REGISTRATION NO. 333-___
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
CONTINENTAL AIRLINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4512 74-2099724
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION
ORGANIZATION) NUMBER)
2929 ALLEN PARKWAY, SUITE 2010
HOUSTON, TEXAS 77019
(713) 834-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------------------
JEFFERY A. SMISEK, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
CONTINENTAL AIRLINES, INC.
2929 ALLEN PARKWAY, SUITE 2010
HOUSTON, TEXAS 77019
(713) 834-2950
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES OF CORRESPONDENCE TO:
JOHN K. HOYNS, ESQ.
HUGHES HUBBARD & REED LLP
ONE BATTERY PARK PLAZA
NEW YORK, NEW YORK 10004-1482
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
--------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are so offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=======================================================================================================
PROPOSED MAXIMUM PROPOSED
OFFERING MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT (1) PRICE (2) FEE (3)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pass Through Certificates $250,000,000 $250,000,000 $75,758
=======================================================================================================
<FN>
(1) Omitted pursuant to Rule 457(o).
(2) Estimated solely for purposes of calculating the registration fee.
(3) Pursuant to Rule 457(o), the registration fee has been calculated on the
basis of the maximum aggregate offering price of all securities listed.
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
SUBJECT TO COMPLETION - DATED JULY 15, 1997
PROSPECTUS
$250,000,000
CONTINENTAL AIRLINES, INC.
PASS THROUGH CERTIFICATES
--------------------------
Up to $250,000,000 aggregate public offering price of Pass Through
Certificates (the "Certificates") (or its equivalent (based on the applicable
exchange rate at the time of sale) in one or more foreign currencies or currency
units) may be offered for sale from time to time pursuant to this Prospectus and
related Prospectus Supplements (as defined below). Certificates may be issued in
one or more series in amounts, at prices and on terms to be determined at the
time of the offering. In respect of each offering of Certificates, a separate
Continental Airlines Pass Through Trust for each series of Certificates being
offered (each, a "Trust") will be formed pursuant to one or more Pass Through
Trust Agreements (each, a "Basic Agreement") and one or more supplements thereto
(each, a "Trust Supplement") relating to such Trust to be entered into between
Continental Airlines, Inc. ("Continental" or the "Company") and the trustee
named therein (the "Trustee"), as trustee under each Trust. Each Certificate in
a series will represent a fractional undivided interest in the related Trust and
will have no rights, benefits or interests in respect of any other Trust. The
property of the Trusts will consist of equipment notes issued on a nonrecourse
basis by one or more owner trustees pursuant to separate leveraged lease
transactions (the "Equipment Notes") to finance or refinance a portion of the
equipment cost of aircraft manufactured by EMBRAER-Empresa Brasileira de
Aeronautica S.A., including engines (each, an "Aircraft" and, collectively, the
"Aircraft"), which have been or will be leased to Continental pursuant to a
separate lease agreement (each such lease agreement, a "Lease") for each
Aircraft.
The specific terms of the particular Certificates in respect of which
this Prospectus is being delivered will be set forth in a supplement to this
Prospectus (the "Prospectus Supplement") which will be delivered together with
this Prospectus, including, where applicable, the specific designation, form,
aggregate principal amount, initial public offering price and distribution dates
relating to such Certificates, the currency in which such Certificates will be
payable, the Trust or Trusts relating to such Certificates, the Equipment Notes
to be purchased by such Trust or Trusts, the Aircraft relating to such Equipment
Notes, the leveraged lease transactions relating to such Equipment Notes and
other special terms relating to such Certificates and the net proceeds from the
offering of such Certificates. The Certificates shall be issued in registered
form only and may, if so specified in the applicable Prospectus Supplement, be
issued in accordance with a book-entry system.
With respect to one or more Aircraft, Equipment Notes may be issued,
each of which may have a different interest rate, final maturity date and
<PAGE>
ranking in respect of priority of payment. For each series of Certificates, the
Trustee will purchase one or more Equipment Notes issued with respect to one or
more Aircraft such that all of the Equipment Notes held in the related Trust
will have identical ranking and identical interest rates (in each case equal to
the rate applicable to the Certificates issued by such Trust), and such that the
latest maturity date for such Equipment Notes will occur on or before the final
distribution date for such Certificates. Interest paid on the Equipment Notes
held in each Trust will be passed through to the holders of the Certificates
relating to such Trust on the dates and at the rate per annum set forth in the
Prospectus Supplement relating to such Certificates until the final distribution
date for such Trust, subject to the effect of any cross-subordination provisions
described in the Prospectus Supplement for a series of Certificates. Principal
paid on the Equipment Notes held in each Trust will be passed through to the
holders of the Certificates relating to such Trust in scheduled amounts on the
dates set forth in the Prospectus Supplement relating to such Certificates until
the final distribution date for such Trust, subject to the effect of any
cross-subordination provisions described in the Prospectus Supplement for a
series of Certificates. The Equipment Notes issued with respect to any Aircraft
will be secured by a security interest in such Aircraft and by a security
interest in the Lease relating thereto, including the right to receive rentals
payable in respect of such Aircraft by Continental.
The Certificates may be sold to or through underwriters, through
dealers or agents or directly to purchasers. See "Plan of Distribution." The
Prospectus Supplement will set forth the names of any underwriters, dealers or
agents involved in the sale of the Certificates in respect of which this
Prospectus is being delivered, the proposed amounts, if any, to be purchased by
underwriters and the compensation, if any, of such underwriters or agents. See
"Plan of Distribution" for information concerning secondary trading of the
Certificates.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF CERTIFICATES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
The date of this Prospectus is [________________].
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
AVAILABLE INFORMATION
Continental has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all amendments
and exhibits, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Certificates offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, and to which reference is hereby
made. Statements made in this Prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved.
Continental is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports and other information with the
Commission. Such reports and other information, as well as the Registration
Statement, including exhibits and schedules filed therewith, may be inspected at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, Room 1024, and at the regional offices of
the Commission located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and at 7 World Trade Center, 13th Floor, New York, New
York 10048. Copies of such materials may be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Such material may also be accessed electronically by means of
the Commission's home page on the Internet at http://www.sec.gov. In addition,
reports, proxy statements and other information concerning Continental may be
inspected and copied at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
Continental is the successor to Continental Airlines Holdings, Inc.
("Holdings"), which merged with and into on April 27, 1993. Holdings had also
been subject to the informational requirements of the Exchange Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 0-9781)
are hereby incorporated by reference in this Prospectus: (i) Continental's
Annual Report on Form 10-K for the year ended December 31, 1996, filed on
February 24, 1997, (ii) Continental's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1997, filed on April 28, 1997 and (iii)
Continental's Current Reports on Form 8-K filed January 6, March 21, April 18,
May 28, June 10 and June 25, 1997.
All reports and any definitive proxy or information statements filed
by Continental pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Certificates offered hereby shall be deemed to be incorporated
by reference into this Prospectus and to be a part hereof from the respective
<PAGE>
dates of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated herein by reference, or contained in
this Prospectus, shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Continental will provide without charge to any person to whom a copy
of this Prospectus has been delivered, upon written or oral request, a copy of
any or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
Continental Airlines, Inc., 2929 Allen Parkway, Suite 2010, Houston, Texas
77019, Attention: Secretary, telephone (713) 834-2950.
<PAGE>
THE COMPANY
Continental Airlines, Inc. is a major United States air carrier
engaged in the business of transporting passengers, cargo and mail. Continental
is the fifth largest United States airline (as measured by revenue passenger
miles in the first five months of 1997) and, together with its wholly owned
subsidiary, Continental Express, Inc. ("Express"), and its 91%-owned subsidiary,
Continental Micronesia, Inc. ("CMI"), each a Delaware corporation, serves 195
airports worldwide as of June 12, 1997.
The Company operates its route system primarily through domestic hubs
at Newark, George Bush Intercontinental in Houston, Cleveland, and a Pacific hub
on the island of Guam. Each of Continental's three domestic hubs is located in a
large business and population center, contributing to a high volume of "origin
and destination" traffic. The Guam hub is strategically located to provide
service from Japanese and other Asian cities to popular resort destinations in
the western Pacific. Continental is the primary carrier at each of these hubs,
accounting for 54%, 79%, 54% and 68% of average daily jet departures,
respectively, as of June 12, 1997.
The Company is a Delaware corporation. Its executive offices are
located at 2929 Allen Parkway, Suite 2010, Houston, Texas 77019, and its
telephone number is (713) 834-2950.
GENERAL OUTLINE OF TRUST STRUCTURE
In respect of each offering of Certificates, one or more Trusts will
be formed, and the related Certificates issued, pursuant to separate Trust
Supplements to be entered into between the Trustee and Continental in accordance
with the terms of the Basic Agreement. Concurrently with the execution and
delivery of each Trust Supplement, the Trustee, on behalf of the Trust formed
thereby, will enter into one or more purchase or refunding agreements (each such
agreement being herein referred to as a "Note Purchase Agreement") pursuant to
which it will agree to purchase one or more Equipment Notes relating to one or
more of the Aircraft described in the applicable Prospectus Supplement. Pursuant
to the applicable Note Purchase Agreement or Note Purchase Agreements, the
Trustee, on behalf of each Trust, will purchase one or more Equipment Notes such
that the Equipment Notes that constitute the property of such Trust will have
identical interest rates (in each case equal to the rate applicable to the
Certificates issued by such Trust) and identical priority of payment relative to
each of the other Equipment Notes issued under the Related Indentures (as
defined below). The maturity dates of the Equipment Notes acquired by each Trust
will occur on or before the final distribution date applicable to the
Certificates that will be issued by such Trust. The Trustee will distribute the
amount of payments of principal, premium, if any, and interest received by it as
holder of the Equipment Notes to the registered holders of Certificates of the
Trust (the "Certificateholders") in which such Equipment Notes are held, subject
to the effect of any cross-subordination provisions described in the Prospectus
Supplement for a series of Certificates. See "Description of the Certificates"
and "Description of the Equipment Notes."
<PAGE>
USE OF PROCEEDS
Except as set forth in a Prospectus Supplement for a specific offering
of Certificates, the Certificates will be issued in order to facilitate the
financing or refinancing of the debt portion and, in certain cases, the
refinancing of some of the equity portion of one or more separate leveraged
lease transactions entered into by Continental, as lessee, with respect to the
Aircraft as described in the applicable Prospectus Supplement. Except as set
forth in a Prospectus Supplement for a specific offering of Certificates, the
proceeds from the sale of the Certificates will be used by the Trustee on behalf
of the applicable Trust or Trusts to purchase Equipment Notes issued by the
respective Owner Trustee or Owner Trustees to finance or refinance (as specified
in the applicable Prospectus Supplement) the related Aircraft. Any portion of
the proceeds from the sale of Certificates not used by the Trustee to purchase
Equipment Notes on or prior to the date specified therefor in the applicable
Prospectus Supplement will be distributed on a Special Distribution Date (as
defined below) to the applicable Certificateholder holders, together with
interest, but without premium. See "Description of Certificates -- Special
Distribution Upon Unavailability of Aircraft."
The Equipment Notes will be issued under separate trust indentures
(the "Indentures") between a bank, trust company or other institution specified
in the related Prospectus Supplement, as trustee thereunder (in such capacity,
herein referred to as the "Loan Trustee"), and an institution specified in the
related Prospectus Supplement acting, not in its individual capacity, but solely
as owner trustee (an "Owner Trustee") of a separate trust for the benefit of one
or more institutional investors (each, an "Owner Participant"). With respect to
each Leased Aircraft, the related Owner Participant will have provided or will
provide from sources other than the Equipment Notes a portion of the equipment
cost of the related Aircraft. No Owner Participant, however, will be personally
liable for any amount payable under the related Indenture or the Equipment Notes
issued thereunder. Simultaneously with the acquisition of each Aircraft, the
related Owner Trustee will have leased or will lease such Aircraft to
Continental pursuant to a separate Lease, and Continental will have subleased or
will sublease such Aircraft to Express.
RATIO OF EARNINGS TO FIXED CHARGES
The following information for the year ended December 31, 1992 and for
the period January 1, 1993 through April 27, 1993 relates to Continental's
predecessor, Holdings. Information for the period April 28, 1993 through
December 31, 1993, for the years ended December 31, 1994, 1995 and 1996 and for
the three months ended March 31, 1996 and 1997 relates to Continental. The
information as to Continental has not been prepared on a consistent basis of
accounting with the information as to Holdings due to Continental's adoption,
effective April 27, 1993, of fresh start reporting in accordance with the
American Institute of Certified Public Accountants' Statement of Position 90-7
- -- "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code"
("SOP 90-7").
For the year ended December 31, 1992, for the periods January 1, 1993
through April 27, 1993 and April 28, 1993 through December 31, 1993 and for the
<PAGE>
year ended December 31, 1994, earnings were not sufficient to cover fixed
charges. Additional earnings of $131 million, $979 million, $60 million and $667
million, respectively, would have been required to achieve ratios of earnings to
fixed charges of 1.0. The ratio of earnings to fixed charges for the years ended
December 31, 1995 and December 31, 1996 was 1.53 and 1.81, respectively. The
ratio of earnings to fixed charges for the three months ended March 31, 1996 and
March 31, 1997 was 1.70 and 1.88, respectively. For purposes of calculating this
ratio, earnings consist of earnings before taxes, minority interest and
extraordinary items plus interest expense (net of capitalized interest), the
portion of rental expense representative of interest expense and amortization of
previously capitalized interest. Fixed charges consist of interest expense and
the portion of rental expense representative of interest expense.
DESCRIPTION OF THE CERTIFICATES
In connection with each offering of Certificates, one or more separate
Trusts will be formed and one or more series of Certificates will be issued
pursuant to the Basic Agreement and one or more separate Trust Supplements to be
entered into between Continental and the Trustee. The statements made under this
caption are summaries and reference is made to the detailed provisions of the
Basic Agreement, the form of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The summaries relate
to the Basic Agreement and each of the Trust Supplements, the Trusts to be
formed thereby and the Certificates to be issued by each Trust except to the
extent, if any, described in the applicable Prospectus Supplement. The
Prospectus Supplement that accompanies this Prospectus contains a glossary of
the material terms used with respect to the specific series of Certificates
being offered thereby. The Trust Supplement relating to each series of
Certificates and the forms of the related Note Purchase Agreement, Indenture,
Lease, Trust Agreement, Participation Agreement, intercreditor agreement and
liquidity facility agreement, as applicable, will be filed as exhibits to a
post-effective amendment to the Registration Statement of which this Prospectus
is a part, a Current Report on Form 8-K, a Quarterly Report on Form 10-Q or an
Annual Report on Form 10-K, as applicable, filed by Continental with the
Commission.
The Certificates offered pursuant to this Prospectus will be limited
to $250,000,000 aggregate public offering price (or its equivalent (based on the
applicable exchange rate at the time of sale) in one or more foreign currencies
or currency units).
To the extent that any provision in any Prospectus Supplement is
inconsistent with any provision in this summary, the provision of such
Prospectus Supplement will control.
GENERAL
Each Certificate will represent a fractional undivided interest in the
Trust created by the Trust Supplement pursuant to which such Certificate was
issued and all payments and distributions shall be made only from the related
Trust Property (as defined below). The property of each Trust (the "Trust
Property") will include (i) the Equipment Notes held in such Trust and all
monies at any time paid thereon and all monies due and to become due thereunder,
subject to the effect of any cross-subordination provisions described in the
Prospectus Supplement for a series of Certificates, (ii) funds from time to time
<PAGE>
deposited with the Trustee in accounts relating to such Trust and (iii) if so
specified in the Prospectus Supplement related to a series of Certificates,
rights under intercreditor agreements relating to cross-subordination
arrangements and monies receivable under a liquidity facility. Each Certificate
will represent a pro rata share of the outstanding principal amount of the
Equipment Notes held in the related Trust and, unless otherwise specified in the
applicable Prospectus Supplement, will be issued in minimum denominations of
$1,000 or any integral multiple thereof except that one Certificate of each
series may be issued in a different denomination. The Certificates do not
represent an interest in or obligation of Continental, the Trustee, any of the
Loan Trustees or Owner Trustees in their individual capacities, any Owner
Participant, or any affiliate of any thereof. Each Certificateholder by its
acceptance of a Certificate agrees to look solely to the income and proceeds
from the Trust Property as provided in the Basic Agreement and the applicable
Trust Supplement.
The Equipment Notes issued under an Indenture may be held in more than
one Trust and one Trust may hold Equipment Notes issued under more than one
Indenture (each Indenture the Equipment Notes of which are held in a Trust, a
"Related Indenture"). Unless otherwise provided in a Prospectus Supplement, only
Equipment Notes having the same priority of payment (the Equipment Notes of any
such priority, a "Class") may be held in the same Trust.
Interest will be passed through to Certificateholders of each Trust at
the rate per annum payable on the Equipment Notes held in such Trust, as set
forth for such Trust on the cover page of the applicable Prospectus Supplement,
subject to the effect of any cross-subordination provisions described in the
Prospectus Supplement for a series of Certificates.
Reference is made to the Prospectus Supplement that accompanies this
Prospectus for a description of the specific series of Certificates being
offered thereby, including: (1) the specific designation and title of such
Certificates; (2) the Regular Distribution Dates (as defined below) and Special
Distribution Dates (as defined below) applicable to such Certificates; (3) the
currency or currencies (including currency units) in which such Certificates may
be denominated; (4) the specific form of such Certificates, including whether or
not such Certificates are to be issued in accordance with a book-entry system;
(5) a description of the Equipment Notes to be purchased by such Trust,
including (a) the period or periods within which, the price or prices at which,
and the terms and conditions upon which such Equipment Notes may or must be
redeemed or defeased in whole or in part, by the Owner Trustee, (b) the payment
priority of such Equipment Notes in relation to any other Equipment Notes issued
with respect to the related Aircraft, (c) any additional security or liquidity
enhancements therefor and (d) any intercreditor or other rights or limitations
between or among the holders of Equipment Notes of different priorities issued
by the same Owner Trustee; (6) a description of the related Aircraft; (7) a
description of the related Note Purchase Agreement and Related Indentures,
including a description of the events of default under the Related Indentures,
the remedies exercisable upon the occurrence of such events of default and any
limitations on the exercise of such remedies with respect to such Equipment
Notes; (8) a description of the related Lease, Trust Agreement and Participation
Agreement, including (a) the names of the related Owner Trustees, (b) a
description of the events of default under the related Leases, the remedies
exercisable upon the occurrence of such events of default and any limitations on
<PAGE>
the exercise of such remedies with respect to such Equipment Notes, and (c) the
rights of the related Owner Trustee, if any, and/or Owner Participant, if any,
to cure failures of Continental to pay rent under the related Lease; (9) the
extent, if any, to which the provisions of the operative documents applicable to
such Equipment Notes may be amended by the parties thereto without the consent
of the holders of, or only upon the consent of the holders of a specified
percentage of aggregate principal amount of, such Equipment Notes; (10)
cross-default or cross-collateralization provisions in the Related Indentures;
(11) subordination provisions among the holders of Certificates, including any
cross-subordination provisions among the holders of Certificates in separate
Trusts; and (12) any other special terms pertaining to such Certificates.
If any Certificates are denominated in one or more foreign currencies
or currency units, the restrictions, certain United States federal income tax
considerations, specific terms and other information with respect to such
Certificates and such foreign currency or currency units will be set forth in
the applicable Prospectus Supplement.
BOOK-ENTRY REGISTRATION
GENERAL
If specified in the applicable Prospectus Supplement, the Certificates
will be subject to the provisions described below and under the caption "--
Definitive Certificates." Upon issuance, each series of Certificates will be
represented by one or more fully registered global certificates. Unless
otherwise provided in a Prospectus Supplement, each global certificate will be
deposited with, or on behalf of, The Depository Trust Company ("DTC") and
registered in the name of CEDE & Co. ("Cede"), the nominee of DTC. No person
acquiring an interest in such Certificates ("Certificate Owner") will be
entitled to receive a certificate representing such person's interest in such
Certificates, except as set forth below under "-- Definitive Certificates."
Unless and until Definitive Certificates are issued under the limited
circumstances described herein, all references to actions by Certificateholders
shall refer to actions taken by DTC upon instructions from DTC Participants (as
defined below), and all references herein to distributions, notices, reports and
statements to Certificateholders shall refer, as the case may be, to
distributions, notices, reports and statements to DTC or Cede, as the registered
holder of such Certificates, or to DTC Participants for distribution to
Certificate Owners in accordance with DTC procedures.
Continental has been advised that DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and "clearing agency" registered pursuant to
section 17A of the Exchange Act. DTC was created to hold securities for its
participants ("DTC Participants") and to facilitate the clearance and settlement
of securities transactions between DTC Participants through electronic
book-entries, thereby eliminating the need for physical transfer of
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to the DTC system
also is available to others such as banks, brokers, dealers and trust companies
<PAGE>
that clear through or maintain a custodial relationship with a DTC Participant
either directly or indirectly ("Indirect Participants").
Certificate Owners that are not DTC Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, the Certificates may do so only through DTC Participants and
Indirect Participants. In addition, Certificate Owners will receive all
distributions of principal and interest from the Trustee through DTC
Participants or Indirect Participants, as the case may be. Under a book-entry
format, Certificate Owners may experience some delay in their receipt of
payments, because such payments will be forwarded by the Trustee to Cede, as
nominee for DTC. DTC will forward such payments in same-day funds to DTC
Participants who are credited with ownership of the Certificates in amounts
proportionate to the principal amount of each such DTC Participant's respective
holdings of beneficial interests in the Certificates. DTC Participants will
thereafter forward payments to Indirect Participants or Certificate Owners, as
the case may be, in accordance with customary industry practices. The forwarding
of such distributions to the Certificate Owners will be the responsibility of
such DTC Participants. Unless and until the Definitive Certificates are issued
under the limited circumstances described herein, the only "Certificateholder"
will be Cede, as nominee of DTC. Certificate Owners will not be recognized by
the Trustee as Certificateholders, as such term is used in the Basic Agreement,
and Certificate Owners will be permitted to exercise the rights of
Certificateholders only indirectly through DTC and DTC Participants.
Under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry transfers
of the Certificates among DTC Participants on whose behalf it acts with respect
to the Certificates and to receive and transmit distributions of principal,
premium, if any, and interest with respect to the Certificates. DTC Participants
and Indirect Participants with which Certificate Owners have accounts with
respect to the Certificates similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective customers.
Accordingly, although Certificate Owners will not possess the Certificates, the
Rules provide a mechanism by which Certificate Owners will receive payments and
will be able to transfer their interests.
Because DTC can only act on behalf of DTC Participants, who in turn
act on behalf of Indirect Participants, the ability of a Certificate Owner to
pledge the Certificates to persons or entities that do not participate in the
DTC system, or to otherwise act with respect to such Certificates, may be
limited due to the lack of a physical certificate for such Certificates.
DTC has advised Continental that it will take any action permitted to
be taken by a Certificateholder under the Basic Agreement only at the direction
of one or more DTC Participants to whose accounts with DTC the Certificates are
credited. Additionally, DTC has advised Continental that in the event any action
requires approval by Certificateholders of a certain percentage of beneficial
interest in each Trust, DTC will take such action only at the direction of and
on behalf of DTC Participants whose holders include undivided interests that
satisfy any such percentage. DTC may take conflicting actions with respect to
<PAGE>
other undivided interests to the extent that such actions are taken on behalf of
DTC Participants whose holders include such undivided interests.
Neither Continental nor the Trustee will have any liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Certificates held by Cede, as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The applicable Prospectus Supplement will specify any additional
book-entry registration procedures applicable to Certificates denominated in a
currency other than United States dollars.
SAME-DAY SETTLEMENT AND PAYMENT
So long as the Certificates are registered in the name of DTC or its
nominee, all payments made by Continental to the Loan Trustee under any Lease
will be in immediately available funds. Such payments, including the final
distribution of principal with respect to the Certificates of any Trust, will be
passed through to DTC in immediately available funds.
Secondary trading in long-term notes and debentures of corporate
issuers is generally settled in clearinghouse or next-day funds. In contrast,
secondary trading in pass through certificates is generally settled in
immediately available or same-day funds. Any Certificates registered in the name
of DTC or its nominee will trade in DTC's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the Certificates will
therefore be required by DTC to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in same-day funds
on trading activity in the Certificates.
DEFINITIVE CERTIFICATES
Certificates will be issued in certificated form ("Definitive
Certificates") to Certificate Owners or their nominees, rather than to DTC or
its nominee, only if (i) Continental advises the Trustee in writing that DTC is
no longer willing or able to discharge properly its responsibilities as
depository with respect to such Certificates and Continental is unable to locate
a qualified successor, (ii) Continental, at its option, elects to terminate the
book-entry system through DTC or (iii) after the occurrence of certain events of
default or other events specified in the related Prospectus Supplement,
Certificate Owners with fractional undivided interests aggregating not less than
a majority in interest in such Trust advise the Trustee, Continental and DTC
through DTC Participants in writing that the continuation of a book-entry system
through DTC (or a successor thereto) is no longer in the Certificate Owners'
best interest.
Upon the occurrence of any event described in the immediately
preceding paragraph, the Trustee will be required to notify all Certificate
Owners through DTC Participants of the availability of Definitive Certificates.
Upon surrender by DTC of the certificates representing the Certificates and
receipt of instructions for re-registration, the Trustee will reissue the
Certificates as Definitive Certificates to Certificate Owners.
<PAGE>
Distributions of principal, premium, if any, and interest with respect
to Certificates will thereafter be made by the Trustee directly in accordance
with the procedures set forth in the Basic Agreement and the applicable Trust
Supplements, to holders in whose names the Definitive Certificates were
registered at the close of business on the applicable record date. Such
distributions will be made by check mailed to the address of such holder as it
appears on the register maintained by the Trustee. The final payment on any
Certificate, however, will be made only upon presentation and surrender of such
Certificate at the office or agency specified in the notice of final
distribution to Certificateholders.
Definitive Certificates will be freely transferable and exchangeable
at the office of the Trustee upon compliance with the requirements set forth in
the Basic Agreement and the applicable Trust Supplements. No service charge will
be imposed for any registration of transfer or exchange, but payment of a sum
sufficient to cover any tax or other governmental charge shall be required.
PAYMENTS AND DISTRIBUTIONS
Subject to the effect of any cross-subordination provisions set forth
in the Prospectus Supplement for a series of Certificates, payments of
principal, premium, if any, and interest with respect to the Equipment Notes
held in each Trust will be distributed by the Trustee, upon receipt, to
Certificateholders of such Trust on the dates and in the currency specified in
the applicable Prospectus Supplement, except in certain cases when some or all
of such Equipment Notes are in default as described in the applicable Prospectus
Supplement. Payments of principal of, and interest on, the unpaid principal
amount of the Equipment Notes held in each Trust will be scheduled to be
received by the Trustee on the dates specified in the applicable Prospectus
Supplement (such scheduled payments of interest and principal on the Equipment
Notes to the Trustee are herein referred to as "Scheduled Payments," and the
dates specified in the applicable Prospectus Supplement for distribution of
Scheduled Payments to the Trustee are herein referred to as "Regular
Distribution Dates"). See "Description of the Equipment Notes -- General."
Subject to the effect of any cross-subordination provisions set forth in the
Prospectus Supplement for a series of Certificates, each Certificateholder of
each Trust will be entitled to receive a pro rata share of any distribution in
respect of Scheduled Payments of principal and interest made on the Equipment
Notes held in the Trust.
Payments of principal, premium, if any, and interest received by the
Trustee on account of the early redemption, if any, of the Equipment Notes
relating to one or more Aircraft held in a Trust, and payments, other than
Scheduled Payments received on a Regular Distribution Date or within five days
thereafter, received by the Trustee following default in respect of Equipment
Notes held in a Trust relating to one or more Aircraft ("Special Payments") will
be distributed on the date determined pursuant to the applicable Prospectus
Supplement (a "Special Distribution Date") except that, unless otherwise
specified in the applicable Prospectus Supplement, payments received by the
Trustee following default in respect of the Equipment Notes on a Regular
Distribution Date as a result of a drawing under any liquidity facility,
specified in the applicable Prospectus Supplement (each, a "Liquidity
Facility"), provided for the benefit of the Certificateholders shall be
distributed on such Regular Distribution Date. The Trustee will mail notice to
<PAGE>
the Certificateholders of record of the applicable Trust not less than 15 days
prior to the Special Distribution Date on which any Special Payment is scheduled
to be distributed by the Trustee stating such anticipated Special Distribution
Date.
POOL FACTORS
Unless otherwise described in the applicable Prospectus Supplement,
the "Pool Balance" for each Trust or for the Certificates issued by any Trust
indicates, as of any date, the original aggregate face amount of the
Certificates of such Trust less the aggregate amount of all payments made in
respect of the Certificates of such Trust other than payments made in respect of
interest or premium thereon or reimbursement of any costs and expenses in
connection therewith. The Pool Balance for each Trust as of any Regular
Distribution Date or Special Distribution Date shall be computed after giving
effect to the payment of principal, if any, on the Equipment Notes or other
Trust Property held in such Trust and the distribution thereof to be made on
that date.
Unless otherwise described in the applicable Prospectus Supplement,
the "Pool Factor" for each Trust as of any Regular Distribution Date or Special
Distribution Date is the quotient (rounded to the seventh decimal place)
computed by dividing (i) the Pool Balance by (ii) the aggregate original face
amount of the Certificates of such Trust. The Pool Factor for each Trust as of
any Regular Distribution Date or Special Distribution Date shall be computed
after giving effect to the payment of principal, if any, on the Equipment Notes
or other Trust Property held in such Trust and distribution thereof to be made
on that date. The Pool Factor for each Trust will initially be 1.0000000;
thereafter, the Pool Factor for each Trust will decline as described herein to
reflect reductions in the Pool Balance of such Trust. The amount of a
Certificateholder's pro rata share of the Pool Balance of a Trust can be
determined by multiplying the original denomination of the holder's Certificate
of such Trust by the Pool Factor for such Trust as of the applicable Regular
Distribution Date or Special Distribution Date. The Pool Factor and the Pool
Balance for each Trust will be mailed to Certificateholders of such Trust on
each Regular Distribution Date and Special Distribution Date.
Unless there has been an early redemption, a purchase of an issue of
Equipment Notes by the related Owner Trustee after an Indenture Default (as
defined below), a default in the payment of principal in respect of one or more
issues of the Equipment Notes held in a Trust or certain actions have been taken
following a default thereon, as described in the applicable Prospectus
Supplement, the Pool Factor for the Trusts will decline in proportion to the
scheduled repayments of principal on the Equipment Notes held in such Trust as
described in the applicable Prospectus Supplement. In the event of such
redemption, purchase or default, the Pool Factor and the Pool Balance of each
Trust so affected will be recomputed after giving effect thereto and notice
thereof will be mailed to the Certificateholders of such Trust. Each Trust will
have a separate Pool Factor.
REPORTS TO CERTIFICATEHOLDERS
On each Regular Distribution Date and Special Distribution Date, the
Trustee will include with each distribution of a Scheduled Payment or Special
<PAGE>
Payment to Certificateholders of the related Trust a statement, giving effect to
such distribution to be made on such Regular Distribution Date or Special
Distribution Date, setting forth the following information (per $1,000 aggregate
principal amount of Certificate for such Trust, as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal and the
amount allocable to premium, if any;
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor for such Trust.
So long as the Certificates are registered in the name of DTC or its
nominee on the record date prior to each Regular Distribution Date and Special
Distribution Date, the Trustee will request from DTC a securities position
listing setting forth the names of all DTC Participants reflected on DTC's books
as holding interests in the Certificates on such record date. On each Regular
Distribution Date and Special Distribution Date, the applicable Trustee will
mail to each such DTC Participant the statement described above and will make
available additional copies as requested by such DTC Participant for forwarding
to Certificate Owners.
In addition, after the end of each calendar year, the Trustee will
prepare for each Certificateholder of each Trust at any time during the
preceding calendar year a report containing the sum of the amounts determined
pursuant to clauses (i) and (ii) above with respect to the Trust for such
calendar year or, in the event such person was a Certificateholder during only a
portion of such calendar year, for the applicable portion of such calendar year,
and such other items as are readily available to the Trustee and which a
Certificateholder shall reasonably request as necessary for the purpose of such
Certificateholder's preparation of its federal income tax returns. Such report
and such other items shall be prepared on the basis of information supplied to
the Trustee by the DTC Participants and shall be delivered by the Trustee to
such DTC Participants to be available for forwarding by such DTC Participants to
Certificate Owners in the manner described above.
At such time, if any, as the Certificates are issued in the form of
Definitive Certificates, the Trustee will prepare and deliver the information
described above to each Certificateholder of record of each Trust as the name
and period of beneficial ownership of such Certificateholder appears on the
records of the registrar of the Certificates.
VOTING OF EQUIPMENT NOTES
Subject to the effect of any cross-subordination provisions set forth
in the related Prospectus Supplement, the Trustee, as holder of the Equipment
Notes held in each Trust, has the right to vote and give consents and waivers
with respect to such Equipment Notes under the Related Indentures. The Basic
Agreement and related Trust Supplement set forth (i) the circumstances in which
the Trustee may direct any action or cast any vote as the holder of the
Equipment Notes held in the applicable Trust at its own discretion, (ii) the
circumstances in which the Trustee shall seek instructions from the
Certificateholders of such Trust and (iii) the percentage of Certificateholders
required to direct the Trustee to take any such action. If specified in the
<PAGE>
related Prospectus Supplement, the right of a Trustee to vote and give consents
and waivers with respect to the Equipment Notes held in the related Trust may,
in the circumstances set forth in an intercreditor agreement to be executed by
such Trustee, be exercisable by another person specified in such Prospectus
Supplement.
EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT
The Prospectus Supplement will specify the events of default under the
Basic Agreement (an "Event of Default") and the Related Indentures (an
"Indenture Default"). The Indenture Defaults will include events of default
under the related Leases (a "Lease Event of Default"). With respect to any
Equipment Notes which are supported by a Liquidity Facility, the Indenture
Defaults or Events of Default may include events of default under such Liquidity
Facility. Unless otherwise provided in a Prospectus Supplement, all of the
Equipment Notes issued under the same Indenture will relate to a specific
Aircraft and there will be no cross-collateralization or cross-default
provisions in the Indentures, and events resulting in an Indenture Default under
any particular Indenture will not necessarily result in an Indenture Default
occurring under any other Indenture. If an Indenture Default occurs in fewer
than all of the Indentures, notwithstanding the treatment of Equipment Notes
issued under any Indenture under which an Indenture Default has occurred,
payments of principal and interest on the Equipment Notes issued pursuant to
Indentures with respect to which an Indenture Default has not occurred will
continue to be made as originally scheduled. As described below under "--
Cross-Subordination Issues," a Prospectus Supplement may provide the terms of
any cross-subordination provisions among Certificateholders of separate Trusts.
If such provisions are so provided, payments made pursuant to a Related
Indenture under which an Indenture Default has not occurred may be distributed
first to the holders of the Certificates issued under the Trust which holds the
most senior Equipment Notes issued under all Related Indentures.
The ability of the applicable Owner Trustee or Owner Participant under
the Related Indenture to cure Indenture Defaults, including Indenture Defaults
that result from the occurrence of a Lease Event of Default under the related
Lease, will be described in the Prospectus Supplement. Unless otherwise provided
in a Prospectus Supplement, with respect to any Certificates or Equipment Notes
entitled to the benefits of a Liquidity Facility, a drawing under any such
Liquidity Facility for the purpose of making a payment of interest as a result
of the failure by Continental to have made a corresponding payment will not cure
an Indenture Default related to such failure by Continental.
The Prospectus Supplement related to a series of Certificates will
describe the circumstances under which the Trustee of the related Trust may vote
some or all of the Equipment Notes held in such Trust. Such Prospectus
Supplement also will set forth the percentage of Certificateholders of such
Trust entitled to direct the Trustee to take any action with respect to such
Equipment Notes. If the Equipment Notes outstanding under an Indenture are held
by more than one Trust, then the ability of the Certificateholders issued with
respect to any one Trust to cause the Loan Trustee with respect to any Equipment
Notes held in such Trust to accelerate the Equipment Notes under the Related
Indenture or to direct the exercise of remedies by the Loan Trustee under the
Related Indenture will depend, in part, upon the proportion between the
<PAGE>
aggregate principal amount of the Equipment Notes outstanding under such
Indenture and held in such Trust and the aggregate principal amount of all
Equipment Notes outstanding under such Indenture. In addition, if
cross-subordination provisions are applicable to any series of Certificates,
then the ability of the Certificateholders of any one Trust holding Equipment
Notes issued under Related Indentures to cause the Loan Trustee with respect to
any Equipment Notes held in such Trust to accelerate the Equipment Notes under
the Related Indenture or to direct the exercise of remedies by the Loan Trustee
under the Related Indenture will depend, in part, upon the Class of Equipment
Notes held in such Trust. If the Equipment Notes outstanding under an Indenture
are held by more than one Trust, then each Trust will hold Equipment Notes with
different terms from the Equipment Notes held in the other Trusts and therefore
the Certificateholders of a Trust may have divergent or conflicting interests
from those of the Certificateholders of the other Trusts holding Equipment Notes
issued under the same Indenture. In addition, so long as the same institution
acts as Trustee of each Trust, in the absence of instructions from the
Certificateholders of any such Trust, the Trustee for such Trust could for the
same reason be faced with a potential conflict of interest upon an Indenture
Default. In such event, the Trustee has indicated that it would resign as
Trustee of one or all such Trusts, and a successor trustee would be appointed in
accordance with the terms of the Basic Agreement.
The Prospectus Supplement for a series of Certificates will specify
whether and under what circumstances the Trustee may or shall sell for cash to
any person all or part of the Equipment Notes held in the related Trust. Any
proceeds received by the Trustee upon any such sale shall be deposited in an
account established by the Trustee for the benefit of the Certificateholders of
such Trust for the deposit of such Special Payments (the "Special Payments
Account") and shall be distributed to the Certificateholders of such Trust on a
Special Distribution Date. The market for Equipment Notes in default may be very
limited, and there can be no assurance that they could be sold for a reasonable
price. Furthermore, so long as the same institution acts as Trustee of multiple
Trusts, it may be faced with a conflict in deciding from which Trust to sell
Equipment Notes to available buyers. If the Trustee sells any such Equipment
Notes with respect to which an Indenture Default exists for less than their
outstanding principal amount, the Certificateholders of such Trust will receive
a smaller amount of principal distributions than anticipated and will not have
any claim for the shortfall against Continental, any Owner Trustee, Owner
Participant or the Trustee. Furthermore, neither the Trustee nor the
Certificateholders of such Trust could take any action with respect to any
remaining Equipment Notes held in such Trust so long as no Indenture Defaults
exist with respect thereto.
Any amount, other than Scheduled Payments received on a Regular
Distribution Date, distributed to the Trustee of any Trust by the Loan Trustee
under any Indenture on account of the Equipment Notes held in such Trust
following an Indenture Default under such Indenture shall be deposited in the
Special Payments Account for such Trust and shall be distributed to the
Certificateholders of such Trust on a Special Distribution Date. In addition, if
a Prospectus Supplement provides that the applicable Owner Trustee may, under
circumstances specified therein, redeem or purchase the outstanding Equipment
Notes issued under the Related Indenture, the price paid by such Owner Trustee
to the Trustee of any Trust for the Equipment Notes issued under such Indenture
<PAGE>
and held in such Trust shall be deposited in the Special Payments Account for
such Trust and shall be distributed to the Certificateholders of such Trust on a
Special Distribution Date.
Any funds representing payments received with respect to any Equipment
Notes held in a Trust in default, or the proceeds from the sale by the Trustee
of any such Equipment Notes, held by the Trustee in the Special Payments Account
for such Trust shall, to the extent practicable, be invested and reinvested by
the Trustee in Permitted Investments pending the distribution of such funds on a
Special Distribution Date. "Permitted Investments" will be specified in the
related Prospectus Supplement.
The Basic Agreement provides that the Trustee of each Trust shall,
within 90 days after the occurrence of a default in respect of such Trust, give
to the Certificateholders of such Trust notice, transmitted by mail, of all
uncured or unwaived defaults with respect to such Trust known to it, provided
that, except in the case of default in the payment of principal, premium, if
any, or interest on any of the Equipment Notes held in such Trust, the Trustee
shall be protected in withholding such notice if it in good faith determines
that the withholding of such notice is in the interests of such
Certificateholders. The term "default" as used in this paragraph only means the
occurrence of an Indenture Default with respect to Equipment Notes held in a
Trust as described above, except that in determining whether any such Indenture
Default has occurred, any grace period or notice in connection therewith shall
be disregarded.
The Basic Agreement contains a provision entitling the Trustee of each
Trust, subject to the duty of the Trustee during a default to act with the
required standard of care, to be offered reasonable security or indemnity by the
Certificateholders of such Trust before proceeding to exercise any right or
power under the Basic Agreement at the request of such Certificateholders.
The Prospectus Supplement for a series of Certificates will specify
the percentage of Certificateholders entitled to waive, or to instruct the
Trustee to waive, any past Event of Default with respect to such Trust and its
consequences. The Prospectus Supplement for a series of Certificates also will
specify the percentage of Certificateholders (and whether of such Trust or of
any other Trust holding Equipment Notes issued under Related Indentures)
entitled to waive, or to instruct the Trustee or the Loan Trustee to waive, any
past Indenture Default under any Related Indenture and thereby annul any
direction given with respect thereto.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
Continental will be prohibited from consolidating with or merging into
any other corporation or transferring substantially all of its assets as an
entirety to any other corporation unless (i) the surviving successor or
transferee corporation shall (a) be validly existing under the laws of the
United States or any state thereof, (b) be a "citizen of the United States" (as
defined in Section 40102 of Title 49 of the United States Code, relating to
aviation (the "Transportation Code")) holding a carrier operating certificate
issued by the Secretary of Transportation pursuant to Chapter 447 of Title 49,
United States Code, if, and so long as, such status is a condition of
entitlement to the benefits of Section 1110 of the Bankruptcy Code, and (c)
expressly assume all of the obligations of Continental contained in the Basic
Agreement and any Trust Supplement, the Note Purchase Agreements and the
<PAGE>
Participation Agreements and the Leases, and any other operative documents; and
(ii) Continental shall have delivered a certificate and an opinion or opinions
of counsel indicating that such transaction, in effect, complies with such
conditions.
MODIFICATIONS OF THE BASIC AGREEMENT
The Basic Agreement contains provisions permitting Continental and the
Trustee of each Trust to enter into a supplemental trust agreement, without the
consent of the holders of any of the Certificates of such Trust, including among
other things (i) to provide for the formation of such Trust and the issuance of
a series of Certificates, (ii) to evidence the succession of another corporation
to Continental and the assumption by such corporation of Continental's
obligations under the Basic Agreement and the applicable Trust Supplement, (iii)
to add to the covenants of Continental for the benefit of holders of such
Certificates, or to surrender any right or power in the Basic Agreement
conferred upon Continental, (iv) to cure any ambiguity or correct or supplement
any defective or inconsistent provision of the Basic Agreement or the applicable
Trust Supplement or to make any other provisions with respect to matters or
questions arising thereunder, provided such action shall not materially
adversely affect the interests of the holders of such Certificates, or to cure
any ambiguity or correct any mistake or (without limitation of the foregoing),
to give effect or provide for replacement liquidity facilities, if applicable to
such Certificates, (v) to comply with any requirement of the Commission, any
applicable law, rules or regulations of any exchange or quotation system on
which any Certificates may be listed or of any regulatory body, (vi) to modify,
eliminate or add to the provisions of the Basic Agreement to the extent as shall
be necessary to continue the qualification of the Basic Agreement (including any
supplemental agreement) under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act") and to add to the Basic Agreement such other provisions
as may be expressly permitted by the Trust Indenture Act, (vii) to provide for a
successor Trustee or to add to or change any provision of the Basic Agreement as
shall be necessary to facilitate the administration of the Trusts thereunder by
more than one Trustee and (viii) to make any other amendments or modifications
to the Basic Agreement, provided such amendments or modifications shall only
apply to Certificates issued thereafter; provided, in the case of clauses (i)
through (viii) above, that no such supplemental trust agreement shall adversely
affect the status of any Trust as a grantor trust for U.S. federal income tax
purposes.
The Basic Agreement also contains provisions permitting Continental
and the Trustee of each Trust, with the consent of the Certificateholders of
such Trust evidencing fractional undivided interests aggregating not less than a
majority in interest of such Trust, and, with the consent of the applicable
Owner Trustee (such consent not to be unreasonably withheld), to execute
supplemental trust agreements adding any provisions to or changing or
eliminating any of the provisions of the Basic Agreement, to the extent relating
to such Trust, and the applicable Trust Supplement, or modifying the rights of
the Certificateholders, except that no such supplemental trust agreement may,
without the consent of each Certificateholder so affected thereby, (a) reduce in
any manner the amount of, or delay the timing of, any receipt by the Trustee of
payments on the Equipment Notes held in such Trust or distributions in respect
of any Certificate related to such Trust, or change the date or place of any
payment in respect of any Certificate, or make distributions payable in coin or
<PAGE>
currency other than that provided for in such Certificates, or impair the right
of any Certificateholder of such Trust to institute suit for the enforcement of
any such payment when due, (b) permit the disposition of any Equipment Note held
in such Trust, except as provided in the Basic Agreement or the applicable Trust
Supplement, or otherwise deprive any Certificateholder of the benefit of the
ownership of the applicable Equipment Notes, (c) reduce the percentage of the
aggregate fractional undivided interests of the Trust provided for in the Basic
Agreement or the applicable Trust Supplement, the consent of the holders of
which is required for any such supplemental trust agreement or for any waiver
provided for in the Basic Agreement or such Trust Supplement, (d) modify any of
the provisions relating to the rights of the Certificateholders in respect of
the waiver of events of default or receipt of payment, (e) alter the priority of
distributions specified in any applicable intercreditor agreement in a manner
materially adverse to the interests of the Certificateholders of such Trust or
(f) adversely affect the status of any Trust as a grantor trust for U.S. federal
income tax purposes.
MODIFICATION OF INDENTURE AND RELATED AGREEMENTS
The Prospectus Supplement will specify the Trustee's obligations in
the event that the Trustee, as the holder of any Equipment Notes held in a
Trust, receives a request for its consent to any amendment, modification or
waiver under the Indenture or other documents relating to such Equipment Notes
(including any Lease or any Liquidity Facility).
CROSS-SUBORDINATION ISSUES
The Equipment Notes issued under an Indenture may be held in more than
one Trust and one Trust may hold Equipment Notes issued under more than one
Related Indenture. Unless otherwise provided in a Prospectus Supplement, only
Equipment Notes of the same series may be held in the same Trust. In such event,
payments made on account of a subordinate class of Certificates issued under a
Prospectus Supplement may, under circumstances described in such Prospectus
Supplement, be subordinated to the prior payment of all amounts owing to
Certificateholders of a Trust which holds senior Equipment Notes issued under
any Related Indentures. The Prospectus Supplement related to an issuance of
Certificates will describe any such "cross-subordination" provisions and any
related terms, including the percentage of Certificateholders under any Trust
which are permitted to (i) grant waivers of defaults under any Related
Indenture, (ii) consent to the amendment or modification of any Related
Indenture or (iii) direct the exercise of remedial actions under any Related
Indenture.
TERMINATION OF THE TRUSTS
The obligations of Continental and the Trustee with respect to a Trust
will terminate upon the distribution to Certificateholders of such Trust of all
amounts required to be distributed to them pursuant to the Basic Agreement and
the applicable Trust Supplement and the disposition of all property held in such
Trust. In no event shall any Trust continue beyond 110 years following the date
of the execution of the applicable Trust Supplement (or such other final
expiration date as may be specified in such Trust Supplement). The Trustee will
send to each Certificateholder of record of such Trust notice of the termination
<PAGE>
of such Trust, the amount of the proposed final payment and the proposed date
for the distribution of such final payment for such Trust. The final
distribution to any Certificateholder of such Trust will be made only upon
surrender of such Certificateholder's Certificates at the office or agency of
the Trustee specified in such notice of termination.
DELAYED PURCHASE
In the event that, on the delivery date of any Certificates, all of
the proceeds from the sale of such Certificates are not used to purchase the
Equipment Notes contemplated to be held in the related Trust, such Equipment
Notes may be purchased by the Trustee at any time on or prior to the date
specified in the applicable Prospectus Supplement. In such event, the Trustee
will hold the proceeds from the sale of such Certificates not used to purchase
Equipment Notes in an escrow account pending the purchase of the Equipment Notes
not so purchased. Such proceeds will be invested at the direction and risk of,
and for the account of, such person as shall be specified in the applicable
Prospectus Supplement (the "Responsible Party") in certain specified
investments, which may include: (i) obligations of, or guaranteed by, the United
States Government or agencies thereof, (ii) open market commercial paper of any
corporation incorporated under the laws of the United States of America or any
State thereof rated at least P-2 or its equivalent by Moody's Investors Service,
Inc. or at least A-2 or its equivalent by Standard & Poor's Ratings Services, a
division of the McGraw-Hill Companies, Inc., (iii) certificates of deposit
issued by commercial banks organized under the laws of the United States or of
any political subdivision thereof having a combined capital and surplus in
excess of $100,000,000 which banks or their holding companies have a rating of A
or its equivalent by Moody's Investors Service, Inc. or Standard & Poor's
Ratings Services, a division of the McGraw-Hill Companies, Inc., provided,
however, that the aggregate amount at any one time so invested in certificates
of deposit issued by any one bank shall not exceed 5% of such bank's capital and
surplus, (iv) U.S. dollar-denominated offshore certificates of deposit issued
by, or offshore time deposits with, any commercial bank described in clause
(iii) above or any subsidiary thereof and (v) repurchase agreements with any
financial institution having combined capital and surplus of at least
$100,000,000 with any of the obligations described in clauses (i) through (iv)
above as collateral; provided that if all of the above investments are
unavailable, the entire amounts to be invested may be used to purchase federal
funds from an entity described in clause (iii) above; and provided further that
no investment shall be eligible as a specified investment unless the final
maturity date or date of return of such investment is on or before (x) the
scheduled date for the purchase of such Equipment Notes, or (y) if no date has
been scheduled for the purchase of such Equipment Notes, the next Business Day,
or (z) if the Responsible Party has given notice that such Equipment Notes will
not be purchased, the next applicable Special Distribution Date. Earnings on
such investments in the escrow account for each Trust will be paid to the
Responsible Party periodically, and the Responsible Party will be responsible
for any losses.
On the next Regular Distribution Date specified in the applicable
Prospectus Supplement, the Responsible Party will pay to the Trustee an amount
equal to the interest that would have accrued on any Equipment Notes purchased
after the date of the issuance of such Certificates from the date of the
<PAGE>
issuance of such Certificates to, but excluding, the date of the purchase of
such Equipment Notes by the Trustee.
SPECIAL DISTRIBUTION UPON UNAVAILABILITY OF AIRCRAFT
To the extent that, due to a casualty to, or other event causing the
unavailability of, one or more Aircraft, the full amount of the proceeds from
the sale of any Certificates held in the escrow account referred to above will
not be (as notified to the Trustee), or is not, used to purchase Equipment Notes
on or prior to the date specified in the applicable Prospectus Supplement, an
amount equal to the unused proceeds will be distributed by the Trustee to the
holders of record of such Certificates on a pro rata basis upon not less than 15
days' prior notice to them on a Special Distribution Date, together with
interest thereon at a rate equal to the rate applicable to such Certificates,
but without premium, and the Responsible Party will pay to the Trustee on such
date an amount equal to such interest.
LIQUIDITY FACILITY
The related Prospectus Supplement may provide that one or more
payments of interest on the Certificates of one or more series will be supported
by a Liquidity Facility issued by an institution identified in the related
Prospectus Supplement. The provider of such Liquidity Facility will have a claim
senior to the Certificateholders' as specified in the related Prospectus
Supplement.
THE TRUSTEE
Unless otherwise provided in the Prospectus Supplement for any series
of Certificates, the Trustee for each series of Certificates will be Wilmington
Trust Company. With certain exceptions, the Trustee makes no representations as
to the validity or sufficiency of the Basic Agreement, the Trust Supplements,
the Certificates, the Equipment Notes, the Indentures, the Leases or other
related documents. The Trustee shall not be liable with respect to any series of
Certificates, for any action taken or omitted to be taken by it in good faith in
accordance with the direction of the holders of a majority in principal amount
of outstanding Certificates of such series issued under the Basic Agreement.
Subject to such provisions, such Trustee shall be under no obligation to
exercise any of its rights or powers under the Basic Agreement at the request of
any holders of Certificates issued thereunder unless they shall have offered to
the Trustee indemnity satisfactory to it. The Basic Agreement provides that the
Indenture Trustee in its individual or any other capacity may acquire and hold
Certificates issued thereunder and, subject to certain conditions, may otherwise
deal with Continental and, with respect to the Aircraft, with any Owner Trustee
with the same rights it would have if it were not the Trustee.
The Trustee may resign with respect to any or all of the Trusts at any
time, in which event Continental will be obligated to appoint a successor
trustee. If the Trustee ceases to be eligible to continue as Trustee with
respect to a Trust or becomes incapable of acting as Trustee or becomes
insolvent, Continental may remove such Trustee, or any Certificateholder of such
Trust for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of such
<PAGE>
Trustee and the appointment of a successor trustee. Any resignation or removal
of the Trustee with respect to a Trust and appointment of a successor trustee
for such Trust does not become effective until acceptance of the appointment by
the successor trustee. Pursuant to such resignation and successor trustee
provisions, it is possible that a different trustee could be appointed to act as
the successor trustee with respect to each Trust. All references in this
Prospectus to the Trustee should be read to take into account the possibility
that the Trusts could have different successor trustees in the event of such a
resignation or removal.
The Basic Agreement provides that Continental will pay the Trustee's
Fees and expenses and indemnify the Trustee against certain liabilities.
DESCRIPTION OF THE EQUIPMENT NOTES
The statements made under this caption are summaries and reference is
made to the entire Prospectus and detailed information appearing in the
applicable Prospectus Supplement.
To the extent that any provision in any Prospectus Supplement is
inconsistent with any provision in this summary, the provision of such
Prospectus Supplement will control.
GENERAL
All Equipment Notes will be issued under a separate Indenture between
the related Owner Trustee of a trust for the benefit of the Owner Participant
who is the beneficial owner of the related Aircraft, and the related Loan
Trustee. The Equipment Notes will be nonrecourse obligations of the applicable
Owner Trustee. Each Equipment Note will be authenticated under an Indenture by
the Loan Trustee. All Equipment Notes issued under the same Indenture will
relate to, and be secured by, one or more Aircraft identified and described in
the related Prospectus Supplement and which are leased to Continental pursuant
to a Lease between the Owner Trustee under the applicable Owner Trust and
Continental.
With respect to each Aircraft, the related Owner Trustee has acquired
or will acquire such Aircraft from the manufacturer of such Aircraft or from an
interim owner established by such manufacturer, as the case may be, has granted
or will grant a security interest in such Aircraft to the related Loan Trustee
as security for the payments of the related Equipment Notes, and has leased or
will lease such Aircraft to Continental pursuant to the related Lease which has
been or will be assigned to the related Loan Trustee. Pursuant to each such
Lease, Continental will be obligated to make or cause to be made rental and
other payments to the related Loan Trustee on behalf of the related Owner
Trustee in amounts specified in the applicable Prospectus Supplement.
PRINCIPAL AND INTEREST PAYMENTS
Interest received by the Trustee on the Equipment Notes held in each
Trust will be passed through to the Certificateholders of such Trust on the
dates and at the rate per annum set forth in the applicable Prospectus
Supplement until the final distribution for such Trust. Principal received by
<PAGE>
the Trustee on the Equipment Notes held in each Trust will be passed through to
the Certificateholders of such Trust in scheduled amounts on the dates set forth
in the applicable Prospectus Supplement until the final distribution date for
such Trust.
If any date scheduled for any payment of principal, premium, if any,
or interest with respect to the Equipment Notes is not a Business Day, such
payment will be made on the next succeeding Business Day without any additional
interest.
REDEMPTION
The applicable Prospectus Supplement will describe the circumstances,
whether voluntary or involuntary, under which the Equipment Notes may be
redeemed or purchased prior to the stated maturity date thereof, in whole or in
part, the premium, if any, applicable upon certain redemptions or purchases and
other terms applying to the redemptions or purchases of such Equipment Notes.
SECURITY
The Equipment Notes will be secured by (i) an assignment by the
related Owner Trustee to the related Loan Trustee of such Owner Trustee's rights
(except for certain rights, including those described below) under the Lease or
Leases with respect to the related Aircraft, including the right to receive
payments of rent thereunder, (ii) a mortgage granted to such Loan Trustee in
such Aircraft, subject to the rights of Continental under such Lease or Leases
and (iii) an assignment to such Loan Trustee of certain of such Owner Trustee's
rights with respect to such Aircraft under the purchase agreement between
Express and the related manufacturer. Under the terms of each Lease,
Continental's obligations in respect of each Aircraft will be those of a lessee
under a "net lease." Accordingly, Continental will be obligated, among other
things and at its expense, to cause each Aircraft to be duly registered, to pay
all costs of operating such Aircraft and to maintain, service, repair and
overhaul (or cause to be maintained, serviced, repaired and overhauled) such
Aircraft. With respect to the Aircraft, the assignment by the related Owner
Trustee to the related Loan Trustee of its rights under the related Lease will
exclude, among other things, rights of such Owner Trustee and the related Owner
Participant relating to indemnification by Continental for certain matters,
insurance proceeds payable to such Owner Trustee in its individual capacity and
to such Owner Participant under liability insurance maintained by Continental
pursuant to such Lease or by such Owner Trustee or such Owner Participant,
insurance proceeds payable to such Owner Trustee in its individual capacity or
to such Owner Participant under certain casualty insurance maintained by such
Owner Trustee or such Owner Participant pursuant to such Lease and any rights of
such Owner Participant or such Owner Trustee to enforce payment of the foregoing
amounts and their respective rights to the proceeds of the foregoing.
The Prospectus Supplement will specify the required insurance coverage
with respect to the Aircraft.
Continental will be required, except under certain circumstances, to
keep each Aircraft registered under the Transportation Code, and to record the
<PAGE>
Indenture and the Lease, if applicable, among other documents, with respect to
each Aircraft under the Transportation Code. Such recordation of the Indenture,
the Lease and other documents with respect to each Aircraft will give the
related Loan Trustee a perfected security interest in the related Aircraft
whenever it is located in the United States or any of its territories and
possessions; the Convention on the International Recognition of Rights in
Aircraft (the "Convention") provides that such security will also be recognized,
with certain limited exceptions, in those jurisdictions that have ratified or
adhere to the Convention. Continental will have the right, subject to certain
conditions, at its own expense to register each Aircraft in countries other than
the United States. Each Aircraft may also be operated by Continental or under
sublease or interchange arrangements in countries that are not parties to the
Convention. The extent to which the related Loan Trustee's security interest
would be recognized in an Aircraft located in a country that is not a party to
the Convention, and the extent to which such security interest would be
recognized in a jurisdiction adhering to the Convention if the Aircraft is
registered in a jurisdiction not a party to the Convention, is uncertain.
Moreover, in the case of an Indenture Default, the ability of the related Loan
Trustee to realize upon its security interest in an Aircraft could be adversely
affected as a legal or practical matter if such Aircraft were registered or
located outside the United States.
Unless otherwise specified in the applicable Prospectus Supplement,
the Equipment Notes will not be cross-collateralized and consequently the
Equipment Notes issued in respect of any one Aircraft will not be secured by any
other Aircraft or the Lease related thereto. Unless and until an Indenture
Default with respect to an Aircraft has occurred and is continuing, the related
Loan Trustee may exercise only limited rights of the related Owner Trustee under
the related Lease.
Funds, if any, held from time to time by the Loan Trustee with respect
to any Aircraft, prior to the distribution thereof, will be invested and
reinvested by such Loan Trustee. Such investment and reinvestment will be at the
direction of Continental (except in the case of a Lease Event of Default under
the applicable Lease), in certain investments described in the Related
Indenture. The net amount of any loss resulting from any such investments will
be paid by Continental.
Section 1110 of the Bankruptcy Code provides that, in reorganization
cases under Chapter 11 of the Bankruptcy Code, the right of a lessor with
respect to, and of the holder of a security interest in, aircraft capable of
carrying 10 or more individuals or 6,000 pounds or more of cargo leased to or
subject to a security interest granted by a citizen of the United States (as
defined in the Transportation Code) holding an air carrier operating certificate
issued by the Secretary of Transportation pursuant to the Transportation Code
for such aircraft (a certificate which Continental and Express each presently
possesses) to take possession of such aircraft in compliance with the provisions
of the lease or security agreement is not affected by (a) the automatic stay
provision of the Bankruptcy Code, which provision generally enjoins the taking
of any action against a debtor by a creditor, (b) the provision of the
Bankruptcy Code allowing the trustee or debtor-in-possession to use, sell or
lease property of the estate and (c) any power of the bankruptcy court to enjoin
a repossession. Section 1110 provides, however, that the right of a lessor or
secured party to take possession of an aircraft in compliance with the
provisions of the lease or security agreement in the event of a default may not
be exercised for 60 days following the date of commencement of the
<PAGE>
reorganization proceedings (unless specifically permitted by the bankruptcy
court) and may not be exercised at all if, within such 60-day period (or such
longer period consented to by the lessor, conditional vendor or holder of a
security interest), the trustee or debtor-in-possession agrees to perform the
debtor's obligations that become due on or after such date and cures all
existing defaults (other than defaults resulting solely from the financial
condition, bankruptcy, insolvency or reorganization of the debtor).
In connection with any issuance of Certificates under this Prospectus
and the applicable Prospectus Supplement, it is a condition to the Trustee's
obligation to purchase Equipment Notes with respect to each Aircraft that
outside counsel to Continental provide its opinion to such Trustee that the
Owner Trustee, as lessor under the Lease for such Aircraft, and the Loan
Trustee, as assignee of such Owner Trustee's rights under such Lease pursuant to
the Related Indenture, will be entitled to the benefits of Section 1110 of the
U.S. Bankruptcy Code with respect to the airframe and engines comprising such
Aircraft so long as Continental continues to be a "citizen of the United States"
as defined in Section 40102 of Title 49 of the Transportation Code holding an
air carrier operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49 of the Transportation Code for aircraft
capable of carrying 10 or more individuals or 6,000 pounds or more of cargo.
Such opinions will not address the possible replacement of an Aircraft after an
Event of Loss (as defined in the Indenture) in the future.
RANKING OF EQUIPMENT NOTES
Some of the Equipment Notes related to one or more Aircraft, as
described in the related Prospectus Supplement, may be subordinated and junior
in right of payment to other Equipment Notes related to the same Aircraft. The
terms of such subordination, if any, will be described in the related Prospectus
Supplement.
PAYMENTS AND LIMITATION OF LIABILITY
Each Aircraft will be leased by the related Owner Trustee to
Continental for a term commencing on the delivery date thereof to such Owner
Trustee and expiring on a date not earlier than the latest maturity date of the
related Equipment Notes, unless previously terminated as permitted by the terms
of the related Lease. The basic rent and other payments under each such Lease
will be payable by Continental in accordance with the terms specified in the
applicable Prospectus Supplement, and will be assigned by the related Owner
Trustee under the Related Indenture to the Loan Trustee. The balance of any
basic rent payment under each Lease, after payment of amounts due on the
Equipment Notes issued under the Indenture corresponding to such Lease, will be
paid over to the applicable Owner Participant. Continental's obligation to pay
rent and to cause other payments to be made under each Lease will be general
obligations of Continental. The Equipment Notes will not be obligations of, or
guaranteed by, Continental.
None of the Owner Trustees, the Owner Participants or the Loan
Trustees shall be personally liable to any holder of such Equipment Notes for
amounts payable under such Equipment Notes, or, except as provided in the
Indentures relating thereto in the case of the Owner Trustees and the Loan
Trustees, for any liability under such Indentures. Except in the circumstances
<PAGE>
referred to above, all amounts payable under any Equipment Notes (other than
payments made in connection with an optional redemption or purchase by the
related Owner Trustee or the related Owner Participant) will be made only from
(i) the assets subject to the lien of the Related Indenture with respect to such
Aircraft or the income and proceeds received by the related Loan Trustee
therefrom (including rent payable by Continental under the related Lease) or
(ii) if so provided in the related Prospectus Supplement, the applicable
Liquidity Facility.
LIQUIDITY FACILITY
The related Prospectus Supplement may provide that one or more
payments of interest on the related Equipment Notes of one or more series or
distributions made by the Trustee of the related Trust will be supported by a
Liquidity Facility issued by an institution identified in the related Prospectus
Supplement. Unless otherwise provided in the related Prospectus Supplement, the
provider of the Liquidity Facility will have a senior claim upon the assets
securing the Equipment Notes.
INTERCREDITOR ISSUES
Equipment Notes may be issued in different Classes, which means that
the Equipment Notes may have different payment priorities even though they are
issued by the same Owner Trustee and relate to the same Aircraft. In such event,
the related Prospectus Supplement will describe the priority of distributions
among such Equipment Notes (and any Liquidity Facilities therefor), the ability
of any Class to exercise and/or enforce any or all remedies with respect to the
related Aircraft, the Lease related thereto and certain other intercreditor
terms and provisions.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
GENERAL
Unless otherwise indicated in the applicable Prospectus Supplement,
the following summary describes the principal U.S. federal income tax
consequences to Certificateholders of the purchase, ownership and disposition of
the Certificates offered hereby and in the opinion of Hughes Hubbard & Reed LLP,
special tax counsel to Continental ("Tax Counsel"), is accurate in all material
respects with respect to the matters discussed therein. Except as otherwise
specified, the summary is addressed to beneficial owners of Certificates ("U.S.
Certificateholders") that are citizens or residents of the United States,
corporations, partnerships or other entities created or organized in or under
the laws of the United States or any state therein, or estates or trusts the
income of which is subject to U.S. federal income taxation regardless of its
source ("U.S. Persons") that will hold the Certificates as capital assets. This
summary does not address the tax treatment of U.S. Certificateholders that may
be subject to special tax rules, such as banks, insurance companies, dealers in
securities or commodities, tax-exempt entities, holders that will hold
Certificates as part of a straddle or holders that have a "functional currency"
other than the U.S. Dollar, nor does it address the tax treatment of U.S.
Certificateholders that do not acquire Certificates as part of the initial
offering thereof. The summary does not purport to be a comprehensive description
of all of the tax considerations that may be relevant to a decision to purchase
<PAGE>
Certificates. This summary does not describe any tax consequences arising under
the laws of any state, locality or taxing jurisdiction other than the United
States.
The summary is based upon the tax laws and practice of the United
States as in effect on the date of this Prospectus, as well as judicial and
administrative interpretations thereof (in final or proposed form) available on
or before such date. All of the foregoing are subject to change, which change
could apply retroactively. Prospective investors should note that no rulings
have been sought from the Internal Revenue Service (the "IRS") with respect to
the federal income tax consequences discussed below, and no assurances can be
given that the IRS will not take contrary positions. PROSPECTIVE INVESTORS
SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE FEDERAL, STATE, LOCAL
AND FOREIGN TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE CERTIFICATES.
TAX STATUS OF THE TRUSTS
In the opinion of Tax Counsel, each Trust will be classified as a
grantor trust for U.S. federal income tax purposes.
TAXATION OF CERTIFICATEHOLDERS GENERALLY
A U.S. Certificateholder will be treated as owning its pro rata
undivided interest in each of the Equipment Notes and any other property held by
the related Trust. Accordingly, each U.S. Certificateholder's share of interest
paid on the Equipment Notes will be taxable as ordinary income, as it is paid or
accrued, in accordance with such U.S. Certificateholder's method of accounting
for U.S. federal income tax purposes, and a U.S. Certificateholder's share of
premium, if any, paid on redemption of an Equipment Note will be treated as
capital gain. In the event that a Trust is supported by a Liquidity Facility,
any amounts received by the Trust under the Liquidity Facility with respect to
unpaid interest will be treated for U.S. federal income tax purposes as having
the same characteristics as the payments they replace.
Each U.S. Certificateholder will be entitled to deduct, consistent
with its method of accounting, its pro rata share of fees and expenses paid or
incurred by the corresponding Trust as provided in Section 162 or 212 of the
Internal Revenue Code of 1986, as amended (the "Code"). Certain fees and
expenses, including fees paid to the Trustee and the provider of the Liquidity
Facility (if applicable), will be borne by parties other than the
Certificateholders. It is possible that such fees and expenses will be treated
as constructively received by the Trust, in which event a U.S. Certificateholder
will be required to include in income and will be entitled to deduct its pro
rata share of such fees and expenses. If a U.S. Certificateholder is an
individual, estate or trust, the deduction for such holder's share of such fees
or expenses will be allowed only to the extent that all of such holder's
miscellaneous itemized deductions, including such holder's share of such fees
and expenses, exceed 2% of such holder's adjusted gross income. In addition, in
the case of U.S. Certificateholders who are individuals, certain otherwise
allowable itemized deductions will be subject generally to additional
limitations on itemized deductions under applicable provisions of the Code.
<PAGE>
EFFECT OF SUBORDINATION OF SUBORDINATED CERTIFICATEHOLDERS
In the event that any Trust (such Trust being a "Subordinated Trust"
and the related Certificates being "Subordinated Certificates") is subordinated
in right of payment to any other Trust and the Subordinated Trust receives less
than the full amount of the receipts of interest, principal or premium paid with
respect to the Equipment Notes held by it (any shortfall in such receipts being
the "Shortfall Amounts") because of the subordination of such Trust, the
corresponding owners of beneficial interests in the Subordinated Certificates
(the "Subordinated Certificateholders") would probably be treated for federal
income tax purposes as if they had (1) received as distributions their full
share of such receipts, (2) paid over to the relevant preferred class of
Certificateholders an amount equal to their share of such Shortfall Amount, and
(3) retained the right to reimbursement of such amounts to the extent of future
amounts payable to such Subordinated Certificateholders with respect to such
Shortfall Amount.
Under this analysis, (1) Subordinated Certificateholders incurring a
Shortfall Amount would be required to include as current income any interest or
other income of the corresponding Subordinated Trust that was a component of the
Shortfall Amount, even though such amount was in fact paid to the relevant
preferred class of Certificateholders, (2) a loss would only be allowed to such
Subordinated Certificateholders when their right to receive reimbursement of
such Shortfall Amount becomes worthless (I.E., when it becomes clear that funds
will not be available from any source to reimburse such loss), and (3)
reimbursement of such Shortfall Amount prior to such a claim of worthlessness
would not be taxable income to Subordinated Certificateholders because such
amount was previously included in income. These results should not significantly
affect the inclusion of income for Subordinated Certificateholders on the
accrual method of accounting, but could accelerate inclusion of income to
Subordinated Certificateholders on the cash method of accounting by, in effect,
placing them on the accrual method.
ORIGINAL ISSUE DISCOUNT
The Equipment Notes may be issued with original issue discount
("OID"), which may require U.S. Certificateholders to include such OID in gross
income in advance of the receipt or accrual of the stated interest on such
Equipment Notes. The Prospectus Supplement will state whether any Equipment
Notes to be held by the related Trust will be issued with OID. Generally, a
holder of a debt instrument issued with original issue discount that is not de
minimis must include such original issue discount in income for federal income
tax purposes as it accrues, in advance of the receipt of the cash attributable
to such income, under a method that takes into account the compounding of
interest.
SALE OR OTHER DISPOSITION OF THE CERTIFICATES
Upon the sale, exchange or other disposition of a Certificate, a U.S.
Certificateholder generally will recognize capital gain or loss equal to the
difference between the amount realized on the disposition (other than any amount
attributable to accrued interest which will be taxable as ordinary income) and
the U.S. Certificateholder's adjusted tax basis in the related Equipment Notes
and any other property held by the corresponding Trust. Any gain or loss will be
<PAGE>
long-term capital gain or loss to the extent attributable to property held by
the Trust for more than one year.
FOREIGN CERTIFICATEHOLDERS
Subject to the discussion of backup withholding below, payments of
principal and interest on the Equipment Notes to, or on behalf of, any
beneficial owner of a Certificate that is not a U.S. Person (a "Non-U.S.
Certificateholder") will not be subject to U.S. federal withholding tax;
provided, in the case of interest, that (i) such Non-U.S. Certificateholder does
not actually or constructively own 10% or more of the total combined voting
power of all classes of the stock of Continental, (ii) such Non-U.S.
Certificateholder is not a controlled foreign corporation for U.S. tax purposes
that is related to an Owner Participant and (iii) either (A) the Non-U.S.
Certificateholder certifies, under penalties of perjury, that it is not a U.S.
Person and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") and holds the Certificate certifies, under penalties of perjury,
that such statement has been received from the Non-U.S. Certificateholder by it
or by another financial institution and furnishes the payor with a copy thereof.
Regulations proposed by the Internal Revenue Service on April 15, 1996, if
finalized in their current form, would modify the certification requirements
described in clause (iii) with respect to certain payments after December 31,
1997.
Any capital gain realized upon the sale, exchange, retirement or other
disposition of a Certificate or upon receipt of premium paid on an Equipment
Note by a Non-U.S. Certificateholder will not be subject to U.S. federal income
or withholding taxes if (i) such gain is not effectively connected with a U.S.
trade or business of the holder and (ii) in the case of an individual, such
holder is not present in the United States for 183 days or more in the taxable
year of the sale, exchange, retirement or other disposition or receipt.
BACKUP WITHHOLDING
Payments made on the Certificates and proceeds from the sale of
Certificates will not be subject to a backup withholding tax of 31% unless, in
general, the Certificateholder fails to comply with certain reporting procedures
or otherwise fails to establish an exemption from such tax under applicable
provisions of the Code.
ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable Prospectus Supplement,
the Certificates may, subject to certain legal restrictions, be purchased and
held by an employee benefit plan (a "Plan") subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or an individual
retirement account or an employee benefit plan subject to section 4975 of the
Code. A fiduciary of a Plan must determine that the purchase and holding of a
Certificate is consistent with its fiduciary duties under ERISA and does not
result in a non-exempt prohibited transaction as defined in section 406 of ERISA
or section 4975 of the Code. Employee benefit plans which are governmental plans
<PAGE>
(as defined in section 3(32) of ERISA) and certain church plans (as defined in
section 3(33) of ERISA) are not subject to Title I of ERISA or section 4975 of
the Code. The Certificates may, subject to certain legal restrictions, be
purchased and held by such plans.
PLAN OF DISTRIBUTION
Certificates may be sold to one or more underwriters for public
offering and sale by them or to investors or other persons directly or through
one or more dealers or agents. Any such underwriter, dealer or agent involved in
the offer and sale of the Certificates will be named in an applicable Prospectus
Supplement.
The Certificates may be sold at a fixed price or prices, which may be
changed, or from time to time at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated prices.
Dealer trading may take place in certain of the Certificates, including
Certificates not listed on any securities exchange. Continental does not intend
to apply for listing of the Certificates on a national securities exchange.
Continental also may, from time to time, authorize underwriters acting as
Continental's agents to offer and sell the Certificates upon the terms and
conditions as shall be set forth in any Prospectus Supplement. In connection
with the sale of Certificates, underwriters may be deemed to have received
compensation from Continental in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Certificates for
whom they may act as agent. Underwriters may sell Certificates to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions (which may
be changed from time to time) from the purchasers for whom they may act as
agent.
If a dealer is used directly by Continental in the sale of
Certificates in respect of which this Prospectus is delivered, such Certificates
will be sold to the dealer, as principal. The dealer may then resell such
Certificates to the public at varying prices to be determined by such dealer at
the time of resale. Any such dealer and the terms of any such sale will be set
forth in the Prospectus Supplement relating thereto.
Certificates may be offered and sold through agents designated by
Continental from time to time. Any such agent involved in the offer or sale of
the Certificates in respect of which this Prospectus is delivered will be named
in, and any commissions payable by Continental to such agent will be set forth
in, the applicable Prospectus Supplement. Unless otherwise indicated in the
applicable Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
Offers to purchase Certificates may be solicited directly by
Continental and sales thereof may be made by Continental directly to
institutional investors or others who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale thereof. The terms
of any such sales will be described in the Prospectus Supplement relating
thereto. Except as set forth in the applicable Prospectus Supplement, no
director, officer or employee of Continental will solicit or receive a
commission in connection with direct sales by Continental of the Certificates,
<PAGE>
although such persons may respond to inquiries by potential purchasers and
perform ministerial and clerical work in connection with any such direct sales.
Any underwriting compensation paid by Continental to underwriters,
dealers or agents in connection with the offering of Certificates, and any
discounts, concessions or commissions allowed by underwriters to participating
dealers, will be set forth in an applicable Prospectus Supplement. Underwriters,
dealers and agents participating in the distribution of the Certificates may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Certificates may be deemed to
be underwriting discounts and commissions under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements with
Continental, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act, and to
reimbursement by Continental for certain expenses.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, Continental and its subsidiaries in the ordinary course of
business.
If so indicated in an applicable Prospectus Supplement and subject to
existing market conditions, Continental will authorize dealers acting as
Continental's agents to solicit offers by certain institutions to purchase
Certificates at the public offering price set forth in such Prospectus
Supplement pursuant to Delayed Delivery Contracts ("Contracts") providing for
payment and delivery on the date or dates stated in such Prospectus Supplement.
Each Contract will be for an amount not less than, and the aggregate principal
amount of Certificates sold pursuant to Contracts shall not be less nor more
than, the respective amounts stated in such Prospectus Supplement. Institutions
with whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but will in all cases be subject
to the approval of Continental. Contracts will not be subject to any conditions
except the purchase by an institution of the Certificates covered by its
Contracts shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject. A
commission indicated in the applicable Prospectus Supplement will be granted to
underwriters and agents soliciting purchases of Certificates pursuant to
Contracts accepted by Continental. Agents and underwriters will have no
responsibility in respect of the delivery or performance of Contracts.
If an underwriter or underwriters are utilized in the sale of any
Certificates, the applicable Prospectus Supplement will contain a statement as
to the intention, if any, of such underwriters at the date of such Prospectus
Supplement to make a market in the Certificates. No assurances can be given that
there will be a market for the Certificates.
The place and time of delivery for the Certificates in respect of
which this Prospectus is delivered will be set forth in the applicable
Prospectus Supplement.
<PAGE>
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement,
the validity of the Certificates will be passed upon for Continental by Hughes
Hubbard & Reed LLP, One Battery Park Plaza, New York, New York. Unless otherwise
indicated in the applicable Prospectus Supplement, Hughes Hubbard & Reed LLP
will rely on the opinion of counsel for the Trustee as to certain matters
relating to the authorization, execution and delivery of such Certificates by,
and the valid and binding effect thereof on, such Trustee.
EXPERTS
The consolidated financial statements (including financial statement
schedules) of Continental Airlines, Inc. appearing in Continental Airlines,
Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1996 have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon included therein and incorporated herein by reference. Such
consolidated financial statements are, and audited consolidated financial
statements to be included in subsequently filed documents will be, incorporated
herein in reliance upon reports of Ernst & Young LLP pertaining (to such
consolidated financial statements to the extent covered by consents filed with
the Commission) given upon the authority of such firm as experts in accounting
and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with this offering, other than
underwriting discounts and commissions, are:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration filing fee......... $ 75,758
Printing and engraving expenses.................................... 150,000*
Trustee fees and expenses.......................................... 25,000*
Accounting fees and expenses....................................... 60,000*
Rating Agency fees................................................. 60,000*
Legal fees and expenses............................................ 200,000*
Miscellaneous...................................................... 29,242*
--------
Total..................................................... 600,000*
========
- -----------------
<FN>
* Estimates.
</FN>
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation and Bylaws provide that the
Company will indemnify each of its directors and officers to the full extent
permitted by the laws of the State of Delaware and may indemnify certain other
persons as authorized by the Delaware General Corporation Law (the "GCL").
Section 145 of the GCL provides as follows:
"(a) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
<PAGE>
(b) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even though less than a quorum, or
(2) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative, or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of undertaking
by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including attorneys'
fees) incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
<PAGE>
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this section with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees)".
The Certificate of Incorporation and Bylaws of the Company also limit
the personal liability of directors to the Company and its stockholders for
monetary damages resulting from certain breaches of the directors' fiduciary
duties. The Bylaws of the Company provide as follows:
<PAGE>
"No Director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (i) for any breach of the Director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the. . . GCL, or (iv) for any
transaction from which the Director derived any improper personal benefit. If
the GCL is amended to authorize corporate action further eliminating or limiting
the personal liability of Directors, then the liability of Directors of the
Corporation shall be eliminated or limited to the full extent permitted by the
GCL, as so amended".
The Company maintains directors' and officers' liability insurance.
ITEM 16. EXHIBITS.
Reference is made to the Exhibit Index which immediately precedes the
exhibits filed with this Registration Statement, which is incorporated herein by
reference.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section l0(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the
low or high and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
<PAGE>
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) shall not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by any such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
or not such indemnification is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Houston, State of Texas, on July 15, 1997.
CONTINENTAL AIRLINES, INC.
By: /S/ JEFFERY A. SMISEK
------------------------------------
Jeffery A. Smisek
Executive Vice President, General
Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on July 15, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
*
- ----------------------------- Chairman of the Board and Chief Executive
Gordon M. Bethune Officer (Principal Executive
*
- ----------------------------- Executive Vice President and Chief Financial
Lawrence W. Kellner Officer (Principal Financial Officer)
*
- ----------------------------- Vice President and Controller
Michael P. Bonds (Principal Accounting Officer)
*
- ----------------------------- Director
Thomas J. Barrack, Jr.
*
- ----------------------------- President, Chief Operating Officer and
Gregory D. Brenneman Director
*
- ----------------------------- Director
Lloyd M. Bentsen, Jr.
*
- ----------------------------- Director
David Bonderman
*
- ----------------------------- Director
Patrick Foley
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
*
- ----------------------------- Director
Douglas H. McCorkindale
*
- ----------------------------- Director
George G.C. Parker
*
- ----------------------------- Director
Richard W. Pogue
*
- ----------------------------- Director
William S. Price III
*
- ----------------------------- Director
Donald L. Sturm
*
- ----------------------------- Director
Karen Hastie Williams
*
- ----------------------------- Director
Charles A. Yamarone
*By: /S/ SCOTT R. PETERSON
-----------------------------------
SCOTT R. PETERSON, Attorney-in-fact
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<S> <C>
4.1 Form of Pass Through Trust Agreement
5.1 Opinion of Hughes Hubbard & Reed LLP
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst & Young LLP
23.1 Consent of Hughes Hubbard & Reed LLP (included in its
opinion filed as exhibit 5.1)
24.1 Powers of Attorney
25.1 Statement of Eligibility of Wilmington Trust Company on Form T-1
</TABLE>
EXHIBIT 4.1
FORM OF PASS THROUGH TRUST AGREEMENT
<PAGE>
- --------------------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of [ ], 1997
between
CONTINENTAL AIRLINES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS
Section 1.01 Definitions ....................................................2
Section 1.02 Compliance Certificates and Opinions ..........................11
Section 1.03 Form of Documents Delivered to Trustee ........................12
Section 1.04 Directions of Certificateholders ..............................12
ARTICLE II - ORIGINAL ISSUANCE OF CERTIFICATES:
ACQUISITION OF TRUST PROPERTY
Section 2.01 Amount Unlimited; Issuable in Series ..........................14
Section 2.02 Acquisition of Equipment Notes ................................16
Section 2.03 Acceptance by Trustee .........................................17
Section 2.04 Limitation of Powers ..........................................18
ARTICLE III - THE CERTIFICATES
Section 3.01 Form, Denomination and Execution of Certificates ..............18
Section 3.02 Authentication of Certificates ................................18
Section 3.03 Temporary Certificates ........................................19
Section 3.04 Transfer and Exchange .........................................19
Section 3.05 Book-Entry and Definitive Certificates ........................20
Section 3.06 Mutilated, Destroyed, Lost or Stolen Certificates .............22
Section 3.07 Persons Deemed Owners .........................................22
Section 3.08 Cancellation ..................................................23
Section 3.09 Limitation of Liability for Payments ..........................23
ARTICLE IV - DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 4.01 Certificate Account and Special Payments Account ..............23
Section 4.02 Distributions from Certificate Account and Special Payments
Account .......................................................24
Section 4.03 Statements to Certificateholders ..............................26
Section 4.04 Investment of Special Payment Moneys ..........................26
ARTICLE V - THE COMPANY
Section 5.01 Maintenance of Corporate Existence ............................27
Section 5.02 Consolidation, Merger, Etc. ...................................27
ARTICLE VI - DEFAULT
Section 6.01 Events of Default .............................................28
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
Section 6.02 Incidents of Sale of Equipment Notes ..........................29
Section 6.03 Judicial Proceedings Instituted by Trustee; Trustee May
Bring Suit ....................................................30
Section 6.04 Control by Certificateholders .................................30
Section 6.05 Waiver of Past Defaults .......................................31
Section 6.06 Right of Certificateholders to Receive Payments
Not to Be Impaired ............................................31
Section 6.07 Certificateholders May Not Bring Suit Except Under
Certain Conditions ............................................31
Section 6.08 Remedies Cumulative ...........................................32
Section 6.09 Undertaking for Costs .........................................32
ARTICLE VII - THE TRUSTEE
Section 7.01 Certain Duties and Responsibilities ...........................33
Section 7.02 Notice of Defaults ............................................33
Section 7.03 Certain Rights of Trustee .....................................34
Section 7.04 Not Responsible for Recitals or Issuance of Certificates ......35
Section 7.05 May Hold Certificates .........................................35
Section 7.06 Money Held in Trust ...........................................35
Section 7.07. Compensation and Reimbursement ................................35
Section 7.08 Corporate Trustee Required; Eligibility .......................36
Section 7.09 Resignation and Removal; Appointment of Successor .............36
Section 7.10 Acceptance of Appointment by Successor ........................38
Section 7.11 Merger, Conversion, Consolidation or Succession
to Business ...................................................39
Section 7.12 Maintenance of Agencies .......................................39
Section 7.13 Money for Certificate Payments to Be Held in Trust ............40
Section 7.14 Registration of Equipment Notes in Trustee's Name .............41
Section 7.15 Representations and Warranties of Trustee .....................41
Section 7.16 Withholding Taxes; Information Reporting ......................42
Section 7.17 Trustee's Liens ...............................................42
Section 7.18 Preferential Collection of Claims .............................42
ARTICLE VIII - CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01 The Company to Furnish Trustee with Names and Addresses of
Certificateholders ............................................43
Section 8.02 Preservation of Information; Communications to
Certificateholders ............................................43
Section 8.03 Reports by Trustee ............................................43
Section 8.04 Reports by the Company ........................................43
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
ARTICLE IX - SUPPLEMENTAL AGREEMENTS
Section 9.01 Supplemental Agreements Without Consent of
Certificateholders ............................................44
Section 9.02 Supplemental Agreements with Consent of Certificateholders ....46
Section 9.03 Documents Affecting Immunity or Indemnity .....................47
Section 9.04 Execution of Supplemental Agreements ..........................47
Section 9.05 Effect of Supplemental Agreements .............................47
Section 9.06 Conformity with Trust Indenture Act ...........................47
Section 9.07 Reference in Certificates to Supplemental Agreements ..........47
ARTICLE X - AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS
Section 10.01 Amendments and Supplements to Indenture and
Other Note Documents ..........................................48
ARTICLE XI - TERMINATION OF TRUSTS
Section 11.01 Termination of the Trusts .....................................49
ARTICLE XII - MISCELLANEOUS PROVISIONS
Section 12.01 Limitation on Rights of Certificateholders ....................50
Section 12.02 Liabilities of Certificateholders .............................50
Section 12.03 Registration of Equipment Notes in Name of
Subordination Agent ...........................................50
Section 12.04 Notices .......................................................50
Section 12.05 Governing Law .................................................51
Section 12.06 Severability of Provisions ....................................52
Section 12.07 Trust Indenture Act Controls ..................................52
Section 12.08 Effect of Headings and Table of Contents ......................52
Section 12.09 Successors and Assigns ........................................52
Section 12.10 Benefits of Agreement .........................................52
Section 12.11 Legal Holidays ................................................52
Section 12.12 Counterparts ..................................................52
Section 12.13 Communication by Certificateholders with Other
Certificateholders ............................................53
Section 12.14 Intention of Parties ..........................................53
EXHIBITS
Exhibit A Form of Certificate
<PAGE>
Reconciliation and tie between Continental Airlines Pass Through Trust
Agreement, dated as of [ ], 1997 and the Trust Indenture Act of 1939. This
reconciliation does not constitute part of the Pass Through Trust Agreement.
<TABLE>
<CAPTION>
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
------------------- ------------------
<S> <C>
310(a)(1) 7.07
(a)(2) 7.07
312(a) 3.05; 8.01; 8.02
313(a) 7.07
314(a) 8.04(a) - (c)
(a)(4) 8.04(d)
(c)(1) 1.02
(c)(2) 1.02
(d)(1) 7.13; 11.01
(d)(2) 7.13; 11.01
(d)(3) 2.01
(e) 1.02
315(b) 7.02
316(a)(last sentence) 1.01(c)
(a)(1)(A) 6.04
(a)(1)(B) 6.05
(b) 6.06
(c) 1.04(d)
317(a)(1) 6.03
(b) 7.13
318(a) 12.05
</TABLE>
<PAGE>
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of [ ], 1997 (the "BASIC
AGREEMENT"), between CONTINENTAL AIRLINES, INC., a Delaware corporation (the
"COMPANY"), and WILMINGTON TRUST COMPANY, a Delaware trust company, as Trustee,
is made with respect to the formation from time to time of separate Continental
Airlines Pass Through Trusts, and the issuance from time to time of separate
series of Pass Through Certificates representing fractional undivided interests
in the respective Trusts.
WITNESSETH:
WHEREAS, from time to time, the Company and the Trustee may enter into
a Trust Supplement (this and certain other defined terms used herein are defined
in Section 1.01) pursuant to which the Trustee shall declare the creation of a
separate Trust for the benefit of the Holders of the series of Certificates to
be issued in respect of such Trust, and the initial Holders of the Certificates
of such series, as the grantors of such Trust, by their respective acceptances
of the Certificates of such series, shall join in the creation of such Trust
with the Trustee;
WHEREAS, all Certificates to be issued in respect of each separate
Trust will be issued as a separate series pursuant to this Agreement, will
evidence fractional undivided interests in such Trust and will have no rights,
benefits or interests in respect of any other separate Trust or the property
held therein, subject, however, to the provisions of any Intercreditor Agreement
to which one or more Trusts may be a party;
WHEREAS, from time to time, pursuant to the terms and conditions of
this Agreement with respect to each separate Trust formed hereunder, the Trustee
on behalf of such Trust shall purchase one or more issues of Equipment Notes
having the same interest rate as, and final maturity dates not later than the
final Regular Distribution Date of, the series of Certificates issued in respect
of such Trust and, subject to the terms of any related Intercreditor Agreement,
shall hold such Equipment Notes in trust for the benefit of the
Certificateholders of such Trust;
WHEREAS, to facilitate the sale of Equipment Notes to, and the purchase
of Equipment Notes by, the Trustee on behalf of each Trust created from time to
time pursuant to this Agreement, the Company as the "ISSUER", as such term is
defined in and solely for purposes of the Securities Act of 1933, as amended, of
the Certificates to be issued in respect of each Trust and as the "OBLIGOR", as
such term is defined in and solely for purposes of the Trust Indenture Act of
1939, as amended, has duly authorized the execution and delivery of this Basic
Agreement and each Trust Supplement with respect to all such Certificates and is
undertaking to perform certain administrative and ministerial duties hereunder
and is also undertaking to pay the fees and expenses of the Trustee; and
WHEREAS, this Basic Agreement, as supplemented from time to time, 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;
<PAGE>
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. For all purposes of this Basic Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms used herein that are defined in this Article I have
the meanings assigned to them in this Article I, and include the
plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, or by the
rules promulgated under the Trust Indenture Act, have the meanings
assigned to them therein;
(3) all references in this Basic Agreement to designated
"ARTICLES", "SECTIONS", "SUBSECTIONS" and other subdivisions are to
the designated Articles, Sections, Subsections and other subdivisions
of this Basic Agreement;
(4) the words "HEREIN", "HEREOF" and "HEREUNDER" and other words
of similar import refer to this Basic Agreement as a whole and not to
any particular Article, Section, Subsection or other subdivision;
(5) unless the context otherwise requires, whenever the words
"INCLUDING", "INCLUDE" or "INCLUDES" are used herein, it shall be
deemed to be followed by the phrase "WITHOUT LIMITATION"; and
(6) the term "THIS AGREEMENT" (as distinguished from "THIS BASIC
AGREEMENT") refers, unless the context otherwise requires, to this
Basic Agreement as supplemented by the Trust Supplement creating a
particular Trust and establishing the series of Certificates issued or
to be issued in respect thereof, with reference to such Trust and such
series of Certificates, as this Basic Agreement as so supplemented may
be further supplemented with respect to such Trust and such series of
Certificates.
ACT: Has the meaning, with respect to any Certificateholder,
specified in Section 1.04(a).
AFFILIATE: Means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person; PROVIDED, HOWEVER,
that neither America West Airlines, Inc. nor any of its subsidiaries
shall be deemed to be an "AFFILIATE" of the Company for purposes of
this Agreement. For the purposes of this definition, "CONTROL", when
used with respect to any specified Person, means the power, directly
<PAGE>
or indirectly, to direct the management and policies of such Person,
whether through the ownership of voting securities or by contract or
otherwise, and the terms "CONTROLLING" and "CONTROLLED" have meanings
correlative to the foregoing.
AIRCRAFT: Means one or more aircraft, including engines therefor,
owned by or leased to the Company and securing one or more Equipment
Notes.
AUTHORIZED AGENT: Means, with respect to the Certificates of any
series, any Paying Agent or Registrar for the Certificates of such
series.
BASIC AGREEMENT: Means this Pass Through Trust Agreement, as the
same may from time to time be supplemented, amended or modified, but
does not include any Trust Supplement.
BOOK-ENTRY CERTIFICATES: Means, with respect to the Certificates
of any series, a beneficial interest in the Certificates of such
series, ownership and transfers of which shall be made through book
entries as described in Section 3.05.
BUSINESS DAY: Means, with respect to the Certificates of any
series, any day other than a Saturday, a Sunday or a day on which
commercial banks are required or authorized to close in Houston,
Texas, New York, New York, or, so long as any Certificate of such
series is outstanding, the city and state in which the Trustee or any
related Loan Trustee maintains its Corporate Trust Office or receives
and disburses funds.
CERTIFICATE: Means any one of the certificates executed and
authenticated by the Trustee, substantially in the form of Exhibit A
hereto.
CERTIFICATE ACCOUNT: Means, with respect to the Certificates of
any series, the account or accounts created and maintained for such
series pursuant to Section 4.01(a) and the related Trust Supplement.
CERTIFICATEHOLDER OR HOLDER: Means, with respect to the
Certificates of any series, the Person in whose name a Certificate of
such series is registered in the Register for Certificates of such
series.
CERTIFICATE OWNER: Means, with respect to the Certificates of any
series, for purposes of Section 3.05, the Person who owns a Book-Entry
Certificate of such series.
CLEARING AGENCY: Means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended.
CLEARING AGENCY PARTICIPANT: Means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a
Clearing Agency effects, directly or indirectly, book-entry transfers
and pledges of securities deposited with the Clearing Agency.
<PAGE>
COMPANY: Means Continental Airlines, Inc., a Delaware
corporation, or its successor in interest pursuant to Section 5.02, or
(only in the context of provisions hereof, if any, when such reference
is required for purposes of compliance with the Trust Indenture Act)
any other "obligor" (within the meaning of the Trust Indenture Act)
with respect to the Certificates of any series.
CONTROLLING PARTY: Means the Person entitled to act as such
pursuant to the terms of any Intercreditor Agreement.
CORPORATE TRUST OFFICE: Means, with respect to the Trustee or any
Loan Trustee, 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, with respect to the Certificates of any
series, the date designated as such in the Trust Supplement
establishing such series.
DEFINITIVE CERTIFICATES: Has the meaning, with respect to the
Certificates of any series, specified in Section 3.05.
DIRECTION: Has the meaning specified in Section 1.04(a).
EQUIPMENT NOTES: Means, with respect to the Certificates of any
series, all of the equipment notes issued under the Indentures related
to such series of Certificates.
ERISA: Means the Employee Retirement Income Security Act of 1974,
as amended from time to time, or any successor federal statute.
ESCROW ACCOUNT: Has the meaning, with respect to the Certificates
of any series, specified in Section 2.02(b).
ESCROWED FUNDS: Has the meaning, with respect to any Trust,
specified in Section 2.02(b).
EVENT OF DEFAULT: Means, in respect of any Trust, an Indenture
Event of Default under any Indenture pursuant to which Equipment Notes
held by such Trust were issued.
FRACTIONAL UNDIVIDED INTEREST: Means the fractional undivided
interest in a Trust that is evidenced by a Certificate relating to
such Trust.
INDENTURE: Means, with respect to any Trust, each of the one or
more separate trust indenture and security agreements or trust
indenture and mortgages or similar documents described in, or on a
schedule attached to, the Trust Supplement and an indenture having
substantially the same terms and conditions which relates to a
Substitute Aircraft, as each such indenture may be amended or
supplemented in accordance with its respective terms; and "INDENTURES"
means all of such agreements.
<PAGE>
INDENTURE EVENT OF DEFAULT: Means, with respect to any Indenture,
any Indenture Event of Default (as such term is defined in such
Indenture).
INITIAL REGULAR DISTRIBUTION DATE: Means, with respect to the
Certificates of any series, the first Regular Distribution Date on
which a Scheduled Payment is to be made.
INTERCREDITOR AGREEMENT: Means any agreement by and among the
Trustee, as trustee hereunder with respect to one or more Trusts, one
or more Liquidity Providers and a Subordination Agent providing, among
other things, for the distribution of payments made in respect of
Equipment Notes held by such Trusts.
ISSUANCE DATE: Means, with respect to the Certificates of any
series, the date of the issuance of such Certificates.
LEASE: Means any 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; and "LEASES" means all such Leases.
LETTER OF REPRESENTATIONS: Means, with respect to the
Certificates of any series, an agreement among the Company, the
Trustee and the initial Clearing Agency.
LIQUIDITY FACILITY: Means, with respect to the Certificates of
any series, any revolving credit agreement, letter of credit or
similar facility relating to the Certificates of such series between a
bank or other financial institution and a Subordination Agent, as
amended, replaced, supplemented or otherwise modified from time to
time in accordance with its terms and the terms of any Intercreditor
Agreement.
LIQUIDITY PROVIDER: Means, with respect to the Certificates of
any series, a bank or other financial institution that agrees to
provide a Liquidity Facility for the benefit of the holders of
Certificates of such series.
LOAN TRUSTEE: Means, with respect to any Equipment Note or the
Indenture applicable thereto, the bank or trust company designated as
loan or indenture trustee under such Indenture, and any successor to
such Loan Trustee as such trustee; and "LOAN TRUSTEES" means all of
the Loan Trustees under the Indentures.
NOTE DOCUMENTS: Means, with respect to the Certificates of any
series, the Equipment Notes with respect to such Certificates and,
with respect to such Equipment Notes, the related Indenture, Note
Purchase Agreement and, if the related Aircraft is leased to the
Company, the related Lease and the related Owner Trustee's Purchase
Agreement.
NOTE PURCHASE AGREEMENT: Means, with respect to the Certificates
of any series, any note purchase, refunding, participation or similar
<PAGE>
agreement providing for, among other things, the purchase of Equipment
Notes by the Trustee on behalf of the relevant Trust; and "NOTE
PURCHASE AGREEMENTS" means all such agreements.
OFFICER'S CERTIFICATE: Means a certificate signed, (a)in the case
of the Company, by (i) the Chairman or Vice Chairman of the Board of
Directors, the President, any Executive Vice President, any Senior
Vice President or the Treasurer of the Company, signing alone, or (ii)
any Vice President of the Company signing together with the Secretary,
the Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company or (b) in the case of the Trustee or an Owner Trustee or a
Loan Trustee, a Responsible Officer of the Trustee or such Owner
Trustee or such Loan Trustee, as the case may be.
OPINION OF COUNSEL: Means a written opinion of legal counsel who
(a) in the case of counsel for the Company may be (i)a senior attorney
of the Company one of whose principal duties is furnishing advice as
to legal matters, (ii) Hughes Hubbard & Reed LLP or (iii) such other
counsel designated by the Company and reasonably acceptable to the
Trustee and (b) in the case of any Owner Trustee or any Loan Trustee,
may be such counsel as may be designated by any of them whether or not
such counsel is an employee of any of them, and who shall be
reasonably acceptable to the Trustee.
OTHER AGREEMENTS: Has the meaning specified in Section 6.01(b).
OUTSTANDING: When used with respect to Certificates of any
series, means, as of the date of determination, all Certificates of
such series theretofore authenticated and delivered under this
Agreement, except:
(i) Certificates of such series theretofore cancelled by the
Registrar or delivered to the Trustee or the Registrar for
cancellation;
(ii) All of the Certificates of such series if money in the
full amount required to make the final distribution with respect
to such series pursuant to Section 11.01 hereof has been
theretofore deposited with the Trustee in trust for the Holders
of the Certificates of such series as provided in Section 4.01
pending distribution of such money to such Certificateholders
pursuant to payment of such final distribution payment; and
(iii) Certificates of such series in exchange for or in lieu
of which other Certificates of such series have been
authenticated and delivered pursuant to this Agreement.
OWNER PARTICIPANT: Means, with respect to any Equipment Note, the
"Owner Participant", if any, 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.
<PAGE>
OWNER TRUSTEE: Means, with respect to any Equipment Note, the
"Owner Trustee", if any, 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 related Indentures.
OWNER TRUSTEE'S PURCHASE AGREEMENT: Has the meaning, with respect
to the Certificates of any series if the related Aircraft is leased to
the Company, specified therefor in the related Lease.
PAYING AGENT: Means, with respect to the Certificates of any
series, the paying agent maintained and appointed for the Certificates
of such series pursuant to Section 7.12.
PERMITTED INVESTMENTS: Means obligations of the United States of
America or agencies or instrumentalities thereof for the payment of
which the full faith and credit of the United States of America is
pledged, maturing in not more than 60 days after the date of
acquisition thereof or such lesser time as is required for the
distribution of any Special Payments on a Special Distribution Date.
PERSON: Means any person, including any individual, corporation,
limited liability company, partnership, joint venture, association,
joint-stock company, trust, trustee, unincorporated organization, or
government or any agency or political subdivision thereof.
POOL BALANCE: Means, with respect to the Certificates of any
series as of any date, (i) the original aggregate face amount of the
Certificates of any series less (ii) the aggregate amount of all
payments made in respect of such Certificates other than payments made
in respect of interest or premium thereon or reimbursement of any
costs or expenses incurred in connection therewith. The Pool Balance
as of any Distribution Date shall be computed after giving effect to
the payment of principal, if any, on the Equipment Notes or other
Trust Property held in the Trust and the distribution thereof to be
made on such Distribution Date.
POOL FACTOR: Means, with respect to any series of Certificates as
of any date, the quotient (rounded to the seventh decimal place)
computed by dividing (i) the Pool Balance of such series as at such
date by (ii) the original aggregate face amount of the Certificates of
such series. The Pool Factor as of any Distribution Date shall be
computed after giving effect to the payment of principal, if any, on
the Equipment Notes or other Trust Property held in the Trust and the
distribution thereof to be made on such Distribution Date.
POSTPONED NOTES: Means, with respect to any Trust or the related
series of Certificates, the Equipment Notes to be held in such Trust
as to which a Postponement Notice shall have been delivered pursuant
to Section 2.02(b).
<PAGE>
POSTPONEMENT NOTICE: Means, with respect to any Trust or the
related series of Certificates, an Officer's Certificate of the
Company signed by an officer of the Company (1) requesting that the
Trustee temporarily postpone purchase of the related Equipment Notes
to a date later than the Issuance Date of such series of Certificates,
(2) identifying the amount of the purchase price of each such
Equipment Note and the aggregate purchase price for all such Equipment
Notes, (3) setting forth the reasons for such postponement and (4)
with respect to each such Equipment Note, either (a) setting or
resetting a new Transfer Date (which shall be on or prior to the
applicable Cut-off Date) for payment by the Trustee of such purchase
price and issuance of the related Equipment Note (subject to
subsequent change from time to time in accordance with the relevant
Note Purchase Agreement), or (b) indicating that such new Transfer
Date (which shall be on or prior to the applicable Cut-off Date) will
be set by subsequent written notice not less than one Business Day
prior to such new Transfer Date (subject to subsequent change from
time to time in accordance with the relevant Note Purchase Agreement).
POTENTIAL PURCHASER: Has the meaning, with respect to any
Certificateholder, specified in Section 6.01(b).
PTC EVENT OF DEFAULT: Means, with respect to the Certificates of
any series, any failure to pay within ten Business Days of the due
date thereof: (i) the outstanding Pool Balance of such series of
Certificates on the date specified in any Trust Supplement for such
payment or (ii) interest due on the Certificates of such series on any
Distribution Date (unless the related Subordination Agent shall have
made an Interest Drawing or Drawings (as defined in the related
Intercreditor Agreement), or a withdrawal or withdrawals pursuant to a
cash collateral account under such Intercreditor Agreement, with
respect thereto in an aggregate amount sufficient to pay such interest
and shall have distributed such amount to the Trustee).
PURCHASING CERTIFICATEHOLDER: Has the meaning, with respect to
any Certificateholder, specified in Section 6.01(b).
RECORD DATE: Means, with respect to any Trust or the related
series of Certificates, (i) for Scheduled Payments to be distributed
on any Regular Distribution Date, other than the final distribution
with respect to such series, the 15th day (whether or not a Business
Day) preceding such Regular Distribution Date, and (ii) for Special
Payments to be distributed on any Special Distribution Date, other
than the final distribution with respect to such series, the 15th day
(whether or not a Business Day) preceding such Special Distribution
Date.
REGISTER and REGISTRAR: Means, each with respect to the
Certificates of any series, the register maintained and the registrar
appointed pursuant to Sections 3.04 and 7.12.
REGULAR DISTRIBUTION DATE: Means, with respect to distributions
of Scheduled Payments in respect of any series of Certificates, each
date designated as such in this Agreement, until payment of all the
Scheduled Payments to be made under the Equipment Notes held in the
Trust have been made.
<PAGE>
REQUEST: Means a request by the Company setting forth the subject
matter of the request accompanied by an Officer's Certificate and an
Opinion of Counsel as provided in Section 1.02 of this Basic
Agreement.
RESPONSIBLE OFFICER: Means, with respect to any Trustee, any Loan
Trustee and any Owner Trustee, any officer in the Corporate Trust
Department of the Trustee, Loan Trustee or Owner Trustee or any other
officer customarily performing functions similar to those performed by
the persons who at the time shall be such officers, respectively, or
to whom any corporate trust matter is referred because of his
knowledge of and familiarity with a particular subject.
RESPONSIBLE PARTY: Means, with respect to the Certificates of any
series, the person designated as such in the related Trust Supplement.
SCHEDULED PAYMENT: Means, with respect to any Equipment Note, (i)
any payment of principal or interest on such Equipment Note (other
than any such payment which is not in fact received by the Trustee or
any Subordination Agent within five days of the date on which such
payment is scheduled to be made) or (ii) any payment of interest on
the Certificates of any series with funds drawn under the Liquidity
Facility for such series, which payment represents the installment of
principal on such Equipment Note at the stated maturity of such
installment, the payment of regularly scheduled interest accrued on
the unpaid principal amount of such Equipment Note, or both; PROVIDED,
HOWEVER, that any payment of principal, premium, if any, or interest
resulting from the redemption or purchase of any Equipment Note shall
not constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as from time
to time constituted or created under the Securities Exchange Act of
1934, as amended, or, if at any time after the execution of this
instrument such Commission is not existing and performing the duties
now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
SELLING CERTIFICATEHOLDER: Has the meaning, with respect to any
Certificateholder, specified in Section 6.01(b).
SPECIAL DISTRIBUTION DATE: Means, with respect to the
Certificates of any series, each date on which a Special Payment is to
be distributed as specified in this Agreement.
SPECIAL PAYMENT: Means (i) any payment (other than a Scheduled
Payment) in respect of, or any proceeds of, any Equipment Note or
Trust Indenture Estate (as defined in each Indenture), (ii) the
amounts required to be distributed pursuant to the last paragraph of
Section 2.02(b) or (iii) the amounts required to be distributed
pursuant to the penultimate paragraph of Section 2.02(b).
<PAGE>
SPECIAL PAYMENTS ACCOUNT: Means, with respect to the Certificates
of any series, the account or accounts created and maintained for such
series pursuant to Section 4.01(b) and the related Trust Supplement.
SPECIFIED INVESTMENTS: Means, with respect to any Trust, unless
otherwise specified in the related Trust Supplement, (i) obligations
of, or guaranteed by, the United States Government or agencies
thereof, (ii) open market commercial paper of any corporation
incorporated under the laws of the United States of America or any
state thereof rated at least P-2 or its equivalent by Moody's
Investors Service, Inc. or at least A-2 or its equivalent by Standard
& Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc., (iii) certificates of deposit issued by commercial banks
organized under the laws of the United States or of any political
subdivision thereof having a combined capital and surplus in excess of
$100,000,000 which banks or their holding companies have a rating of A
or its equivalent by Moody's Investors Service, Inc. or Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc.; PROVIDED, HOWEVER, that the aggregate amount at any one time so
invested in certificates of deposit issued by any one bank shall not
exceed 5% of such bank's capital and surplus, (iv) U.S.
dollar-denominated offshore certificates of deposit issued by, or
offshore time deposits with, any commercial bank described in clause
(iii) above or any subsidiary thereof and (v) repurchase agreements
with any financial institution having combined capital and surplus of
at least $100,000,000 with any of the obligations described in clauses
(i) through (iv) above as collateral; PROVIDED FURTHER that if all of
the above investments are unavailable, the entire amounts to be
invested may be used to purchase federal funds from an entity
described in clause (iii) above.
SUBORDINATION AGENT: Has the meaning specified therefor in any
Intercreditor Agreement.
SUBSTITUTE AIRCRAFT: Means, with respect to any Trust, any
Aircraft of a type specified in this Agreement and, at the election of
the Company, substituted prior to the applicable Cut-off Date, if any,
pursuant to the terms of this Agreement.
TRANSFER DATE: Has the meaning assigned to that term or any of
the terms "Delivery Date", "Funding Date" or "Closing Date" in a Note
Purchase Agreement, and in any event refers to any such date as it may
be changed from time to time in accordance with the terms of such Note
Purchase Agreement.
TRIGGERING EVENT: Has the meaning specified therefor in any
Intercreditor Agreement.
TRUST: Means, with respect to the Certificates of any series, the
trust under this Agreement.
TRUSTEE: Means Wilmington Trust Company, or its successor in
interest, and any successor or other trustee appointed as provided
herein.
<PAGE>
TRUST INDENTURE ACT: Except as otherwise provided in Section
9.06, means, with respect to any particular Trust, the United States
Trust Indenture Act of 1939, as in force at the date as of which the
related Trust Supplement was executed.
TRUST PROPERTY: Means, with respect to any Trust, (i) subject to
any related Intercreditor Agreement, the Equipment Notes held as the
property of such 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 related Escrow Account, the related Certificate
Account and the related Special Payments Account and, subject to the
related Intercreditor Agreement, any proceeds from the sale by the
Trustee pursuant to Article VI hereof of any such Equipment Note,
(iii) all rights of such Trust and the Trustee, on behalf of the
Trust, under any Intercreditor Agreement, including, without
limitation, all monies receivable in respect of such rights, and (iv)
all monies receivable under any Liquidity Facility for such Trust.
TRUST SUPPLEMENT: Means an agreement supplemental hereto pursuant
to which (i) a separate Trust is created for the benefit of the
Holders of the Certificates of a series, (ii) the issuance of the
Certificates of such series representing fractional undivided
interests in such Trust is authorized and (iii) the terms of the
Certificates of such series are established.
Section 1.02. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request (except with respect to matters set forth in Article II)
by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take any
action under any provision of this Basic Agreement or, in respect of the
Certificates of any series, this Agreement, the Company, such Owner Trustee or
such Loan Trustee, as the case may be, shall furnish to the Trustee (i) an
Officer's Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Basic Agreement or this
Agreement relating to the proposed action have been complied with and (ii) an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Basic Agreement or this
Agreement relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Basic Agreement or, in respect of the
Certificates of any series, this Agreement (other than a certificate provided
pursuant to Section 8.04(d)) or any Trust Supplement shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions in this
Basic Agreement or this Agreement relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
<PAGE>
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters and any such Person may certify or give an opinion as to such
matters in one or several documents.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Basic Agreement or, in respect of the Certificates of any
series, this Agreement, they may, but need not, be consolidated and form one
instrument.
Section 1.04. DIRECTIONS OF CERTIFICATEHOLDERS. (a) Any direction,
consent, request, demand, authorization, notice, waiver or other action provided
by this Agreement in respect of the Certificates of any series to be given or
taken by Certificateholders (a "DIRECTION") may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such
Certificateholders in person or by an agent or proxy duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
when it is hereby expressly required pursuant to this Agreement, to the Company
or any Loan Trustee. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "ACT" of
the Certificateholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent or
proxy shall be sufficient for any purpose of this Trust Agreement and conclusive
in favor of the Trustee, the Company and the related Loan Trustee, if made in
the manner provided in this Section 1.04.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or such other officer, and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner
which the Trustee deems sufficient.
<PAGE>
(c) In determining whether the Certificateholders of the requisite
Fractional Undivided Interests of Certificates of any series Outstanding have
given any Direction under this Agreement, Certificates owned by the Company or
any Affiliate thereof shall be disregarded and deemed not to be Outstanding for
purposes of any such determination. In determining whether the Trustee shall be
protected in relying upon any such Direction, only Certificates which the
Trustee knows to be so owned shall be so disregarded. Notwithstanding the
foregoing, (i) if any such Person owns 100% of the Certificates of any series
Outstanding, such Certificates shall not be so disregarded, and (ii) if any
amount of Certificates of any series so owned by any such Person have been
pledged in good faith, such Certificates shall not be disregarded if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Certificates and that the pledgee is not the Company or any
Affiliate thereof.
(d) The Company may, at its option, by delivery of an Officer's
Certificate to the Trustee, set a record date to determine the
Certificateholders in respect of the Certificates of any series, entitled to
give any Direction. Notwithstanding Section 316(c) of the Trust Indenture Act,
such record date shall be the record date specified in such Officer's
Certificate, which shall be a date not more than 30 days prior to the first
solicitation of Certificateholders of the applicable series in connection
therewith. If such a record date is fixed, such Direction may be given before or
after such record date, but only the Certificateholders of record of the
applicable series at the close of business on such record date shall be deemed
to be Certificateholders for the purposes of determining whether
Certificateholders of the requisite proportion of Outstanding Certificates of
such series have authorized or agreed or consented to such Direction, and for
that purpose the Outstanding Certificates shall be computed as of such record
date; provided, however, that no such Direction by the Certificateholders on
such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Agreement not later than one year after such
record date.
(e) Any Direction by the Holder of any Certificate shall bind the
Holder of every Certificate issued upon the transfer thereof or in exchange
therefor or in lieu thereof, whether or not notation of such Direction is made
upon such Certificate.
(f) Except as otherwise provided in Section 1.04(c), Certificates of
any series owned by or pledged to any Person shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority or distinction as among all of the Certificates of such
series.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES:
ACQUISITION OF TRUST PROPERTY
Section 2.01. AMOUNT UNLIMITED; ISSUABLE IN SERIES. (a) The aggregate
principal amount of Certificates which may be authenticated and delivered under
this Basic Agreement is unlimited. The Certificates may be issued from time to
time in one or more series and shall be designated generally as the "PASS
THROUGH CERTIFICATES", with such further designations added or incorporated in
<PAGE>
such title for the Certificates of each series as specified in the related Trust
Supplement. Each Certificate shall bear upon its face the designation so
selected for the series to which it belongs. All Certificates of the same series
shall be substantially identical except that the Certificates of a series may
differ as to denomination and as may otherwise be provided in the Trust
Supplement establishing the Certificates of such series. Each series of
Certificates issued pursuant to this Agreement will evidence fractional
undivided interests in the related Trust and, except as may be contained in any
Intercreditor Agreement, will have no rights, benefits or interests in respect
of any other Trust or the Trust Property held therein. All Certificates of the
same series shall be in all respects equally and ratably entitled to the
benefits of this Agreement without preference, priority or distinction on
account of the actual time or times of authentication and delivery, all in
accordance with the terms and provisions of this Agreement.
(b) The following matters shall be established with respect to the
Certificates of each series issued hereunder by a Trust Supplement executed and
delivered by and among the Company and the Trustee:
(1) the formation of the Trust as to which the Certificates of such
series represent fractional undivided interests and its designation (which
designation shall distinguish such Trust from each other Trust created
under this Basic Agreement and a Trust Supplement);
(2) the specific title of the Certificates of such series (which title
shall distinguish the Certificates of such series from each other series of
Certificates created under this Basic Agreement and a Trust Supplement);
(3) any limit upon the aggregate principal amount of the Certificates
of such series which may be authenticated and delivered (which limit shall
not pertain to Certificates authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Certificates of
the series pursuant to Sections 3.03, 3.04 and 3.06);
(4) the Cut-off Date with respect to the Certificates of such series;
(5) the Regular Distribution Dates applicable to the Certificates of
such series;
(6) the Special Distribution Dates applicable to the Certificates of
such series;
(7) if other than as provided in Section 7.12(b), the Registrar or the
Paying Agent for the Certificates of such series, including any
Co-Registrar or additional Paying Agent;
(8) if other than as provided in Section 3.02, the denominations in
which the Certificates of such series shall be issuable;
(9) if other than United States dollars, the currency or currencies
(including currency units) in which the Certificates of such series shall
be denominated;
<PAGE>
(10) the specific form of the Certificates of such series (including
the interest rate applicable thereto) and whether or not Certificates of
such series are to be issued as Book-Entry Certificates and, if such
Certificates are to be Book-Entry Certificates, the form of Letter of
Representations, if any (or, in the case of any Certificates denominated in
a currency other than United States dollars and if other than as provided
in Section 3.05, whether and the circumstances under which beneficial
owners of interests in such Certificates in permanent global form may
exchange such interests for Certificates of such series and of like tenor
of any authorized form and denomination);
(11) a description of the Equipment Notes to be acquired and held in
the related Trust and of the related Aircraft and Note Documents;
(12) provisions with respect to the terms for which the definitions
set forth in Article I hereof or the terms of Section 11.01 hereof permit
or require further specification in the related Trust Supplement;
(13) any restrictions (including legends) in respect of ERISA;
(14) whether such series will be subject to an Intercreditor Agreement
and, if so, the specific designation of such Intercreditor Agreement;
(15) whether such series will have the benefit of a Liquidity Facility
and, if so, any terms appropriate thereto;
(16) whether there will be a deposit agreement or other arrangement
prior to the delivery of one or more Aircraft and, if so, any terms
appropriate thereto; and
(17) any other terms of the Certificates of such series (which terms
shall not be inconsistent with the provisions of the Trust Indenture Act),
including any terms of the Certificates of such series which may be
required or advisable under United States laws or regulations or advisable
in connection with the marketing of Certificates of the series.
(c) At any time and from time to time after the execution and delivery
of this Basic Agreement and a Trust Supplement forming a Trust and establishing
the terms of Certificates of a series, Certificates of such series shall be
executed, authenticated and delivered by the Trustee to the Person or Persons
specified by the Company upon request of the Company and upon satisfaction or
waiver of any conditions precedent set forth in such Trust Supplement or in any
other document to which a Trustee is a party relating to the issuance of the
Certificates of such series.
Section 2.02. ACQUISITION OF EQUIPMENT NOTES. (a) Unless otherwise
specified in the related Trust Supplement, on or prior to the Issuance Date of
the Certificates of a series, the Trustee shall execute and deliver the related
Note Purchase Agreements in the form delivered to the Trustee by the Company and
shall, subject to the respective terms thereof, perform its obligations under
such Note Purchase Agreements. The Trustee shall issue and sell such
Certificates, in authorized denominations and in such Fractional Undivided
<PAGE>
Interests, so as to result in the receipt of consideration in an amount equal to
the aggregate purchase price of the Equipment Notes contemplated to be purchased
by the Trustee under the related Note Purchase Agreements and, concurrently
therewith, the Trustee shall purchase, pursuant to the terms and conditions of
the Note Purchase Agreements, such Equipment Notes at a purchase price equal to
the amount of such consideration so received. Except as provided in Sections
3.03, 3.04 and 3.06 hereof, the Trustee shall not execute, authenticate or
deliver Certificates of such series in excess of the aggregate amount specified
in this paragraph. The provisions of this Subsection (a) are subject to the
provisions of Subsection (b) below.
(b) If on or prior to the Issuance Date with respect to a series of
Certificates the Company shall deliver to the Trustee a Postponement Notice
relating to one or more Postponed Notes, the Trustee shall postpone the purchase
of such Postponed Notes and shall deposit into an escrow account (as to such
Trust, the "ESCROW ACCOUNT") to be maintained as part of the related Trust an
amount equal to the purchase price of such Postponed Notes (the "ESCROWED
FUNDS"). The portion of the Escrowed Funds so deposited with respect to any
particular Postponed Notes shall be invested by the Trustee at the written
direction and risk of, and for the benefit of, the Responsible Party in
Specified Investments (i) maturing no later than any scheduled Transfer Date
relating to such Postponed Notes or (ii) if no such Transfer Date has been
scheduled, maturing on the next Business Day, or (iii) if the Company has given
notice to the Trustee that such Postponed Notes will not be issued, maturing on
the next applicable Special Distribution Date, if such investments are
reasonably available for purchase. The Trustee shall make withdrawals from the
Escrow Account only as provided in this Agreement. Upon request of the Company
on one or more occasions and the satisfaction or waiver of the closing
conditions specified in the applicable Note Purchase Agreements on or prior to
the related Cut-off Date, the Trustee shall purchase the applicable Postponed
Notes with the Escrowed Funds withdrawn from the Escrow Account. The purchase
price shall equal the principal amount of such Postponed Notes.
The Trustee shall hold all Specified Investments until the maturity
thereof and will not sell or otherwise transfer Specified Investments. If
Specified Investments held in an Escrow Account mature prior to any applicable
Transfer Date, any proceeds received on the maturity of such Specified
Investments (other than any earnings thereon) shall be reinvested by the Trustee
at the written direction and risk of, and for the benefit of, the Responsible
Party in Specified Investments maturing as provided in the preceding paragraph.
Any earnings on Specified Investments received from time to time by the
Trustee shall be promptly distributed to the Responsible Party. The Responsible
Party shall pay to the Trustee for deposit to the relevant Escrow Account an
amount equal to any losses on such Specified Investments as incurred. On the
Initial Regular Distribution Date in respect of the Certificates of any series,
the Responsible Party will pay (in immediately available funds) to the Trustee
an amount equal to the interest that would have accrued on any Postponed Notes
with respect to such Certificates, if any, purchased after the Issuance Date if
such Postponed Notes had been purchased on the Issuance Date, from the Issuance
Date to, but not including, the date of the purchase of such Postponed Notes by
the Trustee.
<PAGE>
If, in respect of the Certificates of any series, the Company notifies
the Trustee prior to the Cut-off Date that any Postponed Notes will not be
issued on or prior to the Cut-off Date for any reason, on the next Special
Distribution Date for such Certificates occurring not less than 15 days
following the date of such notice, (i) the Responsible Party shall pay to the
Trustee for deposit in the related Special Payments Account, in immediately
available funds, an amount equal to the interest that would have accrued on the
Postponed Notes designated in such notice at a rate equal to the interest rate
applicable to such Certificates from the Issuance Date to, but not including,
such Special Distribution Date and (ii) the Trustee shall transfer an amount
equal to that amount of Escrowed Funds that would have been used to purchase the
Postponed Notes designated in such notice and the amount paid by the Responsible
Party pursuant to the immediately preceding clause (i) to the related Special
Payments Account for distribution as a Special Payment in accordance with the
provisions hereof.
If, on such Cut-off Date, an amount equal to less than all of the
Escrowed Funds (other than Escrowed Funds referred to in the immediately
preceding paragraph) has been used to purchase Postponed Notes, on the next such
Special Distribution Date occurring not less than 15 days following such Cut-off
Date (i) the Responsible Party shall pay to the Trustee for deposit in such
Special Payments Account, in immediately available funds, an amount equal to the
interest that would have accrued on such Postponed Notes contemplated to be
purchased with such unused Escrowed Funds (other than Escrowed Funds referred to
in the immediately preceding paragraph) but not so purchased at a rate equal to
the interest rate applicable to such Certificates from the Issuance Date to, but
not including, such Special Distribution Date and (ii) the Trustee shall
transfer such unused Escrowed Funds and the amount paid by the Responsible Party
pursuant to the immediately preceding clause (i) to such Special Payments
Account for distribution as a Special Payment in accordance with the provisions
hereof.
Section 2.03. ACCEPTANCE BY TRUSTEE. The Trustee, upon the execution
and delivery of a Trust Supplement creating a Trust and establishing a series of
Certificates, shall acknowledge its acceptance of all right, title and interest
in and to the Trust Property to be acquired pursuant to Section 2.02 hereof and
the related Note Purchase Agreements and shall declare that the Trustee holds
and will hold such right, title and interest for the benefit of all then present
and future Certificateholders of such series, upon the trusts herein and in such
Trust Supplement set forth. By the acceptance of each Certificate of such series
issued to it under this Agreement, each initial Holder of such series as grantor
of such Trust shall thereby join in the creation and declaration of such Trust.
Section 2.04. LIMITATION OF POWERS. Each Trust shall be constituted
solely for the purpose of making the investment in the Equipment Notes provided
for in the related Trust Supplement, and, except as set forth herein, the
Trustee shall not be authorized or empowered to acquire any other investments or
engage in any other activities and, in particular, the Trustee shall not be
authorized or empowered to do anything that would cause such Trust to fail to
qualify as a "grantor trust" for federal income tax purposes (including, as
subject to this restriction, acquiring any Aircraft (as defined in the
respective Indentures) by bidding such Equipment Notes or otherwise, or taking
any action with respect to any such Aircraft once acquired).
<PAGE>
ARTICLE III
THE CERTIFICATES
Section 3.01. FORM, DENOMINATION AND EXECUTION OF CERTIFICATES. The
Certificates of each series shall be issued in fully registered form without
coupons and shall be substantially in the form attached hereto as Exhibit A,
with such omissions, variations and insertions as are permitted by this
Agreement, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange on which such Certificates may be
listed or to conform to any usage in respect thereof, or as may, consistently
herewith, be determined by the Trustee or the officers executing such
Certificates, as evidenced by the Trustee's or respective officers' execution of
the Certificates.
Except as provided in Section 3.05, the definitive Certificates of such
series shall be typed, printed, lithographed or engraved or produced by any
combination of these methods or may be produced in any other manner permitted by
the rules of any securities exchange on which the Certificates may be listed,
all as determined by the officers executing such Certificates, as evidenced by
their execution of such Certificates.
Except as otherwise provided in the related Trust Supplement, the
Certificates of each series shall be issued in minimum denominations of $1,000
or integral multiples thereof except that one Certificate of such series may be
issued in a different denomination.
The Certificates of such series shall be executed on behalf of the
Trustee by manual or facsimile signature of a Responsible Officer of the
Trustee. Certificates of any series bearing the manual or facsimile signature of
an individual who was, at the time when such signature was affixed, authorized
to sign on behalf of the Trustee shall be valid and binding obligations of the
Trustee, notwithstanding that such individual has ceased to be so authorized
prior to the authentication and delivery of such Certificates or did not hold
such office at the date of such Certificates.
Section 3.02. AUTHENTICATION OF CERTIFICATES. (a) On the Issuance Date,
the Trustee shall duly execute, authenticate and deliver Certificates of each
series in authorized denominations equalling in the aggregate the aggregate
principal amount of the Equipment Notes that may be purchased by the Trustee
pursuant to the related Note Purchase Agreements, and evidencing the entire
ownership of the related Trust. Thereafter, the Trustee shall duly execute,
authenticate and deliver the Certificates of such series as herein provided.
(b) No Certificate of any series shall be entitled to any benefit under
this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A hereto executed by the Trustee by manual signature, and such
certificate of authentication upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates of any series shall be dated the date of
their authentication.
<PAGE>
Section 3.03. TEMPORARY CERTIFICATES. Until definitive Certificates are
ready for delivery, the Trustee shall execute, authenticate and deliver
temporary Certificates of each series. Temporary Certificates of each series
shall be substantially in the form of definitive Certificates of such series but
may have insertions, substitutions, omissions and other variations determined to
be appropriate by the officers executing the temporary Certificates of such
series, as evidenced by their execution of such temporary Certificates. If
temporary Certificates of any series are issued, the Trustee will cause
definitive Certificates of such series to be prepared without unreasonable
delay. After the preparation of definitive Certificates of such series, the
temporary Certificates shall be exchangeable for definitive Certificates upon
surrender of such temporary Certificates at the office or agency of the Trustee
designated for such purpose pursuant to Section 7.12, without charge to the
Certificateholder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute, authenticate and deliver in exchange
therefor a like face amount of definitive Certificates of like series, in
authorized denominations and of a like Fractional Undivided Interest. Until so
exchanged, such temporary Certificates shall be entitled to the same benefits
under this Agreement as definitive Certificates.
Section 3.04. TRANSFER AND EXCHANGE. The Trustee shall cause to be kept
at the office or agency to be maintained by it in accordance with the provisions
of Section 7.12 a register (the "REGISTER") for each series of Certificates in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates of such series and of
transfers and exchanges of such Certificates as herein provided. The Trustee
shall initially be the registrar (the "REGISTRAR") for the purpose of
registering such Certificates of each series and transfers and exchanges of such
Certificates as herein provided.
All Certificates issued upon any registration of transfer or exchange
of Certificates of any series shall be valid obligations of the applicable
Trust, evidencing the same interest therein, and entitled to the same benefits
under this Agreement, as the Certificates of such series surrendered upon such
registration of transfer or exchange.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office or such other office or agency, the Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of like series, in authorized
denominations of a like aggregate Fractional Undivided Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of like series, in authorized denominations and of a like
aggregate Fractional Undivided Interest, upon surrender of the Certificates to
be exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute, authenticate and deliver
the Certificates that the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar duly executed by
the Certificateholder thereof or its attorney duly authorized in writing.
<PAGE>
No service charge shall be made to a Certificateholder for any
registration of transfer or exchange of Certificates, but the Trustee shall
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates. All
Certificates surrendered for registration of transfer or exchange shall be
cancelled and subsequently destroyed by the Trustee.
Section 3.05. BOOK-ENTRY AND DEFINITIVE CERTIFICATES. (a) The
Certificates of any series may be issued in the form of one or more typewritten
Certificates representing the Book-Entry Certificates of such series, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Company. In such case, the Certificates of such series
delivered to The Depository Trust Company shall initially be registered on the
Register in the name of CEDE & Co., the nominee of the initial Clearing Agency,
and no Certificate Owner will receive a definitive certificate representing such
Certificate Owner's interest in the Certificates of such series, except as
provided above and in Subsection (d) below. As to the Certificates of any
series, unless and until definitive, fully registered Certificates (the
"DEFINITIVE CERTIFICATES") have been issued pursuant to Subsection (d) below:
(i) the provisions of this Section 3.05 shall be in full force and
effect;
(ii) the Company, the Paying Agent, the Registrar and the Trustee may
deal with the Clearing Agency Participants for all purposes (including the
making of distributions on the Certificates) as the authorized
representatives of the Certificate Owners;
(iii) to the extent that the provisions of this Section 3.05 conflict
with any other provisions of this Agreement (other than the provisions of
any Trust Supplement expressly amending this Section 3.05 as permitted by
this Basic Agreement), the provisions of this Section 3.05 shall control;
(iv) the rights of Certificate Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency
Participants; and until Definitive Certificates are issued pursuant to
Subsection (d) below, the Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit
distributions of principal, interest and premium, if any, on the
Certificates to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Certificateholders of such series
holding Certificates of such series evidencing a specified percentage of
the Fractional Undivided Interests in the related Trust, the Clearing
Agency shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Clearing Agency
Participants owning or representing, respectively, such required percentage
of the beneficial interest in Certificates of such series and has delivered
such instructions to the Trustee. The Trustee shall have no obligation to
determine whether the Clearing Agency has in fact received any such
instructions.
<PAGE>
(b) Whenever notice or other communication to the Certificateholders of
such series is required under this Agreement, unless and until Definitive
Certificates shall have been issued pursuant to Subsection (d) below, the
Trustee shall give all such notices and communications specified herein to be
given to Certificateholders of such series to the Clearing Agency.
(c) Unless and until Definitive Certificates of a series are issued
pursuant to Subsection (d) below, on the Record Date prior to each applicable
Regular Distribution Date and Special Distribution Date, the Trustee will
request from the Clearing Agency a securities position listing setting forth the
names of all Clearing Agency Participants reflected on the Clearing Agency's
books as holding interests in the Certificates on such Record Date.
(d) If with respect to the Certificates of any series (i) the Company
advises the Trustee in writing that the Clearing Agency is no longer willing or
able to discharge properly its responsibilities and the Trustee or the Company
is unable to locate a qualified successor, (ii) the Company, at its option,
advises the Trustee in writing that it elects to terminate the book-entry system
through the Clearing Agency or (iii) after the occurrence of an Event of
Default, Certificate Owners of Book-Entry Certificates of such series evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the related Trust, by Act of such Certificate Owners delivered to the Company
and the Trustee, advise the Company, the Trustee and the Clearing Agency through
the Clearing Agency Participants in writing that the continuation of a
book-entry system through the Clearing Agency Participants is no longer in the
best interests of the Certificate Owners of such series, then the Trustee shall
notify all Certificate Owners of such series, through the Clearing Agency, of
the occurrence of any such event and of the availability of Definitive
Certificates. Upon surrender to the Trustee of all the Certificates of such
series held by the Clearing Agency, accompanied by registration instructions
from the Clearing Agency Participants for registration of Definitive
Certificates in the names of Certificate Owners of such series, the Trustee
shall issue and deliver the Definitive Certificates of such series in accordance
with the instructions of the Clearing Agency. Neither the Company, the
Registrar, the Paying Agent nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such registration instructions. Upon the issuance of
Definitive Certificates of such series, the Trustee shall recognize the Person
in whose name the Definitive Certificates are registered in the Register as
Certificateholders hereunder. Neither the Company nor the Trustee shall be
liable if the Trustee or the Company is unable to locate a qualified successor
Clearing Agency.
(e) Except as otherwise provided in the related Trust Supplement, the
Trustee shall enter into the applicable Letter of Representations with respect
to such series of Certificates and fulfill its responsibilities thereunder.
(f) The provisions of this Section 3.05 may be made inapplicable to any
series or may be amended with respect to any series in the related Trust
Supplement.
Section 3.06. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a)
any mutilated Certificate is surrendered to the Registrar, or the Registrar
<PAGE>
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Registrar and the Trustee such
security, indemnity or bond, as may be required by them to save each of them
harmless, then, in the absence of notice to the Registrar or the Trustee that
such destroyed, lost or stolen Certificate has been acquired by a BONA FIDE
purchaser, and PROVIDED, HOWEVER, that the requirements of Section 8-405 of the
Uniform Commercial Code in effect in any applicable jurisdiction are met, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or
Certificates of like series, in authorized denominations and of like Fractional
Undivided Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate under this
Section 3.06, the Trustee shall require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section 3.06 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the related Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
The provisions of this Section 3.06 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.07. PERSONS DEEMED OWNERS. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent may treat the Person in whose name any Certificate is registered
(as of the day of determination) as the owner of such Certificate for the
purpose of receiving distributions pursuant to Article IV and for all other
purposes whatsoever, and none of the Trustee, the Registrar or any Paying Agent
shall be affected by any notice to the contrary.
Section 3.08. CANCELLATION. All Certificates surrendered for payment or
transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for cancellation
and shall promptly be cancelled by it. No Certificates shall be authenticated in
lieu of or in exchange for any Certificates cancelled as provided in this
Section 3.08, except as expressly permitted by this Agreement. All cancelled
Certificates held by the Registrar shall be destroyed and a certification of
their destruction delivered to the Trustee.
Section 3.09. LIMITATION OF LIABILITY FOR PAYMENTS. All payments and
distributions made to Certificateholders of any series in respect of the
Certificates of such series shall be made only from the Trust Property of the
related Trust and only to the extent that the Trustee shall have sufficient
income or proceeds from such Trust Property to make such payments in accordance
with the terms of Article IV of this Agreement. Each Certificateholder, by its
acceptance of a Certificate, agrees that it will look solely to the income and
proceeds from the Trust Property of the related Trust for any payment or
<PAGE>
distribution due to such Certificateholder pursuant to the terms of this
Agreement and that it will not have any recourse to the Company, the Trustee,
the Loan Trustees, the Owner Trustees or the Owner Participants, except as
otherwise expressly provided herein or in the related Intercreditor Agreement.
The Company is a party to this Agreement solely for purposes of meeting
the requirements of the Trust Indenture Act, and therefore shall not have any
right, obligation or liability hereunder (except as otherwise expressly provided
herein).
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. CERTIFICATE ACCOUNT AND SPECIAL PAYMENTS ACCOUNT. (a) The
Trustee shall establish and maintain on behalf of the Certificateholders of each
series a Certificate Account as one or more non-interest-bearing accounts. The
Trustee shall hold such Certificate Account in trust for the benefit of the
Certificateholders of such series, and shall make or permit withdrawals
therefrom only as provided in this Agreement. On each day when a Scheduled
Payment is made to the Trustee (under an Intercreditor Agreement, if applicable)
with respect to the Certificates of such series, the Trustee, upon receipt
thereof, shall immediately deposit the aggregate amount of such Scheduled
Payment in such Certificate Account.
(b) The Trustee shall establish and maintain on behalf of the
Certificateholders of each series a Special Payments Account as one or more
accounts, which shall be non-interest bearing except as provided in Section
4.04. The Trustee shall hold the Special Payments Account in trust for the
benefit of the Certificateholders of such series and shall make or permit
withdrawals therefrom only as provided in this Agreement. On each day when one
or more Special Payments are made to the Trustee (under an Intercreditor
Agreement, if applicable) with respect to the Certificates of such series, the
Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of
such Special Payments in such Special Payments Account.
(c) The Trustee shall present (or, if applicable, cause the
Subordination Agent to present) to the related Loan Trustee of each Equipment
Note such Equipment Note on the date of its stated final maturity or, in the
case of any Equipment Note which is to be redeemed in whole pursuant to the
related Indenture, on the applicable redemption date under such Indenture.
Section 4.02. DISTRIBUTIONS FROM CERTIFICATE ACCOUNT AND SPECIAL
PAYMENTS ACCOUNT. (a) On each Regular Distribution Date with respect to a series
of Certificates or as soon thereafter as the Trustee has confirmed receipt of
the payment of all or any part of the Scheduled Payments due on the Equipment
Notes held (subject to the Intercreditor Agreement) in the related Trust on such
date, the Trustee shall distribute out of the applicable Certificate Account the
entire amount deposited therein pursuant to Section 4.01(a). There shall be so
distributed to each Certificateholder of record of such series on the Record
Date with respect to such Regular Distribution Date (other than as provided in
Section 11.01 concerning the final distribution) by check mailed to such
<PAGE>
Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional Undivided Interest
in the Trust held by such Certificateholder) of the total amount in the
applicable Certificate Account, 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 in immediately available funds
to the account designated by such Clearing Agency (or such nominee).
(b) On each Special Distribution Date with respect to any Special
Payment with respect to a series of Certificates or as soon thereafter as the
Trustee has confirmed receipt of any Special Payments due on the Equipment Notes
held (subject to the Intercreditor Agreement) in the related Trust or realized
upon the sale of such Equipment Notes, the Trustee shall distribute out of the
applicable Special Payments Account the entire amount of such applicable Special
Payment deposited therein pursuant to Section 4.01(b). There shall be so
distributed to each Certificateholder of record of such series on the Record
Date with respect to such Special Distribution Date (other than as provided in
Section 11.01 concerning the final distribution) by check mailed to such
Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional Undivided Interest
in the related Trust held by such Certificateholder) of the total amount in the
applicable Special Payments Account on account of such Special Payment, 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 in immediately available funds to the account designated by such
Clearing Agency (or such nominee).
(c) The Trustee shall, at the expense of the Company, cause notice of
each Special Payment with respect to a series of Certificates to be mailed to
each Certificateholder of such series at his address as it appears in the
Register. In the event of redemption or purchase of Equipment Notes held in the
related Trust, such notice shall be mailed not less than 15 days prior to the
Special Distribution Date for the Special Payment resulting from such redemption
or purchase, which Special Distribution Date shall be the date of such
redemption or purchase. In the event that the Trustee receives a notice from the
Company that Postponed Notes will not be purchased by the Trustee pursuant to
Section 2.02, such notice of Special Payment shall be mailed as soon as
practicable after receipt of such notice from the Company and shall state the
Special Distribution Date for such Special Payment, which shall occur 15 days
after the date of such notice of Special Payment or (if such 15th day is not
practicable) as soon as practicable thereafter. In the event that any Special
Payment is to be made pursuant to the last paragraph of Section 2.02(b) hereof,
there shall be mailed on the Cut-off Date (or, if such mailing on the Cut-off
Date is not practicable, as soon as practicable after the Cut-off Date), notice
of such Special Payment stating the Special Distribution Date for such Special
Payment, which shall occur 15 days after the date of such notice of such Special
Payment (or, if such 15th day is not practicable, as soon as practicable
thereafter). In the case of any other Special Payments, such notice shall be
mailed as soon as practicable after the Trustee has confirmed that it has
received funds for such Special Payment, stating the Special Distribution Date
for such Special Payment which shall occur not less than 15 days after the date
of such notice and as soon as practicable thereafter. Notices mailed by the
Trustee shall set forth:
<PAGE>
(i) the Special Distribution Date and the Record Date therefor (except
as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment (taking into account any
payment to be made by the Company pursuant to Section 2.02(b)) for each
$1,000 face amount Certificate and the amount thereof constituting
principal, premium, if any, and interest,
(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the same date as a Regular
Distribution Date for the Certificates of such series, the total amount to
be received on such date for each $1,000 face amount Certificate.
If the amount of premium, if any, payable upon the redemption or purchase of an
Equipment Note has not been calculated at the time that the Trustee mails notice
of a Special Payment, it shall be sufficient if the notice sets forth the other
amounts to be distributed and states that any premium received will also be
distributed.
If any redemption of the Equipment Notes held in any Trust is
cancelled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder of the related series at
its address as it appears on the Register.
Section 4.03. STATEMENTS TO CERTIFICATEHOLDERS. (a) On each Regular
Distribution Date and Special Distribution Date, the Trustee will include with
each distribution of a Scheduled Payment or Special Payment, as the case may be,
to Certificateholders of the related series a statement setting forth the
information provided below. Such statement shall set forth (per $1,000 aggregate
principal amount of Certificate as to (i) and (ii) below) the following
information:
(i) the amount of such distribution hereunder allocable to principal
and the amount allocable to premium, if any;
(ii) the amount of such distribution hereunder allocable to interest;
and
(iii) the Pool Balance and the Pool Factor of the related Trust.
With respect to the Certificates registered in the name of a Clearing
Agency or its nominee, on the Record Date prior to each Distribution Date, the
Trustee will request from the Clearing Agency a securities position listing
setting forth the names of all the Clearing Agency Participants reflected on the
Clearing Agency's books as holding interests in the Certificates on such Record
Date. On each Distribution Date, the applicable 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 Certificates.
<PAGE>
(b) Within a reasonable period of time after the end of each calendar
year but not later than the latest date permitted by law, the Trustee shall
furnish to each Person who at any time during such calendar year was a
Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i) and (a)(ii) above with respect to the
related Trust for such calendar year or, in the event such Person was a
Certificateholder of record during a portion of such calendar year, for the
applicable portion of such year, and such other items as are readily available
to the Trustee and which a Certificateholder shall reasonably request as
necessary for the purpose of such Certificateholder's preparation of its federal
income tax returns. With respect to Certificates registered in the name of a
Clearing Agency or its nominee, 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 Certificates in the manner
described in Section 4.03(a).
Section 4.04. INVESTMENT OF SPECIAL PAYMENT MONEYS. Any money received
by the Trustee pursuant to Section 4.01(b) representing a Special Payment which
is not distributed on the date received shall, to the extent practicable, be
invested in Permitted Investments by the Trustee pending distribution of such
Special Payment pursuant to Section 4.02. Any investment made pursuant to this
Section 4.04 shall be in such Permitted Investments having maturities not later
than the date that such moneys are required to be used to make the payment
required under Section 4.02 on the applicable Special Distribution Date and the
Trustee shall hold any such Permitted Investments until maturity. The Trustee
shall have no liability with respect to any investment made pursuant to this
Section 4.04, other than by reason of the willful misconduct or negligence of
the Trustee. All income and earnings from such investments shall be distributed
on such Special Distribution Date as part of such Special Payment.
ARTICLE V
THE COMPANY
Section 5.01. MAINTENANCE OF CORPORATE EXISTENCE. The Company, at its
own cost and expense, will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights and
franchises, except as otherwise specifically permitted in Section 5.02;
PROVIDED, HOWEVER, that the Company shall not be required to preserve any right
or franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company.
Section 5.02. CONSOLIDATION, MERGER, ETC. The Company shall not
consolidate with or merge into any other corporation or convey, transfer or
lease substantially all of its assets as an entirety to any Person unless:
(a) the corporation formed by such consolidation or into which the
Company is merged or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety shall
<PAGE>
be (i) organized and validly existing under the laws of the United States
of America or any state thereof or the District of Columbia, (ii) a
"citizen of the United States" as defined in 49 U.S.C. ss. 40102(a)(15), as
amended, and (iii) a United States certificated air carrier, if and so long
as such status is a condition of entitlement to the benefits of Section
1110 of the Bankruptcy Reform Act of 1978, as amended (11 U.S.C. ss. 1110),
with respect to the Leases or the Aircraft owned by the Company;
(b) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety shall
execute and deliver to the Trustee applicable to the Certificates of each
series a duly authorized, valid, binding and enforceable agreement in form
and substance reasonably satisfactory to the Trustee containing an
assumption by such successor corporation or Person of the due and punctual
performance and observance of each covenant and condition of the Note
Documents and of this Agreement applicable to the Certificates of each
series to be performed or observed by the Company; and
(c) the Company shall have delivered to the Trustee an Officer's
Certificate of the Company and an Opinion of Counsel of the Company
reasonably satisfactory to the Trustee, each stating that such
consolidation, merger, conveyance, transfer or lease and the assumption
agreement mentioned in clause (b) above comply with this Section 5.02 and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
Upon any consolidation or merger, or any conveyance, transfer or lease
of substantially all of the assets of the Company as an entirety in accordance
with this Section 5.02, the successor corporation or Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Agreement applicable
to the Certificates of each series with the same effect as if such successor
corporation or Person had been named as the Company herein. No such conveyance,
transfer or lease of substantially all of the assets of the Company as an
entirety shall have the effect of releasing any successor corporation or Person
which shall have become such in the manner prescribed in this Section 5.02 from
its liability in respect of this Agreement and any Note Document applicable to
the Certificates of such series to which it is a party.
ARTICLE VI
DEFAULT
Section 6.01. EVENTS OF DEFAULT. (a) EXERCISE OF REMEDIES. Upon the
occurrence and during the continuation of any Indenture Event of Default under
any Indenture, the Trustee may (i) to the extent it is the Controlling Party at
such time (as determined pursuant to the related Intercreditor Agreement),
direct the exercise of remedies as provided in such related Intercreditor
Agreement and (ii) if there is no related Intercreditor Agreement, direct the
<PAGE>
exercise of remedies or take other action as provided in the relevant Indenture
to the extent that it may do so as the holder of the Equipment Notes issued
under such Indenture and held in the related Trust.
(b) PURCHASE RIGHTS OF CERTIFICATEHOLDERS. At any time after the
occurrence and during the continuation of a Triggering Event, each
Certificateholder of Certificates of certain series (each, a "POTENTIAL
PURCHASER" and, collectively, the "POTENTIAL PURCHASERS") will have certain
rights to purchase the Certificates of one or more other series, all as set
forth in the Trust Supplement applicable to the Certificates held by such
Potential Purchaser. The purchase price with respect to the Certificates of any
series shall be equal to the Pool Balance of the Certificates of such series,
together with accrued and unpaid interest thereon to the date of such purchase,
without premium, but including any other amounts then due and payable to the
Certificateholders of such series under this Agreement, any related
Intercreditor Agreement or any other Note Document or on or in respect of the
Certificates of such series; PROVIDED, HOWEVER, that if such purchase occurs
after a Record Date, such purchase price shall be reduced by the amount to be
distributed hereunder on the related Distribution Date (which deducted amounts
shall remain distributable to, and may be retained by, the Certificateholder as
of such Record Date); PROVIDED, FURTHER, that no such purchase of Certificates
of such series shall be effective unless the purchasing Certificateholder (each,
a "PURCHASING CERTIFICATEHOLDER" and, collectively, the "PURCHASING
CERTIFICATEHOLDERS") shall certify to the Trustee that contemporaneously with
such purchase, one or more Purchasing Certificateholders are purchasing,
pursuant to the terms of this Agreement and the other Agreements, if any,
relating to the Certificates of a series that are subject to the same
Intercreditor Agreement (such other Agreements, the "OTHER AGREEMENTS"), the
Certificates of each such series that the Trust Supplement applicable to the
Certificates held by the Purchasing Certificateholder specifies may be purchased
by such Purchasing Certificateholder. Each payment of the purchase price of the
Certificates of any series shall be made to an account or accounts designated by
the Trustee and each such purchase shall be subject to the terms of this Section
6.01. By acceptance of its Certificate, each Certificateholder (each, a "SELLING
CERTIFICATEHOLDER" and, collectively, the "SELLING CERTIFICATEHOLDERS") of a
series that is subject to purchase by Potential Purchasers, all as set forth in
the Trust Supplement applicable to the Certificates held by the Selling
Certificateholders, agrees that, at any time after the occurrence and during the
continuance of a Triggering Event, it will, upon payment of the purchase price
specified herein by one or more Purchasing Certificateholders, forthwith sell,
assign, transfer and convey to such Purchasing Certificateholder (without
recourse, representation or warranty of any kind except for its own acts), all
of the right, title, interest and obligation of such Selling Certificateholder
in this Agreement, any related Intercreditor Agreement, the related Liquidity
Facility, the related Note Documents and all Certificates of such series held by
such Selling Certificateholder (excluding all right, title and interest under
any of the foregoing to the extent such right, title or interest is with respect
to an obligation not then due and payable as respects any action or inaction or
state of affairs occurring prior to such sale) and the Purchasing
Certificateholder shall assume all of such Selling Certificateholder's
obligations under this Agreement, any related Intercreditor Agreement, the
related Liquidity Facility and the related Note Documents. The Certificates of
such series will be deemed to be purchased on the date payment of the purchase
price is made notwithstanding the failure of any Selling Certificateholder to
deliver any Certificates of such series and, upon such a purchase, (i) the only
rights of the Selling Certificateholders will be to deliver the Certificates to
<PAGE>
the Purchasing Certificateholder and receive the purchase price for such
Certificates of such series and (ii) if the Purchasing Certificateholder shall
so request, such Selling Certificateholder will comply with all of the
provisions of Section 3.04 hereof to enable new Certificates of such series to
be issued to the Purchasing Certificateholder in such denominations as it shall
request. All charges and expenses in connection with the issuance of any such
new Certificates shall be borne by the Purchasing Certificateholder.
Section 6.02. INCIDENTS OF SALE OF EQUIPMENT NOTES. Upon any sale of
all or any part of the Equipment Notes held in the Trust made either under the
power of sale given under this Agreement or otherwise for the enforcement of
this Agreement, the following shall be applicable:
(1) CERTIFICATEHOLDERS AND TRUSTEE MAY PURCHASE EQUIPMENT NOTES. Any
Certificateholder, the Trustee in its individual or any other capacity or
any other Person may bid for and purchase any of the Equipment Notes held
in the Trust, and upon compliance with the terms of sale, may hold, retain,
possess and dispose of such Equipment Notes in their own absolute right
without further accountability.
(2) RECEIPT OF TRUSTEE SHALL DISCHARGE PURCHASER. The receipt of the
Trustee making such sale shall be a sufficient discharge to any purchaser
for his purchase money, and, after paying such purchase money and receiving
such receipt, such purchaser or its personal representative or assigns
shall not be obliged to see to the application of such purchase money, or
be in any way answerable for any loss, misapplication or non-application
thereof.
(3) APPLICATION OF MONEYS RECEIVED UPON SALE. Any moneys collected by
the Trustee upon any sale made either under the power of sale given by this
Agreement or otherwise for the enforcement of this Agreement shall be
applied as provided in Section 4.02.
Section 6.03. JUDICIAL PROCEEDINGS INSTITUTED BY TRUSTEE; TRUSTEE MAY
BRING SUIT. If there shall be a failure to make payment of the principal of,
premium, if any, or interest on any Equipment Note held in the related Trust, or
if there shall be any failure to pay Rent (as defined in the relevant Lease)
under any Lease when due and payable, then the Trustee, in its own name and as
trustee of an express trust, as holder of such Equipment Notes, to the extent
permitted by and in accordance with the terms of any related Intercreditor
Agreement and any related Note Documents (subject to rights of the applicable
Owner Trustee or Owner Participant to cure any such failure to pay principal of,
premium, if any, or interest on any Equipment Note or to pay Rent under any
Lease in accordance with the applicable Indenture), shall be entitled and
empowered to institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on such Equipment
Notes or under such Lease and may prosecute any such claim or proceeding to
judgment or final decree with respect to the whole amount of any such sums so
due and unpaid.
Section 6.04. CONTROL BY CERTIFICATEHOLDERS. Subject to Section 6.03
and any related Intercreditor Agreement, the Certificateholders holding
<PAGE>
Certificates of a series evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the related Trust shall have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee with respect to such Trust or pursuant to the terms of
such Intercreditor Agreement, or exercising any trust or power conferred on the
Trustee under this Agreement or such Intercreditor Agreement, including any
right of the Trustee as Controlling Party under such Intercreditor Agreement or
as holder of the Equipment Notes held in the related Trust; PROVIDED, HOWEVER,
that
(1) such Direction shall not in the opinion of the Trustee be in
conflict with any rule of law or with this Agreement and would not involve
the Trustee in personal liability or expense,
(2) the Trustee shall not determine that the action so directed would
be unjustly prejudicial to the Certificateholders of such series not taking
part in such Direction, and
(3) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such Direction.
Section 6.05. WAIVER OF PAST DEFAULTS. Subject to any related
Intercreditor Agreement, the Certificateholders holding Certificates of a series
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust (i) may on behalf of all of the Certificateholders
waive any past Event of Default hereunder and its consequences or (ii) if the
Trustee is the Controlling Party, may direct the Trustee to instruct the
applicable Loan Trustee to waive any past Indenture Event of Default under any
related Indenture and its consequences, and thereby annul any Direction given by
such Certificateholders or the Trustee to such Loan Trustee with respect
thereto, except a default:
(1) in the deposit of any Scheduled Payment or Special Payment under
Section 4.01 or in the distribution of any payment under Section 4.02 on
the Certificates of a series, or
(2) in the payment of the principal of (premium, if any) or interest
on the Equipment Notes held in the related Trust, or
(3) in respect of a covenant or provision hereof which under Article
IX hereof cannot be modified or amended without the consent of each
Certificateholder holding an Outstanding Certificate of a series affected
thereby.
Upon any such waiver, such default shall cease to exist with respect to the
Certificates of such series and any Event of Default arising therefrom shall be
deemed to have been cured for every purpose and any direction given by the
Trustee on behalf of the Certificateholders of such series to the relevant Loan
Trustee shall be annulled with respect thereto; but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon. Upon any such waiver, the Trustee shall vote the Equipment
Notes issued under the relevant Indenture to waive the corresponding Indenture
Event of Default.
<PAGE>
Section 6.06. RIGHT OF CERTIFICATEHOLDERS TO RECEIVE PAYMENTS NOT TO BE
IMPAIRED. Anything in this Agreement to the contrary notwithstanding, including,
without limitation, Section 6.07 hereof, but subject to any related
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
applicable Certificates when due, or to institute suit for the enforcement of
any such payment on or after the applicable Regular Distribution Date or Special
Distribution Date, shall not be impaired or affected without the consent of such
Certificateholder.
Section 6.07. CERTIFICATEHOLDERS MAY NOT BRING SUIT EXCEPT UNDER
CERTAIN CONDITIONS. A Certificateholder of any series shall not have the right
to institute any suit, action or proceeding at law or in equity or otherwise
with respect to this Agreement, for the appointment of a receiver or for the
enforcement of any other remedy under this Agreement, unless:
(1) such Certificateholder previously shall have given written notice
to the Trustee of a continuing Event of Default;
(2) Certificateholders holding Certificates of such series evidencing
Fractional Undivided Interests aggregating not less than 25% of the related
Trust shall have requested the Trustee in writing to institute such action,
suit or proceeding and shall have offered to the Trustee indemnity as
provided in Section 7.03(e);
(3) the Trustee shall have refused or neglected to institute any such
action, suit or proceeding for 60 days after receipt of such notice,
request and offer of indemnity; and
(4) no direction inconsistent with such written request shall have
been given to the Trustee during such 60-day period by Certificateholders
holding Certificates of such series evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the related
Trust.
It is understood and intended that no one or more of the
Certificateholders of any series shall have any right in any manner whatsoever
hereunder or under the related Trust Supplement or under the Certificates of
such series to (i) surrender, impair, waive, affect, disturb or prejudice any
property in the Trust Property of the related Trust, or the lien of any related
Indenture on any property subject thereto, or the rights of the
Certificateholders of such series or the holders of the related Equipment Notes,
(ii) obtain or seek to obtain priority over or preference with respect to any
other such Certificateholder of such series or (iii) enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all the Certificateholders of such series subject to the
provisions of this Agreement.
Section 6.08. REMEDIES CUMULATIVE. Every remedy given hereunder to the
Trustee or to any of the Certificateholders of any series shall not be exclusive
of any other remedy or remedies, and every such remedy shall be cumulative and
in addition to every other remedy given hereunder or now or hereafter given by
statute, law, equity or otherwise.
<PAGE>
Section 6.09. UNDERTAKING FOR COSTS. In any suit for the enforcement of
any right or remedy under this Agreement, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, a court may require any
party litigant in such suit to file an undertaking to pay the costs of such
suit, and may assess costs against any such party litigant, in the manner and to
the extent provided in the Trust Indenture Act; PROVIDED, HOWEVER, that neither
this Section 6.09 nor the Trust Indenture Act shall be deemed to authorize any
court to require such an undertaking or to make such an assessment in any suit
instituted by the Company.
ARTICLE VII
THE TRUSTEE
Section 7.01. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during
the continuance of an Event of Default in respect of a Trust, the Trustee
undertakes to perform such duties in respect of such Trust as are specifically
set forth in this Agreement, and no implied covenants or obligations shall be
read into this Agreement against the Trustee.
(b) In case an Event of Default in respect of a Trust has occurred and
is continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Agreement in respect of such Trust, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a)of this Section 7.01; and
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts.
(d) Whether or not herein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 7.01.
Section 7.02. NOTICE OF DEFAULTS. As promptly as practicable after, and
in any event within 90 days after, the occurrence of any default (as such term
is defined below) hereunder known to the Trustee, the Trustee shall transmit by
mail to the Company, any related Owner Trustees, any related Owner Participants,
the related Loan Trustees and the Certificateholders holding Certificates of the
related series in accordance with Section 313(c) of the Trust Indenture Act,
notice of such default hereunder known to the Trustee, unless such default shall
have been cured or waived; PROVIDED, HOWEVER, that, except in the case of a
default in the payment of the principal, premium, if any, or interest on any
<PAGE>
Equipment Note, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee or a trust committee
of directors and/or Responsible Officers of the Trustee in good faith shall
determine that the withholding of such notice is in the interests of the
Certificateholders of the related series. For the purpose of this Section 7.02
in respect of any Trust, the term "DEFAULT" means any event that is, or after
notice or lapse of time or both would become, an Event of Default in respect of
that Trust.
Section 7.03. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of
Section 315 of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting in reliance upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Request;
(c) whenever in the administration of this Agreement or any
Intercreditor Agreement, the Trustee shall deem it desirable that a matter
be proved or established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon an
Officer's Certificate of the Company, any related Owner Trustee or any
related Loan Trustee;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement or any Intercreditor
Agreement at the Direction of any of the Certificateholders pursuant to
this Agreement or any Intercreditor Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the cost, expenses and liabilities which might be
incurred by it in compliance with such Direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture or other paper or document;
(g) the Trustee may execute any of the trusts or powers under this
Agreement or any Intercreditor Agreement or perform any duties under this
Agreement or any Intercreditor Agreement either directly or by or through
agents or attorneys, and the Trustee shall not be responsible for any
<PAGE>
misconduct or negligence on the part of any agent or attorney appointed
with due care by it under this Agreement or any Intercreditor Agreement;
(h) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the Direction
of the Certificateholders holding Certificates of any series evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the related Trust relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement or any Intercreditor Agreement; and
(i) the Trustee shall not be required to expend or risk its own funds
in the performance of any of its duties under this Agreement, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk is not reasonably assured to it.
Section 7.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES.
The recitals contained herein and in the Certificates of each series, except the
certificates of authentication, shall not be taken as the statements of the
Trustee, and the Trustee assumes no responsibility for their correctness.
Subject to Section 7.15, the Trustee makes no representations as to the validity
or sufficiency of this Basic Agreement, any Equipment Notes, any Intercreditor
Agreement, the Certificates of any series, any Trust Supplement or any Note
Documents, except that the Trustee hereby represents and warrants that this
Basic Agreement has been, and each Trust Supplement, each Certificate, each Note
Purchase Agreement and each Intercreditor Agreement of, or relating to, each
series will be executed and delivered by one of its officers who is duly
authorized to execute and deliver such document on its behalf.
Section 7.05. MAY HOLD CERTIFICATES. The Trustee, any Paying Agent,
Registrar or any of their Affiliates or any other agent, in their respective
individual or any other capacity, may become the owner or pledgee of
Certificates and, subject to Sections 310(b) and 311 of the Trust Indenture Act,
if applicable, may otherwise deal with the Company, any Owner Trustees or the
Loan Trustees with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.
Section 7.06. MONEY HELD IN TRUST. Money held by the Trustee or the
Paying Agent in trust under this Agreement need not be segregated from other
funds except to the extent required herein or by law and neither the Trustee nor
the Paying Agent shall have any liability for interest upon any such moneys
except as provided for herein.
Section 7.07. COMPENSATION AND REIMBURSEMENT. The Company agrees:
(1) to pay, or cause to be paid, to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust); and
<PAGE>
(2) except as otherwise expressly provided herein or in any Trust
Supplement, to reimburse, or cause to be reimbursed, the Trustee upon its
request for all reasonable out-of-pocket expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Basic Agreement, any Trust Supplement or any Intercreditor
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, willful
misconduct or bad faith or as may be incurred due to the Trustee's breach
of its representations and warranties set forth in Section 7.15; and
(3) to indemnify, or cause to be indemnified, the Trustee with respect
to the Certificates of any series, pursuant to the particular sections of
the Note Purchase Agreement specified in the related Trust Supplement.
The Trustee shall be entitled to reimbursement from, and shall have a
lien prior to the Certificates of each series upon, all property and funds held
or collected by the Trustee in its capacity as Trustee with respect to such
series or the related Trust for any tax incurred without negligence, bad faith
or willful misconduct, on its part, arising out of or in connection with the
acceptance or administration of such Trust (other than any tax attributable to
the Trustee's compensation for serving as such), including any costs and
expenses incurred in contesting the imposition of any such tax. The Trustee
shall notify the Company of any claim for any tax for which it may seek
reimbursement. If the Trustee reimburses itself from the Trust Property of such
Trust for any such tax, it will mail a brief report within 30 days setting forth
the amount of such tax and the circumstances thereof to all Certificateholders
of such series as their names and addresses appear in the Register.
Section 7.08. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. Each Trust shall
at all times have a Trustee which shall be eligible to act as a trustee under
Section 310(a) of the Trust Indenture Act and shall have a combined capital and
surplus of at least $75,000,000 (or a combined capital and surplus in excess of
$5,000,000 and the obligations of which, whether now in existence or hereafter
incurred, are fully and unconditionally guaranteed by a corporation organized
and doing business under the laws of the United States, any state or territory
thereof or of the District of Columbia and having a combined capital and surplus
of at least $75,000,000). If such corporation publishes reports of conditions at
least annually, pursuant to law or to the requirements of federal, state,
territorial or District of Columbia supervising or examining authority, then for
the purposes of this Section 7.08 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.08 to act as Trustee of any
Trust, the Trustee shall resign immediately as Trustee of such Trust in the
manner and with the effect specified in Section 7.09.
Section 7.09. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
<PAGE>
of any Trust pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as Trustee of any or all Trusts
by giving prior written notice thereof to the Company, the Authorized Agents,
the related Owner Trustees and the related Loan Trustees. If an instrument of
acceptance by a successor Trustee shall not have been delivered to the Company,
the related Owner Trustees and the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Direction of the
Certificateholders of the related series holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in such Trust delivered to the Trustee and to the Company, the related Owner
Trustees and the related Loan Trustees.
(d) If at any time in respect of any Trust:
(1) the Trustee shall fail to comply with Section 310 of the Trust
Indenture Act, if applicable, after written request therefor by the Company
or by any Certificateholder who has been a BONA FIDE Certificateholder for
at least six months; or
(2) the Trustee shall cease to be eligible under Section 7.08 and
shall fail to resign after written request therefor by the Company or by
any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may remove the Trustee or (ii) any
Certificateholder of the related series who has been a BONA FIDE
Certificateholder for at least six months may, on behalf of itself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee of such Trust.
(e) If a Responsible Officer of the Trustee shall obtain actual
knowledge of an Avoidable Tax (as defined below) in respect of any Trust which
has been or is likely to be asserted, the Trustee shall promptly notify the
Company and shall, within 30 days of such notification, resign as Trustee of
such Trust hereunder unless within such 30-day period the Trustee shall have
received notice that the Company has agreed to pay such tax. The Company shall
promptly appoint a successor Trustee of such Trust in a jurisdiction where there
are no Avoidable Taxes. As used herein, an "AVOIDABLE TAX" in respect of such
Trust means a state or local tax: (i) upon (w) such Trust, (x) such Trust
Property, (y) Certificateholders of such Trust or (z) the Trustee for which the
Trustee is entitled to seek reimbursement from the Trust Property of such Trust,
and (ii) which would be avoided if the Trustee were located in another state, or
jurisdiction within a state, within the United States of America. A tax shall
<PAGE>
not be an Avoidable Tax in respect of any Trust if the Company or any Owner
Trustee shall agree to pay, and shall pay, such tax.
(f) If the Trustee shall resign, be removed or become incapable of
acting as Trustee of any Trust or if a vacancy shall occur in the office of the
Trustee of any Trust for any cause, the Company shall promptly appoint a
successor Trustee of such Trust. If, within one year after such resignation,
removal or incapability, or other occurrence of such vacancy, a successor
Trustee of such Trust shall be appointed by Direction of the Certificateholders
of the related series holding Certificates of such series evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in such
Trust delivered to the Company, the related Owner Trustees, the related Loan
Trustee and the retiring Trustee, then the successor Trustee of such Trust so
appointed shall, with the approval of the Company of such appointment, which
approval shall not be unreasonably withheld, forthwith upon its acceptance of
such appointment, become the successor Trustee of such Trust and supersede the
successor Trustee of such Trust appointed as provided above. If no successor
Trustee shall have been so appointed as provided above and accepted appointment
in the manner hereinafter provided, the resigning Trustee or any
Certificateholder who has been a BONA FIDE Certificateholder of the related
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee of such Trust.
(g) The successor Trustee of a Trust shall give notice of the
resignation and removal of the Trustee and appointment of the successor Trustee
by mailing written notice of such event by first-class mail, postage prepaid, to
the Certificateholders of the related series as their names and addresses appear
in the Register. Each notice shall include the name of such successor Trustee
and the address of its Corporate Trust Office.
Section 7.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor
Trustee appointed hereunder shall execute and deliver to the Company and to the
retiring Trustee with respect to any or all Trusts an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
with respect to such Trusts shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the successor Trustee, such retiring Trustee shall execute and
deliver an instrument transferring to such successor Trustee all such rights,
powers and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all Trust Property held by such retiring
Trustee in respect of such Trusts hereunder, subject nevertheless to its lien,
if any, provided for in Section 7.07. Upon request of any such successor
Trustee, the Company, the retiring Trustee and such successor Trustee shall
execute and deliver any and all instruments containing such provisions as shall
be necessary or desirable to transfer and confirm to, and for more fully and
certainly vesting in, such successor Trustee all such rights, powers and trusts.
If a successor Trustee is appointed with respect to one or more (but
not all) Trusts, the Company, the predecessor Trustee and each successor Trustee
with respect to any Trust shall execute and deliver a supplemental agreement
hereto which shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
<PAGE>
predecessor Trustee with respect to the Trusts as to which the predecessor
Trustee is not retiring shall continue to be vested in the predecessor Trustee,
and shall add to or change any of the provisions of this Basic Agreement and the
applicable Trust Supplements as shall be necessary to provide for or facilitate
the administration of the Trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental agreement shall
constitute such Trustees as co-Trustees of the same Trust and that each such
Trustee shall be Trustee of separate Trusts.
No institution shall accept its appointment as a Trustee hereunder
unless at the time of such acceptance such institution shall be qualified and
eligible under this Article VII.
Section 7.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder;
PROVIDED, HOWEVER, that such corporation shall be otherwise qualified and
eligible under this Article VII, without the execution or filing of any paper or
any further act on the part of any of the parties hereto. In case any
Certificates shall have been executed or authenticated, but not delivered, by
the Trustee then in office, any successor by merger, conversion or consolidation
to such authenticating Trustee may adopt such execution or authentication and
deliver the Certificates so executed or authenticated with the same effect as if
such successor Trustee had itself executed or authenticated such Certificates.
Section 7.12. MAINTENANCE OF AGENCIES. (a) With respect to each series
of Certificates, there shall at all times be maintained an office or agency in
the location set forth in Section 12.04 where Certificates of such series may be
presented or surrendered for registration of transfer or for exchange, and for
payment thereof, and where notices and demands, to or upon the Trustee in
respect of such Certificates or this Agreement may be served; PROVIDED, HOWEVER,
that, if it shall be necessary that the Trustee maintain an office or agency in
another location with respect to the Certificates of any series (E.G., the
Certificates of such series shall be represented by Definitive Certificates and
shall be listed on a national securities exchange), the Trustee will make all
reasonable efforts to establish such an office or agency. Written notice of the
location of each such other office or agency and of any change of location
thereof shall be given by the Trustee to the Company, any Owner Trustees, the
Loan Trustees (in the case of any Owner Trustee or Loan Trustee, at its address
specified in the Note Documents or such other address as may be notified to the
Trustee) and the Certificateholders of such series. In the event that no such
office or agency shall be maintained or no such notice of location or of change
of location shall be given, presentations and demands may be made and notices
may be served at the Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a Paying Agent
hereunder with respect to the Certificates of each series. Each such Authorized
Agent shall be a bank or trust company, shall be a corporation organized and
doing business under the laws of the United States or any state, with a combined
<PAGE>
capital and surplus of at least $75,000,000, or a corporation having a combined
capital and surplus in excess of $5,000,000, the obligations of which are
guaranteed by a corporation organized and doing business under the laws of the
United States or any state, with a combined capital and surplus of at least
$75,000,000, and shall be authorized under such laws to exercise corporate trust
powers, subject to supervision by federal or state authorities. The Trustee
shall initially be the Paying Agent and, as provided in Section 3.04, Registrar
hereunder with respect to the Certificates of each series. Each Registrar shall
furnish to the Trustee, at stated intervals of not more than six months, and at
such other times as the Trustee may request in writing, a copy of the Register
maintained by such Registrar.
(c) Any corporation into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authorized Agent shall
be a party, or any corporation succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent, if such
successor corporation is otherwise eligible under this Section 7.12, without the
execution or filing of any paper or any further act on the part of the parties
hereto or such Authorized Agent or such successor corporation.
(d) Any Authorized Agent may at any time resign by giving written
notice of resignation to the Trustee, the Company, any related Owner Trustees
and the related Loan Trustees. The Company may, and at the request of the
Trustee shall, at any time terminate the agency of any Authorized Agent by
giving written notice of termination to such Authorized Agent and to the
Trustee. Upon the resignation or termination of an Authorized Agent or in case
at any time any such Authorized Agent shall cease to be eligible under this
Section 7.12 (when, in either case, no other Authorized Agent performing the
functions of such Authorized Agent shall have been appointed), the Company shall
promptly appoint one or more qualified successor Authorized Agents, reasonably
satisfactory to the Trustee, to perform the functions of the Authorized Agent
which has resigned or whose agency has been terminated or who shall have ceased
to be eligible under this Section 7.12. The Company shall give written notice of
any such appointment made by it to the Trustee, any related Owner Trustees and
the related Loan Trustees; and in each case the Trustee shall mail notice of
such appointment to all Certificateholders of the related series as their names
and addresses appear on the Register for such series.
(e) The Company agrees to pay, or cause to be paid, from time to time
to each Authorized Agent reasonable compensation for its services and to
reimburse it for its reasonable expenses.
Section 7.13. MONEY FOR CERTIFICATE PAYMENTS TO BE HELD IN TRUST. All
moneys deposited with any Paying Agent for the purpose of any payment on
Certificates shall be deposited and held in trust for the benefit of the
Certificateholders entitled to such payment, subject to the provisions of this
Section 7.13. Moneys so deposited and held in trust shall constitute a separate
trust fund for the benefit of the Certificateholders with respect to which such
money was deposited.
<PAGE>
The Trustee may at any time, for the purpose of obtaining the
satisfaction and discharge of this Agreement or for any other purpose, direct
any Paying Agent to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon
which such sums were held by such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Section 7.14. REGISTRATION OF EQUIPMENT NOTES IN TRUSTEE'S NAME.
Subject to the provisions of any Intercreditor Agreement, the Trustee agrees
that all Equipment Notes to be purchased by any Trust and Permitted Investments,
if any, shall be issued in the name of the Trustee as trustee for the applicable
Trust or its nominee and held by the Trustee in trust for the benefit of the
Certificateholders of such series, or, if not so held, the Trustee or its
nominee shall be reflected as the owner of such Equipment Notes or Permitted
Investments, as the case may be, in the register of the issuer of such Equipment
Notes or Permitted Investments, as the case may be.
Section 7.15. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee
hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation organized and
validly existing in good standing under the laws of the State of Delaware;
(b) the Trustee has full power, authority and legal right to execute,
deliver and perform this Agreement, any Intercreditor Agreement and the
Note Purchase Agreements and has taken all necessary action to authorize
the execution, delivery and performance by it of this Agreement, any
Intercreditor Agreement and the Note Purchase Agreements;
(c) the execution, delivery and performance by the Trustee of this
Agreement, any Intercreditor Agreement and the Note Purchase Agreements (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;
(d) the execution, delivery and performance by the Trustee of this
Agreement, any Intercreditor Agreement and the Note Purchase Agreements
will not require the authorization, consent, or approval of, the giving of
notice to, the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency of the United
<PAGE>
States or the state of the United States where it is located regulating the
banking and corporate trust activities of the Trustee; and
(e) this Agreement, any Intercreditor Agreement and the Note Purchase
Agreements have been duly executed and delivered by the Trustee and
constitute the legal, valid and binding agreements of the Trustee,
enforceable against it in accordance with their respective terms; PROVIDED,
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 7.16. WITHHOLDING TAXES; INFORMATION REPORTING. As to the
Certificates of any series, the Trustee, as trustee of the related grantor trust
created by this Agreement, shall exclude and withhold from each distribution of
principal, premium, if any, and interest and other amounts due under this
Agreement or under the Certificates of such series any and all withholding taxes
applicable thereto as required by law. The Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any amounts
payable in respect of the Certificates of such series, to withhold such amounts
and timely pay the same to the appropriate authority in the name of and on
behalf of the Certificateholders of such series, that it will file any necessary
withholding tax returns or statements when due, and that, as promptly as
possible after the payment thereof, it will deliver to each such
Certificateholder of such series appropriate documentation showing the payment
thereof, together with such additional documentary evidence as such
Certificateholders may reasonably request from time to time. The Trustee agrees
to file any other information reports as it may be required to file under United
States law.
Section 7.17. TRUSTEE'S LIENS. The Trustee in its individual capacity
agrees that it will, in respect of each Trust created by this Agreement, at its
own cost and expense promptly take any action as may be necessary to duly
discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance,
security interest or claim ("TRUSTEE'S LIENS") on or with respect to the Trust
Property of such Trust which is attributable to the Trustee either (i) in its
individual capacity and which is unrelated to the transactions contemplated by
this Agreement or the related Note Documents or (ii) as Trustee hereunder or in
its individual capacity and which arises out of acts or omissions which are not
contemplated by this Agreement.
Section 7.18. PREFERENTIAL COLLECTION OF CLAIMS. The Trustee shall
comply with Section 311(a) of the Trust Indenture Act, excluding any creditor
relationship listed in Section 311(b) of the Trust Indenture Act. If the Trustee
shall resign or be removed as Trustee, it shall be subject to Section 311(a) of
the Trust Indenture Act to the extent provided therein.
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. THE COMPANY TO FURNISH TRUSTEE WITH NAMES AND ADDRESSES
OF CERTIFICATEHOLDERS. The Company will furnish to the Trustee within 15 days
<PAGE>
after each Record Date with respect to a Scheduled Payment, and at such other
times as the Trustee may request in writing within 30 days after receipt by the
Company of any such request, a list, in such form as the Trustee may reasonably
require, of all information in the possession or control of the Company as to
the names and addresses of the Certificateholders of each series, in each case
as of a date not more than 15 days prior to the time such list is furnished;
provided, HOWEVER, that so long as the Trustee is the sole Registrar for such
series, no such list need be furnished; and PROVIDED FURTHER, HOWEVER, that no
such list need be furnished for so long as a copy of the Register is being
furnished to the Trustee pursuant to Section 7.12.
Section 8.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
CERTIFICATEHOLDERS. The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Certificateholders of each
series contained in the most recent list furnished to the Trustee as provided in
Section 7.12 or Section 8.01, as the case may be, and the names and addresses of
Certificateholders of each series received by the Trustee in its capacity as
Registrar, if so acting. The Trustee may destroy any list furnished to it as
provided in Section 7.12 or Section 8.01, as the case may be, upon receipt of a
new list so furnished.
Section 8.03. REPORTS BY TRUSTEE. Within 60 days after May 15 of each
year commencing with the first full year following the issuance of any series of
Certificates, the Trustee shall transmit to the Certificateholders of such
series, as provided in Section 313(c) of the Trust Indenture Act, a brief report
dated as of such May 15, if required by Section 313(a) of the Trust Indenture
Act.
Section 8.04. REPORTS BY THE COMPANY. The Company shall:
(a) file with the Trustee, within 30 days after the Company is
required to file the same with the SEC, copies of the annual reports and of
the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may from time to time by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934, as amended; or, if the Company is not required to file information,
documents or reports pursuant to either of such sections, then to file with
the Trustee and the SEC, in accordance with rules and regulations
prescribed by the SEC, such of the supplementary and periodic information,
documents and reports which may be required pursuant to section 13 of the
Securities Exchange Act of 1934, as amended, in respect of a security
listed and registered on a national securities exchange as may be
prescribed in such rules and regulations;
(b) file with the Trustee and the SEC, in accordance with the rules
and regulations prescribed by the SEC, such additional information,
documents and reports with respect to compliance by the Company with the
conditions and covenants of the Company provided for in this Agreement, as
may be required by such rules and regulations, including, in the case of
annual reports, if required by such rules and regulations, certificates or
opinions of independent public accountants, conforming to the requirements
of Section 1.02;
<PAGE>
(c) transmit to all Certificateholders, in the manner and to the
extent provided in Section 313(c) of the Trust Indenture Act such summaries
of any information, documents and reports required to be filed by the
Company pursuant to subsections (a) and (b) of this Section 8.04 as may be
required by rules and regulations prescribed by the SEC; and
(d) furnish to the Trustee, not less often than annually, a brief
certificate from the principal executive officer, principal financial
officer or principal accounting officer as to his knowledge of the
Company's compliance with all conditions and covenants under this Agreement
(it being understood that for purposes of this paragraph (d), such
compliance shall be determined without regard to any period of grace or
requirement of notice provided under this Agreement).
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF
CERTIFICATEHOLDERS. Without the consent of the Certificateholders, the Company
may (but will not be required to), and the Trustee (subject to Section 9.03)
shall, at the Company's request, at any time and from time to time, enter into
one or more agreements supplemental hereto or, if applicable, to an
Intercreditor Agreement or a Liquidity Facility, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to provide for the formation of a Trust, the issuance of a series
of Certificates and other matters contemplated by Section 2.01(b); or
(2) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein contained or of the Company's obligations under any Intercreditor
Agreement or any Liquidity Facility; or
(3) to add to the covenants of the Company for the benefit of the
Certificateholders of any series, or to surrender any right or power
conferred upon the Company in this Agreement, any Intercreditor Agreement
or any Liquidity Facility; or
(4) to correct or supplement any provision in this Agreement, any
Intercreditor Agreement or any Liquidity Facility which may be defective or
inconsistent with any other provision herein or therein or to cure any
ambiguity or to modify any other provision with respect to matters or
questions arising under this Agreement, any Intercreditor Agreement or any
Liquidity Facility, PROVIDED, HOWEVER, that any such action shall not
materially adversely affect the interests of the Certificateholders of any
series; to correct any mistake in this Agreement, any Intercreditor
Agreement or any Liquidity Facility; or, as provided in any Intercreditor
<PAGE>
Agreement, to give effect to or provide for a Replacement Liquidity
Facility (as defined in such Intercreditor Agreement); or
(5) to comply with any requirement of the SEC, any applicable law,
rules or regulations of any exchange or quotation system on which the
Certificates of any series are listed or of any regulatory body; or
(6) to modify, eliminate or add to the provisions of this Agreement,
any Intercreditor Agreement or any Liquidity Facility to such extent as
shall be necessary to continue the qualification of this Agreement, any
Intercreditor Agreement or any Liquidity Facility (including any
supplemental agreement) under the Trust Indenture Act or under any similar
Federal statute hereafter enacted, and to add to this Agreement, any
Intercreditor Agreement or any Liquidity Facility such other provisions as
may be expressly permitted by the Trust Indenture Act, excluding, however,
the provisions referred to in Section 316(a)(2) of the Trust Indenture Act
as in effect at the date as of which this Basic Agreement was executed or
any corresponding provision in any similar Federal statute hereafter
enacted; or
(7) to evidence and provide for the acceptance of appointment under
this Agreement, any Intercreditor Agreement or any Liquidity Facility by a
successor Trustee with respect to one or more Trusts and to add to or
change any of the provisions of this Agreement, any Intercreditor Agreement
or any Liquidity Facility as shall be necessary to provide for or
facilitate the administration of the Trust, pursuant to the requirements of
Section 7.10; or
(8) to provide the information required under Section 7.12 and Section
12.04 as to the Trustee; or
(9) to make any other amendments or modifications hereto, PROVIDED,
HOWEVER, that such amendments or modifications shall apply to Certificates
of any series to be thereafter issued;
PROVIDED, HOWEVER, that no such supplemental agreement shall adversely affect
the status of any Trust as a grantor trust under Subpart E, Part I of Subchapter
J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended,
for U.S. federal income tax purposes.
Section 9.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF
CERTIFICATEHOLDERS. With respect to each separate Trust and the series of
Certificates relating thereto, with the consent of the Certificateholders
holding Certificates of such series (including consents obtained in connection
with a tender offer or exchange offer for the Certificates) evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in such Trust, by Direction of said Certificateholders delivered to the Company
and the Trustee, the Company may (with the consent of the Owner Trustees, if
any, relating to such Certificates, which consent shall not be unreasonably
withheld), but shall not be obligated to, and the Trustee (subject to Section
9.03) shall, enter into an agreement or agreements supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement, any Intercreditor Agreement or any
<PAGE>
Liquidity Facility to the extent applicable to such Certificateholders or of
modifying in any manner the rights and obligations of such Certificateholders
under this Agreement, any Intercreditor Agreement or any Liquidity Facility;
PROVIDED, HOWEVER, that no such agreement shall, without the consent of the
Certificateholder of each Outstanding Certificate affected thereby:
(1) reduce in any manner the amount of, or delay the timing of, any
receipt by the Trustee of payments on the Equipment Notes held in such
Trust or distributions that are required to be made herein on any
Certificate of such series, or change any date of payment on any
Certificate of such series, or change the place of payment where, or the
coin or currency in which, any Certificate of such series is payable, or
impair the right to institute suit for the enforcement of any such payment
or distribution on or after the Regular Distribution Date or Special
Distribution Date applicable thereto; or
(2) permit the disposition of any Equipment Note included in the Trust
Property of such Trust except as permitted by this Agreement, or otherwise
deprive such Certificateholder of the benefit of the ownership of the
Equipment Notes in such Trust; or
(3) alter the priority of distributions specified in the Intercreditor
Agreement in a manner materially adverse to the interests of the
Certificateholders of any series; or
(4) reduce the specified percentage of the aggregate Fractional
Undivided Interests of such Trust that is required for any such
supplemental agreement, or reduce such specified percentage required for
any waiver (of compliance with certain provisions of this Agreement or
certain defaults hereunder and their consequences) provided for in this
Agreement; or
(5) modify any of the provisions of this Section 9.02 or Section 6.05,
except to increase any such percentage or to provide that certain other
provisions of this Agreement cannot be modified or waived without the
consent of the Certificateholder of each Certificate of such series
affected thereby; or
(6) adversely affect the status of any Trust as a grantor trust under
Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the
Internal Revenue Code of 1986, as amended, for U.S. federal income tax
purposes.
It shall not be necessary for any Direction of such Certificateholders
under this Section 9.02 to approve the particular form of any proposed
supplemental agreement, but it shall be sufficient if such Direction shall
approve the substance thereof.
Section 9.03. DOCUMENTS AFFECTING IMMUNITY OR INDEMNITY. If in the
opinion of the Trustee any document required to be executed by it pursuant to
the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or
indemnity in favor of the Trustee under this Basic Agreement or any Trust
Supplement, the Trustee may in its discretion decline to execute such document.
<PAGE>
Section 9.04. EXECUTION OF SUPPLEMENTAL AGREEMENTS. In executing, or
accepting the additional trusts created by, any supplemental agreement permitted
by this Article or the modifications thereby of the trusts created by this
Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
Section 9.05. EFFECT OF SUPPLEMENTAL AGREEMENTS. Upon the execution of
any agreement supplemental to this Agreement under this Article, this Basic
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Basic Agreement for all purposes; and every
Certificateholder of each series theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby to the extent applicable to such
series.
Section 9.06. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
agreement executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act as then in effect.
Section 9.07. REFERENCE IN CERTIFICATES TO SUPPLEMENTAL AGREEMENTS.
Certificates of each series authenticated and delivered after the execution of
any supplemental agreement applicable to such series pursuant to this Article
may bear a notation in form approved by the Trustee as to any matter provided
for in such supplemental agreement; and, in such case, suitable notation may be
made upon Outstanding Certificates of such series after proper presentation and
demand.
ARTICLE X
AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS
Section 10.01. AMENDMENTS AND SUPPLEMENTS TO INDENTURE AND OTHER NOTE
DOCUMENTS. In the event that the Trustee, as holder (or beneficial owner through
the Subordination Agent) of any Equipment Notes (or as a prospective purchaser
of any Postponed Notes) in trust for the benefit of the Certificateholders of
any series or as Controlling Party under an Intercreditor Agreement, receives
(directly or indirectly through the Subordination Agent) a request for a consent
to any amendment, modification, waiver or supplement under any Indenture, other
Note Document or any other related document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder of such series registered on the Register as of the date of
such notice. The Trustee shall request from the Certificateholders of such
series a Direction as to (a) whether or not to take or refrain from taking (or
direct the Subordination Agent to take or refrain from taking) any action which
a holder of (or, with respect to Postponed Notes, a prospective purchaser of)
such Equipment Note has the option to direct, (b) whether or not to give or
execute (or direct the Subordination Agent to give or execute) any waivers,
consents, amendments, modifications or supplements as a holder of (or, with
respect to Postponed Notes, a prospective purchaser of) such Equipment Note or a
Controlling Party and (c) how to vote (or direct the Subordination Agent to
vote) any Equipment Note (or, with respect to a Postponed Note, its commitment
<PAGE>
to acquire such Postponed Note) if a vote has been called for with respect
thereto. Provided such a request for Certificateholder Direction shall have been
made, in directing any action or casting any vote or giving any consent as the
holder of any Equipment Note (or in directing the Subordination Agent in any of
the foregoing), (i) other than as Controlling Party, the Trustee shall vote for
or give consent to any such action with respect to such Equipment Note (or
Postponed Note) in the same proportion as that of (A) the aggregate face amounts
of all Certificates actually voted in favor of or for giving consent to such
action by such Direction of Certificateholders to (B) the aggregate face amount
of all Outstanding Certificates and (ii) as Controlling Party, the Trustee shall
vote as directed in such Certificateholder Direction by the Certificateholders
of such series evidencing a Fractional Undivided Interest aggregating not less
than a majority in interest in the Trust. For purposes of the immediately
preceding sentence, a Certificate shall have been "actually voted" if the Holder
of such Certificate has delivered to the Trustee an instrument evidencing such
Holder's consent to such Direction prior to one Business Day before the Trustee
directs such action or casts such vote or gives such consent. Notwithstanding
the foregoing, but subject to Section 6.04 and any Intercreditor Agreement, the
Trustee may, with respect to the Certificates of any series, in its own
discretion and at its own direction, consent and notify the relevant Loan
Trustee of such consent (or direct the Subordination Agent to consent and notify
the Loan Trustee of such consent) to any amendment, modification, waiver or
supplement under any related Indenture or any other related Note Document if an
Event of Default hereunder shall have occurred and be continuing or if such
amendment, modification, waiver or supplement will not materially adversely
affect the interests of the Certificateholders of such series.
ARTICLE XI
TERMINATION OF TRUSTS
Section 11.01. TERMINATION OF THE TRUSTS. In respect of each Trust
created by the Basic Agreement as supplemented by a related Trust Supplement,
the respective obligations and responsibilities of the Company and the Trustee
with respect to such Trust shall terminate upon the distribution to all Holders
of Certificates of the series of such Trust and the Trustee of all amounts
required to be distributed to them pursuant to this Agreement and the
disposition of all property held as part of the Trust Property of such Trust;
PROVIDED, HOWEVER, that in no event shall such Trust continue beyond one hundred
ten (110) years following the date of the execution of the Trust Supplement with
respect to such Trust (or such other final expiration date as may be specified
in such Trust Supplement).
Notice of any termination of a Trust, specifying the applicable Regular
Distribution Date (or applicable Special Distribution Date, as the case may be)
upon which the Certificateholders of any series may surrender their Certificates
to the Trustee for payment of the final distribution and cancellation, shall be
mailed promptly by the Trustee to Certificateholders of such series not earlier
than the minimum number of days and not later than the maximum number of days
specified therefor in the related Trust Supplement preceding such final
distribution specifying (A) the Regular Distribution Date (or Special
<PAGE>
Distribution Date, as the case may be) upon which the proposed final payment of
the Certificates of such series will be made upon presentation and surrender of
Certificates of such series 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 Regular Distribution Date (or Special
Distribution Date, as the case may be) is not applicable, payments being made
only upon presentation and surrender of the Certificates of such series at the
office or agency of the Trustee therein specified. The Trustee shall give such
notice to the Registrar at the time such notice is given to Certificateholders
of such series. Upon presentation and surrender of the Certificates of such
series in accordance with such notice, the Trustee shall cause to be distributed
to Certificateholders of such series amounts distributable on such Regular
Distribution Date (or Special Distribution Date, as the case may be) pursuant to
Section 4.02.
In the event that all of the Certificateholders of such series shall
not surrender their Certificates for cancellation within six months after the
date specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders of such series to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. No additional interest shall accrue on the Certificates of
such series after any Regular Distribution Date (or Special Distribution Date,
as the case may be) of such series, as specified in the first written notice. In
the event that any money held by the Trustee for the payment of distributions on
the Certificates of such series shall remain unclaimed for two years (or such
lesser time as the Trustee shall be satisfied, after 60 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 and the
Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death or
incapacity of any Certificateholder of any series shall not operate to terminate
this Agreement or the related Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties
hereto or any of them.
Section 12.02. LIABILITIES OF CERTIFICATEHOLDERS. Neither the existence
of the Trust nor any provision in this Agreement is intended to or shall limit
the liability the Certificateholders would otherwise incur if the
Certificateholders owned Trust Property as co-owners, or incurred any
obligations of the Trust, directly rather than through the Trust.
Section 12.03. REGISTRATION OF EQUIPMENT NOTES IN NAME OF SUBORDINATION
AGENT. If a Trust is party to an Intercreditor Agreement, the Trustee agrees
that all Equipment Notes to be purchased by such Trust shall be issued in the
name of the Subordination Agent under such Intercreditor Agreement or its
<PAGE>
nominee and held by such Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, such Subordination Agent or its nominee
shall be reflected as the owner of such Equipment Notes in the register of the
issuer of such Equipment Notes.
Section 12.04. NOTICES. (a) Unless otherwise specifically provided
herein or in the applicable Trust Supplement with respect to any Trust, all
notices required under the terms and provisions of this Basic Agreement or such
Trust Supplement with respect to such Trust shall be in English and in writing,
and any such notice may be given by United States mail, courier service or
telecopy, and any such notice shall be effective when delivered or received or,
if mailed, three days after deposit in the United States mail with proper
postage for ordinary mail prepaid,
if to the Company:
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Attention: Chief Financial Officer and
General Counsel
Facsimile: (713) 523-2831
if to the Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Department
Facsimile: (302) 651-8882
Telephone: (302) 651-8584
(b) The Company or the Trustee, by notice to the other, may designate
additional or different addresses for subsequent notices or communications.
(c) Any notice or communication to Certificateholders of any series
shall be mailed by first-class mail to the addresses for Certificateholders of
such series shown on the Register kept by the Registrar and to addresses filed
with the Trustee for Certificate Owners of such series. Failure so to mail a
notice or communication or any defect in such notice or communication shall not
affect its sufficiency with respect to other Certificateholders or Certificate
Owners of such series.
(d) If a notice or communication is mailed in the manner provided above
within the time prescribed, it is conclusively presumed to have been duly given,
whether or not the addressee receives it.
<PAGE>
(e) If the Company mails a notice or communication to the
Certificateholders of such series, it shall mail a copy to the Trustee and to
each Paying Agent for such series at the same time.
(f) Notwithstanding the foregoing, all communications or notices to the
Trustee shall be deemed to be given only when received by a Responsible Officer
of the Trustee.
(g) The Trustee shall promptly furnish the Company with a copy of any
demand, notice or written communication received by the Trustee hereunder from
any Certificateholder, Owner Trustee or Loan Trustee.
Section 12.05. GOVERNING LAW. THIS BASIC AGREEMENT HAS BEEN DELIVERED
IN THE STATE OF NEW YORK AND, TOGETHER WITH ALL TRUST SUPPLEMENTS AND
CERTIFICATES, SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.06. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or the related Trust,
or of the Certificates of such series or the rights of the Certificateholders
thereof.
Section 12.07. TRUST INDENTURE ACT CONTROLS. This Agreement is subject
to the provisions of the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions. If any provision of this Agreement
limits, qualifies or conflicts with another provision which is required to be
included in this Agreement by the Trust Indenture Act, the required provision
shall control.
Section 12.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 12.09. SUCCESSORS AND ASSIGNS. All covenants, agreements,
representations and warranties in this Agreement by the Trustee and the Company
shall bind and, to the extent permitted hereby, shall inure to the benefit of
and be enforceable by their respective successors and assigns, whether so
expressed or not.
Section 12.10. BENEFITS OF AGREEMENT. Nothing in this Agreement or in
the Certificates of any series, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, and the
Certificateholders of each series, any benefit or any legal or equitable right,
remedy or claim under this Agreement.
<PAGE>
Section 12.11. LEGAL HOLIDAYS. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate of
any series shall not be a Business Day with respect to such series, then
(notwithstanding any other provision of this Agreement) payment need not be made
on such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such Regular Distribution Date or Special
Distribution Date, and no interest shall accrue during the intervening period.
Section 12.12. COUNTERPARTS. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
Section 12.13. COMMUNICATION BY CERTIFICATEHOLDERS WITH OTHER
CERTIFICATEHOLDERS. Certificateholders of any series may communicate with other
Certificateholders of such series with respect to their rights under this Basic
Agreement, the related Trust Supplement or the Certificates of such series
pursuant to Section 312(b) of the Trust Indenture Act. The Company, the Trustee
and any and all other persons benefitted by this Agreement shall have the
protection afforded by Section 312(c) of the Trust Indenture Act.
Section 12.14. INTENTION OF PARTIES. The parties hereto intend that
each Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a trust or association taxable as a corporation or as a
partnership. The powers granted and obligations undertaken pursuant to this
Agreement shall be so construed so as to further such intent.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
CONTINENTAL AIRLINES, INC.
By: ______________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
as Trustee
By: ______________________________________
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
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 as the registered owner
hereof, Cede & Co., has an interest herein.1
CONTINENTAL AIRLINES ____________ PASS THROUGH TRUST
Pass Through
Certificate, Series __________
Final Regular Distribution Date: _____, ____
evidencing a fractional undivided interest in a
trust, the property of which includes certain
equipment notes each secured by Aircraft owned
by or leased to Continental Airlines, Inc.
Certificate
No._________ $__________ Fractional Undivided Interest representing
._____% of the Trust per $1,000 face amount
THIS CERTIFIES THAT __________________, for value received, is the
registered owner of a $___________ (________ dollars) Fractional Undivided
Interest in the Continental Airlines Pass Through Trust, Series [___] (the
"TRUST") created by Wilmington Trust Company, as trustee (the "TRUSTEE"),
pursuant to a Pass Through Trust Agreement dated as of [ ], 1997 (the "BASIC
AGREEMENT"), as supplemented by Trust Supplement No. _______ thereto dated
__________, 199_ (collectively, the "Agreement"), between the Trustee and
Continental Airlines, Inc., a corporation incorporated under Delaware law (the
"COMPANY"), a summary of certain of the pertinent provisions of which is set
forth below. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Agreement. This
Certificate is one of the duly authorized Certificates designated as "___%
Continental Airlines Pass Through Certificate, Series ____" (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,
- ----------
1. This legend to appear on Book-Entry Certificates to be deposited with
The Depository Trust Company.
<PAGE>
the Certificateholder of this Certificate assents to and agrees to be bound by
the provisions of the Agreement and any related Intercreditor Agreement. The
property of the Trust includes certain Equipment Notes and all rights of the
Trust to receive any payments under any Intercreditor Agreement or Liquidity
Facility (the "TRUST PROPERTY"). Each issue of the Equipment Notes is or will be
secured by, among other things, a security interest in 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 any
related Intercreditor Agreement, from funds then available to the Trustee, there
will be distributed on each __________ and ___________ (a "REGULAR DISTRIBUTION
DATE"), commencing on _________, 199_, 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 any related 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 the presentation or surrender of
this Certificate or the making of any notation hereon. 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
<PAGE>
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations set
forth, the transfer of this Certificate is registrable in the Register upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar, duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in minimum denominations of $1,000 Fractional Undivided Interest and
integral multiples thereof except that one Certificate may be issued in a
different denomination. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Trust, as requested by the
Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee shall require payment of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
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
<PAGE>
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
THIS CERTIFICATE AND THE AGREEMENT HAVE EACH BEEN DELIVERED IN THE
STATE OF NEW YORK AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES AND
CERTIFICATEHOLDERS HEREUNDER AND THEREUNDER 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.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
CONTINENTAL AIRLINES, INC.
By: WILMINGTON TRUST COMPANY,
as Trustee
By: ________________________________
Title: ________________________________
Dated: ___________________
<PAGE>
[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: ________________________________
Authorized Officer
EXHIBIT 5.1
OPINION OF HUGHES HUBBARD & REED LLP
<PAGE>
Hughes Hubbard & Reed LLP One Battery Park Plaza
New York, New York 10004-1482
Telephone: 212-837-6000
Facsimile: 212-422-4726
July 15, 1997
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
Re: Continental Airlines, Inc.
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as your counsel in connection with the above-referenced
Registration Statement on Form S-3 (the "Registration Statement") filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Act"), with respect to pass through certificates (the "Pass
Through Certificates") expected to be issued by one or more trusts to be formed
by Continental Airlines, Inc. (the "Company"). Such trusts are expected to
acquire certain equipment notes relating to leases of aircraft to the Company.
The Pass Though Certificates are expected to be issued and sold by the Company
from time to time pursuant to Rule 415 under the Act for an aggregate initial
offering price not to exceed $250,000,000 or the equivalent thereof in one or
more foreign currencies or composite currencies.
The Pass Through Certificates will be issued in series under a Pass
Through Trust Agreement between the Company and Wilmington Trust Company, the
trustee thereunder (the "Pass Through Trust Agreement"), the form of which has
been filed as an exhibit to the Registration Statement, and a Supplement thereto
relating to each such series (a "Trust Supplement").
We have examined the Certificate of Incorporation and Bylaws of the
Company and the form of the Pass Through Trust Agreement. In addition, we have
examined, and have relied as to matter of fact upon, originals or copies,
certified or otherwise identified to our satisfaction, of such corporate
records, agreements, documents and other instruments and such certificates or
comparable documents of public officials and of officers and representatives of
the Company, and have made such other and further investigations as we have
deemed relevant and necessary as a basis for the opinion hereinafter set forth.
Based upon and subject to the foregoing, we are of the opinion that,
with respect to each series of Pass Through Certificates, when (i) the
applicable provisions of the Act and such "Blue Sky" or state securities laws as
may be applicable shall have been complied with, (ii) the Pass Through Trust
Agreement shall have been duly authorized and validly executed and delivered by
the Company to the trustee thereunder, (iii) the Trust Supplement relating to
such series has been duly authorized and validly executed and delivered by the
Company to such trustee, (iv) the Board of Directors of the Company has taken
all necessary corporate action to approve the terms of the offering of such Pass
Through Certificates and related matters and (v) the Pass Through Certificates
of such series have been duly executed, authenticated, issued and delivered in
accordance with the provisions of the Pass Through Trust Agreement, the related
Trust Supplement and the applicable definitive purchase, underwriting or similar
agreement approved by the Board of Directors of the Company and upon payment of
the consideration therefor provided for therein, such Pass Through Certificates
will be legally issued and binding obligations of the Company.
<PAGE>
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the law of the State of
New York, the federal law of the United States and the Delaware General
Corporation Law.
We hereby consent to the filing of this opinion as an exhibit to said
Registration Statement and we further consent to the use of our name in the
Registration Statement under the caption "Legal Opinions". In giving this
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ HUGHES HUBBARD & REED LLP
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<PAGE>
CONTINENTAL AIRLINES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN MILLIONS)
<TABLE>
<CAPTION>
Three Three
Months Months 4/28/93 | 1/1/93
Ended Ended through | through
3/31/97 3/31/96 1996 1995 1994 12/31/93 | 4/27/93 1992
------- ------- ------- ------- -------- -------- | ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
|
Earnings: |
Earnings (Loss) Before Income |
Taxes, Minority Interest and |
Extraordinary Items $ 124 $ 95 $ 428 $ 310 $ (651) ($52) | ($977) ($125)
Plus: |
Interest Expense (a) 42 47 165 213 241 165 | 52 153
Capitalized Interest (6) (1) (5) (6) (17) (8) | (2) (6)
Amortization of Capitalized |
Interest 1 1 3 2 1 0 | 0 0
Portion of Rent Expense |
Representative of Interest |
Expense (a) 94 89 359 360 337 216 | 117 324
------ ------ ------ ------ ------- ------ | ------ ------
255 231 950 879 (89) 321 | (810) 346
------ ------ ------ ------ ------- ------ | ------ ------
Fixed Charges: |
Interest Expense (a) 42 47 165 213 241 165 | 52 153
Portion of Rent Expense |
Representative of |
Interest Expense (a) 94 89 359 360 337 216 | 117 324
------ ------ ------ ------ ------- ------ | ------ ------
Total Fixed Charges 136 136 524 573 578 381 | 169 477
------ ------ ------ ------ ------- ------ | ------ ------
Coverage Adequacy (Deficiency) $ 119 $ 95 $ 426 $ 306 $ (667) $ (60) | $ (979) $ (131)
====== ====== ====== ====== ======= ====== | ====== ======
Coverage Ratio 1.88 1.70 1.81 1.53 n/a n/a | n/a n/a
====== ====== ====== ====== ======= ====== | ====== ======
- ----------
<FN>
Note: A vertical black line is shown in the table above to separate
Continental's post-reorganized consolidated financial data of Holdings
since they have not been prepared on a consistent basis of accounting.
(a) Includes Fair Market Value Adjustments resulting from the Company's
emergence from bankruptcy.
</FN>
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Continental
Airlines, Inc. for the registration of $250,000,000 of Pass Through Certificates
and to the incorporation by reference therein of our reports dated February 10,
1997, with respect to the consolidated financial statements and schedules of
Continental Airlines, Inc. included in its Annual Report (Form 10-K) for the
year ended December 31, 1996, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Houston, Texas
July 10, 1997
EXHIBIT 24.1
POWERS OF ATTORNEY
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ JEFFERY A. SMISEK
-----------------------------------------
(Signature)
Printed Name: JEFFERY A. SMISEK
--------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ GORDON M. BETHUNE
-----------------------------------------
(Signature)
Printed Name: GORDON M. BETHUNE
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ LAWRENCE W. KELLNER
-----------------------------------------
(Signature)
Printed Name: LAWRENCE W. KELLNER
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ MICHAEL P. BONDS
-----------------------------------------
(Signature)
Printed Name: MICHAEL P. BONDS
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ THOMAS J. BARRACK, JR.
-----------------------------------------
(Signature)
Printed Name: THOMAS J. BARRACK, JR.
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ GREGORY D. BRENNEMAN
-----------------------------------------
(Signature)
Printed Name: GREGROY D. BRENNEMAN
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ LLOYD M. BENTSEN, JR.
-----------------------------------------
(Signature)
Printed Name: LLOYD M. BENTSEN, JR.
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ DAVID BONDERMAN
-----------------------------------------
(Signature)
Printed Name: DAVID BONDERMAN
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ PATRICK FOLEY
-----------------------------------------
(Signature)
Printed Name: PATRICK FOLEY
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ DOUGLAS H. MCCORKINDALE
-----------------------------------------
(Signature)
Printed Name: DOUGLAS H. MCCORKINDALE
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ GEORGE G.C. PARKER
-----------------------------------------
(Signature)
Printed Name: GEORGE G.C. PARKER
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ RICHARD W. POGUE
-----------------------------------------
(Signature)
Printed Name: RICHARD W. POGUE
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ WILLIAM S. PRICE III
-----------------------------------------
(Signature)
Printed Name: WILLIAM S. PRICE III
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ DONALD L. STURM
-----------------------------------------
(Signature)
Printed Name: DONALD L. STURM
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ KAREN HASTIE WILLIAMS
-----------------------------------------
(Signature)
Printed Name: KAREN HASTIE WILLIAMS
---------------------------
Dated and effective as of June 10, 1997
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Continental Airlines, Inc.,
a Delaware corporation (the "Company"), does hereby constitute and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's name and behalf in the undersigned's capacity as a
director and/or officer of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as a director
and/or officer that such person or persons may deem necessary or advisable to
enable the Company to comply with the Securities Act of 1933, as amended, and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain Registration Statement on Form S-3 relating to
certain of the Company's Pass Through Certificates in respect of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to, power and authority to sign for the undersigned in the capacity as a
director and/or officer of the Company the Registration Statement, and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
/S/ CHARLES A. YAMARONE
-----------------------------------------
(Signature)
Printed Name: CHARLES A. YAMARONE
---------------------------
Dated and effective as of June 10, 1997
EXHIBIT 25.1
STATEMENT OF ELIGIBILITY OF WILMINGTON TRUST COMPANY ON FORM T-1
<PAGE>
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) [ X ]
-----
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
CONTINENTAL AIRLINES, INC.
(Exact name of obligor as specified in its charter)
Delaware 74-2099724
(State of incorporation (I.R.S. employer identification no.)
or formation)
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
EMB-145 Pass Through Certificates
(Title of the indenture securities)
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and
records of the trustee and upon information
furnished by the obligor, the obligor is not an
affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes
the certificate of authority of Wilmington Trust Company to
commence business and the authorization of Wilmington Trust
Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act. D. Copy of most recent Report of Condition
of Wilmington Trust Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Wilmington Trust Company, a corporation organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 2nd day of July, 1997.
[SEAL] WILMINGTON TRUST COMPANY
Attest: /S/ ROSELINE K. MANEY By: /S/ BRUCE L. BISSON
---------------------- ---------------------------
ASSISTANT SECRETARY Name: Bruce L. Bisson
---------------------- Title: Vice President
<PAGE>
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
<PAGE>
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware
is at Rodney Square North, in the City of Wilmington, County of New
Castle; the name of its resident agent is WILMINGTON TRUST COMPANY
whose address is Rodney Square North, in said City. In addition to such
principal office, the said corporation maintains and operates branch
offices in the City of Newark, New Castle County, Delaware, the Town of
Newport, New Castle County, Delaware, at Claymont, New Castle County,
Delaware, at Greenville, New Castle County Delaware, and at Milford
Cross Roads, New Castle County, Delaware, and shall be empowered to
open, maintain and operate branch offices at Ninth and Shipley Streets,
418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in
the City of Wilmington, New Castle County, Delaware, and such other
<PAGE>
branch offices or places of business as may be authorized from time to
time by the agency or agencies of the government of the State of
Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation
are to do any or all of the things herein mentioned as fully and to the
same extent as natural persons might or could do and in any part of the
world, viz.:
(1) To sue and be sued, complain and defend in any Court of law
or equity and to make and use a common seal, and alter the
seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of
this State, to discount bills, notes or other evidences of
debt, to receive deposits of money, or securities for money,
to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and
enjoy all the powers, rights, privileges and franchises
incident to a corporation which are proper or necessary for
the transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and
the purchase, sale, management and disposal of property of
all descriptions, and to prepare and execute all papers
which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every
description, and to carry on the business of conveyancing in
all its branches.
<PAGE>
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or
underwriting the stock, bonds or other obligations of any
corporation, association, state or municipality, and may
receive and manage any sinking fund therefor on such terms
as may be agreed upon between the two parties, and in like
manner may act as Treasurer of any corporation or
municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body
politic, corporation, association or person, either alone or
in conjunction with any other person or persons, corporation
or corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court
in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in
<PAGE>
bankruptcy, executor, administrator, guardian, bailee, or in
any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority,
in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the exercise
of any of its powers hereby given, or for the performance of
any of the duties which it may undertake or be called upon
to perform, or for the assumption of any responsibility the
said Corporation may be entitled to receive a proper
compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual owners thereof, including the right to vote
<PAGE>
thereon; to invest and deal in and with any of the moneys of
the Corporation upon such securities and in such manner as
it may think fit and proper, and from time to time to vary
or realize such investments; to issue bonds and secure the
same by pledges or deeds of trust or mortgages of or upon
the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided
that the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part
of the world.
(2) To acquire the good will, rights, property and franchises
and to undertake the whole or any part of the assets and
liabilities of any person, firm, association or corporation,
and to pay for the same in cash, stock of this Corporation,
bonds or otherwise; to hold or in any manner to dispose of
the whole or any part of the property so purchased; to
conduct in any lawful manner the whole or any part of any
business so acquired, and to exercise all the powers
necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and
to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw, make,
accept, endorse, discount, execute and issue promissory
<PAGE>
notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same
extent as natural persons might or could do, to purchase or
otherwise acquire, to hold, own, to mortgage, sell, convey
or otherwise dispose of, real and personal property, of
every class and description, in any State, District,
Territory or Colony of the United States, and in any foreign
country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall
(except where otherwise expressed in said paragraph) be
nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes
and powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares
of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative. The
voting powers and the preferences and relative, participating, optional
<PAGE>
and other special rights of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of
any and all other series at any time outstanding; and, subject to the
provisions of subparagraph 1 of Paragraph (c) of this Article FOURTH,
the Board of Directors of the Corporation is hereby expressly granted
authority to fix by resolution or resolutions adopted prior to the
issuance of any shares of a particular series of Preferred Stock, the
voting powers and the designations, preferences and relative, optional
and other special rights, and the qualifications, limitations and
restrictions of such series, including, but without limiting the
generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series
shall be paid, the extent of the preference or relation, if
any, of such dividends to the dividends payable on any other
class or classes, or series of the same or other class of
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for,
shares of any other class or classes or of any series of the
same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and conditions
on which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
<PAGE>
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or
all series of Preferred Stock as a class, to elect one or
more directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more
series of Preferred Stock or under such circumstances and on
such conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential dividends
on the Preferred Stock (fixed in accordance with the provisions of
section (b) of this Article FOURTH), if any, shall have been met and
after the Corporation shall have complied with all the requirements, if
any, with respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with the
provisions of section (b) of this Article FOURTH), and subject further
to any conditions which may be fixed in accordance with the provisions
of section (b) of this Article FOURTH, then and not otherwise the
holders of Common Stock shall be entitled to receive such dividends as
may be declared from time to time by the Board of Directors.
(2) After distribution in full of the preferential amount, if
any, (fixed in accordance with the provisions of section (b)
of this Article FOURTH), to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to receive all of the remaining
assets of the Corporation, tangible and intangible, of
whatever kind available for distribution to stockholders
ratably in proportion to the number of shares of Common
Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
<PAGE>
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on
all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have
any preemptive right to purchase or subscribe for any unissued stock of
any class or series or any additional shares of any class or series to
be issued by reason of any increase of the authorized capital stock of
the Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any
such unissued stock, additional authorized issue of shares of any class
or series of stock or securities convertible into or exchangeable for
stock, or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of Directors to such
persons, firms, corporations or associations, whether such holders or
others, and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case, be
as fixed from time to time by the Board of Directors in the resolution
or resolutions adopted pursuant to authority granted in section (b) of
this Article FOURTH and the consent, by class or series vote or
otherwise, of the holders of such of the series of Preferred Stock as
are from time to time outstanding shall not be required for the
issuance by the Board of Directors of any other series of Preferred
Stock whether or not the powers, preferences and rights of such other
series shall be fixed by the Board of Directors as senior to, or on a
parity with, the powers, preferences and rights of such outstanding
series, or any of them; provided, however, that the Board of Directors
may provide in the resolution or resolutions as to any series of
<PAGE>
Preferred Stock adopted pursuant to section (b) of this Article FOURTH
that the consent of the holders of a majority (or such greater
proportion as shall be therein fixed) of the outstanding shares of such
series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the
whole Board, provided, however, that the number of directors shall not
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a
majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office for
a term expiring at the next succeeding annual meeting, directors of the
second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting and directors of the third class shall
be elected to hold office for a term expiring at the third succeeding
<PAGE>
annual meeting. Any vacancies in the Board of Directors for any reason,
and any newly created directorships resulting from any increase in the
directors, may be filled by the Board of Directors, acting by a
majority of the directors then in office, although less than a quorum,
and any directors so chosen shall hold office until the next annual
election of directors. At such election, the stockholders shall elect a
successor to such director to hold office until the next election of
the class for which such director shall have been chosen and until his
successor shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation), any
director or the entire Board of Directors of the Corporation may be
removed at any time without cause, but only by the affirmative vote of
the holders of two-thirds or more of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at a meeting
of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation not less than 14 days nor more than
50 days prior to any meeting of the stockholders called for the
election of directors; provided, however, that if less than 21 days'
notice of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the seventh day following the
day on which notice of the meeting was mailed to stockholders. Notice
of nominations which are proposed by the Board of Directors shall be
given by the Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee
<PAGE>
proposed in such notice, (ii) the principal occupation or employment of
such nominee and (iii) the number of shares of stock of the Corporation
which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance
with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be
disregarded.
(g) No action required to be taken or which may be taken at any annual
or special meeting of stockholders of the Corporation may be taken
without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants
as may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of
the whole Board, may designate any of their number to constitute an
Executive Committee, which Committee, to the extent provided in said
resolution, or in the By-Laws of the Company, shall have and may
exercise all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, and shall have power to
authorize the seal of the Corporation to be affixed to all papers which
may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
<PAGE>
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or
more of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for
this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside of the
State of Delaware at such places as may be from time to time designated
by the Board, and the Directors may keep the books of the Company
outside of the State of Delaware at such places as may be from time to
time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law,
and except as otherwise expressly provided in sections (b) and (c) of
this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair
market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
<PAGE>
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any similar transaction (whether or not with
or into or otherwise involving an Interested Stockholder)
which has the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of any
class of equity or convertible securities of the Corporation
or any Subsidiary which is directly or indirectly owned by
any Interested Stockholder, or any Affiliate of any
Interested Stockholder, shall require the affirmative vote
of the holders of at least two-thirds of the outstanding
shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the
purpose of this Article FIFTEENTH as one class ("Voting
Shares"). Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or
that some lesser percentage may be specified, by law or in
any agreement with any national securities exchange or
otherwise.
(2) The term "business combination" as used in this Article FIFTEENTH
shall mean any transaction which is referred to any one or more of
clauses (A) through (E) of paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH shall not
be applicable to any particular business combination and such business
combination shall require only such affirmative vote as is required by
law and any other provisions of the Charter or Act of Incorporation of
<PAGE>
By-Laws if such business combination has been approved by a majority of
the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the
determination of stockholders entitled to notice of and to vote on
such business combination, or immediately prior to the consummation
of any such transaction:
(A) is the beneficial owner, directly or indirectly, of
more than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial
owner, directly or indirectly, of not less than 10% of
the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at
any time within two years prior thereto beneficially
owned by any Interested Stockholder, and such
assignment or succession shall have occurred in the
course of a transaction or series of transactions not
involving a public offering within the meaning of the
Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own,
directly or indirectly, or
(B) which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such
right is exercisable immediately or only after the
<PAGE>
passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or
understanding, or
(C) which are beneficially owned, directly or indirectly,
by any other person with which such first mentioned
person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any
shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include
any other Voting Shares which may be issuable pursuant to any
agreement, or upon exercise of conversion rights, warrants or
options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect
on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis
of information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an
Affiliate or Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another as to the
<PAGE>
matters referred to in paragraph (3) of section (c), or (4) whether
the assets subject to any business combination or the consideration
received for the issuance or transfer of securities by the
Corporation, or any Subsidiary has an aggregate fair market value
of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this
Charter or Act of Incorporation by the By-Laws), the affirmative
vote of the holders of at least two-thirds of the outstanding
shares of the capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose
as one class) shall be required to amend, alter or repeal any
provision of Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of
this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted under
the Delaware General Corporation Laws as the same exists or may
hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
<PAGE>
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
<PAGE>
EXHIBIT B
As existing on January 16, 1997
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
<PAGE>
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
Section 6. SPECIAL meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
<PAGE>
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not more than nine
members who shall be selected by the Board of Directors from its own members and
who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the Board of
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office of the
Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Executive Committee may be held at any time
when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall be kept
and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
<PAGE>
(F) In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of the Company by
its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than thirteen
members who shall be selected by the Board of Directors, a majority of whom
shall be members of the Board of Directors and who shall hold office during the
pleasure of the Board.
(B) The Trust Committee shall have general supervision over the Trust
Department and the investment of trust funds, in all matters, however, being
subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of the
Company or elsewhere in its discretion at such times to be determined by a
<PAGE>
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be kept and
promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint Committees
and/or designate officers or employees of the Company to whom supervision over
the investment of trust funds may be delegated when the Trust Committee is not
in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who shall be
selected by the Board of Directors from its own members, none of whom shall be
an officer of the Company, and shall hold office at the pleasure of the Board.
(B) The Audit Committee shall have general supervision over the Audit
Division in all matters however subject to the approval of the Board of
Directors; it shall consider all matters brought to its attention by the officer
in charge of the Audit Division, review all reports of examination of the
Company made by any governmental agency or such independent auditor employed for
that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the majority
of its members shall deem it to be proper for the transaction of its business,
and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more than five
(5) members who shall be selected by the Board of Directors from its own members
who are not officers of the Company and who shall hold office during the
pleasure of the Board.
(B) The Compensation Committee shall in general advise upon all matters
of policy concerning the Company brought to its attention by the management and
<PAGE>
from time to time review the management of the Company, major organizational
matters, including salaries and employee benefits and specifically shall
administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at any time by
the Chairman of the Compensation Committee, the Chairman of the Board of
Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by the Board
of Directors as an associate director, to serve during the pleasure of the
Board.
(B) An associate director shall be entitled to attend all directors
meetings and participate in the discussion of all matters brought to the Board,
with the exception that he would have no right to vote. An associate director
will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any Committee
created under Article III of the By-Laws of this Company, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absence or
disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
<PAGE>
Section 2. THE VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
<PAGE>
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
<PAGE>
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words "Wilmington
Trust Company" within the inner circle the words
"Wilmington, Delaware."
<PAGE>
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
<PAGE>
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in defending any
proceeding in advance of its final disposition, PROVIDED, HOWEVER, that the
payment of expenses incurred by a Director officer in his capacity as a Director
or officer in advance of the final disposition of the proceeding shall be made
only upon receipt of an undertaking by the Director or officer to repay all
amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses, under this
Article X is not paid in full within ninety days after a written claim therefor
has been received by the Corporation the claimant may file suit to recover the
unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expense of prosecuting such claim. In any such action
the Corporation shall have the burden of proving that the claimant was not
entitled to the requested indemnification of payment of expenses under
applicable law.
(D) The rights conferred on any person by this Article X shall not be
exclusive of any other rights which such person may have or hereafter acquire
<PAGE>
under any statute, provision of the Charter or Act of Incorporation, these
By-Laws, agreement, vote of stockholders or disinterested Directors or
otherwise. (E) Any repeal or modification of the foregoing provisions of this
Article X shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to the time of such
repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole
or in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
<PAGE>
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: July 2, 1997 By: /S/ BRUCE L. BISSON
---------------------------
Name: Bruce L. Bisson
Title: Vice President
<PAGE>
EXHIBIT d
NOTICE
This form is intended to assist state
nonmember banks and savings banks with
state publication requirements. It has
not been approved by any state banking
authorities. Refer to your appropriate
state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ---------------------------------------------------------- ------------------
Name of Bank City
in the State of DELAWARE , at the close of business on March 31, 1997.
------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins.................................. 181,744
Interest-bearing balances............................................................ 0
Held-to-maturity securities............................................................. 445,954
Available-for-sale securities........................................................... 767,337
Federal funds sold and securities purchased under agreements to resell.................. 86,900
Loans and lease financing receivables:
Loans and leases, net of unearned income............................... 3,685,616
LESS: Allowance for loan and lease losses............................. 52,478
LESS: Allocated transfer risk reserve................................. 0
Loans and leases, net of unearned income, allowance, and reserve....... 3,633,138
Assets held in trading accounts......................................................... 0
Premises and fixed assets (including capitalized leases)................................ 94,513
Other real estate owned................................................................. 3,702
Investments in unconsolidated subsidiaries and associated companies..................... 20
Customers' liability to this bank on acceptances outstanding............................ 0
Intangible assets....................................................................... 4,012
Other assets............................................................................ 103,524
Total assets............................................................................ 5,320,844
CONTINUED ON NEXT PAGE
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices..................................................................... 3,618,174
Available-for-sale securities........................................................... 767,337
Noninterest-bearing..................................................... 784,267
Interest-bearing........................................................2,833,907
Federal Funds pursed and Securities sold under agreements to repurchase................. 293,862
Demand notes issued to the U.S. Treasury................................................ 64,550
Trading liabilities (from Schedule Rc-D)................................................ 0
Other borrowed money: 20
With original maturity of one year or less.............................. 774,000
With original maturity of more than one year............................ 43,000
Bank's liability on acceptances executed and outstanding................................ 0
Subordinated notes and debentures....................................................... 0
Other liabilities (from Schedule RC-G).................................................. 95,672
Total liabilities....................................................................... 4,889,258
EQUITY CAPITAL
Perpetual preferred stock and related surplus........................................... 0
Common stock............................................................................ 500
Surplus (exclude all surplus related to preferred stock)................................ 62,118
Undivided profits and capital reserves.................................................. 371,107
Net unreleased holding gains (losses) on available-for-sale securities.................. (2,139)
Total equity capital.................................................................... 431,586
Total liabilities, limited-life preferred stock, and equity capital..................... 5,320,944
Thousands of dollars
</TABLE>
