Document:

eh1200474_ex1001.htm

EXHIBIT 10.1

 

 

LOAN AGREEMENT

(DIP Term Facility)

 

THIS AGREEMENT made effective as of the 26th day of March, 2012 (the "Effective Date")

 

BETWEEN:

 

CENTURY SERVICES LP, a limited partnership

formed under the laws of the Province of Alberta;

 

(hereinafter referred to as the "Lender")

 

- and -

 

OILSANDS QUEST INC., a corporation incorporated pursuant to the laws of the State of Colorado, United States; and OILSANDS QUEST SASK INC., OILSANDS QUEST TECHNOLOGY INC., 1291329 ALBERTA LIMITED, STRIPPER ENERGY SERVICES INC., TOWNSHIP PETROLEUM CORPORATION, WESTERN PETROCHEMICALS CORP., and 1259882 ALBERTA LTD., each a corporation incorporated pursuant to the laws of the Province of Alberta;

 

(hereinafter collectively referred to as the "Borrowers")

 

 

RECITALS:

 

	
A.

	
The Borrowers have requested that the Lender provide a debtor-in-possession term loan facility more particularly described in this Agreement, to be available and used for the purposes specified in this Agreement.

 

	
B.

	
The Lender has agreed to provide the Borrowers with such loan facility upon and subject to the terms and conditions herein set forth.

 

NOW THEREFORE in consideration of the covenants and agreements herein contained the parties hereto covenant and agree as follows:

 

 

ARTICLE 1

DEFINITIONS

 

	
1.1

	
Definitions:

 

In this Agreement, including, without limitation, in the recitals to this Agreement, the following capitalized words, terms and expressions have the respective meanings set out below:

 

	
  

	
(a)

	
"1259882" means 1259882 Alberta Ltd., and its successors and permitted assigns;

 

  

  

  

 

	
  

	
(b)

	
"1291329" means 1291329 Alberta Limited, and its successors and permitted assigns;

 

	
  

	
(c)

	
"Advance" means an advance of funds by the Lender under the Facility;

 

	
  

	
(d)

	
"Advance Date" means the date of the Advance under the Facility;

 

	
  

	
(e)

	
"Affiliate" shall mean, with respect to any person, any other person who directly or indirectly controls, is controlled by, or is under direct or indirect common control with, such person, and includes any person in like relation to an Affiliate.  A person shall be deemed to control another person if such first person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other person, whether through the ownership of voting securities, by contract or otherwise;

 

	
  

	
(f)

	
"Agreement", "this Agreement", "hereto", "herein", "hereof", "hereby", "hereunder" and similar expressions used herein shall refer to the whole of this Agreement and any schedule hereto, as amended from time to time;

 

	
  

	
(g)

	
"Applicable Law" shall mean, with respect to any Person, property, transaction, event or other matter, any law, rule, statute, regulation, order, judgement, decree, treaty, directive or other requirement having the force of law relating or applicable to such person, property, transaction, event or other matter, and shall also include any interpretation thereof by any Person having jurisdiction over it or charged with its administration or interpretation;

 

	
  

	
(h)

	
"Borrowers" means, collectively, Quest, OQS, Technology, 1291329, SES, TPC, Western and 1259882 and their respective successors and permitted assigns, and "Borrower" meaning any one of them;

 

	
  

	
(i)

	
"Borrowers' Counsel" means the law firm of Norton Rose Canada LLP;

 

	
  

	
(j)

	
"Business Day" means each day other than a Saturday, Sunday or any day on which the chartered banks are not open for business in the Province of Alberta;

 

	
  

	
(k)

	
"Canadian Dollars" or "Cdn." means lawful money of Canada;

 

	
  

	
(l)

	
"Cash Flow Statements and Projections" means the detailed consolidated cash flow statements and projections in respect of Quest and delivered to the Lender pursuant to Section 5.1(e)(ii) and 5.1(e)(iii) hereof;

 

	
  

	
(m)

	
"CCAA" means the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 as amended;

 

	
  

	
(n)

	
"CCAA Proceedings" means the proceedings commenced by the Borrowers under the CCAA as more particularly set out in the Initial Order and commenced under the Court of Queen's Bench of Alberta Court File number 1101-16110;

 

	
  

	
(o)

	
"Contractual Obligation" means, with respect to any Person, any provision or any agreement, instrument, undertaking or other obligation to which such person is a party or by which it or any of its property is bound;

 

  

Page 2

  

 

	
  

	
(p)

	
"Damages" in respect of any matter, means all claims, demands, proceedings, losses, damages (including special, incidental and/or consequential damages such as, but not limited to loss of profit, loss of business revenue and failure to realize expected profits or savings), liabilities, deficiencies, costs and expenses (including, without limitation, all legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement) arising directly or indirectly as a consequence of such matter;

 

	
  

	
(q)

	
"Default" means any event, act or condition which with the giving of notice or lapse of time, or both, would constitute an Event of Default;

 

	
  

	
(r)

	
"DIP Order" means the DIP financing provisions set out in the Initial Order as amended by the Order issued by the Court of Queen's Bench of Alberta, Judicial District of Calgary on February 16, 2012, under the provisions of the CCAA whereby the Borrowers are authorized and empowered to enter into an arrangement to obtain the Facility;

 

	
  

	
(s)

	
"Eagles Nest Oilsands Assets" means the oil sand lease and associated assets held by TPC and located in the vicinity of Eagles Nest, in the Province of Saskatchewan, as more particularly described in the third report of the Monitor dated February 8, 2012;

 

	
  

	
(t)

	
"Effective Date" has the meaning set for in the recitals hereto;

 

	
  

	
(u)

	
"Environmental Health and Safety Liabilities" means any liability or damages, including, without limitation, any bodily injury, personal injury, property damage, damage to or of any Person, or on-site or off-site contamination of any real property and any consequence thereof, arising out of or relating to Environmental Laws or the presence, management, use, storage, disposal, release, discharge, distribution or processing of Hazardous Materials or Hazardous Substance;

 

	
  

	
(v)

	
"Environmental Laws" means all Applicable Law in respect of the natural environment, public or occupational health or safety, and the manufacture, importation, handling, transportation, storage, disposal and treatment of Hazardous Materials or Hazardous Substances;

 

	
  

	
(w)

	
"Equipment" means the equipment described in Schedule "2" hereto annexed;

 

	
  

	
(x)

	
"Event of Default" means any one of the Events of Default set out in Article 6 hereof;

 

	
  

	
(y)

	
"Exchangeable Shares" means all of the issued and outstanding exchangeable shares issued by OQS to former holders of OQS common shares in connection with a reorganization agreement between Canwest Petroleum Corporation (predecessor to Quest) and Oilsands Quest Inc. (predecessor to OQS) dated June 9, 2006 on the basis of 1 common share for 8.23 exchangeable shares; for certainty, the rights, privileges and restrictions governing such exchangeable shares provide that each whole exchangeable share may be exchanged for one Quest common share;

 

	
  

	
(z)

	
"Facility" has the meaning given to it in Section 2.1;

 

	
  

	
(aa)

	
"GAAP" means generally accepted accounting principles in the United States of America that are in effect from time to time;

 

  

Page 3

  

 

	
  

	
(bb)

	
"Hazardous Materials" means any wastes, soil, excavated or reclaimed soil or debris and includes materials, substances or pollutants, whether or not hazardous or toxic (including petroleum products, polychlorinated biphenyls ("PCBs"), asbestos or asbestos-containing materials and radioactive materials), the presence, management, use, storage, disposal, release, discharge, distribution or processing of which is regulated by or could give rise to liability under Environmental Laws;

 

	
  

	
(cc)

	
"Hazardous Substance" means any solid, liquid, gas, odour, heat, sound, vibration or radiation, or combination thereof, that may impair the natural environment, injure or damage property or plant or animal life or harm or impair the health of any individual;

 

	
  

	
(dd)

	
"Initial Advance" means the first Advance made by the Lender under the Facility;

 

	
  

	
(ee)

	
"Initial Order" means the order issued by the Court of Queen's Bench of Alberta, Judicial District of Calgary, on November 29, 2011 under the CCAA under Court File number 1101-16110, in respect of the Borrowers, as the same may be amended from time to time with the consent of the Lender;

 

	
  

	
(ff)

	
"Insurance" means the insurance required to be kept and maintained by the Borrowers pursuant to Article 7 hereof;

 

	
  

	
(gg)

	
"Investment" shall mean, with respect to any Person, any direct or indirect investment in, or purchase or other acquisition of the securities of, or an equity interest in any other Person, any loan or advance to, or arrangement for the purpose of providing funds or credit to (excluding extensions of trade credit in the ordinary course of business in accordance with customary commercial terms), or capital contribution to (whether by means of a transfer of cash or other property or any payment for property or Service for the account or use of) any other Person, or any purchase or other acquisition of all or substantially all of the property of any other Person;

 

	
  

	
(hh)

	
"Lender" means Century Services LP and its successors and assigns;

 

	
  

	
(ii)

	
"Lender’s Counsel" means the law firm of Fraser Milner Casgrain LLP;

 

	
  

	
(jj)

	
"Loan" shall mean the principal amount of the Advance made under the Facility;

 

	
  

	
(kk)

	
"Loan Amount" means, at any point in time, the principal amount of the Loan then outstanding and unpaid, whether or not then due;

 

	
  

	
(ll)

	
"Material Adverse Effect" means any change, condition, event or occurrence, as determined by the Lender, in its sole and absolute discretion, in respect of the Borrowers (including their respective Subsidiaries, if any) or the Equipment or other collateral granted under the Security Documents or any of them that, individually or in the aggregate, has been, or could reasonably constitute or be expected to constitute a material adverse change which involves a reasonable possibility of any change, condition, event or occurrence which, when considered either individually or together with all other changes, conditions, events or occurrences, could reasonably be expected to materially and adversely affect the financial condition, results of operations, business, assets, capital or prospects of  the Borrowers (including their respective Subsidiaries, if

 

  

Page 4

  

 

	
  

	
 

	
any) or any of them or a material adverse effect on the ability of the Borrowers or any of them (including their respective Subsidiaries) to perform their obligations under any of the Security Documents, or impede materially the value of the collateral such that the aggregate liquidation value of the collateral falls below 1.15:1 of the Loan Amount as determined by the Lender in its sole and absolute discretion; for the purpose of greater certainty, a Material Adverse Effect includes, but is not limited to, any actions, suits or proceedings, pending or, threatened involving a claim of more than Cdn. $250,000 and not stayed under the Initial Order.  For certainty, the initiation of the CCAA Proceedings shall not be a Material Adverse Effect;

 

	 	
(mm)

	
"Maximum Amount" has the meaning given to it in Section 2.1, as such amount may be permanently reduced pursuant to Section 3.1(a) hereof;

 

	
  

	
(nn)

	
"Minimum Fee" means the sum of $85,500, being the amount of interest that would be payable, calculated quarterly, on an amount equal to seventy-five (75%) percent of the Facility over the Minimum Period at a rate of sixteen (16%) percent per annum;

 

	
  

	
(oo)

	
"Minimum Period" shall mean a period of three (3) months commencing on the Advance Date;

 

	
  

	
(pp)

	
"Monitor" means Ernst & Young in its capacity as the monitor appointed by the Court of Queen's Bench of Alberta pursuant to the Initial Order;

 

	
  

	
(qq)

	
"Monitoring Fee" means the sum of Cdn. $7,500, payable to the Lender in accordance with Section 2.4(c) hereof;

 

	
  

	
(rr)

	
"OQS" means Oilsands Quest Sask Inc., and its successors and permitted assigns;

 

	
  

	
(ss)

	
"Permit" has the meaning given to it in Section 4.1(q);

 

	
  

	
(tt)

	
"Permitted Encumbrances" means those encumbrances set out in Schedule "1" hereto annexed;

 

	
  

	
(uu)

	
"Permitted Payments" means those amounts set out in the Cash Flow Statement and Projections delivered hereunder from time to time, and any other payments consented to in writing by the Lender in its sole discretion, acting reasonably;

 

	
  

	
(vv)

	
"Person" is to be broadly interpreted and shall include an individual, a corporation, a partnership, a trust, an unincorporated organization, a joint venture, the government of a country or any political subdivision thereof, or any agency or department of any such government, and the executors, administrators or other legal representatives of an individual in such capacity;

 

	
  

	
(ww)

	
"Quest" means Oilsands Quest Inc., and its successors and permitted assigns;

 

	
  

	
(xx)

	
"Release" is to be broadly interpreted and shall include an actual, impending or potential discharge, deposit, spill, leak, pumping, pouring, emission, emptying, injection, escape, leaching, seepage or disposal of a Hazardous Substance which is or may become or might constitute a breach of any Environmental Laws;

 

  

Page 5

  

 

	
  

	
(yy)

	
"Required Consents" means any consent that would be required pursuant to any license or user agreement between the Borrowers and another person in order to grant a security interest in the subject matter thereof to the Lender in the ranking and priority required by the Lender;

 

	
  

	
(zz)

	
"Restricted Payment" means, with respect to any Person, any payment to such Person (i) of any dividends, withdrawals of capital or other payments of any kind on or in respect of any shares of its capital, (ii) on account of, or for the purpose of setting apart any property for a sinking or other analogous fund for, the purchase, redemption, retirement or other acquisition of any shares of its capital or any warrants, options or rights to acquire any such shares, or the making by such persons of any other distribution in respect of any shares of its capital, (iii) of any principal of or interest or premium on or of any amount in respect of a sinking or analogous fund or defeasance fund for any debt or liability of such person ranking in right of payment subordinate to any liability of such Person under the Security Documents, (iv) in respect of an Investment, or (v) of any management, consulting or similar fee or any bonus payment or comparable payment, or by way of gift or other gratuity, to any Affiliate of such person or to any shareholder, director or officer thereof; provided that, notwithstanding the foregoing, the Borrower are permitted to make any and all required payments in connection to the “Existing Retention Program”, as such term is defined in the Initial Order, and all Permitted Payments;

 

	
  

	
(aaa)

	
"Security Documents" means those documents referred to in Section 3.1 hereof;

 

	 	
(bbb)

	
"SES" means Stripper Energy Services Inc., a corporation incorporated pursuant to the laws of the Province of Alberta, and its successors and permitted assigns;

 

	
  

	
(ccc)

	
"Subsidiary" of any Person shall mean any other Person of which shares or other equity units having ordinary voting power to elect a majority of the board of directors or other individuals performing comparable functions, or which are entitled to or represent more than 50% of the owners’ equity or capital or entitlement to profits, are owned beneficially or controlled, directly or indirectly, by any one or more of such first person and the Subsidiaries of such first person, and shall include any other Person in like relationship to a Subsidiary of such first person; and

 

	 	
(ddd)

	
"Technology" means Oilsands Quest Technology Inc., and its successors and permitted assigns;

 

	
  

	
(eee)

	
"TPC" means Township Petroleum Corporation, and its successors and permitted assigns; and

 

	
  

	
(fff)

	
"Western" means Western Petrochemicals Corp., and its successors and permitted assigns.

 

	
1.2

	
Schedules:

 

The following schedules are attached hereto and are incorporated in and deemed to be an integral part of this Agreement:

 

  

Page 6

  

 

Schedule "1"                        Permitted Encumbrances

 

Schedule "2"                        Equipment

 

Schedule "3"                        [intentionally omitted]

 

Schedule "4"                        Subsidiaries

 

Schedule "5"                        Debt Required to be paid out on Closing

 

 

ARTICLE 2

FACILITY

 

	
2.1

	
Facility Established:

 

In reliance upon the representations, warranties and covenants of each of the Borrowers herein contained and subject to the terms and conditions herein set forth, the Lender hereby establishes in favour of the Borrowers a non-revolving, debtor-in-possession term loan facility (the "Facility"), up to a maximum amount of Two Million Eight Hundred and Fifty Thousand Dollars ($2,850,000) (the "Maximum Amount"), on the following terms:

 

	
  

	
(a)

	
The Loan shall be advanced in a single Advance.

 

	
  

	
(b)

	
The outstanding Loan Amount shall not at any time exceed the Maximum Amount.

 

	
  

	
(c)

	
The Facility shall be a non-revolving twelve (12) month term facility and shall have the Minimum Period as the minimum initial term.  The Borrowers shall have the right to permanently repay the Facility in full at any time after the expiry of the Minimum Period.

 

	
  

	
(d)

	
The Loan (and any accrued and unpaid interest thereon) is payable on the earlier to occur of the following (each a "Termination Date"):

 

	
  

	
(i)

	
demand by the Lender following the occurrence of an Event of Default;

 

	
  

	
(ii)

	
the date which is 365 days immediately following the Effective Date;

 

	
  

	
(iii)

	
the date on which the Borrowers complete all requirements of a plan of arrangement that has been accepted by the creditors to the Borrowers and approved by and Order of a court of competent jurisdiction in connection with the CCAA Proceedings; and

 

	
  

	
(iv)

	
the date on which the stay of proceedings set out in the Initial Order is terminated, expires or is lifted.

 

	
  

	
(e)

	
The Loan shall be repayable from the Advance Date as follows:

 

	
  

	
(i)

	
interest on the outstanding balance of the Loan Amount shall be paid on the last Business Day of each month during the term of the Facility; and

 

  

Page 7

  

 

	
  

	
(ii)

	
on the Termination Date, the Borrower shall pay the outstanding balance of the Loan with all interest accrued but unpaid thereon, together with any other amounts outstanding or payable hereunder.

 

	
  

	
(f)

	
Any payment of principal or interest hereunder shall be made payable to or to the order of the Lender or to such Person or Persons as the Lender may from time to time in writing direct.

 

	
  

	
(g)

	
Notwithstanding anything to the contrary herein, any partial or late payments shall be applied against any part of the indebtedness owing hereunder by the Borrowers to the Lender as the Lender may see fit in its sole and absolute discretion and the Lender shall at all times and from time to time have the right to change any application of any late or partial payment received by it and to re-apply the same on any part or parts of such indebtedness as the Lender may see fit in its sole and absolute discretion, notwithstanding any previous application.

 

	
  

	
(h)

	
All payments hereunder shall be made at the Lender’s office in Calgary, Alberta as set out in Section 9.1 hereof prior to 2:00 p.m. (Calgary time). Any payments received by the Lender after 2:00 p.m. (Calgary time) on the day payable shall be deemed to have been made and to have been received by the Lender on the next Business Day;

 

	
  

	
(i)

	
Interest on overdue interest shall be calculated in respect of the daily balance outstanding at the rate of sixteen (16%) per annum, determined daily and calculated and payable monthly, based on the actual number of days elapsed divided by 365.

 

	
  

	
(j)

	
In the event that any provision of this Agreement would oblige Borrowers to make any payment of interest or any other payment that is construed by a court of competent jurisdiction to be interest in an amount or calculated at a rate that would be prohibited by law or would result in a receipt by Lender of interest at a criminal rate (as such terms are construed under the Criminal Code (Canada)), then notwithstanding such provision, such amount or rate shall be deemed to have been adjusted nunc pro tunc to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or so result in a receipt by the Lender of interest at a criminal rate, such adjustment to be effected, to the extent necessary, (i) firstly, by reducing the amount or rate of interest otherwise required to be paid under Sections 2.1(j) and 2.2 and (ii) thereafter, by reducing any fees, commissions, premiums and other amounts that would constitute interest for the purposes of section 347 of the Criminal Code (Canada). If, notwithstanding the provisions of this Section 2.1(j) and after giving effect to all adjustments contemplated thereby, the Lender shall have received an amount in excess of the maximum permitted by the Criminal Code (Canada), then such excess shall be applied by the Lender to the reduction of the principal balance of the Loan outstanding and not to the payment of interest or if such excessive interest exceeds such principal balance, such excess shall be refunded to the Borrowers. Any amount or rate of interest referred to in this Section 2.1(j) shall be determined in accordance with generally accepted actuarial practices and principles at an effective annual rate of interest over the term of this Agreement on the assumption that any charges, fees or expenses that fall within the meaning of "interest" (as defined in the Criminal Code (Canada)) shall, if they relate to a specific period of time, be prorated over that period of time and 

 

  

Page 8

  

 

	
  

	
 

	
otherwise be prorated over the terms of this Agreement and, in the event of dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by the Lender shall be conclusive for the purposes of such determination.

 

	
  

	
(k)

	
Unless otherwise stated, wherever in this Agreement reference is made to a rate of interest "per annum" or a similar expression is used, such interest will be calculated on the basis of a calendar year of 365 days or 366 days, as the case may be, and using the nominal rate method of calculation, and will not be calculated using the effective rate method of calculation or on any other basis that gives effect to the principle of deemed re-investment of interest.

 

	
  

	
(l)

	
For the purposes of the Interest Act (Canada) and disclosure under such act, whenever interest to be paid under this Agreement is to be calculated on the basis of a year of 365 or 366 days or any other period of time that is less than a calendar year, the yearly rate of interest to which the rate determined pursuant to such calculation is equivalent is the rate so determined multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by 365 or 366 or such other period of time, as the case may be.

 

	
2.2

	
Interest:

 

Interest shall be calculated at the rate of Sixteen Percent (16%) per annum on the daily balance outstanding under the Facility.  Interest shall be calculated monthly in arrears, before and after maturity, default or judgment, with interest on overdue interest calculated in the same manner at any time on the daily balance outstanding at the same rate based on the actual number of days lapsed divided by 365.

 

	
2.3

	
Legal Fees:

 

All reasonable legal, financial and other advisory fees and disbursements (on a full indemnity basis) of the Lender in connection with the completion of the transactions contemplated herein and includes, without limitation, the drafting, preparation and negotiation of the agreements and other documents governing this transaction, advising the Lender thereon and closing and reporting upon the completion of the transaction, shall be borne by the Borrowers and shall be payable on the Advance Date. Such fees and disbursements are payable whether or not the Facility is completed or funds are advanced in connection therewith and shall be secured by the Security Documents.

 

	
2.4

	
Facility Fees:

 

The Borrowers covenant and agree with the Lender that:

 

	
  

	
(a)

	
In connection with the Facility, the Borrowers shall pay to the Lender on the Effective Date a facility fee equal to $75,000;

 

	
  

	
(b)

	
Commencing on the Advance Date, the Lender shall earn an amount of interest on the Loan Amount at least equal to the Minimum Fee, and if such amount is not earned on or before the expiry of the Minimum Period or the payment in full of the Facility, the balance owing on the account of the Minimum Fee shall be added to the Loan Amount; and

 

  

Page 9

  

 

	
  

	
(c)

	
As of the Effective Date, the Lender shall earn the Monitoring Fee, such fee to be paid by the Borrowers to the Lender quarterly in arrears.

 

	
2.5

	
Proof of Loan Amount:

 

The Borrowers acknowledge that the recording by the Lender of an Advance and any principal, interest, fees, payments or other amounts owing or received under this Agreement in an account opened and maintained by the Lender in respect thereof shall constitute, in the absence of manifest error, conclusive evidence of the Borrowers’ indebtedness and liability at any time and from time to time under this Agreement; provided that the failure of the Lender to record any amount in such account shall not affect the obligation of the Borrowers to pay or repay such indebtedness and liability in accordance with the terms of this Agreement.

 

	
2.6

	
Pre-Conditions to the Initial Advance:

 

The Lender shall not be obliged to make the Initial Advance unless and until each of the following conditions has been fulfilled, satisfied and performed in a manner completely satisfactory to the Lender and its counsel, in each case acting reasonably, in all respects:

 

	
  

	
(a)

	
prior to the Advance Date, the Borrowers shall have obtained the DIP Order in a form and content satisfactory to the Lender, and as of the Advance Date, no application to vary or rescind the DIP Order shall have been made and no appeal shall have been made with respect to the DIP Order or any appeals therefrom shall have been dismissed or vacated;

 

	
  

	
(b)

	
the assets and undertaking of the Borrowers or any one of them include either or both the Equipment and the Eagles Nest Oilsands Assets, subject only to the Permitted Encumbrances;

 

	
  

	
(c)

	
all of the Security Documents, shall have been executed by such Persons as are duly authorized to execute such documents and the Lender shall be satisfied that such Persons have been so duly authorized and such documents shall have been delivered to the Lender’s Counsel and filed and registered as the Lender’s Counsel may consider necessary or advisable;

 

	
  

	
(d)

	
an assignment of the insurance policy and proceeds thereof;

 

	
  

	
(e)

	
the Borrowers shall have delivered to the Lender certificates of good standing (or equivalent) for each of the Borrowers and certified resolutions for each of the Borrowers authorizing the due execution, delivery and performance of its obligations under this Agreement and the Security Documents;

 

	
  

	
(f)

	
the Lender shall have received officers’ certificates, including without limitation, certificates of incumbency, from the Borrowers;

 

	
  

	
(g)

	
the Lender shall have received opinions of the Borrowers’ Counsel addressed to the Lender and the Lender’s Counsel with respect to the due authorization, execution, delivery and enforceability of the Security Documents, and the registration of security interests in respect of each Borrower and containing such other usual and customary 

 

  

Page 10

  

 

	
  

	
 

	
opinions as the Lender and the Lender’s counsel consider appropriate, all in form and substance satisfactory to the Lender and the Lender’s Counsel acting reasonably;

 

	
  

	
(h)

	
subject to the CCAA Proceedings, no Event of Default shall have occurred and continue to subsist and no event or circumstance shall have occurred and no condition shall exist which will result, either immediately, or with the lapse of time or giving of notice or both, in the occurrence or existence of an Event of Default;

 

	
  

	
(i)

	
each of the warranties and representations made by the Borrowers in this Agreement, in any of the Security Documents and in any other document, material, information or report supplied or delivered in connection with the Facility to the Lender, the Lender’s Counsel or representatives of the Lender shall be true and correct on and after as of the Advance Date with the same effect as if such representations and warranties had been made on and as of the Advance Date, and each of the Borrowers shall have delivered to the Lender a certificate of a senior officer of such Borrower to such effect;

 

	
  

	
(j)

	
no Material Adverse Effect shall have occurred since the commencement of the CCAA Proceedings;

 

	
  

	
(k)

	
the Lender shall have received such financial and other information in respect of each of the Borrowers as may be reasonably required by the Lender;

 

	
  

	
(l)

	
the Lender shall have received Certificates of Insurance in form and substance acceptable to the Lender, together with evidence satisfactory to the Lender that each policy of insurance is in full force, that all premiums which are due have been paid and that no claims have been made thereunder or, if any claims have been made, written notice of such claims has been given to the Lender and that coverage of such risks and perils as stipulated in Article 7 have been effected and are in force;

 

	
  

	
(m)

	
the Lender shall have received evidence, satisfactory to it, that all current amounts payable owing to prior ranking secured creditors (if any) have been paid, and, subject to the Initial Order and the DIP Order, satisfactory confirmation that all rents payable, periodic payments owing to prior ranking secured creditors (if any) and all statutory priority claims (including, without limitation, goods and service tax, harmonized sales tax, provincial retail sales tax, workers’ compensation remittances, employee source deductions (i.e., income tax, pension plan contributions and employment insurance premiums etc.) have been paid up to date and have no claim against the property, assets and undertaking of the Borrowers;

 

	
  

	
(n)

	
the debt referred to in Schedule "5" annexed hereto, if any, shall be repaid in full simultaneously with the obtaining of the Advance by the Borrowers;

 

	
  

	
(o)

	
the Lender shall be satisfied that, subject to the stay provisions of the Initial Order, the Borrowers have complied with and are continuing to comply with all applicable federal, provincial and municipal laws, regulations and policies in relation to their activities;

 

	
  

	
(p)

	
the DIP Order grants to the Lender a first priority mortgage, charge, security interest and encumbrance over and in and to all of the assets of each of the Borrowers, except 

 

  

Page 11

  

 

	
  

	
 

	
for Permitted Encumbrances, and for those disclosed to and approved, in writing, by the Lender;

 

	
  

	
(q)

	
the Borrowers have retained Ceridian as a payroll service to remit all payroll related payments including service deductions; and

 

	
  

	
(r)

	
the Lender shall have received such other documentation as the Lender or the Lender’s Counsel may reasonably require.

 

Each of the conditions set forth in this Section 2.6 is for the exclusive benefit of the Lender and unless waived in writing by the Lender shall be fulfilled, satisfied and performed by the Borrowers.

 

 

ARTICLE 3

SECURITY

 

	
3.1

	
Security Documents:

 

As security for the timely repayment of the Loan and the due and punctual payment and performance of this Agreement and all other indebtedness, liabilities and obligations of each of the Borrowers to the Lender under, arising out of or from this Agreement or any other agreement, both present and future direct or indirect, absolute or contingent, matured or otherwise, or howsoever arising, the Borrowers shall deliver to the Lender on or before the Advance Date (unless otherwise indicated) the following documents, each in form and content satisfactory to the Lender:

 

	
  

	
(a)

	
a general security agreement by each Borrower in favour of the Lender creating a first charge over all present and after-acquired property, assets and undertaking of such Borrower subject only to the Permitted Encumbrances; provided that notwithstanding any provision herein to the contrary, the Lender shall forthwith provide a written release and execute and deliver all documents necessary or desirable to release the charge over the assets and undertaking of TPC in and to the Eagles Nest Oilsands Assets upon the sale of the Eagles Nest Oilsands Assets in accordance with the Initial Order;

 

	
  

	
(b)

	
an assignment to the Lender of the rights, benefits and interest of each Borrower in and to the Insurance and all proceeds resulting therefrom, together with a certificate of insurance from the insurers in form and content satisfactory to the Lender showing that all proceeds arising from such Insurance shall be payable to the Lender; and

 

	
  

	
(c)

	
such other documents, agreements, instruments, undertakings and assurances as the Lender or the Lender’s Counsel, acting reasonably, may deem necessary or advisable in connection with, relating to or arising from or to give effect to or better assure the foregoing Security Documents.

 

 

  

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES

 

	
4.1

	
Borrowers’ Representations and Warranties:

 

In order to induce the Lender to enter into this Agreement and to make available the Loan and to advance the Loan, the Borrowers, on a joint and several basis, make the following representations and warranties to the Lender as at the date hereof:

 

	
  

	
(a)

	
Authorization:  Each Borrower has the corporate power and authority required as of the date hereof to enter into and perform its obligations under this Agreement, to own or lease its property and assets and to conduct the business in which they are currently engaged.

 

	
  

	
(b)

	
Corporate Power, No Conflict with Laws or Agreements:  Neither the execution nor the delivery of this Agreement by each Borrower, nor the consummation by it of the transactions herein contemplated, nor the compliance by it with the terms, conditions and provisions hereof will conflict with or result in a breach of any of the terms, conditions or provisions of:

 

	
  

	
(i)

	
its constating documents;

 

	
  

	
(ii)

	
any material agreement, instrument or arrangement to which such Borrower is a party, or by which any of its property is or may be bound, or constitute a default thereunder, or result thereunder in the creation or imposition of any security interest, mortgage, lien, charge or encumbrance of any nature whatsoever upon any of such properties or assets of the Borrower;

 

	
  

	
(iii)

	
any judgment, order, writ, injunction or decree of any court, relating to such Borrower; or

 

	
  

	
(iv)

	
any Applicable Law relating to such Borrower, or its properties or assets.

 

	
  

	
(c)

	
Status:  Each Borrower is corporation duly incorporated and organized and is validly subsisting under the laws of its jurisdiction of incorporation.

 

	
  

	
(d)

	
Agreement Binding:  This Agreement constitutes a legal, valid and binding obligation of each Borrower enforceable against it in accordance with its terms, subject to applicable laws relating to bankruptcy, insolvency and other similar laws affecting creditors’ rights generally and subject to the qualification that equitable remedies may only be granted in the discretion of a court of competent jurisdiction.

 

	
  

	
(e)

	
Litigation:  Excepting only the CCAA Proceedings and any other proceedings of which the Borrowers have advised the Lender in writing, there are no actions, suits or proceedings pending or, to the knowledge of the Borrowers, threatened, at law or in equity or before any federal, provincial, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or before any arbitrator or mediator of any kind, which involve a reasonable possibility of any material adverse change in the financial condition of the Borrowers and, to the best knowledge of the

 

  

Page 13

  

 

	
  

	
 

	
Borrowers, the Borrowers are not in default with respect to any judgment, order, writ, injunction, decree, rule or regulation of any court, arbitrator or mediator or federal, provincial, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign.

 

	
  

	
(f)

	
Information Provided:  All information, data and reports (financial or otherwise) furnished by or on behalf of the Borrowers to induce the Lender to enter into this Agreement were true, accurate and complete in all material respects at the time that they were furnished to the Lender and continue to be true as of the date hereof.

 

	
  

	
(g)

	
Disclosure:  None of the representations and warranties made herein and no document furnished by or on behalf each of the Borrowers to the Lender in connection with the transactions contemplated herein contain any untrue statement of a material fact or omit to state any material fact necessary to make any such statement or representation not misleading to the Lender and there are no facts directly relating to any Borrower, not disclosed herein or otherwise disclosed in writing to the Lender which, if known to the Lender, might reasonably be expected to deter the Lender from completing the transactions contemplated in this Agreement.

 

	
  

	
(h)

	
No Assignment:  Other than for the Permitted Encumbrances, there has been no assignment, sale, transfer, conveyance, mortgage, charge, pledge or hypothecation, absolute or contingent, direct or indirect, of the whole or any part of the  rights, title and interest of the Borrowers in any of their respective properties or assets.

 

	
  

	
(i)

	
Consent:  The entering into of this Agreement and all documents referred to herein or contemplated hereby do not require any consent, approval or authorization of any other Person, other than Required Consents.

 

	
  

	
(j)

	
Maintain Insurance:  Each of the Borrowers are maintaining the insurance required herewith in full force and effect.

 

	
  

	
(k)

	
Financial Statements:  The consolidated financial statements of Quest which have been furnished to the Lender pursuant to this Agreement or in connection with the request for credit by the Borrowers, present fairly the financial condition of Quest on a consolidated basis and have been prepared in accordance with GAAP and there has been no Material Adverse Effect since the date of such statements.  The Borrowers do not have any liability (contingent or otherwise) or other obligations for the payment of money of the type required to be disclosed in accordance with GAAP which are not disclosed on such financial statements.

 

	
  

	
(l)

	
Corporate Authorization:  This Agreement including the borrowing of monies hereunder and the other obligations of the Borrowers have been duly authorized, executed and delivered by each Borrower.

 

	
  

	
(m)

	
Ownership:  Each Borrower owns and has all right, title and interest in and to all of its assets, machinery, equipment and has the authority to grant security therein to the Lender free of all security interests, mortgages, liens, claims, charges or other encumbrances in favour of any other person other than the Permitted Encumbrances.

 

  

Page 14

  

 

	
  

	
(n)

	
Statutory Claims, etc.:  Any and all rents payable, periodic payments owing to prior secured creditors (if any) and any and all statutory priority claims (including, without limitation, goods and service tax, harmonized sales tax, provincial retail sales tax, workers’ compensation remittances, employee source deductions payable to Canada Revenue Agency (i.e., income tax, pension plan contributions, and employment insurance premiums, etc.) have been paid in full and/or set aside for remittance when due (as the case may be) as of the date hereof.

 

	
  

	
(o)

	
Tax Status:  Except as the Borrowers have previously disclosed in writing to the Lender with specific reference to this paragraph, the Borrowers have filed all tax returns which are required to be filed by them, and has paid when required by Applicable Law all taxes (if any) which have become due as shown on such returns or on any assessment received by them.  The income tax liability of the Borrowers and their Subsidiaries (if any) has been assessed for all financial years to and including the financial year included in the most recent financial statements of the Borrowers delivered to the Lender, and there is no material outstanding matter of dispute or difference between any of the Borrowers and their Subsidiaries (if any) and any federal, provincial, state, territorial or municipal taxing authority, agency or department.

 

	
  

	
(p)

	
Subsidiaries, etc.:  Schedule "4" annexed hereto (with such amendments thereto as are delivered by the Borrowers to the Lender subsequent to the date of this Agreement to reflect events occurring subsequent to the date of this Agreement) contains a complete and accurate list of all Subsidiaries of the Borrowers, and sets out with respect to each Borrower and their Subsidiaries its jurisdiction of  incorporation and the address of its executive office and its principal place of business, the jurisdictions in which it holds any material property or carries on any material business, the number and classes of its issued and outstanding shares and the registered and beneficial holders of all such shares (other than in respect of Quest). Excluding the Exchangeable Shares and any warrants, options, contracts or commitments in respect of the securities of Quest, except as set out in Schedule "4" (as the same may be amended as aforesaid) there are no outstanding warrants, options, contracts or commitments of any kind entitling any Person to purchase or otherwise acquire from any Borrower and its Subsidiaries any shares in the capital of or other equity interests in any Borrower and its  Subsidiaries nor are there outstanding any securities which are convertible into or exchangeable for any shares in the capital of or other equity interests in any Borrower and its Subsidiaries.

 

	
  

	
(q)

	
Permits:  Each Borrower and its Subsidiaries holds in good standing all material permits, licences, approvals, franchises, rights-of-way, easements and entitlements (collectively, "Permits") which it requires, or is required by Applicable Law, to hold, own, lease, license or use the property included in the business carried on by it and to carry on such business, except for such Permits the absence of which do not affect its or its rights to carry on business in such jurisdiction and, has not had, and which does not have a reasonable possibility of having, a Material Adverse Effect.

 

	
  

	
(r)

	
Environmental Matters:  Each Borrower specifically represents and warrants that, the business carried on and the properties owned or used at any time by any Borrower and its Subsidiaries (including the lands owned or occupied by any of them and the waters on or under the lands) have at all times been carried on, owned, possessed or used in 

 

  

Page 15

  

 

	
  

	
 

	
compliance with all Environmental Laws; none of the Borrowers nor their respective Subsidiaries is subject to any proceedings alleging the violation of any Environmental Law, and no part of its businesses or properties is the subject of any proceeding to evaluate whether remedial action is needed as a result of the Release of or presence of any Hazardous Substance on any lands owned or occupied by them; there are no circumstances that could reasonably be expected to give rise to any civil or criminal proceedings or liability regarding the Release of or presence of any Hazardous Substance on any lands used in, possessed, or related to the business or property of any of the Borrowers or their respective Subsidiaries or on any lands on which any of the Borrowers or their respective Subsidiaries have disposed or arranged for the disposal of any materials arising from the business carried on by it, or regarding the violation of any Environmental Law by any of the Borrowers or their respective Subsidiaries or by any other Person for which any of them is responsible; all Hazardous Substances possessed, disposed of, treated or stored on lands owned, possessed or occupied by any of the Borrowers or their respective Subsidiaries have been possessed, disposed of, treated and stored in compliance with all Environmental Laws; there are no proceedings and there are no circumstances or facts which could give rise to any proceeding in which it is or could be alleged that any of the Borrowers or their respective Subsidiaries are responsible for any domestic or foreign clean up or remediation of lands contaminated by Hazardous Substances or for any other remedial or corrective action under any Environmental Laws; each of the Borrowers or their respective Subsidiaries has maintained all environmental and operating documents and records relating to its business and property in the manner and for the time periods required by any Environmental Laws and none of the lands have been subjected to an environmental audit and none of the Borrowers is aware of any pending or proposed changes to any Environmental Laws which would render illegal or materially adversely affect its business, properties or opportunities.

 

 

ARTICLE 5

COVENANTS

 

	
5.1

	
Affirmative Covenants:

 

Each Borrower, on a joint and several basis, covenants and agrees with the Lender, as follows:

 

	
  

	
(a)

	
Perform Obligations:  Each Borrower shall fully observe and perform its obligations under this Agreement, the Security Documents and all other agreements and documentation delivered hereunder, including, without limitation, duly and punctually paying all amounts payable by such Borrower.

 

	
  

	
(b)

	
Corporate Existence:  Each Borrower shall at all times maintain in good standing its corporate existence under the laws of its jurisdiction of incorporation and qualify and remain duly qualified to do business and own property in each jurisdiction in which such qualification is necessary in order to carry on its business and operations.

 

	
  

	
(c)

	
Compliance with Law:  Each Borrower shall comply, in all respects, with all Applicable Laws, subject to any order issued in connection with the CCAA Proceedings.

 

  

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(d)

	
Control Systems:  Each Borrower shall establish and maintain accounting systems and such internal controls in respect of its businesses (including without limitation, inventory and cash management systems) acceptable to the Lender; acting reasonably, and shall utilize the service of a payroll processing and servicing company approved in writing by the Lender.  Each Borrower shall provide the Lender with the name, address and other particulars of such payroll service together with a release and direction authorizing and instructing such payroll service to divulge any information sought or to be requested by the Lender until the Loan Amount shall be repaid in full.  The Lender agrees that Ceridian is an acceptable payroll processing and servicing company.

 

	
  

	
(e)

	
Financial Statements and Reports:  Quest shall deliver or cause to be delivered to the Lender:

 

	
  

	
(i)

	
monthly bank statements for each bank account of the Borrowers;

 

	
  

	
(ii)

	
every month by the 15th Business Day of each month, a consolidated cash flow projection of Quest for the then following 90 days;

 

	
  

	
(iii)

	
every month by the 15th Business Day of each month, a consolidated cash flow statement of Quest for the immediately preceding month.  Any changes in the actual cash flow from the applicable Cash Flow Statement and Projections prepared by such Borrower shall be explained in writing by management on a monthly basis on the 15th Business Day of each month;

 

	
  

	
(iv)

	
as soon as practicable and in any event within 30 Business Days following each fiscal quarter for Quest during the term of this Agreement, management prepared interim unaudited consolidated financial statements for Quest, including in each case a balance sheet, statement of profit and loss and a statement of changes in financial position, together with comparative figures for the corresponding period in the previous fiscal year;

 

	
  

	
(v)

	
on the 15th day of each month next following, an aged accounts receivable and payable listing;

 

	
  

	
(vi)

	
on or by the 15th day of each and every month of the Loan, and thereafter if there shall exist any outstanding Loan Amount, proof of payment of all rents payable, all periodic payments owing to prior ranking secured creditors (if any) and all statutory priority claims of the Borrowers (including, without limitation, goods and service tax, harmonized sales tax, provincial retail sales tax, workers’ compensation remittances, employee source deductions (i.e., income tax, pension plan contributions and employment insurance premiums, etc.)). In addition to the foregoing, proof of payment for all priority payables shall be provided within 15 days of the due date of any such payments; and

 

	
  

	
(vii)

	
from time to time all such further and other reports and information concerning such Borrower as the Lender may reasonably request.

 

All such reports shall be in such form and shall contain such detail as the Lender may reasonably request; provided however, that the Borrowers shall have a 5 day period in 

 

  

Page 17

  

 

which to cure any default in delivering the deliverables required under this Section 5.1(e), before such default in delivery shall amount to an "Event of Default" under this Agreement.

 

	
  

	
(f)

	
Compliance with Agreement:  Each Borrower shall carry out all of its obligations under this Agreement and the Security Documents.

 

	
  

	
(g)

	
Material Adverse Change:  Each Borrower will provide the Lender with prompt written notice and all records, statements or other evidence of any material adverse change in its financial condition and of any matter, act or thing materially adversely affecting its property or assets, its interest therein or of any material loss, destruction, damage of or to any property referred to in or charged by any of the Security Documents.

 

	
  

	
(h)

	
Inspection:  Each Borrower shall permit the Lender and all other Persons designated by the Lender to visit and inspect its properties and assets during normal business hours upon twenty-four (24) hours prior written notice given to them and to examine and make copies of all books and records relating to its properties and assets and shall ensure that the Lender and each such Person has free and unrestricted access to its property and assets and every part thereof and to such books and records, and that the Lender and each such Person will be provided with such information and data relating to its properties and assets as the Lender or such Person may reasonably request.

 

	
  

	
(i)

	
Further Assurances:  At any and all times each Borrower will do, execute, acknowledge and deliver all such further acts, deeds, conveyances, mortgages, transfers and assurances as the Lender shall  require for the purpose of giving, clarifying, perfecting and dealing with conflicting claims thereto, the validity, legality or enforceability of the mortgages, hypothecs, charges or security of the nature herein specified upon all property intended to be secured by the Security Documents and for the better assuring, conveying, mortgaging, hypothecating, assigning, confirming, pledging, charging and transferring unto the Lender all the hereditaments and premises, estates and property mortgaged, hypothecated, pledged and charged under the Security Documents, or transferred, or intended to be or which such Borrower may hereafter become bound to mortgage, hypothecate, pledge or charge or transfer in favour of the Lender and all choses in action and other intangibles to be secured in favour of the Lender hereunder.

 

	
  

	
(j)

	
Permitted Encumbrances:  Subject to the CCAA Proceedings, each Borrower will keep and maintain each of the Permitted Encumbrances in good standing and will comply with the terms thereof and will forthwith notify the Lender in writing describing in reasonable detail any defaults thereunder.

 

	
  

	
(k)

	
Condition of Properties:  Each Borrower will keep or cause to be kept all of its properties and assets in good mechanical condition, repair and appearance subject to normal wear and tear.

 

	
  

	
(l)

	
Statutory Claims, etc.:  Subject to the CCAA Proceedings, each Borrower shall remit and pay when due, all statutory liens, trust and other Crown claims, any and all rents payable, periodic payments owing to prior secured creditors (if any) and any and all statutory priority claims (including without limitation, employee claims, goods and service tax, harmonized sales tax, provincial retail sales tax, workers’ compensation 

 

  

Page 18

  

 

	
  

	
 

	
remittances, employee source deductions payable to Canada Revenue Agency (i.e., income tax, pension plan contributions, employment insurance premiums, etc.) when due and payable and shall provide the Lender with proof of such payment and remittance, satisfactory to the Lender, within two Business Days of the due date thereof, such proof to include, where applicable, copies of correspondence to and from Canada Revenue Agency together with cheque stubs and cancelled cheques (once received).  Each Borrower consents to the Lender contacting any Persons, including governmental agencies, necessary to confirm payment of same and agrees to sign any such further instruments, documents and take such further action as may be required to give effect to such consent.

 

	
  

	
(m)

	
Payment of Obligations:  Subject to the CCAA Proceedings, each Borrower shall pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its debts and liabilities of whatever nature, except when the amount or validity thereof is being contested and adequate reserves with respect thereto are maintained by such Borrower in accordance with GAAP.

 

	
  

	
(n)

	
Maintenance of Existence and Conduct of Business:  Each Borrower shall preserve and keep in full force and effect its corporate existence; make all material governmental and regulatory filings promptly; engage primarily in business of the same nature as now carried on by it; carry on and conduct its business in a proper, efficient and businesslike manner, in accordance with good business practises; take all reasonable action to obtain and maintain in full force and effect all rights, privileges, franchises and permits necessary or desirable in the conduct of its business; and comply with all Contractual Obligations and Applicable Law except to the extent that the failure to comply therewith would not, in the aggregate, cause or have a reasonable possibility of causing a Material Adverse Effect.

 

	
  

	
(o)

	
Notice:  Each Borrower shall give written notice of each of the following events to the Lender promptly upon becoming aware of any such event:

 

	
  

	
(i)

	
any Default or Event of Default;

 

	
  

	
(ii)

	
any material default or material event of default under any of its Contractual Obligations or any material litigation, investigation or proceeding which may exist at any time involving such Borrower or any of its Affiliates or Subsidiaries and any Person, including, but not limited to, any governmental authority;

 

	
  

	
(iii)

	
any litigation or proceeding (other than the CCAA Proceedings) affecting it or any of its Subsidiaries in which the portion of the alleged damages not fully covered by insurance is more than Cdn. $10,000 (or an equivalent amount in any other currencies) or in which any injunctive or similar relief is sought; and

 

	
  

	
(iv)

	
any event which has caused, or which has a reasonable possibility of causing, a Material Adverse Effect.

 

	
  

	
(p)

	
Proposal:  The Borrowers, jointly and severally, shall provide the Lender with at least two (2) Business Days prior written notice of any proposal or of any Notice of Intention 

 

  

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to Make a Proposal to Creditors or of any intention to make a filing under the CCAA Proceedings or otherwise.

 

	
  

	
(q)

	
Insurance:  The Borrowers shall obtain and maintain insurance on substantially the same terms and conditions in existence on the date hereof and designate the Lender as first loss payee in respect of such policies, all as described in Article 3 and Article 7 of this Agreement.

 

	
  

	
(r)

	
Payroll Service:  The Borrowers agree at all times to utilize a well known payroll service satisfactory to the Lender to remit all payroll related payments including source deductions.  The Lender agrees that Ceridian is satisfactory to it as a payroll service.

 

	
  

	
(s)

	
Cash Flow:  The Borrowers shall operate within the Cash Flow Statements and Projections, subject to a negative variance of up to 10% of the total projected Permitted Payments for the applicable 90 day period (or any positive variance thereof) each as determined as at the last day of each month.

 

	
5.2

	
Negative Covenants:

 

Each Borrower, on a joint and several basis, covenants and agrees with the Lender, that:

 

	
  

	
(a)

	
Further Mortgaging:  Except for advances secured by the Permitted Encumbrances, the Borrowers will not place or secure any debt in addition to the Loan against any of the  properties or assets of any Borrower, nor will they create, assume or permit to exist any mortgage, charge, hypothec, pledge, lien or other encumbrance or security interest with respect to any of the properties or assets of any Borrower, without the prior written consent of the Lender, which consent will not be unduly withheld.  For greater certainty, the Borrowers will not grant any purchase money security interest to a vendor or another lender in connection with the purchase of any property or assets by the Borrowers or grant any security in connection with any loan under the Canada Small Business Financing Act, without the prior written consent of the Lender, which consent may be unreasonably withheld.

 

	
  

	
(b)

	
Transfer:  Other than in the ordinary course of business, the Borrowers shall not dispose of or transfer by way of sale, conveyance, assignment, mortgage, charge, security interest or otherwise or relocate, its undertaking, properties or assets or any part thereof or any of its interest therein or any part thereof, without the prior written consent of the Lender.  Notwithstanding the foregoing, the Borrowers shall not dispose of or transfer by way of sale, conveyance, assignment, mortgage, charge, security interest or otherwise, the Equipment without the prior written consent of the Lender, which consent may be unreasonably withheld.

 

	
  

	
(c)

	
Purchase of Assets/Shares Restricted:  For as long as there is any indebtedness of the Borrowers owing to the Lender and unless the prior written consent of the Lender is obtained, which consent may be unreasonably withheld by it in its sole and absolute discretion, the Borrowers shall not purchase (other than in the ordinary cause of business) any assets from or shares of any Person.

 

  

Page 20

  

 

	
  

	
(d)

	
Making of Loans and Investments Restricted:  The Borrowers shall not make any loans to or investments in any Person, except as set out in the Cash Flow Statements and Projections or as otherwise consented to by the Lender with the prior written consent of the Lender, which consent may be unreasonably withheld by it in its sole and absolute discretion.

 

	
  

	
(e)

	
Payments to Non-Arm’s Length Persons:  Except as set out in the Cash Flow Statements and Projections the Borrowers shall not advance to or repay any amounts owing to any Affiliate, Subsidiary, parent corporation or any shareholder of any of them, except for salaries, overtime and commission in amounts or calculated on a basis agreed to by the Lender in writing, or other non-arm’s length Person without the prior written consent of the Lender, which consent may be unreasonably withheld by it in its sole and absolute discretion.

 

	
  

	
(f)

	
Further Indebtedness:  Except for fees and other amounts owing pursuant to this Agreement and the Security Documents, the Borrowers shall not incur any indebtedness, except trade debt in the ordinary course of business which, for greater certainty, excludes indebtedness for borrowed money.

 

	
  

	
(g)

	
No Guarantees:  Other than as provided in this Agreement, the Borrowers shall not guarantee the obligations of any Person other than to the Lender.

 

	
  

	
(h)

	
No Change in Name:  None of the Borrowers shall change its name without the prior written consent of the Lender which consent will not be unreasonably withheld.

 

	
  

	
(i)

	
Sale of Shares Restricted: Unless the prior written consent of the Lender is obtained, which consent will not be unreasonably withheld, the Borrowers (excluding Quest and, in respect of the Exchangeable Shares only, OQS) shall not permit any shareholder to sell or transfer their shares in any Borrower (excluding Quest and the Exchangeable Shares), or, in any way, permit or consent to any change in effective voting control of any Borrower (excluding Quest and in respect to OQS, any change effected by exchange of the Exchangeable Shares)(by contractual or other means).

 

	
  

	
(j)

	
Amalgamations, etc.:  The Borrowers shall not enter into any transaction of amalgamation or consolidation or merger and none of the Borrowers shall liquidate, wind-up or dissolve itself (or suffer any liquidation, winding-up or dissolution or any proceedings therefor) or continue itself under the laws of any other statute or jurisdiction without the prior written consent of the Lender which consent will not be unreasonably withheld.

 

	
  

	
(k)

	
Restricted Payments:  The Borrowers shall not make any Restricted Payment without the prior written consent of the Lender.

 

	
  

	
(l)

	
Amendments:  The Borrowers shall not amend any of their constating documents or by-laws in a manner that would be prejudicial to the interest of the Lender hereunder and will promptly provide the Lender with a copy of any such amendment.

 

	
  

	
(m)

	
Proposal:  The Borrowers shall not include in any proposal to creditors a proposal to the Lender; provided that if the Borrowers include the Lender in any such proposal to 

 

  

Page 21

  

 

	
  

	
 

	
creditors, through inadvertence or otherwise, the Borrowers hereby consent to an order for a declaration that the stay of proceedings provision of the CCAA Proceedings no longer operates in respect of the Lender and terminating any such stay against the Lender.

 

	
  

	
(n)

	
Court Filings:  The Borrowers shall provide the Lender with not less than two (2) Business Days prior written notice of any court filings to be made by them, such notice to include copies of such court filings.

 

	
  

	
(o)

	
DIP Order:  The Borrowers shall not request, obtain or consent to any amendment, modification or variation of the DIP Order without the prior written consent of the Lender (acting reasonably).

 

 

ARTICLE 6

EVENTS OF DEFAULT

 

	
6.1

	
Events of Default:

 

Without in any way derogating from the rights of the Lender hereunder, each of the following events shall constitute an event of default (an "Event of Default") under this Agreement:

 

	
  

	
(a)

	
if the Borrowers fail to pay any amount of principal, interest, fee or other amount when due and payable under this Agreement or any of the Security Documents;

 

	
  

	
(b)

	
if any of the representations or warranties given by any of the Borrowers in this Agreement or the Security Documents is or shall become untrue;

 

	
  

	
(c)

	
if any Borrower defaults in the observance or performance of any negative covenant or condition in this Agreement or in the Security Documents or any other agreement between the Lender and the Borrowers;

 

	
  

	
(d)

	
if the Borrower defaults on the observance or performance of any covenant (other than the negative covenants) or any condition in this agreement or in the Security Documents or any other agreement between the Lender and the Borrowers and such default is not remedied within seven (7) days after the occurrence of such default;

 

	
  

	
(e)

	
other than the CCAA Proceedings, if the Borrowers commit an act of bankruptcy under the Bankruptcy and Insolvency Act (Canada) or institutes proceedings for its winding up, liquidation or dissolution, or takes action to become a voluntary bankrupt, or consents to the filing of a bankruptcy proceeding against it, or files a petition or other proceeding seeking reorganization, readjustment, arrangement, composition or similar relief under any law or consent to the filing of any such petition or other proceeding, or consent to the appointment of a monitor, receiver, liquidator, trustee or assignee in bankruptcy or insolvency of the whole or any material part of its property, or make an assignment for the benefit of creditors, or publicly announces or admits in writing its inability to pay its debts generally as they become due, or suspends or threatens to suspend transaction of all or any substantial part of its usual business, or any action is taken by any of the Borrowers in furtherance of any of the foregoing;

 

  

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(f)

	
other than the CCAA Proceedings, if proceedings are instituted in any court of competent jurisdiction by any Person other than the Borrowers or any Subsidiary, parent or a shareholder or affiliates of the Borrowers or for the winding up, liquidation or dissolution of the Borrowers or any Subsidiary, or for any reorganization, readjustment, arrangement, composition or similar relief with respect to the Borrowers or any Subsidiary under any bankruptcy law or any other applicable insolvency law, or for the appointment of a receiver, liquidator, trustee or assignee in bankruptcy or insolvency of the whole or any material part of the property of the Borrowers or any Subsidiary, and at any time thereafter such proceeding is not contested by the Borrowers or any such Subsidiary, or if any order sought in any such proceeding is granted and at any time thereafter such order is not either dismissed or effectively contested by the Borrowers, parents, affiliates or any Subsidiary and the effect thereof stayed;

 

	
  

	
(g)

	
if the Borrowers fail to keep current all rents payable, except payment of current rent which is stayed pursuant to the CCAA Proceedings, pay for all repairs and improvements to the Equipment when due, make all periodic payments owing to prior ranking secured creditors (if any), statutory priority claims (including, without limitation, goods and service tax, harmonized sales tax, provincial retail sales tax, workers’ compensation remittances and employee source deductions (i.e., income tax, pension plan contributions, and employment insurance premiums, etc.)) or fails to provide evidence thereof satisfactory to the Lender within two (2) Business Days of the due date hereof;

 

	
  

	
(h)

	
if (i) either the Initial Order or the DIP Order is varied without the consent of the Lender or any other order is made with is or may be prejudicial to the interests of the Lender, (ii) either the Initial Order or the DIP Order is appealed or leave to appeal is granted, (iii) the stay of proceedings contained in the Initial Order is terminated or lifted or (iv) the CCAA Proceedings are terminated or concluded;

 

	
  

	
(i)

	
if there shall be a default under the Security Documents;

 

	
  

	
(j)

	
if a plan of arrangement is presented by the Borrowers in respect of the CCAA Proceedings and not accepted by the creditors or by the Court;

 

	
  

	
(k)

	
an event occurs which has a Material Adverse Effect;

 

	
  

	
(l)

	
if the Lender in good faith believes and has commercially reasonable grounds to believe that the prospect of payment or performance of the all or any indebtedness, liabilities and other obligations of the Borrowers to the Lender hereunder or under the Security Documents or any other document delivered pursuant to, or arising from dealings between the Lender and any other Person contemplated by this Agreement, whether actual or contingent, direct or indirect, matured or not, now existing or arising hereafter is or is about to be materially impaired or that the Lender’s security over the assets of the Borrowers is or is about to be placed in jeopardy.

 

	
6.2

	
Remedies:

 

Upon the occurrence of an Event of Default, in addition to the rights and remedies given it by this Agreement, and the Security Documents and all those allowed by all Applicable Laws, the Lender may, at 

 

  

Page 23

  

 

its sole option, declare the Loan, interest and any other sums due, owing or payable hereunder to be immediately due and payable, all without presentment, demand, protest, notice of dishonour or any other demand or notice whatsoever, all of which are expressly hereby waived by each of the Borrowers.  Thereafter, the Lender may take all such steps and exercise all such remedies as may be permitted hereunder or in the Security Documents or by law or equity as it may deem necessary to protect and enforce its rights hereunder and to enforce and realize upon the Security Documents and any other security held by the Lender.  In doing so, the Lender shall not be required to marshall its security in favour of payment of any other debt and shall be at liberty to realize its security without letters of any kind so long as it shall act reasonably save and except for such period of notice as may be reasonably necessary under the common law principle that a demand must be reasonable and a reasonable time given to meet it.

 

	
6.3

	
Remedies Cumulative:

 

The rights and remedies of the Lender under this Agreement are cumulative and are in addition to and not in substitution for any rights or remedies provided by law; and any single or partial exercise by the Lender of any right or remedy for a default or breach of any term, covenant, condition or agreement herein contained shall not be deemed to be a waiver of or to alter, affect or prejudice any other right or remedy or other rights or remedies, to which the Lender may be lawfully entitled for the same default or breach and any waiver by the Lender of the strict observance, performance or compliance with any term, covenant, condition or agreement herein contained, and any indulgence granted by the Lender shall be of no effect unless given in writing and then shall only be effective for the specific instance given and shall not be deemed to be a waiver of any subsequent default.  The Lender may exercise all rights and remedies constituted by, or provided for in, the Security Documents granted to the Lender pursuant to or incidental to this Agreement.  The Lender may, to the extent permitted by applicable law, bring suit at law, in equity or otherwise, for any available relief or purpose including but not limited to:

 

	
  

	
(a)

	
the specific performance of or declaratory relief with respect to any covenant or agreement contained in this Agreement, the Security Documents or in any document given pursuant to or incidental to any of them;

 

	
  

	
(b)

	
an injunction against a violation of any of the terms thereof;

 

	
  

	
(c)

	
any action in aid of the exercise of any power granted hereby or by law; or

 

	
  

	
(d)

	
the recovery of judgment for any and all amounts due hereunder or under the Security Documents.

 

 

ARTICLE 7

INSURANCE

 

	
7.1

	
Covenant to Insure:

 

The Borrowers covenant and agree that they will, with an insurer and in amounts acceptable to the Lender, insure, keep insured or cause to be insured and kept insured against all risks and perils save for those exclusions specifically approved by the Lender in writing, all insurable property forming part of the collateral under the Security Documents, including but not limited to the Equipment.  In addition, the Borrowers shall maintain business interruption and third party liability insurance with insurers 

 

  

Page 24

  

 

acceptable to the Lender and in such amounts as the Lender requires, on substantially the same terms and conditions that exist on the date hereof.  Prior to advance of the Loan, the Borrowers shall provide to the Lender a certificate of insurance showing the Lender and its assigns as additional insureds and first loss payees and containing a clause requiring the insurer to give the Lender at least 30 days prior written notice of any alteration in the terms of such policies or of the cancellation thereof.

 

	
7.2

	
Covenant to Pay Premiums:

 

The Borrowers shall duly and punctually pay or cause to be paid all premiums and other sums of money payable for maintaining all insurance required to be maintained and effected under Section 7.1 hereof.  In the event of failure on the part of the Borrowers to maintain or cause to be maintained any insurance required by Section 7.1 hereof, the Lender may, but shall not be obliged to, effect such insurance and the Borrowers covenant to repay to the Lender all of the premiums paid by the Lender and such amounts shall be added to the Loan Amount and shall be secured by the Security Documents.  The Borrowers shall deliver to the Lender forthwith upon written request by the Lender and at least 60 days prior to the due date, evidence of payment of all premiums and other sums of money payable for keeping and maintaining the insurance referred to in Section 7.1 hereof and shall deposit with the Lender copies of all such policies.

 

	
7.3

	
Application of Insurance Proceeds:

 

All proceeds from the insurance referred to in Section 7.1 hereof shall be paid to the Lender by the insurer and shall be applied by the Lender in payment (or partial payment if proceeds are insufficient to fully repay the Loan Amount) of the Loan Amount.  The Borrowers shall, for such purposes, do, sign, execute and endorse all transfers, assignments, cheques, loss claims, proofs of claim, receipts, writings and things necessary and hereby irrevocably appoint the Lender its attorney to do, sign, execute and endorse as aforesaid should the Borrowers fail to do so when requested by the Lender.  The Borrowers hereby specifically authorizes and directs the Insurers to effect payment directly to the Lender as required under this section and further direct that no negotiable instrument of other form of payment shall name either the Borrowers or the Lender.  The Lender shall have full and ample authority to adjust and compromise any claim without the concurrence of the Borrowers.

 

 

ARTICLE 8

COMPENSATION, SET-OFF AND INDEMNITY

 

	
8.1

	
Compensation and Set-Off:

 

In addition to and not in limitation of any rights now or hereafter granted under Applicable Law, if an Event of Default occurs, the Lender is authorized at any time and from time to time to the fullest extent permitted by law without notice to the Borrowers or to any other Person, any notice being expressly waived by the Borrowers, to set off and compensate and to apply any and all indebtedness at any time owing by the Lender to or for the credit of or the account of the Borrowers against and on account of the obligations and liabilities of the Borrowers due and payable to the Lender under this Agreement including, without limitation, all claims of any nature or description arising out of or connected with this Agreement, irrespective of whether or not the Lender has made any demand under this Agreement.  Without any obligation or liability on its part, the Lender will attempt in good faith to advise the Borrowers of the Lender’s exercise of any of its rights under this Section 8.1 but in no event shall failure to do so affect the legality, validity or existence of the exercise of such offset.

 

  

Page 25

  

 

	
8.2

	
Indemnification:

 

The Borrowers do, jointly and severally, hereby agree that they will indemnify and hold harmless and pay promptly to the Lender the amount of any Damages arising from or in connection with:

 

	
  

	
(a)

	
Breach of Representations or Warranties:  Any breach of any representation or warranty in this Agreement or in the Security Documents (collectively the "Agreements") or in any certificate delivered in connection with any of the Agreements without giving effect to any supplementary disclosures made after the Advance Date unless the subsequent disclosure is one made in compliance with the terms and conditions of this Agreement with respect to ongoing disclosure;

 

	
  

	
(b)

	
Breach of Covenants: Any breach by the Borrowers in the performance of its covenants or obligations in the Agreements or any of them or in any certificate of document delivered pursuant to the Agreements or any of them;

 

	
  

	
(c)

	
Environmental, Health and Safety Liabilities:  Without restricting the generality of the foregoing and the Agreements, or any part of any of them, any breach by the Borrowers of Environmental Laws of any jurisdiction including any Environmental Health and Safety Liabilities arising out of or relating to: (i) the ownership, operation or condition of the Equipment at any time; (ii) any Hazardous Materials or other contaminants present on the lands and premises occupied by the Borrowers at any time; (iii) any leakage or release of Hazardous Materials howsoever caused and wherever occurring; or (iv) Hazardous Material emanating from or carried by or released by the Borrowers; and

 

	
  

	
(d)

	
Expressly Included Liabilities:  Without restricting the generality of the foregoing, any liability, obligation, contract or commitment (whether known or unknown and whether absolute, accrued, contingent or otherwise) to the Lender which may be implied by the facts or events which give rise to them, or arise under Applicable Law or otherwise, which, if borne by the Lender, would result in the non-recovery of the Loan Amount determined as if such facts or events had not occurred.

 

 

ARTICLE 9

GENERAL PROVISIONS

 

	
9.1

	
Notices:

 

Any notice, demand, request, consent, waiver, agreement or approval which may or is required to be given pursuant to this Agreement shall be in writing and shall be sufficiently given or made if served personally upon the party for whom it is intended, or transmitted by facsimile, or (except in the case of an actual or pending disruption of postal service) mailed by registered mail, and in the case of:

 

	
  

	
(a)

	
the Lender, addressed to it at:

 

	
  

	
CENTURY SERVICES LP

	
  

	
310, 318 – 11th Avenue SW

	
  

	
Calgary, Alberta T2G 0Y2

	
  

	
 

	
  

	 

	
  

	
 

 

  

Page 26

  

 

	
  

	
Attention:          Director, Risk & Compliance

	
  

	
Facsimile No:    (403) 294-9409

 

	
  

	
(b)

	
the Borrowers addressed to them, jointly, at:

 

	
  

	
OILSANDS QUEST INC.

	
  

	
Suite 800, 1333 8th Street SW

	
  

	
Calgary, Alberta T2G 3A4

	
  

	
 

	
  

	
Attention:          Chief Executive Officer

	
  

	
Facsimile No:    (403) 263-9812

 

Each party may, from time to time, change its address or stipulate another address from the address described above in the manner provided in this section.  The date of receipt of any such notice, demand, request, consent, agreement or approval, if served personally, shall be deemed to be the date of delivery thereof, if transmitted by facsimile, the date of receipt shall be deemed to be the first Business Day after transmission, or if mailed as aforesaid, the date of receipt shall be deemed to be the fourth Business Day following the date of mailing.  For the purposes hereof, personal service on the Borrowers shall be effectually made by delivery to an officer, director or employee of any Borrower at the address set out above.  If on the date of mailing or on or before the fourth Business Day thereafter, there is a general interruption in the operation of postal service in Canada which does or is likely to delay delivery by mail, to the extent possible the communications aforesaid shall be served personally or by facsimile transmission.

 

	
9.2

	
Waiver:

 

No consent or waiver, express or implied, by Lender to or of any breach or default by the Borrowers in performance of its obligations hereunder shall be deemed or construed to be a consent to or waiver of any other breach or default in the performance by it of its obligations hereunder.  Failure on the part of the Lender to complain of any act or failure to act of the Borrowers or to declare the Borrowers in default, irrespective of how long such failure continues, shall not constitute a waiver by the Lender of its rights hereunder in such instance or in any subsequent instance.

 

	
9.3

	
Amendments:

 

This Agreement may not be modified or amended except with the written consent of the Lender and the Borrowers.

 

	
9.4

	
Entire Agreement:

 

This Agreement, the documents required to be delivered hereunder and the Security Documents shall constitute the entire agreement between the Lender and the Borrowers pertaining to the Loan and shall supersede all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, relating thereto and there are no warranties, representations or other agreements between the Lender and the Borrowers in connection with the Loan.

 

  

Page 27

  

 

	
9.5

	
Assignment:

 

	
  

	
(a)

	
The Lender may assign, transfer, negotiate, pledge or otherwise hypothecate to any Person (an "Assignee"), in whole or in part, the Lender’s rights and interests in, to or under this Agreement, or any of them, and any amounts due or to become due hereunder or in connection herewith (the "Assigned Rights") together with the security under Security Documents securing the Assigned Rights, (provided that, if any Assignee exercises any of the Assigned Rights, such Assignee shall agree to assume and be subject to the obligations under of this Agreement and the Security Documents, as applicable, relating to the Assigned Rights) and all rights and remedies of the Lender in connection with the Assigned Rights shall be enforceable by the Assignee against the Borrowers as the same would have been by the Lender but for such assignment, transfer, negotiation, pledge or hypothecation and the Borrowers shall not assert against any Assignee or otherwise, any claims or equities that the Borrowers may have against the Lender to delay, diminish, extinguish or otherwise affect the amount and timeliness of payment to the Assignee or the performance by the Borrowers of any of the Assigned Rights.

 

	
  

	
(b)

	
The Borrowers shall not assign any of their rights and obligations under this Agreement or the Security Documents, or any of them, without the prior written consent of the Lender, which may be withheld by the Lender in its sole discretion.

 

	
9.6

	
No Merger:

 

The taking of any judgment or judgments on any of the covenants herein contained or contained in any Security Documents or the collection or realization of any security shall not operate as a merger or affect the Lenders rights to interest at the rate and in the same manner as herein provided.

 

	
9.7

	
No Agency, Joint Venture or Partnership:

 

The Lender is not the partner, joint venturer, agent or representative of any Borrowers and none of the Borrowers is the partner, joint venturer, agent or representative of the Lender for any purpose and shall not hold itself out to any Person as such.

 

	
9.8

	
No Limitation:

 

None of the obligations of the Borrowers or any one of them hereunder or under any of the Security Documents shall be released or diminished in whole or in part because of any lack of capacity or authorization or any defect or error in or execution of this Agreement or any Security Documents or any other matter or thing whatsoever.

 

	
9.9

	
Rights, Powers and Remedies:

 

Each right, power and remedy of the Lender provided for herein, in the Security Documents or available at law or in equity or in any other agreement shall be separate and in addition to every other such right, power and remedy.  Any one or more and/or any combination of such rights, remedies and powers may be exercised by the Lender from time to time and no such exercise shall exhaust the rights, remedies or powers of the Lender or preclude the Lender from exercising any one or more of any such rights, remedies and powers or any combination thereof from time to time thereafter or simultaneously.

 

  

Page 28

  

 

	
9.10

	
Survival:

 

All covenants, undertakings, agreements, representations and warranties made by the Borrowers in this Agreement, the Security Documents and any certificates, reports, statements, information, data, documents or instruments delivered pursuant to or in connection with the Loan this Agreement or any of the Security Documents shall survive the execution and delivery of this Agreement the Security Documents and any advances of the Loan made by the Lender pursuant to this Agreement and any of the Security Documents, and shall continue in full force and effect until the Loan Amount and all other amounts payable by the Borrowers to the Lender is paid in full.  All representations and warranties made by the Borrowers in writing shall be deemed to have been relied upon by the Lender.

 

	
9.11

	
Conflict:

 

If a conflict or inconsistency exists between a provision of any of the Security Documents and a provision of this Agreement, the provisions of this Agreement shall prevail to the extent necessary to remove such conflict.  If there is a representation, warranty, covenant, agreement or event of default contained in any Security Document, which is not contained herein, or vice versa, such additional provision shall not constitute a conflict but shall be valid and enforceable in accordance with its terms.

 

	
9.12

	
Severability:

 

If any provision of this Agreement or any Security Document shall be held invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall attach only to such provision and shall not affect any or all other provisions of this Agreement or any Security Documents and where necessary, shall be construed as if such invalid, illegal or unenforceable provision had never been contained therein; provided, however, that such provision shall not be by reason thereof be invalid, illegal or unenforceable in any other jurisdiction in which no such impediment exists.

 

	
9.13

	
Successors and Assigns:

 

Subject to Section 9.5 hereof, this Agreement and each of the covenants, warranties and representations herein contained or in any certificates delivered in connection herewith by the Borrowers shall enure to the benefit of and be binding upon the Lender and the Borrowers and their respective successors and assigns.

 

	
9.14

	
Expenses:

 

The Borrowers shall be responsible for all legal, financial, facilitation and other advisory fees and disbursements and out-of-pocket expenses of the Lender in connection with the transaction contemplated herein including, but not limited to, all fees incurred by Lender in connection with the preparation of this Agreement, the Security Documents, any protective disbursements, all court attendances in Canada or elsewhere and any proceedings taken to enforce the Lender’s rights and remedies.  All such fees and expenses shall be secured by the Security Documents, whether or not the Loan is advanced and shall include the time spent by Lender and its representatives in retaking, holding, repairing, processing and preparing for disposition and disposing of the Lender’s security calculated at the Lender’s standard rates.

 

  

Page 29

  

 

	
9.15

	
Governing Law:

 

This Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein and the courts of the Province of Alberta shall have exclusive jurisdiction to determine any matter, dispute or cause arising hereunder.

 

	
9.16

	
Time of Essence:

 

Time is of the essence of this Agreement and shall continue to be of the essence.

 

	
9.17

	
Headings and Interpretation:

 

The insertion in this Agreement of headings is for convenience of reference only and shall not affect the construction, meaning, intent or interpretation of any provision.

 

	
9.18

	
Number and Gender:

 

All nouns and personal pronouns relating thereto shall be read and construed as the number and gender may require and the verb shall be read and construed as agreeing with the noun and pronoun.  All obligations, documents, representation and warranties of the Borrowers shall be joint and several so that the performance of same by either Borrowers shall constitute performance per se by the other unless a different interpretation is required in order for the particular event to have meaning in the context.

 

	
9.19

	
Counterparts:

 

This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement by facsimile transmission or any electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement.

 

	
9.20

	
Currency:

 

All dollar amounts referred to herein are expressed in Canadian funds. The Borrowers acknowledge that it shall be responsible for the costs (including, without limitation, bank service charges and currency exchange commissioners exchange rates) of converting funds to or from Canadian currency and hereby consents to the exchange and service charges applied by the Lender’s Bank in respect of same.

 

	
9.21

	
Registrations:

 

Neither the preparation, execution nor the registration of this Agreement or any Security Documents, nor any filing or registration with respect thereto, shall bind the Lender to make an advance of the Loan unless and until each of the terms, conditions and provisions contained herein have been satisfied and performed by the Borrowers to the full satisfaction of the Lender.

 

 [SIGNATURES CONTAINED ON THE FOLLOWING PAGE]

 

  

Page 30

  

 

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by its respective officers thereto duly authorized as of the date first above written.

 

	
OILSANDS QUEST INC.

 

	  	
OILSANDS QUEST SASK INC.

 

	
By:

	  /s/ Garth Wong	
By:

	  /s/ Garth Wong
	  	
Name:    Garth Wong

	  	
Name:    Garth Wong

	  	
Title:       President and

        Chief Executive Officer

	  	
Title:       President and

        Chief Executive Officer

	  	
I have the authority to bind the corporation

	  	
I have the authority to bind the corporation

 

	
OILSANDS QUEST TECHNOLOGY INC.

 

	  	
1291329 ALBERTA LIMITED

 

	
By:

	  /s/ Garth Wong	
By:

	  /s/ Garth Wong
	  	
Name:    Garth Wong

	  	
Name:    Garth Wong

	  	
Title:       President and

        Chief Executive Officer

	  	
Title:       President and

        Chief Executive Officer

	  	
I have the authority to bind the corporation

	  	
I have the authority to bind the corporation

 

	
STRIPPER ENERGY SERVICES INC.

 

	  	
TOWNSHIP PETROLEUM CORPORATION

 

	
By:

	  /s/ Garth Wong	
By:

	  /s/ Garth Wong
	  	
Name:    Garth Wong

	  	
Name:    Garth Wong

	  	
Title:       President and

        Chief Executive Officer

	  	
Title:       President and

        Chief Executive Officer

	  	
I have the authority to bind the corporation

	  	
I have the authority to bind the corporation

 

	
WESTERN PETROCHEMICALS CORP.

 

	  	
1259882 ALBERTA LTD.

 

	
By:

	  /s/ Garth Wong	
By:

	  /s/ Garth Wong
	  	
Name:    Garth Wong

	  	
Name:   Garth Wong

	  	
Title:       President and

        Chief Executive Officer

	  	
Title:      President and

       Chief Executive Officer

	  	
I have the authority to bind the corporation

	  	
I have the authority to bind the corporation

 

 

  

Page 31

  

 

 

	  	  	
CENTURY SERVICES LP, by its general partner Century Services Inc.

	  	  	
Per:

	  /s/ Tammy Kemp
	  	  	  	
Name:  Tammy Kemp

	  	  	  	
Title:     Director, Risk & Compliance

	  	  	  	
I have the authority to bind the corporation

 

 

 

 

 

  

Page 32

  

 

SCHEDULE "1"

 

PERMITTED ENCUMBRANCES

 

PART 1 - GENERAL PERMITTED ENCUMBRANCES

 

	
1.

	
Liens for security given to a public authority or any municipality or government or other public authority when required by statutory or regulatory obligation in connection with the operation of the business of any Borrower in the ordinary course of the operation of that business, which do not, in the aggregate, materially interfere with the ordinary course of conduct of the  business of any Borrower or affect the Lender’s priority to its security interest in the Equipment.

 

	
2.

	
Liens for taxes, assessments, governmental charges or levies not at the time due or delinquent according to law provided such liens do not affect the Lender’s priority to its security interest in the Equipment.

 

	
3.

	
Liens securing obligations not yet due and payable under the unemployment insurance legislation, workers’ compensation programs, and other social security legislation provided such liens do not affect the Lender’s priority to its security interest in the Equipment.

 

	
4.

	
Liens:

 

	
  

	
(a)

	
Securing public or statutory obligations of any Borrower;

 

	
  

	
(b)

	
Constituting deposits securing, or in lieu of, surety, appeal or custom bonds in proceedings to which any Borrower is a party; and

 

	
  

	
(c)

	
Securing bids, tenders, contracts (other than contracts for the payment of money); provided in each such case that such liens are not registered against title to any real or personal property of a Borrower and do not affect the Lender’s priority to its security interest in the Equipment.

 

	
  

	
(d)

	
Carriers’, warehousemens’, mechanics’, materialmens’, repairmens’, construction or other similar Liens arising in the ordinary course of business which relate to obligations not overdue provided such liens do not affect the Lender’s priority to its security interest in the Equipment.

 

	
  

	
(e)

	
Liens created by the Security Documents.

 

 

 

 

  

  

  

 

PART 2 - SPECIFIC PERMITTED ENCUMBRANCES

 

OILSANDS QUEST SASK INC. has the following permitted encumbrances at Alberta PPR:

 

	
Secured Party

	
Expiry Date

	
Registration No.

	
THE TORONTO-DOMINION BANK

	
2017-Mar-16

	
07031630820

	
CIT FINANCIAL LTD.

	
2014-Sep-26

	
08092626312

	
THE DRIVING FORCE INC.

	
2012-Nov-05

	
09110520964

	
THE DRIVING FORCE INC.

	
2012-Nov-05

	
09110523167

	
THE DRIVING FORCE INC.

	
2012-Nov-09

	
09110917168

	
ATB CORPORATE FINANCIAL SERVICES

	
2015-Feb-10

	
10021024182

 

 

The following entities had no registrations against:

 

Oilsands Quest Inc.

 

Oilsands Quest Technology Inc.

 

1291329 Alberta Limited

 

Stripper Energy Services Inc.

 

Township Petroleum Corporation

 

Western Petrochemicals Corp

 

1259882 Alberta Ltd.

 

 

 

  

  

  

 

SCHEDULE "2"

 

EQUIPMENT

 

All goods now or hereafter used or intended to be used in any business of a Borrower (and which are not inventory) including but not limited to fixtures, plant, tools, furniture, equipment, machinery, all spare parts, accessories installed in or affixed or attached to any of the foregoing, and all drawings, specifications, plans and manuals relating thereto, vehicles and other tangible personal property, whether located on or about or in transit to or from the address of the Borrowers set out in Section 9.1 of this Agreement or any other address, including the following:

 

[Listing of appraised Equipment to be attached]

 

 

  

  

  

 

 

	
Owner

	
Equipment

	
Serial Number

	
1291329 

Alberta Ltd.

	
2006 Shelter Industries Inc. 12' x 60' watercar (Kitchen Complex)

	
726006-794

	
1291329 

Alberta Ltd.

	
2006 Shelter Industries Inc. 12' x 60' kitchen (Kitchen Complex)

	
726006-795

	
1291329 

Alberta Ltd.

	
2006 Shelter Industries Inc. 12' x 60' kitchen (Kitchen Complex)

	
726006-796

	
1291329 

Alberta Ltd.

	
2006 Shelter Industries Inc. 12' x 60' diner (Kitchen Complex)

	
726006-797

	
1291329 

Alberta Ltd.

	
2006 Shelter Industries Inc. 12' x 60' diner (Kitchen Complex)

	
726006-798

	
1291329 

Alberta Ltd.

	
2006 Shelter Industries Inc. 12' x 60' rec room (Kitchen Complex)

	
726006-799

	
1291329 

Alberta Ltd.

	
2006 Shelter Industries Inc. 12' x 60' rec room (Kitchen Complex)

	
726006-800

	
1291329 

Alberta Ltd.

	
Miscellaneous kitchen equipment & appliances

	
Various

	
1291329 

Alberta Ltd.

	
C-Can Cooler Unit

	
U-017636

	
1291329 

Alberta Ltd.

	
C-Can Cooler Unit

	
CLIU209907

	
1291329 

Alberta Ltd.

	
C-Can Cooler Unit

	
524353104

	
1291329 

Alberta Ltd.

	
C-Can Storage Unit

	
NTRLC072946

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (A Dorm Complex)

	
526006-824

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (A Dorm Complex)

	
526006-825

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' washcar (A Dorm Complex)

	
526006-826

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (A Dorm Complex)

	
526006-827

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (A Dorm Complex)

	
526006-828

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (A Dorm Complex)

	
526006-829

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (A Dorm Complex)

	
526006-830

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (A Dorm Complex)

	
526006-831

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 29' entrance (A Dorm Complex)

	
722906-832

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (B Dorm Complex)

	
526006-815

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (B Dorm Complex)

	
526006-816

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' washcar (B Dorm Complex)

	
526006-817

 

 

  

  

  

 

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (B Dorm Complex)

	
526006-818

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (B Dorm Complex)

	
526006-819

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (B Dorm Complex)

	
526006-820

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (B Dorm Complex)

	
526006-821

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 60' bunk (B Dorm Complex)

	
526006-822

	
1291329 

Alberta Ltd.

	
2007 Shelter Industries Inc. 12' x 29' mud room (B Dorm Complex)

	
722906-823

	
1291329 

Alberta Ltd.

	
2001 Samson Modular Builders 12' x 56' building (C Dorm Complex)

	
260010151

	
1291329 

Alberta Ltd.

	
2001 Samson Modular Builders 12' x 56' building (C Dorm Complex)

	
260010152

	
1291329 

Alberta Ltd.

	
2001 Samson Modular Builders 12' x 56' building (C Dorm Complex)

	
260010153

	
1291329 

Alberta Ltd.

	
2001 Samson Modular Builders 12' x 56' building (C Dorm Complex)

	
260010154

	
1291329 

Alberta Ltd.

	
2001 Samson Modular Builders 12' x 56' building (C Dorm Complex)

	
260010155

	
1291329 

Alberta Ltd.

	
2001 Samson Modular Builders 12' x 56' building (C Dorm Complex)

	
260010156

	
1291329 

Alberta Ltd.

	
2001 Samson Modular Builders 12' x 56' building (C Dorm Complex)

	
260010157

	
1291329 

Alberta Ltd.

	
2001 Samson Modular Builders 12' x 56' building (C Dorm Complex)

	
260010158

	
1291329 

Alberta Ltd.

	
2002 GNS Industrial Trailer Services 12' x 56' building (D Dorm Complex)

	
1256021839

	
1291329 

Alberta Ltd.

	
2002 GNS Industrial Trailer Services 12' x 56' building (D Dorm Complex)

	
1256021840

	
1291329 

Alberta Ltd.

	
2002 GNS Industrial Trailer Services 12' x 56' building (D Dorm Complex)

	
1256021841

	
1291329 

Alberta Ltd.

	
2002 GNS Industrial Trailer Services 12' x 56' building (D Dorm Complex)

	
1256021842

	
1291329 

Alberta Ltd.

	
2002 GNS Industrial Trailer Services 12' x 56' building (D Dorm Complex)

	
1256021843

	
1291329 

Alberta Ltd.

	
2002 GNS Industrial Trailer Services 12' x 56' building (D Dorm Complex)

	
1256021844

	
1291329 

Alberta Ltd.

	
2002 GNS Industrial Trailer Services 12' x 56' building (D Dorm Complex)

	
1256021845

	
1291329 

Alberta Ltd.

	
2002 GNS Industrial Trailer Services 12' x 56' building (D Dorm Complex)

	
1256021846

	
1291329 

Alberta Ltd.

	
2008 GNS 12' x 60' rec room (Rec Hall Complex)

	
1260G08081

	
1291329 

Alberta Ltd.

	
2008 GNS 12' x 60' rec room (Rec Hall Complex)

	
1260G08082

 

 

  

  

  

 

	
1291329 

Alberta Ltd.

	
Base Camp shop

	
Unit 5286

	
1291329 

Alberta Ltd.

	
Main Office Complex

	
5214-A

	
1291329 

Alberta Ltd.

	
Main Office Complex

	
5214-B

	
1291329 

Alberta Ltd.

	
Main Office Complex

	
5214-C

	
1291329 

Alberta Ltd.

	
Main Office Complex

	
5214-D

	
1291329 

Alberta Ltd.

	
Main Office Complex

	
5214-E

	
1291329 

Alberta Ltd.

	
Main Office Complex

	
5214-G

	
1291329 

Alberta Ltd.

	
Shelter Industries Inc. 12' x 54' Security facility

	
725406-838

	
1291329 

Alberta Ltd.

	
First Aid facility (site renovated)

	
R-15470233

	
1291329 

Alberta Ltd.

	
2006 Shelter Industries Inc. 12' x 54' wet sleeper (2 man)

	
725406-812

	
1291329 

Alberta Ltd.

	
2006 Shelter Industries Inc. 12' x 60 wet sleeper (4 man)

	
526006-814

	
1291329 

Alberta Ltd.

	
2006 Shelter Industries Inc. 12' x 60' wet sleeper (4 man)

	
526006-813

	
1291329 

Alberta Ltd.

	
Water storage tanks / building

	
1136011456

	
1291329 

Alberta Ltd.

	
Water storage tanks / building

	
11581002135

	
1291329 

Alberta Ltd.

	
Sewage tanks & System

	
ES-08-006-D3-A1-GA-E3-BB

	
1291329 

Alberta Ltd.

	
2006 Northern Steel Fuel Tank - 10,000L Gas

	
H-101293

	
1291329 

Alberta Ltd.

	
2006 Northern Steel Fuel Tank - 49,900L Diesel

	
H-101368

	
1291329 

Alberta Ltd.

	
2006 Northern Steel Fuel Tank - 49,900L Diesel

	
H-101296

	
1291329 

Alberta Ltd.

	
2006 Northern Steel Fuel Tank - 10,000L Gas

	
H-101287

	
1291329 

Alberta Ltd.

	
2007 Northern Steel Fuel Tank - 20,000L Gas

	
H-102199

	
1291329 

Alberta Ltd.

	
2004 Westeel Fuel Tank - 49,900L Diesel

	
B-925031

	
1291329 

Alberta Ltd.

	
2008 Northern Steel Fuel Tank - 49,900L Diesel

	
H-102396

	
1291329 

Alberta Ltd.

	
2007Northern Steel Fuel Tank - 49,900L Diesel

	
H-101635

	
1291329 

Alberta Ltd.

	
Fuel Tank 49,664L Diesel

	
H-101650

 

 

  

  

  

 

	
1291329 

Alberta Ltd.

	
Fuel Tank 20,668L Diesel

	
H-102215

	
1291329 

Alberta Ltd.

	
Fuel Tank 10,000L Gas

	
222

	
1291329 

Alberta Ltd.

	
Communications equipment (towers and radios)

	
85-20065

	
1291329 

Alberta Ltd.

	
Camp televisions

	
Various

	
1291329 

Alberta Ltd.

	
Satellite television system

	
Various

	
1291329 

Alberta Ltd.

	
Camp matting and field matting (80 pieces)

	
Various

	
1291329 

Alberta Ltd.

	
2007 Honda FourTrax ATV

	
1HFTE352874002002

	
1291329 

Alberta Ltd.

	
2009 Honda FourTrax ATV

	
1HFTE352694200435

	
1291329 

Alberta Ltd.

	
2007 Honda FourTrax ATV

	
1HFTE352774200157

	
1291329 

Alberta Ltd.

	
2009 Honda FourTrax ATV

	
1HFTE353294200392

	
1291329 

Alberta Ltd.

	
2009 Honda FourTrax ATV

	
1HFTE352094200382

	
1291329 

Alberta Ltd.

	
2008 Ski-Doo MXZ Renegade Snowmobile

	
2BPSBX8D78V000184

	
1291329 

Alberta Ltd.

	
2008 Ski-Doo MXZ Renegade Snowmobile

	
2BPSBX8C68V000250

	
1291329 

Alberta Ltd.

	
2010 Ski-Doo Tundra 550F Snowmobile

	
2BPSGKABXAV000599

	
1291329 

Alberta Ltd.

	
2010 Ski-Doo Tundra 550F Snowmobile

	
2BPSGKCB2AV000581

	
1291329 

Alberta Ltd.

	
2010 Ski-Doo Tundra 300F Snowmobile

	
2BPSGKABXAV000649

	
1291329 

Alberta Ltd.

	
2008 Ski-Doo Tundra 300F Snowmobile

	
2BPSGA8B58V000155

	
1291329 

Alberta Ltd.

	
2008 Ski-Doo Tundra 300F Snowmobile

	
2BPSGA8B18V000422

	
1291329 

Alberta Ltd.

	
2009 Polaris Ranger 700EFI ATV

	
4XAHH68A992714858

	
1291329 

Alberta Ltd.

	
2009 Polaris Ranger 700EFI ATV

	
4XAHH68A592872789

 

	
1291329 

Alberta Ltd.

	
Light towers, transformers, cabling

	
Various

	
1291329 

Alberta Ltd.

	
1995 Auburn Wellsite trailer (#238 - moved from Test Site 3)

	
W238952271

 

	
1291329 

Alberta Ltd.

	
Sea-Can

	
HDMA92-686473

	
1291329 

Alberta Ltd.

	
Sea-Can

	
JS06-12694

 

 

  

  

  

 

 

	
1291329 

Alberta Ltd.

	
Sea-Can

	
DJ99-00294

	
1291329 

Alberta Ltd.

	
Sea-Can

	
NTRLC072981

	
1291329 

Alberta Ltd.

	
Sea-Can

	
SP505318

	
1291329 

Alberta Ltd.

	
Sea-Can

	
JS06-12769

	
1291329 

Alberta Ltd.

	
Sea-Can

	
TY7205331

	
1291329 

Alberta Ltd.

	
Sea-Can

	
CXIC159111

	
1291329 

Alberta Ltd.

	
Sea-Can

	
SAH1030635

	
1291329 

Alberta Ltd.

	
Sea-Can

	
SP505355

	
1291329 

Alberta Ltd.

	
Sea-Can

	
SP505290

	
1291329 

Alberta Ltd.

	
Sea-Can

	
TCC070B14962

	
1291329 

Alberta Ltd.

	
Sea-Can

	
SAH1030616

	
1291329 

Alberta Ltd.

	
Sea-Can

	
BSBU-217068

	
1291329 

Alberta Ltd.

	
Air Compresser Trailer

	
VIN# 4FVCBBAA4AU410324

	
1291329 

Alberta Ltd.

	
Air Monitoring Trailer

	
VIN # n/a

	
1291329 

Alberta Ltd.

	
Shop and Core Building

	
5302B/5302A

	
1291329 

Alberta Ltd.

	
Sewage tanks

	
no serial #

	
Oilsands 

Quest Sask Inc.

	
2006 AGI - Envirotank 1,000BBL Tank (T-302)

	
18488

	
Oilsands 

Quest Sask Inc.

	
2006 AGI - Envirotank 1,000BBL Tank (1-T-410)

	
18486

	
Oilsands 

Quest Sask Inc.

	
2006 AGI - Envirotank 1,000BBL Tank (T-420)

	
18487

	
Oilsands 

Quest Sask Inc.

	
2006 AGI - Envirotank 1,000BBL Tank (T-450)

	
18703

	
Oilsands 

Quest Sask Inc.

	
2006 AGI - Envirotank 1,000BBL Tank (T-460)

	
18481

	
Oilsands 

Quest Sask Inc.

	
2006 AGI - Envirotank 1,000BBL Tank

	
18701

	
Oilsands 

Quest Sask Inc.

	
2006 AGI - Envirotank 1,000BBL Tank (T-352)

	
18493

	
Oilsands 

Quest Sask Inc.

	
2006 AGI - Envirotank 1,000BBL Tank (T-351)

	
18492

 

 

  

  

  

 

 

	
Oilsands 

Quest Sask Inc.

	
2006 AGI - Envirotank 1,000BBL Tank (T-301)

	
18494

	
Oilsands 

Quest Sask Inc.

	
2008 AGI-Envirotank 400BBL Tank

	
18941

	
Oilsands 

Quest Sask Inc.

	
2006 NWP Industries 400BBL Tank

	
4001146/34-121

	
Oilsands 

Quest Sask Inc.

	
Tank (400 bbl)

	
8170-1-T-330

	
Oilsands 

Quest Sask Inc.

	
Tank (400 bbl)

	
8170-1-T-331

	
Oilsands 

Quest Sask Inc.

	
Tank (400 bbl)

	
8170-1-T-331A

	
Oilsands 

Quest Sask Inc.

	
Tank (400 bbl)

	
8170-1-T-332

	
Oilsands 

Quest Sask Inc.

	
Tank (400 bbl)

	
8170-1-T-333

	
Oilsands 

Quest Sask Inc.

	
Tank (400 bbl)

	
8170-1-T-333A

	
Oilsands 

Quest Sask Inc.

	
400BBL Tank     (T-360)

	
no serial #

	
Oilsands 

Quest Sask Inc.

	
2008 Northern Steel 49,574L Deisel Fuel Tank

	
H-102395

	
Oilsands 

Quest Sask Inc.

	
2008 Northern Steel 49,574L Deisel Fuel Tank

	
H-102391

	
Oilsands 

Quest Sask Inc.

	
Office complex

	
726006-811

	
Oilsands 

Quest Sask Inc.

	
Motor Control Building

	
Unit 3052

	
Oilsands 

Quest Sask Inc.

	
PLC panel

	
208003-01-02-35B-001

	
Oilsands 

Quest Sask Inc.

	
Delta V control panel

	
208002-01-49-34-000

	
Oilsands 

Quest Sask Inc.

	
Cell Phone tower

	
2B9TS321X64098

	
Oilsands 

Quest Sask Inc.

	
Boiler feed water pre-heaters

	
no serial # visible

	
Oilsands 

Quest Sask Inc.

	
Atco Fold-A-Way Steam Generator Building

	
no serial # visible

	
Oilsands 

Quest Sask Inc.

	
Steam Generator 25MM btu/hr

	
EF-25-SG/GF-DUAL

	
Oilsands 

Quest Sask Inc.

	
Steam Generator 6 mmbtu/hr

	
Watertube 4748

	
Oilsands 

Quest Sask Inc.

	
Steam Generator 6 mmbtu/hr

	
no serial # visible

	
Oilsands 

Quest Sask Inc.

	
Steam Separator

	
8170-1-V550

	
Oilsands 

Quest Sask Inc.

	
LP steam drum, flash drum, separator, valves

	
Penn S/N 44202/8170-1-V-555

 

 

  

  

  

 

 

	
Oilsands 

Quest Sask Inc.

	
Level Transmitter

	
no serial # visible

	
Oilsands 

Quest Sask Inc.

	
Pipe

	
Various

	
Oilsands 

Quest Sask Inc.

	
DW tank

	
11581002135

	
Oilsands 

Quest Sask Inc.

	
Water Softener skid and equipment

	
8170-1-P-346

	
Oilsands 

Quest Sask Inc.

	
Chemical and ozone totes, pumps, mixers, tanks

	
208003-01-02-35C-004

	
Oilsands 

Quest Sask Inc.

	
Downhaul heater

	
no serial # visible

	
Oilsands 

Quest Sask Inc.

	
Pumps

	
MODEL GG-190/8170-

1-SMP-558 and various

	
Oilsands 

Quest Sask Inc.

	
Meters

	
208002-01-2-85-000 

and various

	
Oilsands 

Quest Sask Inc.

	
Free Water Knock Out (FWKO) -Stored offsite

	
WR94292

	
Oilsands 

Quest Sask Inc.

	
Rigmats

	
Various

	
Oilsands 

Quest Sask Inc.

	
2006 GNS Industrial Laboratory trailer and equipment

	
1260G06070

	
Oilsands 

Quest Sask Inc.

	
Wellheads

	
Various

	
Oilsands 

Quest Sask Inc.

	
SeaCan

	
SP505289

	
Oilsands 

Quest Sask Inc.

	
SeaCan

	
BSBU417326

	
Oilsands 

Quest Sask Inc.

	
SeaCan

	
SP505369

	
Oilsands 

Quest Sask Inc.

	
SeaCan

	
BSBU417327

	
Oilsands 

Quest Sask Inc.

	
SeaCan

	
BSBU4175360

	
Oilsands 

Quest Sask Inc.

	
SeaCan

	
GJ98-6661

	
Oilsands 

Quest Sask Inc.

	
Manifold skid c/w building

	
no serial # visible

	
Oilsands 

Quest Sask Inc.

	
Control valves

	
Various

	
Oilsands 

Quest Sask Inc.

	
Standard valves

	
Various

	
Oilsands 

Quest Sask Inc.

	
Surface equip/Temp/ Pressure sensing string

	
Various

	
Oilsands 

Quest Sask Inc.

	
Casing, marker joints, centralizers, float equipment

	
Various

	
Oilsands 

Quest Sask Inc.

	
Tanks (1 * 1000 bbl)

	
Unit 5054

 

 

  

  

  

 

	
Oilsands 

Quest Sask Inc.

	
Pump Skid and control building

	
3656 M/LGroup/3756 M/LGroup

 

 

  

  

  

 

SCHEDULE "3"

 

[Intentionally Omitted]

 

 

 

 

 

  

  

  

 

SCHEDULE "4"

 

SUBSIDIARIES

 

	
Borrower

	
Subsidiaries

	
Jurisdiction of incorporation

	
Address of executive 

office

	
Principal 

place of 

business

	
Jurisdiction in 

which material property is 

located or where there is material business

	
Shareholder

	
Number and class of shares held

	
Oilsands Quest Sask Inc.

	
Oilsands Quest Sask Inc.

 

Oilsands Quest Technology Inc.

 

Township Petroleum Corporation

 

Western Petrochemicals Corp.

 

1259882 Alberta Ltd.

 

1291329 Alberta Ltd.

	
Colorado

	
800, 1333 8th  Avenue SW, Calgary, Alberta

	
Alberta

	
Alberta, Colorado Saskatchewan

	
N/A

	
N/A

	
Oilsands Quest Sask Inc.

	
Stripper Energy Services Inc.

	
Alberta

	
800, 1333 8th  Avenue SW, Calgary, Alberta

	
Alberta

	
Alberta, Saskatchewan

	
Oilsands Quest Inc. holds the Common Shares and Series 2 Preferred Shares

	
17,387,311 Common Shares

 

8,900,747 Series 2 Preferred Shares

 

Exchangeable Shares

	
Stripper Energy Services Inc.

	
None

	
Alberta

	
800, 1333 8th  Avenue SW, Calgary, Alberta

	
Alberta

	
Alberta, Saskatchewan

	
Oilsands Quest Sask Inc.

	
685,833 Class A Common Shares

 

394,167 Class B Common Shares

	
Oilsands Quest Technology Inc.

	
None

	
Alberta

	
800, 1333 8th  Avenue SW, Calgary, Alberta

	
Alberta

	
Alberta, Saskatchewan

	
Oilsands Quest Inc.

	
100 Common Shares

	
Township Petroleum Corporation

	
None

	
Alberta

	
800, 1333 8th  Avenue SW, Calgary, Alberta

	
Alberta

	
Alberta,

	
Oilsands Quest Inc.

	
100 Common Shares

	
Western Petrochemicals Corp.

	
None

	
Alberta

	
800, 1333 8th  Avenue SW, Calgary, Alberta

	
Alberta

	
Alberta, Saskatchewan

	
Oilsands Quest Inc.

	
21,702,925 Common Shares

	
1259882 Alberta Ltd.

	
None

	
Alberta

	
800, 1333 8th  Avenue SW, Calgary, Alberta

	
Alberta

	
Alberta

	
Oilsands Quest Inc.

	
1 Common Share

	
1291329 Alberta Ltd.

	
None

	
Alberta

	
800, 1333 8th  Avenue SW, Calgary, Alberta

	
Alberta

	
Alberta, Saskatchewan

	
Oilsands Quest Inc.

	
100 Class A Common Shares

 

 

 

  

  

  

 

SCHEDULE "5"

 

DEBT REQUIRED TO BE PAID CONTEMPORANEOUSLY WITH THE ADVANCE

 

 

 

Nile61780013ex4_1.htm

 

Exhibit 4.1

 

EXECUTION VERSION

TRUST SUPPLEMENT No. 2012-1A-O

Dated as of March 22, 2012

between

WILMINGTON TRUST COMPANY

as Trustee,

and

CONTINENTAL AIRLINES, INC.

to

PASS THROUGH TRUST AGREEMENT

Dated as of September 25, 1997

$753,035,000

Continental Airlines Pass Through Trust 2012-1A-O

4.150% Continental Airlines

Pass Through Certificates,

Series 2012-1A-O

  

  

  

TABLE OF CONTENTS

 

 

 

Page

	
 

ARTICLE I THE CERTIFICATES

	
2

	
Section 1.01.  The Certificates

	
2

	
 

ARTICLE II DEFINITIONS

	
4

	
Section 2.01.  Definitions

	
4

	
 

ARTICLE III DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS

	
10

	
Section 3.01.  Statements to Applicable Certificateholders

	
10

	
Section 3.02.  Special Payments Account

	
12

	
Section 3.03.  Distributions from Special Payments Account

	
12

	
Section 3.04.  Limitation of Liability for Payments

	
13

	
 

ARTICLE IV DEFAULT

	
13

	
Section 4.01.  Purchase Rights of Certificateholders

	
13

	
Section 4.02.  Amendment of Section 6.05 of the Basic Agreement

	
16

	
 

ARTICLE V THE TRUSTEE

	
16

	
Section 5.01.  Delivery of Documents; Delivery Dates

	
16

	
Section 5.02.  Withdrawal of Deposits

	
17

	
Section 5.03.  The Trustee

	
17

	
Section 5.04.  Representations and Warranties of the Trustee

	
18

	
Section 5.05.  Trustee Liens

	
19

	
 

ARTICLE VI ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS

	
19

	
Section 6.01.  Amendment of Section 5.02 of the Basic Agreement

	
19

	
Section 6.02.  Supplemental Agreements Without Consent of Applicable Certificateholders

	
19

	
Section 6.03.  Supplemental Agreements with Consent of Applicable Certificateholders

	
20

	
Section 6.04.  Consent of Holders of Certificates Issued under Other Trusts

	
20

	
 

ARTICLE VII TERMINATION OF TRUST

	
20

	
Section 7.01.  Termination of the Applicable Trust

	
20

	
 

ARTICLE VIII MISCELLANEOUS PROVISIONS

	
22

	
Section 8.01.  Basic Agreement Ratified

	
22

	
Section 8.02.  GOVERNING LAW

	
23

	
Section 8.03.  Execution in Counterparts

	
23

	
Section 8.04.  Intention of Parties

	
23

 

	
Exhibit A

	
-

	
Form of Certificate

	
Exhibit B

	
-

	
DTC Letter of Representations

	
Exhibit C

	
-

	
Form of Assignment and Assumption Agreement

  

  

BACK

This Trust Supplement No. 2012-1A-O, dated as of March 22, 2012 (herein called the “Trust Supplement”), between Continental Airlines, Inc., a Delaware corporation (the “Company”), and Wilmington Trust Company (the “Trustee”), to the Pass Through Trust Agreement, dated as of September 25, 1997, between the Company and the Trustee (the “Basic Agreement”).

W I T N E S S E T H:

WHEREAS, the Basic Agreement, unlimited as to the aggregate principal amount of Certificates (unless otherwise specified herein, capitalized terms used herein without definition having the respective meanings specified in the Basic Agreement) which may be issued thereunder, has heretofore been executed and delivered;

WHEREAS, the Company currently owns three Boeing 737-924ER aircraft (collectively, the “Encumbered Aircraft”), each of which was as of February 1, 2012 subject to an existing security interest, and has obtained commitments from Boeing for the delivery of 18 Boeing 737-924ER aircraft and six Boeing 787-8 aircraft (collectively, the “Eligible Aircraft”);

WHEREAS, the Company intends to finance (i) each Encumbered Aircraft after the existing security interest on such Encumbered Aircraft has been discharged and (ii) 14 Boeing 737-924ER aircraft and four Boeing 787-8 aircraft included in the Eligible Aircraft (such Eligible Aircraft to be financed, the “New Aircraft” and, together with the Encumbered Aircraft, the “Applicable Aircraft”);

WHEREAS, with respect to each Applicable Aircraft, the Company will issue pursuant to an Indenture, on a recourse basis, Equipment Notes (i) in the case of each Encumbered Aircraft, to finance such Encumbered Aircraft (if such Encumbered Aircraft is subject to an existing security interest, after such security interest has been discharged), and (ii) in the case of each New Aircraft, to finance a portion of the purchase price of such New Aircraft;

WHEREAS, the Trustee hereby declares the creation of the Continental Airlines Pass Through Trust 2012-1A-O (the “Applicable Trust”) for the benefit of the Applicable Certificateholders, and the initial Applicable Certificateholders as the grantors of the Applicable Trust, by their respective acceptances of the Applicable Certificates, join in the creation of the Applicable Trust with the Trustee;

WHEREAS, all Certificates to be issued by the Applicable Trust will evidence fractional undivided interests in the Applicable Trust and will convey no rights, benefits or interests in respect of any property other than the Trust Property except for those Certificates to which an Escrow Receipt has been affixed;

WHEREAS, the Escrow Agent and the Underwriters have contemporaneously herewith entered into an Escrow Agreement with the Escrow Paying Agent pursuant to which the Underwriters have delivered to the Escrow Agent the proceeds from the sale of the Applicable Certificates, and have irrevocably instructed the Escrow Agent to withdraw and pay funds from

 

 

 

  

  

BACK

 

2

 

such proceeds upon request and proper certification by the Trustee to purchase Equipment Notes as the conditions set forth in the NPA for such purchase are satisfied from time to time prior to the Delivery Period Termination Date;

WHEREAS, the Escrow Agent on behalf of the Applicable Certificateholders has contemporaneously herewith entered into a Deposit Agreement with the Depositary under which the Deposits referred to therein will be made and from which it will withdraw funds to allow the Trustee to purchase Equipment Notes from time to time prior to the Delivery Period Termination Date;

WHEREAS, pursuant to the terms and conditions of the Basic Agreement as supplemented by this Trust Supplement (the “Agreement”) and the NPA, upon the financing of an Applicable Aircraft under the NPA, the Trustee on behalf of the Applicable Trust, using funds withdrawn under the Escrow Agreement, shall purchase one or more Equipment Notes having the same interest rate as, and final maturity date not later than the final Regular Distribution Date of, the Applicable Certificates issued hereunder and shall hold such Equipment Notes in trust for the benefit of the Applicable Certificateholders;

WHEREAS, all of the conditions and requirements necessary to make this Trust Supplement, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Trust Supplement in the form and with the terms hereof have been in all respects duly authorized;

WHEREAS, this Trust Supplement is subject to the provisions of the Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be governed by such provisions;

NOW THEREFORE, in consideration of the premises herein, it is agreed between the Company and the Trustee as follows:

 

ARTICLE I

THE CERTIFICATES

 

Section 1.01.  The Certificates.  There is hereby created a series of Certificates to be issued under the Agreement to be distinguished and known as “Continental Airlines Pass Through Certificates, Series 2012-1A-O” (hereinafter defined as the “Applicable Certificates”).  Each Applicable Certificate represents a fractional undivided interest in the Applicable Trust created hereby.  The Applicable Certificates shall be the only instruments evidencing a fractional undivided interest in the Applicable Trust.

The terms and conditions applicable to the Applicable Certificates are as follows:

(a)           The aggregate principal amount of the Applicable Certificates that shall be authenticated under the Agreement (except for Applicable Certificates authenticated and

  

  

BACK

 

3

delivered under Sections 3.03, 3.04, 3.05 and 3.06 of the Basic Agreement) is $753,035,000.

(b)           The Regular Distribution Dates with respect to any distribution of Scheduled Payments means April 11 and October 11 of each year, commencing on October 11, 2012, until distribution of all of the Scheduled Payments to be made under the Equipment Notes has been made.

(c)           The Special Distribution Dates with respect to the Applicable Certificates means any Business Day on which a Special Payment is to be distributed pursuant to the Agreement.

(d)           At the Escrow Agent’s request under the Escrow Agreement, the Trustee shall affix the corresponding Escrow Receipt to each Applicable Certificate.  In any event, any transfer or exchange of any Applicable Certificate shall also effect a transfer or exchange of the related Escrow Receipt.  Prior to the Final Distribution, no transfer or exchange of any Applicable Certificate shall be permitted unless the corresponding Escrow Receipt is attached thereto and also is so transferred or exchanged.  By acceptance of any Applicable Certificate to which an Escrow Receipt is attached, each Holder of such an Applicable Certificate acknowledges and accepts the restrictions on transfer of the Escrow Receipt set forth herein and in the Escrow Agreement.

(e)           (i)           The Applicable Certificates shall be in the form attached hereto as Exhibit A.  Any Person acquiring or accepting an Applicable Certificate or an interest therein will, by such acquisition or acceptance, be deemed to represent and warrant to and for the benefit of the Company that either (i) the assets of an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or of a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), have not been used to purchase or hold Applicable Certificates or an interest therein or (ii) the purchase and holding of Applicable Certificates or an interest therein are exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to one or more prohibited transaction statutory or administrative exemptions.

(ii)           The Applicable Certificates shall be Book-Entry Certificates and shall be subject to the conditions set forth in the Letter of Representations between the Company and the Clearing Agency attached hereto as Exhibit B.

(f)           The “Participation Agreements” as defined in this Trust Supplement are the “Note Purchase Agreements” referred to in the Basic Agreement.

(g)           The Applicable Certificates are subject to the Intercreditor Agreement, the Deposit Agreement and the Escrow Agreement.

(h)           The Applicable Certificates are entitled to the benefits of the Liquidity Facility.

  

  

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(i)           The Responsible Party is the Company.

(j)           The date referred to in clause (i) of the definition of the term “PTC Event of Default” in the Basic Agreement is the Final Maturity Date.

(k)           The “particular sections of the Note Purchase Agreement”, for purposes of clause (3) of Section 7.07 of the Basic Agreement, are Section 8.1 of each Participation Agreement.

 

(l)            The Equipment Notes to be acquired and held in the Applicable Trust, and the related Aircraft and Note Documents, are described in the NPA.

 

ARTICLE II

DEFINITIONS

 

Section 2.01.  Definitions.  For all purposes of the Basic Agreement as supplemented by this Trust Supplement, the following capitalized terms have the following meanings (any term used herein which is defined in both this Trust Supplement and the Basic Agreement shall have the meaning assigned thereto in this Trust Supplement for purposes of the Basic Agreement as supplemented by this Trust Supplement):

Agreement:  Has the meaning specified in the recitals hereto.

Aircraft:  Means each of the Applicable Aircraft (or Substitute Aircraft) in respect of which a Participation Agreement is to be or is, as the case may be, entered into in accordance with the NPA (or any substitute aircraft, including engines therefor, owned by the Company and securing one or more Equipment Notes).

Aircraft Purchase Agreement:  Has the meaning specified in the NPA.

Applicable Aircraft:  Has the meaning specified in the recitals hereto.

Applicable Certificate:  Has the meaning specified in Section 1.01 of this Trust Supplement.

Applicable Certificateholder:  Means the Person in whose name an Applicable Certificate is registered on the Register for the Applicable Certificates.

Applicable Closing Date:  Has the meaning specified in Section 5.01(b) of this Trust Supplement.

Applicable Participation Agreement:  Has the meaning specified in Section 5.01(b) of this Trust Supplement.

Applicable Trust:  Has the meaning specified in the recitals hereto.

  

  

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Assignment and Assumption Agreement:  Means the assignment and assumption agreement substantially in the form of Exhibit C hereto executed and delivered in accordance with Section 7.01 of this Trust Supplement.

Basic Agreement:  Has the meaning specified in the first paragraph of this Trust Supplement.

Boeing:  Means The Boeing Company.

Business Day:  Means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in New York, New York, Chicago, Illinois, or, so long as any Applicable Certificate is Outstanding, the city and state in which the Trustee, the Subordination Agent or any Loan Trustee maintains its Corporate Trust Office or receives and disburses funds.

Certificate:  Has the meaning specified in the Intercreditor Agreement.

Certificate Buyout Event: Means that a Continental Bankruptcy Event has occurred and is continuing and the following events have occurred:  (A) (i) the 60-day period specified in Section 1110(a)(2)(A) of the U.S. Bankruptcy Code (the “60-Day Period”) has expired and (ii) Continental has not entered into one or more agreements under Section 1110(a)(2)(A) of the U.S. Bankruptcy Code to perform all of its obligations under all of the Indentures or, if it has entered into such agreements, has at any time thereafter failed to cure any default under any of the Indentures in accordance with Section 1110(a)(2)(B) of the Bankruptcy Code; or (B) if prior to the expiry of the 60-Day Period, Continental shall have abandoned any Aircraft.

Class:  Has the meaning specified in the Intercreditor Agreement.

Closing Notice:  Has the meaning specified in the NPA.

Company:  Has the meaning specified in the first paragraph of this Trust Supplement.

Continental Bankruptcy Event: Has the meaning specified in the Intercreditor Agreement.

Controlling Party:  Has the meaning specified in the Intercreditor Agreement.

Cut-off Date:  Means the earlier of (a) the Delivery Period Termination Date and (b) the date on which a Triggering Event occurs.

 

Delivery Period Termination Date:  Means the earlier of (a) March 31, 2013, or, if the Equipment Notes relating to all of the Applicable Aircraft (or Substitute Aircraft in lieu of any Eligible Aircraft) have not been purchased by the Applicable Trust and the

  

  

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Continental Airlines Pass Through Trust 2012-1B-O on or prior to such date due to any reason beyond the control of the Company and not occasioned by the Company’s fault or negligence, June 30, 2013 (provided that, if a labor strike occurs or continues at Boeing after the Issuance Date and on or prior to either or both of such dates referred to in this clause (a), such date or dates on or following the Issuance Date shall be extended by adding thereto a number of days, up to 60 days, that such strike continued in effect after the Issuance Date), and (b) the date on which Equipment Notes issued with respect to all of the Applicable Aircraft (including any Substitute Aircraft in lieu of any Eligible Aircraft) have been purchased by the Applicable Trust and the Continental Airlines Pass Through Trust 2012-1B-O in accordance with the NPA.

 

Deposit Agreement:  Means the Deposit Agreement dated as of March 22, 2012 relating to the Applicable Certificates between the Depositary and the Escrow Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

Depositary:  Means Natixis S.A., a French société anonyme, acting through its New York Branch.

Deposits:  Has the meaning specified in the Deposit Agreement.

Distribution Date:  Means any Regular Distribution Date or Special Distribution Date as the context requires.

Eligible Aircraft:  Has the meaning specified in the recitals hereto.

Encumbered Aircraft:  Has the meaning specified in the recitals hereto.

Escrow Agent:  Means, initially, U.S. Bank National Association and any replacement or successor therefor appointed in accordance with the Escrow Agreement.

Escrow Agreement:  Means the Escrow and Paying Agent Agreement dated as of March 22, 2012 relating to the Applicable Certificates, among the Escrow Agent, the Escrow Paying Agent, the Trustee and Underwriters, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

Escrow Paying Agent:  Means the Person acting as paying agent under the Escrow Agreement.

Escrow Receipt:  Means the receipt substantially in the form annexed to the Escrow Agreement representing a fractional undivided interest in the funds held in escrow thereunder.

Final Distribution:  Has the meaning specified in the Escrow Agreement.

Final Maturity Date:  Means October 11, 2025.

  

  

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Final Withdrawal:  Has the meaning specified in the Escrow Agreement.

Final Withdrawal Date:  Has the meaning specified in the Escrow Agreement.

Final Withdrawal Notice:  Has the meaning specified in Section 5.02 of this Trust Supplement.

Indenture:  Means each of the separate trust indentures and mortgages relating to the Aircraft, each as specified or described in a Closing Notice delivered pursuant to the NPA or the related Participation Agreement, in each case as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

Intercreditor Agreement:  Means the Intercreditor Agreement dated as of March 22, 2012 among the Trustee, the Other Trustees, the Liquidity Provider, the liquidity provider relating to the Class B Certificates and Wilmington Trust Company, as Subordination Agent and as trustee thereunder, as amended, supplemented or otherwise modified from time to time in accordance with its terms.

Investors:  Means the Underwriters, together with all subsequent beneficial owners of the Applicable Certificates.

Issuance Date:  Has the meaning specified in the NPA.

Liquidity Facility:  Means, initially, the Revolving Credit Agreement dated as of March 22, 2012 relating to the Applicable Certificates, between the Liquidity Provider and Wilmington Trust Company, as Subordination Agent, as agent and trustee for the Applicable Trust, and, from and after the replacement of such agreement pursuant to the Intercreditor Agreement, the replacement liquidity facility therefor, in each case as amended, supplemented or otherwise modified from time to time in accordance with their respective terms.

Liquidity Provider:  Means, initially, Credit Suisse AG, New York Branch, and any replacements or successors therefor appointed in accordance with the Intercreditor Agreement.

Make-Whole Amount:  Has the meaning specified in any Indenture.

New Aircraft:  Has the meaning specified in the recitals of this Trust Supplement.

Note Documents:  Means the Equipment Notes with respect to the Applicable Certificates and, with respect to any such Equipment Note, the Indenture and the Participation Agreement relating to such Equipment Note.

Notice of Purchase Withdrawal:  Has the meaning specified in the Deposit Agreement.

  

  

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NPA:  Means the Note Purchase Agreement dated as of March 22, 2012 among the Trustee, the Other Trustees, the Company, the Escrow Agent, the Escrow Paying Agent and the Subordination Agent, providing for, among other things, the purchase of Equipment Notes by the Trustee on behalf of the Applicable Trust, as the same may be amended, supplemented or otherwise modified from time to time, in accordance with its terms.

Other Agreements:  Means (i) the Basic Agreement as supplemented by Trust Supplement No. 2012-1B-O dated as of the date hereof relating to Continental Airlines Pass Through Trust 2012-1B-O, (ii) the Basic Agreement as supplemented by a Trust Supplement relating to any Additional Trust and (iii) the Basic Agreement as supplemented by a Trust Supplement relating to any Refinancing Trust.

Other Trustees:  Means the trustees under the Other Agreements, and any successor or other trustee appointed as provided therein.

Other Trusts:  Means the Continental Airlines Pass Through Trust 2012-1B-O, an Additional Trust, if any, and a Refinancing Trust or Trusts, if any, created by the Other Agreements.

Participation Agreement:  Means each Participation Agreement to be entered into, or entered into (as the case may be), by the Trustee pursuant to the NPA, as the same may be amended, supplemented or otherwise modified in accordance with its terms.

Pool Balance:  Means, as of any date, (i) the original aggregate face amount of the Applicable Certificates less (ii) the aggregate amount of all payments made as of such date in respect of such Applicable Certificates or in respect of Deposits other than payments made in respect of interest or premium (including Make-Whole Amount) thereon or reimbursement of any costs or expenses incurred in connection therewith.  The Pool Balance as of any date shall be computed after giving effect to any special distribution with respect to unused Deposits, payment of principal of the Equipment Notes or payment with respect to other Trust Property and the distribution thereof to be made on that date.

Pool Factor:  Means, as of any Distribution Date, the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the original aggregate face amount of the Applicable Certificates.  The Pool Factor as of any Distribution Date shall be computed after giving effect to any special distribution with respect to unused Deposits, payment of principal of the Equipment Notes or payment with respect to other Trust Property and the distribution thereof to be made on that date.

 Prospectus Supplement:  Means the final Prospectus Supplement dated March 8, 2012 relating to the offering of the Applicable Certificates and the Class B Certificates.

Ratings Confirmation:  Has the meaning specified in the Intercreditor Agreement.

  

  

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Related Pass Through Trust Agreement:  Means the Basic Agreement as supplemented by the Trust Supplement No. 2012-1A-S dated as of the date hereof relating to the Continental Airlines Pass Through Trust 2012-1A-S and entered into by the Company and the Related Trustee, which agreement becomes effective upon the execution and delivery of the Assignment and Assumption Agreement pursuant to Section 7.01 of this Trust Supplement.

Related Trust:  Means the Continental Pass Through Trust 2012-1A-S, to be formed under the Related Pass Through Trust Agreement.

Related Trustee:  Means the trustee under the Related Pass Through Trust Agreement.

Scheduled Closing Date:  Has the meaning specified in the NPA.

Scheduled Payment: Means, with respect to any Equipment Note, (i) any payment of principal or interest on such Equipment Note (other than any such payment which is not in fact received by the Trustee or the Subordination Agent within five days of the date on which such payment is scheduled to be made) or (ii) any payment of interest on the Applicable Certificates with funds drawn under the Liquidity Facility, which payment in any such case represents the installment of principal on such Equipment Note at the stated maturity of such installment, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; provided, however, that any payment of principal, premium (including Make-Whole Amount), if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment.

Special Payment:  Means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Collateral (as defined in each Indenture).

Substitute Aircraft:  Has the meaning specified in the NPA.

Transfer Date:  Has the meaning specified in Section 7.01 of this Trust Supplement.

Triggering Event:  Has the meaning assigned to such term in the Intercreditor Agreement.

Trust Property:  Means (i) subject to the Intercreditor Agreement, the Equipment Notes held as the property of the Applicable Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) funds from time to time deposited in the Certificate Account and the Special Payments Account and, subject to the Intercreditor Agreement, any proceeds from the sale by the Trustee pursuant to Article VI of the Basic Agreement of any Equipment Note and (iii) all rights of the Applicable Trust

  

  

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and the Trustee, on behalf of the Applicable Trust, under the Intercreditor Agreement, the Escrow Agreement, the NPA and the Liquidity Facility, including, without limitation, all rights to receive certain payments thereunder, and all monies paid to the Trustee on behalf of the Applicable Trust pursuant to the Intercreditor Agreement or the Liquidity Facility, provided that rights with respect to the Deposits or under the Escrow Agreement, except for the right to direct withdrawals for the purchase of Equipment Notes to be held herein, will not constitute Trust Property.

Trust Supplement:  Has the meaning specified in the first paragraph of this trust supplement.

Trustee:  Has the meaning specified in the first paragraph of this Trust Supplement.

 

Underwriters:  Means, collectively, Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Jefferies & Company, Inc.

 

Underwriting Agreement:  Means the Underwriting Agreement dated March 8, 2012 among the Underwriters, the Company and the Depositary, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

 

ARTICLE III

DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS

 

Section 3.01.  Statements to Applicable Certificateholders.  (a)  On each Distribution Date, the Trustee will include with each distribution to Applicable Certificateholders of a Scheduled Payment or Special Payment, as the case may be, a statement setting forth the information provided below (in the case of a Special Payment, reflecting in part the information provided by the Escrow Paying Agent under the Escrow Agreement).  Such statement shall set forth (per $1,000 face amount Applicable Certificate as to (ii), (iii), (iv) and (v) below) the following information:

(i)           the aggregate amount of funds distributed on such Distribution Date under the Agreement and under the Escrow Agreement, indicating the amount allocable to each source, including any portion thereof paid by the Liquidity Provider;

(ii)           the amount of such distribution under the Agreement allocable to principal and the amount allocable to premium (including Make-Whole Amount), if any;

(iii)           the amount of such distribution under the Agreement allocable to interest;

(iv)           the amount of such distribution under the Escrow Agreement allocable to interest;

  

  

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(v)           the amount of such distribution under the Escrow Agreement allocable to unused Deposits, if any; and

 

(vi)          the Pool Balance and the Pool Factor.

 

With respect to the Applicable Certificates registered in the name of a Clearing Agency or its nominee, on the Record Date prior to each Distribution Date, the Trustee will request that such Clearing Agency post on its Internet bulletin board a securities position listing setting forth the names of all Clearing Agency Participants reflected on such Clearing Agency’s books as holding interests in the Applicable Certificates on such Record Date.

(b)           Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was an Applicable Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and (a)(v) above for such calendar year or, in the event such Person was an Applicable Certificateholder of record during a portion of such calendar year, for such portion of such year, and such other items as are readily available to the Trustee and which an Applicable Certificateholder shall reasonably request as necessary for the purpose of such Applicable Certificateholder’s preparation of its U.S. federal income tax returns.  Such statement and such other items shall be prepared on the basis of information supplied to the Trustee by the Clearing Agency Participants and shall be delivered by the Trustee to such Clearing Agency Participants to be available for forwarding by such Clearing Agency Participants to the holders of interests in the Applicable Certificates in the manner described in Section 3.01(a) of this Trust Supplement.

(c)           If the aggregate principal payments scheduled for a Regular Distribution Date prior to the Delivery Period Termination Date differ from the amount thereof set forth for the Applicable Certificates on page S-35 of the Prospectus Supplement, by no later than the 15th day prior to such Regular Distribution Date, the Trustee shall mail written notice of the actual amount of such scheduled payments to the Applicable Certificateholders of record as of a date within 15 Business Days prior to the date of mailing.

 

(d)           Promptly following (i) the Delivery Period Termination Date, if there has been any change in the information set forth in clauses (y) and (z) below from that set forth in page S-35 of the Prospectus Supplement, and (ii) the date of any early redemption of, or any default in the payment of principal or interest in respect of, any of the Equipment Notes held in the Applicable Trust, or any Final Withdrawal, the Trustee shall furnish to Applicable Certificateholders of record on such date a statement setting forth (x) the expected Pool Balances for each subsequent Regular Distribution Date following the Delivery Period Termination Date, (y) the related Pool Factors for such Regular Distribution Dates and (z) the expected principal payment schedule of the Equipment Notes, in the aggregate, held as Trust Property at the date of such notice.  With respect to the Applicable Certificates registered in the name of a Clearing Agency, on the Delivery Period Termination Date, the Trustee will request from such Clearing Agency a securities position listing setting forth the names of all Clearing Agency Participants reflected on such Clearing Agency’s books as holding interests in the Applicable Certificates on such date.  The Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional

 

  

  

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copies as requested by such Clearing Agency Participant for forwarding to holders of interests in the Applicable Certificates.

 

(e)           The Trustee shall provide promptly to the Applicable Certificateholders all material non-confidential information received by the Trustee from the Company.

 

(f)           This Section 3.01 supersedes and replaces Section 4.03 of the Basic Agreement, with respect to the Applicable Trust.

 

Section 3.02.  Special Payments Account.  (a)  The Trustee shall establish and maintain on behalf of the Applicable Certificateholders a Special Payments Account as one or more accounts, which shall be non-interest bearing except as provided in Section 4.04 of the Basic Agreement.  The Trustee shall hold the Special Payments Account in trust for the benefit of the Applicable Certificateholders and shall make or permit withdrawals therefrom only as provided in the Agreement.  On each day when one or more Special Payments are made to the Trustee under the Intercreditor Agreement, the Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of such Special Payments in the Special Payments Account.

 

(b)  This Section 3.02 supersedes and replaces Section 4.01(b) of the Basic Agreement in its entirety, with respect to the Applicable Trust.

 

Section 3.03.  Distributions from Special Payments Account.  (a)  On each Special Distribution Date with respect to any Special Payment or as soon thereafter as the Trustee has confirmed receipt of any Special Payments due on the Equipment Notes held (subject to the Intercreditor Agreement) in the Applicable Trust or realized upon the sale of such Equipment Notes, the Trustee shall distribute out of the Special Payments Account the entire amount of such Special Payment deposited therein pursuant to Section 3.02(a) of this Trust Supplement.  There shall be so distributed to each Applicable Certificateholder of record on the Record Date with respect to such Special Distribution Date (other than as provided in Section 7.01 of this Trust Supplement concerning the final distribution) by check mailed to such Applicable Certificateholder, at the address appearing in the Register, such Applicable Certificateholder’s pro rata share (based on the Fractional Undivided Interest in the Applicable Trust held by such Applicable Certificateholder) of the total amount in the Special Payments Account on account of such Special Payment, except that, with respect to Applicable Certificates registered on the Record Date in the name of a Clearing Agency (or its nominee), such distribution shall be made by wire transfer in immediately available funds to the account designated by such Clearing Agency (or such nominee).

 

(b)           The Trustee shall, at the expense of the Company, cause notice of each Special Payment to be mailed to each Applicable Certificateholder at his address as it appears in the Register.  In the event of redemption or purchase of Equipment Notes held in the Applicable Trust, such notice shall be mailed not less than 15 days prior to the Special Distribution Date for the Special Payment resulting from such redemption or purchase, which Special Distribution Date shall be the date of such redemption or purchase.  In the case of any other Special Payments, such notice shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment, stating the Special Distribution Date for such

  

  

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Special Payment which shall occur not less than 15 days after the date of such notice and as soon as practicable thereafter.  Notices with respect to a Special Payment mailed by the Trustee shall set forth:

 

(i)           the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 7.01 of this Trust Supplement),

 

(ii)           the amount of the Special Payment for each $1,000 face amount Applicable Certificate and the amount thereof constituting principal, premium (including Make-Whole Amount), if any, and interest,

 

(iii)           the reason for the Special Payment, and

 

(iv)           if the Special Distribution Date is the same date as a Regular Distribution Date, the total amount to be received on such date for each $1,000 face amount Applicable Certificate.

 

If the amount of premium (including Make-Whole Amount), if any, payable upon the redemption or purchase of an Equipment Note has not been calculated at the time that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium (including Make-Whole Amount) received will also be distributed.

 

If any redemption of the Equipment Notes held in the Trust is canceled, the Trustee, as soon as possible after learning thereof, shall cause notice thereof to be mailed to each Applicable Certificateholder at its address as it appears on the Register.

 

(b)  This Section 3.03 supersedes and replaces Section 4.02(b) and Section 4.02(c) of the Basic Agreement in their entirety, with respect to the Applicable Trust.

Section 3.04.  Limitation of Liability for Payments.  Section 3.09 of the Basic Agreement shall be amended, with respect to the Applicable Trust, by deleting the phrase “the Owner Trustees or the Owner Participants” in the second sentence thereof and adding in lieu thereof “the Liquidity Provider”.

 

ARTICLE IV

DEFAULT

 

Section 4.01.  Purchase Rights of Certificateholders.  (a) By acceptance of its Applicable Certificate, each Applicable Certificateholder agrees that at any time after the occurrence and during the continuation of a Certificate Buyout Event:

(i) each Class B Certificateholder (other than the Company or any of its Affiliates) shall have the right to purchase all, but not less than all, of the Applicable Certificates upon 15 days’ written notice to the Trustee and each other Class B Certificateholder, on the third Business Day next following the expiry of such 15-day notice period, provided that (A) if prior to the end of such 15-day period any other Class

  

  

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B Certificateholder (other than the Company or any of its Affiliates) notifies such purchasing Class B Certificateholder that such other Class B Certificateholder wants to participate in such purchase, then such other Class B Certificateholder (other than the Company or any of its Affiliates) may join with the purchasing Class B Certificateholder to purchase all, but not less than all, of the Applicable Certificates pro rata based on the Fractional Undivided Interest in the Class B Trust held by each such Class B Certificateholder and (B) if prior to the end of such 15-day period any other Class B Certificateholder fails to notify the purchasing Class B Certificateholder of such other Class B Certificateholder’s desire to participate in such a purchase, then such other Class B Certificateholder shall lose its right to purchase the Applicable Certificates pursuant to this Section 4.01(a)(i);

 

 

(ii) if any Additional Certificates are issued pursuant to any Additional Trust, each Additional Certificateholder (other than the Company or any of its Affiliates) shall have the right (which shall not expire upon any purchase of the Applicable Certificates pursuant to clause (i) above) to purchase all, but not less than all, of the Applicable Certificates and the Class B Certificates upon 15 days’ written notice to the Trustee, the Class B Trustee and each other Additional Certificateholder, on the third Business Day next following the expiry of such 15-day notice period, provided that (A) if prior to the end of such 15-day period any other Additional Certificateholder (other than the Company or any of its Affiliates) notifies such purchasing Additional Certificateholder that such other Additional Certificateholder wants to participate in such purchase, then such other Additional Certificateholder (other than the Company or any of its Affiliates) may join with the purchasing Additional Certificateholder to purchase all, but not less than all, of the Applicable Certificates and the Class B Certificates pro rata based on the Fractional Undivided Interest in the Additional Trust held by each such Additional Certificateholder and (B) if prior to the end of such 15-day period any other Additional Certificateholder fails to notify the purchasing Additional Certificateholder of such other Additional Certificateholder’s desire to participate in such a purchase, then such other Additional Certificateholder shall lose its right to purchase the Applicable Certificates and the Class B Certificates pursuant to this Section 4.01(a)(ii); and

(iii) if any Refinancing Certificates are issued, each Refinancing Certificateholder shall have the same right (subject to the same terms and conditions) to purchase Certificates pursuant to this Section 4.01(a) (and to receive notice in connection therewith) as the Certificateholders of the Class that such Refinancing Certificates refinanced.

The purchase price with respect to the Applicable Certificates shall be equal to the Pool Balance of the Applicable Certificates, together with accrued and unpaid interest thereon to the date of such purchase, without premium (including Make-Whole Amount), but including any other amounts then due and payable to the Applicable Certificateholders under the Agreement, the Intercreditor Agreement, the Escrow Agreement or any Note Document or on or in respect of the Applicable Certificates; provided, however, that no such purchase of Applicable Certificates shall be effective unless the purchaser(s) shall certify to the Trustee that contemporaneously with such purchase, such purchaser(s) is (are) purchasing, pursuant to the terms of the Agreement and

  

  

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the Other Agreements, (A) in the case of any purchase of the Applicable Certificates pursuant to clause (i) above, all of the Applicable Certificates or (B) in the case of any purchase of Applicable Certificates and Class B Certificates pursuant to clause (ii) above, all of the Applicable Certificates and the Class B Certificates.  Each payment of the purchase price of the Applicable Certificates referred to in the first sentence hereof shall be made to an account or accounts designated by the Trustee and each such purchase shall be subject to the terms of this Section 4.01.  Each Applicable Certificateholder agrees by its acceptance of its Applicable Certificate that (at any time after the occurrence of a Certificate Buyout Event) it will, upon payment from such Class B Certificateholder(s), Additional Certificateholder(s) or Refinancing Certificateholder(s), as the case may be, of the purchase price set forth in the first sentence of this paragraph, (i) forthwith sell, assign, transfer and convey to the purchaser(s) thereof (without recourse, representation or warranty of any kind except for its own acts), all of the right, title, interest and obligation of such Applicable Certificateholder in the Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the NPA, the Note Documents and all Applicable Certificates and Escrow Receipts held by such Applicable Certificateholder (excluding all right, title and interest under any of the foregoing to the extent such right, title or interest is with respect to an obligation not then due and payable as respects any action or inaction or state of affairs occurring prior to such sale) (and the purchaser shall assume all of such Applicable Certificateholder’s obligations under the Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the NPA, the Note Documents and all such Applicable Certificates and Escrow Receipts), (ii) if such purchase occurs after a record date specified in Section 2.03 of the Escrow Agreement relating to the distribution of unused Deposits and/or accrued and unpaid interest on Deposits and prior to or on the related distribution date thereunder, forthwith turn over to the purchaser(s) of its Applicable Certificate all amounts, if any, received by it on account of such distribution, and (iii) if such purchase occurs after a Record Date relating to any distribution and prior to or on the related Distribution Date, forthwith turn over to the purchaser(s) of its Applicable Certificate all amounts, if any, received by it on account of such distribution.  The Applicable Certificates will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of the Applicable Certificateholders to deliver any Applicable Certificates and, upon such a purchase, (I) the only rights of the Applicable Certificateholders will be to deliver the Applicable Certificates to the purchaser(s) and receive the purchase price for such Applicable Certificates and (II) if the purchaser(s) shall so request, such Applicable Certificateholder will comply with all the provisions of Section 3.04 of the Basic Agreement to enable new Applicable Certificates to be issued to the purchaser in such denominations as it shall request.  All charges and expenses in connection with the issuance of any such new Applicable Certificates shall be borne by the purchaser thereof.

As used in this Section 4.01 and elsewhere in this Trust Supplement, the terms “Additional Certificate”, “Additional Certificateholder”, “Additional Equipment Notes”, “Additional Trust”, “Class B Certificate”, “Class B Certificateholder”, “Class B Trust”, “Class B Trustee”, “Refinancing Certificates”, “Refinancing Certificateholder”, “Refinancing Equipment Notes” and “Refinancing Trust” shall have the respective meanings assigned to such terms in the Intercreditor Agreement.

  

  

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(b)           This Section 4.01 supersedes and replaces Section 6.01(b) of the Basic Agreement, with respect to the Applicable Trust.

Section 4.02.  Amendment of Section 6.05 of the Basic Agreement.  Section 6.05 of the Basic Agreement shall be amended, with respect to the Applicable Trust, by deleting the phrase “and thereby annul any Direction given by such Certificateholders or the Trustee to such Loan Trustee with respect thereto,” set forth in the first sentence thereof.

 

ARTICLE V

THE TRUSTEE

 

Section 5.01.  Delivery of Documents; Delivery Dates.  (a)  The Trustee is hereby directed (i) to execute and deliver the Intercreditor Agreement, the Escrow Agreement and the NPA on or prior to the Issuance Date, each in the form delivered to the Trustee by the Company, and (ii) subject to the respective terms thereof, to perform its obligations thereunder.  Upon request of the Company and the satisfaction or waiver of the closing conditions specified in the Underwriting Agreement, the Trustee shall execute, deliver, authenticate, issue and sell Applicable Certificates in authorized denominations equaling in the aggregate the amount set forth, with respect to the Applicable Trust, in Schedule I to the Underwriting Agreement evidencing the entire ownership interest in the Applicable Trust, which amount equals the maximum aggregate principal amount of Equipment Notes which may be purchased by the Trustee pursuant to the NPA.  Except as provided in Sections 3.03, 3.04, 3.05 and 3.06 of the Basic Agreement, the Trustee shall not execute, authenticate or deliver Applicable Certificates in excess of the aggregate amount specified in this paragraph.  The provisions of this Section 5.01(a) supersede and replace the first sentence of Section 3.02(a) of the Basic Agreement, with respect to the Applicable Trust.

(b)           After the Issuance Date, the Company may deliver from time to time to the Trustee a Closing Notice relating to one or more Equipment Notes.  After receipt of a Closing Notice and in any case no later than one Business Day prior to a Scheduled Closing Date as to which such Closing Notice relates (the “Applicable Closing Date”), the Trustee shall (as and when specified in the Closing Notice) instruct the Escrow Agent to provide a Notice of Purchase Withdrawal to the Depositary requesting (A) the withdrawal of one or more Deposits on the Applicable Closing Date in accordance with and to the extent permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B) the payment of all, or a portion, of such Deposit or Deposits in an amount equal in the aggregate to the purchase price of such Equipment Notes to or on behalf of the Company, all as shall be described in the Closing Notice.  The Trustee shall (as and when specified in such Closing Notice), subject to the conditions set forth in Section 2 of the NPA, enter into and perform its obligations under the Participation Agreement specified in such Closing Notice (the “Applicable Participation Agreement”) and cause such certificates, documents and legal opinions relating to the Trustee to be duly delivered as required by the Applicable Participation Agreement.  If at any time prior to the Applicable Closing Date, the Trustee receives a notice of postponement pursuant to Section 1(e) or 1(f) of the NPA, then the Trustee shall give the Depositary (with a copy to the Escrow Agent) a notice of cancellation of such Notice of Purchase Withdrawal relating to such Deposit or Deposits on such Applicable Closing Date.  Upon satisfaction of the conditions specified in the NPA and the

  

  

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Applicable Participation Agreement, the Trustee shall purchase the applicable Equipment Notes with the proceeds of the withdrawals of one or more Deposits made on the Applicable Closing Date in accordance with the terms of the Deposit Agreement and the Escrow Agreement.  The purchase price of such Equipment Notes shall equal the principal amount of such Equipment Notes.  Amounts withdrawn from such Deposit or Deposits in excess of the purchase price of the Equipment Notes or to the extent not applied on the Applicable Closing Date to the purchase price of the Equipment Notes, shall be re-deposited by the Trustee with the Depositary on the Applicable Closing Date in accordance with the terms of the Deposit Agreement.  The provisions of this Section 5.01(b) supersede and replace the provisions of Section 2.02 of the Basic Agreement with respect to the Applicable Trust, and all provisions of the Basic Agreement relating to Postponed Notes and Section 2.02 of the Basic Agreement shall not apply to the Applicable Trust.

(c)  The Trustee acknowledges its acceptance of all right, title and interest in and to the Trust Property to be acquired pursuant to Section 5.01(b) of this Trust Supplement, the NPA and each Applicable Participation Agreement, and declares that it holds and will hold such right, title and interest for the benefit of all present and future Applicable Certificateholders, upon the trusts set forth in the Agreement.  By its acceptance of an Applicable Certificate, each initial Applicable Certificateholder, as a grantor of the Applicable Trust, joins with the Trustee in the creation of the Applicable Trust.  The provisions of this Section 5.01(c) supersede and replace the provisions of Section 2.03 of the Basic Agreement, with respect to the Applicable Trust.

Section 5.02.  Withdrawal of Deposits.  If any Deposits remain outstanding on the Business Day next succeeding the Cut-off Date, the Trustee shall promptly give the Escrow Agent notice that the Trustee’s obligation to purchase Equipment Notes under the NPA has terminated and instruct the Escrow Agent to provide a notice of Final Withdrawal to the Depositary substantially in the form of Exhibit B to the Deposit Agreement (the “Final Withdrawal Notice”).

Section 5.03.  The Trustee.  (a)  Subject to Section 5.04 of this Trust Supplement and Section 7.15 of the Basic Agreement, the Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Trust Supplement, the Deposit Agreement, the NPA or the Escrow Agreement or the due execution hereof or thereof by the Company or the other parties thereto (other than the Trustee), or for or in respect of the recitals and statements contained herein or therein, all of which recitals and statements are made solely by the Company, except that the Trustee hereby represents and warrants that each of this Trust Supplement, the Basic Agreement, each Applicable Certificate, the Intercreditor Agreement, the NPA and the Escrow Agreement has been executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf.

(b)           Except as herein otherwise provided and except during the continuation of an Event of Default in respect of the Applicable Trust created hereby, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason of this Trust Supplement other than as set forth in the Agreement, and this Trust Supplement is executed

  

  

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and accepted on behalf of the Trustee, subject to all the terms and conditions set forth in the Agreement, as fully to all intents as if the same were herein set forth at length.

Section 5.04.  Representations and Warranties of the Trustee.  The Trustee hereby represents and warrants that:

(a)           the Trustee has full power, authority and legal right to execute, deliver and perform this Trust Supplement, the Intercreditor Agreement, the Escrow Agreement, the NPA and the Note Documents to which it is or is to become a party and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Supplement, the Intercreditor Agreement, the Escrow Agreement, the NPA and the Note Documents to which it is or is to become a party;

(b)           the execution, delivery and performance by the Trustee of this Trust Supplement, the Intercreditor Agreement, the Escrow Agreement, the NPA and the Note Documents to which it is or is to become a party (i) will not violate any provision of any United States federal law or the law of the state of the United States where it is located governing the banking and trust powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have an adverse effect on the Trustee’s performance or ability to perform its duties hereunder or thereunder or on the transactions contemplated herein or therein;

(c)           the execution, delivery and performance by the Trustee of this Trust Supplement, the Intercreditor Agreement, the Escrow Agreement, the NPA and the Note Documents to which it is or is to become a party will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the state of the United States where it is located regulating the banking and corporate trust activities of the Trustee; and

(d)           this Trust Supplement, the Intercreditor Agreement, the Escrow Agreement, the NPA and the Note Documents to which it is or is to become a party have been, or will be, as applicable, duly executed and delivered by the Trustee and constitute, or will constitute, as applicable, the legal, valid and binding agreements of the Trustee, enforceable against it in accordance with their respective terms; provided, however, that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity.

  

  

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Section 5.05.  Trustee Liens.  The Trustee in its individual capacity agrees, in addition to the agreements contained in Section 7.17 of the Basic Agreement, that it will at its own cost and expense promptly take any action as may be necessary to duly discharge and satisfy in full any Trustee’s Liens on or with respect to the Trust Property which is attributable to the Trustee in its individual capacity and which is unrelated to the transactions contemplated by the Intercreditor Agreement or the NPA.

 

ARTICLE VI

ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS

 

Section 6.01.  Amendment of Section 5.02 of the Basic Agreement.  Section 5.02 of the Basic Agreement shall be amended, with respect to the Applicable Trust, by (i) replacing the phrase “of the Note Documents and of this Agreement” set forth in paragraph (b) thereof with the phrase “of the Note Documents, of the NPA and of this Agreement” and (ii) replacing the phrase “of this Agreement and any Note Document” set forth in the last paragraph of Section 5.02 with the phrase “of this Agreement, the NPA and any Note Document”.

Section 6.02.  Supplemental Agreements Without Consent of Applicable Certificateholders.  Without limitation of Section 9.01 of the Basic Agreement, under the terms of, and subject to the limitations contained in, Section 9.01 of the Basic Agreement, the Company may (but will not be required to), and the Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company’s request, at any time and from time to time:

(i)           enter into one or more agreements supplemental to the Escrow Agreement, the NPA or the Deposit Agreement, for any of the purposes set forth in clauses (1) through (9) of such Section 9.01, and (without limitation of the foregoing or Section 9.01 of the Basic Agreement) (a) clauses (2) and (3) of such Section 9.01 shall also be deemed to include the Company’s obligations under (in the case of clause (2)), and the Company’s rights and powers conferred by (in the case of clause (3)), the NPA, and (b) references in clauses (4), (6) and (7) of such Section 9.01 to “any Intercreditor Agreement or any Liquidity Facility” shall also be deemed to refer to “the Intercreditor Agreement, the Liquidity Facility, the Escrow Agreement, the NPA or the Deposit Agreement”,

(ii)           enter into one or more agreements supplemental to the Agreement, the Intercreditor Agreement or the NPA to provide for the formation of a single Additional Trust, the issuance of Additional Certificates, the purchase by the Additional Trust (if any) of applicable Additional Equipment Notes and other matters incidental thereto or otherwise contemplated by Section 2.01(b) of the Basic Agreement, subject to the provisions of Section 4(a)(vi) of the NPA and Section 9.1(d) of the Intercreditor Agreement, and

(iii)           enter into one or more agreements supplemental to the Agreement to provide for the formation of one or more Refinancing Trusts, the issuance of Refinancing Certificates, the purchase by any Refinancing Trust of applicable Refinancing Equipment Notes and other matters incidental thereto or as otherwise contemplated by Section 2.01(b) of the Basic Agreement, subject to the provisions of Section 4(a)(vi) of the NPA and Section 9.1(c) of the Intercreditor Agreement.

  

  

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Section 6.03.  Supplemental Agreements with Consent of Applicable Certificateholders.  Without limitation of Section 9.02 of the Basic Agreement, the provisions of Section 9.02 of the Basic Agreement shall apply to agreements or amendments for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Escrow Agreement, the Deposit Agreement, the Liquidity Facility or the NPA or modifying in any manner the rights and obligations of the Applicable Certificateholders under the Escrow Agreement, the Deposit Agreement, the Liquidity Facility or the NPA; provided that the provisions of Section 9.02(1) of the Basic Agreement shall be deemed to include reductions in any manner of, or delay in the timing of, any receipt by the Applicable Certificateholders of payments upon the Deposits.

Section 6.04.  Consent of Holders of Certificates Issued under Other Trusts.  Notwithstanding any provision in Section 6.02 or Section 6.03 of this Trust Supplement to the contrary, no amendment or modification of Section 4.01 of this Trust Supplement shall be effective unless the trustee for each Class of Certificates affected by such amendment or modification shall have consented thereto.

 

ARTICLE VII

TERMINATION OF TRUST

 

Section 7.01.  Termination of the Applicable Trust.  (a)  The respective obligations and responsibilities of the Company and the Trustee with respect to the Applicable Trust shall terminate upon the earlier of (A) the completion of the assignment, transfer and discharge described in the first sentence of the immediately following paragraph and (B) distribution to all Applicable Certificateholders and the Trustee of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property; provided, however, that in no event shall the Applicable Trust continue beyond one hundred ten (110) years following the date of the execution of this Trust Supplement.

Upon the earlier of (i) the first Business Day following March 31, 2013 or, if later, the fifth Business Day following the Delivery Period Termination Date and (ii) the fifth Business Day following the date on which a Triggering Event occurs (such date, the “Transfer Date”), or, if later, the date on which all of the conditions set forth in the immediately following sentence have been satisfied, the Trustee is hereby directed (subject only to the immediately following sentence) to, and the Company shall direct the institution that will serve as the Related Trustee under the Related Pass Through Trust Agreement to, execute and deliver the Assignment and Assumption Agreement, pursuant to which the Trustee shall assign, transfer and deliver all of the Trustee’s right, title and interest to the Trust Property to the Related Trustee under the Related Pass Through Trust Agreement.  The Trustee and the Related Trustee shall execute and deliver the Assignment and Assumption Agreement upon the satisfaction of the following conditions:

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Opinion of Counsel dated the date of the Assignment and Assumption Agreement and each satisfying the requirements of Section 1.02 of the Basic Agreement, which Opinion of Counsel shall be substantially to the effect set forth below and may be relied upon by the Beneficiaries (as defined in the Assignment and Assumption Agreement):

(I)           Upon the execution and delivery thereof by the parties thereto in accordance with the terms of the Agreement and the Related Pass Through Trust Agreement, the Assignment and Assumption Agreement will constitute the valid and binding obligation of each of the parties thereto enforceable against each such party in accordance with its terms;

(II)           Upon the execution and delivery of the Assignment and Assumption Agreement in accordance with the terms of the Agreement and the Related Pass Through Trust Agreement, each of the Applicable Certificates then Outstanding will be entitled to the benefits of the Related Pass Through Trust Agreement;

(III)           The Related Trust is not required to be registered as an investment company under the Investment Company Act of 1940, as amended;

(IV)           The Related Pass Through Trust Agreement constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms; and

(V)           Neither the execution and delivery of the Assignment and Assumption Agreement in accordance with the terms of the Agreement and the Related Pass Through Trust Agreement, nor the consummation by the parties thereto of the transactions contemplated to be consummated thereunder on the date thereof, will violate any law or governmental rule or regulation of the State of New York or the United States of America known to such counsel to be applicable to the transactions contemplated by the Assignment and Assumption Agreement.

(ii)           The Trustee and the Company shall have received (x) a copy of the articles of incorporation and bylaws of the Related Trustee certified as of the Transfer Date by the Secretary or Assistant Secretary of such institution and (y) a copy of the filing (including all attachments thereto) made by the institution serving as the Related Trustee with the Office of the Superintendent, State of New York Banking Department for the qualification of the Related Trustee under Section 131(3) of the New York Banking Law.

 

Upon the execution of the Assignment and Assumption Agreement by the parties thereto, the Applicable Trust shall be terminated, the Applicable Certificateholders shall receive beneficial interests in the Related Trust in exchange for their interests in the Applicable Trust equal to their respective beneficial interests in the Applicable Trust, and the Outstanding Applicable Certificates representing Fractional Undivided Interests in the Applicable Trust shall be deemed for all purposes of the Agreement and the Related Pass Through Trust Agreement, without further signature or action of any party or Applicable Certificateholder, to be certificates representing the same fractional undivided interests in the Related Trust and its trust property.

  

  

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By acceptance of its Applicable Certificate, each Applicable Certificateholder consents to such assignment, transfer and delivery of the Trust Property to the trustee of the Related Trust upon the execution and delivery of the Assignment and Assumption Agreement.

In connection with the occurrence of the event set forth in clause (B) above of the first paragraph of this Section 7.01, notice of such termination, specifying the Distribution Date upon which the Applicable Certificateholders may surrender their Applicable Certificates to the Trustee for payment of the final distribution and cancellation, shall be mailed promptly by the Trustee to Applicable Certificateholders not earlier than the 60th day and not later than the 15th day next preceding such final Distribution Date specifying (A) the Distribution Date upon which the proposed final payment of the Applicable Certificates will be made upon presentation and surrender of Applicable Certificates at the office or agency of the Trustee therein specified, (B) the amount of any such proposed final payment, and (C) that the Record Date otherwise applicable to such Distribution Date is not applicable, payments being made only upon presentation and surrender of the Applicable Certificates at the office or agency of the Trustee therein specified.  The Trustee shall give such notice to the Registrar at the time such notice is given to Applicable Certificateholders.  Upon presentation and surrender of the Applicable Certificates in accordance with such notice, the Trustee shall cause to be distributed to Applicable Certificateholders such final payments.

In the event that all of the Applicable Certificateholders shall not surrender their Applicable Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Applicable Certificateholders to surrender their Applicable Certificates for cancellation and receive the final distribution with respect thereto.  No additional interest shall accrue on the Applicable Certificates after the Distribution Date specified in the first written notice.  In the event that any money held by the Trustee for the payment of distributions on the Applicable Certificates shall remain unclaimed for two years (or such lesser time as the Trustee shall be satisfied, after sixty days’ notice from the Company, is one month prior to the escheat period provided under applicable law) after the final distribution date with respect thereto, the Trustee shall pay to each Loan Trustee the appropriate amount of money relating to such Loan Trustee and shall give written notice thereof to the Company.

(b)  The provisions of this Section 7.01 supersede and replace the provisions of Section 11.01 of the Basic Agreement in its entirety, with respect to the Applicable Trust.

 

ARTICLE VIII

MISCELLANEOUS PROVISIONS

 

Section 8.01.  Basic Agreement Ratified.  Except and so far as herein expressly provided, all of the provisions, terms and conditions of the Basic Agreement are in all respects ratified and confirmed; and the Basic Agreement and this Trust Supplement shall be taken, read and construed as one and the same instrument.  All replacements of provisions of, and other modifications of the Basic Agreement set forth in this Trust Supplement are solely with respect to the Applicable Trust.

  

  

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Section 8.02.  GOVERNING LAW.  THE AGREEMENT AND, UNTIL THE TRANSFER DATE, THE APPLICABLE CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.  THIS SECTION 8.02 SUPERSEDES AND REPLACES SECTION 12.05 OF THE BASIC AGREEMENT, WITH RESPECT TO THE APPLICABLE TRUST.

Section 8.03.  Execution in Counterparts.  This Trust Supplement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

Section 8.04.  Intention of Parties.  The parties hereto intend that the Applicable Trust be classified for U.S. federal income tax purposes as a grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended, and not as a trust or association taxable as a corporation or as a partnership.  Each Applicable Certificateholder and Investor, by its acceptance of its Applicable Certificate or a beneficial interest therein, agrees to treat the Applicable Trust as a grantor trust for all U.S. federal, state and local income tax purposes.  The powers granted and obligations undertaken pursuant to the Agreement shall be so construed so as to further such intent.

  

  

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IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust Supplement to be duly executed by their respective officers thereto duly authorized, as of the day and year first written above.

	  	
CONTINENTAL AIRLINES, INC.

	  	  
	  	  
	  	
By:

	
 /s/ Gerald Laderman

	  	  	
Name:

	
 Gerald Laderman

	  	  	
Title:

	
 Senior Vice President Finance and Treasurer

	  	
WILMINGTON TRUST COMPANY,

    as Trustee

	  	  
	  	  
	  	
By:

	
 /s/ Chad May

	  	  	
Name:

	
 Chad May

	  	  	
Title:

	
 Financial Services Officer

[Trust Supplement No. 2012-1A-O Signature Page]

  

  

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EXHIBIT A

FORM OF CERTIFICATE

Certificate

No.       

[Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the registered owner hereof, Cede & Co., has an interest herein.]*

CONTINENTAL AIRLINES PASS THROUGH TRUST 2012-1A-O

Continental Airlines Pass Through Certificate, Series 2012-1A-O

Issuance Date:  March 22, 2012

Final Maturity Date:  October 11, 2025

Evidencing A Fractional Undivided Interest In The Continental Airlines Pass Through Trust 2012-1A-O, The Property Of Which Shall Include Certain Equipment Notes Each Secured By An Aircraft Owned By Continental Airlines, Inc.

$[_____________] Fractional Undivided Interest

representing 0.0001327960% of the Trust per $1,000 face amount

THIS CERTIFIES THAT __________, for value received, is the registered owner of a $___________ (______________________________________________ DOLLARS) Fractional Undivided Interest in the Continental Airlines Pass Through Trust 2012-1A-O (the “Trust”) created by Wilmington Trust Company, as trustee (the “Trustee”), pursuant to a Pass Through Trust Agreement, dated as of September 25, 1997 (the “Basic Agreement”), between the Trustee and Continental Airlines, Inc., a Delaware corporation (the “Company”), as

 

______________________

 

*           This legend to appear on Book-Entry Certificates to be deposited with the Depository Trust Company.

  

  

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supplemented by Trust Supplement No. 2012-1A-O thereto, dated as of March 22, 2012 (the “Trust Supplement” and, together with the Basic Agreement, the “Agreement”), between the Trustee and the Company, a summary of certain of the pertinent provisions of which is set forth below.  To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement.  This Certificate is one of the duly authorized Certificates designated as “Continental Airlines Pass Through Certificates, Series 2012-1A-O” (herein called the “Certificates”).  This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement.  By virtue of its acceptance hereof, the holder of this Certificate (the “Certificateholder” and, together with all other holders of Certificates issued by the Trust, the “Certificateholders”) assents to and agrees to be bound by the provisions of the Agreement and the Intercreditor Agreement.  The property of the Trust includes certain Equipment Notes and all rights of the Trust to receive payments under the Intercreditor Agreement and the Liquidity Facility (the “Trust Property”).  Each issue of the Equipment Notes is secured by, among other things, a security interest in an Aircraft owned by the Company.

The Certificates represent Fractional Undivided Interests in the Trust and the Trust Property and have no rights, benefits or interest in respect of any other separate trust established pursuant to the terms of the Basic Agreement for any other series of certificates issued pursuant thereto.

Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on April 11 and October 11 of each year (a “Regular Distribution Date”) commencing October 11, 2012, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments.  Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received.  If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period.  The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate.

Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without presentation or surrender of this Certificate or the making of any notation hereon, except that with respect to Certificates registered on the Record Date in the name of a Clearing Agency (or its nominee), such distribution shall be made by wire transfer.

  

  

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Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice.

The Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company or the Trustee or any affiliate thereof.  The Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Agreement.  All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement.  Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Agreement.  This Certificate does not purport to summarize the Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, privileges, and duties evidenced hereby.  A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request.

The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Company and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust.  Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate.  The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates.

As provided in the Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder’s attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees.

Under certain circumstances set forth in Section 7.01 of the Trust Supplement, all of the Trustee’s right, title and interest to the Trust Property may be assigned, transferred and delivered to the Related Trustee of the Related Trust pursuant to the Assignment and Assumption Agreement.  Upon the effectiveness of such Assignment and Assumption Agreement (the “Transfer”), the Trust shall be terminated, the Certificateholders shall receive beneficial interests

  

  

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in the Related Trust in exchange for their interests in the Trust equal to their respective beneficial interests in the Trust, the Certificates representing Fractional Undivided Interests in the Trust shall be deemed for all purposes of the Agreement and the Related Pass Through Trust Agreement to be certificates representing the same fractional undivided interests in the Related Trust and its trust property.  Each Certificateholder, by its acceptance of this Certificate or a beneficial interest herein, agrees to be bound by the Assignment and Assumption Agreement and subject to the terms of the Related Pass Through Trust Agreement as a Certificateholder thereunder.  From and after the Transfer, unless and to the extent the context otherwise requires, references herein to the Trust, the Agreement and the Trustee shall constitute references to the Related Trust, the Related Pass Through Trust Agreement and trustee of the Related Trust, respectively.

The Certificates are issuable only as registered Certificates without coupons in minimum denominations of $1,000 Fractional Undivided Interest and integral multiples thereof, except that one Certificate may be issued in a different denomination.  As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same.

No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith.

Each Certificateholder and Investor, by its acceptance of this Certificate or a beneficial interest herein, agrees to treat the Trust as a grantor trust for all U.S. federal, state and local income tax purposes.

The Trustee, the Registrar, and any agent of the Trustee or the Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary.

The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property.

Any Person acquiring or accepting this Certificate or an interest herein will, by such acquisition or acceptance, be deemed to have represented and warranted to and for the benefit of the Company that either:  (i) the assets of an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or of a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), have not been used to purchase or hold this Certificate or an interest herein or (ii) the purchase and holding of this Certificate or an interest herein are exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to one or more prohibited transaction statutory or administrative exemptions.

  

  

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THE AGREEMENT AND, UNTIL THE TRANSFER, THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.  THE RELATED PASS THROUGH TRUST AGREEMENT AND, FROM AND AFTER THE TRANSFER, THIS CERTIFICATE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.

IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.

	  	
CONTINENTAL AIRLINES PASS THROUGH TRUST 2012-1A-O

	  	  
	  	
By:

	
WILMINGTON TRUST COMPANY,

as Trustee

	  	  
	  	  
	  	
By:

	  
	  	  	
Name:

	  
	  	  	
Title:

	  

  

  

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FORM OF THE TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

	  	
WILMINGTON TRUST COMPANY,

    as Trustee

	  	  
	  	  
	  	
By:

	  
	  	  	
Name:

	  
	  	  	
Title:

	  

  

  

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EXHIBIT B

[DTC Letter of Representations]

  

  

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EXHIBIT C

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

Continental Airlines Pass Through Trust 2012-1A-O

ASSIGNMENT AND ASSUMPTION AGREEMENT (2012-1A-O), dated ________ __, ____ (the “Assignment Agreement”), between Wilmington Trust Company, a Delaware trust company (“WTC”), not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement dated as of September 25, 1997 (as amended or modified from time to time, the “Basic Agreement”), as supplemented by the Trust Supplement No. 2012-1A-O dated as of March 22, 2012 (the “Trust Supplement” and together with the Basic Agreement, the “Agreement”) in respect of the Continental Airlines Pass Through Trust 2012-1A-O (the “Assignor”), and Wilmington Trust Company, a Delaware trust company, not in its individual capacity except as expressly provided herein, but solely as trustee under the Basic Agreement as supplemented by the Trust Supplement No. 2012-1A-S dated as of March 22, 2012 (the “New Supplement”, and, together with the Basic Agreement, the “New Agreement”) in respect of the Continental Airlines Pass Through Trust 2012-1A-S (the “Assignee”).

W I T N E S S E T H:

WHEREAS, the parties hereto desire to effect on the date hereof (the “Transfer Date”) (a) the transfer by the Assignor to the Assignee of all of the right, title and interest of the Assignor in, under and with respect to, among other things, the Trust Property and each of the documents listed in Schedule I hereto (the “Scheduled Documents”) and (b) the assumption by the Assignee of the obligations of the Assignor (i) under the Scheduled Documents and (ii) in respect of the Applicable Certificates issued under the Agreement; and

WHEREAS, the Scheduled Documents permit such transfer upon satisfaction of certain conditions heretofore or concurrently herewith being complied with;

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto do hereby agree as follows (capitalized terms used herein without definition having the meaning ascribed thereto in the Agreement):

1.           Assignment.  The Assignor does hereby sell, assign, convey, transfer and set over unto the Assignee as of the Transfer Date all of its present and future right, title and interest in, under and with respect to the Trust Property and the Scheduled Documents and each other contract, agreement, document or instrument relating to the Trust Property or the Scheduled Documents (such other contracts, agreements, documents or instruments, together with the Scheduled Documents, to be referred to as the “Assigned Documents”), and any proceeds therefrom, together with all documents and instruments evidencing any of such right, title and interest.

  

  

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2.           Assumption.  The Assignee hereby assumes for the benefit of the Assignor and each of the parties listed in Schedule II hereto (collectively, the “Beneficiaries”) all of the duties and obligations of the Assignor, whenever accrued, pursuant to the Assigned Documents and hereby confirms that it shall be deemed a party to each of the Assigned Documents to which the Assignor is a party and shall be bound by all the terms thereof (including the agreements and obligations of the Assignor set forth therein) as if therein named as the Assignor.  Further, the Assignee hereby assumes for the benefit of the Assignor and the Beneficiaries all of the duties and obligations of the Assignor under the Outstanding Applicable Certificates and hereby confirms that the Applicable Certificates representing Fractional Undivided Interests under the Agreement shall be deemed for all purposes of the Agreement and the New Agreement to be certificates representing the same fractional undivided interests under the New Agreement equal to their respective beneficial interests in the trust created under the Agreement.

3.           Effectiveness.  This Assignment Agreement shall be effective upon the execution and delivery hereof by the parties hereto, and each Applicable Certificateholder, by its acceptance of its Applicable Certificate or a beneficial interest therein, agrees to be bound by the terms of this Assignment Agreement.

4.           Payments.  The Assignor hereby covenants and agrees to pay over to the Assignee, if and when received following the Transfer Date, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignor that, under Section 1 hereof, belong to the Assignee.

5.           Further Assurances.  The Assignor shall, at any time and from time to time, upon the request of the Assignee, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the Assignee may reasonably request to obtain the full benefits of this Assignment Agreement and of the rights and powers herein granted.  The Assignor agrees to deliver any Applicable Certificates, and all Trust Property, if any, then in the physical possession of the Assignor, to the Assignee.

6.           Representations and Warranties.  (a)  The Assignee represents and warrants to the Assignor and each of the Beneficiaries that:

(i)           it has all requisite power and authority and legal right to enter into and carry out the transactions contemplated hereby and to carry out and perform the obligations of the “Pass Through Trustee” under the Assigned Documents;

(ii)           on and as of the date hereof, the representations and warranties of the Assignee set forth in Section 7.15 of the Basic Agreement and Section 5.04 of the New Supplement are true and correct.

(b)           The Assignor represents and warrants to the Assignee that:

(i)           it is duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the full trust power, authority and legal right under

  

  

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the laws of the State of Delaware and the United States pertaining to its trust and fiduciary powers to execute and deliver this Assignment Agreement;

(ii)           the execution and delivery by it of this Assignment Agreement and the performance by it of its obligations hereunder have been duly authorized by it and will not violate its articles of association or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it is bound; and

(iii)           this Assignment Agreement constitutes the legal, valid and binding obligations of it enforceable against it in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity.

7.           GOVERNING LAW.  THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.

8.           Counterparts.  This Assignment Agreement may be executed in any number of counterparts, all of which together shall constitute a single instrument.  It shall not be necessary that any counterpart be signed by both parties so long as each party shall sign at least one counterpart.

9.           Third Party Beneficiaries.  The Assignee hereby agrees, for the benefit of the Beneficiaries, that its representations, warranties and covenants contained herein are also intended to be for the benefit of each Beneficiary, and each Beneficiary shall be deemed to be an express third party beneficiary with respect thereto, entitled to enforce directly and in its own name any rights or claims it may have against such party as such beneficiary.

10.           Notice.   Promptly following the Transfer Date, the Assignee shall notify the Depositary of the occurrence of the assignment hereunder and the name and contact information of the Assignee.

  

  

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IN WITNESS WHEREOF, the parties hereto, through their respective officers thereunto duly authorized, have duly executed this Assignment Agreement as of the day and year first above written.

	  	
ASSIGNOR:

	  	  
	  	
WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement and Trust Supplement in respect of the Continental Airlines Pass Through Trust 2012-1A-O

	  	  
	  	
By:

	  
	  	  	
Name:

	  
	  	  	
Title:

	  

	  	
ASSIGNEE:

	  	  
	  	
WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly provided herein, but solely as trustee under the Pass Through Trust Agreement and Trust Supplement in respect of the Continental Airlines Pass Through Trust 2012-1A-S

	  	  
	  	
By:

	  
	  	  	
Name:

	  
	  	  	
Title:

	  

  

  

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Schedule I

Schedule of Assigned Documents

(1) Intercreditor Agreement dated as of March 22, 2012 among the Trustee, the Other Trustees, the Liquidity Provider, the liquidity provider relating to the Class B Certificates and the Subordination Agent.

 

(2) Escrow and Paying Agent Agreement (Class A) dated as of March 22, 2012 among the Escrow Agent, the Underwriters, the Trustee and the Paying Agent.

 

(3) Note Purchase Agreement dated as of March 22, 2012 among the Company, the Trustee, the Other Trustees, the Subordination Agent, the Escrow Agent and the Paying Agent.

 

(4) Deposit Agreement (Class A) dated as of March 22, 2012 between the Escrow Agent and the Depositary.

 

(5) Each of the Operative Agreements (as defined in the Participation Agreement for each Aircraft) in effect as of the Transfer Date.

 

  

  

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Schedule II

Schedule of Beneficiaries

Wilmington Trust Company, not in its individual capacity but solely as Subordination Agent

Wilmington Trust Company, not in its individual capacity but solely as Paying Agent

Credit Suisse AG, New York Branch, as Liquidity Provider

Natixis S.A., acting through its New York Branch, as Depositary

Continental Airlines, Inc.

Credit Suisse Securities (USA) LLC, as Underwriter

Morgan Stanley & Co. LLC, as Underwriter

Deutsche Bank Securities Inc., as Underwriter

Goldman, Sachs & Co., as Underwriter

Citigroup Global Markets Inc., as Underwriter

J.P. Morgan Securities LLC, as Underwriter

Jefferies & Company, Inc., as Underwriter

U.S. Bank National Association, as Escrow Agent

Each of the other parties to the Assigned Documents

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