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Exhibit 4.16
EXECUTION
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TRUST INDENTURE AND MORTGAGE 322
Dated as of June 25, 1997
Between
CONTINENTAL AIRLINES, INC.,
Owner
and
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Mortgagee,
Mortgagee
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EQUIPMENT NOTES COVERING
ONE BOEING 737-3T0 AIRCRAFT
BEARING U.S. REGISTRATION ▇▇▇▇ N12322
AND MANUFACTURER'S SERIAL NO. 23373
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TABLE OF CONTENTS Page
GRANTING CLAUSE 1
ARTICLE I DEFINITIONS 5
ARTICLE II THE EQUIPMENT NOTES 5
SECTION 2.01. Form of Equipment Notes 5
SECTION 2.02. Issuance and Terms of Equipment Notes 9
SECTION 2.03. Method of Payment 12
SECTION 2.04. Application of Payments 14
SECTION 2.05. Termination of Interest in Collateral 15
SECTION 2.06. Registration Transfer and Exchange of
Equipment Notes 15
SECTION 2.07. Mutilated, Destroyed, Lost or Stolen
Equipment Notes 17
SECTION 2.08. Payment of Expenses on Transfer;
Cancellation 17
SECTION 2.09. Mandatory Redemptions of Equipment
Notes 17
SECTION 2.10. Voluntary Redemptions of Equipment
Notes 18
SECTION 2.11. Redemptions; Notice of Redemption 18
SECTION 2.12. Subordination 19
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS 20
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SECTION 3.01. Basic Distributions 20
SECTION 3.02. Event of Loss; Replacement; Optional
Redemption 21
SECTION 3.03. Payments After Event of Default 22
SECTION 3.04. Certain Payments 26
SECTION 3.05. Other Payments 26
ARTICLE IV COVENANTS OF THE OWNER 26
SECTION 4.01. Liens 26
SECTION 4.02. Possession, Operation and Use,
Maintenance, Registration and Markings 27
SECTION 4.03. Inspection 33
SECTION 4.04. Replacement and Pooling of Parts, Alterations,
Modifications and Additions; Substitution of Engines 33
SECTION 4.05. Loss, Destruction or Requisition 38
SECTION 4.06. Insurance 43
SECTION 4.07. Merger of Owner 44
ARTICLE V EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE 45
SECTION 5.01. Event of Default 45
SECTION 5.02. Remedies 47
SECTION 5.03. Return of Aircraft, Etc. 48
SECTION 5.04. Remedies Cumulative 49
SECTION 5.05. Discontinuance of Proceedings 50
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SECTION 5.06. Waiver of Past Defaults 50
SECTION 5.07. Appointment of Receiver 50
SECTION 5.08. Mortgagee Authorized to Execute Bills of Sale, Etc. 51
SECTION 5.09. Rights of Note Holders to Receive Payment 51
ARTICLE VI DUTIES OF THE MORTGAGEE 51
SECTION 6.01. Notice of Event of Default 51
SECTION 6.02. Action Upon Instructions; Certain Rights and Limitations 52
SECTION 6.03. Indemnification 52
SECTION 6.04. No Duties Except as Specified in Trust
Indenture or Instructions 53
SECTION 6.05. No Action Except Under Trust Indenture or Instructions 53
SECTION 6.06. Investment of Amounts Held by Mortgagee 54
ARTICLE VII THE MORTGAGEE 54
SECTION 7.01. Acceptance of Trusts and Duties 54
SECTION 7.02. Absence of Duties 55
SECTION 7.03. No Representations or Warranties as to
Aircraft or Documents 55
SECTION 7.04. No Segregation of Monies; No Interest 55
SECTION 7.05. Reliance; Agreements; Advice of Counsel 56
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SECTION 7.06. Compensation 56
SECTION 7.07. Instructions from Note Holders 57
ARTICLE VIII INDEMNIFICATION 57
SECTION 8.01. Scope of Indemnification 57
ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES 57
SECTION 9.01. Resignation of Mortgagee; Appointment of Successor 57
SECTION 9.02. Appointment of Additional and Separate Trustees 58
ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS TRUST
INDENTURE AND OTHER DOCUMENTS 60
SECTION 10.01. Instructions of Majority; Limitations 60
SECTION 10.02. Mortgagee Protected 62
SECTION 10.03. Documents Mailed to Note Holders 62
SECTION 10.04. No Request Necessary for Trust Indenture Supplement 62
ARTICLE XI MISCELLANEOUS 62
SECTION 11.01. Termination of Trust Indenture 62
SECTION 11.02. No Legal Title to Collateral in Note Holders 63
SECTION 11.03. Sale of Aircraft by Mortgagee Is Binding 63
SECTION 11.04. Trust Indenture for Benefit of Owner, Mortgagee,
Second Mortgagee, Note Holders and the other Indenture
Indemnitees 63
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SECTION 11.05. Notices 63
SECTION 11.06. Severability 64
SECTION 11.07. No Oral Modification or Continuing Waivers 64
SECTION 11.08. Successors and Assigns 64
SECTION 11.09. Headings 64
SECTION 11.10. Normal Commercial Relations 65
SECTION 11.11. Governing Law; Counterpart Form 65
SECTION 11.12. Voting By Note Holders 65
SECTION 11.13. Section 1110 65
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TABLE OF CONTENTS
Page
ANNEX A Definitions
ANNEX B Insurance
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization and Interest Rates
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TRUST INDENTURE AND MORTGAGE 322
TRUST INDENTURE AND MORTGAGE 322, dated as of June 25, 1997 ("Trust
Indenture"), between CONTINENTAL AIRLINES, INC., a Delaware corporation
("Owner"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in
its individual capacity, except as expressly stated herein, but solely as
Mortgagee hereunder (together with its successors hereunder, the "Mortgagee").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the parties hereto desire by this Trust Indenture, 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 Mortgagee, as part of the Collateral hereunder, among other things, of
all of the Owner's right, title and interest in and to the Aircraft and, except
as hereinafter expressly provided, all payments and other amounts received
hereunder in accordance with the terms hereof, as security for, among other
things, the Owner's obligations to the Note Holders and the Indenture
Indemnitees;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner and authenticated and delivered by the Mortgagee
hereunder, the valid, binding and enforceable obligations of the Owner; and
WHEREAS, all things necessary to make this Trust Indenture the
valid, binding and legal obligation of the Owner 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 Original Amount of, interest on, Make-Whole
Amount, if any, and all other amounts due with respect to, all Equipment Notes
from time to time outstanding hereunder according to their tenor and effect and
to secure the performance and observance by the Owner of all
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the agreements, covenants and provisions contained herein and in the
Participation Agreement and in the Equipment Notes, for the benefit of the Note
Holders and each of the Indenture Indemnitees, and in consideration of the
premises and of the covenants herein contained, and of the acceptance of the
Equipment Notes by the holders thereof, and for 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 Mortgagee, its successors in
trust and assigns, for the security and benefit of, the Note Holders and each of
the Indenture Indemnitees, a first priority purchase money security interest in
and mortgage lien on all right, title and interest of the Owner in, to and under
the following described property, rights and privileges, whether now or
hereafter acquired (which, collectively, together with all property hereafter
specifically subject to the Lien of this Trust Indenture by the terms hereof or
any supplement hereto, are included within, and are referred to as, the
"Collateral"), to wit:
(1) The Airframe which is one Boeing 737-3T0 aircraft with the FAA
Registration number of N12322 and the manufacturer's serial number of
23373 and Engines, each of which Engines is a CFM International CFM 56-3
engine with the manufacturer's serial numbers of 721-369 and 721-374, is
of 750 or more rated takeoff horsepower or the equivalent of such
horsepower (such Airframe and Engines more particularly described in the
Trust Indenture Supplement executed and delivered as provided herein) as
the same is now and will hereafter be constituted, whether now owned by
the Owner or hereafter acquired, 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, together with (a) all Parts of whatever nature,
which are from time to time included within the definitions of "Airframe"
or "Engines", whether now owned or hereafter acquired, including all
substitutions, renewals and replacements of and additions, improvements,
accessions and accumulations to the Airframe and Engines (other than
additions, improvements, accessions and accumulations which constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or
other equipment excluded from the definition of Parts) and (b) all
Aircraft Documents;
(2) The Aircraft Purchase Agreement and the Bills of Sale and (to
the extent assignable without the consent of
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any manufacturer) any other 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 with respect to a
manufacturer), together 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;
(3) All proceeds with respect to the requisition of title to or use
of the Aircraft or any Engine by any Government Entity or from the sale or
other disposition of the Aircraft, the Airframe, any Engine or other
property described in any of these Granting Clauses by the Mortgagee
pursuant to the terms of this Trust Indenture, and all insurance proceeds
with respect to the Aircraft, the Airframe, any Engine or any part
thereof, but excluding any insurance maintained by the Owner and not
required under Section 4.06;
(4) All rents, revenues and other proceeds collected or entitled to
be collected by the Mortgagee pursuant to Section 5.03(b) and all monies
and securities from time to time deposited or required to be deposited
with the Mortgagee by or for the account of the Owner pursuant to any
terms of this Trust Indenture held or required to be held by the Mortgagee
hereunder; and
(5) All proceeds of the foregoing;
PROVIDED, HOWEVER, that notwithstanding any of the foregoing provisions, so long
as no Event of Default shall have occurred and be continuing, (a) the Mortgagee
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 Mortgagee with respect to the Aircraft Purchase Agreement, to exercise in
the Owner's name all rights and powers of the buyer under the Aircraft Purchase
Agreement (other than to amend, modify or waive any of the
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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 Aircraft
Purchase Agreement; and provided, further, that notwithstanding the occurrence
or continuation of an Event of Default, the Mortgagee shall not enter into any
amendment of the Aircraft Purchase Agreement that would increase the obligations
of Owner thereunder.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, and its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.12 and Article III hereof, without
any preference, distinction or priority of any one Equipment Note over any other
by reason of priority of time of issue, sale, negotiation, date of maturity
thereof or otherwise for any reason whatsoever, and for the uses and purposes
and in all cases and as to all property specified in paragraphs (1) through (5)
inclusive above, subject to the terms and provisions set forth in this Trust
Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner shall remain liable under the Indenture
Agreements to perform all of the obligations assumed by it thereunder, except to
the extent prohibited or excluded from doing so pursuant to the terms and
provisions thereof, and the Mortgagee, the Note Holders and the Indenture
Indemnitees shall have no obligation or liability under the Indenture Agreements
by reason of or arising out of the assignment hereunder, nor shall the
Mortgagee, the Note Holders or the Indenture Indemnitees be required or
obligated in any manner to perform or fulfill any obligations of the Owner under
or pursuant to the Indenture Agreements, 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.
The Owner does hereby constitute the Mortgagee the true and lawful
attorney of the Owner, irrevocably, granted for good and valuable consideration
and coupled with an interest and with full power of substitution, and with full
power (in the name of the Owner or otherwise) to ask for, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies (in each case including insurance and requisition
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proceeds) due and to become due under or arising out of the Indenture
Agreements, and all other property which now or hereafter constitutes part of
the Collateral, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action or to
institute any proceedings which the Mortgagee may deem to be necessary or
advisable in the premises; provided that the Mortgagee shall not exercise any
such rights except upon the occurrence and during the continuance of an Event of
Default hereunder.
The Owner agrees that at any time and from time to time, upon the
written request of the Mortgagee, 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 (including without limitation UCC continuation
statements) as the Mortgagee may reasonably deem necessary to perfect, preserve
or protect the mortgage, security interests and assignments created or intended
to be created hereby or to obtain for the Mortgagee the full benefits of the
assignment hereunder and of the rights and powers herein granted.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used but not defined herein shall have the
respective meanings set forth or incorporated by reference, and shall be
construed in the manner described, in Annex A hereto.
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes
The Equipment Notes shall be substantially in the form set forth
below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE
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STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE.
CONTINENTAL AIRLINES, INC.
SERIES [_____] EQUIPMENT NOTE DUE [____] ISSUED IN CONNECTION WITH THE
[BOEING/▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇] MODEL _______ AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N_____.
No. ____ Date: [__________, ____]
_______________________
INTEREST RATE MATURITY DATE
[___________] [____________]
CONTINENTAL AIRLINES, INC., a Delaware corporation ("Owner"), hereby
promises to pay to __________________, or the registered assignee thereof, the
principal sum of $____________ (the "Original Amount"), together with interest
on the amount of the Original Amount remaining unpaid from time to time
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) from the date hereof until paid in full at a rate per annum equal to the
Debt Rate. The Original Amount of this Equipment Note shall be payable in
installments on the dates set forth in Schedule I hereto equal to the
corresponding percentage of the Original Amount of this Equipment Note set forth
in Schedule I hereto. Accrued but unpaid interest shall be due and payable in
semiannual installments commencing on December 30, 1997, and thereafter on June
30 and December 30 of each year, to and including _______________.
Notwithstanding the foregoing, the final payment made on this Equipment Note
shall be in an amount sufficient to discharge in full the unpaid Original 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 interest shall accrue on the
amount of such payment during such extension.
For purposes hereof, the term "Trust Indenture" means the Trust
Indenture and Mortgage 322, dated as of June 25, 1997, between the Owner and
Wilmington Trust Company (the "Mortgagee"), as the same may be amended or
supplemented from time to time.
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All other capitalized terms used in this Equipment Note and not defined herein
shall have the respective meanings assigned in the Trust Indenture.
This Equipment Note shall bear interest, payable on demand, at the
Payment Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Original Amount, any overdue 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).
The interest rate borne by this Equipment Note shall be subject to
adjustments to the extent, and under the circumstances, specified by the
Registration Rights Agreement.
There shall be maintained an Equipment Note Register for the purpose
of registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.06 of the Trust Indenture.
The Original Amount and interest and other amounts due hereunder
shall be payable in Dollars in immediately available funds at the Corporate
Trust Office of the Mortgagee, or as otherwise provided in the Trust Indenture.
Each such payment shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note, except that in the case of any
final payment with respect to this Equipment Note, the Equipment Note shall be
surrendered promptly thereafter to the Mortgagee for cancellation.
The holder hereof, by its acceptance of this Equipment Note, agrees
that, except as provided in the Trust Indenture, each payment of the Original
Amount, Make-Whole Amount, if any, and interest received by it hereunder shall
be applied, first, to the payment of accrued interest on this Equipment Note (as
well as any interest on any overdue Original Amount, any overdue Make-Whole
Amount, if any, or, to the extent permitted by Law, any overdue interest and
other amounts hereunder) to the date of such payment, second, to the payment of
the Original Amount of this Equipment Note then due, third, to the payment of
Make-Whole Amount, if any, and any other amount due hereunder or under the
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Trust Indenture, and fourth, the balance, if any, remaining thereafter, to the
payment of installments of the Original Amount of this Equipment Note remaining
unpaid in the inverse order of their maturity (provided that this Equipment Note
shall not be subject to redemption except as provided in Sections 2.09, 2.10 and
2.11 of the Trust Indenture).
This Equipment Note is one of the Equipment Notes referred to in the
Trust Indenture which have been or are to be issued by the Owner pursuant to the
terms of the Trust Indenture. The Collateral is held by the Mortgagee as
security, in part, for the Equipment Notes. The provisions of this Equipment
Note are subject to the Trust Indenture. Reference is hereby made to the Trust
Indenture for a complete statement of the rights and obligations of the holder
of, and the nature and extent of the security for, this Equipment Note and the
rights and obligations of the holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the Trust
Indenture, as well as for a statement of the terms and conditions of the Trust
created by the Trust Indenture, to all of which terms and conditions in the
Trust Indenture each holder hereof agrees by its acceptance of this Equipment
Note.
As provided in the Trust Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for a like
aggregate Original Amount of Equipment Notes of different authorized
denominations, as requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner and the Mortgagee shall treat the person in whose name
this Equipment Note is registered as the owner hereof for all purposes, whether
or not this Equipment Note be overdue, and neither the Owner nor the Mortgagee
shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as provided in Sections
2.09, 2.10 and 2.11 of the Trust Indenture but not otherwise. In addition, this
Equipment Note may be accelerated as provided in Section 5.02 of the Trust
Indenture.
[The indebtedness evidenced by this Equipment Note is, to the extent
and in the manner provided in the Trust Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Trust
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Indenture) in respect of [Series A Equipment Notes]1 [Series A and Series B
Equipment Notes]2 [Series A, Series B and Series C Equipment Notes]3 and this
Equipment Note is issued subject to such provisions. The Note Holder of this
Equipment Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Mortgagee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Trust Indenture and (c) appoints the Mortgagee his
attorney-in-fact for such purpose.]4
Unless the certificate of authentication hereon has been executed by
or on behalf of the Mortgagee by manual signature, this Equipment Note shall not
be entitled to any benefit under the Trust Indenture or be valid or obligatory
for any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner has caused this Equipment Note to be
executed in its corporate name by its officer thereunto duly authorized on the
date hereof.
CONTINENTAL AIRLINES, INC.
By:______________________________
Name:
Title:
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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 for each Equipment Note other than any Series A Equipment
Note
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MORTGAGEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Trust Indenture.
WILMINGTON TRUST COMPANY, as
Mortgagee
By:________________________________
Name:
Title:
SCHEDULE I
EQUIPMENT NOTE AMORTIZATION
Payment Date Percentage of Original Amount to Be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes
The Equipment Notes shall be dated the date of issuance thereof,
shall be issued in four separate series consisting of Series A, Series B, Series
C and Series D and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto. On the date thereof, each Equipment
Note shall be issued to the Subordination Agent on behalf of a Pass Through
Trustee under the Pass Through Trust Agreement. The Equipment Notes shall be
issued in registered form only. The Equipment Notes shall be issued in
denominations of $1,000 and integral multiples thereof, except that one
Equipment Note of each Series may be in an amount that is not an integral
multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate (calculated
on the basis of a year of 360 days comprised of twelve 30-day months) on the
unpaid Original Amount thereof from time to time outstanding, payable in arrears
on December 30, 1997, and on each June 30 and December 30 thereafter until
maturity. The Original Amount of each Equipment Note shall be payable on the
dates and in the installments equal to the
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corresponding percentage of the Original Amount as set forth in Schedule I
hereto which shall be attached as Schedule I to the Equipment Notes.
Notwithstanding the foregoing, the final payment made under each Equipment Note
shall be in an amount sufficient to discharge in full the unpaid Original 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 Payment Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Original 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 at 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 interest shall accrue on the amount of
such payment during such extension.
The Owner agrees to pay to the Mortgagee for distribution in
accordance with Section 3.04 hereof: (i) an amount equal to the fees payable to
the relevant Liquidity Provider under Section 2.03 of each Liquidity Facility
and the related Fee Letter (as defined in the Intercreditor Agreement)
multiplied by a fraction the numerator of which shall be the then outstanding
aggregate principal amount of the Series A Equipment Notes, Series B Equipment
Notes and Series C Equipment Notes and the denominator of which shall be the
then outstanding aggregate principal amount of all "Series A Equipment Notes,"
"Series B Equipment Notes" and "Series C Equipment Notes" issued under this
Indenture and each of the Related Indentures; (ii) (x) the amount equal to
interest on any Downgrade Advance (other than any Applied Downgrade Advance)
payable under Section 3.07(e) 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(a)(i) of each Liquidity Facility minus Investment Earnings
from such Non-Extension Advance multiplied by (y) the fraction specified in the
foregoing clause (i); (iv) if any payment default shall have occurred and be
continuing with
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respect to interest on any Series A Equipment Notes, Series B Equipment Notes or
Series C Equipment Notes, (x) the excess, if any, of (1) an amount equal to
interest on any Unpaid Advance, Applied Downgrade Advance or Applied
Non-Extension Advance payable under Section 3.07(a)(i) of each Liquidity
Facility over (2) the sum of Investment Earnings from any Final Advance plus any
amount of interest at the Payment Due Rate actually payable (whether or not in
fact paid) by Owner on the overdue scheduled interest on the Equipment Notes in
respect of which such Unpaid Advance, Applied Downgrade Advance or Applied
Non-Extension 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
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 Equipment Notes," "Series B
Equipment Notes" and "Series C Equipment Notes" issued under this Indenture and
each of the Related Indentures (other than interest becoming due and payable
solely as a result of acceleration of any such "Equipment Notes"); and (v)
Owner's pro rata share of any other amounts owed to the Liquidity Providers by
the Subordination Agent as borrower under each Liquidity Facility other than
amounts due as repayment of advances thereunder or as interest on such advances,
except to the extent payable pursuant to clause (ii), (iii) or (iv) above, (c)
Owner's pro rata share of all compensation and reimbursement of expenses,
disbursements and advances payable by Owner to the Pass Through Trustees under
the Pass Through Trust Agreements, and (d) Owner's pro rata share of 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. As used herein,
"Owner's pro rata share" means as of any time a fraction, the numerator of which
is the principal balance then outstanding of Equipment Notes (other than the
Series D Equipment Notes) and the denominator of which is the aggregate
principal balance then outstanding of all "Equipment Notes" (other than "Series
D Equipment Notes") (as such terms are defined in this Trust Indenture and each
of the Related Indentures). For purposes of this paragraph, the terms "Applied
Downgrade Advance", "Applied Non-Extension Advance" (if applicable), "Cash
Collateral Account", "Downgrade Advance", "Final Advance", "Investment
Earnings", "Non-Extension Advance"
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(if applicable) and "Unpaid Advance" shall have the meanings specified in each
Liquidity Facility.
The Equipment Notes shall be executed on behalf of the Owner by one
of its authorized officers. Equipment Notes bearing the signatures of
individuals who were at any time the proper officers of the Owner shall bind the
Owner, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Equipment Notes or
did not hold such offices at the respective dates of such Equipment Notes. The
Owner may from time to time execute and deliver Equipment Notes with respect to
the Aircraft to the Mortgagee for authentication upon original issue and such
Equipment Notes shall thereupon be authenticated and delivered by the Mortgagee
upon the written request of the Owner signed by an authorized officer of the
Owner; provided, however, that each such request shall specify the aggregate
Original Amount of all Equipment Notes to be authenticated hereunder on original
issue with respect to the Aircraft. No Equipment Note shall be secured by or
entitled to any benefit under this Trust Indenture or be valid or obligatory for
any purposes, unless there appears on such Equipment Note a certificate of
authentication in the form provided for herein executed by the Mortgagee by the
manual signature of one of its authorized officers and such certificate upon any
Equipment Notes be conclusive evidence, and the only evidence, that such
Equipment Note has been duly authenticated and delivered hereunder.
The aggregate Original Amount of the Equipment Notes issued
hereunder shall not exceed $16,112,054.
SECTION 2.03. Method of Payment
(a) The Original 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 12:30
p.m., New York City time, on the due date of payment to the Mortgagee at the
Corporate Trust Office for distribution among the Note Holders in the manner
provided herein. The Owner shall not have any responsibility for the
distribution of such payment to any Note Holder. Notwithstanding the foregoing
or any provision in any Equipment Note to the contrary, the Mortgagee will use
reasonable efforts to pay or cause to be paid, if so directed in writing by any
Note Holder (with a copy to the Owner), all amounts paid by
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the Owner hereunder and under such holder's Equipment Note or Equipment Notes to
such holder or a nominee therefor (including all amounts distributed pursuant to
Article III of this Trust Indenture) by transferring, or causing to be
transferred, by wire transfer of immediately available funds in Dollars, prior
to 2:00 p.m., New York City 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 Mortgagee 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 Mortgagee, in its
individual capacity and not as trustee, agrees to compensate such holders for
loss of use of funds at Debt Rate until such payment is made and the Mortgagee
shall be entitled to any interest earned on such funds until such payment is
made. Any payment made hereunder shall be made 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 Mortgagee for cancellation promptly after such payment. Notwithstanding any
other provision of this Trust Indenture to the contrary, the Mortgagee 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 Mortgagee 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 12:30 PM, New York time, at the place of
payment. Prior to the due presentment for registration of transfer of any
Equipment Note, the Owner and the Mortgagee shall deem and treat the Person in
whose name any Equipment Note is registered on the Equipment Note Register as
the absolute owner and holder of such Equipment Note for the purpose of
receiving payment of all amounts payable with respect to such Equipment Note and
for all other purposes, and none of the Owner or the Mortgagee shall be affected
by any notice to the contrary. So long as any signatory to the Participation
Agreement or nominee thereof shall be a registered Note Holder, all payments to
it shall be made to the account of such Note Holder specified in Schedule 1
thereto and otherwise in the manner provided in or pursuant to the Participation
Agreement unless it shall have specified some other account or manner of payment
by notice to the Mortgagee consistent with this Section 2.03.
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(b) The Mortgagee, as agent for the Owner, shall exclude and
withhold at the appropriate rate from each payment of Original Amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or under
each Equipment Note (and such exclusion and withholding shall constitute payment
in respect of such Equipment Note) any and all United States withholding taxes
applicable thereto as required by Law. The Mortgagee 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 Note Holders, 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 it will deliver to each Note
Holder (with a copy to the Owner) appropriate receipts showing the payment
thereof, together with such additional documentary evidence as any such Note
Holder may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to the
Mortgagee a properly completed, accurate and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such holder
is made (but prior to the making of such payment), or in either of the two
preceding calendar years, and has not notified the Mortgagee of the withdrawal
or inaccuracy of such form prior to the date of such payment (and the Mortgagee
has no reason to believe that any information set forth in such form is
inaccurate), the Mortgagee shall withhold only the amount, if any, required by
Law (after taking into account any applicable exemptions properly claimed by the
Note Holder) to be withheld from payments hereunder or under the Equipment Notes
held by such holder in respect of United States federal income tax. If a Note
Holder (x) which is a Non-U.S. Person has furnished to the Mortgagee a properly
completed, accurate and currently effective U.S. Internal Revenue Service Form
4224 in duplicate (or such successor certificate, form or forms as may be
required by the United States Treasury Department as necessary in order to
properly avoid withholding of United States federal income tax), for each
calendar year in which a payment is made (but prior to
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the making of any payment for such year), and has not notified the Mortgagee of
the withdrawal or inaccuracy of such certificate or form prior to the date of
such payment (and the Mortgagee has no reason to believe that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Mortgagee 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 holder, no amount
shall be withheld from payments in respect of United States federal income tax.
If any Note Holder has notified the Mortgagee that any of the foregoing forms or
certificates is withdrawn or inaccurate, or if such holder has not filed a form
claiming an exemption from United States withholding tax 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
holder, the Mortgagee agrees to withhold from each payment due to the relevant
Note Holder withholding taxes at the appropriate 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 Mortgagee
to withhold taxes in the manner provided for herein or for any false, inaccurate
or untrue evidence provided by any Note Holder hereunder.
SECTION 2.04. Application of Payments
In the case of each Equipment Note, each payment of Original Amount,
Make-Whole Amount, if any, and interest due thereon shall be applied:
First: to the payment of accrued interest on such Equipment
Note (as well as any interest on any overdue Original Amount, any overdue
Make-Whole Amount, if any, and to the extent permitted by Law, any overdue
interest and any other overdue amounts thereunder) to the date of such
payment;
Second: to the payment of the Original Amount of such
Equipment Note (or a portion thereof) then due thereunder;
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Third: to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under such Equipment Note; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Original Amount of such Equipment Note remaining unpaid
(provided that such Equipment Note shall not be subject to redemption
except as provided in Sections 2.09, 2.10 and 2.11 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Original Amount of such Equipment Note in the inverse order of
their maturity.
SECTION 2.05. Termination of Interest in Collateral
No Note Holder nor any other Indenture Indemnitee shall, as such,
have any further interest in, or other right with respect to, the Collateral
when and if the Original Amount of, Make-Whole Amount, if any, and interest on
and other amounts due under all Equipment Notes held by such Note Holder and all
other sums then due and payable to such Note Holder, such Indenture Indemnitee
or the Mortgagee hereunder (including, without limitation, under the third
paragraph of Section 2.02 hereof and interest accruing on each Equipment Note
after the commencement of a Case) and under the other Operative Agreements
(other than the Related Indentures, the Second Mortgage and any Second Mortgage
Supplement) by the Owner (collectively, the "Secured Obligations") shall have
been paid in full.
SECTION 2.06. Registration Transfer and Exchange of Equipment Notes
The Mortgagee shall keep a register (the "Equipment Note Register")
in which the Mortgagee shall provide for the registration of Equipment Notes and
the registration of transfers of Equipment Notes. No such transfer shall be
given effect unless and until registration hereunder shall have occurred. The
Equipment Note Register shall be kept at the Corporate Trust Office of the
Mortgagee. The Mortgagee is hereby appointed "Equipment Note Registrar" for the
purpose of registering Equipment Notes and transfers of Equipment Notes as
herein provided. A holder of any Equipment Note intending to exchange such
Equipment Note shall surrender such Equipment Note to the Mortgagee at the
Corporate Trust Office, together with a written request from the registered
holder thereof for the issuance of a
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new Equipment Note, specifying, in the case of a surrender for transfer, the
name and address of the new holder or holders. Upon surrender for registration
of transfer of any Equipment Note, the Owner shall execute, and the Mortgagee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Equipment Notes of a like aggregate Original Amount
and of the same series. At the option of the Note Holder, Equipment Notes may be
exchanged for other Equipment Notes of any authorized denominations of a like
aggregate Original Amount, upon surrender of the Equipment Notes to be exchanged
to the Mortgagee at the Corporate Trust Office. Whenever any Equipment Notes are
so surrendered for exchange, the Owner shall execute, and the Mortgagee shall
authenticate and deliver, the Equipment Notes which the Note Holder making the
exchange is entitled to receive. All Equipment Notes issued upon any
registration of transfer or exchange of Equipment Notes (whether under this
Section 2.06 or under Section 2.07 hereof or otherwise under this Trust
Indenture) shall be the valid obligations of the Owner evidencing the same
respective obligations, and entitled to the same security and benefits under
this Trust Indenture, as the Equipment Notes surrendered upon such registration
of transfer or exchange. Every Equipment Note presented or surrendered for
registration of transfer, shall (if so required by the Mortgagee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Mortgagee duly executed by the Note Holder or such holder's
attorney duly authorized in writing, and the Mortgagee shall require evidence
satisfactory to it as to the compliance of any such transfer with the Securities
Act, and the securities Laws of any applicable state. The Mortgagee shall make a
notation on each new Equipment Note of the amount of all payments of Original
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 Original Amount marked on such new Equipment Note, as provided above, shall
be deemed to have been made thereon. The Owner shall not be required to exchange
any surrendered Equipment Notes as provided above during the ten-day period
preceding the due date of any payment on such Equipment Note. The Owner shall in
all cases deem the Person in whose name any Equipment Note shall have been
issued and registered as the absolute owner and holder of such Equipment Note
for the purpose
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of receiving payment of all amounts payable by the Owner with respect to such
Equipment Note and for all purposes until a notice stating otherwise is received
from the Mortgagee and such change is reflected on the Equipment Note Register.
The Mortgagee will promptly notify the Owner of each registration of a transfer
of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of this Trust
Indenture and the Participation Agreement applicable to Note Holders, including
Sections 6.3, 6.4 and 9.1 thereof and shall be deemed to have covenanted to the
parties to the Participation Agreement as to the matters covenanted by the
original Note Holder in the Participation Agreement. Subject to compliance by
the Note Holder and its transferee (if any) of the requirements set forth in
this Section 2.06, Mortgagee and Owner shall use all reasonable efforts to issue
new Equipment Notes upon transfer or exchange within 10 Business Days of the
date an Equipment Note is surrendered for transfer or exchange.
SECTION 2.07. 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 of the holder of such
Equipment Note, execute and the Mortgagee shall authenticate and deliver in
replacement thereof a new Equipment Note, payable in the same Original Amount
dated the same date and captioned as issued in connection with the Aircraft. If
the Equipment Note being replaced has become mutilated, such Equipment Note
shall be surrendered to the Mortgagee and a photocopy thereof shall be furnished
to the Owner. If the Equipment Note being replaced has been destroyed, lost or
stolen, the holder of such Equipment Note shall furnish to the Owner and the
Mortgagee such security or indemnity as may be required by them to save the
Owner and the Mortgagee harmless and evidence satisfactory to the Owner and the
Mortgagee of the destruction, loss or theft of such Equipment Note and of the
ownership thereof. If a "qualified institutional buyer" of the type referred to
in paragraph (a)(1)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act
(a "QIB") is the holder of any such destroyed, lost or stolen Equipment Note,
then the written indemnity of such QIB, signed by an authorized officer thereof,
in favor of, delivered to and in form reasonably satisfactory Owner shall be
accepted as satisfactory indemnity and security and no further indemnity or
security shall be required as a
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condition to the execution and delivery of such new Equipment Note. Subject to
compliance by the Note Holder with the requirements set forth in this Section
2.07, Mortgagee and Owner shall use all reasonable efforts to issue new
Equipment Notes within 10 Business Days of the date of the written request
therefor from the Note Holder.
SECTION 2.08. Payment of Expenses on Transfer; Cancellation
(a) No service charge shall be made to a Note Holder for any
registration of transfer or exchange of Equipment Notes, but the Mortgagee, as
Equipment Note Registrar, may 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.
(b) The Mortgagee shall cancel all Equipment Notes surrendered for
replacement, redemption, transfer, exchange, payment or cancellation and shall
destroy the canceled Equipment Notes.
SECTION 2.09. Mandatory Redemptions of Equipment Notes
On the date on which the Owner is required pursuant to Section 4.05
hereof to make payment for an Event of Loss with respect to the Airframe, all of
the Equipment Notes shall be redeemed in whole at a redemption price equal to
100% of the unpaid Original Amount thereof, together with all accrued interest
thereon to the date of redemption and all other Secured Obligations owed or then
due and payable to the Note Holders but without Make-Whole Amount. On such date
of redemption, all other Secured Obligations then due and payable to each
Indenture Indemnitee shall likewise be paid in full.
SECTION 2.10. Voluntary Redemptions of Equipment Notes
All (but not less than all) of the Equipment Notes may be redeemed
by the Owner upon at least 30 days' revocable prior written notice to the
Mortgagee and the Note Holders, and the Equipment Notes shall be redeemed in
whole at a redemption price equal to 100% of the unpaid Original Amount thereof,
together with accrued interest thereon to the date of redemption and all other
Secured Obligations owed or then due and payable to the Note Holders plus, if
such redemption is made prior to the Premium Termination Date, Make-Whole
Amount, if any. On such
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date of redemption, all other Secured Obligations then due and payable to each
Indenture Indemnitee shall likewise be paid in full.
SECTION 2.11. Redemptions; Notice of Redemption
(a) No redemption of any Equipment Note may be made except to the
extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Equipment Note may be made by the Mortgagee.
(b) Notice of redemption with respect to the Equipment Notes shall
be given by the Mortgagee by first-class mail, postage prepaid, mailed not less
than 25 nor more than 60 days prior to the applicable redemption date, to each
Note Holder of such Equipment Notes to be redeemed, at such Note Holder's
address appearing in the Equipment Note Register; provided that such notice
shall be revocable by written notice from the Owner to Mortgagee given not later
than three days prior to the redemption date. All notices of redemption shall
state: (1) the redemption date, (2) the applicable basis for determining the
redemption price, (3) that on the redemption date, the redemption price will
become due and payable upon each such Equipment Note, and that, if any such
Equipment Notes are then outstanding, interest on such 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 redemption
price.
(c) On or before the redemption date, the Owner (or any person on
behalf of 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 by the Mortgagee, deposit or cause to be deposited with the
Mortgagee by 12:30 PM New York time on the redemption date in immediately
available funds the redemption price of the Equipment Notes to be redeemed.
(d) Notice of redemption having been given as aforesaid, the
Equipment Notes to be redeemed shall, on the redemption date, become due and
payable at the Corporate Trust Office of the Mortgagee or at any office or
agency maintained for such purposes pursuant to Section 2.06, and from and after
such redemption date (unless there shall be a default in the payment of the
redemption price) any such Equipment Notes then
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outstanding shall cease to bear interest. Upon surrender of any such Equipment
Note for redemption in accordance with said notice, such Equipment Note shall be
redeemed at the redemption price. 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 in effect for such Equipment Note as of
such redemption date.
SECTION 2.12. Subordination
(a) The Owner and, by acceptance of its Equipment Notes of any
Series, each Note Holder of such Series, hereby agree that no payment or
distribution shall be made on or in respect of the Secured Obligations owed to
such Note Holder of such Series, including any payment or distribution of cash,
property or securities after the commencement of a proceeding (a "Case") of the
type referred to in Section 5.01(v), (vi) or (vii) hereof, except as expressly
provided in Article III hereof.
(b) By the acceptance of its Equipment Notes of any Series (other
than Series A), each Note Holder of such Series agrees that in the event that
such Note Holder, in its capacity as a Note Holder, 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 2.12 or Article III hereof, it will
hold any amount so received in trust for the Senior Holder (as defined in
Section 2.12(c) hereof) and will forthwith turn over such payment to the
Mortgagee in the form received to be applied as provided in Article III hereof.
(c) As used in this Section 2.12, the term "Senior Holder" shall
mean, (i) the Note Holders of Series A until the Secured Obligations in respect
of Series A Equipment Notes have been paid in full (including, without
limitation, interest accruing after the commencement of a Case), (ii) after the
Secured Obligations in respect of Series A Equipment Notes have been paid in
full (including, without limitation, such post-petition interest), the Note
Holders of Series B until the Secured Obligations in respect of Series B
Equipment Notes have been paid in full (including, without limitation, interest
accruing after the commencement of a Case), (iii) after the Secured Obligations
in respect of Series B Equipment Notes have been paid in full (including,
without limitation, such post-petition interest), the Note Holders of Series C
(including,
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without limitation, interest accruing after the commencement of a Case), and
(iv) after the Secured Obligations in respect of the Series C Equipment Notes
have been paid in full (including, without limitation, such post-petition
interest), the Note Holders of Series D.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS
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
Mortgagee shall be promptly distributed in the following order of priority:
(i) so much of such payment as shall be required to pay in
full the aggregate amount of the payment or payments of Original Amount
and interest (as well as any interest on any overdue Original Amount and,
to the extent permitted by Law, on any overdue interest) then due under
all Series A Equipment Notes shall be distributed to the Note Holders of
Series A ratably, without priority of one over the other, in the
proportion that the amount of such payment or payments then due under each
Series A Equipment Note bears to the aggregate amount of the payments then
due under all Series A 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 Original Amount and interest (as well
as any interest on any overdue Original Amount and, to the extent
permitted by Law, on any overdue interest) then due under all Series B
Equipment Notes shall be distributed to the Note Holders of Series B
ratably, without priority of one over the other, in the proportion that
the amount of such payment or payments then due under each Series B
Equipment Note 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 Original Amount and interest (as well
as any interest on any overdue Original Amount and, to the extent
permitted by Law, on any overdue interest) then due under all Series C
Equipment Notes shall be distributed to the
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Note Holders of Series C ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments then due
under each Series C Equipment Note 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 Original Amount and interest (as well
as any interest on any overdue Original Amount and, to the extent
permitted by Law, on any overdue interest) then due under all Series D
Equipment Notes shall be distributed to the Note Holders of Series D
ratably, without priority of one over the other, in the proportion that
the amount of such payment or payments then due under each Series D
Equipment Note bears to the aggregate amount of the payments then due
under all Series D Equipment Notes.
SECTION 3.02. Event of Loss; Replacement; Optional Redemption
Except as otherwise provided in Section 3.03 hereof, any payments
received by the Mortgagee (i) with respect to the Airframe or the Airframe and
one or more Engines as the result of an Event of Loss or (ii) pursuant to an
optional redemption of the Equipment Notes pursuant to Section 2.10 hereof shall
be applied to redemption of the Equipment Notes and to all other Secured
Obligations by applying such funds in the following order of priority:
First, (a) to reimburse the Mortgagee and the Note Holders 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
Agreements and then (b) to pay any other amounts then due
(except as provided in clause "Second" below) to the
Mortgagee, the Note Holders and the other Indenture
Indemnitees under this Trust Indenture, the Participation
Agreement or the Equipment Notes;
Second, (i) to pay the amounts specified in paragraph (i) of
clause "Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series A Equipment Notes;
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(ii) after giving effect to paragraph (i) above, to pay
the amounts specified in paragraph (ii) of clause
"Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, to pay
the amounts specified in paragraph (iii) of clause
"Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series C Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, to pay
the amounts specified in paragraph (iv) of clause
"Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of
the Series D Equipment Notes; and
Third, the balance, if any, of such payments or amounts 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 4.05 hereof, any insurance, condemnation or similar proceeds which
result from such Event of Loss and are paid over to the Mortgagee shall be held
by the Mortgagee as permitted by Section 7.04 hereof (provided that such moneys
shall be invested as provided in Section 6.06 hereof) as additional security for
the obligations of Owner under Operative Agreements 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.
SECTION 3.03. Payments After Event of Default
Except as otherwise provided in Section 3.04 hereof, all payments
received and amounts held or realized by the Mortgagee (including any amounts
realized by the Mortgagee from the exercise of any remedies pursuant to Article
V hereof) after an Event of Default shall have occurred and be continuing and
after the declaration specified in Section 5.02(b) hereof, as
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well as all payments or amounts then held by the Mortgagee as part of the
Collateral, shall be promptly distributed by the Mortgagee in the following
order of priority:
First, so much of such payments or amounts as shall be required to
(i) reimburse the Mortgagee or WTC for any tax (except to
the extent resulting from a failure of the Mortgagee to
withhold taxes pursuant to Section 2.04(b) hereof), expense
or other loss (including, without limitation, all amounts
to be expended at the expense of, or charged upon the
rents, revenues, issues, products and profits of, the
property included in the Collateral (all such property
being herein called the "Mortgaged Property") pursuant to
Section 5.03(b) hereof) incurred by the Mortgagee or WTC
(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 Mortgagee,
WTC or the Note Holders in the protection, exercise or
enforcement of any right, power or remedy or any damages
sustained by the Mortgagee, WTC or any Note Holder,
liquidated or otherwise, upon such Event of Default shall
be applied by the Mortgagee as between itself, WTC and the
Note Holders in reimbursement of such expenses and any
other expenses for which the Mortgagee, WTC or the Note
Holders are entitled to reimbursement under any Operative
Agreement and (ii) pay all amounts payable to the other
Indenture Indemnitees hereunder and under the Participation
Agreement; and in the case the aggregate amount to be so
distributed is insufficient to pay as aforesaid in clauses
(i) and (ii), then ratably, without priority of one over
the other, in proportion to the amounts owed each hereunder;
Second, so much of such payments or amounts remaining as shall be
required to reimburse the then existing or prior Note
Holders for payments made pursuant to Section 6.03 hereof
(to the extent not previously reimbursed) shall be
distributed to such then existing or prior Note Holders
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 Note Holder pursuant to
said Section 6.03 hereof;
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Third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate
unpaid Original Amount of all Series A Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and all
other Secured Obligations in respect of the Series
A Equipment Notes (other than Make-Whole Amount)
to the date of distribution, shall be distributed
to the Note Holders of Series A, 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
Original Amount of all Series A Equipment Notes
held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any)
to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series A
Equipment Notes held by all such holders plus the
accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Amount) 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 Original Amount of all Series B Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and all
other Secured Obligations in respect of the Series
B Equipment Notes (other than Make-Whole Amount)
to the date of distribution, shall be distributed
to the Note Holders of Series B, 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
Original Amount of all Series B Equipment Notes
held by each holder plus the accrued but unpaid
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interest and other amounts due hereunder or
thereunder (other than the Make-Whole Amount, if
any) to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series B
Equipment Notes held by all such holders plus the
accrued but unpaid interest and other amounts due
thereon (other than the Make-Whole Amount) 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 Original
Amount of all Series C Equipment Notes, and the
accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Amount which shall not
be due and payable) and all other Secured Obligations
in respect of the Series C Equipment Notes (other
than Make-Whole Amount) to the date of distribution,
shall be distributed to the Note Holders of Series C,
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 Original
Amount of all Series C Equipment Notes held by each
holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than the
Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Original
Amount of all Series C Equipment Notes held by all
such holders plus the accrued but unpaid interest and
other amounts due thereon (other than the Make-Whole
Amount) 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 Original Amount of all Series D Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and all
other Secured Obligations in
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respect of the Series D Equipment Notes (other
than Make-Whole Amount) to the date of
distribution, shall be distributed to the Note
Holders of Series D, 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 Original Amount of all
Series D Equipment Notes held by each holder plus
the accrued but unpaid interest and other amounts
due hereunder or thereunder (other than the
Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid
Original Amount of all Series D Equipment Notes
held by all such holders plus the accrued but
unpaid interest and other amounts due thereon
(other than the Make-Whole Amount) to the date of
distribution; and
Fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be held or distributed in accordance with
Section 3.01 of the Second Mortgage.
No Make-Whole Amount shall be due and payable on the Equipment Notes
as a consequence of the acceleration of the Equipment Notes as a result of an
Event of Default.
SECTION 3.04. Certain Payments
(a) Any payments received by the Mortgagee for which no provision as
to the application thereof is made in this Trust Indenture and for which such
provision is made in any other Operative Agreement shall be applied forthwith to
the purpose for which such payment was made in accordance with the terms of such
other Operative Agreement, as the case may be.
(b) Notwithstanding anything to the contrary contained in this
Article III, the Mortgagee will distribute promptly upon receipt any indemnity
payment received by it from the Owner in respect of the Mortgagee in its
individual capacity, any Note Holder or any other Indenture Indemnitee, in each
case whether or not pursuant to Section 8 of the Participation Agreement,
directly to the Person entitled thereto. Any payment received by the Mortgagee
under the third paragraph of Section 2.02 shall be
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distributed to the Subordination Agent in its capacity as Note Holder to be
distributed in accordance with the terms of the Intercreditor Agreement.
SECTION 3.05. Other Payments
Any payments received by the Mortgagee for which no provision as to
the application thereof is made elsewhere in this Trust Indenture or in any
other Operative Agreement shall be distributed by the Mortgagee to the extent
received or realized at any time, in the order of priority specified in Section
3.01 hereof and thereafter shall be applied to any other Secured Obligations
then due and payable, ratably, without priority of any holder thereof over any
other, and after payment in full of all amounts then due in accordance with
Section 3.01 and such Secured Obligations, and so long as no Special Default or
Event of Default shall have occurred and be continuing, in the manner provided
in clause "Third" of Section 3.02 hereof.
ARTICLE IV
COVENANTS OF THE OWNER
SECTION 4.01. Liens
The Owner will not directly or indirectly create, incur, assume or
suffer to exist any Lien or with respect to the Airframe or any Engine, title to
any of the foregoing or any interest of Owner 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.
SECTION 4.02. Possession, Operation and Use, Maintenance,
Registration and Markings
(a) General. Except as otherwise expressly provided herein, the
Owner shall be entitled to operate, use, locate, employ or otherwise utilize or
not utilize the Airframe, any Engine or any Parts in any lawful manner or place
in accordance with the Owner's business judgment.
(b) Possession. The Owner, without the prior consent of Mortgagee,
shall not lease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine, or
permit any Engine to be
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installed, on any airframe other than the Airframe; except that the Owner may,
without such prior written consent of Mortgagee:
(i) Subject or permit any Permitted Lessee to subject any
Engine to normal interchange agreements or pooling agreements or
arrangements, in each case customary in the commercial airline industry
and entered into by Owner or such Permitted Lessee, as the case may be, in
the ordinary course of business; provided, however, that if Owner's title
to any such Engine is divested under any such agreement or arrangement,
then such Engine shall be deemed to have suffered an Event of Loss as of
the date of such divestiture, and Owner shall comply with Section 4.04(e)
in respect thereof;
(ii) Deliver or permit any Permitted Lessee to deliver
possession of the Aircraft, Airframe, any Engine or any Part (x) to the
manufacturer thereof or to any third-party maintenance provider for
testing, service, repair, maintenance or overhaul work on the Aircraft,
Airframe, any Engine or any Part, or, to the extent required or permitted
by Section 4.04, for alterations or modifications in or additions to the
Aircraft, Airframe or any Engine or (y) to any Person for the purpose of
transport to a Person referred to in the preceding clause (x);
(iii) Install or permit any Permitted Lessee to install an
Engine on an airframe owned by Owner or such Permitted Lessee, as the case
may be, free and clear of all Liens, except (x) Permitted Liens and those
that do not apply to the Engines, and (y) the rights of third parties
under normal interchange or pooling agreements and arrangements of the
type that would be permitted under Section 4.02(b)(i);
(iv) Install or permit any Permitted Lessee to install an
Engine on an airframe leased to Owner or such Permitted Lessee, or
purchased by Owner or such Permitted Lessee subject to a mortgage,
security agreement, conditional sale or other secured financing
arrangement, but only if (x) such airframe is free and clear of all Liens,
except (A) the rights of the parties to such lease, or any such secured
financing arrangement, covering such airframe and (B) Liens of the type
permitted by clause (iii) above and (y) Owner or Permitted Lessee, as the
case may be, shall have received from the lessor, mortgagee, secured party
or conditional seller, in respect of such airframe, a written agreement
(which may be a copy of the lease, mortgage, security agreement,
conditional sale or other agreement covering such airframe), whereby such
Person agrees that it
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will not acquire or claim any right, title or interest in, or Lien on,
such Engine by reason of such Engine being installed on such airframe at
any time while such Engine is subject to the Lien of this Trust Indenture;
(v) Install or permit any Permitted Lessee to install an
Engine on an airframe owned by Owner or such Permitted Lessee, leased to
Owner or such Permitted Lessee, or purchased by Owner or such Permitted
Lessee subject to a conditional sale or other security agreement under
circumstances where neither clause (iii) or (iv) above is applicable;
provided, however, that any such installation shall be deemed an Event of
Loss with respect to such Engine, and Owner shall comply with Section
4.04(e) hereof in respect thereof;
(vi) Transfer or permit any Permitted Lessee to transfer
possession of the Aircraft, Airframe or any Engine to the U.S. Government,
in which event Owner shall promptly notify Mortgagee in writing of any
such transfer of possession and, in the case of any transfer pursuant to
CRAF, in such notification shall identify by name, address and telephone
numbers the Contracting Office Representative or Representatives for the
Military Airlift Command of the United States Air Force to whom notices
must be given and to whom requests or claims must be made to the extent
applicable under CRAF;
(vii) Enter into a charter or Wet Lease or other similar
arrangement with respect to the Aircraft or any other aircraft on which
any Engine may be installed (which shall not be considered a transfer of
possession hereunder); provided that the Owner's obligations hereunder
shall continue in full force and effect notwithstanding any such charter
or Wet Lease or other similar arrangement;
(viii) So long as no Special Default or Event of Default shall
have occurred and be continuing, and subject to the provisions of the
immediately following paragraph, enter into a lease with respect to the
Aircraft, Airframe or any Engine to any Permitted Air Carrier that is not
then subject to any bankruptcy, insolvency, liquidation, reorganization,
dissolution or similar proceeding and shall not have substantially all of
its property in the possession of any liquidator, trustee, receiver or
similar person; provided that, in the case only of a lease to a Permitted
Foreign Air Carrier, (A) the United States maintains diplomatic relations
with the country of domicile of such Permitted Foreign Air Carrier (or, in
the case of Taiwan, diplomatic relations at least as good as those in
effect on the Closing Date) and (B) Owner shall have furnished
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Mortgagee and Second Mortgagee a favorable opinion of counsel, reasonably
satisfactory to Mortgagee and Second Mortgagee, in the country of domicile
of such Permitted Foreign Air Carrier, that (v) the terms of such lease
are the legal, valid and binding obligations of the parties thereto
enforceable under the laws of such jurisdiction, (w) it is not necessary
for Mortgagee or Second Mortgagee to register or qualify to do business in
such jurisdiction, if not already so registered or qualified, as a result,
in whole or in part, of the proposed lease, (x) Mortgagee's and Second
Mortgagee's Lien in respect of, the Aircraft, Airframe and Engines will be
recognized in such jurisdiction, (y) the Laws of such jurisdiction of
domicile require fair compensation by the government of such jurisdiction,
payable in a currency freely convertible into Dollars, for the loss of
title to the Aircraft, Airframe or Engines in the event of the requisition
by such government of such title (unless Owner shall provide insurance in
the amounts required with respect to hull insurance under this Trust
Indenture covering the requisition of title to the Aircraft, Airframe or
Engines by the government of such jurisdiction so long as the Aircraft,
Airframe or Engines are subject to such lease) and (z) the agreement of
such Permitted Air Carrier that its rights under the lease are subject and
subordinate to all the terms of this Trust Indenture is enforceable
against such Permitted Air Carrier under applicable law;
provided that (1) the rights of any transferee who receives possession by reason
of a transfer permitted by this Section 4.02(b) (other than by a transfer of an
Engine which is deemed an Event of Loss) shall be subject and subordinate to all
the terms of this Trust Indenture, (2) the Owner shall remain primarily liable
for the performance of all of the terms of this Trust Indenture and all the
terms and conditions of this Trust Indenture and the other Operative Agreements
shall remain in effect and (3) no lease or transfer of possession otherwise in
compliance with this Section 4.02(b) shall (x) result in any registration or
re-registration of an Aircraft, except to the extent permitted by Section
4.02(e) or the maintenance, operation or use thereof except in compliance with
Sections 4.02(c) and 4.02(d) or (y) permit any action not permitted to the Owner
hereunder.
In the case of any lease permitted under this Section 4.02(b), the
Owner will include in such lease appropriate provisions which (s) make such
lease expressly subject and subordinate to all of the terms of this Trust
Indenture, including the rights of the Mortgagee to avoid such lease in the
exercise of its rights to repossession of the Airframe and
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Engines hereunder; (t) require the Permitted Lessee to comply with the terms of
Section 4.06; (u) expressly prohibit the Permitted Lessee from any further
subleasing of the Airframe or any Engine subject thereto (except for (i)
transfers of the type permitted in Section 4.02(b)(i) through (vii), inclusive
and (ii) subleasing where the head lessee is a person described in clause (i) of
the definition of Permitted Air Carrier (and all other provisions of this
Section 4.02(b) applicable to a lease shall apply to any such sublease)) and (v)
require that the Airframe or any Engine subject thereto be used in accordance
with the limitations applicable to the Owner's possession and use provided in
this Trust Indenture. No lease permitted under this Section 4.02(b) shall be
entered into unless (w) Owner shall provide written notice to Mortgagee (such
notice in the event of a lease to a U.S. Air Carrier to be given promptly after
entering into any such lease or, in the case of a lease to any other Permitted
Air Carrier, 10 days in advance of entering into such lease); (x) Owner shall
furnish to Mortgagee evidence reasonably satisfactory to Mortgagee that the
insurance required by Section 4.06 remains in effect; (y) all necessary
documents shall have been duly filed, registered or recorded in such public
offices as may be required fully to preserve the first priority security
interest (subject to Permitted Liens) of Mortgagee and the second priority
security interest (subject to Permitted Liens) of the Second Mortgagee in the
Aircraft, Airframe and Engines; and (z) Owner shall reimburse Mortgagee and
Second Mortgagee for all of its reasonable out-of-pocket fees and expenses,
including, without limitation, reasonable fees and disbursements of counsel,
incurred by Mortgagee and Second Mortgagee in connection with any such lease.
For all purposes of this Section, the term "lease" shall be deemed to include
interchange agreements with respect to the Aircraft or Airframe. Except as
otherwise provided herein and without in any way relieving the Owner from its
primary obligation for the performance of its obligations under this Trust
Indenture, the Owner may in its sole discretion permit a lessee to exercise any
or all rights which the Owner would be entitled to exercise under Sections 4.02
(other than a change in registration pursuant to Section 4.02(e)) and 4.04, and
may cause a lessee to perform any or all of the Owner's obligations under
Article IV, and the Mortgagee agrees to accept actual and full performance
thereof by a lessee in lieu of performance by the Owner.
Mortgagee hereby agrees, and each Note Holder by acceptance of an
Equipment Note agrees, for the benefit of each
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lessor, conditional seller, indenture trustee or secured party of any engine
leased to, or purchased by, Owner or any Permitted Lessee subject to a lease,
conditional sale, trust indenture or other security agreement that Mortgagee,
each Note Holder and their respective successors and assigns will not acquire or
claim, as against such lessor, conditional seller, indenture trustee or secured
party, any right, title or interest in any engine as the result of such engine
being installed on the Airframe or any airframe subject to the Lien of a Related
Indenture or the Second Mortgage at any time while such engine is subject to
such lease, conditional sale, trust indenture or other security agreement and
owned by such lessor or conditional seller or subject to a trust indenture or
security interest in favor of such indenture trustee or secured party.
(c) Operation and Use. So long as the Aircraft, Airframe or any
Engine is subject to the Lien of this Trust Indenture, the Owner shall not
operate, use or locate the Aircraft, Airframe or any Engine, or allow the
Aircraft, Airframe or any Engine to be operated, used or located, (i) in any
area excluded from coverage by any insurance required by the terms of Section
4.06, except in the case of a requisition by the U.S. Government where the Owner
obtains indemnity in lieu of such insurance from the U.S. Government, or
insurance from the U.S. Government, against substantially the same risks and for
at least the amounts of the insurance required by Section 4.06 covering such
area, or (ii) in any recognized area of hostilities unless covered in accordance
with Section 4.06 by war risk insurance, or in either case unless the Aircraft,
the Airframe or any Engine is only temporarily operated, used or located in such
area as a result of an emergency, equipment malfunction, navigational error,
hijacking, weather condition or other similar unforeseen circumstance, so long
as Owner diligently and in good faith proceeds to remove the Aircraft from such
area. So long as the Aircraft, the Airframe or any Engine is subject to the Lien
of this Trust Indenture, the Owner shall not permit such Aircraft, Airframe or
any Engine, as the case may be, to be used, operated, maintained, serviced,
repaired or overhauled (x) in violation of any Law binding on or applicable to
such Aircraft, Airframe or Engine or (y) in violation of any airworthiness
certificate, license or registration of any Government Entity relating to the
Aircraft, the Airframe or any Engine, except (i) immaterial or non-recurring
violations with respect to which corrective measures are taken promptly by Owner
or Permitted Lessee, as the case may be, upon discovery thereof, or (ii) to the
extent the
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validity or application of any such Law or requirement relating to any such
certificate, license or registration is being contested in good faith by Owner
or Permitted Lessee in any reasonable manner which does not involve any material
risk of the sale, forfeiture or loss of the Aircraft, Airframe or any Engine,
any material risk of criminal liability or material civil penalty against
Mortgagee or Second Mortgagee or impair the Mortgagee's or Second Mortgagee's
security interest in the Aircraft, Airframe or any Engine.
(d) Maintenance and Repair. So long as the Aircraft, Airframe or any
Engine is subject to the Lien of this Trust Indenture, the Owner, at its own
cost and expense, shall cause the Aircraft, Airframe and each Engine to be
maintained, serviced, repaired and overhauled in accordance with (i) maintenance
standards required by or substantially equivalent to those required by the FAA
or the central aviation authority of Canada, France, Germany, Japan, the
Netherlands or the United Kingdom for the Aircraft, Airframe and Engines, so as
to (A) keep the Aircraft, the Airframe and each Engine in as good operating
condition as on the Closing Date, ordinary wear and tear excepted, (B) keep the
Aircraft in such operating condition as may be necessary to enable the
applicable airworthiness certification of such Aircraft to be maintained under
the regulations of the FAA or other Aviation Authority then having jurisdiction
over the operation of the Aircraft, except during (x) temporary periods of
storage in accordance with applicable regulations, (y) maintenance and
modification permitted hereunder or (z) periods when the FAA or such other
Aviation Authority has revoked or suspended the airworthiness certificates for
Similar Aircraft; and (ii) except during periods when a Permitted Lease is in
effect, the same standards as Owner uses with respect to similar aircraft of
similar size in its fleet operated by Owner in similar circumstances and, during
any period in which a Permitted Lease is in effect, the same standards used by
the Permitted Lessee with respect to similar aircraft of similar size in its
fleet and operated by the Permitted Lessee in similar circumstances. Owner
further agrees that the Aircraft, Airframe and Engines will be maintained, used,
serviced, repaired, overhauled or inspected in compliance with applicable Laws
with respect to the maintenance of the Aircraft and in compliance with each
applicable airworthiness certificate, license and registration relating to the
Aircraft, Airframe or any Engine issued by the Aviation Authority, other than
minor or nonrecurring violations with respect to which corrective measures
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are taken upon discovery thereof and except to the extent Owner or Permitted
Lessee is contesting in good faith the validity or application of any such Law
or requirement relating to any such certificate, license or registration in any
reasonable manner which does not create a material risk of sale, loss or
forfeiture of the Aircraft, the Airframe or any Engine or the interest of
Mortgagee or Second Mortgagee therein, or any material risk of criminal
liability or material civil liability against Mortgagee or Second Mortgagee. The
Owner shall maintain or cause to be maintained the Aircraft Documents in the
English language.
(e) Registration. The Owner on or prior to the date of the Closing
shall cause the Aircraft to be duly registered in its name under the Act and
except as otherwise permitted by this Section 4.02(e) at all times thereafter
shall cause the Aircraft to remain so registered. So long as no Special Default
or Event of Default shall have occurred and be continuing, Owner may, by written
notice to Mortgagee, request to change the country of registration of the
Aircraft. Any such change in registration shall be effected only in compliance
with, and subject to all of the conditions set forth in, Section 6.4.5 of the
Participation Agreement. Unless the Trust Indenture has been discharged, Owner
shall also cause the Trust Indenture and the Second Mortgage to be duly recorded
and at all times maintained of record as a first-priority perfected mortgage and
as a second-priority perfected mortgage, respectively (subject in each case to
Permitted Liens), on the Aircraft, the Airframe and each of the Engines (except
to the extent such perfection or priority cannot be maintained solely as a
result of the failure by Mortgagee or Second Mortgagee to execute and deliver
any necessary documents).
(f) Markings. If permitted by applicable Law, on or reasonably
promptly after the Closing Date, Owner will cause to be affixed to, and
maintained in, the cockpit of the Airframe and on each Engine, in each case, in
a clearly visible location, a placard of a reasonable size and shape bearing the
legend: "Subject to a security interest in favor of Wilmington Trust Company,
not in its individual capacity but solely as Mortgagee." Such placards may be
removed temporarily, if necessary, in the course of maintenance of the Airframe
or Engines. If any such placard is damaged or becomes illegible, Owner shall
promptly replace it with a placard complying with the requirements of this
Section 4.02(f).
SECTION 4.03. Inspection
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(a) At all reasonable times, so long as the Aircraft is subject to
the Lien of this Trust Indenture, Mortgagee and its authorized representatives
(the "Inspecting Parties") may (not more than once every 12 months unless a
Special Default or an Event of Default has occurred and is continuing then such
inspection right shall not be so limited) inspect the Aircraft, Airframe and
Engines (including without limitation, the Aircraft Documents) and any such
Inspecting Party may make copies of such Aircraft Documents not reasonably
deemed confidential by Owner or such Permitted Lessee.
(b) Any inspection of the Aircraft hereunder shall be limited to a
visual, walk-around inspection and shall not include the opening of any panels,
bays or other components of the Aircraft, and no such inspection shall interfere
with Owner's or any Permitted Lessee's maintenance and operation of the
Aircraft, Airframe and Engines.
(c) With respect to such rights of inspection, Mortgagee shall not
have any duty or liability to make, or any duty or liability by reason of not
making, any such visit, inspection or survey.
(d) Each Inspecting Party shall bear its own expenses in connection
with any such inspection (including the cost of any copies made in accordance
with Section 4.03(a)).
SECTION 4.04. Replacement and Pooling of Parts, Alterations,
Modifications and Additions; Substitution of Engines
(a) Replacement of Parts. Except as otherwise provided herein, so
long as the Airframe or Engine is subject to the Lien of this Indenture, Owner,
at its own cost and expense, will, or will cause a Permitted Lessee to, at its
own cost and expense, promptly replace (or cause to be replaced) all Parts which
may from time to time be incorporated or installed in or attached to the
Aircraft, Airframe or any Engine and 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. In addition, Owner
may, at its own cost and expense, or may permit a Permitted Lessee at its own
cost and expense to, remove (or cause to be removed) 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
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permanently rendered unfit for use; provided, however, that Owner, except as
otherwise provided herein, at its own cost and expense, will, or will cause a
Permitted Lessee at its own cost and expense to, replace such Parts as promptly
as practicable. All replacement Parts shall be free and clear of all Liens,
except for Permitted Liens and pooling arrangements to the extent permitted by
Section 4.04(c) below (and except in the case of replacement property
temporarily installed on an emergency basis) and shall be in good operating
condition and have a value and utility not less than the value and utility of
the Parts replaced (assuming such replaced Parts were in the condition required
hereunder).
(b) Parts. Except as otherwise provided herein, any Part at any time
removed from the Airframe or any Engine shall remain subject to the Lien of this
Trust Indenture, no matter where located, until such time as such Part shall be
replaced by a Part that has been incorporated or installed in or attached to
such Airframe or any Engine and that meets the requirements for replacement
Parts specified above. Immediately upon any replacement Part becoming
incorporated or installed in or attached to such Airframe or any Engine as
provided in Section 4.04(a), without further act, (i) the replaced Part shall
thereupon be free and clear of all rights of the Mortgagee and shall no longer
be deemed a Part hereunder, and (ii) such replacement Part shall become subject
to this Trust Indenture and be deemed part of such Airframe or any Engine, as
the case may be, for all purposes hereof to the same extent as the Parts
originally incorporated or installed in or attached to such Airframe or any
Engine.
(c) Pooling of Parts. Any Part removed from the Aircraft, Airframe
or an Engine may be subjected by the Owner or a Permitted Lessee to a normal
pooling arrangement customary in the airline industry and entered into in the
ordinary course of business of Owner or Permitted Lessee provided that the part
replacing such removed Part shall be incorporated or installed in or attached to
such Airframe or any Engine in accordance with Sections 4.04(a) and 4.04(b) 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 any Engine may be owned by any third party, subject to a normal pooling
arrangement, so long as the Owner or a Permitted Lessee, at its own cost and
expense, as promptly thereafter as reasonably possible, either (i) causes such
replacement part to become
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subject to the Lien of this Trust Indenture, free and clear of all Liens except
Permitted Liens, at which time such replacement part shall become a Part or (ii)
replaces (or causes to be replaced) such replacement part by incorporating or
installing in or attaching to the Aircraft, Airframe or any Engine a further
replacement Part owned by the Owner free and clear of all Liens except Permitted
Liens and which shall become subject to the Lien of this Trust Indenture in
accordance with Section 4.04(b).
(d) Alterations, Modifications and Additions. The Owner shall, or
shall cause a Permitted Lessee to, make (or cause to be made) alterations and
modifications in and additions to the Aircraft, Airframe and each Engine as may
be required to be made from time to time to meet the applicable standards of the
FAA or other Aviation Authority having jurisdiction over the operation of the
Aircraft, to the extent made mandatory in respect of the Aircraft (a "Mandatory
Modification"); provided however, that the Owner or a Permitted Lessee may, in
good faith and by appropriate procedure, contest the validity or application of
any law, rule, regulation or order in any reasonable manner which does not
materially adversely affect Mortgagee's or Second Mortgagee's interest in the
Aircraft and does not involve any material risk of sale, forfeiture or loss of
the Aircraft or the interest of Mortgagee or Second Mortgagee therein, or any
material risk of civil liability or any material risk of criminal liability
being imposed on Mortgagee or Second Mortgagee or the holder of any Equipment
Note. In addition, the Owner, at its own expense, may, or may permit a Permitted
Lessee at its own cost and expense to, from time to time make or cause to be
made such alterations and modifications in and additions to the Airframe or any
Engine (each an "Optional Modification") as the Owner or such Permitted Lessee
may deem desirable in the proper conduct of its business including, without
limitation, removal of Parts which Owner deems are obsolete or no longer
suitable or appropriate for use in the Aircraft, Airframe or such Engine;
provided, however, that no such Optional Modification shall (i) materially
diminish the value, utility, or remaining useful life of the Aircraft or any
Engine below its value, utility or remaining useful life immediately prior to
such Optional Modification (assuming the Aircraft or such Engine was in the
condition required by the Trust Indenture immediately prior to such Optional
Modification) or (ii) cause the Aircraft to cease to have the applicable
standard certificate of airworthiness. All Parts incorporated or installed in or
attached to any Airframe or any Engine as the result of any alteration,
modification or addition effected by
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the Owner shall be free and clear of any Liens except Permitted Liens and shall
become subject to the Lien of this Trust Indenture; provided that the Owner or
any Permitted Lessee may, at any time so long as the Airframe or any Engine is
subject to the Lien of this Trust Indenture, remove any such Part (such Part
being referred to herein as a "Removable Part") from such Airframe or an Engine
if (i) such Part is in addition to, and not in replacement of or in substitution
for, any Part originally incorporated or installed in or attached to such
Airframe or any Engine at the time of delivery thereof from the manufacturer or
any Part in replacement of, or in substitution for, any such original Part, (ii)
such Part is not required to be incorporated or installed in or attached or
added to such Airframe or any Engine pursuant to the terms of Section 4.02(d) or
the first sentence of this Section 4.04(d), and (iii) such Part can be removed
from such Airframe or any Engine without materially diminishing the value,
utility or remaining useful life which such Airframe or any Engine would have
had at the time of removal had such removal not occurred, assuming the Aircraft
was otherwise maintained in the condition and repair required by this Trust
Indenture. Upon the removal by the Owner of any such Part as above provided,
title thereto shall, without further act, be free and clear of all rights of the
Mortgagee and such Part shall no longer be deemed a Part hereunder. Removable
Parts may be leased from or financed by third parties other than Mortgagee.
(e) Substitution of Engines. Upon the occurrence of an Event of Loss
with respect to an Engine under circumstances in which an Event of Loss with
respect to the Airframe has not occurred, Owner shall promptly (and in any event
within 15 days after such occurrence) give the Mortgagee written notice of such
Event of Loss. The Owner shall have the right at its option at any time, on at
least 5 Business Days' prior notice to the Mortgagee, to substitute, and if an
Event of Loss shall have occurred with respect to an Engine under circumstances
in which an Event of Loss with respect to the Airframe has not occurred, shall
within 60 days of the occurrence of such Event of Loss substitute, a Replacement
Engine for any Engine. In such event, immediately upon the effectiveness of such
substitution and without further act, (i) the replaced Engine shall thereupon be
free and clear of all rights of the Mortgagee and the Lien of this Trust
Indenture and shall no longer be deemed an Engine hereunder and (ii) such
Replacement Engine shall become subject to this Trust Indenture and be deemed
part of the Aircraft for all purposes hereof to the same extent as the replaced
Engine.
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Such Replacement Engine shall be an engine manufactured by Engine
Manufacturer that is the same model as the Engine to be replaced thereby, or an
improved model, and that is suitable for installation and use on the Airframe,
and that has a value, utility and remaining useful life (without regard to hours
and cycles remaining until overhaul) at least equal to the Engine to be replaced
thereby (assuming that such Engine had been maintained in accordance with this
Trust Indenture). 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
Mortgagee agrees to cooperate with the Owner to the extent necessary to enable
it to timely satisfy such conditions:
(i) an executed counterpart of each of the following documents
shall be delivered to the Mortgagee:
(A) a Trust Indenture Supplement and a Second Mortgage
Supplement covering the Replacement Engine, which shall have been
duly filed for recordation pursuant to the 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 4.02(e), 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
Mortgagee); and
(C) UCC financing statements covering the security interests
created by this Trust Indenture and the Second Mortgage (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 Mortgagee and the Second Mortgagee to protect the
security interests of the Mortgagee and the Second Mortgagee in the
Replacement Engine;
(ii) the Owner shall cause to be delivered to the Mortgagee
and Second Mortgagee an opinion of counsel to the effect that the Lien of
this Trust Indenture and the Second Mortgage continues to be in full force
and effect with respect to the Replacement Engine and such evidence of
compliance with the insurance provisions of Section 4.06
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with respect to such Replacement Engine as Mortgagee and Second Mortgagee
shall reasonably request;
(iii) the Owner shall have furnished to Mortgagee and Second
Mortgagee an opinion of Owner's aviation law counsel reasonably
satisfactory to Mortgagee and Second Mortgagee and addressed to Mortgagee
and Second Mortgagee as to the due filing for recordation of the Trust
Indenture Supplement and the Second Mortgage Supplement with respect to
such Replacement Engine under the Act or such other applicable law of the
jurisdiction other than the United States in which the Aircraft is
registered in accordance with Section 4.02(e), as the case may be; and
(iv) the Owner shall have furnished to Mortgagee a certificate
of a qualified aircraft engineer (who may be an employee of Owner)
certifying that such Replacement Engine has a value and utility and
remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to the Engine so replaced (assuming that such
Engine had been maintained in accordance with this Trust Indenture).
Upon satisfaction of all conditions to such substitution, (x) the
Mortgagee 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 from the Lien of this Trust
Indenture, (y) the Mortgagee 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 (other than
those reserved to others under Section 4.06(b)) and proceeds in respect of any
Event of Loss giving rise to such replacement to the extent not previously
applied to the purchase price of the Replacement Engine as provided in Section
4.05(d).
SECTION 4.05. Loss, Destruction or Requisition
(a) Event of Loss With Respect to the Airframe.
Upon the occurrence of an Event of Loss with respect to the
Airframe, the Owner shall promptly (and in any event within 15 days after such
occurrence) give the Mortgagee written notice of such Event of Loss. The Owner
shall, within 45 days after such occurrence, give the Mortgagee written notice
of Owner's election to either replace the Airframe as provided under Section
4.05(a)(i) or to make payment in respect of such Event of Loss as
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provided under Section 4.05(a)(ii) (it being agreed that if Owner shall not have
given the Mortgagee such notice of such election within the above specified time
period, the Owner shall be deemed to have elected to make payment in respect of
such Event of Loss as provided under Section 4.05(a)(ii)):
(i) if Owner elects to replace the Airframe, Owner shall,
subject to the satisfaction of the conditions contained in Section
4.05(c), as promptly as possible and in any event within 120 days after
the occurrence of such Event of Loss, cause to be subjected to the Lien of
this Trust Indenture, in replacement of the Airframe with respect to which
the Event of Loss occurred, a Replacement Airframe and, if any Engine
shall have been installed on the Airframe when it suffered the Event of
Loss, a Replacement Engine therefor, such Replacement Airframe and
Replacement Engines to be free and clear of all Liens except Permitted
Liens and to have a value, utility and remaining useful life (without
regard to hours or cycles remaining until the next regular maintenance
check) at least equal to the Airframe or Engine, as the case may be, to be
replaced thereby (assuming that such Airframe or Engine had been
maintained in accordance with this Trust Indenture); provided that if the
Owner shall not perform its obligation to effect such replacement under
this clause (i) during the 120-day period of time provided herein, it
shall pay the amounts required to be paid pursuant to and within the time
frame specified in clause (ii) below; or
(ii) if Owner elects to make a payment in respect of such
Event of Loss of the Airframe, Owner shall make a payment to the Mortgagee
for purposes of redeeming Equipment Notes in accordance with Section 2.09
hereof on a date on or before the Business Day next following the earlier
of (x) the 120th day following the date of the occurrence of such Event of
Loss, and (y) the fourth Business Day following the receipt of insurance
proceeds with respect to such Event of Loss (but in any event not earlier
than the date of Owner's election under Section 4.05(a) to make payment
under this Section 4.05(a)(ii)); and upon such payment and payment of all
other Secured Obligations then due and payable, the Mortgagee shall, at
the cost and expense of the Owner, release from the Lien of this Trust
Indenture the Airframe and the Engines, by executing and delivering to the
Owner all documents and instruments as the Owner may reasonably request to
evidence such release.
(b) Effect of Replacement. Should the Owner have provided a
Replacement Airframe and Replacement Engines, if any, as provided for in Section
4.05(a)(i), (i) the Lien of this Trust
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Indenture shall continue with respect to such Replacement Airframe and
Replacement Engines, if any, as though no Event of Loss had occurred; (ii) the
Mortgagee shall, at the cost and expense of the Owner, release from the Lien of
this Trust Indenture the replaced Airframe and Engines, if any, by executing and
delivering to the Owner such documents and instruments as the Owner may
reasonably request to evidence such release; and (iii) in the case of a
replacement upon an Event of Loss, the Mortgagee shall assign to the Owner all
claims the Mortgagee may have against any other Person arising from the Event of
Loss and the Owner shall receive all insurance proceeds (other than those
reserved to others under Section 4.06(b)) and proceeds from any award in respect
of condemnation, confiscation, seizure or requisition, including any investment
interest thereon, to the extent not previously applied to the purchase price of
the Replacement Airframe and Replacement Engines, if any, or payment of all
other Secured Obligations then due and payable, as provided in Section 4.05(d).
(c) Conditions to Airframe and Engine Replacement. The Owner's right
to substitute a Replacement Airframe and Replacement Engines, if any, as
provided in Section 4.05(a)(i) shall be subject to the fulfillment, at the
Owner's sole cost and expense, in addition to the conditions contained in such
Section 4.05(a)(i), of the following conditions precedent:
(i) on the date when the Replacement Airframe and Replacement
Engines, if any, is subjected to the Lien of this Trust Indenture and the
Second Mortgage (such date being referred to in this Section 4.05 as the
"Replacement Closing Date"), an executed counterpart of each of the
following documents (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 Mortgagee:
(A) a Trust Indenture Supplement and a Second Mortgage
Supplement covering the Replacement Airframe and Replacement
Engines, if any, which shall have been duly filed for recordation
pursuant to the 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 4.02(e), 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
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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 Mortgagee); and
(D) UCC 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 4.02(e)) as are deemed necessary or desirable by counsel for
the Mortgagee and the Second Mortgagee to protect the security
interests of the Mortgagee and the Second Mortgagee in the
Replacement Airframe and Replacement Engines, if any;
(ii) the Replacement Airframe and Replacement Engines, if any,
shall be of the same model as the Airframe or Engines, as the case may be,
or an improved model of such aircraft or engines of the manufacturer
thereof, shall have a value and utility (without regard to hours or cycles
remaining until the next regular maintenance check) at least equal to, and
be in as good operating condition and repair as, the Airframe and any
Engines replaced (assuming such Airframe and Engines had been maintained
in accordance with this Trust Indenture);
(iii) the Mortgagee (acting directly or by authorization to
its special counsel) shall have received satisfactory evidence as to the
compliance with Section 4.06 with respect to the Replacement Airframe and
Replacement Engines, if any;
(iv) on the Replacement Closing Date, (A) the Owner shall
cause the Replacement Airframe and Replacement Engines, if any, to be
subject to the Lien of this Trust Indenture and the Second Mortgage free
and clear of Liens (other than Permitted Liens), (B) the Replacement
Airframe shall have been duly certified by the FAA as to type and
airworthiness in accordance with the terms of this Trust Indenture and (C)
application for registration of the Replacement Airframe in accordance
with Section 4.02(e) shall have been duly made with the FAA or other
applicable Aviation Authority and the Owner shall have authority to
operate the Replacement Airframe;
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(v) the Mortgagee and the Second Mortgagee at the expense of
the Owner, shall have received (acting directly or by authorization to its
special counsel) (A) an opinion of counsel, addressed to the Mortgagee and
the Second Mortgagee, to the effect that the Replacement Airframe and
Replacement Engine, if any, has or have duly been made subject to the Lien
of this Trust Indenture and the Second Mortgage, and the Mortgagee will be
entitled to the benefits of Section 1110 with respect to the Replacement
Airframe, provided that such opinion with respect to Section 1110 may be
based on the same reasoning, and be subject to the same assumptions and
qualifications as the opinion referred to in Section 4.1.2(D) of the
Participation Agreement and need not be delivered to the extent that
immediately prior to such replacement the benefits of Section 1110 were
not, solely by reason of a change in law or court interpretation thereof,
available to Mortgagee, and (B) an opinion of Owner's aviation law counsel
reasonably satisfactory to and addressed to Mortgagee and Second Mortgagee
as to the due registration of any such Replacement Airframe and the due
filing for recordation of each Trust Indenture Supplement and Second
Mortgage Supplement with respect to such Replacement Airframe or
Replacement Engine under the Act or such other applicable law of the
jurisdiction other than the United States in which the Replacement
Airframe is to be registered in accordance with Section 4.02(e), as the
case may be;
(vi) the Owner shall have furnished to the Mortgagee a
certificate of a qualified aircraft engineer (who may be an employee of
Owner) certifying that the Replacement Airframe and Replacement Engines,
if any, have a value and utility and remaining useful life (without regard
to hours and cycles remaining until overhaul) at least equal to the
Airframe and any Engines so replaced (assuming that such Airframe and
Engines had been maintained in accordance with this Trust Indenture); and
(vii) the Owner shall have furnished to the Mortgagee a
certified report of a qualified independent aircraft appraiser, reasonably
satisfactory to the Mortgagee, certifying that the Replacement Airframe
and Replacement Engines, if any, have a value and utility and remaining
useful life (without regard to hours and cycles remaining until overhaul)
at least equal to the Airframe and any Engines so replaced (assuming that
such Airframe and Engines were in the condition required by the terms
hereof).
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(d) Certain Payments Received on Account of an Event of Loss. Any
insurance proceeds in respect of damage or loss constituting an Event of Loss
and any other amounts received at any time by Mortgagee or Owner from any
Government Entity or any other Person in respect of any Event of Loss will be
applied as follows:
(i) If such amounts are received with respect to the Airframe,
and any Engine installed thereon at the time of such Event of Loss, upon
compliance by Owner with the applicable terms of Section 4.05(c) with
respect to the Event of Loss for which such amounts are received, such
amounts shall be paid over to, or retained by, Owner;
(ii) If such amounts are received with respect to an Engine
(other than an Engine installed on the Airframe at the time such Airframe
suffers an Event of Loss), upon compliance by Owner with the applicable
terms of Section 4.04(e) with respect to the Event of Loss for which such
amounts are received, such amounts shall be paid over to, or retained by,
Owner;
(iii) If such amounts are received, in whole or in part, with
respect to the Airframe, and Owner makes, has made or is deemed to have
made the election set forth in Section 4.05(a)(ii), such amounts shall be
applied as follows:
first, if the sum described in Section 4.05(a)(ii) has not
then been paid in full by Owner, such amounts shall be paid to Mortgagee
to the extent necessary to pay in full such sum; and
second, the remainder, if any, shall be paid to Owner.
(e) Requisition for Use. In the event of a requisition for use by
any Government Entity of the Airframe and the Engines, if any, or engines
installed on such Airframe while such Airframe is subject to the Lien of this
Trust Indenture, the Owner shall promptly notify the Mortgagee of such
requisition and all of the Owner's obligations under this Trust Indenture shall
continue to the same extent as if such requisition had not occurred except to
the extent that the performance or observance of any obligation by the Owner
shall have been prevented or delayed by such requisition; provided that the
Owner's obligations under this Section 4.05 with respect to the
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occurrence of an Event of Loss for the payment of money and under Section 4.06
(except while an assumption of liability by the U.S. Government of the scope
referred to in Section 4.02(c) is in effect) shall not be reduced or delayed by
such requisition. Any payments received by the Mortgagee or the Owner or
Permitted Lessee from such Government Entity with respect to such requisition of
use shall be paid over to, or retained by, the Owner. In the event of an Event
of Loss of an Engine resulting from the requisition for use by a Government
Entity of such Engine (but not the Airframe), the Owner will replace such Engine
hereunder by complying with the terms of Section 4.04(e) and any payments
received by the Mortgagee or the Owner from such Government Entity with respect
to such requisition shall, upon such replacement and to the extent not
theretofore applied as provided herein, be paid over to, or retained by, the
Owner.
(f) Certain Payments to be Held As Security. Any amount referred to
in this Section 4.05 or in Section 4.06 which is payable or creditable to, or
retainable by, the Owner shall not be paid or credited to, or retained by the
Owner if at the time of such payment, credit or retention a Special Default or
an Event of Default shall have occurred and be continuing, but shall be paid to
and held by the Mortgagee as security for the obligations of the Owner under
this Trust Indenture, the Second Mortgage and the Operative Agreements, and at
such time as there shall not be continuing any such Special Default or Event of
Default such amount and any gain realized as a result of investments required to
be made pursuant to Section 6.06 shall to the extent not theretofore applied as
provided herein and therein, be paid over to the Owner.
SECTION 4.06. Insurance
(a) Owner's Obligation to Insure. Owner shall comply with, or cause
to be complied with, each of the provisions of Annex B, which provisions are
hereby incorporated by this reference as if set forth in full herein.
(b) Insurance for Own Account. Nothing in Section 4.06 shall limit
or prohibit (a) Owner from maintaining the policies of insurance required under
Annex B with higher limits than those specified in Annex B, or (b) Mortgagee
from obtaining insurance for its own account (and any proceeds payable under
such separate insurance shall be payable as provided in the policy relating
thereto); provided, however, that no insurance
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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 Section 4.06 and Annex B.
(c) Indemnification by Government in Lieu of Insurance. Mortgagee
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft described in Annex B, indemnification from, or insurance provided by,
the U.S. Government, or upon the written consent of Mortgagee, other Government
Entity, against such risk in an amount that, when added to the amount of
insurance (including permitted self-insurance), if any, against such risk that
Owner (or any Permitted Lessee) may continue to maintain, in accordance with
this Section 4.06, during the period of such requisition or transfer, shall be
at least equal to the amount of insurance against such risk otherwise required
by this Section 4.06.
(d) Application of Insurance Proceeds. As between Owner and
Mortgagee, all insurance proceeds received as a result of the occurrence of an
Event of Loss with respect to the Aircraft or any Engine under policies required
to be maintained by Owner pursuant to this Section 4.06 and Annex B will be
applied in accordance with Section 4.05(d). All proceeds of insurance required
to be maintained by Owner, in accordance with Section 4.06 and Section B of
Annex B, in respect of any property damage or loss not constituting an Event of
Loss with respect to the Aircraft, Airframe or any Engine will be applied in
payment (or to reimburse Owner) for repairs or for replacement property, and any
balance remaining after such repairs or replacement with respect to such damage
or loss shall be paid over to, or retained by, Owner.
SECTION 4.07. Merger of Owner
(a) In General. Owner shall not consolidate with or merge into any
other person under circumstances in which Owner is not the surviving
corporation, or convey, transfer or lease in one or more transactions all or
substantially all of its assets to any other person, unless:
(i) such person is organized, existing and in good standing
under the Laws of the United States, any State of the United States or the
District of Columbia and, upon consummation of such transaction, such
person will be a U.S. Air Carrier;
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(ii) such person executes and delivers to Mortgagee a duly
authorized, legal, valid, binding and enforceable agreement, reasonably
satisfactory in form and substance to Mortgagee, containing an effective
assumption by such person of the due and punctual performance and
observance of each covenant, agreement and condition in the Operative
Agreements to be performed or observed by Owner;
(iii) such person makes such filings and recordings with the
FAA pursuant to the Act as shall be necessary to evidence such
consolidation or merger; and
(iv) immediately after giving effect to such consolidation or
merger no Event of Default shall have occurred and be continuing.
(b) Effect of Merger. Upon any such consolidation or merger of Owner
with or into, or the conveyance, transfer or lease by Owner of all or
substantially all of its assets to, any Person in accordance with this Section
4.07, such Person will succeed to, and be substituted for, and may exercise
every right and power of, Owner under the Operative Agreements with the same
effect as if such person had been named as "Owner" therein. No such
consolidation or merger, or conveyance, transfer or lease, shall have the effect
of releasing Owner or such Person from any of the obligations, liabilities,
covenants or undertakings of Owner under the Trust Indenture.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE
SECTION 5.01. Event of Default
"Event of Default" means any of the following events (whatever the
reason for such Event of Default and whether 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):
(i) the failure of the Owner to pay (i) principal of, interest
on or Make-Whole Amount, if any, under any Equipment Note when due, and
such failure shall continue unremedied for a period of 10 Business Days,
or (ii) any other amount payable by it to the Note Holders under this
Trust Indenture or the Participation Agreement when due, and such failure
shall continue for a period in excess of 10
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Business Days after Owner has received written notice from Mortgagee of
the failure to make such payment when due;
(ii) Owner shall fail to carry and maintain, or cause to be
carried and maintained, insurance on and in respect of the Aircraft,
Airframe and Engines in accordance with the provisions of Section 4.06;
(iii) Owner shall fail to observe or perform (or caused to be
observed and performed) in any material respect any other covenant,
agreement or obligation set forth herein or in any other Operative
Agreement to which Owner is a party and such failure shall continue
unremedied for a period of 30 days from and after the date of written
notice thereof to Owner from Mortgagee, unless such failure is capable of
being corrected and Owner shall be diligently proceeding to correct such
failure, in which case there shall be no Event of Default unless and until
such failure shall continue unremedied for a period of 180 days after
receipt of such notice;
(iv) any representation or warranty made by Owner herein, in
the Participation Agreement or in any other Operative Agreement to which
Owner is a party (a) shall prove to have been untrue or inaccurate in any
material respect as of the date made, (b) such untrue or inaccurate
representation or warranty is material at the time in question, (c) and
the same shall remain uncured (to the extent of the adverse impact of such
incorrectness on the interest of the Mortgagee) for a period in excess of
30 days from and after the date of written notice thereof from Mortgagee
to Owner;
(v) the Owner shall consent to the appointment of or taking
possession by a receiver, trustee or liquidator of itself or of a
substantial part of its property, or the Owner shall admit in writing its
inability to pay its debts generally as they come due or shall make a
general assignment for the benefit of its creditors, or the Owner shall
file a voluntary petition in bankruptcy or a voluntary petition or an
answer seeking reorganization, liquidation or other relief under any
bankruptcy laws or insolvency laws (as in effect at such time), or an
answer admitting the material allegations of a petition filed against it
in any such case, or the Owner shall seek relief by voluntary petition,
answer or consent, under the provisions of any other bankruptcy or similar
law providing for the reorganization or winding-up of corporations (as in
effect at such time), or the Owner shall seek an agreement, composition,
extension or adjustment with its creditors under such laws or the Owner's
board of directors shall
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adopt a resolution authorizing corporate action in furtherance of any of
the foregoing;
(vi) an order, judgment or decree shall be entered by any
court of competent jurisdiction appointing, without the consent of the
Owner, a receiver, trustee or liquidator of the Owner or of any
substantial part of its property, or any substantial part of the property
of the Owner shall be sequestered, or granting any other relief in respect
of the Owner as a debtor under any bankruptcy laws or other insolvency
laws (as in effect at such time), and any such order, judgment, decree, or
decree of appointment or sequestration shall remain in force undismissed,
unstayed or unvacated for a period of 90 days after the date of entry
thereof;
(vii) a petition against the Owner in a proceeding under any
bankruptcy laws or other insolvency laws (as in effect at such time) is
filed and not withdrawn or dismissed within 90 days thereafter, or if,
under the provisions of any law providing for reorganization or winding-up
of corporations which may apply to the Owner, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Owner of
any substantial part of its property and such jurisdiction, custody or
control shall remain in force unrelinquished, unstayed or unterminated for
a period of 90 days; or
(viii) an "Event of Default" under any of the Related
Indentures shall have occurred and be continuing.
SECTION 5.02. Remedies
(a) If an Event of Default shall have occurred and be continuing and
so long as the same shall continue unremedied, then and in every such case the
Mortgagee may exercise any or all of the rights and powers and pursue any and
all of the remedies pursuant to this Article V and shall have and may exercise
all of the rights and remedies of a secured party under the Uniform Commercial
Code and may take possession of all or any part of the properties covered or
intended to be covered by the Lien created hereby or pursuant hereto and may
exclude the Owner and all persons claiming under it wholly or partly therefrom;
provided, that the Mortgagee shall give the Owner fifteen days' prior written
notice of its intention to sell the Aircraft. Without limiting any of the
foregoing, it is understood and agreed that the Mortgagee may exercise any right
of sale of the Aircraft available to it, even though it shall not have taken
possession
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of the Aircraft and shall not have possession thereof at the time of such sale.
(b) If an Event of Default shall have occurred and be continuing,
then and in every such case the Mortgagee may (and shall, upon receipt of a
written demand therefor from a Majority in Interest of Note Holders), at any
time, by delivery of written notice or notices to the Owner, declare all the
Equipment Notes to be due and payable, whereupon the unpaid Original Amount of
all Equipment Notes then outstanding, together with accrued but unpaid interest
thereon (without Make-Whole Amount) and other amounts due thereunder or
otherwise payable hereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived; provided
that if an Event of Default referred to in clause (v), (vi) or (vii) of Section
5.01 hereof shall have occurred, then and in every such case the unpaid Original
Amount then outstanding, together with accrued but unpaid interest and all other
amounts due hereunder and under the Equipment Notes shall immediately and
without further act become due and payable without presentment, demand, protest
or notice, all of which are hereby waived.
This Section 5.02(b), however, is subject to the condition that, if
at any time after the Original Amount of the Equipment Notes shall have become
so due and payable, and before any judgment or decree for the payment of the
money so due, or any thereof, shall be entered, all overdue payments of interest
upon the Equipment Notes and all other amounts payable hereunder or under the
Equipment Notes (except the Original Amount of the Equipment Notes which by such
declaration shall have become payable) shall have been duly paid, and every
other Default and Event of Default with respect to any covenant or provision of
this Trust Indenture shall have been cured, then and in every such case a
Majority in Interest of Note Holders may (but shall not be obligated to), by
written instrument filed with the Mortgagee, rescind and annul the Mortgagee's
declaration (or such automatic acceleration) and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Default or
Event of Default or impair any right consequent thereon.
(c) The Note Holders shall be entitled, at any sale pursuant to this
Section 5.02, to credit against any purchase price bid at such sale by such
holder all or any part of the unpaid obligations owing to such Note Holder and
secured by the
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Lien of this Trust Indenture (only to the extent that such purchase price would
have been paid to such Note Holder pursuant to Article III hereof if such
purchase price were paid in cash and the foregoing provisions of this subsection
(c) were not given effect).
(d) In the event of any sale of the Collateral, or any part thereof,
pursuant to any judgment or decree of any court or otherwise in connection with
the enforcement of any of the terms of this Trust Indenture, the unpaid Original
Amount of all Equipment Notes then outstanding, together with accrued interest
thereon (without Make-Whole Amount), and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement (or its designee) is a
Note Holder, the Mortgagee will not be authorized or empowered to acquire title
to any Collateral or take any action with respect to any Collateral so acquired
by it if such acquisition or action would cause any Trust to fail to qualify as
a "grantor trust" for federal income tax purposes.
SECTION 5.03. Return of Aircraft, Etc.
(a) If an Event of Default shall have occurred and be continuing and
the Equipment Notes have been accelerated, at the request of the Mortgagee, the
Owner shall promptly execute and deliver to the Mortgagee such instruments of
title and other documents as the Mortgagee may deem necessary or advisable to
enable the Mortgagee or an agent or representative designated by the Mortgagee,
at such time or times and place or places as the Mortgagee may specify, to
obtain possession of all or any part of the Collateral to which the Mortgagee
shall at the time be entitled hereunder. If the Owner shall for any reason fail
to execute and deliver such instruments and documents after such request by the
Mortgagee, the Mortgagee may (i) obtain a judgment conferring on the Mortgagee
the right to immediate possession and requiring the Owner to execute and deliver
such instruments and documents to the Mortgagee, to the entry of which judgment
the Owner hereby specifically consents to the fullest extent permitted by Law,
and (ii) pursue all or part of such Collateral wherever it may be found and may
enter any of the premises of Owner wherever such Collateral may be or be
supposed to be and
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search for such Collateral and take possession of and remove such Collateral.
All expenses of obtaining such judgment or of pursuing, searching for and taking
such property shall, until paid, be secured by the Lien of this Trust Indenture.
(b) Upon every such taking of possession, the Mortgagee may, from
time to time, at the expense of the Collateral, make all such expenditures for
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modifications or alterations to and of the Collateral, as it may
deem proper. In each such case, the Mortgagee shall have the right to maintain,
use, operate, store, insure, lease, control, manage, dispose of, modify or alter
the Collateral and to exercise all rights and powers of the Owner relating to
the Collateral, as the Mortgagee shall deem best, including the right to enter
into any and all such agreements with respect to the maintenance, use,
operation, storage, insurance, leasing, control, management, disposition,
modification or alteration of the Collateral or any part thereof as the
Mortgagee may determine, and the Mortgagee shall be entitled to collect and
receive directly all rents, revenues and other proceeds of the Collateral and
every part thereof, without prejudice, however, to the right of the Mortgagee
under any provision of this Trust Indenture to collect and receive all cash held
by, or required to be deposited with, the Mortgagee hereunder. Such rents,
revenues and other proceeds shall be applied to pay the expenses of the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, improvement, modification or alteration of the Collateral and of
conducting the business thereof, and to make all payments which the Mortgagee
may be required or may elect to make, if any, for taxes, assessments, insurance
or other proper charges upon the Collateral 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 Mortgagee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Mortgagee, and of all persons properly engaged and employed by
the Mortgagee with respect hereto.
SECTION 5.04. Remedies Cumulative
Each and every right, power and remedy given to the Mortgagee
specifically or otherwise in this Trust Indenture shall
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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 and
in such order as may be deemed expedient by the Mortgagee, 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 Mortgagee in the exercise of
any right, remedy or power or in the pursuance of 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.
SECTION 5.05. Discontinuance of Proceedings
In case the Mortgagee shall have instituted any proceeding to
enforce any right, power or remedy under this Trust Indenture by foreclosure,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Mortgagee, then and in every such case the Owner and the Mortgagee shall,
subject to any determination in such proceedings, be restored to their former
positions and rights hereunder with respect to the Collateral, and all rights,
remedies and powers of the Owner or the Mortgagee shall continue as if no such
proceedings had been instituted.
SECTION 5.06. Waiver of Past Defaults
Upon written instruction from a Majority in Interest of Note
Holders, the Mortgagee shall waive any past Default hereunder and its
consequences and upon any such waiver such Default shall cease to exist and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Trust Indenture, but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon; provided,
that in the absence of written instructions from all the Note Holders, the
Mortgagee shall not waive any Default (i) in the payment of the Original Amount,
Make-Whole Amount, if any, and interest and other amounts due under any
Equipment Note then outstanding, or (ii) in respect of a covenant or provision
hereof which, under Article X hereof, cannot be modified or amended without the
consent of each Note Holder.
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SECTION 5.07. Appointment of Receiver
The Mortgagee shall, as a matter of right, be entitled to the
appointment of a receiver (who may be the Mortgagee or any successor or nominee
thereof) for all or any part of the Collateral, whether such receivership be
incidental to a proposed sale of the Collateral or the taking of possession
thereof or otherwise, and the Owner hereby consents to the appointment of such a
receiver and will not oppose any such appointment. Any receiver appointed for
all or any part of the Collateral shall be entitled to exercise all the rights
and powers of the Mortgagee with respect to the Collateral.
SECTION 5.08. Mortgagee Authorized to Execute Bills of Sale, Etc.
The Owner irrevocably appoints, while an Event of Default has
occurred and is continuing, the Mortgagee the true and lawful attorney-in-fact
of the Owner (which appointment is coupled with an interest) in its name and
stead and on its behalf, for the purpose of effectuating any sale, assignment,
transfer or delivery for the enforcement of the Lien of this Trust Indenture,
whether pursuant to foreclosure or power of sale, assignments and other
instruments as may be necessary or appropriate, with full power of substitution,
the Owner hereby ratifying and confirming all that such attorney or any
substitute shall do by virtue hereof in accordance with applicable law.
Nevertheless, if so requested by the Mortgagee or any purchaser, the Owner shall
ratify and confirm any such sale, assignment, transfer or delivery, by executing
and delivering to the Mortgagee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 5.09. Rights of Note Holders to Receive Payment
Notwithstanding any other provision of this Trust Indenture, the
right of any Note Holder to receive payment of principal of, and premium, if
any, and interest on an 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 in accordance with the terms
hereof, shall not be impaired or affected without the consent of such Note
Holder.
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ARTICLE VI
DUTIES OF THE MORTGAGEE
SECTION 6.01. Notice of Event of Default
If the Mortgagee shall have Actual Knowledge of an Event of Default
or of a Default arising from a failure to pay any installment of principal and
interest on any Equipment Note, the Mortgagee shall give prompt written notice
thereof to each Note Holder. Subject to the terms of Sections 5.06, 6.02 and
6.03 hereof, the Mortgagee shall take such action, or refrain from taking such
action, with respect to such Event of Default or Default (including with respect
to the exercise of any rights or remedies hereunder) as the Mortgagee shall be
instructed in writing by a Majority in Interest of Note Holders. Subject to the
provisions of Section 6.03, if the Mortgagee shall not have received
instructions as above provided within 20 days after mailing notice of such Event
of Default to the Note Holders, the Mortgagee may, subject to instructions
thereafter received pursuant to the preceding provisions of this Section 6.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall determine advisable in the best interests of the Note
Holders; provided, however, that the Mortgagee may not sell the Aircraft or any
Engine without the consent of a Majority in Interest of Note Holders. For all
purposes of this Trust Indenture, in the absence of Actual Knowledge on the part
of the Mortgagee, the Mortgagee shall not be deemed to have knowledge of a
Default or an Event of Default (except, the failure of Owner to pay any
installment of principal or interest within one Business Day after the same
shall become due, which failure shall constitute knowledge of a Default) unless
notified in writing by the Owner or one or more Note Holders.
SECTION 6.02. Action Upon Instructions; Certain Rights and
Limitations
Subject to the terms of Sections 5.02(a), 5.06, 6.01 and 6.03
hereof, upon the written instructions at any time and from time to time of a
Majority in Interest of Note Holders, the Mortgagee shall, subject to the terms
of this Section 6.02, take such of the following actions as may be specified in
such instructions: (i) give such notice or direction or exercise such
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right, remedy or power hereunder as shall be specified in such instructions and
(ii) give such notice or direction or exercise such right, remedy or power
hereunder with respect to any part of the Collateral as shall be specified in
such instructions; it being understood that without the written instructions of
a Majority in Interest of Note Holders, the Mortgagee shall not, except as
provided in Section 6.01, approve any such matter as satisfactory to the
Mortgagee.
The Mortgagee will execute and the Owner will file such continuation
statements with respect to financing statements relating to the security
interest created hereunder in the Collateral as may be specified from time to
time in written instructions of a Majority in Interest of Note Holders (which
instructions shall be accompanied by the form of such continuation statement so
to be filed). The Mortgagee will furnish to each Note Holder, promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates and other instruments furnished to the Mortgagee hereunder
SECTION 6.03. Indemnification
The Mortgagee shall not be required to take any action or refrain
from taking any action under Section 6.01 (other than the first sentence
thereof), 6.02 or Article V hereof unless the Mortgagee 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 Note Holders. The Mortgagee
agrees that it shall look solely to the Note Holders for the satisfaction of any
indemnity (except expenses for foreclosure of the type referred to in clause
"First" of Section 3.03 hereof) owed to it pursuant to this Section 6.03. The
Mortgagee shall not be under any obligation to take any action under this Trust
Indenture or any other Operative Agreement and nothing herein or therein shall
require the Mortgagee to expend or risk its own funds or otherwise incur the
risk of any financial liability 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 written indemnity of any Note Holder who is a QIB, signed by
an authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Mortgagee shall be accepted
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as reasonable assurance of adequate indemnity). The Mortgagee shall not be
required to take any action under Section 6.01 (other than the first sentence
thereof) or 6.02 or Article V hereof, nor shall any other provision of this
Trust Indenture or any other Operative Agreement be deemed to impose a duty on
the Mortgagee to take any action, if the Mortgagee shall have been advised by
counsel that such action is contrary to the terms hereof or is otherwise
contrary to Law.
SECTION 6.04. No Duties Except as Specified in Trust Indenture or
Instructions
The Mortgagee shall not have any duty or obligation to use, operate,
store, lease, control, manage, sell, dispose of or otherwise deal with the
Aircraft or any other part of the Collateral, or to otherwise take or refrain
from taking any action under, or in connection with, this Trust Indenture or any
part of the Collateral, except as expressly provided by the terms of this Trust
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Trust Indenture; and no implied duties or obligations shall be
read into this Trust Indenture against the Mortgagee. The Mortgagee agrees that
it will in its individual capacity and at its own cost and expense (but without
any right of indemnity in respect of any such cost or expense under Section 8.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Collateral which result from claims
against it in its individual capacity not related to the administration of the
Collateral or any other transaction pursuant to this Trust Indenture or any
document included in the Collateral.
SECTION 6.05. No Action Except Under Trust Indenture or Instructions
The Mortgagee will not use, operate, store, lease, control, manage,
sell, dispose of or otherwise deal with the Aircraft or any other part of the
Collateral except in accordance with the powers granted to, or the authority
conferred upon the Mortgagee pursuant to this Trust Indenture and in accordance
with the express terms hereof.
SECTION 6.06. Investment of Amounts Held by Mortgagee
Any amounts held by the Mortgagee pursuant to the proviso to the
first sentence of Section 3.01, pursuant to
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Section 3.02, or pursuant to any provision of any other Operative Agreement
providing for amounts to be held by the Mortgagee which are not distributed
pursuant to the other provisions of Article III hereof shall be invested by the
Mortgagee from time to time in Cash Equivalents as directed by the Owner so long
as the Mortgagee may acquire the same using its best efforts. Unless otherwise
expressly provided in this Trust Indenture, any income realized as a result of
any such investment, net of the Mortgagee's reasonable fees and expenses in
making such investment, shall be held and applied by the Mortgagee in the same
manner as the principal amount of such investment is to be applied and any
losses, net of earnings and such reasonable fees and expenses, shall be charged
against the principal amount invested. The Mortgagee shall not be liable for any
loss resulting from any investment required to be made by it under this Trust
Indenture other than by reason of its willful misconduct or gross negligence,
and any such investment may be sold (without regard to its maturity) by the
Mortgagee without instructions whenever such sale is necessary to make a
distribution required by this Trust Indenture.
ARTICLE VII
THE MORTGAGEE
SECTION 7.01. Acceptance of Trusts and Duties
The Mortgagee accepts the duties hereby created and applicable to it
and agrees to perform the same but only upon the terms of this Trust Indenture
and agrees to receive and disburse all monies constituting part of the
Collateral in accordance with the terms hereof. The Mortgagee, 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), (ii) as provided in the fourth sentence of Section
2.04(a) hereof and the last sentence of Section 6.04 hereof, and (iii) from the
inaccuracy of any representation or warranty of the Mortgagee (in its individual
capacity) in the Participation Agreement or expressly made hereunder.
SECTION 7.02. Absence of Duties
Except in accordance with written instructions furnished pursuant to
Section 6.01 or 6.02 hereof, and except as
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provided in, and without limiting the generality of, Sections 6.03, 6.04 and
7.07 hereof the Mortgagee shall have no duty (i) to see to any registration of
the Aircraft or any recording or filing of this Trust Indenture or any other
document, or to see to the maintenance of any such registration, recording or
filing, (ii) to see to any insurance on the Aircraft or to effect or maintain
any such insurance, whether or not Owner shall be in default with respect
thereto, (iii) to see to the payment or discharge of any lien or encumbrance of
any kind against any part of the Collateral, (iv) to confirm, verify or inquire
into the failure to receive any financial statements from Owner, or (v) to
inspect the Aircraft at any time or ascertain or inquire as to the performance
or observance of any of Owner's covenants herein or any Permitted Lessee's
covenants under any assigned Permitted Lease with respect to the Aircraft.
SECTION 7.03. No Representations or Warranties as to Aircraft or
Documents
THE MORTGAGEE IN ITS INDIVIDUAL OR TRUST CAPACITY DOES NOT MAKE AND
SHALL NOT BE DEEMED TO HAVE MADE AND HEREBY EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS,
VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE
AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR
NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK
OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER. The Mortgagee, in its
individual or trust capacities, does not make or shall not be deemed to have
made any representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Participation Agreement, the
Equipment Notes or the Aircraft Purchase Agreement, or as to the correctness of
any statement contained in any thereof, except for the representations and
warranties of the Owner made in its individual capacity and the representations
and warranties of the Mortgagee in its individual capacity, in each case
expressly made in this Trust Indenture or in the Participation Agreement. The
Note Holders make no representation or warranty hereunder whatsoever.
SECTION 7.04. No Segregation of Monies; No Interest
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Any monies paid to or retained by the Mortgagee pursuant to any
provision hereof and not then required to be distributed to the Note Holders, or
the Owner as provided in Article III hereof need not be segregated in any manner
except to the extent required by Law or Section 6.06 hereof, and may be
deposited under such general conditions as may be prescribed by Law, and the
Mortgagee shall not be liable for any interest thereon (except that the
Mortgagee shall invest all monies held as directed by Owner so long as no Event
of Default has occurred and is continuing (or in the absence of such direction,
by the Majority In Interest of Note Holders) in Cash Equivalents; provided,
however, that any payments received, or applied hereunder, by the Mortgagee
shall be accounted for by the Mortgagee so that any portion thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof.
SECTION 7.05. Reliance; Agreements; Advice of Counsel
The Mortgagee shall not incur any liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Mortgagee may accept a copy of a resolution of the Board of Directors (or
Executive Committee thereof) of the Owner, certified by the Secretary or an
Assistant Secretary thereof as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted and that the same
is in full force and effect. As to the aggregate unpaid Original Amount of
Equipment Notes outstanding as of any date, the Owner may for all purposes
hereof rely on a certificate signed by any Vice President or other authorized
corporate trust officer of the Mortgagee. As to any fact or matter relating to
the Owner the manner of which is not specifically described herein, the
Mortgagee may for all purposes hereof rely on a certificate, signed by a duly
authorized officer of the Owner, as to such fact or matter, and such certificate
shall constitute full protection to the Mortgagee for any action taken or
omitted to be taken by it in good faith in reliance thereon. In the
administration of the trusts hereunder, the Mortgagee may execute any of the
trusts or powers hereof and perform its powers and duties hereunder directly or
through agents or attorneys and may, at the expense of the Collateral, advise
with counsel, accountants and other skilled persons to be selected and retained
by it, and the
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Mortgagee shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the written advice or written opinion of any such
counsel, accountants or other skilled persons.
SECTION 7.06. Compensation
The Mortgagee shall be entitled to reasonable compensation,
including expenses and disbursements (including the reasonable fees and expenses
of counsel), for all services rendered hereunder and shall, on and subsequent to
an Event of Default hereunder, have a priority claim on the Collateral for the
payment of such compensation, to the extent that such compensation shall not be
paid by Owner, and shall have the right, on and subsequent to an Event of
Default hereunder, to use or apply any monies held by it hereunder in the
Collateral toward such payments. The Mortgagee agrees that it shall have no
right against the Note Holders for any fee as compensation for its services as
trustee under this Trust Indenture.
SECTION 7.07. Instructions from Note Holders
In the administration of the trusts created hereunder, the Mortgagee
shall have the right to seek instructions from a Majority in Interest of Note
Holders should any provision of this Trust Indenture appear to conflict with any
other provision herein or should the Mortgagee's duties or obligations hereunder
be unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions. The Mortgagee shall be fully protected for
acting in accordance with any instructions received under this Section 7.07.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Scope of Indemnification
The Mortgagee shall be indemnified by the Owner to the extent and in
the manner provided in Section 8 of the Participation Agreement.
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ARTICLE IX
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. Resignation of Mortgagee; Appointment of Successor
(a) The Mortgagee or any successor thereto may resign at any time
without cause by giving at least 30 days' prior written notice to the Owner and
each Note Holder, such resignation to be effective upon the acceptance of the
trusteeship by a successor Mortgagee. In addition, a Majority in Interest of
Note Holders may at any time (but only with the consent of Owner, which consent
shall not be unreasonably withheld, except that such consent shall not be
necessary if an Event of Default is continuing) remove the Mortgagee without
cause by an instrument in writing delivered to the Owner and the Mortgagee, and
the Mortgagee shall promptly notify each Note Holder thereof in writing, such
removal to be effective upon the acceptance of the trusteeship by a successor
Mortgagee. In the case of the resignation or removal of the Mortgagee, a
Majority in Interest of Note Holders may appoint a successor Mortgagee by an
instrument signed by such holders, which successor, so long as no Event of
Default shall have occurred and be continuing, shall be subject to Owner's
reasonable approval. If a successor Mortgagee shall not have been appointed
within 30 days after such notice of resignation or removal, the Mortgagee, the
Owner or any Note Holder may apply to any court of competent jurisdiction to
appoint a successor Mortgagee to act until such time, if any, as a successor
shall have been appointed as above provided. The successor Mortgagee so
appointed by such court shall immediately and without further act be superseded
by any successor Mortgagee appointed as above provided.
(b) Any successor Mortgagee, however appointed, shall execute and
deliver to the Owner and the predecessor Mortgagee an instrument accepting such
appointment and assuming the obligations of the Mortgagee arising from and after
the time of such appointment, and thereupon such successor Mortgagee, without
further act, shall become vested with all the estates, properties, rights,
powers and duties of the predecessor Mortgagee hereunder in the trust hereunder
applicable to it with like effect as if originally named the Mortgagee herein;
but nevertheless upon the written request of such successor Mortgagee, such
predecessor Mortgagee shall execute and deliver
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an instrument transferring to such successor Mortgagee, upon the trusts herein
expressed applicable to it, all the estates, properties, rights and powers of
such predecessor Mortgagee, and such predecessor Mortgagee shall duly assign,
transfer, deliver and pay over to such successor Mortgagee all monies or other
property then held by such predecessor Mortgagee hereunder.
(c) Any successor Mortgagee, however appointed, shall be a bank or
trust company having its principal place of business in the Borough of
Manhattan, City and State of New York; Chicago, Illinois; Hartford, Connecticut;
Wilmington, Delaware; or Boston, Massachusetts and having (or whose obligations
under the Operative Agreements are guaranteed by an affiliated entity having) a
combined capital and surplus of at least $100,000,000, if there be such an
institution willing, able and legally qualified to perform the duties of the
Mortgagee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Mortgagee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Mortgagee shall be a
party, or any corporation to which substantially all the corporate trust
business of the Mortgagee may be transferred, shall, subject to the terms of
paragraph (c) of this Section 9.01, be a successor Mortgagee and the Mortgagee
under this Trust Indenture without further act.
SECTION 9.02. Appointment of Additional and Separate Trustees
(a) Whenever (i) the Mortgagee shall deem it necessary or desirable
in order to conform to any Law of any jurisdiction in which all or any part of
the Collateral shall be situated or to make any claim or bring any suit with
respect to or in connection with the Collateral, this Trust Indenture, any other
Indenture Agreement, the Equipment Notes or any of the transactions contemplated
by the Participation Agreement, (ii) the Mortgagee shall be advised by counsel
satisfactory to it that it is so necessary or prudent in the interests of the
Note Holders (and the Mortgagee shall so advise the Owner), or (iii) the
Mortgagee shall have been requested to do so by a Majority in Interest of Note
Holders, then in any such case, the Mortgagee and, upon the written request of
the Mortgagee, the Owner, shall execute and deliver an indenture supplemental
hereto and such
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other instruments as may from time to time be necessary or advisable either (1)
to constitute one or more bank or trust companies or one or more persons
approved by the Mortgagee, either to act jointly with the Mortgagee as
additional trustee or trustees of all or any part of the Collateral, or to act
as separate trustee or trustees of all or any part of the Collateral, in each
case with such rights, powers, duties and obligations consistent with this Trust
Indenture as may be provided in such supplemental indenture or other instruments
as the Mortgagee or a Majority in Interest of Note Holders may deem necessary or
advisable, or (2) to clarify, add to or subtract from the rights, powers, duties
and obligations theretofore granted any such additional or separate trustee,
subject in each case to the remaining provisions of this Section 9.02. If the
Owner shall not have taken any action requested of it under this Section 9.02(a)
that is permitted or required by its terms within 15 days after the receipt of a
written request from the Mortgagee so to do, or if an Event of Default shall
have occurred and be continuing, the Mortgagee may act under the foregoing
provisions of this Section 9.02(a) without the concurrence of the Owner, and the
Owner hereby irrevocably appoints (which appointment is coupled with an
interest) the Mortgagee, its agent and attorney-in-fact to act for it under the
foregoing provisions of this Section 9.02(a) in either of such contingencies.
The Mortgagee may, in such capacity, execute, deliver and perform any such
supplemental indenture, or any such instrument, as may be required for the
appointment of any such additional or separate trustee or for the clarification
of, addition to or subtraction from the rights, powers, duties or obligations
theretofore granted to any such additional or separate trustee. In case any
additional or separate trustee appointed under this Section 9.02(a) shall die,
become incapable of acting, resign or be moved, all the assets, property,
rights, powers, trusts, duties and obligations of such additional or separate
trustee shall revert to the Mortgagee until a successor additional or separate
trustee is appointed as provided in this Section 9.02(a).
(b) No additional or separate trustee shall be entitled to exercise
any of the rights, powers, duties and obligations conferred upon the Mortgagee
in respect of the custody, investment and payment of monies and all monies
received by any such additional or separate trustee from or constituting part of
the Collateral or otherwise payable under any Operative Agreement to the
Mortgagee shall be promptly paid over by it to the Mortgagee. All other rights,
powers, duties and obligations
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conferred or imposed upon any additional or separate trustee shall be exercised
or performed by the Mortgagee and such additional or separate trustee jointly
except to the extent that applicable Law of any jurisdiction in which any
particular act is to be performed renders the Mortgagee incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations (including the holding of title to all or part of the Collateral in
any such jurisdiction) shall be exercised and performed by such additional or
separate trustee. No additional or separate trustee shall take any discretionary
action except on the instructions of the Mortgagee or a Majority in Interest of
Note Holders. No trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder, except that the Mortgagee shall
be liable for the consequences of its lack of reasonable care in selecting, and
the Mortgagee's own actions in acting with, any additional or separate trustee.
Each additional or separate trustee appointed pursuant to this Section 9.02
shall be subject to, and shall have the benefit of Articles V through IX and
Article XI hereof insofar as they apply to the Mortgagee. The powers of any
additional or separate trustee appointed pursuant to this Section 9.02 shall not
in any case exceed those of the Mortgagee hereunder.
(c) If at any time the Mortgagee shall deem it no longer necessary
or in order to conform to any such Law or take any such action or shall be
advised by such counsel that it is no longer so necessary or desirable in the
interest of the Note
Holders, or in the event that the Mortgagee shall have been
requested to do so in writing by a Majority in Interest of Note Holders, the
Mortgagee and, upon the written request of the Mortgagee, the Owner, shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional or separate trustee.
The Mortgagee may act on behalf of the Owner under this Section 9.02(c) when and
to the extent it could so act under Section 9.02(a) hereof.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 10.01. Instructions of Majority; Limitations
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(a) The Mortgagee agrees with the Note Holders that it shall not
enter into any amendment, waiver or modification of, supplement or consent to
this Trust Indenture, or any other Operative Agreement to which it is a party,
unless such supplement, amendment, waiver, modification or consent is consented
to in writing by a Majority in Interest of Note Holders, but upon the written
request of a Majority in Interest of Note Holders, the Mortgagee shall from time
to time enter into any such supplement or amendment, or execute and deliver any
such waiver, modification or consent, as may be specified in such request and as
may be (in the case of any such amendment, supplement or modification), to the
extent such agreement is required, agreed to by the Owner; provided, however,
that, without the consent of each holder of an affected Equipment Note then
outstanding and of each Liquidity Provider, no such amendment, waiver or
modification of the terms of, or consent under, any thereof, shall (i) modify
any of the provisions of this Section 10.01, or of Article II or III or Section
5.01, 5.02(c), 5.02(d) and 5.02(e), 6.02, 11.11, 11.12 or 11.13 hereof, the
definitions of "Event of Default," "Default," "Special Default," "Majority in
Interest of Note Holders," "Make-Whole Amount" or "Note Holder," or the
percentage of Note Holders required to take or approve any action hereunder,
(ii) reduce the amount, or change the time of payment or method of calculation
of any amount, of Original Amount, Make-Whole Amount, if any, or interest with
respect to any Equipment Note, (iii) reduce, modify or amend any indemnities in
favor of the Mortgagee or the Note Holders (except that the Mortgagee may
consent to any waiver or reduction of an indemnity payable to it), or (iv)
permit the creation of any Lien on the Trust Indenture Estate or any part
thereof other than Permitted Liens or deprive any Note Holder or other Indenture
Indemnitee of the benefit of the Lien of this Trust Indenture on the Collateral,
except as provided in connection with the exercise of remedies under Article V
hereof. Notwithstanding the foregoing, without the consent of the affected
Liquidity Providers, neither the Owner nor the Mortgagee shall enter into any
amendment, waiver or modification of, supplement or consent to this Trust
Indenture or the other Operative Agreements which shall reduce, modify or amend
any indemnities in favor of such Liquidity Providers.
(b) The Owner and the Mortgagee may enter into one or more
agreements supplemental hereto without the consent of any Note Holder for any
of the following purposes: (i) (a) to cure
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any 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 Note Holder in its capacity
solely as Note Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner in accordance with the
terms hereof or to evidence the succession of a new trustee hereunder pursuant
hereto, the removal of the trustee hereunder or the appointment of any
co-trustee or co-trustees or any separate or additional trustee or trustees;
(iii) to convey, transfer, assign, mortgage or pledge any property to or with
the Mortgagee 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 Note Holders in its capacity solely as Note Holder; (iv) to
correct or amplify the description of any property at any time subject to the
Lien of this Trust Indenture or better to assure, convey and confirm unto the
Mortgagee any property subject or required to be subject to the Lien of this
Trust Indenture, the Airframe or Engines or any Replacement Airframe or
Replacement Engine; (v) to add to the covenants of the Owner for the benefit of
the Note Holders, or to surrender any rights or power herein conferred upon the
Owner; (vi) to add to the rights of the Note Holders; and (vii) to include on
the Equipment Notes any legend as may be required by Law.
SECTION 10.02. Mortgagee Protected
If, in the opinion of the institution acting as Mortgagee hereunder,
any document required to be executed by it pursuant to the terms of Section
10.01 hereof affects any right, duty, immunity or indemnity with respect to such
institution under this Trust Indenture, such institution may in its discretion
decline to execute such document.
SECTION 10.03. Documents Mailed to Note Holders
Promptly after the execution by the Owner or the Mortgagee of any
document entered into pursuant to Section 10.01 hereof, the Mortgagee shall
mail, by first class mail, postage prepaid, a copy thereof to Owner (if not a
party thereto) and to each Note Holder at its address last set forth in the
Equipment Note Register, but the failure of the Mortgagee to mail such copies
shall not impair or affect the validity of such document.
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SECTION 10.04. No Request Necessary for Trust Indenture Supplement
No written request or consent of the Note Holders pursuant to
Section 10.01 hereof shall be required to enable the Mortgagee to execute and
deliver a Trust Indenture Supplement specifically required by the terms hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Trust Indenture
Upon (or at any time after) payment in full of the Original Amount
of, Make-Whole Amount, if any, and interest on and all other amounts due under
all Equipment Notes and provided that there shall then be no other Secured
Obligations due to the Indenture Indemnitees, the Note Holders and the Mortgagee
hereunder or under the Participation Agreement or other Operative Agreement, the
Owner shall direct the Mortgagee 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 Collateral from the Lien of the Trust Indenture and the
Mortgagee shall execute and deliver such instrument as aforesaid; provided,
however, that this Trust Indenture and the trusts created hereby shall earlier
terminate and this Trust Indenture shall be of no further force or effect upon
any sale or other final disposition by the Mortgagee of all property
constituting part of the Collateral and the final distribution by the Mortgagee
of all monies or other property or proceeds constituting part of the Collateral
in accordance with the terms hereof. Except as aforesaid otherwise provided,
this Trust Indenture and the trusts created hereby shall continue in full force
and effect in accordance with the terms hereof.
SECTION 11.02. No Legal Title to Collateral in Note Holders
No holder of an Equipment Note shall have legal title to any part of
the Collateral. No transfer, by operation of law or otherwise, of any Equipment
Note or other right, title and interest of any Note Holder in and to the
Collateral or hereunder shall operate to terminate this Trust Indenture or
entitle such holder or any successor or transferee of such holder to an
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accounting or to the transfer to it of any legal title to any part of the
Collateral.
SECTION 11.03. Sale of Aircraft by Mortgagee Is Binding
Any sale or other conveyance of the Collateral, or any part thereof
(including any part thereof or interest therein), by the Mortgagee made pursuant
to the terms of this Trust Indenture shall bind the Note Holders and shall be
effective to transfer or convey all right, title and interest of the Mortgagee,
the Owner and such holders in and to such Collateral or part thereof. No
purchaser or other grantee shall be required to inquire as to the authorization,
necessity, expediency or regularity of such sale or conveyance or as to the
application of any sale or other proceeds with respect thereto by the Mortgagee.
SECTION 11.04. Trust Indenture for Benefit of Owner,
Mortgagee, Second Mortgagee, Note Holders and the other Indenture Indemnitees
Nothing in this Trust Indenture, whether express or implied, shall
be construed to give any person other than the Owner, the Mortgagee, the Second
Mortgagee, the Note Holders and the other Indenture Indemnitees, any legal or
equitable right, remedy or claim under or in respect of this Trust Indenture,
except that the persons referred to in the last paragraph of Section 4.02(b)
shall be third party beneficiaries of such paragraph.
SECTION 11.05. Notices
Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, authorizations, directions, consents,
waivers or documents provided or permitted by this Trust Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner, addressed to it at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attention: Chief Financial Officer, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, (ii) if to
Mortgagee, addressed to it at its office at ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, (iii) if to any Note Holder or
any Indenture Indemnitee, addressed to such party at such address as such party
shall have furnished by notice to the Owner and the Mortgagee, or, until an
address is so
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furnished, addressed to the address of such party (if any) set forth on Schedule
1 to the Participation Agreement or in the Equipment Note Register. Whenever any
notice in writing is required to be given by the Owner or the Mortgagee or any
Note Holder to any of the other of them, such notice shall be deemed given and
such requirement satisfied when such notice is received, or if such notice is
mailed by certified mail, postage prepaid, three Business Days after being
mailed, addressed as provided above. Any party hereto may change the address to
which notices to such party will be sent by giving notice of such change to the
other parties to this Trust Indenture.
SECTION 11.06. Severability
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 11.07. No Oral Modification or Continuing Waivers
No term or provision of this Trust Indenture or the Equipment Notes
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the Owner and the Mortgagee, in compliance with
Section 10.01 hereof. Any waiver of the terms hereof or of any Equipment Note
shall be effective only in the specific instance and for the specific purpose
given.
SECTION 11.08. Successors and Assigns
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Note Holder
shall bind the successors and assigns of such holder. Each Note Holder by its
acceptance of an Equipment Note agrees to be bound by this Trust Indenture and
all provisions of the Operative Agreements applicable to a Note Holder.
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SECTION 11.09. Headings
The headings of the various Articles and sections herein and in the
table of contents hereto are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 11.10. Normal Commercial Relations
Anything contained in this Trust Indenture to the contrary
notwithstanding. Owner and Mortgagee may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with Owner,
fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Owner for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
SECTION 11.11. Governing Law; Counterpart Form
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate counterparts (or upon separate
signature pages bound together into one or more counterparts), each of which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 11.12. Voting By Note Holders
All votes of the Note Holders shall be governed by a vote of a
Majority in Interest of Note Holders, except as otherwise provided herein.
SECTION 11.13. Section 1110
The Mortgagee shall be entitled to the benefits of Section 1110 with
respect to the right to take possession of the Aircraft, Airframe, Engines and
Parts as provided herein in the event of a case under Chapter 11 of the
Bankruptcy Code in which Owner is a debtor, and in any instance where more than
one construction is possible of the terms and conditions hereof or any other
pertinent Operative Agreement, each such party agrees
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that a construction which would preserve such benefits shall control over any
construction which would not preserve such benefits.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture and Mortgage to be duly executed by their respective officers thereof
duly authorized as of the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:______________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
WILMINGTON TRUST COMPANY,
as Mortgagee
By:______________________________
Name:
Title:
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ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly
provided, a reference to:
(i) each of "Owner," "Mortgagee," "Note Holder" or any other person
includes, without prejudice to the provisions of any Operative
Agreement, any successor in interest to it and any permitted
transferee, permitted purchaser or permitted assignee of it;
(ii) words importing the plural include the singular and words
importing the singular include the plural;
(iii) any agreement, instrument or document, or any annex, schedule or
exhibit thereto, or any other part thereof, includes, without
prejudice to the provisions of any Operative Agreement, that
agreement, instrument or document, or annex, schedule or
exhibit, or part, respectively, as amended, modified or
supplemented from time to time in accordance with its terms and
in accordance with the Operative Agreements, and any agreement,
instrument or document entered into in substitution or
replacement therefor;
(iv) any provision of any Law includes any such provision as amended,
modified, supplemented, substituted, reissued or reenacted prior to
the Closing Date, and thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby," "herein,"
"hereto," "hereof" and "hereunder" and words of similar import when
used in any Operative Agreement refer to such Operative Agreement
as a whole and not to any particular provision of such Operative
Agreement;
(vi) the words "including," "including, without limitation," "including,
but not limited to," and terms or phrases of similar import when
used in any Operative Agreement, with respect to any matter or
thing, mean including, without limitation, such matter or thing;
and
(vii) a "Section," an "Exhibit," an "Annex" or a "Schedule" in any
Operative Agreement, or in any annex thereto,
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is a reference to a section of, or an exhibit, an annex or a
schedule to, such Operative Agreement or such annex, respectively.
(b) Each exhibit, annex and schedule to each Operative Agreement is
incorporated in, and shall be deemed to be a part of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative
Agreement, all accounting terms therein shall be construed and all accounting
determinations thereunder shall be made in accordance with GAAP.
(d) Headings used in any Operative Agreement are for convenience
only and shall not in any way affect the construction of, or be taken into
consideration in interpreting, such Operative Agreement.
(e) For purposes of each Operative Agreement, the occurrence and
continuance of a Default or Event of Default referred to in Section 5.01(v),(vi)
or (vii) shall not be deemed to prohibit the Owner from taking any action or
exercising any right that is conditioned on no Special Default, Default or Event
of Default having occurred and be continuing if such Special Default, Default or
Event of Default consists of the institution of reorganization proceedings with
respect to Owner under Chapter 11 of the Bankruptcy Code and the trustee or
debtor-in-possession in such proceedings shall have agreed to perform its
obligations under the Trust Indenture with the approval of the applicable court
and thereafter shall have continued to perform such obligations in accordance
with Section 1110.
DEFINED TERMS
"Act" means part A of subtitle VII of title 49, United States Code.
"Actual Knowledge" means (a) as it applies to Mortgagee, actual
knowledge of a responsible officer in the Corporate Trust Office, and (b) as it
applies to Owner, actual knowledge of a Vice President or more senior officer of
Owner or any other officer of Owner having responsibility for the transactions
contemplated by the Operative Agreements; provided that each of Owner and
Mortgagee shall be deemed to have "Actual Knowledge" of any matter as to which
it has received notice from
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Owner, any Note Holder or Mortgagee, such notice having been given pursuant to
Section 11.05 of the Trust Indenture.
"Affiliate" means, with respect to any person, any other person
directly or indirectly controlling, controlled by or under common control with
such person. For purposes of this definition, "control" means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
by contract or otherwise and "controlling," "controlled by" and "under common
control with" have correlative meanings.
"Aircraft" means, collectively, the Airframe and Engines.
"Aircraft Bills of Sale" means, collectively, (i) the full warranty
▇▇▇▇ of sale covering the Aircraft executed by Airframe Manufacturer in favor of
Mitsubishi International Corporation, Kawasaki Enterprises Inc., Diamond Lease
(U.S.A.), Inc. and Kyodo Leasing America, Inc. (the "Sellers"), and (ii) the
full warranty ▇▇▇▇ of sale covering the Aircraft executed by the Sellers to TAC.
"Aircraft Documents" means all technical data, manuals and log
books, and all inspection, modification and overhaul records and other service,
repair, maintenance and technical records that are required by the FAA (or the
relevant Aviation Authority), to be maintained with respect to the Aircraft,
Airframe, Engines or Parts, and such term shall include all additions, renewals,
revisions and replacements of any such materials from time to time made, or
required to be made, by the FAA (or other Aviation Authority) regulations, and
in each case in whatever form and by whatever means or medium (including,
without limitation, microfiche, microfilm, paper or computer disk) such
materials may be maintained or retained by or on behalf of Owner (provided, that
all such materials shall be maintained in the English language).
"Aircraft Purchase Agreement" means the Aircraft Purchase Agreement,
dated June 20, 1997 among Owner Trustee, Owner Participant and Owner (including
all exhibits thereto), insofar as it relates to the Aircraft.
"Airframe" means (a) the aircraft (excluding Engines or engines from
time to time installed thereon) manufactured by Airframe Manufacturer and
identified by Airframe Manufacturer's
3
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ registration number and Airframe Manufacturer's
serial number set forth in the initial Trust Indenture Supplement and any
Replacement Airframe and (b) any and all Parts incorporated or installed in or
attached or appurtenant to such airframe, and any and all Parts removed from
such airframe, unless the Lien of the Trust Indenture shall not be applicable to
such Parts in accordance with Section 4.04 of the Trust Indenture. Upon
substitution of a Replacement Airframe under and in accordance with the Trust
Indenture, such Replacement Airframe shall become subject to the Trust Indenture
and shall be the "Airframe" for all purposes of the Trust Indenture and the
other Operative Agreements and thereupon the Airframe for which the substitution
is made shall no longer be subject to the Trust Indenture, and such replaced
Airframe shall cease to be the "Airframe."
"Airframe Manufacturer" means The Boeing Company, a Delaware
corporation.
"Amortization Amount" means, with respect to any Equipment Note, as
of any Payment Date, the amount determined by multiplying the percentage set
forth opposite such Date on the Amortization Schedule by the Original Amount of
such Equipment Note.
"Amortization Schedule" means, with respect to each Equipment Note,
the amortization schedule for such Equipment Note delivered pursuant to Section
2.02 of the Trust Indenture.
"Appraiser" means a firm of internationally recognized, independent
aircraft appraisers.
"Average Life Date" for any Equipment Note shall be the date which
follows the time of determination by a period equal to the Remaining Weighted
Average Life of such Equipment Note. "Remaining Weighted Average Life" on a
given date with respect to any Equipment Note shall be the number of days equal
to the quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining scheduled payment
of principal of such Equipment Note by (ii) the number of days from and
including such determination date to but excluding the date on which such
payment of principal is scheduled to be made, by (b) the then outstanding
principal amount of such Equipment Note.
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"Aviation Authority" means the FAA or, if the Aircraft is permitted
to be, and is, registered with any other Government Entity under and in
accordance with Section 4.02(e) of the Trust Indenture and Section 6.4.5 of the
Participation Agreement, such other Government Entity.
"Bankruptcy Code" means the United States Bankruptcy Code, 11
U.S.C. Sections 101 et seq.
"Beneficial Owner" when used in relation to an Equipment Note means
a Person that, by reason of direct ownership, contract, share ownership or
otherwise, has the right to receive or participate in receiving, directly or
indirectly, payments of principal, interest or Make-Whole Amount in respect of
such Equipment Note; provided that a Person shall not be deemed to be a
Beneficial Owner of an Equipment Note solely because another Person in which
such a Person owns common stock or other equity securities is a registered
holder or Beneficial Owner of such Equipment Note unless such Person is an
Affiliate of such other Person.
"Bills of Sale" means the Aircraft Bills of Sale, the TAC ▇▇▇▇ of
Sale, the Owner Trustee ▇▇▇▇ of Sale and the FAA ▇▇▇▇ of Sale.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks are authorized or required by law to close in New
York, New York, Houston, Texas or Wilmington, Delaware.
"Case" has the meaning attributed thereto in Section 2.12(a) of the
Trust Indenture.
"Cash Equivalents" means the following securities (which shall
mature within 90 days of the date of purchase thereof): (a) direct obligations
of the U.S. Government; (b) obligations fully guaranteed by the U.S. Government;
(c) certificates of deposit issued by, or bankers' acceptances of, or time
deposits or a deposit account with, Mortgagee or any bank, trust company or
national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained earnings of at least $500,000,000 and having a rate of "C" or better
from the Thomson BankWatch Service; or (d) commercial paper of any issuer doing
business under the laws of the United
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States or one of the states thereof and in each case having a rating assigned to
such commercial paper by Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors
Service, Inc. equal to A1 or higher.
"Citizen of the United States" is defined in 49 U.S.C. ss.
40102(a)(15).
"Closing" means the occurrence of the following concurrent events
performed in accordance with the Participation Agreement and the Trust
Indenture: (i) the making of the secured loan and issuance of the Equipment
Notes pursuant to Section 2.1 of the Participation Agreement; (ii) the purchase
of the Aircraft by Owner pursuant to the Aircraft Purchase Agreement utilizing,
in part, the proceeds of such secured loan; and (iii) completion of the other
events contemplated by the Operative Agreements to occur at the Closing.
"Closing Date" means the date specified in the initial Trust
Indenture Supplement as the Closing Date, which shall be the date on which the
Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended; provided
that, when used in relation to a Plan, "Code" shall mean the Internal Revenue
Code of 1986 and any regulations and rulings issued thereunder, all as amended
and in effect from time to time.
"Collateral" is defined in the Granting Clause of the Trust
Indenture.
"Corporate Trust Office" means the principal office of Mortgagee
located at Mortgagee's address for notices under the Participation Agreement or
such other office at which Mortgagee's corporate trust business shall be
administered which Mortgagee shall have specified by notice in writing to Owner
and each Note Holder.
"CRAF" means the Civil Reserve Air Fleet Program established
pursuant to 10 U.S.C. Section 9511-13 or any similar substitute program.
"Debt Rate" means, with respect to (i) any Series, the rate per
annum specified for such Series under the heading "Interest Rate" in Schedule I
to the Trust Indenture and (ii) for any other purpose, with respect to any
period, the weighted
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average interest rate per annum during such period borne by the outstanding
Equipment Notes, excluding any interest payable at the Payment Due Rate.
"Default" means any event or condition that with the giving of
notice or the lapse of time or both would become an Event of Default.
"Dollars," "United States Dollars" or "$" means the lawful currency
of the United States.
"DOT" means the Department of Transportation of the United States or
any Government Entity succeeding to the functions of such Department of
Transportation.
"Engine" means (a) each of the engines manufactured by Engine
Manufacturer and identified by Engine Manufacturer's model number and Engine
Manufacturer's serial number set forth in the initial Trust Indenture Supplement
and originally installed on the Airframe on the Closing Date, and any
Replacement Engine, in any case whether or not from time to time installed on
such Airframe or installed on any other airframe or aircraft, and (b) any and
all Parts incorporated or installed in or attached or appurtenant to such
engine, and any and all Parts removed from such engine, unless the Lien of the
Trust Indenture shall not apply to such Parts in accordance with Section 4.04 of
the Trust Indenture. Upon substitution of a Replacement Engine under and in
accordance with the Trust Indenture, such Replacement Engine shall become
subject to the Trust Indenture and shall be an "Engine" for all purposes of the
Trust Indenture and the other Operative Agreements and thereupon the Engine for
which the substitution is made shall no longer be subject to the Trust
Indenture, and such replaced Engine shall cease to be an "Engine."
"Engine Manufacturer" means CFM International.
"Equipment Note Register" is defined in Section 2.06 of the Trust
Indenture.
"Equipment Notes" means and includes any equipment notes issued
under the Trust Indenture in the form specified in Section 2.01 thereof (as such
form may be varied pursuant to the terms of the Trust Indenture) and any
Equipment Note issued under the Trust Indenture in exchange for or replacement
of any Equipment Note.
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"ERISA" means the Employee Retirement Income Security Act of 1974,
and any regulations and rulings issued thereunder all as amended and in effect
from time to time.
"Event of Default" is defined in Section 5.01 of the Trust
Indenture.
"Event of Loss" means, with respect to the Aircraft, Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:
(a) the destruction of such property, damage to such property
beyond economic repair or rendition of such property permanently unfit for
normal use by Owner;
(b) the actual or constructive total loss of such property or
any damage to such property, or requisition of title or use of such
property, which results in an insurance settlement with respect to such
property on the basis of a total loss or constructive or compromised total
loss;
(c) any theft, hijacking or disappearance of such property for
a period of 180 consecutive days or more;
(d) any seizure, condemnation, confiscation, taking or
requisition (including loss of title) of such property by any Government
Entity or purported Government Entity (other than a requisition of use by
a Permitted Government Entity) for a period exceeding 180 consecutive days
or, in the case of requisition of title to the Aircraft or Airframe, for a
period in excess of 90 consecutive days;
(e) as a result of any law, rule, regulation, order or other
action by the Aviation Authority or by any Government Entity of the
government of registry of the Aircraft or by any Government Entity
otherwise having jurisdiction over the operation or use of the Aircraft,
the use of such property in the normal course of Owner's business of
passenger air transportation is prohibited for a period of 180 consecutive
days unless Owner, prior to the expiration of such 180-day period, shall
have undertaken and shall be diligently carrying forward such steps as may
be necessary or desirable to permit the normal use of such property by
Owner, but in any event if such use shall have been prohibited for a
period of two consecutive years, provided that no Event of Loss shall be
deemed to have occurred if such prohibition has been applicable to Owner's
entire U.S. fleet of such property and Owner, prior to the
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expiration of such two-year period, shall have conformed at least one unit
of such property 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 and shall be diligently carrying forward, in
a manner which does not discriminate against such property on the basis of
ownership or otherwise in so conforming such property, steps which are
necessary or desirable to permit the normal use of the Aircraft by Owner,
but in any event if such use shall have been prohibited for a period of
three years;
(f) with respect to any Engine, any divestiture of title to
such engine shall be treated as an Event of Loss.
An Event of Loss with respect to the Aircraft shall be deemed to have occurred
if an Event of Loss occurs with respect to its Airframe. The date of such Event
of Loss shall be the date of such loss, damage, insurance settlement, seizure,
condemnation, confiscation, taking or requisition of title or use or
prohibition, except that for purposes of clause (c), (d) and (e) above, no Event
of Loss shall be deemed to have occurred until the date of expiration of the
applicable period referred to therein.
"Existing Indenture" means the Amended and Restated Trust Indenture
and Mortgage, dated as of April 27, 1993, between Owner Trustee and Wilmington
Trust Company, as indenture trustee, which provides for a security interest in
the Aircraft.
"Existing Indenture Release" means the release executed by the
indenture trustee under the Existing Indenture releasing the Aircraft, the
Aircraft Documents and certain other collateral from the lien of the Existing
Indenture.
"Existing Lease" means the Amended and Restated Lease Agreement,
dated as of April 27, 1993, between Owner Trustee, as lessor, and Owner, as
lessee, providing for the lease of the Aircraft to Owner.
"Expenses" means any and all liabilities, obligations, losses,
damages, settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other professionals,
and costs of investigation).
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"FAA" means the Federal Aviation Administration of the United States
or any Government Entity succeeding to the functions of such Federal Aviation
Administration.
"FAA ▇▇▇▇ of Sale" means a ▇▇▇▇ of sale for the Aircraft on AC Form
8050-2 (or such other form as may be approved by the FAA) delivered to Owner on
the Closing Date by the Owner Trustee.
"FAA Filed Documents" means the Trust Indenture, the initial Trust
Indenture Supplement, the Second Mortgage, the Second Mortgage Supplement
relating to the Aircraft, the FAA ▇▇▇▇ of Sale, the Termination of Lease, the
Existing Indenture Release and an application for registration of
the Aircraft with the FAA in the name of Owner.
"FAA Regulations" means the Federal Aviation Regulations issued or
promulgated pursuant to the Act from time to time.
"Financing Statements" means, collectively, (a) UCC-1 financing
statements covering the Collateral, by Owner, as debtor, showing Mortgagee and
Second Mortgagee as secured parties, for filing in Texas and each other
jurisdiction that, in the opinion of Mortgagee, is necessary to perfect its Lien
on the Collateral and (b) UCC-3 financing statements (i) evidencing the
termination of the Existing Lease, for filing in Texas and each other
jurisdiction that, in the opinion of Mortgagee, is reasonably desirable and (ii)
evidencing the release of the Aircraft, Aircraft Documents and other collateral
from the Lien of the Existing Indenture for filing in Utah and each other
jurisdiction that, in the opinion of Mortgagee, is reasonably desirable.
"GAAP" means generally accepted accounting principles as set forth
in the statements of financial accounting standards issued by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants, as such principles may at any time or from time to time be varied
by any applicable financial accounting rules or regulations issued by the SEC
and, with respect to any person, shall mean such principles applied on a basis
consistent with prior periods except as may be disclosed in such person's
financial statements.
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"Government Entity" means (a) any federal, state, provincial or
similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Indemnitee" means (i) WTC, Mortgagee and Second Mortgagee, (ii)
each separate or additional trustee appointed pursuant to the Trust Indenture
and Second Mortgage, (iii) the Subordination Agent, (iv) each Liquidity
Provider, (v) the Pass Through Trustees, (vi) each Affiliate of the persons
described in clauses (i) and (ii), (vii) each Affiliate of the persons described
in clauses (iii), (iv) and (v), (viii) the respective directors, officers,
employees, agents and servants of each of the persons described in clauses (i),
(ii) and (vi), (ix) the respective directors, officers, employees, agents and
servants of each of the persons described in clauses (iii), (iv), (v) and (vii),
(x) the successors and permitted assigns of the persons described in clauses
(i), (ii) and (viii), and (xi) the successors and permitted assigns of the
persons described in clauses (iii), (iv), (v) and (ix); provided that the
persons described in clauses (iii), (iv), (v), (vii), (ix) and (xi) are
Indemnitees only for purposes of Section 8.1 of the Participation Agreement.
"Indenture Agreements" means the Aircraft Purchase Agreement and the
Bills of Sale, to the extent included in Granting Clause (2) of the Trust
Indenture, and any other contract, agreement or instrument from time to time
assigned or pledged under the Trust Indenture.
"Indenture Default" means any condition, circumstance, act or event
that, with the giving of notice, the lapse of time or both, would constitute an
Indenture Event of Default.
"Indenture Event of Default" means any one or more of the
conditions, circumstances, acts or events set forth in Section 5.01 of the Trust
Indenture.
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"Indenture Indemnitee" means (i) WTC and the Mortgagee, (ii) each
separate or additional trustee appointed pursuant to the Trust Indenture, (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 each of the persons described in clauses (i) through (v)
inclusive above.
"Intercreditor Agreement" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Providers and the Subordination
Agent, dated as of the Issuance Date, 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.
"IRS" means the Internal Revenue Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.
"Issuance Date" means June 25, 1997.
"Law" means (a) any constitution, treaty, statute, law, decree,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lien" means any mortgage, pledge, lien, charge, claim, encumbrance,
lease or security interest affecting the title to or any interest in property.
"Liquidity Facilities" means the three Revolving Credit Agreements
(consisting of a separate Revolving Credit Agreement with each Liquidity
Provider with respect to each Pass Through Trust) between the Subordination
Agent, as borrower, and a Liquidity Provider, each dated as of the Issuance
Date, 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 Provider" means Kredietbank N.V., acting through its New
York Branch, as a Class A Liquidity Provider, Class B Liquidity Provider and
Class C Liquidity Provider (as
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such terms are defined in the Intercreditor Agreement) under the respective
Liquidity Facilities, or any successor thereto.
"Majority in Interest of Note Holders" means as of a particular date
of determination, the holders of a majority in aggregate unpaid Original Amount
of all Equipment Notes outstanding as of such date (excluding any Equipment
Notes held by Owner or any of its Affiliates (unless all Equipment Notes then
outstanding shall be held by Owner or any Affiliate of Owner); provided that for
the purposes of directing any action or casting any vote or giving any consent,
waiver or instruction hereunder, any Note Holder of an Equipment Note or
Equipment Notes may allocate, in such Note Holder'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 any Equipment Note, an
amount (as determined by an independent investment banker of national standing)
equal to the excess, if any, of (a) the present value of the remaining scheduled
payments of principal and interest to maturity of such Equipment Note computed
by discounting such payments on a semiannual basis on each Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate equal to
the Treasury Yield over (b) the outstanding principal amount of such Equipment
Note plus accrued interest to the date of determination. For purposes of
determining the Make-Whole Amount, "Treasury Yield" means, at the date of
determination with respect to any Equipment Note, the interest rate (expressed
as a decimal and, in the case of United States Treasury bills, converted to a
bond equivalent yield) determined to be the per annum 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 the most recent
weekly average yield to maturity for two series of United States Treasury
securities, trading in the public securities markets, (A) one maturing as close
as possible to, but earlier than, the Average Life Date of such Equipment Note
and (B) 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
on the most recent H.15(519),
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such weekly average yield to maturity as published in such H.15(519).
"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 a Make-Whole Amount shall be the
third Business Day prior to the applicable payment or redemption date and 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.
"Material Adverse Change" means, with respect to any person, any
event, condition or circumstance that materially and adversely affects such
person's business or consolidated financial condition, or its ability to observe
or perform its obligations, liabilities and agreements under the Operative
Agreements.
"Minimum Liability Insurance Amount" means $300,000,000.
"Mortgaged Property" is defined in Section 3.03 of the Trust
Indenture.
"Mortgagee" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as mortgagee under the
Trust Indenture.
"Mortgagee Agreements" means, collectively, the Participation
Agreement, the Trust Indenture, the Second Mortgage, and each other agreement
between Mortgagee or Second Mortgagee and any other party to the Participation
Agreement, relating to the Transactions, delivered on the Closing Date.
"Non-U.S. Person" means any Person other than a United States
person, as defined in Section 7701(a)(30) of the Code.
"Note Holder" means at any time each registered holder of one or
more Equipment Notes.
"Officer's Certificate" means, in respect of any party to the
Participation Agreement, a certificate signed by the Chairman, the President,
any Vice President (including those with varying ranks such as Executive,
Senior, Assistant or Staff Vice President), the Treasurer or the Secretary of
such party.
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"Operative Agreements" means, collectively, the Participation
Agreement, the Trust Indenture, the initial Trust Indenture Supplement, the
Second Mortgage, the Second Mortgage Supplement relating to the Aircraft, the
Bills of Sale and the Equipment Notes.
"Original Amount," with respect to an Equipment Note, means the
stated original principal amount of such Equipment Note and, with respect to all
Equipment Notes, means the aggregate stated original principal amounts of all
Equipment Notes.
"Owner Participant" means the Pension Benefit Guaranty Corporation.
"Owner Person" means Owner, any lessee, assignee, successor or other
user or person in possession of the Aircraft, Airframe or an Engine with or
without color of right, or any Affiliate of any of the foregoing (excluding any
Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any person
using or claiming any rights with respect to the Aircraft, Airframe or an Engine
directly by or through any of the persons in this parenthetical).
"Owner Trustee" means First Security Bank, N.A., not in its
individual capacity, except as expressly provided, but solely as trustee under
its Trust Agreement dated April 27, 1993 with Pension Benefit Guaranty
Corporation, a wholly owned United States Government corporation, relating to
the Aircraft.
"Owner Trustee ▇▇▇▇ of Sale" means the full warranty ▇▇▇▇ of sale
covering the Aircraft executed by the Owner Trustee in favor of Owner.
"Participation Agreement" means the Participation Agreement 322
dated as of June 25, 1997 among Owner, the Pass Through Trustees, the
Subordination Agent and Mortgagee.
"Parts" means all appliances, parts, components, instruments,
appurtenances, accessories, furnishings, seats and other equipment of whatever
nature (other than (a) Engines or engines, and (b) any Removable Part leased by
Owner from a third party or subject to a security interest granted to a third
party), that may from time to time be installed or incorporated in or attached
or appurtenant to the Airframe or any Engine.
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"Pass Through Agreements" means the Pass Through Trust Agreements,
the Intercreditor Agreement, the Liquidity Facilities and the Fee Letters
referred to in Section 2.03 of each of the Liquidity Facilities, provided that
no amendment, modification or supplement to, or substitution or replacement of,
any such Fee Letter shall be effective for purposes of any obligation of Owner,
unless consented to by Owner.
"Pass Through Certificates" means the pass through certificates
issued by the Pass Through Trusts (and any other pass through certificates for
which such pass through certificates may be exchanged).
"Pass Through Trust" means each of the four separate pass through
trusts created under the relevant Pass Through Trust Agreement.
"Pass Through Trust Agreement" means each of the four separate pass
through trust agreements dated as of the Issuance Date by and between the Owner
and a Pass Through Trustee.
"Pass Through Trustee" means Wilmington Trust Company, a Delaware
banking corporation, in its capacity as trustee under each Pass Through Trust
Agreement.
"Pass Through Trustee Agreements" means the Participation Agreement,
the Pass Through Trust Agreements and the Intercreditor Agreement.
"Payment Date" means each June 30 and December 30, commencing on
December 30, 1997.
"Payment Due Rate" means, with respect to (i) any payment made to a
Note Holder under any Series of Equipment Notes, the lesser of (a) the Debt Rate
applicable to such Series plus 2% and (b) the maximum rate permitted by
applicable law and (ii) any other payment made under any Operative Agreement to
any other Person, 7.522% per annum (computed on the basis of a year of 360 days
comprised of twelve 30-day months).
"Permitted Air Carrier" means (i) any manufacturer of airframes or
aircraft engines, or any Affiliate of a manufacturer of airframes or aircraft
engines, (ii) any Permitted Foreign Air Carrier or (iii) any U.S.
Air Carrier.
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"Permitted Country" means any country listed on Schedule 4 to the
Participation Agreement.
"Permitted Foreign Air Carrier" means any air carrier with its
principal executive offices in any Permitted Country and which is authorized to
conduct commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.
"Permitted Government Entity" means (i) the U.S. Government or (ii)
any Government Entity if the Aircraft is then registered under the laws of the
country of such Government Entity.
"Permitted Lien" means (a) the rights of Mortgagee under the
Operative Agreements, or of WTC as second mortgagee under the Second Mortgage,
or of any Permitted Lessee under any Permitted Lease; (b) Liens attributable to
Mortgagee (both in its capacity as trustee under the Trust Indenture and in its
individual capacity); (c) the rights of others under agreements or arrangements
to the extent expressly permitted by the terms of Section 4.02(b) or 4.04 of the
Trust Indenture or Article IV of the Second Mortgage; (d) Liens of Taxes of
Owner (and its U.S. federal tax law consolidated group), or Liens for Taxes of
any Tax Indemnitee (and its U.S. federal tax law consolidated group) for which
Owner is obligated to indemnify such Tax Indemnitee under any of the Operative
Agreements, in any such case either not yet due or being contested in good faith
by appropriate proceedings so long as such Liens and such proceedings do not
involve any material risk of the sale, forfeiture or loss of the Aircraft, the
Airframe, or any Engine or the interest of Mortgagee or Second Mortgagee therein
or impair the Lien of the Trust Indenture or the Second Mortgage; (e)
materialmen's, mechanics', workers', repairers', employees' or other like Liens
arising in the ordinary course of business for amounts the payment of which is
either not yet delinquent for more than 60 days or is being contested in good
faith by appropriate proceedings, so long as such Liens and such proceedings do
not involve any material risk of the sale, forfeiture or loss of the Aircraft,
the Airframe, or any Engine or the interest of Mortgagee or Second Mortgagee
therein or impair the Lien of the Trust Indenture or the Second Mortgage; (f)
Liens arising out of any judgment or award against Owner (or any Permitted
Lessee), so long as such judgment shall, within 60 days after the entry
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thereof, have been discharged or vacated, or execution thereof stayed pending
appeal or shall have been discharged, vacated or reversed within 60 days after
the expiration of such stay, and so long as during any such 60 day period there
is not, or any such judgment or award does not involve, any material risk of the
sale, forfeiture or loss of the Aircraft, the Airframe, or any Engine or the
interest of Mortgagee or Second Mortgagee therein or impair the Lien of the
Trust Indenture or the Second Mortgage; (g) any other Lien with respect to which
Owner (or any Permitted Lessee) shall have provided a bond, cash collateral or
other security adequate in the reasonable opinion of Mortgagee.
"Permitted Lease" means a lease permitted under Section 4.02(b) of
the Trust Indenture.
"Permitted Lessee" means the lessee under a Permitted Lease.
"Persons" or "persons" means individuals, firms, partnerships, joint
ventures, trusts, trustees, Government Entities, organizations, associations,
corporations, government agencies, committees, departments, authorities and
other bodies, corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
"Plan" means any employee benefit plan within the meaning of Section
3(3) of ERISA, or any plan within the meaning of Section 4975(e)(1) of the Code.
"Premium Termination Date" means December 30, 2004 in the case of
the Series A Equipment Notes, December 30, 2003 in the case of the Series B
Equipment Notes, June 30, 2002 in the case of the Series C Equipment Notes and
June 30, 2000 in the case of the Series D Equipment Notes.
"QIB" is defined in Section 2.07 of the Trust Indenture.
"Registration Rights Agreement" means the Exchange and Registration
Rights Agreement dated the Issuance Date by and among Owner and certain initial
purchasers of the Pass Through Certificates named therein, providing for, among
other things, the exchange offer with respect to such Pass Through Certificates
to be registered under the Securities Act or the shelf registration of such Pass
Through Certificates for a period specified therein.
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"Related Indentures" means, collectively, each Trust Indenture and
Mortgage under which "Equipment Notes" have been issued and acquired by the Pass
Through Trustees on or prior to August 31, 1997 (other than this Trust
Indenture), as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Removable Part" is defined in Section 4.04(d) of the Trust
Indenture.
"Replacement Airframe" means any airframe substituted for the
Airframe pursuant to Article IV of the Trust Indenture.
"Replacement Engine" means an engine substituted for an Engine
pursuant to Article IV of the Trust Indenture.
"SEC" means the Securities and Exchange Commission of the United
States, or any Government Entity succeeding to the functions of such Securities
and Exchange Commission.
"Second Mortgage" means the Second Trust Indenture and Mortgage
dated as of even date with the Participation Agreement between the Owner and
Second Mortgagee.
"Second Mortgagee" means Wilmington Trust Company, not in its
individual capacity, except as expressly stated in the Second Mortgage, but
solely as second mortgagee.
"Second Mortgage Supplement" means any Trust Indenture and Mortgage
Supplement executed by Owner relating to the Second Mortgage, substantially in
the form of Exhibit A to the Second Mortgage, with appropriate modifications to
reflect the purpose for which it is being used.
"Section 1110" means 11 U.S.C. Section 1110 of the Bankruptcy Code
or any successor or analogous section of the federal bankruptcy law in effect
from time to time.
"Secured Obligations" is defined in Section 2.05 of the Trust
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security" means a "security" as defined in Section 2(l) of the
Securities Act.
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"Senior Holder" is defined in Section 2.12(c) of the Trust
Indenture.
"Series" means any of Series A, Series B, Series C or Series D.
"Series A" or "Series A Equipment Notes" means Equipment Notes
issued under the Trust Indenture and designated as "Series A" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued under the Trust Indenture and designated as "Series B" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued under the Trust Indenture and designated as "Series C" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes
issued under the Trust Indenture and designated as "Series D" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series D."
"Similar Aircraft" means a Boeing Model 737-3T0 aircraft.
"Special Default" means (i) the failure by Owner to pay any amount
of principal of or interest on any Equipment Note when due or (ii) the
occurrence of any Default or Event of Default referred to in Section 5.01(v),
(vi) or (vii).
"Subordination Agent" means Wilmington Trust Company, as
subordination agent under the Intercreditor Agreement, or any successor thereto.
"Subordination Agent Agreements" means the Participation Agreement,
the Liquidity Facilities and the Intercreditor Agreement.
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"TAC" means TAC 322 Corp., a Delaware corporation.
"TAC ▇▇▇▇ of Sale" means the full warranty ▇▇▇▇ of sale covering the
Aircraft executed by TAC in favor of the Owner Trustee.
"Tax Indemnitee" means (a) WTC, Mortgagee and Second Mortgagee, (b)
each separate or additional trustee appointed pursuant to the Trust Indenture
and the Second Mortgage, (c) each Note Holder and (d) the respective successors,
assigns, agents and servants of the foregoing.
"Taxes" means all license, recording, documentary, registration and
other similar fees and all taxes, levies, imposts, duties, charges, assessments
or withholdings of any nature whatsoever imposed by any Taxing Authority,
together with any penalties, additions to tax, fines or interest thereon or
additions thereto.
"Taxing Authority" means any federal, state or local government or
other taxing authority in the United States, any foreign government or any
political subdivision or taxing authority thereof, any international taxing
authority or any territory or possession of the United States or any taxing
authority thereof.
"Termination of Lease" means the Termination of Lease dated June 25,
1997, terminating the Existing Lease.
"Threshold Amount" means $3,500,000.
"Transaction Expenses" means all costs and expenses incurred by
Mortgagee and Second Mortgagee in connection with (a) the preparation, execution
and delivery of the Operative Agreements and the recording or filing of any
documents, certificates or instruments in accordance with any Operative
Agreement, including, without limitation, the FAA Filed Documents and the
Financing Statements, (b) the initial fee of Mortgagee and Second Mortgagee
under the Trust Indenture and the Second Mortgage, respectively, and (c) the
reasonable fees and disbursements of counsel for each Mortgagee, the Second
Mortgagee and special counsel in Oklahoma City, Oklahoma, in each case, in
connection with the Closing.
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"Transactions" means the transactions contemplated by the
Participation Agreement.
"Transfer" means the transfer, sale, assignment or other conveyance
of all or any interest in any property, right or interest.
"Transferee" means a person to which any Note Holder purports or
intends to Transfer any or all of its right, title or interest in the Equipment
Note, as described in Section 9 of the Participation Agreement.
"Trust Indenture" means this Trust Indenture and Mortgage 322, dated
as of the date of the Participation Agreement, between Owner and Mortgagee.
"Trust Indenture Supplement" means a Trust Indenture and Mortgage
Supplement, substantially in the form of Exhibit A to the Trust Indenture, with
appropriate modifications to reflect the purpose for which it is being used.
"UCC" means the Uniform Commercial Code as in effect in any
applicable jurisdiction.
"United States" or "U.S." means the United States of America;
provided that for geographic purposes, "United States" means, in aggregate, the
50 states and the District of Columbia of the United States of America.
"U.S. Air Carrier" means any United States air carrier that is 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 10 or more individuals or
6000 pounds or more of cargo, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the FAA Regulations, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provisions therefor or in the absence thereof.
"U.S. Government" means the federal government of the United States,
or any instrumentality or agency thereof the obligations of which are guaranteed
by the full faith and credit of the federal government of the United States.
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"U.S. Person" means any Person described in Section 7701(a)(30) of
the Code.
"Weighted Average Life to Maturity" means, with respect to any
specified Debt, at the time of the determination thereof the number of years
obtained by dividing the then Remaining Dollar-years of such Debt by the then
outstanding principal amount of such Debt. The term "Remaining Dollar-years"
shall mean the amount obtained by (1) multiplying the amount of each
then-remaining principal payment on such Debt by the number of years (calculated
at the nearest one-twelfth) that will elapse between the date of determination
of the Weighted Average Life to Maturity of such Debt and the date of that
required payment and (2) totaling all the products obtained in clause (1) above.
"Wet Lease" means any arrangement whereby Owner or a Permitted
Lessee agrees to furnish the Aircraft, Airframe or any Engine to a third party
pursuant to which the Aircraft, Airframe or Engine shall at all times be in the
operational control of Owner or a Permitted Lessee, provided that Owner's
obligations under the Trust Indenture shall continue in full force and effect
notwithstanding any such arrangement.
"WTC" means Wilmington Trust Company, a Delaware banking
corporation, not in its capacity as Mortgagee under the Trust Indenture, but in
its individual capacity.
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ANNEX B
INSURANCE
Capitalized terms used but not defined herein shall have the
respective meanings set forth or incorporated by reference in Annex A to the
Trust Indenture.
A. Liability Insurance
1. Except as provided in Section A.2 below, Owner will carry or
cause to be carried at all times, at no expense to Mortgagee, comprehensive
airline legal liability (including, but not limited to passenger liability,
property damage, baggage liability, cargo and mail liability, hangarkeeper's
liability and contractual liability insurance) with respect to the Aircraft, the
Airframe and the Engines, which is (i) in an amount not less than the greater of
(x) the amount of comprehensive airline legal liability insurance from time to
time applicable to aircraft owned or leased and operated by Owner of the same
type and operating on similar routes as the Aircraft and (y) the Minimum
Liability Insurance Amount per occurrence; (ii) of the type and covering the
same risks as from time to time applicable to aircraft operated by Owner of the
same type as the Aircraft; and (iii) maintained in effect with insurers of
nationally or internationally recognized responsibility (such insurers being
referred to herein as "Approved Insurers").
2. 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 Section A.1 above, insurance otherwise conforming with the
provisions of said Section A.1 except that (i) the amounts of coverage shall not
be required to exceed the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or operated by Owner of
the same type as the Aircraft which are on the ground and not in operation and
(ii) the scope of the risks covered and the type of insurance shall be the same
as from time to time shall be applicable to aircraft owned or operated by Owner
of the same type which are on the ground and not in operation.
▇. ▇▇▇▇ Insurance
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1. Except as provided in Section B.2 below, Owner will carry or
cause to be carried at all times, at no expense to Mortgagee, with Approved
Insurers "all-risk" ground and flight aircraft hull insurance covering each
Aircraft (including the Engines when they are installed on the Airframe or any
other airframe) which is of the type as from time to time applicable to aircraft
owned by Owner of the same type as the Aircraft for an amount denominated in
United States Dollars not less than the unpaid Original Amount together with six
months of interest accrued thereon (collectively, the "Debt Balance").
Any policies of insurance carried in accordance with this Section
B.1 covering the Aircraft and any policies taken out in substitution or
replacement for any such policies (i) shall name Mortgagee as exclusive loss
payee for any proceeds to be paid under such policies up to an amount equal to
the Debt Balance and (ii) shall provide that (A) in the event of a loss
involving proceeds in excess of the Threshold Amount, the proceeds in respect of
such loss up to an amount equal to the Debt Balance shall be payable to the
Mortgagee, except in the case of a loss with respect to an Engine installed on
an airframe other than the Airframe, in which case Owner (or any Permitted
Lessee) shall endeavor to arrange for any payment of insurance proceeds in
respect of such loss to be held for the account of the Mortgagee whether such
payment is made to Owner (or any Permitted Lessee) or any third party, it being
understood and agreed that in the case of any payment to Mortgagee otherwise
than in respect of an Event of Loss, the Mortgagee shall, upon receipt of
evidence satisfactory to it that the damage 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 to Owner or its order,
and (B) the entire amount of any loss involving proceeds of the Threshold Amount
or less or the amount of any proceeds of any loss in excess of the Debt Balance
shall be paid to Owner or its order unless a Event of Default or Special Default
shall have occurred and be continuing and the insurers have been notified
thereof by the Mortgagee. In the case of a loss with respect to an engine (other
than an Engine) installed on the Airframe, Mortgagee shall hold any payment to
it of any insurance proceeds in respect of such loss for the account of Owner or
any other third party that is entitled to receive such proceeds.
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2. 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 Section B.1 above, insurance otherwise conforming with the
provisions of said Section B.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
by Owner of the same type similarly on the ground and not in operation, provided
that Owner shall maintain insurance against risk of loss or damage to the
Aircraft in an amount equal to the Debt Balance during such period that the
Aircraft is on the ground and not in operation.
C. War-Risk, Hijacking and Allied Perils Insurance
If Owner (or any Permitted Lessee) shall at any time operate or
propose to operate the Aircraft, Airframe or any Engine (i) in any area of
recognized hostilities or (ii) on international routes and war-risk, hijacking
or allied perils insurance is maintained by Owner (or any Permitted Lessee) with
respect to other aircraft owned or operated by Owner (or any Permitted Lessee)
on such routes or in such areas, Owner shall maintain or cause to be maintained
war-risk, hijacking and related perils insurance of substantially the same type
carried by major United States commercial air carriers operating the same or
comparable models of aircraft on similar routes or in such areas and in no event
in an amount less than the unpaid Original Amount.
D. General Provisions
Any policies of insurance carried in accordance with Sections A, B
and C, including any policies taken out in substitution or replacement for such
policies:
(i) shall name Mortgagee, the Second Mortgagee, each Note Holder and
each Liquidity Provider as an additional insured (collectively, the "Additional
Insureds"), as its interests may appear;
(ii) shall apply worldwide and have no territorial restrictions or
limitations (except only in the case of war, hijacking and related perils
insurance required under Section C, which shall apply to the fullest extent
available in the international insurance market);
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(iii) shall provide that, in respect of the interests of the
Additional Insureds in such policies, the insurance shall not be invalidated or
impaired by any act or omission (including misrepresentation and nondisclosure)
by Owner (or any Permitted Lessee) or any other Person (including, without
limitation, use for illegal purposes of the Aircraft or any Engine) and shall
insure the Additional Insureds regardless of any breach or violation of any
representation, warranty, declaration, term or condition contained in such
policies by Owner (or any Permitted Lessee);
(iv) shall provide that, if the insurers cancel such insurance for
any reason whatsoever, or if the same is allowed to lapse for nonpayment of
premium, or if any material change is made in the insurance which adversely
affects the interest of any of the Additional Insureds, such cancellation, lapse
or change shall not be effective as to the Additional Insureds for 30 (seven
days in the case of war risk, hijacking and allied perils insurance) days after
receipt by the Additional Insureds of written notice by such insurers of such
cancellation, lapse or change, provided 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;
(v) shall waive any rights of setoff (including for unpaid
premiums), recoupment, counterclaim or other deduction, whether by attachment or
otherwise, against each Additional Insured;
(vi) shall waive any right of recourse, subrogation, setoff,
recoupment, counterclaim or other deduction against any Additional Insured;
(vii) shall be primary without right of contribution from any other
insurance that may be available to any Additional Insured;
(viii) shall provide that all of the liability insurance provisions
thereof, except the limits of liability, shall operate in all respects as if a
separate policy had been issued covering each party insured thereunder;
(ix) shall provide that none of the Additional Insureds shall be
liable for any insurance premium; and
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(x) shall contain a 50/50% Clause per Lloyd's Aviation Underwriters'
Association Standard Policy Form AVS 103;
E. Reports and Certificates; Other Information
On or prior to the Closing Date and on or prior to each renewal date
of the insurance policies required hereunder, Owner will furnish or cause to be
furnished to Mortgagee insurance certificates describing in reasonable detail
the insurance maintained by Owner hereunder and a report, signed by Owner's
regularly retained independent insurance broker (the "Insurance Broker"),
stating the opinion of such Insurance Broker that (a) all premiums in connection
with the insurance then due have been paid and (b) such insurance complies with
the terms of this Annex B. To the extent such agreement is reasonably obtainable
Owner will also cause the Insurance Broker to agree to advise Mortgagee in
writing of any default in the payment of any premium and of any other 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 or Engines or cause the cancellation or termination of such insurance,
and to advise Mortgagee in writing at least 30 days (seven days in the case of
war-risk and allied perils coverage or such shorter period as may be available
in the international insurance market, as the case may be) prior to the
cancellation, lapse or material adverse change of any insurance maintained
pursuant to this Annex B.
F. Right to Pay Premiums
The Additional Insureds shall have the rights but not the
obligations of an additional named insured. None of Mortgagee and the other
Additional Insured shall have any obligation to pay any premium, commission,
assessment or call due on any such insurance (including reinsurance).
Notwithstanding the foregoing, in the event of cancellation of any insurance due
to the nonpayment of premiums, Mortgagee shall have the option, in its sole
discretion, to pay any such premium in respect of the Aircraft that is due in
respect of the coverage pursuant to this Trust Indenture and to maintain such
coverage, as Mortgagee may require, until the scheduled expiry date of such
insurance and, in such event, Owner shall, upon demand, reimburse Mortgagee for
amounts so paid by them.
G. Deductibles; Self-insurance
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Owner may self-insure by way of deductible, premium adjustment or
franchise provisions or otherwise (including, with respect to insurance
maintained pursuant to Section B, insuring for a maximum amount which is less
than the Debt Balance) in the insurance covering the risks required to be
insured against pursuant to Section 4.06 and this Annex B under a program
applicable to all aircraft in Owner's fleet, but in no case shall the aggregate
amount of self-insurance in regard to Section 11 and this Annex B exceed during
any policy year, with respect to all of the aircraft in Owner's fleet
(including, without limitation, the Aircraft), the lesser of (a) 50% of the
largest replacement value of any single aircraft in Owner's fleet and (b) 1-1/2%
of the average aggregate insurable value (during the preceding policy year) of
all aircraft (including, without limitation, the Aircraft) on which Owner
carries insurance, unless an insurance broker of national standing shall certify
that the standard among all other major U.S. airlines is a higher level of
self-insurance, in which case Owner may self-insure to such higher level. In
addition, Owner (and any Permitted Lessee) may self-insure to the extent of any
applicable deductible per aircraft that does not exceed industry standards for
major U.S. airlines.
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EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
TRUST INDENTURE AND MORTGAGE 322 SUPPLEMENT
This TRUST INDENTURE AND MORTGAGE 322 SUPPLEMENT NO. 1, dated
______________ ___, ____ (herein called this "Trust Indenture Supplement") of
CONTINENTAL AIRLINES, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 322, dated as of June 25,
1997 (as amended and supplemented to the date hereof, the "Trust Indenture")
between the Owner and Wilmington Trust Company, as Mortgagee (the "Mortgagee"),
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 Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture relates to
the Airframe and Engines described below, and a counterpart of the Trust
Indenture is attached hereto and made a part hereof and this Trust Indenture
Supplement, together with such counterpart of the Trust Indenture, is being
filed for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement WITNESSETH that the
Owner hereby confirms that the Lien of the Trust Indenture on the Collateral
covers all of Owner's right, title and interest in and to the following
described property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
The Boeing Company
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together with all of the Owner's right, title and interest in and to
all Parts of whatever nature, whether now owned or hereinafter acquired and
which are from time to time incorporated or installed in or attached to said
airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
CFM International
together with all of Owner's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to either of such
engines.
Together with all of Owner's right, title and interest in and to (a)
all Parts of whatever nature, which from time to time are included within the
definition of "Airframe" or "Engine", whether now owned or hereafter acquired,
including all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and Engines (other
than additions, improvements, accessions and accumulations which constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment excluded from the definition of Parts) and (b) all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, its successors and assigns, in trust for the equal and proportionate
benefit and security of the Note Holders and the Indenture Indemnitees, except
as provided in Section 2.13 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Equipment Note over any other by
reason of 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 Trust Indenture.
This Trust Indenture Supplement shall be construed as supplemental
to the Trust Indenture and shall form a part
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thereof. The Trust Indenture is each hereby incorporated by reference herein and
is hereby ratified, approved and confirmed. The Closing Date is June 25, 1997.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
* * *
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
CONTINENTAL AIRLINES, INC.
By:______________________________
Name:
Title:
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SCHEDULE I
Original Amount Interest Rate
Series A:
Series B:
Series C:
Series D:
[INTENTIONALLY OMITTED FROM THE VERSION
OF THIS DOCUMENT FILED WITH THE FAA AS CONTAINING
CONFIDENTIAL FINANCIAL INFORMATION]
Trust Indenture and Mortgage
Equipment Note Amortization
Percentage of Original
Payment Date Amount to be Paid
EXECUTION
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TRUST INDENTURE AND MORTGAGE 322
Dated as of June 25, 1997
Between
CONTINENTAL AIRLINES, INC.,
Owner
and
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
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but solely as Mortgagee,
Mortgagee
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EQUIPMENT NOTES COVERING
ONE BOEING 737-3T0 AIRCRAFT
BEARING U.S. REGISTRATION ▇▇▇▇ N12322
AND MANUFACTURER'S SERIAL NO. 23373
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