·-~-;._.:, ____ . --··-· ------·- -··---~--

To: Gerald P. FitzGerald 

Acting Director of Aviation 

95 0 C T 12 P 3 : I 6 

DOCUMENT FOR EXECUTION 

NEW ARK INTERNATIONAL AIRPORT 

CONTINENTAL AIRLINES, INC. 

MASTER LEASE AGREEMENT NO. ANA-170 

SUPPLEMENT NO. 15 

EFFECTNE DATE: JANUARY !. 1995 

' -~~-'-'- -. 

The subject agreement provides for a) an extension to the term for the Area C-3 

portion of Terminal C's lease to March 31, 2013 with adjustments in rental's and fees; 

b) payment of monorail fees upon commencement ofthe Monorail System operation, 

and payment of a Phase lA charge in connection with the performance of the Phase lA 

Roadway Work. 

Authorization to supplement the subject lease in accordance with the above 

terms was granted by Board of Commissioner approval on February 9, 1995. 

(Note: Per our discussion, it is my understanding that you will simultaneously execute 

this document along with other EWR Master Airline Lessee lease extension 

agreements) 

Mario C. Diaz 

Manager 

Property Development & Management Division 

New Jersey Airports 

'ncr, 

'""''"'. 
1: .-

). 

CERTIFICATE OF OFFICER 

·OF 

CONTINENTAL AfRLINES, INC. 

The undersigned, Jeffery A. Smisek, Senior Vice President, General Counsel and 

Secretary of Continental Airlines, Inc., a Delaware corporation (the "Company'), hereby 

certifies as follows: 

Holden Shannon is the duly elected Staff Vice President-Properties and 

Facilities of the Company and is duly authorized under the Company's By-Laws to 

execute and deliver leases, sub-leases, assignments, permits, service agreements, 

purchase orders, asset sale agreements, finance agreements, interline and other 

contracts on behalf of the Company. 

IN WITNESS WHEREOF, I have duly executed this Certificate on thisOl,-<"<' day of 

June, 1995. 

Je 

Senior · resident, General 

Counsel and Secretary 

ORlGINAL ON FILE 

' . 

I . 

ANA-170-SlS.M.lA.lR 

operated by the Lessee. The said Monorail Fee shall be a fee per 

thousand pounds of total Maximum Weight for Take-off, as defined 

in said subparagraph (b) . 

(d) Commencing no later than the 20th day of the 

month following the month during which the Monorail Fee 

Commencement Date occurs and no later than the 20th day of each 

and every month thereafter, including the month following the 

expiration or earlier termination of the Lease, when the Lessee 

furnishes to the Port Authority a statement duly certified by an 

authorized officer of the Lessee certifying the number of takeoffs by type of aircraft operated by the Lessee during the 

preceding calendar month, it shall also separately state said 

take-offs by Passenger Aircraft. The Lessee shall pay to the 

Port Authority at the time it is obligated to furnish to the Port 

Authority the foregoing statement the Monorail Fee determined in 

accordance with Schedule M and payable by the Lessee for its 

Passenger Aircraft operations during the preceding calendar month 

computed on the basis of said operations. The Monorail Fee 

payable by the Lessee hereunder shall be in addition to any and 

all other rents, charges and fees imposed upon and payable by the 

Lessee under the Lease. The Monorail Fee shall be payable by the 

Lessee whether or not the Lessee uses the Monorail System or any 

or all of the Public Aircraft Facilities in addition to the 

runways. 

(e) Without limiting any of the foregoing 

provisions of this Paragraph or any of the provisions of Schedule 

M, commencing on the effective date hereof and from time to time 

thereafter and during each calendar year, but no more frequently 

than quarterly, the Port Authority may notify the Lessee whether 

and to what extent the payments due to the Port Authority 

resulting from the tentative Monorail Fee established pursuant to 

Schedule M will be likely to exceed or be less than the payments 

which would result from the estimated finalized Monorail Fee as 

described in Paragraph II of Schedule M for such year for the 

period during such year as designated by the Port Authority's 

notice. If such notice is given the Lessee shall pay a new 

tentative Monorail Fee established by the Port Authority and set 

forth in said notice until the same is further adjusted in 

accordance with this subparagraph or Schedule M. 

2. There shall be added to the Lease, as ''Schedule M,'' 

the following: 

-5-
ANA-170-SlS.M.lA.lR 

"SCHEDULE M 

I. Commencing upon the date (hereinafter called the 

'Monorail Fee Commencement Date') which the Port Authority shall 

have certified to be the date as of which the construction of the 

Monorail System at Newark International Airport (hereinafter 

called the 'Airport') has been substantially completed and is 

operational and continuing thereafter for the balance of the term 

of the Lease, the Lessee shall pay to the Port Authority a 

Monorail Fee for each and every take-off of each and every 

Passenger Aircraft, as defined in Paragraph 1 of Supplement No. 

15 of the Lease, operated by the Lessee. For the period from the 

Monorail Fee Commencement Date through the 31st day of December 

of the year in which the said Monorail Fee Commencement Date 

occurs (which period is hereinafter referred to as 'the Initial 

Schedule M Period'), the Lessee shall pay for each and every such 

take-off, a tentative Monorail Fee at the rate of $0.94 per 

thousand pounds of Maximum Weight for Take-off, as defined in 

Paragraph 1 of Supplement No. 15 of the Lease. It is understood 

that the Monorail Fee for the Initial Schedule M Period set forth 

above is tentative only and is subject to final determination as 

hereinafter provided. 

II. Initial Construction Factor: 

(a) (1) On or after the Monorail Fee Commencement 

Date the Port Authority shall determine the portion of the total 

construction costs (the 'Monorail Construction Costs') paid or 

incurred by the Port Authority in connection with the Monorail 

Construction Work, which shall be the total of the following: 

A. Construction Costs: 

(1) payments to independent contractors, vendors 

and suppliers; 

(2) premiums or charges for Performance Bonds; 

(3) insurance premiums or charges; 

(4) direct payroll and exp~nses of Port Authority 

employees and agents engaged in performance 

or supervision of the work, charged in 

accordance with Port Authority accounting 

practice. 

-6-
ANA-170-SlS.M.lA.lR 

Lessee to the Port Authority for each calendar month during 

calendar year 1995 or such other calendar year and for each and 

every month thereafter during the remainder of the Phase lA 

Charge Period. The Lessee shall pay the New Phase lA CH&RP 

Charge at the time it pays the tentative Charges for the calendar 

month following the month during which the New Phase lA CH&RP 

Charge is calculated and shall continue to make payments based on 

the said New Phase lA CH&RP Charge at the time it pays each 

Charge hereunder during the remainder of the Phase lA Charge 

Period. 

(c) Any deficiency in the amounts due to the 

Port Authority from the Lessee for any calendar year resulting 

from the adjustment of the Initial or New Phase lA CH&RP Charge 

shall be paid to the Port Authority by the Lessee within thirty 

(30) days after demand therefor and any excess payments made by 

the Lessee determined on the basis of an adjusted Initial or New 

Phase lA CH&RP Charge shall be credited against future Charges 

hereunder, such credit to be made within thirty (30) days 

following the adjustment of the Initial or New Phase lA CH&RP 

Charge, as the case may be." 

8. Schedule C attached to the Lease, as heretofore 

amended, shall be deemed further amended as follows: 

(a) The fifth (5th), sixth (6th) and seventh (7th) 

lines of Paragraph I thereof shall be amended to read as follows: 

"(hereinafter called the 'Airport') and continuing 

thereafter throughout the term of the letting under the 

Agreement, the Lessee shall pay to the Port Authority 

a flight fee for each and every take-off made by any 

aircraft operated by the Lessee. In connection with the 

Phase lA Roadway Work as defined in Supplement No. 15 of 

the Lease, there shall be included in the aforesaid 

flight fee an Initial Phase lA Charge Factor subject to 

adjustment as hereinafter provided. For. . '' 

(b) 

subparagraph B of 

following: 

' ' There shall be added immediately after 

Paragraph II thereof, as subparagraph BB, 

"BB. Initial Phase lA Charge Factor: 

-22-

the 
ANA-170-Sl5.M.lA.lR 

In connection with the Phase lA Roadway Work and in 

addition to the P. A. F. Charge Factor and the Airport Services 

Charge Factor above, the Lessee shall pay an Initial Phase lA 

Charge Factor determined as follows: after the close of calendar 

year 1994, the Port Authority shall establish an Initial Phase lA 

Charge Factor by multiplying the Initial Fee Per Acre, as 

determined in Paragraph 5 of Supplement No. 15 of the Lease, by 

the total developed land area at the Airport occupied by the 

Public Aircraft Facilities during the calendar year for which the 

adjustment is being made and the resulting product shall be 

divided by the total Maximum Weight for Take-off of all aircraft, 

as determined under subparagraph A (2) of Section II hereof, at 

the Airport during the calendar year for which the adjustment is 

being made, and the quotient thereof shall be multiplied by one 

thousand (1000), the resulting product thereof being herein 

referred to as the 'Initial Phase lA Charge Factor'." 

(c) There shall be added immediately after 

subparagraph BB thereof, as subparagraph BBB, the following: 

"BBB. New Phase lA Charge Factor 

After the close of calendar year 1994 and after the 

close of each calendar year thereafter up to and including the 

calendar year during which the Phase lA Roadway Work is substantially completed (it being understood that, in the event the 

Phase lA Roadway Work is not completed by December 31, 1998, the 

Lessee shall have no right nor shall the Port Authority have any 

obligation to extend or to offer to extend the term of the 

letting hereunder beyond March 31, 2013), the Port Authority will 

adjust the Initial Phase lA Charge Factor specified above and any 

New Phase lA Charge Factor, as hereinafter defined, as the case 

may be, upwards or downwards, as follows: after the close of 

calendar year 1994 and after the close of each calendar year 

thereafter up to and including the calendar year during which the 

Phase lA Roadway Work is completed, the Port Authority shall 

establish a New Phase lA Charge Factor by multiplying the New Fee 

Per Acre, as determined in Paragraph 5 of Supplement No. 15 of 

the Lease, by the total developed land area at the Airport 

occupied by the Public Aircraft Facilities during the calendar 

year for which the adjustment is being made and the resulting 

product shall be divided by the total Maximum Weight for Takeoff of all aircraft, as determined under subparagraph A(2) of 

Section I hereof, operated at the Airport during the calendar 

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ANA-170-SlS.M.lA.lR 

year for which the adjustment is being made, and the quotient 

thereof shall be multiplied by one thousand (1000), the resulting 

product thereof being, in each case, herein referred to as the 

'New Phase lA Charge Factor'.'' 

(d) The first (1st) line of subparagraph (C) 

thereof shall be amended to read as follows: 

"The final P.A.F. Charge Factor, the final 

Airport Services Charge Factor and the Initial 

or New Phase lA Charge Factor, as the case may 

be, as determined above .... " 

9. Schedule D attached to the Lease, as heretofore amended 

shall be deemed further amended as follows: 

(a) The sixth (6th), seventh (7th) and eighth (8th) 

lines of Paragraph I thereof shall be amended to read as follows: 

"and continuing thereafter throughout the term of the 

letting under the Agreement the Lessee shall pay to the 

Port Authority a gallonage fee for each gallon of fuel 

delivered to aircraft operated by the Lessee. The 

Lessee, as an additional component of said gallonage 

fee and in connection with the Phase lA Roadway Work, 

as defined in Supplement No. 15 to the Lease shall pay 

an Initial Phase lA Charge Component and a New Phase lA 

Charge Component as hereinafter determined. The Lessee 

either itself, if it is a fuel storage .... '' 

(b) There shall be added immediately after 

subparagraph B of Paragraph II thereof, as subparagraph BB, the 

following: 

''BB. Initial Phase lA Charge component: 

In connection with the Phase lA Roadway Work and in 

addition to the System Charge Component and the Airport Services 

Charge Component above, the Lessee shal~ pay an Initial Phase lA 

Charge Component determined as follows: after the close of 

calendar year 1994, the Port Authority shall establish an Initial 

Phase lA Charge Component by multiplying the Initial Fee Per 

Acre, as determined in Paragraph 5 of Supplement No. 15 of the 

Lease, by the total developed land area at the Airport occupied 

-24-
ANA-170-S15.M.lA.1R 

"The final System Charge Component, the final Airport 

Services Charge Component and the Initial or New Phase 

lA Charge Component, as the case may be, as determined 

above shall be .... " 

10. There shall be added to the Lease immediately 

after Section 92 thereof the following "Section 92A "· 

"Section 92A. Airline Service Standards 

Subject to and without limiting or affecting any other 

term or provision of this Lease, the Lessee agrees to provide 

service at the premises for the benefit of the traveling public 

in a manner consistent with generally accepted airline industry 

standards for airport terminals and will cooperate with the Port 

Authority and other airlines serving the traveling public at the 

Airport in maintaining these standards through organized airport 

service improvement groups. The foregoing provision shall be 

binding as well on sublessees and others using the premises." 

11. Effective as of December 31, 1998, the term of 

the letting of the Area C-3 portion of the premises under the 

Lease is hereby extended for the period ending on March 31, 2013, 

unless sooner terminated, at the rentals in accordance with 

Paragraphs 12 and 13 below and upon all the terms, covenants, 

provisions and conditions of the Lease, as hereby amended. 

12. Area C-3 Annual Rentals: For the period 

commenc~ng ' . on January 1, 1999 to and including December 31, 2003, 

in addition to all other rentals, fees and charges under the 

Lease, the Lessee shall pay to the Port Authority rental for Area 

C-3 during the extension set forth in Paragraph 11 hereof as 

follows: 

For Area C-3 rental at an annual rate 

consisting of a Facility Factor, as hereinafter defined, in the 

plus the Airport 

Services Factor, as the same shall then ·h~ve been adjusted in. 

accordance with Schedule A attached to the Lease, as herein 

amended, based upon a 1993 final Airport Services Factor in the 

of 

which 

annual rate is subject to adjustment from time to time as 

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ANA-170-SlS.M.lA.lR 

C-3 forms a part; (ii) from the center of partitions separating 

Area C-3 from areas occupied from or used by others." 

16. Section 53 of the Lease entitled "Payment of 

Flight Fees" shall be deemed amended as follows: 

(a) The date appearing on the third (3rd) line 

of paragraph (a) (1) thereof as "December 31, 1998" shall be 

deemed amended to read "March 31, 2013". 

(b) Subparagraph (2) of paragraph (a) thereof 

shall be deemed amended to read as follows: 

"(2) It is recognized that the flight fee 

provisions contained in Schedule C are 

effective through the expiration date of 

the letting hereunder (March 31, 2013) .'' 

17. Section 56 of the Lease entitled "Fuel Gallonage 

Fees" shall be deemed amended as follows: 

(a) The date appearing as "December 31, 1998" 

on the second (2nd) line of paragraph (a) thereof shall be deemed 

amended to read ''March 31, 2013'' .. 

(b) The second subparagraph of paragraph (a) 

thereof shall be deemed amended to read as follows: 

"It is recognized that the fuel gallonage fee 

provisions contained in Schedule D are 

effective through the expiration of the letting 

hereunder (March 31, 2013)." 

18. It is understood, acknowledged and agreed that 

the right of the Port Authority to terminate the Lease and the 

letting thereunder with respect to all or portions of Area C-3 as 

specified in, provided under, and as stated in Paragraph 5 of 

Supplement No. 11 of the Lease shall continue to apply with full 

force and effect in accordance with the terms thereof throughout 

the term of Area C-3 as such term is extended by Paragraph 11 

hereof. 

19. The Lessee represents and warrants that no broker 

has been concerned in the negotiation of this Supplemental 

-31-

anal70suppl7-ex 

"(c) If any clause, provision or section of this Agreement shall be ruled invalid by 

any court of competent jurisdiction, the invalidity of such clause, provision or section or 

sections shall not affect any of the remaining clauses, provisions or sections hereof." 

29. Paragraph (d) of Section 49 of the Lease, as previously amended, shall be deemed 

further amended by changing the "1998" in the seventh('?) and ninth (9th) lines thereof to "2018" 

and by changing the "1999" in the last line thereof to "20 19". 

30. Section 53 of the Lease, as previously amended, shall be deemed further amended 

as follows: 

(a) The date appearing on the third (3'd) line of paragraph (a) (I) thereof (as set forth in 

Supplement 15 of the Lease) as "March 31, 2013" shall be deemed amended to read "December 

31, 2018". 

(b) Subparagraph (2) of paragraph (a) of Section 53 of the Lease, as previously 

amended, shall be deemed further amended to read as follows: 

"(2) It is recognized that pursuant to Paragraph 2 of Supplement No. 17 

to the Lease the term of the letting of only the Area C-3 portion of the premises is 

extended to March 31, 2028, and that flight fee provisions contained in Schedule C 

are effective through December 31, 2018. It is hereby agreed that for the portion of 

the term of the letting of said Area C-3 hereunder subsequent to December 31, 

2018, the Port Authority and the Lessee shall negotiate in good faith toward the 

establishment of provisions covering the determination of the flight fees payable by 

the Lessee for the portion of the term of said Area C-3 commencing January 1, 

2019 through the expiration date of the term of the letting of said Area C-3 

hereunder (March 31, 2028), and upon the establishment of the same the Lessee 

shall pay flight fees in accordance with said pi'ovisions for said portion of the term. 

If the parties do not reach such agreement, the Lessee shall pay flight fees in 

accordance with the Port Authority's Schedule of Charges for said portion of the 

term of said Area C-3 commencing January I, 2019." 

31. The last line of the seventh (7th) subparagraph of paragraph (a) of Section 54 of the 

Lease is hereby amended to read as follows: 

"additions, and also including the modifications and additions to the Fuel 

System which the Lessee shall perform as part of the Expansion 

Construction Work under Section 93 hereof, shall be and become part of 

the Fuel System." 

32. Section 56 of the Lease, as previously amended, shall be deemed further amended 

to as follows: 

TERM C SUPP 17 

55 

be used for any purpose other than heating or air-conditioning the CAL 

Premises or the generation of domestic hot water and precisely and 

without limiting the foregoing none of the same shall be used for the 

heating or air-conditioning of aircraft, 

(e) The Lessee shall pay to the Port Authority the Port 

Authority charge for such r~gh-temperature hot water and chilled water 

determined as provided in Schedule B, attached hereto and hereby made 

a part hereof, and in the manner and at the times provided therein. 

(f) For the purposes hereof the term "high-temperature hot 

water" shall mean water having an average temperature of approximately 

380 degrees Fahrenheit and the term "chilled water" shall mean water 

having an average temperature of approximately 45 degrees Fahrenheit. 

(g) · The Port Authorir:y may not discontinue its opeJ::ation of 

the Central Plant except upon thirty (30) days' notice to the Lessee 

and unless high-temperature hot water and chilled water shall be 

available to the Lessee from another supplier and upon any such 

discontinuance the Lessee shall be at liberty to contract or otherwise 

arrange for the supply of such high-temperature hot water and chilled 

water after the expiration of said thirty days from any other person, 

firm or corporation. 

Section 7. 

The term of the letting of the premises and the right to use 

the non-exclusive areas shall commence on August 1, 1999 and, unless 

sooner terminated, shall expire on December 31, 2018. 

Section 8. Rentals 

(a) For the period commencing on August 1, 1999 to and 

including December 31, 2003, the Lessee shall pay to the Port 

Authority rental for the CAL Premises, ihcluding the Lessee's right to 

use the non-exclusive areas, (i) f6r the portion of the term during 

said period when four (4) Aircr;a;f;t:==G=a~te Positions are let to the 

Lessee, at the monthly rate of 

amount o . 

.. ~~~~~~~~~~~~~~~~~~~--~~~~~~~~~~~~~~~~~~~~~~~~~~~' plus the Airport Services Factor, as che same shall then have been adjusted in 

accordance with Schedule A {ar:tached hereto, hereby made a part 

hereof, and, as the same is hereinafter amended, hereinafter called 

c~ 

( 40 ;i 

\ . ...._ ____ / r 
a maximum gross weight of 870,000 pounds or in connection with 

aircraft for which the thickness of flexible pavement (if flexible 

pavement is used) is no greater than that necessary for the above 

designated aircraft. 

(b) The Public Aircraft Facilities may, in the sole 

discretion of the Port Authority, also be made available for use by 

aircraft other than that mentioned above or included in the aforesaid 

categories provided such aircraft, in the Port Authority's sole 

judgment, will not cause undue wear and tear to and may safely use the 

Public Aircraft Facilities. 

(c) Notwithstanding any of the foregoing, the use of the 

Public Aircraft Facilities shall be subject to existing Port Authority 

rules and regulations and such further reasonable rules and 

regulations as the Port Authority may from time to time promulgate 

pursuant to Section 35 hereof including, without limitation thereto, 

such further rules and regulations as impose other or different 

restrictions as to the types, weights or characteristics of Aircraft 

which may use the same. The Port Authority by such rules and 

regulations may forbid or limit the use of the Public Aircraft 

Facilities by Aircraft for reasons other than herein set forth, even 

though such Aircraft meet the requirements of this Section with 

respect to Maximum 'N'eight for Take-off. 

Section 14. Payment of Flight Fees 

(a) For the portion of the term of the CAL Lease during 

which the Lessee shall be conducting flight operations from Passenger 

Terminal Building C, the flight fees payable with respect to the 

Lessee's flight operations from the CAL Premises shall be calculated 

in accordance with the applicable provisions of the Agreement of Lease 

bearing Port Authority Lease No. ANA-170 covering the Lessee's 

premises in Passenger Terminal Building c. In the event that at any 

time during the term of the CAL Lease the Lessee shall cease to 

conduct flight operations from Passenger Terminal Building C, the 

provisions of this Section 14 shall govern the payment of flight fees 

for the Lessee's flight operations from the CAL Premises. 

(b) In the event that at any time during the term of the 

CAL Lease the Lessee shall cease to conduct flight operations from 

Passenger Terminal Building C, then throughout the remainder of the 

term of the letting under the CAL Lease, the Lessee shall pay to the 

Port Authority che flight fees established by the Port Authority from 

time to time in accordance with the provisions of Schedule C, attached 

hereto and hereby made a part hereof, for each and every take-off of 

each and every aircraft operated by the Lessee. The said flight fee 

shall be a fee (per thousand pounds of Maximum Weight for Take-off) 

prorated to the nearest hundred pounds and is made up of two factors, 

a P.A.F. Charge Factor and an Airport Services Factor, as set forth in 

Schedule C. 

53 
(cJ "Maximum Weight for Take-off" when used with reference 

to aircraft shall mean the Maximum Weight at which such aircraft is 

authorized to take-off from the Airport by the Federal Governmental 

Agency or Agencies having jurisdiction, under conditions of zero wind 

velocity and standard atmosphere, on the least restricted Runway which 

is available for take-off by such aircraft under the Rules and 

Regulations of the Port Authority, provided, that Runways shall be 

deemed to be available for use under the Rules and Regulations of the 

Port Authority, within the meaning of this definition, in cases where 

they are not actually available for periods of less than forty-eight 

(48) hours because of snow, ice, or other temporary emergency 

conditions. If such Maximum Weight is not specified by such Agency or 

Agencies, then said phrase shall mean the highest Maximum Authorized 

Weight for Take-off of other aircraft of the same type and model at 

the time of take-off. 

(d) "Maximurn Weight for Landing" when used with reference 

to aircraft shall mean the Maximum Weight at which such aircraft is 

authorized to land at the Airport by the Federal Governmental Agency 

or Agencies having jurisdiction, under conditions of zero wind 

velocity and standard atmosphere, on the least restricted Runway which 

is available for landing by such aircraft under the Rules and 

Regulations of the Port Authority, provided, that Runways shall be 

deemed to be available for use under the Rules and Regulations of the 

Port Authority, within the meaning of this definition, in cases where 

they are not actually available for periods of less than forty-eight 

(48) hours because of snow, ice, or other temporary emergency 

conditions. If such Maximum Weight is not specified by such Agency or 

Agencies, then said phrase shall mean the highest Maximum Authorized 

Weight for Landing of other aircraft of the same type and model at the 

t-ime of landing. 

(e) Commencing no later than the 20th day of the month 

following the month during which the Lessee ceases to conduct flight 

operations from Passenger Terminal Building C, and no later than the 

20th day of each and every month thereafter during the remainder of 

the term of the CAL Lease, including the month following the 

expiration of the CAL Lease, the Lessee shall furnish to the Port 

Authority a statement duly certified by an authorized officer of the 

Lessee certifying the number of take-offs by type of aircraft operated 

by the Lessee during the preceding calendar month. The Lessee shall 

pay to the Port Authority at the time it is obligated to furnish to 

the Port Authority the foregoing statement the flight fees payable by 

the Lessee for its aircraft operations during the preceding calendar 

month computed on the basis of said operations and the flight fees 

determined in accordance with Schedule C. The flight fees payable by 

Lessee hereunder shall be in addition to any and all rents, charges 

and fees imposed upon and payable by the Lessee whether or not the 

Lessee uses any or all of the Public Aircraft Facilities in addition 

to the runways. 

S4 
SCHEDULE C 

I. (a) Commencing on the Schedule C Date, as defined in 

Section 14 of Port Authority Agreement No. ANB-056 (hereinafter 

called "the Lease") with Continental Airlines, Inc. (hereinafter 

called "the Lessee") at Newark International Airport (hereinafter 

called "the Airport"), and continuing thereafter throughout the 

remainder of the term of the Lease, the Lessee shall pay to the Port 

Authority a flight fee for each and every take-off made by any 

aircraft operated by the Lessee. In connection with the Phase 1A 

Roadway Work, as defined in Section 78 of the Lease, there shall be 

included in the aforesaid flight fee an Initial Phase lA Cha:r:ge 

Factor subject to adjustment as hereinafter provided. For calendar 

year 1999, a current tentative flight fee has been established for 

each and every take-off at the rate of $2.45 per thousand pounds of 

Maximum Weight for Take-Off, which tentative flight fee represents 

the summation of the following factors: 

(1) A P.A.F. Charge Factor, which pertains to the Port 

Authority's snow removal operations and provision, operation·, 

maintenance, servicing, repair and replacement of and to the Public 

Aircraft Facilities and Airport emergency services. (For calendar 

year 1999, $1.1434 of the tentative flight fee of $2.45 per thousand pounds represents the tentative P.A.F. Charge Factor); and 

(2) An Airport Services Charge Factor which pertains to 

the Port Authority's snow removal operations and provision, operation, maintenance, repair and replacement with respect to Airport 

Services. (For calendar year 1999, $1.2537 of the tentative flight 

fee of $2.45 per thousand pounds represents the tentative Airport 

Services Charge Factor); and 

(3) A Phase lA Charge Factor. (For calendar year 1999, 

$0.0529 of the tentative flight fee of $2.45 per thousand pounds 

represents the tentative Phase lA Charge Factor). 

II. It is hereby acknowledged that the Port Authority established a tentative flight fee for calendar year 1973 at the 

rate of $0.6500 and that said fee has been adjusted each calendar 

year thereafter as hereinafter set forth, resulting in the portions 

of the tentative flight fee set forth in items (1) and (2) of 

Section I hereof and that the Port Authority established a tentative 

portion of the flight fee for calendar year 1994 and that said 

portion of the fee has been adjusted each ~alendar year thereafter 

as hereinafter set forth, resulting in the portion of the tentative 

Page l of Schedule C 
flight fee set forth in item (3) of Section I hereof. After the 

close of calendar year 1999 and after the close of each calendar 

year thereafter, the Port Authority will adjust the tentative flight 

fee for the applicable calendar year, upwards or downwards, to a 

finalized flight fee for each such calendar year, as follows: 

(A) P.A.F. Charae Factor 

(1) The Port Authority shall determine the total 

of the following major elements o£ costs actually incurred or 

accrued during calendar year 1999 or other calendar year for which 

the adjustment is being made in connection with the Public Aircraft 

Facilities: 

(a) fixed charges on Port Authority 

investment in Public Aircraft Facilities; and 

(b) the Port Authority's cost of direct labor, 

materials, payments to contractors and suppliers, the Port Authority's cost charged to the Emergency Service Functions at the 

Airport (whether performed by the Airport Police Section or other 

section or sections or other Port Authority organiz-ation unit or 

units as may hereafter perform the same or similar functions), 

other costs for the operation, maintenance, repair and replacement 

of Public Aircraft Facilities, and the pro rata share of the cost 

of snow and ice remova~. 

(2) The Port Authority will also determine the 

total Maximum Weight for Take-Off of all aircraft using the Airport 

during the calendar year for which the adjustment is being made 

except such aircraft as are not required to pay a flight fee, such 

as government flights, etc. 

(3) The Port Authority will multiply the sum of 

$0.3130 representing the tentative P.A.F. Charge Factor for calendar year 1973 by a fraction the numerator of which shall be the 

total of the actual elements of cost described in subparagraphs (a) 

and {b) of the preceding paragraph (A) {1) and the denominator of 

which shall be $4,010,000.00; the resulting product shall then be 

multiplied by a fraction, the numerator of which shall be 

17,734,000,000 and the denominator of which shall be the total 

Maximum Weight for Take-Off determined in the preceding paragraph 

(A) (2); and the resultant product shall be the final P.A.F. Charge 

Factor of the finalized flight fee for the calendar year for which 

the adjustment is being made. 

{B) Airport Services Charge Factor 

(1) The Port Authority shall determine the total 

Page 2 of Schedule C 
of the major elements of cost actually incurred or accrued during 

the calendar year for which adjustment is being made, as such major 

elements are described in Paragraph I, subparagraphs (a) through 

(d) in Schedule A attached to this Agreement. 

(2) The Port Authority shall also determine the 

percentage of total developed land area at the Airport occupied by 

the Public Aircraft ~acilities during the calendar year for which 

the adjustment is being made. 

(3) The Port Authority will multiply the sum of 

$0.3370 representing the tentative Airport Services Charge Factor 

for calendar year 1973 by a fraction the numerator of which shall 

be the total of the actual major elements of costs determined under 

the preceding paragraph (B) (l) and the denominator of which shall 

be $4, 625, 000.00; the resulting product shall be multiplied by a 

fraction the numerator of which shall be 17,734,000,000 and the 

denominator of which shall be the total Maximum Weight for Take-Off 

determined in paragraph (A) (2) above, and that product shall then 

be multiplied by a fract.ion the numerator of which shall be the 

percentage determined in paragraph (B) (2) above and the denominator 

of which shall be 66.47~. 

(~) The resultant product shall be the final 

Airport Services Charge Factor of the finalized flight fee for the 

calendar year for which the adjustment is being made. 

(BB) Phase lA Charge Factor: 

In connection with the Phase lA Roadway Work and in 

addition the P. A. F. Charge Factor and the Airport Services Charge 

Factor above, the Lessee shall pay a Phase lA Charge Factor determined as follows: after the close of calendar year 1998, the Port 

Authority established the tentative Phase 1A Charge Factor set forth 

above; after the close of calendar year 1999 and after the close of 

each calendar year thereafter, the Port Authority will adjust the 

foregoing tentative Phase lA Charge Factor for the calendar year for 

which the adjustment is being made, by multiplying the Phase lA 

Charge Per Acre, as determined in Section 78 of the Lease, by the 

total developed land area at the Airport occupied by the Public 

Aircraft Facilities during the calendar year for which the adjustment is being made and the resulting product shall be divided by the 

total Maximum Weight for take-off of all aircraft, as determined 

under subparagraph A (2) of Section II hereof, at the Airport during 

the calendar year for which the adjustment is being made, and the 

quotient thereof shall be multiplied by one thousand (1000), the 

resulting product thereof being herein referred to as the "Phase lA 

Charge Factor" for the calendar year for which the adjustment is 

being made. 

Page 3 of Schedule C 
(C) (1) The final P.A.F. Charge Factor, the final 

Airport Services Charge Factor and the Phase lA Charge Factor, as 

the case may be, as determined above shall be added together and the 

sum thereof shall constitute the finalized flight fee for the 

calendar year for which the adjustment is being made. It shall also 

constitute the tentative flight fee for the calendar year in which 

such adjustment is calculated, and such flight fee will be expressed 

in cents per thousand pounds of Maximum Weight for Take-Off. The 

finalized flight fee shall be multiplied by the total Maximum Weight 

for Take-Off (in thousands·of pounds) of all aircraft operated by 

the Lessee which took off from the Airport during the calendar year 

for which the adjustment is made and for the calendar months which 

have elapsed since the close of said calendar year. The resultant 

product shall constitute the total flight fee charges payable by the 

Lessee to the Port Authority for the Airline's use of the Public 

Aircraft Facilities during the calendar year for which the adjustment is being made, and for the months which have elapsed since the 

close of the said calendar year. The Lessee shall continue to make 

payments based on the new tentative flight fee until the same is 

further adjusted. 

. 

(2) Any deficiency due to the Port Authority 

from the Lessee for any calendar year resulting from adjustment of 

the flight fee shall be paid to the Port Authority by the Lessee 

within thirty (30) days after demand therefor and any excess payments made by the Lessee determined on the basis of an adjusted 

flight fee shall be credited aga.inst future flight fee charges, such 

credit to be made within thirty (30) days following the adjustment 

of the flight fee. 

(D) All percentage shares calculated under this 

Schedule C shall be expressed in decimals to the nearest ten thousandth. 

(E) All flight fees payable under the AgL-eement 

shall be expressed in cents per thousand pounds of Maximum Weight 

for Take-Off to the nearest ten-thousandth of a cent. 

For 

Initialed: 

For 

Page 4 oE Schedule C 

anal70suppl7-ex 

At any time and from time to time after the Port Authority may have 

exercised its rights under Subdivision II to perform the Assumable Maintenance 

and Repair the Port Authority shall have the right, upon notice to the Lessee to 

return the obligation to perform the Assumable Maintenance and Repair to the 

Lessee commencing on a date to be specified in such notice which date shall be not 

less than thirty (30) nor more than ninety (90) days from the giving of such notice. 

Such date shall be 'the Return Date of the Assumable Maintenance and Repair'. 

From and after the Return Date of the Assumable Maintenance and Repair the 

Lessee shall perform the Assumable Maintenance pursuant to and in accordance 

with all the terms and provisions of the Lease including, but not limited to, this 

Section 85. 

From and after the Return Date of the Assumable Maintenance and Repair 

the Lessee shall continue to pay the Cost of Assumable Maintenance and Repair, it 

being understood, that nothing herein shall release or be deemed to release the 

Lessee from the payment to the Port Authority oftbe Cost of Assumable 

Maintenance and Repair including that portion thereof consisting of the Annual 

Capital Cost in accordance with Subdivision IV hereof arising prior to the Return 

Date of the Assumable Maintenance and Repair; nor shall anything herein require 

the Port Authority to make any calculation or determination with resp~ct to the 

Cost of Assumable Maintenance and Repair prior to the time specified therefor in 

Subdivision IV hereof." 

48. The provisions of Section 88 and Section 91 of, and Exhibit X-1 to, the Lease as 

herein amended shall apply solely with respect to the C-1and C-2 portions of the premises 

hereunder, and shall not apply in any manner to the Mortgaged Premises (as defined in Section 96 

of the Lease). 

49. The Section of the Leased entitled "Entire Agreement" shall be deemed 

renunnbered as Section 98 and the reference in the first sentence thereof to Section 93 shall be 

deemed amended to read "Section 98", and in addition to the Section added as new Section 93 in 

Paragraph 6 of this Seventeenth Supplemental Agreement, new Sections 94, 95, 96 and 97 are 

hereby added to the Lease reading as follows: 

"Section 94. Federal Inspection 

(a) The Lessee has advised the Port Authority that it intends to make available 

to the United States a portion or portions of the premises for the inspection of the 

passengers of the Lessee and their baggage by the United States for United States customs, 

immigration, public health and other governmental purposes, if the United States will 

accept and use the same. 1be Port Authority shall have no obligation or responsibility of 

any kind with respect to the foregoing or the arrangements that must be made by the 

Lessee with the United States and any agencies thereof having jurisdiction. 

TE;RM C SUPP l7 

75 
anal70suppl7-ex 

(b) From and after the Effective Date of Supplement No. 17 of the Lease, the 

Lessee shall be entitled to utilize the number of slots at the international arrivals facilities 

of Terminal Bat the Airport held by, assigned to or utilized by the Lessee as of the 

Effective Date of Supplement No. 17 of the Lease. Further, the Lessee hereby expressly 

covenants and agrees that, fol!owing the issuance of the certificate called for in paragraph 

(n)(l) of Section 93 of the Lease, any requirement for slots above the number of slots held 

by, assigned to or utilized by the Lessee for its international air passenger operations at 

Terminal Bat the Airport on the Effective Date of Supplement No. 17 of the Lease shall 

be handled by the Lessee at the FIS facilities at the premises hereunder at all times and 

only such operations that exceed the design capacity of the said FIS facilities at the 

premises may then be handled by additional slots ofthe Lessee at the international arrivals 

facilities of Terminal Bat the Airport, if otherwise pe1mitted. 

Section 95. Storage Tanks 

(a) All aboveground storage tanks and underground storage tanks, if any, 

installed in the premises as of the effective date of Supplement No. 17 to this Lease and its 

or their appurtenances, pipes, lines, fixtures and other related equipment, together with all 

aboveground storage tanks and underground storage tanks installed in the premises during 

the term of the letting subsequent to the said date and its or their appurtenances, pipes, 

lines, fixtures and other related equipment are hereinafter collectively called the 'Tanks' 

and singularly called a 'Tank'. The Lessee hereby agrees that title and ownership of the 

Tanks shall be and remain in the Lessee, notwithstanding anything to the contrary in any 

construction or alteration application. The Port Authority has made no representations or 

wananties with respect to the Tanks or their location and shall assume no responsibility 

for the Tanks. All Tanks installed subsequent to said date shall be installed pursuant to the 

terms and conditions of the Lease including without limitation Section 23 hereof and 

nothing in this Section 95 shall or shall be deemed to be permission or authorization to 

install any Tanks. 

(b) Without limiting the generality of any of the provisions of the Lease, the 

Lessee agrees that it shall be solely responsible for maintaining, testing and repairing the 

Tanks. The Lessee shall not perform any servicing, repairs or non-routine maintenance to 

the Tanks without the prior written approval of the Port Authority. 

(c) It is hereby agreed that title to and ownership of the Tanks shall remain in the 

Lessee until the earlier to occur of(!) receipt by the Lessee of notice from the Port 

Authority that title to the Tanks shall vest in the Port Authority or in the City of Newark or 

(2) receipt by the Lessee of notice from the Port Authority that the Port Authority waives 

its right to require the Lessee to remove the Tanks from the premises as set forth in 

paragraph (i) below. The vesting oftitle to the Tanks in the Port Authority or in the City 

of Newark, if at all, in accordance with the foregoing item (1) shall in no event relieve the 

Lessee from the obligation to remove the Tanks from and restore the premises in 

accordance with paragraph (i) below, 

TERM C SUPP 17 

76 

ANA-1.7.058 ·.• ·' ... . '. ,: . .. : 

THIS SUPPLEMENTAL AGREEMENT SHALL NOT BE BINDING 

UPON THE PORT AUTHORITY UNTIL DULY EXECUTED BY 

AN EXECUTIVE OFFICER THEREOF AND DELIVERED TO 

THE LESSEE BY AN AUTHORIZED REPRESENTATIVE OF 

FILE COPY 

THE PORT AUTHORITY 

Newark International Airport 

Lease No. ANA-170 

Supplement No. 8 

SUPPLEMENTAL AGREEMENT 

THIS AGREEMENT dated June 2, 1989 by and between THE 

PORT AUTHORITY OF NEW YORK AND NEW JERSEY (hereinafter called 

''the Port Authority") and CONTINENTAL AIRLINES, INC., a corporation of the State of Delaware, having an office and place of 

business at Suite 1401, P.O. Box 4607, Houston, Texas 77210-4067, 

(hereinafter called ''the Lessee''), 

WITNESSETH, That: 

WHEREAS, the Port Authority and People Express Airlines, 

Inc. (hereinafter called "People Express'') as of January 11, 1985 

entered into an agreement of lease (which agreement of lease as 

heretofore supplemented and amended is hereinafter called "the 

Lease"), covering certain premises, rights and privileges at and 

in respect to Newark International Airport (hereinafter called 

"the Airport'') as therein set forth; and 

WHEREAS, the Lease was thereafter assigned by said 

People Express to the Lessee pursuant to an Assignment of 

Lease with Assumption and Consent Agreement entered into among 

the Port Authority, the Lessee and People Express and dated 

August 15, 1987; and 

WHEREAS, the Port Authority and the Lessee desire to 

amend the Lease in certain respects as hereinafter provided, 

NOW, THEREFORE, the Port Authority and the Lessee, for 

and in consideration of the covenants and mutual agreements 

hereinafter contained, hereby agree to amend the Lease, effective as of June 2, :989, as follows: 

l. (a) In addition to the premises heretofore let to 

the Lessee under the Lease, lne letting as to which shall 

continue in full force and effect, the Port Authority hereby lets 

to the Lessee and the Lessee hereby hires and takes from the Port 

Authority the following: 

- 1 -
ANA-110S8 -. • ".·' I 

' ' ' 

'' ., 

(i) The mechanical and utility room areas 

located on the Mezzanine Inter-Terminal Transportation 

level of Passenger Terminal Building C, which areas are 

shown in hatch on Exhibit AX attached hereto and hereby 

made a part hereof; 

(ii) The areas located on the Departure and 

Concourse/Concession Levels of Passenger Terminal 

Building C as shown in hatch and in stipple on Exhibit 

AX-1 attached hereto and hereby made a part hereof; 

(iii) The areas located on the Arrival Level 

of Passenger Terminal Building C as shown in hatch and 

in stipple on Exhibit AX-2 attached hereto and hereby 

made a part hereof; 

(iv) The areas located on the Operations Level 

of Passenger Terminal Building C as shown in hatch and 

in stipple on Exhibit AX-3 attached hereto and hereby a 

part hereof; 

(v) The crawl space areas in Passenger 

Terminal Building C as shown in hatch on Exhibit AX-4 

attached hereto and hereby made a part hereof; 

(vi) The two aircraft gate position areas, 

aircraft maneuvering areas and ramp and apron areas as 

shown in stipple and in hatch on Exhibit DX attached 

hereto and hereby made a part hereof (the foregoing 

aircraft gate position areas being sometimes referred to 

herein as the "Area D portion of Area C-3" under the 

Lease during the term of the letting of Area C-3 

hereunder); 

together with the fixtures, improvements and other 

property, if any, of the Port Authority located or to be 

located therein or thereon, the said areas, fixtures, 

improvements and other property, if any of the Port 

Authority located or to be located therein or thereon, 

to be and become part of the premises under the Lease, 

as hereby amended, and are designated herein as and 

herein collectively called ''Area C-J'', let to the 

Lessee, subject to and in accordance with all the terms, 

provisions and convenants of the Lease as hereby amended 

for and during the term as set forth b~low. The parties 

acknowledge and agree that the areas added to the 

premises pursuant to this paragraph constitute nonresidential real property. 

possession of 

the effective 

(b) If the Port Authority shall not give 

the areas described in subparagraph (a) above 

date set forth above by reason of the failure 

- 2 -

on 

or 
. '., ' ; ~ - ,, 

' ' 

' refusal of any occupant thereof to deliver possession thereof to 

the Port Authority or by reason of any cause or condition beyond 

the control of the Port Authority, the Port Authority shall not 

be subject to any liability for the failure to give possession on 

said date. No such failure to give possession on the date 

hereinabove specified shall in any wise affect the validity of 

this Agreement or the obligations of the Le~see hereunder, nor 

shall the same be construed in any wise to extend the term beyond 

the date stated in Paragraph 2 hereof. Tender shall be made by 

notice given at least five (5) days prior to the effective date 

of the tender. In the event that notice of tender of the said 

areas is not given for possession to commence on or before three 

hundred sixty-five (365) days after the effective date for the 

commencement of the letting thereof, then this Agreement with 

respect to the letting of the areas described in this Paragraph 

shall be deemed cancelled, except that each party shall and does 

release and discharge the other party from any and all claims or 

demands based on this Agreement, or a breach or alleged breach 

thereof. 

(c) The Lessee acknowledges that it has not relied 

upon any representation or statement of the Port Authority or its 

Commissioners, officers, employees and agents as to the 

suitability of the areas added to the premises pursuant to this 

Paragraph for the operations permitted thereon by the Lease and 

agrees to take the said areas and to use the same in their ''as 

is" condition at the time of the commencement of the letting 

hereunder. Without limiting any of the obligations of the Lessee 

under the Lease, the Lessee agrees that no portion of the 

premises under the Lease will be used initially or at any time 

during the letting thereof which is in a condition unsafe or 

improper for the conduct of the Lessee's operations under the 

Lease, as hereby amended, so that there is a possibility of 

injury or damage to life or property. 

2. The term of the letting of Area C-3 hereunder 

shall commence on June 2, 1989 and, unless sooner terminated, 

shall expire on May 31, 1992. 

3. (a) Area C-3 Annual Rental - The Lessee agrees to 

pay to the Port Authority the following annual rental for the 

Area C-3 portion of the premises (hereinafter referred to as the 

"Area C-3 Annual Rental"): Commencing on June 2, 1989 to and 

including May 31, 1992 an Area C-3 Annual -

the annual 

- 3 -

anal70suppl7-ex 

8 of the Lease, or which shall endanger any person or property therein or thereon; that the Lessee 

expressly hereby assumes all risks in connection with its exercise of said temporary right of 

access; and that nothing herein nor any Port Authority approval or requirement given in 

connection with said temporary right of access shall release or relieve the Lessee from its 

obligations, liabilities and indemnities under the Lease or otherwise. 

(g) With respect to the portion of Added Area 1 shown in diagonal hatch on Exliibit A-1 

hereof and the portion of Added Area 4 shown in diagonal hatch on Exhibit B-1, it is expressly 

understood and agreed that the same are let to the Lessee subject to the right of the Port 

Authority, its officers, employees, agents, representatives and contractors to enter upon the same 

at any time and from time to time to construct thereon and therein, and to maintain, all 

appropriate access stairways and other access facilities (which shall not become part of the 

premises hereunder) suff1cient to provide ingress and egress to and from the parking garage 

structure presently contemplated by the Port Authority to be constructed in the area generally 

located in the front of, and outside of, said portions of the premises; such right of entry for said 

purposes shall be deemed included in and exercised pursuant to and in accordance with Section 

22 of the Lease. The reservation of the said right of entry and the exercise thereof by the Port 

Authority, its officers, employees, agents, representatives and contractors shall not be or be 

construed to be an eviction of the Lessee nor be made the grounds for any abatement of rental nor 

any claim or demand for damages, consequential or otherwise. 

2. (a) Effective as of the Effective Date, the term of the letting of the Area C-3 

portion of the premises under the Lease, as said Area C-3 is defined in Paragraph l of 

Supplement No.8 of the Lease and including the additional areas added or to be added to Area 

C-3 of the premises pursuant to subparagraph (a) of Paragraph 1 above, is hereby extended for 

the period ending on March 31, 2028, unless sooner tenninated, at the Area C-3 rentals in 

accordance with Paragraph 3 below and upon all the terms, covenants, provisions and conditions 

of the Lease, as hereby amended. 

(b) lt is expressly understood and agreed that the extension of the term of Area 

C-3 covered by the foregoing subparagraph (a) of this Paragraph 2 does not and shall not include 

the C-1 and C-2 portions of the premises (as defined above) or any other part of the premises or 

any other area. It is also recognized that the expiration date of the letting of all portions of the 

premises hereunder, other than Area C-3, is and shall remain March 31, 2013 as set forth in 

Section 4 (b) of the Lease as amended by paragraph 2 of Supplement No. 7 of the Lease and that 

said expiration date is not being extended by this Seventeenth Supplemental Agreement, and, 

further, that upon the said expiration date of March 31, 2013 the term of the letting under the 

Lease of all portions of the premises hereunder other than Area C-3 shall expire. 

3. Paragraph 12 of Supplement No.l5 of the Lease is hereby amended to read as 

follows: 

"I. It is hereby agreed that, from and after the Effective Date of Supplement No. 17 of the 

Lease (as said Effective Date is set forth on the first page thereof) and continuing up to and 

TERM C SUPP 17 

6 
ana170supp17-ex 

(ee) for the portion of the term of the letting of Area 

C-3 from January 1, 2019 toDecember31,2023 at 

the daily rate of 

(ff) for the portion of the te1m of the letting of Area 

C-3 from January 1, 2024 to March 31, 2028 at the 

daily rate of~ ... __ . 

(ii) with respect to the Area D portion of Area 

C-3 (as described in Paragraph I (a) (vi) of 

Supplement No.8 of the Lease): Any such 

abatement shall be made on an equitable basis 

giving effect to the amount and character of the said 

Area D portion of Area C-3 the use of which is 

denied to the Lessee as compared with the entire 

Area C-3. 

For the purpose of this Agreement, the measurement of interior building 

space in the aforesaid portion of Area C-3 shall be computed (i) from the inside 

surface of outer walls of the structure of which Area C-3 forms a part; (ii) from 

the center of partitions separating Area C-3 from areas occupied from or used by 

others.H 

6. The following new Section 93 shall be deemed inserted after Section 92A of the 

Lease to read as follows: 

"Section 93. The Expansion Construction Work by the Lessee 

(a) The Lessee shall, prior to its submission to the Port Authority of the plans 

and specifications hereinafter provided for, submit to the Port Authority for its consent, 

the Lessee's comprehensive plan for the Expansion Construction Work, as hereinbelow 

defmed, including but not limited to renderings, layouts, locations, models, estimated 

conunencement and completion dates, and preliminary functional plans ('Comprehensive 

Plan'). The Lessee shall keep the aforesaid Comprehensive Plan covering all portions of 

the Expansion Construction Work up to date and shall submit to the Port Authority for its 

prior approval any amendments, revisions, or modifications thereof, other than field 

changes (except field changes relating to the relocation of Adams Ditch and any work 

affecting the peripheral drainage ditch known as Peddie Ditch.) 

(b) (!) Without limiting the above, the Lessee agrees that said 

Comprehensive Plan shall include the design and construction by the Lessee in, on and 

under the premises and off the premises, where required, of the following: 

TF,.RM C SUPP l7 

l3 
ana170suppl7-ex 

(i) All construction and installation of, and other appropriate, 

necessary or required work for, airline terminal facility capital improvements to 

Passenger Terminal Building C to complete and decorate a completed passenger 

concourse facility in Area C-3 of the premises (said Area C-3 being defined in Paragraph 

I of Supplement No. 8 of the Lease and including the areas added to Area C-3 pursuant to 

Paragraph 1 of the Seventeenth Supplemental Agreement to the Lease) appropriate, 

necessary or required for the expansion of all of the areas thereof and sufficient to handle 

both domestic and international airline passenger traffic, including but not limited to the 

installation of lavatories, stairwells, stairways, escalators, elevators (including freight 

elevators)(' Area C-3 Concourse') and any alterations of and additions to Passenger 

Terminal Building C required or appropriate in connection with Area C-3 Concourse, and 

including without limitation an expansion of the portion of Area D located in Area C-3 so 

as to add thereto a minimum of twelve (12) new air~raft gate positions for wide bodied 

aircraft; 

(ii) The construction and installation of additions and modifications to 

the Fuel System (as defined in Section 54 hereof), including but not limited to 

Distribution Facilities and Tenninal Distribution Units (as such tem1s are defined in 

Section 54 hereof) and underground pipelines, fuel mains, and stubs necessary or required 

to tie into the Fuel System at the Airport to accommodate and serve Area C-3 Concourse 

and all aircraft gate positions located or to be located thereat including without limitation 

all of the aforesaid new aircraft gate positions to be located in the portion of Area D 

located in Area C-3, and also including all necessary, required, or appropriate work to 

make said additions and modifications fully operational as part of the Fuel System; 

(iii) The construction and installation of a new baggage handling 

system, including all related necessary or appropriate work, sufficient to handle the entire 

Passenger Terminal Building C including Concourse C-1, Concourse C-2 and Area C-3 

Concourse; 

(iv) The construction and installation in the Area C-3 Concourse of, 

including all appropriate, necessary or required work for, United States government 

inspection areas (as described in Section 95 hereof) sufficient to handle therein at least 

1,500 international passengers per hour (the 'FIS facilities'); 

(v) INTENTlONALL Y OMITTED 

(vi) TI1e construction and installation of all appropriate lines, 

pipes, mains, cables, manholes, wires, tubes, ducts, assemblies, conduits and other 

facilities required in connection with or relating to the mechanical, utility, 

electrical, storm sewer, sanitary sewer, water, telephone, fire alarm, fire 

protection, gas, heating, ventilation and air conditioning, steam, drainage, 

refrigerating, conunw1ications, and other systems needed for the Expansion 

Construction Work and necessary or required to tie the foregoing into the utility 

TERM C SUPP 17 

14 
anal70suppl7-ex 

access stubs now existing at or within the Passenger Terminal Building C, which 

include water, electrical power, and sanitary service lines, including all necessary 

valves and other equipment and accessories necessary to the use and operation of 

the heating, electrical, water and other utility systems which are to serve the 

premises; 

(vii) All necessary or appropriate tenninal frontage 

improvements sufficient to align with the new roadway configuration planned by 

the Port Authority for the CTA; airside ground roadways; airside ramps; and also 

sidewalks, vehicular service areas, and pedestrian circulation areas, together with 

all related and associated areas and facilities; 

(viii) All grading and paving of ground areas, including without 

limitation, all appropriate, necessary and required work for the full-depth paving 

of all unpaved potiions of the aircraft maneuvering areas in the Area C-3 portion 

of the premises, and for the design and appropriate landscaping together with all 

related and associated work; 

(ix) All work necessary or required to construct additional concession 

areas (as defined in Section 66 hereof) in the Area C-3 Concourse to be made available 

for consumer services as more fully set forth in Section 66 hereof including the 

construction and installation of utility lines which are to serve said concession areas; 

(x) All work necessary or required to tie into Port Authority supply 

lines for high temperature hot water for heating and domestic use purposes only and 

chilled water for air-conditioning purposes only, and in accordance with the requirements 

and specifications as set forth in Section 49 hereof, including all work necessary or 

required to tie into the contemplated expansion of the Port Authority's Central Heating 

and Refrigeration Plant (the "Central Plant"); 

(xi) The grading and paving within Area C-3 of twelve (12) aircraft 

gate positions and aircraft ran1p and apron areas, all taxilanes and all associated and 

related areas and facilities (all of the foregoing to be and fonn part of the Area D portion 

of Area C-3 under the Lease); 

(xii) Construction and installation of all necessary or required blast 

fences; 

(xiii) All other appropriate or necessary work in connection wi.th or 

required by or for the foregoing including without limitation all relamping in the 

premises, all painting, all borings, surveys, route markers, signs, obstruction lights and 

material inspections and all tie-ins to utility lines and roadway access stubs; 

n;RM C SUPP 17 

15 

NEW ISSUE BOOK-ENTRY ONLY 

Ratings: See "Ratings" herein. 

In the opinion of McCarter & Eng/is·\ !.LP, Bond Counsel to .the Authority,,assuming crx,~,.p!iance by the New .)ersey Economic Development • Authority and Continental Airline.s_ Inc. with certain tax cpvenants descr(Qed · ,erefn, under existing law, interest on the Bonds Is 

. excluded from the gross incotr·-· of the owners of the Bonds for federal income tax purposes pursuant to Section 103 of the Internal 

Revenue Code al-1.16, as ar;.ended {the "Internal Revenue Code''), eXcept as to interest on any Bond for any period cfuring 

._ --wti/C!J such[Jond is e/d by a person who is either a "substantia! user" (within the meaning of Section 147 ( -?:) of the Internal 

' A'/IATlON RefMUPdode) f the facilities financed with the proceeds of the Bonds or a "related person" of such "substantial 

\ 

u~er". Interest op the Bonds, however, Is an Item of tax preference under Section 57 of the Internal Revenue Code for 

nll~f, dbmputing alternative minimum tax imposed on individuals and corporations. Bond Counsel is 

F \L 

r (\ .h · h:\.?plnion that interest on the Bonds and any gain on the sale of the Bonds are excluded from l r~ l_ 1 

u. s core under the existing New Jersey Gross Income Tax Act. See "TAX MATTERS" herein. . 

l . ')h... u --·~\ $730,360,000 . 

' New Jersey Economic Development Authority 

Special Facility Revenue Bonds 

{Continental Airlines, Inc. Project), Series 1999 

Dated: September 15, 1999 Due as shown on the inside cover page hereto 

The Bonds will be issued in fully registered form in the name of Cede & Co., as nominee of The Depository Trust Comp8.ny ( "DTC"). 

The ultimate purchasers of the Bonds will own them through the book-entry only system maintained by DTC. The Bonds will be issued in 

denominations of $5,000 and integral multiples In excess thereof. So long as Cede & Co. is the registered owner of the Bonds, the 

principal, purchase price and redemption price, if any, of and interest on the Bonds will be payable by Chase Bank of Texa~. National 

Association, as trustee (the "Trustee"), to DTC. DTC will in turn remit such payments to its participants for subsequent disbursement to 

beneficial owners of the Bonds, as more fully described herein. Interest on the Bonds is payable semiannually on each March 15 and 

September 15, commencing March 15, 2000. 

The Bonds will be subject to redemption prior to maturity, and to mandatory tender prior to maturity, as more fully described 

herein. 

The Bonds are being issued by the New Jersey Economic Development Authority (the "Authority") to finance the design and 

construction of certain passenger terminal and related facilities (the ''Project'') for Continental' Airlines, Inc. at Newark International Airport 

(the ''Airport'') in New Jersey, including a new passenger terminal to be known as ''Concourse C-3''. The Bonds will be issued as special, 

limited obligations of the Authority, payable from and secured by a pledge of certain receipts and revenues of the Authority, comprised of 

certain rental payments payable to the Authority pursuant to two L~ase Agreements described herein between the Authority and 

Continental 

Airlines 

Continental Airlines, Inc. will unconditionally guarantee the payment to the Trustee of all amounts required for the full and prompt 

payment of the principal, purchase price and redemption price, if any, of and interest on the Bonds when due. Continental Airlines, Inc. will 

also enter into a Leasehold Mortgage with the Trustee, pledging to the Trustee its leasehold interest in the portion of the Project comprising 

Concourse C-3 as security for up to $550,000,000 of ,its payment ot obligations with respect to the Bonds. Other than the Leasehold 

Mortgage, the Bonds will not be secured by any other Interest in the Project or the Leased Premises (as defined herein). Further, the Port 

Authority of New York and New Jersey, as operator of the Airport, will not have any obligation whatsoever with respect to the Bonds. 

THE STATE OF NEW JERSEY IS NOT OBLIGATED TO PAY. AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE 

STATE OF NEW JERSEY IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL. PURCHASE PRICE OR REDEMPTION PRICE, IF ANY, OF 

OR INTEREST ON THE BONDS. THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY OUT OF 

THE REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS OF THE AUTHORITY PLEDGED UNDER THE INDENTURE DESCRIBED 

HEREIN AND FROM ANY AMOUNTS OTHERWISE AVAILABLE UNDER THE INDENTURE FOR THE PAYMENT OF THE BONDS. THE 

BONDS DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. THE 

AUTHORITY HAS NO TAXING POWER. 

AN INVESTMENT IN THE BONDS INVOLVES SIGNIFICANT RISKS. For more complete information with respect to the security 

. and sources of payment for the Bonds and certain risks with respect thereto, see "SECURITY FOR THE BONDS" and "CERTAIN 

BONDOWNERS• RISKS" herein. 

AMOUNTS, MATURITIES, INTEREST RATES AND PRICES (ON INSIDE COVER) 

This cover page contains certain information for quick reference only. It is not -intended to be a summary of all factors relating to an 

investment in the Bonds. Investors should read this Official Statement in its entirety before making an investment decision. 

The Bonds are offered when, as and if issued by the Authority and accepted by the Underwriters, subject to prior sale, or withdrawal or 

modification of the offer without notice, and subject to the approving legal opinion of McCarter & English, LLP, Newark, New 

Jersey, Bond Counsel to the Authority. Certain legal matters w/1/ be passed upon for Continental Airlines, Inc. by Jeffery A. 

Smisek, its Executive Vice President and General Counsel, and by its special counsel, Jones, Day, Reavis & Pogue; 

and for the Underwriters by their counsel, O'Mefveny & Myers LLP. The Bonds are expected to be available 

for delivery through the facilities of DTC in New York, New York, on or about September 22, 1999. 

Goldman, Sachs & Co. 

Merrill Lynch & Co. 

Apex Securities Inc. a division of Rice Financial Products Company 

CIBC World Markets Corp. 

J.B. Hanauer & Co. 

September 15, 1999 

Salomon Smith Barney 

Bane of America Securities LLC 

Chase Securities Inc. 

Gibraltar Securities Co. 

Lehman Brothers 
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$730,360,000 

New Jersey Economic Development Authority 

Special Facility Revenue Bonds 

(Continental Airlines, Inc. Project), Series 1999 

$100,275,000 6.625% Term Bonds due September 15, 2012 priced at 105.579% 

(approximate yield 6.00%) 

$184,195,000 6.25% Term Bonds due September 15, 2019 priced at 98.320% 

(approximate yield 6.40%) 

$146,480,000 6.40% Term Bonds due September 15, 2023 priced at 99.392% 

(approximate yield 6.45%} 

$299,410,000 6.25% Term Bonds. due September 15, 2029 priced at 97.359% 

{approximate yield 6.45%) 
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' Investors should rely only on the information contained in this Official Statement No one has been 

authorized to give any different information or to make any other representations. Neither the delivery of 

this Official Statement nor any sale hereunder shall under any circumstances create any implication that 

there has been no change in the affairs of the New Jersey Economic Development Authority or 

Continental Airlines, Inc. since the date hereof. These securities are not be.ing offered in a~y state where 

the offer is not permitted. The New Jersey Economic Development Authority neither has nor assumes any 

responsibility as to the accuracy of the information in this Official Statement (other than ihat under the 

headings "THE AUTHORITY" and '.'NO LITIGATION" (as it relates to the New Jersey Economic 

Development Authority), for which the New Jersey Economic Development Authority,..assumes full and 

sole responsibility). ·· 

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT 

TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF ANY OF THE SECURITIES 

OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN 

MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIE~ ACT OF 1933: AS 

AMENDED, NOR HAS THE INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 

1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF 

SECURITIES LAWS OF THE STATES IN WHICH THE BONDS HAVE BEEN REGISTERED OR QUALIFIED 

AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION'IN OTHER STATES CANNOT BE 

REGARDED AS A RECOMMENDATION THEREOF. 

IN MAKING AN INVESTMENT DECISION, INVESTORS SHOULD RELY ON THEIR OWN EXAMINATION OF THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. NEITHER 

THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS 

APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS OFFICIAL STATEMENT IS 

TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 
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TABLE OF CONTENTS 

Page 

INTRODUCTION .. : . . , ........................... : .... ; ....................... , . . . . . . . . 1 

THE AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

THE AIRPORT . ·. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 

General ......... : ......................... · ......... :. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 

Continental's Operations at the Airport. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 

THE PROJECT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

Project Description ................................... .-. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

Project Stat'~s ..... , ........... , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

APPLICATION OF BOND PROCEEDS.................................................... 10 

SECURITY FOR THE BONDS .·. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0 

The Trust Estate ............ : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 

Principal Source of Payment- Payments of Facility Rent by Continental ....... , . . . . . . . . . . . 10 

Guaranty ....... _.··_.. · ... _ .•. : .. ., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 

Leasehold Mortgage andH~Ietti~g ................ , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 

Additional Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 

ANALYSIS OF POTENTIAL GATE DEMAND................................................ 18 

CONTINENTAL AIRLINES, INC .... : . . , . . . . .. . .. . .. . .. . . .. .. . . .. . .. .. .. .. . . .. . . .. . .. . . . . . 18 

Continental . . .. .. . . .. . .. . . . . .. .. . . . . . . .. . .. . . . .. . .. . .. . . . .. .. . . . .. . .. . . .. . .. . .. . . . . . 18 

Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 

THE BONDS .................................................. , . . .. . .. . . . . . . . . . . .. . . .. 21 

General............................................................................ 21 

Interest Rate Adjustment . . . .. .. . . . .. . . .. .. .. .. . .. . . . . .. . . . . .. .. .. . .. .. . . .. .. . . . . .. . . . 23 

Book-Entry-Only System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 

Mandatory Sinking Fund Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 

Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 

Extraordinary Optional Redemption .. . . . . . . .. .. . .. . . . . . .. . . . .. .. . . .. . .. . .. .. . .. . .. . . .. . 27 

Extraordinary Mandatory Redemption with Respect to Port Authority Leases and Lease 

Agreements .. . . . .. . . . .. .. . .. . . . .. . .. . . . . . .. . . .. . . . .. . . .. .. .. . . .. . .. . .. . .. . . .. . . .. 27 

Special Redemption Upon a Determination of Taxability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 

Extraordinary Mandatory Redemption by the Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 

Extraordinary Mandatory Redemption upon Exercise of Purchase Rights by the 

Port Authority . . .. .. . . .. . . . . . . .. .. . . .. .. . . . . .. .. . . . .. . . .. . .. . . .. .. . . . . . . . . . .. . . . . . . 30 

Selection of Bonds to be Redeemed .................................. :. . . . . . . . . . . . . . . . 30 

Notice of Redemption .. . .. . . . .. .. . . . . . .. . .. .. . . . .. .. . .. . . . . . . .. . . .. . . . . . . .. . . . .. . . . .. 30 

Mandatory Tender of the Bonds....................................................... 31 

CERTAIN BONDOWNERS' RISKS........................................................ 32 

Obligation of Continental as Primary Security; Certain Risks with Respect to Continental . . . . . 32 

Risk Factors Relating to Continental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 

Risk Factors Relating to the Airline Industry. . . .. .. . . . .. . . . . . .. . . . .. . .. . .. .. . .. . . . . .. . . . 35 
. ' 

Certain Considerations Under the United States Bankruptcy Code with Respect to the Lease 

Agreements and the Guaranty ..................................................... . 

Limitations Upon Trustee's Ability to Accelerate Facility Rent ............................ . 

Limitations Upon Trustee's and Bondholders' Ability to Realize Benefits of the Leasehold 

Mortgage ........................................................................ . 

No Direct Interest in Project Insurance or Similar Proceeds .............................. . 

Effect on Bonds of Merger or Other Corporate Reorganization of Continental; Absence of 

Certain Covenants ................................................................ . 

Possible Loss of Tax-Exempt Status of Interest on Bonds ............................... . 

NO l.ITIGATION ...................................................................... . 

RATINGS ............................................................................ . 

AVIATION DEMAND CONSULTANT .................................................... .. 

UNDERWRITING ..................................................................... . 

CONTINUING DISCLOSURE ........................................................... . 

TAX MATIERS ....................................................................... . 

Exclusion of Interest on the Bonds from Gross Income for Federal Income Tax Purposes .... . 

Tax Treatment of Original Issue Discount .............................................. . 

Additional Federal Income Tax Consequences ......................................... . 

State of New Jersey Taxation ........................................................ . 

OTHER LEGAL MA TIERS ............................................................. . 

MISCELLANEOUS .................................................................... . 

APPENDIX A AVAILABILITY OF CERTAIN INFORMATION RELATING TO CONTINENTAL 

AIRLINES, INC. 

APPENDIX B FORM OF OPINION OF BOND COUNSEL 

APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE CONTINUING DISCLOSURE 

AGREEMENT 

APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS 

The Leases 

The Guaranty 

The Indenture 

APPENDIX E ANALYSIS OF POTENTIAL GATE DEMAND 

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$7~0,360,000 

New Jersey Economic Development Authority 

Special Facility Revenue Bonds 

(Continental Airlines, Inc. Project), Series 1999 

INTRODUCTION 

This Official Statement, including its cover page and Appendices, provides information in connection 

with the issuance and sale by the New Jersey Economic Development Authority (the "Authority") of 

$730,360,000 aggregate principal amount of its Special Facility Revenue Bonds (Continental Airlines, 

Inc .. Project), Series 1999 (the "Bon~s';l- The Authority is a public body corporate and politic, 

constituting· an. instrumentality of thy State of New Jersey. See "THE AUTHORITY" herein. . . ' ·"--: '' ; . . . 

· • .• The Authority will issue the Bonds pursuant to an Indenture of Trust dated as of September 1, 1999 

(the "Indenture"), between the Authority and Chase Bank of Texas, National Association, as trustee 

(the! 'Trustee"). The proceeds of the Bonds will be used (a) to -finance the design and construction of 

certain terminal and related facilities and equipment (the "Project") for Continental_ Airlines, Inc. 

("Continental") at Newark International Airport ·(the "Airport") in Newark and Elizabeth, New Jersey, 

including the construction of a new 12- to 19-gate (depending on aircraft size) passenger concourse 

(''Concourse C-3'') adjoining Continental's existing passenger terminal facilities at the Airport, as well as 

certain upgrades and improvements to Continental's existing passenger terminal facilities in Concourses C-1 and C-2 at the Airport and certain improvements to other existing passenger terminal 

facilities in Concourse A-2 at the Airport to be used by Continental, and (b) to fund capitalized interest 

and to pay certain costs of issuance. The Airport serves as one of Continental's principal domestic airport 

hubs. See "THE PROJECT", "APPLICATION OF BOND PROCEEDS", "THE AIRPORT- Continental's 

Operations at the Airport" and "CONTINENTAL AIRLINES, INC.- Continental" herein. 

The Airport is operated by the Port Authority of New York and New Jersey, a body corporate and 

politic, established by a compact between the States of New York and New Jersey with the consent of 

the Congress of the United States (the ''Port Authority''). The Port Authority leases a portion of the real 

property and improvements constituting the Airport from the City of Newark, New Jersey ("Newark"), its 

fee ownec. pursuant to an Agreement of Lease dated October 22, 1947, as amended and supplemented,. 

by and between N.ewark, as lessor, and the Port Authority, as lessee (the "Basic Lease"). The remainder 

of the Airport, which is located in Elizabeth, New Jersey, is owned by the Port Authority. The current 

expiration date of the Basic Lease is December 31, 2031, although it may be subject to earlier termination 

in certain Circumstances . . _ 

The Project will be located at the Airport on two separate sites subleased to Continental by the Port 

Authority pursuant to the following leases: 

• Agreement of Lease (Lease No. ANA-170) dated as of January 11 , 1985, as amended, covering 

Continental's use and occupancy of Concourses C-1 and C-2 and the new Concourse C-3 at the 

Airport (as amended, the "Terminal C Facility Lease"), and 

Amended arid Restated Agreement of Lease (Lease No. ANB-056) dated as of August 1, i999, 

as further amended, covering Continental's use and occupancy of Concourse A-2 at the Airport 

(as amended, the "Terminal A Facility Lease", and together with the Terminal C Facility Lease, 

the "Port Authority Leases"). 

Continental ·currently occupies and uses Concourses C-1 and C-2 at the Airport pursuant to the 

Terminal C Facility Lease; which originally became effective in 1985. Prior to the issuance of the Bonds, 

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Continental and the Port Authority will amend the.Terminal C Facility Lease so that it also governs the use 

and occupancy of the new Concourse C-3-to be constructed" as part of the Project. Continental and the 

Port Authority' havil' reach~a agreeme'Ki\ upon ·and finalized the terms of that amendment Approximately 

96 .. 3% of the available proceeds of the· Bonds,are expected ·to be used to finance the portion of the 

Project consisting of the' construction of the new Concourse C-3 .and upgrades and improvements to 

Concourses C-1 and C-2. 

Continental and the Port Authority have also executed the Terminal A Facility Lease. Approximately 

3J% of the available proceeds of the Bonds are expected to be used to finance the portion ofthe Project 

consisting of improvements to Concourse A-2_ · 

- lnconnection With the Project, Continental and the Authority will enter into ( 1) a Lease Agreement 

(Concourse C-3) dated as of September 1, 1999 (the "Concourse C-3 Lease Agreement") and (2) a 

Lease Agreement (Concourse C-1, C-2 and A-2) dated as of September 1, 1999 (the "Concourse A-2/ 

C-1IC-2-Lease Agreement", and -together with the Concourse C-3 Lease Agreement, the "Lease 

Agreements"), pursuant to which Continental will .sub-sublease to the -Authority (the "Authority 

Sublease"), and the Authority will sulrsub-sublease back to Continental {the "Continental Sublease"), 

Continental's interest in the premises covered by the'Port Authority Leases, including the Project (the 

'.'Leased Premises"). Also under the Lease Agreements, the Authority will lease to Continental up to 

$10.,000,000 of equipment and other personal property :to be financed with the proceeds of the Bonds 

(the "Leased Personal Property" ).:In exchange for its right to sub-sub-sublease .the Leased- Premises 

and to lease the Leased Personal Property from the Authority, Continental will make rental payments to 

the Trustee, as assignee ofthe Authority, in an amount which is sufficient to pay when due the principal, 

purchase price and redemption price, ihmy, of and interest on the Bonds (the "Facility Rent"). 

Continental will also be required to pay the lees of the Trustee and the fees and expenses of the Authority 

in connection with the Project (the "Additional Rent"). See "THE LEASES" in Appendix D hereto .. 

The Bonds will be issued as special, limited obligations of the .Authority, payable from and secured 

by a pledge of certain receipts, funds and revenues of the Authority, including the Facility .Rimt payable 

by Continental under the Lease AgreemenJs, and certain other moneys pledged. therefor under the 

Indenture. Pursuant to the Indenture, the Authority will assign and pledge to the Trustee substantially all 

of its rights and interests in connection with the Continental Sublease under the Lease Agreements, 

inCluding its right to receive Facility Rent thereunder",'' to secure the payment of the Bonds. Pursuant to ·a 

Guaranty Agreement dated as of September 1, 1999 (the "Guaranty"), by and between Ccintiriental and 

the Trustee, Continental will unconditionally guarantee the payment to the Trustee of all amounts 'required 

for the full and prompt payment when due of the principal, purchase price and redemption price, if any, of 

and interest on the Bonds. As security for up to $550,000,000 of its payment obligations under the 

Guaranty, Continental will also grant to the Trustee a leasehold mortgage interest jn its rights under the 

Terminal C Facility Lease and Concourse C-3 Lease Agreement:relating t.o ·the portion of the Project 

comprising Concourse C-3 pursuant to a Leasehold Mortgage dated as of September 1, i 999 (the 

"L:asehold Mortgage"), by and between Continental and the Trustee. · 

The Port Authority will consent to the Lease -Agreements and to· the Leasehold Mortgage in a 

Consent to Subleases and Leasehold Mortgage Agreement, dat~_d as of Septell)ber.J, .1999, among the 

Port Authority, Continental, the Authority and the Trustee{the ''Consent"): The terms of the Consent are 

described in.greater detail under the heading ''Tf:iE,LEASES ~Gons"-0t of Port Authority" in Appendix D ~~- .. . . . . ' 

Besides the Leasehold Mortgage, the Bonds will not be secured by any other interest in the 

Project or the Leased Premises, or by any other _property, including any leasehold. interest or 

other interest of the Port Authority in the Project or the Leased Premises, or by any revenues 

derived by the Port Authority from the operation of the Airport or otherwise. Further, none of 

Newark, Elizabeth and the Port Authority shall have any obligation whatsoever with respect to the 

Bonds. 

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THE STATE OF NEW JERSEY IS NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND 

CREDIT NOR TAXING POWER OF THE STATE OF NEW JERSEY IS PLEDGED TO THE PAYMENT 

OF THE PRINCIPAL, PURCHASE PRICE OR REDEMPTION PRICE, IF ANY, OF OR INTEREST ON 

THE BONDS. THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE 

SOLELY OUT OF THE REVENUES OR'OTHER RECEIPTS, FUNDS OR MONEYS OF THE AUTHORITY PLEDGED UNDER·THE INDENTURE AND FROM ANY AMOUNTS OTHERWISE AVAILABLE 

UNDER THE INDENTURE FOR THE PAYMENT OF THE BONDS. THE BONDS DO NOT NOW AND 

SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. 

THE AUTHORITY HAS NO TAXING POWER. 

AN INVESTMENT IN THE BONDS INVOLVES SIGNIFICANT RISKS. See "SECURITY FOR THE 

BONDS" and :'CERTAIN BONDOWNERS' RISKS" herein, 

The Bonds will be issued in fully registered form·in the name of Cede & Co., as nominee of The 

Depository Trust Company ( "DTC"). The ultimate purchasers of the Bonds will own them through the 

book-entry only system maintained by DTC. The Bonds will be dated September 15, 1999, and initially 

will bear interest at the rates set forth on the inside cover page of this Official Statement, payable on each 

Mwch 15 and September 15, commencing March 15,2000. The final maturity date for the Bonds will be 

September 15, 2029, and the Bonds' will be subject to redemption (in whole or in part) prior to 'maturity 

as described herein, including; in certain circumstances, required mandatory redemption upon the 

expiration, surrender or termination of either the Termiri&l C Facility Lease or the Terminal A Facility Lease 

(both of wh'1oh have terms which do not extend through the final stated maturity of the Bonds) . In 

addition, on or after September 15, 2009, the Bonds (except for the Term Bonds maturing September 15, 2012) may be subject to mandatory tender and a change in interest rate ( s). See "THE 

BONDS- Interest Rate Adjustment" and "-Mandatory Tender of the Bonds" herein. 

Coniinental files reports and other information with ·the Securities and Exchange Commission. 

Certain information with respect to Continental is furnished fn this Official Statement and in Appendix A 

hereto and incorporated in this Official Statement by reference from materials ·on file with the Securities 

and Exchange Commiseion. The information incorporated by reference is considered to be part of this 

Official Statement. See "CONTINENTAL AIRLINES, INC.'' herein and Appendix A- Availability of Certain 

Information Relating to Continental Airlines, Inc. The information incorporated by reference in Appendix A 

and under the head'1ngs "CONTINENTAL AIRLINES, INC.'.' and "CERTAIN BONDOWNERS' RISKSObligations of Continental as ·Primary Security; Certain Risks with Respect to Coniinental- Risk Factors 

Relating to Continental" and "-Risk Factors Relating to the Airline Industry" has been provided by 

Continental and has not been independently verified by the Authority or Goldman, Sachs & Co., as 

representative of the Underwriters. Neither the Authority nor the Underwriters make any representations 

or warranties, express or implied, as to the accuracy or completeness of such information. In addition, 

certain information with respect to the Authority is furnished herein under the captions "THE AUTHORITY" and "NO LITIGATION". The Authority provided such information, and such information has not been 

independently verified by Continental. or the Underwriters, and neither Continental nor the Underwriters 

make any representations 'or warranties, express or implied, as to the accuracy or completeness of such 

information. Further, in connection wi\h the issuance and sale of the Bonds, Continental will agree to 

provide certain annual financial information and notices of the occurrence of certain events, if material. 

See "CONTINUING DISCLOSURE" herein. . . 

Continental .has also retained as its consultant Leigh Fisher Associates ("Leigh Fisher") to consider 

and assess in connection with the offering and.sale of the Bonds Continental's role at the Airport and the 

potential demand for the Concourse C-3 terminal facilities should Continental's operations at the Airport 

be discontinued or substantially reduced. A complete copy of Leigh Fisher's report entitled "Analysis of 

Potential Gate Demand" is included as Appendix E hereto. 

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This Official. Statement contains. certain information and descriptions relating to Continental, the 

Authority, the Project; the Basic Lease, the Port Authority Leases, the Bonds, the Lease Agreements,,.th.~ 

Guaranty, the Leasehold Mortgage,a·continuing disclosure agreement and.the Indenture .. Such information and descriptions are not comprehensiv(l and may not include all of the information that investors m<>y 

believe is important. "Prospective investors should read all of these documents carefully·before deciding 

to invest in the Bonds. Copies of all of these documents are available· from Continental and the 

Underwriters during the initial offering period, and all references to any of the Bonds are qualified in their 

entirety by reference to the definitive form thereof and thejnformation with respect thereto included in the 

aforesaid documents. 

The foregoing Introduction contains only a brief summary of .certain information contained in this 

Official Statement. It is not intended to be complete and is qualified by the more detailed information 

contained elsewhere in this Official Statement. 

THE AUTHORITY 

The Authority was established in 1 97 4 as· a public body corporate and politic, constituting an 

instrumentality of the State of New Jersey pursuant to the New Jersey Economic Development Authority 

Act (the "Act"). The Authority's offices are located 'at 36 West State Street, Trenton, New Jersey . •• ! . . •' . ' -

The Act authorizes the Authority to. finance or aid in financing the acquisition,. construction, 

reconstruction, repair, alteration, improvement and extension of any building, structure, facility or other 

improvement, the purchase and installation of equipment and machinery, and the acquisition and 

improvement of real estate and the extension or provision o( utility services, access roads or other 

appurtenant facilities to be used by or provided for employment-promoting enterprises, either for the 

manufacturing, processing or assembly of materials or products, or for research or office purposes, or to 

reduce, ·abate or prevent environmental pollution derived from the operation of industry, utilities and 

commerce within the State of New Jersey. These include, but are not limited to, pollution control facilities, 

medical and other professional facilities, industrial, recreational, hotel and motel facilities, public utility or 

warehouse uses and commercial and service enterprises. The Authority may finance any such project 

after making a finding that the financing will tend to maintain or provide gainfui employment for the 

inhabitants of the State of New Jersey, will tend to aid, ·assist or encourage the economic development or 

redevelopment of any· political subdivision of the State of New Jersey, will maintain or increase the tax 

base of the State of New Jersey or any political subdivision ofthe State of New Jersey, or will maintain or 

diversify and expand employment promoting enterprises in the State of New Jersey. In order to discharge 

its responsibilities and fulfill those purposes mentioned above, the Authority is authorized to offer various 

financing plans to applicants and to issue and sell bonds and notes for these purposes (including the 

Bonds described herein). · : • .i 

The Act provides that neither the members of the Authority nor any person executing bonds or notes 

issued pursuant to the Act shall be liable personally on such bonds or notes by reason of the issuance 

thereof, and that bonds or other obligations issued by the Authority pursuant to the Act shall not be in any 

way a debt or liability ofthe State of New Jersey or of any political subdivision.thereof and shall not create 

or. constitute any indebtedness, liability or obligation of the .State of New J!lrsey or ·any political 

subdivision thereof, either legal, moral or otherwise. The Act further provides that nothing contained 

therein shall be construed to authorize the Authority to incur any indebtedness on behalf of or in any way . 

obligate the State of New Jersey or any political subdivision thereof. The Bonds will be special, limited 

obligations of the Authority as described under the caption "SECURITY FOR THE BONDS" herein. 

The Authority consists of ten members and three alternate members. Of the ten members, the Chief 

Executive Officer of the New Jersey Commerce and Economic Growth Commission, the Commissioner of 

Labor, the Commissioner of Banking and Insurance and the State of New Jersey Treasurer are ex-officio 

members and the remaining six are public members appointed by the· Governor, with the advice and 

consent of the Senate, all for terms of three years. Anthony R. Coscia is a public member and the 

Chairman of the Authority. Of the six public members, one public member (who shall not be a legislator) 

4 

L 
is appointed by the Governor upon the recommendation of the Senate President, and one public member 

(who shall. not be a legislator) is appointed by the Governor upon the recommendation of the Speaker of 

the General Assembly. Three alternate members are appointed by the Governor with the advice and 

consent of the Senate. Of the three alternate members, one alternate member (who shall not be a 

legislator) is appointed by the Governor upon the recommendation of the Senate President, and one 

alternate member (who shall not be a legislator) is appointed by the Governor upon the recommendation 

of the Speaker of the General Assembly. 

The executive staff of the Authority includes professionals in the fields of industrial and commercial 

development and management, finance and mortgage lending. The Executive Director of the Authority is 

Caren S. Franzini. 

The Authority does not represent or warrant in any way as to the accuracy or completeness of any 

information in this Official Statement, including the Appendices hereto, other than the information 

concerning the Authority under the caption "THE AUTHORITY" and under the caption "NO LITIGATION" 

(as it relates to the Authority) herein. 

THE AIRPORT 

General 

The Airport is located approximately 5 miles south of downtown Newark and is the largest (in terms 

of enplaned passengers) of the three major commercial airports serving the metropolitan New York area 

(i.e., the Airport, La Guardia Airport and John F. Kennedy International Airport). The Airport's passenger 

terminal facilities consist of three terminal buildings with approximately 94 jet aircraft gates. 

As of August 1, 1999, the Airport was served by approximately 51 passenger airlines, including 

14 major and national airlines, 29 non-U.S. flag airlines and seven regional and commuter airlines. The 

Airport is also served by. various charter passenger airlines and all-cargo airlines. Approximately 

32,512,106 passengers used the Airport in 1998 (an increase of 5.2% over 1997), making it the eighth 

largest commercial airport in the United States in terms of passenger traffic, according to the Airports 

Council International. 

Continental's Operations at the Airport 

The Airport is the second largest hub (in terms of enplaned passengers) in Continental's route 

system, alter Houston's George Bush Intercontinental Airport ("Bush Intercontinental"). As of August 1, 

1999, Continental together with its wholly owned subsidiary, Continental Express, lric. ("Express"), 

operated approximately 369 flights daily from the Airport, or 60% of the Airport's average daily 

departures.As of August 1, 1999, approximately 38% of Continental's total scheduled flights and 50% of 

Continental's total capacity (as measured by available seat miles) were conducted at the Airport. The 

drawing on the following page shows each of the rion-stop markets served by Continental and Express 

from the Air[iort as o.f August 1, 1999. 

5 
.. . 

Continental's Newark Hub 

(J) 

--- -·-" -·--.---. 

·-

... 

Takyo 

Honolulu 

Continental Express' 

Newark Hub 

Quebec 

'... •H J'f 

J ,' a 1 ax 

Povt(and 

.. ::_;, ( \ ! 

·,; · '·· I 1 ... Manchester 

-/l ,.., . . Vineyard • 

1' 1 )' N:antucket 

\ L.NewarKY: . .:/··Provtdence 

Mllwliukee,: .- \ \ .. .... ,.-.... Ra rrlsbu rg P.h Jlad elphla \ •·EfaHI.more 

\ (. ----,: l .. 

St. Louis \ -.. .... _.- CmQinna1:t Washington/Dulles i I , ... RIChmp"nd• .N rl Jk 

Lou(§;_vilfe• )../ 0 0 

• 

r K·-···-Gr;;;lf(ef---, C ha,fldue 

; ______ _,.Spattahb,-• '-r:-'. "Seasonal Service 

1· \ oru 'bla 

B!rmingharh • \ ,/YSavannah 

' .'·\.., 

I 

" ; 'J>······ 

Lima\ 

\ 

-

J 

....... _ \ 

-· 

Continental 1

Effective August 1,199

........ 

! 

da Janalro 
Continental currently uses 46 jet gates at the ·Airport, including all of Terminal C and portions of 

Concourse A-2, and uses certain common 'use gates at Terminal B·for international flights. Continental 

also maintains a fiight kitchen, cargo lacilitles,.-aircralt maintenance 'facilities and a training facility ·at the 

Airport. Continental employs more than 11 ,ODD people in the Newark./ New York metropolitan area. 

THE PROJECT 

Project Description 

. . . . : "'· ; . .:0'· 

The Project consists of 

the construction of a new approximately 325,000 square foot concourse· with 12 to 19 gates 

(depending on typeol aircraft) capable of handling domestic or.internationalllights and related· 

facilities at Concourse C-3; · · 

• the construction of a new Terminal C Federal Inspection Services ( "FIS") facility with capacity to 

handle 1 ,50.0 arriving international passengers per hour; 

• the construction of a new approximately 112,000 square foot baggage handling and sortation 

facility for Terminal C; 

• the renovation and mod'1flcation of the existing concourses and support areas at Concourses C-1 

and C-2 and related improvements thereto, including the renovation of Continental's Presidents' 

Club; the renovation of public restrooms; modifications designed to improve passenger fiow; the 

refurbishing of elevators; the relocation of adm-Inistrative offices; the renovation of flight attendant 

crew areas; the modification ol baggage claim areas; the installation of preconditioned air units at · 

certain jet bridges; the construction of an international ticket counter and bag systems; the 

reconfiguratlon of the lobby to expand electronic ticket processing capabilities; the construction of 

a ramp control tower to facilitate the efficient movement of aircraft; and the renovation of ramp 

level airport service facilities; and 

the renovation and modification of gates in Concourse A-2 to provide a total of live gates tor 

Continental, 

includ'1ng for all the aforesaid the purchase and installation of machinery and equipment, all located or to 

be located in either the City of Newark, County of Essex, New Jersey or the City of Elizabeth, County of 

Union, New Jersey. 

Among other things, the Project will expand Continental's capacity at the Airport through the ability 

to handle larger aircraft and will facilitate the further development of the Airport as an efficient 

international hub for Continental. 

In connection with Continental's development and growth plans at the Airport, including the Project, 

the Port Authority will also invest up to $200 million lor the construction of a new parking garage and 

additional traffic lanes at Terminal C. This investment by the Port Authority is not part of the Project. 

Project Status 

Continental has retained Skidmore, Owings & Merrill Architects, PA, in partnership with TAMS 

Consultants, Inc. to serve as its lead architects and JA-Jones GMO asthe construction manager on the 

Concourse C-3 development. Design is approximately 45% complete tor Concourse C-3, approximately 

30% complete tor the Terminal C FIS facility and approximately 35% complete for the Terminal C 

baggage facility. Site preparation is underway, and construction of Concourse C-3 and the FIS facility is 

expected to be completed by April 2002. Construction of the Terminal C baggage facility is expected to 

be completed by June 2001. 

7 ,, 

J 

I 
Continental has retained URS Greiner/Woodward-Ciyde to serve as,its lead architect and Tisliman 

Construction Corporation as the construction manager on the Concourse A-2 development. Design for 

the Concourse A-2 project is approximately 50% complete: Site preparation is underway, and the 

renovation of Concourse A-2 is expected to be completed by Januaryc2001. , 

The miscellaneous improvements to Concourses C-1 and C-2 are either complete or are expected to 

be completed on various dates through October 2001. 

Continental expects that all design and construction costs for the Project will be financed with 

proceeds of the Bonds. Continental further believes that each element of the Project .fa) cari be 

constructed at or below the estimated costs therefor, (b) can be comr>lete_d wiJhin the estimated 

construction schedule, (c) contains only proven technology elements and 0

(d). will constitute fully 

functional airport facilities when completed. 

The diagram on the following page shows the approximate location and major elements of the 

Project. 

8 
"' 

Continental Airlines 

Newark Hub Expansion 

Site Map 

TERMINAL DEVELOPMENT 

-.~ ,y;;., 

, t+1/fJ . ~~ ~• ~, . 

. . .. ..._ 

''ff!M ;J/l -~t"','J< d! OJJi' .., ~~ Q " ~,7, fl~~~~.~~e~~\-l.r,_ ,/i/ICJ <':Z'l. - l- li: 

<:':'"_4_o'i.i~i~;J\1V Ramp Control Tower • -~ ... .:;::::;:-,I . ~ ~ =--~_____:·"_' ~· . "' -·- -

.·. . BaggageSystem ,8\'J ,r;~;:::'1.f~i~~-:~ 

v\ 

~~nrse 

. ; 

C2 ' 

, H.;t_, 

. 

' ,.~· '·1"'~--:;-/ 

"~"~'"":~'ir:J;:::-:;·t:-"" 

,._~,..~ 

~.~ 

\'' c._,.,,'(- ·"f' ?"' 

·, \\ · 't c':c:-·2i·~-.;. ~t.~*' 

\' \), . Presidents Club '1;"'~- ~f'lj 

)Concourse C3 and T~rminal E . rtf ;lfJ 4 "· . 

_ . xpanswn :l\ ~- ,·,.---""'~~~,. _. -;,• ;-.~.. ~ 'I \ \\ . ~ ·-·~ ~'"' ~-JC 'L- i!).1<,. E \ · · · · '" -> {' rfo~;-. ':'·\ 1 C~ Aircraft Parking \' "'-~ \ (f,i·:f~~u :) :) J '\ ~ } '"'

~~ 

·I> . ' ' ' 1c·'•, ., \ \ •v:;:\, • <>' .. ~~11!1---:::4· b' (c;,r' - '1 /#· _,. l~ . ' ..,:\.\ .~.~ · - . · . } I "'I ) '#',1 ,.;Jt ~"-.... ..._.;.-..........._--.;.,. <'·-..'~"="',;,_,.. "' -:---~:--.. _.r-;:,,~,.,...- /;>"',"' ,....-..-,/ ~-r'l: ,./ ;:,~-t J! '\.: \'' -\ .. \ ~~- ~..._;- ..... :-...,..,....,'· .. ~:~.\.,.-/ ,.._,.,.....-.~~ /'1') ..:i""·."'""\~' · ' , ' -"" -r- - --:::~ ~ ' -~ .?":-.. • ' • ---<' '" 

\\ \ ',i . . .. \\ r j ("':~...::.::::;y-'~-<'%/r/::::::::2-::-.//"''->":::;:-'.:.~ 

I•, 1\. \·'-_' .· \\ • 1/ 1 

.. ,\ ~\\ ._, .\\ :_},~:~::> FIS / Facilit;'r-- '-,\-":',F~~~]I J} 't" '""-"-',/! <),,"' · "•<'-..

""'"

.,\ . -\\.' . *' . . . \\ .":J•' y·',/ v ' f·... ~"'"';; 

l---~~·c_·._:;··- ': . 'C'·, ---'";..>--~ .-~--~ --="'->·-- ' /1 ' 

.,... . '<·· _j--;:.:_;····1· _,...-----:%.--;-:::~::::------j-1 I '( ? -:;_./ _...-"""%·--------~.;;. __ :::-p~-- ""'· p";' I· )!>,__\. r"___.v-

--~·-" 

• ._.,;;;f;J::;.._.. ,..., ..... - --.. ..._~ ...- \ • 

, ----._. -::-..---"' ---...... ~..,;..:;.."'" 1 r'" 1 >.,.-... .... ,_.:_~ (\!t~ ---~· '"" 

-- -- -~ -·- ---·-
APPLICATION OF BOND PROCEEDS ' - .-,~,..-, ._ .. , - ',,.,,.,._., . .,._,_, . ~,.. "'"'- '""'~·--<~·>••"" ··' _ . ., 

The following table sets forth the anticipat.ed application of Bond proceeds, exclusive of accrued 

interest: · ·' ~-"--... 

' Deposit to Construction Fund .............. > ._., ............. . Deposit to Capitalized Interest Fund ........ / ... ~· ... ": :· ...... . 

Costs of Issuance (includes Underwriters' discount) .......•..... 

Original Issue Discount ... ' .......... ,/ ... ............ ; .... . 

Principal Amount of Bonds : .. , ...... .f ...... · ................. . 

SECURITY FOR THE BONDS . 

The Trust Estate 

$622,373,865.37 

94,749,350.12 

6,938,634,26 

6,29s.1so:2s· ·· 

$730,360,000.00 

Pursuant to the Indenture, the Authority will irrevocably assign and pledge to the Trustee, as security 

for the Bonds, certain of its interests in the Continental Sublease under the Lease Agreements, including 

its right to receive payments of Facility Rent from Continental in an amount sufficient to pay the principal, 

purchase price and redemption price, if any, of and interest on the Bonds. The Authority will retain only its 

rights to (a) release and indemnification, (b) receive payment of certain costs and expenses, 

(c) enforce certain public purpose covenants undertaken by Continental pursuant to the Lease 

Agreements, (d) receive certain notices and reports or obtain information pursuant to the Lease 

Agreements and (e) exercise certa'1n rights and remedies, including, without limitation, the right to 

require an extraordinary mandatory redemption of Bonds in certain circumstances. See "THE BONDSExtraordinary Mandatory Redemption by the Authority" below. 

All moneys and securities received by the Trustee under the Indenture and held by the Trustee in the 

funds established thereunder (other than the Rebate Fund and the Bond Purchase Fund) are pledged as 

security for repayment of the Bonds. In this regard, the Indenture establishes a Construction Fund, a 

Capitalized Interest Fund and a Debt Service Fund into which certain proceeds of the Bonds will be 

deposited upon issuance. See "APPLICATION OF BOND PROCEEDS" above and "THE INDENTURE" in 

Appendix D hereto. 

Besides the Leasehold 'Mortgage described under the heading "- Leasehold Mortgage aiid 

Reletting" below, the Bonds will not be.secured by any other interest in the Project or the Leased 

Premises, by any other property,- includin~(any leasehold interest or other inter,est of the Port 

Authority in the Project -Or the Leased Premises, or by any revenues derived by the Port Authority 

from the operation of the Airport or otherwise. Further, none of Newark, Elizabeih and the Port 

Authority shall have any obligation whatsoever. with respect to the Bonds. 

THE STATE OF NEW JERSEY IS NOT OBLIGATED TO PAY, AND NEITHEHTHE FAITH AND 

CREDIT NOR TAXING POWER OF THE STATE OF NEW JERSEY IS PLEDGED TO THE PAYMi:NT 

OF THE PRINCIPAL, PURCHASE PRICE OR REDEMPTION PRICE, IF ANY, OF OR INTEREST ON 

THE BOND.S. THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE 

SOLELY OUT OF THE REVENUE¢ OR OTHER RECEIPTS, FUNDS OR MONEYS OF THE AUTHOR~ 

ITY PLEDGED UNDER THE INDENTURE AND FROM ANY AMOUNTS OTHERWISE AVAILABLE 

UNDER THE INDENTURE FOR THE PAYMENT OF THE BONDS. THE BONDS DO NOT NOW AND 

SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORitY. 

THE AUTHORITY HAS NO TAXING POWER.' 

Principal Source of Payment- Payments of. Facility Rent by Continental 

The principal sources (other than unspent Bond proceeds, if.any) for the payment of the principal, 

purchase price and redemption price, if any, of and interest on the Bonds will be the payment by 

Continental of Facility·Rent"llriderthe Lease Agreements arid any ·amoUritil"payable'under the Guaranty 

(as described under "- Guaranty" below). Under the Lease Agreements, Continental is obligated to 

10 
pay' to the Trustee, as assignee of the Authority, Facility Rent in an amount equal to the principal, 

purchase price and redemption price, if any, of and interest on the Bonds, when due. 

The Lease Agreements provide that the obligation of Continental to pay Facility Rent is an absolute 

and unconditional general obligation of Continental. Payment of such amounts. will be dependent upon 

the financial condition and results of operations of Continental. For a description of certain risks relating to 

Continental and its obligation to pay Facility Rent under the 'Lease Agreements, see "CERTAIN 

BONDOWNERS' RISKS- Obligation of Continental as Primary Security; Certain Risks with Respect to 

Continental" herein. · 

Guaranty 

· The owners of. the Bonds are also entitled to the benefits of the Guaranty from Continental to the 

Trustee under which Continental will unconditionally guarantee to the Trustee, for the· benefit of the 

owners of the Bonds, the full and prompt payment of the principal, purchase. price and redemption price, 

if any, 'of and interE?st on the Bonds when and as any of the same· become due and payable as provided in 

the lndenture:The obligations of Continental under the Guaranty are intended to be independent of those 

set out in the Lease Agreements and to be enforceable without regard to the validity or enfOrceability of 

the Lease Agreements or any obligation of Continental contained therein. However, a bankrupicy court 

could limit a claim against Continental under both the· Lease Agreements and':the. Guaranty. See 

"CERTAIN BONDOWNERS' RISKS -Certain Considerations Under the United States Bankruptcy Code 

with Respect to the Lease Agreements and the Guaranty" herein.· · · 

Leasehold Mortgage and Reletting 

Security Interest; Mortgage Amount. Continental's obligation to make payments under the Guaranty 

with respect to up to $550 million (the "Mortgage Amount") of the obligations guaranteed thereunder 

will be secured by a mortgage of Continental's leasehold interest in Concourse C-3 pursuant to the 

Leasehold Mortgage. The Mortgage Amount is based upon the amount of the initial Bond proceeds 

allocable to the construction and financing costs for Concourse C-3 and may be increased by up to 

$150 million with respect to the same amount of any additional bonds .issued under the Indenture on a 

parity with !he Bonds, provided that the proceeds of such additional bonds are expended on Concqurs.e C-3 prior to the scheduled completion date for Concourse C-3 under the Terminal C Facility 

Lease. Any obligations of Continental under the Guaranty in excess of the Mortgage Amount or not 

otherwise satisfied by the exercise of rights under· the Leasehold Mortgage will be unsecured. See 

"CERTAIN BONDOWNERS' RISKS- Limitations Upon Trustee's and Bondholders' Ability to Realize 

Benefits of the Leasehold Mortgage- Limitations on Receipts From Leasehold Mortgage; Obligations 

Undersecured." 

Foreclosure. Upon the occurrence and continuation of an "event of default" under .tihe.Leasehold 

Mortgage, the Trustee, acting on behalf of Bondholders, may foreclose upon the Leasehold Mortgage by 

seeking to (a) take possession of Concourse C,3 from Continental, i.f necessary, and (b) have 

Continental's leasehold interest in Concourse C-3 assigned to a succe.ssor tenant. that satisfies the 

conditions set forth under ''-Obligations of Qualiiying Replacement Tenant- Qualification Standards" 

below (a "Qualifying Replacement Tenant"). The Qualifying Replacement Tenant would also be required 

to ,assume Continental's obligations under the Concourse C-3 Lease Agreement with respect to the 

Bonds (or make other arrangements with the Trustee) and to meet the other conditions described under 

"-Obligations of Qualifying Replacement Tenant" below, including the payment of a "deferred reletting 

fee" to the Port Authority. · 

The "events of default" under the Leasehold Mortgage (each a "Leasehoid Mortgage Event of 

Default") include: 

(a) the Trustee's receipt of a notice from the Port Authority to the effect that Continental is in 

default under the Terminal C Facility Lease and that the Port Authority has elected to terminate the 

11 
I 

I. 

i 

I 

! 

,. 

l 

Terminal C Facility Lease pursuant to its terms as it pertains io Concourse C-3, so long as such 

notice has not been revoked (a "Lease Default"); 

(b) a failure by Continental· to pay all amounts when ·due with respect -to the Bonds in 

accordance with the Guaranty; or 

(c) the election of at least 51% of all Bondholders. to pursue their remedies under the 

Leasehold Mortgage if ( 1 ) the Trustee has received a .statement of account from the Port Authority 

to the effect that Continental is delinquent in its payment obligations under the Terminal C Facility 

Lease in an amount greater than $7.1 million (approximately 60 days' rent, including flight fees, due 

to the Port Authority with respect to Concourse C-3 under the Terminal C Facility Lease) and 

( 2) Continental has failed to pay such amount (other than amounts disputed in good faith) within 

20 days after receiving a warning notice from the Trustee (the events in (b) and (c) each being a 

"Bond Default"). 

Conditions Precedent to Foreclosure. The Port Authority may not terminate ihe Terminal C Facility 

Lease as it pertains to cor1,course C-3 so long as Continental's interest in Concourse c.3 is .encu-mbered 

by the Leas.ehold Mortgage. To preseNe the effectiveness of the Leasehold Mortgage, h:owever, the 

Trustee must take the actions described in this subsection following any Leasehold Mortgage Event of 

Def<tult. /(any of these.conditions were not satisfied or complied with. by the Trustee in· a timely 

manner, the Leasehold Mortgage would terl!linate and the Trustee and Bondholders would be 

forever precluded from foreclosing upon the Leasehold Mortgage. 

1. Notice. Within 30 days after a Leasehold Mortgage Event of Default, the Trustee must give 

notice to the Port Authority of its intent to foreclose upon the Leasehold Mortgage and I or seek the 

assignment of Continental's leasehold interest in Concourse C-3 to a Qualifying Replacement Tenant 

(ihe "Foreclosure Notice"). · · ,- ' . ·,, . . 

• 2. Foreclosure Proceedings and Removal of Continental. The Trustee must identify a Qualifying 

Replacement Tenant to assume from Continental its leasehold interest in Concourse C-3 within 

270 days. (i.e., approximately nine. months) following the Trustee's delivery of a Foreclosure Notice 

(the "Initial Foreclosure Period"). The Qualifying Replacement Tenant must satisfy the requirements 

described below under"- Obligations of Qualifying Replacement Tenant". It Continental does not 

agree voluntarily to assign its leasehold interest in Concourse. C-3 to a Qualifying Replacement 

Tenant, or if Continental fails to vacate Concourse C-3,.· the Trustee niust commence appropriate 

legal proceedings wit~in the first 90 days of the Initial Foreclosure Period and diligently pursue such 

proceedings to secure (a) Continental's removal from Concourse C-3, if necessary, and (b) the 

assignmertt- of Continental's leasehold interest in Concourse C-3 to a Qualifying Replacement 

Tenant. The Initial Foreclosure Period may be extended for up to an additional 450 days (i.e., 

approximately 15 additional months, tor a total of approximately 24 months) if the Trustee has 

secureifthe commitment of a Qualifying· Replacement Tenant prior to the expiration of the Initial 

Foreclosure Period and if pending legal foreclosure proceedings are the sole obstacle then 

. preventirig a Qualifying Replacement Tenant from taking possession of Concourse C-3 (the Initial 

Foreclosure Period, as it _may be extended, is hereafter referred to as the "Foreclosure Period"). 

If Continental:s leasehold interest in Concourse.C-3 has not been assigned to, and assumed by, 

a Qualifying Replacement Tenant by the end of the Foreclosure Period, the Leasehold Mortgage will 

be deemed expired and terminated and of no further force or effect. No assurance can be given that 

the Trustee will have sufficient time to complete any necessary foreclosure proceedings during the 

Foreclosure Period. See "CERTAIN BONDOWNERS' RISKS- Limitations Upon Trustee's and 

Bondholders' Ability to Realize Benefits of the Leasehold Mortgage". 

3. Foreclosure Period Payments. Except as described below under "-Certain Bankruptcy 

Matters," to preserve the effectiveness of the Leasehold Mortgage upon the commencement of and 

during the continuation of the Foreclosure Period, the Trustee must make certain ongoing payments 

to the Port Authority pursuant to the Terminal C Facility Lease, to the extent such payments are not 

12 
being made by Continental, including payments in respect of (a) the ground rentals payable by 

Continental under the Terminal C Facility Lease with respect to Concourse C-3 (".Ground Rent"), 

(b) the "airport service factor charges" payable by Continental under the Terminal C Facility Lease 

with respect to Concourse C-3 (the "Airport Service Factor Charges") and (c) the flight fees, fuel 

gallonage fees, monorail fees and other activity-based fees payable by Continental_ under the 

Terminal C Facility Lease,. to the extent allocable to Concourse C-3 and provided the Port Authority 

has sought to prevent Continental from using Concourses C-1 and C-2 (the "Activity-Based 

Charges"). In addition, the Trustee might also be required to (a) reimburse the Port Authority for 

expenses in connection with its provision of utilities, security and maintenance services supplied in 

satisfaction of Continental's obligations under the Terminal C Facility Lease in respect of Concourse C-3 during the Foreclosure Period (the "Utilities, Security and Maintenance Costs") and 

(b) pay to the Port Authority certain additional fees to compensate it for the p~eservation of the 

effectiveness of the Leasehold Mortgage (the "Additional Fees") .The following table summarizes 

the scope of the payments that the Trustee could be required to make to the Port Authority during 

the Foreclosure Period to preserve the effectiveness of the Leasehold Mortgage: 

Payment Period 

Upon Delivery of Foreclosure Notice 

0-90 days after delivery of Foreclosure Notice 

91-180 days after delivery of Foreclosure 

Notice (available only if foreclosure 

proceedings have previously commenced and 

are being diligently pursued) 

181-270 days after delivery of Foreclosure 

Notice (available only if pending foreclosure 

proceedings are being diligently pursued) 

13 

Payment Obligation 

Accrued but unpaid Ground Rent; Accrued 

but unpaid Airport Service Factor Charges; 

Up to 60 days of accrued but unpaid 

Activity-Bas.ed Charges, provided the Port 

Authority has sought to prevent 

Continental from using Concourses Cc 1 

and C-2 · 

Current Ground Rent; Current Airport 

Service Factor Charges; Utilities, Security 

and 'Maintenance Costs; Current ActivityBased Charges, provided the Port 

Authority has sought to prevent 

Continental from using Conco'urses C-1 

and C-2 

Current Ground Rent; Current Airport 

Service Factor Charges; Utilities, Security 

and Maintenance Costs; Current ActivityBased Charges, provided the Port · 

Authority has sought to prevent 

Continental from using Concourses C-1 

and C-2 

Current Ground Rent; Current Airport 

Service Factor Charges;- Utilities, Security 

and Maintenance Costs; Up to $3 million in 

Additional Fees for this period, prorated 

and payable monthly (i.e., $1 million per 

month) in advance; Current Activity-Based 

Charges, p(ovided the Port Authority has 

sought to prevent Continental from using 

Concourses C-1 and C-2 
Payment Period 

271-360 days after delivery of Foreclosure 

Notice (available only if a Qualifying 

Replacement Tenant has been secured and 

foreclosure proceedings are continui~_g) 

361-540 days 'alter delivery of Foreclosure 

Notice (available only if a Qualifying 

Replacement Tenant has been secured and 

foreclbst:ire proceedings are continuing) 

541-720 days after delivery of Foreclosure 

Notice (available only if a Qualifying 

Replacement Tenant has been secured and 

foreclosure proceedings are continuing) 

. . -:- · •• ..,:,·.· ,. __ .; . .:;,c 

Payment Obligation 

Current Ground Rent; Current Airport 

Service Factor Charges; Utilities, Security 

and Maintenalice Costs; Up to $3 million in 

Additional FeeiHor this period, prorated 

and payable monthly· (i.e., $1 million per 

mohUi) in advan·ce; ·Current Activity-Based 

Charges; provided the Port· Authority has 

sought to prevent Continental from using 

Concourses C-1 and C-2 · 

Current Ground Rent; Current'Airport 

Service FaCtor Charges; Utilities, seduJity 

and Maintenance Costs; Up to $12 million 

in Additional Fees for this period, prorated 

and payable monthly (i.e., $2 million per 

month) in advance; Current Activity-Based 

Charges, provided the Port Authority has 

sought to prevent Continental from using 

Concourses C-1 and C-2 

Current Ground Rent; Current Airport 

Service Factor Charges; Utilities, Security 

and Maintenance Costs; Up to $18 million 

in Additional Fees for this period, prorated 

and payable monthly (i.e., $3 million per 

month) in advance; Current Activity-Based 

Charges, provided the Port Authority has 

sought to prevent Continental from using 

Concourses C-1 and C-2 

The Indenture establishes a Leasehold Mortgage Reserve Fund for use by the Trustee in the 

event that a foreclosure under the Leasehold Mortgage becomes necessary and the Trustee incurs 

payment obligations to the Port Authority pursuant to the Leasehold Mortgage to preserve its 

effectiveness while a Qualifying Successor Tenant is being secured. Upon completion of the portion 

of the Proje9t comprising Concourse C-3, Continental is required under the Concourse C-3 Lease 

Agreement to fund the Leasehold Mortgage Reserve Fund with a cash deposit or direct pay letter of 

credit or surety bond with a value equal to $9 .6 million. Such amount is estimated to be sufficient to 

cover any payment obligations that the Trustee may be required to pay to the Port Authority through 

the end of the first 90 days of the· Foreclosure Period to preserve the effectiveness of the Leasehold 

Mortgage. However, no assurance can be given that the Leasehold Mortgage Reserve Fund will 

provide sufficient funds to cover all o.r any portion of the payments required during this or any other 

part of the Foreclosure Period to preserve the effE)ctiveness of the Leaseho.ld Mortgage. See 

"CERTAIN BONDOWNERS' RISKS- Limitations Upon Trustee's and Bondholders' AbHity to Realize 

Benefits of the Leasehold Mortgage''. At the direction of Bondholders, the Leasehold Mortgage 

Reserve Fund. may instead be used to repay a portion of the Bonds upon and following a Leasehold 

Mortgage Event of Default, in which case the Leasehold Mortgage would terminate. 

4. Buy Out Rights of Port Authority Prior to Foreclosure. Following a Leasehold Mortgage Event 

of Default, the Port Authority will have the right to purchase the Leasehold Mortgage from the 

Trustee for an amount equal to the Mortgage Amount plus accrued interest to the date of purchase. 

14 
such amount would be used to redeem Bonds but may be insufficient to repay all of the thenoutstanding Bonds. See "CERTAIN BONDOWNERS' RISKS c--c Limitations Upon Trustee's and 

Bondholders' Ability to Realize Benefits of the Leasehold Mortgage" and "THE 

BONDS - Extraordinary Mandatory Redemption Upon Exercise of Purchase Rights by the Port 

Authority". 

Certain Bankruptcy Matters. If any bankruptcy proceedings involving Continental are instituted while 

the Leasehold Mortgage remains in effect, the obligations of the Trustee to take the actions (including 

making certain required payments) described above under"- Conditions Precedent to Foreclosure" in 

order to preserve its and the Bondholders' rights to foreclose upon Continental's interest in Concourse C-3 will be suspended until the earliest to occur of (a) the "rejection" of theTerminal C Facility 

Lease by Continental as debtor-in-possession or by its bankruptcy trustee, (b) the 'assignment of the 

Terminal C Facility Lease to any other entity or person by Continental as debtor-in-p'ossession or by its 

bankruptcy trustee or (c) the conclusion of such bankruptcy proceedings. During the pendency of any 

bankruptcy proceedings, Bondholders could be precluded from foreclosing upon Continental's leasehold 

interest in Concourse C-3. See "CERTAIN BONDOWNERS' RISKS- Limitations Upon Trustee's and 

Bondholders' Ability to Realize Benefits of the Leasehold Mortgage". 

1. Refection of Terminal C Facility Lease. In the event that the Terminal C Facility Lease is 

"rejected" by Continental as debtor-in-possession or by its bankruptcy trustee, the Port Authority 

has agreed that the Trustee will have the right for a 90-day period following the later of the date of 

the bankruptcy court's approval of the rejection of the Terminal C Facility Lease and the effective 

date of the rejection of the Terminal C Facility Lease (the "rejection date") to identify a Qualifying 

Replacement Tenant for Concourse C-3 to succeed to Continental's interests in Concourse C-3 as 

Continental's "deemed assignee". To preserve such right, however, the Trustee would be required 

to (a) give notice to the Port Authority within 30 days after the rejection date of its intent to seek a 

Qualifying Replacement Tenant, (b) pay to the Port Authority all current and previously accrued 

Ground Rents and Airport Service Factor Charges, as well as up to 60 days of accrued but unpaid 

Activity-Based Charges, in each case as they become due under the Terminal C Facility Lease from 

and after the rejection date, and (c) institute appropriate legal proceedings, if necessary, to remove 

Continental from Concourse C-3. Any Qualifying Replacement Tenant identified by the Trustee to 

succeed to Continental's interest in the Terminal C Facility Lease following a "rejection" of the 

Terminal C Facility Lease in a bankruptcy would also have to satisfy the requirements described 

below under"-'--- Obligations of Qualifying Replacement Tenant", 

2. Assignment of Terminal C Facility Lease. If the Terminal C Facility Lease is assigned to 

another entity or person by Continental as debtor-in-possession or by its bankruptcy trustee, and 

assuming the Leasehold Mortgage remains unaltered and in full force and effect in connection 

therewith, upon any then-current or subsequent Lease Default (involving the assignee of the 

Terminal C Facility Lease) or Bond Default (involving (a) the assignee of the Terminal C Facility 

Lease if it has also assumed Continental's obligations under the Concourse C-3 Lease Agreement, or 

(b) Continental if the assignee has not assumed Continental's obligations under the Concourse C-3 

Lease Agreement), the Trustee would again be required to take the actions described above under 

"- Conditions Precedent to Foreclosure" to preserve and effect its right to foreclose upon the 

assignee's interest in Concourse C-3. 

3. Conclusion of Proceedings. Upon Continental's emergence from any bankruptcy proceedings, and if the Terminal C Facility Lease was not "rejected" or assigned to another person or entity 

during the bankruptcy proceedings, the Trustee would be required to take the actions described 

above under "-Conditions Precedent to Foreclosure" to preserve and effect its right to foreclose 

upon Continental's leasehold interest in Concourse· C-3 on account of any then-current or subsequent Lease Default or .Bond Default involving Continental. 

15 

. I 
<L 

Obligations of Qualifying Replacement Tenant· The following requirements and obligations are 

applicable to any Qualifying Replacement Tenant identified by the Trustee to succeed to Continental's 

interests in Concourse C-3 upon the Trustee's foreclosure under the Leasehold Mortgage: 

1. Assignment and Assumption Agreement. The Qualifying Replacement Tenant must execute 

an assignment and assumption agreement with the Port Authority agreeing to be bound by -the terms 

of the Terminate Facility Lease (but-only with respect to Concourse C-3) as if it were the original 

tenant thereunder, except that the Qualifying Replacement Tenant may (with the Trustee's 

approval) agree to lease Concourse C-3 for a term that is less than the remaining term of the 

Terminal C FacHity Lease. 

l'· . . :. . . ' . 

2. Assumption of Authority Financing Obligations. The Qualifying Replacement Tenant must 

also assuni{or succeed to Continental's obligations under the Concourse C-3 Lease Agreement, or 

enter into new arrangements with the Trustee requiring the Qualifying Replacement Tenant to make 

payments.directl/to the Trustee in respect _of the Bonds. 

3. Payment of Accrued Continental Obligations and Deferred Reletting Fee. Upon or prior to 

accepting the assignment and assumption of Continental's leasehold interest in Concourse C-3, the 

Qualifying Replacement Tenant (or the Trustee) must also pay to the Port Authority: 

(a) all accrued Ground Rent, Airport Service Factor Charges, Activity-Based Charges and 

. Utilities, Security and Maintenance Costs previously owed and unpaid by the Trustee pursuant 

to. the Leasehold Mortgage, together with accrued interest thereon at the Port Authority's thenprevailing late charges rate; and 

(b) a "deferred reletting fee" equal to the product of ( 1) the Mortgage Amount multiplied 

by (2) 2% if the default under the Leasehold Mortgage that gave rise to the assignment is a 

Bond Default, 3% if the default is a Lease Default or 4% if there were both Bond and Lease 

Defaults, further multiplied by ( 3) a fraction, the numerator of which is the greater of five or the 

number of full years then remaining under the scheduled lease term for the Terminal C Facility 

Lease and the denominator of which is the total number of originally scheduled lease term years 

for the Terminal C Facility Lease, which deferred reletting fee may be paid upon the commencement of the reletting or in installments with interest over the lesser of (i) ten years and (ii) the 

remaining number of scheduled lease term years for the Terminal C Facility Lease for which the 

Qualifying Replacement Tenant is obligated. 

4. Qualification Standards. Any proposed replacement tenant must be approved by the Port 

Authority, which will reasonably consider whether the proposed Qualifying Replacement Tenant will 

be able to fulfill all of Continental's obligations as lessee of Concourse C-3 for the tenm of its tenancy 

(e.g. whether it is a major domestic or international "scheduled aircraft operator" (as defined in the 

Terminal:c Facility Lease) or a consortium of such carriers, each of which must be jointly and 

severally responsible for the consortium liabilities). In addition, the Port Authority will reasonably 

consider whether such proposed replacement tenant, together with each of its members if it is a 

consortium, satisfies the following conditions: (a) it has financial resources that are sufficient, in the 

opinion of the Port Authority, to fulfill all obligations as the lessee of Concourse C-3 for the term of its 

ten,.ncy, (b) it and its 20% owners have a good reputation for integrity and financial responsibility, 

(c) it and all of its officers, directors, partners, or 20% owners have had no prior "unfavorable 

experience" (as defined in the Terminal C Facility Lease) with the Port Authority, (d) it and all of its 

20% owners·have no "conflict of interest" with the Port Authority or any of its commissioners under 

applicable policies and laws, and (e) it and all of its 20% owners have not been the subject of 

bankruptcy proceedings during the prior five years. A 20% owner refers to any person, firm or 

corporation having an outright or beneficial interest in 20% or more of the monies invested in the 

proposed Qualified Replacement Tenant, and if said Qualified Replacement Tenant is a corporation 

or partnership, by loans thereto, stock ownership therein or any other form of financial interest. 

i6 
The Authority's consent will also be requ·ired for any Qualifying Replacement Tenant who 

succeeds to Continental's interests under the Concourse C-3 Lease Agreement, although such 

consent may riot be unreasonably withheld. The Concourse C-3 Lease Agreement further provides 

that any such successor must, among other things, (a) obtain an opinion of counsel to the effect 

that its assumption of the Project would not impair the excludability of interest paid on the Bonds 

from gross income for purposes of federal income taxation and (b) agree to operate or cause the 

Project to be operated as an authorized project under the.Act. 

There can be no assurance that tlie Trustee will be able to locate. a replacement tenant capable 

of satisfying all of the foregoing requirements. See "CERTAIN BONDOWNERS' RISKS- Limitations 

Upon Trustee's and Bondholders' Ability to Realize Benefits of the Leasehold Mortgage- Limitations on Successor Tenants" herein. 

No Subsequent Mortgages. A Qualifying Replacement Tenant that succeeds to Continental's 

interests in. Concourse C-3·. as a result of the Trustee's exercise of its rights under the Leasehold 

Mortgage must ·separately abide by its commitments to (a) the Port Authority under the terms of its lease 

relating to concourse C-3 and (b) the Trustee and Bondholders pursuant to the Concourse C-3 Lease 

Agreement• or•silch 'other arrangements as may be made between the Trustee and such Qualifying 

Replacement Tenant to secure repayment of the Bonds. Neither the Trustee nor Bondholders would have 

any further leasehold mortgage rigC\ts with respect to Concourse C-3 or any other portion of the Project if 

the Qualifying ReplacementT enant were to breach either such commitment. 

Analysis of Aviation Demand. In addition to the factors and conditions described abcve, the 

likelihood that .the Trustee would be able to find a Qualifying Replacement ,Tenant for Concourse C-3 

would be affected by the supply of and demand for aircraft gates at the Airport and in the greater New 

York area. In connection with the offer and sale of the Bonds, Continental has retained Leigh Fisher as Its 

consultant to consider and assess Continental's role at the Airport and the potential demand for the 

Concourse C-3 terminal facilities should Continental's operations at the Airport be discontinued or 

substantially reduced. See "ANALYSIS OF POTENTIAL GATE DEMAND" below. 

In addition to the foregoing, prospective investors should review the section of this Official Statement 

entitled "CERTAIN BONDOWNERS' RISKS- Limitations Upon Trustee's and Bondholders' Ability to 

Realize Benefits of the Leasehold Mortgage" for a further discussion of the foregoing and other risk 

factors that could affect demand for the Concourse C-3 terminal facilities upon and following a Leasehold 

Mortgage Event of Default, including the · potential availability of other competing facilities within 

Terminal C and other areas at the Airport and certain pricing considerations.' ' . 

Additional Bonds 

·.The Leasehold Mortgage provides that additional bonds on a parity with the Bonds may be issued at 

any time with the approval of the Port Authority prior to the completion ol the Project in an amount up to 

$150 million. The proceeds of any such additional parity bonds must be spent on Concourse C-3, and the 

Mortgage Amount would be increased by the· original principal amount of any such additional parity 

bonds. The Indenture: the Guaranty and the Terminal C Facility Lease further provide that other additional 

bonds (not secured tiy the Leasehold Mortgage) may be issued at any time with the approval of the Port 

Authority prior to the completion of the Project and· upon such terms and conditions as are agreed to by 

the Authority and Continental; but only for purposes related t<J the Leased Premises and improvements 

made during the term of the Port Authority Leases. ' 

17 

'! 

'i. 

.\:• 

ii < 

' 
ANALYSIS OF POTENTIAL GATE DEMAND 

In connection with the offer and sale of the Bonds, Continental has retained Leigh Fisher as its 

consultant to consider and assess Continental's _market share at the Airport and the potential demand for 

the Concourse C-3 terminal facilities should Continental's operations at the Airport be discontinued or 

substantially reduced. As stated in Leigh Fisher's report, among other things: 

1 . Considering likely future growth in passenger demand and planned additions to gate supply, 

most gates at the three major New York area airports, including those being constructed in 

Concourse C-3 an·d Concourse A-2 as part- of the. Project, will be required during peak operating 

periods. . . · 

2. If Continental were to cease or substantially reduce service at the Airport, various hypothetical scenarios described in the report suggest that there would be demand for most or all of the gates 

being constructed as part_ of the Project. For a major operator, a complete terminal, such as 

Terminal C, would likely be preferred to the alternative of using scattered available gates at various 

airports and terminals. · , .. ; ' · ..•. · · · 

3. Although the various described scenarios would not necessarily create demand for all of 

Continental's gates at the Airport, it is likely that the newer facilities on Concourse C-3, with 

dedicated FIS facility: capacity, would be the first to be absorbed. It is likely that Concourse C-3 

gates would be more marketable than gates at most other New York area airports for a variety of 

reasons discussed in the report. 

A complete copy of Leigh Fisher's report is included as Appendix' E hereto. The report should be 

read in its entirety for an ·understanding of the assumptions, findings, opinions and qualifications 

expressed therein. · 

CONTINENTAL AIRLINES, INC. 

Continental 

Continental is a major United States air carrier engaged in the business of transporting passenger0, 

cargo and mail. Continental is the fifth largest United States airline (as measured by revenue passenger 

miles in 1998) and, together with. its wholly-owned subsidiaries, Express and Continental Micronesia, Inc. 

( "CMI"), serves 215 airports worldwide. As of August 1, 1999, Continental flew to 129 domestic and 86 

international destinations and offered .additional connecting service through alliances with domestic and 

foreign carriers. Continental directly serves 16 European cities and is one of the leading airlines providing 

service to Mexico and Central America, serving more destinations there than any other United States 

airline. Through ·its Guam hub, CMI provides extensive service in the: western Pacific, including service to 

more Japanese cities than any other United States carrier. 

Domestic Operations. Continental operates its domestic route system primarily. through hubs. at the 

Airport, Bush Intercontinental, and Hopkins International Airport in Cleveland (''.Hopkins International"). 

Continental's hub system allows it to transport passengers between a large number of destinations with 

substantially more frequent service than if each route were served directly. The hub system also. allows 

Continental to add service to a new destination from a large number of cities using. only one or a limited 

number of aircraft. As of August 1, 1999, Continental operated 77% of the average daily jet departures 

from Bush Intercontinental, 57% of the average daily jet departures at the Airport and 50% of the average 

daily jet departures from Hopkins International (in each case excluding regional jets). Each of Continental's domestic hubs, including the Airport, is located in a large business and population center, 

contributing to a high volume of "origin and destination" traffic. 

18 
. ' 

Domeslfc Carrier Alliances. Continental has entered into and continues to develop alliances with 

domestic carriers: 

In January 1998, Continental announced it had entered into a long-term global alliance.(the 

"Northwest Alliance") with Northwest Airlines, Inc. ("Northwest"). The Northwest Alliance 

includes the placing by each carrier of its code. on a large number of the fiights of the other, and 

.. reciprocal frequent flyer programs and executive lounge access,. Significant other joint marketing 

activities will be undertaken, while preserving the separate identities of the carriers. Continental 

has also entered into agreements ·to code-share with certain Northwest regional affiliates. See 

''CERTAIN BONDOWNERS' RISKS- Obligation of Continental as Primary Security; Certain Risks 

with Respect to Continental- Risk Factors Relating to Continental- Risks Regarding Continental/ Northwest Alliance.'' 

. Continental has a series of agreem~nts with America West Airlines, Inc. ("America West"). 

-'·' _.including agreements.related to cod~--sharing and groundhandling,which havecreated substan-

. tial benefits for. both' airlines . .These code-sharing agreements cover 118 city-pairs and allow 

-Cdntinental to link additional destinations to its route network and derive additionaJ traffic from 

America West's distribution str~ngth in'.bties where Continental has less sales presence. The 

sharing of facilities and employees 'by' Continental and America West in their respeciive key 

markets has resulted in significant cost savings. 

Continental has a code-sharing arrangement with Gulfstream 'international.Airlines, Inc. ("Gulfstream") which commenced in April 1997. Gulfstream serves as a connection for Continental 

passengers throughout Florida as well as five markets in the Bahamas. In July 1999, Continental 

and · Gulfstream announced their intention to expand the code-share agreement to include 

378 new weekly departures to four Caribbean destinations from· San Juan, Puerto Rico beginning 

. November 1, 1999. 

•. Continental has a code-sharing arrangement with Colgan Air, Inc. which commenced in July 1997 

on flights connecting in four· cities in the eastern United States and offers connections for 

Continental passengers to ten cities in the Northeastern and mid-Atlaniic regions of the United 

States. 

Continental and CMI have a cooperative marketing agreement with Hawaiian Airlines that began 

October 1, 1997 on flights connecting in Honolulu and began code-sharing on August 3, 1999. 

On February 25, 1999, Continental announced that it had entered into a code-sharing agreement 

with Alaska Airlines, Inc. ("Alaska") and its affiliate, Horizon Airlines, ·Inc. ("Horizon"). Alaska 

and Horizon serve as a connection for Continental passengers to 29 destinations throughout the 

PaCific Northwest. · · · · 

International Operations. Continental serves destinations throughout Europe, Mexico, the Carib~ 

bean and Central and South America and has extensive operations in the western Pacific conducted by 

CMI. As measured by_ available seat miles for 1998, approximately 37.7-% of Continental's jet operations, 

including CMI, were dedicated to international. traffic. As of August 1, 1999, Continental offered 

182 weekly departures to 1'6 European cities and marketed service to 31 other, European cities through 

code-sharing agreements. Continental_ is one of .the leading. airlin_es providing service to Mexico and 

Central America, serving rnore destinations there than any other United States airline . 

. The f\irport is a significant international gateway. Ffom Newark, Continental serves 16 European 

cities, six Canadian cities, two Mexican cities, three Central American cities, six South American cities 

and six Caribbean destinations, and markets numerous other destinations through code-sharing arrangements with foreign carriers. In addition, Continental commenced non-stop service to Tokyo in November 

1998 arid Tel Aviv in August 1999. · · 

Continental's Houston hub is the focus of Continental's operations in Mexico and Central America. 

Continental currently flies non-stop from Houston to 15 cities in Mexico, every country in Central America, 

19 
I 1 

I 

I 

I 

I 

five c·lties ir> South America, two Caribbean destinations, three cities in Canada and two cities in Europe. 

In addition, Continental commenced non-stop service from Houston to Tokyo in January 1999 and has 

Brazilian 

announced plans to begin non-stop service from Houston to Sao Paulo on November 30, 1999, subject to 

government approval. - · .. , 

Continental also flies to Montreal, Toronto and San Juan from its nub in Cleveland and commenced 

service to London's Gatwick Airport on June 30, 1999. Continental also offers·· seasonaf·service 

Cleveland 

from 

to Cancun. · 

Foreign Carrier Alliances: Over the last decade, major United· States airlines have· developed and 

expanded alliances with foreign air carriers, generally involving adjacent terminal operations; coordinated 

flights, code-sharing and other joint marketing activities. Continental is the sole major United States 

carrier to operate a hub in the New York City area. Consequently, Continental believes it is uniquely 

situated to attract alliance partners from Europe, the Far .. East and South America and int;mds to 

aggressively pursue such alliances. Continental believes that'the Northwest Alliance will .enh~nce its 

Continental 

ability to atlritcl foreign alliance partners. See "CERTAIN BONDOWNERS' RISKS- Obligation of 

Continental 

as Primary Security; Certain Risks with Res·pect to Continent8J- Risk factors Relating to 

- Risks Regarding Continental/ Northwest Alliance.'' · .~ 

Continental believes that developing a network of international'alliance partners will better leverage 

Continental's hub assets by attracting high-yield flow traffic and by strengthening Continental's position 

in large, local (non-connecting) markets and will result in improved returns to Continental. Additionally, 

Continental can enlarge its scope of service more rapidly and enter additional markets with lower capital 

and· start-up costs through formation of alliances with partners as compared with entering .markets 

independently of other carriers. 

Continental has implemented international code-sharing agreements with Alitalia: ·. CSA. Czech 

Airlines, British Midland, EVA Airways Corporation, Virgin Atlantic. Airways ("Virgin''), Viacao Aerea Sao 

Paulo ("VASP"), A1r France, and Campania Panamena de Aviacion, SA ("COPA"), 49% of the 

common equity of·which is owned by Continental. Upon receipt of governmental· approval, Continental 

will commence code-sharing arrangements with Aeroservicios Carabobo S.A. (Aserca), a Venezuelan 

carrier, Avant Airlines, a Chilean carrier, Air Aruba and Air China. In addition, the Northwest Alliance 

contemplates formation of a joint venture with KLM Royal DutCh Airlines, a Dutch' carrier.: . 

which 

Certain of Continental's code-sharing agreements involve block-space arrangements (pursuant to 

the carriers agree to share capacity and bear economic risk for blocks of seats on certain routes). 

Alitalia 

Milan. 

has agreed to purchase blocks of seats on Continentai flights between Newark and Rome or 

Newark 

Continental and Air France purchase blocks of seats on each other's flights betwe~n Housto'n or 

and Paris. Continental and Virgin exchange blocks of seats on each ·~!her's flights between 

Newark and London. Continental's agreement with Virgin also includes the purchase by. Contineqtal of 

blocks of seats on eight other routes ftown by Virgin between the United Kingdom and th(J United $tales. 

Delta 

In July 1999, Air France announced that it had elected to attempt to form a global group 8Johg With 

Air Lines. This announcement precludes the development of additional forms of coopera.tiori 

between Continental and Air France, although ContinentaJ does not anticipate any material adverse effeCt 

on the forms of cooperation with which ii is· currently engaged with Air France._ . .. . .. . .. ' 

' ;.~;' A significant number of the world's major airlines h<:tve engaged in the formation of large, multi-carrier 

would 

alliances that offer to customers and travel agencies on· a global basi.s some pf the benefits that they 

ordinarily expect to receive from a single carrier. The airlines ·participating· in these global groups 

hope that by offering to their customers greater scope and scale they will be able to increase their market' 

share and yield in highly competitive and increasingly concentrated global markets. Continental .. hi'S 

would 

engaged in discussions with Northwest, Alitalia and KLM regarding the formation of a global group thai 

compete with the other global groups that have already formed. or are' in formation. These 

negotiations have not yet concluded. . '· , .. 

20 
' 

. CMI. CMI is. a United States-certificated international air carrier engaged in the business of 

transporting passengers, cargo and mail in the western Pacific. From its. hub operations based on the 

island of Guam, CMI provides service to eight cities in Japan, more than any other U.S. carrier, as well as 

other Pacific Rim destinations, including Taiwan, the Philippines, Hong Kong, Australia, New Caledonia 

and Indonesia. Service to these Japanese cities and certain other Pacific Rim destinations is subject to a 

variety of regulatory restrictions, limiting the ability of other carriers to service these markets. 

CMI is the principal air carrier in the Micronesian Islands, where it pioneered scheduled air service in 

1968. CMI's route system is linked to the Unit<:>d States market through Honolulu (which CMI serves. nonstop from both Guam and Tokyo) and Tokyo (which CMI serves non-stop from Guam and Honolulu). CMI 

and Continental also maintain a code-sharing agreement and coordinate schedules on certain flights from 

the west coast of the United States to Honolulu, and from Honolulu to Guam and Tokyo, to facilitate travel 

from the United States into CMI's route system. Earlier this year, CMI began the previously announced 

accelerated retirement of _certain of its aircraft. · ·· 

Express. Continental's jet service at each of its·domestic hub cities is coordinated with Express, 

which operates new-generation turboprop aircraft and regional jets under the name "Continental 

Express." The turboprop aircraft average approximately seven years of age and seat 64 or fewer 

passengers while the regional jets average less than 15 months of age and seat 50 passengers. In 

addition, Express recently announced the accelerated retirement of certain turboprop aircraft and an 

order to purchase 25 Embraer ERJ-135 ("ERJ-135") 37-seat regional jets. 

·' .As of August 1, 1999, Express served 34 destinations from the Airport (21 by regional jet), 37 

destinations from Bush Intercontinental ( 18 by regional jet) and 51 destinations from Hopkins International (24 by regional jet). In addition, commuter feed traffic is currently provided by other code-sharing 

partners. 

Continental believes that Express' turboprop and regional jet operations complement Continental's 

jet operations by allowing more frequent service to small cities than could be provided economically with 

conventional jet aircraft and by carrying traffic that connects onto Continental's jets. In many cases, 

Express (and Continental) compete for such connecting traffic with commuter airlines owned by or 

affiliated with other major airlines operating out of the same or other cities. Continental believes that 

Express' new regional jets provide greater comfort and enjoy better customer acceptance than its 

turboprop aircraft. The regional jets also allow Express to serve certain routes that cannot be served by 

turboprop aircraft. 

Additional Information 

Continental is. subject to the informational requirements of the Securities Exchange Act of 1934, as 

amended, and in accordance therewith, files reports and other information with the Securities and 

Exchange Commission. Certain information with respect to Continental is incorporated by reference in 

Appendix A hereto from materials on file with the Securities and Exchange Commission. See Appendix A- Availability of Certain Information Relating to Continental Airlines, Inc. Such information has been 

provided by Continental and has not been independently verified by the Authority or the Underwriters, 

and neither of the Authority nor the Underwriters makes any representations or warranties, express or 

implied, as to the accuracy or completeness of such information. 

THE BONDS 

General 

The Bonds will be issued in the original aggregate principal amount of $730,360,000. The Bonds will 

be dated September 15, 1999, will be issued in denominations of $5,000 and integral multiples in excess 

thereof. 

21 

:;.-, 

1! 

; ; 
described 

The final 

herein,.and 

maturity date for the Bonds will be September 15, 2029, unless redeemed earlier as 

Statement, unless 

the Bonds will bear interest at the rates set forth-on .the inside cover of this Official 

Bond will accrue 

adjusted as described under.'.'- Interest Rate· Adjustment" below:· 'Interest on ·each 

September 15, 

from the date such Bond is dated, payable semiannually on each March- 15 and 

Interest on 

commencing March 15, 2000 (each such• date being an "Interest Payment Date"). 

months. For 

the Bonds will be computed· on the basis of a 360-day year- consisting of twelve 30-day 

System," 

as long as the Bonds are book-entry bonds, as described below under "-Book-Entry-Only 

Bonds and 

payment 

all notrees 

of the 

with 

principal, purchase price and redemption price;· if ahy, of and interest on the 

operational arrangements. 

respect to the Bonds. sh-all be made and given in accordance with DTC's 

purchase 

If in the future the Sonds cease id be book-entry bohdS, the principal, 

such'Bond,. 

price and redemption price, if any, of any Bdnd will be payable on presentation and surrehcfer of 

in lawful money of the United States· of America;witliout exchange or collection'¢f1arges 

the registered owner 

to 

below) or 

of such Bond, at the-principal corpora1e'trustofflce ofthe Paying Agent (as defined 

any Bond 

the Tender Agent (as defined below), as applicatiie: AfJ'interest accruing prior to maturiij on 

such Bond 

that 

at 

ceases to be a book-entry.bond,shall be paid by check mailed-to .the registered. holder of 

owns Bonds 

its address as it appears on.the registration book~,of the Trustee.-If any Bondholder that 

be paid. 

in an aggregate principal amount o!$1 ,000,000 or more so requests in writing, ,interest will 

within 

to that Bondholder by electr9nic transfer oi immediately available funds- to the financial institution 

provided 

the Unhed Staies of America and the account number that are reflected in the registratiOf].bOoks; 

Date or 

that any such request must be received by,the Trustee at least five days prior, to the Record 

costs associated· 

if any such 

with 

day is not a B-usiness Day, the Business Day immediately preceding such day. Any 

financial 

an electronic transfer shall be deducted from the amount transferred .to the 

institution receiving such funds on behalf of the Bondholder requesting the transfer. 

an 

"Record Date," as defined under the Indenture, means the first day of the calendar month in which 

means 

Interest 

a day 

Payment 

on which 

Date occurs (whether or not such day is a Business Day), and "Business Day" 

Agent 

banks lOcated in the cities in which'the principal offices of the Trustee, the· Tender 

(as hereinafter defined) the paying--·agent 

Agent") and 

(which will initially'be the Trustee) (the "Paying 

or authorized 

registrar (which will initially be the Trustee) (the "Registrar") are located are not required 

to remain closed- and on which the New York Stock Exchange is not closed. 

only 

Except 

upon 

as described below under "c:- Book-Entry-Only, System,:· the Bonds shall. be transferable 

capacity as 

presentation 

Registrar, 

and surrender thereof at the corporate trust office of the Trustee, acting ·in its 

registered owner 

duly endorsed for transfer, or accompanied by an assignment duly executed by the 

or his authorized representative in a form satisfactory 

presentation 

to the Trustee. Upon due 

of any Bond for transfer, the Trustee shall authenticate and deliver in exchange·therefor-,a 

new Bond or Bonds, registered in the name of the transferee or transferees, 

and of the same 

in authorized denomin~tions. 

Authority or 

aggregate principal amount as the Bond'or Bonds so presented and surrendered. The 

any-tax or 

the Trustee may require the registered-- owner of any Bond to pay a sum sufficient: to·.-;over 

such Bond. 

other governmental charge that.-may be imposed in connection with the transfer or exchange of 

. · 

The Trustee shall not be required to register the tr~nsfer or exchange of'anyBoncj during the pe;iod 

Bond 

from a 

selected 

Record Date through the next Interest Payment Date .• inclusive, nor to transfer or exchange any 

for redemption in whole or in part. In addition, the Trustee shall, not pe required-tq register 

notice 

the transfer 

of 

or exchange of any such Bond during the period of 15 days next preceding the giving of 

redemption. 

The Authority, the Trustee, the tender agent appointed under the Indenture (the "Tender Agent"), 

may 

the remarketing 

deem and 

agent appointed under the Indenture (the "Remarketing Agent") and any other. P.§[Son 

of such Bond 

treat the person in whose name any Bond is registered as the absolute registered owner 

for all purposes, including making payment of'the principal'and 

of and 

the redemption price; if any, 

Authority, 

interest on such Bond and for the purpose of giving notice-to> the holder of such Bond. Neither the 

the Tender Agent, the Remarketing Agent, the Trustee nor any other person shall be bound by 

22 
.. " 

any notice to the contrary. All payments made to the person deemed to be the holder of any Bond in 

accordance with the Indenture shall be valid and effectual and shall discharge .the liability of the Authority 

and the Trustee upon such Bond to the extent of the sums paid. 

Interest Rate Adjustment 

In connection· with a mandatory tender described under "- Mandatory Tender of the Bonds" below, 

the interest rate ( s) on all or a portion of the Bonds, other than the Term Bonds maturing September 15, 

2012, may be adjusted at the option of Continental to a rate determined by the Remarketing Agent on 

45 days' written notice to the Trustee, the Tender Agent, the Paying Agent, the Remarketing Agent and 

the Authority. The reset interest rate ( s) will be the lowest rate ( s) which, in the judgment of the 

Remarketing Agent, having due regard to prevailing market conditions, would be necessary to enable the 

applicable Bonds to be sold at par on the date(s) selected by Continental for such adjustment (each a 

"Tender Date"). The initial reset interest rate ( s) for any Bonds will remain in effect from the initial Tender 

Date until the maturity date of such Bonds, subject to Continental's right to reset the interest rate for such 

Bonds on a second Tender Date occurring not before the date such Bonds would then be subject to 

optional redemption. See''- Optional Redemption" below, The second reset interest rate(s) for any 

Bonds will remain in effect from the second Tender Date until the maturity date of such Bonds.· 

In order to effect a mandatory tender and adjust the interest rate ( s) with respect to any Bonds, 

Continental must deliver 

(a) an opinion of bond counsel to the effect that the action proposed is permitted by the Act, 

the Indenture. and the Lease Agreements, and will not adversely affect.the exclusion of interest on 

such Bonds from gross income for purposes of federal income taxation, and 

(b) funds equal to the difference between the purchase price for the applicable Bonds and the 

amount on deposit with the Remarketing Agent from the remarketing of the applicable Bonds . 

. In the event that such conditions are not met, none of the Bonds will be subject to mandatory tender 

on such Tender Date and Continental will have no liability therefor. The interest rate then in effect on the 

applicable Bonds will .remain in effect until a new Tender Date, if any, is selected by Continental and the 

conditions precedent to the adjustment of the interest rate set forth above are satisfied. The determination by the Remarketing Agent of the reset interest rate for any Bond shall be conclusive and binding. _ 

Book-Entry-Only System 

The Bonds,. when issued, will be registered.in the name of Cede & Co., as nominee for DTC. When 

the. Bonds are issued, ownership interests will be available to purchasers only through a book-entry 

system,maintained by DTC (the "Book-Entry-Only System")·. 

DTC and its' Participants. DTC is a limited-purpose trust company organized under the laws of the 

State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning 

of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions 

of Section 17 A of the Securities Exchange Act of 1 934, as af)'lended. DTC was created. to hold securities 

of its participants (the "DTC Participants") and to facilitate the clearance and settlement of securities 

transactions among DTC Participants in such securities through electronic book-entry changes· in 

accounts of the DTC Participants, thereby eliminating the need for physical movement of securities 

certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing 

corporations, and certain other organizations, some of which (and I or their representatives) own DTC. 

Access to the DTC system is also available to. others such as banks, brokers; dealers and trust 

companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or 

indirectly (the "Indirect Participants"). DTC Participants and Indirect Participants are referred to herein 

as "Participants." 

23 

j 

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Purchase of Ownership 

DTG .. The ownership 

Interests. · The DTC Participants will receive a credit balance in the .records of 

recorded 

interest of. each ·.actual purchaser .of each. Bond (the.: :beneficial owner") will be 

confirmation 

through the records of the DTC Participants. Beneficial .owners wil.knot receive written 

confirmation of 

from DTC of their purchase, but beneficial owners are expected to receive a written 

their purchase providing details of the Bond acquired from the Partio;ipant 

the beneficial 

through,Whic.h 

by DTC and 

owner entered into the transaction. Transfers of ownership interests in ·B~nds will be.made 

specified by DTC 

its Participants, 

and 

acting as nominees of the beneficial owners, in accordanc.e with rules 

its Participants. Beneficial' owners will not receive certificates representing 

ownership 

their 

interests .in any Bonds, except as specifically. provided in the Indenture. · 

Each

1 

arrangements 

person 

with 

for whom a Participant, as nomin~e, ~~san in teres; in a~y Bonds may desire to rnake 

such Participa,nt,to 

pes ire to make arrangements. 

receive a credit balance in the records of such Participant and may 

with- such. Participant 

communiqations with 

to have: all notices . of redemption· anfi. other 

participant and 

respect to such Bonds that may affect_§u.ch person. forwarded in writing bysuch 

~ONTINENTAL WILL 

to be 

HAVE 

notified of all interest payments. NONE OF THE AUTHORITY, THE TRUSTEE OR 

PERSONS FOR WHOM 

ANY RESPONSIBILITY OR OBLIGATION TO SUCJ:1 PARTIC,:fPANTS OR THE 

THEY ACT AS NO[vliNEES 

PROVIDING, OF NOTICE 

.WITH RESPECT TO THE f':AYMENT TO, OR THE 

NOMINEES. 

FOR, SUCH PARTICIPANTSOR THE PERSONS FOR WHOM THEY ACT AS 

are registered 

Payments of Principal, Purchase Price, Redemption Price, if any, and Interest. · So long as all Bon<;:ls 

redemption price, 

in the name of DTC or its nominee, all payments of principal, purchase price and 

registered owner of 

if any, of and interest on the Bonds will be made toDTC or its nominee, Cede, & Co., as 

the accounts of 

the Bonds. Upon receipt of moneys, DTC's current practice is to immediately credit 

the DTC Participants 

of DTC. Payments 

in accordance with their respective holdings shown on the records 

by Participants 

custom·a:rj pnicbces, as'is'nowthecase 

to beneficial owners will be governed by standing instructions and 

bearer form or 

with municipal securities held for the accounts of customers in 

DTC, the Trustee, 

registered in "street name,'' and will be the responsibility of such Participant and not of 

requirements as may 

the Tender Agent, Continental or the Authority, subject to any statutory and regulatory 

price, 

be in effect from time to time. Payment of principal, purchase price and redemption 

such payments 

if any, of and interest on the Bonds' to DTC is the responsibility of the Trustee, disbursement of 

payments-to 

to DTC Participants shall' be the responsibility of DTC, and disbursement of such 

the beneficial owners shall' be the responsibflity of Participants. 

Notices. Notices referenced 

be given only 

in this Official Statement that are to be given to registered owners will 

communications 

to DTC. 

by DTC 

Except as described in the preceding sentence, conveyance of notices and other 

to DTC Participants, by DTC Participants 

Participants and 

to Indirect Pari':cipimts, and by DTC 

Indirect Participants 

them, subject 

to beneficial. owners will· be governed by arrangements among 

to any statutory and regulatory requirements as may be in effect frorntime.to 

the Authority, 

time. None of 

assure that any 

the 

such 

Trustee, 

notice 

the Tender Agent and· Continental will· have any responsibility or obligation to 

is forwarded by DTC to the Participants or by any Participant 

6\.\/ners.' to the beneficial 

·l2·> ·" ;o: . 

. ,_. .:..-;·; 

registration 

Transfers 

books 

of Bonds. 

of 

Upon initial issuance of the Bonds, the Bonds--will·- be registered in the bond 

available 

the Trustee in· the'riame of Cede & Co., as nominee b!DTC.: Bonds"will.not be 

Only System 

for registration of transfec to benefiCial owners except' upon discontinuance orthe Book-EntrYas described below. · · ··' .: :· -. ·" 

-The Authority, .Continental, 

Bond (.initially,.Cede & Co.) 

the Tender Agent and th.eTrustee may treat ti)e registered owner of a 

as the absolute.owner.-t~ereoJ.Jor 

applicable 

all purposes o.f-the Indenture and any 

described above, 

laws, notwithstanding· any notice to the contrary received, by afly of. them; and, except as 

the Authority, Continental, the.-TenderAgent and the. Trustee will have no responsibility 

owners 

for transmitting. 

of any Bonds. 

payments 

None 

to, communicating with;, notifyin_g. or otherwise dealing with any benef:cial 

of the Authority, Continental, the Tender Agent and the Trustee will have any 

24 
, .. 

responsibility or obligation, legal or otherwise, to any party other than to the registered owners of any 

Bond on the registration books of the Trustee. 

Mandatory Tender. So long as the·Bonds are held in Book-Entry-Only form, delivery of any Bond by 

its beneficial owner with respect to any tender of the Bonds shall be m(l.de when-the_ beneficial owner of 

such Bond irrevocably authorizes the Trustee pursuant to the mandatory tender notice, directly or 

through its DTC Participant, to make appropriate entrie·s on the books of DTC or any DTC Participant; 

provided however, the Trustee shall have no obligation 'to make or accept such entries, it ~nhe time that 

such entry is made, the Trustee has not yet received tundsnec"ssary to ~onor such entry. __ .. · 

Discontinuance of Book-Entry-Only System. The Book-Entry-Only System through DTC may be 

terminated upon the happening of any of the following: (a) DTC or the Authority, based upon advice from 

DTC, advises the Trustee that DTC is no longer willing or able to properly discharge ·its responsibilities a~ 

securities depository and the Trustee or the Authority are unable to locate a qualified successor clearing 

agency satisfactory to the Trustee and the Authority; (b) the Authority, with the consent of Continental, 

elects to terminate the Book-Entry-Only System by notice to DTC, Continental and the Trustee and 

makes such election at the request of Continental; or (c) after the occurrence of an event of default 

under the Indenture, the beneficial owners of not less than 51% in aggregate outstanding principal 

amount of the Bonds, through the Participants and DTC, elect to discontinue the Book-Entry-Only System 

through DTC and so advise the Trustee, the Authority and DTC in writing. Upon the occurrence of any of 

the events described above, definitive certificated Bonds will be authenticated and delivered in 

accordance with the Indenture. 

Use of Certain Terms in Other Sections of this Official Statement. While the Bonds are in the BookEntry-Only System, references in other sections of this Official Statement to registered owners should be 

read to include the person for whom the Participant acquires an interest in the Bonds, but (a) all rights of 

ownership must be exercised through DTC and the Book-Entry-Only System, and (b) except as 

described above, notices that are to be given to registered owners by the Authority, the Tender Agent or 

the Trustee will be given only to DTC. · · 

Year 2000. DTC management is aware that some computerapplications, systems, and the like for 

processing data ("Systems") that are dependent upon caJendar dates, including dates before, on, and 

after January 1, 2000, may encounter "Year 2000 problems." DTC has informed its Participants and 

other members of the financial community (the "Industry") that it has developed and is implementing a 

program so that its Systems, as the same relate to the timely payment of distributions (including-principal 

and income payments) to· securityholders, book-entry deliveries, and settlement' of trades within DTC, 

continue to function appropriately. This program includes a technical asses·sment and a remediation plan, 

each of which is complete. Additionally, DTC's plan includes a testing phase, which is expected to be 

completed within appropriate time frames. 

However, DTC's ability to perform properly its services is also dependent upon .other parties, 

including but not limited to issuers and their agents, as well as third party vendors from· whom DTC 

licenses software and hardware, and third party vendors on whom DTC relies for ·information or the 

provision of services, including telecommunication and electrical utility service providers, among others. 

DTC has informed the Industry that it is contacting (and will continue to contact) third party vendors from 

whom DTC acquires services to: (a) impress upon them the importance of such services being 

Year 2000 compliant; and (b) determine the extent of their efforts for Year 2000 remediation (and, as 

appropriate, testing) of their services. In addition, DTC is in the process of developing such contingency 

plans as it deems appropriate. 

According to DTC, the foregoing information with respect to DTC has been provided to the Industry 

for informational purposes only and is not intended to serve as a representation, warranty, or contract 

modification of any kind. 

25 
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Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is 

not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the 

Underwriters, the Authority or Continental. 

Mandatory Sinking Fund Redemption 

The Bonds maturing on Sept\'mber 15, 2019, September 15, 2023 and September 15, 2029 are 

required to be retired ,by manpato,Y sinking fund redemption prior to maturity in direct order of maturity by 

lot by the Trustee, beginning on September 15 of each of the years and".in the respective principal 

amounts set forth below (subject-to reduction by the principal amount of any Bonds of the same maturity 

previously purchased by continental (whether by redemption or purchase) and surrendered to the 

Trustee for cancellatioa· or purchased by the Trustee for cance_llation pursuant to the Indenture), at a 

redemption price equal to· the principal amount thereof to be redeemed plus accrued interest tci. the 

redemption date: · ., · · 

Year 

2013 ............... , 

2014 . ''' ........... ·' 

2015 "" "."" "' ". 

2016 """ ..... • .... .. 

2017 .. "" ........ ". 

2018 " .. " ' ... "" " ' 

2019 (maturity) .. , .. . 

2020 .. " " .... ; . " .. . 

2021 ' ....... : . .. " .. . 

Principal -:- Installment 

$21,785,000 

23,140,000• 

24,580,000 

26;140,000 

27,750,000 

29,475,000 

31,325,000 

33,290,000 

35,425,000 

Year . 

' 2022 " ....... " .... .. 

2023 (maturity) ...... . 

2024 " " . ' .......... -

2025 ................ . 

2026 " " .. " .. " .. " . 

2027 " " .... ' . ' ..... . 

2028 ' ' " " ... ' .... ' ' . 

2029 (final maturity) ... 

Principal 

Installment 

$37,670,000 

40,095,000 

42,655,000 

45,330,000 

48,150,000 

51,160,000 

54,360,000 

57,755,000 

On or before the 45th day preceding each sinking fuhd installment payment date set forth above, 

Continental may deliver any Bonds of the next occurring maturity to ·the Trustee. Upon such delivery, any 

prior redemption, or purchase of such Bonds by the Trustee, such Bonds shall be canceled by the 

Trustee and the amount of the next sinking fund installment shall thereupon be reduced by the principal 

amount of such Bonds so delivered and canceled. In the event that any prior redemption or purchase of 

the Bonds is in an amount greater than the next sinking fund installment, such excess shall continue as a 

credit against the next due future sinking fund installments until exhausted. 

Optional Redemption 

On or after September 15; 2009, but prior to the initial Tender Date, if any, for any Bonds except the 

Term Bonds maturing September 15, 2012, Continental may direct the Authority to redeem such Bonds 

prior to their stated maturities in whole or in part at any time (but if in part only in integral multiples of 

$5,000) at the redempt'1on pr'lces set forth below, plus accrued interest thereon to the date of 

redemption: 

Redemption Dates 

September 15, 2009 through_ September 14, 2010 

September 15, 2010 through September 14, 2011 

September 15, 2011 and thereafter 

Redemption Prices 

101 :ora 

100.5% . 

1 oo.o'Y~ 

On or after the initial Tender Date, if any, (but before a second Tender Date, if any) for any of the Bonds 

except the Term Bonds maturing'September 15, 2012, such Bonds will be subject to optional redemption as 

follows: 

(a) if the length of time from the initial Tender Date to the final maturity of such Bonds is less 

than 10 years, such Bonds will not be subject to optional redemption; and 

(b) if the length of time from the initial Tender Date to the final maturity date of such Bonds is 

10 years or more, such Bonds will be subject to optional redemption by the Authority, at the written 

26 
request of Continental, in whole or in part at any time on or alter the tenth anniversary of such initial 

Tender Date. Such Bonds will be subject to optional redemption at a redemption plice equal to the 

principal amount thereof, plus a premium equal to 1 .0% of the principal amount to be redeemed 

upon and during the year following the tenth anniversary of such initial Tender Date together with 

interest accrued thereon to the date of the redemption. The premium percentage will decline by 

0.5% per year on each subsequent anniversary of such initial Tender Date applicable to such Bonds 

until the Bonds shall be redeemable without premium. Such Bonds will be subject to such optional 

redemption upon receipt by the Trustee not less than 45 days prior to such redemption date of a 

written direction from Continental stating that it intends to exercise its option to redeem such Bonds. 

On or after the second Tender Date for any Bonds, such Bonds will not be subject to optional 

redemption. 

Extraordinary Optional Redemption 

Continental may direct the Authority to redeem the Bonds at a redemption price equaf to 100% of the 

unpaid principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of 

redemption, at any time, upon the occurrence of any of the following events: 

(a) in whole or in part, if Continental determines, in its sole discretion, that the continued 

operation of the Project or a substantial portion of the Project is impractical, uneconomical or 

undesirable for any reason; 

(b) in whole or in part, if all or a portion of the Project is damaged, destroyed, condemned, 

taken by eminent domain or sold under a reasonably apprehended threat of condemnation or such 

portion of the Project or the use or control thereof is condemned or taken by eminent domain or sold 

under a reasonably apprehended threat of condemnation as to render the Project or a substantial 

portion of the Project unsatisfactory for its intended use as determined by. Continental in its sole 

discretion; 

(c) in whole or in part, if operation of the Project or a substantial portion of the Project is 

enjoined or prevented or is otherwise prohibited by, or conflicts with, any order, 'decree, rule or 

regulation of any court or of any federal, State of New Jersey or local regulatory body, administrative 

agency or other governmental body; or 

(d) with respect to any Bonds other than the Term Bonds maturing September 15, 2012, in 

part, on any date, at the direction of Continental after the filing of a completion certificate by 

Continental in accordance with the Indenture upon completion of the construction of the Project, with 

funds remaining in the Construction Fund .and not reserved for punch-list items, costs of construction, deposits to the Rebate Fund or additional capital projects. .• 

In the event of a partial redemption, the amount of the Bonds to be redeemed will not be more than 

the applicable amount set forth under "-Extraordinary .Mandatory Redemption wiUr Respect to Port 

Authority Leases ana Lease Agreements- Expiration, Surrender or-Termination- of Port Authority 

Leases" below based on which portion of the Port Authority Leases are affected (expressed as a 

percentage of the outstanding principal amount of the Bonds) plus accrued interest thereon. 

Extraordinary Mandatory Redemption with Respect to Port Authority Leases and Lease 

Agreements 

Expiration, Surrender or Termination of Port Authority Leases. If the Port Authority Leases (or either 

of them, in its entirety, as provided below) are surrendered or terminate or expire, the. Authority must 

redeem the Bonds as a whole or in part at a redemption price equal to 100% of the unpaid principal 

amount of such Bonds to be redeemed, together with interest accrued thereon to the date of redemption, 

as soon as practicable, but in any event within 90 days after the effective date of any expiration, 

surrender or termination of the Port Authority Leases or either of them, in its entirety. In the event of the 

27 

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;'; 

''·\ 

' 

,; 

' 

:; 

;'I• 
' (. . 

;j 

1 

I 

II 

II 

I 

I' 

I 

I, 

jl 

I 

i 

\l: 

expiration, surrender or termination of one of the Port Authority Leases in its entirety, the amount of 

Bonds to be redeemed shall be equal to the amount set forth below based upon which Port Authority 

Lease has expired or has been surrendered or terminated (expressed as a percentage of the outstanding 

principal amount of the Bonds.) plus accrued interest on the Bonds to be redeemed to the. redemption 

date of such Bonds; provided that the amount of Bonds to be redeemed may be reduced by the 

aggregate principal amount· (valued at par) of any Bonds previously redeemed or purchased by or on 

behalf of Continental arid delivered to the Paying Agent for cancellation: 

Expiration, Surrender or 

Termination 'Of Lease 

Terminal· A Facility Lease· 

Terminal C Facility Lease 

Percentage 

3.7% 

96.3%. 

Expiration, Surrender or Termination of Lease Agreements or Basic Lease. If both Lease Agreements are surrendered, expire or terminate in their entirety, including, without limitation, on account of the 

surrender, termination or expiration of the Basic Lease and/or both Project Leases, the Trustee must 

redeem the Bonds as a whole at a redemption price equal to 1 00% of the unpaid principal amount 

together with interest accrued thereon to the date of redemption, as soon as practicable, but in any event 

within 90 days after the effective date of any surrender, termination or expiration of the Lease 

Agreements in their entirety. 

For a more complete description of these and other circumstances under which the Lease 

Agreements could terminate or expire, see "THE LEASES -The Concourse A-2/ C-1/ G-2 Lease 

Agreement- Term" and "-The Concourse C-3 Lease Agreement- Term" in Appendix D hereto. 

No Redemption if Continental Retains Occupancy Rights. Notwithstanding the foregoing, the Bonds 

will not be subject to extraordinary mandatory redemption in whole or in part in the event of: ' . . - . . . ' " ' . . . . 

(a) the expiration, surrender or termination of one or both of the Port Authority Leases as a 

result of the expiration, surrender or termination of the Basic Lease so long as Continental continues 

to have permitted occupancy of the related portion of the Leased Premises (including occupancy as 

a result of a permitted holdover tenancy) or · 

(b) the expiration, surrender or termination of both Lease Agreements so long as Continental 

continues to have permitted occupancy of the Leased Premises (including occupancy as a result of 

a permitted holdover tenancy). 

· · .• ·As described in Appendix D hereto under "THE LEASES- The Port Authority Leases," the 

Terminal A Facility Lease will expire on December 31, 2018, unless extended, and the Terminal C 

Facility Lease will expire in its entirety on March 31, 2028, unless extended. Each of the Port 

Authority Leases will also be subject to earlier termination in certain circumstances. In the event 

either Port Authority Lease is not extended through the final stated maturity date of the Bonds, a 

corresponding portion of outstanding Bonds could become subject to extraordinary mandatory 

redemption as described in the preceding paragraphs. In addition, if either Port Authority Lease 

is otherwise terminated or surrendered prior to the stated maturity of the Bonds while any Bonds 

remain outstanding, a corresponding portion ·of outstanding Bonds also could become subject to 

extraordinary mandatory redemption as described in the preceding paragraphs. There can be no 

assurance that either the Terminal A Facility Lease or the Terminal C Facility Lease will continue 

in effect through its respective scheduled expiration date or that such expiration date will be 

extended. 

Special Redemption Upon a Determination of Taxability 

The Bonds are subject to special redemption at a redemption price equal to 100% of the unpaid 

principal amount of the Bonds to be redeemed; plus accrued interest thereon, if any, to the date of 

redemption in the event of a Determination of Taxability (defined below) on any date selected by 

28 
Continental, but not later than 180 days after such Determination of Taxability. "Determination of 

Taxability" means a determination that the interest on the Bonds is includable in the gross income of the 

holder or ·the beneficial owner thereof for purposes of federal income taxation, which will be deemed to 

have occurred upon the receipt by the Trustee of written notice from a current or former holder of a Bond 

or from Continental of 

(a) the issuance of a published or private ruling or a technical advice .memorandum by the 

Internal Revenue Service in which Continental has participated or has been given the opportunity to 

participate, and which ruling or memorandum Continental, in its discretion, does not contest or from 

which no further right of judicial review or appeal exists, or · 

(b) a final determination from which no further right of appeal exists of any court of competent 

jurisdiction in the United States in a proceeding in which Continental has participated or has been a 

party, or has been given the opportunity to participate or be a party, 

in either c~se, to the effect that, as a result of a failure by Continental to observe the provisions of its tax 

covenants in the Lease Agreements, the interest payable on such Bonds is included in· the gross income 

of the holders.thereofforfederal income tax purposes,.other than a person who is a "substantial user" of 

the Project or a "related person'' of such substantial user within the mean.ing of Section 147(a) of the 

Internal Revenue Code; provided however, that no such Determination of Taxability will be considered to 

exist unless 

(a) the registered owner or former registered owner of the Bond involved in such proceeding or 

action ( 1 ) gives Continental and the Trustee prompt notice of the commencement thereof and 

( 2) ·. (if Continental agrees to pay all expenses in connection therewith) offers Continental the 

opportunity to control unconditionally the defense thereof, and 

(b) either ( 1 ) Continental does not agree within 30 days of receipt of such offer to pay such 

expenses and liabilities and to control such defense or ( 2) Continental exhausts or chooses not to 

·exhaust all available proceedings for the contest, review, appeal or rehearing of such decree, 

judgment or action which Continental detenmines to be appropriate. 

No Determination of Taxability described above will result from the inclusion of interest on any Bond 

in the computation of minimum or indirect taxes or if ihe events which would otherwise give ris.e to a 

Determination of Taxability are the result of a change in the Internal Revenue Code or regulations under 

the Internal Revenue Code adopted and becoming effective after the date of issuance of the Bonds. All of 

such Bonds will be redeemed upon a Determination of Taxability as described above, unless, in the 

opinion of Bond Counsel, 'redemption of a portion of such Bonds would have the result that interest 

payable on the remaining Bonds outstanding after the redemption would not be so included in the gross 

income for federal income tax purposes of any holder or beneficial owner thereof (other than a person 

who is a "substantial user" of the Project or a "related person" of such a substantial user within the 

meaning of Section 147 (a) of the Internal Revenue Code), in which event only such portion will be 

redeemed. 

Rights and remedies of holders of the Bonds could be limited in the event of a Determination of 

Taxability. See "CERTAIN BONDOWNERS' RISKS~ Possible Loss 'of Tax-Exempt Status of Interest on 

Bonds." 

Extraordinary Mandatory Redemption by the Authority · 

The Bonds are subject to extraordinary mandatory redemption at the option of the Authority on any 

date at a redemption price equal to 100% of the unpaid principal amount of such Bonds to be redeemed 

plus acc;rued interest thereon, if any, to the date of redemption as follows: 

(a) in whole, upon receipt by the Trustee and Continental of a notice from the Authority that 

( 1 ) Continental has failed for twelve consecutive months, without first obtaining the prior written 

29 

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1j 

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consent Of the Authority, to continue to operate the Project or to cause the Project to be operated as 

Continental 

an authorized,project within the meaning of the Act; ('2[ any representation or warranty made by 

in either Lease Agreement or in any. other document furnished in connection with the 

Lease Agreements proves to have been false or misleading in any material respect when made; 

( 3) Continental has failed to maintain or cause to be maintained the liability insurance required 

pursua~l to t~e.!--ease Agreements for the benefit of the Authority for 30 consecutive days and for an 

additional thre? Business Days after notice by the AuthoritY to Continental of such failure; or ( 4) the 

Authority is unable t~ exere<ise its right ·to specific performance of any covenant of_ Continental 

pursuanrto 'eithei·[~ase Agreement due to the fact that such -speqific perfo~ance would constitute 

a breach or default of or would conflict with or violate the Port Authority Leases or either of them or 

involve the· specffic enforcement of. any covenant of Continental under the Bond Documents relating 

to or-of a-Property Interest it the performance of such covenant would constitute a breach of the Port 

Authority Leases or either oHhem; or 

(b) in whole, or in part if such partial redemption will preserve the exclusion from gross income 

as evidenc8d'-b/arr.cipinion of bond counsel, if the whole or a part of the Project is damaged or 

· des\foyecf·dondemn<'!d or taken-by eminent domain, and Continental elects not to rebuild, replace, 

repair, or restore· trie'- Project;'provided, however that the Bonds are not subject to mandatory 

redemption in··accordancewiththis· subparagraph 

English; 

if c'ontinental receives an opinion of McCarter & 

English, 

LLP (or if McCarter& English, LLP ce'ases to exist: from any successor firm to McCarter & 

Continental_ 

LLP, or if there is no successor firm, any nationally recognized bond counsel designated by 

iJQcj, rea~mnably acceptable to the Authority)· to the effect that the Project would still 

constitute an.airpoct-_that._is an exewp!Jacility within the meaning of Section 142(a) (1) of the 

Internal Revenue ,Code or.omat failure to rebuild, replace, repair or restore would not cause the 

interest on the Bonds to be includable in gross income for federal income tax purposes. 

Extraordinary Mandatory Redemption Upon Exercise of Purchase Rights by the Port Authority . . -t·:·-,· 

... ,-The Bonds are subject to extraordinary.mandatory redemption prior to maturity at any time at a 

redemption price equal to 100% oi the unpaid princ;ipal amount thereof plus accrued interest (if any) 

thereon, to the redemption date, to the extent of and as soon as practical following the Trustee's receipt 

of any moneys received by the Trustee as a result of .the exercise by the Port Authority of its purchase 

rights under.- the .Terminal C Fac_ility Lease following a Leasehoid Mortgage Event of Default See 

''SECUf3lTY FOR Tf-IE BONDS-Leasehold ·Mortgage and Reletting- Con_ditions Precedent to ForecloLirnitationdJpon 

sure -e,Buy Out Flights 'oi Port Authority Prior to Foreclosure" and ,"CERTAIN BONDOWNERS' RISKS -

Limitatio~,s 

_Trust~e·~ a~dBondhplders' Ability I() Realize Benefits of the Leasehold Mortgage -

on. Receipts from Leasehold Mortgage; Obligations Undersecured" .. 

Selection • L. 

o( Boncls to l:>e Redeemed ·~·. _,.,_ •• ·-·' • • • • •• 

Bonds 

. Whenever less'!f{afi' aO of'tfle Bonds are to be redeen1ed, Continenial will select the maturity of the 

to _be redeenied,'iind within a 'maturity,'the Trustee 'Will select the specific Bonds to be redeemed 

by lot Whenever Bonds to be redeemed are required to be selected by lot, the Trustee will be authorized 

to drawby,)otthe numbers of,,the Bonds to. be,redeemed 

Trustee"ln 

i.n any manner deemed reasonable by the 

Bond 

ttie case of a Bond of a .denomination greater than $5,000, the Trustee will treat each such 

as. repres~nting such- number of separate Bonds, each of the denomination of $5,000, as is 

obtained by dividing the actual principal amount of such Bond by $5,000, with any remainder amount 

after so dividing by $5,000 to be added to and_ considered part of one otsuch. separate Bonds. . •, .. _, - .. . . ·' 

Notice of Redemption 

The Tru;tee, 6ri'b~h~lf ofthe 1\utnorr.t\i: sli~ll give notice by mailing notice of the call_for redemption 

of the Bonds by first class mail, postage prepaid, at least 30 days but no more than 60 days prior to the 

date 

at 

fixed for redemption, to the registered-owner of each Bond subject to redemption in whole or in part 

the registered owner.'s address shown on: the registration books. Any notice mailed in accordance with 

30 
the requirements of the Indenture shall be conclusively presumed to have been given, whether or not 

such notice is actually received by the Bondholders. Failure to receive notice of redemption, or any defect 

in that notice, as to any Bond shall not affect the validity of the proceedings for the. redemption of any 

other Bond. Any optional redemption for which notice is given may be conditioned upon the deposit with 

the Trustee not later than the date fixed for redemption of moneys sufficient to redeem all Bonds called 

for redemption as described in the Indenture; and such notice shall be of no effect unless such moneys 

are so deposited. All Bonds, or portions thereof, so called for redemption will cease to bear interest on the 

specified ·date fixed for redemption, provided funds for their redemption are on deposit with the Trustee 

at that time, and shall no longer be considered outstanding under the Indenture. So long as DTC or its 

nominee is the sole registered owner of the Bonds under the Book-Entry-Only System, redemption 

notices will be sent only to DTC. Any failure on the part of DTC or a DTC Participant 0r Indirect Participant 

to notify the beneficial owner of a book-entry interest in the Bonds so affected shall not affect validity of 

the redemption. . · · 

Except when DTC or its nominee is the sole registered owner of the Bonds pursuant to the BookEntry-Only System, if less than all of the Bonds are to be redeemed, the Bonds to be redeemed will be 

selected by the Trustee. 

Mandatory Tender of the Bonds 

The Bonds other than the Term Bonds maturing September 15, 2012 are subject to mandatory 

tender and purchase, initially on any Tender Date selected by Continental on or after September 15, 

2009, as a whole or in part, at a price equal to the principal amount thereof plus premium (if any) plus 

accrued interest (if any) thereon to the date of purchase on 30 days' notice. Bonds previously tendered 

will become subject to mandatory tender for a second time on any Tender Date selected by Continental 

occurring on or after the date, if any, when such Bonds· would then be subject to optional redemption. 

The amount of any premium that is due as part of the purchase price in connection with any mandatory 

tender of Bonds is the amount that would be due if Continental exercised its right to optional redemption 

on such date (see "- Optional Redemption" above). 

Unless there is an Event of Default under the Indenture and the Remarketing Agent elects not to do 

so, the Remarketing Agent will offer for sale and use its best efforts to sell the Bonds to persons other 

than Continental and the Authority and their affiliates and· insiders at a price equal to the principal amount 

thereof plus accrued interest (if any) thereon to the Tender Date, and the proceeds of such sale, 

together with any moneys furnished by Continental for the purchase of the Bonds under the Lease 

Agreements will be used to pay for the mandatory purchase. These are the only sources of funds that 

may be used for the purchase of the Bonds. See also "-Interest Rate Adjustment'' above. 

Any Bond to be purchased on any Tender Date that is not delivered by the Bondholder thereof to the 

Tender Agent on such Tender Date will nonetheless be deemed to have been tendered by the 

Bondholder thereof for purchase and to have been purchased, if moneys for such purchase have been 

deposited with the Trustee or made available to the Tender Agent on or before such Tender Date in 

accordance with the Indenture. Thereafter: · 

(a) the Authority shall execute and the Trustee shall authenticate and deliver,a new Bond or 

Bonds in the same aggregate principal denomination as the. Bond deemed to have been tendered 

and purchased to the person to whom the Bond deemed to have been tendered and purchased 

would have been delivered, and the Trustee shall register such new Bond in the manner provided in 

the Indenture; 

(b) such Bond deemed to have been tendered and purchased shall no longer be outstanding 

under the Indenture; · ' · · 

(c) interest on such Bond deemed to have been tendered and purchased shall cease to accrue 

to the former Bondholder thereof as of such Tender Date; 

31 

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'.' , I l: 

ri 

i ' 

; 'i 
(d) the former Bondholder of such Bond shall cease to be entitled to the benefits and security 

ofthe Indenture as of such Tender Date, except to receive the moneys representing the purchase 

price of such Bond against delivery thereof at the principal office of the Tender Agent; and 

.. (.~). the Trust~e will not register, nor.will the Tender Agent, the Trustee (in such capacity and 

as Paying _Agent). recognize, any furtheqransfers of such Bond by the former Bondholder thereof. 

At th~· ~xpense of Continent$, th·e Tender Agent will promptly give notice by mail to the Bondholder 

of any Bond .which is-deemed to have been tendered and purchased. 

Moneys to 'be. used .for the purchase of any. Bqrid deemed to have been tendered and purchased 

shall be deposited with the Tender Ageni and held in 'irustby the Tender Agent in a separate escrow 

account, ·without liabifity for interest thereon; and shall be paid to the former Bondholder of such Bond 

upon presentation thereof. Except as provided in the to/lowing paragraph, the former Bondholder of such 

BondshaiJ,thereafter be restricted exclusivel>e to,such. moneys for the satisfaction of any claim of 

vyhatever nature on its part under the.lndenture or on, or with respect to, such Bond. 

Any moneys which the Tender Agent holds in trust for the payment of the principal amount of any 

Bond deemed to have been tendered and purchased and which remain unclaimed shall be applied 

pursuant to the terms of the Uniform Unclaimed Property Act, N.J.S.A. 46:30B·1 et seq: · 

· CERTAIN BONDOWNERS' RISKS ·.:·:. 

The following 

'o' .,.~, 

section describes certain ris.~ . .factors affe.ct[ng the payment of and security for the 

Bonds, The following discussion is not meant to be an exhaustive.lio.l of all the risks associated with the 

purchase ot thi'J Bonds and does not necessarily reflectJhe relative importance of the various risks. In 

evaluqting the.Bonds, potential investors should consider,. the to/lowing risk factors along with all other 

information described elsewhere or incorporated by reference in this Official Statement. 

Obligation of Continental as Primary Security; Certain Risks with Respect to Continental 

Payments of Facility Rent by Continental under the Lease Agreements and any amounts payable by 

Continental under the Guaranty will constitute the principal security (other than available unspent Bond 

proceeds and any proceeds recognized pursuant to. the.Leasehold Mortgage) foF the payment of the 

principal and purchase price and the redemption price, it any, of and interest on the Bonds. Although the 

obligation of Continental to make payments under the Lease Agreements and the Guaranty provides that 

any required payments thereunder will be an absoiUti'J and unconditional general obligation of Continental, the payment of such amounts will be dependent upon the financial condition and results of operations 

of ContinentaL· · ·· ' " . ·.; ·- :,i: • . 

. , C()ntinental,is subjec.t to the informational requirements of the Securities.ExchangeAc,t of 1934, as· 

am,nded, and in accordance therewith files reports. and other information with-' the Securities and 

Exchange Commission, Certain infonmation with respect to Continental, Express and CMI is furnished 

above under the caption "CONTINENTAL AIRLINES, INC." and in Appendix A hereto and incorporated 

therein by reference from materials on file with the' Securities and Exchange Commission, In addition to 

sUch information, ·prospective purchasers of any of the Bonds should consider the following risk factors 

relating to Continental: · ' · · '· 

Risk Factors Relating to Continental 

Leverage and Liquidity. Continental 

. -~ .. 

has a higher proportion of debt compared to its equity capital 

than some of its principal competitors. In addition, Continental's cash resources are less than some of its 

principal competitors. A majority of Continental's property and equipment is subject to liens securing 

indebtedness. Accordingly, Continental may be less able than some of its competitors to withstand a 

32 
' '' 

prolongedTecessionconditions. 

in ·the airline industry or respond as flexibly to changing economic and competitive 

As of JUne 30, 1999, Continental had: · 

$3.1 billion (including current maturities)of long-termdebt and capital i~ase obligations. . . . . . . 

$1 .6 billion of common stockholders' equity. 

$1.3 billion ·,n_ cash ancj cash equivalents (excluding restricted cash and cash equivalents of 

$11 million) . · · · ·· · 

$225 million available 'to be drawn under general lines of credit'. 

Continental haic s~bstantial commitments for c~pital expendit~res, including 

new aircraft. As of August 1, 199.9, Continental 

for the acquisition of 

thrdugh 2005: Continental 

had agreed to acquire a total of 99 Boeing jet aircraft 

conditions). Tfie estimated 

also has optfons for an additional' 121 aircraft (exercisable subject to certain 

aggregate•cost of Continental's firm commitments 

approximately $4.7 billion. Continental 

for Boeing aircraft is 

tion of enhanced pass 

currently plans to finance-its new Boeing aircraft with a combinaavailability and market 

through 

conditions. 

trust 

As 

certificates,'lease equity and other third party financing, subject to 

been arranged for such 

of August 1, 1999, approximately $897 million in financing had 

future Boeing deliveries. . . 

regional 

As of 

jets 

August 

and 

1 

25 

,)999, 

ERJ-1:35 

Express had firm co~mitments for 27 Embraer ERJ-145 ("ERJ-145") 50-seat 

:i7-seatregional 

50 ERJ-135 aircraft exercisable 

jets, with opiions far-an additional125 ERJ-145 <>nd 

through 2008. Neither Express nor Continental will.h.ave any obligation to 

take any such firm aircraft that are not financed by a third party and ieased to Express or Continental. In 

the fourth quarter of 1998, Express began the previously announced accelerated retiremeni of certain 

turboprop aircraft. · · · · · · · 

Continental expects to finance certain of its capital commitments through operating 

will increase its operating expenses. 

leases, which 

For 1998, cash expenditures under operating 

aircraft approximated $702 million, 

leases relating to 

compared 

relating to facilities and other 

to $626 million for 1997, and approximately $263 million 

rentals, compared to $236 million in 1997-. 

Additional 

predict whether 

financing 

sufficient 

will be needed to satisfy Continental's capital commitments: Continental cannot 

commitments. 

financ:ing will be available for capital expenditures not covered by firm financing 

. - . 

Continental's History .. of, Operating Losses. Continental 

$221 million 

recorded net .income of approximately 

1996 and $224 

in the 

million 

/irs! six months of 1999, $383 million in.1998, $385 million in 1997, $319 million in 

in ·1995. However, Continental experienced significant operating 

prev·lous eight years. Historically, 

losses in the 

Continental cannot predict whether 

the financial results. of the U.S. airline industry have been cyclical. 

current industry conditions will cohfinue. . 

costs 

Aircraft 

were· approximately 

Fuel . . Fuel costs 

7.9%· 

constitute a significant portion of Contin.ental's operating expenses .. Fuel 

of operating expenses 

10.2% for the year ended December 

for the six month'S ended June 30, 1999 and 

31, 1998 (excluding fleet disposition I impairment 

and supplies are influenced significantly 

loss). Fuel prices 

tal· enters into .. petroleum· 

by international polit'<cal·and economic circumstances. Continencommitments 

.. swap contracts, petroleum call option contracts and jet· fuel purchase. 

to provide some short-term protection (generally 

increase in jet fuel prices. However, 

three to six months) against a sharp 

operating results. 

significant changes in fuel costs would materially affect Continental's· 

higher fuel prices orcurtailm~~~O 

If a fuel supply .shortag~ were to arise fro'1' a disruption of oil imports orotherwise, 

.. f scl)~du.led airline service could result. , · 

Labor Matters. In· September 199c, Continental announced 

employees to 

its intention to bring all Continental 

1997 and will 

industry 

continue 

standard 

to be phased 

wages no later than the end of the year 200Q. Wage increases began in 

ih through the year 2000. 

33 
The current status of Continental's and its subsidiaries' principal labor union agreements is as 

follows: 

Continental's Pilots. In June 1998, Continental's pilots ratified a five-year collective bargaining 

agreement, retroactive to October 1997. The agreement becomes amendable in October 2002. 

', '' ' ''· 'iJ' 

Express' Pilots. In December 1998, Express and its pilots executed a new agreement. This 

agreement will become amendable on October i ,: 2002. ·. - · · '' 

• Flight Attendants. The flight attendants at Continental, Express and CMI, Continental's subsidiary 

based in Guam, are covered by collective bargaining agreements that become amendable on 

December 31, 1999, November 1, 1999, and June 30, 2000, respectively. 

Dispatchers.· Continental's dispatchers ratified a new five-year collective bargaining agreement in 

July 1998. The agreement becomes amendable in October 2003. · 

Mechanics. ·Continental's mechanics are· covered by a newagreement signed in January 1999 

that becomes amendable January 8, 2002. _CMI's. mechanics . are -.covered by a collective 

bargaining agreement that becomes amendable March 31, 2001. Express' -mechanics ratified an 

initial collective bargaining agreement in.July_i999. The_ agreement becomes. amendable in July 

2003. 

Risks Regarding Continental I Northwest Alliance and Global Alliances. In November i 998, Continental and Northwest began implementing the Northwest Alliance, a long-term global alliance involving 

extensive code-sharing, frequent flyer reciprocity and other cooperative activities. In a related transaction, 

on November 20, 1998, a Northwest affiliate acquired securities representing approxim-ately 14.5% of 

Continental's equity from Continental's principal shareholder and certain other parties. These acquired 

securities, together with additional Continental equity securities for which the Northwest affiliate holds a 

limited voting proxy, represent approximately 52% of the fully diluted voting power of Continental. 

Continental's ability to implement the Northwest Alliance successfully and to achieve anticipated 

benefits are subject to certain risks and uncertainties, including: · 

• Disapproval or delay by regulatory authorities or adverse regulatory developments. 

Competitive pressures, including developments with respect to alliances among other air carriers. 

Customer reaction to the alliance, including reaction to differences in product and benefiis 

provided by Continental and Northwest. 

• Economic conditions in the principal markets served by Continental ~nd Northwest. 

• Increased costs or other implementation difficulties, including those·caused by employees. 

• Continental's ability to modify certain contracts that restrict certain aspects ~{ theailiance. 

On October 23, 1998, the Department of Justice ( "DOJ") filed a lawsuit against Northwest and 

Continental challenging Northwest's acquisition of an interest in Continental. The.DOJ cjid not seek to 

preliminarily enjoin the transaction before it closed on November 20, i 998, nor .is the DOJ challenging the 

Northwest Alliance at this time, although it is continuing lo investigate.certain specific aspects of the 

alliance. Continental is in the process of implementing the alliance with Northwest. While it is not possible 

to predict the ultimate outcome of this litigation, Continental believes that this litigation will not have a 

material adverse effect on .Continental. 

Continental has engaged in discussions with Northwest, Alitalia and KLM regarding the formation of 

a global group that would compete with the other global groups thai have ·already formed or are in 

formation. These negotiations have not yet concluded. If Continental is able to form a global group with 

these other carriers, this global group will be one of the smaller of th.e global groups that are currently in 

formation. If Continental and its group members are not able to achieve a sufficiently high level of 

34 
coordination . and . integration . of. their adlvities . as compared ·to the <COOrdination and . integration of 

competing groups, Continental could experience an adverse impact on its traffic and yield performance. 

Because of Continental's strategic positions: in New York City and Latin America, which provide to it a 

greater degree :of self-sufficiency, Continental· does not believe that any adverse impact would be 

material. • ,., .. ,, . _ 

• < . • " • • "t. . -... : .. -:(·. ~ . ' r : ._ • • , _ •• • 

Year 4000. Computerized systems are. essential to Continental's operations .. Many .. computer 

prcigrams'in use around the' world use only two digits to identify the applicable year_ and do riot take 

account of the change in century that will occur in the year 2000. If this problem is not corrected, 

computer applications rcould -fail --or ·create mistakes. As a result, Continental has·'implemented a 

Year 2000 project thar.is•iritended to allow-Continental's computer systems to function properly in the 

year •2000·-andJ.thereafter;e-Continental be1ieves .that·theccyear 2000: issue will not pose significant 

operational problems•for its computer systems: ·- · 

. ::,1 .. --'0::' -:;<~- .: ' ~-- •. ·-: ::o -·. <· ,_.;• . - -:09(\tinental has also contacted its significant suppliers and vendor<; wjt~ whorl) its systems jnte_rface 

or upo!J _whom-its pusiness depends. Continental. is worki~g _wi!hthese.parties to minimize. the extent -to 

which its business will_b_,.,_vulnerable tq their failure to remediate their Year-2000 issues. Continental's 

business is also dependent upon certain governmental agencies, such as the.FAA, that provide essential 

services to the aviation' industry: Continental cannot-predict whether the systems'of such third parties on 

which Continental's business· relies (including'' those of the FAA) willbe modified on a timely basis. ·· 

· ·· Continental's business, financial condition and results of 'operations could be materially adversEllY 

affected if its systems or those operated by other parties on which Continental's business depends-fail to 

operate properly beyond 1999. • .. 

Risk Factors Relating hJ the Air/in~ lndu;try 

Competition and 'tndustr/Conditions. The airline industry is highly competitive and susceptible to 

price discounting. Carriers have used-discount fares to slimulate traffic during periods of slack demand; 

lei generate cash flow and io increase market share. Some of Continental's competitors' have substantially 

greater finan'Cial resources or lower cost structures than continentaL .. . . - - -· .~ ' · .. ':"· . . , .. 

Airline profit•levels are highly sensitive to changes in fuel· costs, fare levels and passenger demand. 

Passenger demand and fare-levels have in the past been influenced by, ·among other things;·the general 

state of the economy (both in international regions and domestically), international events, airline 

capacity and pricing actions taken by carriers. For example, the operating results of CMI declined during 

1996,.1.997 and 1998. as a .resuiL.of the continued weakness-of the yen against th!3 •dollar, a . .weak 

Japanese economy and increased fuel costs. Domestically, from 1990 to··1993, the weak U.S.-economy, 

turbulent international events and extensive price discounting by carriers contributed to unprecedented 

losses for U.S. airlines·c·lri the last several years; the u.s.· economy ·has improved and excessive price 

discounting has abated. Continental cannoi predict the ·extent fo which these industry conditions will 

coritin·ue. · · -~-

• ' .:y .:;~ . -.. ·· ... · 

In recent·years, the. major l:J.S. airlines-have sought to form marketing alliances with other U.S.•and 

foreign air carriers. Such alliances, generally. provide for "code-sharing'',· frequent flyer--.reciprocity, 

coordinated scheduling of flights of each alliance member to permit convenient connections and other 

joint marketing activities, including ticketing practices and the· treatment of customers. Such ·arrange: 

ments permit. an airline to:market flights operated by other alliance members as its .own; This increases 

the destinations, connections and frequencies offered by the airline, which provides an opportunity to 

increase traffic-on such airline's segment oUiights connecting with alliance· partners. The Northwest 

Alliance is an ·example of such an arrangement, and Continental has existing alliances with numerous 

other air carriers: Other ·major U.S. -·airlines have alliances or planned alliances more extensive than 

Continental's .alliances. Continental cannot predict the extent to which Continental will benefit from·its 

alliances or be disadvantaged by competing alliances. 

35 

li 

i 

,\1 

[!. 

I •' 

i' 

·II j~ 

I· 
l ,, 

Regulatory Matters. Airlines are subject to extensive regulatory and legal compliance requirements. 

These .requirements impose substantial costs on airlines. In the last several years; the FAA ha$ issued a 

number of directives and other regulations relating to the maintenance and operation of aircraft that have 

required significant.expenditures. Such FAA requirements cover, among other things, retirement of older 

aircraft, security measures, collision avoidance systems, airborne windshear avoidance systems, noise 

abatement, commuter aircraft safety and increased inspections and maintenance procedures to be 

conducted on·oider aircraft. Continental expects to continue incurring expenses in complying with the 

FAA's regulations: · · · 

Additional-laws, regulations; taxes and airport rates and-charges have been proposed from time to 

time that could significantly increase the cost of airline operations or reduce revenues. Congress and .the 

DOT have also proposed the regulation of airlines'. competitive responses and other activities. Restric, 

!ions on the ownership and transfer of airline routes and. takeoff and landing slots have also been 

proposed. The ability of U.S. carriers to operate international routes is subject to change because the 

applicable arrangements between the United States and foreign governments may be amended. from 

time to time, or because appropriate slots or facilities are not made available. Continental cannot provide 

assurances that laws or regulations enacted in the future will not adversely affect Continental. ' . -. ' ;,•-

The. Federal Aviation Administration has designated John F. Kennedy lnternationa,l Airport ("John F. 

Kennedy"), New York LaGua.rdia Airport·. ("LaGuardia''), Chicago O'Hare International Airport 

("O'Hare") and Ronald Reagan Washington National Airport in Washington D.C. ("Reagan National") 

as "high density traffic airports'' and has lim'!ted the number of departure and· arrival slots at those 

airports. Currently, such slots may be voluntarily sold or transferred between carriers. The DOT has in the 

past reallocated slots to other carriers and reserves the right to withdraw slots. Various amendments to 

the slot system proposed from time to time could, if adopted, significantly affect operations at high 

density traffic airports, significantly change the value of the slots, grant slots to other carriers or for route 

or aircraft specific usage, expand slots'at other airports or·eliminate slots entirely. The DOT has proposed 

the elimination of slot restrictions at high density airports other than Reagan National. The full House of 

Representatives has passed legislation containing a similar proposal which could eliminate slots as early 

as 2002 at O'Hare and :200~ at LaGuardia and John F. Kennedy, and which doubles the maximum 

passenger facilities charges permitted to be charged by airport authorities. Continental cannot predict 

whether any of these proposals will be adopted. However, if legislation or regulation eliminating slots is 

adopted, the value of such slots could be· deemed to be permanently impaired, resulting in a loss being 

charged to Continental's earnings for the relevant 'period. Moreover, the elimination of slots could have an 

adverse effect upon future results of operations of Continental. 

·•.· 

Certain Considerations Under the United States Bankruptcy Code with Respect io the Lease 

Agreements and the Guaranty 

-~~ the. ~~ent a bankruptcy, case.;$ filed with ;e;pect to Continental, a.bankruptcy co~rt could 

<;fetermine that the Lease Agreemen.ts are. executory contracts or unexpired leases pursuant to Section 365 of the United States Bankruptcy Code. In that event, a trustee in bankrupicy or Continental as a 

debtor-in-possession might reject one or both of the Lease Agreements. Under the United States 

Bankruptcy Code,- any rejection of one or both of the Lease Agreements could result in a claim for 

damages against Continental .. in connection with the Bonds,_ which. claim would rank as that of a general 

unsecured creditor of Continental. II a. court determined that the Lease Agreement ( s) were unexpired 

leases of non-residential real property, the amount of any su.ch corresponding claim would be limited to 

the rent payable under the Lease Agreement(s) (without· acceleration) for the greater. of one year or 

15% of the remaining term of the Lease Agreement ( s) , but not to exceed three years, following the 

earlier of (a) the date the bankruptcy petition was filed and· (b) the date on which Continental 

surrendered the leased property under the Lease Agreement( s), plus any unpaid rentals under the 

Lease Agreement(s) (without acceleration)· on the earlier of such dates. In this event, any claim with 

respect to the Bonds that do not mature (absent acceleration) within the period of one year or 15% of 

the remaining term of the Lease Agreement(s) (but not in·.excess of three years) following the 

36 
' ' 

bankruptcy commencement date (i.e., the earlier of (a) or (b) above) could be limited'to the interest 

which would accrue on the Bonds during such period and may not permit a claim for the recovery of 

principal. See "-Limitations Upon Trustee's and Bondholders' Ability to Realize Benefits of the 

Leasehold Mortgage- Effect of Continental Bankruptcy" below. 

Pur~uant to the terms of the Guaranty, Continental will unconditionally guarant~e' td the Tru~tee, for 

the benefit of the owners of the. sands, the full and prompt payment ·of the principal, purchase price and 

redemption price, if any' of SllCh Bonds when and as the same shall become due and payable as 

provided in the .Indenture, \'Vhether at the state<:!. m-aturity th-ereof, by redemption, acceleration or 

otherwise, and the full and prompt payment of the interest on the Bonds when and as the same shall 

become due and payable as provided in the Indenture . .The obligations covered by the Guaranty are 

intended by the parties to be independent oi those set out i.n the Lease Agreements (and thereby not 

subject !De the Bankruptcy. Code limitaiions ,on clilims for darilflges with respect to non-residential real 

property. leases discussed above) and to be enforceable without regard to the validity or enforceability of 

the Lease Agreements oi a(lY obligation.of Continental-contained therein. In the event a bankruptcy case 

were filed with respect ·-io Continental, the Trustee might file a claim pursuant to the Guaranty, 

independent of any elaim.under the Lease Agreements and Indenture, for the payment of all amounts, if 

any, required for the payment of the principal, purchase price and redemption price, if any, of and interest 

on the Bonds when due. Such claim, if allowed, would rank as that of-a general unsecured creditor of 

ContinentaL A bankruptcy court could determine;· however,.that-the. Trustee's claims under the Guaranty 

should be limited to the same extent as the Bankruptcy Code limitation of claims for damages with 

respect to nonresidential real property leases described above in connection with claims under the Lease 

Agreements. No assurance can be given that the Trustee's claims in connection with the Guaranty will 

not be so limited. If so limited, the Guaranty would provide no additional security for payments due on the 

Bonds. 

No representation or warranty is made· by Continental or any other party that any claim under the 

Lease Agreements or the Guaranty will be allowed or that any recovery on any such claim will be 

permitted under the United States Bankruptcy Code. 

Limitations Upon Trustee's Ability to Accelerate Facility Rent 

Upon certain payment-related events of default under the Indenture, the Trustee may declare all 

amounts owed under the· Bonds immediately· due and payable. The Lease Agreements provide that 

Continental must pay Facility Rent in an amount sufficient to pay all amounts when due upon the Bonds; 

upon acceleration or-otherwise. New Jersey law concerning real property leases provides- for certain 

remedies. available to a lessor for breach of a· lease for real property; and acceleration of all rental 

payments due under the lease may not be an available remedy. A court could conclude that the 

requirement that Continental pay Facility Rent in an amount equal to the amount due on the Bonds 

following·an acceleration of the Bonds is, in effect, an impermissible acceleration of the rent due under a 

lease' for 'real property and refuse to enforce the payment. .- · · . . . I"~:..,;'. i . .. - ' .. 

Limitations·Upon Trustee's and Bondholders' Ability to Realize Benefits of the Leasehold 

Mortgage ·• · 

Upon and during a Leasehold Mortgage Event of Default the Trustee may seek to foreclose upon 

Continental-'s leasehold interests in Concourse C-3 under the Terminal C Facility Lease and assign such 

interests. to a Qualifying Replacement Tenant. The Qualifying Replacement. Tenant would similarly 

assume Continental's obligations under the Concourse C"3: Lease Agreement to make payments in 

respect of all or (with the approval of Bondholders owning at least 75% of the then-outstanding principal 

amount of the Bonds) a portion of the Bonds when due .or would negotiate a separate arrangement with 

the Trustee guaranteeing repayment of the Bonds. See "SECURITY FOR THE BONDS- Leasehold 

Mortgage and Reletting" for a more detailed discussion of the leasehold mortgage rights granted to the 

Trustee. Certain practical and legal considerations, however, could inhibit or materially delay the 

Trustee's ability to foreclose upon its interests in the Terminal C Facility Lease or locate a Qualifying 

37 
Replacement Tenant for Concourse c,3, or otherwise preclude.the receipt of sufficientrevenues following 

a foreclosure to repay all the f?onds. ,,. ". · ''· ·. 

Umitations on Receipts from Leasehpld. Mo~gage; Obiigf'tion~·· Undersecurech . ']"he Le;:tsehold 

Mortgage precludes the Trustee and Bondholders from ,recovering any amounts' in excess of the 

"Mortgage Amount": initially $5'5o,oob,OOO,' pursuan't to any toreclosure·unilerti\e Leaseliofil Mortgage. 

lri addition, the Leasehold Mortgage provides that the' Port Authority has tne'opticin cit "l:iuying-ciut'' the 

Trustee's and Bondholders' rights iJn&r the Leasehold Mortgage following a Leasehold Mortgage Event 

of Default bY paynieht to tHe Trustee of the MOrtgage AmOunt and. certain other limited sums· (which 

amounls would be used to effect a mandatory redemption of Bonds as described under''THE BONDS'~ 

Extraordinary Mandatory Redemption ·up6n . Exercise· of'. Purchase· Rights by the 'Port ·Authority'' )'.The 

Bonds aie'being issued in the cirigirlal priridpal anriourit of $Y30,360;000:Consequently, upon' and 

following a Leasehold Mortgage Everlf-'i:if Default;- the Trustee may not be able to recogni:Ce' suilitient 

proceeds 

. ·- . 

from . 

the . fore'closure .· 

or - -.. -. -' .... ' . . -.-,-· ,; ···-:· ,. ,, threatened foreclosure of its security interest in Concourse C,3.iri order 

to repay all of th6 BOnds. 

!• • 

See ''THE BONDS ~-Selecti9ri of B6rids-:t6 be Red8eiiied';. ,.. ·---~ - ;', • ' • ', '>.--' 

·Uncertain Gate Demand; Availability-of Competing Facilities. The likelihood that the' Trustee ·would 

be ·able to find· a-.Qualifying Repla:cemef\t Tenant .for Continental's ConcoUrse".C·3• gates would be 

affected· by the supply of and demand' for gates at the Airport and iri· the greater··NeWYork area. Such 

supply and demand cannot be predicted ·at'this time and ~could be affected by such factors as an 

economic downturn in the area at the· time the Trustee is seeking a Qualifying Replacement Tenant 

Further; in addition to Concourse· {>:Y, the Terminal C Facility· Lease covers !he gates and space in 

Concourses. C~ 1 and C-2 at the Airport It is possible 'that if Continental-has defaulted under the 

Terminal C Facility•Lease; the Port Authority· would endeavor to relet Concourses C-l and C-2 at the 

same time the Trustee is attempting to seek a Qualifying Replacement Tenant for Concourse C'3. 

Particularly. given the requirements that aoy Qualifying Replacement Tenant for Concourse C-3 make 

certain· payinimisas discussed further under·; -..:Assumption of Disproportionate Boniiobiigations:' and 

"___:Payment ot' 'Deferred Reletting Fee' to the Port Authority'' below, the,availability .of competing 

facilities without those pricing requirements could make it more difficult for· the Trustee to locate a Qualifying Replacement Tenant for Concourse C-3. • "" .. , , ··;.. -, ,,, . 

, cFUrther, while m.ost of Continental's traffic at the Airport consists.of origination-and-destination 

passenger traffic; .a .significant portion of its operations support passenger traffic that is not originated in, 

or ultimately destined for, the Airport. The factthat many of Continental's facilities atthe Airport,. including 

its gates, are sized to accommodate.significant.hubb,ing activity could make it·unlikely thaU:Iemand for ail 

of such facilities will .. be- as great .For further discussion, see Appendix E -c-. Analysis of~ Potential. Gate 

Demand. ,. , , .-·,· 

·r; · 'i· ; . · · -·. · · -~ · ·· . · ; . .;:i,, :< : : ,·1, · 

.. , . Assumption of Disproportionate Bonci Obligations. Because of the ar;nortizatipn-.whedyle. for the 

Bonds, ttie. rental~ payments under the Lease)greements .,towards the, end. of th.e )eas~ te(ms .. will be. greater than earlier rental payments. As a result, ~the Trustee's ability to secure a QualifYing Replacement 

Tenant willing. to pay rent L!nder..the Concourse 813 Lease Agreement on the,same·basir; as continental 

towards . the end of the stated ·i~rm of the Concourse C~3 Lease Agreement couldbe adverse.ly~affected, ·" ~ >::. · .•. 

Effect of Continentaf,Bankruptcy. ·In addition to giVing, rise to the possibility of limited damages 

against Continental as described above under. ...I'- Certain Considerations Under the United States 

Bankruptcy Code with· Respect to the. Lease Agree·ments and the Guaranty"; certain· procedural and 

substantive provisions of•the United-States Bankruptcy Code could significantly-delay• or inhibit during a 

bankruptcy of ContinentaHhe .Tru'i;tee's,. ability to cause' Continental to surren'der:aoy or all of Concourse C-3 so that Contiflental's leasehold interest in such facility could be assighed.to a Qualifying 

Replacement Tenant: lri. particular, whilfi th·e Leasehold Mortgage would permit the Bondholders· to be 

treated as secured crec]itor:s in· a.bankruptcy proceeding ihvolving Corrtinental;· an: automatic stay.against 

foreclosure on the.Leasehold Mortgage could mean that the· Trustee would-not be able to foreclose on the Leasehold Mortgage and obtain a Qualifying Replacement Tenant·.for Concourse C-3 during the 

38 
pendency of the bankruptcy proceeding. In contrast, Continental could seek to suspend its payments in 

respect of the Bonds during the pendency of any bankruptcy proceedings. 

Limited Foreclosure Period. If Continental does not consent to the assignment of its rights and 

obligations with respect to Concourse C-3 to a new tenant following a Leasehold Mortgage Event of 

Default, the Trustee will have a maximum of 720 days following the delivery by the Trustee to' the Port 

Authority of a notice of the Trustee's intention to exercise its rights under the Leasehold Mortgage to 

foreclose upon its security interest in Concourse C-3 pursuant to the Leasehold Mortgage. Under New 

Jersey law, the Trustee must comply with many procedural requirements to foreclose on the Leasehold 

Mortgage. These include time-consuming filing and notice· requirements. In addition, a judgment of 

foreclosure must be obtained from applicable administrative and I or judicial authorities and acted upon by 

the local· sheriff. It is possible, particularly if Continental or any of its other creditors challenge the 

foreclosure, that tlie Trustee may not be able to foreclose within the 720 day time period arid, in such 

event would lose its right to obtain a Qualifying Replacement Tenant for Concourse C-3. 

Trustee's Obligations During Foreclosure Period. As a condi!Lon to exercising its rights.under the 

Leasehold Mortgage, the Trustee is responsible for all accrued but unpaid Ground Rent and Airport 

Service Factor Charges and .up to 60 days of all Activity-Based Charges allocable to Concourse C-3, 

including ftight fees, at the time the Trustee delivers a reletting election notice to the Port Authority. 

Further, the Trustee· will be responsible for paying all current Ground Rent, Airport Service Factor 

Charges, Utility Security ana Maintenance Costs and Activity-Based Charges allocable to Concourse C-3 

and not paid by Continental unde"r'the Terminal C Facility Lease from and'after the date it elects l<i 

enforce its rights under .the Leasehold Mortgage. See "SECURITY FOR THE BONDS- Leasehold 

Mortgage and Reletting" above. The Indenture provides for a Leasehold Mortgage Reserve Fund to be 

funded by Continental upon completion of the Project in an amount ($9.6 million) estimated to be 

sufficient to cover approximately five months· of Ground Rentals and Airport Service Factor Charges 

allocable to Concourse c:3 under the Terminal C Facility Lease, and two'months of Activity-Based 

Charges allocable to Concourse C-3 under the Terminal C Facility Lease. While it is intended that this 

Leasehold Mortgage Reserve Fund will be sufficient to cover. the obligations of the Trustee-during the 

time before the Trustee is able to locate a Qualifying Replacement Tenant for Concourse C-3 (which 

might thereafter assume- any further obligations that would accrue during the Foreclosure Period to 

preserve the effectiveness of the Leasehold Mortgage until it can gain possession of Concourse C-3), 

there can be no assurance that the Leasehold Mortgage Reserve Fund will, in fact, be adequate for such 

purpose, or that any Qualifying Replacement Tenant, if located, would be willing to assumeimy such 

further obligations that accrue during the Foreclosure Period. If the Leasehold Mortgage Reserve Fund is 

not sufficient, the Bondholders may be compelled to choose between providing ·additional funds to the 

Trustee for that purpose on the one hand and losing'their rights under the Leasehold Mortgage on the 

other hand. · . 

Failure to Fund Leasehold Mortgage Fund; Project Completion Risks. Continental is required to fund 

the Leasehold Mortgage Reserve Fund upon completion of the construction of Concourse C-3, which it 

currently estimates will occur at or about April 2002. The Ttus!ee"s ability to Seek"and find a Qualifying 

Replacement Tenant to assume and succeed to Continental's interests in Concourse C-3 could be 

substantially impaired,.or even inhibited, if a Leasehold Mortgage Event of Default were to occur prior to 

Continental's funding of the Leasehold Mortgage Reserve Fund and, particularly, during the period that 

Concourse C-3 is under construction. If a Leasehold Mortgage Event of Default were to occur during this 

time, no funds would be available to the Trustee under the Indenture for any payments that are required 

to be made to the Port Authority to preserve the effectiveness of the Leasehold Mortgage while a 

Qualifying Replacement Tenant is being sought. If any required payments were not made, the Leasehold 

Mortgage would terminate and the Trustee and Bondholders would have no further rights or interests with 

respect to Concourse C-3. In addition, the Trustee and Bondholders would have no rights or interests in 

the construction and related contracts entered into by Continental for the construction of Concourse C-3. 

For these and other reasons, if a Leasehold Mortgage jOvent of Default were to occur during the 

construction· period, the Trustee could encounter particular difficulties locating a Qualifying Replacement 

39 

' I 

i I 

I i 

I 

I 

I 

! I 

i I 

I 

I 

I :i 

I! 

' 
_ _,_;-

r 

l.t 

I, ''1 . I. 

Tenant who would be willing to assume and succeed to Continental's interests if\ Concourse C-3 as• an 

be 

uncompleted facility. Finally, although Continental estimates that the construction of Concourse C-3 will 

completed on or about April 2002, prospective investors should consider that completion of the 

construction of Concourse C-3 by the anticipated completion date could be' adversely affected by such 

factors as (a) estimating errors, (b) design· arid engineering errors, (c) delays· in the award 'or 

processing of construction contracts or changes in construction plans, (d) unforeseen site conditions, 

tion-related 

(e) labor difficulties, 

delays. 

(f) adverse weather conditions, (g) · coniractor· defaults and''( ti) other construc-

· · .,;,- , .. 

. ' .. Requirement for Single Successor. ~· 

Tenant or Consortium of ;Tenants,· The Leasehold Mq[lgage 

gonsortium 

provides that the Trustee may assign the.- Terminal G. Facility Le<J.se only to a single tenant ·or to,_a 

meets 

of tenants, each of which '1s jointly and severally responsible for the conscortium's liabilities and 

Reletting 

certain 

~ 

requirements described under "SECURITY FOR THE- BONDS.-, Leasehold Mortgage and 

multiple 

Obligations, of. Qualifying Replacement T:enant ~ Quafifi<;atian Standards", but .. not: to 

tenants that are not part of a consortium. This limits the availability of potential Qualifying 

Replacement 

allowed•to mortgage 

Tenants. In addition, the Leasehold Mortgage provides that subsequent tenants·will not be 

their interests- in Concourse C-3. Thus, !tie Trustee and Bondholders will have' no 

Replacement 

further- rights or ·Interests in ·concourse C-3 following the assignment- of the facility to a Qualifying 

Tenant. · 

•" • ' ' . . • ' . .:::. 1·-' . • . . Payment of "Deferred Re/etting . • • • Fee" to the Port Authority. As a condition to assuming Continental's 

rights and interests with respect to Concourse C-3, a Qualifying 'Replacement tenant must pay .to--the 

'~SECURITY 

Port -Authority at the time of such a~sumption a deierred reletting fee of up to $22-million. See FOR THE BONDS - Leasehold Mortgage imd 'Reletting --:- Obligations of Qualifying 'ReThis 

placement Tenant- Payment of Accrued Continental Obligation<;> and Deterred Reletting Fee': ,al;>ove. 

immediat~ly 

fee, cand the fact that theport Authority could .lease the. same p;operty to the oame tenant 

f~llowi.ng the expiration of the term of the Foreclosure Perio(J under the. Leasehold Mortgage 

Replacement 

(i.e., up to 720 days) without regard to this fee could impair th!' ability of the Trustee to find a Qualifying 

Terminal C 

Tenant .willing to assume Cof\tinental's obligations.with respect to Concourse C-3 under the 

Facility Lease and the Concourse C-3 Lease, Agreement. · ., 

Port 

Limitations 

Authority 

on SuccessorTenants. Any proposed replacementtenant must tie approved by both the 

Mortgage' 

and· the Authority. As described above under ''SECURITY FOR THE BONDS---'- Leasehold 

and· Reletting- Obligations of Qualifying Replacement Tenant......: Qualification Standards,'' 

the Port Authority in particular is entitled to consider a number ·6Hacto'rs in -determining whether"t6 

Port-Authority 

provide '1ts consent to a proposed replacement tenant nominated by tlie Trusiee. Some of the factors !he 

Port 

inay ·consider in deciding wheiher to apilrove: a proposed re'placement tenant provide the 

willing 

Authority witli'-sigriificant discretion to reject any proposed repfa'cerneni teriant who is" otherWise 

Agreement 

and able to assume Continental's rights and obligations under the Concourse c:3 LEiase 

and with.respect to c:;oncourse. C-3. • .• 

No Direct Interest in Project lnsura~ce or SimilarPro<io;>eds :; . . '..;''' 

' ·~ 

Pursuant to ihe Terminal C Facility lease, Continental is requirEid·to maintain casUalty insurancE! with 

respect to Concourses C-1, C-2 and C-3 -iii an aggregateamount nofle~s than the full replacement value 

thereof. In addition, the Terminal C Facility Lease requires Continentai'toapply the proceeds o(finYiiiich . . ' . ' . ·. c ,. ., - _. ' --. 

occurrence 

insurance to rebuild or reconstruct the affected portions of Concourses C-1, C-2 and' C-3 ·upon the 

of any casualty event or other loss. Bon-dholders·tiave·no diri!chnterest 

proceeds orsimilar 

in any such·insi.mince 

proceeds. -.- o.·· • ... . . . .. 

Pursuant to the Terminal A Facility Lease, the. Port Authority Will be required to r:naintain casualty 

insurance with respect to Concourse A-2 in an amount not less than 80%.(90% if the enclosed portions 

are protected by a sprinkler system) of the insurable value thereof, which may be effected in whole or in 

part under the Port Authority's self-insurance plan>. In addition, the,Terminal A Facility Lease will provide 

that, upon the occurrence of any casualty event, the Port Authority shal.l repair or rebuild..the damaged 

40 
portions of Concourse A-2, unless such repair or rebuilding cannot be completed within 90 days, in which 

event the Port Authority may terminate the Terminal A Facility Lease in whole or in part. Bondholders will 

have no direct interest in the proceeds of any such insurance or similar proceeds. 

Effect on Bonds of Merger or Other Corporate Reorganization of Continental; Absence of Certain 

Covenants ' 

The Lease Agreements do not prohibit Continental from consolidating or merging with or into another 

corporation or entity, or from selling or otherwise disposing of all or substantially all of its assets, so long 

as certain conditions are satisfied. See "THE LEASES- The Concourse A-2/C-1 /C-2 Lease Agreement- Continental's. Obligation to Maintain Corporate Existence" and "-The Concourse C-3 Lease 

Agreement- ContinentaJ's Obligation to Maintain Corporate Existence" in Appendix D. If Continental 

were to. participate in a merger or other corporate reorganization as permitted· under .the Lease 

Agreements·, either voluntarily or otherwise, the financial condition and prospects of the surviving or 

resulting corporation or transferee could be materially different from those of Continental, and the security 

for the payment of the Bonds, and the ratings thereon and market price thereof, could. be.adversely 

affected. · 

Holders of the Bonds do not have the right to require Continental to repurchase the Bonds because 

of a merger or other corporate reorganization of Continental. 

Further, Continental has recently entered into a long-term global alliance with Northwest and a 

corporate governance agreement with certain affilia,tes of Northwest. The ability of Continental toengage 

in a change of control transaction other than with Northwest or an affiliate thereof is limited by the 

provisions of the corporate governance agreement. See ''CERTAIN BONDOWNERS' RISKS - Obligation 

of Continental as Primary Security; Certain Risks with Respect to Continental- Risk Factors Relating to 

Continental -Risks Regarding Continental/Northwest Alliance" above. 

Possible Loss of Tax-Exempt Status of Interest on Bonds 

On the date of delivery of and payment for the Bonds, Bond Counsel will render its opinion with 

respect to the tax-exempt status of the interest on the Bonds, the form of which opinion is set forth in 

Appendix B hereto. See also "TAX MATIERS" herein. 

If the interest on the Bonds is determined to be includable in gross income of registered owners of 

the Bonds for federal income tax purposes on account of a Determination of Taxability, such Bonds will be 

subject to special mandatory redemption as described under "THE BONDS- Special Redemption Upon 

a Determination of Taxability" above. If the interest on the Bonds is determined to be includable in gross 

income of registered owners of the Bonds for federal income tax purposes for any reason other than as a 

result of a Determination of Taxability, the Bonds will not be subject to special mandatory redemption. In 

either such event, there will be no adjustment iri the interest rate on the Bonds and the owners will not be 

indemnified against losses sustained as a result of a determination that the interest on the Bonds is not 

excludable from gross income for federal income tax purposes. Further, a Determination of Taxability may 

not occur for a substantial period of time after interest first becomes includable in the gross income of the 

owners of. the Bonds for federal income tax purposes, No· Determination of Taxability will result if the 

events that Would otherwise give· rise to a Determination of Taxability are the res.ult of a change in the 

Internal Revenue Code or regulations promulgated ·under the lrtternal Revenue Code adopted and 

becoming effective after the date of issuance of the Bonds. Additionally, if, prior to a Determination of 

Taxability, the lien of the Indenture has been defeased pursuant to the provisions thereof, such Bonds will 

not be subject to special mandatory redemption as a result or such Determination of Taxability. In certain 

circumstances, the loss of the exclusion of interest on any Bonds from gross income of the owners of 

those Bonds for federal income tax purposes could be retroactive to the date of issuance of the Bonds. 

The tax liability of the owners of any Bonds for failure. to inclUde interest on the Bonds in their gross 

income may extend to years for which interest was received on the. Bonds, or a portion of the Bonds, and 

for which the relevant statute of limitations has not yet, run: .. 

41 
·· If the Bonds are redeemed as· described in the foregoing paragraph, then the failure by 

Continental to observe any covenant, agreement or representation in the Lease Agreements or 

Indenture that results in a Determination of Taxability will not constitute an Event of Default under 

the Indenture and payment of the redemption price will constitute full and complete payment and 

satisfaction to the owners ot the Bonds for any·claims, damages, costs or expenses arising out of 

or based upon such failure by Continental. 

NO LITIGATION 

There is, ·to the best knowledge of the Authority, no action, suit or proceeding at law or in equity 

pending or threatened against the !iuiilority to restrain or enjoin the issuance or sale of the Bonds or in 

ariy way contesting the validity or affecting the power of the Authority with respect to the issuance or sale 

of the Bonds or the documents or instruments executed by the Authority in connection therewith or the 

existence or powers of the Authority o~ the right. of the Authority to finance the Project, nor, 'to the best 

knowled'ge ofthe Authority, any basis therefor. 

RATINGS 

Moody's and S&P have provided ratings fcir the Bonds of Ba2 and BB, respectively. These ratings 

reflect only the view of such organizations, and an explanation of the significance of such ratings may be 

obtained only from the rating agency furnishing such' rating. There is no assurance that such ratings will 

be maintained for any given period of time or that such ratings will not be revised downward, suspended 

or withdrawn entirely by such rating agencies; ihn their sole judgment, circumstances so warrant. Any 

such downward revision, suspension or withdrawal of such ratings may have an adverse effect on the 

market price of the affected series of Bonds. 

AVIATION DEMAND CONSULTANT 

The Analysis of Potential Gate Demand included as Appendix E to this Official Statement has been 

prepared by Leigh Fisher, as consultant to Continentaf, and is included in reliance upon the knowledge 

and experience of such firm in the field of airport consulting. 

UNDERWRITING. 

The· Bonds are being purcna:sed for reoffering by the Underwriters at an aggregate underwriting 

discount of$5,135,864.26 and an aggregate original issue discount of $6,298,150.25. The Purchase 

Contract dated September 15, 1999 between the Authority and Goldman, Sachs & Co., as representative 

of the Underwriters, provides that the UnderWriters will purchase all of the Bonds if any are purchased 

and that such purchase is subject to certain' terms and conditions set forth therein, including the approval 

of certain legal matters by counsel. Continental has agreed to indemnify the Authority and ·the 

Underwriters against certain liabilit'1es, including certain civil liabilities under federal securities laws. 

CONTINUING DISCLOSURE 

Continental will enter into a continuing disclosure agreement with the Trustee upon the issuance and 

sale of the Bonds to provide certain financial and operating data concerning its affairs on a continuing 

basis for owners of the Bonds. For a description of such agreement, see Appendix C- Summary of 

Certain Provisions of the Continuing Disclosure Agreement. 

42 
· TAX MATTERS 

,._. ·::·.: 

Exclusion of Interest on the Bonds from Gross Income for Federallncome.Tax Purposes 

The Internal Revenue Code 'irnr)oses certain requirement's 'iivi]ith .must be met ofi a continuing basis 

subsequent to the issuance 'of the Bonds ·in order to assure thEifi'nterest on the Bonds will be and remain 

excluded from gross income for federal income tax purposes uncier Section ·i··a·3 ofthe Internal Revenue 

Code. Such requirements include, among other things, rebate of arbitrage, investment limitations, use of 

proceeds for qualifying airport facilities, limitations with respect to paymei'ii 'of issuance costs and 

acquisition of land, used property and prohibited facilities .. failu_re of the Authority or Continental to 

comply with such requirements may cause .interest on the Bonqs to. be incjud~d in gross income for 

federal income tax purposes retroactive to the date of issuance of the Bonds. Except as otherwise 

expressly permitted by the Bond Documents, the Authority and Continental have covenanted not to take 

any action or fail to take any action which would cause the interest on the Bonds to be included in gross 

income under Section 1 03 of the Internal Revenue Code as in ef1€.ct on the date of issuance of the Bonds. 

Assuming compliance by the .. AUthority and Continental with their covenants with respect to the 

Internal Revenue Code, McCarter & English·, LLP, Bond Counsel·to the Authority, is·of the·opiriion that, 

under existing law, interest on the Bonds is excluded frorri the gross income of the owners of the·Bonds 

for federal income tax purposes pursuant to SeCtion· 103 of the Internal Revenue Code, except' as to 

interest on any Bond for any period during which such Bond is held by a· person who is either a 

"substantial user" (within the meaning of Section 147 (a) of the Internal Revenue Code) of the facilities 

financed with the proceeds of the Bonds or a "related person" of such a substantial user. 

Certain requirements contained or referred to in the documents relevant to the Bonds may be 

changed and certain actions may be taken, under the circ!Jm'stances and'subject tci'the terms and 

conditions set forth in· such' documents; upon tlie advice or with the app.roving opinion of nationally· 

recognized bond counsel. McCarter & English, LLP expresses 'no opinion as tO' ~ny Bond or the interest 

thereon if any such change occurs or action is taken upon the advice 'or approval of bond counsel other 

than McCarter & English, LLP. · ·· 

Tax Treatment of Original Issue Discount 

The initial public offering price of the Bonds is less than the principal amount payable on each of the 

Bonds at maturity. The difference between the initial public offering price of the Bonds at which price a 

substantial amount of each of the Bonds was sold and the principal amount payable .at maturity of each of 

the Bonds constitutes original issue discount Bond Counsel is of the opinion that the appropriate portion 

of the original issue discount allocable to the original and each subsequent owner of the Bonds will be 

treated for federal income tax purposes as interest not includable in gross income under Section 103 of 

the Internal Revenue Code to the same extent as stated interest on the Bonds. 

Under Section 1288 of the Internal Revenue Code, original issue discount on the Bonds accrues on 

the basis of economic accrual. The basis of an initial purchaser of a Bond acquired at the initial public 

offering price of the Bond will be increased by the amount of such accrued discount 

Owners of the Bonds should consult their personal tax advisors with respect to the determination for 

federal income tax purposes of the original issue discount properly accruable with respect to the Bonds 

and the tax accounting treatment of accrued interest 

Additional Federal Income Tax Consequences 

Under the Internal Revenue Code, interest on the Bonds is an ''item of tax preference" and therefore 

is included in calculating alternative minimum taxable income for purposes of the alternative minimum tax 

imposed by Section 55 of the Internal Revenue Code on individuals and corporations. 

Prospective purchasers of the BoQdS should also be aware that ownership of, accrual or receipt of 

interest on, or disposition of, governmental obligations, such as the Bonds, may have collateral federal 

43 
income tax consequences tor certain taxpayers, including- financial institutions, property and casualty 

insurance companies, S Corporations, certain foreign corporations, 

or Railroad Retirement benefits 

individual recipients of Social Security 

and taxpayers who may be deemed to have incurred or continued 

indebtedness to purchase or carry such obligations. Prospective purchasers of the Bonds should consult 

their tax advisers as to any possible coll<:iieral consequences· from _their ownership of, accrual or receipt of 

interest on, or disposition ·ot; the_ Bonds .. · 

State of New Jersey Taxation 

Bond Counsel is of the opinion that, based upon existing law, interest on the Bonds and any gain on 

Act. 

the sale of the Bonds are- excluded Irani gross income under the existing New Jersey Gross Income Tax 

OTHER LEGAL MATTERS 

opinion 

Legal 

of McCarter&. 

matters incident 

English, 

to the authorization and issuance of the Bonds are subject to the approving 

matters will be passed upon 

LLP, Newark, New Jersey, Bond Counsel to th!" Authority. Certain legal 

General Counsel, and by 

lor Continental by Jeffery A. Smisek, its Executive Vice President and 

its special counsel, Jones, Day, Reavis & Pogue; and lor the Underwriters by 

their counsel, O'Melveny & Myers LLP .. 

MISCELLANEOUS 

Ag-reements, 

The summaries 

the Guaranty, 

and de~criptions 

_the 

herein of the Basic Lease, the Port Authority Leases, the Lease 

Indenture, the Consent and any other documents 

and not purporting to be quoted 

relating to the Bonds 

in lull are qualified in their entirety by reference 

provisions of such documents, 

to the complete 

copies of which may be obtained 

Underwriters during the period of 

from Continental and from the 

the offering. Appendix A to this Official Statement incorporates by 

reference information concerning Continental, including certain financial information. 

44 
This Official Statement has been duly authorized by the Authority and approved by Continental. 

Approved by: 

CONTINENTAL AIRLINES, INC. 

45 

NEW JERSEY ECONOMIC DEVELOPMENT 

AUTHORITY 

By: Is I CAR EN S. FRANZINI 

Name: Caren S. Franzini 

Title: Executive Director 
" ' APPENDIX A 

AVAILABILITY OF CERTAIN INFORMATION RELATING TO 

CONTINENTAL AIRLINES, INC. 

Available Information 

Continental is subject to the informational requirements of the Securities Exchange Act of 1934, as 

amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other 

information with the Securities and Exchange Commission (the "SEC"). Reports, proxy statements and 

other information filed by Continental can be inspected and copied at the public reference facilities 

maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, 

and at the following Regional Offices of the SEC: Citicorp Center, 500 West Madison Street, Suite 1400, 

Chicago, Illinois 60661-2511, and Seven World Trade Center, 13th Floor, New York, New York 10048. 

Copies of such material can be obtained from the Public Reference Section of. the SEC at 450 Fifth 

Street, N.W., Washington, D.C. 20549 upon payment of prescribed rates. The SEC maintains a Web site 

at http: //www.sec.gov containing reports, proxy statements and other information regarding registrants 

that file electronically with the SEC, including Continental. In addition, reports, proxy statements and 

other information concerning Continental may be inspected and copied at the offices of the New York 

Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. 

Incorporation of Certain Documents by Reference 

The Annual Report of Continental on Form 10-K. for the fiscal year ended December 31, 1998, 

together with Continental's quarterly reports filed on Form 10-Q for the quarters ended March 31, 1999 

and June 30, 1999, is hereby incorporated by reference in this Official Statement and made a part hereof. 

All documents filed by Continental pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange 

Act after the date of this Official Statement and until the time when the Official Statement is available to 

any person from a nationally recognized securities information repository, but in no case less than 

25 days from the end of the underwriting period (i.e., being the later of such time as (a) the Authority 

delivers the Bonds to the Underwriters, or (b) the Underwriters do not retain, directly or as a member of 

an underwriting syndicate, an unsold balance of Bonds for sale to the public), shall be deemed to be 

incorporated by reference in this Official Statement and to be a part hereof from the date of filing of such 

documents. Any statement contained in a document incorporated or deemed to be incorporated by 

reference herein, or contained in this Official Statement, shall be deemed to be modified or superseded 

for purposes of this Official Statement to the extent that a statement contained herein or in any other 

subsequently filed document that aiso is or is deemed to be incorporated by reference herein modifies or 

supersedes such statement. Any such statement so modified or superseded shall not be deemed, except 

as so modified or superseded, to constitute a part of this Official Statement. 

Continental will provide without charge to each person to whom this Official Statement is delivered, 

on written or oral request of such person, a copy of any or all documents incorporated by reference in this 

Official Statement without exhibits to such documents (unless such exhibits are specifically incorporated 

by reference into such documents). Requests for such copies should be directed to the Corporate 

Secretary, Continental Airlines, Inc., 1600 Smith Street, Houston, Texas 77002, telephone 

(713) 324-2948. 

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