ESCROW AND PAYING AGENT AGREEMENT
Dated as of June 29, 2004
among
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
as Escrow Agent
CITIGROUP GLOBAL MARKETS INC.
and
MORGAN STANLEY & CO. INCORPORATED
as Underwriters
WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Continental Airlines Pass Through Trust 2004-ERJ1
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
<PAGE>
TABLE OF CONTENTS
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SECTION 1.
Escrow Agent...............................................2
Section 1.01.
Appointment of Escrow Agent................................2
Section 1.02.
Instruction; Etc...........................................2
Section 1.03. Initial
Escrow Amount; Issuance of Escrow Receipts.........3
Section 1.04. Payments
to Receiptholders.................................4
Section 1.05.
Mutilated, Destroyed, Lost or Stolen Escrow Receipt........4
Section 1.06.
Additional Escrow Amounts..................................5
Section 1.07.
Resignation or Removal of Escrow Agent.....................5
Section 1.08. Persons
Deemed Owners......................................5
Section 1.09. Further
Assurances.........................................5
SECTION 2.
Paying Agent...............................................5
Section 2.01.
Appointment of Paying Agent................................5
Section 2.02.
Establishment of Paying Agent Account......................6
Section 2.03. Payments
From Paying Agent Account.........................6
Section 2.04.
Withholding Taxes..........................................7
Section 2.05.
Resignation or Removal of Paying Agent.....................7
Section 2.06. Notice
of Final Withdrawal.................................8
SECTION 3.
Payments...................................................8
SECTION 4.
Other Actions..............................................8
SECTION 5.
Representations and Warranties of the Escrow AgenT.........8
SECTION 6.
Representations and Warranties of the Paying Agent........10
SECTION 7.
Indemnification...........................................11
SECTION 8.
Amendment, Etc............................................11
SECTION 9.
Notices...................................................11
SECTION 10.
Transfer..................................................12
SECTION 11.
Entire Agreement..........................................12
SECTION 12.
Governing Law.............................................12
SECTION 13.
Waiver of Jury Trial Right................................12
SECTION 14.
Counterparts..............................................12
Exhibit A
Escrow Receipt
Exhibit B
Withdrawal Certificate
<PAGE>
ESCROW AND
PAYING AGENT AGREEMENT dated as of June 29, 2004 (as amended,
modified or supplemented from time to time,
this "AGREEMENT") among WELLS FARGO
BANK NORTHWEST, NATIONAL ASSOCIATION, a
national banking association, as Escrow
Agent (in such capacity, together with its
successors in such capacity, the
"ESCROW AGENT"); CITIGROUP GLOBAL MARKETS
INC. and MORGAN STANLEY & CO.
INCORPORATED, as Underwriters of the
Certificates referred to below (the
"UNDERWRITERS" and together with their
respective transferees and assigns as
registered owners of the Certificates, the
"INVESTORS") under the Underwriting
Agreement referred to below; WILMINGTON
TRUST COMPANY, a Delaware banking
corporation, not in its individual capacity
except as otherwise expressly
provided herein, but solely as trustee (in
such capacity, together with its
successors in such capacity, the "PASS
THROUGH TRUSTEE") under the Pass Through
Trust Agreement referred to below; and
WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as paying agent
hereunder (in such capacity, together with
its successors in such capacity, the
"PAYING AGENT").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Continental Airlines, Inc. ("CONTINENTAL") and the
Pass
Through Trustee have entered into a Trust
Supplement, dated as of June 29, 2004
(the "TRUST SUPPLEMENT"), to the Pass
Through Trust Agreement, dated as of
September 25, 1997 (together, as amended,
modified or supplemented from time to
time in accordance with the terms thereof,
the "PASS THROUGH TRUST AGREEMENT")
relating to Continental Airlines Pass
Through Trust 2004-ERJ1 (the "PASS THROUGH
TRUST") pursuant to which the Continental
Airlines Pass Through Trust, Series
2004-ERJ1 Certificates referred to therein
(the "CERTIFICATES") are being issued
(the date of such issuance, the "ISSUANCE
DATE");
WHEREAS, Continental, the Depositary and the Underwriters have
entered into an Underwriting Agreement
dated as of June 18, 2004 (as amended,
modified or supplemented from time to time
in accordance with the terms thereof,
the "UNDERWRITING AGREEMENT") pursuant to
which the Pass Through Trustee will
issue and sell the Certificates to the
Underwriters;
WHEREAS, Continental, the Pass Through Trustee, and certain
other
persons concurrently herewith are entering
into the Note Purchase Agreement,
dated as of the date hereof (the "NOTE
PURCHASE AGREEMENT"), pursuant to which
the Pass Through Trustee has agreed to
acquire from time to time on or prior to
the Delivery Period Termination Date (as
defined in the Note Purchase Agreement)
equipment notes (the "EQUIPMENT NOTES")
issued to finance the acquisition of
aircraft by Continental, as lessee,
utilizing a portion of the proceeds from the
sale of the Certificates (the "NET
PROCEEDS");
WHEREAS, the Underwriters and the Pass Through Trustee intend
that
the Net Proceeds (excluding any amount used
to purchase Equipment Notes on the
Issuance Date) be held in escrow by the
Escrow Agent on behalf of the Investors,
subject to withdrawal upon request by the
Pass Through Trustee and satisfaction
of the conditions set forth in the Note
Purchase Agreement for the purpose of
purchasing Equipment Notes, and that
pending such withdrawal the Net Proceeds be
deposited on behalf of the Escrow Agent
with WESTLB AG, acting through its New
York Branch, as Depositary (the
"DEPOSITARY") under the Deposit Agreement, dated
<PAGE>
as of the date hereof between the
Depositary and the Escrow Agent relating to
the Pass Through Trust (as amended,
modified, supplemented or replaced from time
to time in accordance with the terms
thereof, the "DEPOSIT AGREEMENT") pursuant
to which, among other things, the
Depositary will pay interest for distribution
to the Investors and establish accounts
from which the Escrow Agent shall make
withdrawals upon request of and proper
certification by the Pass Through
Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to
pay
amounts required to be distributed to the
Investors in accordance with this
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall
have
the meanings ascribed to such terms in the
Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable
consideration, the receipt and
sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. ESCROW
AGENT.
Section 1.01. APPOINTMENT OF ESCROW AGENT. Each of the
Underwriters,
for and on behalf of each of the Investors,
hereby irrevocably appoints,
authorizes and directs the Escrow Agent to
act as escrow agent and fiduciary
hereunder and under the Deposit Agreement
for such specific purposes and with
such powers as are specifically delegated
to the Escrow Agent by the terms of
this Agreement, together with such other
powers as are reasonably incidental
thereto. Any and all money received and
held by the Escrow Agent under this
Agreement or the Deposit Agreement shall be
held in escrow by the Escrow Agent
in accordance with the terms of this
Agreement. This Agreement is irrevocable
and the Investors' rights with respect to
any monies received and held in escrow
by the Escrow Agent under this Agreement or
the Deposit Agreement shall only be
as provided under the terms and conditions
of this Agreement and the Deposit
Agreement. The Escrow Agent (which term as
used in this sentence shall include
reference to its affiliates and its own and
its affiliates' officers, directors,
employees and agents): (a) shall have no
duties or responsibilities except those
expressly set forth in this Agreement; (b)
shall not be responsible to the Pass
Through Trustee or the Investors for any
recitals, statements, representations
or warranties of any person other then
itself contained in this Agreement or the
Deposit Agreement or for the failure by the
Pass Through Trustee, the Investors
or any other person or entity (other than
the Escrow Agent) to perform any of
its obligations hereunder (whether or not
the Escrow Agent shall have any
knowledge thereof); and (c) shall not be
responsible for any action taken or
omitted to be taken by it hereunder or
provided for herein or in connection
herewith, except for its own willful
misconduct or gross negligence (or simple
negligence in connection with the handling
of funds).
Section 1.02. INSTRUCTION; ETC. The Underwriters, for and on
behalf
of each of the Investors, hereby
irrevocably instruct the Escrow Agent, and the
Escrow Agent agrees, (a) to enter into the
Deposit Agreement, (b) to appoint the
Paying Agent as provided in this Agreement,
(c) upon receipt at any time and
<PAGE>
from time to time prior to the Termination
Date (as defined below) of a
certificate substantially in the form of
Exhibit B hereto (a "WITHDRAWAL
CERTIFICATE") executed by the Pass Through
Trustee, together with an attached
Notice of Purchase Withdrawal in
substantially the form of Exhibit A to the
Deposit Agreement duly completed by the
Pass Through Trustee (the "APPLICABLE
NOTICE OF PURCHASE WITHDRAWAL" and the
withdrawal to which it relates, a
"PURCHASE WITHDRAWAL"), immediately to
execute the Applicable Notice of Purchase
Withdrawal as Escrow Agent and transmit it
to the Depositary by facsimile
transmission in accordance with the Deposit
Agreement; PROVIDED that, upon the
request of the Pass Through Trustee after
such transmission, the Escrow Agent
shall cancel such Applicable Notice of
Purchase Withdrawal, and (d) if there are
any undrawn Deposits (as defined in the
Deposit Agreement) on the "TERMINATION
DATE", which shall mean the earlier of (i)
March 31, 2005 and (ii) the day on
which the Escrow Agent receives notice from
the Pass Through Trustee that the
Pass Through Trustee's obligation to
purchase Equipment Notes under the Note
Purchase Agreement has terminated, to give
notice to the Depositary (with a copy
to the Paying Agent) substantially in the
form of Exhibit B to the Deposit
Agreement requesting a withdrawal of all of
the remaining Deposits, together
with accrued and unpaid interest on such
Deposits to the date of withdrawal, on
the 25th day after the date that such
notice of withdrawal is given to the
Depositary (or, if not a Business Day, on
the next succeeding Business Day) (a
"FINAL WITHDRAWAL"), PROVIDED that if the
day scheduled for the Final Withdrawal
in accordance with the foregoing is within
10 days before or after a Regular
Distribution Date, then the Escrow Agent
shall request that such requested Final
Withdrawal be made on such Regular
Distribution Date (the date of such requested
withdrawal, the "FINAL WITHDRAWAL DATE").
If for any reason the Escrow Agent
shall have failed to give the Final
Withdrawal Notice to the Depositary on or
before April 11, 2005, and there are
unwithdrawn Deposits on such date, the
Final Withdrawal Date shall be deemed to be
April 29, 2005.
Section 1.03. INITIAL ESCROW AMOUNT; ISSUANCE OF ESCROW
RECEIPTS.
The Escrow Agent hereby directs the
Underwriters to, and the Underwriters hereby
acknowledge that on the date hereof they
shall, irrevocably deliver to the
Depositary on behalf of the Escrow Agent,
an amount in U.S. dollars ("DOLLARS")
and immediately available funds equal to
$173,629,000 (or such lesser amount
equal to the Net Proceeds less amounts, if
any, used to purchase Equipment Notes
on the Issuance Date) for deposit on behalf
of the Escrow Agent with the
Depositary in accordance with Section 2.1
of the Deposit Agreement. The
Underwriters hereby instruct the Escrow
Agent, upon receipt of such sum from the
Underwriters, to confirm such receipt by
executing and delivering to the Pass
Through Trustee an Escrow Receipt in the
form of Exhibit A hereto (an "ESCROW
RECEIPT"), (a) to be affixed by the Pass
Through Trustee to each Certificate and
(b) to evidence the same percentage
interest (the "ESCROW INTEREST") in the
Account Amounts (as defined below) as the
Fractional Undivided Interest in the
Pass Through Trust evidenced by the
Certificate to which it is to be affixed.
The Escrow Agent shall provide to the Pass
Through Trustee for attachment to
each Certificate newly issued under and in
accordance with the Pass Through
Trust Agreement an executed Escrow Receipt
as the Pass Through Trustee may from
time to time request of the Escrow Agent.
Each Escrow Receipt shall be
registered by the Escrow Agent in a
register (the "REGISTER") maintained by the
Escrow Agent in the same name and same
manner as the Certificate to which it is
attached and may not thereafter be detached
from such Certificate to which it is
to be affixed prior to the distribution of
the Final Withdrawal (the "FINAL
<PAGE>
DISTRIBUTION"). After the Final
Distribution, no additional Escrow Receipts
shall be issued and the Pass Through
Trustee shall request the return to the
Escrow Agent for cancellation of all
outstanding Escrow Receipts.
Section 1.04. PAYMENTS TO RECEIPTHOLDERS. All payments and
distributions made to holders of an Escrow
Receipt (collectively
"RECEIPTHOLDERS") in respect of the Escrow
Receipt shall be made only from
amounts deposited in the Paying Agent
Account (as defined below) ("ACCOUNT
AMOUNTS"). Each Receiptholder, by its
acceptance of an Escrow Receipt, agrees
that (a) it will look solely to the Account
Amounts for any payment or
distribution due to such Receiptholder
pursuant to the terms of the Escrow
Receipt and this Agreement and (b) it will
have no recourse to Continental, the
Pass Through Trustee, the Paying Agent or
the Escrow Agent, except as expressly
provided herein or in the Pass Through
Trust Agreement. No Receiptholder shall
have any right to vote or in any manner
otherwise control the operation and
management of the Paying Agent Account or
the obligations of the parties hereto,
nor shall anything set forth herein, or
contained in the terms of the Escrow
Receipt, be construed so as to constitute
the Receiptholders from time to time
as partners or members of an
association.
Section 1.05. MUTILATED, DESTROYED, LOST OR STOLEN ESCROW
RECEIPT.
If (a) any mutilated Escrow Receipt is
surrendered to the Escrow Agent or the
Escrow Agent receives evidence to its
satisfaction of the destruction, loss or
theft of any Escrow Receipt and (b) there
is delivered to the Escrow Agent and
the Pass Through Trustee such security,
indemnity or bond, as may be required by
them to hold each of them harmless, then,
absent notice to the Escrow Agent or
the Pass Through Trustee that such
destroyed, lost or stolen Escrow Receipt has
been acquired by a bona fide purchaser, and
provided that the requirements of
Section 8-405 of the Uniform Commercial
Code in effect in any applicable
jurisdiction are met, the Escrow Agent
shall execute, authenticate and deliver,
in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen
Escrow Receipt, a new Escrow Receipt or
Escrow Receipts and of like Escrow
Interest in the Account Amounts and bearing
a number not contemporaneously
outstanding.
In connection with the issuance of any new Escrow Receipt under
this
Section 1.05, the Escrow Agent may require
the payment of a sum sufficient to
cover any tax or other governmental charge
that may be imposed in relation
thereto and any other expenses (including
the fees and expenses of the Pass
Through Trustee and the Escrow Agent)
connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section
1.05
shall constitute conclusive evidence of the
appropriate Escrow Interest in the
Account Amounts, as if originally issued,
whether or not the lost, stolen or
destroyed Escrow Receipt shall be found at
any time.
The provisions of this
Section are exclusive and shall preclude (to
the extent lawful) all other rights and
remedies with respect to the replacement
or payment of mutilated, destroyed, lost or
stolen Escrow Receipts.
<PAGE>
Section 1.06. ADDITIONAL ESCROW AMOUNTS. On the date of any
Purchase
Withdrawal, the Pass Through Trustee may
re-deposit with the Depositary some or
all of the amounts so withdrawn in
accordance with Section 2.4 of the Deposit
Agreement.
Section 1.07. RESIGNATION OR REMOVAL OF ESCROW AGENT. Subject to
the
appointment and acceptance of a successor
Escrow Agent as provided below, the
Escrow Agent may resign at any time by
giving 30 days' prior written notice
thereof to the Investors, but may not
otherwise be removed except for cause by
the written consent of the Investors with
respect to Investors representing
Escrow Interests aggregating not less than
a majority in interest in the Account
Amounts (an "ACTION OF INVESTORS"). Upon
any such resignation or removal, the
Investors, by an Action of Investors, shall
have the right to appoint a
successor Escrow Agent. If no successor
Escrow Agent shall have been so
appointed and shall have accepted such
appointment within 30 days after the
retiring Escrow Agent's giving of notice of
resignation or the removal of the
retiring Escrow Agent, then the retiring
Escrow Agent may appoint a successor
Escrow Agent. Any successor Escrow Agent
shall be a bank which has an office in
the United States with a combined capital
and surplus of at least $100,000,000.
Upon the acceptance of any appointment as
Escrow Agent hereunder by a successor
Escrow Agent, such successor Escrow Agent
shall enter into such documents as the
Pass Through Trustee shall require and
shall thereupon succeed to and become
vested with all the rights, powers,
privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall
be discharged from its duties and
obligations hereunder. No resignation or
removal of the Escrow Agent shall be
effective unless a written confirmation
shall have been obtained from each of
Moody's Investors Service, Inc. and
Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies,
Inc., that the replacement of the Escrow
Agent with the successor Escrow Agent will
not result in (a) a reduction of the
rating for the Certificates below the then
current rating for the Certificates
or (b) a withdrawal or suspension of the
rating
