EXHIBIT 99.1
CONTINENTAL AIRLINES, INC.
DEFERRED COMPENSATION PLAN TRUST AGREEMENT
TABLE OF CONTENTS
ARTICLE I : GENERAL TRUST PROVISIONS . . . . . . . . I-1
ARTICLE II : GENERAL DUTIES OF THE PARTIES . . . . . . II-1
ARTICLE III : INVESTMENT, ADMINISTRATION AND
DISBURSEMENT OF TRUST FUND . . . . . . . III-1
ARTICLE IV : SETTLEMENT OF ACCOUNTS . . . . . . . . . IV-1
ARTICLE V : TAXES, EXPENSES AND COMPENSATION
OF TRUSTEE . . . . . . . . . . . . . . . V-1
ARTICLE VI : FOR PROTECTION OF TRUSTEE . . . . . . . . VI-1
ARTICLE VII : INDEMNITY OF TRUSTEE . . . . . . . . . . VII-1
ARTICLE VIII : RESIGNATION AND REMOVAL OF TRUSTEE . . . VIII-1
ARTICLE IX : DURATION AND TERMINATION OF
TRUST AND AMENDMENT . . . . . . . . . . . IX-1
ARTICLE X : CLAIMS OF COMPANY'S CREDITORS . . . . . . X-1
ARTICLE XI : ADOPTING ENTITIES . . . . . . . . . . . . XI-1
ARTICLE XII : MISCELLANEOUS . . . . . . . . . . . . . . XII-1
CONTINENTAL AIRLINES, INC.
DEFERRED COMPENSATION PLAN TRUST AGREEMENT
THIS AGREEMENT AND DECLARATION OF TRUST, made this ______ day
of December, 1998, by and between (i) CONTINENTAL AIRLINES, INC.
(hereinafter referred to as the "Company") and (ii) CHASE BANK OF
TEXAS, N.A. (hereinafter referred to as the "Trustee).
WHEREAS, the Company has established the CONTINENTAL AIRLINES,
INC. DEFERRED COMPENSATION PLAN (hereinafter referred to as the
"Plan") for the benefit of certain individuals who are eligible for
benefits under the terms of the Plan (such individuals being
referred to herein as the "Members"), which Plan provides for the
payment of certain deferred compensation benefits (the "Benefits")
to the Members and the beneficiaries of the respective Members who
may become entitled to any payments under the terms of the Plan in
the event of the Member's death ("Beneficiaries"); and
WHEREAS, the Plan contemplates that the Company will pay the
entire cost of the Benefits from its general assets; and
WHEREAS, the Company desires to adopt the CONTINENTAL
AIRLINES, INC. DEFERRED COMPENSATION PLAN TRUST AGREEMENT (the
"Trust Agreement") establishing a trust (the "Trust") to aid the
Company in meeting its obligations under the Plan; and
WHEREAS, the Trust is intended to be a "grantor trust" with
the corpus and income of the Trust treated as assets and income of
the Company for federal income tax purposes; and
WHEREAS, the Company intends that the assets of the Trust
shall at all times be subject to the claims of general creditors of
the Company as provided in Article X; and
WHEREAS, the Company intends that the existence of the Trust
shall not alter the characterization of the Plan as "unfunded" for
purposes of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and shall not be construed to provide income to
any Member prior to actual payment of Benefits under the Plan; and
WHEREAS, other adopting entities have adopted the Plan and
other adopting entities may adopt the Plan in the future, and the
Company desires to permit such entities to adopt separate subtrusts
hereunder that are substantially similar to the Trust; and
WHEREAS, under the Trust, the Trustee covenants that it will
hold all property which it may receive hereunder, IN TRUST, for the
uses and purposes and upon the terms and conditions hereinafter
stated;
NOW, THEREFORE, the parties hereto establish the Trust,
effective January 1, 1999, and agree, as follows:
ARTICLE I
General Trust Provisions
1.1 Establishment of Trust. The Company hereby adopts this
Trust Agreement. The Trust shall consist of such sums of money and
other property acceptable to the Trustee as from time to time shall
be paid or delivered to the Trustee by the Company. All such money
and other property, all investments and reinvestments made
therewith or proceeds thereof and all earnings and profits thereon,
less all payments and charges as authorized herein, shall
constitute the "Trust Fund." The Trust Fund shall at all times be
subject to the claims of general creditors of the Company as
provided in Article X. No Member or Beneficiary shall have any
preferred claim to, or any beneficial ownership interest in, any
assets of the Trust Fund prior to the time such assets are paid to
such Member or Beneficiary as Benefits.
1.2 Separate Sub-Trusts. Contrary provisions of the Trust
notwithstanding, except as provided in Article XI, the provisions
of the Trust shall apply separately and equally to the Company and
to each adopting entity that has entered into this Trust Agreement
pursuant to Article XI. The Company and each such adopting entity
shall bear the cost of providing Benefits for its own Members and
their Beneficiaries, and the portion of the Trust Fund attributable
to the contributions of the Company and each such adopting entity
shall be available to provide benefits only to the Company's or
such adopting entity's (as applicable) Members and their
Beneficiaries or to satisfy claims of the Company's or such
adopting entity's (as applicable) Bankruptcy Creditors in the event
the Company or such adopting entity (as applicable) become
Insolvent (as such terms are defined in Section 10.1).
1.3 Trust Irrevocable. The Trust shall be irrevocable and
shall be held for the exclusive purpose of providing benefits under
the Plan to Members and their Beneficiaries and defraying expenses
of the Trust in accordance with the provisions of this Trust
Agreement. Except as provided in Sections 3.6(c) and 3.6(d) and
Articles IX and X hereof, no part of the income or corpus of the
Trust Fund shall be recoverable by or for the Company.
1.4 Non-Alienation. No right or interest to receive
benefits from the Trust may be assigned, sold, anticipated,
alienated or otherwise transferred by any Member or Beneficiary.
1.5 Acceptance by Trustee. The Trustee accepts the Trust
established under this Trust Agreement on the terms and subject to
the provisions set forth herein, and it agrees to discharge and
perform fully and faithfully all of the duties and obligations
imposed upon it under this Trust Agreement.
ARTICLE II
General Duties of the Parties
2.1 General Duties of the Company and the Trustee.
(a) The Company has provided or will provide the
Trustee with a copy of the Plan and shall provide the Trustee with
a copy of any amendment to the Plan promptly upon its adoption.
The Plan, as of the date of execution of this Trust Agreement, is
hereby incorporated by reference into and shall form a part of this
Trust Agreement as fully as if set forth herein verbatim. Any
amendment to the Plan shall also be incorporated by reference into
and form a part of this Trust Agreement, effective as of the
effective date of such amendment. As soon as administratively
practicable after December 31, 1999, the Company shall prepare and
deliver to the Trustee a schedule (the "Benefit Schedule," as
amended from time to time as provided herein) setting forth as of
such date (1) the name and mailing address of each Member entitled
to receive Benefits, (2) the Beneficiaries, if any, designated by
each Member, and (3) the aggregate balance of each Member's Account
(as such term is defined in the Plan) and subaccount thereof. The
Company shall be responsible for notifying the Trustee of any
changes in the information set forth on the Benefit Schedule,
including, but not limited to, the addition of new Members and a
change in the mailing address of a Member.
(b) Subject to the provisions of Section 2.1(c),
beginning in the year 2001, (1) prior to the occurrence of a Change
in Control (as such term is defined in Section 12.4), the Company
shall prepare and deliver to the Trustee by March 31 of each year
a completely updated Benefit Schedule as of the preceding
December 31, and (2) from and after the occurrence of a Change in
Control, the Trustee shall keep the Benefit Schedule accurate and
current, including but not limited to, preparing by March 31 of
each year a completely updated Benefit Schedule as of the preceding
December 31 with such assistance from the Company and third parties
as may be necessary in order to permit distributions from the Trust
Fund to be made in accordance with the provisions of Section 3.6.
The Company shall keep accurate books and records with respect to
the eligibility of individuals to participate in the Plan and the
Benefits payable under the Plan, and shall provide such information
to the Trustee and any third party referred to in the immediately
preceding sentence and shall also provide access to such books and
records at such time or times as the Trustee shall reasonably
request.
(c) If, at any time, the Company fails or refuses to
give the Trustee an updated Benefit Schedule or, if applicable,
data or access to such books and records in accordance with Section
2.1(b), the Trustee shall deliver a written request to the Company
to provide such Benefit Schedule or, if applicable, access to books
and records of the Company and to provide such data as required in
accordance with Section 2.1(b) for the Trustee to keep the Benefit
Schedule accurate and current. If the Company fails or refuses to
comply with the Trustee's written request pursuant to the preceding
sentence prior to the expiration of thirty days from the date of
delivery thereof by the Trustee, the Trustee shall, after ten days
written notice to the Company, immediately pay to each Member an
amount equal to such Member's aggregate account balance ("Account
Balance") as set forth on the most recent Benefit Schedule, reduced
by any taxes to be withheld pursuant to Section 3.6. Such payment
shall be made in accordance with the provisions of Section 3.6.
For this purpose, the Company shall be deemed to have complied with
the Trustee's written request if, in the Trustee's judgment, it
shall have substantially complied at the end of the thirty-day
period and is endeavoring in good faith to complete compliance
without delay.
(d) The administrative committee charged with the
general administration of the Plan (the "Committee") shall notify
each Member and Beneficiary of a then deceased Member in writing of
any changes in the Benefit Schedule with respect to such Member or
Beneficiary.
(e) It is intended that Benefits payable to Members
shall be determined under the provisions of the Plan and shall be
calculated under the provisions of the Plan as of the date of
payment. Payment of Benefits shall be based upon the amounts set
forth on the Benefit Schedule only under the circumstances set
forth in Section 2.1(c). If the actual Benefits payable to a
Member under the provisions of the Plan exceeds the amount set
forth on the Benefit Schedule which is paid pursuant to Section
2.1(c), the Company shall be liable for payment of the remaining
portion of such Benefits.
(f) Trust provisions to the contrary notwithstanding,
the Company shall have the right at any time, and from time to
time, in its sole discretion, to substitute marketable securities
of equal fair market value for any asset held by the Trust. This
right is exercisable by the Company in a nonfiduciary capacity
without the approval or consent of any person in a fiduciary
capacity.
(g) As soon as administratively practicable after each
date upon which an amount is credited to a Member's "Account" under
the Plan pursuant to Section 3.1 of the Plan, the Company shall
contribute an equivalent amount to the Trust.
2.2 Additional General Duties of Trustee. The Trustee shall
manage, invest and reinvest the Trust Fund as the Trustee may
determine in the exercise of its fiduciary duties hereunder,
consistent with the provisions of Article III. The Trustee shall
collect the income on the Trust Fund, and make distributions
therefrom, all as hereinafter provided.
ARTICLE III
Investment, Administration and Disbursement of Trust Fund
3.1 Investment of Trust Fund. The following provisions
shall apply with respect to the investment of the Trust Funds:
(a) At any time prior to the occurrence of a Change in
Control, the Trustee shall invest and reinvest the assets of
the Trust Fund in accordance with the written directions
received from time to time by the Trustee from the Committee.
Specifically, but not by way of limitation, the Committee may,
in its discretion, direct the Trustee to follow the deemed
investment directions of each Member or Beneficiary of a
deceased Member, whether written or telephonic, with respect
to a portion of the Trust Fund assets equal in value to the
Account Balance maintained under the Plan on behalf of such
individual, within parameters established by, and as agent
for, the Committee;
(b) To the extent that the Trustee is directed by the
Committee, the Trustee may invest in securities (including
stock or rights to acquire stock) or obligations issued by the
Company;
(c) To the extent that the Trustee is directed by the
Committee, the Trustee may establish one or more separate
investment accounts within the Trust Fund, each separate
account being hereinafter referred to as a Fund. Except as
otherwise provided, the Trustee shall transfer to each such
Fund such portion of the assets of the Trust Fund as the
Committee directs. The Trustee shall be under no duty to
question, and shall not incur any liability on account of
following, any direction of the Committee. The Trustee shall
be under no duty to review the investment guidelines,
objectives, and restrictions established, or the specific
investment directions given by the Committee for any Fund, or
to make suggestions to the Committee in connection therewith.
To the extent that directions from the Committee to the
Trustee represent deemed investment elections of the Members,
the Trustee shall have no responsibility for such investment
elections and shall incur no liability on account of investing
the assets of the Trust Fund in accordance with such
directions. All interest, dividends, and other income
received with respect to, and any proceeds received from the
sale or other disposition of securities or other property held
in, a Fund shall be credited to and reinvested in such Fund.
All expenses of the Trust Fund which are allocable to a
particular Fund shall be so allocated and charged. The
Committee may direct the Trustee to eliminate a Fund or Funds,
and the Trustee shall thereupon dispose of the assets of such
Fund and reinvest the proceeds thereof in accordance with the
directions of the Committee; and
(d) From and after the occurrence of a Change in
Control, or if the Committee fails to provide the Trustee with
such written directions, the Trustee shall have, with respect
to the Trust Fund, power in its discretion to invest and
reinvest such assets in (i) common and preferred stocks,
bonds, notes (whether secured or unsecured) and debentures
(including convertible stocks and securities but not including
any stock, debt instruments, or other securities of the
Company, the Trustee or their affiliates) which are readily
marketable and listed on a United States national securities
exchange or the NASDAQ national market, (ii) interest-bearing
deposit accounts or certificates of deposit maturing within
one year after acquisition thereof, entered into or issued by
a United States national or state bank or trust company having
capital, surplus and undivided profits, at the holding company
level, of at least $75 million, (iii) direct obligations of,
and obligations fully guaranteed by, the United States of
America or any agency of the United States of America which is
backed by the full faith and credit of the United States of
America (so long as such obligations shall mature within one
year after acquisition thereof), (iv) any common, collective
or commingled fund, including a fund maintained by the
Trustee, established and maintained primarily for the purpose
of investing and reinvesting in assets of the type described
in (i), (ii) or (iii) above, and (v) insurance contracts
issued by one or more insurance companies. Further,
notwithstanding the provisions of the preceding sentence,
after the occurrence of a Change in Control or in the event
the Committee fails to provide the Trustee with written
directions pursuant to the preceding provisions of this
Section 3.1, the Trustee shall have the power in its
discretion to retain, maintain, continue, sell, or take any
other actions relative to any assets then held in the Trust
Fund (including, without limitation, to take actions in
accordance with investment directions obtained directly from
a Member or Beneficiary of a deceased Member with respect to
a portion of the Trust Fund assets equal in value to the
Account Balance maintained under the Plan on behalf of such
individual).
3.2 Valuation of Trust Fund. As soon as practicable after
the last day of each calendar year and as of such other dates as
may be specified by the Company or the Committee, the Trustee shall
report to the Company and the Committee the assets held in the
Trust Fund as of such day and shall determine and include in such
report the fair market value as of such day of each such asset. In
determining such fair market values, the Trustee shall use such
market quotations and other information as are available to it and
may in its discretion be appropriate. The report of any such
valuation shall not constitute a representation by the Trustee that
the amounts reported as fair market values would actually be
realized upon the liquidation of the Trust Fund. The Trustee shall
not be accountable to the Company or to any other person on the
basis of any such valuation, but its accountability shall be in
accordance with the provisions of Article IV hereof.
3.3 Additional Investment Powers of Trustee. Subject to the
provisions of Sections 3.1, 3.6 and 9.2 hereof, the Trustee shall
have, with respect to the Trust Fund, the power in its discretion:
(a) To retain any property at any time received by it;
(b) To sell, exchange, convey, transfer or dispose of,
and to grant options for the purchase or exchange with respect
to, any property at any time held by it;
(c) To register and carry any securities or any other
property in the name of the Trustee, or in the name of the
nominee of the Trustee (or to hold any such property
unregistered) without increasing or decreasing the fiduciary
liability of the Trustee, and to exercise any option, right or
privilege to convert any convertible securities, including
shares or fractional shares of the Trustee so long as the
conversion privilege is offered pro rata to all shareholders;
(d) To cause any securities to be held in book-entry
or in bearer form;
(e) To hold property for investment that may be
unproductive of income; and
(f) To hold uninvested at any time, without liability
for interest thereon for a reasonable period of time, any
money received by the Trustee until the same shall be
reinvested or disbursed.
3.4 Administrative Powers of Trustee. The Trustee shall
have the power in its discretion:
(a) To exercise all voting and other rights with
respect to the shares of stock held in the Trust Fund and to
grant proxies, discretionary or otherwise; provided, however,
that, prior to the occurrence of a Change in Control, (1) the
Committee shall direct the Trustee with respect to all such
matters other than with respect to stock issued by the Company
or its affiliates, and (2) the Trustee shall exercise all
voting and other rights with respect to stock issued by the
Company or its affiliates;
(b) To cause any shares of stock to be registered and
held in the name of one or more of its nominees, or one or
more nominees of any system for the central handling of
securities, without increase or decrease of liability;
(c) To collect and receive any and all money and other
property due to the Trust Fund and to give full discharge
therefor;
(d) Subject to the provisions of Section 3.6 hereof:
to settle, compromise or submit to arbitration any claims,
debts or damages due or owing to or from the Trustee; to
commence or defend suits or legal proceedings to protect any
interest of the Trust; and to represent the Trust in all suits
or legal proceedings in any court or before any other body or
tribunal;
(e) To organize under the laws of any state a
corporation or limited liability company for the purpose of
acquiring and holding title to any property which it is
authorized to acquire under this Trust Agreement and to
exercise with respect thereto any or all of the powers set
forth in this Trust Agreement;
(f) To determine how all receipts and disbursements
shall be credited, charged or apportioned as between income
and principal;
(g) To determine the amount and time of Benefit
payments in accordance with Section 3.6;
(h) To employ and compensate such attorneys, counsel,
brokers or other agents or employees and to delegate to them
such of the duties, rights and powers of the Trustee as may be
deemed advisable in handling and administering the Trust; and
(i) Generally to do all acts, whether or not expressly
authorized, which the Trustee may deem necessary or desirable
for the protection of the Trust Fund.
3.5 Dealings with Trustee. Persons dealing with the Trustee
shall be under no obligation to see to the proper application of
any money paid or property delivered to the Trustee or to inquire
into the Trustee's authority as to any transaction.
3.6 Distributions from Trust Fund.
(a) Except as set forth in Section 3.6(c), Section
3.6(d), Section 9.2 and Article X hereof, distributions from the
Trust Fund shall be made by the Trustee to the Members and
Beneficiaries at the times and in the amounts determined in
accordance with the provisions of the Plan and, to the maximum
extent permitted by applicable law, the Trustee shall be fully
protected in so doing. Any amounts so paid shall be reduced by the
amount of any federal, state, or local income or other taxes that
may be required by law to be withheld or paid by the Trustee or the
Company. To the extent required by applicable law, the Trustee
shall withhold, pay, and report such amounts to the appropriate
governmental authorities. To the extent the withholding and
reporting obligations belong to the Company and not to the Trustee,
the Trustee shall pay to the Company the appropriate withholding
amount. The Company, the Committee, the Members, and the
Beneficiaries shall provide the Trustee with all of the information
necessary for the Trustee to determine the amount of such taxes
required to be withheld or paid by the Trustee or the Company, and
the Trustee shall be fully protected in relying upon such
information. Notwithstanding any provision of this Trust Agreement
to the contrary, the Company shall be obligated to pay the
Benefits. To the extent that the Trust Fund is not sufficient to
pay any Benefit when due, the Company shall pay such Benefit
directly. In the event Benefits are due to more than one Member or
Beneficiary on the same date and the Trust Fund is not sufficient
to pay all such Benefits, the Trust Fund shall be applied pro rata
among such Members and Beneficiaries on the basis of the Benefits
due to be paid such individuals on such date. Nothing in this
Trust Agreement shall relieve the Company of its liabilities to pay
Benefits except to the extent such liabilities are met by
application of Trust Fund assets.
(b) Prior to the occurrence of a Change in Control,
the Committee shall direct the Trustee in writing as to the time
and amount of Benefits to be distributed to the Members and
Beneficiaries. From and after the occurrence of a Change in
Control, a Member or Beneficiary who believes that he or she is
entitled to Benefits may apply in writing directly to the Trustee
for payment of such Benefits. Such application shall advise the
Trustee of the circumstances which entitle such Member or
Beneficiary to payment of such Benefits. The Trustee shall, in
such case, reach its own independent determination as to the
Member's or Beneficiary's entitlement to Benefits, even though the
Trustee may be informed from another source (including the Company
or the Committee) that payments are not due under the Plan. If the
Trustee so desires, it may, in its sole discretion, make such
additional inquiries and/or take such additional measures as it
deems necessary in order to enable it to determine whether Benefits
are due and payable, including, but not limited to, interviewing
appropriate persons, requesting affidavits, soliciting oral or
written testimony under oath, or holding a hearing or other
proceeding. After the occurrence of a Change in Control, the
Trustee shall determine whether Benefits are payable as promptly as
possible.
(c) At any time and from time to time, the Committee
may direct the Trustee in writing to distribute to the Company cash
held by the Trustee as part of the Trust Fund in an amount equal to
the Benefits accrued under the Plan that have been forfeited under
the terms of the Plan. As soon as practicable after receipt of
such a direction and, if such direction is received by the Trustee
after the occurrence of a Change in Control, the Trustee's
independent determination that such benefits have, in fact, been
forfeited in accordance with the terms of the Plan, the Trustee
shall distribute such amount to the Company.
(d) At any time and from time to time prior to the
occurrence of a Change in Control, the Company may apply in writing
to the Trustee for a distribution by the Trustee to the Company of
assets held by the Trustee as part of the Trust Fund ("Trust
Assets") in an amount (the "Refund Amount") equal to or less than
the difference, if any, between (i) the Net Fair Market Value of
the Trust Assets (as such term is hereinafter defined) as of the
last day of the month coincident with or immediately preceding the
date of such application, and (ii) 125% of the aggregate Account
Balances for all Members and Beneficiaries as of such date. Such
application shall advise the Trustee of the manner in which the
Refund Amount was calculated. Upon the receipt of such an appli-
cation from the Company, the Trustee shall reach its own inde-
pendent determination as to the Company's entitlement to the Refund
Amount, even though the Trustee may be informed from another source
(including a Member) that the Company is not entitled to the Refund
Amount. If the Trustee so desires, it may, in its sole discretion,
make such additional inquiries and/or take such additional measures
as it deems necessary in order to enable it to determine whether
the Company is entitled to the Refund Amount, including, but not
limited to, interviewing appropriate persons, requesting affi-
davits, soliciting oral or written testimony under oath, or
engaging such independent third parties as the Trustee may deem
necessary to assist in making such determination. In addition, the
Trustee may rely conclusively upon, and shall be protected in
relying upon, information received from a third party engaged by
the Company as the recordkeeper for the Plan with respect to the
aggregate Account Balances for all Members and Beneficiaries as of
the relevant date. The Trustee shall determine whether the Company
is entitled to all or any portion of the Refund Amount as promptly
as possible. If the Trustee determines that the Company is
entitled to all or any portion of the Refund Amount, then the
Trustee shall distribute such amount to the Company in cash or in
kind as determined by the Trustee in its sole discretion. As used
herein, the term "Net Fair Market Value of the Trust Assets" shall
mean the fair market value of the Trust Assets, as determined by
the Trustee in its sole discretion, reduced by all liabilities of
the Trust, whether or not such liabilities are secured by any or
all of the Trust Assets, other than liabilities to Members or
Beneficiaries under the Plan. In determining such fair market
value, the Trustee shall use such market quotations and other
information as are available to it and may in its discretion be
appropriate; provided, however, that the fair market value of any
life insurance contract which constitutes a portion of the Trust
Assets shall be its net cash surrender value. The determination of
the Net Fair Market Value of the Trust Assets by the Trustee shall
not constitute a representation by the Trustee that the amounts re-
ported as fair market values would actually be realized upon the
liquidation of the Trust Assets. The Trustee shall not be
accountable to the Company or to any other person, including the
Members or Beneficiaries, on the basis of any such valuation except
as otherwise provided in this Trust Agreement.
(e) The Trustee may engage its own counsel or other
experts to assist it in making any determination under Section
3.6(a), (b), (c), (d) or (g) hereof. The cost of such counsel or
other expert assistance, and any other costs reasonably incurred by
the Trustee in making any such determination, shall be borne by the
Company. If the Company fails to pay any such costs when due or
requested by the Trustee, the Trustee may use the assets of the
Trust Fund to pay them as provided in Section 5.2.
(f) The Trustee shall not itself commence any legal
action, whether in the nature of an interpleader action, request
for declaratory judgment or otherwise, requesting a court to make
a determination under Section 3.6(a), (b), (c) or (d) hereof in the
Trustee's stead without first using its best efforts to make such
determination.
(g) Notwithstanding any other provision of this Trust
Agreement, if any amounts held in the Trust are found in a
"determination" (within the meaning of Section 1313(a) of the
Internal Revenue Code of 1986, as amended) to have been includible
in gross income of a Member or Beneficiary prior to payment of such
amounts from the Trust, the Trustee shall, as soon as practicable
after receiving notice thereof, pay such amounts to such Member or
Beneficiary, as applicable, (but not in excess of such Member's or
Beneficiary's Account Balance at the time of such payment). For
purposes of this Section 3.6, the Trustee shall be entitled to rely
on an affidavit by a Member or Beneficiary, as applicable, and a
copy of the determination to the effect that a determination
described in the preceding sentence has occurred.
ARTICLE IV
Settlement of Accounts
The Trustee shall keep full accounts of all of its receipts
and disbursements. The Trustee's books and records with respect to
the Trust Fund shall be open to inspection by the Company, any
Member, or any Beneficiary of a deceased Member, or their
representatives at all times during business hours of the Trustee.
Within sixty days after December 31 of each year (or such other
date as may be agreed to by the Company and the Trustee), or any
termination of the duties of the Trustee, the Trustee shall
prepare, sign and mail to the Company and the Committee an account
of its acts and transactions as Trustee hereunder. If, within
sixty days after the mailing of the account or any amended account,
the Company and the Committee have not filed with the Trustee
notice of any objection to any act or transaction of the Trustee,
the account or amended account shall become an account stated. If
any objection has been filed, and if the objecting party is
satisfied that it should be withdrawn or if the account is adjusted
to the objecting party's satisfaction, the objecting party shall in
writing filed with the Trustee signify its approval of the account
and it shall become an account stated. When an account becomes an
account stated, such account shall be finally settled, and the
Trustee shall be completely discharged and released, as if such
account had been settled and allowed by a judgment or decree of a
court of competent jurisdiction in an action or proceeding in which
the Trustee, the Company and the Committee were parties. The
Trustee, the Company or the Committee shall have the right to apply
at any time to a court of competent jurisdiction for judicial
settlement of any account of the Trustee not previously settled as
hereinabove provided. In any such action or proceeding it shall be
necessary to join as parties the Trustee, the Company and the
Committee and any judgment or decree entered therein shall be
conclusive upon all such parties.
ARTICLE V
Taxes, Expenses and Compensation of Trustee
5.1 Taxes. The Company agrees that all income, deductions,
and credits of the Trust Fund belong to it as owner for income tax
purposes and will be included on the Company's income tax returns.
The Company shall from time to time pay taxes (references in this
Trust Agreement to the payment of taxes shall include interest and
applicable penalties) of any and all kinds whatsoever which at any
time are lawfully levied or assessed upon or become payable in
respect of the Trust Fund, the income or any property forming a
part thereof, or any security transaction pertaining thereto. To
the extent that any taxes levied or assessed upon the Trust Fund
are not paid by the Company or contested by the Company pursuant to
the last sentence of this Section 5.1, the Trustee shall pay such
taxes out of the Trust Fund and the Company shall upon demand by
the Trustee deposit into the Trust Fund an amount equal to the
amount paid from the Trust Fund to satisfy such tax liability. If
requested by the Company, the Trustee shall, at Company expense,
contest the validity of such taxes in any manner deemed appropriate
by the Company or its counsel, but only if it has received an
indemnity bond or other security satisfactory to it to pay any
expenses of such contest. Alternatively, the Company may itself
contest the validity of any such taxes, but any such contest shall
not affect the Company's obligation to reimburse the Trust Fund for
taxes paid from the Trust Fund.
5.2 Expenses and Compensation. The Trustee shall be paid
compensation by the Company as the Company and the Trustee may from
time to time agree. The Trustee shall be reimbursed by the Company
for its reasonable expenses of management and administration of the
Trust, including reasonable compensation of counsel and any agent
engaged by the Trustee to assist it in such management and
administration. In the event that the Company shall fail or refuse
to pay such compensation or make such reimbursement within sixty
days of demand, the Trustee may satisfy such obligations out of the
assets of the Trust Fund; in that event, the Company shall
immediately upon demand by the Trustee deposit into the Trust Fund
a sum equal to the amount paid by the Trust Fund for such fees and
expenses.
ARTICLE VI
For Protection of Trustee
6.1 Communications with the Company, the Committee and the
Members.
(a) The Company shall certify to the Trustee the name
or names of any person or persons authorized to act for the Company
and for the Committee. Such certification shall be signed by an
officer of the Company. Until the Company notifies the Trustee, in
a similarly signed notice, that any such person is no longer
authorized to act for the Company or for the Committee, as
applicable, the Trustee may continue to fully rely upon the
authority of such person.
(b) The Trustee may fully rely upon any certificate,
notice or direction of the Company or the Committee which the
Trustee reasonably believes to have been signed by a duly
authorized officer or agent of the Company or the Committee, as
applicable.
(c) Communications to the Trustee shall be sent in
writing to the Trustee at 600 Travis Street, Tenth Floor, Houston,
Texas 77002, or to such other address as the Trustee may specify.
No communication shall be binding upon the Trust Fund or the
Trustee until it is received by the Trustee and unless it is in
writing and signed by an authorized person.
(d) Communications to the Company shall be sent in
writing to the Company at 1600 Smith Street, Dept. HQSEO, Houston,
Texas 77002, Attention: General Counsel, or to such other address
as the Company may specify in writing to the Trustee. Communica-
tions to the Committee shall be sent in writing to the Company's
address, Attention: Deferred Compensation Plan Administrative
Committee. Communications to a Member or Beneficiary shall be sent
in writing to the address of such person as stated on the Benefit
Schedule, or to such other address as such person may specify in
writing to the Trustee. No communication shall be binding upon the
Company, the Committee, or a Member or Beneficiary until it is
received by such person.
6.2 Advice of Counsel. The Trustee may consult with any
legal counsel with respect to the construction of this Trust
Agreement, its duties hereunder or any act which it proposes to
take or omit, and shall not be liable for any action taken or
omitted in good faith pursuant to such advice. Expenses of such
counsel shall be deemed to be expenses of management and
administration of the Trust within the meaning of Section 5.2
hereof.
6.3 Fiduciary Responsibility.
(a) The Trustee shall discharge its duties under this
Trust Agreement in effectuating the Plan in a manner consistent
with the objectives of this Trust Agreement and the Plan. The
Trustee shall not be liable for any loss sustained by the Trust
Fund by reason of the purchase, retention, sale or exchange of any
investment in good faith and in accordance with the provisions of
this Trust Agreement. The Trustee shall have no responsibility or
liability for any failure of the Company to make contributions to
the Trust Fund or for any insufficiency of assets in the Trust Fund
to pay Benefits when due. The Trustee shall not be liable
hereunder for any act taken or omitted to be taken in good faith,
except for its own negligence or misconduct.
(b) No bond shall be required of the Trustee unless
otherwise required by law.
(c) The Trustee's duties and obligations shall be
limited to those expressly imposed upon it by this Trust Agreement.
(d) The Company at any time may employ as agent (to
perform any act, keep any records or accounts, or make any
computations required of the Company or the Committee by this Trust
Agreement or the Plan) the individual, corporation or association
serving as Trustee hereunder. Nothing done by said individual,
corporation or association as such agent shall affect its
responsibilities or liability as Trustee hereunder.
ARTICLE VII
Indemnity of Trustee
The Company hereby indemnifies and holds the Trustee harmless
from and against any and all losses, damages, costs, expenses or
liabilities (herein, "Liabilities"), including reasonable
attorneys' fees and other costs of litigation, to which the Trustee
may become subject pursuant to, arising out of, occasioned by,
incurred in connection with or in any way associated with this
Trust Agreement, except for any act or omission constituting
negligence or misconduct of the Trustee. If one or more
Liabilities shall arise, or if the Company fails to indemnify the
Trustee as provided herein, or both, then the Trustee may engage
counsel of the Trustee's choice, but at the Company's expense,
either to conduct the defense against such Liabilities or to
conduct such actions as may be necessary to obtain the indemnity
provided for herein, or to take both such actions. The Trustee
shall notify the Company within five days after the Trustee has so
engaged counsel of the name and address of such counsel. If the
Trustee shall be entitled to indemnification by the Company
pursuant to this Article VII and the Company shall not provide such
indemnification upon demand, the Trustee may apply assets of the
Trust Fund in full satisfaction of the obligations for indemnity by
the Company, and any legal proceeding by the Trustee against the
Company for such indemnification shall be on behalf of the Trust.
ARTICLE VIII
Resignation and Removal of Trustee
8.1 Resignation of Trustee. The Trustee may resign upon
sixty days' prior written notice to the Human Resources Committee
of the Board of Directors of Continental Airlines, Inc. (the "Human
Resources Committee") and the Committee, except that any such
resignation shall not be effective until the Human Resources
Committee has appointed in writing a successor trustee, which must
be a bank, trust company, or an individual, and such successor has
accepted the appointment in writing; provided, however, that if
such appointment is to become effective at any time after the
occurrence of a Change in Control, then the consent of a majority
of the Members to the appointment of such successor trustee must be
obtained. For all purposes of this Trust Agreement where the
consent of a majority of the Members is required, the determination
of majority consent shall be based upon receiving the consent of
any combination of Members whose sum of Account Balances as of the
time of determination is greater than fifty percent of the sum of
Account Balances for all Members at such time, rather than upon
receiving the consent of a majority of the number of Members. For
purposes of this determination, Beneficiaries of deceased Members
shall be considered Members. The Human Resources Committee shall
make a good faith effort, following receipt of notice of
resignation from the Trustee, to find and appoint a successor
Trustee who will adhere to the obligations imposed on such
successor under the terms of this Trust Agreement, and in
particular, but without limitation, the obligation to exercise
judgment independent of the Company in the circumstances described
in Section 3.6 hereof. The appointment of a successor trustee
shall also be conditioned upon obtaining from such successor a
written statement that the successor has read the Trust Agreement
and understands its obligations thereunder. If the consent of a
majority of the Members is required for the appointment of a
successor Trustee, then the Trustee shall be responsible for
securing such Member consents in a timely fashion and, unless
ordered by a court of competent jurisdiction, shall not reveal to
the Human Resources Committee, the Company, the Committee or any
other person any information concerning such consents, except
whether the required majority has been achieved. Any notice sent
to Members by the Trustee canvassing the Members as to their
consent to a successor trustee shall include the name and address
of the proposed successor trustee. Any consent of a Member
required under this Section 8.1 shall be deemed given if no written
objection is received by the Trustee from such Member within
fourteen days after request for such consent is sent postpaid by
United States registered or certified mail with return receipt
requested to such Member. Provisions of the Trust Agreement to the
contrary notwithstanding, if the Trustee gives written notice of
resignation to the Human Resources Committee and the Committee and
no successor Trustee has been appointed within sixty days of
receipt of such written notice, then the Trustee may apply to a
court of competent jurisdiction for judicial appointment of a
successor trustee.
8.2 Removal of Trustee. The Human Resources Committee may
remove the Trustee upon sixty days' (or such short period as may be
agreed to by the Trustee) prior written notice to the Trustee and
the Committee, except that any such removal shall not be effective
until (a) the close of such notice period, (b) the delivery by the
Human Resources Committee to the Trustee of an instrument in
writing appointing a successor trustee meeting the requirements of
Section 8.1, and (c) an acceptance of such appointment in writing
executed by such successor. Notwithstanding the provisions of the
preceding sentence, if such appointment of a successor trustee is
to become effective at any time after the occurrence of a Change in
Control, then the removal of the Trustee and the appointment of a
successor trustee shall not be effective until the Trustee has
received the consent of a majority of the Members (as determined in
accordance with the provisions of Section 8.1 hereof) to such
removal and such appointment. Upon the receipt by the Trustee of
a written notice of removal, the Trustee shall be responsible for
securing the Member consents (if such consents are required
pursuant to the preceding provisions of this Section 8.2) in a
timely fashion and, unless ordered by a court of competent
jurisdiction, shall not reveal to the Human Resources Committee,
the Company, the Committee or any other person any information
concerning such consents, except whether the required majority has
been achieved. Any notice sent to Members by the Trustee
canvassing the Members as to their consent to removal of the
Trustee and the appointment of a proposed successor trustee, shall
include the name and address of the proposed successor trustee.
Any consent of a Member required under this Section 8.2 shall be
deemed given if no written objection is received by the Trustee
from such Member within fourteen days after request for such
consent is sent postpaid by United States registered or certified
mail with return receipt requested to such Member.
8.3 Successor Trustee. All of the provisions set forth
herein with respect to the Trustee shall relate to each successor
with the same force and effect as if such successor had been
originally named as the Trustee hereunder.
8.4 Transfer of Trust Fund to Successor. Upon the
resignation or removal of the Trustee and appointment of a
successor, the Trustee shall transfer and deliver the Trust Fund to
such successor. Following the effective date of the appointment of
the successor, the Trustee's responsibility hereunder shall be
limited to managing the assets in its possession and transferring
such assets to the successor, and settling its final account.
Neither the Trustee nor the successor shall be liable for the acts
of the other.
ARTICLE IX
Duration and Termination of Trust and Amendment
9.1 Duration and Termination. The Trust is hereby declared
to be irrevocable and shall continue until (a) all payments
required by Section 3.6 have been made or (b) until the Trust Fund
contains no assets and retains no claims to recover assets from the
Company or any other person or entity, whichever shall first occur.
Notwithstanding the preceding provisions of this Section 9.1,
unless earlier terminated, the Trust shall terminate twenty-one
(21) years after the death of the last to die of all of the Members
and their issue living on the effective date of this Trust
Agreement; provided, however, that if at that time the Trust may be
continued in force without violating the rule against perpetuities
or any other law of the State of Texas, then the Trust shall remain
in effect until otherwise terminated as provided hereunder.
9.2 Distribution upon Termination. If this Trust terminates
under the provisions of Section 9.1, the Trustee shall liquidate
the Trust Fund and, after its final account has been settled as
provided in Article IV, shall distribute to the Company the net
balance of any assets of the Trust remaining after all expenses
have been paid and all Benefits, whether or not due and payable
under the terms of the Plan on the date of such termination, have
been paid to the Members and Beneficiaries. Upon making such
distribution, the Trustee shall be relieved from all further
liability. The powers of the Trustee hereunder shall continue so
long as any assets of the Trust Fund remain in its hands.
9.3 Amendment. The Human Resources Committee may from time
to time amend, in whole or in part, any or all of the provisions of
this Trust Agreement; provided, however, that (a) no amendment will
be made to this Trust Agreement or the Plan which will cause this
Trust Agreement, the Plan or the assets of the Trust Fund to be
governed by or subject to Part 2, 3, or 4 of Title I of ERISA, (b)
no such amendment shall adversely affect any Benefits to the date
of such amendment in respect of any Member or Beneficiary or the
amount of assets of the Trust Fund available to pay such Benefits,
(c) no such amendment shall purport to alter the irrevocable
character of the Trust established under this Trust Agreement, (d)
no such amendment shall change the duties or responsibilities of
the Trustee unless the Trustee consents thereto in writing, and (e)
after the occurrence of a Change in Control, no amendment will be
made to this Trust Agreement without the consent of a majority of
the Members (as determined pursuant to the provisions of Section
8.1 hereof). Upon receipt of a request from the Human Resources
Committee for an amendment which requires the consent of a majority
of the Members, the Trustee shall be responsible for securing
Member consents in a timely fashion, and unless ordered by a court
of competent jurisdiction, shall not reveal to the Human Resources
Committee, the Committee, the Company, or any other person any
information concerning such consents, except whether the required
majority has been achieved. Any consent of a Member required under
this Section 9.3 shall be deemed given if no written objection is
received by the Trustee from such Member within fourteen days after
request for such consent is sent postpaid by United States
registered or certified mail with return receipt requested to such
Member. This Trust Agreement may be amended, to the extent
permitted in this Section 9.3, by an instrument in writing executed
on behalf of Continental Airlines, Inc. by its authorized
representatives, consents to which instrument have been obtained
from the required majority of Members if such consents are
required.
ARTICLE X
Claims of Company's Creditors
10.1 Insolvency of Company. As used in this Article X, the
Company shall be deemed to be "Insolvent" if (a) the Company is
unable to pay its debts as they come due, or (b) the Company is
subject to a pending proceeding as a debtor under the United States
Bankruptcy Code (or any successor federal statute). In the event
that the Company shall be deemed Insolvent, the assets of the Trust
Fund shall be held for the benefit of the general creditors of the
Company (hereinafter referred to as "Bankruptcy Creditors").
10.2 Trustee's Responsibilities if Company may be Insolvent.
(a) If at any time the Company or a person claiming to
be a creditor of the Company alleges in writing to the Trustee that
the Company has become Insolvent, the Trustee shall within thirty
days independently determine whether the Company is Insolvent and,
pending such determination, the Trustee shall discontinue any
payment of Benefits under the Plan and this Trust Agreement and
shall hold the Trust Fund for the benefit of Bankruptcy Creditors.
The Trustee shall resume payments of Benefits under the Plan and
this Trust Agreement in accordance with Section 3.6 hereof only
after the Trustee has determined that the Company is not Insolvent
(or is no longer Insolvent, if the Trustee initially determined the
Company to be Insolvent) or upon receipt of an order of a court of
competent jurisdiction requiring such payments. The Company, by
its chief executive officer and its Board of Directors, shall
further be obligated to give the Trustee prompt notice in writing
in the event that the Company becomes Insolvent, with the same
consequences as provided in the preceding two sentences. In
determining whether the Company is Insolvent, the Trustee may rely
conclusively upon, and shall be protected in relying upon, court
records showing that the Company is Insolvent, or a current report
or statement from a nationally recognized credit reporting agency
showing that the Company is Insolvent. For purposes of this Trust
Agreement, knowledge and information concerning the Company which
is not in the possession of the Trustee shall not be imputed to the
Trustee. The Trustee shall have no duty or obligation to ascertain
whether the Company is Insolvent unless and until it receives a
writing that the Company is Insolvent as described in the first or
third sentence of this Section 10.2(a).
(b) If the Trustee determines that the Company is
Insolvent, the Trustee shall hold the assets of the Trust Fund for
the benefit of the Bankruptcy Creditors, and shall disburse the
assets of the Trust Fund to satisfy such claims as a court of
competent jurisdiction shall direct.
(c) If the Trustee discontinues payment of Benefits
pursuant to Section 10.2(a) and subsequently resumes such payments,
the first payment to a Member or Beneficiary following such
discontinuance shall include an aggregate amount equal to the
difference between the payments that would have been made to such
Member or Beneficiary, as applicable, under this Trust Agreement
but for this Section 10.2 and the aggregate payments actually made
to such Member or Beneficiary, as applicable, by the Company
pursuant to the Plan during any such period of discontinuance. In
the event that upon resumption of payments pursuant to the
preceding sentence, the assets of the Trust Fund are insufficient
to pay Benefits in full, Benefit payments to the affected Members
and Beneficiaries shall be prorated so as to equitably apportion
the assets of the Trust Fund among all affected Members and
Beneficiaries in proportion to their Benefits.
10.3 Trust Recovery of Payments to Creditors. In the event
that at any time an amount is paid from the Trust Fund to
Bankruptcy Creditors of the Company, the Trustee shall demand that
the Company deposit into the Trust Fund a sum equal to the amount
paid by the Trust Fund to such Bankruptcy Creditors and, if such
payment is not made within ninety days of such demand, the Trustee
shall take such action as it deems prudent or advisable to recover
payment.
ARTICLE XI
Adopting Entities
It is contemplated that other corporations, associations,
partnerships or proprietorships that have adopted the Plan may
adopt this Trust Agreement and thereby become the Company. Any
such entity, whether or not presently existing, may become a party
hereto by appropriate action of its officers without the need for
approval of its board of directors or noncorporate counterpart or
of the Human Resources Committee or the Committee. As of the date
hereof, the Company, Continental Express, Inc., and Continental
Micronesia, Inc. have adopted the Plan and shall be deemed to be
parties to this Trust Agreement. The provisions of the Trust
Agreement shall apply separately and equally to the Company and
each other adopting entity and their respective Members and their
Beneficiaries in the same manner as is expressly provided for the
Company and its Members and their Beneficiaries, except that (a)
the power to appoint or otherwise affect the Trustee and the power
to amend the Trust Agreement shall be exercised by the Human
Resources Committee alone and (b) the determination of whether a
Change in Control has occurred shall be based solely on Continental
Airlines, Inc.
ARTICLE XII
Miscellaneous
12.1 Laws of Texas to Govern. This Trust Agreement and the
Trust hereby created shall be construed and regulated by the laws
of the State of Texas.
12.2 Titles and Headings Not to Control. The titles to
Articles and headings of Sections in this Trust Agreement are
placed herein for convenience of reference only and, in the case of
any conflict, the text of this Trust Agreement, rather than such
titles or headings, shall control.
12.3 Affiliates. As used in this Trust Agreement, the term
"affiliate" as applied to the Company or to the Trustee means any
person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, the Company or the Trustee, as the case may be. For
purposes of this definition, the term "control" as used with
respect to any person or entity shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of such person or entity, whether through
the ownership of an equity interest in such entity, by contract or
otherwise.
12.4 Change in Control. For purposes of this Trust
Agreement, the term "Change in Control" shall have the same meaning
as is assigned to such term under the Continental Airlines, Inc.
1998 Stock Incentive Plan, as in effect on January 1, 1999.
Continental Airlines, Inc., by its chief executive officer and the
Human Resources Committee, shall be obligated to give the Trustee
prompt notice in writing of the occurrence of a Change in Control.
In the event the Trustee receives such a notice or if at any time
a Member or a Beneficiary of a deceased Member alleges in writing
to the Trustee that a Change in Control has occurred, the Trustee
shall within thirty days independently determine whether a Change
in Control has occurred and, pending such determination, the
Trustee shall assume that a Change in Control has occurred for all
purposes of this Trust Agreement and the Plan. The Trustee shall
have no duty or obligation to ascertain whether a Change in Control
has occurred unless it receives a written notice as described in
either of the preceding two sentences. In determining whether a
Change in Control has occurred, the Trustee may, in its sole
discretion, make such additional inquiries and/or take such
additional measures as it deems necessary, including, but not
limited to, interviewing appropriate persons, requesting
affidavits, soliciting oral or written testimony under oath, or
engaging such independent third parties as the Trustee may deem
necessary to assist in making such determination. Notwithstanding
the foregoing, if at any time Continental Airlines, Inc.'s chief
executive officer or the Human Resources Committee notifies the
Trustee in writing that the Trustee should interpret this Trust
Agreement and the Plan as if a Change in Control had occurred, then
for all purposes of this Trust Agreement and the Plan, the Trustee
shall so interpret this Trust Agreement and the Plan. Once the
notice described in the preceding sentence is received by the
Trustee, it may not be rescinded.
12.5 Successors and Assigns. This Trust Agreement may not be
assigned by either party without the prior written consent of the
other, and any purported assignment without such prior written
consent shall be null and void. This Trust Agreement shall be
binding upon the successors and permitted assigns of each party
hereto.
12.6 Controlling Document. Should an inconsistency or
conflict exist between the specific terms of this Trust Agreement
and those of the Plan, then the relevant terms of this Trust
Agreement shall govern and control.
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be executed as of the day and year first above
written.
CONTINENTAL AIRLINES, INC.
By:________________________________
Name: _____________________________
Title: ____________________________
CHASE BANK OF TEXAS, N.A., Trustee
By:________________________________
Name: _____________________________
Title: ______________________________
OTHER ADOPTING ENTITIES
AS OF JANUARY 1, 1999:
CONTINENTAL EXPRESS, INC.
By:________________________________
Name: _____________________________
Title: ______________________________
CONTINENTAL MICRONESIA, INC.
By:________________________________
Name: _____________________________
Title: ____________________________