACCOUNT AMOUNTS") from time to time deposited into a certain paying
agent account (the "PAYING AGENT ACCOUNT") described in the Escrow and Paying
Agent Agreement (Class C) dated as of June 26, 2001 (as amended, modified or
supplemented from time to time, the "ESCROW AND PAYING AGENT AGREEMENT") among
Wells Fargo Bank Northwest, N.A., as Escrow Agent (in such capacity, together
with its successors in such capacity, the "ESCROW AGENT"), Morgan Stanley & Co.
Incorporated, as Underwriter, Wilmington Trust Company, as Pass Through Trustee
(in such capacity, together with its successors in such capacity, the "PASS
THROUGH TRUSTEE") and Wilmington Trust Company, as paying agent (in such
capacity, together with its successors in such capacity, the "PAYING AGENT").
Capitalized terms not defined herein shall have the meanings assigned to them in
the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue of
its acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.
This Escrow Receipt represents a fractional undivided interest in
amounts deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property other than such amounts. This Escrow Receipt evidences the same
percentage interest in the Account Amounts as the Fractional Undivided Interest
in the Pass Through Trust evidenced by the Certificate to which this Escrow
Receipt is affixed.
All payments and distributions made to Receiptholders in respect of
the Escrow Receipt shall be made only from Account Amounts deposited in the
Paying Agent Account. The holder of this Escrow Receipt, by its acceptance of
this Escrow Receipt, agrees that it will look solely to the Account Amounts for
any payment or distribution due to it pursuant to this Escrow Receipt and that
it will not have any recourse to Continental, the Pass Through Trustee, the
Paying Agent or the Escrow Agent, except as expressly provided herein or in the
Pass Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have
any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account, nor shall anything set forth herein, or
contained in the terms of this Escrow Receipt, be construed so as to constitute
the Receiptholders from time to time as partners or members of an association.
This Escrow Receipt may not be assigned or transferred except in
connection with the assignment or transfer of the Certificate to which this
Escrow Receipt is affixed. After payment to the holder hereof of its Escrow
Interest in the Final Distribution, upon the request of the Pass Through
Trustee, the holder hereof will return this Escrow Receipt to the Pass Through
Trustee.
The Paying Agent may treat the person in whose name the Certificate
to which this Escrow Receipt is attached as the owner hereof for all purposes,
and the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt
to be duly executed.
Dated: June 26, 2001
WELLS FARGO BANK NORTHWEST, N.A,
as Escrow Agent
By
-------------------------------
Name:
Title:
EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class C)
Wells Fargo Bank Northwest, N.A.,
as Escrow Agent
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as
of June 26, 2001 (the "Agreement"). We hereby certify to you that the conditions
to the obligations of the undersigned to execute a Participation Agreement
pursuant to the Note Purchase Agreement have been satisfied. Pursuant to Section
1.02(c) of the Agreement, please execute the attached Notice of Purchase
Withdrawal and immediately transmit by facsimile to the Depositary, at (212)
325-8319, Attention: Robert Finney and Mark Verbitsky.
Very truly yours,
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Pass Through
Trustee
By
-------------------------------
Name:
Title:
Dated: ____________, 200_
----------------------------------------------------------------
AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT
Dated as of June 26, 2001
Among
CONTINENTAL AIRLINES, INC.,
WILMINGTON TRUST COMPANY,
as Pass Through Trustee under each of the
Pass Through Trust Agreements
WILMINGTON TRUST COMPANY,
as Subordination Agent
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
as Escrow Agent
and
WILMINGTON TRUST COMPANY,
as Paying Agent
----------------------------------------------------------------
INDEX TO NOTE PURCHASE AGREEMENT
Page
SECTION 1. Financing of New Aircraft..........................................4
SECTION 2. Conditions Precedent..............................................11
SECTION 3. Representations and Warranties....................................12
SECTION 4. Covenants.........................................................16
SECTION 5. Notices...........................................................18
SECTION 6. Expenses..........................................................18
SECTION 7. Further Assurances................................................19
SECTION 8. Miscellaneous.....................................................19
SECTION 9. Governing Law.....................................................20
SCHEDULES
Schedule I New Aircraft and Scheduled Delivery Months
Schedule II Trust Supplements
Schedule III Deposit Agreements
Schedule IV Escrow and Paying Agent Agreements
Schedule V Mandatory Document Terms
Schedule VI Mandatory Economic Terms
ANNEX
Annex A Definitions
EXHIBITS
Exhibit A-1 Form of Leased Aircraft Participation Agreement
Exhibit A-2 Form of Lease
Exhibit A-3 Form of Leased Aircraft Indenture
Exhibit A-4 Form of Aircraft Purchase Agreement Assignment
Exhibit A-5 Form of Leased Aircraft Trust Agreement
Exhibit A-6 Form of Special Indenture
Exhibit B Form of Delivery Notice
Exhibit C-1 Form of Owned Aircraft Participation Agreement
Exhibit C-2 Form of Owned Aircraft Indenture
Exhibit D Form of Special Addition to Participation Agreement
Exhibit E Special Revisions to Section 6.2 of the Participation Agreement
Exhibit F Additional Subordination Provision for Series D Equipment Notes
AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
This AMENDED AND RESTATED NOTE PURCHASE AGREEMENT, dated as of June
26, 2001, among (i)CONTINENTAL AIRLINES, INC., a Delaware corporation (the
"Company"), (ii)WILMINGTON TRUST COMPANY ("WTC"), a Delaware banking
corporation, not in its individual capacity except as otherwise expressly
provided herein, but solely as trustee (in such capacity together with its
successors in such capacity, the "Pass Through Trustee") under each of the four
separate Pass Through Trust Agreements (as defined below), (iii) WILMINGTON
TRUST COMPANY, a Delaware banking corporation, as subordination agent and
trustee (in such capacity together with its successors in such capacity, the
"Subordination Agent") under the Intercreditor Agreement (as defined below),
(iv) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, (formerly known as First
Security Bank, National Association) a national banking association, as Escrow
Agent (in such capacity together with its successors in such capacity, the
"Escrow Agent"), under each of the Escrow and Paying Agent Agreements (as
defined below) and (v) WILMINGTON TRUST COMPANY, a Delaware banking corporation,
as Paying Agent (in such capacity together with its successors in such capacity,
the "Paying Agent") under each of the Escrow and Paying Agent Agreements, which
amends and restates the Note Purchase Agreement, dated as of April 19, 2001,
among certain of the foregoing parties (the "ORIGINAL NOTE PURCHASE AGREEMENT").
W I T N E S S E T H:
WHEREAS, capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in Annex A hereto;
WHEREAS, the Company has obtained commitments from the Manufacturer
pursuant to the Aircraft Purchase Agreements for the delivery of the 31 aircraft
listed in Schedule I hereto (together with any aircraft substituted therefor in
accordance with an Aircraft Purchase Agreement prior to the delivery thereof,
the "ELIGIBLE AIRCRAFT"), and the Company wishes to finance pursuant to this
Agreement a portion of the purchase price of nine of the twelve Boeing 737-824
aircraft, five of the seven Boeing 737-924 Aircraft, six of the ten Boeing
767-424ER aircraft, and one of the two Boeing 777-224ER aircraft included in the
Eligible Aircraft (such aircraft to be financed hereunder, the "NEW AIRCRAFT");
WHEREAS, the Company, the Pass Through Trustee with respect to the
Class A-1 Certificates, Class A-2 Certificates, and Class B Certificates
(collectively, the "PRIOR CERTIFICATES"), the Subordination Agent, the Escrow
Agent under the Escrow and Paying Agreements relating to the Prior Certificates
and the Paying Agent under such Escrow and Paying Agent Agreements entered into
the Original Note Purchase Agreement in connection with the original issuance of
the Prior Certificates;
WHEREAS, the Original Note Purchase Agreement contemplated the
subsequent issuance of the Class C Certificates, which the Company has now
arranged, and in order to provide for the financing of the New Aircraft, as
contemplated by the Original Note Purchase Agreement, the parties hereto wish to
amend and restate the Original Note Purchase Agreement as provided herein;
WHEREAS, pursuant to the Basic Pass Through Trust Agreement and each
of the Trust Supplements set forth in Schedule II hereto, separate grantor
trusts (collectively, the "PASS THROUGH TRUSTS" and, individually, a "PASS
THROUGH TRUST") have been created to facilitate certain of the transactions
contemplated hereby, including, without limitation, the issuance and sale of
pass through certificates pursuant thereto (collectively, the "CERTIFICATES") to
provide for a portion of the financing of the New Aircraft;
WHEREAS, the Company entered into the Underwriting Agreement dated
as of April 4, 2001 (the "PRIOR UNDERWRITING AGREEMENT") with the several
underwriters named therein (the "PRIOR UNDERWRITERS") under which the Company
caused the Pass Through Trustees with respect to the Prior Certificates to issue
and sell the Prior Certificates to the Prior Underwriters, and the Company has
entered into the Underwriting Agreement, dated as of June 12, 2001 (the "CLASS C
UNDERWRITING AGREEMENT" and, together with the Prior Underwriting Agreement, the
"UNDERWRITING AGREEMENTS") with the underwriter named therein (the "CLASS C
UNDERWRITER" and, together with the Prior Underwriters, the "UNDERWRITERS")
which provides that the Company will cause the Pass Through Trustee with respect
to the Class C Certificates to issue and sell the Class C Certificates to the
Class C Underwriter;
WHEREAS, (i) the Escrow Agents and the Depositary have entered into
the Deposit Agreements set forth in Schedule III hereto (the "DEPOSIT
AGREEMENTS") whereby the applicable Escrow Agent agreed to direct the applicable
Underwriters to make certain deposits referred to therein on the applicable
Issuance Date (the "INITIAL DEPOSITS") and to permit the applicable Pass Through
Trustee to make additional deposits from time to time thereafter (the Initial
Deposits together with such additional deposits are collectively referred to as
the "DEPOSITS") and (ii) the applicable Pass Through Trustees, Underwriters,
Paying Agents and Escrow Agents have entered into the Escrow and Paying Agent
Agreements set forth in Schedule IV hereto (the "ESCROW AND PAYING AGENT
AGREEMENTS") whereby, among other things, (a) the applicable Underwriters agreed
to deliver an amount equal to the amount of the applicable Initial Deposits to
the Depositary on behalf of the applicable Escrow Agent and (b) the applicable
Escrow Agent, upon the Depositary receiving such amount, agreed to deliver
escrow receipts to be affixed to each Certificate;
WHEREAS, as required by the Original Note Purchase Agreement and the
Class C Underwriting Agreement, the Company has obtained Rating Agency
Confirmation that the terms of the Class C Certificates will not result in a
withdrawal, suspension or downgrading of the ratings of the Class A-1
Certificates, Class A-2 Certificates or Class B Certificates;
WHEREAS, prior to the financing of each New Aircraft, the Company
will determine whether to enter into a leveraged lease transaction as lessee
with respect to such New Aircraft (a "LEASED AIRCRAFT") or to purchase as owner
such New Aircraft (an "OWNED AIRCRAFT") and which series of Equipment Notes will
be issued with respect to such New Aircraft, and the Company will give to the
Pass Through Trustee a Delivery Notice (as defined below) specifying its
election;
WHEREAS, upon receipt of a Delivery Notice with respect to a New
Aircraft, subject to the terms and conditions of this Agreement, the applicable
Pass Through Trustees will enter into the applicable Financing Agreements
relating to such New Aircraft;
WHEREAS, upon the financing of each New Aircraft, each applicable
Pass Through Trustee will fund its purchase of Equipment Notes with the proceeds
of one or more Deposits withdrawn by the applicable Escrow Agent under the
related Deposit Agreement bearing the same interest rate as the Certificates
issued by such Pass Through Trust; and
WHEREAS, (i) Landesbank Hessen-Thuringen Girozentrale (the
"LIQUIDITY PROVIDER"), has entered into four separate revolving credit
agreements, one each for the benefit of the Certificateholders of each Pass
Through Trust, in each case with the Subordination Agent, as agent for the Pass
Through Trustee on behalf of each such Pass Through Trust (each such revolving
credit agreement with the Liquidity Provider, a "LIQUIDITY FACILITY") and (ii)
the Pass Through Trustee, the Liquidity Provider and the Subordination Agent
have entered into the Intercreditor Agreement, dated as of April 19, 2001, and
an amendment thereto dated the date hereof (the "INTERCREDITOR AGREEMENT");
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. FINANCING OF NEW AIRCRAFT. (a) The Company confirms that
it has entered into the Aircraft Purchase Agreements with the Manufacturer
pursuant to which the Company has agreed to purchase, and the Manufacturer has
agreed to deliver, the Eligible Aircraft in the months specified in Schedule I
hereto, all on and subject to terms and conditions specified in the applicable
Aircraft Purchase Agreement. The Company agrees to finance the New Aircraft in
the manner provided herein, all on and subject to the terms and conditions
hereof and of the relevant Financing Agreements.
(b) In furtherance of the foregoing, the Company agrees to give the
parties hereto, the Depositary and each of the Rating Agencies not less than two
Business Days' prior notice substantially in the form of Exhibit B hereto (a
"DELIVERY NOTICE") of the scheduled delivery date (the "SCHEDULED DELIVERY
DATE") (or, in the case of a substitute Delivery Notice under Section 1(e) or
(f) hereof, one Business Day's prior notice) in respect of each New Aircraft
under the applicable Aircraft Purchase Agreement, which notice shall:
(i) specify whether the Company has elected to treat such New
Aircraft as a Leased Aircraft or an Owned Aircraft;
(ii) specify the Scheduled Delivery Date of such New Aircraft (which
shall be a Business Day before the Cut-off Date and, except as provided in
Section 1(f) hereof, the date (the "FUNDING DATE") on which the financing
therefor in the manner provided herein shall be consummated);
(iii) instruct each Pass Through Trustee being requested to purchase
Equipment Notes pursuant to such Delivery Notice (the "APPLICABLE PASS THROUGH
TRUSTEES") to instruct the relevant Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary with respect to the Equipment Notes to be issued in
connection with the financing of such New Aircraft (except in the case of any
such financing on the Issuance Date);
(iv) instruct each Applicable Pass Through Trustee to enter into the
Participation Agreement included in the Financing Agreements with respect to
such Aircraft in such form and at such a time on or before the Funding Date
specified in such Delivery Notice and to perform its obligations thereunder;
(v) specify the aggregate principal amount of each series of
Equipment Notes, if any, to be issued, and purchased by the Applicable Pass
Through Trustees, in connection with the financing of such New Aircraft
scheduled to be delivered on such Funding Date (which shall in all respects
comply with the Mandatory Economic Terms); and
(vi) if such New Aircraft is to be a Leased Aircraft, certify that
the related Owner Participant (A) is not an Affiliate of the Company and (B)
based on the representations of such Owner Participant, is either (1) a
Qualified Owner Participant or (2) any other person the obligations of which
under the Owner Participant Agreements (as defined in the applicable
Participation Agreement) are guaranteed by a Qualified Owner Participant.
(c) Upon receipt of a Delivery Notice, the Applicable Pass Through
Trustees shall, and shall cause the Subordination Agent to, enter into and
perform their obligations under the Participation Agreement specified in such
Delivery Notice, PROVIDED that such Participation Agreement and the other Lease
Financing Agreements or Owner Financing Agreements to be entered into pursuant
to such Participation Agreement shall be in the forms thereof annexed hereto in
all material respects with such changes therein as shall have been requested by
the related Owner Participant (in the case of Lease Financing Agreements) or the
initial purchasers of the Series D Equipment Notes or Class D pass through
certificates, in any such case agreed to by the Company and, if modified in any
material respect, as to which Rating Agency Confirmation shall have been
obtained from each Rating Agency by the Company (to be delivered by the Company
to the Applicable Pass Through Trustees on or before the relevant Funding Date,
it being understood that if Rating Agency Confirmation shall have been received
with respect to any Financing Agreements and such Financing Agreements are
utilized for subsequent New Aircraft (or Substitute Aircraft) without material
modifications, no additional Rating Agency Confirmation shall be required);
PROVIDED, HOWEVER, that the relevant Financing Agreements as executed and
delivered shall not vary the Mandatory Economic Terms and shall contain the
Mandatory Document Terms. Notwithstanding the foregoing, (i) if The Boeing
Company or General Electric Company, or any of their respective Affiliates, is
the Owner Participant with respect to any Leased Aircraft, the Leased Aircraft
Participation Agreement to be entered into pursuant to the Delivery Notice with
respect to such Leased Aircraft may be modified, if agreed to by the Company,
from the form annexed hereto (A) to add a Section 16 thereto substantially in
the form of Exhibit D hereto and (B) in the case of The Boeing Company or any of
its Affiliates, Section 6.2 may be changed as set forth in Exhibit E hereto, and
such Leased Aircraft Participation Agreement, as so modified, shall be deemed
(1) to be substantially in the form thereof annexed hereto and (2) by virtue of
such modification not to be inconsistent with the Mandatory Document Terms, (ii)
if any Financing Agreement annexed hereto shall not have been reviewed by either
Rating Agency prior to the Issuance Date, then, prior to the use thereof in
connection with the financing of any Aircraft hereunder, the Company shall
obtain from each Rating Agency a confirmation that the use of such Financing
Agreement would not result in (A) a reduction of the rating for any Class of
Certificates below the then current rating for such Class of Certificates or (B)
a withdrawal or suspension of the rating of any Class of Certificates, and (iii)
an Indenture may be modified to the extent required pursuant to Section 4(a)(vi)
of this Agreement. The Company shall pay the reasonable costs and expenses of
the Rating Agencies in connection with obtaining any such Rating Agency
Confirmation. With respect to each New Aircraft, the Company shall cause WTC (or
such other person that meets the eligibility requirements to act as loan trustee
under the Leased Aircraft Indenture, Owned Aircraft Indenture or Special
Indenture) to execute as Loan Trustee the Financing Agreements relating to such
Aircraft to which such Loan Trustee is intended to be a party, and shall
concurrently therewith execute such Financing Agreements to which the Company is
intended to be a party and perform its respective obligations thereunder. Upon
the request of either Rating Agency, the Company shall deliver or cause to be
delivered to each Rating Agency a true and complete copy of each Financing
Agreement relating to the financing of each New Aircraft together with a true
and complete set of the closing documentation (including legal opinions)
delivered to the related Loan Trustee, Subordination Agent and Pass Through
Trustee under the related Participation Agreement.
(d) [Intentionally omitted.]
(e) If after giving any Delivery Notice, there shall be a delay in
the delivery of the Eligible Aircraft referred to therein, or if on the
Scheduled Delivery Date of the Eligible Aircraft the financing thereof in the
manner contemplated hereby shall not be consummated for whatever reason, the
Company shall give the parties hereto prompt notice thereof. Concurrently with
the giving of such notice of postponement or subsequently, the Company shall
give the parties hereto a substitute Delivery Notice specifying the date to
which delivery and related financing of such Eligible Aircraft or of another
Eligible Aircraft of the same type in lieu thereof shall have been re-scheduled
(which shall be a Business Day before the Cut-off Date on which the Escrow
Agents shall be entitled to withdraw one or more Deposits under each of the
applicable Deposit Agreements to enable each Applicable Pass Through Trustee to
fund its purchase of the related Equipment Notes). Upon receipt of any such
notice of postponement, each Applicable Pass Through Trustee shall comply with
its obligations under Section 5.01 of each of the Trust Supplements and
thereafter the financing of such Eligible Aircraft, as specified in such
substitute Delivery Notice, shall take place on the re-scheduled Delivery Date
therefor (all on and subject to the terms and conditions of the relevant
Financing Agreements or other financing agreements in the case of a Special
Structure) unless further postponed as provided herein.
(f) Anything in this Section 1 to the contrary notwithstanding, the
Company shall have the right at any time on or before the Scheduled Delivery
Date of any New Aircraft, and subsequent to its giving a Delivery Notice
therefor, to postpone the Scheduled Delivery Date of such New Aircraft so as to
enable the Company to change its election to treat such New Aircraft as a Leased
Aircraft or an Owned Aircraft by written notice of such postponement to the
other parties hereto. The Company shall subsequently give the parties hereto a
substitute Delivery Notice complying with the provisions of Section 1(b) hereof
and specifying the new Funding Date for such postponed New Aircraft (which shall
be a Business Day occurring before the Cut-off Date and on which the Escrow
Agents shall be entitled to withdraw Deposits under each of the applicable
Deposit Agreements sufficient to enable each Applicable Pass Through Trustee to
fund its purchase of the related Equipment Notes). In addition, the Company
shall have the further right, anything in this Section 1 to the contrary
notwithstanding, to accept delivery of a New Aircraft under the applicable
Aircraft Purchase Agreement on the Delivery Date thereof by utilization of
bridge financing of such New Aircraft and promptly thereafter give the parties
hereto a Delivery Notice specifying a Funding Date not later than 90 days after
the Delivery Date of such New Aircraft and no later than the Cut-off Date and
otherwise complying with the provisions of Section 1(b) hereof. All other terms
and conditions of this Note Purchase Agreement shall apply to the financing of
any such New Aircraft on the re-scheduled Funding Date therefor except (i) the
re-scheduled Funding Date shall be deemed the Delivery Date of such New Aircraft
for all purposes of this Section 1 and (ii) the related Financing Agreements
shall be amended to reflect the original delivery of such New Aircraft to the
Company.
(g) If the Scheduled Delivery Date for any Eligible Aircraft is
delayed (a) more than 30 days beyond the last day of the month set forth
opposite such Eligible Aircraft under the heading "Scheduled Delivery Months" in
Schedule I hereto or (b) beyond September 30, 2002, the Company may identify for
delivery a substitute aircraft therefor meeting the following conditions (a
"SUBSTITUTE AIRCRAFT"): (i) a Substitute Aircraft must be a Boeing 737-800,
737-900, 767-400ER or 777-200ER aircraft manufactured after the date of this
Agreement, (ii) one or more Substitute Aircraft of the same or different types
may be substituted for one or more Eligible Aircraft of the same or different
types so long as after giving effect thereto such substitution does not vary the
Mandatory Economic Terms and (iii) the Company shall be obligated to obtain
Rating Agency Confirmation in respect of the replacement of any Eligible
Aircraft by Substitute Aircraft. Upon the satisfaction of the conditions set
forth above with respect to a Substitute Aircraft, the Eligible Aircraft to be
replaced shall cease to be subject to this Agreement and all rights and
obligations of the parties hereto concerning such Eligible Aircraft shall cease,
and such Substitute Aircraft shall become and thereafter be subject to the terms
and conditions of this Agreement to the same extent as such Eligible Aircraft.
(h) The Company shall have no liability for the failure of the Pass
Through Trustees to purchase Equipment Notes with respect to any New Aircraft or
Substitute Aircraft.
(i) The parties agree that if, in connection with the delivery of a
New Aircraft or Substitute Aircraft, any Owner Participant who is to be a party
to any Lease Financing Agreement shall not be a "Citizen of the United States"
within the meaning of Section 40102(a)(15) of the Act, then the applicable Lease
Financing Agreements shall be modified, consistent with the Mandatory Document
Terms, to require such Owner Participant to enter into a voting trust, voting
powers or similar arrangement satisfactory to the Company that (A) enables such
New Aircraft or Substitute Aircraft to be registered in the United States and
(B) complies with the FAA regulations issued under the Act applicable thereto.
(j) Anything herein to the contrary notwithstanding, the Company
shall not have the right, and shall not be entitled, at any time to request the
issuance of Equipment Notes of any series to any Pass Through Trustee in an
aggregate principal amount in excess of the amount of the Deposits then
available for withdrawal by the Escrow Agent under and in accordance with the
provisions of the related Deposit Agreement.
(k) Notwithstanding the foregoing provisions of this Section 1, and
anything herein to the contrary notwithstanding, upon not less than 30 days'
prior written notice to the parties hereto, the Company shall have the right,
within 120 days after the date any Aircraft has been financed as an Owned
Aircraft, to sell such Owned Aircraft and transfer title to such Owned Aircraft
to an Owner Trustee for the benefit of an Owner Participant (which shall be a
Qualified Owner Participant) in a transaction in which such Owner Trustee
assumes all of the obligations of the Company under the relevant Equipment Notes
and the Owned Aircraft Indenture on a non-recourse basis (with the Company being
released from such obligations, except to the extent accrued prior thereto),
leases the Aircraft to the Company and assigns such lease to the Loan Trustee
pursuant to an amended and restated trust indenture (a "SALE/LEASEBACK
TRANSACTION"). In connection with such Sale/Leaseback Transaction, the Company
and the relevant Note Holders will execute and deliver appropriate documentation
permitting the Owner Trustee to assume the obligations of the Company under the
relevant Equipment Notes and the Owned Aircraft Indenture on a non-recourse
basis, releasing the Company from all obligations in respect of such Equipment
Notes and the Owned Aircraft Indenture (except to the extent accrued prior
thereto), and take all other actions as are reasonably necessary to permit such
assumption by the Owner Trustee. In connection with any such Sale/Leaseback
Transaction, the parties hereto agree that (a) the documents to be utilized
shall be (i) an amended and restated participation agreement amending and
restating the applicable Owned Aircraft Participation Agreement, to be
substantially in the form of the Leased Aircraft Participation Agreement, among
the Company, the relevant Note Holders, the Owner Participant, the Owner
Trustee, and the Loan Trustee, with (x) such changes to such form to reflect the
assumption of such Equipment Notes by the Owner Trustee on a non-recourse basis
rather than the issuance thereof by the Owner Trustee and original purchase
thereof by the Note Holders and also to reflect the release of the Company from
all obligations under such Equipment Notes and the Owned Aircraft Indenture
(except to the extent accrued prior thereto) and (y) such other changes as may
be permitted under Section 1(c) hereof applicable to a Leased Aircraft
Participation Agreement in connection with a leveraged lease transaction, (ii) a
Lease, with such changes as may be permitted under Section 1(c) hereof
applicable to the Lease in connection with a leveraged lease transaction, (iii)
an amended and restated trust indenture amending and restating the relevant
Owned Aircraft Indenture, to be substantially in the form of a Leased Aircraft
Indenture, between the Owner Trustee and the Loan Trustee, with (x) such changes
to such form to reflect the assumption of all of the obligations of the Owner
Trustee under the relevant Equipment Notes and the relevant Owned Aircraft
Indenture on a non-recourse basis and the release of the obligations of the
Company under such Equipment Notes and the relevant Owned Aircraft Indenture and
(y) such other changes as may be permitted under Section 1(c) hereof applicable
to a Leased Aircraft Indenture in connection with a leveraged lease transaction,
(iv) a purchase agreement assignment, to be substantially in the form of the
Aircraft Purchase Agreement Assignment between the Company and the Owner Trustee
with (x) such changes to such form to reflect the prior purchase of the Aircraft
by the Company from the Manufacturer, and (y) such other changes as may be
permitted under Section 1(c) hereof applicable to an Aircraft Purchase Agreement
Assignment in connection with a leveraged lease transaction, and (v) a Trust
Agreement, between the Owner Trustee and the Owner Participant with such changes
as may be permitted in accordance with the provisions of Section 1(c) hereof
applicable to a Trust Agreement in connection with a leveraged lease transaction
and (b) the relevant Equipment Notes shall be delivered to the Loan Trustee for
cancellation in exchange for new equipment notes to be issued to the Note
Holders by the Owner Trustee upon the authentication thereof by the Loan
Trustee, such new equipment notes to be substantially in the form contained in
Section 2.01 of the Leased Aircraft Indenture. Such new equipment notes will
have the same payment terms except that in the event that the Company enters
into a Sale/Leaseback Transaction prior to the Delivery Period Termination Date,
the Company shall have the right to reoptimize the new equipment notes to be
issued to the Note Holders by the Owner Trustee in compliance with the Mandatory
Economic Terms and subject to obtaining Rating Agency Confirmation with respect
thereto.
Notwithstanding the foregoing, the Company shall not have the right
to enter into a Sale/Leaseback Transaction unless the Company (i) causes to be
delivered to the Loan Trustee an opinion of counsel (both counsel and opinion
satisfactory to the Loan Trustee) to the effect that the Pass Through Trusts
will not be subject to Federal income tax as a result of such Sale/Leaseback
Transaction, (ii) furnishes to the Loan Trustee either (A) an opinion of counsel
to the effect that the Certificateholders will not recognize gain or loss for
Federal income tax purposes as a result of such Sale/Leaseback Transaction and
will be subject to Federal income tax on the same amount, in the same manner and
at the same time as would have been the case if such Sale/Leaseback Transaction
had not occurred or (B) both an opinion of counsel (both counsel and opinion
satisfactory to the Loan Trustee) that the Certificateholders should not
recognize gain or loss for Federal income tax purposes in connection with such
Sale/Leaseback Transaction and should be subject to Federal income tax on the
same amount, in the same manner and at the same time as would have been the case
if such Sale/Leaseback Transaction had not occurred and an indemnification in
favor of the holders of the Certificates in form and substance reasonably
satisfactory to the Loan Trustee and (iii) obtains a Rating Agency Confirmation
with respect thereto. In addition, the Company agrees to otherwise comply with
the provisions of Sections 1(c) and 2 hereof in connection with any
Sale/Leaseback Transaction.
SECTION 2. CONDITIONS PRECEDENT. The obligation of the Pass Through
Trustees to enter into, and to cause the Subordination Agent to enter into, any
Participation Agreement as directed pursuant to a Delivery Notice and to perform
its obligations thereunder is subject to satisfaction of the following
conditions:
(a) no Triggering Event shall have occurred;
(b) the Company shall have delivered a certificate to each such Pass
Through Trustee and the Liquidity Provider stating that (i) such Participation
Agreement and the other Financing Agreements to be entered into pursuant to such
Participation Agreement do not vary the Mandatory Economic Terms and contain the
Mandatory Document Terms, and (ii) any substantive modification of such
Financing Agreements from the forms of Financing Agreements attached to this
Agreement do not materially and adversely affect the Certificateholders, and
such certification shall be true and correct; and
(c) upon purchase hereunder of the Series A-1, Series A-2 or Series
B Equipment Notes relating to any New Aircraft, the Series C Equipment Notes
relating to such New Aircraft shall be concurrently purchased.
Anything herein to the contrary notwithstanding, the obligation of
each Pass Through Trustee to purchase Equipment Notes shall terminate on the
Cut-off Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES. (a) The Company
represents and warrants that:
(i) the Company is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and is a
"citizen of the United States" as defined in Section 40102(a)(15) of
the Act, and has the full corporate power, authority and legal right
under the laws of the State of Delaware to execute and deliver this
Agreement and each Financing Agreement to which it will be a party
and to carry out the obligations of the Company under this Agreement
and each Financing Agreement to which it will be a party;
(ii) the execution and delivery by the Company of this
Agreement and the performance by the Company of its obligations
under this Agreement have been duly authorized by the Company and
will not violate its Certificate of Incorporation or by-laws or the
provisions of any indenture, mortgage, contract or other agreement
to which it is a party or by which it is bound; and
(iii) this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against it in accordance with
its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at law or
in equity.
(b) WTC represents and warrants that:
(i) WTC is duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and is a "citizen
of the United States" as defined in Section 40102(a)(15) of the Act,
and has the full corporate power, authority and legal right under
the laws of the State of Delaware and the United States pertaining
to its banking, trust and fiduciary powers to execute and deliver
this Agreement and each Financing Agreement to which it will be a
party and to carry out the obligations of WTC, in its capacity as
Subordination Agent, Pass Through Trustee or Paying Agent, as the
case may be, under this Agreement and each Financing Agreement to
which it will be a party;
(ii) the execution and delivery by WTC, in its capacity as
Subordination Agent, Pass Through Trustee or Paying Agent, as the
case may be, of this Agreement and the performance by WTC, in its
capacity as Subordination Agent, Pass Through Trustee or Paying
Agent, as the case may be, of its obligations under this Agreement
have been duly authorized by WTC, in its capacity as Subordination
Agent, Pass Through Trustee or Paying Agent, as the case may be, and
will not violate its articles of association or by-laws or the
provisions of any indenture, mortgage, contract or other agreement
to which it is a party or by which it is bound; and
(iii) this Agreement constitutes the legal, valid and binding
obligations of WTC, in its capacity as Subordination Agent, Pass
Through Trustee or Paying Agent, as the case may be, enforceable
against it in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether considered in
a proceeding at law or in equity.
(c) The Pass Through Trustee hereby confirms to each of the other
parties hereto that its representations and warranties set forth in Section 7.15
of the Basic Pass Through Trust Agreement and Section 5.04 of each Trust
Supplement are true and correct as of the date hereof.
(d) The Subordination Agent represents and warrants that:
(i) the Subordination Agent is duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware, and has the full corporate power, authority and legal
right under the laws of the State of Delaware and the United States
pertaining to its banking, trust and fiduciary powers to execute and
deliver this Agreement and each Financing Agreement to which it is
or will be a party and to perform its obligations under this
Agreement and each Financing Agreement to which it is or will be a
party;
(ii) this Agreement has been duly authorized, executed and
delivered by the Subordination Agent; this Agreement constitutes the
legal, valid and binding obligations of the Subordination Agent
enforceable against it in accordance with its terms, except as the
same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(iii) none of the execution, delivery and performance by the
Subordination Agent of this Agreement contravenes any law, rule or
regulation of the State of Delaware or any United States
governmental authority or agency regulating the Subordination
Agent's banking, trust or fiduciary powers or any judgment or order
applicable to or binding on the Subordination Agent and do not
contravene the Subordination Agent's articles of association or
by-laws or result in any breach of, or constitute a default under,
any agreement or instrument to which the Subordination Agent is a
party or by which it or any of its properties may be bound;
(iv) neither the execution and delivery by the Subordination
Agent of this Agreement nor the consummation by the Subordination
Agent of any of the transactions contemplated hereby requires the
consent or approval of, the giving of notice to, the registration
with, or the taking of any other action with respect to, any
Delaware governmental authority or agency or any federal
governmental authority or agency regulating the Subordination
Agent's banking, trust or fiduciary powers;
(v) there are no Taxes payable by the Subordination Agent
imposed by the State of Delaware or any political subdivision or
taxing authority thereof in connection with the execution, delivery
and performance by the Subordination Agent of this Agreement (other
than franchise or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for services
rendered in connection with the transactions contemplated by the
Intercreditor Agreement or any of the Liquidity Facilities), and
there are no Taxes payable by the Subordination Agent imposed by the
State of Delaware or any political subdivision thereof in connection
with the acquisition, possession or ownership by the Subordination
Agent of any of the Equipment Notes (other than franchise or other
taxes based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of
the Liquidity Facilities); and
(vi) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability of
the Subordination Agent to perform its obligations under this
Agreement.
(e) The Escrow Agent represents and warrants that:
(i) the Escrow Agent is a national banking association duly
incorporated, validly existing and in good standing under the laws
of the United States and has the full corporate power, authority and
legal right under the laws of the United States pertaining to its
banking, trust and fiduciary powers to execute and deliver this
Agreement, each Deposit Agreement and each Escrow and Paying Agent
Agreement (collectively, the "ESCROW AGENT AGREEMENTS") and to carry
out the obligations of the Escrow Agent under each of the Escrow
Agent Agreements;
(ii) the execution and delivery by the Escrow Agent of each of
the Escrow Agent Agreements and the performance by the Escrow Agent
of its obligations hereunder and thereunder have been duly
authorized by the Escrow Agent and will not violate its articles of
association or by-laws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it is
bound; and
(iii) each of the Escrow Agent Agreements constitutes the
legal, valid and binding obligations of the Escrow Agent enforceable
against it in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether considered in
a proceeding at law or in equity.
(f) The Paying Agent represents and warrants that:
(i) the Paying Agent is duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has
the full corporate power, authority and legal right under the laws
of the United States pertaining to its banking, trust and fiduciary
powers to execute and deliver this Agreement and the Escrow and
Paying Agent Agreement (collectively, the "PAYING AGENT AGREEMENTS")
and to carry out the obligations of the Paying Agent under each of
the Paying Agent Agreements;
(ii) the execution and delivery by the Paying Agent of each of
the Paying Agent Agreements and the performance by the Paying Agent
of its obligations hereunder and thereunder have been duly
authorized by the Paying Agent and will not violate its articles of
association or by-laws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it is
bound; and
(iii) each of the Paying Agent Agreements constitutes the
legal, valid and binding obligations of the Paying Agent enforceable
against it in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether considered in
a proceeding at law or in equity.
SECTION 4. COVENANTS. (a) The Company covenants with each of the
other parties hereto that:
(i) [Intentionally omitted];
(ii) subject to Section 4(a)(iv) of this Agreement, the Company
shall at all times maintain its corporate existence and shall not wind up,
liquidate or dissolve or take any action, or fail to take any action, that would
have the effect of any of the foregoing;
(iii) the Company shall at all times remain a U.S. Air Carrier (as
defined in the Financing Agreements) and shall at all times be otherwise
certificated and registered to the extent necessary to entitle (A) in the case
of Leased Aircraft, the Owner Trustee (and the Loan Trustee as assignee of the
Owner Trustee's rights under each Lease) to the rights afforded to lessors of
aircraft equipment under Section 1110 and (B) in the case of Owned Aircraft, the
Loan Trustee to the rights afforded to secured parties of aircraft equipment
under Section 1110;
(iv) Section 13.2.1 of each Lease is hereby incorporated by
reference herein;
(v) the Company agrees to provide written notice to each of the
parties hereto of the occurrence of the Cut-off Date no later than one Business
Day after the date thereof; such notice to refer specifically to the Pass
Through Trustee's obligation to assign, transfer and deliver all of its right,
title and interest to the Trust Property (as defined in each Pass Through Trust
Agreement) to the trustee of the Related Trust (as defined in each Pass Through
Trust Agreement) in accordance with Section 7.01 of each of the Trust
Supplements; and
(vi) the Company shall not issue Series D Equipment Notes pursuant
to any Indenture, unless it shall have obtained written confirmation from each
Rating Agency that the issuance of such Series D Equipment Notes will 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. If Series D Equipment Notes are
initially issued to other than the pass through trustee for the Class D
Certificates, the Company will cause (i) such Series D Equipment Notes to be
subject to the provisions of the Intercreditor Agreement that allow the
"Controlling Party" (as defined in the Intercreditor Agreement), during the
continuance of an "Indenture Default" (as defined in the Intercreditor
Agreement), to direct the Loan Trustee in taking action under the applicable
Indenture and (ii) the Indenture under which such Series D Equipment Notes are
issued to include the provisions set forth in Exhibit F to this Agreement.
(b) WTC, in its individual capacity, covenants with each of the
other parties to this Agreement that it will, immediately upon obtaining
knowledge of any facts that would cast doubt upon its continuing status as a
"citizen of the United States" as defined in Section 40102(a)(15) of the Act and
promptly upon public disclosure of negotiations in respect of any transaction
which would or might adversely affect such status, notify in writing all parties
hereto of all relevant matters in connection therewith. Upon WTC giving any such
notice, WTC shall, subject to Section 8.02 of any Indenture then entered into,
resign as Loan Trustee in respect of such Indenture.
SECTION 5. NOTICES. Unless otherwise specifically provided herein,
all notices required or permitted by the terms of this Agreement shall be in
English and in writing, and any such notice shall become effective upon being
delivered personally or, if promptly confirmed by mail, when dispatched by
facsimile or other written telecommunication, addressed to such party hereto at
its address or facsimile number set forth below the signature of such party at
the foot of this Agreement.
SECTION 6. EXPENSES. (a) The Company agrees to pay to the
Subordination Agent when due an amount or amounts equal to the fees payable to
the Liquidity Provider under Section 2.03 of each Liquidity Facility and the
related Fee Letter (as defined in the Intercreditor Agreement) multiplied by a
fraction the numerator of which shall be the then outstanding aggregate amount
of the Deposits under the Deposit Agreements and the denominator of which shall
be the sum of (x) the then outstanding aggregate principal amount of the Series
A-1 Equipment Notes, Series A-2 Equipment Notes, Series B Equipment Notes and
Series C Equipment Notes issued under all of the Indentures and (y) the then
outstanding aggregate amount of the Deposits under the Deposit Agreements.
(b) So long as no Equipment Notes have been issued in respect of any
Aircraft, the Company agrees to pay (i) to the Subordination Agent when due (A)
the amount equal to interest on any Downgrade Advance (other than any Applied
Downgrade Advance) payable under Section 3.07 of each Liquidity Facility minus
Investment Earnings while such Downgrade Advance shall be outstanding, (B) the
amount equal to interest on any Non-Extension Advance (other than any Applied
Non-Extension Advance) payable under Section 3.07 of each Liquidity Facility
minus Investment Earnings while such Non-Extension Advance shall be outstanding
and (C) any other amounts owed to the Liquidity Provider by the Subordination
Agent as borrower under each Liquidity Facility (other than amounts due as
repayment of advances thereunder or as interest on such advances, except to the
extent payable pursuant to clause (A) or (B)), (ii) all compensation and
reimbursement of expenses, disbursements and advances payable by the Company
under the Pass Through Trust Agreements, (iii) all compensation and
reimbursement of expenses and disbursements payable to the Subordination Agent
under the Intercreditor Agreement except with respect to any income or franchise
taxes incurred by the Subordination Agent in connection with the transactions
contemplated by the Intercreditor Agreement and (iv) in the event the Company
requests any amendment to any Operative Agreement, all reasonable fees and
expenses (including, without limitation, fees and disbursements of counsel) of
the Escrow Agent and/or the Paying Agent in connection therewith. For purposes
of this Section 6(b), the terms "Applied Downgrade Advance", "Applied
Non-Extension Advance", "Downgrade Advance", "Investment Earnings" and
"Non-Extension Advance" shall have the meanings specified in each Liquidity
Facility.
SECTION 7. FURTHER ASSURANCES. Each party hereto shall duly execute,
acknowledge and deliver, or shall cause to be executed, acknowledged and
delivered, all such further agreements, instruments, certificates or documents,
and shall do and cause to be done such further acts and things, in any case, as
any other party hereto shall reasonably request in connection with its
administration of, or to carry out more effectually the purposes of, or to
better assure and confirm unto it the rights and benefits to be provided under,
this Agreement.
SECTION 8. MISCELLANEOUS. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Company,
the Subordination Agent, the Escrow Agent, the Paying Agent and the Pass Through
Trustee, and the Company's, the Subordination Agent's, the Escrow Agent's, the
Paying Agent's and the Pass Through Trustee's obligations under any and all
thereof, shall survive the expiration or other termination of this Agreement and
the other agreements referred to herein.
(b) This Agreement may be executed in any number of counterparts
(and each of the parties hereto shall not be required to execute the same
counterpart). Each counterpart of this Agreement, including a signature page
executed by each of the parties hereto, shall be an original counterpart of this
Agreement, but all of such counterparts together shall constitute one
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought. The index
preceding this Agreement and the headings of the various Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions hereof. The terms of this
Agreement shall be binding upon, and shall inure to the benefit of, the Company
and its successors and permitted assigns, the Pass Through Trustee and its
successors as Pass Through Trustee (and any additional trustee appointed) under
any of the Pass Through Trust Agreements, the Escrow Agent and its successors as
Escrow Agent under the Escrow and Paying Agent Agreements, the Paying Agent and
its successors as Paying Agent under the Escrow and Paying Agent Agreement and
the Subordination Agent and its successors as Subordination Agent under the
Intercreditor Agreement.
(c) This Agreement is not intended to, and shall not, provide any
person not a party hereto (other than the Underwriters and each of the
beneficiaries of Section 6 hereof) with any rights of any nature whatsoever
against any of the parties hereto, and no person not a party hereto (other than
the Underwriters and each of the beneficiaries of Section 6 hereof) shall have
any right, power or privilege in respect of, or have any benefit or interest
arising out of, this Agreement.
SECTION 9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THIS AGREEMENT
IS BEING DELIVERED IN THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
CONTINENTAL AIRLINES, INC.
By
---------------------------------
Name:
Title:
Address: 1600 Smith Street
Dept. HQS-FN
Houston, TX 77002
Attention: Treasurer
Facsimile: (713) 324-2447
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as otherwise provided herein,
but solely as Pass Through Trustee
By
---------------------------------
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Facsimile: (302) 651-8882
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as otherwise provided herein,
but solely as Subordination Agent
By
---------------------------------
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Facsimile: (302) 651-8882
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
as Escrow Agent
By
---------------------------------
Name:
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust
Department, 3rd Floor
Facsimile: (801) 246-5053
WILMINGTON TRUST COMPANY,
as Paying Agent
By
---------------------------------
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Facsimile: (302) 651-8882
SCHEDULE I to
NOTE PURCHASE AGREEMENT
ELIGIBLE AIRCRAFT AND SCHEDULED DELIVERY MONTHS
Expected
New Aircraft Registration Manufacturer's Scheduled
TYPE NUMBER SERIAL NUMBER DELIVERY MONTH
- ----------------- ----------------- ----------------- ----------------
Boeing 737-824 N76269 31588 Oct 2001
Boeing 737-824 N73270 31632 Oct 2001
Boeing 737-824 N35271 31589 Nov 2001
Boeing 737-824 N36272 31590 Nov 2001
Boeing 737-824 N37273 31591 Dec 2001
Boeing 737-824 N37274 31592 Jan 2002
Boeing 737-824 N73275 31593 Feb 2002
Boeing 737-824 N73276 31594 Feb 2002
Boeing 737-824 N37277 31595 Mar 2002
Boeing 737-824 N73278 31596 June 2002
Boeing 737-824 N79279 31597 June 2002
Boeing 737-824 N36280 31598 June 2002
Boeing 737-924 N37408 30125 Oct 2001
Boeing 737-924 N37409 30126 Nov 2001
Boeing 737-924 N75410 30127 Dec 2001
Boeing 737-924 N71411 30128 Jan 2002
Boeing 737-924 N31412 30129 Mar 2002
Boeing 737-924 N37413 30130 May 2002
Boeing 737-924 N30414 30131 June 2002
Boeing 767-424ER N66057 29452 Jan 2002
Boeing 767-424ER N67058 29453 Jan 2002
Boeing 767-424ER N69059 29454 Feb 2002
Boeing 767-424ER N78060 29455 Feb 2002
Boeing 767-424ER N68061 29456 Mar 2002
Boeing 767-424ER N76062 29457 Mar 2002
Boeing 767-424ER N69063 29458 April 2002
Boeing 767-424ER N76064 29459 April 2002
Boeing 767-424ER N76065 29460 May 2002
Boeing 767-424ER N77066 29461 May 2002
Boeing 777-224ER N78017 31679 Mar 2002
Boeing 777-224ER N37018 31680 April 2002
SCHEDULE II to
NOTE PURCHASE AGREEMENT
TRUST SUPPLEMENTS
Trust Supplement dated as of the Prior Issuance Date between the Company and the
Pass Through Trustee in respect of Continental Airlines Pass Through Trust,
Series 2001-1A-1-O.
Trust Supplement dated as of the Prior Issuance Date between the Company and the
Pass Through Trustee in respect of Continental Airlines Pass Through Trust,
Series 2001-1A-2-O.
Trust Supplement dated as of the Prior Issuance Date between the Company and the
Pass Through Trustee in respect of Continental Airlines Pass Through Trust,
Series 2001-1B-O.
Trust Supplement dated as of the Class C Issuance Date between the Company and
the Pass Through Trustee in respect of Continental Airlines Pass Through Trust,
Series 2001-1C-O.
SCHEDULE III to
NOTE PURCHASE AGREEMENT
DEPOSIT AGREEMENTS
Deposit Agreement (Class A-1) dated as of the Prior Issuance Date between the
Depositary and the Escrow Agent.
Deposit Agreement (Class A-2) dated as of the Prior Issuance Date between the
Depositary and the Escrow Agent.
Deposit Agreement (Class B) dated as of the Prior Issuance Date between the
Depositary and the Escrow Agent.
Deposit Agreement (Class C) dated as of the Class C Issuance Date between the
Depositary and the Escrow Agent.
SCHEDULE IV to
NOTE PURCHASE AGREEMENT
ESCROW AND PAYING AGENT AGREEMENTS
Escrow and Paying Agent Agreement (Class A-1) dated as of the Prior Issuance
Date among the Escrow Agent, the Prior Underwriters, the Pass Through Trustee
and the Paying Agent.
Escrow and Paying Agent Agreement (Class A-2) dated as of the Prior Issuance
Date among the Escrow Agent, the Prior Underwriters, the Pass Through Trustee
and the Paying Agent.
Escrow and Paying Agent Agreement (Class B) dated as of the Prior Issuance Date
among the Escrow Agent, the Prior Underwriters, the Pass Through Trustee and the
Paying Agent.
Escrow and Paying Agent Agreement (Class C) dated as of the Class C Issuance
Date among the Escrow Agent, the Class C Underwriter, the Pass Through Trustee
and the Paying Agent.
SCHEDULE V TO
NOTE PURCHASE AGREEMENT
MANDATORY DOCUMENT TERMS
The terms "Trust Indenture Form," "Lease Form" and "Participation Agreement
Form" shall have the respective meanings specified in Schedule VI to the Note
Purchase Agreement.
1. May not modify in any material adverse respect the Granting Clause of the
Trust Indenture Form so as to deprive the Note Holders of a first priority
security interest in and mortgage lien on the Aircraft and the Lease or to
eliminate any of the obligations secured thereby or otherwise modify in any
material adverse respect as regards the interests of the Note Holders, the
Subordination Agent, the Liquidity Providers or the Mortgagee the
provisions of Article II or III or Section 4.02, 4.03, 4.04, 5.02, 5.06,
9.01(b), 10.04, 10.11 or 10.12 of the Trust Indenture Form.
2. May not modify in any material adverse respect as regards the interests of
the Note Holders, the Subordination Agent, the Liquidity Providers or the
Mortgagee the provisions of Section 3.2.1(e), 3.3(c), 4.7, the final
sentence of 7.1.1, 10.3.1(d)(ii), 13.3, 16, 18.3 or 18.7(a) of the Lease
Form or otherwise modify the terms of the Lease Form so as to deprive the
Mortgagee of rights expressly granted to the "Mortgagee" therein.
3. May not modify in any material adverse respect as regards the interests of
the Note Holders, the Subordination Agent, the Liquidity Providers or the
Mortgagee the provisions of Section 5.1.9, 5.1.10, 5.1.11, 5.1.12, 7.5, 12,
15.8(a) or 15.9 of the Participation Agreement Form or of the provisions of
Section 5.1.2(xxiii) or 10.1.1(a)(iv) of the Participation Agreement Form
so as to eliminate the requirement to deliver to the Loan Participant or
the Mortgagee, as the case may be, the legal opinions to be provided to
such Persons thereunder (recognizing that the lawyers rendering such
opinions may be changed) or of the provisions of Section 7.6.11(a)(ii) of
the Participation Agreement Form as regards the rights of the Mortgagee
thereunder or otherwise modify the terms of the Participation Agreement
Form to deprive the Trustees, the Subordination Agent, the Liquidity
Providers or the Mortgagee of any indemnity or right of reimbursement in
its favor for Expenses or Taxes.
4. May not modify, in any material adverse respect as regards the interests of
the Note Holders, the Subordination Agent, the Liquidity Providers or the
Mortgagee, the definition of "Make Whole Amount" in Annex A to the
Participation Agreement Form.
Notwithstanding the foregoing, any such Mandatory Document Term may be
modified to correct or supplement any such provision which may be defective
or to cure any ambiguity or correct any mistake, PROVIDED that any such
action shall not materially adversely affect the interests of the Note
Holders, the Subordination Agent, the Liquidity Providers, the Mortgagee or
the Certificateholders.
SCHEDULE VI TO
NOTE PURCHASE AGREEMENT
MANDATORY ECONOMIC TERMS
EQUIPMENT NOTES
Obligor: Continental or an Owner Trust
Maximum Principal Amount:
The aggregate principal amount of all the Equipment Notes issued with respect to
an Aircraft shall not exceed the amounts set forth in the following table:
MAXIMUM
PRINCIPAL
MANUFACTURER'S AMOUNT OF
SERIAL EQUIPMENT
AIRCRAFT TYPE NUMBER NOTES
- ------------- ------ -----
Boeing 737-824 31588 $31,772,000
Boeing 737-824 31632 31,772,000
Boeing 737-824 31589 31,828,333
Boeing 737-824 31590 31,828,333
Boeing 737-824 31591 31,886,833
Boeing 737-824 31592 32,051,500
Boeing 737-824 31593 32,107,833
Boeing 737-824 31594 32,107,833
Boeing 737-824 31595 32,164,167
Boeing 737-824 31596 32,402,500
Boeing 737-824 31597 32,402,500
Boeing 737-824 31598 32,402,500
Boeing 737-924 30125 32,226,133
Boeing 737-924 30126 32,283,733
Boeing 737-924 30127 32,339,200
Boeing 737-924 30128 32,473,600
Boeing 737-924 30129 32,608,000
Boeing 737-924 30130 32,748,800
Boeing 737-924 30131 32,812,800
Boeing 767-424ER 29452 63,119,700
Boeing 767-424ER 29453 63,119,700
MAXIMUM
PRINCIPAL
MANUFACTURER'S AMOUNT OF
SERIAL EQUIPMENT
AIRCRAFT TYPE NUMBER NOTES
- ------------- ------ -----
Boeing 767-424ER 29454 63,252,000
Boeing 767-424ER 29455 63,252,000
Boeing 767-424ER 29456 63,384,300
Boeing 767-424ER 29457 63,384,300
Boeing 767-424ER 29458 63,516,600
Boeing 767-424ER 29459 63,516,600
Boeing 767-424ER 29460 63,642,600
Boeing 767-424ER 29461 63,642,600
Boeing 777-224ER 31679 90,059,667
Boeing 777-224ER 31680 90,438,883
The original aggregate principal amount of all Equipment Notes (other than
Series D Equipment Notes, if any) for all Aircraft shall not exceed the
aggregate face amount of all Certificates originally issued on the Issuance
Dates. The original aggregate principal amount of all Equipment Notes (other
than Series D Equipment Notes, if any) shall not exceed the original aggregate
face amount of all Certificates of the related Class originally issued on the
Issuance Dates.
The Loan to Aircraft Value for each series of Equipment Notes issued in respect
of each Aircraft computed on the date of issuance thereof (with (i) the
principal amount of the series of Equipment Notes that rank equally or senior
aggregated for purposes of the calculation and (ii) the value for such Aircraft
for these purposes equal to the value (the "ASSUMED APPRAISED VALUE") for such
Aircraft set forth in the Prospectus Supplement under "Description of the
Aircraft and the Appraisals--The Appraisals" in the column "Appraised Value")
and thereafter based on such value after giving effect to the Depreciation
Assumption (as defined in the Prospectus Supplement in "Description of the
Equipment Notes--Loan to Value Ratios of Equipment Notes")) will not exceed as
of the issuance date of such Equipment Notes and any December 15 Regular
Distribution Date thereafter (assuming no default in the payment of the
Equipment Notes and after giving effect to scheduled payments) the Loan to
Aircraft Value for such series of Equipment Notes for such Aircraft set forth in
the applicable table in Appendix 1 to this Schedule (with the maximum at
issuance the same as the maximum at December 15, 2002).
As of the Delivery Period Termination Date and each December 15 Regular
Distribution Date thereafter, the Loan to Aircraft Value for each Class of
Certificates (computed (i) after aggregating the principal amount of the class
of Certificates that rank equally or senior and (ii) as of any such date on the
basis of the Assumed Appraised Value of all Aircraft that have been financed
pursuant to the Note Purchase Agreement and the Depreciation Assumption)will not
exceed (assuming no default in the payment of the Equipment Notes and after
giving effect to scheduled payments) the percentages set forth in the following
table for the applicable date:
CLASS A-1 CLASS A-2 CLASS B CLASS C
DATE CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
- --------------------------------------------------- ------------ ------------ ------------ ------------
December 15, 2002.................................. 40.1% 40.1% 53.0% 62.0%
December 15, 2003.................................. 39.2% 39.2% 52.1% 60.7%
December 15, 2004.................................. 38.4% 38.4% 51.0% 59.5%
December 15, 2005.................................. 37.8% 37.8% 50.2% 58.6%
December 15, 2006.................................. 37.4% 37.4% 49.7% 57.9%
December 15, 2007.................................. 36.9% 36.9% 49.1% 57.3%
December 15, 2008.................................. 36.7% 36.7% 48.8% 56.9%
December 15, 2009.................................. 36.4% 36.4% 48.4% 56.4%
December 15, 2010.................................. 35.9% 35.9% 47.8% 55.7%
December 15, 2011 ................................. 35.3% 35.3% 47.0% N/A
December 15, 2012.................................. 35.3% 35.3% 46.1% N/A
December 15, 2013.................................. 36.9% 36.9% 45.0% N/A
December 15, 2014.................................. 38.6% 38.6% 43.7% N/A
December 15, 2015.................................. 39.4% 39.4% 42.1% N/A
December 15, 2016.................................. 37.5% 37.5% N/A N/A
December 15, 2017.................................. 34.6% 34.6% N/A N/A
December 15, 2018.................................. 33.0% 33.0% N/A N/A
December 15, 2019.................................. 31.1% 31.1% N/A N/A
December 15, 2020.................................. 23.5% 23.5% N/A N/A
- -------------
If the Delivery Period Termination Date is not a Regular Distribution Date, the
LTV applicable to the Delivery Period Termination Date shall be the LTV for the
next preceding Regular Distribution Date, unless the Delivery Period Termination
Date is before December 15, 2002, in which case the LTV for December 15, 2002,
shall apply.
Initial Average Life (in years) for any Aircraft:
Series A-1: not more than 14.0 years from the Prior
Issuance Date
Series B: not more than 11.2 years from the Prior
Issuance Date
Series C: not more than 6.3 years from the Class C
Issuance Date
AVERAGE LIFE (IN YEARS)
As of the Delivery Period Termination Date, the average life of the Class
A-1 Certificates and the Class B Certificates shall not be more than 11.9
years and 8.4 years, respectively, from the Prior Issuance Date and the
average life of the Class C Certificates shall not be more than 5.3 years
from the Class C Issuance Date(computed without regard to the acceleration
of any Equipment Notes and after giving effect to any special distribution
on the Certificates thereafter required in respect of unused Deposits).
FINAL MATURITY DATE
There shall be a payment of principal scheduled on at least one Series A-1
Equipment Note on June 15, 2021, and no Series A-1 Equipment Note shall
mature after such date.
Series A-2: June 15, 2011, with no scheduled
amortization
There shall be a payment of principal scheduled on at least one Series B
Equipment Note on December 15, 2015, and no Series B Equipment Note shall
mature after such date.
There shall be a payment of principal scheduled on at least one Series C
Equipment Note on June 15, 2011, and no Series C Equipment Note shall
mature after such date.
As of the Delivery Period Termination Date (assuming Equipment Notes are
acquired by the Pass Through Trusts for all of the Aircraft), the aggregate
principal amount of the Series A-2 Equipment Notes shall equal the original face
amount of the Class A-2 Certificates.
Debt Rate (computed on the basis of a 360-day year consisting of twelve 30-day
months, payable semi-annually in arrears)
Series A-1: 6.703%
Series A-2: 6.503%
Series B: 7.373%
Series C: 7.033%
Payment Due Rate: Debt Rate plus 2% per annum
Payment Dates: June 15 and December 15
Make-Whole Premiums: As provided in Article II of the form of
Trust Indenture marked as Exhibit A-3 or A-6
(whichever shall be utilized for a Leased Aircraft)
of the Note Purchase Agreement (the "TRUST
INDENTURE FORM") or the Owned Aircraft Indenture
marked as Exhibit C-2 of the Note Purchase
Agreement (the "OWNED INDENTURE FORM")
Redemption and Purchase: As provided in Article II of the Trust Indenture
Form
All-risk hull insurance: In the case of Leased Aircraft, not less than
Stipulated Loss Value and, in the case of Owned
Aircraft, not less than the unpaid principal amount
of the Series A-1, A-2, B and C Equipment Notes,
together with six months of interest accrued
thereon, subject to Continental's right to
self-insure on terms no more favorable to
Continental in any material respect than those set
forth in Section G of Annex D to the Lease Form, in
the case of Leased Aircraft, or Section G of Annex
B to the Owned Indenture Form, in the case of Owned
Aircraft
LEASE
Term: The Base Lease Term shall expire by its terms on or
after final maturity date of the latest maturity
date of the related Equipment Notes
Lease Payment Dates: Not less frequently than June 15 and December 15
Minimum Rent: Basic Rent due and payable on each Payment Date
shall be at least sufficient to pay in full, as of
such Payment Date (assuming timely payment of the
related Equipment Notes prior to such Date), the
aggregate principal amount of scheduled
installments due on the related Equipment Notes
outstanding on such Payment Date, together with
accrued and unpaid interest thereon.
Supplemental Rent: Sufficient to cover the sums described in clauses
(a) through (d) of such term as defined in Annex A
to the form of Lease (the "LEASE FORM") marked as
Exhibit A-2 of the Note Purchase Agreement
Stipulated Loss Value: At all times equal to or greater than the then
outstanding principal amount of the related
Equipment Notes together with accrued interest
thereon
Termination Value: At all times equal to or greater than the then
outstanding principal amount of the related
Equipment Notes together with accrued interest
thereon
Minimum Liability As set forth in Schedule 1 to the
Insurance Amount: Lease Form.
Payment Due Rate: As set forth in Schedule 1 to the Lease Form.
SLV Rate: As set forth in Schedule 1 Lease Form.
PARTICIPATION AGREEMENT
Mortgagee, Subordination Agent, Liquidity Provider, Pass Through Trustees,
Escrow Agents and Note Holders indemnified against Expenses and Taxes to the
extent set forth in Section 9 of the form of the Participation Agreement (the
"PARTICIPATION AGREEMENT FORM") marked as Exhibit A-1 to the Note Purchase
Agreement
APPENDIX 1
MAXIMUM LTVS BY AIRCRAFT
---------------------------------------------------------------------------------------------------
SERIES A-1 / A-2
---------------------------------------------------------------------------------------------------
Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing
737-824 737-824 737-824 737-824 737-824 737-824 737-824 737-924 737-924 737-924 737-924
N73278
------
N76269 N35271 N73275 N79279
------ ------ ------ ------
N73270 N36272 N37273 N37274 N73276 N37277 N36280 N37408 N37409 N75410 N71411
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Date
Dec 15, 2002 45.0% 44.9% 44.8% 44.6% 44.5% 44.5% 42.8% 45.0% 45.0% 45.0% 45.0%
Dec 15, 2003 43.0% 42.9% 42.8% 42.6% 42.5% 42.4% 40.8% 43.3% 43.2% 43.1% 43.0%
Dec 15, 2004 42.0% 41.9% 41.8% 41.6% 41.5% 41.5% 39.8% 42.3% 42.2% 42.2% 42.0%
Dec 15, 2005 41.2% 41.1% 41.0% 40.8% 40.7% 40.7% 39.0% 41.5% 41.4% 41.3% 41.2%
Dec 15, 2006 40.6% 40.5% 40.4% 40.2% 40.1% 40.1% 38.4% 40.9% 40.8% 40.7% 40.6%
Dec 15, 2007 40.2% 40.1% 40.0% 39.8% 39.8% 39.7% 38.0% 40.5% 40.4% 40.4% 40.2%
Dec 15, 2008 39.8% 39.7% 39.6% 39.4% 39.4% 39.3% 37.6% 40.1% 40.0% 40.0% 39.8%
Dec 15, 2009 39.6% 39.5% 39.4% 39.2% 39.2% 39.1% 37.3% 39.9% 39.8% 39.7% 39.6%
Dec 15, 2010 39.3% 39.2% 39.1% 38.9% 38.9% 38.8% 37.0% 39.6% 39.5% 39.5% 39.3%
Dec 15, 2011 38.9% 38.8% 38.7% 38.5% 38.4% 38.4% 36.5% 39.2% 39.1% 39.0% 38.9%
Dec 15, 2012 38.3% 38.2% 38.2% 38.0% 37.9% 37.8% 36.0% 38.6% 38.5% 38.5% 38.3%
Dec 15, 2013 40.1% 40.0% 40.0% 39.8% 39.7% 39.6% 37.6% 40.4% 40.3% 40.3% 40.1%
Dec 15, 2014 42.1% 42.0% 41.9% 41.7% 41.6% 41.6% 39.3% 42.4% 42.3% 42.3% 42.1%
Dec 15, 2015 43.0% 42.9% 42.8% 42.6% 42.6% 42.5% 40.1% 43.4% 43.3% 43.3% 43.1%
Dec 15, 2016 41.2% 41.1% 41.0% 40.8% 40.7% 40.7% 38.3% 41.5% 41.4% 41.3% 41.2%
Dec 15, 2017 39.7% 39.6% 39.5% 39.3% 39.3% 39.2% 36.7% 40.0% 39.9% 39.8% 39.7%
Dec 15, 2018 37.7% 37.6% 37.5% 37.3% 37.3% 37.2% 34.7% 37.5% 37.5% 37.4% 37.2%
Dec 15, 2019 31.4% 31.3% 31.3% 31.1% 31.0% 31.0% 28.8% 34.0% 33.9% 33.8% 33.7%
Dec 15, 2020 29.5% 29.5% 29.4% 29.3% 29.2% 29.2% 26.9% 29.8% 29.7% 29.7% 29.6%
--------------------------------------------------------------------------------------------------
SERIES A-1 / A-2
--------------------------------------------------------------------------------------------------
Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing
737-924 737-924 737-924 767- 767- 767- 767- 767- 777- 777-
424ER 424ER 424ER 424ER 424ER 224ER 224ER
N66057 N69059 N68061 N69063 N76065
------ ------ ------ ------ ------
N31412 N37413 N30414 N67058 N78060 N76062 N76064 N77066 N78017 N37018
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Date
Dec 15, 2002 44.8% 43.3% 43.2% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 44.6%
Dec 15, 2003 42.8% 41.3% 41.2% 44.6% 44.6% 44.5% 43.0% 42.9% 44.1% 42.6%
Dec 15, 2004 41.8% 40.3% 40.2% 43.6% 43.5% 43.4% 42.0% 41.9% 43.1% 41.5%
Dec 15, 2005 41.0% 39.5% 39.4% 42.8% 42.7% 42.6% 41.1% 41.0% 42.3% 40.7%
Dec 15, 2006 40.4% 38.9% 38.8% 42.2% 42.1% 42.0% 40.5% 40.4% 41.7% 40.1%
Dec 15, 2007 40.0% 38.5% 38.4% 41.8% 41.7% 41.6% 40.0% 40.0% 41.3% 39.6%
Dec 15, 2008 39.6% 38.0% 37.9% 41.3% 41.3% 41.2% 39.6% 39.5% 40.8% 39.2%
Dec 15, 2009 39.4% 37.8% 37.7% 41.1% 41.0% 41.0% 39.3% 39.2% 40.6% 38.9%
Dec 15, 2010 39.1% 37.4% 37.4% 40.8% 40.7% 40.7% 39.0% 38.9% 40.3% 38.6%
Dec 15, 2011 38.7% 36.9% 36.9% 40.4% 40.3% 40.2% 38.5% 38.4% 39.9% 38.1%
Dec 15, 2012 38.2% 36.4% 36.3% 39.8% 39.7% 39.7% 37.9% 37.8% 39.3% 37.5%
Dec 15, 2013 39.9% 38.0% 37.9% 41.7% 41.6% 41.5% 39.6% 39.5% 41.2% 39.2%
Dec 15, 2014 41.9% 39.8% 39.7% 43.2% 43.1% 43.0% 40.9% 40.8% 43.0% 40.8%
Dec 15, 2015 42.9% 40.6% 40.5% 43.2% 43.1% 43.0% 40.8% 40.7% 43.0% 40.7%
Dec 15, 2016 41.0% 38.7% 38.6% 42.8% 42.7% 42.6% 40.3% 40.2% 42.3% 39.9%
Dec 15, 2017 39.5% 37.2% 37.1% 41.2% 41.1% 41.1% 38.7% 38.6% 40.7% 38.3%
Dec 15, 2018 37.1% 34.7% 34.6% 39.2% 39.1% 39.0% 36.6% 36.5% 38.7% 36.2%
Dec 15, 2019 33.6% 31.2% 31.2% 36.6% 36.5% 36.4% 34.0% 33.9% 36.1% 33.6%
Dec 15, 2020 29.4% 27.2% 27.2% 30.7% 30.6% 30.6% 28.3% 28.3% 30.3% 28.1%
MAXIMUM LTVS BY AIRCRAFT
---------------------------------------------------------------------------------------------------
SERIES B
---------------------------------------------------------------------------------------------------
Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing
737-824 737-824 737-824 737-824 737-824 737-824 737-824 737-924 737-924 737-924
N76269 N35271 N73275 N73278
------ ------ ------ ------
N73270 N36272 N37273 N37274 N73276 N37277 N79279 N37408 N37409 N75410
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
N36280
------
Date
Dec 15, 2002 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0%
Dec 15, 2003 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 53.6% 55.0% 55.0% 55.0%
Dec 15, 2004 55.0% 55.0% 54.9% 54.6% 54.5% 54.4% 52.3% 55.0% 55.0% 55.0%
Dec 15, 2005 54.1% 54.0% 53.9% 53.6% 53.5% 53.4% 51.3% 54.5% 54.4% 54.3%
Dec 15, 2006 53.3% 53.2% 53.1% 52.8% 52.7% 52.6% 50.4% 53.7% 53.6% 53.5%
Dec 15, 2007 52.8% 52.7% 52.6% 52.3% 52.2% 52.1% 49.9% 53.2% 53.1% 53.0%
Dec 15, 2008 52.2% 52.1% 52.0% 51.8% 51.7% 51.6% 49.3% 52.6% 52.5% 52.5%
Dec 15, 2009 52.0% 51.9% 51.8% 51.5% 51.4% 51.3% 49.0% 52.4% 52.3% 52.2%
Dec 15, 2010 51.6% 51.5% 51.4% 51.1% 51.0% 50.9% 48.6% 52.0% 51.9% 51.8%
Dec 15, 2011 51.0% 50.9% 50.8% 50.6% 50.5% 50.4% 48.0% 51.4% 51.3% 51.2%
Dec 15, 2012 50.3% 50.2% 50.1% 49.9% 49.8% 49.7% 47.2% 50.7% 50.6% 50.5%
Dec 15, 2013 49.4% 49.3% 49.3% 49.0% 48.9% 48.8% 46.3% 49.8% 49.7% 49.6%
Dec 15, 2014 48.4% 48.3% 48.2% 48.0% 47.9% 47.8% 45.2% 48.8% 48.7% 48.6%
Dec 15, 2015 47.0% 46.9% 46.9% 46.6% 46.5% 46.5% 43.8% 47.4% 47.3% 47.2%
----------------------------------------------------------------------------------------------------------
SERIES B
----------------------------------------------------------------------------------------------------------
Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing
737-924 737-924 737-924 737-924 767-424ER 767-424ER 767-424ER 767-424ER 767-424ER 777-224 ER777-224ER
N66057 N69059 N68061 N69063 N76065
------ ------ ------ ------ ------
N71411 N31412 N37413 N30414 N67058 N78060 N76062 N76064 N77066 N78017 N37018
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Date
Dec 15, 2002 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0%
Dec 15, 2003 55.0% 55.0% 54.2% 54.1% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0%
Dec 15, 2004 55.0% 54.9% 52.9% 52.8% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 54.5%
Dec 15, 2005 54.1% 53.8% 51.8% 51.7% 55.0% 55.0% 55.0% 54.0% 53.9% 55.0% 53.4%
Dec 15, 2006 53.3% 53.1% 51.0% 50.9% 55.0% 55.0% 55.0% 53.1% 53.0% 54.7% 52.6%
Dec 15, 2007 52.8% 52.6% 50.5% 50.4% 54.8% 54.7% 54.6% 52.6% 52.5% 54.2% 52.0%
Dec 15, 2008 52.2% 52.0% 49.9% 49.8% 54.3% 54.2% 54.1% 52.0% 51.9% 53.6% 51.4%
Dec 15, 2009 52.0% 51.7% 49.6% 49.5% 54.0% 53.9% 53.8% 51.6% 51.5% 53.3% 51.1%
Dec 15, 2010 51.6% 51.4% 49.1% 49.0% 53.6% 53.5% 53.4% 51.2% 51.1% 53.0% 50.6%
Dec 15, 2011 51.0% 50.8% 48.5% 48.4% 53.0% 52.9% 52.8% 50.5% 50.4% 52.4% 50.0%
Dec 15, 2012 50.3% 50.1% 47.7% 47.6% 52.3% 52.2% 52.1% 49.7% 49.6% 51.6% 49.2%
Dec 15, 2013 49.4% 49.2% 46.8% 46.7% 51.4% 51.3% 51.2% 48.8% 48.7% 50.7% 48.3%
Dec 15, 2014 48.4% 48.2% 45.7% 45.6% 50.3% 50.2% 50.1% 47.6% 47.5% 49.7% 47.1%
Dec 15, 2015 47.0% 46.8% 44.3% 44.3% 48.9% 48.8% 48.7% 46.2% 46.1% 48.3% 45.7%
MAXIMUM LTVS BY AIRCRAFT
---------------------------------------------------------------------------------------------------
SERIES C
---------------------------------------------------------------------------------------------------
Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing
737-824 737-824 737-824 737-824 737-824 737-824 737-824 737-924 737-924 737-924 737-924
N73278
------
N76269 N35271 N73275 N79279
------ ------ ------ ------
N73270 N36272 N37273 N37274 N73276 N37277 N36280 N37408 N37409 N75410 N71411
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Date
Dec 15, 2002 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 64.0% 64.0% 64.0% 64.0%
Dec 15, 2003 65.0% 65.0% 65.0% 64.8% 64.7% 64.6% 62.1% 64.0% 64.0% 64.0% 64.0%
Dec 15, 2004 63.9% 63.7% 63.6% 63.3% 63.2% 63.1% 60.6% 64.0% 64.0% 64.0% 63.9%
Dec 15, 2005 62.6% 62.5% 62.4% 62.1% 62.0% 61.9% 59.4% 63.1% 63.0% 62.9% 62.6%
Dec 15, 2006 61.7% 61.6% 61.5% 61.2% 61.1% 61.0% 58.5% 62.2% 62.1% 62.0% 61.7%
Dec 15, 2007 61.1% 61.0% 60.9% 60.6% 60.5% 60.4% 57.8% 61.6% 61.5% 61.4% 61.2%
Dec 15, 2008 60.5% 60.4% 60.3% 60.0% 59.9% 59.8% 57.2% 61.0% 60.9% 60.8% 60.5%
Dec 15, 2009 60.2% 60.1% 60.0% 59.7% 59.6% 59.5% 56.8% 60.7% 60.6% 60.5% 60.2%
Dec 15, 2010 59.8% 59.7% 59.6% 59.2% 59.1% 59.0% 56.3% 60.2% 60.1% 60.0% 59.8%
--------------------------------------------------------------------------------------------------
SERIES C
--------------------------------------------------------------------------------------------------
Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing
737-924 737-924 737-924 767- 767- 767- 767- 767- 777- 777-
424ER 424ER 424ER 424ER 424ER 224ER 224ER
N66057 N69059 N68061 N69063 N76065
------ ------ ------ ------ ------
N31412 N37413 N30414 N67058 N78060 N76062 N79064 N77066 N78017 N37018
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Date
Dec 15, 2002 64.0% 64.0% 64.0% 63.0% 63.0% 63.0% 63.0% 63.0% 65.0% 65.0%
Dec 15, 2003 64.0% 62.8% 62.7% 63.0% 63.0% 63.0% 63.0% 63.0% 65.0% 64.7%
Dec 15, 2004 63.6% 61.3% 61.2% 63.0% 63.0% 63.0% 63.0% 63.0% 65.0% 63.2%
Dec 15, 2005 62.4% 60.1% 60.0% 63.0% 63.0% 63.0% 62.6% 62.4% 64.3% 61.9%
Dec 15, 2006 61.5% 59.1% 59.0% 63.0% 63.0% 63.0% 61.6% 61.5% 63.4% 61.0%
Dec 15, 2007 60.9% 58.5% 58.4% 63.0% 63.0% 63.0% 60.9% 60.8% 62.8% 60.3%
Dec 15, 2008 60.3% 57.8% 57.7% 62.9% 62.8% 62.6% 60.2% 60.1% 62.1% 59.6%
Dec 15, 2009 60.0% 57.4% 57.3% 62.6% 62.4% 62.3% 59.8% 59.7% 61.8% 59.2%
Dec 15, 2010 59.5% 56.9% 56.8% 62.1% 62.0% 61.9% 59.3% 59.2% 61.4% 58.7%
ANNEX A to
NOTE PURCHASE AGREEMENT
DEFINITIONS
"ACT" means 49 U.S.C.ss.ss.40101-46507.
"AFFILIATE" means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with such person.
For purposes of this definition, "control" means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities or by contract
or otherwise and "controlling," "controlled by" and "under common control with"
have correlative meanings.
"AIRCRAFT PURCHASE AGREEMENT" means, in the case of the Boeing 767-424ER
Aircraft, the Purchase Agreement No. 2060, dated as of October 10, 1997, in the
case of the Boeing 777-224ER Aircraft, the Purchase Agreement No. 2061, dated as
of October 10, 1997 or, in the case of the Boeing 737-924 Aircraft and the
Boeing 737-824 Aircraft, the Purchase Agreement No. 1951 dated July 23, 1996, as
amended, each between the Company and the Manufacturer (including all exhibits
thereto, together with all letter agreements entered into that by their terms
constitute part of any such Purchase Agreement); and "AIRCRAFT PURCHASE
AGREEMENTS" means all such agreements.
"AIRCRAFT PURCHASE AGREEMENT ASSIGNMENT" means a Purchase Agreement and Engine
Warranties Assignment substantially in the form of Exhibit A-4-I or A-4-II to
the Note Purchase Agreement.
"ASSUMED AMORTIZATION SCHEDULE" means the amortization schedule set forth on
page S-31 of the Prospectus Supplement.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.ss.ss.102 ET
SEQ.
"BASIC PASS THROUGH TRUST AGREEMENT" means the Pass Through Trust Agreement,
dated September 25, 1997, between the Company and Pass Through Trustee, as such
agreement may be supplemented, amended or modified, but does not include any
Trust Supplement.
"BUSINESS DAY" means any day, other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by law to close in New York,
New York, Houston, Texas, Wilmington, Delaware or Salt Lake City, Utah.
"CERTIFICATES" has the meaning set forth in the fifth recital to the Note
Purchase Agreement.
"CERTIFICATEHOLDER" means the Person in whose name a Certificate is registered
in the Register.
"CLASS" means the class of Certificates issued by each Pass Through Trust.
"CLASS A-1 CERTIFICATES" means Certificates issued by the Class A-1 Pass Through
Trust.
"CLASS A-2 CERTIFICATES" means Certificates issued by the Class A-2 Pass Through
Trust.
"CLASS B CERTIFICATES" means Certificates issued by the Class B Pass Through
Trust.
"CLASS C CERTIFICATES" means Certificates issued by the Class C Pass Through
Trust.
"CLASS C ISSUANCE DATE" means the date of the original issuance of the Class C
Certificates.
"CLASS C UNDERWRITER" has the meaning set forth in the sixth recital to the Note
Purchase Agreement.
"CLASS C UNDERWRITING AGREEMENT" has the meaning set forth in the sixth recital
to the Note Purchase Agreement.
"CLASS D CERTIFICATES" means pass through certificates issued by the Continental
Airlines Pass Through Trust, Series 2001-1D, if any.
"COMPANY" means Continental Airlines, Inc., a Delaware corporation.
"CORPORATE TRUST OFFICE" with respect to any Pass Through Trustee or any Loan
Trustee, means the office of such trustee in the city at which at any particular
time its corporate trust business shall be principally administered.
"CUT-OFF DATE" means the earlier of (a) the day after the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
"DELIVERY PERIOD TERMINATION DATE" means the earlier of (a) September 30, 2002,
or, if the Equipment Notes relating to all of the New Aircraft (or Substitute
Aircraft in lieu thereof) have not been purchased by the Pass Through Trustees
on or prior to such date due to any reason beyond the control of the Company and
not occasioned by the Company's fault or negligence, December 31, 2002 (provided
that, if a labor strike occurs or continues at the Manufacturer after the
Issuance Date on or prior to either or both of such dates referred to in this
clause (a), such date or dates on or following the Issuance Date shall be
extended by adding thereto the number of days that such strike continued in
effect after the Issuance Date) and (b) the date on which Equipment Notes issued
with respect to all of the New Aircraft (or Substitute Aircraft in lieu thereof)
have been purchased by the Pass Through Trustees in accordance with the Note
Purchase Agreement.
"DELIVERY DATE" means the Business Day on which a New Aircraft is delivered to
and accepted by the Company.
"DEPOSIT" has the meaning set forth in the seventh recital to the Note Purchase
Agreement.
"DEPOSIT AGREEMENT" has the meaning set forth in the seventh recital to the Note
Purchase Agreement.
"DEPOSITARY" means Credit Suisse First Boston, a banking institution organized
under the laws of Switzerland, acting through its New York branch.
"ELIGIBLE AIRCRAFT" has the meaning set forth in the second recital to the Note
Purchase Agreement.
"EQUIPMENT NOTES" means and includes any equipment notes issued under any
Indenture in the form specified in Section 2.01 thereof (as such form may be
varied pursuant to the terms of such Indenture) and any Equipment Note issued
under any Indenture in exchange for or replacement of any other Equipment Note.
"ESCROW AGENT" has the meaning set forth in the first paragraph of the Note
Purchase Agreement.
"ESCROW AND PAYING AGENT AGREEMENT" has the meaning set forth in the seventh
recital to the Note Purchase Agreement.
"FAA" means the Federal Aviation Administration of the United States.
"FINAL WITHDRAWAL" with respect to each Escrow and Paying Agent Agreement, has
the meaning set forth in Section 1.02 thereof.
"FINANCING AGREEMENTS" means, collectively, the Lease Financing Agreements and
the Owner Financing Agreements.
"GOVERNMENT ENTITY" means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government or (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"INDENTURES" means, collectively, the Leased Aircraft Indentures, the Special
Indentures and the Owned Aircraft Indentures.
"INTERCREDITOR AGREEMENT" has the meaning set forth in the eleventh recital to
the Note Purchase Agreement.
"ISSUANCE DATE" means either the Prior Issuance Date or the Class C Issuance
Date.
"LAW" means (a) any constitution, treaty, statute, law, decree, regulation,
order, rule or directive of any Government Entity, and (b) any judicial or
administrative interpretation or application of, or decision under, any of the
foregoing.
"LEASE" means a Lease Agreement substantially in the form of Exhibit A-2 to the
Note Purchase Agreement.
"LEASE FINANCING AGREEMENTS" means, collectively, the Aircraft Purchase
Agreement Assignment, the Leased Aircraft Participation Agreement, the Lease,
the Leased Aircraft Indenture (or, in a case where The Boeing Company or any of
its Affiliates is the Owner Participant and if so specified in the Delivery
Notice, the Special Indenture), the Equipment Notes issued thereunder and the
Trust Agreement relating to the financing of a Leased Aircraft.
"LEASED AIRCRAFT" means a New Aircraft subject to a Lease.
"LEASED AIRCRAFT INDENTURE" means a Trust Indenture and Mortgage substantially
in the form of Exhibit A-3 to the Note Purchase Agreement.
"LEASED AIRCRAFT PARTICIPATION AGREEMENT" means a Participation Agreement
substantially in the form of Exhibit A-1 to the Note Purchase Agreement.
"LIQUIDITY FACILITY" has the meaning set forth in the eleventh recital to the
Note Purchase Agreement.
"LIQUIDITY PROVIDER" has the meaning set forth in the eleventh recital to the
Note Purchase Agreement.
"LOAN TRUSTEE" means the "Mortgagee" as defined in the Financing Agreements.
"MANDATORY DOCUMENT TERMS" means the terms set forth on Schedule V to the Note
Purchase Agreement.
"MANDATORY ECONOMIC TERMS" means the terms set forth on Schedule VI to the Note
Purchase Agreement.
"MANUFACTURER" means The Boeing Company, a Delaware corporation, solely in its
capacity as manufacturer or seller of New Aircraft.
"NEW AIRCRAFT" has the meaning set forth in the second recital to the Note
Purchase Agreement.
"NOTE PURCHASE AGREEMENT" means the Amended and Restated Note Purchase Agreement
to which this Annex A is attached.
"NOTICE OF PURCHASE WITHDRAWAL" with respect to each Deposit Agreement, has the
meaning set forth in Section 2.3 thereof.
"OPERATIVE AGREEMENTS" means, collectively, the Pass Through Trust Agreements,
the Escrow and Paying Agent Agreements, the Deposit Agreements, the Liquidity
Facilities, the Intercreditor Agreement, the Trust Agreements, the Equipment
Notes, the Certificates and the Financing Agreements.
"ORIGINAL NOTE PURCHASE AGREEMENT" has the meaning set forth in the third
recital to the Note Purchase Agreement.
"OWNED AIRCRAFT" means a New Aircraft subject to an Owned Aircraft Indenture.
"OWNED AIRCRAFT INDENTURE" means a Trust Indenture and Mortgage substantially in
the form of Exhibit C-2 to the Note Purchase Agreement.
"OWNED AIRCRAFT PARTICIPATION AGREEMENT" means a Participation Agreement
substantially in the form of Exhibit C-1 to the Note Purchase Agreement.
"OWNER FINANCING AGREEMENTS" means, collectively, the Owned Aircraft
Participation Agreement, the Owned Aircraft Indenture and the Equipment Notes
issued thereunder.
"OWNER PARTICIPANT" means, with respect to any Leased Aircraft, the Person named
as the Owner Participant in the Participation Agreement with respect to such
Leased Aircraft.
"OWNER TRUST" means with respect to any Leased Aircraft, the trust created by
the "Trust Agreement" referred to in the Leased Aircraft Indenture or Special
Indenture related thereto.
"OWNER TRUSTEE" means with respect to any Leased Aircraft, the "Owner Trustee"
party to the "Trust Agreement" referred to in the Leased Aircraft Indenture or
Special Indenture related thereto.
"PARTICIPATION AGREEMENTS" means, collectively, the Leased Aircraft
Participation Agreements and the Owned Aircraft Participation Agreements.
"PASS THROUGH TRUST" has the meaning set forth in the fifth recital to the Note
Purchase Agreement.
"PASS THROUGH TRUST AGREEMENT" means each of the four separate Trust
Supplements, together in each case with the Basic Pass Through Trust Agreement,
each dated as of the applicable Issuance Date, by and between the Lessee and
Pass Through Trustee.
"PASS THROUGH TRUSTEE" has the meaning set forth in the first paragraph of the
Note Purchase Agreement.
"PAYING AGENT" has the meaning set forth in the first paragraph of the Note
Purchase Agreement.
"PERSON" means any individual, firm, partnership, joint venture, trust, trustee,
Government Entity, organization, association, corporation, limited liability
company, government agency, committee, department, authority and other body,
corporate or incorporate, whether having distinct legal status or not, or any
member of any of the same.
"PRIOR CERTIFICATES" has the meaning set forth in the third recital to the Note
Purchase Agreement.
"PRIOR ISSUANCE DATE" means the date of original issuance of the Prior
Certificates.
"PRIOR UNDERWRITER" has the meaning set forth in the sixth recital to the Note
Purchase Agreement.
"PRIOR UNDERWRITING AGREEMENT" has the meaning set forth in the sixth recital to
the Note Purchase Agreement.
"PROSPECTUS SUPPLEMENT" means the final Prospectus Supplement, dated June 12,
2001, to the Prospectus, dated March 23, 2001, of the Company relating to the
offering of the Certificates.
"QUALIFIED OWNER PARTICIPANT" means any bank, trust company, insurance company,
financial institution, partnership, limited liability company or corporation
(other than, without the Company's consent, a commercial air carrier, a
commercial aircraft operator, a freight forwarder or Affiliate of any of the
foregoing), in each case with a combined capital and surplus or net worth of at
least $50,000,000.
"RATING AGENCIES" means, collectively, at any time, each nationally recognized
rating agency which shall have been requested to rate the Certificates and which
shall then be rating the Certificates. The initial Rating Agencies will be
Moody's Investors Service, Inc. and Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc.
"RATING AGENCY CONFIRMATION" means, with respect to (1) any Financing Agreement
that has been modified in any material respect from the forms thereof attached
to the Note Purchase Agreement, (2) a Substitute Aircraft or (3) a
Sale/Leaseback Transaction, a written confirmation from each of the Rating
Agencies that (1) the use of such Financing Agreement with such modifications,
(2) the substituting of such Substitute Aircraft for an Eligible Aircraft or (3)
the consummation of such Sale/Leaseback Transaction, respectively, whichever of
the foregoing shall in a particular case require Rating Agency Confirmation,
would not result in (i) a reduction of the rating for any Class of Certificates
below the then current rating for such Class of Certificates or (ii) a
withdrawal or suspension of the rating of any Class of Certificates.
"REGISTER" means the register maintained pursuant to Sections 3.04 and 7.12 of
the Basic Pass Through Trust Agreement with respect to each Pass Through Trust.
"REGULAR DISTRIBUTION DATES" shall mean June 15 and December 15 of each year,
commencing December 15, 2001.
"SALE/LEASEBACK TRANSACTION" has the meaning set forth in Section 1(k) of the
Note Purchase Agreement.
"SECTION 1110" means 11 U.S.C. ss. 1110 of the Bankruptcy Code or any successor
or analogous Section of the federal bankruptcy Law in effect from time to time.
"SERIES A-1 EQUIPMENT NOTES" means Equipment Notes issued under an Indenture and
designated as "Series A-1" thereunder.
"SERIES A-2 EQUIPMENT NOTES" means Equipment Notes issued under an Indenture and
designated as "Series A-2" thereunder.
"SERIES B EQUIPMENT NOTES" means Equipment Notes issued under an Indenture and
designated as "Series B" thereunder.
"SERIES C EQUIPMENT NOTES" means Equipment Notes issued under an Indenture and
designated as "Series C" thereunder.
"SERIES D EQUIPMENT NOTES" means Equipment Notes issued under an Indenture and
designated as "Series D" thereunder, if any.
"SPECIAL INDENTURE" means a Trust Indenture and Mortgage substantially in the
form of Exhibit A-6 to the Note Purchase Agreement.
"SUBORDINATION AGENT" has the meaning set forth in the first paragraph of the
Note Purchase Agreement.
"SUBSTITUTE AIRCRAFT" has the meaning set forth in Section 1(g) of the Note
Purchase Agreement.
"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.
"TRIGGERING EVENT" has the meaning assigned to such term in the Intercreditor
Agreement.
"TRUST AGREEMENT" means a Trust Agreement substantially in the form of Exhibit E
to the Note Purchase Agreement.
"TRUST SUPPLEMENT" means an agreement supplemental to the Basic Pass Through
Trust Agreement pursuant to which (i) a separate trust is created for the
benefit of the holders of the Pass Through Certificates of a class, (ii) the
issuance of the Pass Through Certificates of such class representing fractional
undivided interests in such trust is authorized and (iii) the terms of the Pass
Through Certificates of such class are established.
"UNDERWRITERS" has the meaning set forth in the sixth recital to the Note
Purchase Agreement.
"WTC" has the meaning set forth in the first paragraph of the Note Purchase
Agreement.
EXHIBIT A-1 to
NOTE PURCHASE AGREEMENT
FORM OF LEASED AIRCRAFT PARTICIPATION AGREEMENT
[Filed Separately]
EXHIBIT A-2 to
NOTE PURCHASE AGREEMENT
FORM OF LEASE
[Filed Separately]
EXHIBIT A-3 to
NOTE PURCHASE AGREEMENT
FORM OF LEASED AIRCRAFT INDENTURE
[Filed Separately]
EXHIBIT A-4-I to
NOTE PURCHASE AGREEMENT
FORM OF AIRCRAFT PURCHASE AGREEMENT ASSIGNMENT - CFM
---------------------------------------------------
CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON
DISSEMINATION SET FORTH IN SECTION 8 OF THE
PARTICIPATION AGREEMENT (AS DEFINED HEREIN)
---------------------------------------------------
PURCHASE AGREEMENT AND ENGINE WARRANTIES ASSIGNMENT ___
PURCHASE AGREEMENT AND ENGINE WARRANTIES ASSIGNMENT ___, dated as of
__________, between Continental Airlines, Inc., a Delaware corporation
("Assignor"), and Wells Fargo Bank Northwest, National Association, a national
banking association, not in its individual capacity but solely as Owner Trustee
("Assignee") under Trust Agreement ___ dated as of __________ (the "Trust
Agreement"), between the Owner Participant named therein and Assignee, in its
individual capacity, and otherwise not in its individual capacity but solely as
trustee thereunder.
Assignor and Manufacturer (as such term and other capitalized terms
are hereinafter defined) are parties to the Purchase Agreement, providing, among
other things, for the manufacture and sale by Manufacturer or Manufacturer's
wholly owned subsidiary to Assignor of certain aircraft, engines and related
equipment, including the Aircraft. Assignor and Engine Manufacturer are parties
to the General Terms Agreement, containing, among other terms and conditions,
the Engine Warranties.
Assignee wishes to acquire the Aircraft and Assignor, on the terms
and conditions hereinafter set forth, is willing to assign to Assignee certain
of Assignor's rights and interests under the Purchase Agreement and the General
Terms Agreement and Assignee is willing to accept such assignment, as
hereinafter set forth.
AGREEMENTS
The parties hereto agree as follows:
Section 1. DEFINITIONS. For all purposes of this Assignment, except
as otherwise expressly provided or unless the context otherwise requires, the
following terms shall have the following meanings:
AIRCRAFT - The Boeing Model 737-___ aircraft bearing Manufacturer's
Serial No. _______ and U.S. Registration No. __________, to be financed pursuant
to the Participation Agreement, including the Engines.
ENGINES - Two CFM Model ________ series engines bearing
manufacturer's serial numbers ________ and ________, respectively, installed on
the Aircraft.
ENGINE MANUFACTURER - CFM International, Inc., a Delaware
corporation, and its successors and assigns.
ENGINE WARRANTIES - Engine Manufacturer's "New Engine Warranty,"
"New Parts Warranty," "Ultimate Life Warranty" and "Campaign Change Warranty,"
as set forth in the Engine Manufacturer's Engine Product Support Plan which
forms a part of the General Terms Agreement, and as limited by the applicable
terms of the General Terms Agreement and such Engine Product Support Plan.
GENERAL TERMS AGREEMENT - The Agreement No. 6-7075, dated as of June
10, 1985, by and between Engine Manufacturer and Assignor, including the "Engine
Product Support Plan" at Exhibit B thereto, insofar as such Engine Product
Support Plan relates to the Engine Warranties, but excluding any and all letter
agreements attached thereto, to the extent that such General Terms Agreement and
such Exhibit relate to the Engines, as such General Terms Agreement may
hereafter be amended, supplemented and modified to the extent permitted by the
terms of this Assignment to the extent relating to the Engines.
LEASE - The Lease Agreement ___, dated as of __________, as at any
time amended, supplemented and modified, between Assignee, as lessor, and
Assignor, as lessee, providing for the lease of the Aircraft.
MANUFACTURER - The Boeing Company, a Delaware corporation, and its
successors and assigns.
PARTICIPATION AGREEMENT - The Participation Agreement ___, dated as
of ___________, among Assignor, the Participants, Assignee and Mortgagee, as at
any time amended, supplemented and modified.
PURCHASE AGREEMENT - Purchase Agreement No. 1951, dated July 23,
1996, between Manufacturer and Assignor, providing, among other things, for the
manufacture and sale by Manufacturer to Assignor of certain Boeing Model 737
aircraft (including the Aircraft) and including as part thereof Exhibits A, B,
D, E and F thereto, but excluding all other exhibits and letter and supplemental
agreements, to the extent that such Purchase Agreement and such Exhibits relate
to the Aircraft, as such Purchase Agreement may hereafter be amended,
supplemented and modified to the extent permitted by the terms of this
Assignment.
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 the Participation
Agreement.
Section 2. ASSIGNMENT. Assignor does hereby sell, assign, transfer
and set over unto Assignee and its successors and permitted assigns all of
Assignor's rights and interests in and to the Purchase Agreement, as and only to
the extent that the same relates to the Aircraft, and in and to the General
Terms Agreement, as and only to the extent that the Engine Warranties contained
therein relate to the Engines, except to the extent reserved below, including
without limitation in such assignment (a) all claims for damages in respect of
the Aircraft and the Engines arising as a result of any default by Manufacturer
under the Purchase Agreement or Engine Manufacturer or any other vendor or
supplier of other parts or equipment installed on or in the Aircraft, including
without limitation all warranty service life policies, aircraft performance
guarantees and indemnity provisions contained in the Purchase Agreement and the
Engine Warranties, and all claims arising thereunder, in respect of the Aircraft
and the Engines, (b) any and all rights of Assignor to compel performance of the
terms of the Purchase Agreement in respect of the Aircraft and the Engine
Warranties in respect of the Engines and (c) the right to purchase and take
title to the Aircraft pursuant to the Purchase Agreement; reserving to Assignor,
however, with respect to the Aircraft and each Engine, (i) all rights to receive
any credits due to Assignor with respect to the purchase price of the Aircraft
pursuant to the Purchase Agreement and of the Engines pursuant to the General
Terms Agreement, (ii) all of Assignor's rights and interests in or arising out
of any payments or deposits made relating to the Aircraft or to be made by
Assignor on amounts credited or to be credited or paid or to be paid by the
Manufacturer to the Assignor in respect of the Aircraft and (iii) so long and
only so long as the Aircraft and each Engine shall be subject to the Lease and
no Lease Event of Default shall have occurred and be continuing thereunder, the
rights (A) to demand, accept and retain all rights in and to all property (other
than the Aircraft), data and services that Manufacturer or Engine Manufacturer
is obligated to provide or does provide pursuant to the Purchase Agreement or
the General Terms Agreement, as the case may be, and (B) to obtain services,
training, data and demonstration and test flights pursuant to the Purchase
Agreement or the General Terms Agreement, as the case may be.
Assignee hereby accepts such assignment subject to the terms hereof.
Assignor has furnished a true copy of the Purchase Agreement and a true copy of
the General Terms Agreement to Assignee and has specifically directed Assignee's
attention to Paragraph 10 of Part A, Paragraph 5 of Part C, Paragraph 3 of Part
D, Paragraph 2 of Part D-1, Paragraph 5 of Part F-1, and Paragraph 9 and 10 of
Part F-2 of Exhibit B to the Purchase Agreement.
Section 3. EXERCISE OF RIGHTS OF "BUYER" UNDER PURCHASE AGREEMENT
AND OF "AIRLINE" UNDER GENERAL TERMS AGREEMENT. Notwithstanding the foregoing,
if and so long as no Lease Event of Default shall have occurred and be
continuing, Assignee authorizes Assignor, to the exclusion of Assignee, during
the Term, to exercise in Assignor's name all rights and powers of the "Buyer" in
respect of the Aircraft under the Purchase Agreement and of the "Airline" in
respect of each Engine under the General Terms Agreement, and of Assignee in
respect of a default by any vendor or supplier of parts and equipment (as
specified in clause (a) of Section 2 above) and to retain any recovery or
benefit resulting from the enforcement of any warranty or indemnity under the
Purchase Agreement or the General Terms Agreement in respect of the Aircraft or
each Engine, as the case may be, except that Assignor may not enter into any
change order or other amendment, modification or supplement to the Purchase
Agreement without the written consent or countersignature of Assignee if such
change order, amendment, modification or supplement would (i) result in any
rescission, cancellation or termination of the Purchase Agreement in respect of
the Aircraft or (ii) materially diminish the rights assigned hereunder to
Assignee. Assignee agrees that, as between Assignee and Manufacturer or Engine
Manufacturer, as the case may be (and without affecting Assignor's duties or
obligations under the Participation Agreement or the Lease), neither
Manufacturer nor Engine Manufacturer, as the case may be, shall be deemed to
have knowledge of any Lease Default, Lease Event of Default, declaration of
default or the discontinuance or remedy thereof or the Aircraft or either Engine
being no longer subject to the Lease or any change in the authority of Assignor
or Assignee, as the case may be, to exercise any of the rights established
hereunder unless and until Manufacturer shall have received written notice
thereof from Assignee or Mortgagee addressed to its Vice President - Contracts
at P.O. Box 3707, Mail Code 21-34, Seattle, Washington 98124-2207, if by mail,
or to (425) 237-1706, if by facsimile, or, in the case of Engine Manufacturer,
Engine Manufacturer shall have received written notice thereof from Assignee or
Mortgagee addressed to its Commercial Contract Director at P.O. Box 15514,
Cincinnati, Ohio 45215-6301, if by mail, or to (513) 243-1345, if by facsimile.
So long as Manufacturer and Engine Manufacturer act in good faith, Manufacturer
and Engine Manufacturer may rely conclusively on any such notice without
inquiring as to the accuracy of, or the entitlement of the party to give, such
notice.
The Engine Manufacturer shall not be deemed to have knowledge of the
replacement of an Engine with another CFM engine, until the Engine Manufacturer
has received written notice thereof. Such notice shall include the serial number
of the Engine being replaced, as well as the serial number of the replacement
Engine and shall be sent to: Lease Pool Manager, Customer Support Operation, GE
Aircraft Engines, 111 Merchant Street, Room 450, Cincinnati, Ohio 45246.
Section 4. CERTAIN AGREEMENTS. It is expressly agreed that, anything
herein contained to the contrary notwithstanding:
(a) Assignor shall at all times remain liable (i) to Manufacturer
under the Purchase Agreement to perform all the duties and obligations of
the "Buyer" thereunder and (ii) to Engine Manufacturer under the General
Terms Agreement to perform all the duties and obligations of the
"Airline" thereunder, in each case to the same extent as if this
Assignment had not been executed,
(b) the exercise by Assignee of any of the rights assigned hereunder
shall not release Assignor from any of its duties or obligations to
Manufacturer under the Purchase Agreement or to Engine Manufacturer under
the General Terms Agreement except to the extent that such exercise by
Assignee shall constitute performance of such duties and obligations, and
(c) except as provided in the next sentence, none of Assignee,
Mortgagee or any Participant shall have any obligation or liability under
the Purchase Agreement or the General Terms Agreement by reason of, or
arising out of, this Assignment or be obligated to perform any of the
obligations or duties of Assignor under the Purchase Agreement or the
General Terms Agreement or to make any payment thereunder or to make any
inquiry as to the sufficiency of any payment received by any of them or to
present or file any claim or to take any other action to collect or enforce
any claim for any payment assigned hereunder.
Anything contained in this Assignment, the Consent and Agreement or the Engine
Consent and Agreement to the contrary notwithstanding, but without in any way
releasing Assignor from any of its duties or obligations under the Purchase
Agreement, the General Terms Agreement or this Assignment, Assignee and
Mortgagee confirm for the benefit of Manufacturer and Engine Manufacturer,
respectively, that, insofar as the provisions of the Purchase Agreement or the
Engine Warranties relate to the Aircraft or the Engines, as the case may be, in
exercising any rights under the Purchase Agreement or the Engine Warranties, or
in making any claim with respect to the Aircraft or other goods and services
delivered or to be delivered pursuant to the Purchase Agreement or the Engine
Warranties, the terms and conditions of the Purchase Agreement and the Engine
Warranties including, without limitation, the Disclaimer and Release and
Exclusion of Liabilities provisions of Article 12, including without limitation
Exhibit B (the "Product Assurance Document") and Exhibit C (the "Customer
Support Document") of the Purchase Agreement shall apply to, and be binding
upon, Assignee and Mortgagee to the same extent as Assignor.
Section 5. PRESERVATION OF RIGHTS. Nothing contained in this
Assignment shall in any way diminish or limit the provisions of Assignor's
indemnity in Section 9 of the Participation Agreement with respect to any
liability of Assignee to Manufacturer in any way relating to or arising out of
the Purchase Agreement. Nothing contained in this Assignment shall subject
Manufacturer or Engine Manufacturer to any obligation or liability to which it
would not otherwise be subject under the Purchase Agreement or under the General
Terms Agreement, as the case may be, or modify in any respect the contract
rights of Manufacturer or Engine Manufacturer thereunder, except as may be
provided in the Consent and Agreement and the Engine Consent and Agreement, or
require Manufacturer to divest itself of title to or possession of the Aircraft
or other goods and services until delivery thereof and payment therefor as
provided in the Purchase Agreement or subject Manufacturer or Engine
Manufacturer to any multiple or duplicative liability or obligation under the
Purchase Agreement or the General Terms Agreement, as the case may be. No
further assignment of the Engine Warranties, including without limitation
assignments for security purposes (other than under the Trust Indenture), are
permitted without the express written consent of Engine Manufacturer.
Section 6. APPOINTMENT OF ATTORNEY. Effective at any time when a
Lease Event of Default shall have occurred and be continuing, (i) unless
Assignee and Mortgagee (so long as the Lien of the Trust Indenture has not been
discharged), in their sole discretion, shall notify Manufacturer or Engine
Manufacturer, as the case may be, to the contrary, the authorization given to
Assignor under Section 3 hereof to enforce such rights and claims shall
henceforth cease to be effective and Assignee and its successors and permitted
assigns shall, to the exclusion of Assignor, be entitled to assert and enforce
such rights and claims as substitute party plaintiff or otherwise, and Assignor
shall, at the request of Assignee or its successors or permitted assigns and at
Assignor's expense, cooperate with and take such action as is reasonably
necessary to enable Assignee and its successors and permitted assigns to enforce
such rights and claims, and (ii) Assignor does hereby constitute Assignee, its
successors and permitted assigns, Assignor's true and lawful attorney,
irrevocably, with full power (in the name of Assignor or otherwise) to ask,
require, demand, receive, compound and give acquittance for any and all monies
and claims for monies due and to become due under, or arising out of, the
Purchase Agreement in respect of the Aircraft or the Engine Warranties in
respect of the Engines, as the case may be, to the extent that the same have
been assigned by this Assignment and, for such period as Assignee may exercise
rights with respect thereto under this Assignment, to endorse any checks or
other instruments or orders in connection therewith and to file any claims or
take any action or institute (or, if previously commenced, assume control of)
any proceeding and to obtain any recovery in connection therewith which Assignee
may deem to be necessary or advisable in the premises.
Section 7. OTHER ACTION. Assignor agrees that, at Assignor's sole
cost and expense, at any time and from time to time, upon the written request of
Assignee or, so long as the Lien of the Trust Indenture has not been discharged,
Mortgagee, Assignor will promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as Assignee or,
so long as the Lien of the Trust Indenture has not been discharged, Mortgagee,
may reasonably request in order to obtain the full benefits of this Assignment
and of the rights and powers herein granted.
Section 8. ASSIGNOR'S REPRESENTATIONS AND WARRANTIES. Assignor does
hereby represent and warrant that the Purchase Agreement and the General Terms
Agreement are in full force and effect as to Assignor and are enforceable
against Assignor in accordance with their respective terms. Assignor does hereby
further represent and warrant that Assignor has, with the authorized execution
of the Consent and Agreement and the Engine Consent and Agreement, (i) received
all necessary consents to the assignment and transfer contemplated herein
(including without limitation the assignment and transfer contemplated herein of
Assignor's rights under the Purchase Agreement and the General Terms Agreement)
and (ii) assuming that the Consent and Agreement and the Engine Consent and
Agreement are in full force and effect, such consents are in full force and
effect and Assignor further represents and warrants that Assignor has not
assigned (except as assigned hereby) or pledged (except pursuant to the 737
Purchase Agreement Assignment dated as of November 27, 1996 between Lessee and
Manufacturer, the Lien of which will have been released at or prior to the
delivery of this Agreement), and hereby covenants that it will not during the
Term assign (except as assigned hereby) or pledge so long as this Assignment
shall remain in effect, the whole or any part of the rights hereby assigned or
any of its rights with respect to the Aircraft under the Purchase Agreement or
with respect to the Engines under the General Terms Agreement not assigned
hereby to anyone other than Assignee.
Section 9. PAYMENTS. Notwithstanding this Assignment and anything
herein to the contrary, all amounts that Manufacturer or Engine Manufacturer is
obligated to pay to Assignor under the Purchase Agreement with respect to the
Aircraft or under the General Terms Agreement with respect to the Engines,
including, without limitation, resulting from the enforcement of any warranty,
covenant, representation, indemnity or product support agreement thereunder or
the enforcement or exercise of any right or power thereunder or hereunder (in
the case of Manufacturer, a "Manufacturer Payment," and in the case of Engine
Manufacturer, an "Engine Manufacturer Payment") (excluding, however, from
Manufacturer Payments and Engine Manufacturer Payments any amounts Manufacturer
is obligated to pay to Assignor with respect to the rights reserved to Assignor
in Section 2 hereof), will be payable and applicable as follows: all
Manufacturer Payments and Engine Manufacturer Payments shall be paid to Assignor
unless and until Manufacturer or Engine Manufacturer, as the case may be, shall
have received written notice as set forth in Section 3 hereof from Assignee or
Mortgagee that a Lease Event of Default has occurred and is continuing,
whereupon Manufacturer or Engine Manufacturer, as the case may be, will, until
Manufacturer or Engine Manufacturer, as the case may be, shall have received
written notice from Assignee or Mortgagee that all Lease Events of Default have
been cured or waived, make any and all such payments directly to Assignee (or,
so long as the Trust Indenture has not been discharged and Manufacturer or
Engine Manufacturer, as the case may be, shall have received notice thereof, to
Mortgagee). Any amounts received by Assignee pursuant to the immediately
preceding sentence shall, to the extent not theretofore applied in satisfaction
of sums owing to Assignee in accordance with the terms of the Operative
Agreements, be held and invested as provided in Section 4.4 of the Lease.
Section 10. ASSIGNEE'S AGREEMENT. Assignee agrees that, during the
Term, except as otherwise contemplated by Section 2 hereof and unless a Lease
Event of Default shall have occurred and be continuing, it will not enter into
any agreement that would amend, modify, supplement, rescind, cancel or terminate
the Purchase Agreement or the General Terms Agreement in respect of the Aircraft
or the Engines without the prior written consent of Assignor.
Section 11. EXECUTION; COUNTERPARTS, ETC. This Assignment is
executed by Assignor and Assignee concurrently with the execution and delivery
of the Lease. This Assignment may be executed by the parties hereto in separate
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. The section headings in this Assignment are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
Section 12. CONFIDENTIAL TREATMENT. Assignee agrees that it will not
disclose to any third party the terms of the Purchase Agreement or the General
Terms Agreement except (i) as required by applicable law or governmental
regulation, (ii) in connection with the financing of the Aircraft, (iii) as
permitted under Section 8 of the Participation Agreement as if this Assignment
were specifically referred to therein, (iv) with the consent of Assignor,
Manufacturer and the Engine Manufacturer (as the case may be) or (v) in
connection with any sale or lease of the Aircraft. Assignee further agrees that
in connection with any disclosures made as contemplated by clauses (ii) (except
in connection with the financing contemplated by the Participation Agreement),
(iii) (except as to clauses (C) and (E) and (F) of Section 8 of the
Participation Agreement) or (iv) of the preceding sentence, Assignee shall
instruct the entity to which such information is disclosed to treat such
information as confidential on the terms set forth in this Section 12.
Section 13. ASSIGNMENT TO MORTGAGEE. The right, title and interest
of Assignee in and to this Assignment has been assigned to and is subject to a
security interest in favor of Wilmington Trust Company, as Mortgagee under the
Trust Indenture, for the benefit of the Noteholders and the Indenture
Indemnitees referred to in such Trust Indenture, all to the extent provided in
such Trust Indenture. Assignor hereby consents to such assignment and to the
creation of such security interest in and to this Assignment.
SECTION 14. GOVERNING LAW. THIS ASSIGNMENT SHALL IN ALL RESPECTS BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS.
[This space intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement and Engine Warranties Assignment ___ to be duly executed as of the day
and year first above written.
CONTINENTAL AIRLINES, INC.
By_________________________________
Name:
Title:
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee
By_________________________________
Name:
Title:
The undersigned, as Mortgagee for the benefit of the Note Holders
and Indenture Indemnitees and as assignee of, and holder of a security interest
in, the estate, right, title and interest of Assignee in and to the foregoing
Assignment pursuant to the terms of the Trust Indenture agrees to the terms of
the foregoing Assignment and agrees that its rights and remedies under the Trust
Indenture shall be subject to the terms and conditions of the foregoing
Assignment, including Sections 4 and 5 therein, and of the Purchase Agreement
and the General Terms Agreement.
WILMINGTON TRUST COMPANY,
as Mortgagee
By________________________________
Name:
Title:
MANUFACTURER CONSENT AND AGREEMENT ___
The undersigned, THE BOEING COMPANY, a Delaware corporation, hereby
acknowledges notice of and consents to all of the terms of Purchase Agreement
and Engine Warranties Assignment ___ (herein called the "Assignment") (the
defined terms therein being hereinafter used with the same meanings unless
otherwise defined herein) between Continental Airlines, Inc., as Assignor, and
Wells Fargo Bank Northwest, National Association, as Owner Trustee, as Assignee,
and hereby confirms to Assignee that: (i) all representations, warranties,
indemnities and agreements of Manufacturer under the Purchase Agreement with
respect to the Aircraft shall inure to the benefit of Assignee to the same
extent as if originally named the "Buyer" therein, except as provided by Section
2 of the Assignment; (ii) Assignee shall not be liable for any of the
obligations or duties of Assignor under the Purchase Agreement, nor shall the
Assignment give rise to any duties or obligations whatsoever on the part of
Assignee owing to Manufacturer, except as provided in Section 4 of the
Assignment; (iii) Manufacturer consents to the grant of a security interest in
the Aircraft pursuant to the Trust Indenture by Assignee and agrees that the
Assignment constitutes an agreement by Assignee as required by Article 10.2 of
the Purchase Agreement; and (iv) Manufacturer will continue to pay to Assignor
or its order all payments that Manufacturer may be required to make in respect
of the Aircraft under the Purchase Agreement unless and until Manufacturer shall
have received written notice from Assignee or Mortgagee addressed to its Vice -
President - Contracts at P.O. Box 3707, Mail Code 21-34, Seattle, Washington
98124-2207, if by mail, or to (425) 237-1706, if by facsimile, that a Lease
Event of Default has occurred and is continuing or the Lease has been terminated
(unless Assignor or its designee has acquired ownership of the Aircraft pursuant
to the Operative Agreements and Assignor has given written notice thereof to
Manufacturer), whereupon Manufacturer will not be required to make further
inquiry into the content of such notice and will make any and all payments that
it may be required thereafter to make in respect of the Aircraft under the
Purchase Agreement and the right to receive that has been assigned under the
Assignment, directly to Assignee at its address at 79 South Main Street, Third
Floor, Salt Lake City, Utah 84111, Attn: Corporate Trust Department (or, so long
as the Trust Indenture has not been discharged, directly to Mortgagee at its
address at Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890, Attn: Corporate Trust Administration), unless and until Manufacturer
shall have received notice in writing from Assignee or Mortgagee that no Lease
Event of Default is continuing, whereupon Manufacturer shall make all payments
that Manufacturer may be required to make in respect of the Aircraft under the
Purchase Agreement to Assignor or its order, as aforesaid.
Manufacturer hereby represents and warrants that: (i) Manufacturer
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware; (ii) the making and performance of the Purchase
Agreement and this Manufacturer Consent and Agreement ___ have been duly
authorized by all necessary corporate action on the part of Manufacturer, do not
require any stockholder approval and do not contravene Manufacturer's Restated
Certificate of Incorporation or By-laws or any indenture, credit agreement or
other contractual agreement to which Manufacturer is a party or by which it is
bound and the making of the Purchase Agreement and this Manufacturer Consent and
Agreement ___, the giving of the warranty obligations thereunder, do not, as to
such making or giving, contravene any law binding on Manufacturer; and (iii) the
Purchase Agreement constituted, as of the date thereof and at all times
thereafter to and including the date of this Manufacturer Consent and Agreement
___, and this Manufacturer Consent and Agreement ___ constitutes, binding
obligations of Manufacturer enforceable against Manufacturer in accordance with
their respective terms subject to (A) the limitations of applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and (B) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law), which
principles do not make the remedies available at law or in equity with respect
to the Purchase Agreement and this Manufacturer Consent and Agreement ___
inadequate for the practical realization of the benefits intended to be provided
thereby. It is understood that the execution of this Manufacturer Consent and
Agreement ___ by Manufacturer is subject to the condition that, concurrently
with the delivery of the Aircraft to Assignee, Assignee shall lease the Aircraft
to Assignor under the Lease.
THIS MANUFACTURER CONSENT AND AGREEMENT ___ SHALL IN ALL RESPECTS BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF WASHINGTON, INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT REFERENCE TO CONFLICTS OF
LAWS PRINCIPLES.
Dated as of ____________.
THE BOEING COMPANY
By_________________________________
Name:
Title:
ENGINE MANUFACTURER CONSENT AND AGREEMENT ___
The undersigned, CFM INTERNATIONAL INC., a Delaware corporation,
hereby acknowledges notice of and consents to all of the terms of Purchase
Agreement and Engine Warranties Assignment ___ (herein called the "Assignment")
(the defined terms therein being hereinafter used with the same meanings unless
otherwise defined herein) between Continental Airlines, Inc., as Assignor, and
Wells Fargo Bank Northwest, National Association, as Owner Trustee, as Assignee.
Under the General Terms Agreement, Engine Manufacturer has agreed to support
certain CFM Model 56-7B26 engines and spare parts therefor purchased by Assignor
from Engine Manufacturer, as installed on certain Boeing Model 737 aircraft.
Engine Manufacturer hereby confirms to Assignor and Assignee that the Engine
Warranties, as and to the extent that such relate to the Engines, shall inure to
the benefit of Assignee (and, so long as the Trust Indenture has not been
discharged, Mortgagee) to the same extent as if originally named "Airline" in
the General Terms Agreement and to the benefit of Assignor (but only to the
extent provided for in the Assignment) in each case subject to the terms and
conditions of the Assignment; provided, that Engine Manufacturer shall not owe
any liability or obligation under the Engine Warranties more than once in total.
Engine Manufacturer represents and warrants that:
1. It is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware;
2. The making and performance of this Engine Manufacturer Consent
and Agreement ___ in accordance with its terms have been duly authorized by all
necessary corporate action on the part of Engine Manufacturer, do not require
any stockholder approval and do not contravene its Certificate of Incorporation
or by-laws or any debenture, credit agreement or other contractual agreement to
which Engine Manufacturer is a party or by which it is bound or any law binding
on Engine Manufacturer;
3. The making and performance of the Engine Warranties in accordance
with their terms have been duly authorized by all necessary corporate action on
the part of Engine Manufacturer, do not require any stockholder approval and do
not contravene Engine Manufacturer's Certificate of Incorporation or by-laws or
any debenture, credit agreement or other contractual agreement to which Engine
Manufacturer is a party or by which it is bound, and do not, as to the making
thereof, contravene any law binding on Engine Manufacturer, and to the best of
its knowledge, do not as to the performance thereof contravene any law binding
on Engine Manufacturer; and
4. The Engine Warranties constituted as of the date on which they
were made and at all times thereafter to and including the date of this Engine
Manufacturer Consent and Agreement ___, and this Engine Manufacturer Consent and
Agreement ___ constitute binding obligations of Engine Manufacturer enforceable
against Engine Manufacturer in accordance with their respective terms subject
to:
(a) the limitations of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights
of creditors generally; and
(b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
[This space intentionally left blank.]
THIS ENGINE MANUFACTURER CONSENT AND AGREEMENT ___ SHALL IN ALL
RESPECTS BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES
OF CONFLICTS OF LAWS.
Dated as of _____________.
CFM INTERNATIONAL, INC.
By_________________________________
Name:
Title:
EXHIBIT A-4-II to
NOTE PURCHASE AGREEMENT
FORM OF AIRCRAFT PURCHASE AGREEMENT ASSIGNMENT - GE
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CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION
SET FORTH IN SECTION 8 OF THE PARTICIPATION AGREEMENT (AS DEFINED HEREIN)
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PURCHASE AGREEMENT AND ENGINE WARRANTIES ASSIGNMENT [___]
PURCHASE AGREEMENT AND ENGINE WARRANTIES ASSIGNMENT [___], dated as
of [___________], between Continental Airlines, Inc., a Delaware corporation
("Assignor"), and Wells Fargo Bank Northwest, National Association, a national
banking association, not in its individual capacity but solely as Owner Trustee
("Assignee") under Trust Agreement [___] dated as of [___________] (the "Trust
Agreement"), between the Owner Participant named therein and Assignee, in its
individual capacity, and otherwise not in its individual capacity but solely as
trustee thereunder.
Assignor and Manufacturer (as such term and other capitalized terms
are hereinafter defined) are parties to the Purchase Agreement, providing, among
other things, for the manufacture and sale by Manufacturer or Manufacturer's
wholly owned subsidiary to Assignor of certain aircraft, engines and related
equipment, including the Aircraft. Assignor and Engine Manufacturer are parties
to the General Terms Agreement, containing, among other terms and conditions,
the Engine Warranties.
Assignee wishes to acquire the Aircraft and Assignor, on the terms
and conditions hereinafter set forth, is willing to assign to Assignee certain
of Assignor's rights and interests under the Purchase Agreement and the General
Terms Agreement and Assignee is willing to accept such assignment, as
hereinafter set forth.
AGREEMENTS
The parties hereto agree as follows:
Section 1. DEFINITIONS. For all purposes of this Assignment, except
as otherwise expressly provided or unless the context otherwise requires, the
following terms shall have the following meanings:
AIRCRAFT - The Boeing Model [767-424] [767-224] [777-224] aircraft
bearing Manufacturer's Serial No. [______] and U.S. Registration No.
N[_________], to be financed pursuant to the Participation Agreement, including
the Engines.
AGTA - The Aircraft General Terms Agreement AGTA-CAL between the
Manufacturer and Lessee, dated October 10, 1997.
ENGINES - Two General Electric Company [CF6-80C2B4F] [CF6-80C2B8F]
[GE90] series engines bearing manufacturer's serial numbers [______] and
[______], respectively, installed on the Aircraft.
ENGINE MANUFACTURER - General Electric Company, a New York
corporation, and its successors and assigns.
ENGINE WARRANTIES - Engine Manufacturer's "New Engine Warranty,"
"New Parts Warranty," "Ultimate Life Warranty" and "Campaign Change Warranty,"
as set forth in the Engine Manufacturer's Engine Product Support Plan which
forms a part of the General Terms Agreement, and as limited by the applicable
terms of the General Terms Agreement and such Engine Product Support Plan.
GENERAL TERMS AGREEMENT - The Amended and Restated General Terms
Agreement No. 6-8057, dated as of November 1, 1994, by and between Engine
Manufacturer and Assignor, including the "Engine Product Support Plan" at
Exhibit B thereto, insofar as such Engine Product Support Plan relates to the
Engine Warranties, but excluding any and all letter agreements attached thereto,
to the extent that such General Terms Agreement and such Exhibit relate to the
Engine Warranties, as such General Terms Agreement may hereafter be amended,
supplemented and modified to the extent permitted by the terms of this
Assignment to the extent relating to the Engines.
LEASE - The Lease Agreement [___], dated as of [___________], as at
any time amended, supplemented and modified, between Assignee, as lessor, and
Assignor, as lessee, providing for the lease of the Aircraft.
MANUFACTURER - The Boeing Company, a Delaware corporation, and its
successors and assigns.
PARTICIPATION AGREEMENT - The Participation Agreement [___], dated
as of [___________], among Assignor, the Participants, Assignee and Mortgagee,
as at any time amended, supplemented and modified.
PURCHASE AGREEMENT - Purchase Agreement No. [2060, dated as of
October 10, 1997,] [2211, dated as of November 16, 1998] [2061 (formerly known
as Purchase Agreement No. 1785), dated as of October 10, 1997] between
Manufacturer and Assignor, providing, among other things, for the manufacture
and sale by Manufacturer to Assignor of certain Boeing Model [767-424] [767-224]
[777-224] aircraft (including the Aircraft) and including as part thereof
Exhibits A, B, BFE1, EE1 and SLP1 thereto and the AGTA (as and to the extent
incorporated by reference in the Purchase Agreement and including Exhibit C to
the AGTA and excluding the other Exhibits and Letter Agreements hereto), but
excluding all other exhibits and letter and supplemental agreements, to the
extent that such Purchase Agreement and such Exhibits relate to the Aircraft, as
such Purchase Agreement may hereafter be amended, supplemented and modified to
the extent permitted by the terms of this Assignment.
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 the Participation
Agreement.
Section 2. ASSIGNMENT. Assignor does hereby sell, assign, transfer
and set over unto Assignee and its successors and permitted assigns all of
Assignor's rights and interests in and to the Purchase Agreement, as and only to
the extent that the same relates to the Aircraft, and in and to the General
Terms Agreement, as and only to the extent that the Engine Warranties contained
therein relate to the Engines, except to the extent reserved below, including
without limitation in such assignment (a) all claims for damages in respect of
the Aircraft and the Engines arising as a result of any default by Manufacturer
under the Purchase Agreement or Engine Manufacturer or any other vendor or
supplier of other parts or equipment installed on or in the Aircraft, including
without limitation all warranty service life policies, aircraft performance
guarantees and indemnity provisions contained in the Purchase Agreement and the
Engine Warranties, and all claims arising thereunder, in respect of the Aircraft
and the Engines, (b) any and all rights of Assignor to compel performance of the
terms of the Purchase Agreement in respect of the Aircraft and the Engine
Warranties in respect of the Engines and (c) the right to purchase and take
title to the Aircraft pursuant to the Purchase Agreement; reserving to Assignor,
however, with respect to the Aircraft and each Engine, (i) all rights to receive
any credits due to Assignor with respect to the purchase price of the Aircraft
pursuant to the Purchase Agreement and of the Engines pursuant to the General
Terms Agreement, (ii) all of Assignor's rights and interests in or arising out
of any payments or deposits made relating to the Aircraft or to be made by
Assignor on amounts credited or to be credited or paid or to be paid by the
Manufacturer to the Assignor in respect of the Aircraft and (iii) so long and
only so long as the Aircraft and each Engine shall be subject to the Lease and
no Lease Event of Default shall have occurred and be continuing thereunder, the
rights (A) to demand, accept and retain all rights in and to all property (other
than the Aircraft), data and services that Manufacturer or Engine Manufacturer
is obligated to provide or does provide pursuant to the Purchase Agreement or
the General Terms Agreement, as the case may be, and (B) to obtain services,
training, data and demonstration and test flights pursuant to the Purchase
Agreement or the General Terms Agreement, as the case may be.
Assignee hereby accepts such assignment subject to the terms hereof.
Assignor has furnished a true copy of the Purchase Agreement and a true copy of
the General Terms Agreement to Assignee and has specifically directed Assignee's
attention to Section 12 of Part 2, Section 5 of Part 3, Section 6 of Part 5 and
Section 3 of Part 6 of Exhibit C to the AGTA.
Section 3. EXERCISE OF RIGHTS OF "CUSTOMER" UNDER PURCHASE AGREEMENT
AND OF "AIRLINE" UNDER GENERAL TERMS AGREEMENT. Notwithstanding the foregoing,
if and so long as no Lease Event of Default shall have occurred and be
continuing, Assignee authorizes Assignor, to the exclusion of Assignee, during
the Term, to exercise in Assignor's name all rights and powers of the "Customer"
in respect of the Aircraft under the Purchase Agreement and of the "Airline" in
respect of each Engine under the General Terms Agreement, and of Assignee in
respect of a default by any vendor or supplier of parts and equipment (as
specified in clause (a) of Section 2 above) and to retain any recovery or
benefit resulting from the enforcement of any warranty or indemnity under the
Purchase Agreement or the General Terms Agreement in respect of the Aircraft or
each Engine, as the case may be, except that Assignor may not enter into any
change order or other amendment, modification or supplement to the Purchase
Agreement without the written consent or countersignature of Assignee if such
change order, amendment, modification or supplement would (i) result in any
rescission, cancellation or termination of the Purchase Agreement in respect of
the Aircraft or (ii) materially diminish the rights assigned hereunder to
Assignee. Assignee agrees that, as between Assignee and Manufacturer or Engine
Manufacturer, as the case may be (and without affecting Assignor's duties or
obligations under the Participation Agreement or the Lease), neither
Manufacturer nor Engine Manufacturer, as the case may be, shall be deemed to
have knowledge of any Lease Default, Lease Event of Default, declaration of
default or the discontinuance or remedy thereof or the Aircraft or either Engine
being no longer subject to the Lease or any change in the authority of Assignor
or Assignee, as the case may be, to exercise any of the rights established
hereunder unless and until Manufacturer shall have received written notice
thereof from Assignee or Mortgagee addressed to its Vice President - Contracts
at P.O. Box 3707, Mail Code 21-34, Seattle, Washington 98124-2207, if by mail,
or to (425) 237-1706, if by facsimile, or, in the case of Engine Manufacturer,
Engine Manufacturer shall have received written notice thereof from Assignee or
Mortgagee addressed to General Electric Company, GE Aircraft Engines, One Neuman
Way, Cincinnati, Ohio 45215-6301, Attention: Director, Commercial Contracts, if
by facsimile. So long as Manufacturer and Engine Manufacturer act in good faith,
Manufacturer and Engine Manufacturer may rely conclusively on any such notice
without inquiring as to the accuracy of, or the entitlement of the party to
give, such notice.
The Engine Manufacturer shall not be deemed to have knowledge of the
replacement of an Engine with another [CF6-80C2B4F] [CF6-80C2B8F] [GE90][
engine, until the Engine Manufacturer has received written notice thereof. Such
notice shall include the serial number of the Engine being replaced, as well as
the serial number of the replacement Engine and shall be sent to: Lease Pool
Manager, Customer Support Operation, GE Aircraft Engines, 111 Merchant Street,
Room 450, Cincinnati, Ohio 45246.
Section 4. CERTAIN AGREEMENTS. It is expressly agreed that, anything
herein contained to the contrary notwithstanding:
(a) Assignor shall at all times remain liable (i) to Manufacturer
under the Purchase Agreement to perform all the duties and obligations of
the "Customer" thereunder and (ii) to Engine Manufacturer under the General
Terms Agreement to perform all the duties and obligations of the "Airline"
thereunder, in each case to the same extent as if this Assignment had not
been executed,
(b) the exercise by Assignee of any of the rights assigned hereunder
shall not release Assignor from any of its duties or obligations to
Manufacturer under the Purchase Agreement or to Engine Manufacturer under
the General Terms Agreement except to the extent that such exercise by
Assignee shall constitute performance of such duties and obligations, and
(c) except as provided in the next sentence, none of Assignee,
Mortgagee or any Participant shall have any obligation or liability under
the Purchase Agreement or the General Terms Agreement by reason of, or
arising out of, this Assignment or be obligated to perform any of the
obligations or duties of Assignor under the Purchase Agreement or the
General Terms Agreement or to make any payment thereunder or to make any
inquiry as to the sufficiency of any payment received by any of them or to
present or file any claim or to take any other action to collect or enforce
any claim for any payment assigned hereunder.
Anything contained in this Assignment, the Consent and Agreement or the Engine
Consent and Agreement to the contrary notwithstanding, but without in any way
releasing Assignor from any of its duties or obligations under the Purchase
Agreement, the General Terms Agreement or this Assignment, Assignee and
Mortgagee confirm for the benefit of Manufacturer and Engine Manufacturer,
respectively, that, insofar as the provisions of the Purchase Agreement or the
Engine Warranties relate to the Aircraft or the Engines, as the case may be, in
exercising any rights under the Purchase Agreement or the Engine Warranties, or
in making any claim with respect to the Aircraft or other goods and services
delivered or to be delivered pursuant to the Purchase Agreement or the Engine
Warranties, the terms and conditions of the Purchase Agreement including,
without limitation, the Disclaimer and Release and the Exclusion of
Consequential and Other Damages provisions of Sections 12.1 through 12.3 of
Exhibit C to the AGTA and the Engine Warranties, including without limitation
Exhibit B to the General Terms Agreement shall apply to, and be binding upon,
Assignee and Mortgagee to the same extent as Assignor.
Section 5. PRESERVATION OF RIGHTS. Nothing contained in this
Assignment shall in any way diminish or limit the provisions of Assignor's
indemnity in Section 9 of the Participation Agreement with respect to any
liability of Assignee to Manufacturer in any way relating to or arising out of
the Purchase Agreement. Nothing contained in this Assignment shall subject
Manufacturer or Engine Manufacturer to any obligation or liability to which it
would not otherwise be subject under the Purchase Agreement or under the General
Terms Agreement, as the case may be, or modify in any respect the contract
rights of Manufacturer or Engine Manufacturer thereunder, except as may be
provided in the Consent and Agreement and the Engine Consent and Agreement, or
require Manufacturer to divest itself of title to or possession of the Aircraft
or other goods and services until delivery thereof and payment therefor as
provided in the Purchase Agreement or subject Manufacturer or Engine
Manufacturer to any multiple or duplicative liability or obligation under the
Purchase Agreement or the General Terms Agreement, as the case may be. No
further assignment of the Engine Warranties, including without limitation
assignments for security purposes (other than under the Trust Indenture), are
permitted without the express written consent of Engine Manufacturer.
Section 6. APPOINTMENT OF ATTORNEY. Effective at any time when a
Lease Event of Default shall have occurred and be continuing, (i) unless
Assignee and Mortgagee (so long as the Lien of the Trust Indenture has not been
discharged), in their sole discretion, shall notify Manufacturer or Engine
Manufacturer, as the case may be, to the contrary, the authorization given to
Assignor under Section 3 hereof to enforce such rights and claims shall
henceforth cease to be effective and Assignee and its successors and permitted
assigns shall, to the exclusion of Assignor, be entitled to assert and enforce
such rights and claims as substitute party plaintiff or otherwise, and Assignor
shall, at the request of Assignee or its successors or permitted assigns and at
Assignor's expense, cooperate with and take such action as is reasonably
necessary to enable Assignee and its successors and permitted assigns to enforce
such rights and claims, and (ii) Assignor does hereby constitute Assignee, its
successors and permitted assigns, Assignor's true and lawful attorney,
irrevocably, with full power (in the name of Assignor or otherwise) to ask,
require, demand, receive, compound and give acquittance for any and all monies
and claims for monies due and to become due under, or arising out of, the
Purchase Agreement in respect of the Aircraft or the Engine Warranties in
respect of the Engines, as the case may be, to the extent that the same have
been assigned by this Assignment and, for such period as Assignee may exercise
rights with respect thereto under this Assignment, to endorse any checks or
other instruments or orders in connection therewith and to file any claims or
take any action or institute (or, if previously commenced, assume control of)
any proceeding and to obtain any recovery in connection therewith which Assignee
may deem to be necessary or advisable in the premises.
Section 7. OTHER ACTION. Assignor agrees that, at Assignor's sole
cost and expense, at any time and from time to time, upon the written request of
Assignee or, so long as the Lien of the Trust Indenture has not been discharged,
Mortgagee, Assignor will promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as Assignee or,
so long as the Lien of the Trust Indenture has not been discharged, Mortgagee,
may reasonably request in order to obtain the full benefits of this Assignment
and of the rights and powers herein granted.
Section 8. ASSIGNOR'S REPRESENTATIONS AND WARRANTIES. Assignor does
hereby represent and warrant that the Purchase Agreement and the General Terms
Agreement are in full force and effect as to Assignor and are enforceable
against Assignor in accordance with their respective terms. Assignor does hereby
further represent and warrant that Assignor has, with the authorized execution
of the Consent and Agreement and the Engine Consent and Agreement, (i) received
all necessary consents to the assignment and transfer contemplated herein
(including without limitation the assignment and transfer contemplated herein of
Assignor's rights under the Purchase Agreement and the General Terms Agreement)
and (ii) assuming that the Consent and Agreement and the Engine Consent and
Agreement are in full force and effect, such consents are in full force and
effect and Assignor further represents and warrants that Assignor has not
assigned (except as assigned hereby) or pledged (except pursuant to the
[___________________________] between Lessee and Manufacturer, the Lien of which
will have been released at or prior to the delivery of this Agreement), and
hereby covenants that it will not during the Term assign (except as assigned
hereby) or pledge so long as this Assignment shall remain in effect, the whole
or any part of the rights hereby assigned or any of its rights with respect to
the Aircraft under the Purchase Agreement or with respect to the Engines under
the General Terms Agreement not assigned hereby to anyone other than Assignee.
Section 9. PAYMENTS. Notwithstanding this Assignment and anything
herein to the contrary, all amounts that Manufacturer or Engine Manufacturer is
obligated to pay to Assignor under the Purchase Agreement with respect to the
Aircraft or under the General Terms Agreement with respect to the Engines,
including, without limitation, resulting from the enforcement of any warranty,
covenant, representation, indemnity or product support agreement thereunder or
the enforcement or exercise of any right or power thereunder or hereunder (in
the case of Manufacturer, a "Manufacturer Payment," and in the case of Engine
Manufacturer, an "Engine Manufacturer Payment") (excluding, however, from
Manufacturer Payments and Engine Manufacturer Payments any amounts Manufacturer
is obligated to pay to Assignor with respect to the rights reserved to Assignor
in Section 2 hereof), will be payable and applicable as follows: all
Manufacturer Payments and Engine Manufacturer Payments shall be paid to Assignor
unless and until Manufacturer or Engine Manufacturer, as the case may be, shall
have received written notice as set forth in Section 3 hereof from Assignee or
Mortgagee that a Lease Event of Default has occurred and is continuing,
whereupon Manufacturer or Engine Manufacturer, as the case may be, will, until
Manufacturer or Engine Manufacturer, as the case may be, shall have received
written notice from Assignee or Mortgagee that all Lease Events of Default have
been cured or waived, make any and all such payments directly to Assignee (or,
so long as the Trust Indenture has not been discharged and Manufacturer or
Engine Manufacturer, as the case may be, shall have received notice thereof, to
Mortgagee). Any amounts received by Assignee pursuant to the immediately
preceding sentence shall, to the extent not theretofore applied in satisfaction
of sums owing to Assignee in accordance with the terms of the Operative
Agreements, be held and invested as provided in Section 4.4 of the Lease.
Section 10. ASSIGNEE'S AGREEMENT. Assignee agrees that, during the
Term, except as otherwise contemplated by Section 2 hereof and unless a Lease
Event of Default shall have occurred and be continuing, it will not enter into
any agreement that would amend, modify, supplement, rescind, cancel or terminate
the Purchase Agreement or the General Terms Agreement in respect of the Aircraft
or the Engines without the prior written consent of Assignor.
Section 11. EXECUTION; COUNTERPARTS, ETC. This Assignment is
executed by Assignor and Assignee concurrently with the execution and delivery
of the Lease. This Assignment may be executed by the parties hereto in separate
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. The section headings in this Assignment are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
Section 12. CONFIDENTIAL TREATMENT. Assignee agrees that it will not
disclose to any third party the terms of the Purchase Agreement or the General
Terms Agreement except (i) as required by applicable law or governmental
regulation, (ii) in connection with the financing of the Aircraft, (iii) as
permitted under Section 8 of the Participation Agreement as if this Assignment
were specifically referred to therein, (iv) with the consent of Assignor,
Manufacturer and the Engine Manufacturer (as the case may be) or (v) in
connection with any sale or lease of the Aircraft. Assignee further agrees that
in connection with any disclosures made as contemplated by clauses (ii) (except
in connection with the financing contemplated by the Participation Agreement),
(iii) (except as to clauses (C) and (E) and (F) of Section 8 of the
Participation Agreement) or (iv) of the preceding sentence, Assignee shall
instruct the entity to which such information is disclosed to treat such
information as confidential on the terms set forth in this Section 12.
Section 13. ASSIGNMENT TO MORTGAGEE. The right, title and interest
of Assignee in and to this Assignment has been assigned to and is subject to a
security interest in favor of Wilmington Trust Company, as Mortgagee under the
Trust Indenture, for the benefit of the Noteholders and the Indenture
Indemnitees referred to in such Trust Indenture, all to the extent provided in
such Trust Indenture. Assignor hereby consents to such assignment and to the
creation of such security interest in and to this Assignment.
SECTION 14. GOVERNING LAW. THIS ASSIGNMENT SHALL IN ALL RESPECTS BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS.
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IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement and Engine Warranties Assignment [___] to be duly executed as of the
day and year first above written.
CONTINENTAL AIRLINES, INC.
By_________________________________
Name:
Title:
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee
By_________________________________
Name:
Title:
The undersigned, as Mortgagee for the benefit of the Note Holders
and Indenture Indemnitees and as assignee of, and holder of a security interest
in, the estate, right, title and interest of Assignee in and to the foregoing
Assignment pursuant to the terms of the Trust Indenture agrees to the terms of
the foregoing Assignment and agrees that its rights and remedies under the Trust
Indenture shall be subject to the terms and conditions of the foregoing
Assignment, including Sections 4 and 5 therein, and of the Purchase Agreement
and the General Terms Agreement.
WILMINGTON TRUST COMPANY,
as Mortgagee
By_________________________________
Name:
Title:
MANUFACTURER CONSENT AND AGREEMENT
The undersigned, THE BOEING COMPANY, a Delaware corporation, hereby
acknowledges notice of and consents to all of the terms of Purchase Agreement
and Engine Warranties Assignment [___] (herein called the "Assignment") (the
defined terms therein being hereinafter used with the same meanings unless
otherwise defined herein) between Continental Airlines, Inc., as Assignor, and
Wells Fargo Bank Northwest, National Association, as Owner Trustee, as Assignee,
and hereby confirms to Assignee that: (i) all representations, warranties,
indemnities and agreements of Manufacturer under the Purchase Agreement with
respect to the Aircraft shall inure to the benefit of Assignee to the same
extent as if originally named the "Customer" therein, except as provided by
Section 2 of the Assignment; (ii) Assignee shall not be liable for any of the
obligations or duties of Assignor under the Purchase Agreement, nor shall the
Assignment give rise to any duties or obligations whatsoever on the part of
Assignee owing to Manufacturer, except as provided in Section 4 of the
Assignment; (iii) Manufacturer consents to the grant of a security interest in
the Aircraft pursuant to the Trust Indenture by Assignee and agrees that the
Assignment constitutes an agreement by Assignee as required by Article 9.2 of
the AGTA; and (iv) Manufacturer will continue to pay to Assignor or its order
all payments that Manufacturer may be required to make in respect of the
Aircraft under the Purchase Agreement unless and until Manufacturer shall have
received written notice from Assignee or Mortgagee addressed to its Vice -
President - Contracts at P.O. Box 3707, Mail Code 21-34, Seattle, Washington
98124-2207, if by mail, or to (425) 237-1706, if by facsimile, that a Lease
Event of Default has occurred and is continuing, whereupon Manufacturer will not
be required to make further inquiry into the content of such notice and will
make any and all payments that it may be required thereafter to make in respect
of the Aircraft under the Purchase Agreement and the right to receive that has
been assigned under the Assignment, directly to Assignee at its address at 79
South Main Street, Third Floor, Salt Lake City, Utah 84111, Attn: Corporate
Trust Department (or, so long as the Trust Indenture has not been discharged,
directly to Mortgagee at its address at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890, Attn: Corporate Trust Administration),
unless and until Manufacturer shall have received notice in writing from
Assignee or Mortgagee that no Lease Event of Default is continuing, whereupon
Manufacturer shall make all payments that Manufacturer may be required to make
in respect of the Aircraft under the Purchase Agreement to Assignor or its
order, as aforesaid.
Manufacturer hereby represents and warrants that: (i) Manufacturer
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware; (ii) the making and performance of the Purchase
Agreement and this Manufacturer Consent and Agreement [___] have been duly
authorized by all necessary corporate action on the part of Manufacturer, do not
require any stockholder approval and do not contravene Manufacturer's Restated
Certificate of Incorporation or By-laws or any indenture, credit agreement or
other contractual agreement to which Manufacturer is a party or by which it is
bound and the making of the Purchase Agreement and this Manufacturer Consent and
Agreement [___], the giving of the warranty obligations thereunder, do not, as
to such making or giving, contravene any law binding on Manufacturer; and (iii)
the Purchase Agreement constituted, as of the date thereof and at all times
thereafter to and including the date of this Manufacturer Consent and Agreement
[___], and this Manufacturer Consent and Agreement [___] constitutes, binding
obligations of Manufacturer enforceable against Manufacturer in accordance with
their respective terms subject to (A) the limitations of applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and (B) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law), which
principles do not make the remedies available at law or in equity with respect
to the Purchase Agreement and this Manufacturer Consent and Agreement [___]
inadequate for the practical realization of the benefits intended to be provided
thereby. It is understood that the execution of this Manufacturer Consent and
Agreement [___] by Manufacturer is subject to the condition that, concurrently
with the delivery of the Aircraft to Assignee, Assignee shall lease the Aircraft
to Assignor under the Lease.
THIS MANUFACTURER CONSENT AND AGREEMENT [___] SHALL IN ALL RESPECTS
BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF WASHINGTON, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT REFERENCE TO
CONFLICTS OF LAWS PRINCIPLES.
Dated as of _________ __, ____.
THE BOEING COMPANY
By_________________________________
Name:
Title:
MSN: ______
ENGINE MANUFACTURER CONSENT AND AGREEMENT
The undersigned, GENERAL ELECTRIC COMPANY, a New York corporation,
hereby acknowledges notice of and consents to all of the terms of Purchase
Agreement and Engine Warranties Assignment [___] (herein called the
"Assignment") (the defined terms therein being hereinafter used with the same
meanings unless otherwise defined herein) between Continental Airlines, Inc., as
Assignor, and Wells Fargo Bank Northwest, National Association, as Owner
Trustee, as Assignee. Under the General Terms Agreement, Engine Manufacturer has
agreed to support certain [CF6-80C2B8F] [CF6-80C2B4F] [GE90] engines and spare
parts therefor purchased by Assignor from Engine Manufacturer, as installed on
certain Boeing Model [767-424] [767-224] [777-224] aircraft. Engine Manufacturer
hereby confirms to Assignor and Assignee that the Engine Warranties, as and to
the extent that such relate to the Engines, shall inure to the benefit of
Assignee (and, so long as the Trust Indenture has not been discharged,
Mortgagee) to the same extent as if originally named "Airline" in the General
Terms Agreement and to the benefit of Assignor (but only to the extent provided
for in the Assignment) in each case subject to the terms and conditions of the
Assignment; PROVIDED, that Engine Manufacturer shall not owe any liability or
obligation under the Engine Warranties more than once in total.
Engine Manufacturer represents and warrants that:
1. It is a corporation duly organized and validly existing in good
standing under the laws of the State of New York;
2. The making and performance of this Engine Manufacturer Consent
and Agreement [___] in accordance with its terms have been duly authorized by
all necessary corporate action on the part of Engine Manufacturer, do not
require any stockholder approval and do not contravene its Certificate of
Incorporation or by-laws or any debenture, credit agreement or other contractual
agreement to which Engine Manufacturer is a party or by which it is bound or any
law binding on Engine Manufacturer;
3. The making and performance of the Engine Warranties in accordance
with their terms have been duly authorized by all necessary corporate action on
the part of Engine Manufacturer, do not require any stockholder approval and do
not contravene Engine Manufacturer's Certificate of Incorporation or by-laws or
any debenture, credit agreement or other contractual agreement to which Engine
Manufacturer is a party or by which it is bound, and do not, as to the making
thereof, contravene any law binding on Engine Manufacturer, and to the best of
its knowledge, do not as to the performance thereof contravene any law binding
on Engine Manufacturer; and
4. The Engine Warranties constituted as of the date on which they
were made and at all times thereafter to and including the date of this Engine
Manufacturer Consent and Agreement [___], and this Engine Manufacturer Consent
and Agreement [___] constitute binding obligations of Engine Manufacturer
enforceable against Engine Manufacturer in accordance with their respective
terms subject to:
(a) the limitations of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights
of creditors generally; and
(b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
[This space intentionally left blank.]
THIS ENGINE MANUFACTURER CONSENT AND AGREEMENT [___] SHALL IN ALL
RESPECTS BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES
OF CONFLICTS OF LAWS.
Dated as of _________ __, ____.
GENERAL ELECTRIC COMPANY
By_________________________________
Name:
Title:
EXHIBIT A-5 to
NOTE PURCHASE AGREEMENT
FORM OF LEASED AIRCRAFT TRUST AGREEMENT
[Filed Separately]
EXHIBIT A-6 to
NOTE PURCHASE AGREEMENT
FORM OF SPECIAL INDENTURE
[Filed Separately]
EXHIBIT B
TO
NOTE PURCHASE AGREEMENT
FORM OF DELIVERY NOTICE
DELIVERY NOTICE
Dated as of [__________]
To each of the addressees listed
in Schedule A hereto
RE: DELIVERY NOTICE IN ACCORDANCE WITH AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT REFERRED TO BELOW
Gentlemen:
Reference is made to the Amended and Restated Note Purchase Agreement,
dated as of June [ ], 2001, among Continental Airlines, Inc. (the "COMPANY"),
Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through
Trust Agreements (as defined therein) (the "PASS THROUGH TRUSTEE"), Wilmington
Trust Company, as Subordination Agent (the "SUBORDINATION AGENT"), Wells Fargo
Bank Northwest, National Association, as Escrow Agent (the "ESCROW AGENT") and
Wilmington Trust Company, as Paying Agent (the "PAYING AGENT") (as in effect
from time to time, the "NOTE PURCHASE AGREEMENT"). Unless otherwise defined
herein, capitalized terms used herein shall have the meanings set forth in the
Note Purchase Agreement or, to the extent not defined therein, the Intercreditor
Agreement.
Pursuant to Sections 1(b) of the Note Purchase Agreement, the undersigned
hereby notifies you, in respect of the Boeing [_______] aircraft with
manufacturer's serial number [______] (the "AIRCRAFT"), of the following:
(1) The Company has elected to treat the Aircraft as [a Leased Aircraft] [an
Owned Aircraft];
(2) The Scheduled Delivery Date of the Aircraft is [_________];
(3) The Funding Date for the Aircraft shall be [__________]; and
(4) The aggregate amount of each series of Equipment Notes to be issued, and
purchased by the respective Pass Through Trustees referred to below (each,
an "APPLICABLE PASS THROUGH TRUSTEE"), on the Funding Date, in connection
with the financing of such Aircraft is as follows:
(a) the Class A-1 Trustee shall purchase Series A-1 Equipment Notes in the
amount of $[__________];
(b) The Class A-2 Trustee shall purchase Series A-2 Equipment Notes in the
amount of $[__________];
(c) the Class B Trustee shall purchase Series B Equipment Notes in the
amount of $[__________]; and
(d) the Class C Trustee shall purchase Series C Equipment Notes in the
amount of $[__________].
The Company hereby instructs the Class A-1 Trustee to (i) execute a
Withdrawal Certificate in the form of Annex A hereto dated as of [__________]
and attach thereto a Notice of Purchase Withdrawal dated such date completed as
set forth on Exhibit A-1 hereto and (ii) deliver such Withdrawal Certificate and
Notice of Purchase Withdrawal to the applicable Escrow Agent.
The Company hereby instructs the Class A-2 Trustee to (i) execute a
Withdrawal Certificate in the form of Annex A hereto dated as of [__________]
and attach thereto a Notice of Purchase Withdrawal dated such date completed as
set forth on Exhibit A-2 hereto and (ii) deliver such Withdrawal Certificate and
Notice of Purchase Withdrawal to the applicable Escrow Agent.
The Company hereby instructs the Class B Trustee to (i) execute a
Withdrawal Certificate in the form of Annex A hereto dated as of [__________]
and attach thereto a Notice of Purchase Withdrawal dated such date completed as
set forth on Exhibit B hereto and (ii) deliver such Withdrawal Certificate and
Notice of Purchase Withdrawal to the applicable Escrow Agent.
The Company hereby instructs the Class C Trustee to (i) execute a
Withdrawal Certificate in the form of Annex A hereto dated as of [__________]
and attach thereto a Notice of Purchase Withdrawal dated such date completed as
set forth on Exhibit C hereto and (ii) deliver such Withdrawal Certificate and
Notice of Purchase Withdrawal to the applicable Escrow Agent.
The Company hereby instructs each Applicable Pass Through Trustee to (i)
purchase Equipment Notes of a series and in an amount set forth opposite such
Pass Through Trustee in clause (4) above with a portion of the proceeds [of the
withdrawals of Deposits referred to in the applicable Notice of Purchase
Withdrawal referred to above] [received by it from the sale of Certificates on
- --------------
Eliminate each applicable clause if the specified Pass Through Trustee will not
purchase Equipment Notes for the Aircraft.
Eliminate if the specified Pass Through Trustee will not purchase Equipment
Notes for the Aircraft.
Eliminate if the specified Pass Through Trustee will not purchase Equipment
Notes for the Aircraft.
Eliminate if the specified Pass Through Trustee will not purchase Equipment
Notes for the Aircraft.
the Issuance Date] and (ii) re-deposit with the Depositary the excess, if any,
of the amount so withdrawn OVER the purchase price of such Equipment Notes.
The Company hereby instructs each Applicable Pass Through Trustee to (a)
enter into the Participation Agreement [____] dated as of [__________] among the
Company, as Lessee, Wilmington Trust Company, as Mortgagee and Loan Participant,
First Security Bank, National Association, as Owner Trustee, and [__________],
as Owner Participant, (b) perform its obligations thereunder and (c) deliver
such certificates, documents and legal opinions relating to such Pass Through
Trustee as required thereby. [The Company confirms that the Special Indenture
shall be utilized in lieu of the Leased Aircraft Indenture.]
The Company hereby certifies that the Owner Participant with respect to
the Aircraft (A) is not an Affiliate of the Company and (B) based on the
representations of such Owner Participant, is either a Qualified Owner
Participant or a person whose obligations under the Owner Participant Agreements
(as defined in the Participation Agreement) are guaranteed by a Qualified Owner
Participant.
Yours faithfully,
Continental Airlines, Inc.
By:______________________________
Name:
Title:
SCHEDULE A
Wilmington Trust Company, as
Pass Through Trustee, Subordination
Agent and Mortgagee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Facsimile: (302) 651-8882
Wells Fargo Bank Northwest, National Association,
as Escrow Agent
79 South Main Street, 3rd Floor
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
Facsimile: (801) 246-5053
Standard & Poor's Ratings Services
55 Water Street, 35th Floor
New York, New York 10004
Attention: Michael K. Vernier
Facsimile: (212) 438-6632
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: Richard Bittenbender
Facsimile: (212) 553-3855
Annex A
WITHDRAWAL CERTIFICATE
(Class ___)
Wells Fargo Bank Northwest, National Association,
as Escrow Agent
Ladies and Gentlemen:
Reference is made to the Escrow and Paying Agent Agreement, dated as
of [April 19, 2001] [June [ ], 2001] (the "Agreement"). We hereby certify to you
that the conditions to the obligations of the undersigned to execute a
Participation Agreement pursuant to the Note Purchase Agreement have been
satisfied. Pursuant to Section 1.02(c) of the Agreement, please execute the
attached Notice of Withdrawal and immediately transmit by facsimile to the
Depositary, at (212) 325-8319.
Capitalized terms used herein but not defined herein shall have the
meanings set forth in the Agreement.
Very truly yours,
WILMINGTON TRUST COMPANY,
not in its individual capacity by solely as Pass
Through Trustee
By:_____________________________________________
Name:
Title:
Dated: As of [__________]
Exhibit A-1
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney
Telecopier: 212-325-8319
Gentlemen:
Reference is made to the Deposit Agreement (Class A-1) dated as of
April 19, 2001 (the "DEPOSIT AGREEMENT") between Wells Fargo Bank Northwest,
National Association (formerly known as First Security Bank, National
Association), as Escrow Agent, and Credit Suisse First Boston, New York branch,
as Depositary (the "DEPOSITARY").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$[_______], Account No. [____].
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to [___________________], Account No. ____, Reference: _________] on
________ __, 20___, upon the telephonic request of a representative of the Pass
Through Trustee.
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
as Escrow Agent
By:________________________________
Name:
Title:
Dated: As of [__________]
Exhibit A-2
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney
Telecopier: 212-325-8319
Gentlemen:
Reference is made to the Deposit Agreement (Class A-2) dated as of
April 19, 2001 (the "DEPOSIT AGREEMENT") between Wells Fargo Bank Northwest,
National Association (formerly known as First Security Bank, National
Association), as Escrow Agent, and Credit Suisse First Boston, New York branch,
as Depositary (the "DEPOSITARY").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$[_______], Account No. [____].
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to [___________________], Account No. ____, Reference: _________] on
________ __, 20__, upon the telephonic request of a representative of the Pass
Through Trustee.
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
as Escrow Agent
By:________________________________
Name:
Title:
Dated: As of [__________]
Exhibit C
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney
Telecopier: 212-325-8319
Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of
April 19, 2001 (the "DEPOSIT AGREEMENT") between Wells Fargo Bank Northwest,
National Association, (formerly known as First Security Bank, National
Association), as Escrow Agent, and Credit Suisse First Boston, New York branch,
as Depositary (the "DEPOSITARY").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$[_______], Account No. [_____].
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to ___________________], Account No. ____, Reference: _________] on
________ __, 20__, upon the telephonic request of a representative of the Pass
Through Trustee.
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
as Escrow Agent
By:________________________________
Name:
Title:
Dated: As of [__________]
Exhibit C
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney
Telecopier: 212-325-8319
Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
June [ ], 2001 (the "DEPOSIT AGREEMENT") between Wells Fargo Bank Northwest,
National Association, as Escrow Agent, and Credit Suisse First Boston, New York
branch, as Depositary (the "DEPOSITARY").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
[_______], Account No. [_____].
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to ___________________], Account No. ____, Reference: _________] on
________ __, 20__, upon the telephonic request of a representative of the Pass
Through Trustee.
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
as Escrow Agent
By:________________________________
Name:
Title:
Dated: As of [__________]
EXHIBIT C-1 to
NOTE PURCHASE AGREEMENT
FORM OF OWNED AIRCRAFT PARTICIPATION AGREEMENT
[Filed Separately]
EXHIBIT C-2 to
NOTE PURCHASE AGREEMENT
FORM OF OWNED AIRCRAFT INDENTURE
[Filed Separately]
EXHIBIT D to
NOTE PURCHASE AGREEMENT
SECTION 16. OWNER PARTICIPANT'S RIGHT TO RESTRUCTURE
16.1 GENERAL RIGHT TO RESTRUCTURE
Lessee, Loan Participant and each Note Holder agree that after the
Delivery Date and subject to the limitations of Section 16.2, the original Owner
Participant (or any transferee Owner Participant that is an Affiliate of the
original Owner Participant) shall have the right to restructure the Transactions
using (a) a "cross-border lease," a tax lease or a head-lease/sublease structure
and (b) any other type of transaction, which may involve special structural
arrangements, as such Owner Participant may elect (any such structure described
above, a "Special Structure"). Any Special Structure may result in additional
persons participating in the Transactions, which persons shall agree to
provisions comparable to Sections 7.6.4(a) and 7.6.13. Subject to the provisions
of Sections 16.2 and 16.3, Lessee, Loan Participant and each Note Holder agree
to cooperate in the implementation of any such restructuring and take such
action as may reasonably be requested by the original Owner Participant to
accomplish such restructuring, including taking such actions as may be
reasonable or customary in the type of Special Structure selected. In connection
with any proposed Special Structure, Owner Participant shall provide all
information reasonably requested by Lessee, Loan Participant or any Note Holder
with respect thereto. The original Owner Participant shall be entitled to retain
all of the benefits of any such transaction.
16.2 LIMITATIONS ON RESTRUCTURING PROVISIONS; ADDITIONAL TERMS
16.2.1 LESSEE
(a) Notwithstanding Section 16.1 or 16.2.1(b), in no event shall any
such Special Structure (a) change the terms and conditions of Lessee's rights
and obligations, from those which Lessee would otherwise possess or be subject
to in the absence of any such Special Structure, in a manner which is materially
adverse to Lessee, (b) expose Lessee to any additional risks (including overall
tax risks) beyond those to which Lessee would be exposed in the absence of any
such Special Structure unless Lessee shall have been indemnified against such
additional risks by the original Owner Participant, or other participants in
such transaction (so long as such original Owner Participant or other
participants shall, as to their creditworthiness at the time any such indemnity
is given, be reasonably acceptable to Lessee) in a manner reasonably
satisfactory to Lessee. In no event shall Lessee be required to provide an
indemnity with respect to any foreign tax benefit of a Special Structure or to
indemnify against the failure of a head-lease not to constitute a true lease for
U.S. federal income tax purposes.
(b) In any Special Structure that may be entered into pursuant to
this Section 16, the Termination Values under the Lease (as the same may be
restructured) shall not be affected by the termination values under any
head-lease, except that any prepayment premiums and any funding or swap breakage
costs under such head-lease or similar arrangement will be added in calculating
the Termination Values and Stipulated Loss Values under the Lease (as the same
may be restructured). Further, upon implementation of any Special Structure, the
Stipulated Loss Values payable by Lessee under the Lease (as the same may be
restructured) shall in no event be less than the stipulated loss values payable
under the applicable head-lease or similar arrangement.
16.2.2 LOAN PARTICIPANT AND CERTIFICATE HOLDERS
Notwithstanding Section 16.1, any such Special Structure shall not,
and prior to the exercise of its rights thereunder, the Owner Participant shall
deliver an officer's certificate to the Pass Through Trustee that provides that
any such Special Structure shall not, (a) change the terms and conditions of
Loan Participant's, any Note Holder's or any Pass Through Indemnitee's rights
and obligations under the Operative Agreements or rights and obligations of
holders of Pass Through Certificates, from those which Loan Participant, Note
Holders, Pass Through Indemnitees and such Pass Through Certificate holders
would otherwise possess or be subject to in the absence of such Special
Structure (including, without limitation, the amount and timing of any payment
of principal, interest and Make-Whole Amount under the Equipment Notes, the
relative rights of the Note Holders with respect to such payments and such
holder of Pass Through Certificates and the priority of Mortgagee's Lien on the
Trust Indenture Estate under the Trust Indenture) or (b) expose Loan
Participant, any such Note Holder, any such Pass Through Indemnitee or any such
holder of Pass Through Certificates to any additional risks beyond those to
which Loan Participant, such Note Holder, Pass Through Indemnitee or such holder
of such Pass Through Certificates would be exposed in the absence of such
Special Structure. In addition, in no event shall any Special Structure be
permitted unless a written confirmation from the Rating Agencies (as defined in
the Note Purchase Agreement) is obtained prior to the implementation of such
Special Structure to the effect that such Special Structure will not adversely
affect the ratings of the Pass Through Certificates.
16.3 TRANSACTION EXPENSES
Whether or not any proposed restructuring transaction under this
Section 16 is consummated, the original Owner Participant shall pay (or cause to
be paid) the reasonable costs and expenses incurred by all parties in connection
therewith and shall pay the reasonable costs and expenses of the Rating Agencies
in connection with obtaining the confirmations referred to in Section 16.2.2;
PROVIDED, that, only in connection with a consummated transaction (unless Lessee
shall have, by failing to act in good faith, caused a transaction not to be
consummated), Lessee shall pay or reimburse such original Owner Participant for
the original Owner Participant's reasonable estimate of the costs and expenses
that would have been incurred by all parties if the Transactions had been
restructured as a head-lease/sublease transaction in which the original Owner
Participant, or an Affiliate or designee thereof, were the head-lessee/sublessor
and Lessee were the sublessee.
EXHIBIT E to
NOTE PURCHASE AGREEMENT
Section 6.2 may be amended to delete Section 6.2.9 in its entirety.
EXHIBIT F TO NOTE PURCHASE AGREEMENT
Subordination. (a) As between the Note Holders, this Trust Indenture
shall be a subordination agreement for purposes of Section 510 of the United
States Bankruptcy Code, as amended from time to time.
(b) If any Note Holder receives any payment in respect of any
obligations owing hereunder, 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 intended to
be satisfied shall be revived and continue in full force and effect as if such
payment had not been received.
(c) Each of the Note Holders may take any of the following actions
without impairing its rights under this Trust Indenture:
(i) obtain a Lien on any property to secure any amounts owing to it
hereunder,
(ii) obtain the primary or secondary obligation of any other obligor
with respect to any amounts owing to it hereunder,
(iii) renew, extend, increase, alter or exchange any amounts owing
to it hereunder, 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 Note
Holders shall not prejudice the rights or adversely affect the obligations of
any other party under this Trust Indenture.
---------------------------------------------------------------------
CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION
SET FORTH IN SECTION 8 OF THIS AGREEMENT
---------------------------------------------------------------------
================================================================================
PARTICIPATION AGREEMENT [___]
Dated as of [_______________]
Among
CONTINENTAL AIRLINES, INC.,
Lessee,
[_______________],
Owner Participant,
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
Not in its individual capacity
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee,
and
WILMINGTON TRUST COMPANY,
Not in its individual capacity
except as expressly provided herein,
but solely as Mortgagee, Subordination Agent
under the Intercreditor Agreement and Pass Through Trustee
under each of the Applicable Pass Through Trust Agreements,
Mortgagee and Loan Participant
----------------------------
One Boeing Model [_____] Aircraft
Bearing Manufacturer's Serial No. [_____]
and U.S. Registration No. [_____]
================================================================================
CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION...................................2
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF
EQUIPMENT NOTES; TERMINATION OF OBLIGATION
TO PARTICIPATE.................................................3
2.1 Participation in Lessor's Cost.................................3
2.2 Nature of Obligations of Participants..........................3
2.3 Termination of Obligation to Participate.......................3
SECTION 3. COMMITMENT TO LEASE AIRCRAFT...................................4
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF
LESSOR'S COST; POSTPONEMENT OF SCHEDULED
DELIVERY DATE..................................................4
4.1 Notices of Scheduled Delivery Date.............................4
4.2 Payment of Lessor's Cost.......................................4
4.3 Postponement of Scheduled Delivery Date........................5
4.4 Closing........................................................6
SECTION 5. CONDITIONS PRECEDENT...........................................6
5.1 Conditions Precedent to Obligations of Participants............6
5.2 Conditions Precedent to Obligations of Owner Trustee..........14
5.3 Conditions Precedent to Obligations of Mortgagee..............14
5.4 Conditions Precedent to Obligations of Lessee.................15
5.5 Post-Registration Opinion.....................................16
SECTION 6. REPRESENTATIONS AND WARRANTIES................................16
6.1 Lessee's Representations and Warranties.......................16
6.2 Owner Participant's Representations and Warranties............20
6.3 Bank's Representations and Warranties.........................23
6.4 WTC's Representations and Warranties..........................26
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS........................30
7.1 Covenants of Lessee...........................................30
7.2 Covenants of Owner Participant................................32
7.3 Covenants of Bank and Owner Trustee...........................35
7.4 Covenants of WTC..............................................37
7.5 Covenants of Note Holders.....................................38
7.6 Agreements....................................................40
SECTION 8. CONFIDENTIALITY...............................................48
SECTION 9. INDEMNIFICATION AND EXPENSES..................................48
9.1 General Indemnity.............................................48
9.2 Expenses......................................................56
9.3 General Tax Indemnity.........................................57
9.4 Payments......................................................69
9.5 Interest......................................................69
9.6 Benefit of Indemnities........................................69
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS...........................70
10.1 Participants, Owner Trustee and Note Holders..................70
10.2 Effect of Transfer............................................72
SECTION 11. REFUNDING AND CERTAIN OTHER MATTERS...........................73
11.1 Refunding Generally...........................................73
11.2 Limitations on Obligation to Refund...........................75
11.3 Execution of Certain Documents................................75
11.4 ERISA.........................................................75
11.5 Consent to Optional Redemptions...............................76
SECTION 12. SECTION 1110..................................................76
SECTION 13. CHANGE OF CITIZENSHIP.........................................76
13.1 Generally.....................................................76
13.2 Owner Participant.............................................77
13.3 Owner Trustee.................................................77
13.4 Mortgagee.....................................................77
SECTION 14. CONCERNING OWNER TRUSTEE......................................78
SECTION 15. MISCELLANEOUS.................................................78
15.1 Amendments....................................................78
15.2 Severability..................................................78
15.3 Survival......................................................79
15.4 Reproduction of Documents.....................................79
15.5 Counterparts..................................................79
15.6 No Waiver.....................................................80
15.7 Notices.......................................................80
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE..............81
15.9 Third-Party Beneficiary.......................................81
15.10 Entire Agreement..............................................82
15.11 Further Assurances............................................82
ANNEX, SCHEDULES AND EXHIBITS
ANNEX A - Definitions
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
EXHIBIT A - Opinion of special counsel to Lessee
EXHIBIT B - Opinion of corporate counsel to Lessee
EXHIBIT C - Opinion of corporate counsel to Airframe Manufacturer
EXHIBIT D - Opinion of special counsel to Owner Trustee
EXHIBIT E - Opinion of special counsel to Mortgagee and the Loan Participants
EXHIBIT F - Opinion of special counsel to Owner Participant
EXHIBIT G - Opinion of special counsel in Oklahoma City, Oklahoma
PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT [___], dated as of [_________] (this "Agreement"),
among (a) CONTINENTAL AIRLINES, INC., a Delaware corporation ("Lessee"), (b)
[_______________] a corporation organized under the laws of the OP Jurisdiction
("Owner Participant"), (c) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
expressly provided herein, but solely as Owner Trustee (this and all other
capitalized terms used but not defined herein shall have the respective meanings
ascribed thereto in Section 1) (in its capacity as Owner Trustee, "Owner
Trustee" or "Lessor," and in its individual capacity, "Bank"), (d) WILMINGTON
TRUST COMPANY, a Delaware banking corporation, not in its individual capacity,
except as expressly provided herein, but solely as Mortgagee (in its capacity as
Mortgagee, "Mortgagee" and in its individual capacity, "WTC"), (e) WILMINGTON
TRUST COMPANY, not in its individual capacity, except as expressly provided
herein, but solely as Pass Through Trustee under each of the Applicable Pass
Through Trust Agreements, (each, an "Applicable Pass Through Trustee") and (f)
WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly
provided herein, but solely as Subordination Agent under the Intercreditor
Agreement ("Subordination Agent").
RECITALS
A. Owner Participant and Bank, concurrently herewith, are entering into
the Trust Agreement, pursuant to which, among other things, Owner Trustee agrees
to hold the Trust Estate for the use and benefit of Owner Participant upon and
subject to the terms and conditions set forth therein.
B. Lessee and Airframe Manufacturer have entered into the Purchase
Agreement, pursuant to which, among other things, Airframe Manufacturer has
agreed to manufacture and sell to Lessee and Lessee has agreed to purchase from
Airframe Manufacturer, certain aircraft, including the Aircraft.
C. On the Delivery Date, Lessee and Owner Trustee will enter into the
Purchase Agreement Assignment, pursuant to which, among other things, Lessee
will assign to Owner Trustee its right to purchase the Aircraft from Airframe
Manufacturer upon and subject to the terms and conditions set forth in the
Purchase Agreement and the Purchase Agreement Assignment.
D. Pursuant to each of the Pass Through Trust Agreements, the Pass Through
Trusts were created and the Pass Through Certificates were issued and sold.
E. Pursuant to the Note Purchase Agreement, each Applicable Pass Through
Trustee has agreed to use a portion of the proceeds from the issuance and sale
of the Pass Through Certificates issued by each Applicable Pass Through Trust to
purchase from the Owner Trustee, on behalf of the related Applicable Pass
Through Trust, the Equipment Note bearing the same interest rate as the Pass
Through Certificates issued by such Pass Through Trust.
F. Owner Trustee and Mortgagee, concurrently with the execution and
delivery hereof, have entered into the Trust Indenture for the benefit of the
Note Holders, pursuant to which, among other things, Owner Trustee agrees (1) to
issue Equipment Notes, in the amounts and otherwise as provided in the Trust
Indenture, the proceeds of which will be used to pay a portion of Lessor's Cost
and (2) to mortgage, pledge and assign to Mortgagee all of Owner Trustee's
right, title and interest in the Trust Indenture Estate to secure the Secured
Obligations, including, without limitation, Owner Trustee's obligations under
the Equipment Notes.
G. On the Delivery Date, Lessor and Lessee will enter into the Lease,
pursuant to which, among other things, Lessor shall lease the Aircraft to Lessee
and Lessee shall lease the Aircraft from Lessor upon and subject to the terms
and conditions set forth therein.
H. The parties hereto wish to set forth in this Agreement the terms and
conditions upon and subject to which the aforesaid transactions shall be
effected.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed and
interpreted in the manner described, in Annex A.
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES;
TERMINATION OF OBLIGATION TO PARTICIPATE
2.1 PARTICIPATION IN LESSOR'S COST
Subject to the terms and conditions of this Agreement, on the Delivery
Date, Owner Participant and each Applicable Pass Through Trustee shall
participate in the payment of Lessor's Cost as follows:
(a) Owner Participant shall participate in the payment of Lessor's Cost
for the Aircraft by making an equity investment in the beneficial
ownership of the Aircraft in the amount in Dollars equal to Owner
Participant's Percentage multiplied by Lessor's Cost; and
(b) Each Applicable Pass Through Trustee shall make a non-recourse
secured loan to Owner Trustee to finance, in part, the Owner
Trustee's payment of Lessor's Cost in the amount in Dollars equal to
such Applicable Pass Through Trustee's PTT Percentage multiplied by
Lessor's Cost, such loan to be evidenced by one or more Equipment
Notes, dated the Delivery Date, issued to the Subordination Agent as
the registered holder on behalf of each such Applicable Pass Through
Trustee for the related Applicable Pass Through Trust by Owner
Trustee in accordance with this Agreement and the Trust Indenture,
in an aggregate principal amount equal to the Commitment of each
such Applicable Pass Through Trustee.
2.2 NATURE OF OBLIGATIONS OF PARTICIPANTS
The obligations hereunder of each Participant are several, and not joint,
and a Participant shall have no obligation to make available to Owner Trustee
any portion of any amount not paid hereunder by any other Participant. The
failure by either Participant to perform its obligations hereunder shall not
affect the obligations of Lessee toward the other Participant, except to the
extent provided in Section 5.4.
2.3 TERMINATION OF OBLIGATION TO PARTICIPATE
Notwithstanding any other provision of this Agreement, if the Closing does
not occur on or before the Commitment Termination Date, the Commitment of each
Participant and its obligation to participate in the payment of Lessor's Cost
shall expire and be of no further force and effect; PROVIDED, that the liability
of any Participant that has defaulted in the payment of its Commitment shall not
be released.
SECTION 3. COMMITMENT TO LEASE AIRCRAFT
Subject to the terms and conditions of this Agreement, concurrently with
the issuance of the Equipment Notes on the Delivery Date, Owner Trustee shall
purchase and accept delivery of the Aircraft under and pursuant to the Purchase
Agreement and the Purchase Agreement Assignment, and thereupon Owner Trustee
shall lease the Aircraft to Lessee, and Lessee shall lease the Aircraft from
Owner Trustee, under the Lease.
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S
COST; POSTPONEMENT OF SCHEDULED DELIVERY DATE
4.1 NOTICES OF SCHEDULED DELIVERY DATE
Without limiting its obligations to the Loan Participant under Section
1(b) of the Note Purchase Agreement, Lessee agrees to give Participants, Owner
Trustee, and Mortgagee at least one Business Day's written notice of the
Scheduled Delivery Date, which notice shall set forth Lessor's Cost and the
amount of each Participant's Commitment. Each Participant agrees that making
available its respective Commitment shall constitute a waiver of such notice.
Owner Trustee and Mortgagee shall be deemed to have waived such notice if
Mortgagee shall have received from each Participant funds in the full amount of
its respective Commitment.
4.2 PAYMENT OF LESSOR'S COST
(a) Each Participant agrees, subject to the terms and conditions of this
Agreement, to make the Dollar amount of its respective Commitment available, by
wire transfer of immediately available funds to WTC's account at Citibank, N.A.,
ABA No. 021000089, Account No. 0016-1728, reference Continental Lease [___], at
or before 12:00 Noon, New York City time, on the Scheduled Delivery Date. All
such funds made available by each Participant to WTC shall, until payment
thereof to Airframe Manufacturer and Lessee as provided in Section 4.2(b)(ii) or
return thereof to the respective Participant as provided in Section 4.3.2, be
held by WTC in trust for the benefit of the respective Participant, as the sole
and exclusive property of the respective Participant and not as part of the
Trust Estate or the Trust Indenture Estate.
(b) Subject to the satisfaction, or waiver by the applicable party, of the
conditions precedent set forth in Section 5, and simultaneously with the receipt
by the parties hereto of all amounts to be paid to them on the Delivery Date
pursuant to this Section 4.2, Owner Trustee shall:
(i) purchase, take title to, and accept delivery of, the Aircraft;
(ii) in consideration of the transfer of title to the Aircraft to
Owner Trustee, direct WTC to pay, from the funds made available to WTC
hereunder by the Participants, all or a specified portion of its
Commitment either to (A) Airframe Manufacturer, which payments in the
aggregate shall be equal to Manufacturer's Purchase Price, by wire
transfer of immediately available funds to Airframe Manufacturer's account
set forth in Schedule 1 and (B) Lessee, which payments in the aggregate
shall be equal to Lessor's Cost minus Manufacturer's Purchase Price, by
wire transfer of immediately available funds to Lessee's account set forth
in Schedule 1 or as otherwise directed by Lessee;
(iii) execute an application for registration of the Aircraft with
the FAA and Lease Supplement No. 1, in each case with respect to the
Aircraft;
(iv) execute the Trust Indenture and the initial Trust Indenture
Supplement and issue the Equipment Notes to the Subordination Agent in
accordance with Section 2.1(b);
(v) lease the Aircraft to Lessee, pursuant to the Lease; and
(vi) take such other action as may be required to be taken by the
Owner Trustee on the Delivery Date by the terms of any Operative
Agreement.
4.3 POSTPONEMENT OF SCHEDULED DELIVERY DATE
4.3.1 POSTPONEMENT
If for any reason whatsoever the Closing is not consummated on the
Scheduled Delivery Date, Lessee may, subject to the provisions of 1(e) of the
Note Purchase Agreement, by telephonic notice, given by 5:00 p.m., New York City
time (such telephonic notice to be promptly confirmed in writing by personal
delivery or facsimile), on the Scheduled Delivery Date to each Participant,
Owner Trustee and Mortgagee, designate a Delayed Delivery Date, in which case
the Owner Participant will keep its funds available, and each Loan Participant
shall comply with its obligations under Section 5.01 of each applicable Trust
Supplement.
4.3.2 RETURN OF FUNDS
WTC shall promptly return to each Participant that makes funds available
to it in accordance with Section 4.2(a) such funds, together with interest or
income earned thereon, if the Closing fails to occur on the Scheduled Delivery
Date, PROVIDED that any funds made available by the Loan Participant shall be
returned on such Scheduled Delivery Date.
4.4 CLOSING
The Closing shall occur at the offices of Hughes Hubbard & Reed LLP, One
Battery Park Plaza, New York, New York 10004, or such other place as the parties
shall agree.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTICIPANTS
The obligation of each Participant to make the Dollar amount of its
respective Commitment available for payment as directed by the Owner Trustee on
the Delivery Date is subject to satisfaction or waiver by each such Participant,
on or prior to the Delivery Date, of the conditions precedent set forth below in
this Section 5.1; PROVIDED, that it shall not be a condition precedent to the
obligation of any Participant that any document be produced or action taken that
is to be produced or taken by such Participant or by a Person within such
Participant's control; PROVIDED, FURTHER, that Sections 5.1.2(iii), (xv) and
(xxiii) (H) shall not be conditions precedent to the obligation of Loan
Participants and Sections 5.1.15 and 5.1.16 shall not be conditions precedent to
the obligation of Owner Participant.
5.1.1 NOTICE
Such Participant shall have received the notice described in Section 4.1
or, in the case of a Delayed Delivery Date, 4.3, when and as required thereby,
or shall have waived such notice.
5.1.2 DELIVERY OF DOCUMENTS
Such Participant shall, except as noted below, have received executed
counterparts of the following agreements, instruments, certificates or
documents, and such counterparts (a) shall have been duly authorized, executed
and delivered by the respective party or parties thereto, (b) shall be
reasonably satisfactory in form and substance to such Participant and (c) shall
be in full force and effect:
(i) the Lease; provided, that only Mortgagee shall receive the sole
executed chattel paper original thereof;
(ii) Lease Supplement No. 1; PROVIDED, that only Mortgagee shall
receive the sole executed chattel paper original thereof;
(iii) the Tax Indemnity Agreement; PROVIDED, that only Owner
Participant and Lessee shall receive copies of the Tax Indemnity
Agreement;
(iv) the Trust Agreement;
(v) the Trust Indenture;
(vi) the initial Trust Indenture Supplement;
(vii) the Purchase Agreement Assignment;
(viii) the Consent and Agreement and the Engine Consent and
Agreement;
(ix) the Equipment Notes dated the Delivery Date; PROVIDED, that
only the Subordination Agent shall receive the authenticated Equipment
Notes;
(x) an excerpted copy of the Purchase Agreement to the extent
relating to Airframe Manufacturer's or Engine Manufacturer's respective
warranties or related obligations or any right in the Purchase Agreement
assigned to Owner Trustee pursuant to the Purchase Agreement Assignment;
PROVIDED, that only Owner Trustee and Mortgagee shall receive copies of
such agreements (copies of which may be inspected by Participants and
their respective special counsel on the Delivery Date, but after the
Delivery Date such copies shall be retained by Owner Trustee and Mortgagee
and may be inspected and reviewed by Owner Participant or Loan Participant
or their respective counsel if and only if there shall have occurred and
be continuing a Lease Default or Lease Event of Default);
(xi) the Bills of Sale;
(xii) an invoice from Airframe Manufacturer to Owner Trustee in
respect of the Aircraft (except for the BFE) specifying the amount of the
Manufacturer's Purchase Price and an invoice from Lessee specifying the
amount due to Lessee in respect of the Aircraft and the BFE, which
amounts, in the aggregate, shall equal Lessor's Cost of the Aircraft;
(xiii) an appointment of authorized representatives by Owner
Trustee, and an acceptance thereof by such representatives in each case,
dated the Delivery Date;
(xiv) the broker's report and insurance certificates required by
Section 11 of the Lease;
(xv) an appraisal or appraisals from an Appraiser, which appraisal
or appraisals shall be reasonably satisfactory in form and substance to
Owner Participant; PROVIDED, that only Owner Participant and Lessee shall
receive copies of such appraisal or appraisals;
(xvi) (A) a copy of the Certificate of Incorporation and By-Laws of
Lessee and resolutions of the board of directors of Lessee and/or the
executive committee thereof, in each case certified as of the Delivery
Date, by the Secretary or an Assistant Secretary of Lessee, duly
authorizing the execution, delivery and performance by Lessee of the
Lessee Operative Agreements required to be executed and delivered by
Lessee on or prior to the Delivery Date in accordance with the provisions
hereof and thereof; (B) an incumbency certificate of Lessee, Owner
Participant, Bank and WTC as to the person or persons authorized to
execute and deliver the relevant Operative Agreements on behalf of such
party; and (C) a copy of the Certificate of Incorporation or Articles of
Incorporation and By-Laws and general authorizing resolutions of the
boards of directors (or executive committees) or other satisfactory
evidence of authorization of Owner Participant, Bank and WTC, certified as
of the Delivery Date by the Secretary or an Assistant or Attesting
Secretary of Owner Participant, Bank and WTC, respectively, which
authorize the execution, delivery and performance by Owner Participant,
Bank and WTC, respectively, of each of the Operative Agreements to which
it is a party, together with such other documents and evidence with
respect to it as Lessee or any Participant may reasonably request in order
to establish the consummation of the transactions contemplated by this
Agreement and the taking of all corporate proceedings in connection
therewith;
(xvii) an Officer's Certificate of Lessee, dated as of the Delivery
Date, stating that its representations and warranties set forth in this
Agreement are true and correct as of the Delivery Date (or, to the extent
that any such representation and warranty expressly relates to an earlier
date, true and correct as of such earlier date);
(xviii) an Officer's Certificate of Bank, dated as of the Delivery
Date, stating that its representations and warranties, in its individual
capacity and as Owner Trustee, set forth in this Agreement are true and
correct as of the Delivery Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date, true and
correct as of such earlier date);
(xix) an Officer's Certificate of Owner Participant, dated as of the
Delivery Date, stating that its representations and warranties set forth
in this Agreement are true and correct as of the Delivery Date (or, to the
extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(xx) an Officer's Certificate of WTC, dated as of the Delivery Date,
stating that its representations and warranties, in its individual
capacity or as Mortgagee, a Pass Through Trustee or Subordination Agent,
as the case may be, set forth in this Agreement are true and correct as of
the Delivery Date (or, to the extent that any such representation and
warranty expressly relates to an earlier date, true and correct as of such
earlier date);
(xxi) an application for registration of the Aircraft with the FAA
in the name of Owner Trustee; PROVIDED, that only special counsel in
Oklahoma City, Oklahoma shall receive the sole executed copy thereof for
filing with the FAA;
(xxii) the Financing Statements;
(xxiii) the following opinions of counsel, in each case dated the
Delivery Date:
(A) an opinion of Hughes Hubbard & Reed LLP, special counsel
to Lessee, substantially in the form of Exhibit A;
(B) an opinion of Lessee's Legal Department, substantially in
the form of Exhibit B;
(C) an opinion of [__________ _________,] corporate counsel to
Airframe Manufacturer, substantially in the form of Exhibit C;
(D) an opinion of Ray, Quinney & Nebeker, special counsel to
Owner Trustee, substantially in the form of Exhibit D;
(E) an opinion of Richards, Layton & Finger, special counsel
to Mortgagee and the Loan Participants, substantially in the form of
Exhibit E;
(F) an opinion of [_________,] special counsel to Owner
Participant, substantially in the form of Exhibit F;
(G) an opinion of Lytle Soule & Curlee, special counsel in
Oklahoma City, Oklahoma, substantially in the form of Exhibit G; and
(H) an opinion of [___________,] special tax counsel to Owner
Participant, with respect to certain tax consequences of the
transactions contemplated hereby; PROVIDED, that only Owner
Participant shall receive such opinion;
(xxiv) a copy of a current, valid Standard Certificate of
Airworthiness for the Aircraft duly issued by the FAA;
(xxv) the Participants and their respective counsel shall have
received copies of such documents and papers as such Participants may
reasonably request, other than (A) in the case of the Loan Participants,
copies of the Purchase Agreement, provided that special counsel for the
Loan Participants may inspect the Purchase Agreement in connection with
the transactions contemplated hereby or as a basis for such counsel's
closing opinion, and (B) in the case of parties other than Owner
Participant and its special counsel, the Tax Indemnity Agreement.
5.1.3 OTHER COMMITMENTS
Each other Participant shall have made available the Dollar amount of its
Commitment as directed by Owner Trustee in accordance with Section 4.
5.1.4 VIOLATION OF LAW
No change shall have occurred after the date of this Agreement in any
applicable Law that makes it a violation of Law for (a) Lessee, any Participant,
Subordination Agent, Owner Trustee or Mortgagee to execute, deliver and perform
the Operative Agreements to which any of them is a party or (b) any Participant
to make the Dollar amount of its Commitment available or, in the case of any
Loan Participant, to acquire an Equipment Note or to realize the benefits of the
security afforded by the Trust Indenture.
5.1.5 TAX LAW CHANGE
In respect of Owner Participant, no Adverse Change in Tax Law shall have
been enacted, promulgated or issued on or prior to the Delivery Date. Owner
Participant agrees to consider promptly, and to consult with Lessee concerning
any such Adverse Change in Tax Law and to advise Lessee and Loan Participant
promptly if Owner Participant determines that an Adverse Change in Tax Law which
has been enacted or promulgated or, if proposed, has a substantial likelihood of
becoming effective, would cause Owner Participant to elect not to close with
respect to the Aircraft. At any time on or before the Delivery Date, Owner
Participant may notify Lessee and Loan Participant that Owner Participant elects
not to close as a result of the enactment, promulgation or issuance of any
Adverse Change in Tax Law on or before the Delivery Date, specifying such
Adverse Change in Tax Law; and failure to give such notice on or before the
Delivery Date shall preclude Owner Participant from not closing with respect to
such Aircraft as a result of any Adverse Change in Tax Law.
5.1.6 REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations and warranties of each other party to this Agreement
made, in each case, in this Agreement and in any other Operative Agreement to
which it is a party, shall be true and accurate in all material respects as of
the Delivery Date (unless any such representation and warranty shall have been
made with reference to a specified date, in which case such representation and
warranty shall be true and accurate as of such specified date) and each other
party to this Agreement shall have performed and observed, in all material
respects, all of its covenants, obligations and agreements in this Agreement and
in any other Operative Agreement to which it is a party to be observed or
performed by it as of the Delivery Date.
5.1.7 NO EVENT OF DEFAULT
On the Delivery Date, no event shall have occurred and be continuing, or
would result from the sale, mortgage or lease of the Aircraft, which constitutes
a Lease Default or Lease Event of Default, or an Indenture Default or Indenture
Event of Default.
5.1.8 NO EVENT OF LOSS
No Event of Loss with respect to the Airframe or any Engine shall have
occurred and no circumstance, condition, act or event that, with the giving of
notice or lapse of time or both, would give rise to or constitute an Event of
Loss with respect to the Airframe or any Engine shall have occurred.
5.1.9 TITLE
Owner Trustee shall have good title (subject to filing and recordation of
the FAA Bill of Sale with the FAA) to the Aircraft, free and clear of Liens,
except (a) the rights of Lessee under the Lease and Lease Supplement No. 1, (b)
the Lien created by the Trust Indenture and the initial Trust Indenture
Supplement, (c) the beneficial interest of Owner Participant created by the
Trust Agreement, (d) Liens permitted by clause (d) (solely for taxes not yet
due) of Section 6 of the Lease and (e) Liens permitted by clause (e) of Section
6 of the Lease.
5.1.10 CERTIFICATION
The Aircraft shall have been duly certificated by the FAA as to type and
airworthiness in accordance with the terms of the Purchase Agreement.
5.1.11 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee of
Owner Trustee under the Trust Indenture), shall be entitled to the benefits of
Section 1110 (as currently in effect) with respect to the right to take
possession of the Airframe and Engines and to enforce any of its other rights or
remedies as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor.
5.1.12 FILING
On the Delivery Date (a) the FAA Filed Documents shall have been duly
filed for recordation (or shall be in the process of being so duly filed for
recordation) with the FAA in accordance with the Act and (b) each Financing
Statement shall have been duly filed (or shall be in the process of being so
duly filed) in the appropriate jurisdiction.
5.1.13 NO PROCEEDINGS
No action or proceeding shall have been instituted, nor shall any action
be threatened in writing, before any Government Entity, nor shall any order,
judgment or decree have been issued or proposed to be issued by any Government
Entity, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or any other Operative Agreement or the
transactions contemplated hereby or thereby.
5.1.14 GOVERNMENTAL ACTION
All appropriate action required to have been taken prior to the Delivery
Date by the FAA, or any governmental or political agency, subdivision or
instrumentality of the United States, in connection with the transactions
contemplated by this Agreement shall have been taken, and all orders, permits,
waivers, authorizations, exemptions and approvals of such entities required to
be in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued.
5.1.15 NOTE PURCHASE AGREEMENT
The conditions precedent to the obligations of the Loan Participants and
the other requirements relating to the Aircraft and the Equipment Notes set
forth in the Note Purchase Agreement shall have been satisfied.
5.1.16 PERFECTED SECURITY INTEREST
On the Delivery Date, after giving effect to the filing of the FAA Filed
Documents and the Financing Statements, Mortgagee shall have received a duly
perfected first priority security interest in all of Owner Trustee's right,
title and interest in the Aircraft and the Lease, subject only to Permitted
Liens.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER TRUSTEE
The obligation of Owner Trustee to direct the Participants to apply the
Commitments to pay Lessor's Cost on the Delivery Date is subject to satisfaction
or waiver by Owner Trustee, on or prior to the Delivery Date, of the conditions
precedent set forth below in this Section 5.2.
5.2.1 NOTICE
Owner Trustee shall have received the notice described in Section 4.1 or,
in the case of a Delayed Delivery Date, 4.3, when and as required thereby, or
shall have waived such notice.
5.2.2 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Owner Trustee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Owner Trustee.
5.2.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and
5.1.11 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Owner Trustee.
5.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF MORTGAGEE
The obligation of Mortgagee to authenticate the Equipment Notes on the
Delivery Date is subject to the satisfaction or waiver by Mortgagee, on or prior
to the Delivery Date, of the conditions precedent set forth below in this
Section 5.3.
5.3.1 NOTICE
Mortgagee shall have received the notice described in Section 4.1 or, in
the case of a Delayed Delivery Date, 4.3, when and as required thereby, or shall
have waived such notice.
5.3.2 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Mortgagee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Mortgagee.
5.3.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and
5.1.11 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.
5.4 CONDITIONS PRECEDENT TO OBLIGATIONS OF LESSEE
The obligation of Lessee to lease the Aircraft on the Delivery Date is
subject to the satisfaction or waiver by Lessee, on or prior to the Delivery
Date, of the conditions precedent set forth below in this Section 5.4.
5.4.1 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Lessee, except
as specifically provided therein, and shall be satisfactory to Lessee, unless
the failure to receive any such agreement, instrument, certificate or document
is the result of any action or inaction by Lessee.
5.4.2 SALES TAX
Lessee shall be satisfied that no sales, use, value added, goods and
services or like tax, and no stamp tax duty, is payable with respect to the
delivery of the Aircraft on the Delivery Date to the extent that Lessee has
liability therefor under Section 9.3.
5.4.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.3 (as to all
Participants), 5.1.4, 5.1.5, 5.1.6, 5.1.7 (as to Indenture Defaults or Indenture
Events of Default not constituting Lease Defaults or Lease Events of Default,
respectively), 5.1.8, 5.1.9, 5.1.10, 5.1.11, 5.1.12, 5.1.13 and 5.1.14 shall
have been satisfied or waived by Lessee, unless the failure of any such
condition to be satisfied is the result of any action or inaction by Lessee.
5.4.4 TAX LAW CHANGE
No Adverse Change in Tax Law shall have been enacted, promulgated or
proposed on or prior to the Delivery Date. Lessee agrees to consider promptly,
and to consult with Owner Participant concerning, any such Adverse Change in Tax
Law and to advise Owner Participant and Loan Participant promptly if Lessee
determines that an Adverse Change in Tax Law which has been enacted or
promulgated or, if proposed, has a substantial likelihood of becoming effective,
would cause Lessee to elect not to close the transactions contemplated by the
Lease and this Agreement. At any time on or before the Delivery Date, Lessee may
notify Owner Participant and Loan Participant that Lessee elects not to close
the transactions contemplated by the Lease and this Agreement as a result of the
enactment, promulgation or proposal of any Adverse Change in Tax Law on or
before the Delivery Date, specifying such Adverse Change in Tax Law.
5.5 POST-REGISTRATION OPINION
Promptly upon the registration of the Aircraft and the recordation of the
FAA Filed Documents pursuant to the Act, Lessee will cause Lytle Soule & Curlee,
special counsel in Oklahoma City, Oklahoma, to deliver to Lessee, each
Participant, Owner Trustee and Mortgagee a favorable opinion or opinions
addressed to each of them with respect to such registration and recordation.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
Lessee represents and warrants to each Participant, Subordination Agent,
Owner Trustee and Mortgagee that:
6.1.1 ORGANIZATION; QUALIFICATION
Lessee is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of Delaware and has the corporate power and
authority to conduct the business in which it is currently engaged and to own or
hold under lease its properties and to enter into and perform its obligations
under the Lessee Operative Agreements. Lessee is duly qualified to do business
as a foreign corporation in good standing in each jurisdiction in which the
nature and extent of the business conducted by it, or the ownership of its
properties, requires such qualification, except where the failure to be so
qualified would not give rise to a Material Adverse Change to Lessee.
6.1.2 CORPORATE AUTHORIZATION
Lessee has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery of each of the Lessee Operative Agreements,
and the performance of its obligations thereunder.
6.1.3 NO VIOLATION
The execution and delivery by Lessee of the Lessee Operative Agreements,
the performance by Lessee of its obligations thereunder and the consummation by
Lessee on the Delivery Date of the transactions contemplated thereby, do not and
will not (a) violate any provision of the Certificate of Incorporation or
By-Laws of Lessee, (b) violate any Law applicable to or binding on Lessee or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Lessee), or result in the
creation of any Lien (other than as permitted under the Lease) upon the Aircraft
under, any indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, lease, loan or other material agreement, instrument or document
to which Lessee is a party or by which Lessee or any of its properties is bound.
6.1.4 APPROVALS
The execution and delivery by Lessee of the Lessee Operative Agreements,
the performance by Lessee of its obligations thereunder and the consummation by
Lessee on the Delivery Date of the transactions contemplated thereby do not and
will not require the consent or approval of, or the giving of notice to, or the
registration with, or the recording or filing of any documents with, or the
taking of any other action in respect of, (a) any trustee or other holder of any
Debt of Lessee and (b) any Government Entity, other than the filing of (x) the
FAA Filed Documents and the Financing Statements (and continuation statements
periodically) and (y) filings, recordings, notices or other ministerial actions
pursuant to any routine recording, contractual or regulatory requirements
applicable to it.
6.1.5 VALID AND BINDING AGREEMENTS
The Lessee Operative Agreements have been duly authorized, executed and
delivered by Lessee and, assuming the due authorization, execution and delivery
thereof by the other party or parties thereto, constitute the legal, valid and
binding obligations of Lessee and are enforceable against Lessee in accordance
with the respective terms thereof, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar Laws affecting the rights of creditors generally and general principles
of equity, whether considered in a proceeding at law or in equity.
6.1.6 LITIGATION
Except as set forth in Lessee's most recent Annual Report on Form 10-K, as
amended, filed by Lessee with the SEC on or prior to the Delivery Date, or in
any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by Lessee
with the SEC subsequent to such Form 10-K and on or prior to the Delivery Date,
no action, claim or proceeding is now pending or, to the Actual Knowledge of
Lessee, threatened, against Lessee, before any court, governmental body,
arbitration board, tribunal or administrative agency, which is reasonably likely
to be determined adversely to Lessee and if determined adversely to Lessee would
result in a Material Adverse Change.
6.1.7 FINANCIAL CONDITION
The audited consolidated balance sheet of Lessee with respect to Lessee's
most recent fiscal year included in Lessee's most recent Annual Report on Form
10-K, as amended, filed by Lessee with the SEC, and the related consolidated
statements of operations and cash flows for the period then ended have been
prepared in accordance with GAAP and fairly present in all material respects the
financial condition of Lessee and its consolidated subsidiaries as of such date
and the results of its operations and cash flows for such period, and since the
date of such balance sheet, there has been no material adverse change in such
financial condition or operations of Lessee, except for matters disclosed in (a)
the financial statements referred to above or (b) any subsequent Quarterly
Report on Form 10-Q or Current Report on Form 8-K filed by Lessee with the SEC
on or prior to the date hereof.
6.1.8 REGISTRATION AND RECORDATION
Except for (a) the registration of the Aircraft with the FAA pursuant to
the Act in the name of Owner Trustee, (b) the filing for recordation (and
recordation) of the FAA Filed Documents, (c) the filing of the Financing
Statements (and continuation statements relating thereto at periodic intervals),
(d) the taking of possession and retention by Mortgagee of the original
counterparts of the Lease and Lease Supplement No. 1 and (e) the affixation of
the placards referred to in Section 7.1.3 of the Lease, no further action,
including any filing or recording of any document (including any financing
statement in respect thereof under Article 9 of the UCC) is necessary in order
to establish and perfect the right, title or interest of Owner Trustee, and the
Mortgagee's security interest, in the Aircraft and the Lease, as against Lessee
and any other Person, in each case, in any applicable jurisdictions in the
United States.
6.1.9 CHIEF EXECUTIVE OFFICE
The chief executive office (as such term is defined in Article 9 of the
UCC) of Lessee is located at 1600 Smith Street, Houston, Texas 77002.
6.1.10 NO DEFAULT
No event which, if the Aircraft were subject to the Lease, constitutes a
Lease Default or Lease Event of Default has occurred and is continuing.
6.1.11 NO EVENT OF LOSS
No Event of Loss has occurred with respect to the Airframe or any Engine,
and, to the Actual Knowledge of Lessee, no circumstance, condition, act or event
has occurred that, with the giving of notice or lapse of time or both gives rise
to or constitutes an Event of Loss with respect to the Airframe or any Engine.
6.1.12 COMPLIANCE WITH LAWS
(a) Lessee is a Citizen of the United States and a U.S. Air Carrier.
(b) Lessee holds all licenses, permits and franchises from the appropriate
Government Entities necessary to authorize Lessee to lawfully engage in air
transportation and to carry on scheduled commercial passenger service as
currently conducted, except where the failure to so hold any such license,
permit or franchise would not give rise to a Material Adverse Change to Lessee.
(c) Lessee is not an "investment company" or a company controlled by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
6.1.13 SECURITIES LAWS
Neither Lessee nor any person authorized to act on its behalf has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement, or any of the Equipment Notes or any other interest in or
security under the Trust Indenture, for sale to, or solicited any offer to
acquire any such interest or security from, or has sold any such interest or
security to, any person in violation of the Securities Act.
6.1.14 BROKER'S FEES
No Person acting on behalf of Lessee is or will be entitled to any
broker's fee, commission or finder's fee in connection with the Transactions,
except for fees payable to Lessee's Advisor, if any.
6.1.15 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee under
the Trust Indenture), is entitled to the benefits of Section 1110 (as currently
in effect) with respect to the right to take possession of the Airframe and
Engines and to enforce any of its other rights or remedies as provided in the
Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which
Lessee is a debtor.
6.2 OWNER PARTICIPANT'S REPRESENTATIONS AND WARRANTIES
Owner Participant represents and warrants to Lessee, Loan Participants,
Subordination Agent, Owner Trustee and Mortgagee that:
6.2.1 ORGANIZATION, ETC.
Owner Participant is a corporation duly incorporated, validly existing and
in good standing under the Laws of the OP Jurisdiction, has the corporate power
and authority to conduct the business in which it is currently engaged and to
own or hold under lease its properties and to enter into, and perform its
obligations under the Owner Participant Agreements, and has a tangible net worth
(exclusive of goodwill) greater than $75,000,000.
6.2.2 CORPORATE AUTHORIZATION
Owner Participant has taken, or caused to be taken, all necessary
corporate action (including, without limitation, the obtaining of any consent or
approval of stockholders required by its Certificate of Incorporation or
By-Laws) to authorize the execution and delivery of each of the Owner
Participant Agreements, and the performance of its obligations thereunder.
6.2.3 NO VIOLATION
The execution and delivery by Owner Participant of the Owner Participant
Agreements, the performance by Owner Participant of its obligations thereunder
and the consummation by Owner Participant on the Delivery Date of the
transactions contemplated thereby, do not and will not (a) violate any provision
of the Certificate of Incorporation or By-Laws of Owner Participant, (b) violate
any Law applicable to or binding on Owner Participant or (c) violate or
constitute any default under (other than any violation or default that would not
result in a Material Adverse Change to Owner Participant), or result in the
creation of any Lien (other than as provided for or otherwise permitted in the
Operative Agreements) upon the Trust Estate under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, lease, loan or
other material agreement, instrument or document to which Owner Participant is a
party or by which Owner Participant or any of its properties is bound.
6.2.4 APPROVALS
The execution and delivery by Owner Participant of the Owner Participant
Agreements, the performance by Owner Participant of its obligations thereunder
and the consummation by Owner Participant on the Delivery Date of the
transactions contemplated thereby do not and will not require the consent or
approval of, or the giving of notice to, or the registration with, or the
recording or filing of any documents with, or the taking of any other action in
respect of, (a) any trustee or other holder of any Debt of Owner Participant and
(b) any Government Entity, other than the filing of the FAA Filed Documents and
the Financing Statements.
6.2.5 VALID AND BINDING AGREEMENTS
The Owner Participant Agreements have been duly authorized, executed and
delivered by Owner Participant and, assuming the due authorization, execution
and delivery by the other party or parties thereto, constitute the legal, valid
and binding obligations of Owner Participant and are enforceable against Owner
Participant in accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar Laws affecting the rights of
creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity.
6.2.6 CITIZENSHIP
On the Delivery Date, Owner Participant is a Citizen of the United States.
6.2.7 NO LIENS
On the Delivery Date, there are no Lessor Liens attributable to Owner
Participant in respect of all or any part of the Trust Estate.
6.2.8 INVESTMENT BY OWNER PARTICIPANT
Owner Participant's beneficial interest in the Trust Estate is being
acquired by it for its own account, for investment and not with a view to any
resale or distribution thereof, except that, subject to the restrictions on
transfer set forth in Section 10, the disposition by Owner Participant of its
beneficial interest in the Trust Estate shall at all times be within its
control.
6.2.9 ERISA
No part of the funds to be used by Owner Participant to acquire or hold
its interests in the Trust Estate to be acquired by it under this Agreement
directly or indirectly constitutes assets of a Plan.
6.2.10 LITIGATION
There are no pending or, to the Actual Knowledge of Owner Participant,
threatened actions or proceedings against Owner Participant before any court,
governmental body, arbitration board, administrative agency or tribunal which,
if determined adversely to Owner Participant, would materially adversely affect
the ability of Owner Participant to perform its obligations under the Owner
Participant Agreements.
6.2.11 SECURITIES LAWS
Neither Owner Participant nor any person Owner Participant has
authorized to act on its behalf has directly or indirectly offered any
beneficial interest in or Security relating to the ownership of the Aircraft or
any interest in the Trust Estate, or any of the Equipment Notes or any other
interest in or Security under the Trust Indenture for sale to, or solicited any
offer to acquire any of the same from, any Person in violation of the Securities
Act or applicable state securities Laws.
6.2.12 BROKER'S FEES
No Person acting on behalf of Owner Participant is or will be entitled to
any broker's fee, commission or finder's fee in connection with the
Transactions.
6.3 BANK'S REPRESENTATIONS AND WARRANTIES
Bank represents and warrants to Lessee, Owner Participant, Loan
Participants, Subordination Agent and Mortgagee that:
6.3.1 ORGANIZATION, ETC.
Bank is a national banking association duly organized, validly existing
and in good standing under the Laws of the United States, holding a valid
certificate to do business as a national banking association with banking
authority to execute and deliver, and perform its obligations under, the Owner
Trustee Agreements.
6.3.2 CORPORATE AUTHORIZATION
Bank has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by Law or by its Articles of Association or By-Laws) to
authorize the execution and delivery by Bank, in its individual capacity and as
Owner Trustee, of each of the Owner Trustee Agreements, and the performance of
its obligations thereunder.
6.3.3 NO VIOLATION
The execution and delivery by Bank, in its individual capacity and as
Owner Trustee of the Owner Trustee Agreements, the performance by Bank, in its
individual capacity and as Owner Trustee, of its obligations thereunder and the
consummation by Bank in its individual capacity and as Owner Trustee on the
Delivery Date of the transactions contemplated thereby, do not and will not (a)
violate any provision of the Articles of Association or By-Laws of Bank, (b)
violate any Law of the State of Utah or federal banking Law applicable to or
binding on Owner Trustee or Bank or (c) violate or constitute any default
under(other than any violation or default that would not result in a Material
Adverse Change to Bank, in its individual capacity or as Owner Trustee), or
result in the creation of any Lien (other than the Lien of the Trust Indenture)
upon any property of Bank, in its individual capacity and as Owner Trustee, or
any of its subsidiaries under, any indenture, mortgage, chattel mortgage, deed
of trust, conditional sales contract, lease, loan or other material agreement,
instrument or document to which Bank, in its individual capacity and as Owner
Trustee, is a party or by which Bank, in its individual capacity and as Owner
Trustee, or any of its properties is or may be bound or affected.
6.3.4 APPROVALS
The execution and delivery by Bank, in its individual capacity and as
Owner Trustee, of the Owner Trustee Agreements, the performance by Bank, in its
individual capacity and as Owner Trustee, of its obligations thereunder and the
consummation by Bank, in its individual capacity and as Owner Trustee, on the
Delivery Date of the transactions contemplated thereby do not and will not
require the consent, approval or authorization of, or the giving of notice to,
or the registration with, or the recording or filing of any documents with, or
the taking of any other action in respect of, (a) any trustee or other holder of
any Debt of Bank or (b) any Government Entity governing banking and trust
powers, other than the filing of the FAA Filed Documents and the Financing
Statements.
6.3.5 VALID AND BINDING AGREEMENTS
The Owner Trustee Agreements have been duly authorized, executed and
delivered by Bank, in its individual capacity or as Owner Trustee, as the case
may be, and constitute the legal, valid and binding obligations of Bank, in its
individual capacity and as Owner Trustee, and, assuming the due authorization,
execution and delivery thereof by the other party or parties thereto, are
enforceable against Bank, in its individual capacity and as Owner Trustee, in
accordance with the respective terms thereof, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar Laws affecting the rights of creditors generally and general
principles of equity, whether considered in a proceeding at law or in equity.
6.3.6 CITIZENSHIP
On the Delivery Date, Bank is a Citizen of the United States.
6.3.7 CHIEF EXECUTIVE OFFICE
The chief executive office (as such term is defined in Article 9 of the
UCC) of Owner Trustee is located at 79 South Main Street, Salt Lake City, Utah
84111.
6.3.8 TITLE
On the Delivery Date, Owner Trustee shall have received whatever title (a)
to the Aircraft (other than the BFE) as was conveyed to it by Airframe
Manufacturer and (b) to the BFE as was conveyed to it by Lessee.
6.3.9 NO LIENS; FINANCING STATEMENTS
On the Delivery Date, there are no Lessor Liens attributable to Bank or
Owner Trustee in respect of all or any part of the Aircraft, Trust Estate or the
Trust Indenture Estate. Except for the Financing Statements, it has not, either
in its individual capacity or as Owner Trustee, executed any UCC financing
statements relating to the Aircraft or the Lease.
6.3.10 LITIGATION
There are no pending or, to the Actual Knowledge of Bank, threatened
actions or proceedings against Bank or Owner Trustee before any court,
governmental body, arbitration board, administrative agency or tribunal which,
if determined adversely to Bank, would materially adversely affect the ability
of Bank or Owner Trustee to perform its obligations under the Owner Trustee
Agreements.
6.3.11 SECURITIES LAWS
Neither Bank, nor any person authorized to act on its behalf, has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or security under the Trust Indenture
for sale to, or solicited any offer to acquire any such interest or security
from, or has sold any such interest or security to, any person other than the
Participants, except for the offering and sale of the Pass Through Certificates.
6.3.12 EXPENSES AND TAXES
There are no Expenses or Taxes that may be imposed on or asserted against
the Trust, the Trust Estate or any part thereof or any interest therein, the
Trust Indenture Estate, Lessee, Owner Participant, any Applicable Pass Through
Trustee, Subordination Agent, Owner Trustee or Mortgagee (except as to Owner
Trustee, Taxes imposed on the fees payable to Owner Trustee) under the laws of
Utah in connection with the execution, delivery or performance of any Operative
Agreement by Owner Trustee or in connection with the issuance of the Equipment
Notes, which Expenses or Taxes would not have been imposed if Owner Trustee had
not (x) had its principal place of business in, (y) performed (in its individual
capacity or as Owner Trustee) any or all of its duties under the Operative
Agreements in or (z) engaged in any activities unrelated to the transactions
contemplated by the Operative Agreements in, the State of Utah.
6.4 WTC'S REPRESENTATIONS AND WARRANTIES
WTC represents and warrants (with respect to Section 6.4.10, solely in its
capacity as Subordination Agent) to Lessee, Owner Participant and Owner Trustee
that:
6.4.1 ORGANIZATION, ETC.
WTC is a Delaware banking corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware, holding a valid
certificate to do business as a Delaware banking corporation with banking
authority to execute and deliver, and perform its obligations under, the
Mortgagee Agreements, the Pass Through Trustee Agreements and the Subordination
Agent Agreements.
6.4.2 CORPORATE AUTHORIZATION
WTC has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by Law or by its Certificate of Incorporation or By-Laws)
to authorize the execution and delivery by WTC, in its individual capacity or as
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements and the performance of its obligations
thereunder.
6.4.3 NO VIOLATION
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, a Pass Through Trustee or Subordination Agent, as the
case may be, of its obligations thereunder and the consummation on the Delivery
Date of the transactions contemplated thereby, do not and will not (a) violate
any provision of the Certificate of Incorporation or By-Laws of WTC, (b) violate
any Law applicable to or binding on WTC, in its individual capacity or (except
in the case of any Law relating to any Plan) as Mortgagee, a Pass Through
Trustee or Subordination Agent, or (c) violate or constitute any default under
(other than any violation or default that would not result in a Material Adverse
Change to WTC, in its individual capacity or Mortgagee, a Pass Through Trustee
or Subordination Agent), or result in the creation of any Lien (other than the
Lien of the Trust Indenture) upon any property of WTC, in its individual
capacity or as Mortgagee, a Pass Through Trustee or Subordination Agent, or any
of WTC's subsidiaries under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, lease, loan or other agreement, instrument or
document to which WTC, in its individual capacity or as Mortgagee, a Pass
Through Trustee or Subordination Agent, is a party or by which WTC, in its
individual capacity or as Mortgagee, a Pass Through Trustee or Subordination
Agent, or any of their respective properties is bound.
6.4.4 APPROVALS
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, a Pass Through Trustee or Subordination Agent, as the
case may be, of its obligations thereunder and the consummation on the Delivery
Date by WTC, in its individual capacity or as Mortgagee, a Pass Through Trustee
or Subordination Agent, as the case may be, of the transactions contemplated
thereby do not and will not require the consent, approval or authorization of,
or the giving of notice to, or the registration with, or the recording or filing
of any documents with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of WTC or (b) any Government Entity, other
than the filing of the FAA Filed Documents and the Financing Statements.
6.4.5 VALID AND BINDING AGREEMENTS
The Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements have been duly authorized, executed and delivered
by WTC and, assuming the due authorization, execution and delivery by the other
party or parties thereto, constitute the legal, valid and binding obligations of
WTC, in its individual capacity or as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, and are enforceable against WTC, in its
individual capacity or as Mortgagee, a Pass Through Trustee or Subordination
Agent, as the case may be, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.4.6 CITIZENSHIP
WTC is a Citizen of the United States.
6.4.7 NO LIENS
On the Delivery Date, there are no Lessor Liens attributable to WTC in
respect of all or any part of the Trust Estate or the Trust Indenture Estate.
6.4.8 LITIGATION
There are no pending or, to the Actual Knowledge of WTC, threatened
actions or proceedings against WTC, in its individual capacity or as Mortgagee,
a Pass Through Trustee or Subordination Agent, before any court, administrative
agency or tribunal which, if determined adversely to WTC, in its individual
capacity or as Mortgagee, a Pass Through Trustee or Subordination Agent, as the
case may be, would materially adversely affect the ability of WTC, in its
individual capacity or as Mortgagee, a Pass Through Trustee or Subordination
Agent, as the case may be, to perform its obligations under any of the Mortgagee
Agreements, the Pass Through Trustee Agreements or the Subordination Agent
Agreements.
6.4.9 SECURITIES LAWS
Neither WTC nor any person authorized to act on its behalf has directly or
indirectly offered any beneficial interest or Security relating to the ownership
of the Aircraft or any interest in the Trust Indenture Estate or any of the
Equipment Notes or any other interest in or security under the Trust Indenture
for sale to, or solicited any offer to acquire any such interest or security
from, or has sold any such interest or security to, any Person other than the
Participants, except for the offering and sale of the Pass Through Certificates.
6.4.10 INVESTMENT
The Equipment Notes to be acquired by the Subordination Agent are being
acquired by it for the account of the Applicable Pass Through Trustees, for
investment and not with a view to any resale or distribution thereof, except
that, subject to the restrictions on transfer set forth in Section 10.1.3, the
disposition by it of its Equipment Notes shall at all times be within its
control.
6.4.11 TAXES
There are no Taxes payable by any Applicable Pass Through Trustee or WTC,
as the case may be, imposed by the State of Delaware or any political
subdivision or taxing authority thereof in connection with the execution,
delivery and performance by such Pass Through Trustee or WTC, as the case may
be, of this Agreement or any of the Pass Through Trustee Agreements (other than
franchise or other taxes based on or measured by any fees or compensation
received by any such Pass Through Trustee or WTC, as the case may be, for
services rendered in connection with the transactions contemplated by any of the
Pass Through Trust Agreements), and there are no Taxes payable by any Applicable
Pass Through Trustee or WTC, as the case may be, imposed by the State of
Delaware or any political subdivision thereof in connection with the
acquisition, possession or ownership by any such Pass Through Trustee of any of
the Equipment Notes (other than franchise or other taxes based on or measured by
any fees or compensation received by any such Pass Through Trustee or WTC, as
the case may be, for services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and, assuming that
the trusts created by the Pass Through Trust Agreements will not be taxable as
corporations, but, rather, each will be characterized as a grantor trust under
subpart E, Part I of Subchapter J of the Code or as a partnership under
Subchapter K of the Code, such trusts will not be subject to any Taxes imposed
by the State of Delaware or any political subdivision thereof;
6.4.12 CONTROL
WTC is not an Affiliate of the Owner Participant or the Owner Trustee.
6.4.13 BROKER'S FEES
No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, any Applicable Pass Through Trustee or Subordination Agent, is or
will be entitled to any broker's fee, commission or finder's fee in connection
with the Transactions.
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS
7.1 COVENANTS OF LESSEE
Lessee covenants and agrees, at its own cost and expense, with Owner
Participant, Loan Participants, Owner Trustee and Mortgagee as follows:
7.1.1 CORPORATE EXISTENCE; U.S. AIR CARRIER
Lessee shall at all times maintain its corporate existence, except as
permitted by Section 13.2 of the Lease, and shall at all times remain a U.S. Air
Carrier.
7.1.2 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
Lessee will give Owner Participant, Owner Trustee and Mortgagee timely
written notice (but in any event within 30 days prior to the expiration of the
period of time specified under applicable Law to prevent lapse of perfection) of
any relocation of its chief executive office (as such term is defined in Article
9 of the UCC) from its then present location and will promptly take any action
required by Section 7.1.3(c) as a result of such relocation.
7.1.3 CERTAIN ASSURANCES
(a) Lessee shall duly execute, acknowledge and deliver, or shall cause to
be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as Owner Participant, Owner Trustee or
Mortgagee shall reasonably request for accomplishing the purposes of this
Agreement and the other Operative Agreements, PROVIDED THAT any instrument or
other document so executed by Lessee will not expand any obligations or limit
any rights of Lessee in respect of the transactions contemplated by any
Operative Agreement.
(b) Lessee shall promptly take such action with respect to the recording,
filing, re-recording and refiling of the Lease, the Trust Agreement and the
Trust Indenture and the respective supplements thereto, including, without
limitation, Lease Supplement No. 1 and the initial Trust Indenture Supplement,
as shall be necessary to establish, perfect and protect the interests and rights
of Owner Trustee in and to the Aircraft and under the Lease and the perfection
and priority of the Lien created by the Trust Indenture. Lessee shall furnish to
Owner Participant or Owner Trustee such information (other than with respect to
the citizenship of Owner Participant and Owner Trustee) in Lessee's possession
or otherwise reasonably available to Lessee as may be required to enable Owner
Participant or Owner Trustee to make application for registration of the
Aircraft under the Act (subject to Lessee's rights under Section 7.1.2 of the
Lease) and shall pay or cause to be paid all out-of-pocket costs and expenses
thereof (including, without limitation, reasonable attorneys' fees and
disbursements).
(c) Lessee, at its sole cost and expense, will cause the FAA Filed
Documents, the Financing Statements and all continuation statements (and any
amendments necessitated by any combination, consolidation or merger pursuant to
Section 13.2 of the Lease, or any relocation of its chief executive office) in
respect of the Financing Statements to be prepared and, subject only to the
execution and delivery thereof by Owner Trustee and Mortgagee, as applicable,
duly and timely filed and recorded, or filed for recordation, to the extent
permitted under the Act (with respect to the FAA Filed Documents) or the UCC or
similar law of any other applicable jurisdiction (with respect to such other
documents).
(d) If the Aircraft has been registered in a country other than the United
States pursuant to Section 7.1.2 of the Lease, Lessee will furnish to Owner
Trustee, Mortgagee and each Participant annually after such registration,
commencing with the calendar year after such registration is effected, an
opinion of special counsel reasonably satisfactory to Owner Trustee and
Mortgagee stating that, in the opinion of such counsel, either that (i) such
action has been taken with respect to the recording, filing, rerecording and
refiling of the Operative Agreements and any supplements and amendments thereto
as is necessary to establish, perfect and protect Owner Trustee's and
Mortgagee's respective right, title and interest in and to the Aircraft and the
Operative Agreements, reciting the details of such actions, or (ii) no such
action is necessary to maintain the perfection of such right, title and
interest.
7.1.4 SECURITIES LAWS
Neither Lessee nor any person authorized to act on its behalf will
directly or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement or any of the Equipment Notes or any other interest in or
security under the Trust Indenture, for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any person in violation of the Securities Act or applicable state or foreign
securities Laws.
7.1.5 NOTICE OF SUBLEASE
Lessee shall give to Standard & Poor's a copy of any notice regarding a
sublease of the Aircraft required to be given to the Mortgagee pursuant to
Section 7.2.7(a) of the Lease, at the time such notice is given to Mortgagee, if
at such time Standard & Poor's is then rating the Pass Through Certificates.
7.2 COVENANTS OF OWNER PARTICIPANT
Owner Participant covenants and agrees with Lessee, and except with
respect to Section 7.2.4, Loan Participants, Owner Trustee and Mortgagee as
follows:
7.2.1 LIENS
Owner Participant (a) will not directly or indirectly create, incur,
assume or suffer to exist any Lessor Lien attributable to it on or with respect
to all or any part of the Trust Estate, the Trust Indenture Estate or the
Aircraft, (b) will, at its own cost and expense, promptly take such action as
may be necessary to discharge any Lessor Lien attributable to Owner Participant
on all or any part of the Trust Estate, the Trust Indenture Estate or the
Aircraft and (c) will hold harmless and indemnify Lessee, Owner Trustee, each
Note Holder, Mortgagee, each of their respective Affiliates, successors and
permitted assigns, the Trust Estate and the Trust Indenture Estate from and
against (i) any and all Expenses, (ii) any reduction in the amount payable out
of the Trust Estate or the Trust Indenture Estate and (iii) any interference
with the possession, operation or other use of all or any part of the Aircraft
imposed on, incurred by or asserted against any of the foregoing as a
consequence of any such Lessor Lien.
7.2.2 REVOCATION OF TRUST AGREEMENT
(a) Owner Participant will comply with the provisions of the Trust
Agreement applicable to it, and will not terminate or revoke the Trust Agreement
or the trusts created thereunder without the prior written consent of Lessee and
Mortgagee and will not amend, modify or supplement the Trust Agreement, or waive
any of the provisions thereof, if such amendment, modification, supplement or
waiver would have a material adverse effect on Lessee, without the consent of
Lessee, or on Mortgagee or any Note Holder, without the consent of Mortgagee.
(b) Notwithstanding Section 7.2.2(a), Owner Participant may at any time
remove Owner Trustee pursuant to Section 9.1 of the Trust Agreement or terminate
the Trust Agreement pursuant to Section 11.2 of the Trust Agreement.
7.2.3 CHANGE OF SITUS OF OWNER TRUST
If, at any time, any Tax Indemnitee or the Trust Estate becomes subject to
any Taxes for which it is indemnified pursuant to Section 9.3 of this Agreement
and if, as a consequence thereof, Lessee should request that the situs of the
Trust be moved to another state in the United States from the state in which it
is then located, the situs of the Trust may be moved with the written consent of
Owner Participant (which consent shall not be unreasonably withheld) and Owner
Participant will take whatever action may be reasonably necessary to accomplish
such removal; PROVIDED, that, in any event, (a) Lessee shall provide such
additional tax indemnification as Owner Participant and the Note Holders or the
Pass Through Trustees may reasonably request to cover any additional
unindemnified Taxes or loss of Tax benefits described in the assumptions in the
Tax Indemnity Agreement resulting from such change in the situs of the Trust,
(b) the rights and obligations under the Operative Agreements of Owner
Participant, the Note Holders, Pass Through Trustees and Mortgagee shall not be
adversely affected as a result of the taking of such action, (c) the Lien of the
Trust Indenture on the Trust Indenture Estate shall not be adversely affected by
such action, and Lessee and Owner Trustee shall execute and deliver such
documents as may reasonably be requested by Mortgagee to protect and maintain
the perfection and priority of such Lien, (d) Owner Participant, Pass Through
Trustees and Mortgagee shall have received an opinion or opinions of counsel
(which counsel is reasonably satisfactory to Owner Participant, Pass Through
Trustees and Mortgagee) in scope, form and substance reasonably satisfactory to
Owner Participant, Pass Through Trustees and Mortgagee to the effect that (i)
the Trust, as thus removed, shall remain a validly established trust, (ii) any
amendments to the Trust Agreement necessitated by such removal shall have been
duly authorized, executed and delivered by the parties thereto and shall
constitute the valid and binding obligations of such parties, enforceable in
accordance with their terms, (iii) covering such other matters as Owner
Participant, Pass Through Trustees or Mortgagee may reasonably request, (e) if
such removal involves the replacement of Owner Trustee, then Owner Participant,
Pass Through Trustees and Mortgagee shall have received an opinion of counsel to
such successor Owner Trustee in form and substance reasonably satisfactory to
Owner Participant, Pass Through Trustees and Mortgagee covering the matters
described in the opinion delivered pursuant to Section 5.1.2(xxiii)(D) and (f)
Lessee shall indemnify and hold harmless Owner Participant, Note Holders, Pass
Through Trustees and Bank, in its individual capacity and as Owner Trustee, on a
net after-tax basis against any and all reasonable out-of-pocket costs and
expenses including attorneys' fees and disbursements, fees and expenses of any
new owner trustee, registration, recording or filing fees and taxes incurred by
Owner Participant, Note Holders, Pass Through Trustees or Owner Trustee in
connection with such change of situs. Owner Participant agrees with Lessee that
it will not consent to or direct a change in the situs of the Trust Estate
without the prior written consent of Lessee.
7.2.4 COMPLIANCE WITH LEASE PROVISIONS
Owner Participant will, solely for the benefit of Lessee, comply with the
express provisions applicable to it contained in the Lease.
7.2.5 SECURITIES ACT
Owner Participant will not directly or indirectly offer any beneficial
interest or security relating to the ownership of the Aircraft or any interest
in the Trust Estate or any of the Equipment Notes or any other interest in or
security under the Trust Indenture for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any Person in violation of the Securities Act or applicable state or foreign
securities Laws, provided that the foregoing shall not be deemed to impose on
Owner Participant any responsibility with respect to any such offer, sale or
solicitation by any other party hereto.
7.2.6 REGARDING THE OWNER TRUSTEE
Owner Participant will cause Owner Trustee to perform its obligations
under each Owner Trustee Agreement.
7.3 COVENANTS OF BANK AND OWNER TRUSTEE
Bank, in its individual capacity and/or as Owner Trustee, as provided
below, covenants and agrees with Lessee, Owner Participant, each Note Holder and
Mortgagee as follows:
7.3.1 LIENS
Bank (a) will not directly or indirectly create, incur, assume or suffer
to exist any Lessor Lien attributable to it or Owner Trustee with respect to all
or any part of the Trust Estate, the Trust Indenture Estate or the Aircraft, (b)
will, at its own cost and expense, promptly take such action as may be necessary
to discharge any Lessor Lien attributable to Bank or Owner Trustee on all or any
part of the Trust Estate, the Trust Indenture Estate or the Aircraft and (c)
will personally hold harmless and indemnify Lessee, Owner Participant, each Note
Holder, Mortgagee, each of their respective Affiliates, successors and permitted
assigns, the Trust Estate and the Trust Indenture Estate from and against (i)
any and all Expenses, (ii) any reduction in the amount payable out of the Trust
Estate or the Trust Indenture Estate and (iii) any interference with the
possession, operation or other use of all or any part of the Aircraft imposed
on, incurred by or asserted against any of the foregoing as a consequence of any
such Lessor Lien.
7.3.2 OTHER BUSINESS
Owner Trustee will not enter into any business or other activity except as
contemplated by the Operative Agreements.
7.3.3 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
Bank, in its individual capacity and as Owner Trustee, will give Lessee,
each Participant and Mortgagee 30 days' prior written notice of any relocation
of its chief executive office (as such term is defined in Article 9 of the UCC)
from its then present location and will promptly take any action required by
Section 7.3.8 as a result of such relocation.
7.3.4 SECURITIES ACT
Bank, in its individual capacity and as Owner Trustee, will not directly
or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or security under the Trust Indenture
for sale to, or solicit any offer to acquire any such interest or security from,
or sell any such interest or security to, any Person in violation of the
Securities Act or applicable state or foreign securities Laws, provided that the
foregoing shall not be deemed to impose on Bank in its individual capacity or as
Owner Trustee, any responsibility with respect to any such offer, sale or
solicitation by any other party hereto.
7.3.5 PERFORMANCE OF AGREEMENTS
Owner Trustee shall perform its obligations under the Owner Trustee
Agreements in accordance with the terms thereof.
7.3.6 RELEASE OF LIEN OF TRUST INDENTURE
Owner Trustee, in each instance referred to in the Lease in which a
transfer of any property is required to be made by Owner Trustee to Lessee or
any other Person (other than Mortgagee or Owner Participant), shall, at Lessee's
request and expense, use its reasonable efforts to procure from Mortgagee the
prompt release of the Lien of the Trust Indenture with respect to such property.
7.3.7 NOTICES; DOCUMENTS
In the event any claim with respect to any liabilities is filed against
the Owner Trustee in its capacity as such and Owner Trustee shall have Actual
Knowledge thereof, the Owner Trustee shall promptly notify Lessee in writing
thereof. Owner Trustee further agrees to provide to Lessee promptly any
documents (including the certificate of aircraft registration) that it receives
from the FAA with respect to the Aircraft.
7.3.8 FILINGS
After the Delivery Date, Owner Trustee shall duly execute and deliver to
Lessee all filings and recordings (including, without limitation, all filings
and UCC financing statements under the Act and the UCC and any amendments to UCC
financing statements necessitated by any relocation of its chief executive
office), prepared and delivered to it by Lessee required to perfect Owner
Trustee's title to the Aircraft and the liens of and security interests granted
by the Trust Indenture (or to maintain such perfection) and to make such title,
liens and security interests valid and enforceable.
7.3.9 TRUST AGREEMENT
Each of Bank and Owner Trustee hereby (i) agrees with Lessee, Loan
Participants and Mortgagee not to amend, supplement, terminate or otherwise
modify any provision of the Trust Agreement in such a manner as to adversely
affect the rights of any such party without the prior written consent of such
party and (ii) agrees with Lessee, Loan Participant and Mortgagee not to revoke
the trust created by the Trust Agreement so long as the Trust Indenture remains
undischarged or if such revocation would have an adverse effect on the Lessee.
Nothing contained in this Agreement shall impair any right under the Trust
Agreement of Bank to resign as Owner Trustee in accordance with the provisions
of the Trust Agreement.
7.4 COVENANTS OF WTC
WTC in its individual capacity or as Mortgagee, each Applicable Pass
Through Trustee or Subordination Agent, as the case may be, covenants and agrees
with Lessee, Owner Participant and Owner Trustee as follows:
7.4.1 LIENS
WTC (a) will not directly or indirectly create, incur, assume or suffer to
exist any Lessor Lien attributable to it on or with respect to all or any part
of the Trust Estate, the Trust Indenture Estate or the Aircraft, (b) will, at
its own cost and expense, promptly take such action as may be necessary to
discharge any Lessor Lien attributable to WTC on all or any part of the Trust
Estate, the Trust Indenture Estate or the Aircraft and (c) will personally hold
harmless and indemnify Lessee, Owner Participant, each Note Holder, Owner
Trustee, each of their respective Affiliates, successors and permitted assigns,
the Trust Estate and the Trust Indenture Estate from and against (i) any and all
Expenses, (ii) any reduction in the amount payable out of the Trust Estate or
the Trust Indenture Estate and (iii) any interference with the possession,
operation or other use of all or any part of the Aircraft, imposed on, incurred
by or asserted against any of the foregoing as a consequence of any such Lessor
Lien.
7.4.2 SECURITIES ACT
WTC in its individual capacity or as Mortgagee, an Applicable Pass Through
Trustee or Subordination Agent, will not offer any beneficial interest or
Security relating to the ownership of the Aircraft or any interest in the Trust
Indenture Estate, or any of the Equipment Notes or any other interest in or
security under the Trust Indenture for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any Person in violation of the Securities Act or applicable state or foreign
securities Laws, provided that the foregoing shall not be deemed to impose on
WTC any responsibility with respect to any such offer, sale or solicitation by
any other party hereto.
7.4.3 PERFORMANCE OF AGREEMENTS
WTC, in its individual capacity and as Mortgagee, an Applicable Pass
Through Trustee or Subordination Agent, as the case may be, shall perform its
obligations under the Indenture Agreements, the Pass Through Trustee Agreements
and the Subordination Agent Agreements in accordance with the terms thereof.
7.4.4 WITHHOLDING TAXES
WTC shall indemnify (on an after-tax basis) and hold harmless Lessee,
Lessor and Owner Participant against any United States withholding taxes (and
related interest, penalties and additions to tax) as a result of the failure by
WTC to withhold on payments to any Note Holder if such Note Holder failed to
provide to Mortgagee necessary certificates or forms to substantiate the right
to exemption from such withholding tax.
7.5 COVENANTS OF NOTE HOLDERS
Each Note Holder (including Subordination Agent) as to itself only
covenants and agrees with Lessee, Owner Participant, Owner Trustee and Mortgagee
as follows:
7.5.1 WITHHOLDING TAXES
Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on an
after-tax basis) and hold harmless Lessee, Lessor, Owner Participant and
Mortgagee against any United States withholding taxes (and related interest,
penalties and additions to tax) as a result of the inaccuracy or invalidity of
any certificate or form provided by such Note Holder to Mortgagee in connection
with such withholding taxes. Any amount payable hereunder shall be paid within
30 days after receipt by a Note Holder of a written demand therefor.
7.5.2 TRANSFER; COMPLIANCE
(a) Such Note Holder will (i) not transfer any Equipment Note or interest
therein in violation of the Securities Act or applicable state or foreign
securities Law; PROVIDED, that the foregoing provisions of this section shall
not be deemed to impose on such Note Holder any responsibility with respect to
any such offer, sale or solicitation by any other party hereto, and (ii) perform
and comply with the obligations specified to be imposed on it (as a Note Holder)
under each of the Trust Indenture and the form of Equipment Note set forth in
the Trust Indenture.
(b) Except for the transfer of the interests of each Applicable Pass
Through Trustee in the Equipment Notes to the trustee of the Related Trust (as
defined in each Applicable Pass Through Trust Agreement) in accordance with the
related Applicable Pass Through Trust Agreement and except as otherwise required
by the terms of Section 2.13 of the Trust Indenture or Section 11 hereof, each
Note Holder will not sell, assign, convey, exchange or otherwise transfer any
Equipment Note or any interest in, or represented by, any Equipment Note (it
being understood that this provision is not applicable to the Pass Through
Certificates) unless the proposed transferee thereof first provides Lessee and
Owner Participant with both of the following:
(i) a written representation and covenant that either (a) no portion
of the funds it uses to purchase, acquire and hold such Equipment Note or
interest directly or indirectly constitutes, or may be deemed under the
Code or ERISA or any rulings, regulations or court decisions thereunder to
constitute, the assets of any Plan or (b) the transfer, and subsequent
holding, of such Equipment Note or interest shall not involve or give rise
to a transaction that constitutes a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code
involving Lessee, Owner Participant, a Pass Through Trustee, the
Subordination Agent or the proposed transferee (other than a transaction
that is exempted from the prohibitions of such sections by applicable
provisions of ERISA or the Code or administrative exemptions or
regulations issued thereunder); and
(ii) a written covenant that it will not transfer any Equipment Note
or any interest in, or represented by, any Equipment Note unless the
subsequent transferee also makes the representation described in clause
(i) above and agrees to comply with this clause (ii).
7.6 AGREEMENTS
7.6.1 OWNER TRUSTEE IS OWNER FOR ALL PURPOSES
Lessee, the Owner Participant and Owner Trustee agree that for all
purposes, after the Closing, Owner Trustee will be the owner of the Aircraft
(except that Owner Participant will be the owner for income tax purposes) and
Lessee will be the lessee thereof. No transfer, by operation of Law or
otherwise, of the beneficial interest of Owner Participant in and to the Trust
Estate shall operate to transfer legal title to any part of the Trust Estate to
any transferee thereof.
7.6.2 COMMENCEMENT OF BANKRUPTCY PROCEEDINGS
Lessee, each Participant, each Note Holder, Bank, Owner Trustee, WTC and
Mortgagee agree for the benefit of each of the others that it will not commence
or join in any proceeding under the Bankruptcy Code to commence a case under
Section 303 of the Bankruptcy Code against the Trust Estate. Nothing contained
herein shall be deemed to preclude any Participant, any Note Holder, Bank, Owner
Trustee, WTC or Mortgagee from filing any claim against the Trust Estate in any
case commenced against the Trust Estate.
7.6.3 CERTAIN BANKRUPTCY MATTERS
If (a) all or any part of the Trust Estate becomes the property of, or
Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (b) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code,
Bank or Owner Participant is required, by reason of Bank or Owner Participant
being held to have recourse liability to any Note Holder or Mortgagee directly
or indirectly (other than the recourse liability of Bank or Owner Participant
under this Agreement, the Trust Indenture or by separate agreement), to make
payment on account of any amount payable as principal, Make-Whole Amount, if
any, interest or other amounts on the Equipment Notes, and (c) any Note Holder
or Mortgagee actually receives any Excess Amount, as defined below, which
reflects any payment by Bank or Owner Participant on account of (b) above, then
such Note Holder or Mortgagee, as the case may be, shall promptly refund to Bank
or Owner Participant (whichever shall have made such payment) such Excess
Amount.
For purposes of this Section 7.6.3, "Excess Amount" means the amount by
which such payment exceeds the amount that would have been received by a Note
Holder or Mortgagee if Bank or Owner Participant had not become subject to the
recourse liability referred to in clause (b) above. Nothing contained in this
Section 7.6.3 shall prevent a Note Holder or Mortgagee from enforcing any
personal recourse obligation (and retaining the proceeds thereof) of Bank or
Owner Participant under this Agreement (other than as referred to in clause (b)
above) or the Trust Indenture (and any exhibits or annexes thereto) or from
retaining any amount paid by Owner Participant under Sections 2.13 or 4.03 of
the Trust Indenture.
7.6.4 QUIET ENJOYMENT; SALE BY OWNER TRUSTEE
BINDING
(a) Owner Participant, each Applicable Pass Through Trustee, Subordination
Agent, each Note Holder, Owner Trustee and Mortgagee agrees as to itself with
Lessee that, so long as no Lease Event of Default shall have occurred and be
continuing, such Person shall not (and shall not permit any Affiliate or other
Person claiming by, through or under it to) interfere with Lessee's rights in
accordance with the Lease to the quiet enjoyment, possession and use of the
Aircraft during the Term.
(b) Any assignment, sale, transfer or other conveyance of the Aircraft by
Owner Trustee made pursuant to the terms of this Agreement or the Lease shall
bind Owner Participant and shall be effective to transfer or convey all right,
title and interest of Owner Trustee and Owner Participant in and to the
Aircraft. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such assignment, sale,
transfer or conveyance, or as to the application of any sale or other proceeds
with respect thereto by Owner Trustee, as regards Owner Participant.
7.6.5 RELEASE OF LIEN OF TRUST INDENTURE
Each of Lessee, Lessor and Mortgagee agrees that in each instance referred
to in the Lease in which a transfer of any property is required to be made by
Lessor to Lessee or any other Person (other than Mortgagee), Mortgagee shall,
upon request of Lessor and compliance with the applicable provisions of the
Lease and the Trust Indenture, including payment of all amounts then due and
payable to each Liquidity Provider as Supplemental Rent, promptly execute (at
Lessee's cost and expense) such instruments as Lessor or Lessee may reasonably
request to evidence the release of the Lien of the Trust Indenture with respect
to such property.
7.6.6 NON-RECOURSE
Loan Participant and Mortgagee agree that (a) obligations of Owner Trustee
under the Trust Indenture or any other Operative Agreement and with respect to
the Equipment Notes shall be non-recourse to Owner Participant and to Bank and
(b) they will look solely to the income and proceeds from the Trust Estate and
the Trust Indenture Estate to the extent available for distribution to Note
Holder or Mortgagee as provided in the Trust Indenture and that neither Owner
Participant nor Bank will be personally liable to Loan Participant or Mortgagee
for any amounts payable by Owner Trustee under the Trust Indenture or any other
Operative Agreement; PROVIDED, HOWEVER, that the foregoing is not intended nor
shall it be construed to limit any recourse liability of Owner Participant or
Bank to the extent that such liability is expressly set forth in this Agreement
or in any of the Operative Agreements or arises by reason of the breach of any
representation or warranty or covenant given by such Person (in the case of
Bank, in its individual capacity).
7.6.7 OTHER DOCUMENTS; AMENDMENT
(a) Each of the Owner Participant and the Owner Trustee hereby (A) agrees
with Lessee, the Loan Participants and the Mortgagee not to amend, supplement or
otherwise modify any provision of the Trust Agreement in a manner that could
adversely affect such party without the prior written consent of such party.
Notwithstanding the foregoing, so long as the Lease has not been terminated or
expired, each Participant, the Mortgagee and the Owner Trustee hereby agree for
the benefit of Lessee that without the consent of Lessee they will not amend,
supplement or otherwise modify (i) Article III, Article IX or Section 2.05 of
the Trust Indenture, (ii) any provision of any Operative Agreement that will
affect the stated principal amount of or premium or interest on the Equipment
Notes or (iii) any other provision of the Trust Indenture or Equipment Notes in
a manner that could adversely affect Lessee. Mortgagee and Owner Trustee agree
to promptly furnish to Lessee copies of any supplement, amendment, waiver or
modification of any of the Operative Agreements to which Lessee is not a party.
Each Loan Participant agrees that it will not take any action in respect of the
Trust Indenture Estate except through the Mortgagee pursuant to the Trust
Indenture or as otherwise permitted by Trust Indenture.
(b) Owner Trustee agrees to join with Lessee to the extent that action on
its part is necessary or appropriate (i) to cause the following to be duly
accomplished in accordance with applicable United States federal Law by the time
the Aircraft is delivered under this Agreement and the Lease: (A) the
application for registration of the Aircraft in the name of Owner Trustee and
(B) all related action necessary in order for Lessee to have temporary or
permanent authority to operate the Aircraft as contemplated by the Lease and
(ii) forthwith upon delivery of the Aircraft under this Agreement and the Lease,
to cause all necessary documents to be duly filed for recording in accordance
with applicable United States federal Law.
7.6.8 CONSENTS
Each Participant, each Applicable Pass Through Trustee, Subordination
Agent, Owner Trustee and Mortgagee covenants and agrees, for the benefit of
Lessee, that it shall not unreasonably withhold its consent to any consent or
approval requested of it or of Owner Trustee or Mortgagee under the terms of any
of the Operative Agreements which by its terms is not to be unreasonably
withheld.
7.6.9 INSURANCE
Each of Owner Participant, the Pass Through Trustees, the Subordination
Agent and the Owner Trustee agrees not to obtain or maintain insurance for its
own account as permitted by Section 11.2 of the Lease if such insurance would
limit or otherwise adversely affect the coverage of any insurance required to be
obtained or maintained by Lessee pursuant to Section 11 and Annex D of the
Lease.
7.6.10 EXTENT OF INTEREST OF NOTE HOLDERS
A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Estate or the Trust Indenture Estate when and
if the principal and Make-Whole Amount, if any, of and interest on the Equipment
Note held by such Note Holder, and all other sums, then due and payable to such
Note Holder hereunder and under any other Operative Agreement, shall have been
paid in full.
7.6.11 FOREIGN REGISTRATION
Each Participant, Owner Trustee and Mortgagee hereby agree, for the
benefit of Lessee but subject to the provisions of Section 7.1.2 of the Lease:
(a) that Lessee shall be entitled to register the Aircraft or cause the
Aircraft to be registered in a country other than the United States subject to
compliance with the following:
(i) each of the following requirements is satisfied:
(A) such registration shall be made only after the Tax Attribute
Period, unless Lessee prepays on a lump sum basis any
liability due under the Tax Indemnity Agreement as a result of
such registration based upon the assumption that such
registration would continue for the remainder of the term of
the Permitted Sublease described in clause (C) below;
(B) no Lease Event of Default shall have occurred and be
continuing at the time of such registration;
(C) such proposed change of registration is made in connection
with a Permitted Sublease to a Permitted Air Carrier;
(D) such country is a country with which the United States then
maintains normal diplomatic relations or, if Taiwan, the
United States then maintains diplomatic relations at least as
good as those in effect on the Delivery Date;
(ii) the Owner Trustee and Mortgagee shall have received an opinion
of counsel (subject to customary exceptions) reasonably satisfactory to
the Owner Participant addressed to each such party as to the effect that:
(A) such country would recognize the Owner Trustee's ownership
interest in the Aircraft;
(B) the obligations of Lessee, and the rights and remedies of
Owner Trustee, under the Lease are valid, binding and enforceable
under the laws of such jurisdiction (or the laws of the jurisdiction
to which the laws of such jurisdiction would refer as the applicable
governing law);
(C) after giving effect to such change in registration, the
Lien of the Trust Indenture on the Owner Trustee's right, title and
interest in and to the Aircraft and the Lease shall continue as a
valid and duly perfected first priority security interest and all
filing, recording or other action necessary to protect the same
shall have been accomplished (or, if such opinion cannot be given at
the time of such proposed change in registration because such change
in registration is not yet effective, (1) the opinion shall detail
what filing, recording or other action is necessary and (2) the
Owner Trustee and the Mortgagee shall have received a certificate
from Lessee that all possible preparations to accomplish such
filing, recording and other action shall have been done, and such
filing, recording and other action shall be accomplished and a
supplemental opinion to that effect shall be delivered to the Owner
Trustee and the Mortgagee on or prior to the effective date of such
change in registration;
(D) it is not necessary, solely as a consequence of such
change in registration and without giving effect to any other
activity of the Owner Trustee, the Owner Participant or the
Mortgagee (or any Affiliate thereof), as the case may be, for the
Owner Trustee, the Owner Participant or the Mortgagee to qualify to
do business in such jurisdiction as a result of such reregistration
in order to exercise any rights or remedies with respect to the
Aircraft pursuant to the Lease;
(E) there is no tort liability of the owner or lessor of an
aircraft not in possession thereof under the laws of such
jurisdiction (it being agreed that, in the event such latter opinion
cannot be given in a form satisfactory to the Owner Participant,
such opinion shall be waived if insurance reasonably satisfactory to
the Owner Participant is provided to cover such risk); and
(F) unless Lessee shall have agreed to provide insurance
covering the risk of requisition of use of the Aircraft by the
government of such country (so long as the Aircraft is registered
under the laws of such country), the laws of such country require
fair compensation by the government of such country payable in
currency freely convertible into Dollars and freely removable from
such country (without license or permit, unless Lessee prior to such
proposed reregistration has obtained such license or permit) for the
taking or requisition by such government of such use;
(b) In addition, as a condition precedent to any change in registration
Lessee shall have given to Lessor and Mortgagee assurances reasonably
satisfactory to each of them:
(i) to the effect that the provisions of Section 11 of the Lease
have been complied with after giving effect to such change of
registration;
(ii) of the payment by Lessee of all reasonable out-of-pocket
expenses of Lessor, each Participant and Mortgagee in
connection with such change of registry, including, without
limitation (1) the reasonable fees and disbursements of
counsel to Lessee, Lessor and Mortgagee, (2) any filing or
recording fees, Taxes or similar payments incurred in
connection with the change of registration of the Aircraft and
the creation and perfection of the security interest therein
in favor of Mortgagee for the benefit of Note Holders, and (3)
all costs and expenses incurred in connection with any filings
necessary to continue in the United States the perfection of
the security interest in the Aircraft and the Lease in favor
of Mortgagee for the benefit of Note Holders; and
(iii) to the effect that the tax and other indemnities in favor of
each person named as an indemnitee under any other Operative
Agreement afford each such person substantially the same
protection as provided prior to such change of registration
(or Lessee shall have agreed upon additional indemnities that,
together with such original indemnities, in the reasonable
judgment of Lessor and Mortgagee, afford such protection).
7.6.12 OTHER COMMERCIAL RELATIONS UNAFFECTED
Notwithstanding anything to the contrary set forth in any Operative
Agreement:
(a) Except as set forth in the Purchase Agreement Assignment, nothing
contained in the Operative Agreements shall constitute or be deemed to be a
waiver by Lessee of any rights, remedies or claims it may have against Airframe
Manufacturer or Engine Manufacturer or any subcontractor or supplier of either;
and the Operative Agreements do not and shall not be construed or deemed to
create any rights, waivers, immunities or indemnities in favor of Airframe
Manufacturer, Engine Manufacturer or any subcontractor or supplier of either
with respect to any such rights, remedies or claims of Lessee; and
(b) None of Airframe Manufacturer, by its execution and delivery of the
Consent and Agreement, and Engine Manufacturer, by its execution and delivery of
the Engine Consent and Agreement, shall be deemed to have waived any rights,
remedies or claims which Airframe Manufacturer or Engine Manufacturer (or any
subcontractor or supplier of either), as the case may be, may have against
Lessee; and the Operative Agreements do not and shall not be construed or deemed
to create any rights, waivers, immunities or indemnities in favor of Lessee with
respect to any such rights, remedies or claims of Airframe Manufacturer or
Engine Manufacturer (or any subcontractor or supplier of either).
7.6.13 INTEREST IN CERTAIN ENGINES
Each Participant, Owner Trustee, and Mortgagee agree, for the benefit of
each of the lessor, conditional seller, mortgagee or secured party of any
airframe or engine leased to, or purchased by, Lessee or any Permitted Sublessee
subject to a lease, conditional sale, trust indenture or other security
agreement that it will not acquire or claim, as against such lessor, conditional
seller, mortgagee or secured party, any right, title or interest in any engine
as the result of such engine being installed on the Airframe at any time while
such engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such mortgagee or secured
party.
SECTION 8. CONFIDENTIALITY
Lessee, Owner Participant, Note Holders, Owner Trustee and Mortgagee shall
keep Annexes B, C and D and Schedules 1, 2, 3 and 4 to the Lease, the
Participation Agreement, the Purchase Agreement Assignment and the Tax Indemnity
Agreement confidential and shall not disclose, or cause to be disclosed, the
same to any Person, except (A) to prospective and permitted transferees of
Lessee's, Owner Participant's, a Note Holder's, Liquidity Provider's, Owner
Trustee's, Mortgagee's or other Indenture Indemnitee's interest or their
respective counsel or special counsel, independent insurance brokers, auditors,
or other agents who agree to hold such information confidential, (B) to
Lessee's, Owner Participant's, a Note Holder's, Liquidity Provider's, a Pass
Through Trustee's, Owner Trustee's, Mortgagee's or other Indenture Indemnitee's
counsel or special counsel, independent insurance brokers, auditors, or other
agents, Affiliates or investors who agree to hold such information confidential,
(C) as may be required by any statute, court or administrative order or decree,
legal process or governmental ruling or regulation, including those of any
applicable insurance regulatory bodies (including, without limitation, the
National Association of Insurance Commissioners), federal or state banking
examiners, Internal Revenue Service auditors or any stock exchange, (D) with
respect to Lessee and Owner Participant, by mutual agreement of such parties,
(E) with respect to a Note Holder or any Pass Through Trustee, to a nationally
recognized rating agency for the purpose of obtaining a rating on the Equipment
Notes or the Pass Through Trust Certificates or to support an NAIC rating for
the Equipment Notes or (F) such other Persons as are reasonably deemed necessary
by the disclosing party in order to protect the interests of such party or for
the purposes of enforcing such documents by such party; PROVIDED, that any and
all disclosures permitted by clauses (C), (D), (E) or (F) above shall be made
only to the extent necessary to meet the specific requirements or needs of the
Persons making such disclosures.
SECTION 9. INDEMNIFICATION AND EXPENSES
9.1 GENERAL INDEMNITY
9.1.1 INDEMNITY
Whether or not any of the transactions contemplated hereby are
consummated, Lessee shall indemnify, protect, defend and hold harmless each
Indemnitee from, against and in respect of, and shall pay on a net after-tax
basis, any and all Expenses of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against any Indemnitee, relating to, resulting from,
or arising out of or in connection with, any one or more of the following:
(a) The Operative Agreements, the Pass Through Agreements, or the
enforcement of any of the terms of any of the Operative Agreements or the Pass
Through Agreements;
(b) The Aircraft, the Airframe, any Engine or any Part, including, without
limitation, with respect thereto, (i) the manufacture, design, purchase,
acceptance, nonacceptance or rejection, ownership, registration, reregistration,
deregistration, delivery, nondelivery, lease, sublease, assignment, possession,
use or non-use, operation, maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment, redelivery or
other disposition of the Aircraft, any Engine or any Part, (ii) any claim or
penalty arising out of violations of applicable Laws by Lessee (or any Permitted
Sublessee), (iii) tort liability, whether or not arising out of the negligence
of any Indemnitee (whether active, passive or imputed), (iv) death or property
damage of passengers, shippers or others, (v) environmental control, noise or
pollution and (vi) any Liens in respect of the Aircraft, any Engine or any Part;
(c) The offer, sale, or delivery of any Equipment Notes, Pass Through
Certificates or any interest therein or represented thereby; and
(d) Any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement or other obligation to be
performed by Lessee under any Lessee Operative Agreement or any Pass Through
Agreement or the falsity of any representation or warranty of Lessee in any
Lessee Operative Agreement or any Pass Through Agreement other than in the Tax
Indemnity Agreement.
9.1.2 EXCEPTIONS
Notwithstanding anything contained in Section 9.1.1, Lessee shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 9.1.1 in respect of any Expense of such Indemnitee:
(a) For any Taxes or a loss of Tax benefit, whether or not Lessee is
required to indemnify therefor pursuant to Section 9.3 or the Tax Indemnity
Agreement;
(b) Except to the extent attributable to acts or events occurring prior
thereto, acts or events (other than acts or events related to the performance by
Lessee of its obligations pursuant to the terms of the Lessee Operative
Agreements) that occur after the earliest of: (i) with respect to the Airframe,
any Engine or any Part, the return of possession (it being understood that the
date of the placement of the Aircraft in storage as provided in Section 5 of the
Lease constitutes the date of return of the Aircraft under the Lease) of such
Airframe, Engine or Part pursuant to the terms of and in compliance with the
Lease (other than pursuant to Section 15 thereof, in which case Lessee's
liability under this Section 9.1 shall survive for so long as Lessor shall be
entitled to exercise remedies under such Section 15) or (ii) the termination of
the Term in accordance with the Lease;
(c) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of such Indemnitee of any Equipment Note or interest therein,
except (i) for out-of-pocket costs and expenses incurred as a result of any such
Transfer pursuant to the exercise of remedies under any Operative Agreement
resulting from a Lease Event of Default and (ii) as otherwise required by the
terms of Section 2.13 of the Trust Indenture or Section 11 hereof;
(d) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of Owner Participant of any interest in the Aircraft, or the
Trust Estate except for out-of-pocket costs and expenses incurred as a result of
any such Transfer in connection with the exercise of remedies attributable to
the occurrence of an Indenture Event of Default that is a Lease Event of
Default;
(e) To the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such person by
reason of its interest in the Aircraft or any Operative Agreement);
(f) In the case of Bank, to the extent attributable to matters enumerated
in the proviso to Section 14;
(g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass Through
Agreement;
(h) To the extent attributable to the failure by such Indemnitee or any
related Indemnitee to perform or observe any agreement, covenant or condition on
its part to be performed or observed in any Operative Agreement or any Pass
Through Agreement;
(i) To the extent attributable to the offer or sale by such Indemnitee or
any related Indemnitee of any interest in the Aircraft, the Equipment Notes, the
Pass Through Trust Certificates, the Trust Estate or the Trust Agreement or any
similar interest, in violation of the Securities Act or other applicable
federal, state or foreign securities Laws (other than any thereof caused by the
acts or omissions of Lessee);
(j) (i) With respect to any Indemnitee (other than Mortgagee), to the
extent attributable to the failure of the Mortgagee to distribute funds received
and distributable by it in accordance with the Trust Indenture, (ii) with
respect to any Indemnitee (other than the Owner Trustee), to the extent
attributable to the failure of the Owner Trustee to distribute funds received
and distributable by it in accordance with the Trust Agreement, (iii) with
respect to any Indemnitee (other than the Subordination Agent), 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 any Indemnitee (other than the Escrow Agent), to
the extent attributable to the failure of the Escrow Agent to pay funds received
and payable by it in accordance with any Escrow Agreement, (vi) with respect to
any Indemnitee (other than the Paying Agent), to the extent attributable to the
failure of the Paying Agent to distribute funds received and distributable by it
in accordance with any Escrow Agreement, (vii) to the extent attributable to the
failure of the Depositary to pay funds payable by it in accordance with any
Deposit Agreement, (viii) with respect to Mortgagee, to the extent attributable
to the negligence or willful misconduct of Mortgagee in the distribution of
funds received and distributable by it in accordance with the Trust Indenture,
(ix) with respect to Owner Trustee, to the extent attributable to the negligence
or willful misconduct of Owner Trustee in the distribution of funds received and
distributable by it in accordance with the Trust Agreement, (x) with respect to
the Subordination Agent, to the extent attributable to the negligence or willful
misconduct of the Subordination Agent in the distribution of funds received and
distributable by it in accordance with the Intercreditor Agreement, (xi) with
respect to the Pass Through 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, (xii) with respect to the Escrow Agent, to the extent
attributable to the negligence or willful misconduct of the Escrow Agent in the
payment of funds received and payable by it in accordance with any Escrow
Agreement, and (xiii) with respect to the Paying Agent, to the extent
attributable to the negligence or willful misconduct of the Paying Agent in the
distribution of funds received and distributable by it in accordance with any
Escrow Agreement.
(k) Other than during the continuation of a Lease Event of Default, to the
extent attributable to the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any Operative
Agreement or Pass Through Agreement other than such as have been requested by
Lessee or as are required by or made pursuant to the terms of the Operative
Agreements or Pass Through Agreements (unless such requirement results from the
actions of an Indemnitee not required by or made pursuant to the Operative
Agreements or the Pass Through Agreements);
(l) To the extent attributable to any amount which any Indemnitee
expressly agrees to pay or such Indemnitee expressly agrees shall not be paid by
or be reimbursed by Lessee;
(m) To the extent that it is an ordinary and usual operating or overhead
expense;
(n) With respect to the Owner Participant or the Owner Trustee, or any
related Indemnitee, to the extent attributable to the deregistration of the
Aircraft under the Act as a result of Owner Participant's or Owner Trustee's (or
any related Indemnitee of either) not being a Citizen of the United States as a
result of any act (other than reregistration of the Aircraft pursuant to Section
7.1.2 of the Lease) of Owner Participant or Owner Trustee, or any related
Indemnitee of either of the foregoing (not taken at the request of the Lessee);
(o) For any Lessor Lien attributable to such Indemnitee or any related
Indemnitee;
(p) If another provision of an Operative Agreement or a Pass Through
Agreement specifies the extent of Lessee's responsibility or obligation with
respect to such Expense, to the extent arising from other than failure of Lessee
to comply with such specified responsibility or obligation;
(q) To the extent constituting principal, Make-Whole Amount or interest on
the Equipment Notes attributable solely to an Event of Default not constituting
a Lease Event of Default;
(r) To the extent incurred by or asserted against an Indemnitee as a
result of any "prohibited transaction", within the meaning of Section 406 of
ERISA or Section 4975(c)(1) of the Code; or
(s) To the extent not included in the definition of Supplemental Rent as a
result of the provisions of clause (e) of such definition.
For purposes of this Section 9.1, a Person shall be considered a "related"
Indemnitee with respect to an Indemnitee if such Person is an Affiliate or
employer of such Indemnitee, a director, officer, employee, agent, or servant of
such Indemnitee or any such Affiliate or a successor or permitted assignee of
any of the foregoing.
9.1.3 SEPARATE AGREEMENT
This Agreement constitutes a separate agreement with respect to each
Indemnitee and is enforceable directly by each such Indemnitee.
9.1.4 NOTICE
If a claim for any Expense that an Indemnitee shall be indemnified against
under this Section 9.1 is made, such Indemnitee shall give prompt written notice
thereof to Lessee. Notwithstanding the foregoing, the failure of any Indemnitee
to notify Lessee as provided in this Section 9.1.4, or in Section 9.1.5, shall
not release Lessee from any of its obligations to indemnify such Indemnitee
hereunder, except to the extent that such failure results in an additional
Expense to Lessee (in which event Lessee shall not be responsible for such
additional expense) or materially impairs Lessee's ability to contest such
claim.
9.1.5 NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS; LIMITATIONS
(a) In case any action, suit or proceeding shall be brought against any
Indemnitee for which Lessee is responsible under this Section 9.1, such
Indemnitee shall notify Lessee of the commencement thereof and Lessee may, at
its expense, participate in and to the extent that it shall wish (subject to the
provisions of the following paragraph), assume and control the defense thereof
and, subject to Section 9.1.5(c), settle or compromise the same.
(b) Lessee or its insurer(s) shall have the right, at its or their
expense, to investigate or, if Lessee or its insurer(s) shall agree not to
dispute liability to the Indemnitee giving notice of such action, suit or
proceeding under this Section 9.1.5 for indemnification hereunder or under any
insurance policies pursuant to which coverage is sought, control the defense of,
any action, suit or proceeding, relating to any Expense for which
indemnification is sought pursuant to this Section 9.1, and each Indemnitee
shall cooperate with Lessee or its insurer(s) with respect thereto; PROVIDED,
that Lessee shall not be entitled to control the defense of any such action,
suit, proceeding or compromise any such Expense during the continuance of any
Lease Event of Default arising under Section 14.1 of the Lease. In connection
with any such action, suit or proceeding being controlled by Lessee, such
Indemnitee shall have the right to participate therein, at its sole cost and
expense, with counsel reasonably satisfactory to Lessee; PROVIDED, that such
Indemnitee's participation does not, in the reasonable opinion of the
independent counsel appointed by the Lessee or its insurers to conduct such
proceedings, interfere with the defense of such case.
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without the prior written consent of
Lessee, which consent shall not be unreasonably withheld or delayed, unless such
Indemnitee waives its right to be indemnified with respect to such Expense under
this Section 9.1.
(d) In the case of any Expense indemnified by the Lessee hereunder which
is covered by a policy of insurance maintained by Lessee pursuant to Section 11
of the Lease, at Lessee's expense, each Indemnitee agrees to cooperate with the
insurers in the exercise of their rights to investigate, defend or compromise
such Expense as may be required to retain the benefits of such insurance with
respect to such Expense.
(e) If an Indemnitee is not a party to this Agreement, Lessee may require
such Indemnitee to agree in writing to the terms of this Section 9 and Section
15.8 prior to making any payment to such Indemnitee under this Section 9.
(f) Nothing herein shall be deemed to be an assumption by Lessee of
obligations of Owner Trustee with respect to, or a guarantee by Lessee of, any
amounts payable by Owner Trustee upon Equipment Notes or a guarantee of any
residual value of the Aircraft.
(g) Nothing contained in this Section 9.1.5 shall be deemed to require an
Indemnitee to contest any Expense or to assume responsibility for or control of
any judicial proceeding with respect thereto.
9.1.6 INFORMATION
Lessee will provide the relevant Indemnitee with such information not
within the control of such Indemnitee, as is in Lessee's control or is
reasonably available to Lessee, which such Indemnitee may reasonably request and
will otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill its obligations under Section 9.1.5. The Indemnitee shall supply Lessee
with such information not within the control of Lessee, as is in such
Indemnitee's control or is reasonably available to such Indemnitee, which Lessee
may reasonably request to control or participate in any proceeding to the extent
permitted by Section 9.1.5.
9.1.7 EFFECT OF OTHER INDEMNITIES; SUBROGATION;
FURTHER ASSURANCES
Upon the payment in full by Lessee of any indemnity provided for under
this Agreement, Lessee, without any further action and to the full extent
permitted by Law, will be subrogated to all rights and remedies of the person
indemnified (other than with respect to any of such Indemnitee's insurance
policies or in connection with any indemnity claim such Indemnitee may have
under Section 5.03 or Article VII of the Trust Indenture or Section 5.3 or 7 of
the Trust Agreement) in respect of the matter as to which such indemnity was
paid. Each Indemnitee will give such further assurances or agreements and
cooperate with Lessee to permit Lessee to pursue such claims, if any, to the
extent reasonably requested by Lessee and at Lessee's expense.
9.1.8 REFUNDS
If an Indemnitee receives any refund, in whole or in part, with respect to
any Expense paid by Lessee hereunder, it will promptly pay the amount refunded
(but not an amount in excess of the amount Lessee or any of its insurers has
paid in respect of such Expense) over to Lessee unless a Lease Event of Default
shall have occurred and be continuing, in which case such amounts shall be paid
over to Owner Trustee (or, so long as the Trust Indenture shall not have been
discharged, to Mortgagee) to hold as security for Lessee's obligations under the
Lessee Operative Agreements or, if requested by Lessee, applied to satisfy such
obligations.
9.2 EXPENSES
9.2.1 INVOICES AND PAYMENT
Each of the Owner Trustee, Mortgagee, the Owner Participant, Lessee, the
Applicable Pass Through Trustees, and the Subordination Agent shall promptly
submit to Lessee for its prompt approval (which shall not be unreasonably
withheld) copies of invoices in reasonable detail of the Transaction Expenses
for which it is responsible for providing information as they are received (but
in no event later than the 90th day after the Delivery Date). If so submitted
and approved, the Owner Participant agrees promptly, but in any event no later
than the 105th day after the Delivery Date, to pay (but not in excess of 1% of
Lessor's Cost) Transaction Expenses. Notwithstanding the foregoing, Lessee at
its sole option shall have the right to pay directly any and all Transaction
Expenses. Lessee shall be obligated to pay directly any and all Transaction
Expenses which are in excess of 1% of Lessor's Cost. If Owner Participant shall
fail to pay any Transaction Expense that it is obligated to pay hereunder,
Lessee shall pay such Transaction Expense. Any such payment by Lessee shall not
affect Owner Participant's obligations or Lessee's rights against Owner
Participant for its failure to make any such payment.
9.2.2 PAYMENT OF OTHER EXPENSES
Lessee shall pay (i) the ongoing fees and expenses of Owner Trustee and
Mortgagee, and (ii) all reasonable out-of-pocket costs and expenses (including
the reasonable fees and disbursements of counsel) incurred by any Participant
attributable to (A) any transfer of title to the Aircraft or any Engine
contemplated by Section 4.5 of the Lease or (B) any waiver, amendment or
modification of any Operative Agreement to the extent requested by Lessee.
9.2.3 PAYMENTS IF TRANSACTIONS DO NOT CLOSE
In the event that the transaction contemplated by this Agreement fails to
close as a result of the Owner Participant's failure to comply with its
obligations under this Agreement or any breach of a representation or warranty
of Owner Participant made in or pursuant to any Operative Agreement,
notwithstanding any other rights and remedies that the parties hereto shall have
against Owner Participant, the Owner Participant will be responsible for all of
its fees and expenses, including but not limited to the fees, expenses and
disbursements of its special counsel and the fees of the Appraiser referred to
in Section 5.1.2(xv).
9.3 GENERAL TAX INDEMNITY
9.3.1 GENERAL
Except as provided in Section 9.3.2, Lessee agrees that each payment of
Rent paid by Lessee pursuant to the Lease, and any other payment or indemnity
paid by Lessee to a Tax Indemnitee under any Operative Agreement, shall be free
of all withholdings or deductions with respect to Taxes of any nature (other
than U.S. federal, state or local withholding taxes on, based on or measured by
gross or net income), and in the event that Lessee shall be required by
applicable law to make any such withholding or deduction for any such payment
(x) Lessee shall make all such withholdings or deductions, (y) the amount
payable by Lessee shall be increased so that after making all required
withholdings or deductions such Tax Indemnitee receives the same amount that it
would have received had no such withholdings or deductions been made, and (z)
Lessee shall pay the full amount withheld or deducted to the relevant Taxing
Authority in accordance with applicable law. Lessee further agrees that, in the
event it is required to withhold from any payment of Basic Rent, Stipulated Loss
Value (and amounts determined by reference thereto), and amounts payable upon
exercise of Lessee's purchase option pursuant to Section 17.3 of the Lease, any
Tax imposed upon Owner Participant or Owner Trustee (including any withholding
Tax based on income or receipts of Owner Participant or Owner Trustee) and such
Tax is excluded from indemnification pursuant to Section 9.3.2, Lessee shall pay
such additional amount, if any, required so that the total amount paid by Lessee
(after making all required withholdings) is equal to (assuming timely payment of
the Equipment Notes prior to the relevant Payment Date) the aggregate principal
amount of scheduled installments due on the Equipment Notes outstanding on the
relevant Payment Date, together with accrued and unpaid interest, due on the
Equipment Notes; Owner Participant or Owner Trustee, as the case may be, shall
reimburse Lessee for any such additional amounts within two Business Days after
demand therefor. Except as provided in Section 9.3.2 and whether or not any of
the transactions contemplated hereby are consummated, Lessee shall pay,
indemnify, protect, defend and hold each Tax Indemnitee harmless from all Taxes
imposed by any Taxing Authority that may from time to time be imposed on or
asserted against any Tax Indemnitee or the Aircraft, the Airframe, any Engine or
any Part or any interest in any of the foregoing (whether or not indemnified
against by any other Person), upon or with respect to the Operative Agreements
or the transactions or payments contemplated thereby, including but not limited
to any Tax imposed upon or with respect to (x) the Aircraft, the Airframe, any
Engine, any Part, any Operative Agreement (including without limitation any
Equipment Notes) or any data or any other thing delivered or to be delivered
under an Operative Agreement, (y) the purchase, manufacture, acceptance,
rejection, sale, transfer of title, return, ownership, mortgaging, delivery,
transport, charter, rental, lease, re-lease, sublease, assignment, possession,
repossession, presence, use, condition, storage, preparation, maintenance,
modification, alteration, improvement, operation, registration, transfer or
change of registration, reregistration, repair, replacement, overhaul, location,
control, the imposition of any Lien (other than a Lessor Lien), financing,
refinancing requested by the Lessee, abandonment or other disposition of the
Aircraft, the Airframe, any Engine, any Part, any data or any other thing
delivered or to be delivered under an Operative Agreement or (z) rent, interest,
fees or any other income, proceeds, receipts or earnings, whether actual or
deemed, arising upon, in connection with, or in respect of, any of the Operative
Agreements (including the property or income or other proceeds with respect to
property held as part of the Trust Estate) or the transactions contemplated
thereby.
9.3.2 CERTAIN EXCEPTIONS
The provisions of Section 9.3.1 shall not apply to, and Lessee shall
have no liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the
United States or any Taxing Authority or governmental subdivision of the United
States or therein (including any state or local Taxing Authority) (i) on, based
on, or measured by, gross or net income or gross or net receipts, including
capital gains taxes, excess profits taxes, minimum taxes from tax preferences,
alternative minimum taxes, branch profits taxes, accumulated earnings taxes,
personal holding company taxes, succession taxes and estate taxes, and any
withholding taxes on, based on or measured by gross or net income or receipts or
(ii) on, or with respect to, or measured by, capital or net worth or in the
nature of a franchise tax or a tax for the privilege of doing business (other
than, in the case of clause (i) or (ii), sales, use, license or property Taxes);
(b) imposed on a Tax Indemnitee by any Taxing Authority or governmental
subdivision thereof or therein outside of the United States (including any
Taxing Authority in or of a territory, possession or commonwealth of the United
States) (i) on, based on, or measured by, gross or net income or gross or net
receipts, including capital gains taxes, excess profits taxes, minimum taxes
from tax preferences, alternative minimum taxes, branch profits taxes,
accumulated earnings taxes, personal holding company taxes, succession taxes and
estate taxes, and any withholding taxes on, based on or measured by gross or net
income or receipts or (ii) on, or with respect to, or measured by, capital or
net worth or in the nature of a franchise tax or a tax for the privilege of
doing business (other than, in the case of clause (i) or (ii), (A) sales, use,
license or property Taxes, or (B) any Taxes imposed by any Taxing Authority
(other than a Taxing Authority within whose jurisdiction such Tax Indemnitee is
incorporated or organized or maintains its principal place of business) if such
Tax Indemnitee would not have been subject to Taxes of such type by such
jurisdiction but for (I) the location, use or operation of the Aircraft, the
Airframe, any Engine or any Part thereof by a Lessee Person within the
jurisdiction of the Taxing Authority imposing such Tax, or (II) the activities
of any Lessee Person (except for activities of a Lessee Person that is not an
Affiliate, successor or assign of the Lessee, which activities are unrelated to
the transactions contemplated by the Operative Agreements) in such jurisdiction,
including, but not limited to, use of any other aircraft by Lessee in such
jurisdiction, (III) the status of any Lessee Person as a foreign entity or as an
entity owned in whole or in part by foreign persons, (IV) Lessee having made (or
having been deemed to have made) payments to such Tax Indemnitee from the
relevant jurisdiction or (V) in the case of the Pass Through Trustees, any
Participant or any related Tax Indemnitee, the Lessee being incorporated,
organized, maintaining a place of business or conducting activities in such
jurisdiction);
(c) on, or with respect to, or measured by, any trustee fees, commissions
or compensation received by Owner Trustee, Pass Through Trustee, Subordination
Agent or Mortgagee;
(d) on the Trust or the Trust Estate that result from treatment of the
Trust or the Trust Estate as an entity, such as a corporation, separate and
apart from the Owner Participant;
(e) that are being contested as provided in Section 9.3.4 hereof;
(f) imposed on any Tax Indemnitee to the extent that such Taxes result
from the gross negligence or willful misconduct of such Tax Indemnitee or any
Affiliate thereof;
(g) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other disposition
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee (or, in the case of the Owner Participant, by Owner Trustee, or,
in the case of Taxes imposed on a transferee, by the transferor) of any interest
in the Aircraft, the Airframe, any Engine or any Part, the Rent (other than the
assignment of Rent to the Mortgagee pursuant to the Trust Indenture), the Trust,
the Trust Estate, the Trust Indenture Estate, the Lease or any interest arising
under the Operative Agreements or any Equipment Note or a transfer or
disposition (including a deemed transfer or disposition) of any interest in a
Tax Indemnitee (other than (A) a substitution or replacement of the Aircraft,
the Airframe, any Engine or any Part by a Lessee Person that is treated for Tax
purposes as a transfer or disposition, (B) a transfer pursuant to an exercise of
remedies upon a Lease Event of Default that shall have occurred and have been
continuing, or (C) a transfer to Lessee pursuant to Section 17.3 of the Lease);
(h) Taxes in excess of those that would have been imposed had there not
been a transfer or other disposition by or to such Tax Indemnitee or a related
Tax Indemnitee described in paragraph (g) above;
(i) imposed on the Owner Participant and indemnified by Lessee pursuant to
the Tax Indemnity Agreement;
(j) imposed with respect to any period after the expiration or earlier
termination of the Term and, if required pursuant to the terms of the Lease, the
return of possession of the Aircraft to Lessor or placement in storage at the
request of Lessor in accordance with the Lease (provided that this exclusion (j)
shall not apply to Taxes imposed after such period arising as a result of
payments by Lessee under the Operative Agreements after such period);
(k) consisting of any interest, penalties or additions to tax imposed on a
Tax Indemnitee as a result of (in whole or in part) failure of such Tax
Indemnitee or a related Tax Indemnitee to file any return properly and timely,
unless such failure shall be caused by the failure of Lessee to fulfill its
obligations, if any, under Section 9.3.6 with respect to such return;
(l) resulting from, or that would not have been imposed but for, any
Lessor Liens arising as a result of claims against, or acts or omissions of, or
otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee;
(m) imposed on any Tax Indemnitee as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or
any Affiliate thereof contained in any Operative Agreement or the inaccuracy of
any representation or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;
(n) in the nature of an intangible or similar Tax (i) upon or with respect
to the value or principal amount of the interest of any Loan Participant or any
Note Holder in any Equipment Note or the loan evidenced thereby or (ii) upon or
with respect to the value of the interest of the Owner Participant in the Trust
Estate or the Trust, in each case only if such Taxes are in the nature of
franchise Taxes or result from the Tax Indemnitee doing business in the taxing
jurisdiction and are imposed because of the place of incorporation or the
activities unrelated to the transactions contemplated by the Operative
Agreements in the taxing jurisdiction of such Tax Indemnitee;
(o) that is included in Lessor's Cost and paid to the appropriate Taxing
Authority;
(p) imposed on a Tax Indemnitee by a Taxing Authority of a jurisdiction
outside the United States to the extent that such Taxes would not have been
imposed but for a connection between the Tax Indemnitee or a related Tax
Indemnitee and such jurisdiction imposing such Tax unrelated to the transactions
contemplated by the Operative Agreements; or
(q) Taxes relating to ERISA or Section 4975 of the Code.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees that
are successors, assigns, agents, servants or Affiliates of such Tax Indemnitee
shall be related Tax Indemnitees.
9.3.3 PAYMENT
(a) Lessee's indemnity obligation to a Tax Indemnitee under this Section
9.3 shall equal the amount which, after taking into account any Tax imposed upon
the receipt or accrual of the amounts payable under this Section 9.3 and any tax
benefits actually recognized by such Tax Indemnitee as a result of the
indemnifiable Tax (including, without limitation, any benefits recognized as a
result of an indemnifiable Tax being utilized by such Tax Indemnitee as a credit
against Taxes not indemnifiable under this Section 9.3), shall equal the amount
of the Tax indemnifiable under this Section 9.3.
(b) At Lessee's request, the computation of the amount of any indemnity
payment owed by Lessee or any amount owed by a Tax Indemnitee to Lessee pursuant
to this Section 9.3 shall be verified and certified by an independent public
accounting firm selected by such Tax Indemnitee and reasonably satisfactory to
Lessee. Such verification shall be binding. The costs of such verification
(including the fee of such public accounting firm) shall be borne by Lessee
unless such verification shall result in an adjustment in Lessee's favor of 5%
or more of the net present value of the payment as computed by such Tax
Indemnitee, in which case the costs shall be paid by such Tax Indemnitee.
(c) Each Tax Indemnitee shall provide Lessee with such certifications,
information and documentation as shall be in such Tax Indemnitee's possession
and as shall be reasonably requested by Lessee to minimize any indemnity payment
pursuant to this Section 9.3; provided, that notwithstanding anything to the
contrary contained herein, no Tax Indemnitee shall be required to provide Lessee
with any Tax returns.
(d) Each Tax Indemnitee shall promptly forward to Lessee any written
notice, bill or advice received by it from any Taxing Authority concerning any
Tax for which it seeks indemnification under this Section 9.3. Lessee shall pay
any amount for which it is liable pursuant to this Section 9.3 directly to the
appropriate Taxing Authority if legally permissible or upon demand of a Tax
Indemnitee, to such Tax Indemnitee within 30 days of such demand (or, if a
contest occurs in accordance with Section 9.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than one Business Day
prior to the date the Tax to which such amount payable hereunder relates is due.
If requested by a Tax Indemnitee in writing, Lessee shall furnish to the
appropriate Tax Indemnitee the original or a certified copy of a receipt for
Lessee's payment of any Tax paid by Lessee or such other evidence of payment of
such Tax as is acceptable to such Tax Indemnitee. Lessee shall also furnish
promptly upon written request such data as any Tax Indemnitee may reasonably
require to enable such Tax Indemnitee to comply with the requirements of any
taxing jurisdiction unless such data is not reasonably available to Lessee or,
unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar circumstances. For
purposes of this Section 9.3, a "Final Determination" shall mean (i) a decision,
judgment, decree or other order by any court of competent jurisdiction that
occurs pursuant to the provisions of Section 9.3.4, which decision, judgment,
decree or other order has become final and unappealable, (ii) a closing
agreement or settlement agreement entered into in accordance with Section 9.3.4
that has become binding and is not subject to further review or appeal (absent
fraud, misrepresentation, etc.), or (iii) the termination of administrative
proceedings and the expiration of the time for instituting a claim in a court
proceeding.
(e) If any Tax Indemnitee shall actually realize a tax savings by reason
of any Tax paid or indemnified by Lessee pursuant to this Section 9.3 (whether
such tax savings shall be by means of a foreign tax credit, depreciation or cost
recovery deduction or otherwise) and such savings is not otherwise taken into
account in computing such payment or indemnity such Tax Indemnitee shall pay to
Lessee an amount equal to the lesser of (i) the amount of such tax savings, plus
any additional tax savings recognized as the result of any payment made pursuant
to this sentence, when, as, if, and to the extent, realized or (ii) the amount
of all payments pursuant to this Section 9.3 by Lessee to such Tax Indemnitee
(less any payments previously made by such Tax Indemnitee to Lessee pursuant to
this Section 9.3.3 (e)) (and the excess, if any, of the amount described in
clause (i) over the amount described in clause (ii) shall be carried forward and
applied to reduce pro tanto any subsequent obligations of Lessee to make
payments to such Tax Indemnitee pursuant to this Section 9.3); provided, that
such Tax Indemnitee shall not be required to make any payment pursuant to this
sentence so long as a Lease Event of Default of a monetary nature has occurred
and is continuing. If a tax benefit is later disallowed or denied, the
disallowance or denial shall be treated as a Tax indemnifiable under Section
9.3.1 without regard to the provisions of Section 9.3.2 (other than Section
9.3.2 (f)). Each such Tax Indemnitee shall in good faith use reasonable efforts
in filing its tax returns and in dealing with Taxing Authorities to seek and
claim any such tax benefit.
9.3.4 CONTEST
(a) If a written claim is made against a Tax Indemnitee for Taxes with
respect to which Lessee could be liable for payment or indemnity hereunder, or
if a Tax Indemnitee makes a determination that a Tax is due for which Lessee
could have an indemnity obligation hereunder, such Tax Indemnitee shall promptly
give Lessee notice in writing of such claim (provided, that failure to so notify
Lessee shall not relieve Lessee of its indemnity obligations hereunder unless
such failure to notify effectively forecloses Lessee's rights to require a
contest of such claim) and shall take no action with respect to such claim
without the prior written consent of Lessee for 30 days following the receipt of
such notice by Lessee; provided, that, in the case of a claim made against a Tax
Indemnitee, if such Tax Indemnitee shall be required by law to take action prior
to the end of such 30-day period, such Tax Indemnitee shall, in such notice to
Lessee, so inform Lessee, and such Tax Indemnitee shall take no action for as
long as it is legally able to do so (it being understood that a Tax Indemnitee
shall be entitled to pay the Tax claimed and sue for a refund prior to the end
of such 30-day period if (i)(A) the failure to so pay the Tax would result in
substantial penalties (unless immediately reimbursed by Lessee) and the act of
paying the Tax would not materially prejudice the right to contest or (B) the
failure to so pay would result in criminal penalties and (ii) such Tax
Indemnitee shall take any action so required in connection with so paying the
Tax in a manner that is the least prejudicial to the pursuit of the contest). In
addition, such Tax Indemnitee shall (provided, that Lessee shall have agreed to
keep such information confidential other than to the extent necessary in order
to contest the claim) furnish Lessee with copies of any requests for information
from any Taxing Authority relating to such Taxes with respect to which Lessee
may be required to indemnify hereunder. If requested by Lessee in writing within
30 days after its receipt of such notice, such Tax Indemnitee shall, at the
expense of Lessee (including, without limitation, all reasonable costs, expenses
and reasonable attorneys' and accountants' fees and disbursements), in good
faith contest (or, if permitted by applicable law, allow Lessee to contest)
through appropriate administrative and judicial proceedings the validity,
applicability or amount of such Taxes by (I) resisting payment thereof, (II) not
paying the same except under protest if protest is necessary and proper or (III)
if the payment is made, using reasonable efforts to obtain a refund thereof in
an appropriate administrative and/or judicial proceeding. If requested to do so
by Lessee, the Tax Indemnitee shall appeal any adverse administrative or
judicial decision, except that the Tax Indemnitee shall not be required to
pursue any appeals to the United States Supreme Court. If and to the extent the
Tax Indemnitee is able to separate the contested issue or issues from other
issues arising in the same administrative or judicial proceeding that are
unrelated to the transactions contemplated by the Operative Agreements without,
in the good faith judgment of such Tax Indemnitee, adversely affecting such Tax
Indemnitee, such Tax Indemnitee shall permit Lessee to control the conduct of
any such proceeding and shall provide to Lessee (at Lessee's cost and expense)
with such information or data that is in such Tax Indemnitee's control or
possession that is reasonably necessary to conduct such contest. In the case of
a contest controlled by a Tax Indemnitee, such Tax Indemnitee shall consult with
Lessee in good faith regarding the manner of contesting such claim and shall
keep Lessee reasonably informed regarding the progress of such contest. A Tax
Indemnitee shall not fail to take any action expressly required by this Section
9.3.4 (including, without limitation, any action regarding any appeal of an
adverse determination with respect to any claim) or settle or compromise any
claim without the prior written consent of the Lessee (except as contemplated by
Section 9.3.4(b) or (c)).
(b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee be
required to pursue any contest (or to permit Lessee to pursue any contest)
unless (i) Lessee shall have agreed to pay such Tax Indemnitee on demand all
reasonable costs and expenses incurred by such Tax Indemnitee in connection with
contesting such Taxes, including, without limitation, all reasonable out of
pocket costs and expenses and reasonable attorneys' and accountants' fees and
disbursements, (ii) if such contest shall involve the payment of the claim,
Lessee shall advance the amount thereof (to the extent indemnified hereunder)
plus interest, penalties and additions to tax with respect thereto that are
required to be paid prior to the commencement of such contest on an
interest-free after-Tax basis to such Tax Indemnitee (and such Tax Indemnitee
shall promptly pay to the Lessee any net realized tax benefits resulting from
such advance including any tax benefits resulting from making such payment),
(iii) such Tax Indemnitee shall have reasonably determined that the action to be
taken will not result in any material risk of forfeiture, sale or loss of the
Aircraft (unless Lessee shall have made provisions to protect the interests of
any such Tax Indemnitee in a manner reasonably satisfactory to such Tax
Indemnitee) (provided, that such Tax Indemnitee agrees to notify Lessee in
writing promptly after it becomes aware of any such risk), (iv) no Lease Event
of Default shall have occurred and be continuing unless Lessee has provided
security for its obligations hereunder by advancing to such Tax Indemnitee
before proceeding or continuing with such contest, the amount of the Tax being
contested, plus any interest and penalties and an amount estimated in good faith
by such Tax Indemnitee for expenses, and (v) prior to commencing any judicial
action controlled by Lessee, Lessee shall have acknowledged its liability for
such claim hereunder, provided that Lessee shall not be bound by its
acknowledgment if the Final Determination articulates conclusions of law and
fact that demonstrate that Lessee has no liability for the contested amounts
hereunder. Notwithstanding the foregoing, if any Tax Indemnitee shall release,
waive, compromise or settle any claim which may be indemnifiable by Lessee
pursuant to this Section 9.3 without the written permission of Lessee, Lessee's
obligation to indemnify such Tax Indemnitee with respect to such claim (and all
directly related claims and claims based on the outcome of such claim) shall
terminate, subject to Section 9.3.4(c), and subject to Section 9.3.4(c), such
Tax Indemnitee shall repay to Lessee any amount previously paid or advanced to
such Tax Indemnitee with respect to such claim, plus interest at the rate that
would have been payable by the relevant Taxing Authority with respect to a
refund of such Tax.
(c) Notwithstanding anything contained in this Section 9.3, a Tax
Indemnitee will not be required to contest the imposition of any Tax and shall
be permitted to settle or compromise any claim without Lessee's consent if such
Tax Indemnitee (i) shall waive its right to indemnity under this Section 9.3
with respect to such Tax (and any directly related claim and any claim the
outcome of which is determined based upon the outcome of such claim), (ii) shall
pay to Lessee any amount previously paid or advanced by Lessee pursuant to this
Section 9.3 with respect to such Tax, plus interest at the rate that would have
been payable by the relevant Taxing Authority with respect to a refund of such
Tax, and (iii) shall agree to discuss with Lessee the views or positions of any
relevant Taxing Authority with respect to the imposition of such Tax.
9.3.5 REFUND
If any Tax Indemnitee shall receive a refund of, or be entitled to a
credit against other liability for, all or any part of any Taxes paid,
reimbursed or advanced by Lessee, such Tax Indemnitee shall pay to Lessee within
30 days of such receipt an amount equal to the lesser of (a) the amount of such
refund or credit plus any net tax benefit (taking into account any Taxes
incurred by such Tax Indemnitee by reason of the receipt of such refund or
realization of such credit) actually realized by such Tax Indemnitee as a result
of any payment by such Tax Indemnitee made pursuant to this sentence (including
this clause (a)) and (b) such tax payment, reimbursement or advance by Lessee to
such Tax Indemnitee theretofore made pursuant to this Section 9.3 (and the
excess, if any, of the amount described in clause (a) over the amount described
in clause (b) shall be carried forward and applied to reduce pro tanto any
subsequent obligation of Lessee to make payments to such Tax Indemnitee pursuant
to this Section 9.3). If, in addition to such refund or credit, such Tax
Indemnitee shall receive (or be credited with) an amount representing interest
on the amount of such refund or credit, such Tax Indemnitee shall pay to Lessee
within 30 days of such receipt or realization of such credit that proportion of
such interest that shall be fairly attributable to Taxes paid, reimbursed or
advanced by Lessee prior to the receipt of such refund or realization of such
credit.
9.3.6 TAX FILING
If any report, return or statement is required to be filed with respect to
any Tax which is subject to indemnification under this Section 9.3, Lessee shall
timely file the same (except for any such report, return or statement which a
Tax Indemnitee has timely notified the Lessee in writing that such Tax
Indemnitee intends to file, or for which such Tax Indemnitee is required by law
to file, in its own name); provided, that the relevant Tax Indemnitee shall
furnish Lessee with any information in such Tax Indemnitee's possession or
control that is reasonably necessary to file any such return, report or
statement and is reasonably requested in writing by Lessee (it being understood
that the Tax Indemnitee shall not be required to furnish copies of its actual
tax returns, although it may be required to furnish relevant information
contained therein). Lessee shall either file such report, return or statement
and send a copy of such report, return or statement to such Tax Indemnitee, and
Owner Trustee if the Tax Indemnitee is not Owner Trustee, or, where Lessee is
not permitted to file such report, return or statement, it shall notify such Tax
Indemnitee of such requirement and prepare and deliver such report, return or
statement to such Tax Indemnitee in a manner satisfactory to such Tax Indemnitee
within a reasonable time prior to the time such report, return or statement is
to be filed.
9.3.7 FORMS
Each Tax Indemnitee agrees to furnish from time to time to Lessee or
Mortgagee or to such other person as Lessee or Mortgagee may designate, at
Lessee's or Mortgagee's request, such duly executed and properly completed forms
as may be necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing Authority, if
(x) such reduction or exemption is available to such Tax Indemnitee and (y)
Lessee has provided such Tax Indemnitee with any information necessary to
complete such form not otherwise reasonably available to such Tax Indemnitee.
9.3.8 NON-PARTIES
If a Tax Indemnitee is not a party to this Agreement, Lessee may require
the Tax Indemnitee to agree in writing, in a form reasonably acceptable to
Lessee, to the terms of this Section 9.3 and Section 15.8 prior to making any
payment to such Tax Indemnitee under this Section 9.3.
9.3.9 SUBROGATION
Upon payment of any Tax by Lessee pursuant to this Section 9.3 to or on
behalf of a Tax Indemnitee, Lessee, without any further action, shall be
subrogated to any claims that such Tax Indemnitee may have relating thereto.
Such Tax Indemnitee shall cooperate with Lessee (to the extent such cooperation
does not result in any unreimbursed cost, expense or liability to such Tax
Indemnitee) to permit Lessee to pursue such claims.
9.3.10 FOREIGN TAX ON LOAN PAYMENTS
If an Owner Participant is incorporated or organized, or maintains a
place of business or conducts activities in, a country other than the United
States or in a territory, possession or commonwealth of the United States
(within the meaning of the tax law of that foreign jurisdiction) and if as a
result thereof any foreign Taxes (including withholding Taxes) are imposed on
the Pass Through Trustees, Pass Through Trusts, or Note Holders, then Owner
Participant shall reimburse Lessee for any payments Lessee is required to make
to or on behalf of any Pass Through Trustee, Pass Through Trust, or Note Holder
under this Section 9.3 as a result of the imposition of such Taxes. The amount
payable by Owner Participant to Lessee shall be an amount which, after taking
into account any such Taxes, any Tax imposed upon the receipt or accrual by
Lessee of such payment by Owner Participant and any tax benefits or tax savings
realized by Lessee with respect to the payment of such withholding Tax or the
payment hereunder, shall equal the amount of Lessee's payment to or on behalf of
such Pass Through Trustee, or Note Holder.
9.4 PAYMENTS
Any payments made pursuant to Section 9.1 or 9.3 shall be due on the 60th
day after demand therefor and shall be made directly to the relevant Indemnitee
or Tax Indemnitee or to Lessee, in immediately available funds at such bank or
to such account as specified by such Indemnitee or Tax Indemnitee or Lessee, as
the case may be, in written directives to the payor, or, if no such direction
shall have been given, by check of the payor payable to the order of, and mailed
to, such Indemnitee or Tax Indemnitee or Lessee, as the case may be, by
certified mail, postage prepaid, at its address as set forth in this Agreement.
9.5 INTEREST
If any amount, payable by Lessee, any Indemnitee or any Tax Indemnitee
under Section 9.1 or 9.3 is not paid when due, the person obligated to make such
payment shall pay on demand, to the extent permitted by Law, to the person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the same is paid, at the
Payment Due Rate. Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.
9.6 BENEFIT OF INDEMNITIES
The obligations of Lessee in respect of all indemnities, obligations,
adjustments and payments in Section 9.1 or 9.3 are expressly made for the
benefit of, and shall be enforceable by, the Indemnitee or Tax Indemnitee
entitled thereto, without declaring the Lease to be in default or taking other
action thereunder, and notwithstanding any provision of the Trust Indenture.
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS
10.1 PARTICIPANTS, OWNER TRUSTEE AND NOTE HOLDERS
10.1.1 OWNER PARTICIPANT
(a) During the Term, Owner Participant shall not Transfer any or all of
its right, title or interest in the Trust Estate or the Trust Agreement and to
this Agreement unless:
(i) The Transferee shall have full power, authority and legal right
to execute and deliver and to perform the obligations of Owner Participant
under this Agreement and the other Owner Participant Agreements and shall
provide reasonably satisfactory evidence of such power and authority to
Lessee, Owner Trustee and Mortgagee;
(ii) The Transferee shall enter into one or more legal, valid,
binding and enforceable agreements effective to confirm that such
Transferee agrees to be bound by all the terms of, and to undertake all of
the obligations arising after such transfer of, the transferring Owner
Participant contained in the Owner Participant Agreements and in which it
makes representations and warranties substantially the same as those
contained in Section 6.2 of the Participation Agreement;
(iii) Lessee shall not be obligated to pay any greater amount or
incur any greater obligation than that which it would have been obliged to
pay or incur under the Lease or other Lessee Operative Agreement if no
transfer or assignment had taken place, and the terms and conditions of
this Lease and the other Lessee Operative Agreements insofar as they
relate to the rights and obligations of Lessee or the Loan Participant
shall not be altered;
(iv) Owner Participant shall deliver to Lessee, Owner Trustee and
Mortgagee an opinion of counsel reasonably satisfactory to each of them to
the effect that such agreement or agreements referred to in Section
10.1.1(a)(ii) and, if applicable, 10.1.1(a)(vi) are legal, binding and
enforceable in accordance with its or their terms and that such transfer
will not violate the Act, the registration provisions of the Securities
Act, or any other applicable Federal law;
(v) The Transfer shall relate to the Owner Participant's entire
interest as Owner Participant;
(vi) The Transferee is a Citizen of the United States (it being
understood that the existence of any such requirement is to be determined
without giving consideration to Section 47.9 of the FAA Regulations or any
other provision that may restrict Lessee's use or operation of the
Aircraft), or shall use a voting powers trust or similar arrangement in
order to hold an interest in the Trust Estate such that the Aircraft can
be registered in the United States (without giving consideration to
Section 47.9 of the FAA Regulations or any other provision that may
restrict Lessee's use or operation of the Aircraft); and
(vii) The Transferee shall be a single person and shall be either
(A) a Permitted Institution or (B) any other person (other than, without
Lessee's consent, a commercial air carrier, a commercial aircraft
operator, a freight forwarder or an Affiliate of any of the foregoing) the
obligations of which under the Owner Participant Agreements are guaranteed
by a Permitted Institution in any case, pursuant to a written guaranty, in
form and substance reasonably satisfactory to Lessee, Owner Trustee and
Mortgagee.
(b) Owner Participant shall give written notice to Lessee, Mortgagee and
Owner Trustee at least 10 days prior to any such Transfer, specifying the name
and address of the proposed Transferee, and providing financial statements of
the proposed Transferee evidencing satisfaction of the requirements described in
Section 10.1.1(a)(vi)(A) or (B) above.
(c) Any fees, charges and expenses, including the reasonable legal fees,
charges and expenses incurred by Lessee, Owner Participant, Mortgagee, any Note
Holder or Owner Trustee in connection with any Transfer by Owner Participant
permitted by this Section 10.1.1, or by the Transferee in any such case, will be
paid for by Owner Participant.
10.1.2 OWNER TRUSTEE
Owner Trustee may transfer its interests in the Trust Agreement pursuant
to Section 9 thereof.
10.1.3 NOTE HOLDERS
Subject to Section 7.5.2 hereof and Section 2.07 of the Trust Indenture,
any Note Holder may, at any time and from time to time, Transfer or grant
participations in all or any portion of the Equipment Notes and/or all or any
portion of its beneficial interest in its Equipment Notes and the Trust
Indenture Estate to any person (it being understood that the sale or issuance of
Pass Through Certificates by a Pass Through Trustee shall not be considered a
Transfer or participation); provided, that any participant in any such
participations shall not have any direct rights under the Operative Agreements
or any Lien on all or any part of the Aircraft or Trust Indenture Estate and
Lessee shall not have any increased liability or obligations as a result of any
such participation. In the case of any such Transfer, the Transferee, by
acceptance of Equipment Notes in connection with such Transfer, shall be deemed
to be bound by all of the covenants of Note Holders contained in the Operative
Agreements.
10.2 EFFECT OF TRANSFER
Upon any Transfer in accordance with Section 10.1.1, 10.1.2 or 10.1.3
(other than any Transfer by any Note Holder, to the extent it only grants
participations in Equipment Notes or in its beneficial interest therein),
Transferee shall be deemed an "Owner Participant," "Owner Trustee" or a "Note
Holder," respectively, for all purposes of this Agreement and the other
Operative Agreements and, in the case of a Transferee of any Participant or Note
Holder, shall be deemed to have paid its ratable portion of Lessor's Cost
previously made by Owner Participant or Loan Participant, respectively, making
such conveyance and represented by the interest being conveyed, and each
reference herein to Owner Participant, Owner Trustee or Note Holder,
respectively, shall thereafter be deemed a reference to such Transferee for all
purposes, and the transferring Owner Participant, Owner Trustee, Loan
Participant or Note Holder shall be released (except, in the case of Owner
Participant, to the extent of any guaranty provided by it under Section
10.1.1(a)(vi)) from all of its liabilities and obligations under this Agreement
and any other Operative Agreements to the extent such liabilities and
obligations arise after such Transfer and, in each case, to the extent such
liabilities and obligations are assumed by the Transferee; PROVIDED, that such
transferring Owner Participant, Owner Trustee or Note Holder (and its respective
Affiliates, successors, assigns, agents, servants, representatives, directors
and officers) will continue to have the benefit of any rights or indemnities
under any Operative Agreement vested or relating to circumstances, conditions,
acts or events prior to such Transfer.
SECTION 11. REFUNDING AND CERTAIN OTHER MATTERS
11.1 REFUNDING GENERALLY
Subject to Sections 11.2 and 11.4, in the event that at any time Lessee
shall have given written notice to Owner Participant, Owner Trustee, and
Mortgagee that Lessee is requesting a voluntary redemption of all, but not less
than all, of the outstanding Equipment Notes (in compliance with the provisions
of Sections 2.11 and 2.12 of the Trust Indenture) by Owner Trustee as part of a
refunding transaction, Owner Participant agrees to negotiate in good faith and
promptly conclude an agreement with Lessee as to the terms of such refunding
transaction (including the terms of any debt to be issued in connection with
such refunding transaction and the documentation to be executed in connection
therewith), and after Lessee and Owner Participant shall have concluded such an
agreement:
11.1.1 REFUNDING CERTIFICATE
Within ten Business Days after reaching such agreement, Owner Participant
will deliver to Lessee a Refunding Certificate. Within ten Business Days of its
receipt of the Refunding Certificate, Lessee may demand a verification pursuant
to Section 3.2.1(d) of the Lease of the information set forth in the Refunding
Certificate. Upon the acceptance by Lessee of the accuracy of the information
set forth in the Refunding Certificate or the determination pursuant to such
verification procedures of the Refunding Information, the appropriate parties
will take the actions specified in Sections 11.1.2 through 11.1.7 below.
11.1.2 FINANCING AGREEMENTS
The appropriate parties will enter into appropriate documentation (which
may include an underwriting agreement or similar private placement agreement)
with the institution or institutions to be named therein providing for (a) the
issuance and sale by Owner Trustee to such institution or institutions on the
Refunding Date of the New Debt and (b) the application of the proceeds of the
sale of the New Debt to the redemption of all such Equipment Notes on the
Refunding Date. Lessee, acting on behalf of Owner Trustee, shall give Mortgagee
at least 30 days' revocable prior written notice of the proposed date of the
optional redemption.
11.1.3 LEASE AMENDMENTS
As a condition to the closing of the refunding transaction, Lessee and
Owner Trustee will amend the Lease, as contemplated by Section 3.2.1(b) of the
Lease, to provide that (a) Basic Rent in respect of the period from and after
the Refunding Date shall be as provided in the Refunding Information and (b)
amounts payable in respect of Stipulated Loss Value and Termination Value, from
and after the Refunding Date shall be as provided in the Refunding Information.
11.1.4 SECURITY AGREEMENTS
Owner Trustee will enter into an agreement to provide for the securing
thereunder of the New Debt in like manner as the Equipment Notes and will enter
into such amendments and supplements to the Trust Indenture (or such new
indenture or other security agreement) and the other Operative Agreements as may
be necessary to effect such refunding.
11.1.5 EXPENSES
Whether or not such refunding transaction is consummated, Lessee shall pay
or reimburse all of the reasonable out-of-pocket expenses of all parties to such
refunding transaction, including, without limitation, any underwriting or
placement fees and the reasonable fees and expenses of such parties' counsel and
any related loan or commitment fees.
11.1.6 MAKE WHOLE AMOUNT
At the closing of such refunding, Owner Trustee shall pay, upon receipt of
the same from Lessee (which Lessee shall pay as Supplemental Rent as a condition
to the closing to the refunding transaction), to the Mortgagee for the account
of each Note Holder, the Make-Whole Amount, if any, payable to such Note Holder
under Section 2.11 of the Trust Indenture.
11.1.7 RETURN OF EQUIPMENT NOTES
Subject to compliance by Owner Trustee and Lessee with all applicable
terms and conditions for voluntary prepayment under the Trust Indenture and this
Agreement, each Note Holder will transfer to Owner Trustee the Equipment Notes
held by it for cancellation (and Owner Trustee shall cancel the same), against
receipt by such Note Holder of the then-outstanding principal amount of such
Equipment Notes, accrued and unpaid interest and Make-Whole Amount, if any,
thereon, together with payment in full of all other amounts then payable to such
Note Holder and Mortgagee hereunder or under the Trust Indenture.
11.2 LIMITATIONS ON OBLIGATION TO REFUND
Notwithstanding the foregoing, Owner Participant shall have no obligation
to proceed with any refunding transaction as contemplated by this Section 11:
(a) If such transaction would have, or creates a material risk of, an
adverse tax consequence to Owner Participant unless Lessee agrees to indemnify
Owner Participant against such adverse tax consequence;
(b) Unless Lessee indemnifies Owner Participant for any liability,
obligation (other than the obligation to pay principal and interest and related
payments in respect of the New Debt), cost or expense (including, without
limitation, reasonable attorneys' fees) related to or arising out of any such
refunding transaction;
(c) If a Lease Event of Default shall have occurred and be continuing; or
(d) If there shall have previously been consummated three refunding
transactions at Lessee's request pursuant to this Section 11.
11.3 EXECUTION OF CERTAIN DOCUMENTS
Lessee, Owner Participant, Owner Trustee and Mortgagee each agree to
execute any document necessary or advisable to implement this Section 11
(including, without limitation, the execution, delivery and/or provision of any
appropriate additional or modified amendment, representation, warranty,
certificate, opinion or other document that may reasonably be requested by
Lessee or any other person).
11.4 ERISA
Owner Participant shall not be obligated to conclude the proposed
refunding transaction unless the agreements utilized to effect such refunding
contain an agreement by the initial holders of the New Debt substantially the
same as Section 7.5.2(b) of this Agreement, except in the case of any refunding
transaction where the New Debt is sold in a public offering under the Securities
Act or a private placement intended for resale pursuant to Rule 144A under the
Securities Act, in which case the holders of the New Debt shall be subject to
the restrictions relating to ERISA substantially the same as those applicable to
the purchasers of the Pass Through Certificates, as described in the Prospectus
Supplement relating to the initial issuance and sale of the Pass Through
Certificates.
11.5 CONSENT TO OPTIONAL REDEMPTIONS
Each of Owner Participant, Owner Trustee and Mortgagee agrees with Lessee
not to cause an optional redemption of the Equipment Notes without Lessee's
consent except as set forth in Section 2.13 of the Trust Indenture.
SECTION 12. SECTION 1110
It is the intention of each of Lessee, Owner Participant, Loan
Participants, the Note Holders (such intention being evidenced by each of their
acceptance of an Equipment Note), Owner Trustee and Mortgagee that Owner
Trustee, as lessor under the Lease (and Mortgagee as assignee of Owner Trustee
under the Trust Indenture), shall be entitled to the benefits of Section 1110 in
the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a
debtor.
SECTION 13. CHANGE OF CITIZENSHIP
13.1 GENERALLY
Without prejudice to the representations, warranties or covenants
regarding the status of any party hereto as a Citizen of the United States:
(a) Each of Lessee, Bank, WTC and Mortgagee agrees that it will,
immediately upon obtaining knowledge of any facts that would cast doubt upon its
continuing status as a Citizen of the United States and promptly upon public
disclosure of negotiations in respect of any transaction which would or might
adversely affect such status, notify in writing all parties hereto of all
relevant matters in connection therewith; and
(b) Owner Participant agrees that, in the event its status is to change or
has changed as a Citizen of the United States, or it makes public disclosure of
circumstances as a result of which it believes that such status is likely to
change, it will notify all the other parties to this Participation Agreement of
(i) such change in status promptly after obtaining Actual Knowledge thereof or
(ii) such belief as soon as practicable after such public disclosure but in any
event within ten Business Days after such public disclosure.
13.2 OWNER PARTICIPANT
Owner Participant agrees, solely for the benefit of Lessee and the Note
Holders that if, during such time as the Aircraft is registered in the United
States, (a) it shall not be a Citizen of the United States and (b) the Aircraft
shall be, or would therefore become, ineligible for registration in the name of
Owner Trustee under the Act and regulations then applicable thereunder (without
giving consideration to Section 47.9 of the FAA Regulations or any other
provision that may restrict Lessee's use or operation of the Aircraft), then
Owner Participant shall as soon as is reasonably practicable, but in any event
within 30 days after obtaining Actual Knowledge of such ineligibility and of
such loss of citizenship, (y) effect voting trust or other similar arrangements
(in which case any provisions contained in the Operative Agreements restricting
Owner Participant's or Owner Trustee's ability to amend the Trust Agreement
shall not apply to the extent necessary to permit the use of such a voting trust
or other similar arrangement) or take any other action as may be necessary to
prevent any deregistration or maintain the United States registration of the
Aircraft or (z) transfer in accordance with the terms of this Agreement all its
right, title and interest in and to this Agreement, the Trust Estate and the
Trust Agreement in accordance with Section 10.1.
13.3 OWNER TRUSTEE
Upon Bank giving any notice in accordance with Section 13.1(a), Owner
Trustee shall, subject to Section 9.1.1 of the Trust Agreement, resign as Owner
Trustee. Upon its receipt of such notice, Owner Participant shall as promptly as
practicable appoint a Citizen of the United States as successor Owner Trustee
pursuant to Section 9.1 of the Trust Agreement.
13.4 MORTGAGEE
Upon WTC giving any notice in accordance with Section 13.1(a), Mortgagee
shall (if and so long as such citizenship is necessary under the Act as in
effect at such time or, if it is not necessary, if and so long as Mortgagee's
citizenship could have any adverse effect on Lessee, any Participant or any Note
Holder), subject to Section 8.02 of the Trust Indenture, resign as Mortgagee
promptly upon its ceasing to be such a citizen.
SECTION 14. CONCERNING OWNER TRUSTEE
It is understood and agreed that, except as otherwise expressly provided
herein or in the Trust Agreement or the Trust Indenture, Owner Trustee is
entering into this Agreement solely in its capacity as trustee as provided in
the Trust Agreement and not in its individual capacity and in no case whatsoever
will it be liable or accountable in its individual capacity for any of the
statements, representations, warranties, agreements or obligations of Owner
Trustee hereunder, or for any loss in respect thereof, as to all of which the
parties agree to look solely to the Trust Estate; PROVIDED, that nothing in this
Section 14 shall be deemed to limit in scope or substance the personal liability
of Bank (a) to Owner Participant as expressly set forth in the Trust Agreement,
(b) in respect of the representations, warranties and agreements of Bank
expressly made as such herein or in any other Operative Agreement to which it is
a party, and (c) for the consequences of its own gross negligence, willful
misconduct, and, in receiving, handling or remitting of funds only, its willful
misconduct or simple negligence as a trustee.
SECTION 15. MISCELLANEOUS
15.1 AMENDMENTS
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by the party against which the
enforcement of the amendment, supplement, waiver, modification, discharge,
termination or variance is sought. Each such amendment, supplement, waiver,
modification, discharge, termination or variance shall be effective only in the
specific instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by oral
communication, course of dealing or performance or other manner not set forth in
an agreement, document or instrument in writing and signed by the party against
which enforcement of the same is sought.
15.2 SEVERABILITY
If any provision hereof shall be held invalid, illegal or unenforceable in
any respect in any jurisdiction, then, to the extent permitted by Law, (a) all
other provisions hereof shall remain in full force and effect in such
jurisdiction and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. If, however, any Law pursuant to which such provisions are held
invalid, illegal or unenforceable may be waived, such Law is hereby waived by
the parties hereto to the full extent permitted, to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.
15.3 SURVIVAL
The indemnities set forth herein shall survive the delivery or return of
the Aircraft, the Transfer of any interest of Owner Participant in this
Agreement, the Trust Estate and the Trust Agreement, the Transfer of any
interest by any Note Holder of its Equipment Note and the expiration or other
termination of this Agreement or any other Operative Agreement.
15.4 REPRODUCTION OF DOCUMENTS
This Agreement, all annexes, schedules and exhibits hereto and all
agreements, instruments and documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed and (b) financial statements, certificates and other information
previously or hereafter furnished to any party hereto, may be reproduced by such
party by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such party may destroy any original
documents so reproduced. Any such reproduction shall be as admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such party in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction likewise is
admissible in evidence.
15.5 COUNTERPARTS
This Agreement and any amendments, waivers, consents or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each of which when so executed
shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
15.6 NO WAIVER
No failure on the part of any party hereto to exercise, and no delay by
any party hereto in exercising, any of its respective rights, powers, remedies
or privileges under this Agreement or provided at Law, in equity or otherwise
shall impair, prejudice or constitute a waiver of any such right, power, remedy
or privilege or be construed as a waiver of any breach hereof or default
hereunder or as an acquiescence therein nor shall any single or partial exercise
of any such right, power, remedy or privilege preclude any other or further
exercise thereof by it or the exercise of any other right, power, remedy or
privilege by it. No notice to or demand on any party hereto in any case shall,
unless otherwise required under this Agreement, entitle such party to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any party hereto to any other or further action in any
circumstances without notice or demand.
15.7 NOTICES
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement or other applicable Operative Agreement, and shall be personally
delivered, sent by facsimile or telecommunication transmission (which in either
case provides written confirmation to the sender of its delivery), sent by
registered mail or certified mail, return receipt requested, postage prepaid, or
sent by overnight courier service, in each case to the respective address, or
facsimile number set forth for such party in Schedule 1, or to such other
address, facsimile or other number as each party hereto may hereafter specify by
notice to the other parties hereto. Each such notice, request, demand,
authorization, direction, consent, waiver or other communication shall be
effective when received or, if made, given, furnished or filed (a) by facsimile
or telecommunication transmission, when confirmed, or (b) by registered or
certified mail, three Business Days after being deposited, properly addressed,
with the U.S. Postal Service.
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(A) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(B) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING
WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT.
(C) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 15.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 15.8(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.
(D) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN
ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.
(E) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION
BASED UPON OR ARISING OUT OF OR RELATING TO THIS AGREEMENT.
15.9 THIRD-PARTY BENEFICIARY
This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than the Liquidity Providers, The Liquidity Guarantor the
Escrow Agent and the Paying Agent, each of which is an intended third party
beneficiary with respect to the provisions of Section 9.1) with any rights of
any nature whatsoever against any of the parties hereto and no person not a
party hereto (other than the Liquidity Providers, The Liquidity Guarantor the
Escrow Agent and the Paying Agent, with respect to the provisions of Section
9.1) shall have any right, power or privilege in respect of any party hereto, or
have any benefit or interest, arising out of this Agreement.
15.10 ENTIRE AGREEMENT
This Agreement, together with the other Operative Agreements, on and as of
the date hereof, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, among any of the parties
hereto with respect to such subject matter are hereby superseded in their
entireties.
15.11 FURTHER ASSURANCES
Each party hereto shall execute, acknowledge and deliver or shall cause to
be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as any other party hereto shall reasonably
request in connection with the administration of, or to carry out more
effectively the purposes of, or to better assure and confirm into such other
party the rights and benefits to be provided under this Agreement and the other
Operative Agreements.
[This space intentionally left blank]
IN WITNESS WHEREOF, each of the parties has caused this Participation
Agreement to be duly executed and delivered as of the day and year first above
written.
CONTINENTAL AIRLINES, INC.,
Lessee
By
-----------------------------------
Name:
Title:
[____________________,]
Owner Participant
By
-----------------------------------
Name:
Title:
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner Trustee
By
-----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as
expressly provided herein,
but solely as Mortgagee
By
-----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as
expressly provided herein,
but solely as Pass Through
Trustee under the Pass
Through Trust Agreement for
the Continental Airlines
Pass Through Trust, 2001-
1A-1-0
By
-----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as
expressly provided herein,
but solely as Pass Through
Trustee under the Pass
Through Trust Agreement for
the Continental Airlines
Pass Through Trust, 2001-
1A-2-0
By
-----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as
expressly provided herein,
but solely as Pass Through
Trustee under the Pass
Through Trust Agreement for
the Continental Airlines
Pass Through Trust, 2001-
1B-0
By
-----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as
expressly provided herein,
but solely as Pass Through
Trustee under the Pass
Through Trust Agreement for
the Continental Airlines
Pass Through Trust, 2001-
1C-0
By
-----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as
expressly provided herein,
but solely as Subordination
Agent
By
-----------------------------------
Name:
Title:
--------------------------
Annex A - Definitions [__]
--------------------------
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly provided, a
reference to:
(i) each of "Lessee," "Lessor," "Loan Participant," "Owner
Trustee," "Owner Participant," "Mortgagee," "Note Holder" or any other
person includes, without prejudice to the provisions of any Operative
Agreement, any successor in interest to it and any permitted
transferee, permitted purchaser or permitted assignee of it;
(ii) words importing the plural include the singular and words
importing the singular include the plural;
(iii) any agreement, instrument or document, or any annex,
schedule or exhibit thereto, or any other part thereof, includes,
without prejudice to the provisions of any Operative Agreement, that
agreement, instrument or document, or annex, schedule or exhibit, or
part, respectively, as amended, modified or supplemented from time to
time in accordance with its terms and in accordance with the Operative
Agreements, and any agreement, instrument or document entered into in
substitution or replacement therefor (including, without limitation,
in the case of each Pass Through Trust Agreement, the "Related Pass
Through Trust Agreement" as defined therein);
(iv) any provision of any Law includes any such provision as
amended, modified, supplemented, substituted, reissued or reenacted
prior to the Delivery Date, and thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby," "herein,"
"hereto," "hereof" and "hereunder" and words of similar import when
used in any Operative Agreement refer to such Operative Agreement as a
whole and not to any particular provision of such Operative Agreement;
(vi) the words "including," "including, without limitation,"
"including, but not limited to," and terms or phrases of similar
import when used in any Operative Agreement, with respect to any
matter or thing, mean including, without limitation, such matter or
thing; and
(vii) a "Section," an "Exhibit," an "Annex" or a "Schedule" in
any Operative Agreement, or in any annex thereto, is a reference to a
section of, or an exhibit, an annex or a schedule to, such Operative
Agreement or such annex, respectively.
(b) Each exhibit, annex and schedule to each Operative Agreement is
incorporated in, and shall be deemed to be a part of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative Agreement, all
accounting terms therein shall be construed and all accounting determinations
thereunder shall be made in accordance with GAAP.
(d) Headings used in any Operative Agreement are for convenience only and
shall not in any way affect the construction of, or be taken into consideration
in interpreting, such Operative Agreement.
(e) For purposes of each Operative Agreement, the occurrence and
continuance of a Lease Default or Lease Event of Default referred to in Section
14.5 shall not be deemed to prohibit the Lessee from taking any action or
exercising any right that is conditioned on no Lease Event of Default, Lease
Default or Special Default having occurred and be continuing if such Lease
Default or Lease Event of Default consists of the institution of reorganization
proceedings with respect to Lessee under Chapter 11 of the Bankruptcy Code and
the trustee or debtor-in-possession in such proceedings shall have (i) agreed to
perform its obligations under the Lease with the approval of the applicable
court and thereafter shall have continued to perform such obligations in
accordance with Section 1110 or (ii) shall have assumed the Lease with the
approval of the relevant court and thereafter shall have continued to perform
its obligations under the Lease.
DEFINED TERMS
"ACT" means part A of subtitle VII of title 49, United States Code.
"ACTUAL KNOWLEDGE" means (a) as it applies to Owner Trustee or Mortgagee,
as the case may be, actual knowledge of a responsible officer in the Corporate
Trust Department or the Corporate Trust Office, respectively, and (b) as it
applies to Owner Participant or Lessee, actual knowledge of a Vice President or
more senior officer of Owner Participant or Lessee, respectively, or any other
officer of Owner Participant or Lessee, respectively, having responsibility for
the transactions contemplated by the Operative Agreements; PROVIDED that each of
Lessee, Owner Participant, Owner Trustee and Mortgagee shall be deemed to have
"Actual Knowledge" of any matter as to which it has received notice from Lessee,
Owner Participant, any Note Holder, Owner Trustee or Mortgagee, such notice
having been given pursuant to Section 15.7 of the Participation Agreement.
"ADDITIONAL INSURED" is defined in Section D of Annex D to the Lease.
"ADVERSE CHANGE IN TAX LAW" means (a) for Lessee, a Change in Tax Law
that Lessee regards as one that could adversely affect the economic consequences
of the transactions contemplated by the Participation Agreement and the other
Operative Agreements that are anticipated by Lessee or (b) for Owner
Participant, any Change in Tax Law that would adversely affect any of the
following tax assumptions:
(i) For federal income tax purposes, the Lease will be a "true"
lease for purposes of the Code and Owner Participant will be treated
as the owner of the Aircraft and Lessee will be treated as the lessee
thereof;
(ii) For federal income tax purposes, Owner Participant will be
entitled to depreciation or cost recovery deductions with respect to
Lessor' s Cost of the Aircraft; and
(iii) For federal income tax purposes, Owner Participant will be
entitled to deductions for interest payments on the Equipment Notes.
"AFFILIATE" means, with respect to any person, any other person directly
or indirectly controlling, controlled by or under common control with such
person. For purposes of this definition, "control" means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities or by contract
or otherwise and "controlling," "controlled by" and "under common control with"
have correlative meanings.
"AIRCRAFT" means, collectively, the Airframe and Engines.
"AIRCRAFT BILL OF SALE" means the full warranty bill of sale covering the
Aircraft delivered by Airframe Manufacturer to Owner Trustee on the Delivery
Date.
"AIRCRAFT DOCUMENTS" means all technical data, manuals and log books, and
all inspection, modification and overhaul records and other service, repair,
maintenance and technical records that are required by the FAA (or the relevant
Aviation Authority), to be maintained with respect to the Aircraft, Airframe,
Engines or Parts; and such term shall include all additions, renewals, revisions
and replacements of any such materials from time to time made, or required to be
made, by the FAA (or other Aviation Authority) regulations, and in each case in
whatever form and by whatever means or medium (including, without limitation,
microfiche, microfilm, paper or computer disk) such materials may be maintained
or retained by or on behalf of Lessee (PROVIDED, that all such materials shall
be maintained in the English language).
"AIRFRAME" means (a) the aircraft (excluding Engines or engines from time
to time installed thereon) manufactured by Airframe Manufacturer and identified
by Airframe Manufacturer's model number, United States registration number and
Airframe Manufacturer's serial number set forth in Lease Supplement No. 1 and
any Replacement Airframe and (b) any and all Parts incorporated or installed in
or attached or appurtenant to such airframe, and any and all Parts removed from
such airframe, unless title to such Parts shall not be vested in Lessor in
accordance with Section 8.1 and Annex C of the Lease. Upon substitution of a
Replacement Airframe under and in accordance with the Lease, such Replacement
Airframe shall become subject to the Lease and shall be the "Airframe" for all
purposes of the Lease and the other Operative Agreements and thereupon the
Airframe for which the substitution is made shall no longer be subject to the
Lease, and such replaced Airframe shall cease to be the "Airframe."
"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 Payment Date on the Amortization Schedule by the Original Amount
of such Equipment Note.
"AMORTIZATION SCHEDULE" means, with respect to each Equipment Note, the
amortization schedule for such Equipment Note delivered pursuant to Section 2.02
of the Trust Indenture.
"APPLICABLE PASS THROUGH TRUST" means each of the separate pass through
trusts created under the Applicable Pass Through Trust Agreements.
"APPLICABLE PASS THROUGH TRUST AGREEMENT" means each of the separate Pass
Through Trust Agreements by and between the Lessee and an Applicable Pass
Through Trustee.
"APPLICABLE PASS THROUGH TRUSTEE" means each Pass Through Trustee that is
a party to the Participation Agreement.
"APPRAISER" means a firm of internationally recognized, independent
aircraft appraisers.
"AVERAGE LIFE DATE" for any Equipment Note shall be the date which
follows the time of determination by a period equal to the Remaining Weighted
Average Life of such Equipment Note. "Remaining Weighted Average Life" on a
given date with respect to any Equipment Note shall be the number of days equal
to the quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining scheduled payment
of principal of such Equipment Note by (ii) the number of days from and
including such determination date to but excluding the date on which such
payment of principal is scheduled to be made, by (b) the then outstanding
principal amount of such Equipment Note.
"AVIATION AUTHORITY" means the FAA or, if the Aircraft is permitted to
be, and is, registered with any other Government Entity under and in accordance
with Section 7.1.2 of the Lease, such other Government Entity.
"BANK" means Wells Fargo Bank Northwest, National Association (formerly
known as First Security Bank, National Association), a national banking
association, not in its capacity as Owner Trustee under the Trust Agreement, but
in its individual capacity.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.ss.
101 ET SEQ.
"BASE LEASE TERM" means the period beginning on and including the
Commencement Date and ending on the Scheduled Expiration Date, or such earlier
date on which the Term terminates in accordance with the provisions of the
Lease.
"BASIC PASS THROUGH TRUST AGREEMENT" means the Pass Through Trust
Agreement, dated September 25, 1997, between Lessee and Pass Through Trustee,
but does not include any Trust Supplement.
"BASIC RENT" means the rent payable for the Aircraft pursuant to Section
3.2.1(a) of the Lease.
"BENEFICIAL OWNER" when used in relation to an Equipment Note means a
Person that, by reason of direct ownership, contract, share ownership or
otherwise, has the right to receive or participate in receiving, directly or
indirectly, payments of principal, interest or Make-Whole Amount in respect of
such Equipment Note; provided that a Person shall not be deemed to be a
Beneficial Owner of an Equipment Note solely because another Person in which
such a Person owns common stock or other equity securities is a registered
holder or Beneficial Owner of such Equipment Note unless such Person is an
Affiliate of such other Person.
"BFE" means all appliances, parts, instruments, appurtenances,
accessories, furnishings or other equipment of whatever nature sold by Lessee to
Owner Trustee pursuant to the BFE Bill of Sale.
"BFE AMOUNT" means the amount paid by Owner Trustee to Lessee to purchase
the BFE, and is designated by Dollar amount in Schedule 3 to the Participation
Agreement.
"BFE BILL OF SALE" means the full warranty bill of sale executed by
Lessee in favor of Owner Trustee, dated the Delivery Date, identifying and
covering the BFE.
"BILLS OF SALE" means the FAA Bill of Sale, the Aircraft Bill of Sale and
the BFE Bill of Sale.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which commercial banks are authorized or required by law to close in New
York, New York, Houston, Texas, Wilmington, Delaware, or Salt Lake City, Utah.
"CASH EQUIVALENTS" means the following securities (which shall mature
within 90 days of the date of purchase thereof): (a) direct obligations of the
U.S. Government; (b) obligations fully guaranteed by the U.S. Government; (c)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Owner Trustee, Mortgagee or any bank, trust company
or national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained earnings of at least $500,000,000 and having a rate of "C" or better
from the Thomson BankWatch Service; or (d) commercial paper of any issuer doing
business under the laws of the United States or one of the states thereof and in
each case having a rating assigned to such commercial paper by Standard & Poor's
or Moody's equal to A1 or higher.
"CHANGE IN TAX LAW" means any amendment, modification, addition or change
in or to the provisions of the Code, any other federal tax statutes, the
Treasury Regulations promulgated thereunder, the Internal Revenue Service
Revenue Rulings, Revenue Procedures or other administrative or judicial
interpretations of the Code or the federal tax statutes that affects the tax
assumptions set forth in the Tax Indemnity Agreement or otherwise affects Owner
Participant's anticipated Net Economic Return (other than a change in the
alternative minimum tax or other change that results in Owner Participant being
subject to alternative minimum tax or unable to fully utilize tax benefits
because of its particular tax situation).
"CITIZEN OF THE UNITED STATES" is defined in Section 40102(a)(15) of the
Act and in the FAA Regulations.
"CLASS C ISSUANCE DATE" means June 26, 2001.
"CLASS C PASS THROUGH TRUST" means the "Class C Trust" as defined in the
Intercreditor Agreement.
"CLOSING" means the closing of the transactions contemplated by the
Participation Agreement on the Delivery Date.
"CODE" means the Internal Revenue Code of 1986, as amended; PROVIDED,
that when used in relation to a Plan, "Code" shall mean the Internal Revenue
Code of 1986 and any regulations and rulings issued thereunder, all as amended
and in effect from time to time.
"COMMENCEMENT DATE" is defined in Schedule 1 to the Lease.
"COMMITMENT" means, for any Participant, the amount of its participation
in the payment of Lessor's Cost.
"COMMITMENT TERMINATION DATE" is defined in Schedule 3 to the
Participation Agreement.
"CONSENT AND AGREEMENT" means the Manufacturer Consent and Agreement
[________], dated as of even date with the Participation Agreement, of Airframe
Manufacturer.
"CONTINUOUS STAY PERIOD" is defined in Section 4.04(a) of the Trust
Indenture.
"CORPORATE TRUST DEPARTMENT" or "TRUST OFFICE" means the principal
corporate trust office of Owner Trustee located from time to time at Owner
Trustee's address for notices under the Participation Agreement or such other
office at which Owner Trustee's corporate trust business shall be administered
which Owner Trustee shall have specified by notice in writing to Lessee,
Mortgagee and each Note Holder.
"CORPORATE TRUST OFFICE" means the principal office of Mortgagee located
at Mortgagee's address for notices under the Participation Agreement or such
other office at which Mortgagee's corporate trust business shall be administered
which Mortgagee shall have specified by notice in writing to Lessee, Owner
Trustee and each Note Holder.
"CRAF" means the Civil Reserve Air Fleet Program established pursuant to
10 U.S.C. ss. 9511-13 or any similar substitute program.
"DEBT" means any liability for borrowed money, or any liability for the
payment of money in connection with any letter of credit transaction or any
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments.
"DEBT RATE" means, with respect to (i) any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Trust Indenture and (ii) any other purpose, with respect to any period, the
weighted average interest rate per annum during such period borne by the
outstanding Equipment Notes, excluding any interest payable at the Payment Due
Rate.
"DEFAULT" means any event or condition that with the giving of notice or
the lapse of time or both would become an Event of Default.
"DELAYED DELIVERY DATE" means a delayed Delivery Date notified to each
Participant, Owner Trustee and Mortgagee by Lessee pursuant to Section 4.3 of
the Participation Agreement, which delayed Delivery Date shall be a Business Day
not later than the Commitment Termination Date.
"DELIVERY DATE" means the Business Day specified in Lease Supplement No.
1 as the date on which, among other things, the Aircraft is delivered to and
accepted by Lessee under the Lease and the Closing occurs.
"DEPOSIT AGREEMENT" means each of the four Deposit Agreements between the
Depositary and the Escrow Agent, dated as of the Issuance Date or, in the case
of the Deposit Agreement relating to the Class C Pass Through Trust, the Class C
Issuance Date, each of which relates to one of the Pass Through Trusts, PROVIDED
that, for purposes of any obligation of Lessee, no amendment, modification or
supplement to, or substitution or replacement of, any such Deposit Agreement
shall be effective unless consented to by Lessee.
"DEPOSITARY" means Credit Suisse First Boston, New York branch, as
Depositary under each Deposit Agreement.
"DOLLARS," "UNITED STATES DOLLARS" or "$" means the lawful currency of
the United States.
"DOT" means the Department of Transportation of the United States or any
Government Entity succeeding to the functions of such Department of
Transportation.
"ELIGIBLE ACCOUNT" means an account established by and with an Eligible
Institution at the request of the Mortgagee, which institution agrees, for all
purposes of the UCC including Article 8 thereof, that (a) such account shall be
a "securities account" (as defined in Section 8-501 of the UCC), (b) all
property (other than cash) credited to such account shall be treated as a
"financial asset" (as defined in Section 8-102(9) of the UCC), (c) the Mortgagee
shall be the "entitlement holder" (as defined in Section 8-102(7) of the UCC) in
respect of such account, (d) it will comply with all entitlement orders issued
by the Mortgagee to the exclusion of the Lessee and the Owner Trustee, and (e)
the "securities intermediary jurisdiction" (under Section 8-110(e) of the UCC)
shall be the State of New York.
"ELIGIBLE INSTITUTION" means the corporate trust department of (a)
Wilmington Trust Company, acting solely in its capacity as a "securities
intermediary" (as defined in Section 8-102(14) of the UCC), or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), which has a long-term unsecured debt rating from Moody's and
Standard & Poor's of at least A-3 or its equivalent.
"ENFORCEMENT DATE" is defined in Section 4.03 of the Trust Indenture.
"ENGINE" means (a) each of the engines manufactured by Engine
Manufacturer and identified by Engine Manufacturer's model number and Engine
Manufacturer's serial number set forth in Lease Supplement No. 1 and originally
installed on the Airframe on delivery thereof pursuant to the Lease, and any
Replacement Engine, in any case whether or not from time to time installed on
such Airframe or installed on any other airframe or aircraft, and (b) any and
all Parts incorporated or installed in or attached or appurtenant to such
engine, and any and all Parts removed from such engine, unless title to such
Parts shall not be vested in Lessor in accordance with Section 8.1 and Annex C
of the Lease. Upon substitution of a Replacement Engine under and in accordance
with the Lease, such Replacement Engine shall become subject to the Lease and
shall be an "Engine" for all purposes of the Lease and the other Operative
Agreements and thereupon the Engine for which the substitution is made shall no
longer be subject to the Lease, and such replaced Engine shall cease to be an
"Engine."
"ENGINE CONSENT AND AGREEMENT" means the Engine Manufacturer Consent and
Agreement [________] dated as of even date with the Participation Agreement, of
Engine Manufacturer.
"ENGINE MANUFACTURER" means [CFM International, a Delaware corporation.]
[General Electric Company, a New York corporation.]
"EQUIPMENT NOTE REGISTER" is defined in Section 2.07 of the Trust
Indenture.
"EQUIPMENT NOTES" means and includes any equipment notes issued under the
Trust Indenture in the form specified in Section 2.01 thereof (as such form may
be varied pursuant to the terms of the Trust Indenture) and any Equipment Note
issued under the Trust Indenture in exchange for or replacement of any Equipment
Note.
"ERISA" means the Employee Retirement Income Security Act of 1974 and any
regulations and rulings issued thereunder all as amended and in effect from time
to time.
"ESCROW AGENT" means Wells Fargo Bank Northwest, National Association
(formerly known as First Security Bank, National Association), as Escrow Agent
under each of the Escrow Agreements.
"ESCROW AGREEMENT" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass Through Certificates named therein and one of the Pass Through
Trustees, dated as of the Issuance Date or, in the case of the Escrow Agreement
relating to the Class C Pass Through Trust, the Class C Issuance Date, each of
which relates to one of the Pass Through Trusts, PROVIDED that, for purposes of
any obligation of Lessee, no amendment, modification or supplement to, or
substitution or replacement of, any such Escrow Agreement shall be effective
unless consented to by Lessee.
"EVENT OF DEFAULT" is defined in Section 4.02 of the Trust Indenture.
"EVENT OF LOSS" means, with respect to the Aircraft, Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:
(a) the destruction of such property, damage to such property beyond
economic repair or rendition of such property permanently unfit for
normal use by Lessee;
(b) the actual or constructive total loss of such property or any damage
to such property, or requisition of title or use of such property,
which results in an insurance settlement with respect to such property
on the basis of a total loss or constructive or compromised total
loss;
(c) any theft, hijacking or disappearance of such property for a period of
180 consecutive days or more;
(d) any seizure, condemnation, confiscation, taking or requisition
(including loss of title) of such property by any Government Entity or
purported Government Entity (other than a requisition of use by a
Permitted Government Entity) for a period exceeding 180 consecutive
days or, if earlier, at the end of the Term;
(e) any seizure, condemnation, confiscation, taking or requisition of use
of such property by any Permitted Government Entity that continues
until the 30th day after the last day of the Term, PROVIDED that no
such Event of Loss shall exist if Lessor shall have elected not to
treat such event as an Event of Loss pursuant to Section 10.6 of the
Lease; and
(f) as a result of any law, rule, regulation, order or other action by the
Aviation Authority or by any Government Entity of the government of
registry of the Aircraft or by any Government Entity otherwise having
jurisdiction over the operation or use of the Aircraft, the use of
such property in the normal course of Lessee's business of passenger
air transportation is prohibited for a period of 180 consecutive days,
unless Lessee, prior to the expiration of such 180 day period, shall
have undertaken and shall be diligently carrying forward such steps as
may be necessary or desirable to permit the normal use of such
property by Lessee, but in any event if such use shall have been
prohibited for a period of two consecutive years, provided that no
Event of Loss shall be deemed to have occurred if such prohibition has
been applicable to Lessee's entire U.S. fleet of such property and
Lessee, prior to the expiration of such two-year period, shall have
conformed at least one unit of such property in its fleet to the
requirements of any such law, rule, regulation, order or other action
and commenced regular commercial use of the same in such jurisdiction
and shall be diligently carrying forward, in a manner which does not
discriminate against such property in so conforming such property,
steps which are necessary or desirable to permit the normal use of the
Aircraft by Lessee, but in any event if such use shall have been
prohibited for a period of three years or such use shall be prohibited
at the expiration of the Term.
"EXCLUDED PAYMENTS" means (i) indemnity payments paid or payable by
Lessee to or in respect of Owner Participant, or Owner Trustee in its individual
capacity, their respective Affiliates, successors and permitted assigns and
their directors, officers, employees, servants and agents pursuant to Section 9
of the Participation Agreement or any corresponding payments under the Lease,
(ii) proceeds of public liability insurance paid or payable as a result of
insurance claims made, or losses suffered, by Owner Trustee in its individual
capacity or by Owner Participant, that are payable directly to Owner Trustee in
its individual capacity, or Owner Participant, respectively, for their own
account, (iii) proceeds of insurance maintained with respect to the Aircraft by
Owner Participant or any Affiliate thereof for its or their own account or
benefit (whether directly or through Owner Trustee) and permitted under Section
11.2 of the Lease, (iv) all payments required to be made under the Tax Indemnity
Agreement by Lessee whether or not denominated as Supplemental Rent, (v) any
Transaction Expenses paid or payable by the Lessee to the Owner Trustee (to the
extent for its sole benefit) or the Owner Participant pursuant to the Lease or
the Participation Agreement, (vi) any amount payable to the Owner Participant by
any transferee as the purchase price of the Owner Participant's interest in the
Trust Estate, (vii) any interest that pursuant to the Operative Agreements may
from time to time accrue in respect of any of the amounts described in clauses
(i) through (vi) above, (viii) any right to enforce the payment of any amount
described in clauses (i) through (vii) above (PROVIDED, that the rights referred
to in this clause (viii) shall not be deemed to include the exercise of any
remedies provided for in the Lease other than the right to sue for specific
performance of any covenant to make such payment or to sue for damages in
respect of the breach of any such covenant) and (ix) any right to exercise any
election or option or make any decision or determination, or to give or receive
any notice, consent, waiver or approval, or to take any other action in respect
of, but in each case, only to the extent relating to, any Excluded Payments.
"EXPENSES" means any and all liabilities, obligations, losses, damages,
settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other professionals,
and costs of investigation).
"FAA" means the Federal Aviation Administration of the United States or
any Government Entity succeeding to the functions of such Federal Aviation
Administration.
"FAA BILL OF SALE" means a bill of sale for the Aircraft on AC Form
8050-2 (or such other form as may be approved by the FAA) delivered to Owner
Trustee on the Delivery Date by Airframe Manufacturer.
"FAA FILED DOCUMENTS" means the Lease, Lease Supplement No. 1, the Trust
Indenture, the Trust Agreement, the initial Trust Indenture Supplement, the FAA
Bill of Sale and an application for registration of the Aircraft with the FAA in
the name of Owner Trustee.
"FAA REGULATIONS" means the Federal Aviation Regulations issued or
promulgated pursuant to the Act from time to time.
"FAIR MARKET RENTAL VALUE" means the fair market rental value in Dollars
for the Aircraft that would apply in an arm's-length transaction between an
informed and willing lessee under no compulsion to lease, and an informed and
willing lessor under no compulsion to lease, the Aircraft, for the applicable
Renewal Lease Term, assuming that (a) the Aircraft has been maintained in
accordance with, and is in the condition required by, the Lease, (b) payments of
rent would be made semiannually, and (c) the Aircraft would be leased during any
such Renewal Lease Term on the same terms and conditions as are set forth in the
Lease with respect to the Base Lease Term.
"FAIR MARKET SALES VALUE" means the fair market sales value in Dollars
for the Aircraft that would apply in an arm's-length transaction between an
informed and willing buyer under no compulsion to buy, and an informed and
willing seller under no compulsion to sell, the Aircraft, in a transaction that
would close on or about the relevant time of determination, assuming that (a)
the Aircraft has been maintained in accordance with, and is in the condition
required by, the Lease and (b) the Aircraft would be delivered to such informed
and willing buyer in the return condition required by the Lease.
"FINANCING STATEMENTS" means, collectively, UCC-1 (and, where
appropriate, UCC-3) financing statements (a) covering the Trust Indenture
Estate, by Owner Trustee, as debtor, showing Mortgagee as secured party, for
filing in Utah and each other jurisdiction that, in the opinion of Mortgagee, is
necessary to perfect its Lien on the Trust Indenture Estate and (b) covering the
Lease and the Aircraft, as a precautionary matter, by Lessee, as lessee, showing
Owner Trustee as lessor and Mortgagee as assignee of Owner Trustee, for filing
in Texas and each other jurisdiction that, in the opinion of Owner Trustee and
Mortgagee, is reasonably desirable.
"FIXED RENEWAL LEASE TERM" means each term for which the Lease is
extended by Lessee, if any, pursuant to the first and second such extensions in
accordance with Section 17 of the Lease.
"GAAP" means generally accepted accounting principles as set forth in the
statements of financial accounting standards issued by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants, as
such principles may at any time or from time to time be varied by any applicable
financial accounting rules or regulations issued by the SEC and, with respect to
any person, shall mean such principles applied on a basis consistent with prior
periods except as may be disclosed in such person's financial statements.
"GOVERNMENT ENTITY" means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government or (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"GTA" means the General Terms Agreement as defined in the Purchase
Agreement Assignment.
"INDEMNITEE" means (i) Bank and Owner Trustee, (ii) WTC and Mortgagee,
(iii) each separate or additional trustee appointed pursuant to the Trust
Agreement or the Trust Indenture, (iv) each Participant, (v) the Trust Estate
and the Trust Indenture Estate, (vi) each Affiliate of the persons described in
clauses (i) through (iv), inclusive, (vii) the respective directors, officers,
employees, agents and servants of each of the persons described in clauses (i)
through (iv) inclusive and in clause (vi), (viii) the successors and permitted
assigns of the persons described in clauses (i) through (iv), inclusive, and in
clauses (vi) and (vii) and (ix) the Pass Through Indemnitees; PROVIDED THAT the
Pass Through Indemnitees are Indemnitees only for purposes of Section 9.1 of the
Participation Agreement. If any Indemnitee is Airframe Manufacturer or Engine
Manufacturer or any subcontractor or supplier of either thereof, such Person
shall be an Indemnitee only in its capacity as Owner Participant, Loan
Participant or Note Holder.
"INDENTURE AGREEMENTS" means the Participation Agreement, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Engine Consent and Agreement, the Bills of Sale and any other
contract, agreement or instrument from time to time assigned or pledged under
the Trust Indenture.
"INDENTURE DEFAULT" means any condition, circumstance, act or event that,
with the giving of notice, the lapse of time or both, would constitute an
Indenture Event of Default.
"INDENTURE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 4.02 of the Trust Indenture.
"INDENTURE INDEMNITEE" means (i) WTC and the Mortgagee, (ii) each
separate or additional trustee appointed pursuant to the Trust Indenture, (iii)
the Subordination Agent, (iv) the Liquidity Provider, (v) each Pass Through
Trustee, (vi) the Paying Agent, (vii) the Escrow Agent and (viii) each of the
respective directors, officers, employees, agents and servants of each of the
persons described in clauses (i) through (vii) inclusive above.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement
among certain Pass Through Trustees, the Liquidity Provider and the
Subordination Agent, dated as of the Issuance Date, as amended by that certain
Amendment No. 1 to Intercreditor Agreement, dated as of the Class C Issuance
Date, among the Pass Through Trustees, the Liquidity Provider, the Subordination
Agent and Lessee, PROVIDED that, for purposes of any obligation of Lessee, no
amendment, modification or supplement to, or substitution or replacement of,
such Intercreditor Agreement shall be effective unless consented to by Lessee.
"INTERIM LEASE TERM" means the period commencing on and including the
Delivery Date, and ending on and including the day immediately preceding the
Commencement Date or such earlier date on which the Term terminates in
accordance with the provisions of the Lease.
"INTERIM RENT" is defined in Schedule 1 to the Lease.
"IRS" means the Internal Revenue Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.
"ISSUANCE DATE" means April 19, 2001.
"LAW" means (a) any constitution, treaty, statute, law, decree,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"LEASE" or "LEASE AGREEMENT" means the Lease Agreement [________], dated
as of even date with the Participation Agreement, between Owner Trustee and
Lessee.
"LEASE DEFAULT" means any condition, circumstance, act or event that,
with the giving of notice, the lapse of time or both, would constitute a Lease
Event of Default.
"LEASE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 14 of the Lease.
"LEASE SUPPLEMENT" means a supplement to the Lease, in the form of
Exhibit A to the Lease.
"LEASE SUPPLEMENT NO. 1" means the initial Lease Supplement, dated the
Delivery Date.
"LESSEE" means Continental Airlines, Inc., a Delaware corporation.
"LESSEE OPERATIVE AGREEMENTS" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the BFE Bill of
Sale, the Purchase Agreement Assignment and each other agreement between Lessee
and any other party to the Participation Agreement, relating to the
Transactions, delivered on the Delivery Date.
"LESSEE PERSON" means Lessee, any sublessee, assignee, successor or other
user or person in possession of the Aircraft, Airframe or an Engine with or
without color of right, or any Affiliate of any of the foregoing (excluding any
Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any person
using or claiming any rights with respect to the Aircraft, Airframe or an Engine
directly by or through any of the persons in this parenthetical, but not
excluding any Person claiming directly or indirectly through or under the
Lease).
"LESSEE'S ADVISOR" is defined in Schedule 3 to the Participation
Agreement.
"LESSOR" means Owner Trustee in its capacity as lessor under the Lease.
"LESSOR LIEN" means, with respect to any person and in respect of any
property (including, without limitation, the Trust Estate, the Trust Indenture
Estate, the Aircraft, Airframe, Engines, Parts or Aircraft Documents) or any
payments, any Lien on such property or payments which (a) arises from claims
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) not related to any of the transactions
contemplated by the Operative Agreements, (b) results from acts or omissions of
such person (if such person is a trustee, whether in its individual capacity or
in its capacity as a trustee) in violation of such person's obligations under
any of the terms of the Operative Agreements, or not related to the transactions
contemplated by the Operative Agreements, (c) is imposed as a result of Taxes
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) or any of its Affiliates not required
to be indemnified by Lessee under the Participation Agreement, or (d) claims
against such person arising out of any transfer by such person of its interest
in the Aircraft, the Trust Estate or the Operative Agreements, other than a
Transfer permitted by the terms of the Operative Agreements or pursuant to the
exercise of remedies set forth in Section 15 of the Lease.
"LESSOR'S COST" means the aggregate of the amounts paid by Owner Trustee
to Airframe Manufacturer and Lessee to purchase the Aircraft and BFE pursuant to
the Purchase Agreement Assignment and the Participation Agreement, and is
designated by Dollar amount in Schedule 3 to the Participation Agreement.
"LIEN" means any mortgage, pledge, lien, charge, claim, encumbrance,
lease or security interest affecting the title to or any interest in property.
"LIQUIDITY FACILITIES" means the four Revolving Credit Agreements
(consisting of a separate Revolving Credit Agreement with the Liquidity Provider
with respect to each Pass Through Trust) between the Subordination Agent, as
borrower, and the Liquidity Provider, each dated as of the Issuance Date or, in
the case of the Liquidity Facility relating to the Class C Pass Through Trust,
the Class C Issuance Date, PROVIDED that, for purposes of any obligation of
Lessee, no amendment, modification or supplement to, or substitution or
replacement of, any such Liquidity Facility shall be effective unless consented
to by Lessee.
"LIQUIDITY PROVIDER" means Landesbank Hessen-Thuringen Girozentrale, a
public law banking institution organized under the laws of Germany, as "Class
A-1 Liquidity Provider," "Class A-2 Liquidity Provider", "Class B Liquidity
Provider" and "Class C Liquidity Provider" (as such terms are defined in the
Intercreditor Agreement).
"LOAN PARTICIPANTS" mean, until the Closing shall have been consummated,
the Applicable Pass Through Trustees, and after the Closing shall have been
consummated, each Note Holder.
"LOSS PAYMENT DATE" means the date on which payment is due pursuant to
Section 10.1.2(a)(i) of the Lease.
"MAINTENANCE PROGRAM" is defined in Annex C to the Lease.
"MAJORITY IN INTEREST OF NOTE HOLDERS" means as of a particular date of
determination, the holders of a majority in aggregate unpaid Original Amount of
all Equipment Notes outstanding as of such date (excluding any Equipment Notes
held by Owner Trustee, Lessee, or Owner Participant or any Affiliate of any such
party or any interests of Owner Trustee or Owner Participant therein by reason
of subrogation pursuant to Section 4.03 of the Trust Indenture (unless all
Equipment Notes then outstanding shall be held by Owner Trustee, Lessee, Owner
Participant or any Affiliate of any thereof)); PROVIDED that for the purposes of
directing any action or casting any vote or giving any consent, waiver or
instruction hereunder any Note Holder of an Equipment Note or Equipment Notes
may allocate, in such Note Holder's sole discretion, any fractional portion of
the principal amount of such Equipment Note or Equipment Notes in favor of or in
opposition to any such action, vote, consent, waiver or instruction.
"MAKE-WHOLE AMOUNT" means, with respect to any Equipment Note, an amount
(as determined by an independent investment bank of national standing) equal to
the excess, if any, of (a) the present value of the remaining scheduled payments
of principal and interest to maturity of such Equipment Note computed by
discounting such payments on a semiannual basis on each Payment Date (assuming a
360-day year of twelve 30-day months) using a discount rate equal to the
Treasury Yield over (b) the outstanding principal amount of such Equipment Note
plus accrued interest to the date of determination. For purposes of determining
the Make-Whole Amount, "Treasury Yield" means, at the date of determination with
respect to any Equipment Note, the interest rate (expressed as a decimal and, in
the case of United States Treasury bills, converted to a bond equivalent yield)
determined to be the per annum rate equal to the semi-annual yield to maturity
for United States Treasury securities maturing on the Average Life Date of such
Equipment Note and trading in the public securities markets either as determined
by interpolation between the most recent weekly average yield to maturity for
two series of United States Treasury securities, trading in the public
securities markets, (A) one maturing as close as possible to, but earlier than,
the Average Life Date of such Equipment Note and (B) the other maturing as close
as possible to, but later than, the Average Life Date of such Equipment Note, in
each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note is reported on the most recent H.15(519), such
weekly average yield to maturity as published in such H.15(519) "H.15(519)"
means the weekly statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal Reserve System.
The date of determination of a Make-Whole Amount shall be the third Business Day
prior to the applicable payment or redemption date and the "most recent
H.15(519)" means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable payment or redemption date.
"MANUFACTURER'S PURCHASE PRICE" means the amount required to be paid to
the Airframe Manufacturer to purchase the Aircraft pursuant to the Purchase
Agreement Assignment.
"MATERIAL ADVERSE CHANGE" means, with respect to any person, any event,
condition or circumstance that materially and adversely affects such person's
business or consolidated financial condition, or its ability to observe or
perform its obligations, liabilities and agreements under the Operative
Agreements.
"MINIMUM LIABILITY INSURANCE AMOUNT" is defined in Schedule 1 to the
Lease.
"MOODY'S" means Moody's Investors Service, Inc.
"MORTGAGED PROPERTY" is defined in Section 3.03 of the Trust Indenture.
"MORTGAGEE" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as loan trustee under the
Trust Indenture.
"MORTGAGEE AGREEMENTS" means, collectively, the Participation Agreement,
the Trust Indenture and each other agreement between Mortgagee and any other
party to the Participation Agreement, relating to the Transactions, delivered on
the Delivery Date.
"MORTGAGEE EVENT" means (i) in the event of a reorganization proceeding
involving the Lessee under Chapter 11 of the Bankruptcy Code, (A) the trustee in
such proceeding or the Lessee not agreeing to perform its obligations under the
Lease, as contemplated under Section 1110, during the 60-day period under
Section 1110(a)(2)(A) of the Bankruptcy Code (or such longer period as may apply
under Section 1110(b) of the Bankruptcy Code) or (B) at any time after agreeing
to perform such obligations, such trustee or the Lessee ceasing to perform such
obligations with the result that the Continuous Stay Period comes to an end or
(ii) either the Equipment Notes shall have become due and payable pursuant to
Section 4.04(b) of the Trust Indenture or Mortgagee has taken action or notified
Owner Trustee that it intends to take action to foreclose the Lien of the Trust
Indenture or otherwise commence the exercise of any significant remedy in
accordance with Section 4.04(a) of the Trust Indenture.
"NET ECONOMIC RETURN" means the Owner Participant's net after-tax yield
utilizing the multiple investment sinking fund method of analysis and aggregate
net after-tax cash flow, computed on the basis of the same methodology and
assumptions as were utilized by the initial Owner Participant in determining
Basic Rent, Stipulated Loss Value percentages and Termination Value percentages,
as of the Delivery Date, as such assumptions may be adjusted for events that
have been the basis for adjustments to Basic Rent pursuant to Section 3.2.1(b)
of the Lease or events giving rise to indemnity payments pursuant to Section 5
of the Tax Indemnity Agreement; PROVIDED, that, if the initial Owner Participant
shall have transferred its interest, Net Economic Return shall be calculated as
if the initial Owner Participant had retained its interest; PROVIDED FURTHER,
that, notwithstanding the preceding proviso, solely for purposes of Section 11
of the Participation Agreement and calculating any adjustments to Basic Rent,
Stipulated Loss Values and Termination Values in connection with a refunding
pursuant to such Section 11 at a time when Owner Participant is a transferee
(other than an Affiliate of the initial Owner Participant), the after-tax yield
(but not the after-tax cash flow) component of Net Economic Return shall be
calculated on the basis of the methodology and assumptions utilized by the
transferee Owner Participant as of the date on which it acquired its interest.
"NET PRESENT VALUE OF RENTS" means the present value, as of the date of
determination, discounted at 8% per annum, compounded semiannually to the date
of determination, of all unpaid Basic Rent payments during the then-remaining
portion of the Base Lease Term, expressed as a percentage of Lessor's Cost.
"NET WORTH" means, for any person, the excess of its total assets over
its total liabilities.
"NEW DEBT" means debt securities in an aggregate principal amount
specified in the Refunding Information.
"NON-U.S. PERSON" means any Person other than a United States person, as
defined in Section 7701(a)(30) of the Code.
"NOTE HOLDER" means at any time each registered holder of one or more
Equipment Notes.
"NOTE PURCHASE AGREEMENT" means the Amended and Restated Note Purchase
Agreement, dated as of the Class C Issuance Date, among Continental Airlines,
Inc., the Subordination Agent, the Escrow Agent, the Paying Agent and the Pass
Through Trustee under each Pass Through Trust Agreement providing for, among
other things, the issuance and sale of certain equipment notes, PROVIDED that,
for purposes of any obligation of Lessee, no amendment, modification or
supplement to, or substitution or replacement of, such Agreement shall be
effective unless consented to by Lessee.
"OBSOLETE PARTS" is defined in Section D of Annex C to the Lease.
"OFFICER'S CERTIFICATE" means, in respect of any party to the
Participation Agreement, a certificate signed by the Chairman, the President,
any Vice President (including those with varying ranks such as Executive,
Senior, Assistant or Staff Vice President), the Treasurer or the Secretary of
such party.
"OPERATIVE AGREEMENTS" means, collectively, the Participation Agreement,
the Trust Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Engine Consent and Agreement, the Lease, Lease Supplement No. 1,
the Trust Indenture, the initial Trust Indenture Supplement, the Bills of Sale,
the Tax Indemnity Agreement and the Equipment Notes.
"OPERATIVE INDENTURES" means each of the indentures under which notes
have been issued and purchased by the Pass Through Trustees pursuant to the Note
Purchase Agreement.
"OP JURISDICTION" is defined in Schedule 3 to the Participation
Agreement.
"ORIGINAL AMOUNT," with respect to an Equipment Note, means the stated
original principal amount of such Equipment Note and, with respect to all
Equipment Notes, means the aggregate stated original principal amounts of all
Equipment Notes.
"OWNER PARTICIPANT" means the person executing the Participation
Agreement as "Owner Participant"; PROVIDED that if an Owner Participant
Transfers its interest to a successor Owner Participant, such transferring Owner
Participant shall thereafter no longer be considered an "Owner Participant".
"OWNER PARTICIPANT AGREEMENTS" means, collectively, the Participation
Agreement, the Tax Indemnity Agreement, the Trust Agreement and each other
agreement between Owner Participant and any other party to the Participation
Agreement relating to the Transactions, delivered on the Delivery Date.
"OWNER PARTICIPANT'S PERCENTAGE" means the percentage of Lessor's Cost
allocated to the Owner Participant in Schedule 2 to the Participation Agreement.
"OWNER TRUSTEE" means Bank, not in its individual capacity, except as
expressly provided in any Operative Agreement, but solely as Owner Trustee under
the Trust Agreement.
"OWNER TRUSTEE AGREEMENTS" means, collectively, the Participation
Agreement, the Lease, Lease Supplement No. 1, the Trust Agreement, the Trust
Indenture, the initial Trust Indenture Supplement, the Equipment Notes, the
Purchase Agreement Assignment, and each other agreement between Owner Trustee
and any other party to the Participation Agreement, relating to the
Transactions, delivered on the Delivery Date.
"PARTICIPANTS" means, collectively, Owner Participant and each Loan
Participant and "Participant" means Owner Participant or a Loan Participant,
individually.
"PARTICIPATION AGREEMENT" means the Participation Agreement [________]
dated as of [________] among Lessee, Owner Participant, Owner Trustee, the
Applicable Pass Through Trustees, Subordination Agent and Mortgagee.
"PARTS" means all appliances, parts, components, instruments,
appurtenances, accessories, furnishings, seats and other equipment of whatever
nature (other than (a) Engines or engines, and (b) any items leased by Lessee
from a third party other than Lessor)), that may from time to time be installed
or incorporated in or attached or appurtenant to the Airframe or any Engine.
"PASS THROUGH AGREEMENTS" means the Pass Through Trust Agreements, the
Note Purchase Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Liquidity Facilities and the Fee Letters referred
to in Section 2.03 of each of the Liquidity Facilities, PROVIDED, that no
amendment, modification or supplement to, or substitution or replacement of, any
such Fee Letter shall be effective for purposes of any obligation of Lessee,
unless consented to by Lessee.
"PASS THROUGH CERTIFICATES" means the pass through certificates issued by
the Pass Through Trusts (and any other pass through certificates for which such
pass through certificates may be exchanged).
"PASS THROUGH INDEMNITEES" means (i) the Subordination Agent, the Paying
Agent, the Escrow Agent, the Liquidity Provider and the Pass Through Trustees,
(ii) each Affiliate of a person described in the preceding clause (i), (iii) the
respective directors, officers, employees, agents and servants of each of the
persons described in the preceding clauses (i) and (ii) and (iv) the successors
and permitted assigns of the persons described in the preceding clauses (i),
(ii) and (iii).
"PASS THROUGH TRUST" means each of the four separate pass through trusts
created under the Pass Through Trust Agreements.
"PASS THROUGH TRUST AGREEMENT" means each of the four separate Trust
Supplements, together in each case with the Basic Pass Through Trust Agreement,
each dated as of the Issuance Date or, in the case of the Trust Supplement
relating to the Class C Pass Through Trust, the Class C Issuance Date, by and
between the Lessee and Pass Through Trustee, PROVIDED, that, for purposes of any
obligation of Lessee, no amendment, modification or supplement to, or
substitution or replacement of, any such Agreement shall be effective unless
consented to by Lessee.
"PASS THROUGH TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as trustee under each Pass Through Trust Agreement.
"PASS THROUGH TRUSTEE AGREEMENTS" means the Participation Agreement, the
Pass Through Trust Agreements, the Note Purchase Agreement, the Deposit
Agreements, the Escrow Agreements, and the Intercreditor Agreement.
"PAYMENT DATE" means (i) each June 15 and December 15 during the Term,
commencing with the first such date to occur after the Commencement Date, (ii)
the Scheduled Expiration Date and (iii) each Scheduled Renewal Term Expiration
Date, if any.
"PAYMENT DUE RATE" is defined in Schedule 1 to the Lease.
"PAYMENT PERIOD" means each of the consecutive semiannual periods (or
such applicable shorter period ended on the Scheduled Expiration Date and the
first and last Payment Dates of any Renewal Term) during the Term ending on a
Payment Date, the first such period commencing on and including the Commencement
Date.
"PAYING AGENT" means Wilmington Trust Company, as Paying Agent under each
of the Escrow Agreements.
"PERMITTED AIR CARRIER" means (i) any manufacturer of airframes or
aircraft engines, or any Affiliate of a manufacturer of airframes or aircraft
engines, (ii) any Permitted Foreign Air Carrier, (iii) any person approved in
writing by Lessor or (iv) any U.S. Air Carrier.
"PERMITTED COUNTRY" means any country listed on Schedule 5 to the Lease.
"PERMITTED FOREIGN AIR CARRIER" means any air carrier with its principal
executive offices in any Permitted Country and which is authorized to conduct
commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.
"PERMITTED GOVERNMENT ENTITY" means (i) the U.S. Government or (ii) any
Government Entity if the Aircraft is then registered under the laws of the
country of such Government Entity.
"PERMITTED INSTITUTION" means any bank, trust company, insurance company,
financial institution, corporation, firm, partnership, limited liability company
or other organization (other than, without Lessee's consent, a commercial air
carrier, a commercial aircraft operator, a freight forwarder or Affiliate of any
of the foregoing), in each case with a combined capital and surplus or net worth
of at least $50,000,000.
"PERMITTED LIEN" means any Lien described in clauses (a) through (g),
inclusive, of Section 6 of the Lease.
"PERMITTED SUBLEASE" means a sublease permitted under Section 7.2.7 of
the Lease.
"PERMITTED SUBLESSEE" means the sublessee under a Permitted Sublease.
"PERSONS" or "PERSONS" means individuals, firms, partnerships, joint
ventures, trusts, trustees, Government Entities, organizations, associations,
corporations, government agencies, committees, departments, authorities and
other bodies, corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
"PLAN" means any employee benefit plan within the meaning of Section 3(3)
of ERISA, or any plan within the meaning of Section 4975(e)(1) of the Code.
"PRELIMINARY NOTICE" is defined in Section 17.1 of the Lease.
"PTT PERCENTAGE" means, with respect to each Applicable Pass Through
Trustee, the percentage of Lessor's Cost allocated to such Pass Through Trustee
in Schedule 2 to the Participation Agreement.
"PURCHASE AGREEMENT" means the Purchase Agreement [________] between
Airframe Manufacturer and Lessee (including all exhibits thereto, together with
all letter agreements entered into that by their terms constitute part of such
Purchase Agreement), to the extent assigned pursuant to the Purchase Agreement
Assignment.
"PURCHASE AGREEMENT ASSIGNMENT" means the Purchase Agreement and Engine
Warranties Assignment [________], dated as of even date with the Participation
Agreement, between Lessee and Owner Trustee.
"PURCHASE DATE" means the last Business Day of the Base Lease Term or any
Renewal Lease Term, as specified in any Purchase Notice.
"PURCHASE NOTICE" is defined in Section 17.3.1 of the Lease.
"QIB" is defined in Section 2.08 of the Trust Indenture.
"REFUNDING CERTIFICATE" means a certificate of an authorized
representative of Owner Participant delivered pursuant to Section 11.1.1 of the
Participation Agreement, setting forth (a) the Refunding Date and (b) the
following information, subject to the limitations set forth in Section 11 of the
Participation Agreement: (i) the principal amount of debt to be issued by Owner
Trustee on the Refunding Date, (ii) the proposed adjusted debt/equity ratio and
(iii) the proposed revised schedules of Basic Rent, Stipulated Loss Value
percentages and Termination Value percentages, and the proposed Amortization
Schedules, calculated in accordance with Section 3.2.1 of the Lease.
"REFUNDING DATE" means the proposed date on which the outstanding
Equipment Notes will be redeemed and refinanced pursuant to Section 11 of the
Participation Agreement.
"REFUNDING INFORMATION" means the information set forth in the Refunding
Certificate (other than the Refunding Date) as such information may have been
revised by any verification procedures demanded by Lessee pursuant to Section
3.2.1(d) of the Lease.
"REMOVABLE PARTS" is defined in Section D of Annex C to the Lease.
"RENEWAL LEASE TERM" means, collectively, the Fixed Renewal Lease Terms
and the Subsequent Renewal Lease Terms, in each case, if any.
"RENEWAL NOTICE" is defined in Section 17.2.1 of the Lease.
"RENEWAL RENT" for the Aircraft means the rent payable therefor in
respect of a Renewal Lease Term determined pursuant to Section 17.2.2 of the
Lease.
"RENEWAL RENT LIMIT" is defined in Schedule 1 to the Lease.
"RENT" means, collectively, Interim Rent, Basic Rent, Renewal Rent and
Supplemental Rent.
"REPLACEMENT AIRFRAME" means any airframe substituted for the Airframe
pursuant to Section 10 of the Lease.
"REPLACEMENT ENGINE" means an engine substituted for an Engine pursuant
to the Lease.
"RETURN ACCEPTANCE SUPPLEMENT" means a Return Acceptance Supplement,
dated as of the date the Aircraft is returned to Lessor pursuant to Section 5 of
the Lease, by Lessor and Lessee substantially in the form of Exhibit B to the
Lease.
"SCHEDULED DELIVERY DATE" means the expected Delivery Date notified to
each Participant, Owner Trustee and Mortgagee by Lessee pursuant to Section 4.1
of the Participation Agreement, which expected Delivery Date shall be a Business
Day not later than the Commitment Termination Date.
"SCHEDULED EXPIRATION DATE" is defined in Schedule 1 to the Lease.
"SCHEDULED RENEWAL TERM EXPIRATION DATE" means, in the case of the first
Fixed Renewal Lease Term, the second anniversary of the Scheduled Expiration
Date, in the case of the second Fixed Renewal Lease Term, the fourth anniversary
of the Scheduled Expiration Date and, in the case of any Subsequent Renewal
Lease Term, the day preceding the first anniversary of the commencement date of
such Subsequent Renewal Lease Term.
"SEC" means the Securities and Exchange Commission of the United States,
or any Government Entity succeeding to the functions of such Securities and
Exchange Commission.
"SECTION 1110" means 11 U.S.C. ss. 1110 of the Bankruptcy Code or any
successor or analogous section of the federal bankruptcy Law in effect from time
to time.
"SECURED OBLIGATIONS" is defined in Section 2.06 of the Trust Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY" means a "security" as defined in Section 2(1) of the
Securities Act.
"SENIOR HOLDER" is defined in Section 2.14(c) of the Trust Indenture.
"SERIES" means any of Series A-1, Series A-2, Series B, Series C or
Series D.
"SERIES A-1" or "SERIES A-1 EQUIPMENT NOTES" means Equipment Notes issued
under the Trust Indenture and designated as "Series A-1" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series A-1."
"SERIES A-2" or "SERIES A-2 EQUIPMENT NOTES" means Equipment Notes issued
under the Trust Indenture and designated as "Series A-2" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series A-2."
"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" is defined in Schedule 1 to the Lease.
"SLV RATE" is defined in Schedule 1 to the Lease.
"SPECIAL DEFAULT" means (i) the failure by Lessee to pay any amount of
Interim Rent, Basic Rent, Renewal Rent, Stipulated Loss Value or Termination
Value when due or (ii) the occurrence of any Lease Default or Lease Event of
Default referred to in Section 14.5 of the Lease.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division
of the McGraw-Hill Companies, Inc.
"STIPULATED LOSS VALUE" means, with respect to the Aircraft, (a) during
the Base Lease Term, the amount determined by multiplying (i) the percentage set
forth in Schedule 3 to the Lease (as adjusted from time to time in accordance
with Section 3.2.1 of the Lease) opposite the Stipulated Loss Value Date by (ii)
Lessor's Cost and (b) during any Renewal Lease Term, the amount determined
pursuant to Section 17.2.3 of the Lease. Notwithstanding anything to the
contrary in any Operative Agreement, Stipulated Loss Value shall always be
sufficient to pay in full, as of the date of payment thereof (assuming timely
payment of the Equipment Notes prior to such date), the aggregate unpaid
principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.
"STIPULATED LOSS VALUE DATE" means, for any month, the day in such month
specified in Schedule 3 to the Lease or, if such day is not a Business Day, the
immediately succeeding Business Day.
"SUBORDINATION AGENT" means Wilmington Trust Company, as subordination
agent under the Intercreditor Agreement.
"SUBORDINATION AGENT AGREEMENTS" means the Participation Agreement, the
Liquidity Facilities and the Intercreditor Agreement.
"SUBSEQUENT RENEWAL LEASE TERM" means each term for which the Lease is
extended by Lessee, if any, after the second Fixed Renewal Lease Term.
"SUPPLEMENTAL RENT" means, without duplication (a) all amounts,
liabilities, indemnities and obligations (other than Interim Rent, Basic Rent or
Renewal Rent but including Make-Whole Amount, if any) that Lessee assumes or
becomes obligated to or agrees to pay under any Lessee Operative Agreement to or
on behalf of Lessor or any other person, including, without limitation, payments
of Stipulated Loss Value, Termination Value and payments of indemnities under
Section 9 of the Participation Agreement, but excluding any amount as to which
Lessee is obligated to pay a pro rata share pursuant to clause (e) of this
definition, (b) (i) to the extent not payable (whether or not in fact paid)
under Section 6(a) of the Note Purchase Agreement (as originally in effect or
amended with the consent of the Owner Participant), an amount or amounts equal
to the fees payable to the Liquidity 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-1 Equipment Notes, Series
A-2 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-1 Equipment Notes", "Series A-2 Equipment Notes",
"Series B Equipment Notes" and "Series C Equipment Notes" (each as defined in
the Note Purchase Agreement); (ii) (x) the amount equal to interest on any
Downgrade Advance (other than any Applied Downgrade Advance) payable under
Section 3.07 of each Liquidity Facility minus Investment Earnings from such
Downgrade Advance multiplied by (y) the fraction specified in the foregoing
clause (i); (iii) (x) the amount equal to interest on any Non-Extension Advance
(other than any Applied Non-Extension Advance) payable under Section 3.07 of
each Liquidity Facility minus Investment Earnings from such Non-Extension
Advance multiplied by (y) the fraction specified in the forgoing clause (i);
(iv) if any payment default shall have occurred and be continuing with respect
to interest on any Series A-1 Equipment Notes, Series A-2 Equipment Notes,
Series B Equipment Notes or Series C Equipment Notes, (x) the excess, if any, of
(1) an amount equal to interest on any Unpaid Advance, Applied Downgrade Advance
or Applied Non-Extension Advance payable under Section 3.07 of each Liquidity
Facility over (2) the sum of Investment Earnings from any Final Advance plus any
amount of interest at the Payment Due Rate actually payable (whether or not in
fact paid) by Lessee in respect of the overdue scheduled interest on the
Equipment Notes in respect of which such Unpaid Advance, Applied Downgrade
Advance or Applied Non-Extension Advance was made multiplied by (y) a fraction
the numerator of which shall be the then aggregate overdue amounts of interest
on the Series A-1 Equipment Notes, Series A-2 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-1 Equipment Notes", "Series A-2 Equipment Notes", "Series B
Equipment Notes" and "Series C Equipment Notes" (each as defined in the Note
Purchase Agreement) (other than interest becoming due and payable solely as a
result of acceleration of any such "Equipment Notes"); and (v) Lessee's pro rata
share of any other amounts owed to the Liquidity Provider by the Subordination
Agent as borrower under each Liquidity Facility (other than amounts due as
repayment of advances thereunder or as interest on such advances), except to the
extent payable pursuant to clause (i), (ii), (iii) or (iv) above, (c) Lessee's
pro rata share of all compensation and reimbursement of expenses, disbursements
and advances payable by Lessee under the Pass Through Trust Agreements, (d)
Lessee's pro rata share of all compensation and reimbursement of expenses and
disbursements payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions contemplated by the
Intercreditor Agreement, (e) Lessee's pro rata share of any amount payable under
Section 9.1 (and, if attributable thereto, Section 9.5) of the Participation
Agreement to any Pass Through Indemnitee to the extent such amount relates to,
results from or arises out of or in connection with (i) the Pass Through
Agreements or the enforcement of any of the terms of any of the Pass Through
Agreements, (ii) the offer, sale, or delivery or the Pass Through Certificates
or any interest therein or represented thereby or (iii) any breach of or failure
to perform or observe, or any other noncompliance with, any covenant or
agreement or other obligation to be performed by Lessee under any Pass Through
Agreement or the falsity of any representation or warranty of Lessee in any Pass
Through Agreement and (f) in the event Lessee requests any amendment to any
Operative Agreement or Pass Through Agreement, Lessee's pro rata share of all
reasonable fees and expenses (including, without limitation, fees and
disbursements of counsel) of the Escrow Agents and the Paying Agents in
connection therewith payable by the Pass Through Trustees under the Escrow
Agreements. As used herein, "Lessee's pro rata share" means as of any time a
fraction, the numerator of which is the principal balance then outstanding of
Equipment Notes (excluding the Series D Equipment Notes) and the denominator of
which is the aggregate principal balance then outstanding of all "Equipment
Notes" (excluding the "Series D Equipment Notes") (as each such term is defined
in each of the Operative Indentures). For purposes of this definition, the terms
"Applied Downgrade Advance", "Applied Non-Extension Advance", "Cash Collateral
Account", "Downgrade Advance", "Final Advance", "Investment Earnings",
"Non-Extension Advance" and "Unpaid Advance" shall have the meanings specified
in each Liquidity Facility.
"TAX ATTRIBUTE PERIOD" is defined in Section 1(e) of the Tax Indemnity
Agreement.
"TAX INDEMNITEE" means (a) Bank and Owner Trustee, (b) WTC and Mortgagee,
(c) each separate or additional trustee appointed pursuant to the Trust
Agreement or the Trust Indenture, (d) each Participant, (e) the Trust Estate and
the Trust Indenture Estate and (f) the respective successors, assigns, agents
and servants of the foregoing. For purposes of this definition, the term "Owner
Participant" shall include any member of an affiliated group (within the meaning
of Section 1504 of the Code) of which Owner Participant is, or may become, a
member if consolidated, joint or combined returns are filed for such affiliated
group for federal, state or local income tax purposes.
"TAX INDEMNITY AGREEMENT" means the Tax Indemnity Agreement [____], dated
as of even date with the Participation Agreement, between Lessee and Owner
Participant.
"TAXES" means all license, recording, documentary, registration and other
similar fees and all taxes, levies, imposts, duties, charges, assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority, together
with any penalties, additions to tax, fines or interest thereon or additions
thereto.
"TAXING AUTHORITY" means any federal, state or local government or other
taxing authority in the United States, any foreign government or any political
subdivision or taxing authority thereof, any international taxing authority or
any territory or possession of the United States or any taxing authority
thereof.
"TERM" means the term, commencing on the Delivery Date, for which the
Aircraft is leased pursuant to Section 3 of the Lease, and shall include the
Interim Lease Term, the Base Lease Term and, if applicable, any Renewal Lease
Term; PROVIDED that if at the scheduled end of the Term the Aircraft or Airframe
is being used, or was within six (6) months prior thereto being used, by the
U.S. Government pursuant to CRAF, the Term shall be deemed extended for the
period necessary to accommodate usage of the Aircraft or Airframe pursuant to
CRAF plus six months thereafter, and Lessee shall be obligated to pay Basic Rent
with respect to any such period of extension at a semiannual rate equal to the
average of the Basic Rent paid during the Base Lease Term or the applicable
Renewal Lease Term, whichever shall have ended immediately prior to such
extension.
"TERMINATION DATE" means any Payment Date occurring after the fifth
anniversary of the Delivery Date on which the Lease shall terminate in
accordance with Section 9 of the Lease.
"TERMINATION VALUE" means, with respect to the Aircraft, the amount
determined by multiplying (a) the percentage set forth in Schedule 4 to the
Lease (as adjusted from time to time in accordance with Section 3.2.1 of the
Lease) opposite the Termination Value Date by (b) Lessor's Cost. Notwithstanding
anything to the contrary in any Operative Agreement, Termination Value shall
always be sufficient to pay in full, as of the date of payment thereof (assuming
timely payment of the Equipment Notes prior to such date), the aggregate unpaid
principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.
"TERMINATION VALUE DATE" means, for any month, the day in such month
specified in Schedule 4 to the Lease or, if such day is not a Business Day, the
immediately succeeding Business Day.
"TRANSACTIONS" means the transactions contemplated by the Participation
Agreement and the other Operative Agreements.
"TRANSACTION EXPENSES" means: (i) the reasonable and actual fees,
expenses and disbursements incurred in connection with the negotiation,
execution and delivery of the Operative Agreements of (1) Richards, Layton &
Finger, special counsel for Mortgagee and the Loan Participants, such
information to be furnished by Mortgagee and the Subordination Agent, (2) Ray,
Quinney & Nebeker, special counsel for the Owner Trustee under the Trust
Agreement, such information to be furnished by Owner Trustee, and(3) Lytle,
Soule & Curlee, special counsel in Oklahoma City, Oklahoma, such information to
be furnished by Lessee, (ii) all fees, taxes and other charges payable in
connection with the recording or filing of instruments and financing statements,
such information to be furnished by Lessee, (iii) the initial fee and reasonable
and actual disbursements of Owner Trustee under the Trust Agreement, such
information to be furnished by the Owner Trustee, (iv) the initial fee and
reasonable and actual disbursements of Mortgagee under the Trust Indenture, such
information to be furnished by Mortgagee, (v) the fee of the Appraiser with
respect to the appraisal of the Aircraft referred to in Section 5.1.2(xv) of the
Participation Agreement, such information to be furnished by the Owner
Participant, (vi) the reasonable and actual fees, out-of-pocket expenses and
disbursements of special counsel to the Owner Participant (as defined in
Schedule 3 to the Participation Agreement), such information to be furnished by
the Owner Participant, (vii) the equity placement fee and reasonable
disbursements of Lessee's Advisor, such information to be furnished by Lessee
and (viii) an allocable portion of the underwriting fee and other expenses
relating to the public offering of the Pass Through Certificates, such
information to be furnished by Lessee.
"TRANSFER" means the transfer, sale, assignment or other conveyance of
all or any interest in any property, right or interest.
"TRANSFEREE" means a person to which any Owner Participant, Owner Trustee
or any Loan Participant or Note Holder purports or intends to Transfer any or
all of its right, title or interest in the Trust Estate or in its Equipment Note
and the Trust Indenture Estate, respectively, as described in Section 10.1.1(a),
10.1.2 or 10.1.3 (but excluding participants in any participation referred to in
Section 10.1.3), respectively, of the Participation Agreement.
"TRUST" means the trust created by the Trust Agreement.
"TRUST AGREEMENT" means the Trust Agreement [________], dated as of even
date with the Participation Agreement, between Owner Participant and Owner
Trustee.
"TRUST ESTATE" means all estate, right, title and interest of Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement and the Purchase
Agreement including, without limitation, all amounts of Basic Rent and
Supplemental Rent including, without limitation, insurance proceeds and
requisition, indemnity or other payments of any kind for of with respect to the
Aircraft. Notwithstanding the foregoing, "Trust Estate" shall not include any
Excluded Payment.
"TRUST INDENTURE" means the Trust Indenture and Mortgage [_____________],
dated as of even date with the Participation Agreement, between Owner Trustee
and Mortgagee.
"TRUST INDENTURE ESTATE" is defined in the "Granting Clause" of the Trust
Indenture.
"TRUST INDENTURE SUPPLEMENT" means a Trust Indenture and Mortgage
[_____________] Supplement, substantially in the form of Exhibit A to the Trust
Indenture, with appropriate modifications to reflect the purpose for which it is
being used.
"TRUST SUPPLEMENT" means an agreement supplemental to the Basic Pass
Through Trust Agreement pursuant to which (i) a separate trust is created for
the benefit of the holders of the Pass Through Certificates of a class, (ii) the
issuance of the Pass Through Certificates of such class representing fractional
undivided interests in such trust is authorized and (iii) the terms of the Pass
Through Certificates of such class are established.
"UCC" means the Uniform Commercial Code as in effect in any applicable
jurisdiction.
"UNITED STATES" or "U.S." means the United States of America; PROVIDED,
that for geographic purposes, "United States" means, in aggregate, the 50 states
and the District of Columbia of the United States of America.
"U.S. AIR CARRIER" means any United States air carrier that is a Citizen
of the United States holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to chapter 447 of title 49 of the United
States Code for aircraft capable of carrying 10 or more individuals or 6000
pounds or more of cargo, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the FAA Regulations, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provisions therefor or in the absence thereof.
"U.S. PERSON" means any Person described in Section 7701(a)(30) of the
Code.
"U.S. GOVERNMENT" means the federal government of the United States, or
any instrumentality or agency thereof the obligations of which are guaranteed by
the full faith and credit of the federal government of the United States.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, with respect to any specified
Debt, at the time of the determination thereof the number of years obtained by
dividing the then Remaining Dollar-years of such Debt by the then outstanding
principal amount of such Debt. The term "Remaining Dollar-years" shall mean the
amount obtained by (1) multiplying the amount of each then-remaining principal
payment on such Debt by the number of years (calculated at the nearest
one-twelfth) that will elapse between the date of determination of the Weighted
Average Life to Maturity of such Debt and the date of that required payment and
(2) totaling all the products obtained in clause (1) above.
"WET LEASE" means any arrangement whereby Lessee or a Permitted Sublessee
agrees to furnish the Aircraft, Airframe or any Engine to a third party pursuant
to which the Aircraft, Airframe or Engine shall at all times be in the
operational control of Lessee or a Permitted Sublessee, provided that Lessee's
obligations under this Lease shall continue in full force and effect
notwithstanding any such arrangement.
"WTC" means Wilmington Trust Company, a Delaware banking corporation, not
in its capacity as Mortgagee under the Trust Indenture, but in its individual
capacity.
-------------------------
SCHEDULE 1
TO
PARTICIPATION AGREEMENT
-------------------------
ACCOUNTS; ADDRESSES
ACCOUNT FOR PAYMENTS ADDRESS FOR NOTICES
-------------------- -------------------
CONTINENTAL AIRLINES, INC. The Chase Manhattan Bank Continental Airlines, Inc.
New York, New York 10081 1600 Smith Street
Account No.: 910-2-499291 Dept. HQS-FN
ABA#: 021-000021 Houston, Texas 77002
Attention: Darlene Cafferata Attention: Senior Vice
Voice: 312-807-4084 President - Finance
Facsimile: 312-807-4501 Facsimile: (713) 324-2447
Reference: Continental
Lease [_____]
OWNER PARTICIPANT [_____] [_____]
THE BOEING COMPANY The Chase Manhattan Bank The Boeing Company
New York, New York 10081 P.O. Box 3707
Account No.: 910-1-012764 Seattle, Washington 98124-
ABA#: 021-000021 3707
Attention: Paul Trupia Attention: Treasurer
Voice: 212-552-2829 M/S 68-34
Facsimile: 212-552-0107 Facsimile: (206) 237-8746
Reference: Continental
Lease [_____]
WELLS FARGO BANK Wells Fargo Bank Northwest, Wells Fargo Bank Northwest,
NORTHWEST, NATIONAL National Association National Association
ASSOCIATION 79 South Main Street 79 South Main Street
Salt Lake City, Utah 84111 Salt Lake City, Utah 84111
Account No.: 051-0922115 Attention: Corporate Trust
Corporate Trust Department Department
ABA#: 124-0000-12 Facsimile: (801) 246-5053
Reference: Continental
Lease[____]
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS MORTGAGEE New York, New York 10081 Rodney Square North
Account No.: 920-1-014363 1100 North Market Street
ABA#: 021-000021 Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Continental Facsimile: (302) 651-8882
Lease [____]
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS SUBORDINATION AGENT New York, New York 10081 Rodney Square North
Account No.: 920-1-014363 1100 North Market Street
ABA#: 021-000021 Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Continental Facsimile: (302) 651-8882
Lease [___]
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE New York, New York 10081 Rodney Square North
FOR THE 2001-1A-1 PASS Account No.: 920-1-014363 1100 North Market Street
THROUGH TRUST ABA#: 021-000021 Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Continental Facsimile: (302) 651-8882
Lease [___]
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE New York, New York 10081 Rodney Square North
FOR THE 2001-1A-2 PASS Account No.: 920-1-014363 1100 North Market Street
THROUGH TRUST ABA#: 021-000021 Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Continental Facsimile: (302) 651-8882
Lease [___]
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE New York, New York 10081 Rodney Square North
FOR THE 2001-1B PASS Account No.: 920-1-014363 1100 North Market Street
THROUGH TRUST ABA#: 021-000021 Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Continental Facsimile: (302) 651-8882
Lease [___]
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE New York, New York 10081 Rodney Square North
FOR THE 2001-1C PASS Account No.: 920-1-014363 1100 North Market Street
THROUGH TRUST ABA#: 021-000021 Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Continental Facsimile: (302) 651-8882
Lease [___]
-------------------------
SCHEDULE 2
TO
PARTICIPATION AGREEMENT
-------------------------
COMMITMENTS
PARTICIPANT PERCENTAGE OF LESSOR'S DOLLAR AMOUNT
- ----------- ---------------------- -------------
COST
----
OWNER PARTICIPANT OWNER PARTICIPANT'S
PERCENTAGE
PASS THROUGH TRUSTEE LOAN PARTICIPANT'S
PTT PERCENTAGE
TOTAL 100%
-------------------------
SCHEDULE 3
TO
PARTICIPATION AGREEMENT
-------------------------
CERTAIN TERMS
DEFINED TERM DEFINITION
BFE Amount [______________]
Commitment Termination Date [______________]
Lessor's Cost [______________]
Lessee's Advisor
OP Jurisdiction [______________]
Special counsel to the Owner
Participant [______________]
-------------------------------------------------------------------------
CONFIDENTIAL: ANNEXES B, C AND D AND SCHEDULES 1, 2, 3 AND 4 OF THIS
LEASE AGREEMENT ARE SUBJECT TO RESTRICTIONS ON DISSEMINATION
SET FORTH IN SECTION 8 OF THE PARTICIPATION AGREEMENT (AS DEFINED HEREIN)
-------------------------------------------------------------------------
================================================================================
LEASE AGREEMENT [______]
Dated as of [_______________]
Between
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Lessor
and
CONTINENTAL AIRLINES, INC.,
Lessee
- --------------------------------------------------------------------------------
One Boeing Model [737-824] [737-924]
[767-424] [777-224] Aircraft
Bearing United States Registration No. N[______] and
Bearing Manufacturer's Serial No. [______] with two
[CFM MODEL 56-7B26]
[GE MODEL CF6-80C2B8F] [GE MODEL GE90] Engines
Bearing Engine Manufacturer's Serial Nos. [______] and [______]
================================================================================
THE RIGHT, TITLE AND INTEREST OF LESSOR IN AND TO, AMONG OTHER THINGS,
THIS LEASE AGREEMENT HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST
IN FAVOR OF WILMINGTON TRUST COMPANY, A DELAWARE BANKING CORPORATION, AS
MORTGAGEE, UNDER THE TRUST INDENTURE AND MORTGAGE [______], DATED AS OF
[_______________], FOR THE BENEFIT OF THE HOLDERS OF THE EQUIPMENT NOTES
REFERRED TO IN SUCH TRUST INDENTURE, ALL TO THE EXTENT PROVIDED IN SUCH TRUST
INDENTURE. THIS LEASE AGREEMENT HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS; TO
THE EXTENT, IF ANY, THAT THIS LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS
DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN LESSOR'S RIGHT, TITLE AND INTEREST IN AND
TO THIS LEASE AGREEMENT MAY BE PERFECTED THROUGH THE DELIVERY OR POSSESSION OF
ANY COUNTERPART OF THIS LEASE AGREEMENT OTHER THAN THE COUNTERPART OF THIS LEASE
AGREEMENT THAT CONTAINS THE ORIGINAL RECEIPT EXECUTED BY WILMINGTON TRUST
COMPANY, AS MORTGAGEE.
CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION..............................1
SECTION 2. DELIVERY AND ACCEPTANCE...................................1
2.1 Delivery and Lease of Aircraft............................1
2.2 Acceptance by Lessee......................................2
SECTION 3. TERM AND RENT.............................................2
3.1 Term......................................................2
3.2 Rent......................................................2
3.3 Payments..................................................6
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR;
SECTION 1110 MATTERS......................................6
4.1 Disclaimer................................................7
4.2 Certain Agreements of Lessor..............................7
4.3 Quiet Enjoyment...........................................7
4.4 Investment of Funds Held as Security......................8
4.5 Title Transfers by Lessor.................................8
4.6 Lessor's Interest in Certain Engines......................9
4.7 Lease For U.S. Federal Income Tax Law
Purposes; Section 1110 of Bankruptcy Code................10
SECTION 5. RETURN OF AIRCRAFT.......................................10
5.1 Compliance with Annex B..................................10
5.2 Storage and Related Matters..............................10
5.3 Return of Other Engines..................................11
5.4 Fuel.....................................................11
SECTION 6. LIENS....................................................11
SECTION 7. REGISTRATION, OPERATION, POSSESSION,
SUBLEASING AND RECORDS...................................12
7.1 Registration and Operation...............................12
7.2 Possession...............................................14
7.3 Certain Limitations on Subleasing or Other
Relinquishment of Possession.............................18
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF
PARTS; ALTERATIONS, MODIFICATIONS AND
ADDITIONS; OTHER LESSEE COVENANTS.........................19
8.1 Maintenance; Replacement and Pooling of
Parts; Alterations, Modifications and
Additions.................................................19
8.2 Information, Certificates, Notices and
Reports...................................................19
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE...................21
9.1 Right of Termination......................................21
9.2 Election by Lessor to Sell................................21
9.3 Retention of Aircraft by Lessor...........................24
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.......................26
10.1 Event of Loss With Respect to Aircraft....................26
10.2 Event of Loss With Respect to an Engine...................28
10.3 Conditions to any Replacement.............................29
10.4 Conveyance to Lessee......................................31
10.5 Application of Payments...................................31
10.6 Requisition of Aircraft for Use...........................32
10.7 Requisition of an Engine for Use..........................33
10.8 Application of Payments...................................33
10.9 Application of Payments During Existence of
a Lease Event of Default..................................33
SECTION 11. INSURANCE.................................................34
11.1 Lessee's Obligation to Insure.............................34
11.2 Insurance for Own Account.................................34
11.3 Indemnification by Government in Lieu of
Insurance.................................................34
11.4 Application of Insurance Proceeds.........................35
11.5 Application of Payments During Existence of
Lease Event of Default....................................35
SECTION 12. INSPECTION................................................35
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE...............36
13.1 In General................................................36
13.2 Merger of Lessee..........................................36
13.3 Assignment Security for Lessor's
Obligations...............................................37
13.4 Successor Owner Trustee...................................38
SECTION 14. LEASE EVENTS OF DEFAULT...................................38
14.1 Payments..................................................38
14.2 Insurance.................................................39
14.3 Other Covenants...........................................39
14.4 Representations and Warranties............................39
14.5 Bankruptcy and Insolvency.................................40
SECTION 15. REMEDIES AND WAIVERS......................................40
15.1 Remedies..................................................40
15.2 Limitations Under CRAF....................................44
15.3 Right to Perform for Lessee...............................44
15.4 Determination of Fair Market Rental Value
and Fair Market Sales Value...............................45
15.5 Remedies Cumulative.......................................45
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF,
COUNTERCLAIM, ETC.........................................46
SECTION 17. RENEWAL AND PURCHASE OPTIONS..............................46
17.1 Notices Generally.........................................46
17.2 Renewal Options...........................................47
17.3 Purchase Option...........................................49
17.4 Appraisals................................................50
SECTION 18. MISCELLANEOUS.............................................51
18.1 Amendments................................................51
18.2 Severability..............................................51
18.3 Third-Party Beneficiary...................................51
18.4 Reproduction of Documents.................................52
18.5 Counterparts..............................................52
18.6 Notices...................................................52
18.7 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE.....................................................53
18.8 No Waiver.................................................54
18.9 Entire Agreement..........................................54
ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A Definitions
ANNEX B Return Conditions
ANNEX C Maintenance
ANNEX D Insurance
EXHIBIT A Form of Lease Supplement
EXHIBIT B Form of Return Acceptance Supplement
SCHEDULE 1 Certain Terms
SCHEDULE 2 Basic Rent
SCHEDULE 3 Stipulated Loss Value Schedule
SCHEDULE 4 Termination Value Schedule
SCHEDULE 5 Permitted Countries
SCHEDULE 6 Placards
LEASE AGREEMENT [______]
LEASE AGREEMENT [______], dated as of [_______________] (this "Agreement"
or "Lease"), between (a) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
expressly provided herein, but solely as Owner Trustee (this and all other
capitalized terms used but not defined herein shall have the respective meanings
ascribed thereto in Section 1 below) ("Lessor" or "Owner Trustee"), and (b)
CONTINENTAL AIRLINES, INC., a Delaware corporation ("Lessee").
RECITALS
A. Lessor and Lessee are parties to the Participation Agreement, pursuant
to which, among other things, Lessor and Lessee have agreed to enter into this
Agreement.
B. Pursuant to the Trust Agreement, Owner Participant has authorized
Lessor to enter into this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed and
interpreted in the manner described, in Annex A.
SECTION 2. DELIVERY AND ACCEPTANCE
2.1 DELIVERY AND LEASE OF AIRCRAFT
Lessor hereby agrees (subject to the satisfaction or waiver of the
conditions set forth in Section 5 of the Participation Agreement) to lease to
Lessee for the Term and Lessee hereby agrees (subject to the satisfaction or
waiver of the conditions set forth in Section 5 of the Participation Agreement)
to lease from Lessor for the Term, the Aircraft, commencing immediately upon
acquisition of the Aircraft by Lessor pursuant to the Purchase Agreement
Assignment.
2.2 ACCEPTANCE BY LESSEE
(a) By executing and delivering Lease Supplement No. 1, Lessee confirms to
Lessor that Lessee has duly and irrevocably accepted delivery of the Aircraft
for all purposes of this Agreement.
(b) Lessor has authorized one or more employees of Lessee, designated by
Lessee in writing, as the authorized representative or representatives of Lessor
to accept delivery of the Aircraft on behalf of Lessor pursuant to the Purchase
Agreement Assignment and the Participation Agreement. Lessee hereby agrees that
if delivery of the Aircraft shall be accepted by an employee or employees of
Lessee pursuant to such authorization by Lessor, such acceptance of delivery by
such employee or employees on behalf of Lessor shall, without further act,
irrevocably constitute acceptance by Lessee of the Aircraft for all purposes of
this Agreement.
SECTION 3. TERM AND RENT
3.1 TERM
The Aircraft shall be leased hereunder for the Term, unless this Agreement
or the leasing of the Aircraft is earlier terminated in accordance with any
provision of this Agreement. Lessee shall have the option to renew the leasing
of the Aircraft hereunder pursuant to, and subject to the terms and conditions
of, Section 17, for the Renewal Lease Term.
3.2 RENT
3.2.1 INTERIM RENT; BASIC RENT; ADJUSTMENTS TO
BASIC RENT AND CERTAIN OTHER AMOUNTS
(a) Lessee shall pay Interim Rent to Lessor on the last day of the Interim
Lease Term, which shall be allocated to the Interim Lease Term. During the Base
Lease Term, Lessee shall pay to Lessor, on each Payment Date, Basic Rent in the
amount equal to the percentage of Lessor's Cost specified in Schedule 2 for such
Payment Date, which shall be allocated to the Payment Period ending on such
Payment Date, if designated as a payment in arrears, or allocated to the Payment
Period commencing on such Payment Date, if designated as a payment in advance,
in each case as specified in Schedule 2, as such amount may be adjusted pursuant
to Section 3.2.1(b).
(b) Basic Rent, Stipulated Loss Values and Termination Values, shall be
subject to adjustment as follows:
(i) In the event that Transaction Expenses paid by Lessor pursuant
to Section 9.2 of the Participation Agreement are determined to be other
than 1.0% of Lessor's Cost, then in each case the Basic Rent percentages
set forth in Schedule 2, Stipulated Loss Value percentages set forth in
Schedule 3 and the Termination Value percentages set forth in Schedule 4
shall be recalculated (upwards or downwards) by the Owner Participant, on
or prior to the 120th day after the Delivery Date using the same methods
and assumptions used to calculate original Basic Rent, Stipulated Loss
Value and Termination Value percentages in order to (1) maintain the Owner
Participant's Net Economic Return and (2) minimize the Net Present Value
of Rents to Lessee to the extent possible consistent with clause (1)
hereof.
(ii) In the event of a refinancing as contemplated by Section 11 of
the Participation Agreement, then the Basic Rent percentages set forth in
Schedule 2, Stipulated Loss Value percentages set forth in Schedule 3 and
the Termination Value percentages set forth in Schedule 4 shall be
recalculated (upwards and downwards) by the Owner Participant as
contemplated by such Section to (1) maintain the Owner Participant's Net
Economic Return and (2) to the extent possible consistent with clause (1)
hereof, minimize the Net Present Value of Rents to Lessee.
(iii) In the event that Lessee is required to indemnify the Owner
Participant under the Tax Indemnity Agreement, then (A) in the event that
the Lessee agrees to satisfy such indemnity obligation pursuant to Section
__ of the Tax Indemnity Agreement, the Basic Rent percentages set forth in
Schedule 2, and (B) in any event, the Stipulated Loss Value percentages
set forth in Schedule 3 and the Termination Value percentages set forth in
Schedule 4 shall be recalculated (upwards or downwards) by Owner
Participant, using the same methods and assumptions (except to the extent
such assumptions shall be varied to take into account the Tax Loss or
Foreign Tax Credit Loss (as each such term is defined in the Tax Indemnity
Agreement) that is the subject of such indemnification and any prior or
contemporaneous Tax Loss or Foreign Tax Credit Loss) used to calculate the
Basic Rent percentages, the Stipulated Loss Value percentages and the
Termination Value percentages on the Delivery Date, in order to (1)
maintain the Owner Participant's Net Economic Return and (2) to the extent
possible consistent with clause (1) hereof, minimize the Net Present Value
of Rents to Lessee.
(c) All adjustments pursuant to Section 3.2.1(b) shall be made as promptly
as practicable after either Owner Participant or Lessee gives notice to the
other that an event has occurred that requires an adjustment. Owner Participant
and Lessee shall give prompt notice to the other of any event requiring an
adjustment. Any recalculation of the percentages of Basic Rent, Stipulated Loss
Value and Termination Value shall be prepared by Owner Participant, subject to
verification at the request of Lessee in accordance with this Section 3.2.1(c),
on the basis of the same methodology and assumptions used by Owner Participant
in determining the percentages of Basic Rent, Stipulated Loss Value and
Termination Value as of the Delivery Date, except as such assumptions have been
modified to reflect the events giving rise to adjustments hereunder. Promptly
after an adjustment is made hereunder, Owner Participant shall deliver to Lessee
a description of such adjustment, setting forth in reasonable detail the
calculation thereof. All adjustments shall (i) be made so as to avoid
characterization of the Lease as a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code unless such adjustments
are made in a manner that reflects the effect of such characterization and (ii)
be in compliance with the requirements of Sections 4.02(5), 4.07(l) and, on a
prospective basis, 4.08(1) of Revenue Procedure 75-28, except to the extent that
on the Delivery Date the Lease constituted a "disqualified leaseback or
long-term agreement" or was not in compliance with the regulations referred to
in clause (ii). All adjustments required pursuant to Section 3.2.1(b) shall be
set forth in a Lease Supplement or in an amendment to this Lease, and promptly
after execution thereof by Lessor and Lessee, Lessee shall give a copy thereof
to Mortgagee.
(d) If Lessee believes that any calculations by Owner Participant pursuant
to Section 3.2.1(c) are in error, and if, after consultation, Lessee and Owner
Participant are unable to agree on an adjustment, then a nationally recognized
firm of accountants selected by Lessee and reasonably satisfactory to Owner
Participant shall verify such calculations. Owner Participant will make
available to such firm, but not, in any circumstances, to Lessee or any
representative of Lessee, the methodology and assumptions referred to in Section
3.2.1(c) and any modifications thereto made to reflect the events giving rise to
adjustments hereunder (subject to the execution by such firm of a
confidentiality agreement, reasonably acceptable to Owner Participant,
prohibiting disclosure of such methodology and assumptions to any third party).
The determination by such firm of accountants shall be final. Lessee will pay
the reasonable costs and expenses of such further verification by such
accountants, provided that if it results in a decrease in Basic Rent which
decreases the remaining Net Present Value of Rents by ten or more basis points
from the remaining Net Present Value of Rents as recalculated by the Owner
Participant, then the Owner Participant will pay such costs and expenses.
(e) Notwithstanding anything to the contrary in any Operative Agreement,
the amount of the payment of Basic Rent due and payable on each Payment Date
shall be at least sufficient to pay in full, as of such Payment Date (assuming
timely payment of the Equipment Notes prior to such Date), the aggregate
principal amount of scheduled installments due on the Equipment Notes
outstanding on such Payment Date, together with the accrued and unpaid interest
thereon, due on such Payment Date in respect of the Equipment Notes; provided,
however, that no installment of Basic Rent shall be increased to the extent such
increase would be based upon (i) any attachment or diversion of Basic Rent on
account of Lessor Liens, (ii) any modification of the payment terms of the
Equipment Notes, other than as required or permitted by any Operative Agreement
(including, without limitation, as permitted upon the occurrence of a Lease
Event of Default) or (iii) the acceleration of any Equipment Note or Equipment
Notes due solely to the occurrence of an Indenture Event of Default that does
not constitute a Lease Event of Default.
3.2.2 SUPPLEMENTAL RENT
Lessee shall pay to Lessor, or to whosoever shall be entitled thereto, any
and all Supplemental Rent when and as the same shall become due and owing.
Lessee will also pay to Lessor, or to whosoever shall be entitled thereto as
Supplemental Rent, to the extent permitted by applicable Law, interest at the
Payment Due Rate on any part of any amount of Rent (including, without
limitation, Supplemental Rent) not paid by 12:30 p.m., New York time, on the
date when due (so long as, in the case of any person not a party to the
Participation Agreement, Lessee had received timely notice of the account to
which such payment was required to be made), for the period from and including
the date on which the same was due to, but excluding, the date of payment in
full.
3.3 PAYMENTS
(a) Payments of Rent by Lessee shall be paid by wire transfer of
immediately available Dollars, not later than 12:30 p.m., New York time, on the
date when due, to the account of Lessor specified in Schedule 1 to the
Participation Agreement or to such other account in the United States as
directed by Lessor to Lessee in writing at least 10 Business Days prior to the
date such payment of Rent is due or, in the case of any payment of Supplemental
Rent expressly payable to a person other than Lessor, to the person that shall
be entitled thereto to such account in the United States as such person may
specify from time to time to Lessee at least 10 Business Days prior to the date
such payment of Rent is due.
(b) Except as otherwise expressly provided herein, whenever any payment of
Rent shall be due on a day that is not a Business Day, such payment shall be
made on the next day that is a Business Day, and, if such payment is made on
such next Business Day, no interest shall accrue on the amount of such payment
during such extension.
(c) So long as Lessee has not received written notice from the Mortgagee
that the Lien of the Trust Indenture has been discharged, and notwithstanding
Section 3.3(a), Lessor hereby directs, and Lessee agrees, that all payments of
Rent and all other amounts payable by Lessee hereunder, other than Excluded
Payments, shall be paid directly to Mortgagee on behalf of Lessor by wire
transfer of immediately available Dollars to the account of Mortgagee specified
in Schedule 1 to the Participation Agreement, or to such other account in the
United States as Mortgagee may specify by written notice to Lessor and Lessee at
least 10 Business Days prior to the date such payment of Rent is due.
(d) Excluded Payments shall be paid by wire transfer of immediately
available Dollars to the account of the person specified in the Participation
Agreement or, if not so specified, to such account in the United States as may
be specified by such person by written notice to Lessor and Lessee from time to
time at least 10 Business Days prior to the date such payment is required to be
made.
(e) All computations of interest under this Agreement shall be made on the
basis of a year of 360 days comprised of twelve 30-day months.
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION
1110 MATTERS
4.1 DISCLAIMER
LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS." LESSEE
ACKNOWLEDGES AND AGREES THAT AS BETWEEN LESSEE AND EACH OF LESSOR, MORTGAGEE AND
ANY PARTICIPANT (i) LESSEE HAS SELECTED THE AIRCRAFT AND MANUFACTURER THEREOF
AND (ii) NONE OF LESSOR, MORTGAGEE AND ANY PARTICIPANT MAKES, HAS MADE OR SHALL
BE DEEMED TO HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED,
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO:
(v) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY PARTICULAR
PURPOSE OF THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(w) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE
AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(x) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY
ENGINE OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE;
(y) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR THE LIKE; OR
(z) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF.
4.2 CERTAIN AGREEMENTS OF LESSOR
Unless a Lease Event of Default shall have occurred and be continuing,
Lessor agrees to make available to Lessee such rights as Lessor may have under
any warranty with respect to the Aircraft made, or made available, by Airframe
Manufacturer or Engine Manufacturer or any of their respective subcontractors or
suppliers, as the case may be, pursuant to and in accordance with the terms of
the Purchase Agreement Assignment.
4.3 QUIET ENJOYMENT
So long as no Lease Event of Default shall have occurred and be
continuing, Lessor shall not interfere with Lessee's rights hereunder to
continued possession, use and operation of, and quiet enjoyment of, the Aircraft
during the Term.
4.4 INVESTMENT OF FUNDS HELD AS SECURITY
4.4.1 INVESTMENT
Any moneys required to be paid to or retained by Lessor that are required
to be paid to Lessee or applied as provided herein shall, until paid to Lessee
as provided herein or applied as provided herein, be invested by Lessor from
time to time as directed in writing by Lessee (or, if Lessee fails to so direct,
by or as directed by Lessor in its sole discretion) and at the expense and risk
of Lessee in Cash Equivalents so long as such Cash Equivalents specified by
Lessee or Lessor, as the case may be, can be acquired by Lessor using its best
efforts; provided, that so long as the Lien of the Trust Indenture shall not
have been discharged, such moneys shall be invested and held by Mortgagee, as
assignee of Lessor, in accordance with this Lease and upon discharge of such
Lien, Mortgagee shall pay any such money held by it to Lessor to be held and
invested in accordance with this Section.
4.4.2 PAYMENT OF GAIN OR LOSS
Any net gain (including interest received) realized as the result of
investments pursuant to Section 4.4.1 (net of any fees, commissions and other
reasonable expenses, if any, incurred in connection with such investment) shall
be held and applied in the same manner as the principal amount is to be held and
applied hereunder. Lessee will promptly pay to Lessor, on demand, the amount of
any loss realized as the result of any such investment (together with any fees,
commissions and other reasonable expenses, if any, incurred in connection with
such investment), such amount so paid to be held and applied by Lessor as
contemplated in Section 4.4.1 above.
4.4.3 LIMITATION OF LIABILITY
All investments under this Section 4.4 shall be at the expense and risk of
Lessee, and Lessor and Mortgagee shall not be liable for any loss resulting from
any investment made under this Section 4.4 other than by reason of its willful
misconduct or gross negligence. Any such investment may be sold (without regard
to its maturity) by Lessor without instructions whenever such sale is necessary
to make a distribution required by this Lease.
4.5 TITLE TRANSFERS BY LESSOR
If Lessor shall be required to transfer title to the Aircraft, Airframe or
any Engine to Lessee or any other person pursuant to this Lease, then (a) Lessor
shall (1) transfer to Lessee or such other person, as the case may be, all of
Lessor's right, title and interest in and to the Aircraft, Airframe or such
Engine, as the case may be, free and clear of all Lessor Liens, (2) so long as
the Lien of the Trust Indenture has not been discharged, comply with the Trust
Indenture relating to the release of the Aircraft, Airframe or such Engine, (3)
assign to Lessee or such other person, as the case may be, if and to the extent
permitted under the Purchase Agreement, all warranties of Airframe Manufacturer
and Engine Manufacturer with respect to the Aircraft, Airframe or such Engine,
and (4) assign to Lessee or such other person, as the case may be, if and to the
extent permitted, all claims, if any, for damage to the Aircraft, Airframe or
such Engine, in each case free of Lessor Liens, and without recourse or warranty
of any kind whatsoever (except as to the transfer described in clause (1) above
and as to the absence of such Lessor Liens, as aforesaid), and (b) Lessor shall
promptly deliver to Lessee or such other person, as the case may be, a bill of
sale and agreements of assignment, evidencing such transfer and assignment, and
such other instruments of transfer, all in form and substance reasonably
satisfactory to Lessee (or such other person, as the case may be), as Lessee (or
such other person, as the case may be) may reasonably request.
4.6 LESSOR'S INTEREST IN CERTAIN ENGINES
Lessor hereby agrees for the benefit of each lessor, conditional seller,
indenture trustee or secured party of any engine leased to, or purchased by,
Lessee or any Permitted Sublessee subject to a lease, conditional sale, trust
indenture or other security agreement that Lessor, its successors and assigns
will not acquire or claim, as against such lessor, conditional seller, indenture
trustee or secured party, any right, title or interest in any engine as the
result of such engine being installed on the Airframe at any time while such
engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such indenture trustee or
secured party.
4.7 LEASE FOR U.S. FEDERAL INCOME TAX LAW PURPOSES; SECTION 1110 OF
BANKRUPTCY CODE
(a) Lessee and Lessor agree that this Lease is, and shall be treated as, a
lease for U.S. federal income tax purposes of the Aircraft, Airframe, Engines
and Parts.
(b) It is the intention of each of Lessee and Lessor that Lessor (and
Mortgagee as assignee of Lessor under the Trust Indenture) shall be entitled to
the benefits of Section 1110 with respect to the right to take possession of the
Aircraft, Airframe, Engines and Parts and to enforce any of its other rights or
remedies as provided in this Lease.
SECTION 5. RETURN OF AIRCRAFT
5.1 COMPLIANCE WITH ANNEX B
Lessee shall comply with each of the provisions of Annex B hereto, which
provisions are hereby incorporated by this reference as if set forth in full
herein.
5.2 STORAGE AND RELATED MATTERS
If Lessor gives written notice to Lessee not less than 60 days nor more
than 120 days prior to the end of the Term requesting storage of the Aircraft
upon its return hereunder, Lessee will provide Lessor, or cause Lessor to be
provided, with outdoor parking facilities for the Aircraft for a period up to 30
days, commencing on the date of such return, and upon request of Lessor to
Lessee made at least 10 days prior to the end of such initial 30 day period, for
an additional 30 day period commencing upon expiration of such initial period,
at such storage facility in the 48 contiguous states of the United States as
Lessee may select. Lessee shall, at Lessor's written request, maintain insurance
(if available) for the Aircraft during such storage period, PROVIDED that Lessor
shall reimburse Lessee for Lessee's out-of-pocket cost of providing such
insurance. Such storage shall be at Lessor's risk, and Lessor shall pay all
applicable storage fees, except that Lessee shall pay the parking fees for the
initial 30 day storage period; PROVIDED that Lessee's obligation to provide
parking shall be subject to Lessor entering into an agreement prior to the
commencement of the storage period with the storage facility providing, among
other things, that Lessor shall bear all maintenance charges and other costs
(other than parking fees for the initial 30 day period) incurred.
5.3 RETURN OF OTHER ENGINES
In the event that any Engine owned by Lessor shall not be installed on the
Airframe at the time of return hereunder, Lessee shall be required to return the
Airframe hereunder with a Replacement Engine meeting the requirements of, and in
accordance with, Section 10 hereof and Annex B hereto. Thereupon, Lessor will
transfer to Lessee the Engine constituting part of such Aircraft but not
installed on such Airframe at the time of the return of the Airframe.
5.4 FUEL
Upon the return of the Airframe upon any termination of this Lease, Lessor
shall pay Lessee, as compensation for any fuel or oil contained in the fuel or
oil tanks of such Airframe, the value of such fuel or oil at the price paid by
Lessee for such fuel or oil, PROVIDED that if the Aircraft is being returned in
connection with the exercise of remedies pursuant to Section 15, Lessor shall
have no obligation to make such payment to Lessee until Lessor shall have been
paid all amounts due to it pursuant to Section 15.
SECTION 6. LIENS
Lessee shall not, directly or indirectly, create, incur, assume or suffer
to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine
or any Part, title to any of the foregoing or any interest of Lessee therein, or
the Lessee's rights in and to this Lease or any Permitted Sublease, except (a)
the respective rights of Lessor, Mortgagee, the Participants or Lessee under the
Operative Agreements, or of any Permitted Sublessee under any Permitted
Sublease; (b) Lessor Liens; (c) the rights of others under agreements or
arrangements to the extent permitted by the terms of Sections 7.2 and 7.3 or
Annex C; (d) Liens for Taxes of Lessee (and its U.S. federal tax law
consolidated group), or Liens for Taxes of any Tax Indemnitee (and its U.S.
federal tax law consolidated group) for which Lessee is obligated to indemnify
such Tax Indemnitee under any of the Lessee Operative Agreements, in any such
case either not yet due or being contested in good faith by appropriate
proceedings so long as such Liens and such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Aircraft, the Airframe, any
Engine or the interest of any Participant therein or impair the lien of the
Trust Indenture; (e) materialmen's, mechanics', workers', repairers', employees'
or other like Liens arising in the ordinary course of business for amounts the
payment of which is either not yet delinquent for more than 60 days or is being
contested in good faith by appropriate proceedings, so long as such Liens and
such proceedings do not involve any material risk of the sale, forfeiture or
loss of the Aircraft, the Airframe, any Engine or the interest of any
Participant therein or impair the lien of the Trust Indenture; (f) Liens arising
out of any judgment or award against Lessee (or against any Permitted
Sublessee), so long as such judgment shall, within 60 days after the entry
thereof, have been discharged or vacated, or execution thereof stayed pending
appeal or shall have been discharged, vacated or reversed within 60 days after
the expiration of such stay, and so long as during any such 60-day period there
is not, or any such judgment or award does not involve, any material risk of the
sale, forfeiture or loss of the Aircraft, the Airframe, any Engine or the
interest of any Participant therein or impair the lien of the Trust Indenture,
and (g) any other Lien with respect to which Lessee (or any Permitted Sublessee)
shall have provided a bond, cash collateral or other security adequate in the
reasonable opinion of Lessor. Lessee shall promptly take (or cause to be taken)
such action as may be necessary duly to discharge (by bonding or otherwise) any
Lien not excepted above if the same shall at any time arise in respect of the
Aircraft, the Airframe, any Engine or any Part during the Term.
SECTION 7. REGISTRATION, OPERATION, POSSESSION, SUBLEASING
AND RECORDS
7.1 REGISTRATION AND OPERATION
7.1.1 REGISTRATION AND RECORDATION
Subject to the compliance by Lessor and Owner Participant with their
respective obligations under Section 13 of the Participation Agreement, Lessee
shall cause the Aircraft to be, and at all times during the Term to remain, duly
registered with the FAA under the Act or with such other country of registry as
shall be permitted under Section 7.1.2 below, in the name of Lessor as owner and
lessor (except to the extent that such registration under the Act cannot be
effected with the FAA because of Lessor's or Owner Participant's failure to
comply with the citizenship requirements for registration of the Aircraft under
the Act). Lessor shall execute and deliver all such documents as Lessee (or any
Permitted Sublessee) may reasonably request for the purpose of effecting and
continuing such registration. Unless Mortgagee has given Lessee notice that the
Trust Indenture has been discharged, Lessee shall also cause the Trust Indenture
to be duly recorded and at all times maintained of record as a first-priority
perfected mortgage (subject to Permitted Liens) on the Aircraft, the Airframe
and each of the Engines (except to the extent such perfection or priority cannot
be maintained solely as a result of the failure by Lessor or Mortgagee to
execute and deliver any necessary documents).
7.1.2 REREGISTRATION
So long as no Lease Event of Default shall have occurred and be
continuing, Lessee may, by written notice to Lessor, request to change the
country of registration of the Aircraft. Any such change in registration shall
be effected only in compliance with, and subject to all of the conditions set
forth in, Section 7.6.11 of the Participation Agreement.
7.1.3 MARKINGS
If permitted by applicable Law, on or reasonably promptly after the
Delivery Date, Lessee will cause to be affixed to, and maintained in, the
cockpit of the Airframe and on each Engine, in each case, in a clearly visible
location (it being understood that the location of such placards, as identified
to the Owner Participant prior to the Delivery Date, shall be deemed to be in
compliance with this requirement), a placard of a reasonable size and shape
bearing the legend, in English, set forth in Schedule 6. Such placards may be
removed temporarily, if necessary, in the course of maintenance of the Airframe
or Engines. If any such placard is damaged or becomes illegible, Lessee shall
promptly replace it with a placard complying with the requirements of this
Section 7.1.3.
7.1.4 COMPLIANCE WITH LAWS
Lessee shall not, and shall not allow any other person to, operate, use,
maintain, service, repair or overhaul the Aircraft (a) in violation of any Law
binding on or applicable to the Aircraft, the Airframe or any Engine, or (b) in
violation of any airworthiness certificate, license or registration of any
Government Entity relating to the Aircraft, the Airframe or any Engine, except
(1) immaterial or non-recurring violations with respect to which corrective
measures are taken promptly by Lessee or a Permitted Sublessee, as the case may
be, upon discovery thereof, and (2) to the extent Lessee or any Permitted
Sublessee is contesting the validity or application of any such Law or
requirement relating to any such certificate, license or registration in good
faith in any reasonable manner which does not involve any material risk of the
sale, forfeiture or loss of the Aircraft, the Airframe, any Engine or the
interest of any Participant therein, any material risk of criminal liability or
of material civil penalty against Lessor, Mortgagee or any Participant or impair
the lien of the Trust Indenture.
7.1.5 OPERATION
Lessee agrees not to operate, use or locate the Aircraft, the Airframe or
any Engine, or allow the Aircraft, the Airframe or any Engine to be operated,
used or located (a) in any area excluded from coverage by any insurance required
by the terms of Section 11, except in the case of a requisition by the U.S.
Government where Lessee obtains an indemnity in lieu of such insurance from the
U.S. Government, or insurance from the U.S. Government, covering such area, in
accordance with Section 11.3 or (b) in any recognized area of hostilities unless
fully covered in accordance with Annex D by war-risk insurance as required by
the terms of Section 11 (including, without limitation, Section 11.3), unless in
any case referred to in this Section 7.1.5 the Aircraft is only temporarily
operated, used or located in such area as a result of an emergency, equipment
malfunction, navigational error, hijacking, weather condition or other similar
unforeseen circumstances, so long as Lessee diligently and in good faith
proceeds to remove the Aircraft from such area.
7.2 POSSESSION
Lessee will not, without the prior written consent of Lessor, sublease or
otherwise in any manner deliver, transfer or relinquish possession of the
Aircraft, the Airframe or any Engine or install any Engine, or permit any Engine
to be installed, on any airframe other than the Airframe; PROVIDED, HOWEVER,
subject to the provisions of Section 7.3, Lessee may, without such prior written
consent:
7.2.1 INTERCHANGE AND POOLING
Subject or permit any Permitted Sublessee to subject (i) the Airframe to
normal interchange agreements or (ii) any Engine to normal interchange
agreements or pooling agreements or arrangements, in each case customary in the
commercial airline industry and entered into by Lessee or such Permitted
Sublessee, as the case may be, in the ordinary course of business; PROVIDED,
HOWEVER, that if Lessor's title to any such Engine is divested under any such
agreement or arrangement, then such Engine shall be deemed to have suffered an
Event of Loss as of the date of such divestiture, with the effect that Lessee
shall be required to replace such Engine with a Replacement Engine meeting the
requirements of, and in accordance with, Section 10.
7.2.2 TESTING AND SERVICE
Deliver or permit any Permitted Sublessee to deliver possession of the
Aircraft, Airframe, any Engine or any Part (i) to the manufacturer thereof or to
any third-party maintenance provider, for testing, service, repair, maintenance
or overhaul work on the Aircraft, Airframe, any Engine or any Part, or, to the
extent required or permitted by the terms of Annex C, for alterations or
modifications in or additions to the Aircraft, Airframe or any Engine or (ii) to
any Person for the purpose of transport to a Person referred to in the preceding
clause (i).
7.2.3 TRANSFER TO U.S. GOVERNMENT
Transfer or permit any Permitted Sublessee to transfer possession of the
Aircraft, Airframe or any Engine to the U.S. Government, in which event Lessee
shall promptly notify Lessor and Mortgagee in writing of any such transfer of
possession and, in the case of any transfer pursuant to CRAF, in such
notification shall identify by name, address and telephone numbers the
Contracting Office Representative or Representatives for the Military Airlift
Command of the United States Air Force to whom notices must be given and to whom
requests or claims must be made to the extent applicable under CRAF.
7.2.4 INSTALLATION OF ENGINES ON OWNED AIRCRAFT
Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, as the case may be, free
and clear of all Liens, except (a) Permitted Liens and those that do not apply
to the Engines and (b) the rights of third parties under normal interchange or
pooling agreements and arrangements of the type that would be permitted under
Section 7.2.1.
7.2.5 INSTALLATION OF ENGINES ON OTHER AIRFRAMES
Install or permit any Permitted Sublessee to install an Engine on an
airframe leased to Lessee or such Permitted Sublessee, or purchased by Lessee or
such Permitted Sublessee subject to a mortgage, security agreement, conditional
sale or other secured financing arrangement, but only if (a) such airframe is
free and clear of all Liens, except (i) the rights of the parties to such lease,
or any such secured financing arrangement, covering such airframe and (ii) Liens
of the type permitted by clauses (a) and (b) of Section 7.2.4 and (b) Lessee or
Permitted Sublessee, as the case may be, shall have received from the lessor,
mortgagee, secured party or conditional seller, in respect of such airframe, a
written agreement (which may be a copy of the lease, mortgage, security
agreement, conditional sale or other agreement covering such airframe), whereby
such Person agrees that it will not acquire or claim any right, title or
interest in, or Lien on, such Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to this Lease or is owned
by Lessor.
7.2.6 INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT
Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, leased to Lessee or such
Permitted Sublessee, or purchased by Lessee or such Permitted Sublessee subject
to a conditional sale or other security agreement under circumstances where
neither Section 7.2.4 or 7.2.5 is applicable; PROVIDED, HOWEVER, that any such
installation shall be deemed an Event of Loss with respect to such Engine, and
Lessee shall comply with Section 10.2 hereof in respect thereof.
7.2.7 SUBLEASING
With respect to the Aircraft, Airframe or any Engine, so long as no Lease
Event of Default shall have occurred and is continuing, enter into a sublease
with any Permitted Air Carrier, but only if:
(a) Lessee shall provide written notice to Lessor and Mortgagee (such
notice in the event of a sublease to a U.S. Air Carrier to be given promptly
after entering into any such sublease or, in the case of a sublease to any other
Permitted Air Carrier, 10 days in advance of entering into such sublease);
(b) At the time that Lessee enters into such sublease, such Permitted Air
Carrier shall not be subject to any bankruptcy, insolvency, liquidation,
reorganization, dissolution or similar proceeding, and shall not have
substantially all of its property in the possession of any liquidator, trustee,
receiver or similar person;
(c) Any such sublease (i) shall not extend beyond the expiration of the
Base Lease Term or any Renewal Lease Term then in effect unless Lessee shall
have irrevocably committed to purchase the Aircraft, (ii) shall include
provisions for the maintenance, operation, possession, inspection and insurance
of the Aircraft that are the same in all material respects as the applicable
provisions of this Lease and (iii) shall be expressly subject and subordinate to
all the terms of this Agreement and to the rights, powers and remedies of Lessor
hereunder, including, without limitation, Lessor's rights under Section 15 to
repossess the Aircraft, Airframe and Engines and to terminate such sublease upon
the occurrence of a Lease Event of Default;
(d) In connection with a sublease to a Permitted Foreign Air Carrier, (1)
the United States maintains diplomatic relations with the country of domicile of
such Permitted Foreign Air Carrier (or, in the case of Taiwan, diplomatic
relations at least as good as those in effect on the Delivery Date) and (2)
Lessee shall have furnished Lessor and Mortgagee a favorable opinion of counsel,
reasonably satisfactory to Lessor, in the country of domicile of such Permitted
Foreign Air Carrier, that (i) the terms of such sublease are the legal, valid
and binding obligations of the parties thereto enforceable under the laws of
such jurisdiction, (ii) it is not necessary for Owner Participant, Lessor or
Mortgagee to register or qualify to do business in such jurisdiction, if not
already so registered or qualified, as a result, in whole or in part, of the
proposed sublease, (iii) Lessor's title to, and Mortgagee's Lien in respect of,
the Aircraft, Airframe and Engines will be recognized in such jurisdiction, (iv)
the Laws of such jurisdiction of domicile require fair compensation by the
government of such jurisdiction, payable in a currency freely convertible into
Dollars, for the loss of title to the Aircraft, Airframe or Engines in the event
of the requisition by such government of such title (unless Lessee shall provide
insurance in the amounts required with respect to hull insurance under Section
11 covering the requisition of title to the Aircraft, Airframe or Engines by the
government of such jurisdiction so long as the Aircraft, Airframe or Engines are
subject to such sublease) and (v) the agreement of such Permitted Air Carrier
that its rights under the sublease are subject and subordinate to all the terms
of this Lease is enforceable against such Permitted Air Carrier under applicable
law;
(e) Lessee shall furnish to Lessor, Mortgagee and Owner Participant
evidence reasonably satisfactory to Lessor that the insurance required by
Section 11 remains in effect;
(f) All necessary documents shall have been duly filed, registered or
recorded in such public offices as may be required fully to preserve the title
of Lessor, and the first priority security interest (subject to Permitted Liens)
of Mortgagee, in the Aircraft, Airframe and Engines;
(g) Lessee shall reimburse Lessor, Mortgagee and Owner Participant for all
of their reasonable out-of-pocket fees and expenses, including, without
limitation, reasonable fees and disbursements of counsel, incurred by Lessor,
Mortgagee and Owner Participant in connection with any such sublease; and
(h) No such sublease shall be made to a Permitted Foreign Air Carrier
prior to the close of the Tax Attribute Period, unless Lessee prepays on a
lump-sum basis any liability due under the Tax Indemnity Agreement as a result
of such sublease based upon the assumption that such sublease were to continue
for the remainder of the term of such sublease.
7.3 CERTAIN LIMITATIONS ON SUBLEASING OR OTHER
RELINQUISHMENT OF POSSESSION
Notwithstanding anything to the contrary in Section 7.2:
(a) The rights of any person that receives possession of the Aircraft in
accordance with Section 7.2 shall be subject and subordinate to all the terms of
this Lease, and to Lessor's rights, powers and remedies hereunder, including,
without limitation (i) Lessor's right to repossess the Aircraft pursuant to
Section 15, (ii) Lessor's right to terminate and avoid such sublease, delivery,
transfer or relinquishment of possession upon the occurrence of a Lease Event of
Default and (iii) the right to require such person to forthwith deliver the
Aircraft, the Airframe and Engines subject to such transfer upon the occurrence
of a Lease Event of Default;
(b) Lessee shall remain primarily liable hereunder for the performance of
all the terms of this Lease to the same extent as if such transfer had not
occurred, and no transfer of possession of the Aircraft, the Airframe, any
Engine or any Part shall in any way discharge or diminish any of Lessee's
obligations to Lessor hereunder or under any Operative Agreement;
(c) Lessee shall ensure that no sublease, delivery, transfer or
relinquishment permitted under Section 7.2 shall affect the United States
registration of the Aircraft, unless also made in accordance with the provisions
of Section 7.1.2;
(d) Any event that constitutes or would, with the passage of time,
constitute an Event of Loss under paragraph (c), (d), or (e) of the definition
of such term (as set forth in Annex A) shall not be deemed to violate the
provisions of Section 7.2; and
(e) Any Wet Lease shall not constitute a delivery, transfer or
relinquishment of possession for purposes of Section 7.2 and shall not be
prohibited by the terms hereof.
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS;
ALTERATIONS, MODIFICATIONS AND ADDITIONS; OTHER
LESSEE COVENANTS
8.1 MAINTENANCE; REPLACEMENT AND POOLING OF PARTS;
ALTERATIONS, MODIFICATIONS AND ADDITIONS
At all times during the Term, Lessee shall comply with, or cause to be
complied with, each of the provisions of Annex C, which provisions are hereby
incorporated by this reference as if set forth in full herein.
8.2 INFORMATION, CERTIFICATES, NOTICES AND REPORTS
8.2.1 FINANCIAL INFORMATION
Lessee will furnish to Lessor:
(a) Within 90 days after the end of each of the first three fiscal
quarters in each fiscal year of Lessee, a consolidated balance sheet
of Lessee as of the end of such quarter and related statements of
income and cash flows for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter,
setting forth in each case in comparative form the corresponding
figures for the corresponding period in the preceding fiscal year,
prepared in accordance with GAAP; PROVIDED THAT so long as Lessee is
subject to the reporting requirements of the Securities Exchange Act
of 1934, a copy of Lessee's report on Form 10-Q for such fiscal
quarter (excluding exhibits) or an e-mail notice that such report
has been filed with the SEC and providing a website address at which
such report may be accessed will satisfy this paragraph (a).
(b) Within 120 days after the end of each fiscal year of Lessee, a
consolidated balance sheet of Lessee as of the end of such fiscal
year and related statements of income and cash flows of Lessee for
such fiscal year, in comparative form with the preceding fiscal
year, prepared in accordance with GAAP, together with a report of
Lessee's independent certified public accountants with respect to
their audit of such financial statements; PROVIDED THAT so long as
Lessee is subject to the reporting requirements of the Securities
Exchange Act of 1934, a copy of Lessee's report on Form 10-K for
such fiscal year (excluding exhibits) or an e-mail notice that such
report has been filed with the SEC and providing a website address
at which such report may be accessed will satisfy this paragraph
(b).
8.2.2 ANNUAL CERTIFICATE
Within 120 days after the close of each fiscal year of Lessee, Lessee
shall deliver to Lessor and Mortgagee an Officer's Certificate of Lessee (which,
in lieu of delivery pursuant to Section 18.6, may be delivered by e-mail and, in
such case, need not include a manual signature of a required officer but instead
shall set forth a typed signature of such an officer) to the effect that such
officer is familiar with or has reviewed or caused to be reviewed the relevant
terms of this Lease and the other Lessee Operative Agreements and that such
officer does not have knowledge of the existence as at the date of such
certificate of any Lease Event of Default or, if any such Lease Event of Default
exists, specifying the nature and period of existence thereof and the action
Lessee has taken or is taking or proposes to take with respect thereto.
8.2.3 INFORMATION FOR FILINGS
Lessee shall promptly furnish to Owner Participant or Lessor such
information (other than with respect to the citizenship of Owner Participant and
Lessor) within Lessee's or any Permitted Sublessee's possession, or reasonably
available to or obtainable by Lessee or such Permitted Sublessee, as may be
required to enable Lessor timely to file any reports required to be filed by it
as lessor under the Lease or to enable Owner Participant to timely file any
reports required to be filed by it, as the beneficiary of the Trust Estate, in
either case, with any Government Entity because of, or in connection with, the
interest of Owner Participant or Lessor in the Aircraft, Airframe or Engines,
this Lease or any other part of the Trust Estate; provided, however, that with
respect to any such information which Lessee reasonably deems commercially
sensitive or confidential, Owner Participant or Lessor, as the case may be,
shall afford Lessee a reasonable opportunity to seek from any such Government
Entity a waiver of the obligation of Owner Participant or Lessor to file any
such information, or shall consent to the filing of such information directly by
Lessee in lieu of filing by Owner Participant or Lessor, and if any such waiver
or consent is evidenced to the reasonable satisfaction of Owner Participant or
Lessor, as the case may be, then Lessee shall not be required to furnish such
information to Owner Participant or Lessor.
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE
9.1 RIGHT OF TERMINATION
(a) Lessee shall have the right at its option to terminate this Lease
during the Base Lease Term, effective only on a Termination Date occurring on or
after the fifth anniversary of the Delivery Date, if:
(i) Lessee makes a good faith determination that the Aircraft either
has become economically obsolete or is surplus to Lessee's requirements
and the Chief Financial Officer or Treasurer of Lessee so certifies in
writing to Lessor; and
(ii) written notice of Lessee's exercise of its option to terminate
this Agreement shall be given to Lessor not less than 90 days prior to the
proposed Termination Date specified in such notice.
(b) Lessor shall notify Lessee and Mortgagee of Lessor's intention to sell
or retain the Aircraft, as provided in this Section 9, within 30 days after
Lessee gives Lessor written notice pursuant to Section 9.1(a)(ii). Any failure
by Lessor to give such notice of its election shall be deemed to be an election
to sell the Aircraft, as provided in this Section 9.
(c) Any termination pursuant to this Section 9 shall become effective on
the date of the sale, if any, pursuant to Section 9.2 or upon the date of
termination and payment by Lessee and Lessor in accordance with Section 9.3 if
Lessor elects to retain the Aircraft.
9.2 ELECTION BY LESSOR TO SELL
9.2.1 BIDS; CLOSING OF SALE
Unless Lessor has given Lessee notice of Lessor's election to retain the
Aircraft, Lessee, as agent for Lessor, shall, until the date ten Business Days
prior to the proposed Termination Date, use commercially reasonable efforts to
obtain bids for a cash purchase of the Aircraft and Lessor may, if it desires to
do so, also seek to obtain such bids. In the event Lessee receives any bid,
Lessee shall promptly, and in any event at least ten Business Days prior to the
proposed date of sale, certify to Lessor in writing the amount and terms of such
bid, the proposed date of such sale and the name and address of the person (who
shall not be Lessee or any Affiliate of Lessee or any person with whom Lessee or
any such Affiliate has an arrangement for the future use of the Aircraft by
Lessee or any such Affiliate) submitting such bid. In the event Lessor receives
any bid on or prior to the date ten Business Days prior to the proposed
Termination Date, Lessor shall, at least ten Business Days prior to the proposed
date of sale, certify to Lessee in writing the amount and terms of such bid, the
proposed date of such sale and the name and address of the person submitting
such bid.
9.2.2 CLOSING OF SALE
(a) On the proposed Termination Date (i) Lessee shall deliver the Airframe
and Engines or engines constituting part of the Aircraft to the bidder, if any,
which shall have submitted the highest cash bid (net of applicable brokerage
commissions) on or before the date ten Business Days prior to such Termination
Date, in the same manner as if delivery were made to Lessor pursuant to Section
5 and Annex B and in full compliance with the terms thereof, and shall duly
transfer to Lessor title to any such engines not owned by Lessor, all in
accordance with the terms of Section 5 and Annex B, and (ii) Lessor shall
simultaneously therewith transfer the Airframe and Engines or engines to such
bidder, in the manner described in Section 4.5, against cash paid to Lessor in
the amount of such highest bid (net of applicable brokerage commissions and all
reasonable out-of-pocket fees and expenses incurred by Lessor, Mortgagee and
Owner Participant in connection with such sale and the related termination of
this Lease (collectively, the "Expenses of Sale")) and in the manner and in
funds of the type specified in Section 3.3.
(b) All proceeds of any sale described in Section 9.2.2(a) (net of the
Expenses of Sale) shall be paid to and retained by Lessor and, on such
Termination Date, and as a condition precedent to such sale and the delivery of
the Aircraft and Engines or engines to such bidder, Lessee shall pay to Lessor,
in the manner and in funds of the type specified in Section 3.3:
(i) all unpaid Basic Rent due at any time prior to such Termination
Date and all Basic Rent due on such Termination Date to the extent payable
in arrears with respect to the Payment Period then ended; plus
(ii) an amount equal to the excess, if any, of the Termination Value
for the Aircraft, computed as of such Termination Date, over the proceeds
of such sale (net of the Expenses of Sale); plus
(iii) as provided in Section 3.2.2, interest on the amounts
specified in the foregoing clause (i) at the Payment Due Rate from and
including the date on which any such amount was due to the date of payment
of such amount in full.
As a further condition precedent to such sale and delivery, Lessee shall
pay all Supplemental Rent due by Lessee to Lessor, Mortgagee or the Participants
under this Lease (including, without limitation, (A) Supplemental Rent in
respect of Make-Whole Amount, if any, payable pursuant to Section 2.10(b) of the
Trust Indenture in connection with a prepayment of the Equipment Notes upon such
sale, (B) all interest charges provided for hereunder or under any other Lessee
Operative Agreement with respect to the late payment of any amounts so payable,
and (C) the Expenses of Sale).
(c) Upon and subject to any such sale and receipt of proceeds by Lessor,
and full and final payment of all amounts described in Section 9.2.2(b), and
compliance by Lessee with all the other provisions of this Section 9.2,
(i) Lessor will transfer to Lessee, in accordance with Section 4.5,
any Engines constituting part of the Aircraft but which were not then
installed on the Airframe and sold therewith; and
(ii) the obligation of Lessee to pay Basic Rent, on or after the
Payment Date with reference to which Termination Value is computed, shall
cease, and the Term for the Aircraft shall end effective as of the date of
such sale.
(d) A sale of the Aircraft pursuant to this Section 9.2.2 shall take place
only on a Termination Date. Subject to Section 9.3, if no sale shall have
occurred on or as of the proposed Termination Date, this Agreement shall
continue in full force and effect, and all of Lessee's obligations shall
continue, including, without limitation, its obligation to pay Rent, in each
case, as if the notice under Section 9.1 shall not have been given and, subject
to Section 9.2.3(b), Lessee may give another notice pursuant to Section 9.1.
9.2.3 WITHDRAWAL OF NOTICE OF TERMINATION
(a) Lessee may withdraw any notice given pursuant to Section 9.1 at any
time on or before the date ten Business Days prior to the proposed Termination
Date, whereupon this Agreement shall continue in full force and effect and all
of Lessee's obligations shall continue, including, without limitation, its
obligation to pay Rent, in each case, as if the notice under Section 9.1 shall
not have been given and Lessee may give another notice pursuant to Section 9.1;
PROVIDED that Lessee shall not be entitled to give more than five notices
pursuant to Section 9.1.
(b) Lessee shall pay all reasonable out-of-pocket fees and expenses of
Lessor, Mortgagee and Owner Participant in connection with any notice of
termination withdrawn by Lessee or in connection with any notice of termination
pursuant to which a sale of the Aircraft fails to occur.
9.3 RETENTION OF AIRCRAFT BY LESSOR
(a) If Lessor shall elect to retain the Aircraft in accordance with
Section 9.1, on the proposed Termination Date:
(i) Lessor shall pay, or cause to be paid, in the manner and in
funds of the type specified in Section 3.3, to the Mortgagee an amount
sufficient to prepay all outstanding Equipment Notes pursuant to Section
2.10(b) of the Trust Indenture;
(ii) subject to receipt by Mortgagee of the funds described in
paragraph (i) above, Lessee shall deliver the Airframe and Engines or
engines constituting part of the Aircraft to Lessor pursuant to Section 5
and Annex B and in full compliance with the terms thereof, and shall duly
transfer to Lessor title to any such engines not owned by Lessor, all in
accordance with the terms of Section 5 and Annex B;
(iii) Lessee shall pay to Lessor, in the manner and in funds of the
type specified in Section 3.3:
(1) all unpaid Basic Rent due at any time prior to such
Termination Date and all Basic Rent due on such
Termination Date to the extent payable in arrears with
respect to the Payment Period then ended; plus
(2) as provided in Section 3.2.2, interest on the amounts
specified in the foregoing clause (1) at the Payment Due
Rate from and including the date on which any such
amount was due to the date of payment of such amount in
full; and
(iv) Lessee shall also pay all Supplemental Rent due and payable by
Lessee to Lessor, Mortgagee or the other Participants under this Lease
(other than any Supplemental Rent in respect of Make-Whole Amount, if any,
payable pursuant to Section 2.10(b) of the Trust Indenture in connection
with a prepayment of the Equipment Notes upon such sale), including
without limitation all interest charges provided for hereunder or under
any other Lessee Operative Agreement with respect to the late payment of
any amounts, so payable, and the reasonable out-of-pocket fees and
expenses incurred by Lessor, Mortgagee and Owner Participant in connection
with such termination and sale.
(b) Upon full and final payment to Lessor, Mortgagee and the Participants
of the amounts described in Section 9.3(a), and compliance by Lessee with all
the other applicable provisions of this Section 9.3,
(i) Lessor will transfer to Lessee, in accordance with Section 4.5,
any Engines constituting part of the Aircraft but which were not then
installed on the Airframe and sold therewith; and
(ii) The obligation of Lessee to pay Basic Rent otherwise due on or
after the Termination Date shall cease, and the Term for the Aircraft
shall end effective as of such Termination Date.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.
10.1 EVENT OF LOSS WITH RESPECT TO AIRCRAFT
10.1.1 NOTICE AND ELECTION
(a) Upon the occurrence of an Event of Loss with respect to the Airframe,
and any Engine or Engines installed thereon at the time of such Event of Loss,
Lessee shall promptly (and in any event within 15 days after such occurrence)
give Lessor and Mortgagee written notice of such Event of Loss. Within 45 days
after such occurrence, Lessee shall give Lessor and Mortgagee written notice of
Lessee's election to make payment in respect of such Event of Loss, as provided
in Section 10.1.2, or to replace the Airframe, and any such Engines, as provided
in Section 10.1.3.
(b) Any failure by Lessee to give such notice of its election shall be
deemed to be an election of the option set forth in Section 10.1.2. In addition,
Lessee shall not be entitled to elect the option set forth in Section 10.1.3 if,
at the time Lessor receives such notice from Lessee, there shall have occurred
and be continuing a Special Default or a Lease Event of Default.
(c) For purposes of Section 10.1.2, an Event of Loss with respect to the
Airframe shall be deemed to constitute an Event of Loss with respect to the
Aircraft. For purposes of Section 10.1.3, any Engine not actually suffering an
Event of Loss shall not be required to be replaced.
10.1.2 PAYMENT OF LOSS AND TERMINATION OF LEASE
(a) If Lessee elects, in accordance with Section 10.1.1, to make payment
in respect of any such Event of Loss, then Lessee shall pay, in the manner and
in funds of the type specified in Section 3.3, the following amounts:
(i) on or before the Business Day next following the earlier of (x)
the 120th day following the date of the occurrence of such Event of Loss,
and (y) the fourth Business Day following the receipt of insurance
proceeds with respect to such occurrence (but in any event not earlier
than the date of Lessee's election under Section 10.1.1 to make payment
under this Section 10.1.2), Lessee shall pay to Lessor:
(1) all unpaid Interim Rent, Basic Rent or Renewal Rent, as the
case may be, due at any time prior to the Stipulated Loss
Value Date that is on or immediately preceding the Loss
Payment Date; plus
(2) the Stipulated Loss Value of the Aircraft computed as of the
Stipulated Loss Value Date used in the foregoing clause (1)
for the computation of unpaid Rent; plus
(3) if the Stipulated Loss Value Date used in the foregoing clause
(1) is a Payment Date on which Basic Rent payable in arrears
is due, the amount of such Basic Rent; plus
(4) as provided in Section 3.2.2, interest on the amount specified
in the foregoing clause (1) at the Payment Due Rate from and
including the date on which any such amount was due to the
date of payment of such amount in full; plus
(5) interest on the amounts specified in the foregoing clauses (2)
and (3) at the SLV Rate from and including the Stipulated Loss
Value Date used in the foregoing clause (1) for the
computation of unpaid Rent to the date such amount is due, and
thereafter at the Payment Due Rate to the date of payment of
such amounts in full; and
(ii) on or before the date required for payment of the amounts
specified in paragraph (i) above, Lessee shall also pay to Lessor,
Mortgagee and the other Participants all other amounts due and payable by
Lessee to Lessor, Mortgagee and the other Participants under this Lease,
the Participation Agreement or any other Lessee Operative Agreement.
(b) Upon payment in full of all amounts described in the foregoing
paragraph (a),(i) the obligation of Lessee to pay Interim Rent, Basic Rent or
Renewal Rent hereunder with respect to the Aircraft shall terminate, (ii) the
Term for the Aircraft shall end and (iii) Lessor will transfer the Aircraft to
Lessee, as-is and where-is, and subject to any insurer's salvage rights, but
otherwise in the manner described in Section 4.5.
10.1.3 REPLACEMENT OF AIRFRAME AND ENGINES
(a) If Lessee elects, in accordance with Section 10.1.1, to replace the
Airframe, and any Engines actually suffering the Event of Loss, then Lessee
shall, as promptly as possible and in any event within 120 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with Section 10.3 and as replacement for the Airframe, and any such
Engine, title to a Replacement Airframe (which shall comply with paragraph (b)
below), and for each such Engine a Replacement Engine, in each case free and
clear of all Liens other than Permitted Liens. If Lessee makes such election,
but for any reason fails or is unable to effect such replacement within such
time period and in compliance with the requirements set forth in Section 10.3,
then Lessee shall be deemed to have initially made the election set forth in
Section 10.1.2 with the effect that Lessee shall immediately pay, in the manner
and in funds of the type specified in Section 3.3, the amounts required under,
and in accordance with, Section 10.1.2.
(b) Any such Replacement Airframe shall be an airframe that is the same
model as the Airframe to be replaced thereby, or an improved model, and that has
a value, utility and remaining useful life (without regard to hours or cycles
remaining until the next regular maintenance check), at least equal to the
Airframe to be replaced thereby (assuming that such Airframe had been maintained
in accordance with the Lease). Any such Replacement Engine shall meet the
requirements of, and be conveyed by Lessee to Lessor in accordance with, Section
10.2 (other than the notice requirement set forth in Section 10.2.1).
10.2 EVENT OF LOSS WITH RESPECT TO AN ENGINE
10.2.1 NOTICE
Upon the occurrence of an Event of Loss with respect to an Engine under
circumstances in which an Event of Loss with respect to the Airframe has not
occurred, Lessee shall promptly (and in any event within 15 days after such
occurrence) give Lessor written notice of such Event of Loss.
10.2.2 REPLACEMENT OF ENGINE
Lessee shall, promptly and in any event within 60 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with Section 10.3 and as replacement for the Engine with respect to
which any Event of Loss occurred, title to a Replacement Engine free and clear
of all Liens other than Permitted Liens. Such Replacement Engine shall be an
engine manufactured by Engine Manufacturer that is the same model as the Engine
to be replaced thereby, or an improved model, and that is suitable for
installation and use on the Airframe, and that has a value, utility and
remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to the Engine to be replaced thereby (assuming that
such Engine had been maintained in accordance with the Lease).
10.2.3 ENGINE EXCHANGE
Upon not less than five (5) Business Days' prior written notice to Lessor,
Lessee may replace any Engine leased hereunder with another engine (the
"Exchanged Engine") meeting the requirements of Section 10.2.2. Such Exchanged
Engine shall be deemed to be a "Replacement Engine" and Lessor and Lessee shall
comply with the provisions of Section 10.3 with regard to the Exchanged Engine
and the Engine so replaced.
10.3 CONDITIONS TO ANY REPLACEMENT
10.3.1 DOCUMENTS
Prior to or at the time of conveyance of title to any Replacement Airframe
or Replacement Engine to Lessor, Lessee shall take each of the following
actions:
(a) furnish Lessor with a full warranty bill of sale duly conveying to
Lessor such Replacement Airframe or Replacement Engine, in form and substance
reasonably satisfactory to Lessor and cause such Replacement Airframe to be duly
registered in the name of Lessor pursuant to the Act;
(b) cause (i) a Lease Supplement subjecting such Replacement Airframe or
Replacement Engine to this Lease, duly executed by Lessee, to be delivered to
Lessor for execution and, upon such execution, to be filed for recordation with
the FAA pursuant to the Act, (ii) a Trust Indenture Supplement, subjecting such
Replacement Airframe or Replacement Engine to the Trust Indenture, to be
delivered to Lessor for execution and, upon execution, to be filed for
recordation with the FAA pursuant to the Act and (iii) such Financing Statements
and other filings, as Lessor or Mortgagee may reasonably request, duly executed
by Lessee and, to the extent applicable, Lessor and Mortgagee (and Lessor and
Mortgagee shall execute and deliver the same), to be filed in such locations as
any such party may reasonably request;
(c) furnish such evidence of compliance with the insurance provisions of
Section 11 with respect to such Replacement Airframe or Replacement Engine as
Lessor may reasonably request;
(d) furnish an opinion or opinions of Lessee's counsel (which may be
Lessee's legal department) reasonably satisfactory to Lessor and addressed to
Lessor and Mortgagee to the effect that (i) such full warranty bill of sale
referred to in Section 10.3.1(a) constitutes an effective instrument for the
conveyance of title to the Replacement Airframe or Replacement Engine and (ii)
in the case of a Replacement Airframe, Lessor and Mortgagee, as assignee of
Lessor, will be entitled to the benefits of Section 1110 with respect to the
Replacement Airframe, provided that such opinion referred to in this clause (ii)
need not be delivered to the extent that immediately prior to such replacement
the benefits of Section 1110 were not, solely by reason of a change in law or
court interpretation thereof, available to Lessor or Mortgagee, as assignee of
Lessor;
(e) furnish an opinion of Lessee's aviation law counsel reasonably
satisfactory to Lessor and addressed to Lessor and Mortgagee as to the due
registration of any such Replacement Airframe and the due filing for recordation
of each Lease Supplement and Trust Indenture Supplement with respect to such
Replacement Airframe or Replacement Engine under the Act; and
(f) with respect to the replacement of the Airframe, and any Engine
installed thereon at the time of the subject Event of Loss, if requested by
Lessor and at Lessor's expense, furnish a certified report of a qualified
independent aircraft appraiser, reasonably satisfactory to Lessor, certifying
that such Replacement Airframe and any such Replacement Engine complies with the
value, utility and remaining useful life requirements set forth in Section
10.1.3(b).
Lessor and Lessee understand and agree that if at the time of any
replacement of the Airframe or any Engine, as contemplated in this Section 10,
the Airframe was registered in a jurisdiction other than the United States, then
the requirements set forth above in this Section 10.3.1 relating to compliance
with the requirements of the Act or the FAA, shall be deemed to refer to the
comparable applicable Law of, and the Aviation Authority of, such other
jurisdiction.
10.3.2 OTHER OBLIGATIONS
(a) Lessor and Lessee agree that, upon any Replacement Airframe becoming
the Airframe hereunder, and upon any Replacement Engine becoming an Engine
hereunder, this Lease shall continue to be, and shall be treated as, a lease for
U.S. federal income tax purposes of, among other things, such Replacement
Airframe and such Replacement Engine. Without limiting the foregoing, Lessee and
Lessor intend that Lessor shall, in all events, be entitled to the benefits of
Section 1110 with respect to any Replacement Airframe or Replacement Engine and
Lessee and Lessor shall cooperate and take such action as the other may
reasonably request so as to ensure that Lessor shall be entitled to such
benefits.
(b) No Event of Loss with respect to an Engine, or with respect to an
Airframe, shall result in, or otherwise allow or permit (other than as provided
in Section 10.1.2(b)), any reduction, deferral, discharge or other change in the
timing or amount of any Rent payable by Lessee hereunder, and (subject to such
Section 10.1.2(b)) Lessee shall pay all such Rent and other amounts as though
such Event of Loss had not occurred.
10.4 CONVEYANCE TO LESSEE
Upon compliance by Lessee with the applicable terms of Sections 10.1.3,
10.2 and 10.3.1, Lessor will transfer to Lessee the Airframe or Engine, as the
case may be, with respect to which such Event of Loss occurred, in accordance
with Section 4.5.
10.5 APPLICATION OF PAYMENTS
Any amounts, other than insurance proceeds in respect of damage or loss
not constituting an Event of Loss (the application of which is provided for in
Section 11), received at any time by Lessor, Lessee or any Permitted Sublessee
from any Government Entity or any other Person in respect of any Event of Loss
will be applied as follows:
10.5.1 REPLACEMENT OF AIRFRAME AND ENGINES
If such amounts are received with respect to the Airframe, and any Engine
installed thereon at the time of such Event of Loss, upon compliance by Lessee
with the applicable terms of Section 10.1.3 with respect to the Event of Loss
for which such amounts are received, such amounts shall be paid over to, or
retained by, Lessee.
10.5.2 LOSS OF ENGINE
If such amounts are received with respect to an Engine (other than an
Engine installed on the Airframe at the time such Airframe suffers an Event of
Loss), upon compliance by Lessee with the applicable terms of Section 10.2.2
with respect to the Event of Loss for which such amounts are received, such
amounts shall be paid over to, or retained by, Lessee.
10.5.3 PAYMENT OF LOSS
If such amounts are received, in whole or in part, with respect to the
Airframe, and Lessee makes, has made or is deemed to have made the election set
forth in Section 10.1.2, such amounts shall be applied as follows:
(a) FIRST, if the sum described in Section 10.1.2 has not then been paid
in full by Lessee, such amounts shall be paid to Lessor (or to Mortgagee so long
as Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture
has been duly discharged, except with respect to Excluded Payments) to the
extent necessary to pay in full such sum;
(b) SECOND, the remainder, if any, shall be paid to Lessee.
10.6 REQUISITION OF AIRCRAFT FOR USE
If any Government Entity shall requisition for use the Airframe and the
Engines or engines installed thereon, and if the same does not constitute an
Event of Loss, Lessee shall promptly notify Lessor and Mortgagee of such
requisition and all of Lessee's obligations under this Agreement shall continue
to the same extent as if such requisition had not occurred; PROVIDED, HOWEVER,
that if the Airframe and Engines or engines installed thereon are not returned
to Lessor by Lessee at the end of the Term or within 30 days thereafter, and
Lessor, upon notice given not less than 30 days nor more than 120 days before
the end of the Term, shall have elected to treat such event as constituting an
Event of Loss with respect to the Aircraft, Lessee shall then be deemed to have
made the election set forth in Section 10.1.2 with the effect that Lessee shall
be obligated to pay the Stipulated Loss Value and all other amounts payable
pursuant to Section 10.1.2 with respect to the Aircraft as if an Event of Loss
had occurred as of the end of the Term. If Lessor shall not have elected to
treat such event as an Event of Loss, Lessee shall be obligated to return the
Airframe and Engines or engines to Lessor pursuant to, and in all other respects
to comply with the provisions of, Section 5 promptly upon their return by such
Government Entity, and Lessee shall pay to Lessor upon such return an amount
equal to the average daily Basic Rent payable by Lessee during the Term for each
day after the end of the Term to but excluding the day of such return, up to a
maximum of 30 days.
10.7 REQUISITION OF AN ENGINE FOR USE
If any Government Entity shall requisition for use any Engine but not the
Airframe, Lessee will replace such Engine by complying with the applicable terms
of Sections 10.2 and 10.3 to the same extent as if an Event of Loss had occurred
with respect to such Engine, and any payments received by Lessor or Lessee from
such Government Entity with respect to such requisition shall be paid or
retained in accordance with Section 10.5.2.
10.8 APPLICATION OF PAYMENTS
All payments received by Lessor or Lessee, or any Permitted Sublessee,
from any Government Entity for the use of the Airframe and Engines or engines
installed thereon during the Term shall be paid over to, or retained by, Lessee
and all payments received by Lessor or Lessee from any Government Entity for the
use of the Airframe and Engines or engines installed thereon after the Term
shall be paid over to, or retained by, Lessor; provided that, if such
requisition constitutes an Event of Loss, or Lessor has elected under Section
10.6 to treat such requisition as an Event of Loss, then all such payments shall
be paid over to Lessor (or to Mortgagee so long as Mortgagee has not given
notice to Lessee that the Lien of the Trust Indenture has been duly discharged),
and held as provided in Section 10.5.
10.9 APPLICATION OF PAYMENTS DURING EXISTENCE OF A
LEASE EVENT OF DEFAULT
Any amount described in this Section 10 that is payable or creditable to,
or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if at the time such payment, credit or retention would otherwise occur a
Special Default or Lease Event of Default shall have occurred and be continuing,
but shall instead be held by or paid over to Lessor (or to Mortgagee so long as
Mortgagee has not given notice to Lessee that the Trust Indenture has been duly
discharged) as security for the obligations of Lessee under this Lease and the
other Lessee Operative Agreements and shall be invested pursuant to Section 4.4
hereof unless and until Lessor shall have demanded liquidated damages pursuant
to Section 15.1.3 or 15.1.4 and such amount is applied, at the option of Lessor,
or upon the written request of Lessee to Lessor, from time to time during the
continuance of a Lease Event of Default, to Lessee's obligations under this
Lease as and when due, it being understood that any such application shall be
made to such obligations of Lessee as Lessor may determine in its sole
discretion. At such time as there shall not be continuing any Special Default or
Lease Event of Default, such amount shall be paid to Lessee to the extent not
previously applied in accordance with this Section 10.9.
SECTION 11. INSURANCE
11.1 LESSEE'S OBLIGATION TO INSURE
Lessee shall comply with, or cause to be complied with, each of the
provisions of Annex D, which provisions are hereby incorporated by this
reference as if set forth in full herein.
11.2 INSURANCE FOR OWN ACCOUNT
Nothing in Section 11 shall limit or prohibit (a) Lessee from maintaining
the policies of insurance required under Annex D with higher limits than those
specified in Annex D, or (b) Lessor, Mortgagee or Owner Participant from
obtaining insurance for its own account (and any proceeds payable under such
separate insurance shall be payable as provided in the policy relating thereto);
PROVIDED, HOWEVER, that no insurance may be obtained or maintained that would
limit or otherwise adversely affect the coverage of any insurance required to be
obtained or maintained by Lessee pursuant to this Section 11 and Annex D.
11.3 INDEMNIFICATION BY GOVERNMENT IN LIEU OF
INSURANCE
Lessor agrees to accept, in lieu of insurance against any risk with
respect to the Aircraft described in Annex D, indemnification from, or insurance
provided by, the U.S. Government, or upon the written consent of Lessor, other
Government Entity, against such risk in an amount that, when added to the amount
of insurance (including permitted self-insurance), if any, against such risk
that Lessee (or any Permitted Sublessee) may continue to maintain, in accordance
with this Section 11, during the period of such requisition or transfer, shall
be at least equal to the amount of insurance against such risk otherwise
required by this Section 11.
11.4 APPLICATION OF INSURANCE PROCEEDS
As between Lessor and Lessee, all insurance proceeds received as a result
of the occurrence of an Event of Loss with respect to the Aircraft or any Engine
under policies required to be maintained by Lessee pursuant to this Section 11
will be applied in accordance with Section 10.5. All proceeds of insurance
required to be maintained by Lessee, in accordance with Section 11 and Section B
of Annex D, in respect of any property damage or loss not constituting an Event
of Loss with respect to the Aircraft, Airframe or any Engine will be applied in
payment (or to reimburse Lessee) for repairs or for replacement property, and
any balance remaining after such repairs or replacement with respect to such
damage or loss shall be paid over to, or retained by, Lessee.
11.5 APPLICATION OF PAYMENTS DURING EXISTENCE OF LEASE
EVENT OF DEFAULT
Any amount described in this Section 11 that is payable or creditable to,
or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if at the time such payment, credit or retention would otherwise occur a
Special Default or Lease Event of Default shall have occurred and be continuing,
but shall instead be held by or paid over to Lessor (or to Mortgagee so long as
Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture
has been duly discharged) as security for the obligations of Lessee under this
Lease and shall be invested pursuant to Section 4.4 hereof unless and until
Lessor shall have demanded liquidated damages pursuant to Section 15.1.3 or
15.1.4 and such amount is applied, at the option of Lessor, or upon the written
request of Lessee to Lessor, from time to time during the continuance of a Lease
Event of Default, to Lessee's obligations under this Lease and the other Lessee
Operative Agreements as and when due, it being understood that any such
application shall be made to such obligations of Lessee as Lessor may determine
in its sole discretion. At such time as there shall not be continuing any
Special Default or Lease Event of Default, such amount shall be paid to Lessee
to the extent not previously applied in accordance with this Section 11.5.
SECTION 12. INSPECTION
(a) At all reasonable times Lessor, Mortgagee or the Owner Participant,
and their respective authorized representatives (the "Inspecting Parties") may
(not more than once every 12 months unless a Lease Event of Default has occurred
and is continuing then such inspection right shall not be so limited) inspect
the Aircraft, Airframe and Engines (including, without limitation, the Aircraft
Documents) and any such Inspecting Party may make copies of such Aircraft
Documents not reasonably deemed confidential by Lessee or such Permitted
Sublessee.
(b) Any inspection of the Aircraft hereunder shall be limited to a visual,
walk-around inspection and shall not include the opening of any panels, bays or
other components of the Aircraft, and no such inspection shall interfere with
Lessee's or any Permitted Sublessee's maintenance and operation of the Aircraft,
Airframe and Engines.
(c) With respect to such rights of inspection, Lessor, Owner Participant
and Mortgagee shall not have any duty or liability to make, or any duty or
liability by reason of not making, any such visit, inspection or survey.
(d) Each Inspecting Party shall bear its own expenses in connection with
any such inspection (including the cost of any copies made in accordance with
Section 12(a)).
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE
13.1 IN GENERAL
This Lease and the other Lessee Operative Agreements shall be binding upon
and inure to the benefit of Lessor and Lessee and their respective successors
and permitted assigns. Except as otherwise expressly permitted by the terms of
the Lease or any other Lessee Operative Agreement, Lessee will not, without the
prior written consent of Lessor and Mortgagee, assign any of its rights under
this Lease. Except as otherwise provided herein (including, without limitation,
under the provisions of Section 15 hereof), Lessor and Mortgagee may not assign
or convey any of its right, title and interest in and to this Lease or the
Aircraft without the prior written consent of Lessee, such consent not to be
unreasonably withheld.
13.2 MERGER OF LESSEE
13.2.1 IN GENERAL
Lessee shall not consolidate with or merge into any other person under
circumstances in which Lessee is not the surviving corporation, or convey,
transfer or lease in one or more transactions all or substantially all of its
assets to any other person, unless:
(a) such person is organized, existing and in good standing under the Laws
of the United States, any State of the United States or the District Columbia
and, upon consummation of such transaction, such person will be a U.S. Air
Carrier;
(b) such person executes and delivers to Lessor and Mortgagee a duly
authorized, legal, valid, binding and enforceable agreement, reasonably
satisfactory in form and substance to Lessor, containing an effective assumption
by such person of the due and punctual performance and observance of each
covenant, agreement and condition in the Lessee Operative Agreements to be
performed or observed by Lessee;
(c) such person makes such filings and recordings with the FAA pursuant to
the Act as shall be necessary to evidence such consolidation or merger; and
(d) immediately after giving effect to such consolidation or merger no
Lease Event of Default shall have occurred and be continuing.
13.2.2 EFFECT OF MERGER
Upon any such consolidation or merger of Lessee with or into, or the
conveyance, transfer or lease by Lessee of all or substantially all of its
assets to, any Person in accordance with this Section 13.2, such Person will
succeed to, and be substituted for, and may exercise every right and power of,
Lessee under the Lessee Operative Agreements with the same effect as if such
person had been named as "Lessee" therein. No such consolidation or merger, or
conveyance, transfer or lease, shall have the effect of releasing Lessee or such
Person from any of the obligations, liabilities, covenants or undertakings of
Lessee under the Lease.
13.3 ASSIGNMENT SECURITY FOR LESSOR'S OBLIGATIONS
In order to