COLLATERAL MAINTENANCE AGREEMENT AMONG CONTINENTAL AIRLINES, INC., FINANCIAL GUARANTY INSURANCE COMPANY, as Policy Provider, AND WILMINGTON TRUST COMPANY, as Mortgagee dated as of June 9, 2006
AMONG
CONTINENTAL
AIRLINES, INC.,
FINANCIAL
GUARANTY INSURANCE COMPANY,
as
Policy
Provider,
AND
WILMINGTON
TRUST COMPANY,
as
Mortgagee
dated
as
of June 9, 2006
PAGE
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ARTICLE
1
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1
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Section
1.1
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1
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Section
1.2
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1
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ARTICLE
2
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1
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Section
2.1
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1
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Section
2.2
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2
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Section
2.3
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3
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Section
2.4
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3
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Section
2.5
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4
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Section
2.6
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4
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ARTICLE
3
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4
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Section
3.1
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4
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Section
3.2
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7
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Section
3.3
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7
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Section
3.4
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8
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ARTICLE
4
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9
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Section
4.1
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9
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Section
4.2
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9
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Section
4.3
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9
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Section
4.4
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10
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Section
4.5
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10
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Section
4.6
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11
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Section
4.7
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11
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Section
4.8
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11
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Section
4.9
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11
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Section
4.10
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11
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APPENDIX
I - FORM OF APPRAISAL COMPLIANCE REPORT
APPENDIX
II - FORM OF NONAPPRAISAL COMPLIANCE
REPORT
COLLATERAL
MAINTENANCE AGREEMENT, dated as of June 9, 2006 (this “Agreement”),
among CONTINENTAL AIRLINES, INC., a Delaware corporation (the “Company”),
FINANCIAL GUARANTY INSURANCE COMPANY, a New York stock insurance company (the
“Policy
Provider”),
and
WILMINGTON TRUST COMPANY, as Mortgagee (the “Mortgagee”)
under
the Trust Indenture and Mortgage, dated as of the date hereof, between the
Company and the Mortgagee (the “Trust
Indenture”).
R
E C I T
A L S
WHEREAS,
the Company, and the Mortgagee have entered into the Trust Indenture providing
for the issuance of $320,000,000 aggregate principal amount of Equipment Notes,
and the Policy Provider has issued the Policy under which the Subordination
Agent may make drawings to make certain payments with respect to the Series
G
Equipment Notes for the benefit of Class G Pass Through
Certificateholders;
WHEREAS,
in order to secure the payment of the principal amount of and interest on the
Equipment Notes and all other Secured Obligations under the Trust Indenture,
the
Company has granted a security interest in the Collateral pursuant to the Trust
Indenture; and
WHEREAS,
the Company, the Policy Provider and the Mortgagee wish to set forth herein
certain additional agreements with respect to the Collateral.
NOW,
THEREFORE, in consideration of the premises and other benefits to the Company,
the receipt and sufficiency of which are hereby acknowledged, the Company,
the
Policy Provider and the Mortgagee agree as follows:
DEFINITIONS
AND RULES OF CONSTRUCTION
Section
1.1 Definitions.
Capitalized terms used above or hereinafter and not otherwise defined herein
shall have the meanings ascribed to such terms in the Trust
Indenture.
Section
1.2 Rules
of Construction.
The
rules of construction for this Agreement are set forth under “General
Provisions” in Annex A to the Trust Indenture.
REPORTS
REGARDING THE COLLATERAL
Section
2.1 Annual
Appraisal.
So long
as the Equipment Notes are outstanding, by the tenth Business Day of October
in
2006 and by the tenth Business Day of October of each year thereafter, the
Company shall furnish the Policy Provider, the Mortgagee and the Rating
Agencies
an Independent Appraiser’s Certificate signed by an Independent Appraiser, dated
as of a date between the preceding September 25 and October 10
(inclusive). Each such Independent Appraiser’s Certificate shall state, in the
opinion of such Independent Appraiser, based upon use of the Annual Methodology,
the following:
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(a)
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the
Fair Market Value of the Collateral (excluding any Cash Collateral
and,
for the avoidance of doubt, any Excluded Parts) as of a specified
date
within 45 days (or, if an Independent Appraiser’s Certificate signed
by such Independent Appraiser has not previously been delivered to
the
Policy Provider pursuant to this Agreement or in the Prospectus
Supplement, 60 days) (the “Permitted
Days”)
preceding the date of such Certificate (the “Annual
Valuation Date”);
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(b)
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the
Fair Market Value of the Rotables and of the Expendables included
in the
Collateral as of the applicable Annual Valuation Date (and shall
separately state the quantity of such Rotables and Expendables);
and
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(c)
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the
Fair Market Value of the Serviceable Parts and the Unserviceable
Parts
included in the Collateral as of the applicable Annual Valuation
Date.
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Each
annual Independent Appraiser’s Certificate shall be accompanied by an Appraisal
Compliance Report determined using data as of the applicable Annual Valuation
Date. The Appraisal Compliance Report shall set forth the calculation of the
Collateral Ratio, the Subordinated Collateral Ratio and the Rotable Ratio based
on the Fair Market Value of the Collateral and the Rotables set forth in such
Independent Appraiser’s Certificate, the Fair Market Value of Cash Collateral
held by the Collateral Agent, the principal amount of the Series G Equipment
Notes outstanding and the principal amount of the Series B Equipment Notes
outstanding, each as of the applicable Annual Valuation Date. Upon written
request of the Policy Provider given to the Company within twenty Business
Days
after delivery to the Policy Provider of an annual Independent Appraiser’s
Certificate under this Section 2.1, the Company shall furnish to the Policy
Provider (with a copy to the Mortgagee) a recent Parts Inventory Report and
a
report showing the percentage of the total cost of the Pledged Spare Parts
located at each Company facility (determined, with respect to each model of
Spare Part or Appliance included in the Pledged Spare Parts, using the average
cost of the Pledged Spare Parts of such model multiplied by the quantity of
such
model included in the Pledged Spare Parts) as of the same date as the date
of
such Parts Inventory Report.
Section
2.2 Semiannual
Appraisal.
So long
as the Equipment Notes are outstanding, by the tenth Business Day of April
in
2007 and by the tenth Business Day of April in each year thereafter, the Company
shall furnish the Policy Provider, the Mortgagee and the Rating Agencies an
Independent Appraiser’s Certificate signed by an Independent Appraiser, dated as
of a date between the preceding March 25 and April 10 (inclusive). Each
such semiannual Independent Appraiser’s Certificate shall state, in the opinion
of such Independent Appraiser, based upon the use of the Semiannual Methodology,
the following:
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(a)
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the
Fair Market Value of the Collateral (excluding any Cash Collateral
and,
for the avoidance of doubt, any Excluded Parts) as of a specified
date
within the
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Permitted
Days preceding the date of such Certificate (the “Semiannual
Valuation Date”);
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(b)
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the
Fair Market Value of the Rotables and of the Expendables included
in the
Collateral as of the applicable Semiannual Valuation Date (and shall
separately state the quantity of such Rotables and Expendables);
and
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(c)
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the
Fair Market Value of the Serviceable Parts and the Unserviceable
Parts
included in the Collateral as of the applicable Semiannual Valuation
Date.
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Each
semiannual Independent Appraiser’s Certificate shall be accompanied by an
Appraisal Compliance Report determined using data as of the applicable
Semiannual Valuation Date. The Appraisal Compliance Report provided with the
semiannual Independent Appraiser’s Certificate shall set forth the calculation
of the Collateral Ratio, the Subordinated Collateral Ratio and the Rotable
Ratio
based on the Fair Market Value of the Collateral and Rotables set forth in
such
Independent Appraiser’s Certificate, the Fair Market Value of Cash Collateral
held by the Collateral Agent, the principal amount of the Series G Equipment
Notes outstanding and the principal amount of the Series B Equipment Notes
outstanding, each as of the applicable Semiannual Valuation Date.
Section
2.3 Quarterly
Reports.
So long
as the Equipment Notes are outstanding, within ten Business Days after each
January 1 and July 1, commencing with January 1, 2007, the
Company shall furnish the Policy Provider and the Trustee a Nonappraisal
Compliance Report determined as of such January 1 or July 1, as
applicable, or any date during such ten Business Day period
thereafter.
Section
2.4 Special
Reports.
The
Policy Provider (or, if a Policy Provider Default has occurred and is
continuing, the Mortgagee at the direction of the Controlling Party) may (i)
if
the Company defaults in any of its obligations with respect to indebtedness
of
the Company in an outstanding principal amount greater than $100,000,000 which
results in the acceleration of the Company’s obligation to pay such indebtedness
in full prior to its stated final maturity date, at any time prior to the
payment of such indebtedness or the reversal of such acceleration, or (ii)
if an
Event of Default occurs, at any time while such Event of Default is continuing,
request by written notice to the Company that the Company furnish to the Policy
Provider (with copies to the Mortgagee and the Rating Agencies) a special
Independent Appraiser’s Certificate. Any such special Independent Appraiser’s
Certificate shall state, in the opinion of such Independent Appraiser, based
upon use of the Annual Methodology, the following:
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(a)
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the
Fair Market Value of the Collateral (excluding any Cash Collateral
and,
for the avoidance of doubt, any Excluded Parts) as of a specified
date
within the Permitted Days preceding the date of such Certificate
(the
“Special
Valuation Date”
and, together with each Annual Valuation Date and Semiannual Valuation
Date, the “Valuation
Dates”);
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(b)
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the
Fair Market Value of the Rotables and of the Expendables included
in the
Collateral as of the applicable Special Valuation Date (and shall
separately state the quantity of such Rotables and Expendables);
and
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(c)
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the
Fair Market Value of the Serviceable Parts and the Unserviceable
Parts
included in the Collateral as of the applicable Special Valuation
Date.
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The
Company shall furnish to the Policy Provider (with copies to the Mortgagee
and
the Rating Agencies) any such requested special Independent Appraiser’s
Certificate reasonably promptly after receipt of such request. Notwithstanding
the foregoing, the Company shall not be obligated (i) to furnish any
Independent Appraiser’s Certificate under this Section 2.4
during the Section 1110
Period or (ii) to deliver pursuant to this Article 2 an Independent
Appraiser’s Certificate more than twice in any six month period. Upon written
request of the Policy Provider given to the Company within twenty Business
Days
after delivery to the Policy Provider of a special Independent Appraiser’s
Certificate under this Section 2.4, the Company shall furnish to the Policy
Provider (with copies to the Mortgagee and the Rating Agencies) a recent Parts
Inventory Report and a report showing the percentage of the total cost of the
Pledged Spare Parts located at each Company facility (determined as provided
in
the last sentence of Section 2.1) as of the same date as the date of such Parts
Inventory Report.
Section
2.5 Information
from the Mortgagee.
The
Fair Market Value of any Investment Securities included in the Cash Collateral
for purposes of this Agreement shall be determined by the Mortgagee in
accordance with customary financial market practices. The Mortgagee shall inform
the Company of the principal amount of the Series G Equipment Notes outstanding,
the principal amount of the Series B Equipment Notes outstanding and the Fair
Market Value of any Investment Securities included in the Collateral, in each
case as of any Valuation Date or for purposes of Section 3.1,
promptly after the Company’s request for such information.
Section
2.6 Independent
Appraiser.
If the
Policy Provider (or, if a Policy Provider Default has occurred and is
continuing, the Mortgagee at the direction of the Controlling Party) has a
reasonable basis for concluding that the performance of the Independent
Appraiser that executed the most recent Independent Appraiser’s Certificate
delivered pursuant to Article 2 was not satisfactory, the Policy Provider
(or, if a Policy Provider Default has occurred and is continuing, the Mortgagee
at the direction of the Controlling Party) may designate another Independent
Appraiser to perform the next required appraisal under this Article 2 by
written notice given to the Company within 90 days after the date of such
most recent Independent Appraiser’s Certificate. The Company shall use such
other Independent Appraiser designated by the Policy Provider (or the Mortgagee,
as the case may be) for the next appraisal unless it gives the Policy Provider
(or the Mortgagee, as the case may be) written notice of reasonable objection
to
the use of such other Independent Appraiser.
COLLATERAL
REQUIREMENTS
Section
3.1 Maintenance
of Collateral Ratio and Rotable Ratio.
(a) If
the
Collateral Ratio, as most recently determined pursuant to an Appraisal
Compliance Report, is greater than the Maximum Collateral Ratio or the
Subordinated Collateral Ratio, as most recently determined pursuant to an
Appraisal Compliance Report, is greater than
the
Maximum Subordinated Collateral Ratio, the Company shall within 90 days after
the date of the Appraisal Compliance Report setting forth the calculation of
such Collateral Ratio or Subordinated Collateral Ratio:
(i) subject
additional Qualified Spare Parts (the “Additional
Parts”)
to the
Lien of the Trust Indenture in accordance with Section 3.1(c);
(ii) grant
a
security interest to a Collateral Agent in other property to secure the Secured
Obligations for the benefit of the Note Holders and the Indenture Indemnitees,
provided that the Company shall have received, with respect to the use for
purposes of this Section 3.1(a) of such additional collateral and the applicable
Collateral Agreement, (x) approval of the Policy Provider and (y) Ratings
Confirmation with respect to the Pass Through Certificates;
(iii) provide
additional cash and/or Investment Securities to the Mortgagee under the Trust
Indenture, provided that if the Continental Cash Balance as of the applicable
Valuation Date was less than $600,000,000, then the amount of Cash Collateral
included in the Collateral, after giving effect to the action taken pursuant
to
Sections 3.1(a) and 3.1(b) with respect to such Valuation Date, shall not exceed
$20,000,000;
(iv) if
the
787 Spare Parts are not then included as Qualified Spare Parts, subject the
787
Spare Parts to the Lien of the Trust Indenture as Qualified Spare Parts in
accordance with Section 3.1(f);
(v) redeem
some or all of the Equipment Notes pursuant to Section 2.11 of the Trust
Indenture (provided that, in the case of the Series B Equipment Notes, any
such redemption before the fifth anniversary of the Issuance Date may be made
only to the extent necessary to satisfy the applicable Collateral Ratio or
Subordinated Collateral Ratio requirement); or
(vi) any
combination of the foregoing;
such
that, the Collateral Ratio and the Subordinated Collateral Ratio, as
recalculated giving effect to such action taken pursuant to this Section 3.1(a)
and, in the case of clauses (i), (ii), (iii) and (iv) of this Section 3.1(a),
using the Fair Market Value of any such additional Collateral determined
pursuant to Section 3.1(d) (but otherwise using the information used to
determine the Collateral Ratio and the Subordinated Collateral Ratio as most
recently determined pursuant to Article 2), would not be greater than the
Maximum Collateral Ratio or the Maximum Subordinated Collateral Ratio,
respectively.
(b) If
the
Rotable Ratio, as most recently determined pursuant to an Appraisal Compliance
Report, is less than the Minimum Rotable Ratio, the Company shall within 90
days
after the date of the Appraisal Compliance Report setting forth the calculation
of such Rotable Ratio:
(i) subject
additional Rotables (the “Additional
Rotables”)
to the
Lien of the Trust Indenture in accordance with Section 3.1(c);
(ii) provide
additional cash and/or Investment Securities to the Mortgagee under the Trust
Indenture; provided
that if
the Continental Cash Balance as of the applicable Valuation Date was less than
$600,000,000, then the amount of Cash Collateral included in the Collateral,
after giving effect to the action taken pursuant to Sections 3.1(a) and 3.1(b)
with respect to such Valuation Date, shall not exceed $20,000,000;
(iii) if
the
787 Spare Parts are not then included as Qualified Spare Parts, subject Rotable
Parts that are 787 Spare Parts to the Lien of the Trust Indenture in accordance
with Section 3.1(f);
(iv) redeem
some or all of the Equipment Notes pursuant to Section 2.11 of the Trust
Indenture (provided that, in the case of the Series B Equipment Notes, any
such redemption before the fifth anniversary of the Issuance Date may be made
only to the extent necessary to satisfy the Rotable Ratio requirement);
or
(v) any
combination of the foregoing.
such
that, the Rotable Ratio, as recalculated giving effect to such action taken
pursuant to this Section 3.1(b) and, in the case of clauses (i), (ii) and (iii)
of this Section 3.1(b), using the Fair Market Value of any such additional
Collateral determined pursuant to Section 3.1(d) (but otherwise using the
information used to determine the Rotable Ratio as most recently determined
pursuant to Article 2), would not be less than the Minimum Rotable
Ratio.
(c) In
order
to comply with Section 3.1(a)(i) or Section 3.1(b)(i), the Company shall
(i) add one or more locations as Designated Locations pursuant to
Section 4.04(b) of the Trust Indenture, in which case the Qualified Spare
Parts or Rotables, as the case may be, at such new Designated Locations, to
the
extent not included in the Pledged Spare Parts on the preceding Valuation Date,
shall be deemed Additional Parts or Additional Rotables, as the case may be;
and/or (ii) add to a Designated Location Qualified Spare Parts or Rotables,
as the case may be, that were not included as Pledged Spare Parts on the
preceding Valuation Date, which shall be deemed Additional Parts or Additional
Rotables, as the case may be.
(d) In
connection with the provision of additional Collateral pursuant to clause (i),
(ii) or (iv) of Section 3.1(a) or clause (i) or (iii) of Section 3.1(b), the
Company shall furnish to the Policy Provider (with copies to the Mortgagee
and
the Rating Agencies) an Independent Appraiser’s Certificate signed by an
Independent Appraiser, dated as of a date after the most recent Valuation Date,
stating, in the opinion of such Independent Appraiser, the Fair Market Value
of
such additional Collateral (other than Cash Collateral), as of a date not
earlier than 60 days prior to the date of such Independent Appraiser’s
Certificate (but not earlier than the most recent Valuation Date) and using,
in
the case of Additional Parts, 787 Spare Parts, Additional Rotables or Rotable
Parts that are 787 Spare Parts, the Annual Methodology.
(e) If
the
Company shall have provided Cash Collateral pursuant to Section 3.1(a)(iii)
or
Section 3.1(b)(ii) (the “Temporary
Cash Collateral”),
it
shall within 90 days after providing such Temporary Cash Collateral (i) in
the
case of Section 3.1(a)(iii), take additional action pursuant to Section 3.1(a)
(excluding the right to provide Cash Collateral) to cause the Collateral
Ratio
and
Subordinated Collateral Ratio, calculated to exclude such Temporary Cash
Collateral, not to be greater than the Maximum Collateral Ratio and the Maximum
Subordinated Collateral Ratio, respectively, and (ii) in the case of Section
3.1(b)(ii), take additional action pursuant to Section 3.1(b) (excluding the
right to provide Cash Collateral) to cause the Rotable Ratio, calculated to
exclude such Temporary Cash Collateral, not to be less than the Minimum Rotable
Ratio.
(f) In
order
to comply with Section 3.1(a)(iv) or 3.1(b)(iii), the Company shall subject
the
787 Spare Parts or Rotable Parts that are 787 Spare Parts to the Lien of the
Trust Indenture as Qualified Spare Parts by executing and delivering to the
Mortgagee a Trust Indenture Collateral Supplement with respect to the 787 Spare
Parts or Rotable Parts that are 787 Spare Parts, as the case may be,
provided
that the
Company’s right under Section 3.1(a)(iv) or 3.1(b)(iii) (whichever shall be the
first to occur) shall be subject to the approval of the Policy
Provider.
Section
3.2 Certain
Limitations Regarding the Collateral.
During
any period commencing on the Closing Date or the date of an Independent
Appraiser’s Certificate delivered pursuant to Article 2 through the date
preceding the date of the next Independent Appraiser’s Certificate delivered
pursuant to Article 2 (each, an “Applicable
Period”),
the
Company agrees that, as of any date during an Applicable Period, the aggregate
Appraised Value of all Pledged Spare Parts (x) previously during such
Applicable Period sold, transferred or disposed of (excluding any such
transaction pursuant to Section 4.04(a)(ii) of the Trust Indenture and
Pledged Spare Parts deemed sold pursuant to the proviso in Section 4.04(c)
of the
Trust Indenture as to which the Company has reacquired title) (collectively,
“Sales”)
shall
not exceed 3% of the Appraised Value of the Collateral, (y) then subject to
leases to Permitted Lessees or loans to other Persons (together, “Loans”)
shall
not exceed 3% of the Appraised Value of the Collateral or (z) previously
during such Applicable Period moved from a Designated Location to a location
not
a Designated Location (excluding those permitted under Sections 4.04(a)(i)
of the Trust Indenture and clauses (i) and (ii) of Section 4.04(c) of the
Trust Indenture) (“Moves”)
shall
not exceed 3% of the Appraised Value of the Collateral.
Section
3.3 Fleet
Reduction.
If at
any time after the Closing Date so long as any Series G Equipment Notes are
outstanding the total number of Aircraft of any Aircraft Model (as defined
below) in the Company’s in-service fleet during any period of 60 consecutive
days is less than the Specified Minimum (as defined below) for such Aircraft
Model (other than due to restrictions on operating such Aircraft imposed by
the
FAA or any other instrumentality or agency of the United States), then within
90
days after such occurrence the Company shall redeem Series G Equipment Notes
pursuant to Section 2.11 of the Trust Indenture in an aggregate principal
amount not less than the principal amount of the Series G Equipment Notes
outstanding as of a date specified by the Company within 60 days prior to the
redemption date multiplied by a fraction, the numerator of which shall be the
Appraised Value of the Pledged Spare Parts that are appropriate for
incorporation in, installation on, attachment or appurtenance to, or use in
only
Aircraft of such Aircraft Model or Engines utilized only on such Aircraft,
and
the denominator of which shall be the Appraised Value of the Collateral. If
at
any time after the Closing Date so long as any Series B Equipment Notes are
outstanding the total number of Aircraft of any Aircraft Model (as defined
below) in the Company’s in-service fleet during any period of 60 consecutive
days is less than the Specified Minimum (as defined below) for such
Aircraft
Model (other than due to restrictions on operating such Aircraft imposed by
the
FAA or any other instrumentality or agency of the United States), then within
90
days after such occurrence the Company shall redeem Series B Equipment Notes
pursuant to Section 2.11 of the Trust Indenture in an aggregate principal
amount not less than the principal amount of the Series B Equipment Notes
outstanding as of a date specified by the Company within 60 days prior to the
redemption date multiplied by a fraction, the numerator of which shall be the
Appraised Value of the Pledged Spare Parts that are appropriate for
incorporation in, installation on, attachment or appurtenance to, or use in
only
Aircraft of such Aircraft Model or Engines utilized only on such Aircraft,
and
the denominator of which shall be the Appraised Value of the Collateral. For
purposes of this Section “Aircraft
Model”
shall
mean each of the five models or groups of models of Aircraft set forth below
and
“Specified
Minimum”
for
any
Aircraft Model shall mean the number of Aircraft set forth opposite such
Aircraft Model below:
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Aircraft
Model
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Specified
Minimum
|
|
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1.
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Boeing
737-700, Boeing
737-800
and Boeing 737-900
Aircraft
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63
Aircraft
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2.
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Boeing
737-300 and
Boeing
737-500 Aircraft
|
40
Aircraft
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3.
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Boeing
757-200 and
Boeing
757-300
Aircraft
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23
Aircraft
|
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4.
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Boeing
767-200 and
Boeing
767-400 Aircraft
|
13
Aircraft
|
|
5.
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Boeing
777-200 Aircraft
|
9
Aircraft
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Section
3.4 Inspection.
(a) At
all
reasonable times, the Policy Provider (or, if a Policy Provider Default has
occurred and is continuing, the Mortgagee at the direction of the Controlling
Party) and its authorized representatives (the “Inspecting
Parties”)
may
(not more than once every 12 months unless an Event of Default has occurred
and
is continuing, in which case such inspection right shall not be so limited)
inspect the Pledged Spare Parts (including without limitation, the Spare Parts
Documents).
(b) Any
inspection of the Pledged Spare Parts hereunder shall be limited to a visual
inspection and shall not include the disassembling, or opening of any
components, of any Pledged Spare Part, and no such inspection shall interfere
with the Company’s or any Permitted Lessee’s maintenance and use of the Pledged
Spare Parts.
(c) With
respect to such rights of inspection, the Policy Provider (or the Mortgagee,
as
the case may be) shall not have any duty or liability to make, or any duty
or
liability by reason of not making, any such visit, inspection or
survey.
(d) Each
Inspecting Party shall bear its own expenses in connection with any such
inspection, provided
that the
Company shall reimburse the Inspecting Party for its reasonable out-of-pocket
expenses in connection with any such inspection during the continuance of an
Event of Default, except during the Section 1110 Period.
MISCELLANEOUS
Section
4.1 Benefits
of Agreement Restricted.
Subject
to the provisions of Section 4.6 hereof, nothing in this Agreement or the other
Operative Agreements, express or implied, shall give or be construed to give
to
any Person, other than the parties hereto, any legal or equitable right, remedy
or claim under or in respect of this Agreement or under any covenant, condition
or provision herein contained, all such covenants, conditions and provisions,
subject to Section 4.6 hereof, being for the sole benefit of the parties hereto,
provided,
that
the following provisions of this Agreement are for the benefit of the Mortgagee
acting on behalf of the Note Holders of Series B (collectively, the
“Subordinated
Security Provisions”):
(i)
the requirement that appraisals of the Collateral be obtained for purposes
of
determining the Maximum Subordinated Collateral Ratio by the tenth Business
Day
of April and the tenth Business Day of October in each year, commencing in
October 2006; (ii) the requirement that the Maximum Subordinated Collateral
Ratio be complied with in connection with such appraisals; (iii) the second
sentence of Section 3.3; and (iv) clause (y) of the proviso to Section 4.4
(it being understood that the other provisions of this Agreement not expressly
included within clauses (i), (ii), (iii) and (iv) of this proviso, including
without limitation defined terms, are not Subordinated Security Provisions).
Upon payment in full of the Series G Equipment Notes and the Policy Provider
Obligations, if any Series B Equipment Notes are then outstanding, Section
3.4,
as then in effect, shall at such time become a Subordinated Security Provision,
except that each reference therein to the Policy Provider shall be deemed
changed to the Mortgagee.
Section
4.2 Appraiser’s
Certificate.
Unless
otherwise specifically provided and subject to Section 11.14 of the Trust
Indenture, an Independent Appraiser’s Certificate shall be sufficient evidence
of the Appraised Value and Fair Market Value of any property under this
Agreement.
Section
4.3 Notices;
Waiver.
Any
request, demand, authorization, direction, notice, consent, waiver or other
document provided or permitted by this Agreement to be made upon, given or
furnished to, or filed with
(a) the
Company shall be sufficient for every purpose hereunder if in writing and sent
by personal delivery, by telecopier, by registered or certified mail or by
nationally recognized overnight courier, postage or courier charges, as the
case
may be, prepaid, to the Company at:
Continental
Airlines, Inc.
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
Treasurer
Telecopier
No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) the
Policy Provider shall be sufficient for every purpose hereunder if in writing
and sent by personal delivery, by telecopier, by registered or certified mail
or
by nationally recognized overnight courier, postage or courier charges, as
the
case may be, prepaid, to the Policy Provider at:
Financial
Guaranty Insurance Company
▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: SF
Surveillance
Telecopier
No.: (▇▇▇)
▇▇▇-▇▇▇▇
(c) the
Mortgagee shall be sufficient for every purpose hereunder if in writing and
sent
by personal delivery, by telecopier, by registered or certified mail or by
nationally recognized overnight courier, postage or courier charges, as the
case
may be, prepaid to the Mortgagee at:
Wilmington
Trust Company
▇▇▇▇▇▇
Square North
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Corporate Trust Administration
Telecopier
No.: (▇▇▇)
▇▇▇-▇▇▇▇
or
to any
of the above parties at any other address or telecopier number subsequently
furnished in writing by it to each of the other parties listed above. Any such
delivery shall be deemed made on the date of receipt by the addressee of such
delivery or of refusal by such addressee to accept delivery.
Section
4.4 Amendments,
Etc.
This
Agreement may be amended or supplemented, and compliance with any obligation
in
this Agreement may be waived, by written instrument executed by the Company,
the
Mortgagee and the Policy Provider, provided,
that
(x) the Subordinated Security Provisions may not be amended, supplemented
or waived by the Company, the Mortgagee and the Policy Provider but may be
amended, supplemented or waived by the Company and the Mortgagee, with the
consent of the Required Subordinated Holders and without the consent of the
Policy Provider or the holders of the Series G Equipment Notes and (y) if
Section 3.2 is amended or supplemented, or compliance therewith waived, any
transaction entered into subsequent thereto that would not be in compliance
with
the provisions of such sentence as in effect on the Closing Date shall not
be
permitted if the Subordinated Collateral Ratio, as recalculated giving effect
to
such transaction but otherwise using the information used to determine the
Subordinated Collateral Ratio as most recently determined pursuant to
Article 2, would be greater than the Maximum Subordinated Collateral
Ratio.
Section
4.5 No
Waiver.
No
failure on the part of the Policy Provider (or the Mortgagee, to the extent
applicable) to exercise, and no delay in exercising any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. Failure by the
Policy
Provider (or the Mortgagee, to the extent applicable) at any time or times
hereafter to require strict performance by the Company with any of the
provisions, warranties, terms or conditions contained herein shall not waive,
affect or diminish any right of the Policy Provider (or the Mortgagee, as the
case may be) at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been modified or waived
by
any course of conduct or knowledge of the Policy Provider (or the Mortgagee,
as
the case may be) or any agent, officer or employee of the Policy Provider (or
the Mortgagee, as the case may be).
Section
4.6 Successors
and Assigns.
This
Agreement and all obligations of the Company hereunder shall be binding upon
the
successors and permitted assigns of the Company, and shall, together with the
rights and remedies of the Policy Provider and the Mortgagee hereunder, inure
to
the benefit of the Policy Provider, the Mortgagee and their respective
successors and assigns. The interest of the Company under this Agreement is
not
assignable and any attempt to assign all or any portion of this Agreement by
the
Company shall be null and void except for an assignment in connection with
a
merger, consolidation or conveyance, transfer or lease of all or substantially
all the Company’s assets permitted under the Trust Indenture. Upon the
occurrence of a Policy Provider Default, all rights and obligations of the
Policy Provider under this Agreement shall
automatically, without any notice, demand or other action, be assigned to and
assumed by the Mortgagee, and the Mortgagee shall
take or
refrain from taking action under this Agreement at the direction of the
Controlling Party.
Section
4.7 Governing
Law.
THIS
AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW
YORK.
Section
4.8 Effect
of Headings.
The
Article and Section headings and the Table of Contents contained in this
Agreement have been inserted for convenience of reference only, and are and
shall be without substantive meaning or content of any kind whatsoever and
are
not a part of this Agreement.
Section
4.9 Counterpart
Originals.
This
Agreement may be signed in two or more counterparts, each of which shall be
deemed an original, but all of which shall together constitute one and the
same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.
Section
4.10 Severability.
The
provisions of this Agreement are severable, and if any clause or provision
shall
be held invalid, illegal or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect in that
jurisdiction only such clause or provision, or part thereof, and shall not
in
any manner affect such clause or provision in any other jurisdiction or any
other clause or provision of this Agreement in any jurisdiction, to the fullest
extent permitted by law.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and
delivered all as of the date first above written.
| CONTINENTAL AIRLINES, INC. | ||
| |
|
|
| By: | ||
|
Name: |
||
|
Title:
|
||
|
FINANCIAL
GUARANTY
INSURANCE
COMPANY,
as Policy
Provider
|
||
| |
|
|
| By: | ||
|
Name: |
||
|
Title:
|
||
|
WILMINGTON
TRUST
COMPANY,
as Mortgagee
|
||
| |
|
|
| By: | ||
|
Name: |
||
|
Title:
|
||
Appendix
I to the
[Address
to Policy Provider,
Mortgagee
and the Rating
Agencies]
Appraisal
Compliance Report Under the Collateral
Maintenance
Agreement
Ladies
and Gentlemen:
We
refer
to the Collateral Maintenance Agreement, dated as of June 9, 2006 (the
“Agreement”),
among
Continental Airlines, Inc. (the “Company”),
Financial Guaranty Insurance Company and Wilmington Trust Company, as Mortgagee.
Terms defined in the Agreement and used herein have such respective defined
meanings. The Company hereby certifies that:
|
1.
|
This
Compliance Report is accompanied by an Independent Appraiser’s Certificate
(the “Relevant
Appraisal”)
dated [___________]. The Valuation Date for purposes of the Relevant
Appraisal was [___________] (the “Relevant
Valuation Date”).
|
|
2.
|
The
following sets forth the calculation of the Collateral Ratio as of
the
Relevant Valuation Date:
|
|
a.
|
The
aggregate principal amount of all Series G Equipment Notes outstanding
as
of the Relevant Valuation Date
|
$[_______] |
|
|
b.
|
The
Fair Market Value of the Cash Collateral as of the Relevant Valuation
Date
|
$[_______] |
|
|
c.
|
The
Fair Market Value of the Collateral (excluding Cash Collateral) as
of the
Relevant Valuation Date, as set forth in the accompanying Independent
Appraiser’s Certificate
|
$[_______] |
|
|
d.
|
The
Collateral Ratio
((a
- b) ÷ c)
|
[_______]% |
|
3.
|
The
following sets forth the calculation of the Subordinated Collateral
Ratio
as of the Relevant Valuation Date:
|
|
a.
|
The
aggregate principal amount of all Series G Equipment Notes and
Series B
Equipment Notes outstanding as of the Relevant Valuation
Date
|
$[_______] |
|
|
b.
|
The
Fair Market Value of the Cash Collateral as of the Relevant Valuation
Date
|
$[_______] |
|
|
c.
|
The
Fair Market Value of the Collateral (excluding Cash Collateral)
as of the
Relevant Valuation Date, as set forth in the accompanying Independent
Appraiser’s Certificate
|
$[_______] |
|
|
d.
|
The
Subordinated Collateral Ratio ((a - b) ÷ c)
|
[_______]% |
|
4.
|
The
following sets forth the calculation of the Rotable Ratio as of the
Relevant Valuation Date:
|
|
a.
|
The
Fair Market Value of the Rotables as of the Relevant Valuation
Date, as
set forth in the accompanying Independent Appraiser’s
Certificate
|
$[_______] |
|
|
b.
|
The
aggregate principal amount of all Series G Equipment Notes
outstanding as
of the Relevant Valuation Date
|
$[_______] |
|
|
c.
|
The
Fair Market Value of the Cash Collateral as of the Relevant
Valuation
Date
|
$[_______] |
|
|
d.
|
The
Rotable Ratio
(a
÷ b - c)
|
[_______]% |
|
5.
|
The
Continental Cash Balance as of the Relevant Valuation Date was
$[___________].
|
Dated: [__________]
| Very truly yours, | ||
| CONTINENTAL AIRLINES, INC. | ||
| |
|
|
| By: | ||
|
Name: |
||
|
Title:
|
||
Appendix
II to the
[Address
to Policy Provider,
Mortgagee
and the Rating
Agencies]
Nonappraisal
Compliance Report Under the Collateral
Maintenance
Agreement
Ladies
and Gentlemen:
We
refer
to the Collateral Maintenance Agreement, dated as of June 9, 2006 (the
Agreement”),
among
Continental Airlines, Inc. (the “Company”),
Financial Guaranty Insurance Company and Wilmington Trust Company, as Mortgagee.
Terms defined in the Agreement and used herein have such respective defined
meanings. The Company hereby certifies that:
|
1.
|
The
most recent Independent Appraiser’s Certificate furnished by the Company
(the “Relevant
Appraisal”)
[was dated January 25, 2006] [pursuant to Article 2 of the Agreement
was
dated [______________] (the “Relevant
Date”).]
The Valuation Date for purposes of the Relevant Appraisal was
[___________] (the “Relevant
Valuation Date”).
|
|
2.
|
The
aggregate Appraised Value of all Collateral determined as of the
Relevant
Valuation Date pursuant to the Agreement [, as subsequently supplemented
pursuant to Section 3.1 of the Agreement,] is
$[________].
|
|
3.
|
During
the period (the “Relevant
Period”)
beginning on the [Closing Date] [Relevant Date] and ending on [_______]
(the “Determination
Date”).
|
|
i)
|
Sales
did not exceed 3% of the Appraised Value of the Collateral,
and
|
|
ii)
|
Moves
did not exceed 3% of the Appraised Value of the
Collateral.
|
|
4.
|
Loans
outstanding on the Determination Date did not exceed 3% of the Appraised
Value of the Collateral.
|
|
5.
|
Attached
hereto as Exhibit 1 is a report that correctly sets forth as of the
Determination Date the percentage of the average cost of all Pledged
Spare
Parts consisting of Rotables, Expendables and all Pledged Spare Parts
located at each Company facility.
|
|
6.
|
Attached
hereto as Exhibit 2 is a report that correctly sets forth the
following information as of the Determination Date with respect to
each
Pledged Spare Part model among the 500 Pledged Spare Part models
with the
highest aggregate Appraised Value:
|
|
i)
|
Manufacturer’s
part number;
|
|
ii)
|
the
Company’s part tracking number;
|
|
iii)
|
part
description;
|
|
iv)
|
related
aircraft model(s);
|
|
v)
|
classification
as Rotable or Expendable;
|
|
vi)
|
quantity
on hand; and
|
|
vii)
|
the
Company’s average cost.
|
| Very truly yours, | ||
| CONTINENTAL AIRLINES, INC. | ||
| |
|
|
| By: | ||
|
Name: |
||
|
Title:
|
||