Exhibit 4.16
TRUST INDENTURE AND MORTGAGE
(2001-1 747-1)
dated as of August 22, 2001
between
UNITED AIR LINES, INC.,
Owner
and
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION
as Indenture Trustee
___________________________________
Equipment Notes Covering
One Boeing 747-422 Aircraft
Bearing U.S. Registration No. N117UA
___________________________________
TABLE OF CONTENTS
Page
GRANTING CLAUSE.................................................................................... 1
HABENDUM CLAUSE.................................................................................... 3
ARTICLE 1 DEFINITIONS............................................................................ 4
Section 1.01 Definitions.................................................................... 4
ARTICLE 2 THE EQUIPMENT NOTES; OTHER OBLIGATIONS................................................. 16
Section 2.01 Equipment Notes; Title and Terms............................................... 16
Section 2.02 Execution and Authentication................................................... 16
Section 2.03 Registrar and Paying Agent..................................................... 17
Section 2.05 Noteholder Lists; Ownership of Equipment Notes................................. 18
Section 2.06 Mutilated, Destroyed, Lost or Stolen Equipment Notes........................... 18
Section 2.07 Cancellation................................................................... 19
Section 2.08 Payment on Equipment Notes..................................................... 19
Section 2.09 Termination of Interest in the Indenture Estate................................ 20
Section 2.10 Withholding Taxes.............................................................. 20
Section 2.11 Subordination.................................................................. 21
Section 2.12 Certain Agreements Regarding Liquidity Facilities.............................. 21
ARTICLE 3 RECEIPT, DISTRIBUTION AND APPLICATION OF FUNDS......................................... 23
Section 3.01 Basic Distributions............................................................ 23
Section 3.02 Event of Loss; Optional Redemption............................................. 24
Section 3.03 Payments After Indenture Event of Default...................................... 25
Section 3.04 Certain Payments............................................................... 27
Section 3.05 Other Payments................................................................. 28
Section 3.06 Payments to Owner.............................................................. 28
ARTICLE 4 COVENANTS OF OWNER..................................................................... 28
Section 4.01 Registration, Maintenance and Operation; Possession and Permitted Leases;
Insignia....................................................................... 28
Section 4.02 Replacement and Pooling of Parts; Alterations, Modifications and Additions..... 33
Section 4.03 Insurance...................................................................... 35
Section 4.04 Inspection..................................................................... 39
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TABLE OF CONTENTS
(continued)
Page
ARTICLE 5 EVENT OF LOSS........................................................................... 40
Section 5.01 (a)Event of Loss with Respect to the Aircraft................................... 40
(b) Event of Loss with Respect to an Engine............................................ 43
(c) Application of Payments from Governmental Authorities for Requisition of
Title, etc......................................................................... 44
(d) Requisition for Use of the Aircraft by the United States Government or
Government of Registry of the Aircraft............................................. 44
(e) Requisition for Use of an Engine by the United States Government or the
Government of Registry of the Aircraft............................................. 45
(f) Application of Payments During Existence of Certain Indenture Defaults and
Events of Default.................................................................. 45
Section 5.02 Liens........................................................................... 45
ARTICLE 6 REDEMPTION OF EQUIPMENT NOTES........................................................... 45
Section 6.01 Redemption of Equipment Notes upon Certain Events............................... 45
Section 6.02 Notice of Redemption to Noteholders............................................. 46
Section 6.03 Deposit of Redemption Price..................................................... 46
Section 6.04 Equipment Notes Payable on Redemption Date...................................... 46
ARTICLE 7 MATTERS CONCERNING UNCLAIMED MONIES..................................................... 47
Section 7.01 Repayment of Monies for Equipment Note Payments Held by the Indenture
Trustee......................................................................... 47
ARTICLE 8 DEFAULTS AND REMEDIES................................................................... 47
Section 8.01 Indenture Events of Default..................................................... 47
Section 8.02 Acceleration; Rescission and Annulment.......................................... 49
Section 8.03 Other Remedies Available to Indenture Trustee................................... 49
Section 8.04 Waiver of Existing Defaults..................................................... 52
Section 8.05 Control by Majority............................................................. 52
Section 8.06 Rights of Noteholders to Receive Payment........................................ 52
Section 8.07 Indenture Trustee May File Proofs of Claim...................................... 52
ARTICLE 9 INDENTURE TRUSTEE....................................................................... 52
Section 9.01 Duties of Indenture Trustee..................................................... 52
Section 9.02 Rights of Indenture Trustee..................................................... 53
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TABLE OF CONTENTS
(continued)
Page
Section 9.03 Individual Rights of Indenture Trustee......................................... 53
Section 9.04 Funds May Be Held by Indenture Trustee or Paying Agent; Investments............ 54
Section 9.05 Notice of Defaults............................................................. 55
Section 9.06 Compensation and Indemnity..................................................... 55
Section 9.07 Replacement of Indenture Trustee............................................... 55
Section 9.08 Successor Indenture Trustee, Agents by Merger, etc............................. 56
Section 9.09 Eligibility; Disqualification.................................................. 56
Section 9.10 Trustee's Liens................................................................ 57
ARTICLE 10 TERMINATION OF TRUST INDENTURE......................................................... 57
Section 10.01 Termination of Trust Indenture................................................. 57
Section 10.02 Survival of Certain Obligations................................................ 58
Section 10.03 Monies to Be Held in Trust..................................................... 58
Section 10.04 Monies to Be Returned to Owner................................................. 58
ARTICLE 11 AMENDMENTS AND WAIVERS................................................................. 59
Section 11.01 Amendments to this Agreement Without Consent of the Noteholders................ 59
Section 11.02 Amendments to this Agreement with Consent of Noteholders....................... 59
Section 11.03 Revocation and Effect of Consents.............................................. 60
Section 11.04 Notation on or Exchange of Equipment Notes..................................... 61
Section 11.05 Indenture Trustee Protected.................................................... 61
Section 11.06 Amendments, Waivers, etc. of Other Operative Documents......................... 61
Section 11.07 Notices to Liquidity Providers................................................. 61
ARTICLE 12 MISCELLANEOUS.......................................................................... 61
Section 12.01 Notices........................................................................ 61
Section 12.02 GOVERNING LAW.................................................................. 63
Section 12.03 Execution in Counterparts...................................................... 63
Exhibit A-1 Form of Series A-1 Equipment Notes
Exhibit A-2 Form of Series ▇-▇, ▇-▇, ▇, ▇ and D Equipment Notes
Exhibit B-1 Description of Series A-1 Equipment Notes
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Exhibit B-2 Description of Series A-2 Equipment Notes
Exhibit B-3 Description of Series A-3 Equipment Notes
Exhibit B-4 Description of Series B Equipment Notes
Exhibit B-5 Description of Series C Equipment Notes
Exhibit B-6 Description of Series D Equipment Notes
Exhibit C Certain Economic Terms
Exhibit D Form of Indenture Supplement
Exhibit E Schedule of Countries Authorized for Domicile of Permitted Lessee
Exhibit F Schedule of Countries Authorized for Aircraft Registration
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TRUST INDENTURE AND MORTGAGE (2001-1 747-1)
This TRUST INDENTURE AND MORTGAGE (2001-1 747-1) dated as of August 22,
2001, is between UNITED AIR LINES, INC., a Delaware corporation ("Owner"), and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a
national banking association, as Indenture Trustee hereunder (the "Indenture
Trustee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, all capitalized terms used and not otherwise defined herein shall
have the respective meanings set forth or referred to in Article 1 hereof;
WHEREAS, the parties desire by this Agreement, among other things, (i) to
provide for the issuance by the Owner of the Equipment Notes and (ii) to provide
for the assignment, mortgage and pledge by the Owner to the Indenture Trustee,
as part of the Indenture Estate hereunder, among other things, of certain of the
Owner's right, title and interest in and to the Aircraft and certain payments
and other amounts received hereunder or thereunder in accordance with the terms
hereof, as security for, among other things, the Owner's obligations in respect
of the Equipment Notes subject to Section 2.11 and Article 3 hereof;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner and authenticated and delivered by the Indenture Trustee
hereunder, the valid, binding and enforceable obligations of the Owner; and
WHEREAS, all things necessary to make this Agreement the legal, valid and
binding obligation of the Owner and the Indenture Trustee, for the uses and
purposes herein set forth, in accordance with its terms, have been done and
performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH, that, to
secure the prompt payment of the principal of, Make-Whole Amount, if any, and
interest on, and all other amounts due with respect to, all Equipment Notes from
time to time outstanding hereunder, all other amounts due hereunder and to
secure the performance and observance by the Owner of all the agreements,
covenants and provisions contained herein and in the other Operative Documents
to which it is a party, for the benefit of the Noteholders and each of the
Indenture Indemnitees and the prompt payment of any and all amounts from time to
time owing hereunder and under the Participation Agreement by the Owner to the
Noteholders and the Indenture Indemnitees (the obligations specified above being
collectively referred to herein as the "Secured Obligations") and for the uses
and purposes and subject to the terms and provisions hereof, and in
consideration of the premises and of the covenants herein contained, and of the
acceptance of the Equipment Notes by the Noteholders, and of other good and
valuable consideration the receipt and adequacy whereof are hereby acknowledged,
the Owner has granted, bargained, sold, assigned, transferred, conveyed,
mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign,
transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its
successors and permitted assigns, for the security and benefit of the
Noteholders and each of the other Indenture Indemnitees from time to time, a
first
[Trust Indenture and Mortgage (2001-1 747-1)]
priority security interest in and first priority mortgage lien on all estate,
right, title and interest of the Owner in, to and under the following described
property, rights, interests and privileges whether now or hereafter acquired and
subject to the Lien hereof (which collectively, including all property hereafter
specifically subjected to the Lien of this Agreement by any instrument
supplemental hereto, are herein called the "Indenture Estate"):
(1) the Airframe and Engines (each such Engine having 750 or more
rated take-off horsepower or the equivalent thereof) as the same is now and will
hereafter be constituted, whether now or hereafter acquired and subjected to the
Lien hereof, and in the case of such Engines, whether or not any such Engine
shall be installed in or attached to the Airframe or any other airframe and all
substitutions or replacements therefor, as provided in this Agreement, together
with all Parts of whatever nature which are from time to time included in the
"Airframe" or the "Engines", whether now or hereafter acquired and subjected to
the Lien hereof, and all renewals, substitutions, replacements, additions,
improvements, accessories and accumulations with respect to any of the
foregoing, and all records, logs and other related materials with respect to any
of the foregoing as may be required to be maintained by the FAA;
(2) The Purchase Agreement to the extent the same relates to
continuing rights of the Owner in respect of any warranty, indemnity or
agreement, express or implied, as to title, materials, workmanship, design or
patent infringement or related matters with respect to the Airframe or the
Engines (reserving to the Owner, however, all of the Owner's other rights and
interest in and to the Purchase Agreement), the Consent and Agreement, and the
Bills of Sale, together in each case with all rights, powers, privileges,
options and other benefits of the Owner thereunder (subject to such reservation)
with respect to the Airframe or the Engines, including, without limitation, the
right to make all waivers and agreements, to give and receive all notices and
other instruments or communications, to take such action upon the occurrence of
a default thereunder, including the commencement, conduct and consummation of
legal, administrative or other proceedings, as shall be permitted thereby or by
law, and to do any and all other things which the Owner is or may be entitled to
do thereunder (subject to such reservation), subject to the terms and conditions
of the Consent and Agreement;
(3) without limiting the generality of the foregoing, all requisition
proceeds with respect to the Aircraft or any Part thereof or any other property
described in any of the Granting Clauses and all insurance proceeds with respect
to the Aircraft or any Part thereof or any other property described in any of
the Granting Clauses from insurance required to be maintained by the Owner under
Section 4.03, but excluding any liability insurance in favor of the Owner or any
other insured party and any insurance maintained by the Owner and not required
under Section 4.03 and all proceeds from the sale or disposition of the Aircraft
or any other property described in these Granting Clauses;
(4) all rents, revenues and other proceeds collected by the Indenture
Trustee pursuant to Section 8.03 and all moneys and securities now or hereafter
paid or deposited or required to be paid or deposited to or with the Indenture
Trustee by or for the account of the Owner pursuant to any term of any Operative
Document and held or required to be held by the Indenture Trustee hereunder; and
(5) all proceeds of the foregoing.
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PROVIDED, HOWEVER, that notwithstanding any of the foregoing provisions, so
long as no Indenture Event of Default shall have occurred and be continuing, (a)
the Indenture Trustee shall not take or cause to be taken any action contrary to
the Owner's right hereunder to quiet enjoyment of the Airframe and Engines, and
to possess, use, retain and control the Airframe and Engines and all revenues,
income and profits derived therefrom, and (b) the Owner shall have the right, to
the exclusion of the Indenture Trustee, with respect to the Purchase Agreement,
to exercise in the Owner's name all rights and powers of the buyer under the
Purchase Agreement (other than to amend, modify or waive any of the warranties
or indemnities contained therein, except in the exercise of the Owner's
reasonable business judgment) and to retain any recovery or benefit resulting
from the enforcement of any warranty or indemnity under the Purchase Agreement;
and provided, further, that, notwithstanding the occurrence or continuation of
an Indenture Event of Default, the Indenture Trustee shall not enter into any
amendment of the Purchase Agreement which would increase the obligations of the
Owner thereunder or in any way affect the right and interest of Owner under the
Purchase Agreement to the extent not assigned hereunder.
HABENDUM CLAUSE
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the benefit and
security of the Indenture Trustee and the Noteholders from time to time, except
as provided in Section 2.11 and Article 3 hereof, without any preference,
distinction or priority of any one Equipment Note over any other by reason of
series, priority of time of issue, sale, negotiation, date of maturity thereof
or otherwise for any reason whatsoever, and for the uses and purposes and
subject to the terms and provisions set forth in this Agreement.
1. It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner shall remain liable under each of the
Operative Documents to which it is a party to perform all of the obligations
assumed by it thereunder, all in accordance with and pursuant to the terms and
provisions thereof, and, except as provided in the Consent and Agreement, the
Indenture Trustee and the Noteholders shall have no obligation or liability
under any of the Operative Documents to which the Owner is a party by reason of
or arising out of the assignment hereunder, nor shall the Indenture Trustee or
the Noteholders be required or obligated in any manner to perform or fulfill any
obligations of the Owner under any of the Operative Documents to which the Owner
is a party, or, except as herein expressly provided, to make any payment, or to
make any inquiry as to the nature or sufficiency of any payment received by it,
or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
2. The Owner does hereby constitute the Indenture Trustee the true
and lawful attorney of the Owner, irrevocably, for good and valuable
consideration and coupled with an interest and with full power of substitution
with full power (in the name of the Owner or otherwise) subject to the terms and
conditions of this Agreement, to ask, require, demand, receive, ▇▇▇ for,
compound and give acquittance for any and all moneys and claims for moneys due
and to become due to the Owner under or arising out of the Indenture Estate, to
endorse any checks or other instruments or orders in connection therewith, to
file any claims or take any
3
[Trust Indenture and Mortgage (2001-1 747-1)]
action or institute any proceedings which the Indenture Trustee may deem to be
necessary or advisable in the premises as fully as the Owner itself could do;
provided that the Indenture Trustee shall not exercise any such rights except
upon the occurrence and during the continuance of an Event of Default hereunder.
3. The Owner agrees that at any time and from time to time, upon the
written request of the Indenture Trustee, the Owner will promptly and duly
execute and deliver or cause to be duly executed and delivered any and all such
further instruments and documents as the Indenture Trustee may reasonably deem
desirable in obtaining the full benefits of the assignment hereunder and of the
rights and powers herein granted.
4. The Owner does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that it will not assign or pledge, so
long as the Lien of this Indenture has not been discharged in accordance with
the terms hereof, any of its rights, titles or interests hereby assigned to any
Person other than the Indenture Trustee.
5. It is hereby further agreed that any and all property described
or referred to in the granting clause hereof which is hereafter acquired by the
Owner shall ipso facto, and without any other conveyance, assignment or act on
the part of the Owner or the Indenture Trustee, become and be subject to the
Lien herein granted as fully and completely as though specifically described
herein.
IT IS HEREBY FURTHER COVENANTED AND AGREED by and among the parties hereto
as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. (a) For all purposes of this Agreement and the
-----------
other Operative Documents, except as otherwise expressly provided or unless the
context otherwise requires:
(1) each of "Owner," "Indenture Trustee," "Noteholder," "Pass
Through Trustee," "Subordination Agent," "Liquidity Provider," or any other
Person includes, without prejudice to the provisions of any Operative
Documents, any successor in interest to it and any permitted transferee,
permitted purchaser or permitted assignee of it;
(2) the terms defined in this Article 1 have the meanings
assigned to them in this Article 1, and include the plural as well as the
singular;
(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles in the United States;
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[Trust Indenture and Mortgage (2001-1 747-1)]
(4) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(5) all references in this Agreement to Articles, Sections
and Exhibits refer to Articles, Sections and Exhibits of this Agreement.
(b) For all purposes of this Agreement, the following capitalized
terms have the following respective meanings:
"Acceptable Alternate Engine" means a ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Model PW4056
---------------------------
engine or an engine of the same or another manufacturer of equivalent or greater
value and utility (without regard to hours or cycles) as the replaced or
substituted Engine (assuming such Engine was in the condition required by the
terms of this Agreement), and suitable for installation and use on the Airframe;
provided that such engine shall (i) be of the same make, model and manufacturer
as the other engine installed on the Airframe and (ii) be an engine of a type
then being utilized by Owner on other Boeing 747-422 aircraft operated by Owner.
"Additional Insured" means the Indenture Trustee, Owner in its
------------------
capacity as lessor under any Permitted Lease, the Subordination Agent (so long
as it is the registered holder of any Equipment Note on behalf of the Pass
Through Trustees), each Pass Through Trustee (so long as it is a Noteholder),
each Liquidity Provider and each of their respective Affiliates, successors and
permitted assigns, and the respective directors, officers and employees of each
of the foregoing.
"Affiliate" with respect to a specified Person, means any other Person
---------
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control"
when used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means any Paying Agent or Registrar.
-----
"Aircraft" means the Airframe together with the four Engines whether
--------
or not such Engines are installed on the Airframe or any other airframe.
"Airframe" means: (i) the Boeing Model 747-422 aircraft (excluding
--------
Engines or engines from time to time installed thereon) specified by United
States Registration Number and Manufacturer's serial number in the initial
Indenture Supplement; (ii) any Replacement Airframe which may from time to time
be substituted pursuant to Section 5.01(a)(ii) hereof and (iii) in either case
any and all Parts which are from time to time incorporated or installed in or
attached thereto or which have been removed therefrom, unless the Lien of this
Agreement shall not be applicable to such Part in accordance with Section 4.02.
"Amortization Amount" means, with respect to any Equipment Note, as of
-------------------
any Payment Date, the amount set forth opposite such Payment Date on the
Amortization Schedule.
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[Trust Indenture and Mortgage (2001-1 747-1)]
"Amortization Schedule" means, with respect to each Series of
---------------------
Equipment Notes, the amortization schedule for such Series as set forth on
Exhibit ▇-▇, ▇-▇, ▇-▇, ▇-▇, B-5 and B-6, as the case may be.
"Appraisers" means, collectively, Aircraft Information Services, Inc.,
----------
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, Inc., and AvSolutions Inc., or such other independent
aircraft appraiser as may be acceptable to Owner and the Indenture Trustee.
"Average Life Date" means for each Equipment Note to be redeemed, the
-----------------
date which follows the redemption date by a period equal to the Remaining
Weighted Average Life at the redemption date of such Equipment Note.
"Bankruptcy Code" means the United States Bankruptcy Code, Title 11 of
---------------
the United States Code, as amended from time to time.
"Basic Pass Through Trust Agreement" means the Pass Through Trust
----------------------------------
Agreement dated as of August 22, 2001 between Owner and Pass Through Trustee,
but does not include any Pass Through Trust Supplement.
"Bills of Sale" means, collectively, the FAA ▇▇▇▇ of Sale and the
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Warranty ▇▇▇▇ of Sale.
"Business Day" means any day other than a Saturday or Sunday or a day
------------
on which commercial banks are required or authorized to close in: Chicago,
Illinois; New York, New York; and, so long as any Equipment Note is outstanding,
the city and state in which the Indenture Trustee, the Subordination Agent or
any Pass Through Trustee has its principal place of business or receives and
disburses funds.
"Certificated Air Carrier" means a Citizen of the United States
------------------------
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United States Code,
for aircraft capable of carrying ten or more individuals or 6,000 pounds or more
of cargo or that otherwise is certified or registered to the extent required to
fall within the purview of 11 U.S.C. Section 1110 or any analogous successor
provision of the Bankruptcy Code.
"Citizen of the United States" has the meaning given such term in
----------------------------
Section 40102(a)(15) of Title 49 of the United States Code.
"Closing" means the closing of the transactions contemplated by the
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Participation Agreement.
"Closing Date" means the date on which the Closing occurs.
------------
"Code" means the Internal Revenue Code of 1986, as amended through the
----
Closing Date.
"Consent and Agreement" means the Consent and Agreement (2001-1 747-1)
---------------------
dated as of the date hereof executed by the Manufacturer.
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"Co-Registrar" shall have the meaning specified therefor in Section
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2.03.
"Corporate Trust Department" means the principal office of the
--------------------------
Indenture Trustee located at the Indenture Trustee's address for notices under
the Participation Agreement or such other office at which the Indenture
Trustee's corporate trust business shall be administered which the Indenture
Trustee shall have specified by notice in writing to Owner and each Noteholder.
"Debt Rate" means, with respect to any Series of Equipment Notes, the
---------
rate per annum specified for such Series under the heading "Interest Rate" in
the related Exhibit B for such Series.
"Eligible Institution" means (a) the corporate trust department of the
--------------------
Indenture Trustee, the Subordination Agent or any Pass Through Trustee, as
applicable, or (b) a depository institution organized under the laws of the
United States of America or any one of the States thereof or the District of
Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured
debt rating from Moody's and Standard & Poor's of at least "A-3" or its
equivalent.
"Engine" means (i) each of the four ▇▇▇▇▇ & Whitney Model PW4056
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engines listed by manufacturer's serial numbers in the initial Indenture
Supplement, whether or not from time to time installed on such Airframe or any
other airframe; (ii) any Replacement Engine which may from time to time be
substituted for any of such four engines pursuant to the terms hereof; and (iii)
in either case, any and all Parts which are from time to time incorporated or
installed in or attached to any such engine and any and all Parts removed
therefrom unless the Lien of this Agreement shall not apply to such Parts in
accordance with Section 4.02.
"Equipment Note" or "Equipment Notes" means any equipment note or
-------------- ---------------
notes issued under this Agreement, including each of the Series A-1, Series A-2,
Series A-3, Series B, Series C and Series D Equipment Notes, as applicable,
issued hereunder, substantially in the form of Exhibit A-1 or A-2, as
applicable, hereto as such form may be varied pursuant to the terms hereof and
any and all Equipment Notes issued in replacement or exchange therefor in
accordance with the provisions hereof.
"Event of Loss" with respect to the Aircraft, Airframe or any Engine
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means any of the following events with respect to such property: (i) the loss
of such property or of the use thereof due to the destruction of or damage to
such property which renders repair uneconomic or which renders such property
permanently unfit for normal use by Owner for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect to
such property on the basis of a total loss, or a constructive or compromised
total loss; (iii) the theft or disappearance of such property, or the
confiscation, condemnation, or seizure of, or requisition of title to, or use
of, such property by any governmental or purported governmental authority (other
than a requisition for use by the U.S. Government or any government of registry
of the Aircraft or any agency or instrumentality thereof), which in the case of
any event referred to in this clause (iii) shall have resulted in the loss of
title or possession of such property by Owner for a period in excess of 180
consecutive days; (iv) as a result of any law, rule, regulation, order or other
action by the FAA or other governmental body of the government of registry of
the Aircraft having jurisdiction, use of such property in the normal course of
the business of air
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[Trust Indenture and Mortgage (2001-1 747-1)]
transportation shall have been prohibited for a period in excess of 180
consecutive days, unless Owner, prior to the expiration of such 180-day period,
shall have undertaken and shall be diligently carrying forward, in a manner that
does not discriminate against the Aircraft, all steps which are necessary or
desirable to permit the normal use of such property by Owner, and Owner, within
two years from the time of grounding, shall have conformed at least one such
aircraft in its fleet to the requirements of any such law, rule, regulation,
order or other action and commenced regular commercial use of the same in such
jurisdiction; (v) the requisition for use by any government of registry of the
Aircraft (other than the U.S. government) or any instrumentality or agency
thereof, which shall have occurred during the Term and shall have continued for
more than two years; and (vi) any divestiture of title to an Engine treated as
an Event of Loss pursuant to Section 5.01(b) hereof. An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if an Event of Loss
occurs with respect to the Airframe.
"Expenses" means any and all liabilities, obligations, losses,
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damages, penalties, claims (including, but not limited to, negligence, strict or
absolute liability, liability in tort and liabilities arising out of the
violations of laws or regulatory requirements of any kind), actions, suits,
costs, expenses and disbursements (including reasonable legal fees and
expenses).
"FAA ▇▇▇▇ of Sale" means an FAA AC Form 8050-2 ▇▇▇▇ of sale executed
----------------
by Manufacturer in favor of Owner and dated the date of delivery of the Aircraft
from Manufacturer to Owner pursuant to the terms of the Purchase Agreement.
"Federal Aviation Act" means part A of subtitle VII of title 49,
--------------------
United States Code.
"Federal Aviation Administration" and "FAA" mean the United States
------------------------------- ---
Federal Aviation Administration and any successor agency or agencies thereto.
"Fundamental Documents" means, collectively, the Operative Documents
---------------------
and the Pass Through Documents.
"Indemnitee" means (i) State Street and the Indenture Trustee and each
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separate or additional trustee appointed pursuant to this Agreement, (ii) the
Subordination Agent, (iii) the Paying Agent, (iv) each Pass Through Trustee, (v)
each Liquidity Provider, (vi) each Noteholder, and, in each case, each of their
respective affiliates, successors and permitted assigns and each of their
respective directors, officers, employees, agents and servants.
"Indenture Default" means any event which is, or after notice or
-----------------
passage of time, or both, would be, an Indenture Event of Default.
"Indenture Estate" shall have the meaning specified therefor in the
----------------
Granting Clause hereof.
"Indenture Event of Default" shall have the meaning specified therefor
--------------------------
in Article 8.
"Indenture Indemnitee" means (i) the Indenture Trustee in its
--------------------
individual capacity and as Indenture Trustee, (ii) each separate or additional
trustee appointed pursuant to
8
[Trust Indenture and Mortgage (2001-1 747-1)]
this Agreement, (iii) the Subordination Agent, (iv) each Liquidity Provider, (v)
each Pass Through Trustee, and (vi) each of the respective directors, officers,
employees, agents and servants of the persons described in clauses (i) through
(v) inclusive above.
"Indenture Supplement" means a supplement to this Agreement in the
--------------------
form of Exhibit D hereto.
"Indenture Trustee" means State Street and each other Person which may
-----------------
from time to time be acting as Indenture Trustee in accordance with the
provisions of this Agreement.
"Insured Amount" has the meaning specified therefor on Exhibit C.
--------------
"Intercreditor Agreement" means that certain Intercreditor Agreement
-----------------------
among the Pass Through Trustees, the Liquidity Providers and the Subordination
Agent, dated as of August 22, 2001; provided that, for purposes of any
obligation of Owner, no amendment, modification or supplement to, or
substitution or replacement of, such Intercreditor Agreement shall be effective
unless consented to by Owner.
"Interest Payment Date" means March 1, 2002 and each March 1 and
---------------------
September 1 of each year thereafter.
"Issuance Date" means, with respect to each Series of Equipment Notes,
-------------
the date such Equipment Notes are issued by the Owner pursuant to the terms
hereof.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
----
exercise of rights, security interest or claim.
"Liquidity Facilities" means the five (5) Revolving Credit Agreements
--------------------
(consisting of a separate Revolving Credit Agreement with each Liquidity
Provider with respect to each of the Class A-1 Trust, the Class A-2 Trust, the
Class A-3 Trust, the Class B Trust and the Class C Trust) between the
Subordination Agent, as borrower, and a Liquidity Provider, each dated as of
August 22, 2001; provided that, for purposes of any obligation of Owner, no
amendment, modification or supplement to, or substitution or replacement of, any
such Liquidity Facility shall be effective unless consented to by Owner.
"Liquidity Providers" means Westdeutsche Landesbank Girozentrale,
-------------------
acting through its New York branch, as the Liquidity Provider under the Class ▇-
▇ Liquidity Facility, the Class A-2 Liquidity Facility, the Class A-3 Liquidity
Facility, the Class B Liquidity Facility and the Class C Liquidity Facility (as
such terms are defined in the Intercreditor Agreement) or any successor thereto.
"Loss Payee Amount" has the meaning specified therefor on Exhibit C.
-----------------
"Loss Payment Date" shall have the meaning specified in Section
-----------------
5.01(a).
"Majority in Interest of Noteholders" means as of a particular date of
-----------------------------------
determination and subject to Section 2.6 of the Intercreditor Agreement, the
holders of a majority in aggregate unpaid principal amount of all Equipment
Notes outstanding as of such date
9
[Trust Indenture and Mortgage (2001-1 747-1)]
(excluding any Equipment Notes held by Owner, Indenture Trustee or any Affiliate
of any such party or any interests of Owner therein unless all Equipment Notes
shall be held by any such entity or an Affiliate thereof); provided that for the
purposes of directing any action or casting any vote or giving any consent,
waiver or instruction hereunder, any Noteholder of an Equipment Note or
Equipment Notes may allocate, in such Noteholder's sole discretion, any
fractional portion of the principal amount of such Equipment Note or Equipment
Notes in favor of or in opposition to any such action, vote, consent, waiver or
instruction.
"Make-Whole Amount" means, with respect to each Equipment Note, an
-----------------
amount (as determined by an independent investment banker of national standing
selected by Owner) equal to the excess, if any, determined under the following
calculation:
(1) the present value of the remaining scheduled payments of
principal and interest from the determination date to maturity of such
Equipment Note computed by discounting the payments on a semi-annual basis
on each Payment Date (assuming a 360-day year of twelve 30-day months)
using a discount rate equal to the Treasury Yield, minus
(2) the outstanding principal amount of such Equipment Note plus
accrued interest to the date of determination.
For purposes of determining the Make-Whole Amount, the "Treasury Yield" means,
--------------
at the date of determination with respect to any Equipment Note, the interest
rate (expressed as a semi-annual equivalent and as a decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield) determined
to be the annual rate equal to the semi-annual yield to maturity for United
States Treasury securities maturing on the Average Life Date of such Equipment
Note and trading in the public securities markets either as determined by
interpolation between most recent weekly average yield to maturity for two
series of United States Treasury securities trading in the public securities
markets, (1) one maturing as close as possible to, but earlier than, the Average
Life Date of such Equipment Note and (2) the other maturing as close as possible
to, but later than, the Average Life Date of such Equipment Note, in each case
as published in the most recent H.15(519) or, if a weekly average yield to
maturity for United States Treasury securities maturing on the Average Life Date
of such Equipment Note is reported in the most recent H.15(519), the weekly
average yield to maturity as published in such H.15(519). As used in the
definition of "Treasury Yield", "H.15(519)" means, the weekly statistical
---------
release designated as such, or any successor publication, published by the Board
of Governors of the Federal Reserve System. The date of determination of Make-
Whole Amount is the third (3rd) Business Day prior to the applicable payment
date. The "most recent H.15(519)" means the H.15(519) published prior to the
---------------------
close of business on the third Business Day prior to the applicable payment or
redemption date.
"Manufacturer" means The Boeing Company, and its successors and
------------
assigns.
"Minimum Liability Insurance Amount" has the meaning specified
----------------------------------
therefor on Exhibit C.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. (or any successor
-------
thereto).
10
[Trust Indenture and Mortgage (2001-1 747-1)]
"Non-U.S. Person" means any Person other than a United States person,
---------------
as defined in Section 7701(a)(30) of the Code.
"Note Purchase Agreement" has the meaning specified for the term "Note
-----------------------
Purchase Agreement" in the Intercreditor Agreement.
"Noteholder" means a person in whose name an Equipment Note is
----------
registered on the Register (including, so long as it holds any Series ▇-▇,
▇▇▇▇▇▇ ▇-▇, Series A-3, Series B, Series C or Series D Equipment Notes issued
hereunder, the Subordination Agent on behalf of the Pass Through Trustee under
the applicable Pass Through Trust Agreement pursuant to the provisions of the
Intercreditor Agreement).
"Operative Documents" means this Agreement, the Participation
-------------------
Agreement, the Consent and Agreement, the Purchase Agreement (to the extent
assigned pursuant hereto), Bills of Sale, the Equipment Notes and the initial
Indenture Supplement.
"Owner" means United Air Lines, Inc., a Delaware corporation and its
-----
successors and permitted assigns.
"Participation Agreement" means the Participation Agreement (2001-1
-----------------------
747-1) dated as of the date hereof among Owner, the Pass Through Trustees, the
Subordination Agent and the Indenture Trustee.
"Parts" means all appliances, parts, components, instruments,
-----
appurtenances, accessories, furnishings, seats and other equipment of whatever
nature (other than (a) complete Engines or engines, and (b) any Passenger
Convenience Equipment), that may from time to time be installed or incorporated
in or attached or appurtenant to the Airframe or any Engine.
"Pass Through Certificates" means any of the credit enhanced pass
-------------------------
through certificates issued pursuant to any of the Pass Through Trust
Agreements.
"Pass Through Documents" means the Pass Through Trust Agreements, the
----------------------
Intercreditor Agreement, the Note Purchase Agreement and the Liquidity
Facilities.
"Pass Through Trust" means each of the ▇-▇, ▇-▇, ▇-▇, ▇, ▇ and D pass
------------------
through trusts created pursuant to the related Pass Through Trust Agreement.
"Pass Through Trust Agreements" means each of the ▇-▇, ▇-▇, ▇-▇, ▇, ▇
-----------------------------
and D Pass Through Trust Supplements, together in each case with the Basic Pass
Through Trust Agreement, each dated as of August 22, 2001 and entered into by
and between the Owner and a Pass Through Trustee.
"Pass Through Trust Supplement" shall have the meaning specified for
-----------------------------
the term "Trust Supplement" in the Basic Pass Through Trust Agreement.
"Pass Through Trustee" means State Street in its capacity as trustee
--------------------
under each Pass Through Trust Agreement, and such other Person that may from
time to time be acting as successor trustee under any such Pass Through Trust
Agreement.
11
[Trust Indenture and Mortgage (2001-1 747-1)]
"Passenger Convenience Equipment" means severable components or
-------------------------------
systems installed on or affixed to the Airframe that are used to provide
individual telecommunications or electronic entertainment to passengers aboard
the Aircraft, if and for so long as such equipment shall be owned by, or shall
be subject to a security interest, license or other interest of, another Person
(other than any Affiliate of Owner) in accordance with the provisions of Section
4.02(d) hereof.
"Past Due Rate" means, with respect to any Equipment Note, the rate
-------------
per annum equal to 1% over the Debt Rate as in effect for such Equipment Note.
"Paying Agent" means any Person acting as Paying Agent hereunder
------------
pursuant to Section 2.03.
"Payment Date" means, with respect to each Series of Equipment Notes,
------------
each Payment Date listed on the Amortization Schedule for such Series of
Equipment Notes set forth in Exhibit ▇-▇, ▇-▇, ▇-▇, ▇-▇, B-5 or B-6, as the case
may be.
"Permitted Air Carrier" means any Certificated Air Carrier or any air
---------------------
carrier principally domiciled in a country listed on Exhibit E hereto.
"Permitted Investment" means (a) investments in obligations of, or
--------------------
guaranteed by, the United States Government having maturities no later than 90
days following the date of such investment; (b) investments in open market
commercial paper of any corporation incorporated under the laws of the United
States of America or any state thereof with a short-term unsecured debt rating
issued by Moody's and Standard & Poor's of at least "A-1" and "P-1,"
respectively, having maturities no later than 90 days following the date of such
investment; or (c) investments in negotiable certificates of deposit, time
deposits, banker's acceptances, commercial paper or other direct obligations of,
or obligations guaranteed by, commercial banks organized under the laws of the
United States or of any political subdivision thereof (or any U.S. branch of a
foreign bank) with issuer ratings of at least "B/C" by Thomson Bankwatch, having
maturities no later than 90 days following the date of such investment;
provided, however, that : (x) all Permitted Investments that are ban
-------- -------
obligations shall be denominated in U.S. dollars; and (y) the aggregate amount
of Permitted Investments at any one time that are bank obligations issued by any
one bank shall not be in excess of 5% of such bank's capital and surplus;
provided further that (1) any investment of the types described in clauses (a),
-------- ------- ------- ---
(b) and (c) above may be made through a repurchase agreement in commercially
--- ---
reasonable form with a bank or other financial institution qualifying as an
Eligible Institution so long as such investment is held by a third party
custodian also qualifying as an Eligible Institution, (2) all such investments
set forth in clauses (a), (b) and (c) above mature no later than the Business
------- --- ---- ---
Day preceding the next Interest Payment Date and (3) the Indenture Trustee is
hereby authorized in making or disposing of any Permitted Investment to deal
with itself (in its individual capacity) or with any one or more of its
affiliates, whether it or such affiliates are acting as an agent of the
Indenture Trustee or for any third person or dealing as principal for its own
account; and provided further, that in the case of any Permitted Investment
-------- -------
issued by a domestic branch of a foreign bank, the income from such investment
shall be from sources within the United States for purposes of the Code.
12
[Trust Indenture and Mortgage (2001-1 747-1)]
"Permitted Lien" means (i) the rights of Owner as herein provided
--------------
(including the rights of any Permitted Lessee under a Permitted Lease), and any
other rights of Owner or any other Person existing pursuant to the Operative
Documents, (ii) Liens attributable to the Indenture Trustee (both in its
capacity as trustee under this Agreement and in its individual capacity), any
Pass Through Trustee (in its individual capacity, as Noteholder and as trustee
under the Pass Through Trust Agreements) or the Subordination Agent (in its
individual capacity, as registered holder of the Equipment Notes on behalf of
the Pass Through Trustees and as agent under the Intercreditor Agreement), (iii)
Liens for Taxes of Owner (or any Permitted Lessee) either not yet due or being
contested in good faith by appropriate proceeding so long as such proceedings do
not involve any material risk of the sale, forfeiture or loss of the Airframe or
any Engine or any interest thereon, (iv) materialmen's, mechanics', workmen's,
repairmen's, employees' or other like liens arising in the ordinary course of
Owner's or any Permitted Lessee's business securing obligations that are not
overdue for a period of more than 60 days or are being contested in good faith
by appropriate proceedings so long as during such 60-day period there is not, or
such proceedings do not involve, any material risk of the sale, forfeiture or
loss of the Airframe or any Engine or any interest therein, (v) Liens arising
out of any judgment or award against Owner (or any Permitted Lessee), unless
there exists a material risk of the sale, forfeiture or loss of the Airframe or
any Engine or any interest therein or unless the judgment secured shall not,
within 60 days after the entry thereof, have been discharged, vacated, reversed
or execution thereof stayed pending appeal or shall not have been discharged,
vacated or reversed within 60 days after the expiration of such stay, and (vi)
any other Lien with respect to which Owner (or any Permitted Lessee) shall have
provided a bond, cash collateral or other security in an amount and under terms
reasonably satisfactory to the Indenture Trustee.
"Permitted Lease" means a lease permitted under Section 4.01(b)
---------------
hereof.
"Permitted Lessee" means the lessee under a Permitted Lease.
----------------
"Person" means any individual, corporation, partnership, joint
------
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Purchase Agreement" means the agreement between Owner and the
------------------
Manufacturer relating to the purchase by Owner of the Aircraft, as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only insofar as the foregoing relates to the Aircraft.
"Rating Agencies" has the meaning specified for such term in the
---------------
Intercreditor Agreement.
"Record Date" for the interest or Amortization Amount payable on any
-----------
Equipment Note on any Interest Payment Date or Payment Date (other than the
maturity date) for such Equipment Note, as the case may be, means the calendar
day (whether or not a Business Day) which is 15 calendar days prior to the
related Interest Payment Date or Payment Date.
13
[Trust Indenture and Mortgage (2001-1 747-1)]
"Redemption Date" means the date on which the Equipment Notes are to
---------------
be redeemed or purchased pursuant to Section 6.01(a) or (b), as the case may be,
as specified in the notice delivered pursuant to Section 6.02 hereof.
"Redemption Price" shall have the meaning specified therefor in
----------------
Section 6.01(b).
"Register" shall have the meaning specified therefor in Section 2.03.
--------
"Registrar" means any person acting as Registrar hereunder pursuant to
---------
Section 2.03.
"Remaining Weighted Average Life" means, on the redemption date for an
-------------------------------
Equipment Note which is being redeemed, the number of days equal to the quotient
obtained by dividing (a) the sum of the products obtained by multiplying (i) the
amount of each then remaining installment of principal, including the payment
due on the maturity date of such Equipment Note, by (ii) the number of days from
and including the redemption date to but excluding the scheduled payment date of
such principal installment; by (b) the then unpaid principal amount of such
Equipment Note.
"Replacement Airframe" means any airframe substituted for an airframe
--------------------
in accordance with Section 5.01(a)(ii) hereof.
"Replacement Engine" means any engine substituted for an Engine in
------------------
accordance with Sections 4.01(d), 5.01(a)(ii) or 5.01(b) hereof.
"SEC" means the Securities and Exchange Commission.
---
"Secured Obligations" shall have the meaning specified therefor in the
-------------------
Granting Clause hereof.
"Senior Noteholder" is defined in Section 2.11(c) hereof.
-----------------
"Series" means, as applicable, any of Series ▇-▇, ▇▇▇▇▇▇ ▇-▇, Series
------
A-3, Series B, Series C and Series D.
"Series A-1" or "Series A-1 Equipment Notes" means, if applicable,
---------- --------------------------
Equipment Notes issued hereunder and designated as "Series A-1", in the original
principal amount and maturities and bearing interest as specified in Exhibit B-
1.
"Series A-2" or "Series A-2 Equipment Notes" means, if applicable,
---------- --------------------------
Equipment Notes issued hereunder and designated as "Series A-2", in the original
principal amount and maturity and bearing interest as specified in Exhibit B-2.
"Series A-3" or "Series A-3 Equipment Notes" means, if applicable,
---------- --------------------------
Equipment Notes issued hereunder and designated as "Series A-3", in the original
principal amount and maturity and bearing interest as specified in Exhibit B-3.
14
[Trust Indenture and Mortgage (2001-1 747-1)]
"Series B" or "Series B Equipment Notes" means, if applicable,
-------- ------------------------
Equipment Notes issued hereunder and designated as "Series B", in the original
principal amount and maturity and bearing interest as specified in Exhibit B-4.
"Series C" or "Series C Equipment Notes" means, if applicable,
-------- ------------------------
Equipment Notes issued hereunder and designated as "Series C", in the original
principal amount and maturity and bearing interest as specified in Exhibit B-5.
"Series D" or "Series D Equipment Notes" means, if applicable,
-------- ------------------------
Equipment Notes issued hereunder and designated as "Series D", in the original
principal amount and maturity and bearing interest as specified in Exhibit B-6.
"State Street" means State Street Bank and Trust Company of
------------
Connecticut, National Association.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
-----------------
Division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. ( or any successor thereto).
"Subordination Agent" means State Street, as subordination agent under
-------------------
the Intercreditor Agreement, or any successor thereto.
"Taxes" means any and all present or future fees (including, without
-----
limitation, license, documentation and registration fees), taxes (including,
without limitation, gross or net income, gross or net receipts, sales, rental,
use, turnover, value added, property (tangible and intangible), excise and stamp
taxes), licenses, levies, imposts, duties, recording charges or fees, charges,
assessments, or withholdings of any nature whatsoever, together with any
assessments, penalties, fines, additions to tax and interest thereon (each,
individually, a "Tax").
"Trust Indenture and Mortgage" or "this Agreement" or "this Indenture"
---------------------------- -------------- --------------
means this Trust Indenture and Mortgage (2001-1 747-1), as the same may from
time to time be supplemented, amended or modified.
"Trustee's Liens" shall have the meaning specified therefor in Section
---------------
9.10.
"United States" or "U.S." means the United States of America.
------------- ----
"United States Government" means the federal government of the United
------------------------
States or any instrumentality or agency thereof.
"Warranty ▇▇▇▇ of Sale" means a full warranty ▇▇▇▇ of sale executed by
---------------------
the Manufacturer in favor of Owner and dated the date of delivery of the
Aircraft to Owner pursuant to the terms of the Purchase Agreement.
"Wet Lease" means any arrangement whereby Owner (or any Permitted
---------
Lessee) agrees to furnish the Airframe and Engines or engines installed thereon
to a third party pursuant to which such Airframe and Engines or engines (i)
shall remain in the operational control of Owner (or such Permitted Lessee) and
(ii) shall be maintained, insured and otherwise used and operated in accordance
with the provisions hereof.
15
[Trust Indenture and Mortgage (2001-1 747-1)]
ARTICLE 2
THE EQUIPMENT NOTES; OTHER OBLIGATIONS
Section 2.01 Equipment Notes; Title and Terms. The Equipment Notes shall
--------------------------------
be issued in up to six separate series designated as Series A-1, Series A-2,
Series A-3, Series B, Series C and Series D, as applicable, shall be dated the
applicable Issuance Date with respect to such Series, and shall be in the
maturities and principal amounts and shall bear interest as specified in Exhibit
▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇ or B-6, as the case may be. Each Series ▇-▇, ▇▇▇▇▇▇ ▇-▇,
Series A-3, Series B, Series C and Series D Equipment Note, as applicable, shall
be issued to the Subordination Agent as nominee for the Pass Through Trustee
under the applicable Pass Through Trust Agreement. The Issuance Date for the
Series A-1, Series A-2, Series A-3, Series B, Series C and Series D Equipment
Notes will be the Closing Date.
Each Series of Equipment Notes shall bear interest at the Debt Rate for
such Series (calculated on the basis of a year of 360 days comprised of 30-day
months) on the unpaid principal amount thereof from time to time outstanding,
payable in arrears on each Interest Payment Date until maturity. The principal
of the Series A-1 shall be payable in installments, on each Payment Date, in
amounts equal to the Amortization Amount for such Payment Date. The principal
of the Series A-2, Series A-3, Series B, Series C and Series D Equipment Notes,
as applicable, shall be payable in one installment as indicated in Exhibit ▇-▇,
▇-▇, ▇-▇, ▇-▇ and B-6 respectively. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid principal amount and all accrued and unpaid
interest on, and any other amounts due under, such Equipment Note. Each
Equipment Note shall bear interest at the Past Due Rate (calculated on the basis
of a year of 360 days comprised of 30-day months) on any part of the principal
amount, Make-Whole Amount, if any, and, to the extent permitted by applicable
law, interest and any other amounts payable thereunder not paid when due for any
period during which the same shall be overdue, in each case for the period the
same is overdue. Amounts shall be overdue if not paid when due (whether as
stated maturity, by acceleration or otherwise). Notwithstanding anything to the
contrary contained herein, if any date on which a payment under any Equipment
Note becomes due and payable is not a Business Day, then such payment shall not
be made on such scheduled date but shall be made on the next succeeding Business
Day and, if such payment is made on such next succeeding Business Day, no
additional interest shall accrue on the amount of such payment during such
extension.
The Equipment Notes are not redeemable or subject to purchase prior to
maturity except as provided in this Agreement.
Section 2.02 Execution and Authentication. (a) Equipment Notes shall be
----------------------------
executed on behalf of the Owner by the manual or facsimile signature of one of
its authorized officers.
(b) If any officer of the Owner executing an Equipment Note no
longer holds that office at the time such Equipment Note is executed on behalf
of the Owner, such Equipment Note shall be valid nevertheless.
16
[Trust Indenture and Mortgage (2001-1 747-1)]
(c) At any time and from time to time after the execution of the
Equipment Notes, the Owner may deliver such Equipment Notes to the Indenture
Trustee for authentication and, subject to the provisions of Section 2.10, the
Indenture Trustee shall authenticate the Equipment Notes by manual signature
upon written orders of the Owner. Equipment Notes shall be authenticated on
behalf of the Indenture Trustee by any authorized officer or signatory of the
Indenture Trustee.
(d) An Equipment Note shall not be valid or obligatory for any
purpose or entitled to any security or benefit hereunder until executed on
behalf of the Owner by the manual or facsimile signature of an officer of the
Owner as provided in Section 2.02(a) and until authenticated on behalf of the
Indenture Trustee by the manual signature of an authorized officer or signatory
of the Indenture Trustee as provided in Section 2.02(c). Such signatures shall
be conclusive evidence that such Equipment Note has been duly executed,
authenticated and issued under this Agreement.
Section 2.03 Registrar and Paying Agent. The Indenture Trustee shall
--------------------------
maintain an office or agency where the Equipment Notes may be presented for
registration of transfer or for exchange (the "Registrar") and an office or
agency where (subject to Sections 2.04 and 2.08) the Equipment Notes may be
presented for payment or for exchange (the "Paying Agent"). The Registrar shall
keep a register (the "Register") with respect to the Equipment Notes and to
their transfer and exchange and the payments of Amortization Amounts thereon, if
any. The Indenture Trustee may appoint one or more co-registrars (the "Co-
Registrars") and one or more additional Paying Agents for the Equipment Notes
and the Indenture Trustee may terminate the appointment of any Co-Registrar or
Paying Agent at any time upon written notice. The term "Registrar" includes any
Co-Registrar. The term "Paying Agent" includes any additional Paying Agent.
The Indenture Trustee shall initially act as Registrar and Paying Agent.
Section 2.04 Transfer and Exchange. At the option of the Noteholder
---------------------
thereof, Equipment Notes may be exchanged for an equal aggregate principal
amount of other Equipment Notes of the same Series, maturity and type and of any
authorized denominations or transferred upon surrender of the Equipment Notes to
be exchanged or transferred at the principal corporate trust office of the
Indenture Trustee, or at any office or agency maintained for such purpose
pursuant to Section 2.03. Whenever any Equipment Notes are so surrendered for
exchange, the Owner shall execute, and the Indenture Trustee shall authenticate
and deliver, the replacement Equipment Notes, in the same aggregate principal
amount, Series and dated the same date as the Equipment Note or Equipment Notes
being replaced which the Noteholder making the exchange is entitled to receive.
All Equipment Notes issued upon any registration of transfer or exchange of
Equipment Notes shall be the valid obligations of the Owner, evidencing the same
obligations, and entitled to the same security and benefits under this
Agreement, as the Equipment Notes surrendered upon such registration of transfer
or exchange.
Every Equipment Note presented or surrendered for registration of transfer
or exchange shall (if so required by the Registrar) be duly endorsed by, or be
accompanied by a written
17
[Trust Indenture and Mortgage (2001-1 747-1)]
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Noteholder thereof or his attorney duly authorized in writing. Indenture
Trustee may require such evidence reasonably satisfactory to it as to the
compliance of any such transfer with the Securities Act, and the securities laws
of any applicable state. Each initial Noteholder and each transferee of an
Equipment Note, by its acceptance of an Equipment Note, agrees to be bound by
and comply with the provisions of the Participation Agreement, this Indenture,
the Note Purchase Agreement and each other Fundamental Document applicable to a
Noteholder.
The Indenture Trustee shall make a notation on each new Equipment Note of
the amount of all payments of Amortization Amount previously made on the old
Equipment Note or Equipment Notes with respect to which such new Equipment Note
is issued and the date to which interest on such old Equipment Note or Equipment
Notes has been paid. Interest shall be deemed to have been paid on such new
Equipment Note to the date on which interest shall have been paid on such old
Equipment Note, and all payments of the Amortization Amount marked on such new
Equipment Note, as provided above, shall be deemed to have been made thereon.
No service charge shall be made to a Noteholder for any registration of
transfer or exchange of Equipment Notes, but the Registrar may, as a condition
to any transfer or exchange hereunder, require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Equipment Notes.
The Registrar shall not be required to register the transfer of or to
exchange any Equipment Note called for redemption or purchase pursuant to such
Section 6.01 or 6.02.
Section 2.05 Noteholder Lists; Ownership of Equipment Notes. (a) The
----------------------------------------------
Indenture Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Noteholders, which list shall be available to the Owner or its
representative for inspection. If the Indenture Trustee is not the Registrar,
the Registrar shall be required to furnish to the Indenture Trustee semi-
annually on or before each Interest Payment Date, and at such other times as the
Indenture Trustee may request in writing, a list, in such form and as of such
date as the Indenture Trustee may reasonably require, containing all the
information in the possession or control of the Registrar as to the names and
addresses of the Noteholders.
(b) Ownership of the Equipment Notes shall be proved by the
Register kept by the Registrar. Prior to due presentment for registration of
transfer of any Equipment Note, the Owner, the Indenture Trustee, the Paying
Agent and the Registrar may deem and treat the Person in whose name any
Equipment Note is registered as the absolute owner of such Equipment Note for
the purpose of receiving payment of principal (including, subject to the
provisions herein regarding the applicable Record Dates, Amortization Amounts)
of, Make-Whole Amount, if any, and interest on such Equipment Note and for all
other purposes whatsoever, whether or not such Equipment Note is overdue, and
none of the Owner, the Indenture Trustee, the Paying Agent or the Registrar
shall be affected by notice to the contrary.
Section 2.06 Mutilated, Destroyed, Lost or Stolen Equipment Notes. If
----------------------------------------------------
any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner
shall, upon the written request
18
[Trust Indenture and Mortgage (2001-1 747-1)]
of the Noteholder of such Equipment Note, issue and execute, and the Indenture
Trustee shall authenticate and deliver, in replacement thereof, as applicable, a
new Equipment Note of the same Series and having the same maturity, payable to
the same Noteholder in the same principal amount and dated the same date as the
Equipment Note so mutilated, destroyed, lost or stolen. If the Equipment Note
being replaced has become mutilated, such Equipment Note shall be surrendered to
the Indenture Trustee. If the Equipment Note being replaced has been destroyed,
lost or stolen, the Noteholder of such Equipment Note shall furnish to the Owner
and the Indenture Trustee such security or indemnity as may be required by it to
save the Owner and the Indenture Trustee harmless and evidence satisfactory to
the Owner and the Indenture Trustee of the destruction, loss or theft of such
Equipment Note and of the ownership thereof.
Section 2.07 Cancellation. The Registrar and any Paying Agent shall
------------
forward to the Indenture Trustee all Equipment Notes surrendered to them for
replacement, redemption, registration of transfer, exchange or payment. The
Indenture Trustee shall cancel all Equipment Notes surrendered for replacement,
redemption, registration of transfer, exchange, payment or cancellation and
shall destroy canceled Equipment Notes.
Section 2.08 Payment on Equipment Notes. The principal amount of,
--------------------------
interest on, Make-Whole Amount, if any, and other amounts due under each
Equipment Note or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 11:00 a.m., Chicago, Illinois time,
on the due date of payment to the Indenture Trustee at the Corporate Trust
Department for distribution among the Noteholders in the manner provided herein.
The Owner shall not have any responsibility for the distribution of such payment
to any Noteholder. Notwithstanding the foregoing or any provision in any
Equipment Note to the contrary, the Indenture Trustee will use reasonable
efforts to pay or cause to be paid, if so directed in writing by any Noteholder
(with a copy to the Owner), all amounts paid by the Owner hereunder or such
holder's Equipment Note or Equipment Notes to such holder or a nominee therefor
(including all amounts distributed pursuant to Article 3 of this Agreement) by
transferring, or causing to be transferred, by wire transfer of immediately
available funds in Dollars, prior to 1:00 p.m., Chicago, Illinois time, on the
due date of payment, to an account maintained by such holder with a bank located
in the continental United States the amount to be distributed to such holder,
for credit to the account of such holder maintained at such bank. If the
Indenture Trustee shall fail to make any such payment as provided in the
immediately foregoing sentence after its receipt of funds at the place and prior
to the time specified above, the Indenture Trustee, in its individual capacity
and not as trustee, agrees to compensate such holders for loss of use of funds
at the federal funds rate until such payment is made and the Indenture Trustee
shall be entitled to any interest earned on such funds until such payment is
made. Any payment made hereunder shall be made free and clear of and without
deduction for or on account of all wire and like charges without any presentment
or surrender of any Equipment Note, except that, in the case of the final
payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Indenture Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Agreement to the contrary,
the Indenture Trustee shall not be required to make, or cause to be made, wire
transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so in view of the time of day when
the funds to be so transferred were received by it if such funds were received
after 11:00 a.m., Chicago, Illinois time, at the place of payment.
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[Trust Indenture and Mortgage (2001-1 747-1)]
Section 2.09 Termination of Interest in the Indenture Estate. No
-----------------------------------------------
Noteholder or Indenture Indemnitee shall have any further interest in, or other
right with respect to, the Indenture Estate when and if the principal amount of,
Make-Whole Amount, if any, and interest on all Equipment Notes held by such
Noteholder and all other sums payable to such Noteholder or Indenture
Indemnitee, as the case may be, hereunder, under such Equipment Notes and under
the other Operative Documents shall have been paid in full.
Section 2.10 Withholding Taxes. The Indenture Trustee, as agent for the
-----------------
Owner, shall exclude and withhold at the appropriate rate from each payment of
principal amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Equipment Note (and such exclusion and payment of
withholding tax shall constitute payment in respect of such Equipment Note) any
and all United States withholding taxes applicable thereto as required by law.
The Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Equipment Notes, to withhold such amounts and timely pay the same
to the appropriate authority in the name of and on behalf of the Noteholders,
that it will file any necessary United States withholding tax returns or
statements when due, and that as promptly as possible after the payment thereof
(but in no event later than 30 days after the due date thereof) it will deliver
to each Noteholder (with a copy to the Owner) appropriate receipts and a U.S.
Treasury Form 1042-S and Form 8109 or Form 8109-B (or similar form at any
relevant time in effect) showing the payment thereof, together with such
additional documentary evidence as any such Noteholder may reasonably request
from time to time.
If a Noteholder which is a Non-U.S. Person has furnished to the Indenture
Trustee a properly completed, accurate and currently effective U.S. Internal
Revenue Service Form ▇-▇ ▇▇▇, ▇-▇ IMY, W-8 ECI or W-8 EXP (or such successor
form or forms as may be required by the United States Treasury Department) for
the calendar year in which the payment hereunder or under the Equipment Note(s)
held by such Noteholder is made (but prior to the making of such payment), and
has not notified the Indenture Trustee of the withdrawal or inaccuracy of such
form prior to the date of such payment (and the Indenture Trustee has no reason
to believe that any information set forth in such form is inaccurate), the
Indenture Trustee shall withhold only the amount, if any, required by law (after
taking into account any applicable exemptions properly claimed by the
Noteholder) to be withheld from payments hereunder or under the Equipment Notes
held by such Noteholder in respect of United States federal income tax (and such
payment of withholding tax shall constitute payment in respect of such Equipment
Note). If a Noteholder which is a U.S. Person has furnished to the Indenture
Trustee a properly completed, accurate and currently effective U.S. Internal
Revenue Service Form W-9, if applicable, prior to a payment hereunder or under
the Equipment Notes held by such Noteholder, no amount shall be withheld from
payments in respect of United States federal income tax. If any Noteholder has
notified the Indenture Trustee that any of the foregoing forms or certificates
is withdrawn or inaccurate, or if such Noteholder has not filed a form claiming
an exemption from United States withholding tax which is applicable to any
relevant period in which a payment is made or if the Code or the regulations
thereunder or the administrative interpretation thereof is at any time after the
date hereof amended to require such withholding of United States federal income
taxes from payments under the Equipment Notes held by such Noteholder, the
Indenture Trustee agrees to withhold from each payment due to the relevant
Noteholder withholding taxes at the appropriate
20
[Trust Indenture And Mortgage (2001-1 747-1)]
rate under law and will, on a timely basis as more fully provided above, deposit
such amounts with an authorized depository and make such returns, statements,
receipts and other documentary evidence in connection therewith as required by
law.
Owner shall not have any liability for the failure of the Indenture Trustee
to withhold taxes in the manner provided for herein or for any false, inaccurate
or untrue evidence provided by any Noteholder hereunder.
Section 2.11 Subordination. (a) The Indenture Trustee and, by
-------------
acceptance of its Equipment Notes of any Series, each Noteholder of such Series,
hereby agree that no payment or distribution shall be made on or in respect of
the Secured Obligations owed to such Noteholder of such Series, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in Section 8.01(e) or (f) hereof, except
as expressly provided in Article 3 hereof.
(b) By the acceptance of its Equipment Notes of any Series
(other than Series A-1, Series A-2 and Series A-3), each Noteholder of such
Series agrees that in the event that such Noteholder, in its capacity as a
Noteholder, shall receive any payment or distribution on any Secured Obligations
in respect of such Series which it is not entitled to receive under this Section
2.11 or Article 3 hereof, it will hold any amount so received in trust for the
Senior Noteholder (as defined in Section 2.11(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied as
provided in the Article 3 hereof.
(c) As used in this Section 2.11, the term "Senior Noteholder"
shall mean (i) the Noteholders of Series A-1, Series A-2 and Series A-3 until
the Secured Obligations in respect of Series A-1 and Series A-2 Equipment Notes
have been paid in full, (ii) after the Secured Obligations in respect of Series
A-1, Series A-2 and Series A-3 Equipment Notes have been paid in full, the
Noteholders of Series B until the Secured Obligations in respect of Series B
Equipment Notes have been paid in full, (iii) after the Secured Obligations in
respect of Series ▇-▇, ▇▇▇▇▇▇ ▇-▇, Series A-3 and Series B Equipment Notes have
been paid in full, the Noteholders of Series C until the Secured Obligations in
respect of Series C Equipment Notes have been paid in full, and (iv) after the
Secured Obligations in respect of Series A-1, Series A-2, Series A-3, Series B
and Series C Equipment Notes have been paid in full, the Noteholders of Series D
Equipment Notes; provided, however, that in the event that a Series of Equipment
Notes shall be redeemed pursuant to the provisions of Section 6.01(b), the
amounts received by the Indenture Trustee in connection with such redemption
shall be applied in accordance with the provisions of Section 3.02(b)
notwithstanding anything contained in this Section 2.11 to the contrary.
Section 2.12 Certain Agreements Regarding Liquidity Facilities. Without
-------------------------------------------------
duplication of amounts paid by the Owner under the Participation Agreement or
the other Fundamental Documents, the Owner agrees to pay to the Indenture
Trustee for distribution in accordance with Section 3.04 hereof: (i) an amount
equal to the fees payable to the relevant Liquidity Provider under the related
Fee Letter (as defined in the Intercreditor Agreement as originally in effect or
as amended with the consent of the Owner) multiplied by a fraction the numerator
of which shall be the sum of the then outstanding aggregate principal amount of
the Series A-1 Equipment Notes, Series A-2 Equipment Notes, Series A-3 Equipment
Notes, Series B Equipment Notes
21
[Trust Indenture And Mortgage (2001-1 747-1)]
and Series C Equipment Notes and the denominator of which shall be the sum of
the then outstanding aggregate principal amount of all "Series A-1 Notes",
"Series A-2 Notes", "Series A-3 Notes", "Series B Notes" and "Series C Notes"
(each as defined in the Intercreditor Agreement); (ii) (x) the amount equal to
interest on any Downgrade Advance (other than any Applied Downgrade Advance)
payable under Section 3.07 of each Liquidity Facility minus Investment Earnings
from such Downgrade Advance multiplied by (y) the fraction specified in the
foregoing clause (i); (iii) (x) the amount equal to interest on any Non-
Extension Advance (other than any Applied Non-Extension Advance) payable under
Section 3.07 of each Liquidity Facility minus Investment Earnings from such Non-
Extension Advance multiplied by (y) the fraction specified in the foregoing
clause (i); (iv) (x) any amounts owed to the Liquidity Providers by the
Subordination Agent as borrower under Section 3.01 (other than in respect of an
Unpaid Advance, an Applied Non-Extension Advance or Applied Downgrade Advance),
3.02, 3.03 (other than in respect of an Unpaid Advance, an Applied Non-Extension
Advance or Applied Downgrade Advance), 7.05 or 7.07 of each Liquidity Facility
(or similar provisions of any succeeding Liquidity Facility) multiplied by (y)
the fraction specified in the foregoing clause (i); (v) if any payment default
shall have occurred and be continuing with respect to interest on any Series A-1
Equipment Note, Series A-2 Equipment Notes, Series B Equipment Note or Series C
Equipment Note, (x) the excess, if any, of (1) the sum of (x) the amount equal
to interest on any Unpaid Advance, an Applied Non-Extension Advance or Applied
Downgrade Advance payable under Section 3.07 of each Liquidity Facility plus (y)
any other amounts payable in respect of such Unpaid Advance, Applied Non-
Extension Advance or Applied Downgrade Advance under Section 3.01, 3.03 or 3.09
of the applicable Liquidity Facility over (2) the sum of Investment Earnings
from any Final Advance plus any amount of interest at the Past Due Rate actually
payable (whether or not in fact paid) by the Owner on the overdue scheduled
interest on the Equipment Notes in respect of which such Unpaid Advance, Applied
Non-Extension Advance or Applied Downgrade Advance was made, multiplied by (y) a
fraction the numerator of which shall be the then aggregate overdue amounts of
interest on the Series A-1 Equipment Notes, Series A-2 Equipment Notes, Series
A-3 Equipment Notes, Series B Equipment Notes and Series C Equipment Notes
(other than interest becoming due and payable solely as a result of acceleration
of any such Equipment Notes) and the denominator of which shall be the then
aggregate overdue amounts of interest on all "Series A-1 Notes", "Series A-2
Notes", "Series A-3 Notes", "Series B Notes" and "Series C Notes" (each as
defined in the Intercreditor Agreement) (other than interest becoming due and
payable solely as a result of acceleration of any such "Notes"); (vi) (x) the
amount equal to all compensation and reimbursement of expenses, disbursements
and advances payable by Owner under the Pass Through Trust Agreements multiplied
by (y) the fraction specified in the foregoing clause (i); and (vii) (x) the
amount equal to all compensation and reimbursement of expenses and disbursements
payable to the Subordination Agent under the Intercreditor Agreement except with
respect to any income or franchise taxes incurred by the Subordination Agent in
connection with the transactions contemplated by the Intercreditor Agreement
multiplied by (y) the fraction specified in the foregoing clause (i). For
purposes of this paragraph, the terms "Applied Downgrade Advance", "Applied Non-
Extension Advance", "Downgrade Advance", "Final Advance", "Investment Earnings"
and "Unpaid Advance" shall have the meanings specified in each Liquidity
Facility or the Intercreditor Agreement referred to therein.
22
[Trust Indenture And Mortgage (2001-1 747-1)]
ARTICLE 3
RECEIPT, DISTRIBUTION AND APPLICATION OF FUNDS
Section 3.01 Basic Distributions. Except as otherwise provided in
-------------------
Section 3.03 hereof, each periodic payment of principal or interest on the
Equipment Notes received by the Indenture Trustee shall be promptly distributed
in the following order of priority:
First, (i) so much of such payment as shall be required to pay in full the
-----
aggregate amount of the payment or payments of principal amount and
interest (as well as any interest on any overdue principal amount and,
to the extent permitted by applicable law, on any overdue interest)
then due under all Series A-1 Equipment Notes, all Series A-2
Equipment Notes and all Series A-3 Equipment Notes shall be
distributed to each Noteholder of Series A-1 Equipment Notes, Series
A-2 Equipment Notes and Series A-3 Equipment Notes ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under all Series A-1 Equipment
Notes, all Series A-2 Equipment Notes and all Series A-3 Equipment
Notes held by such Noteholder bears to the aggregate amount of the
payments then due under all Series A-1 Equipment Notes, all Series A-2
Equipment Notes and all Series A-3 Equipment Notes;
(ii) after giving effect to paragraph (i) above, so much of such
payment remaining as shall be required to pay in full the aggregate
amount of the payment or payments of principal amount and interest (as
well as any interest on any overdue principal amount and, to the
extent permitted by applicable law, on any overdue interest) then due
under all Series B Equipment Notes shall be distributed to each
Noteholder of Series B Equipment Notes ratably, without priority of
one over the other, in the proportion that the amount of such payment
or payments then due under all Series B Equipment Notes held by such
Noteholder bears to the aggregate amount of the payments then due
under all Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, so much of such
payment remaining as shall be required to pay in full the aggregate
amount of the payment or payments of principal amount and interest (as
well as any interest on any overdue principal amount and, to the
extent permitted by applicable law, on any overdue interest) then due
under all Series C Equipment Notes shall be distributed to each
Noteholder of Series C Equipment Notes ratably, without priority of
one over the other, in the proportion that the amount of such payment
or payments then due under all Series C Equipment Notes held by such
Noteholder bears to the aggregate amount of the payments then due
under all Series C Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, so much of such
payment remaining as shall be required to pay in full the aggregate
amount of the payment or payments of principal amount and interest (as
well as any interest on any overdue principal amount and, to the
extent permitted by applicable law, on any overdue interest) then due
under all Series D Equipment Notes shall be distributed
23
[Trust Indenture And Mortgage (2001-1 747-1)]
to each Noteholder of Series D Equipment Notes ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under all Series D Equipment Notes
held by such Noteholder bears to the aggregate amount of the payments
then due under all Series D Equipment Notes; and
Second, the balance, if any, of such installment remaining thereafter shall be
------
distributed to the Owner.
Section 3.02 Event of Loss; Optional Redemption. (a) Except as
----------------------------------
otherwise provided in Section 3.03 hereof, any payments received by the
Indenture Trustee pursuant to Section 6.01(a) following an Event of Loss with
respect to the Aircraft shall be applied to the Secured Obligations by applying
such funds in the following order of priority:
First, (i) to reimburse the Indenture Trustee and the Noteholders for any
-----
reasonable costs or expenses incurred in connection with such
redemption for which they are entitled to reimbursement, or indemnity
by Owner, under the Operative Documents and then (ii) to pay any other
amounts then due (except as provided in clause "Second" below) to the
Indenture Trustee, the Noteholders and the other Indenture Indemnitees
under this Indenture, the Participation Agreement, the Equipment Notes
or any other Fundamental Document;
Second, (i) to pay the amounts specified in paragraph (i) of clause "First"
------
of Section 3.01 hereof;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "First" of Section 3.01 hereof;
(iii) after giving effect to paragraph (ii) above, to pay the amounts
specified in paragraph (iii) of clause "First" of Section 3.01 hereof;
and
(iv) after giving effect to paragraph (iii) above, to pay the
amounts specified in paragraph (iv) of clause "First" of Section 3.01
hereof; and
Third, the balance, if any, of such installment remaining thereafter shall be
-----
distributed to the Owner.
provided, however, that if a Replacement Airframe or Replacement Engine shall be
-------- -------
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 5.01 hereof, any insurance, condemnation or similar proceeds which
result from such Event of Loss and are paid over to the Indenture Trustee shall
be held by the Indenture Trustee as permitted by Section 5.01 hereof (provided
that such moneys shall be invested as provided in Section 9.04 hereof) as
additional security for the obligations of Owner under the Operative Documents
and such proceeds (and such investment earnings), to the extent not theretofore
applied as provided herein, shall be released to the Owner at the Owner's
written request upon the release of such Airframe or Engine and the replacement
thereof as provided herein.
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[Trust Indenture And Mortgage (2001-1 747-1)]
No Make-Whole Amount shall be due and payable on the Equipment Notes as a
consequence of a prepayment under this Section 3.02(a).
(b) Except as otherwise provided in Section 3.03 hereof, any payments
received by the Indenture Trustee in connection with an optional redemption of
any Series of the Equipment Notes pursuant to Section 6.01(b) shall be applied
to redemption of such Series of Equipment Notes and to all other Secured
Obligations due and owing the holders of such Series by applying such funds in
the following order of priority:
First, to reimburse the Indenture Trustee and the holders of such Series for
-----
any reasonable costs or expenses incurred in connection with such
redemption for which they are entitled to reimbursement or indemnity
by Owner under the Operative Documents;
Second, so much of such payment as shall be required to pay in full the
------
aggregate amount of the payment or payments of principal amount and
interest (as well as any interest on any overdue principal amount and,
to the extent permitted by applicable law, on any overdue interest)
then due under such Series of Equipment Notes and all other Secured
Obligations due and owing to the holders of such Series of Equipment
Notes shall be distributed to the holders of such Series ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under all Equipment Notes
of such Series held by such Noteholders bears to the aggregate amount
of the payments then due under all Equipment Notes of such Series; and
Third, the balance, if any, of such installment remaining thereafter shall be
-----
distributed to the Owner.
Section 3.03 Payments After Indenture Event of Default. Except as
-----------------------------------------
otherwise provided in Section 3.04 hereof, all payments received and amounts
held or realized by the Indenture Trustee (including any amounts realized by the
Indenture Trustee from the exercise of any remedies pursuant to Article 8
hereof) after an Indenture Event of Default shall have occurred and be
continuing and after the declaration specified in Section 8.02 hereof, as well
as all payments or amounts then held by the Indenture Trustee as part of the
Indenture Estate, shall be promptly distributed by the Indenture Trustee in the
following order of priority:
First, so much of such payments or amounts as shall be required to (i)
-----
reimburse the Indenture Trustee or State Street for any Tax (except to
the extent resulting from a failure of the Indenture Trustee to
withhold taxes pursuant to Section 2.10 hereof), expense or other loss
(including, without limitation, all amounts to be expended at the
expense of, or charged upon the proceeds of, the Indenture Estate
pursuant to Section 8.03 hereof) incurred by the Indenture Trustee or
State Street (to the extent not previously reimbursed), the expenses
of any sale, or other proceeding, reasonable attorneys' fees and
expenses, court costs, and any other expenditures incurred or
expenditures or advances made by the Indenture Trustee, State Street,
the Noteholders in the protection, exercise or enforcement of any
right, power or remedy or any damages sustained by the Indenture
Trustee, State Street or any
25
[Trust Indenture And Mortgage (2001-1 747-1)]
Noteholder, liquidated or otherwise, upon such Event of Default shall
be applied by the Indenture Trustee as between itself, State Street
and the Noteholders in reimbursement of such expenses and any other
expenses for which the Indenture Trustee, State Street or the
Noteholders are entitled to reimbursement under any Operative Document
and (ii) pay all other amounts payable to the Indenture Indemnitees
hereunder and under the Participation Agreement, as applicable (other
than amounts specified in clauses "Second" through "Fourth" below);
------ ------
and in the case the aggregate amount to be so distributed is
insufficient to pay as aforesaid, then ratably, without prior of one
over the other, in proportion to the amounts owed each hereunder and
under the Participation Agreement;
Second, so much of such payments or amounts remaining as shall be required to
------
reimburse the then existing or prior Noteholders for payments made
pursuant to Section 9.06 hereof (to the extent not previously
reimbursed), shall be distributed to such then existing or prior
Noteholders ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made by each
such then existing or prior Noteholder pursuant to said Section 9.06
hereof;
Third, (i) so much of such payments or amounts remaining as shall be
-----
required to pay in full the aggregate unpaid principal amount of all
Series A-1 Equipment Notes, all Series A-2 Equipment Notes and all
Series A-3 Equipment Notes, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations owed in
respect of the Series A-1 Equipment Notes, Series A-2 Equipment Notes
and Series A-3 Equipment Notes to the date of distribution, shall be
distributed to the Noteholders of Series A-1 Equipment Notes, Series
A-2 Equipment Notes, and Series A-3 Equipment Notes, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid principal amount of
all Series A-1 Equipment Notes, all Series A-2 Equipment Notes and all
Series A-3 Equipment Notes held by each Noteholder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder to
the date of distribution, bears to the aggregate unpaid principal
amount of all Series A-1 Equipment Notes, all Series A-2 Equipment
Notes and all Series A-3 Equipment Notes held by all such Noteholders
plus the accrued but unpaid interest and other amounts due thereon to
the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid principal amount of all Series B Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series B Equipment Notes
to the date of distribution, shall be distributed to the Noteholders
of Series B Equipment Notes, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion
that the aggregate unpaid principal amount of all Series B Equipment
Notes held by each Noteholder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder to the date of distribution,
bears to the aggregate unpaid
26
[Trust Indenture And Mortgage (2001-1 747-1)]
principal amount of all Series B Equipment Notes held by all such
Noteholders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid principal amount of all Series C Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series C Equipment Notes
to the date of distribution, shall be distributed to the Noteholders
of Series C Equipment Notes, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion
that the aggregate unpaid principal amount of all Series C Equipment
Notes held by each Noteholder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder to the date of distribution,
bears to the aggregate unpaid principal amount of all Series C
Equipment Notes held by all such Noteholders plus the accrued but
unpaid interest and other amounts due thereon to the date of
distribution; and
(iv) after giving effect to paragraph (iii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid principal amount of all Series D Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series D Equipment Notes
to the date of distribution, shall be distributed to the Noteholders
of Series D Equipment Notes, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion
that the aggregate unpaid principal amount of all Series D Equipment
Notes held by each Noteholder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder to the date of distribution,
bears to the aggregate unpaid principal amount of all Series D
Equipment Notes held by all such Noteholders plus the accrued but
unpaid interest and other amounts due thereon to the date of
distribution; and
Fourth, the balance, if any, of such payments or amounts remaining thereafter
------
shall be distributed to the Owner.
No Make-Whole Amount shall be payable in connection with an Indenture Event
of Default or distributable under this Section 3.03.
Section 3.04 Certain Payments.
----------------
(a) Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in this Agreement and for which
such provision is made in any other Fundamental Document shall be applied
forthwith to the purpose for which such payment was made in accordance with the
terms of such other Fundamental Document.
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[Trust Indenture And Mortgage (2001-1 747-1)]
(b) Notwithstanding anything to the contrary contained in this
Article 3, the Indenture Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Owner in respect of the Indenture
Trustee in its individual capacity, any Noteholder or any other Indenture
Indemnitee, in each case whether or not pursuant to Section 5(b) of the
Participation Agreement, directly to the Person entitled thereto, except that
any payment under Section 2.12 shall be distributed to the Subordination Agent
to be distributed in accordance with the terms of the Intercreditor Agreement.
Section 3.05 Other Payments. Any payments received by the Indenture
--------------
Trustee for which no provision as to the application thereof is made elsewhere
in this Agreement or in any other Fundamental Document shall be distributed by
the Indenture Trustee to the extent received or realized at any time prior to
payment of all Secured Obligations, in the order of priority specified in
Section 3.01 hereof, and after payment in full of all amounts then due in
accordance with Section 3.01 in the manner provided in clause "Fourth" of
Section 3.03 hereof.
Section 3.06 Payments to Owner. Any amounts distributed hereunder by the
-----------------
Indenture Trustee to the Owner shall be paid to the Owner (within the time
limits contemplated by Section 2.08) by wire transfer of funds of the type
received by the Indenture Trustee at such office and to such account or accounts
of the Owner as shall be designated by notice from the Owner to the Indenture
Trustee from time to time.
ARTICLE 4
COVENANTS OF OWNER
So long as the Airframe or any Engine is subject to the Lien of this
Agreement, the Owner covenants and agrees as follows:
Section 4.01 Registration, Maintenance and Operation; Possession and
-------------------------------------------------------
Permitted Leases; Insignia.
--------------------------
(a) (1) Registration and Maintenance. The Owner, at its own
----------------------------
cost and expense, shall (or shall cause any Permitted Lessee to): (i) on or
prior to the Closing Date, cause the Aircraft to be duly registered in its name,
and, subject to subparagraph (3) of this Section 4.01(a), to remain duly
registered in its name under the Federal Aviation Act; (ii) maintain, service,
repair, and overhaul (or cause to be maintained, serviced, repaired, and
overhauled) the Aircraft (and any engine which is not an Engine but which is
installed on the Aircraft) (x) so as at all times to keep the Aircraft in as
good an operating condition, ordinary wear and tear excepted, as may be
necessary to enable the airworthiness certification for the Aircraft to be
maintained in good standing at all times (other than during temporary periods of
storage in accordance with applicable regulations) under (I) the Federal
Aviation Act, except when all of Owner's Boeing Model 747-422 aircraft
28
[Trust Indenture And Mortgage (2001-1 747-1)]
(powered by engines of the same type as those with which the Airframe shall be
equipped at the time of such grounding) registered in the United States have
been grounded by the FAA unless such grounding was caused by the failure of
Owner to maintain, service, repair and overhaul the Aircraft in accordance with
the terms hereof, or (II) the applicable laws of any other jurisdiction in which
the Aircraft may then be registered from time to time, except when all of
Owner's Boeing Model 747-422 aircraft (powered by engines of the same type as
those with which the Airframe shall be equipped at the time of such grounding)
registered in such jurisdiction have been grounded by the aeronautical authority
of such jurisdiction unless such grounding was caused by the failure of Owner to
maintain, service, repair and overhaul the Aircraft in accordance with the terms
hereof and (y) in substantially the same manner as Owner (or any Permitted
Lessee) maintains, services, repairs or overhauls similar aircraft operated by
Owner (or Permitted Lessee) in similar circumstances and without discriminating
against the Aircraft; and (iii) maintain or cause to be maintained all records,
logs and other materials required to be maintained in respect of the Aircraft by
the FAA or the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered.
(2) Operation. Owner will not (or permit any Permitted
---------
Lessee to) maintain, use, service, repair, overhaul or operate the Aircraft
in violation of any material law or any rule, regulation, treaty, order or
certificate of any government or governmental authority (domestic or
foreign) having jurisdiction, or in violation of any airworthiness
certificate, license or registration relating to the Aircraft issued by any
such authority, except that, (i) Owner or any Permitted Lessee may contest
in good faith the validity or application of any such law, rule,
regulation, order, certificate, license, registration or violation in any
reasonable manner which does not materially adversely affect the Lien of
this Agreement and (ii) Owner shall not be in default under, or required to
take any action set forth in, this sentence if it is not possible for Owner
to comply with the laws of a jurisdiction other than the United States (or
other jurisdiction in which the Aircraft is registered) because of a
conflict with the applicable laws of the United States (or such
jurisdiction where the Aircraft is registered). If the indemnities or
insurance specified in Section 4.03(f), or some combination thereof in
amounts equal to amounts required by Section 4.03(f), have not been
obtained, Owner will not operate the Aircraft, or permit any Permitted
Lessee to operate the Aircraft, in or to any area excluded from coverage by
any insurance required to be maintained by the terms of Section 4.03;
provided, however, that the failure of Owner to comply with the provisions
of this sentence shall not give rise to an Indenture Event of Default where
such failure is attributable to a hijacking, medical emergency, equipment
malfunction, weather conditions, navigational error or other isolated
extraordinary event beyond the control of Owner and Owner is taking all
reasonable steps to remedy such failure as soon as is reasonably
practicable.
(3) Reregistration. Subject to the terms and conditions of
--------------
Section 6(a) of the Participation Agreement, the Owner may at any time
cause the Aircraft to be re-registered under the laws of another country.
(b) Possession and Permitted Leases. Owner will not, without the
-------------------------------
prior written consent of Indenture Trustee, lease or otherwise in any manner
deliver, transfer or relinquish possession of the Airframe or any Engine or
install or permit any Engine to be installed on any airframe other than the
Airframe; provided that, so long as such action shall not deprive the Indenture
Trustee of the perfected Lien of this Agreement on the Airframe or any Engine,
Owner may, without the prior written consent of Indenture Trustee:
(i) subject the Airframe and the Engines or engines then
installed thereon to normal interchange agreements or any Engine to normal
pooling or similar
29
[Trust Indenture And Mortgage (2001-1 747-1)]
arrangements, in each case customary in the airline industry and entered
into by Owner (or any Permitted Lessee) in the ordinary course of its
business with any air carrier; provided, that (A) no such agreement or
arrangement contemplates or requires the transfer of title to the Airframe,
and (B) if Owner's title to any Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to be an Event
of Loss with respect to such Engine and the Owner shall (or shall cause any
Permitted Lessee to) comply with Section 5.01(b) hereof in respect thereof;
(ii) deliver possession of the Airframe or any Engine to the
manufacturer thereof or to any other Person for testing, service, repair,
maintenance or overhaul work on the Airframe or Engine or any Part of any
thereof or for alterations or modifications in or additions to such
Airframe or Engine to the extent required or permitted by the terms hereof;
(iii) install an Engine on an airframe owned by Owner (or any
Permitted Lessee) which airframe is free and clear of all Liens, except:
(A) Permitted Liens and Liens which apply only to the engines (other than
Engines), appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment (other than Parts) installed on such
airframe (but not to the airframe as an entirety), (B) the rights of third
parties under interchange agreements which would be permitted under clause
(i) above, provided that Owner's title to such Engine shall not be divested
as a result thereof and (C) mortgage Liens or other security interests,
provided, that (as regards this clause (C)), such mortgage Liens or other
security interests effectively provide that such Engine shall not become
subject to the lien of such mortgage or security interest, notwithstanding
the installation thereof on such airframe;
(iv) install an Engine on an airframe leased to Owner (or any
Permitted Lessee) or purchased by Owner (or any Permitted Lessee) subject
to a conditional sale or other security agreement, provided that (x) such
airframe is free and clear of all Liens, except: (A) the rights of the
parties to the lease or conditional sale or other security agreement
covering such airframe, or their assignees, and (B) Liens of the type
permitted by subparagraph (iii) of this Section 4.01(b) and (y) such lease,
conditional sale or other security agreement effectively provides that such
Engine shall not become subject to the Lien of such lease, conditional sale
or other security agreement, notwithstanding the installation thereof on
such airframe;
(v) install an Engine on an airframe owned by Owner (or any
Permitted Lessee), leased to Owner (or any Permitted Lessee) or purchased
by Owner (or any Permitted Lessee) subject to a conditional sale or other
security agreement under circumstances where neither subparagraph (iii) nor
subparagraph (iv) of this Section 4.01(b) is applicable, provided that any
divestiture of title to such Engine resulting from such installation shall
be deemed an Event of Loss with respect to such Engine and Owner shall (or
shall cause any Permitted Lessee to) comply with Section 5.01(b) hereof in
respect thereof, Indenture Trustee not intending hereby to waive any right
or interest it may have to or in such Engine under applicable law until
compliance by Owner with such Section 5.01(b);
30
[Trust Indenture and Mortgage (2001-1 747-1)]
(vi) to the extent permitted by Section 4.02(b) hereof,
subject any appliances, Parts or other equipment owned by the Owner and
removed from the Airframe or any Engine to any pooling arrangement referred
to in Section 4.02(b) hereof;
(vii) transfer (or permit any Permitted Lessee to transfer)
possession of the Airframe or any Engine to the United States of America or
any instrumentality or agency thereof pursuant to the Civil Reserve Air
Fleet Program so long as Owner (or any Permitted Lessee) shall promptly
notify Indenture Trustee (x) upon transferring possession of the Airframe
or any Engine to the United States of America or any agency or
instrumentality thereof pursuant to the Civil Reserve Air Fleet Program and
(y) of the name and the address of the Contracting Office Representative
for the Military Airlift Command of the United States Air Force to whom
notice must be given pursuant to Section 15 hereof;
(viii) transfer possession of the Airframe or any Engine to the
United States of America or any instrumentality or agency thereof pursuant
to a lease, contract or other instrument, a copy of which shall be provided
to the Indenture Trustee; or
(ix) so long as no Indenture Default under Section 8.01(a),
(e) or (f) hereof or any Indenture Event of Default shall have occurred and
be continuing, lease the Aircraft, Airframe or any Engine to (1) a
Certificated Air Carrier, (2) any other Permitted Air Carrier, or (3) any
other Person; provided that (A) no such lease shall be permitted to a
lessee that is subject to a proceeding or final order under applicable
bankruptcy, insolvency or reorganization laws on the date the lease is
entered into, (B) in the case of a lease under subclause (2) or (3) above,
on the date of such lease, the United States and the country in which such
lessee is domiciled and principally located maintain diplomatic relations
(which for purposes of this clause (ix) shall include Taiwan and any other
country that is similarly situated) and (C) in the case only of a lease to
any Person under subclause (3) above, the Indenture Trustee receives at the
time of such lease an opinion of counsel to the effect that there exist no
possessory rights in favor of the lessee under the laws of such lessee's
country which would, upon bankruptcy or insolvency of or other default by
the Owner or the lessee, prevent the return of such Engine or Airframe and
such Engine or engine to the Indenture Trustee in accordance with and when
permitted by the terms of Section 8.03 upon the exercise by the Indenture
Trustee of its remedies pursuant to such Section.
The rights of any Permitted Lessee or other transferee (other than a
transferee where the transfer is of an Engine which is deemed an Event of Loss)
shall be subject and subordinate to, all the terms of this Agreement (and any
Permitted Lease shall expressly state that it is so subject and subordinate),
including, without limitation, the Indenture Trustee's right to repossess the
Aircraft and to void any lease upon such repossession, and Owner shall remain
primarily liable for the performance of all of the terms of this Agreement, and
the terms of any such Permitted Lease shall not permit any Permitted Lessee to
take any action not permitted to be taken by Owner in this Agreement with
respect to the Aircraft. No pooling agreement, Permitted Lease or other
relinquishment of possession of the Airframe or any Engine shall in any way
discharge or diminish any of Owner's obligations to the Indenture Trustee under
this Agreement or constitute a waiver of Indenture Trustee's rights or remedies
hereunder. The
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[Trust Indenture and Mortgage (2001-1 747-1)]
Indenture Trustee agrees, for the benefit of Owner (and any Permitted Lessee)
and for the benefit of any mortgagee or other holder of a security interest in
any engine owned by Owner (or any Permitted Lessee), any lessor of any engine
other than an Engine leased to Owner (or any Permitted Lessee) and any
conditional vendor of any engine other than an Engine purchased by Owner (or any
Permitted Lessee) subject to a conditional sale agreement or any other security
agreement, that no interest shall be created under this Agreement in any engine
so owned, leased or purchased and that neither the Indenture Trustee nor its
successors or assigns will acquire or claim, as against Owner (or any Permitted
Lessee) or any such mortgagee, lessor or conditional vendor or other holder of a
security interest or any successor or assignee of any thereof, any right, title
or interest in such engine as the result of such engine being installed on the
Airframe; provided, however, that such agreement of Indenture Trustee shall not
be for the benefit of any lessor or secured party of an airframe leased to Owner
(or any Permitted Lessee) or purchased by Owner (or any Permitted Lessee)
subject to a conditional sale or other security agreement or for the benefit of
any mortgagee or any other holder of a security interest in an airframe owned by
Owner (or any Permitted Lessee), on which airframe Owner (or any Permitted
Lessee) then proposes to install an Engine, unless such lessor, conditional
vendor, other secured party or mortgagee has expressly agreed (which agreement
may be contained in such lease, conditional sale or other security agreement or
mortgage) that neither it nor its successors or assigns will acquire, as against
Indenture Trustee, any right, title or interest in an Engine as a result of such
Engine being installed on such airframe. Owner shall provide the Indenture
Trustee and the Rating Agencies with a copy of any Permitted Lease or any
instrument evidencing a transfer pursuant to paragraph (viii) of this Section
4.01(b), in either case having a term of more than one (1) year, as promptly as
practicable after entering into such Permitted Lease or other transfer.
Any Wet Lease or similar arrangement under which Owner maintains
operational control of the Aircraft shall not constitute a delivery, transfer or
relinquishment of possession for purposes of this Section 4.01. The Indenture
Trustee acknowledges that any consolidation or merger of Owner or conveyance,
transfer or lease of all or substantially all of Owner's assets permitted by the
Operative Documents shall not be prohibited by this Section 4.01.
(c) Insignia. On or prior to the Closing Date, or as soon thereafter
--------
as practicable, Owner agrees to affix and maintain (or cause to be affixed and
maintained) in the cockpit of the Airframe adjacent to the registration
certificate therein and on each Engine a nameplate bearing the inscription:
Mortgaged To
State Street Bank and Trust Company
of Connecticut, National Association, as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Indenture Trustee, in each case as permitted under the
Operative Documents).
Except as above provided, Owner will not allow the name of any Person
to be placed on the Airframe or on any Engine as a designation that might be
interpreted as a claim of ownership; provided, that nothing herein contained
shall prohibit Owner (or any Permitted Lessee) from placing its customary colors
and insignia on the Airframe or any Engine.
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[Trust Indenture and Mortgage (2001-1 747-1)]
(d) Substitution of Engines. The Owner may at any time, at no cost
-----------------------
to the Indenture Trustee, replace any Engine subjected to the Lien hereof by
causing an Acceptable Alternate Engine to be substituted for such Engine
hereunder in accordance with the provisions of Section 5.01(b) hereof to the
same extent as if an Event of Loss has occurred with respect to such Engine.
Section 4.02 Replacement and Pooling of Parts; Alterations, Modifications
------------------------------------------------------------
and Additions.
-------------
(a) Replacement of Parts. Owner, at its own cost and expense, will
--------------------
promptly replace or cause to be replaced all Parts which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason whatsoever, except
as otherwise provided in Section 4.02(c). In addition, the Owner (or any
Permitted Lessee) may, at its own cost and expense, remove in the ordinary
course of maintenance, service, repair, overhaul or testing, any Parts, whether
or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for, provided that the Owner (or
any Permitted Lessee), except as otherwise provided in paragraph (c) of this
Section 4.02, will, at its own cost and expense, replace such Parts as promptly
as practicable. All replacement Parts shall be owned by Owner free and clear of
all Liens (except Permitted Liens, pooling arrangements permitted by Section
4.02(b) hereof and replacement Parts temporarily installed on an emergency
basis) and shall be in as good operating condition as, and shall have a value
and utility substantially equal to, the Parts replaced assuming such replaced
Parts were in the condition and repair required to be maintained by the terms
hereof. Except as provided in Section 4.02(c), all Parts at any time removed
from the Airframe or any Engine shall remain subject to the Lien of this
Agreement, no matter where located, until such time as such Parts shall be
replaced by Parts which meet the requirements for replacement Parts specified
above. Immediately upon any replacement Part becoming incorporated or installed
in or attached to the Airframe or any Engine, without further act (subject only
to Permitted Liens and any pooling arrangement permitted by Section 4.02(b)
hereof and except replacement Parts temporarily installed on an emergency
basis), (i) such replacement Part shall become subject to the Lien of this
Agreement and be deemed a Part for all purposes hereof to the same extent as the
Parts originally incorporated or installed in or attached to the Airframe or
such Engine and (ii) the replaced Part shall be free and clear of all rights of
the Indenture Trustee and shall no longer be deemed a Part hereunder. Upon
request of Owner, the Indenture Trustee shall execute and deliver to Owner such
documents as may be reasonably required to evidence the release of any replaced
Part from the Lien of this Indenture.
(b) Pooling of Parts. Any Part removed from the Airframe or any
----------------
Engine as provided in Section 4.02(a) hereof may be subjected by Owner (or any
Permitted Lessee) to a pooling arrangement of the type which is permitted by
Section 4.01(b)(i) hereof; provided, that the Part replacing such removed Part
shall be incorporated or installed in or attached to such Airframe or Engine in
accordance with Section 4.02(a) as promptly as practicable after the removal of
such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or an Engine in accordance with such
Sections may be owned by any third party subject to such a pooling arrangement,
provided, that Owner (or any Permitted Lessee), at its expense, as promptly
thereafter as practicable, either (i) causes such replacement Part to become
subject to the Lien of this Agreement, free and clear of all Liens other than
33
[Trust Indenture and Mortgage (2001-1 747-1)]
Permitted Liens or (ii) replaces such replacement Part with a further
replacement Part owned by Owner (or any Permitted Lessee) which shall become
subject to the Lien of this Agreement, free and clear of all Liens other than
Permitted Liens.
(c) Alterations, Modifications and Additions. Owner, at its own
----------------------------------------
expense, will make (or cause to be made) such alterations and modifications in
and additions to the Airframe and Engines as may be required to be made from
time to time so as to meet the applicable standards of the FAA or of any
regulatory agency or body of any jurisdiction in which the Aircraft may then be
registered; provided, however, that, Owner or any Permitted Lessee may, in good
faith, and by appropriate proceedings contest the validity or application of any
such law, rule, regulation or order in any reasonable manner which does not
materially adversely affect the Lien of this Agreement. In addition, Owner (or
any Permitted Lessee), at its own expense, may from time to time make such
alterations and modifications in and additions to the Airframe or any Engine as
Owner (or any Permitted Lessee) may deem desirable in the proper conduct of its
business, including removal of Parts which Owner (or any Permitted Lessee) deems
to be obsolete or no longer suitable or appropriate for use on the Airframe or
such Engine (such parts, "Obsolete Parts"); provided that no such alteration,
modification, removal or addition diminishes the condition or airworthiness of
the Airframe or such Engine, or materially diminishes the value, utility or, in
regard to the Airframe, remaining useful life of the Airframe or such Engine
below the condition, airworthiness, value, utility or, in regard to the
Airframe, remaining useful life thereof immediately prior to such alteration,
modification, removal or addition assuming the Airframe or such Engine was then
in the condition required to be maintained by the terms of this Agreement. In
addition, the value (but not the utility, condition or airworthiness) of the
Airframe or any Engine may be reduced by the value, if any, of Obsolete Parts
which shall have been removed. All Parts incorporated or installed in or
attached or added to the Airframe or an Engine as the result of such alteration,
modification or addition (except those parts which are excluded from the
definition of Parts or which may be removed by Owner pursuant to the next
sentence) (the "Additional Parts") shall, without further act, become subject to
the Lien of this Agreement. Notwithstanding the foregoing sentence, Owner (or
any Permitted Lessee), may, at its own expense, at any time, so long as no
Indenture Event of Default shall have occurred and be continuing, remove or
suffer to be removed any Additional Part, provided that such Additional Part (i)
is in addition to, and not in replacement of or substitution for, any Part
originally incorporated or installed in or attached to such Airframe or any
Engine at the time of delivery thereof hereunder or any Part in replacement of
or substitution for any such Part, (ii) is not required to be incorporated or
installed in or attached or added to the Airframe or any Engine pursuant to the
terms of Section 4.01 hereof or the first sentence of this paragraph (c) and
(iii) can be removed from the Airframe or such Engine without diminishing the
condition, airworthiness, value or utility of the Airframe or such Engine which
the Airframe or such Engine would have had at such time had such alteration,
modification or addition not occurred. Upon the removal thereof as provided
above, such Additional Part shall no longer be deemed to be subject to the Lien
of this Agreement or part of the Airframe or Engine from which it was removed.
Upon request of Owner, the Indenture Trustee shall execute and deliver to Owner
such documents as may be reasonably required to evidence the release of any
Additional Part from the Lien of this Indenture.
(d) Certain Matters Regarding Passenger Convenience Equipment. Owner
---------------------------------------------------------
may at any time and from time to time install on the Airframe Passenger
Convenience
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[Trust Indenture and Mortgage (2001-1 747-1)]
Equipment that is (i) owned by another Person and leased to Owner, (ii) sold to
Owner by another Person subject to a conditional sale contract or other retained
security interest, (iii) leased to Owner pursuant to a lease which is subject to
a security interest in favor of another Person or (iv) installed on the Aircraft
subject to a license granted to Owner by another Person, and in any such case
the Indenture Trustee will not acquire or claim, as against any such other
Person, any right, title or interest in any such Passenger Convenience Equipment
solely as a result of its installation on the Airframe.
Section 4.03 Insurance.
---------
(a) Public Liability and Property Damage Insurance. (1) Except as
----------------------------------------------
provided in clause (2) of this Section 4.03(a), and subject to self-insurance to
the extent permitted by Section 4.03(d) hereof, Owner will carry or cause to be
carried with respect to the Aircraft at its or any Permitted Lessee's expense
(i) comprehensive airline liability (including, without limitation, passenger,
contractual, bodily injury, and property damage liability) insurance (exclusive
of manufacturer's product liability insurance and including, without limitation,
aircraft war risk and hijacking insurance, if and to the extent the same is
maintained by Owner (or Permitted Lessee) with respect to other aircraft owned
or leased, and operated by Owner (or Permitted Lessee) on the same routes) and
(ii) cargo liability insurance, (A) in an amount not less than the greater of
(x) the amounts of comprehensive airline liability insurance from time to time
applicable to aircraft owned or leased and operated by Owner of the same type as
the Aircraft and (y) the Minimum Liability Insurance Amount, (B) of the type and
covering the same risks as from time to time are applicable to aircraft owned or
leased and operated by Owner of the same type as the Aircraft, and (C) which is
maintained in effect with insurers of recognized reputation and responsibility;
provided, however, that Owner need not maintain cargo liability insurance, or
may maintain such insurance in an amount less than the Minimum Liability
Insurance Amount, as long as the amount of cargo liability insurance, if any,
maintained with respect to the Aircraft is the same as the cargo liability
insurance, if any, maintained for other Boeing Model 747-422 aircraft owned or
leased, and operated by Owner.
(2) During any period that the Airframe or an Engine, as the
case may be, is on the ground and not in operation, Owner may carry or
cause to be carried as to such non-operating property, in lieu of the
insurance required by clause (1) above, and subject to the self-insurance
to the extent permitted by Section 4.03(d) hereof, insurance by insurers of
recognized reputation and responsibility otherwise conforming with the
provisions of clause (1) except that (A) the amounts of coverage shall not
be required to exceed the amounts of comprehensive airline liability
insurance from time to time applicable to property owned or leased by Owner
of the same type as such non-operating property and which is on the ground
and not in operation; and (B) the scope of the risks covered and the type
of insurance shall be the same as from time to time shall be applicable to
property owned or leased by Owner of the same type as such non-operating
property and which is on the ground and not in operation.
(b) Insurance Against Loss or Damage to the Aircraft. (1) Except as
------------------------------------------------
provided in clause (2) of this Section 4.03(b), and subject to the provisions of
Section 4.03(d) hereof permitting self-insurance, Owner shall maintain or cause
to be maintained in effect, at its or any Permitted Lessee's expense, with
insurers of recognized reputation and responsibility, all-risk
35
[Trust Indenture and Mortgage (2001-1 ▇▇▇-▇)]
▇▇▇▇▇▇▇▇ ▇▇▇▇ insurance covering the Aircraft and fire and extended coverage and
all-risk aircraft hull insurance covering Engines and Parts while temporarily
removed from the Aircraft and not replaced by similar components (including,
without limitation, aircraft war risk and governmental confiscation and
expropriation (other than by the government of registry of the Aircraft) and
hijacking insurance, if and to the extent the same is maintained by Owner (or
any Permitted Lessee) with respect to other aircraft owned or leased, and
operated by Owner (or such Permitted Lessee) on the same routes); provided, that
such insurance shall at all times while the Aircraft is subject to this
Agreement be for an amount (taking into account self-insurance to the extent
permitted by Section 4.03(d) hereof) not less than the Insured Amount for the
Aircraft; and provided further, that subject to compliance with Section 4.03(d)
hereof, such all-risk property damage insurance covering Engines and Parts while
temporarily removed from the Airframe or an airframe of (in the case of Parts)
an Engine need be obtained only to the extent available at reasonable cost (as
reasonably determined by Owner). In the case of a loss with respect to an engine
(other than an Engine) installed on the Airframe in circumstances which do not
constitute an Event of Loss with respect to the Airframe, the Indenture Trustee
shall promptly remit any payment made to it of any insurance proceeds in respect
of such loss to Owner or any other third party that is entitled to receive such
proceeds.
All losses will be adjusted by Owner with the insurers; provided,
however, that during a period when any Indenture Event of Default shall have
occurred and be continuing, Owner shall not agree to any such adjustment without
the consent of the Indenture Trustee. As between the Indenture Trustee and
Owner, it is agreed that all proceeds of insurance maintained in compliance with
the preceding paragraph and received as the result of the occurrence of an Event
of Loss will be applied as follows:
(x) if such payments are received with respect to the
Airframe (or the Airframe and the Engines installed thereon), (i)
unless such property is replaced pursuant to Section 5.01(a)(ii)
hereof, such payments shall be applied in reduction of Owner's
obligation to pay such amounts payable under Section 5.01(a)(i)
hereof, if not already paid by Owner, or, if already paid by Owner,
shall be applied to reimburse Owner for its payment of such amounts
payable under Section 5.01(a)(i) hereof, and the balance, if any, of
such payments remaining thereafter will be paid over to, or retained
by, Owner (or if directed by Owner, any Permitted Lessee); or (ii) if
such property is replaced pursuant to Section 5.01(a)(ii) hereof, such
payments shall be paid over to, or retained by, Owner (or if directed
by Owner, any Permitted Lessee), provided that Owner shall have fully
performed or, concurrently therewith, will fully perform the terms of
Section 5.01(a)(ii) hereof with respect to the Event of Loss for which
such payments are made; and
(y) if such payments are received with respect to an Engine
under the circumstances contemplated by Section 5.01(b) hereof, such
payments shall be paid over to, or retained by, Owner (or if directed
by Owner, any Permitted Lessee), provided that either (i) such
payments are less than the Loss Payee Amount or (ii) Owner shall have
fully performed or, concurrently therewith, will fully perform the
terms of Section 5.01(b) hereof with respect to the Event of Loss for
which such payments are made.
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[Trust Indenture and Mortgage (2001-1 747-1)]
(1) During any period that the Aircraft is on the ground and
not in operation, Owner may carry or cause to be carried, in lieu of the
insurance required by clause (1) above, and subject to the self-insurance
to the extent permitted by Section 4.03(d) hereof, insurance otherwise
conforming with the provisions of said clause (1) except that the scope of
the risks and the type of insurance shall be the same as from time to time
applicable to aircraft owned or leased by Owner of the same type as the
Aircraft similarly on the ground and not in operation, provided that,
subject to the self-insurance to the extent permitted by Section 4.03(d)
hereof, Owner shall maintain insurance against risk of loss or damage to
the Aircraft in an amount at least equal to the Insured Amount of the
Aircraft during such period that the Aircraft is on the ground and not in
operation.
(c) Reports, etc. Owner will furnish, or cause to be furnished, to
------------
the Indenture Trustee on or before the Closing Date, and each annual renewal of
the applicable insurances, a report, signed by AON Risk Services of Illinois,
Inc. or any other independent firm of insurance brokers reasonably acceptable to
the Indenture Trustee which brokers may be in the regular employ of Owner (the
"Insurance Brokers"), describing in reasonable detail the hull and liability
insurance (and property insurance for detached engines and parts) then carried
and maintained with respect to the Aircraft and stating the opinion of such firm
that such insurance complies with the terms hereof; provided that all
information contained in the foregoing report shall not be made available by the
Indenture Trustee to anyone except (A) to any Noteholder's or to prospective and
permitted transferees of Indenture Trustee's or any Noteholder's interest or its
respective counsel, independent certified public accountants, independent
insurance brokers or other agents, who agree to hold such information
confidential, (B) to the Indenture Trustee's counsel or independent certified
public accountants, independent insurance brokers or other agents who agree to
hold such information confidential, (C) as may be required by any statute, court
or administrative order or decree or governmental ruling or regulation, or (D)
as may be necessary for purposes of protecting the interest of any such Person
or for enforcement of this Agreement by the Indenture Trustee; provided,
further, that any and all disclosures permitted by clauses (C) or (D) above
shall be made only to the extent necessary to meet the specific requirements or
needs of the Persons to whom such disclosures are hereby permitted. Owner will
cause such Insurance Broker to agree to advise the Indenture Trustee in writing
of any act or omission on the part of Owner of which it has knowledge and which
might invalidate or render unenforceable, in whole or in part, any insurance on
the Aircraft and to advise the Indenture Trustee in writing at least 30 days (7
days in the case of war risk and allied perils coverage) prior to the
cancellation or material adverse change of any insurance maintained pursuant to
this Section 4.03; provided that if the notice period specified above is not
reasonably obtainable, the Insurance Broker shall provide for as long a period
of prior notice as shall then be reasonably obtainable. In the event that Owner
or any Permitted Lessee shall fail to maintain or cause to be maintained
insurance as herein provided, the Indenture Trustee or Pass Through Trustee may,
at its sole option, but shall be under no duty to, provide such insurance and,
in such event, Owner shall, upon demand, reimburse the Indenture Trustee or Pass
Through Trustee for the cost thereof to the Indenture Trustee or Pass Through
Trustee, as the case may be; provided, however, that no exercise by the
Indenture Trustee or Pass Through Trustee, as the case may be, of said option
shall affect the provisions of this Agreement, including the provisions that
failure by Owner to maintain the prescribed insurance shall constitute an Event
of Default.
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(d) Self-Insurance. Owner may self-insure the risks required to be
--------------
insured against pursuant to this Section 4.03 under a program applicable to all
aircraft (whether owned or leased) in Owner's fleet, but in no case shall the
aggregate amount of such self-insurance in regard to Sections 4.03(a) and
4.03(b) hereof exceed for any calendar year, with respect to all of the aircraft
(whether owned or leased) in Owner's fleet (including, without limitation, the
Aircraft) the lesser of (A) the highest replacement value of any single aircraft
in Owner's fleet or (B) 1-1/2% of the average aggregate insurable value (during
the preceding calendar year) of all aircraft (including, without limitation, the
Aircraft) on which Owner carries insurance. In addition to the foregoing right
to self-insure, Owner (and any Permitted Lessee) may self-insure, to the extent
of any applicable mandatory minimum per aircraft (or, if applicable, per annum
or other period) the hull or liability insurance deductible imposed by the
aircraft hull or liability insurer.
(e) Additional Insurance by Owner. Owner (and any Permitted Lessee)
-----------------------------
may at its own expense carry insurance with respect to its interest in the
Aircraft in amounts in excess of that required to be maintained by this Section
4.03; provided, however, that no insurance may be obtained or maintained that
--------
would limit or otherwise adversely affect the coverage of any insurance required
to be obtained or maintained by Owner pursuant to this Agreement.
(f) Indemnification by Government in Lieu of Insurance.
--------------------------------------------------
Notwithstanding any provisions of this Section 4.03 requiring insurance, the
Indenture Trustee agrees to accept, in lieu of insurance against any risk with
respect to the Aircraft, indemnification from, or insurance provided by, the
United States Government, against such risk in an amount which, when added to
the amount of insurance against such risk maintained by Owner (or any Permitted
Lessee) shall be at least equal to the amount of insurance against such risk
otherwise required by this Section 4.03 (taking into account self-insurance
permitted by Section 4.03(d) hereof).
(g) Terms of Insurance Policies. Any policies carried in accordance
---------------------------
with Sections 4.03(a) and 4.03(b) hereof covering the Aircraft, and any policies
taken out in substitution or replacement for any such policies, (A) shall name
the Additional Insureds as additional insureds, or, if appropriate (but subject
to clause (H) below), loss payees, as their respective interests may appear (but
without imposing on any such party liability to pay premiums with respect to
such insurance), (B) may provide for self-insurance to the extent permitted in
Section 4.03(d) hereof, (C) shall provide that if the insurers cancel such
insurance for any reason whatever, or if the same is allowed to lapse for non-
payment of premium or if any material change is made in the insurance which
adversely affects the interest of any Additional Insured, such lapse,
cancellation or change shall not be effective as to any Additional Insured for
thirty days (seven days in the case of war risk and allied perils coverage)
after receipt by such Additional Insured of written notice by such insurers of
such lapse, cancellation or change; provided, however, that if any notice period
specified above is not reasonably obtainable, such policies shall provide for as
long a period of prior notice as shall then be reasonably obtainable, (D) shall
provide that in respect of the respective interests of each Additional Insured
in such policies the insurance shall not be invalidated by any action or
inaction of Owner (or any Permitted Lessee) or any other Person and shall insure
the respective interests of the Additional Insureds, as they appear, regardless
of any breach or violation of any warranty, declaration or condition contained
in such policies by Owner (or any Permitted Lessee) or by any other Person, (E)
shall be primary without any right of contribution from any other insurance
which is carried
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by any Additional Insured, (F) shall expressly provide that all of the
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each insured, (G) shall waive
any right of the insurers to set-off or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of any
Additional Insured, and (H) shall provide that (i) in the event of a loss
involving the Aircraft, Airframe, or an Engine for which proceeds are in excess
of the Loss Payee Amount, the proceeds in respect of such loss up to the amount
of the Insured Amount for the Aircraft shall be payable to the Indenture
Trustee, it being understood and agreed that in the case of any payment to the
Indenture Trustee otherwise than in respect of an Event of Loss, the Indenture
Trustee shall, upon receipt of evidence reasonably satisfactory to it that the
damages giving rise to such payment shall have been repaired or that such
payment shall then be required to pay for repairs then being made, pay the
amount of such payment, and any interest or income earned thereon in accordance
with Section 9.04 hereof, to Owner or its order, and (ii) the entire amount of
any such loss for which proceeds are equal to or less than the Loss Payee Amount
or the amount of any proceeds of any such loss in excess of the Insured Amount
for the Aircraft shall be paid to Owner or its order unless a Section
8.01(a)(i), 8.01(e) or 8.01(f) Indenture Default or any Indenture Event of
Default shall have occurred and be continuing and the insurers have been
notified thereof by the Indenture Trustee in which case such proceeds shall be
payable to the Indenture Trustee.
(h) Application of Payments During Existence of Certain Indenture
-------------------------------------------------------------
Events of Default. Any amount referred to in this Section 4.03 which is payable
-----------------
to or retainable by Owner (or any Permitted Lessee) shall not be paid to or
retained by Owner (or any Permitted Lessee) if at the time of such payment or
retention an Indenture Default of the type described in Section 8.01(a)(i),
8.01(e) or 8.01(f) or any Indenture Event of Default shall have occurred and be
continuing, but shall be held by or paid over to Indenture Trustee as security
for the obligations of Owner under this Agreement and applied against Owner's
obligations hereunder as and when due. At such time as there shall not be
continuing any such Indenture Default or Indenture Event of Default, such amount
shall be paid to Owner to the extent not previously applied in accordance with
the preceding sentence.
Section 4.04 Inspection. At reasonable times not more often than once in
----------
any twelve (12) month period, and upon at least 20 days prior written notice to
Owner (provided however that if an Indenture Event of Default shall have
occurred and be continuing, any such inspection shall be at reasonable times
without any limit on the number of times and upon at least 5 days prior written
notice to Owner), the Indenture Trustee or its respective authorized
representatives may inspect the Aircraft and inspect and make copies of the
books and records of Owner and any Permitted Lessee required to be maintained by
the FAA or the regulatory agency or body of another jurisdiction in which the
Aircraft is then registered relating to the maintenance of the Aircraft (at the
Indenture Trustee's risk and expense) and shall keep any information or copies
obtained thereby confidential and shall not disclose the same to any Person,
except (A) to the Pass Through Trustees and to prospective and permitted
transferees of any Pass Through Trustee's or the Indenture Trustee's interest
(and such prospective and permitted transferee's counsel, independent insurance
advisors or other agents) who agree to hold such information confidential, (B)
to any Pass Through Trustee's or the Indenture Trustee's counsel, independent
insurance advisors or other agents who agree to hold such information
confidential, (C) as may be required by any statute, court or administrative
order or decree or
39
[Trust Indenture and Mortgage (2001-1 747-1)]
governmental ruling or regulation, and (D) as may be necessary for purposes of
protecting the interest of any such Person or for enforcement of this Agreement
by the Indenture Trustee; provided, however, that any and all disclosures
permitted by clauses (C) and (D) above shall be made only to the extent
necessary to meet the specific requirements or needs of Persons for whom such
disclosures are hereby permitted. Any such inspection of the Aircraft shall be
subject to Owner's safety and security rules applicable at the location of the
Aircraft, shall be a visual, walk-around inspection of the interior and exterior
of the Aircraft and shall not include opening any panels, bays or the like
without the express consent of Owner (except in connection with a heavy
maintenance visit when a panel, bay or the like is scheduled or required to be
opened), which consent Owner may in its sole discretion withhold; provided that
no exercise of such inspection right shall interfere with the normal operation
or maintenance of the Aircraft by, or the business of, Owner (or any Permitted
Lessee). The Indenture Trustee shall have no duty to make any such inspection
and shall incur no liability or obligation by reason of not making any such
inspection.
ARTICLE 5
EVENT OF LOSS
Section 5.01 (a) Event of Loss with Respect to the Aircraft. Upon the
------------------------------------------
occurrence of an Event of Loss with respect to the Airframe or the Airframe and
the Engines and/or engines then installed thereon, Owner shall (1) forthwith
(and in any event, within fifteen days after such occurrence) give the Indenture
Trustee written notice of such Event of Loss and (2) within 90 days after such
occurrence, give the Indenture Trustee written notice of its election to perform
one of the following options (it being understood that the failure to give such
notice shall be deemed to be an election of the option set forth in clause (i)
below):
(i) Not later than the earlier of (x) the first Business
Day next succeeding the 120th day following the occurrence of such Event of
Loss or (y) the first Business Day that is at least three Business Days
after receipt by the loss payee of the insurance proceeds with respect to
such Event of Loss (but not earlier than the first Business Day next
succeeding the 65th day following the occurrence of such Event of Loss)
(the applicable day being the "Loss Payment Date"), Owner shall, to the
extent not paid to the Indenture Trustee as insurance proceeds, pay or
cause to be paid to the Indenture Trustee an amount sufficient to satisfy
the Owner's obligations under Section 6.01(a)(i) and to redeem the Notes as
provided in Section 6.01(a)(ii); or
(ii) Not later than the first Business Day next succeeding
the 120th day following the occurrence of such Event of Loss, Lessee shall
substitute an aircraft or an airframe or an airframe and one or more
engines, as the case may be, in accordance with the terms hereof, provided
that if (A) an Indenture Event of Default (other than as a direct result of
such Event of Loss) shall have occurred and be continuing as of such
election date or (B) Lessee shall have elected to make a substitution under
this clause (ii) and shall fail for any reason to make such substitution in
accordance with the terms hereof, then Lessee shall make the payments
required by clause (i) above on such date.
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At such time as Lessor shall have received the sum of the amounts
specified in clause (i) above, the Indenture Trustee shall release from the Lien
of this Agreement the Aircraft by executing and delivering to the Owner all
documents and instruments as the Owner may reasonably request to evidence such
release.
The Owner's right to substitute a Replacement Airframe and Replacement
Engines, if any, as provided in Section 5.01(a)(ii) shall be subject to the
fulfillment, at the Owner's sole cost and expense, to conditions precedent:
(1) on the date when the Replacement Airframe and Replacement
Engines, if any, is subjected to the Lien of this Agreement (such date
being referred to in this Section 5.01 as the "Replacement Closing Date"),
the following documents shall have been duly authorized, executed and
delivered by the respective party or parties thereto and shall be in full
force and effect, and an executed counterpart of each thereof (or, in the
case of the FAA ▇▇▇▇ of Sale and full warranty ▇▇▇▇ of sale referred to
below, a photocopy thereof) shall have been delivered to the Indenture
Trustee:
(A) an Indenture Supplement covering the Replacement
Airframe and Replacement Engines, if any, which shall have been duly
filed for recordation pursuant to the Federal Aviation Act or such
other applicable law of such jurisdiction other than the United States
in which the Replacement Airframe and Replacement Engines, if any, are
to be registered in accordance with Section 4.01(a)(3), as the case
may be;
(B) an FAA ▇▇▇▇ of Sale (or a comparable document, if any,
of another aviation authority, if applicable) covering the Replacement
Airframe and Replacement Engines, if any, executed by the former owner
thereof in favor of the Owner;
(C) a full warranty (as to title) ▇▇▇▇ of sale, covering
the Replacement Airframe and Replacement Engines, if any, executed by
the former owner thereof in favor of the Owner (or, at the Owner's
option, other evidence of the Owner's ownership of such Replacement
Airframe and Replacement Engines, if any, reasonably satisfactory to
the Indenture Trustee); and
(D) Uniform Commercial Code financing statements (or any
similar statements or other documents required to be filed or
delivered pursuant to the laws of the jurisdiction in which the
Replacement Airframe and Replacement Engines, if any, may be
registered in accordance with Section 4.01(a)(3)) as are deemed
necessary or desirable by counsel for the Indenture Trustee to protect
the security interests of the Indenture Trustee in the Replacement
Airframe and Replacement Engines, if any;
(2) the Replacement Airframe shall be of the same or an improved
make and model as the Airframe replaced and each Replacement Engine shall
be an Acceptable Alternate Engine, and the Replacement Airframe and
Replacement Engines, if any, have a value and utility (with respect to
Engines, without regard to hours or
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[Trust Indenture and Mortgage (2001-1 747-1)]
cycles) at least equal to, and be in as good operating condition and repair
as, the Airframe and any Engines replaced (assuming that such Airframe and
Engines were in the condition required by the terms hereby) as evidenced by
a certificate of an aircraft engineer (who may be an employee of the Owner)
or an appraisal from an independent aircraft appraiser;
(3) the Indenture Trustee (acting directly or by authorization
to its special counsel) shall have received satisfactory evidence as to the
compliance with Section 4.03 with respect to the Replacement Airframe and
Replacement Engines, if any;
(4) the Indenture Trustee at the expense of the Owner, shall
have received (acting directly or by authorization to its special counsel)
(A) an opinion of counsel to Owner (which may be Owner's General Counsel),
addressed to the Indenture Trustee, to the effect that the Replacement
Airframe and Replacement Engine, if any, has or have duly been made subject
to the Lien of this Agreement, that all required action has been taken in
order to maintain, and such action shall maintain, the effectiveness and
priority (to the extent the same existed immediately prior to the
occurrence of such Event of Loss, assuming the Owner was in compliance with
all relevant terms hereof) of the security interests in the Airframe, the
Engines and title thereto created by this Agreement and that the
protections afforded to the Indenture Trustee by Section 1110 of the
Bankruptcy Code will not be less than such protections immediately prior to
the occurrence of such Event of Loss (assuming the Owner was in compliance
with all relevant terms hereof) and (B) an opinion of qualified FAA counsel
(or counsel in any jurisdiction outside the United States where the
Aircraft may be registered in accordance with Section 4.01(a)(3)),
addressed to the Indenture Trustee, as to, in the case of FAA counsel, the
due recordation of the Indenture Supplement and all other documents or
instruments the recordation of which is necessary to perfect and protect
the rights of the Indenture Trustee in the Replacement Airframe and
Replacement Engines, if any, or, in the case of counsel in another
jurisdiction, the taking of all action necessary in such jurisdiction for
such purposes; and
(5) the Indenture Trustee (acting directly or by authorization
to special counsel) shall have received an officer's certificate of Owner
stating that, in the opinion of the signer, all conditions precedent
provided for in this Section 5.01(a) relating to such replacement have been
complied with.
Upon satisfaction of all conditions to such substitution, (x) the
Indenture Trustee shall execute and deliver to the Owner such documents and
instruments, prepared at the Owner's expense, as the Owner shall reasonably
request to evidence the release of such replaced Airframe and Engines, if any,
and rights related thereto from the Lien of this Agreement, (y) the Indenture
Trustee shall assign to the Owner all claims it may have against any other
Person relating to any Event of Loss giving rise to such substitution and (z)
the Owner shall receive all insurance proceeds and proceeds in respect of any
Event of Loss giving rise to such replacement. For all purposes hereof, the
property so substituted shall after such transfer be deemed to be subjected to
the Lien of this Agreement and shall be deemed an "Aircraft," "Airframe" and
"Engine," as the case may be, as defined herein.
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(b) Event of Loss with Respect to an Engine. Upon the occurrence of
---------------------------------------
an Event of Loss with respect to an Engine under circumstances in which there
has not occurred an Event of Loss with respect to the Airframe, Owner shall
forthwith (and in any event, within fifteen days after such occurrence) give the
Indenture Trustee written notice thereof and shall, within 120 days after the
occurrence of such Event of Loss, substitute an Acceptable Alternate Engine free
and clear of all Liens (other than Permitted Liens) in as good an operating
condition as, the Engine subject to such Event of Loss and cause such Acceptable
Alternate Engine to be subjected to the Lien of this Agreement. The Owner's
right to make a replacement hereunder shall be subject to the fulfillment (which
may be simultaneous with such replacement) of the following conditions precedent
at the Owner's sole cost and expense and the Indenture Trustee agrees to
cooperate with the Owner to the extent necessary to enable it to timely satisfy
such conditions:
(i) the following documents shall be duly authorized, executed
and delivered by the respective party or parties thereto, and an executed
counterpart of each shall be delivered to the Indenture Trustee:
(A) an Indenture Supplement covering the Replacement
Engine, which shall have been duly filed for recordation pursuant to
the Federal Aviation Act or such other applicable law of the
jurisdiction other than the United States in which the Aircraft of
which such Engine is a part is registered in accordance with Section
4.01(a)(3), as the case may be;
(B) a full warranty ▇▇▇▇ of sale (as to title) covering
the Replacement Engine, executed by the former owner thereof in favor
of the Owner (or, at the Owner's option, other evidence of the Owner's
ownership of such Replacement Engine, reasonably satisfactory to the
Indenture Trustee); and
(C) Uniform Commercial Code financing statements covering
the security interests created by this Agreement (or any similar
statements or other documents required to be filed or delivered
pursuant to the laws of the jurisdiction in which such Aircraft may be
registered) as are deemed necessary or desirable by counsel for the
Indenture Trustee to protect the security interests of the Indenture
Trustee in the Replacement Engine;
(ii) the Owner shall cause to be delivered to the Indenture
Trustee, if requested by it, an opinion of counsel (which may be Owner's
General Counsel) to the effect that the Lien of this Agreement continues to
be in full force and effect with respect to the Replacement Engine; and
(iii) the Owner shall deliver to the Indenture Trustee an
officer's certificate stating that in the opinion of such signer, all
conditions precedent provided for in this Section 5.01(b) relating to such
replacement have been complied with.
Upon satisfaction of all conditions to such substitution, (x) the Indenture
Trustee shall execute and deliver to the Owner such documents and instruments,
prepared at the Owner's expense, as the Owner shall reasonably request to
evidence the release of such replaced Engine
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[Trust Indenture and Mortgage (2001-1 747-1)]
from the Lien of this Agreement, (y) the Indenture Trustee shall assign to the
Owner all claims it may have against any other Person relating to any Event of
Loss giving rise to such substitution and (z) the Owner shall receive all
insurance proceeds and proceeds in respect of any Event of Loss giving rise to
such replacement. For all purposes hereof, each such replacement engine shall,
after such conveyance, be deemed to be subjected to the Lien of this Agreement
and shall be deemed an "Engine."
(c) Application of Payments from Governmental Authorities for
---------------------------------------------------------
Requisition of Title, etc. Any payments (other than insurance proceeds the
--------------------------
application of which is provided for in Section 4.03) received at any time by
the Indenture Trustee or by Owner from any governmental authority or other
Person with respect to an Event of Loss, other than a requisition for use by the
United States Government or other government of registry of the Aircraft or any
instrumentality or agency of any thereof not constituting an Event of Loss, will
be applied as follows:
(i) if payments are received with respect to the Airframe (or
the Airframe and any Engine or engines then installed thereon), (A) unless
the same are replaced pursuant to Section 5.01(a), such payments as shall
not exceed the amounts payable under Section 5.01(a) hereof required to be
paid by Owner pursuant to Section 5.01(a), shall be applied in reduction of
Owner's obligation to pay the amounts payable under Section 5.01(a) hereof,
if not already paid by Owner, or, if already paid by Owner, shall be
applied to reimburse Owner for its payment of such amounts, and following
the foregoing application, the balance, if any, of such payments shall be
paid over to, or retained by, Owner; or (B) if such property is replaced
pursuant to Section 5.01(a), such payments shall be paid over to or
retained by, Owner; provided, that Owner shall have fully performed or,
concurrently therewith, will fully perform the terms of the last paragraph
of Section 5.01(a) with respect to the Event of Loss for which such
payments are made; and
(ii) if such payments are received with respect to an Engine
under circumstances contemplated by Section 5.01(b) hereof, such payments
shall be paid over to, or retained by, Owner, provided that either (x) such
payments are less than the Loss Payee Amount or (y) Owner shall have fully
performed, or concurrently therewith will perform, the terms of Section
5.01(b) with respect to the Event of Loss for which such payments are made.
(d) Requisition for Use of the Aircraft by the United States
--------------------------------------------------------
Government or Government of Registry of the Aircraft. In the event of the
----------------------------------------------------
requisition for use of the Airframe and the Engines or engines installed on the
Airframe by the United States Government or any other government of registry of
the Aircraft or any instrumentality or agency of any thereof, Owner shall
promptly notify the Indenture Trustee of such requisition, and all of Owner's
obligations under this Agreement with respect to the Aircraft shall continue to
the same extent as if such requisition had not occurred; provided, that during
any period the Aircraft is not in the possession or control of Owner, Owner's
obligations hereunder, other than payment and insurance obligations, shall
continue only to the extent it is feasible for Owner to comply with such
obligations. All payments received by the Indenture Trustee or Owner from such
44
[Trust Indenture and Mortgage (2001-1 747-1)]
government for the use of such Airframe and Engines or engines shall be paid
over to, or retained by, Owner (or, if directed by Owner, any Permitted Lessee).
(e) Requisition for Use of an Engine by the United States
-----------------------------------------------------
Government or the Government of Registry of the Aircraft. In the event of the
--------------------------------------------------------
requisition for use of an Engine by the United States Government or any other
government of registry of the Aircraft or any agency or instrumentality of any
thereof (other than in the circumstances contemplated by subsection (d)), Owner
shall replace (or cause any Permitted Lessee to replace) such Engine hereunder
and Indenture Trustee and Owner (or Permitted Lessee as the case may be) shall
comply with the terms of Section 5.01(b) hereof to the same extent as if an
Event of Loss had occurred with respect to such Engine. Upon compliance with
Section 5.01(b) hereof, any payments received by Indenture Trustee or Owner from
such government with respect to such requisition shall be paid over to, or
retained by Owner.
(f) Application of Payments During Existence of Certain Indenture
-------------------------------------------------------------
Defaults and Events of Default. Any amount referred to in this Section 5.01
------------------------------
which is payable to or retainable by Owner (or any Permitted Lessee) shall not
be paid to or retained by Owner (or any Permitted Lessee) if at the time of such
payment or retention an Indenture Default of the type described in Section
8.01(a)(i), 8.01(e) or 8.01(f) or any Indenture Event of Default shall have
occurred and be continuing, but shall be held by or paid over to Indenture
Trustee as security for the obligations of Owner (or such Permitted Lessee)
under this Agreement and applied against Owner's obligations hereunder as and
when due. At such time as there shall not be continuing any such Indenture Event
of Default, such amount shall be paid to Owner to the extent not previously
applied in accordance with the preceding sentence.
Section 5.02 Liens. The Owner will not directly or indirectly create,
-----
incur, assume or suffer to exist any Lien on or with respect to the Airframe on
any Engine or any interest therein, except Permitted Liens. The Owner shall
promptly, at its own expense, take such action as may be necessary to duly
discharge (by bonding or otherwise) any Lien other than a Permitted Lien arising
at any time.
ARTICLE 6
REDEMPTION OF EQUIPMENT NOTES
Section 6.01 Redemption of Equipment Notes upon Certain Events.
-------------------------------------------------
(a) Event of Loss. If there shall be an Event of Loss to the
-------------
Aircraft or Airframe and the Aircraft or Airframe is not replaced pursuant to
Section 5.01(a)(ii), then each outstanding Equipment Note shall be redeemed in
whole at a price (the "6.01(a) Redemption Price") equal to 100% of the
outstanding principal amount of such Equipment Note, together with accrued and
unpaid interest thereon to but excluding the applicable Redemption Date. No
Make-Whole Amount shall be payable in connection with a redemption under this
Section 6.01.
(b) Voluntary Redemptions of Equipment Notes. Each of the Series
----------------------------------------
A-1, Series A-2, Series A-3, Series B, Series C and Series D Equipment Notes may
be redeemed by the Owner on any date, upon notice as specified in Section 6.02,
and in such event, each
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[Trust Indenture and Mortgage (2001-1 747-1)]
outstanding Equipment Note of such Series shall be redeemed in whole at a price
(the "6.01(b) Redemption Price", and together with the 6.01(a) Redemption Price,
the "Redemption Price") equal to 100% of the outstanding principal amount of
such Equipment Note, together with accrued and unpaid interest thereon to but
excluding the applicable Redemption Date plus Make-Whole Amount, if any, payable
with respect thereto; provided, however, that the Equipment Notes of any Series
may not be redeemed unless the Rating Agencies shall have provided Ratings
Confirmation; provided further that such Ratings Confirmation need not be
obtained in connection with the redemption of all Series of Equipment Notes.
Section 6.02 Notice of Redemption to Noteholders. Irrevocable notice of
-----------------------------------
redemption shall be given by first-class mail, postage prepaid, mailed not less
than 15 nor more than 60 days prior to the Redemption Date, to each Noteholder
of Equipment Notes to be redeemed or purchased, at such Noteholder's address
appearing in the Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the applicable basis for determining the applicable
Redemption Price;
(3) that on the Redemption Date, the applicable Redemption
Price will become due and payable upon each such Equipment Note, and that
interest on Equipment Notes shall cease to accrue on and after such
Redemption Date; and
(4) the place or places where such Equipment Notes are to be
surrendered for payment of the applicable Redemption Price.
Notice of redemption of Equipment Notes to be redeemed shall be given by the
Indenture Trustee.
Section 6.03 Deposit of Redemption Price. On or before the Redemption Date,
---------------------------
the Owner shall to the extent an amount equal to the Redemption Price for the
Equipment Notes to be redeemed on the Redemption Date shall not then be held in
the Indenture Estate, deposit or cause to be deposited with the Indenture
Trustee or the Paying Agent by 11:00 a.m., Chicago time, in immediately
available funds the applicable Redemption Price of the Equipment Notes to be
redeemed on the Redemption Date, together with accrued interest thereon and, in
the case of a redemption pursuant to Section 6.01(b), Make-Whole Amount, if any.
Section 6.04 Equipment Notes Payable on Redemption Date. Notice of
------------------------------------------
redemption or purchase having been given as aforesaid, the Equipment Notes
shall, on the applicable Redemption Date, become due and payable at the
Corporate Trust Department of the Indenture Trustee or at any office or agency
maintained for such purposes pursuant to Section 2.03, and from and after such
Redemption Date (unless there shall be a default in the deposit of the
applicable Redemption Price, accrued interest or Make-Whole Amount, if any,
pursuant to Section 6.03) any Equipment Notes then outstanding shall cease to
bear interest or be deemed to be outstanding for any purpose. Upon surrender of
any such Equipment Note for redemption in accordance with said notice such
Equipment Note shall be paid at the Redemption Price.
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If any Equipment Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal amount thereof shall, until
paid, continue to bear interest from the applicable Redemption Date at the
interest rate applicable to such Equipment Note.
ARTICLE 7
MATTERS CONCERNING UNCLAIMED MONIES
Section 7.01 Repayment of Monies for Equipment Note Payments Held by the
-----------------------------------------------------------
Indenture Trustee. Any money held by the Indenture Trustee or any Paying Agent
-----------------
in trust for any payment in respect of any Secured Obligation, including without
limitation any money deposited pursuant to Section 6.03 or Article 10 and
remaining unclaimed for two years after the due date for such payment, shall,
subject to applicable escheatment laws, be paid to the Owner. The Noteholders
of any outstanding Equipment Notes shall thereafter, as unsecured general
creditors, look only to the Owner for payment thereof, and all liability of the
Indenture Trustee or any such Paying Agent with respect to such trust money
shall thereupon cease; provided that the Indenture Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Owner cause to be mailed to each such Noteholder notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of mailing, any unclaimed balance of such money then
remaining will be repaid to the Owner as provided herein.
ARTICLE 8
DEFAULTS AND REMEDIES
Section 8.01 Indenture Events of Default. The following events shall
---------------------------
constitute "Indenture Events of Default" under this Agreement (whether any such
event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body):
(a) Owner shall fail to pay (i) any amount of interest on, Make-
Whole Amount, if any, or principal of any Equipment Note when due and payable
(whether upon redemption or purchase, final maturity, acceleration or otherwise)
and such failure shall continue unremedied for 10 Business Days after such
amount shall have become due and payable or (ii) any other amount payable by
Owner hereunder or under the Participation Agreement when due and payable and
such failure shall continue unremedied for more than 20 Business Days after
receipt by Owner of written notice from the Indenture Trustee; or
(b) Owner shall fail to carry and maintain on or with respect to
the Aircraft (or cause to be carried and maintained) insurance required to be
maintained in accordance with the provisions of Section 4.03 hereof; provided
that such lapse or cancellation shall not constitute an Indenture Event of
Default until the earlier of (i) 30 days after receipt by the Indenture Trustee
of written notice of such lapse or cancellation or (ii) the date that such lapse
or cancellation is effective as to the Indenture Trustee; or
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(c) Owner shall have failed to perform or observe (or caused to be
performed and observed) in any material respect any other covenant or agreement
to be performed or observed by it under any Operative Document, and such failure
shall continue unremedied for a period of 60 days after receipt by Owner of
written notice thereof from Indenture Trustee; provided, however, that if Owner
shall have undertaken to cure any such failure and, notwithstanding the
reasonable diligence of Owner in attempting to cure such failure, such failure
is not cured within said 60-day period there shall exist no Indenture Event of
Default under this Section 8.01 so long as Owner is proceeding with due
diligence to cure such failure and such failure is in fact cured within 360
days; or
(d) any representation or warranty made by Owner herein or in any
Operative Document shall prove to have been incorrect in any material respect at
the time made and shall remain material at the time in question; provided,
however, such incorrectness shall constitute a default hereunder only if such
incorrectness shall continue uncured for a period of 60 days after the receipt
by Owner of a written notice from (x) Indenture Trustee or (y) subject to
Section 2.6 of the Intercreditor Agreement, holders of 25% in outstanding
principal amount of Equipment Notes in each case advising Owner of the existence
of such incorrectness; or
(e) the commencement of an involuntary case or other proceeding in
respect of Owner in an involuntary case under the federal bankruptcy laws, as
now or hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law in the United States or seeking the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of Owner or for all or substantially all of
its property, or seeking the winding-up or liquidation of its affairs and the
continuation of any such case or other proceeding undismissed or unstayed for a
period of ninety (90) consecutive days or an order for relief under Chapter 11
of the Bankruptcy Code with respect to Owner as debtor or any other order,
judgment or decree shall be entered in any proceeding by any court of competent
jurisdiction appointing, without the consent of Owner, a receiver, trustee or
liquidator of Owner, or for all or substantially all of its property, or
sequestering of all or substantially all of the property of Owner and any such
order, judgment or decree or appointment or sequestration shall be final or
shall remain in force undismissed, unstayed or unvacated for a period of ninety
(90) days after the date of entry thereof; or
(f) the commencement by Owner of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar law in the
United States, or the consent by Owner to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
(or other similar official) of Owner or for all or substantially all of its
property, or the making by Owner of any assignment for the benefit of creditors
or Owner shall take any corporate action to authorize any of the foregoing.
provided, however, that, notwithstanding anything to the contrary contained in
this Section 8.01, any failure of Owner to perform or observe any covenant,
condition, agreement or any error in a representation or warranty shall not
constitute an Indenture Event of Default if such failure or error is caused
solely by reason of any event that constitutes an Event of Loss so long as Owner
is continuing to comply with all of the terms of Section 5.01 hereof.
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Section 8.02 Acceleration; Rescission and Annulment. If an Indenture Event
--------------------------------------
of Default under Section 8.01(e) or 8.01(f) shall have occurred and is
continuing, then the principal of the all Equipment Notes, together with accrued
but unpaid interest thereon, and all other amounts due thereunder and hereunder
shall immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived, and if any other Indenture Event of
Default occurs and is continuing, the Indenture Trustee may (and shall, subject
to Section 2.6 of the Intercreditor Agreement, upon receipt of a written demand
therefor from the holders of 25% in outstanding principal amount of the
Equipment Notes), by notice to the Owner declare the principal of all the
Equipment Notes to be immediately due and payable. Upon such declaration, the
principal of all Equipment Notes together with accrued interest thereon from the
date in respect of which interest was last paid hereunder to the date payment of
such principal has been made or duly provided for, without Make-Whole Amount. At
any time after such declaration and prior to the sale or disposition of the
Indenture Estate, the Indenture Trustee may (and shall upon receipt of a written
demand therefor from a Majority in Interest of Noteholders) by notice to the
Owner, rescind any such declaration and thereby annul its consequences if (i) an
amount sufficient to pay all principal on any Equipment Notes which have become
due otherwise than by such declaration and any interest thereon and interest due
or past due, if any, and all sums due and payable to the Indenture Trustee have
been deposited with the Indenture Trustee, (ii) the rescission would not
conflict with any judgment or decree and (iii) all existing Indenture Defaults
and Indenture Events of Default under this Agreement have been cured or waived
except nonpayment of principal of, or interest on, the Equipment Notes that has
become due solely because of such acceleration. No such rescission shall affect
any subsequent default or impair any right consequent thereon.
Section 8.03 Other Remedies Available to Indenture Trustee. (a) After an
---------------------------------------------
Indenture Event of Default shall have occurred and so long as such Indenture
Event of Default shall be continuing, then and in every such case the Indenture
Trustee, as holder of a security interest in the Aircraft or Engines may, and
when required pursuant to the provisions of Article 9 shall, exercise, any or
all of the rights and powers and pursue any and all of the remedies accorded to
a secured party under applicable law, may recover judgment in its own name as
Indenture Trustee against the Indenture Estate and may take possession of all or
any part of the Indenture Estate and may exclude the Owner and all Persons
claiming under any of them wholly or partly therefrom; provided, however, that
during any period when possession of the Aircraft has been transferred to and
the Aircraft is subject to the Civil Reserve Air Fleet Program in accordance
with the provisions of Section 4.01(b) hereof and in possession of the United
States Government or an agency or instrumentality of the United States, the
Indenture Trustee shall not, on account of any Indenture Event of Default, be
entitled to do any of the following set forth in this Section 8.03 in such
manner as to limit the Owner's control under this Agreement (or any Permitted
Lessee's control under any Permitted Lease) of any Airframe or any Engines
installed thereon, unless at least sixty (60) days' (or such lesser period as
may then be applicable under the Air Mobility Command program of the United
States Government) written notice of default hereunder shall have been given by
the Indenture Trustee by registered or certified mail to the Owner (and any
Permitted Lessee) with a copy addressed to the Contracting Office Representative
for the Air Mobility Command of the United States Air Force under any contract
with the Owner (or any Permitted Lessee) relating to the Aircraft; provided,
further, that the Indenture Trustee shall give the Owner thirty (30) days' prior
written notice of its intention to sell the Aircraft.
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(b) After an Indenture Event of Default shall have occurred and so
long as such Indenture Event of Default shall be continuing, the Indenture
Trustee may, if at the time such action may be lawful and always subject to
compliance with any mandatory legal requirements, either with or without taking
possession, and either before or after taking possession and without instituting
any legal proceedings whatsoever, and having first given notice of such sale by
registered mail to the Owner, at least 30 days prior to the date of such sale,
and any other notice which may be required by law, sell and dispose of the
Indenture Estate, or any part thereof, or interest therein, at public auction or
private sale, in one lot as an entirety or in separate lots, and either for cash
or on credit and on such terms as the Indenture Trustee may determine, and at
any place (whether or not it be the location of the Indenture Estate or any part
thereof) and time designated in the notice above referred to; provided, however,
-------- -------
that, notwithstanding any provision herein to the contrary, the Indenture
Trustee may not provide the notice provided for above of its intention to sell
any of the Indenture Estate or exercise remedies against the Indenture Estate
seeking to deprive the Owner of its rights therein unless a declaration of
acceleration has been made pursuant to Section 8.02 or the Equipment Notes have
otherwise theretofore become due and payable through redemption or otherwise.
Any such sale or sales may be adjourned from time to time by announcement at the
time and place appointed for such sale or sales, or for any such adjourned sale
or sales, without further notice, and the Indenture Trustee and the Noteholder
or Noteholders of any Equipment Notes, or any interest therein, may bid and
become the purchaser at any such sale and each Noteholder shall be entitled at
any sale to credit against any purchase price bid at such sale by such
Noteholder all or any part of the unpaid Secured Obligations owing to such
Noteholder secured by the Lien of this Agreement (in the case of such
Noteholder, only to the extent that such unpaid Secured Obligation would have
been paid to such Noteholder pursuant to Article III hereof if such purchase
price were paid in cash and this sentence, other than this parenthetical, was
not given effect). The Indenture Trustee may exercise such right without
possession or production of the Equipment Notes or proof of ownership thereof,
and as representative of the Noteholders may exercise such right without notice
to the Noteholders or including the Noteholders as parties to any suit or
proceeding relating to foreclosure of any property in the Indenture Estate.
(c) If an Indenture Event of Default has occurred and is
continuing, the Indenture Trustee shall also be entitled to pursue all or any
part of the Indenture Estate wherever it may be found and may enter any of the
premises of the Owner or any other Person wherever the Indenture Estate may be
or be supposed to be and search for the Indenture Estate and take possession of
any item of the Indenture Estate pursuant to this Section 8.03(c). The Indenture
Trustee may, from time to time, at the expense of the Indenture Estate, make all
such expenditures for maintenance, insurance, repairs, replacements,
alterations, additions and improvements to and of the Indenture Estate, as it
may deem proper. In each such case, the Indenture Trustee shall have the right
to maintain, use, insure, operate, store, lease, control or manage the Indenture
Estate, and to carry on business and exercise all rights and powers of the Owner
relating to the Indenture Estate as the Indenture Trustee shall deem
appropriate, including the right to enter into any and all such agreements with
respect to the maintenance, use, insurance, operation, storage, leasing, control
or management of the Indenture Estate or any part thereof. The Indenture Trustee
shall be entitled to collect and receive directly all tolls, rents, issues,
profits, products, revenues or other income pursuant to this Section 8.03(c). In
accordance with the terms of this Section 8.03(c), such tolls, rents, issues,
profits, products, revenues and other income shall be applied to pay the
expenses of using, operating, storing,
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leasing, controlling or managing the Indenture Estate, and of all maintenance,
insurance, repairs, replacements, alterations, additions and improvements, and
to make all payments which the Indenture Trustee may be required or may elect to
make, if any, for taxes, assessments, insurance or other proper charges upon the
Indenture Estate or any part thereof (including the employment of engineers and
accountants to examine, inspect and make reports upon the properties and books
and records of the Owner), and all other payments which the Indenture Trustee
may be required or authorized to make under any provision of this Agreement,
including this Section 8.03(c), as well as just and reasonable compensation for
the services of the Indenture Trustee, and of all persons properly engaged and
employed by the Indenture Trustee.
If an Indenture Event of Default occurs and is continuing and the
Indenture Trustee shall have obtained possession of or title to the Aircraft,
the Indenture Trustee shall not be obligated to use or operate the Aircraft or
cause the Aircraft to be used or operated directly or indirectly by itself or
through agents or other representatives or to lease, license or otherwise permit
or provide for the use or operation of the Aircraft by any other Person unless
(i) the Indenture Trustee shall have been able to obtain insurance in kinds, at
rates and in amounts satisfactory to it in its discretion to protect the
Indenture Estate and the Indenture Trustee, as trustee and individually, against
any and all liability for loss or damage to the Aircraft and for public
liability and property damage resulting from use or operation of the Aircraft
and (ii) funds are available in the Indenture Estate to pay for all such
insurance or, in lieu of such insurance, the Indenture Trustee is furnished with
indemnification from the Noteholders or any other Person upon terms and in
amounts satisfactory to the Indenture Trustee in its discretion to protect the
Indenture Estate and the Indenture Trustee, as trustee and individually, against
any and all such liabilities.
(d) Subject to Sections 8.03(b), the Indenture Trustee may proceed to
protect and enforce this Agreement and the Equipment Notes by suit or suits or
proceedings in equity, at law or in bankruptcy, and whether for the specific
performance of any covenant or agreement herein contained or in execution or aid
of any power herein granted; or for foreclosure hereunder, or for the
appointment of a receiver or receivers for the Indenture Estate or any part
thereof, or for the recovery of judgment for the indebtedness secured by the
Lien created under this Agreement or for the enforcement of any other proper,
legal or equitable remedy available under applicable law.
(e) Each and every right, power and remedy herein given to the
Indenture Trustee specifically or otherwise in this Agreement shall be
cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time and as often in
such order as may be deemed expedient by the Indenture Trustee, and the exercise
or the beginning of the exercise of any power or remedy shall not be construed
to be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by the Indenture Trustee in the
exercise of any right, remedy or power or in pursuing any remedy shall impair
any such right, power or remedy or be construed to be a waiver of any default on
the part of the Owner or to be an acquiescence therein.
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(f) Notwithstanding anything contained herein to the contrary, so
long as the Subordination Agent (acting on behalf of the Pass Through Trustees)
or any Pass Through Trustee is a Noteholder, the Indenture Trustee is not
authorized or empowered to acquire title to the Indenture Estate, or to take any
action with respect to any of the Indenture Estate so acquired by it, if such
acquisition or action would cause any Pass Through Trust to fail to qualify as a
"grantor trust" for federal income tax purposes.
Section 8.04 Waiver of Existing Defaults. A Majority in Interest of
---------------------------
Noteholders by notice to the Indenture Trustee may waive on behalf of the
Noteholders an existing Indenture Default or Indenture Event of Default and its
consequences except (i) an Indenture Default or Indenture Event of Default in
the payment of the principal of or interest on any Equipment Note or (ii) in
respect of a covenant or provision hereof which pursuant to Section 11.02 can
not be amended or modified without the consent of each Noteholder affected
thereby.
Section 8.05 Control by Majority. Except as otherwise expressly provided
-------------------
herein (but subject always to the provisions of the Intercreditor Agreement), a
Majority in Interest of Noteholders may direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee or
exercising any trust or power conferred on it by this Agreement. However, the
Indenture Trustee may refuse to follow any direction that conflicts with law or
this Agreement that would subject the Indenture Trustee to personal liability.
Section 8.06 Rights of Noteholders to Receive Payment. Notwithstanding
----------------------------------------
any other provision of this Agreement (but subject always to the provisions of
the Intercreditor Agreement) the right of any Noteholder to receive payment of
principal of, Make-Whole Amount, if any, and interest on such Equipment Note on
or after the respective due dates expressed in such Equipment Note, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Noteholder.
Section 8.07 Indenture Trustee May File Proofs of Claim. The Indenture
------------------------------------------
Trustee may file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Indenture Trustee and
the Noteholders allowed in any judicial proceedings relating to the Owner, its
creditors, or its property.
ARTICLE 9
INDENTURE TRUSTEE
Section 9.01 Duties of Indenture Trustee. (a) The Indenture Trustee may
---------------------------
refuse to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability or expense.
(b) Subject to the provisions of Sections 2.08 and 9.04, the
Indenture Trustee shall not be liable for interest on any money received except
as otherwise provided in any other Operative Document. Money held in trust by
the Indenture Trustee need not be segregated from other funds except to the
extent required by law.
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Section 9.02 Rights of Indenture Trustee. (a) The Indenture Trustee
---------------------------
may rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Indenture Trustee need not investigate any
fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting,
it may consult with counsel or require an officer's certificate or an opinion of
counsel from the Owner after which it will take such action or refrain from
acting as it deems appropriate. The Indenture Trustee shall not be liable for
any action it takes or omits to take in good faith and in accordance herewith in
reliance on a resolution of the Board of Directors of the Owner, the written
advice of counsel skilled in the area for which such advice is sought acceptable
to the Owner and the Indenture Trustee, officer's certificate or opinions of
counsel provided by the Owner.
(c) The Indenture Trustee may act through agents and shall not
be responsible for the misconduct or negligence of any such agent appointed with
due care; provided that, no such agents shall be appointed by the Indenture
--------
Trustee without the consent of the Owner, such consent not to be unreasonably
withheld.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers.
(e) If an Indenture Event of Default under this Agreement has
occurred and is continuing, the Indenture Trustee shall exercise its rights and
powers under this Agreement, and shall use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
(f) The Indenture Trustee, in its individual capacity, shall not
be answerable or accountable under any circumstances, except (i) for its own
willful misconduct or gross negligence (other than for the handling of funds,
for which the standard of accountability shall be willful misconduct or
negligence).
(g) Except in accordance with written instructions furnished in
accordance with the terms of this Agreement, the Indenture Trustee shall have no
duty (i) to see any recording or filing of this Indenture or any other document,
or to see to the maintenance of any such registration, recording or filing, (ii)
to see to the payment or discharge of any lien or encumbrance of any kind
against any part of the Indenture Estate, or (iii) to ascertain or inquire as to
the performance or observance of any of the Owner's covenants in this Agreement.
(h) The Indenture Trustee, in its individual or trust
capacities, does not make, nor shall it be deemed to have made, any
representation or warranty as to the validity, legality or enforceability of
this Indenture or any other Operative Documents or as to the correctness of any
statement contained in any thereof, except for the representations and
warranties of the Indenture Trustee, in each case expressly made in this
Indenture or in the Operative Documents.
Section 9.03 Individual Rights of Indenture Trustee. The Indenture
--------------------------------------
Trustee in its individual or any other capacity may become the owner or pledgee
of Equipment Notes and may otherwise deal with the Owner or an Affiliate of the
Owner or a subsidiary of the Owner with the same rights it would have if it were
not the Indenture Trustee. Any Agent may do the same with like rights.
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Section 9.04 Funds May Be Held by Indenture Trustee or Paying Agent;
-------------------------------------------------------
Investments. Any monies (including without limitation for purpose of this
-----------
Section 9.04 Permitted Investments constituting the proceeds of the maturity,
sale or other disposition of any Permitted Investment) held by the Indenture
Trustee or the Paying Agent hereunder as part of the Indenture Estate, until
paid out by the Indenture Trustee or the Paying Agent as herein provided, (i)
subject to clause (ii) below, may be carried by the Indenture Trustee or the
Paying Agent on deposit with itself or on deposit to its account with any bank,
trust company or national banking association incorporated or doing business
under the laws of the United States of America or one of the States thereof
having combined capital and surplus and retained earnings of at least
$75,000,000, and neither the Indenture Trustee nor the Paying Agent shall have
any liability for interest upon any such monies except as otherwise agreed in
writing or (ii) at any time and from time to time, at the request of the Owner,
shall be invested and reinvested in Permitted Investments as specified in such
request (if such investments are reasonably available for purchase) and sold, in
any case at such prices, including accrued interest or its equivalent, as are
set forth in such request, and such Permitted Investments shall be held by the
Indenture Trustee in trust as part of the Indenture Estate until so sold;
provided that the Owner shall upon demand pay to the Indenture Trustee the
amount of any loss realized upon maturity, sale or other disposition of any such
Permitted Investment and be entitled to receive from the Indenture Trustee, and
the Indenture Trustee shall promptly pay to the Owner, any profit, income,
interest, dividend or gain realized upon maturity, sale or other disposition of
any Permitted Investment. The Indenture Trustee shall not be responsible for
any losses on any investments or sales of Permitted Investments made pursuant to
the procedure specified in this Section 9.04 other than by reason of its willful
misconduct or gross negligence. All Permitted Investments held by the Indenture
Trustee or the Paying Agent pursuant to this Section 9.04 shall either be (a)
registered in the name of, payable to the order of, or specially indorsed to,
the Indenture Trustee or the Paying Agent, as the case may be, or (b) held in an
Eligible Account. For purposes of this Section 9.04, "Eligible Account" means
an account established by and with an Eligible Institution at the request of the
Indenture Trustee or the Paying Agent, as the case may be, which institution
agrees, for all purposes of the applicable Uniform Commercial Code ("UCC")
including Article 8 thereof, that (a) such account shall be a "securities
account" (as defined in Section 8-501 of the Uniform Commercial Code in effect
in the State of Illinois), (b) all property (other than cash) credited to such
account shall be treated as a "financial asset" (as defined in Section 8-
102(a)(9) of the Uniform Commercial Code in effect in the State of Illinois),
(c) the Indenture Trustee or the Paying Agent, as the case may be, shall be the
"entitlement holder" (as defined in Section 8-102(a)(7) of the Uniform
Commercial Code in effect in the State of Illinois) in respect of such account,
(d) the Eligible Institution will comply with all entitlement orders issued by
the Indenture Trustee or the Paying Agent, as the case may be, to the exclusion
of the Owner, and (e) the "securities intermediary jurisdiction" (under Section
8-110(e) of the Uniform Commercial Code in effect in the State of Illinois)
shall be the State of Illinois. For purposes of this Section 9.04, "Eligible
Institution" means the corporate trust department of (a) State Street, acting
solely in its capacity as a "securities intermediary" (as defined in Section 8-
102(a)(14) of the Uniform Commercial Code in effect in the State of Illinois),
or (b) a depository institution organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
U.S. branch of a foreign bank), which has a long-term unsecured debt rating from
Moody's and Standard & Poor's of at least A-3 or its equivalent.
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[Trust Indenture and Mortgage (2001-1 747-1)]
Section 9.05 Notice of Defaults. If an Indenture Default or Indenture
------------------
Event of Default under this Agreement occurs and is continuing and the Indenture
Trustee has actual knowledge of same, the Indenture Trustee shall (i) promptly
send written notice thereof to the Owner and (ii) within 90 days after the
occurrence of an Indenture Event of Default, mail to each Noteholder notice of
all uncured Indenture Events of Default under this Agreement. Except in the case
of a default in the payment of the principal of, Make-Whole Amount, if any, or
interest on any Equipment Note, the Indenture Trustee shall be protected in
withholding the notice required under clause (ii) above if and so long as the
executive committee or trust committee of directors of the Indenture Trustee
and/or other responsible officers thereof in good faith determines that
withholding such notice is in the best interests of the Noteholders.
Section 9.06 Compensation and Indemnity. The Indenture Trustee shall not
--------------------------
be required to take any action or refrain from taking any action under Section
9.05 (other than the first sentence thereof) or Article 8 hereof unless the
Indenture Trustee shall have been indemnified to its reasonable satisfaction
against any liability, cost or expense (including counsel fees) which may be
incurred in connection therewith pursuant to a written agreement with one or
more Noteholders. The Indenture Trustee agrees that it shall look solely to the
Noteholders for the satisfaction of any indemnity (except expenses, costs or
other amounts specified under clause "First" of Section 3.03 hereof) owed to it
pursuant to this Section 9.06. The Indenture Trustee shall not be under any
obligation to take any action under this Agreement or any other Operative
Document and nothing herein or therein shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur the risk of any financial
ability in the performance of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. The
Indenture Trustee shall not be required to take any action under Section 9.05
(other than the first sentence thereof) or Article 8 hereof, nor shall any other
provision of this Agreement or any other Operative Document be deemed to impose
a duty on the Indenture Trustee to take any action, if the Indenture Trustee
shall have been advised by counsel that such action is contrary to the terms
hereof or is otherwise contrary to law.
Section 9.07 Replacement of Indenture Trustee. (a) The resignation or
--------------------------------
removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee shall become effective only upon the successor Indenture Trustee's
acceptance of appointment as provided in this Section.
(b) The Indenture Trustee may resign by giving at least 30 days'
prior written notice to the Owner. A Majority in Interest of Noteholders may
remove the Indenture Trustee by giving at least 30 days' prior written notice to
the Indenture Trustee and the Owner and may appoint a successor Indenture
Trustee for such Equipment Notes with the Owner's consent. The Owner may remove
the Indenture Trustee at any time no Indenture Default under Section 8.01(a),
(e) or (f) or any Indenture Event of Default shall have occurred and be
continuing, if the Owner determines in its reasonable business judgment that
such removal would be appropriate or if:
(1) the Indenture Trustee fails to comply with Section
9.09;
(2) the Indenture Trustee is adjudged a bankrupt or an
insolvent;
55
[Trust Indenture and Mortgage (2001-1 747-1)]
(3) a receiver or public officer takes charge of the
Indenture Trustee or its property; or
(4) the Indenture Trustee becomes incapable of acting.
(c) If a vacancy exists in the office of Indenture Trustee for
any reason, the Owner shall promptly appoint a successor Indenture Trustee.
(d) If a successor Indenture Trustee does not take office within
30 days after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Owner or a Majority in Interest of Noteholders may
petition any court of competent jurisdiction for the appointment of a successor
Indenture Trustee.
(e) If the Indenture Trustee fails to comply with Section 9.09,
any Noteholder may petition any court of competent jurisdiction for the removal
of such Indenture Trustee and the appointment of a successor Indenture Trustee.
(f) A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee and to the
Owner. Thereupon, the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the retiring Indenture Trustee for which the
successor Indenture Trustee is to be acting as Indenture Trustee under this
Agreement. The retiring Indenture Trustee shall promptly transfer all property
and all books and records relating to the administration of the Indenture Estate
held by it as Indenture Trustee to the successor Indenture Trustee. The
Indenture Trustee shall give notice of each appointment of a successor Indenture
Trustee to the Noteholders, by mailing written notice of such event by first-
class mail to the Noteholders.
Section 9.08 Successor Indenture Trustee, Agents by Merger, etc. If the
---------------------------------------------------
Indenture Trustee or any Agent consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business assets to,
another corporation, the successor corporation, without any further act, shall
be the successor Indenture Trustee or Agent, as the case may be.
Section 9.09 Eligibility; Disqualification. This Agreement shall at all
-----------------------------
times have an Indenture Trustee which (i) shall have a combined capital and
surplus of at least $75,000,000 or (ii) shall have a combined capital and
surplus in excess of $7,500,000 and the obligations of which, whether now in
existence or hereafter incurred, are fully and unconditionally guaranteed by a
corporation organized and doing business under the laws of the United States,
any State or Territory thereof or of the District of Columbia and having a
combined capital and surplus of at least $75,000,000, and which, in any case,
shall be a Citizen of the United States. If such corporation publishes reports
of conditions at least annually, pursuant to law or to the requirements of
Federal, State, Territorial, or District of Columbia supervising or examining
authority, then for the purposes of this Section 9.09, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of conditions so published.
56
[Trust Indenture and Mortgage (2001-1 747-1)]
In case at any time the Indenture Trustee shall cease to be eligible in
accordance with the provisions of this Section 9.09, the Indenture Trustee shall
resign immediately in the manner and with the effect specified in Section 9.07.
Section 9.10 Trustee's Liens. The Indenture Trustee in its individual
---------------
capacity agrees that it will at its own cost and expense promptly take such
action as may be necessary to duly discharge and satisfy in full all Liens
("Trustee's Liens") on the Indenture Estate which are either (i) attributable to
the Indenture Trustee in its individual capacity and which are unrelated to the
transactions contemplated by the Operative Documents, or (ii) which are
attributable to the Indenture Trustee as trustee hereunder or in its individual
capacity and which arise out of acts or omissions which are not expressly
contemplated by this Agreement.
ARTICLE 10
TERMINATION OF TRUST INDENTURE
Section 10.01 Termination of Trust Indenture. Upon (or at any time
------------------------------
after):
(x) payment in full of the outstanding principal
amount of, Make-Whole Amount, if any, and interest on and all other
amounts due under all Equipment Notes and provided that all other
Secured Obligations due to the Noteholders and the other Indenture
Indemnitees shall have been satisfied or paid in full; or
(y) receipt of the confirmation of the Rating Agencies
and after there has been irrevocably deposited (except as provided in
Section 10.04) with the Indenture Trustee as funds in trust,
specifically pledged as security for, and dedicated solely to, the
benefit of the Noteholders, (1) money in an amount, or (2) Permitted
Investments which, through the payment of interest and principal in
respect thereof in accordance with their terms, will provide (not
later than one Business Day before the due date of any payment
referred to below in this paragraph) money in an amount, or (3) a
combination of money and Permitted Investments referred to in the
foregoing clause (2), sufficient, in the opinion of a nationally
recognized firm of independent certified public accountants expressed
in a written certification thereof delivered to the Indenture Trustee,
to pay in full the outstanding principal amount of, Make-Whole Amount,
if any, and interest on the Equipment Notes on the dates such amounts
are due (including as a result of redemption in respect of which
irrevocable notice has been given to the Indenture Trustee on or prior
to the date of such deposit); provided, however, that
-------- -------
(A) upon the making of the deposit referred to above
in this clause (y), the right of the Owner to cause the redemption of
Equipment Notes (except a redemption in respect of which irrevocable
notice has theretofore been given) shall terminate;
(B) the Owner has delivered to the Indenture Trustee
an officer's certificate and an opinion of counsel (both counsel and
opinion to be
57
[Trust Indenture and Mortgage (2001-1 747-1)]
reasonably acceptable to the Indenture Trustee) to the effect that
after the Closing Date there has been published by the Internal
Revenue Service a ruling to the effect that Noteholders will not
recognize income, gain or loss for Federal income tax purposes as a
result of the exercise by the Owner of its option under Clause (y) of
this Section 10.01 and will be subject to Federal income tax on the
same amount and in the same manner and at the same times, as would
have been the case if such option had not been exercised;
(C) all other amounts then due and payable hereunder have
been paid; and
(D) the Owner has delivered to the Indenture Trustee an
officer's certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the satisfaction and
discharge of this Agreement contemplated by this Section 10.01 have
been complied with;
the Owner shall direct the Indenture Trustee to execute and deliver to or as
directed in writing by the Owner an appropriate instrument releasing the
Aircraft and the Engines and all other property included in the Indenture Estate
from the Lien of this Agreement and the Indenture Trustee shall execute and
deliver such instrument as aforesaid; provided, however, that this Agreement and
the trusts created hereby shall earlier terminate and this Agreement shall be of
no further force or effect upon any sale or other final disposition by the
Indenture Trustee of all property constituting part of the Indenture Estate and
the final distribution by the Indenture Trustee of all monies or other property
or proceeds constituting part of the Indenture Estate in accordance with the
terms hereof. Except as aforesaid otherwise provided, this Agreement and the
trusts created hereby shall continue in full force and effect in accordance with
the terms hereof.
Section 10.02 Survival of Certain Obligations. Notwithstanding the
-------------------------------
provisions of Section 10.01, the obligations of the Indenture Trustee contained
in Sections 2.01 through 2.12, Section 7.01, Section 9.10, Section 10.03 and
Section 10.04, and the other rights, duties, immunities and privileges hereunder
of the Indenture Trustee shall survive.
Section 10.03 Monies to Be Held in Trust. All moneys and Permitted
--------------------------
Investments deposited with the Indenture Trustee pursuant to Section 10.01 shall
be held in trust and applied by it, in accordance with the provisions of the
Equipment Notes and this Agreement, to the payment either directly or through
any Paying Agent, as the Indenture Trustee may determine, to the Noteholders, of
principal, Make-Whole Amount, if any, and interest, as applicable, but such
money need not be segregated from other funds except to the extent required by
law.
Section 10.04 Monies to Be Returned to Owner. The Indenture Trustee and
------------------------------
any Paying Agent shall promptly pay or return to the Owner upon request of the
Owner any money or Permitted Investments held by them at any time that are not
required for the payment of the amounts described above in Section 10.03 on the
Equipment Notes for which money or Permitted Investments have been deposited
pursuant to Section 10.01.
58
[Trust Indenture and Mortgage (2001-1 747-1)]
ARTICLE 11
AMENDMENTS AND WAIVERS
Section 11.01 Amendments to this Agreement Without Consent of the
---------------------------------------------------
Noteholders. The Owner and the Indenture Trustee may enter into one or more
-----------
agreements supplemental hereto without the consent of any Noteholder or any
other Person for any of the following purposes:
(1) to correct any mistake or cure any ambiguity, defect or
inconsistency herein or in the Equipment Notes or to make any change not
inconsistent with the provisions hereof; provided that such change does not
--------
adversely affect the interests of any Noteholder;
(2) to evidence the succession of another party as the
Owner in accordance with the terms of the Participation Agreement or to
evidence (in accordance with Article 9) the succession of a new trustee
hereunder, the removal of the trustee hereunder or the appointment of any
co-trustee or co-trustees or any separate or additional trustee or
trustees;
(3) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions
with respect to matters or questions arising hereunder so long as such
action shall not adversely affect the interests of the Noteholders;
(4) to correct or amplify the description of any property
at any time subject to the Lien of this Agreement or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subject to the Lien of this Agreement or to subject to the
Lien of this Agreement the Airframe or Engines or airframe or engines
substituted for the Airframe or Engines in accordance herewith;
(5) to add to the covenants of the Owner, for the benefit
of the Noteholders, or to surrender any rights or power herein conferred
upon the Owner;
(6) to add to the rights of the Noteholders;
(7) [Intentionally Omitted];
(8) to provide for the re-issuance of any Series of
Equipment Notes that has previously been prepaid pursuant to Section
6.01(b), provided that such Series of Equipment Notes is issued in
accordance with the Series hereof; and
(9) to include on the Equipment Notes any legend as may be
required by applicable law.
Section 11.02 Amendments to this Agreement with Consent of Noteholders.
--------------------------------------------------------
(a) With the written consent of a Majority in Interest of
Noteholders, the Owner and the Indenture Trustee may enter into such
supplemental agreements to add any
59
[Trust Indenture and Mortgage (2001-1 747-1)]
provisions to or to change or eliminate any provisions of this Agreement or of
any such supplemental agreements or to modify the rights of the Noteholders;
provided, however, that, an amendment under this Section 11.02 may not without
-------- -------
the consent of each of the Noteholders of the applicable Series of Equipment
Notes and, in the case of the Series A-1 Equipment Notes, Series A-2 Equipment
Notes, Series A-3 Equipment Notes, Series B Equipment Notes or Series C
Equipment Notes, the applicable Liquidity Provider:
(1) reduce the principal amount of, Make-Whole Amount, if any,
or any installment of interest on, such Series of Equipment Notes; or
(2) change the date on which any principal amount of, any
Amortization Amount payable with respect to, Make-Whole Amount, if any, or
interest on such Series of Equipment Notes, is due or payable; or
(3) with respect to each Series of Equipment Notes, create any
Lien on the Indenture Estate prior to or pari passu with the Lien thereon
---- -----
under this Agreement except such as are permitted by this Agreement, or
deprive any Noteholder of the benefit of the Lien on the Indenture Estate
created by this Agreement; or
(4) with respect to such Series of Equipment Notes, reduce the
percentage in principal amount of the outstanding Equipment Notes, the
consent of whose Noteholders is required for any such supplemental
agreement, or the consent of whose Noteholders is required for any waiver
(of compliance with certain provisions of this Agreement or of certain
defaults hereunder or their consequences) provided for in this Agreement;
or
(5) make any change in Article 3, Article 6, Section 8.01
(except to add Indenture Events of Default) or this Section 11.02(a).
(b) It is not necessary under this Section 11.02 for the Noteholders
to consent to the particular form of any proposed supplemental agreement, but it
is sufficient if they consent to the substance thereof.
(c) Promptly after the execution by the Owner and the Indenture
Trustee of any supplemental agreement pursuant to the provisions of this Section
11.02, the Indenture Trustee shall transmit by first-class mail a notice,
setting forth in general terms the substance of such supplemental agreement, to
all Noteholders, as the names and addresses of such Noteholders appear on the
Register. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental agreement.
Section 11.03 Revocation and Effect of Consents. Until an amendment or
---------------------------------
waiver becomes effective, a consent to it by a Noteholder is a continuing
consent by the Noteholder and every subsequent Noteholder, even if notation of
the consent is not made on any Equipment Note. However, any such Noteholder or
subsequent Noteholder may revoke the consent as to his Equipment Note if the
Indenture Trustee receives the notice of revocation before the date the
amendment or waiver becomes effective. After an amendment or waiver becomes
effective, it shall bind every Noteholder affected by such amendment or waiver.
60
[Trust Indenture and Mortgage (2001-1 747-1)]
Section 11.04 Notation on or Exchange of Equipment Notes. The Indenture
------------------------------------------
Trustee may place an appropriate notation about an amendment or waiver on any
Equipment Note thereafter executed. The Indenture Trustee in exchange for such
Equipment Notes may execute new Equipment Notes that reflect the amendment or
waiver.
Section 11.05 Indenture Trustee Protected. The Indenture Trustee need not
---------------------------
sign any supplemental agreement that adversely affects its rights.
Section 11.06 Amendments, Waivers, etc. of Other Operative Documents.
------------------------------------------------------
(a) Subject to Section 11.01, without the consent of a Majority
in Interest of Noteholders, the respective parties to the Participation
Agreement may not modify, amend or supplement such agreement, or give any
consent, waiver, authorization or approval thereunder, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
thereof or of modifying in any manner the rights of the respective parties
thereunder; provided, however, that, without the consent of the Indenture
-------- -------
Trustee or any Noteholder, the Participation Agreement may be modified, amended
or supplemented in order to cure any ambiguity, to correct or supplement any
provisions thereof which may be defective or inconsistent with any other
provision thereof or of any provision of this Agreement, or to make any other
provision with respect to matters or questions arising thereunder or under this
Agreement which shall not be inconsistent with the provisions of this Agreement,
provided the making of any such other provision shall not adversely affect the
interests of the Noteholders.
Section 11.07 Notices to Liquidity Providers. Any request made to any
------------------------------
Noteholder for consent to any amendment or supplement pursuant to this Article
11 shall be promptly furnished by the Indenture Trustee to each Liquidity
Provider at its address set forth in the Intercreditor Agreement.
ARTICLE 12
MISCELLANEOUS
Section 12.01 Notices. (a) Unless otherwise specifically provided for
-------
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by hand-
delivery, overnight courier service, mail, or telecopier (to be confirmed by
hand delivery, overnight courier service or mail) addressed as indicated below
and any such notice shall be effective, in the case of hand-delivery, when
delivered, in the case of overnight courier service, one Business Day after
delivery with charges paid to a courier service with instructions for overnight
delivery, in the case of mail, three Business Days after delivery to the postal
service with certified or registered mail charges paid, and, in the case of
telecopier, upon confirmed transmittal:
61
[Trust Indenture and Mortgage (2001-1 747-1)]
if to the Owner, to:
United Air Lines, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Assistant Treasurer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or if by overnight courier, to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Assistant Treasurer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Indenture Trustee, to:
State Street Bank and Trust
Company of Connecticut, National Association
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Square
Hartford, Connecticut 06103
Attention: Corporate Trust Division
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
State Street Bank and Trust Company
▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) The Owner or the Indenture Trustee by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
(c) Any notice or communication to the Noteholders shall be mailed by
first-class mail to the respective addresses for the Noteholders shown on the
Register kept by the Registrar and to addresses filed with the Indenture Trustee
for other Noteholders. Failure so to mail a notice or communication or any
defect in such notice or communication shall not affect its sufficiency with
respect to other Noteholders of such Equipment Notes of that or any other Series
entitled to receive notice.
(d) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.
62
[Trust Indenture and Mortgage (2001-1 747-1)]
(e) If the Owner mails a notice or communication to the Noteholders,
it shall mail a copy to the Indenture Trustee and to the Paying Agent at the
same time.
Section 12.02 GOVERNING LAW. THIS AGREEMENT AND THE EQUIPMENT NOTES SHALL
-------------
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE
OF ILLINOIS.
Section 12.03 Execution in Counterparts. This Agreement may be executed
-------------------------
in any number of counterparts, each of which shall be an original but such
counterparts shall together constitute but one instrument.
* * *
63
[Trust Indenture and Mortgage (2001-1 747-1)]
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have caused this
Trust Indenture and Mortgage to be duly executed by their respective officers
thereunto duly authorized.
UNITED AIR LINES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Treasurer
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
as Indenture Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT A-1
TO TRUST INDENTURE AND
MORTGAGE
FORM OF SERIES A-1 EQUIPMENT NOTES
UNITED AIR LINES, INC.
SERIES [______] EQUIPMENT NOTE DUE [_____] ISSUED IN CONNECTION
WITH THE BOEING MODEL ________ AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N_____.
No.______ Date: [___________,____]
Original Principal Amount Maturity Date
------------------------- -------------
$________________________ _____________
Debt Rate
_____________
UNITED AIR LINES, INC., a Delaware corporation ("Owner") for value
received, hereby promises to pay to STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, as the Subordination Agent under the
Intercreditor Agreement, or registered assigns, the principal sum of
____________________ Dollars ($__________) in installments, one such installment
to be due and payable on each Payment Date, each such installment to be in an
amount equal to the amount set forth in Schedule 1 hereto, together with
interest on the unpaid principal amount hereof from time to time outstanding
from and including the date hereof until such principal amount is paid in full.
Interest shall accrue at the Debt Rate (calculated on the basis of a year of 360
days and 12 thirty day months) and shall be payable in arrears on each Interest
Payment Date and on the date this Equipment Note is paid in full.
Notwithstanding the foregoing, the final payment made on this Equipment Note
shall be in an amount sufficient to discharge in full the unpaid principal
amount and all accrued and unpaid interest on, and any other amounts due under,
this Equipment Note. Notwithstanding anything to the contrary contained herein,
if any date on which a payment under this Equipment Note becomes due and payable
is not a Business Day, then such payment shall not be made on such scheduled
date but shall be made on the next succeeding Business Day and if such payment
is made on such next succeeding Business Day no additional interest shall accrue
on the amount of such payment during such extension.
EXHIBIT A-1
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
For purposes hereof, the term "Indenture" means the Trust Indenture and
Mortgage (2001-1 747-1) dated as of August 22, 2001 between the Owner and State
Street Bank and Trust Company of Connecticut, National Association (the
"Indenture Trustee"), as the same may be amended or supplemented from time to
time. All other capitalized terms used in this Equipment Note and not defined
herein shall have the respective meanings assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at the Past Due
Rate (calculated on the basis of a year of 360 days and 12 thirty-day months) on
any overdue principal amount, Make-Whole Amount, if any, and (to the extent
permitted by applicable law) any overdue interest and any other amounts payable
hereunder which are overdue, in each case for the period the same is overdue.
Amounts shall be overdue if not paid when due (whether at stated maturity, by
acceleration or otherwise).
This Equipment Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose unless this Equipment Note
has been executed on behalf of the Owner by the manual or facsimile signature of
an authorized officer of the Owner, and authenticated by the Indenture Trustee
by the manual signature of an authorized officer or signatory of the Indenture
Trustee, in each case as specified in Section 2.02 of the Indenture.
This Equipment Note is one of the Equipment Notes referred to in the
Indenture which have been or are to be issued by the Owner pursuant to the terms
of the Indenture. Reference is made to the Indenture and all supplements and
amendments thereto (a copy of which is on file with the Indenture Trustee at its
Corporate Trust Department) for a more complete statement of the terms and
provisions thereof, including a statement of the properties thereby conveyed,
pledged and assigned, the nature and extent of the security, the respective
rights thereunder of the Owner, the Indenture Trustee and the Noteholders of the
Equipment Notes, and the terms upon which the Equipment Notes are, and are to
be, executed and delivered, as well as for a statement of the terms and
conditions of the trust created by the Indenture, to all of which terms and
conditions in the Indenture each Noteholder hereof agrees by its acceptance of
this Equipment Note.
This Equipment Note is subject to redemption as provided in Article 6 of
the Indenture but not otherwise.
If an Indenture Event of Default shall occur and be continuing, the
principal amount remaining unpaid of the Equipment Notes may be declared due and
payable together with accrued interest thereon in the manner and with the effect
provided in the Indenture.
As provided in the Indenture, in certain circumstances this Equipment Note
is transferable, and upon surrender of this Equipment Note for registration of
transfer at the principal corporate trust office of the Registrar, or at the
office or agency maintained for such purpose, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Registrar duly
executed by, the Noteholder or his attorney duly authorized in writing, one or
more new Equipment Notes of the same maturity and type and of authorized
denominations and for the same aggregate principal amount will be issued to the
designated transferee or transferees.
EXHIBIT A-1
Page 2
[Trust Indenture and Mortgage (2001-1 747-1)]
The Equipment Notes are issuable only as registered Equipment Notes. As
provided in the Indenture and subject to certain limitations therein set forth,
Equipment Notes are exchangeable for a like aggregate principal amount of
Equipment Notes of the same series, maturity and type and of authorized
denominations, as requested by the Noteholder surrendering the same, upon
presentation thereof for such purpose at the principal corporate trust office of
the Registrar, or at an office or agency maintained for such purpose.
No service charge shall be made for any such registration of transfer or
exchange, but the Registrar may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. Prior to due
presentment for registration of transfer or exchange of this Equipment Note, the
Owner, the Indenture Trustee, the Paying Agent and the Registrar may deem and
treat the person in whose name this Equipment Note is registered as the absolute
owner hereof for the purpose of receiving payment of the principal of and
interest on this Equipment Note and for all other purposes whatsoever whether or
not this Equipment Note be overdue, and neither the Owner, the Indenture
Trustee, the Paying Agent nor the Registrar shall be affected by notice to the
contrary.
The Noteholder of this Equipment Note, by accepting the same, (a) agrees to
and shall be bound by each provision applicable to it in the Indenture, the Note
Purchase Agreement, the Participation Agreement and each other Operative
Document, (b) authorizes and directs the Indenture Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
as provided in the Indenture and (c) appoints the Indenture Trustee his
attorney-in-fact for such purpose.
AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THIS EQUIPMENT NOTE SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
ILLINOIS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE
OF ILLINOIS.
* * *
EXHIBIT A-1
Page 3
[Trust Indenture and Mortgage (2001-1 747-1)]
IN WITNESS WHEREOF, the Owner has caused this Equipment Note to be duly
executed.
UNITED AIR LINES, INC.
By:____________________________
Title:
EXHIBIT A-1
Page 4
[Trust Indenture and Mortgage (2001-1 747-1)]
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Indenture Trustee
By:_______________________________
Authorized officer and signatory
Page 5
EXHIBIT A-1
SCHEDULE I
AMORTIZATION SCHEDULE
Payment Date Principal Amount
------------
[SEE EXHIBIT B-1 TO INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
[Trust Indenture and Mortgage (2001-1 747-1)]
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT A-2
TO TRUST INDENTURE AND
MORTGAGE
FORM OF SERIES A-2, SERIES A-3, SERIES B, SERIES C AND SERIES D EQUIPMENT NOTES
UNITED AIR LINES, INC.
SERIES [______] EQUIPMENT NOTE DUE [_____] ISSUED IN CONNECTION
WITH THE BOEING MODEL ________ AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N_____.
No.______ Date: [___________,____]
Original Principal Amount Maturity Date
------------------------- -------------
_________________________ _____________
Debt Rate
---------
____________
UNITED AIR LINES, INC., a Delaware corporation ("Owner") for value
received, hereby promises to pay to STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, as the Subordination Agent under the
Intercreditor Agreement, or registered assigns, the principal sum of
______________________ Dollars ($_____________) in one installment on
___________, ____ , together with interest on the unpaid principal amount hereof
from time to time outstanding from and including the date hereof until such
principal amount is paid in full. Interest shall accrue at the Debt Rate
(calculated on the basis of a year of 360 days and 12 thirty day months) payable
in arrears on each Interest Payment Date and on the date this Equipment Note is
paid in full. Notwithstanding the foregoing, the final payment made on this
Equipment Note shall be in an amount sufficient to discharge in full the unpaid
principal amount and all accrued and unpaid interest on, and any other amounts
due under, this Equipment Note. Notwithstanding anything to the contrary
contained herein, if any date on which a payment under this Equipment Note
becomes due and payable is not a Business Day, then such payment shall not be
made on such scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business Day no
additional interest shall accrue on the amount of such payment during such
extension.
For purposes hereof, the term "Indenture" means the Trust Indenture and
Mortgage (2001-1 747-1) dated as of August 22, 2001, between the Owner and State
Street Bank and Trust Company of Connecticut, National Association (the
"Indenture Trustee"), as the same may be amended or supplemented from time to
time. All other capitalized terms used in this Equipment Note and not defined
herein shall have the respective meanings assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at the Past Due
Rate (calculated on the basis of a year of 360 days and 12 thirty day months) on
any overdue principal amount, Make-Whole Amount, if any, and (to the extent
permitted by applicable law) any overdue interest and any other amounts payable
hereunder which are overdue, in each case for the period the same is overdue.
Amounts shall be overdue if not paid when due (whether at stated maturity, by
acceleration or otherwise).
This Equipment Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose unless this Equipment Note
has been executed on behalf of the Owner by the manual or facsimile signature of
an authorized officer of the Owner, and authenticated by the Indenture Trustee
by the manual signature of an authorized officer or signatory of the Indenture
Trustee, in each case as specified in Section 2.02 of the Indenture.
This Equipment Note is one of the Equipment Notes referred to in the
Indenture which have been or are to be issued by the Owner pursuant to the terms
of the Indenture. Reference is made to the Indenture and all supplements and
amendments thereto (a copy of which is on file with the Indenture Trustee at its
Corporate Trust Department) for a more complete statement of the terms and
provisions thereof, including a statement of the properties thereby conveyed,
pledged and assigned, the nature and extent of the security, the respective
rights thereunder of the Owner, the Indenture Trustee and the Noteholders of the
Equipment Notes, and the terms upon which the Equipment Notes are, and are to
be, executed and delivered, as well as for a statement of the terms and
conditions of the trust created by the Indenture, to all of which terms and
conditions in the Indenture each Noteholder hereof agrees by its acceptance of
this Equipment Note.
This Equipment Note is subject to redemption as provided in Article 6 of
the Indenture but not otherwise.
If an Indenture Event of Default shall occur and be continuing, the
principal amount remaining unpaid of the Equipment Notes may be declared due and
payable together with accrued interest thereon in the manner and with the effect
provided in the Indenture.
As provided in the Indenture, in certain circumstances this Equipment Note
is transferable, and upon surrender of this Equipment Note for registration of
transfer at the principal corporate trust office of the Registrar, or at the
office or agency maintained for such purpose, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Registrar duly
executed by, the Noteholder or his attorney duly authorized in writing, one or
more new Equipment Notes of the same maturity and type and of authorized
denominations and for the same aggregate principal amount will be issued to the
designated transferee or transferees.
The Equipment Notes are issuable only as registered Equipment Notes. As
provided in the Indenture and subject to certain limitations therein set forth,
Equipment Notes are exchangeable for a like aggregate principal amount of
Equipment Notes of the same series, maturity and type and of authorized
denominations, as requested by the Noteholder surrendering the same, upon
presentation thereof for such purpose at the principal corporate trust office of
the Registrar, or at an office or agency maintained for such purpose.
No service charge shall be made for any such registration of transfer or
exchange, but the Registrar may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. Prior to due
presentment for registration of transfer or exchange of this Equipment Note, the
Owner, the Indenture Trustee, the Paying Agent and the Registrar may deem and
treat the person in whose name this Equipment Note is registered as the absolute
owner hereof for the purpose of receiving payment of the principal of and
interest on this Equipment Note and for all other purposes whatsoever whether or
not this Equipment Note be overdue, and neither the Owner, the Indenture
Trustee, the Paying Agent nor the Registrar shall be affected by notice to the
contrary.
[The indebtedness evidenced by this Equipment Note is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Indenture) in respect of the Series A-1 Equipment Notes, the Series A-2
Equipment Notes, the Series A-3 Equipment Notes and this Equipment Note is
issued subject to such provisions.]/1/ [The indebtedness evidenced by this
Equipment Note is, to the extent and in the manner provided in the Indenture,
subordinate and subject in right of payment to the prior payment in full of the
Secured Obligations (as defined in the Indenture) in respect of the Series A-1
Equipment Notes, the Series A-2 Equipment Notes, the Series A-3 Equipment Notes
and the Series B Equipment Notes and this Equipment Note is issued subject to
such provisions.]/2/ [The indebtedness evidenced by this Equipment Note is, to
the extent and in the manner provided in the Indenture, subordinate and subject
in right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of the Series A-1 Equipment Notes, the
Series A-2 Equipment Notes, the Series A-3 Equipment Notes, the Series B
Equipment Notes and the Series C Equipment Notes and this Equipment Note is
issued subject to such provisions.]/3/ The Noteholder of this Equipment Note,
by accepting the same, (a) agrees to and shall be bound by [each provision]/4/
[such provisions and each other provision]/1, 2, 3/ applicable to it in the
Indenture, the Note Purchase Agreement, the Participation Agreement and each
other Operative Document, (b) authorizes and directs the Indenture Trustee on
his behalf to take such action as may be necessary or appropriate to effectuate
the subordination as provided in the Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.
_______________________
/1/ To be inserted in the case of a Series B Equipment Note.
/2/ To be inserted in the case of a Series C Equipment Note.
/3/ To be inserted in the case of a Series D Equipment Note.
/4/ To be inserted in the case of a Series A-2 Equipment Note and Series A-3
Equipment Note.
AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THIS EQUIPMENT NOTE SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
ILLINOIS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE
OF ILLINOIS.
* * *
EXHIBIT A-2
Page 4
[Trust Indenture and Mortgage (2001-1 747-1)]
IN WITNESS WHEREOF, the Owner has caused this Equipment Note to be duly
executed.
UNITED AIR LINES, INC.
By:____________________
Title:
EXHIBIT A-2
Page 5
[Trust Indenture and Mortgage (2001-1 747-1)]
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Indenture Trustee
By:___________________________________
Authorized officer and signatory
EXHIBIT A-2
Page 6
[Trust Indenture and Mortgage (2001-1 747-1)]
SCHEDULE I
AMORTIZATION SCHEDULE
Payment Date Principal Amount
[SEE EXHIBIT [B-2][B-4][B-5][B-6] TO INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
EXHIBIT A-2
Page 7
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT B-1
TO TRUST INDENTURE AND
MORTGAGE
DECRIPTION OF SERIES A-1 EQUIPMENT NOTES
Original Principal Amount Maturity Date Interest Rate
------------------------- ------------- -------------
$[_] [_] [_]%
SERIES A-1 AMORTIZATION SCHEDULE
--------------------------------
Payment Date Principal Amount
------------ ----------------
[_] $[_]
EXHIBIT B-1
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT B-2
TO TRUST INDENTURE AND
MORTGAGE
DECRIPTION OF SERIES A-2 EQUIPMENT NOTES
Original Principal Amount Maturity Date Interest Rate
------------------------- ------------- -------------
$[_] [_] [_]%
SERIES A-2 AMORTIZATION SCHEDULE
--------------------------------
Payment Date Principal Amount
------------ ----------------
[_] $[_]
EXHIBIT B-2
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT B-3
TO TRUST INDENTURE AND
MORTGAGE
DESCRIPTION OF SERIES A-3 EQUIPMENT NOTES
No Series A-3 Equipment Notes shall be issued under the Indenture and any
reference to the Series A-3 Equipment Notes contained in the Indenture shall
have no force or effect.
EXHIBIT B-3
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT B-4
TO TRUST INDENTURE AND
MORTGAGE
DESCRIPTION OF SERIES B EQUIPMENT NOTES
No Series B Equipment Notes shall be issued under the Indenture and any
reference to the Series A-3 Equipment Notes contained in the Indenture shall
have no force or effect.
EXHIBIT B-4
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT B-5
TO TRUST INDENTURE AND
MORTGAGE
DECRIPTION OF SERIES C EQUIPMENT NOTES
Original Principal Amount Maturity Date Interest Rate
------------------------- ------------- -------------
$[_] [_] [_]%
SERIES C AMORTIZATION SCHEDULE
------------------------------
Payment Date Principal Amount
------------ ----------------
[_] $[_]
EXHIBIT B-5
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT B-6
TO TRUST INDENTURE AND
MORTGAGE
DECRIPTION OF SERIES D EQUIPMENT NOTES
Original Principal Amount Maturity Date Interest Rate
------------------------- ------------- -------------
$[_] [_] [_]%
SERIES D AMORTIZATION SCHEDULE
------------------------------
Payment Date Principal Amount
------------ ----------------
[_] $[_]
EXHIBIT B-6
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT B-1
TO TRUST INDENTURE AND
MORTGAGE
DESCRIPTION OF SERIES A-1 EQUIPMENT NOTES
EXHIBIT B-1 TO THE TRUST INDENTURE AND MORTGAGE (2001-1 747-1)
HAS BEEN INTENTIONALLY OMITTED FROM THE TRUST INDENTURE
AND MORTGAGE (2001-1 747-1) ON FILE WITH THE FAA
EXHIBIT B-1
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT B-2
TO TRUST INDENTURE AND
MORTGAGE
DESCRIPTION OF SERIES A-2 EQUIPMENT NOTES
EXHIBIT B-2 TO THE TRUST INDENTURE AND MORTGAGE (2001-1 747-1)
HAS BEEN INTENTIONALLY OMITTED FROM THE TRUST INDENTURE
AND MORTGAGE (2001-1 747-1) ON FILE WITH THE FAA
EXHIBIT B-2
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT B-3
TO TRUST INDENTURE AND
MORTGAGE
DESCRIPTION OF SERIES A-3 EQUIPMENT NOTES
EXHIBIT B-3 TO THE TRUST INDENTURE AND MORTGAGE (2001-1 747-1)
HAS BEEN INTENTIONALLY OMITTED FROM THE TRUST INDENTURE
AND MORTGAGE (2001-1 747-1) ON FILE WITH THE FAA
EXHIBIT B-3
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT B-4
TO TRUST INDENTURE AND
MORTGAGE
DESCRIPTION OF SERIES B EQUIPMENT NOTES
EXHIBIT B-4 TO THE TRUST INDENTURE AND MORTGAGE (2001-1 747-1)
HAS BEEN INTENTIONALLY OMITTED FROM THE TRUST INDENTURE
AND MORTGAGE (2001-1 747-1) ON FILE WITH THE FAA
EXHIBIT B-4
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT B-5
TO TRUST INDENTURE AND
MORTGAGE
DESCRIPTION OF SERIES C EQUIPMENT NOTES
EXHIBIT B-5 TO THE TRUST INDENTURE AND MORTGAGE (2001-1 747-1)
HAS BEEN INTENTIONALLY OMITTED FROM THE TRUST INDENTURE
AND MORTGAGE (2001-1 747-1) ON FILE WITH THE FAA
EXHIBIT B-5
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT B-6
TO TRUST INDENTURE AND
MORTGAGE
DESCRIPTION OF SERIES D EQUIPMENT NOTES
EXHIBIT B-6 TO THE TRUST INDENTURE AND MORTGAGE (2001-1 747-1)
HAS BEEN INTENTIONALLY OMITTED FROM THE TRUST INDENTURE
AND MORTGAGE (2001-1 747-1) ON FILE WITH THE FAA
EXHIBIT B-6
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT C
TO TRUST INDENTURE AND
MORTGAGE
CERTAIN ECONOMIC TERMS
EXHIBIT C TO THE TRUST INDENTURE AND MORTGAGE (2001-1 747-1)
HAS BEEN INTENTIONALLY OMITTED FROM THE TRUST INDENTURE
AND MORTGAGE (2001-1 747-1) ON FILE WITH THE FAA
EXHIBIT C
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT C
TO TRUST INDENTURE
AND MORTGAGE
EXHIBIT C
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT D
TO TRUST INDENTURE
AND MORTGAGE
TRUST INDENTURE AND MORTGAGE SUPPLEMENT (2001-1 747-1)
THIS TRUST INDENTURE AND MORTGAGE SUPPLEMENT (2001-1 747-1) dated
____________, 2001 (herein called the "Indenture Supplement") between UNITED AIR
LINES, INC., a Delaware corporation (herein called the "Owner") and STATE STREET
BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association as Indenture Trustee (the "Indenture Trustee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Trust Indenture and Mortgage (2001-1 747-1), dated as of
August 22, 2001 (herein called the "Indenture"), between the Owner and Indenture
Trustee, provides for the execution and delivery of a supplement thereto
substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Indenture
Trustee; and
WHEREAS, the Indenture relates to the Airframe and Engines described below,
and a counterpart of the Indenture is attached hereto and made a part hereof and
this Indenture Supplement, together with such counterpart of the Indenture, is
being filed for recordation on the date hereof with the Federal Aviation
Administration as one document;
NOW, THEREFORE, this Indenture Supplement Witnesseth, that to secure the
prompt payment of the principal of, Make-Whole Amount, if any, and interest on,
and all other amounts due with respect to, all Equipment Notes from time to time
outstanding under the Indenture, all other amounts due under the Indenture and
to secure the performance and observance by the Owner of all the agreements,
covenants and provisions contained in the Indenture and in the other Operative
Documents to which it is a party, for the benefit of the Noteholders and each of
the Indenture Indemnitees and the prompt payment of any and all amounts from
time to time owing under the Indenture and under the Participation Agreement by
the Owner to the Noteholders and the Indenture Indemnitees (the obligations
specified above being collectively referred to herein as the "Secured
Obligations") and for the uses and purposes and subject to the terms and
provisions of the Indenture, and in consideration of the premises and of the
covenants contained in the Indenture, and of the acceptance of the Equipment
Notes by the Noteholders, and of other good and valuable consideration the
receipt and adequacy whereof are hereby acknowledged, the Owner has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Indenture Trustee, its successors and
permitted assigns, for the security and benefit of the Noteholders and each of
the other Indenture Indemnitees from time to time, a first priority security
interest in and first priority mortgage lien on all estate, right, title and
interest of the Owner in the following described property:
EXHIBIT D
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
AIRFRAME
One Airframe Identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
----------- ----- ----- ------------
Boeing 747-422 N[ ]UA [ ]
together with all Parts which are from time to time incorporated or installed in
or attached thereto or which have been removed therefrom, unless the Lien of the
Indenture shall not be applicable to such Part pursuant to the provisions of the
Indenture.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated take-off
horsepower or the equivalent thereof, whether or not such engines shall be
installed in or attached to the Airframe or any other airframe, identified as
follows:
Manufacturer's
Manufacturer Model Serial Number
------------ ----- ------------
▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ [ ]
▇▇▇▇▇ & Whitney PW4056 [ ]
▇▇▇▇▇ & ▇▇▇▇▇▇▇ PW4056 [ ]
▇▇▇▇▇ & Whitney PW4056 [ ]
in each case, together with all Parts which are from time to time incorporated
or installed in or attached thereto or which have been removed therefrom, unless
the Lien of the Indenture shall not be applicable to such Part pursuant to the
provisions of the Indenture.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and permitted assigns, in trust for the
benefit and security of the Indenture Trustee and the Noteholders from time to
time, except as provided in Section 2.11 and Article 3 of the Indenture, without
any preference, distinction or priority of any one Equipment Note over any other
by reason of series, priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Indenture.
This Indenture Supplement shall be construed as a supplemental Indenture
and shall form a part thereof, and the Indenture is hereby incorporated by
reference herein and is hereby ratified, approved and confirmed.
* * *
EXHIBIT D
Page 2
[Trust Indenture and Mortgage (2001-1 747-1)]
IN WITNESS WHEREOF, each of the parties hereto have caused this Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
UNITED AIR LINES, INC.
By:____________________________
Title:
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION
as Indenture Trustee
By:____________________________
Title:
EXHIBIT D
Page 3
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT E
SCHEDULE OF COUNTRIES AUTHORIZED
FOR DOMICILE OF PERMITTED LESSEES
Argentina
Australia
Austria
Bahamas
Barbados
Belgium
Bermuda Islands
Brazil
British Virgin Islands
Canada
Cayman Islands
Chile
Czech Republic
Denmark
Ecuador
Egypt
Finland
France
Germany
Greece
Grenada
Guatemala
Hong Kong
Hungary
Iceland
India
Indonesia
Ireland
Italy
Jamaica
Japan
Kuwait
Liechtenstein
Luxembourg
Malaysia
Malta
Mexico
Monaco
Morocco
Netherlands
Netherlands Antilles
New Zealand
Norway
Paraguay
People's Republic of China
Philippines
Poland
Portugal
Republic of China (Taiwan)
Singapore
South Africa
South Korea
Spain
Sweden
Switzerland
Thailand
Trinidad and Tobago
United Kingdom
Uruguay
Venezuela
EXHIBIT E
Page 1
[Trust Indenture and Mortgage (2001-1 747-1)]
EXHIBIT F
SCHEDULE OF COUNTRIES AUTHORIZED
FOR AIRCRAFT REGISTRATION
Argentina
Australia
Austria
Bahamas
Barbados
Belgium
Bermuda Islands
Brazil
British Virgin Islands
Canada
Cayman Islands
Chile
Czech Republic
Denmark
Ecuador
Egypt
Finland
France
Germany
Greece
Grenada
Guatemala
Hong Kong
Hungary
Iceland
India
Indonesia
Ireland
Italy
Jamaica
Japan
Kuwait
Liechtenstein
Luxembourg
Malaysia
Malta
Mexico
Monaco
Morocco
Netherlands
Netherlands Antilles
New Zealand
Norway
Paraguay
People's Republic of China
Philippines
Poland
Portugal
Republic of China (Taiwan)
Singapore
South Africa
South Korea
Spain
Sweden
Switzerland
Thailand
Trinidad and Tobago
United Kingdom
Uruguay
Venezuela
EXHIBIT F
Page 1
