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EXHIBIT 4(d)2
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INDENTURE AND SECURITY AGREEMENT
(N908AN)
Dated as of October 6, 1999
between
AMERICAN AIRLINES, INC.,
and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Loan Trustee
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One Boeing 737-823 Aircraft
U.S. Registration No. N908AN
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions.....................................................................................4
Section 1.02 Other Definitional Provisions...................................................................5
ARTICLE II
THE EQUIPMENT NOTES
Section 2.01 Form of Equipment Notes.........................................................................5
Section 2.02 Issuance and Terms of Equipment Notes..........................................................10
Section 2.03 Method of Payment..............................................................................12
Section 2.04 Withholding Taxes..............................................................................13
Section 2.05 Application of Payments........................................................................13
Section 2.06 Termination of Interest in Collateral..........................................................13
Section 2.07 Registration, Transfer and Exchange of Equipment Notes.........................................14
Section 2.08 Mutilated, Destroyed, Lost or Stolen Equipment Notes...........................................15
Section 2.09 Payment of Expenses on Transfer; Cancellation..................................................15
Section 2.10 Mandatory Redemption of Equipment Notes........................................................15
Section 2.11 Voluntary Redemption of Equipment Notes........................................................16
Section 2.12 Redemptions; Notice of Redemptions; Repurchases................................................16
Section 2.13 Subordination..................................................................................17
Section 2.14 Certain Payments...............................................................................17
Section 2.15 Repayment of Monies for Equipment Note Payments
held by the Indenture Trustee.........................................................19
Section 2.16 Directions by Subordination Agent..............................................................19
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE COLLATERAL
Section 3.01 Basic Distributions............................................................................20
Section 3.02 Event of Loss; Optional Redemption.............................................................21
Section 3.03 Payments after Event of Default................................................................22
Section 3.04 Certain Payments...............................................................................24
Section 3.05 Payments to the Company........................................................................25
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ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE
Section 4.01 Events of Default..............................................................................25
Section 4.02 Remedies.......................................................................................27
Section 4.03 Remedies Cumulative............................................................................30
Section 4.04 Discontinuance of Proceedings..................................................................30
Section 4.05 Waiver of Past Defaults........................................................................31
Section 4.06 Noteholders May Not Bring Suit Except Under Certain Conditions.................................31
ARTICLE V
DUTIES OF THE LOAN TRUSTEE
Section 5.01 Notice of Event of Default.....................................................................32
Section 5.02 Action upon Instructions; Certain Rights and Limitations.......................................33
Section 5.03 Indemnification................................................................................33
Section 5.04 No Duties Except as Specified in Indenture or Instructions.....................................33
Section 5.05 No Action Except under Indenture or Instructions...............................................33
Section 5.06 Investment of Amounts Held by the Loan Trustee.................................................33
ARTICLE VI
THE LOAN TRUSTEE
Section 6.01 Acceptance of Trusts and Duties................................................................35
Section 6.02 Absence of Certain Duties......................................................................35
Section 6.03 No Representations or Warranties as to the Documents...........................................35
Section 6.04 No Segregation of Monies; No Interest..........................................................35
Section 6.05 Reliance; Agents; Advice of Counsel............................................................36
Section 6.06 Instructions from Noteholders..................................................................36
ARTICLE VII
OPERATING COVENANTS OF THE COMPANY
Section 7.01 Liens..........................................................................................36
Section 7.02 Possession, Operation and Use, Maintenance and Registration....................................38
Section 7.03 Inspection; Financial Information..............................................................43
Section 7.04 Replacement and Pooling of Parts; Alterations, Modifications
and Additions; Substitution of Engines.........................................................45
Section 7.05 Loss, Destruction or Requisition...............................................................47
Section 7.06 Aircraft Liability Insurance...................................................................51
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ARTICLE VIII
SUCCESSOR TRUSTEES
Section 8.01 Resignation or Removal; Appointment of Successor...............................................56
Section 8.02 Appointment of Additional and Separate Trustees................................................58
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.01 Amendments to this Indenture without Consent of Holders........................................60
Section 9.02 Amendments to this Indenture with Consent of Holders...........................................60
Section 9.03 Amendments, Waivers, Etc. of the Participation Agreement.......................................61
Section 9.04 Revocation and Effect of Consents..............................................................62
Section 9.05 Notation on or Exchange of Equipment Notes.....................................................62
Section 9.06 Trustee Protected..............................................................................62
ARTICLE X
MISCELLANEOUS
Section 10.01 Termination of Indenture.......................................................................62
Section 10.02 No Legal Title to Collateral in Noteholders....................................................64
Section 10.03 Sale of Aircraft by Loan Trustee is Binding....................................................64
Section 10.04 Indenture for Benefit of the Company, Loan Trustee and Noteholders.............................65
Section 10.05 Notices........................................................................................65
Section 10.06 Severability...................................................................................66
Section 10.07 No Oral Modification or Continuing Waivers.....................................................66
Section 10.08 Successors and Assigns.........................................................................66
Section 10.09 Headings.......................................................................................66
Section 10.10 Normal Commercial Relations....................................................................66
Section 10.11 Voting by Noteholders..........................................................................66
Section 10.12 Section 1110...................................................................................66
Section 10.13 The Company's Performance and Rights...........................................................67
Section 10.14 Counterparts...................................................................................67
Section 10.15 Governing Law..................................................................................67
Section 10.16 Confidential Information.......................................................................67
Section 10.17 Submission to Jurisdiction.....................................................................68
Exhibit A - Form of Indenture Supplement
Exhibit B - List of Permitted Countries
Schedule I - Description of Equipment Notes
Schedule II - Pass Through Trust Agreement and Pass Through Trust Supplements
Annex A - Definitions
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INDENTURE AND SECURITY AGREEMENT
(N908AN)
This INDENTURE AND SECURITY AGREEMENT (N908AN), dated as of October 6,
1999, is made by and between AMERICAN AIRLINES, INC., a Delaware corporation
(together with its successors and permitted assigns, the "Company"), and STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national
banking association, as Loan Trustee hereunder (together with its permitted
successors hereunder, the "Loan Trustee").
W I T N E S S E T H:
WHEREAS, the parties desire by this Indenture (such term and other
capitalized terms used herein without definition being defined as provided in
Article I), among other things, to provide for (i) the issuance by the Company
of the Equipment Notes and (ii) the assignment, mortgage and pledge by the
Company to the Loan Trustee, as part of the Collateral hereunder, among other
things, of all of the Company's estate, right, title and interest in and to the
Aircraft, as security for, among other things, the Company's obligations to the
Loan Trustee, for the ratable benefit and security of the Noteholders, subject
to Section 2.13 and Article III;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Company and authenticated and delivered by the Loan Trustee
hereunder, the valid, binding and enforceable obligations of the Company; and
WHEREAS, all things necessary to make this Indenture a legal, valid and
binding obligation of the Company for the uses and purposes herein set forth, in
accordance with its terms, have been done and performed and have occurred;
GRANTING CLAUSE
NOW, THEREFORE, to secure the prompt and complete payment (whether at
stated maturity, by acceleration or otherwise) of principal of, Make-Whole
Amount, if any, and interest on, the Equipment Notes and all other amounts
payable by the Company under the Operative Documents and the performance and
observance by the Company of all the agreements and covenants to be performed or
observed by the Company for the benefit of the Noteholders and the Indenture
Indemnitees contained in the Operative Documents, and in consideration of the
premises and of the covenants contained in the Operative Documents, and for
other good and valuable consideration given by the Loan Trustee, the Noteholders
and the Indenture Indemnitees to the Company at or before the Closing Date, the
receipt of which is hereby acknowledged, the Company does hereby grant, bargain,
sell, convey, transfer, mortgage, assign, pledge and confirm unto the Loan
Trustee and its successors in trust and permitted assigns, for the security and
benefit of the Loan Trustee, the Noteholders and the Indenture Indemnitees, a
first priority security interest
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in, and mortgage lien on, all estate, right, title and interest of the Company
in, to and under, all and singular, the following described properties, rights,
interests and privileges whether now or hereafter acquired (hereinafter
sometimes referred to as the "Collateral"):
(1) the Aircraft, including the Airframe and the Engines, whether or
not any such Engine may from time to time be installed on the Airframe or
any other airframe or any other aircraft, and any and all Parts relating
thereto, and, to the extent provided herein, all substitutions and
replacements of, and additions, improvements, accessions and accumulations
to, the Aircraft, including the Airframe, the Engines and any and all Parts
(in each case other than any substitutions, replacements, additions,
improvements, accessions and accumulations that constitute items excluded
from the definition of Parts by clauses (b), (c) and (d) thereof) relating
thereto (such Airframe and Engines as more particularly described in the
Indenture Supplement executed and delivered with respect to the Aircraft on
the Closing Date or with respect to any substitutions or replacements
therefor), and together with all flight records, logs, manuals, maintenance
data and inspection, modification and overhaul records and other documents
at any time required to be maintained with respect to the foregoing, in
accordance with the rules and regulations of the FAA if the Aircraft is
registered under the laws of the United States or the rules and regulations
of the government of the country of registry if the Aircraft is registered
under the laws of a jurisdiction other than the United States;
(2) the Warranty Rights, together with all rights, powers, privileges,
options and other benefits of the Company under the same;
(3) all requisition proceeds with respect to the Aircraft or any Part
thereof, and all insurance proceeds with respect to the Aircraft or any
Part thereof, but excluding all proceeds of, and rights under, any
insurance maintained by the Company and not required under Section 7.06(b);
(4) all moneys and securities now or hereafter paid or deposited or
required to be paid or deposited to or with the Loan Trustee by or for the
account of the Company pursuant to any term of any Operative Document and
held or required to be held by the Loan Trustee hereunder or thereunder;
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, the Company shall have the right, to the exclusion of the Loan
Trustee, (i) to quiet enjoyment of the Aircraft, the Airframe, the Parts and the
Engines, and to possess, use, retain and control the Aircraft, the Airframe, the
Parts and the Engines and all revenues, income and profits derived therefrom and
(ii) with respect to the Warranty Rights, to exercise in the Company's name all
rights and powers of the Buyer (as defined
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in the Purchase Agreement) under the Warranty Rights and to retain any recovery
or benefit resulting from the enforcement of any warranty or indemnity or other
obligation under the Warranty Rights; provided, further, that notwithstanding
the occurrence and continuation of an Event of Default, the Loan Trustee shall
not enter into any amendment or modification of the Purchase Agreement that
would alter the rights, benefits or obligations of the Company thereunder;
TO HAVE AND TO HOLD all and singular the aforesaid property unto the Loan
Trustee, and its successors and permitted assigns, in trust for the ratable
benefit and security of the Noteholders and the Indenture Indemnitees, except as
otherwise provided in this Indenture, including Section 2.13 and Article III,
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 Indenture.
It is expressly agreed that notwithstanding anything herein to the
contrary, the Company shall remain liable under the Purchase Agreement to
perform all of its obligations thereunder, and, except to the extent expressly
provided in any Operative Document, none of the Loan Trustee, any Noteholders or
any Indenture Indemnitee shall be required or obligated in any manner to perform
or fulfill any obligations of the Company under or pursuant to any thereof, 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 amount that may have been assigned to it or to which it may be
entitled at any time or times.
Notwithstanding anything herein to the contrary (but without in any way
releasing the Company from any of its duties or obligations under the Purchase
Agreement), the Loan Trustee, the Noteholders and the Indenture Indemnitees
confirm for the benefit of the Manufacturer that in exercising any rights under
the Warranty Rights, or in making any claim with respect to the Aircraft or
other goods and services delivered or to be delivered pursuant to the Purchase
Agreement, the terms and conditions of the Purchase Agreement relating to the
Warranty Rights, including, without limitation, the warranty disclaimer
provisions for the benefit of the Manufacturer, shall apply to and be binding
upon the Loan Trustee, the Noteholders and the Indenture Indemnitees to the same
extent as the Company. The Company hereby directs the Manufacturer, so long as
an Event of Default shall have occurred and be continuing, to pay all amounts,
if any, payable to the Company pursuant to the Warranty Rights directly to the
Loan Trustee to be held and applied as provided herein. Nothing contained herein
shall subject the Manufacturer to any liability to which it would not otherwise
be subject under the Purchase Agreement or modify in any respect the contract
rights of the Manufacturer thereunder except as provided in the Manufacturer's
Consent.
The Company does hereby constitute the Loan Trustee the true and lawful
attorney of the Company (which appointment is coupled with an interest) with
full power (in the name of
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the Company or otherwise) to ask, require, demand and receive any and all monies
and claims for monies (in each case including insurance and requisition
proceeds) due and to become due to the Company under or arising out of the
Purchase Agreement (to the extent assigned hereby), 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 Loan Trustee may deem
to be necessary or advisable in the premises; provided that the Loan Trustee
shall not exercise any such rights except during the continuance of an Event of
Default. The Company agrees that promptly upon receipt thereof, to the extent
required by the Operative Documents, it will transfer to the Loan Trustee any
and all monies from time to time received by the Company constituting part of
the Collateral, for distribution by the Loan Trustee pursuant to this Indenture.
The Company does hereby warrant and represent that it has not sold,
assigned or pledged, and hereby covenants and agrees that it will not sell,
assign or pledge, so long as this Indenture shall remain in effect and the Lien
hereof shall not have been released pursuant to the provisions hereof, any of
its estate, right, title or interest hereby assigned, to any Person other than
the Loan Trustee, except as otherwise provided in or permitted by any Operative
Document.
The Company agrees that at any time and from time to time, upon the written
request of the Loan Trustee, the Company shall promptly and duly execute and
deliver or cause to be duly executed and delivered any and all such further
instruments and documents as the Loan Trustee 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 Loan Trustee the
full benefit of the assignment hereunder and of the rights and powers herein
granted, provided that any instrument or other document so executed by the
Company will not expand any obligations or limit any rights of the Company in
respect of the transactions contemplated by the Operative Documents.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this Indenture, unless the
context otherwise requires, capitalized terms used but not defined herein shall
have the respective meanings set forth or incorporated by reference in Annex A.
Section 1.02 Other Definitional Provisions. (a) The definitions stated
herein and in Annex A apply equally to both the singular and the plural forms of
the terms defined.
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(b) All references in this Indenture to designated "Articles", "Sections",
"Subsections", "Schedules", "Exhibits", "Annexes" and other subdivisions are to
the designated Article, Section, Subsection, Schedule, Exhibit, Annex or other
subdivision of this Indenture, unless otherwise specifically stated.
(c) The words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section, Subsection, Schedule, Exhibit, Annex or other subdivision.
(d) Unless the context otherwise, requires, whenever the words "including",
"include" or "includes" are used herein, it shall be deemed to be followed by
the phrase "without" limitation".
(e) All references in this Indenture to a "government" are to such
government and any instrumentality or agency thereof.
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 OR OTHER JURISDICTION. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE
OFFERED FOR SALE OR SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH
APPLICABLE STATE OR OTHER LAWS OR EXEMPTIONS FROM SUCH REGISTRATION
REQUIREMENTS ARE AVAILABLE.
AMERICAN AIRLINES, INC.
SERIES 1999 [___] EQUIPMENT NOTE DUE [___]
ISSUED IN CONNECTION WITH THE BOEING [______] AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N[_____]AN
No.____ Date: [______,__] $________________
INTEREST RATE MATURITY DATE
[____] [___________,_____]
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AMERICAN AIRLINES, INC. (together with its successors and permitted
assigns, the "Company") hereby promises to pay to ___________, or the
registered assignee thereof, the principal amount of ________________
Dollars ($_________) [on __________](1) [in installments on the Payment
Dates set forth in Schedule I hereto, each such installment to be in an
amount computed by multiplying the original principal amount of this
Equipment Note by the percentage set forth in Schedule I hereto opposite
the Payment Date on which such installment is due,](2) and to pay interest
in arrears on each Payment Date at the Debt Rate on the principal 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. [Notwithstanding the foregoing, the final payment made on this
Equipment Note shall be in an amount sufficient to discharge in full the
unpaid principal amount and all accrued and unpaid interest on, and any
other amounts due under, this Equipment Note.](2) 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 with the same force and effect as if made on
such scheduled date, and if such payment is made on such next succeeding
Business Day, no interest shall accrue on the amount of such payment from
and after such scheduled date.
For purposes hereof, the term "Indenture" means the Indenture and
Security Agreement (N___AN), dated as of October 6, 1999, between the
Company and State Street Bank and Trust Company of Connecticut, National
Association, as Loan Trustee (the "Loan Trustee"), as the same may be
amended, supplemented or otherwise modified from time to time in accordance
with its terms. All capitalized terms used in this Equipment Note and not
defined herein, unless the context otherwise requires, shall have the
respective meanings set forth or incorporated by reference, and shall be
construed and interpreted in the manner described, in the Indenture.
This Equipment Note shall bear interest, payable on demand, at the
Past Due Rate (and not the Debt Rate) (calculated on the basis of a year of
360 days comprised of twelve 30-day months) on any principal amount and (to
the extent permitted by applicable law) Make-Whole Amount, if any, interest
and any other amounts payable hereunder not paid when due for any period
during which the
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1 To be inserted in non-installment Equipment Notes.
2 To be inserted in installment Equipment Notes.
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same shall be overdue, in each case for the period the same is overdue.
Amounts shall be overdue if not paid in the manner provided herein or in
the Indenture when due (whether at stated maturity, by acceleration or
otherwise).
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 Loan Trustee, or at the office of any successor
trustee, in the manner provided in Section 2.07 of the Indenture.
The principal amount and interest and other amounts due hereunder
shall be payable in Dollars in immediately available funds at the Corporate
Trust Office of the Loan Trustee, or as otherwise provided in the
Indenture. The Company shall not have any responsibility for the
distribution of any such payment to the Noteholder of this Equipment Note.
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 to the Loan Trustee for cancellation.
The holder hereof, by its acceptance of this Equipment Note, agrees
that, except as provided in the Indenture, including the subordination
provisions referred to below, each payment of an installment of principal
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 principal amount,
and, to the extent permitted by law, any overdue Make-Whole Amount, if any,
any overdue interest and other overdue amounts hereunder) to the date of
such payment; second, to the payment of Make-Whole Amount, if any, and
third, to the payment of the principal amount of this Equipment Note (or
portion hereof) then due.
This Equipment Note is one of the Equipment Notes referred to in the
Indenture which have been or are to be issued by the Company pursuant to
the terms of the Indenture. The Collateral is held by the Loan Trustee as
security, in part, for the Equipment Notes. The provisions of this
Equipment Note are subject to the Indenture and the Participation
Agreement. Reference is hereby made to the Indenture and the Participation
Agreement 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 Indenture, to all of which terms and conditions in the
Indenture and the Participation Agreement each holder hereof agrees by its
acceptance of this Equipment Note.
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As provided in the Indenture and subject to certain limitations
therein set forth, this Equipment Note is exchangeable for a like aggregate
principal amount of Equipment Notes of the same Series of different
authorized denominations, as requested by the holder surrendering the same.
Prior to the due presentment for registration of transfer of this Equipment
Note, the Company and the Loan Trustee shall deem and treat the Person in
whose name this Equipment Note is registered on the Equipment Note Register
as the absolute owner and holder hereof for the purpose of receiving all
amounts payable with respect to this Equipment Note and for all purposes,
and neither of the Company nor the Loan Trustee shall be affected by notice
to the contrary.
This Equipment Note is subject to redemption as provided in Sections
2.10 and 2.11 of the Indenture but not otherwise.
The indebtedness evidenced by this Equipment Note [shall rank in right
of payment equally with all Series A-2 Equipment Notes and all other Series
A-1 Equipment Notes.](1) [shall rank in right of payment equally with all
Series A-1 Equipment Notes and all other Series A-2 Equipment Notes.](2)
[is, to the extent and in the manner provided in the Indenture, subordinate
and subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Indenture) in respect of [Series A-1
Equipment Notes and Series A-2 Equipment Notes](3) [Series A-1 Equipment
Notes, Series A-2 Equipment Notes and Series B Equipment Notes](4) [Series
A-1 Equipment Notes, Series A-2 Equipment Notes, Series B Equipment Notes
and Series C Equipment Notes](5), and this Equipment Note is issued subject
to such provisions. The Noteholder of this Equipment Note, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and directs the Loan Trustee on such Noteholder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
as provided in the Indenture and (c) appoints the Loan Trustee such
Noteholder's attorney-in-fact for such purpose.
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1 To be inserted in the case of a Series A-1 Equipment Note.
2 To be inserted in the case of a Series A-2 Equipment Note.
3 To be inserted in the case of a Series B Equipment Note.
4 To be inserted in the case of a Series C Equipment Note.
5 To be inserted in the case of a Series D Equipment Note.
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Without limiting the foregoing, the](1) [The](2) Noteholder of this
Equipment Note, by accepting the same, agrees that if such Noteholder, in
its capacity as a Noteholder, shall receive any payment or distribution on
any Secured Obligation in respect of this Equipment Note that it is not
entitled to receive under Section 2.13 or Article III of the Indenture, it
shall hold any amount so received in trust for the Loan Trustee and
forthwith turn over such amount to the Loan Trustee in the form received to
be applied as provided in Article III of the Indenture.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Loan Trustee by manual signature, this Equipment Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, the Company has caused this Equipment Note to be
executed in its corporate name by its officer thereunto duly authorized on
the date hereof.
AMERICAN AIRLINES, INC.
By:
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Name:
Title:
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
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1 To be inserted in the case of a Series B Equipment Note, a Series C
Equipment Note or a Series D Equipment Note.
2 To be inserted in the case of a Series A-1 Equipment Note or a Series A-2
Equipment Note.
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[_________________________________]
not in its individual capacity but
solely as Loan Trustee
By:
--------------------------------
Name:
Title:
SCHEDULE I(1)
EQUIPMENT NOTE AMORTIZATION
Percentage of Original
Principal Amount
Payment Date to be Paid
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[SEE "EQUIPMENT NOTES AMORTIZATION" ON SCHEDULE I TO
INDENTURE WHICH IS TO BE 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 (a) four
(or if the Series D Equipment Notes are issued, five) separate series consisting
of Series A-1 Equipment Notes, Series A-2 Equipment Notes, Series B Equipment
Notes, Series C Equipment Notes and, if issued, Series D Equipment Notes and (b)
the maturities and principal amounts and shall bear interest at the applicable
Debt Rates specified in Schedule I (or, in the case of a Series D Equipment Note
issued after the Closing Date, as specified in an amendment to this Indenture).
On the Closing Date, each Series A-1 Equipment Note, Series A-2 Equipment Note,
Series B Equipment Note and Series C Equipment Note shall be issued to the
Subordination Agent on behalf of each of the Pass Through Trustees for the Pass
Through Trusts created under the Pass Through Trust Agreements referred to in
Schedule II. The Company shall have the option to issue Series D Equipment Notes
at or after the Closing Date. 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.
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1 To be inserted on installment Equipment Notes.
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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), payable in
arrears on each Payment Date on the unpaid principal amount thereof from time to
time outstanding until such principal amount is paid in full, as further
provided in the form of Equipment Note set forth in Section 2.01. The principal
amount of each Series A-1 Equipment Note shall be payable in installments on the
Payment Dates set forth in Schedule I to such Equipment Note, each such
installment to be in an amount computed by multiplying the original principal
amount of such Equipment Note by the percentage set forth in Schedule I hereto,
the applicable portion of which shall be attached as Schedule I to such
Equipment Note, opposite the Payment Date on which such installment is due. The
principal amount of each Series A-2 Equipment Note and Series B Equipment Note
shall be due in a single payment on October 15, 2009. The principal amount of
each Series C Equipment Note shall be due in a single payment on October 15,
2004. Each Series D Equipment Note shall be payable in installments or in a
single payment as set forth in an amendment to this Indenture, and if payable in
installments, such installments shall be calculated as set forth in the third
preceding sentence. Notwithstanding the foregoing, the final payment made under
each Series A-1 Equipment Note shall be in an amount sufficient to discharge in
full the unpaid principal amount and all accrued and unpaid interest on, and any
other amounts due under, such Equipment Note. Each Equipment Note shall bear
interest, payable on demand, at the Past Due Rate (and not at the Debt Rate)
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any principal amount and (to the extent permitted by applicable law)
Make-Whole Amount, if any, 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 under an
Equipment Note if not paid in the manner provided therein or in this Indenture
when due (whether at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any date on which
a payment hereunder or 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 with the same force and effect
as if made on such scheduled date, and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment
from and after such scheduled date.
The Equipment Notes shall be executed on behalf of the Company by the
manual or facsimile signature of one of its authorized officers. Equipment Notes
bearing the signatures of individuals who were at the time of execution the
proper officers of the Company shall bind the Company, 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. No Equipment Note shall be
secured by or entitled to any benefit under this Indenture or be valid or
obligatory for any purposes unless there appears on such Equipment Note a
certificate of authentication in the form provided herein executed by the Loan
Trustee by the manual signature of one of its authorized officers, and such
certificate upon any Equipment Notes shall be conclusive evidence, and the only
evidence, that such Equipment Note has been duly authenticated and delivered
hereunder.
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Section 2.03. Method of Payment. The principal amount of, interest on,
Make-Whole Amount, if any, and, except to the extent expressly provided herein,
all other amounts due to any Noteholder under each Equipment Note or otherwise
payable hereunder shall be payable by the Company in Dollars by wire transfer of
immediately available funds not later than 10:00 a.m. (New York City time) on
the due date of payment to the Loan Trustee at the Corporate Trust Office for
distribution among the Noteholders in the manner provided herein. The Company
shall not have any responsibility for the distribution of such payment to any
Noteholder. Notwithstanding the foregoing or any provision in any Equipment Note
to the contrary, the Loan Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by any Noteholder (with a copy to the
Company), all amounts paid by the Company hereunder and under such Noteholder's
Equipment Note or Equipment Notes to such Noteholder or a nominee therefor
(including all amounts distributed pursuant to Article III) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 12:00 p.m. (New York City time) on the due date of payment, to
an account maintained by such Noteholder with a bank located in the continental
United States the amount to be distributed to such Noteholder, for credit to the
account of such Noteholder maintained at such bank; provided that, in the event
the Equipment Notes are not held by the Subordination Agent on behalf of the
Pass Through Trustees, the Loan Trustee may at its option pay such amounts by
check mailed to the Noteholder's address as it appears on the Equipment Note
Register. If, after its receipt of funds at the place and prior to the time
specified above in the immediately preceding sentence, the Loan Trustee shall
fail (other than as a result of a failure of the Noteholder to provide it with
wire transfer instructions) to make any such payment required to be paid by wire
transfer as provided in the immediately preceding sentence on the Business Day
it receives such funds, the Loan Trustee, in its individual capacity and not as
trustee, agrees to compensate such Noteholders for loss of use of funds at the
Federal Funds Rate until such payment is made and the Loan Trustee 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 Loan Trustee for
cancellation. Notwithstanding any other provision of this Indenture to the
contrary, the Loan Trustee shall not be required to make, or cause to be made,
wire transfers as aforesaid prior to the first Business Day on which it is
practicable for the Loan Trustee to do so in view of the time of day when the
funds to be so transferred were received by it if such funds were received after
1:00 p.m. (New York City time) at the place of payment.
Section 2.04. Withholding Taxes. The Loan Trustee shall exclude and
withhold at the appropriate rate from each payment of principal amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or under
each Equipment Note (which exclusion and withholding shall constitute payment of
such amounts payable hereunder or in respect of such Equipment Notes, as
applicable) any and all withholding taxes applicable thereto as required by law.
The Loan Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future 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
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(which withholding shall constitute payment of such amounts payable hereunder or
in respect of such Equipment Notes, as applicable) and timely pay the same to
the appropriate authority in the name of and on behalf of the Noteholders, that
it will file any necessary withholding tax returns or statements when due, and
that as promptly as possible after the payment thereof it will deliver to each
Noteholder (with a copy to the Company) appropriate documentation showing the
payment thereof, together with such additional documentary evidence as any such
Noteholder may reasonably request from time to time. The Loan Trustee agrees to
file any other information reports as it may be required to file under United
States law.
Section 2.05. Application of Payments. Subject always to Section 2.13
and except as otherwise provided in Article III, in the case of each Equipment
Note, each payment of an installment of principal amount, Make-Whole Amount, if
any, and interest paid thereon shall be applied:
first, to the payment of accrued interest on such Equipment Note (as
well as any interest on any overdue principal amount and (to the extent
permitted by law) any overdue Make-Whole Amount, if any, any overdue
interest and any other overdue amounts thereunder) to the date of such
payment;
second, to the payment of Make-Whole Amount, if any; and
third, to the payment of principal amount of such Equipment Note (or
portion thereof) then due thereunder.
Section 2.06. Termination of Interest in Collateral. No Noteholder or
Indenture Indemnitee shall, as such, have any further interest in, or other
right with respect to, the Collateral when and if the principal amount of,
Make-Whole Amount, if any, and interest (including interest on any overdue
amounts) on and all other amounts due under all Equipment Notes held by such
Noteholder and all other sums then payable to such Noteholder or Indenture
Indemnitee, as the case may be, hereunder and under the Participation Agreement
by the Company (collectively, "Secured Obligations") shall have been paid in
full.
Section 2.07. Registration, Transfer and Exchange of Equipment Notes.
The Loan Trustee shall keep a register or registers (the "Equipment Note
Register") in which the Loan Trustee 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 Loan Trustee. The Loan Trustee 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 or transfer such Equipment Note shall surrender such Equipment Note to
the Loan Trustee at the Corporate Trust Office, together with a written request
from the registered holder thereof for the issuance of a new Equipment Note of
the
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same Series, 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 and subject to satisfaction of Section 2.09, the
Company shall execute, and the Loan Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Equipment
Notes of a like aggregate principal amount and of the same Series. At the option
of the Noteholder, Equipment Notes may be exchanged for other Equipment Notes of
the same Series of any authorized denominations of a like aggregate principal
amount, upon surrender of the Equipment Notes to be exchanged to the Loan
Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so
surrendered for exchange, the Company shall execute, and the Loan Trustee shall
authenticate and deliver, the Equipment Notes which the Noteholder 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 2.07 or under Section 2.08 or otherwise under this Indenture) shall be
the valid obligations of the Company evidencing the same respective obligations,
and entitled to the same security and benefits under this Indenture, as the
Equipment Notes surrendered upon such registration of transfer or exchange.
Every Equipment Note presented or surrendered for registration of transfer,
shall be duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Loan Trustee, duly executed by the Noteholder or such
Noteholder's attorney duly authorized in writing, and the Loan Trustee shall
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act of 1933, as amended, and the securities laws of any
applicable state or jurisdiction. The Loan Trustee shall make a notation on each
new Equipment Note of the amount of all payments of principal 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. Principal, interest and all other amounts
shall be deemed to have been paid on such new Equipment Note to the date on
which such amounts shall have been paid on such old Equipment Note. The Company
shall not be required to exchange any surrendered Equipment Notes as provided
above (a) during the ten-day period preceding the due date of any payment on
such Equipment Note or (b) that has been called for redemption. The Company and
the Loan Trustee shall in all cases deem and treat the Person in whose name any
Equipment Note shall have been issued and registered on the Equipment Note
Register as the absolute owner and Noteholder 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 neither the Company nor the Loan
Trustee shall be affected by any notice to the contrary. The Loan Trustee will
promptly notify the Company 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 the Operative Documents applicable
to Noteholders, and shall be deemed to have represented, warranted and
covenanted to the parties to the Participation Agreement as to the matters
represented, warranted and covenanted by the Noteholders, including the Pass
Through Trustees, in the Participation Agreement. Subject to compliance by the
Noteholder and its transferee (if any) of the requirements set forth in this
Section 2.07 and in Section 2.09, the Loan Trustee and the Company shall use all
reasonable efforts to issue new Equipment Notes upon
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transfer or exchange within ten Business Days of the date an Equipment Note is
surrendered for transfer or exchange.
Section 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes. If
any Equipment Note becomes mutilated, destroyed, lost or stolen, the Company
shall, upon the written request of the holder of such Equipment Note and subject
to satisfaction of this Section 2.08 and of Section 2.09, execute and the Loan
Trustee shall authenticate and deliver in replacement thereof a new Equipment
Note of the same Series, payable in the same principal 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 Loan Trustee, and a photocopy thereof shall be furnished to
the Company. If the Equipment Note being replaced has been destroyed, lost or
stolen, the holder of such Equipment Note shall furnish to the Company and the
Loan Trustee such security or indemnity as may be required by them to save the
Company and the Loan Trustee harmless and evidence satisfactory to the Company
and the Loan Trustee of the destruction, loss or theft of such Equipment Note
and of the ownership thereof.
Section 2.09. Payment of Expenses on Transfer; Cancellation. (a) No
service charge shall be made to a Noteholder for any registration of transfer or
exchange of Equipment Notes, but the Loan Trustee, 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 Loan Trustee shall cancel all Equipment Notes surrendered for
replacement, redemption, transfer, exchange, payment or cancellation and shall
destroy the canceled Equipment Notes.
Section 2.10. Mandatory Redemption of Equipment Notes. The Company
shall redeem the Equipment Notes in whole in connection with an Event of Loss in
respect of the Airframe or the Airframe and the Engines installed thereon
(unless the Company shall have performed the option set forth in Section
7.05(a)(i) with respect thereto) on or before the Loss Payment Date at a
redemption price equal to 100% of the unpaid principal amount thereof, together
with all accrued interest thereon to (but excluding) the date of redemption, but
without any Make-Whole Amount.
Section 2.11. Voluntary Redemption of Equipment Notes. All, but not
less than all, of the Equipment Notes may be redeemed in whole by the Company
upon at least 20 days' revocable prior written notice to the Loan Trustee at a
redemption price equal to 100% of the unpaid principal amount of the Equipment
Notes being redeemed, together with accrued interest thereon to (but excluding)
the date of redemption and all other amounts payable hereunder or under the
Participation Agreement to the Noteholders plus the Make-Whole Amount, if any.
Any notice shall become irrevocable three days before the redemption date if not
previously revoked.
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Section 2.12. Redemptions; Notice of Redemptions; Repurchases. (a) No
redemption of any Equipment Note may be made except to the extent and in the
manner expressly permitted by this Indenture. At such time as no Pass Through
Certificates are outstanding, the Company may at any time repurchase any of the
Equipment Notes at any price in the open market and may hold, resell or
surrender such Equipment Notes to the Loan Trustee for cancellation.
(b) Notice of redemption with respect to the Equipment Notes shall be
given by the Loan Trustee by first-class mail, postage prepaid, mailed not less
than 15 nor more than 60 days prior to the applicable redemption date, to each
Noteholder at such Noteholder's address appearing in the Equipment Note
Register. 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 Company (or any person on
behalf of the Company) shall, to the extent an amount equal to the redemption
price for the Equipment Notes to be redeemed on the redemption date shall not
then be held in the Collateral, deposit or cause to be deposited with the Loan
Trustee by 11:00 a.m. (New York City 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 (and not
revoked as permitted by Section 2.11), the Equipment Notes to be redeemed shall,
on the redemption date, become due and payable at the Corporate Trust Office of
the Loan Trustee, and from and after such redemption date (unless there shall be
a default in the deposit of the redemption price pursuant to Section 2.12(c))
any such Equipment Notes then 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.
Section 2.13. Subordination. (a) The indebtedness evidenced by the
Series A-1 Equipment Notes and Series A-2 Equipment Notes shall rank in right of
payment equally with all other Series A-1 Equipment Notes and Series A-2
Equipment Notes. The indebtedness evidenced by the Series B Equipment Notes is,
to the extent and in the manner provided in this Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations in respect of the Series A-1 Equipment Notes and Series A-2
Equipment Notes, and the Series B Equipment Notes are issued subject to such
provisions. The indebtedness evidenced by the Series C Equipment Notes is, to
the extent and in the manner provided in this Indenture, subordinate and subject
in right of payment to the prior payment in full of the Secured Obligations in
respect of the Series A-1 Equipment Notes, the Series A-2 Equipment Notes and
the Series B Equipment Notes, and the Series C Equipment Notes are issued
subject to such provisions. The indebtedness evidenced by the Series D Equipment
Notes, if issued, shall be, to the extent and in the manner
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provided in this Indenture, subordinate and subject in right of payment to the
prior payment in full of the Secured Obligations in respect of the Series A-1
Equipment Notes, the Series A-2 Equipment Notes, the Series B Equipment Notes
and the Series C Equipment Notes, and the Series D Equipment Notes, if issued,
shall be issued subject to such provisions. By acceptance of its Equipment Notes
of any Series, each Noteholder of such Series (a) agrees to and shall be bound
by such provisions, (b) authorizes and directs the Loan Trustee on such
Noteholder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Indenture and (c) appoints the
Loan Trustee as such Noteholder's attorney-in-fact for such purpose.
(b) The Company, the Loan Trustee and, by acceptance of its Equipment
Notes of any Series, each Noteholder of such Series, hereby agree that no
payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Noteholder of such Series, including any payment or
distribution of cash, property or securities, after the occurrence of any of the
events referred to in Section 4.01(f) or after the commencement of any
proceedings of the type referred to in Sections 4.01(g), (h) or (i), except as
expressly provided in Article III.
(c) By the acceptance of its Equipment Notes of any Series, each
Noteholder of such Series agrees that if such Noteholder, in its capacity as a
Noteholder, shall receive any payment or distribution on any Secured Obligations
in respect of such Series that it is not entitled to receive under this Section
2.13 or Article III hereof, it will hold any amount so received in trust for the
Loan Trustee and forthwith turn over such amount to the Loan Trustee in the form
received to be applied as provided in Article III.
Section 2.14. Certain Payments. The Company agrees to pay to the Loan
Trustee for distribution in accordance with Section 3.04:
(a) an amount or amounts equal to the fees payable to the 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 sum of the then outstanding aggregate
principal amount of the Series A-1 Equipment Notes, Series A-2 Equipment Notes,
Series B Equipment Notes and Series C Equipment Notes and the denominator of
which shall be the sum of the then outstanding aggregate principal amount of all
"Series A-1 Equipment Notes," "Series A-2 Equipment Notes," "Series B Equipment
Notes" and "Series C Equipment Notes" (in each case as defined in the
Intercreditor Agreement);
(b) the amount equal to interest on any Downgrade Advance (other than
any Applied Downgrade Advance) payable under Section 3.07 of each Liquidity
Facility minus Investment Earnings from such Downgrade Advance, multiplied by
the fraction specified in the foregoing clause (a);
(c) the amount equal to interest on any Non-Extension Advance (other
than any Applied Non-Extension Advance) payable under Section 3.07 of each
Liquidity Facility minus
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Investment Earnings from such Non-Extension Advance, multiplied by the fraction
specified in the foregoing clause (a);
(d) if any payment default shall have occurred and be continuing with
respect to interest on any Series A-1 Equipment Notes, Series A-2 Equipment
Note, Series B Equipment Note or Series C Equipment Note, (x) the excess, if
any, of (1) the amount equal to the sum of interest on any Unpaid Advance or
Applied Provider Advance payable under Section 3.07 of each Liquidity Facility
plus any other amounts payable in respect of such Unpaid Advance or Applied
Provider Advance under Section 3.01, 3.03 or 3.09 of the Liquidity Facility
under which such Unpaid Advance or Applied Provider Advance was made over (2)
the sum of Investment Earnings from any Final Advance plus any amount of
interest at the Past Due Rate actually payable (whether or not in fact paid) by
the Company in respect of the overdue scheduled interest on the Equipment Notes
in respect of which such Unpaid Advance or Applied Provider Advance was made,
multiplied by (y) a fraction, the numerator of which shall be the then aggregate
overdue amounts of interest on the Series A-1 Equipment Notes, Series A-2
Equipment Notes, Series B Equipment Notes and Series C Equipment Notes (other
than interest becoming due and payable solely as a result of acceleration of any
such Equipment Notes) and the denominator of which shall be the then aggregate
overdue amounts of interest on all "Series A-1 Equipment Notes", "Series ▇- ▇
Equipment Notes", "Series B Equipment Notes" and "Series C Equipment Notes" (in
each case as defined in the Intercreditor Agreement) (other than interest
becoming due and payable solely as a result of acceleration of any such
"Equipment Notes");
(e) any amounts owed to the Liquidity Provider by the Subordination
Agent as borrower under Section 3.01 (other than in respect of an Unpaid Advance
or Applied Provider Advance), 3.03 (other than in respect of an Unpaid Advance
or Applied Provider Advance), 7.05 and 7.07 of each Liquidity Facility (or
similar provisions of any Replacement Liquidity Facility) multiplied by the
fraction specified in the foregoing clause (a); and
(f) an amount or amounts equal to the compensation, including
reasonable expenses and disbursements, payable to the Subordination Agent under
Section 6.07 of the Intercreditor Agreement, multiplied by the fraction
specified in the foregoing clause (a) (but in any event without duplication of
any amount or amounts payable by the Company in respect of such compensation
under any other Operative Document or Pass Through Document).
For purposes of this paragraph, the terms "Advance", "Applied Downgrade
Advance", "Applied Non-Extension Advance", "Applied Provider Advance", "Cash
Collateral Account", "Downgrade Advance", "Final Advance", "Investment
Earnings", "Non-Extension Advance", "Replacement Liquidity Facility" and "Unpaid
Advance" shall have the meanings specified in each Liquidity Facility or the
Intercreditor Agreement.
Section 2.15. Repayment of Monies for Equipment Note Payments Held by
the Loan Trustee. Any money held by the Loan Trustee in trust for any payment of
the principal of,
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Make-Whole Amount, if any, or interest or any other amounts due on, any
Equipment Note, including, without limitation, any money deposited pursuant to
Section 2.12(c) or Section 10.01, and remaining unclaimed for two years after
the due date for such payment (or such lesser time as the Loan Trustee shall be
satisfied, after 60 days' notice from the Company, is one month prior to the
escheat period provided under applicable state law) shall be paid to the
Company. The Noteholders of any outstanding Equipment Notes shall thereafter, as
unsecured general creditors, look only to the Company for payment thereof, and
all liability of the Loan Trustee with respect to such trust money shall
thereupon cease; provided that the Loan Trustee, before being required to make
any such repayment, may at the expense of the Company cause to be mailed to each
such Noteholder notice that such money remains unclaimed and that, after a date
specified therein which shall not be less than 30 days from the date of mailing,
any unclaimed balance of such money then remaining will be repaid to the Company
as provided herein.
Section 2.16. Directions by Subordination Agent. So long as the
Subordination Agent is a Noteholder, notwithstanding anything contained herein
or in any other Operative Document to the contrary, in exercising its right to
vote the Equipment Notes held by it, or in giving or taking any direction,
consent, request, demand, instruction, authorization, notice, waiver or other
action provided by this Indenture or in respect of the Equipment Notes to be
given or taken by a Noteholder (each such vote or other action, a "Direction")
in respect of such Equipment Notes, the Subordination Agent may act in
accordance with any votes, directions, consents, requests, demands,
instructions, authorizations, notices, waivers or other actions given or taken
by any applicable Pass Through Trustee or the Controlling Party pursuant to the
Intercreditor Agreement, including without limitation pursuant to Section 2.06,
Article IV or Section 8.01(b) thereof. The Subordination Agent shall be
permitted (x) to give a Direction with respect to less than the entire principal
amount of any single Equipment Note held by it, and (y) to give different
Directions with respect to different portions of the principal amount of any
single Equipment Note held by it. Any Direction given by the Subordination Agent
at any time with respect to more than a majority in aggregate unpaid principal
amount of all of the Equipment Notes issued and then outstanding hereunder shall
be deemed to have been given by a Majority in Interest of Noteholders.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE COLLATERAL
Section 3.01. Basic Distributions. Except as otherwise provided in
Sections 3.02, 3.03 and 3.04, each periodic payment by the Company of regularly
scheduled installments of principal or interest on the Equipment Notes received
by the Loan Trustee shall be promptly distributed in the following order of
priority:
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first, so much of such payment as shall be required to pay in full the
aggregate amount of the payment or payments of principal amount and
interest (as well as any interest on any overdue principal amount and, to
the extent permitted by applicable law, on any overdue interest and any
other overdue amounts) then due under all Series A-1 Equipment Notes and
Series A-2 Equipment Notes shall be distributed to the Noteholders of
Series A- 1 Equipment Notes and Series A-2 Equipment Notes 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-1 Equipment Note or Series
A-2 Equipment Note bears to the aggregate amount of the payments then due
under all Series A-1 Equipment Notes and Series A-2 Equipment Notes;
second, after giving effect to clause "first" above, so much of such
payment remaining as shall be required to pay in full the aggregate amount
of the payment or payments of principal amount and interest (as well as any
interest on any overdue principal amount and, to the extent permitted by
applicable law, on any overdue interest and other overdue amounts) then due
under all Series B Equipment Notes shall be distributed to the Noteholders
of Series B Equipment Notes ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments then
due under each Series B Equipment Note bears to the aggregate amount of the
payments then due under all Series B Equipment Notes;
third, after giving effect to clause "second" above, so much of such
payment remaining as shall be required to pay in full the aggregate amount
of the payment or payments of principal amount and interest (as well as any
interest on any overdue principal amount and, to the extent permitted by
applicable law, on any overdue interest and any other overdue amounts) then
due under all Series C Equipment Notes shall be distributed to the
Noteholders of Series C Equipment Notes ratably, without priority of one
over the other, in the proportion that the amount of such payment or
payments then due under each Series C Equipment Note bears to the aggregate
amount of the payments then due under all Series C Equipment Notes;
fourth, after giving effect to clause "third" above, so much of such
payment remaining as shall be required to pay in full the aggregate amount
of the payment or payments of principal amount and interest (as well as any
interest on any overdue principal amount and, to the extent permitted by
applicable law, on any overdue interest and any other overdue amounts) then
due under all Series D Equipment Notes shall be distributed to the
Noteholders of Series D Equipment Notes ratably, without priority of one
over the other, in the proportion that the amount of such payment or
payments then due under each Series D Equipment Note bears to the aggregate
amount of the payments then due under all Series D Equipment Notes; and
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fifth, the balance, if any, of such installment remaining thereafter
shall be distributed to the Company.
Section 3.02. Event of Loss; Optional Redemption. Except as otherwise
provided in Sections 3.03 and 3.04 and subject to the following proviso, any
payments received by the Loan Trustee with respect to the Aircraft as the result
of (a) an Event of Loss (including amounts paid by the Company pursuant to
Section 2.10) or (b) an optional redemption of the Equipment Notes pursuant to
Section 2.11 shall be applied to redemption of the Equipment Notes pursuant to
Section 2.10 or Section 2.11, as applicable, and to payment of all other Secured
Obligations by applying such funds in the following order of priority:
first, (i) to reimburse the Loan Trustee and the Noteholders for any
reasonable costs or expenses incurred in connection with such redemption
for which they are entitled to reimbursement, or indemnity by the Company,
under the Operative Documents; and then (ii) to pay any other amounts then
due (except as provided in clause "second" below) to the Loan Trustee, the
Noteholders and the Indenture Indemnitees under this Indenture, the
Participation Agreement or the Equipment Notes;
second, (i) to pay the amounts specified in subclause (i) of clause
"third" of Section 3.03 plus Make-Whole Amount, if any, then due and
payable in respect of the Series A-1 Equipment Notes and the Series A-2
Equipment Notes; (ii) after giving effect to subclause (i) above, to pay
the amounts specified in subclause (ii) of clause "third" of Section 3.03
plus Make-Whole Amount, if any, then due and payable in respect of the
Series B Equipment Notes; (iii) after giving effect to subclause (ii)
above, to pay the amounts specified in subclause (iii) of clause "third" of
Section 3.03 plus Make-Whole Amount, if any, then due and payable in
respect of the Series C Equipment Notes; and (iv) after giving effect to
subclause (iii) above, to pay the amounts specified in subclause (iv) of
clause "third" of Section 3.03 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 shall be distributed to
the Company.
provided, however, that any insurance, condemnation or similar proceeds
resulting from an Event of Loss that are received by the Loan Trustee shall be
held or disbursed by the Loan Trustee as provided by Sections 7.05(c) and
7.06(d) (provided that such money held by the Loan Trustee shall be invested as
provided in Section 5.06).
No Make-Whole Amount shall be payable on the Equipment Notes in connection
with their redemption as a result of an Event of Loss in respect of the
Airframe.
Section 3.03. Payments after Event of Default. Except as otherwise
provided in Section 3.04, all payments received and amounts held or realized by
the Loan Trustee (including
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any amounts realized by the Loan Trustee from the exercise of any remedies
pursuant to Article IV) after both an Event of Default shall have occurred and
be continuing and the Equipment Notes shall have become due and payable pursuant
to Section 4.02(a), as well as all payments or amounts then held by the Loan
Trustee as part of the Collateral, shall be promptly distributed by the Loan
Trustee in the following order of priority:
first, so much of such payments or amounts as shall be required to (i)
reimburse the Loan Trustee, to the extent the Loan Trustee is entitled to
be reimbursed or indemnified under the Operative Documents, for any Tax,
expense or other loss (including, without limitation, all amounts to be
expended at the expense of, or charged upon the tolls, rents, revenues,
issues, products and profits of, the Collateral and every part thereof
pursuant to Section 4.02(a)) incurred by the Loan Trustee (to the extent
not previously reimbursed), the expenses of any sale, taking or other
proceeding, reasonable attorneys' fees and expenses, court costs and any
other expenditures incurred or expenditures or advances made by the Loan
Trustee or the Noteholders in the protection, exercise or enforcement of
any right, power or remedy or any damages sustained by the Loan Trustee or
any Noteholder, liquidated or otherwise, upon such Event of Default shall
be applied by the Loan Trustee as between itself and the Noteholders in
reimbursement of such expenses and any other expenses for which the Loan
Trustee or the Noteholders are entitled to reimbursement under any
Operative Document, and (ii) to pay all amounts payable (except as provided
in clauses "second" and "third" below) to the other Indenture Indemnitees
hereunder and under the Participation Agreement; and in case the aggregate
amount so to be distributed is insufficient to pay as aforesaid, 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 Noteholders for payments
made pursuant to Section 5.03 (to the extent not previously reimbursed)
shall be distributed to such then existing or prior Noteholders ratably,
without priority of one over the other, in accordance with the amount of
the payment or payments made by each such then existing or prior Noteholder
pursuant to Section 5.03;
third, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid principal amount of all Series
A-1 Equipment Notes and Series A-2 Equipment Notes and the accrued but
unpaid interest and all other Secured Obligations in respect of the Series
A-1 Equipment Notes and Series A-2 Equipment Notes to the date of
distribution shall be distributed to the Noteholders of Series A-1
Equipment Notes and Series A-2 Equipment Notes ratably, without priority of
one over the other, in the proportion that the aggregate unpaid principal
amount of all Series A-1 Equipment Notes and Series A-2 Equipment Notes
held by each Noteholder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder to the date of distribution bears to
the aggregate unpaid principal amount of all Series A-1 Equipment Notes and
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Series A-2 Equipment Notes held by all such Noteholders plus the accrued
but unpaid interest and other amounts due thereon to the date of
distribution; (ii) after giving effect to subclause (i) above, so much of
such payments or amounts remaining as shall be required to pay in full the
aggregate unpaid principal amount of all Series B Equipment Notes and the
accrued but unpaid interest and all other Secured Obligations in respect of
the Series B Equipment Notes to the date of distribution shall be
distributed to the Noteholders of Series B Equipment Notes ratably, without
priority of one over the other, in the proportion that the aggregate unpaid
principal amount of all Series B Equipment Notes held by each Noteholder
plus the accrued but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution bears to the aggregate unpaid
principal amount of all Series B Equipment Notes held by all such
Noteholders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution; (iii) after giving effect to subclause
(ii) above, so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid principal amount of all Series
C Equipment Notes and the accrued but unpaid interest and all other Secured
Obligations in respect of the Series C Equipment Notes to the date of
distribution shall be distributed to the Noteholders of Series C Equipment
Notes ratably, without priority of one over the other, in the proportion
that the aggregate unpaid principal amount of all Series C Equipment Notes
held by each Noteholder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder to the date of distribution bears to
the aggregate unpaid principal amount of all Series C Equipment Notes held
by all such Noteholders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and (iv) after giving
effect to subclause (iii) above, so much of such payments or amounts
remaining as shall be required to pay in full the aggregate unpaid
principal amount of all Series D Equipment Notes and the accrued but unpaid
interest and all other Secured Obligations in respect of the Series D
Equipment Notes to the date of distribution shall be distributed to the
Noteholders of Series D Equipment Notes, ratably, without priority of one
over the other, in the proportion that the aggregate unpaid principal
amount of all Series D Equipment Notes held by each Noteholder plus the
accrued but unpaid interest and other amounts due hereunder or thereunder
to the date of distribution bears to the aggregate unpaid principal amount
of all Series D Equipment Notes held by all such Noteholders plus the
accrued but unpaid interest and other amounts due thereon to the date of
distribution; and
fourth, the balance, if any, of such payments or amounts shall be
distributed to the Company.
No Make-Whole Amount shall be payable on the Equipment Notes as a
consequence of or in connection with an Event of Default or the acceleration of
the Equipment Notes.
Section 3.04. Certain Payments. (a) Any payments received by the Loan
Trustee for which provision as to the application thereof is made in this
Indenture other than in this
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Article III shall be applied as provided in those provisions. Without limiting
the foregoing, any payments received by the Loan Trustee which are payable to
the Company pursuant to any of the provisions of this Indenture other than those
set forth in this Article III (including Sections 5.06, 7.05 and 7.06 hereof)
shall be so paid to the Company. Any payments received by the Loan Trustee for
which no provision as to the application thereof is made in this Indenture and
for which such provision is made in any other Operative Document shall be
applied forthwith to the purpose for which such payment was made in accordance
with the terms of such other Operative Document.
(b) The Loan Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Company pursuant to Section 4.02 of
the Participation Agreement in respect of (i) State Street and the Loan Trustee,
(ii) the Subordination Agent, (iii) the Pass Through Trustees and (iv) the
Liquidity Provider, in each case, directly to the Person entitled thereto. Any
payment received by the Loan Trustee from the Company under Section 2.14 shall
be distributed to the Subordination Agent to be distributed in accordance with
Section 2.03(c) of the Intercreditor Agreement.
(c) Any payments received by the Loan Trustee not constituting part of
the Collateral or otherwise for which no provision as to the application thereof
is made in any Operative Document shall be distributed by the Loan Trustee to
the Company. Further, and except as otherwise provided in Sections 3.02, 3.03
and 3.04, all payments received and amounts realized by the Loan Trustee with
respect to the Aircraft, to the extent received or realized at any time after
payment in full of all Secured Obligations or after the conditions set forth in
Section 10.01(a)(ii) for the defeasance of this Indenture have been satisfied,
as well as any amounts remaining as part of the Collateral after the occurrence
of such payment in full or defeasance, shall be distributed by the Loan Trustee
to the Company.
Section 3.05. Payments to the Company. Any amounts distributed
hereunder by the Loan Trustee to the Company shall be paid to the Company
(within the time limits contemplated by Section 2.03(a)) by wire transfer of
funds of the type received by the Loan Trustee at such office and to such
account or accounts of such entity or entities as shall be designated by notice
from the Company to the Loan Trustee from time to time.
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE
Section 4.01. Events of Default. Each of the following events shall
constitute an "Event of Default" 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 and each
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such Event of Default shall be deemed to exist and continue so long as, but only
as long as, it shall not have been remedied:
(a) the Company shall fail to make any payment within 15 days after the
same shall have become due of principal amount of, Make-Whole Amount, if any, or
interest on, any Equipment Note;
(b) the Company shall fail to make payment when the same shall become due
of any amount (other than amounts referred to in Section 4.01(a)) due hereunder,
under any Equipment Note or under any other Operative Document, and such failure
shall continue unremedied for 30 days after the receipt by the Company of
written notice thereof from the Loan Trustee or any Noteholder;
(c) the Company shall fail to carry and maintain insurance or indemnity on
or with respect to the Aircraft in accordance with the provisions of Section
7.06; provided that no such failure to carry and maintain insurance shall
constitute an Event of Default until the earlier of (i) the date such failure
shall have continued unremedied for a period of 30 days after receipt by the
Loan Trustee of the notice of cancellation or lapse referred to in Section 7.06
or (ii) the date such insurance is not in effect as to the Loan Trustee;
(d) the Company shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any Operative
Document, and such failure shall continue unremedied for a period of 60 days
after receipt by the Company of written notice thereof from the Loan Trustee or
any Noteholder; provided that, if such failure is capable of being remedied, no
such failure shall constitute an Event of Default for a period of one year after
such notice is received by the Company so long as the Company is diligently
proceeding to remedy such failure;
(e) any representation or warranty made by the Company in any Operative
Document shall prove to have been incorrect in any material respect at the time
made, and such incorrectness shall continue to be material to the transactions
contemplated hereby and continue unremedied for a period of 60 days after
receipt by the Company of written notice thereof from the Loan Trustee or any
Noteholder; provided that, if such incorrectness is capable of being remedied,
no such incorrectness shall constitute an Event of Default for a period of one
year after such notice is received by the Company so long as the Company is
diligently proceeding to remedy such incorrectness;
(f) the Company shall consent to the appointment of or the taking of
possession by a receiver, trustee or liquidator of itself or of a substantial
part of its property, 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
creditors;
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(g) the Company shall file a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization, liquidation or other
relief in a case 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 the Company in any such case, or the Company shall seek relief by
voluntary petition, answer or consent, under the provisions of any other
bankruptcy or other similar law providing for the reorganization or winding-up
of corporations (as in effect at such time), or the Company shall seek an
agreement, composition, extension or adjustment with its creditors under such
laws;
(h) an order, judgment or decree shall be entered by any court of competent
jurisdiction appointing, without the consent of the Company, a receiver, trustee
or liquidator of the Company or of any substantial part of its property, or any
substantial part of its property shall be sequestered, or granting any other
relief in respect of the Company as a debtor under any bankruptcy laws or
insolvency laws (as in effect at such time), and any such order, judgment 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;
or
(i) a petition against the Company in a case under the federal 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 that may
apply to the Company, any court of competent jurisdiction assumes jurisdiction,
custody or control of the Company or 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;
provided, however, that notwithstanding anything to the contrary contained
in this Section 4.01, any failure of the Company to perform or observe any
covenant, condition or agreement shall not constitute an Event of Default if
such failure arises by reason of an event referred to in the definition of
"Event of Loss" so long as the Company is continuing to comply with all of the
terms of Section 7.05.
Section 4.02. 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 Loan Trustee may, and upon the written instructions of a
Majority in Interest of Noteholders, the Loan Trustee shall, do one or more of
the following to the extent permitted by, and subject to compliance with the
requirements of, applicable law then in effect (provided, however, that during
any period the Aircraft is subject to the CRAF Program and is in possession of
or being operated under the direction of the United States government or an
agency or instrumentality of the United States, the Loan Trustee shall not, on
account of any Event of Default, be entitled to exercise or pursue any of the
powers, rights or remedies described in this Section 4.02 in such manner as to
limit the Company's control under this Indenture (or any Permitted Lessee's
control under any Lease) of the Airframe or any Engines installed thereon,
unless at least 60 days' (or such lesser
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period as may then be applicable under the Military Airlift Command Program of
the United States government) prior written notice of default hereunder shall
have been given by the Loan Trustee by registered or certified mail to the
Company (and any such Permitted Lessee) with a copy addressed to the Contracting
Office Representative or other appropriate person for the Military Airlift
Command of the United States Air Force under any contract with the Company
relating to the Aircraft):
(i) declare by written notice to the Company all the Equipment Notes
to be due and payable, whereupon the aggregate unpaid principal amount of
all Equipment Notes then outstanding, together with accrued but unpaid
interest thereon and other amounts due thereunder (but for the avoidance of
doubt, without Make-Whole Amount), 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 Subsections
4.01(f), (g), (h) or (i) shall have occurred and be continuing, then and in
every such case the unpaid principal amount then outstanding, together with
accrued but unpaid interest and all other amounts due thereunder (but for
the avoidance of doubt, without Make-Whole Amount) shall immediately and
without further act become due and payable without presentment, demand,
protest or notice, all of which are hereby waived; and, following such
declaration or deemed declaration:
(ii) (A) cause the Company, upon the written demand of the Loan
Trustee, at the Company's expense, to deliver promptly, and the Company
shall deliver promptly, all or such part of the Airframe or any Engine as
the Loan Trustee may so demand to the Loan Trustee or its order, or, if the
Company shall have failed to so deliver the Airframe or any Engine after
such demand, the Loan Trustee, at its option, may enter upon the premises
where all or any part of the Airframe or any Engine are located and take
immediate possession of and remove the same together with any engine which
is not an Engine but which is installed on the Airframe, subject to all of
the rights of the owner, lessor, lienor or secured party of such engine;
provided that the Airframe with an engine (which is not an Engine)
installed thereon may be flown or returned only to a location within the
continental United States, and such engine shall be held for the account of
any such owner, lessor, lienor, secured party or, if such engine is owned
by the Company, may at the option of the Company with the consent of the
Loan Trustee (which will not be unreasonably withheld) or at the option of
the Loan Trustee with the consent of the Company (which will not be
unreasonably withheld), be exchanged with the Company for an Engine in
accordance with the provisions of Section 7.05(b); (B) sell all or any part
of the Airframe and any Engine at public or private sale, whether or not
the Loan Trustee shall at the time have possession thereof, as the Loan
Trustee may determine, or otherwise dispose of, hold, use, operate, lease
to others or keep idle all or any part of the Airframe or such Engine as
the Loan Trustee, in its sole discretion, may determine, all free and clear
of any rights or claims of the Company, and the proceeds of such sale or
disposition shall be
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applied as set forth in Section 3.03; or (C) exercise any other remedy of a
secured party under the Uniform Commercial Code of the State of New York
(whether or not in effect in the jurisdiction in which enforcement is
sought).
Upon every such taking of possession of Collateral under this Section
4.02, the Loan Trustee may, from time to time, at the expense of the Collateral,
make all such expenditures for maintenance, insurance, repairs, alterations,
additions and improvements to and of the Collateral as it may deem proper. In
each such case, the Loan Trustee shall have the right to maintain, use, operate,
store, lease, control or manage the Collateral and to exercise all rights and
powers of the Company relating to the Collateral as the Loan Trustee shall
reasonably deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, leasing,
control, management or disposition of the Collateral or any part thereof as the
Loan Trustee may reasonably determine; and the Loan Trustee shall be entitled to
collect and receive directly all tolls, rents, revenues, issues, income,
products and profits of the Collateral and every part thereof. Such tolls,
rents, revenues, issues, income, products and profits shall be applied to pay
the expenses of the use, operation, storage, leasing, control, management or
disposition of the Collateral, and of all maintenance, repairs, replacements,
alterations, additions and improvements, and to make all payments that the Loan
Trustee may be required or may elect to make, if any, for Taxes, insurance or
other proper charges assessed against or otherwise imposed upon the Collateral
or any part thereof, and all other payments which the Loan Trustee may be
required or expressly authorized to make under any provision of this Indenture,
as well as just and reasonable compensation for the services of the Loan
Trustee, and shall otherwise be applied in accordance with Article III.
If an Event of Default shall have occurred and be continuing and the
Equipment Notes shall either have been accelerated pursuant to this Section 4.02
or have become due at maturity and the Loan Trustee shall be entitled to
exercise rights hereunder, at the request of the Loan Trustee, the Company shall
promptly execute and deliver to the Loan Trustee such instruments of title and
other documents as the Loan Trustee may reasonably deem necessary or advisable
to enable the Loan Trustee or an agent or representative designated by the Loan
Trustee, at such time or times and place or places as the Loan Trustee may
specify, to obtain possession of all or any part of the Collateral to which the
Loan Trustee shall at the time be entitled hereunder. If the Company shall for
any reason fail to execute and deliver such instruments and documents after such
request by the Loan Trustee, the Loan Trustee may obtain a judgment conferring
on the Loan Trustee the right to immediate possession and requiring the Company
to execute and deliver such instruments and documents to the Loan Trustee, to
the entry of which judgment the Company hereby specifically consents to the
fullest extent it may lawfully do so.
(b) The Loan Trustee shall give the Company at least 30 days' prior
written notice of any public sale or of the date on or after which any private
sale will be held, which notice the Company hereby agrees to the extent
permitted by applicable law is reasonable notice. Any Noteholder or Noteholders
shall be entitled to bid for and become the purchaser of any Collateral
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offered for sale pursuant to this Section 4.02 and to credit against the
purchase price bid at such sale by such Noteholders all or any part of the
unpaid amounts owing to such Noteholders under the Operative Documents and
secured by the Lien of this Indenture (but only to the extent that such purchase
price would have been paid to such Noteholders pursuant to Article III if such
purchase price were paid in cash and the foregoing provision of this Section
4.02(b) were not given effect). The Loan Trustee may exercise such right without
possession or production of the Equipment Notes or proof of ownership thereof,
and as a representative of the Noteholders may exercise such right without
notice to the Noteholders as parties to any suit or proceeding relating to the
foreclosure of any Collateral. The Company shall also be entitled to bid for and
become the purchaser of any Collateral offered for sale pursuant to this Section
4.02.
(c) To the extent permitted by applicable law, the Company irrevocably
appoints, while an Event of Default has occurred and is continuing, the Loan
Trustee the true and lawful attorney-in-fact of the Company (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 Indenture, whether pursuant to foreclosure or
power of sale, or otherwise, to execute and deliver all such bills of sale,
assignments and other instruments as may be necessary or appropriate, with full
power of substitution, the Company hereby ratifying and confirming all that such
attorney or any substitute shall do by virtue hereof in accordance with
applicable law; provided that if so requested by the Loan Trustee or any
purchaser, the Company shall ratify and confirm any such sale, assignment or
transfer of delivery, by executing and delivering to the Loan Trustee 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.
(d) At any time after the Loan Trustee has declared the unpaid
principal amount of all Equipment Notes then outstanding to be due and payable
and prior to the sale of any part of the Collateral pursuant to this Article IV,
a Majority in Interest of Noteholders, by written notice to the Company and the
Loan Trustee, may rescind and annul such declaration and its consequences if:
(i) there has been paid to or deposited with the Loan Trustee an amount
sufficient to pay all overdue installments of principal amount of, and interest
on, the Equipment Notes, and all other amounts owing under the Operative
Documents, that have become due otherwise than by such declaration of
acceleration and (ii) all other Events of Default, other than nonpayment of
principal amount or interest on the Equipment Notes that have become due solely
because of such acceleration, have been cured or waived.
(e) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Noteholder, the Loan Trustee 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
Pass Through Trust to fail to qualify as a "grantor trust" for federal income
tax purposes.
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Section 4.03. Remedies Cumulative. To the extent permitted under
applicable law, each and every right, power and remedy specifically given to the
Loan Trustee herein or otherwise in this Indenture shall be cumulative and shall
be in addition to every other right, power and remedy specifically given herein
or now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically given herein or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by the Loan Trustee, and the exercise or the beginning of the
exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Loan Trustee in the exercise of any right,
remedy or power or in the pursuance of any remedy shall, to the extent permitted
by applicable law, impair any such right, power or remedy or be construed to be
a waiver of any default on the part of the Company or to be an acquiescence
therein.
Section 4.04. Discontinuance of Proceedings. In case the Loan Trustee
shall have instituted any proceedings to enforce any right, power or remedy
under this 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 Loan Trustee, then and in every such case the
Company and the Loan Trustee 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 Loan
Trustee shall continue as if no such proceedings had been undertaken (but
otherwise without prejudice).
Section 4.05. Waiver of Past Defaults. Upon written instruction from a
Majority in Interest of Noteholders, the Loan Trustee 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 the Operative Documents, but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon; provided, however, that in the absence of written
instructions from each of the affected Noteholders, the Loan Trustee shall not
waive any default (i) in the payment of the principal amount, Make-Whole Amount,
if any, or interest due under any Equipment Note then outstanding (other than
with the consent of the holder thereof), or (ii) in respect of a covenant or
provision hereof which, under Article IX, cannot be modified or amended without
the consent of each such affected Noteholder.
Section 4.06. Noteholders May Not Bring Suit Except Under Certain
Conditions. A Noteholder of any Series shall not have the right to institute any
suit, action or proceeding at law or in equity or otherwise with respect to this
Indenture for the appointment of a receiver or for the enforcement of any other
remedy under this Indenture, unless:
(1) such Noteholder previously shall have given written notice to the Loan
Trustee of a continuing Event of Default;
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(2) A Majority in Interest of Noteholders shall have requested the Loan
Trustee in writing to institute such action, suit or proceeding and
shall have offered to the Loan Trustee indemnity as provided in Section
5.03;
(3) the Loan Trustee shall have refused or neglected to institute any such
action, suit or proceeding for 60 days after receipt of such notice,
request and offer of indemnity; and
(4) no direction inconsistent with such written request shall have been
given to the Loan Trustee during such 60-day period by a Majority in
Interest of Noteholders.
Except to the extent provided in the Intercreditor Agreement or in any
Indenture Supplement, it is understood and intended that no one or more of the
Noteholders of any Series shall have any right in any manner whatsoever
hereunder or under the Indenture Supplement or under the Equipment Notes of such
Series to (i) surrender, impair, waive, affect, disturb or prejudice any
Collateral, or the Lien of the Indenture on any Collateral, or the rights of the
Noteholders of such Series, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Noteholder of such Series or (iii)
enforce any right under this Indenture, except in the manner provided in this
Indenture and for the equal, ratable and common benefit of all the Noteholders
of such Series subject to the provisions of this Indenture.
ARTICLE V
DUTIES OF THE LOAN TRUSTEE
Section 5.01. Notice of Event of Default. If the Loan Trustee shall
have knowledge of an Event of Default or of a default arising from a failure by
the Company to pay when due any payment of principal amount, interest or
Make-Whole Amount, if any, due and payable under any Equipment Note, the Loan
Trustee shall promptly give notice thereof to the Company and each Noteholder by
telegram, cable, facsimile or telephone (to be promptly confirmed in writing);
provided, however, that except in the case of a default in the payment of the
principal amount, interest or Make-Whole Amount, if any, due and payable under
any Equipment Note, the Loan Trustee shall be protected in withholding the
notice to the Noteholders required in the foregoing part of this sentence if and
so long as the executive committee or trust committee of directors of the Loan
Trustee and/or trust officers thereof in good faith determine that withholding
such notice is in the interest of the Noteholders. Subject to the terms of
Sections 4.02, 4.05, 5.02 and 5.03, the Loan Trustee shall take such action, or
refrain from taking such action, with respect to such Event of Default
(including with respect to the exercise of any rights or remedies hereunder) as
the Loan Trustee shall be instructed in writing by a Majority in Interest of
Noteholders. Subject to the provisions of Section 5.03, if the Loan Trustee
shall not have received instructions as above
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provided within 20 Business Days after giving notice of such Event of Default to
the Noteholders, the Loan Trustee may, subject to instructions thereafter
received pursuant to the preceding provisions of this Section 5.01, 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 as it
shall reasonably determine to be advisable in the best interests of the
Noteholders and shall use the same degree of care and skill in connection
therewith as a prudent person would use under the circumstances in the conduct
of his or her own affairs; provided that the Loan Trustee may not sell the
Airframe or any Engine without the consent of a Majority in Interest of
Noteholders.
For all purposes of this Indenture, in the absence of actual knowledge,
the Loan Trustee shall not be deemed to have knowledge of a default or an Event
of Default unless notified in writing by the Company or one or more Noteholders;
and "actual knowledge" (as used in the foregoing clause) of the Loan Trustee
shall mean actual knowledge of an officer in the Corporate Trust Division of the
Loan Trustee; provided, however, that the Loan Trustee shall be deemed to have
actual knowledge of (i) the failure of the Company to pay any principal amount
of, or interest on, the Equipment Notes directly to the Loan Trustee when the
same shall become due or (ii) the failure of the Company to maintain insurance
as required under Section 7.06 if the Loan Trustee receives written notice
thereof from an insurer or insurance broker.
Section 5.02. Action upon Instructions; Certain Rights and Limitations.
Subject to the terms of Article IV and this Article V, upon the written
instructions at any time of a Majority in Interest of Noteholders, the Loan
Trustee shall promptly (i) give such notice, direction, consent, waiver or
approval or exercise such right, remedy or power hereunder in respect of all or
any part of the Collateral or (ii) take such other action, as shall be specified
in such instructions.
The Loan Trustee will cooperate with the Company in connection with the
recording, filing, re-recording and refiling of the Indenture and any
supplements to it and any financing statements or other documents as is
necessary to maintain the perfection hereof or otherwise protect the security
interests created hereby. The Loan Trustee shall furnish to the Company upon
request such information and copies of such documents as the Loan Trustee may
have and as are necessary for the Company to perform its duties under Article II
hereof.
Section 5.03. Indemnification. The Loan Trustee shall not be required
to take any action or refrain from taking any action under Sections 5.01 (other
than the first sentence thereof) or 5.02 or Article IV unless it shall have
received indemnification against any risks incurred in connection therewith in
form and substance reasonably satisfactory to it, including, without limitation,
adequate advances against costs that may be incurred by it in connection
therewith. The Loan Trustee shall not be required to take any action under
Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV, nor
shall any other provision of any Operative Document be deemed to impose a duty
on the Loan Trustee to take any action, if the Loan Trustee shall have been
advised by outside counsel that such action is contrary to the terms hereof or
is otherwise contrary to law.
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Section 5.04. No Duties Except as Specified in Indenture or
Instructions. The Loan Trustee shall not have any duty or obligation to manage,
control, lease, use, sell, operate, store, 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 Indenture, except as
expressly provided by the terms of this Indenture or the Participation Agreement
or as expressly provided in written instructions received pursuant to the terms
of Section 5.01 or 5.02; and no implied duties or obligations shall be read into
this Indenture against the Loan Trustee.
Section 5.05. No Action Except under Indenture or Instructions. The
Loan Trustee agrees that it will not manage, control, use, sell, lease, operate,
store, 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 Loan Trustee pursuant to this Indenture and in accordance
with the express terms hereof.
Section 5.06. Investment of Amounts Held by the Loan Trustee. Any
monies (including for the purpose of this Section 5.06 any cash deposited with
the Loan Trustee by the Company, any cash received by the Loan Trustee pursuant
to Sections 7.05(c) or 7.06(d) or otherwise) or Permitted Investments purchased
by the use of such cash pursuant to this Section 5.06 or any cash constituting
the proceeds of the maturity, sale or other disposition of any Permitted
Investments) held by the Loan Trustee hereunder as part of the Collateral, until
paid out by the Loan Trustee as herein provided, (i) subject to clause (ii)
below, may be carried by the Loan Trustee on deposit with itself or on deposit
to its account with any bank, trust company or national banking association
incorporated or doing business under the laws of the United States or one of the
states thereof having combined capital and surplus and retained earnings of a
least $75,000,000, and the Loan Trustee shall not have any liability for
interest upon any such monies except as otherwise agreed in writing with the
Company, or (ii) at any time and from time to time, so long as no Event of
Default shall have occurred and be continuing, at the request of the Company,
shall be invested and reinvested in Permitted Investments as specified in such
request (if such investments are reasonably available for purchase) and sold, in
any case at such prices, including accrued interest or its equivalent, as are
set forth in such request, and such Permitted Investments shall be held by the
Loan Trustee in trust as part of the Collateral until so sold; provided that the
Company shall upon demand pay to the Loan Trustee the amount of any loss
realized upon maturity, sale or other disposition of any such Permitted
Investment and, so long as no Event of Default or Payment Default shall have
occurred and be continuing, the Company shall be entitled to receive from the
Loan Trustee, and the Loan Trustee shall promptly pay to the Company, any
profit, income, interest, dividend or gain realized upon maturity, sale or other
disposition of any Permitted Investment. If an Event of Default or Payment
Default shall have occurred and be continuing, any net income, profit, interest,
dividend or gain realized upon maturity, sale or other disposition of any
Permitted Investment shall be held as part of the Collateral and shall be
applied by the Loan Trustee at the same time, on the same conditions and in the
same manner as the amounts in respect of which such income, profit, interest,
dividend or gain was realized are required to be distributed in accordance with
the provisions hereof pursuant to
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which such amounts were required to be held. The Loan Trustee shall not be
responsible for any losses on any investments or sales of Permitted Investments
made pursuant to the procedure specified in this Section 5.06 other than by
reason of its willful misconduct or negligence. If any moneys or investments are
held by the Loan Trustee solely because an Event of Default has occurred and is
continuing and such moneys or investments have been held for a period of 90
consecutive days during which such Event of Default is continuing without any
remedial action being taken by the Loan Trustee in respect of such Event of
Default pursuant to Section 4.02 hereof, and provided that there is no stay,
moratorium or injunction in effect preventing the taking of such action, then,
notwithstanding any other provision of the Operative Documents, all such moneys
and investments held by the Loan Trustee shall be released to the Company on
such 90th day, or as soon thereafter as practicable.
ARTICLE VI
THE LOAN TRUSTEE
Section 6.01. Acceptance of Trusts and Duties. State Street accepts the
trusts and duties hereby created and applicable to it and agrees to perform such
duties, but only upon the terms of this Indenture and agrees to receive, handle
and disburse all monies received by it as Loan Trustee constituting part of the
Collateral in accordance with the terms hereof. State Street shall have no
liability hereunder except (a) for its own willful misconduct or negligence, (b)
as provided in the fourth sentence of Section 2.03(a) and the penultimate
sentence of Section 5.06, (c) for liabilities that may result from the
inaccuracy of any representation or warranty of State Street in the
Participation Agreement or expressly made hereunder and (d) as otherwise
expressly provided in the Operative Documents.
Section 6.02. Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Sections 5.01, 5.02 or 6.06, and
except as provided in, and without limiting the generality of, Sections 5.02,
5.03 and 5.04, the Loan Trustee, shall have no duty (a) to see to any
registration of the Aircraft or any recording or filing of this Indenture or any
other document, or to see to the maintenance of any such registration, recording
or filing, (b) to see to any insurance on the Aircraft or to effect or maintain
any such insurance, whether or not the Company shall be in default with respect
thereto, (c) to confirm, verify or inquire into the failure to receive any
financial statements of the Company or (d) to inspect the Aircraft at any time
or ascertain or inquire as to the performance or observance of any of the
Company's covenants hereunder with respect to the Aircraft.
Section 6.03. No Representations or Warranties as to the Documents.
Except as provided in Article V of the Participation Agreement, the Loan Trustee
shall not be deemed to have made any representation or warranty as to the
validity, legality or enforceability of any Operative Document or any other
document or instrument, or as to the correctness of any statement (other
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than a statement by the Loan Trustee) contained herein or therein, except that
the Loan Trustee hereby represents and warrants that each of said specified
documents to which it is a party has been or will be duly executed and delivered
by one of its officers who is and will be duly authorized to execute and deliver
such document on its behalf.
Section 6.04. No Segregation of Monies; No Interest. Subject to Section
5.06 hereof, all moneys received by the Loan Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law, and neither the Loan Trustee nor any
agent of the Loan Trustee shall be under any liability for interest on any
moneys received by it hereunder; provided, however, that any payments received,
or applied hereunder, by the Loan Trustee shall be accounted for by the Loan
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof.
Section 6.05. Reliance; Agents; Advice of Counsel. The Loan Trustee
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 reasonably believed by it to be genuine
and reasonably believed by it to be signed by the proper party or parties. The
Loan Trustee may accept a copy of a resolution of the Board of Directors of any
party to the Participation Agreement, certified by the Secretary or an Assistant
Secretary of such party 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 any fact or matter the manner of
ascertainment of which is not specifically described herein, the Loan Trustee
may for all purposes hereof rely on a certificate, signed by a duly authorized
officer of the Company, as to such fact or matter, and such certificate shall
constitute full protection to the Loan Trustee 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 Loan Trustee may, with the consent of the Company
(such consent not to be unreasonably withheld), (a) execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents (including paying agents or registrars) or attorneys, and (b) at the
expense of the Collateral, consult with counsel, accountants and other skilled
Persons to be selected and retained by it. The Loan Trustee shall not be liable
for anything done, suffered or omitted in good faith by it in accordance with
the advice or opinion of any such counsel, accountants or other skilled Persons
acting within such counsel's, accountants' or Person's area of competence (so
long as the Loan Trustee shall have exercised reasonable care and judgment in
selecting such Persons).
Section 6.06. Instructions from Noteholders. In the administration of
the trusts created hereunder, the Loan Trustee shall have the right to seek
instructions from a Majority in Interest of Noteholders should any provision of
this Indenture appear to conflict with any other provision herein or any other
Operative Document or Pass Through Document or should the Loan Trustee's duties
or obligations hereunder be unclear, and the Loan Trustee shall incur no
liability in refraining from acting until it receives such instructions. The
Loan Trustee shall be fully protected for acting in accordance with any
instructions received under this Section 6.06.
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ARTICLE VII
OPERATING COVENANTS OF THE COMPANY
Section 7.01. Liens. The Company will not directly or indirectly
create, incur, assume or suffer to exist any Lien on or with respect to the
Aircraft, its title thereto or any of its interest therein, except:
(a) the respective rights of the Loan Trustee and the Company as
provided in the Operative Documents, the Lien of this Indenture, the rights
of any Permitted Lessee under a Lease permitted hereunder and the rights of
any Person existing pursuant to the Operative Documents or the Pass Through
Documents;
(b) the rights of others under agreements or arrangements to the extent
expressly permitted by this Indenture;
(c) Loan Trustee Liens, Noteholder Liens and Other Party Liens;
(d) Liens for Taxes either not yet due or payable or being contested in
good faith by appropriate proceedings so long as such proceedings do not
involve any material risk of the sale, forfeiture or loss of the Airframe
or any Engine or the Loan Trustee's interest therein or materially impair
the Lien of this Indenture;
(e) materialmen's, mechanics', workers', repairmen's, employees' or
other like Liens arising in the ordinary course of business (including
those arising under maintenance agreements entered into in the ordinary
course of business) securing obligations that either are not yet overdue
for a period of more than 60 days or are being contested in good faith by
appropriate proceedings so long as such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Airframe or any Engine
or the Loan Trustee's interest therein or materially impair the Lien of
this Indenture;
(f) Liens arising out of any judgment or award, so long as such
judgment shall, within 60 days after the entry thereof, have been
discharged, vacated or reversed, or execution thereof stayed pending appeal
or other judicial review or shall have been discharged, vacated or reversed
within 60 days after the expiration of such stay;
(g) any other Lien with respect to which the Company shall have
provided a bond, cash collateral or other security adequate in the
reasonable opinion of the Loan Trustee;
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(h) salvage or similar rights of insurers under insurance policies
maintained by the Company; and
(i) Liens approved in writing by the Loan Trustee with the consent of a
Majority in Interest of the Noteholders.
Liens described in clauses (a) through (i) above are referred to herein as
"Permitted Liens". The Company shall promptly, at its own expense, take (or
cause to be taken) such action as may be necessary duly to discharge (by bonding
or otherwise) any Lien other than a Permitted Lien arising at any time with
respect to the Aircraft, its title thereto or any of its interest therein.
Section 7.02. Possession, Operation and Use, Maintenance and
Registration. (a) Possession. The Company shall not, without the prior written
consent of the Loan Trustee, lease or otherwise in any manner deliver, transfer
or relinquish possession of the Airframe or any Engine or install any Engine, or
permit any Engine to be installed, on any airframe other than the Airframe;
provided that, so long as the Company shall comply with the provisions of
Section 7.06, the Company may without the prior written consent of the Loan
Trustee:
(i) subject the Airframe to interchange agreements or subject
any Engine to interchange or pooling agreements or arrangements, in each
case customary in the airline industry and entered into by the Company in
the ordinary course of its business; provided that (A) no such agreement or
arrangement contemplates or requires the transfer of title to the Airframe
and (B) if the Company's title to any such Engine shall be divested under
any such agreement or arrangement, such divestiture shall be deemed to be
an Event of Loss with respect to such Engine, and the Company shall comply
with Section 7.05(b) in respect thereof;
(ii) deliver possession of the Airframe or any Engine to any
Person for testing, service, repair, maintenance, overhaul work or other
similar purposes or for alterations, modifications or additions to the
Airframe or such Engine to the extent required or permitted by the terms
hereof;
(iii) transfer or permit the transfer of possession of the
Airframe or any Engine to any Government pursuant to a lease, contract or
other instrument;
(iv) subject the Airframe or any Engine to the CRAF Program or
transfer possession of the Airframe or any Engine to the United States
government in accordance with applicable laws, rulings, regulations or
orders (including, without limitation, any transfer of possession pursuant
to the CRAF Program); provided, that the Company (A) shall promptly notify
the Loan Trustee upon transferring possession of the Airframe or any Engine
pursuant to this clause (iv) and (B) in the case of a transfer of
possession pursuant to the CRAF Program, shall notify the Loan Trustee of
the name and address of the responsible
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Contracting Office Representative for the Military Airlift Command of the
United States Air Force or other appropriate Person to whom notices must be
given and to whom requests or claims must be made to the extent applicable
under the CRAF Program;
(v) install an Engine on an airframe owned by the Company (or
any Permitted Lessee) free and clear of all Liens, except (A) Permitted
Liens and Liens that apply only to the engines (other than Engines),
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment (other than Parts) installed on such airframe (but not to
the airframe as an entirety) and (B) the rights of third parties under
interchange agreements or pooling or similar arrangements that would be
permitted under clause (i) above;
(vi) install an Engine on an airframe leased to the Company
(or any Permitted Lessee) or purchased or owned by the Company (or any
Permitted Lessee) subject to a conditional sale or other security
agreement; provided that (A) such airframe is free and clear of all Liens
except (1) the rights of the parties to the lease or conditional sale or
other security agreement covering such airframe, or their successors and
assigns, and (2) Liens of the type permitted by clause (v) of this Section
7.02(a) and (B) either (1) the Company shall have obtained from the lessor
or secured party of such airframe a written agreement (which may be the
lease, conditional sale or other security agreement covering such
airframe), in form and substance satisfactory to the Loan Trustee (it being
understood that an agreement from such lessor or secured party
substantially in the form of the final sentence of the penultimate
paragraph of this Section 7.02(a) shall be deemed to be satisfactory to the
Loan Trustee), whereby such lessor or secured party expressly agrees that
neither it nor its successors or assigns will acquire or claim any right,
title or interest in any Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to the Lien of this
Indenture or (2) such lease, conditional sale or other security agreement
provides that such Engine shall not become subject to the Lien of such
lease, conditional sale or other security agreement at any time while such
Engine is subject to the Lien of this Indenture, notwithstanding the
installation thereof on such airframe;
(vii) install an Engine on an airframe owned by the Company
(or any Permitted Lessee), leased to the Company (or any Permitted Lessee)
or purchased by the Company (or any Permitted Lessee) subject to a
conditional sale or other security agreement under circumstances where
neither clause (v) nor clause (vi) of this Section 7.02(a) is applicable;
provided that such installation shall be deemed an Event of Loss with
respect to such Engine, and the Company shall comply with Section 7.05(b)
in respect thereof, if such installation shall adversely affect the Loan
Trustee's security interest in such Engine, the Loan Trustee not intending
hereby to waive any right or interest it may have to or in such Engine
under applicable law until compliance by the Company with Section 7.05(b);
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(viii) lease any Engine or the Airframe and Engines to any
United States air carrier as to which there is in force a certificate
issued pursuant to the Transportation Code (49 U.S.C. Sections 41101-41112)
or successor provision that gives like authority; and
(ix) lease any Engine or the Airframe and Engines to (A) any
foreign air carrier other than those set forth in clause (B), (B) any
foreign air carrier that is at the inception of the lease based in and a
domiciliary of a country listed in Exhibit B hereto and (C) any foreign air
carrier consented to in writing by the Loan Trustee with the consent of a
Majority in Interest of Noteholders; provided that (x) in the case of a
lease to a foreign air carrier under clause (A) above, the Loan Trustee
receives at the time of such lease (1) written confirmation from each of
the Rating Agencies that such lease would not result in a reduction of the
rating for any class of Pass Through Certificates below the then current
rating for such class of Pass Through Certificates or a withdrawal or
suspension of the rating of any class of Pass Through Certificates and (2)
an opinion of counsel to the Company (such counsel to be reasonably
satisfactory to the Loan Trustee) to the effect that there exist no
possessory rights in favor of the lessee under the laws of such lessee's
country which would, upon bankruptcy or insolvency of or other default by
the Company and assuming at such time such lessee is not insolvent or
bankrupt, prevent the taking of possession of any such Engine or the
Airframe and any such Engine by the Loan Trustee in accordance with and
when permitted by the terms of Section 4.02 upon the exercise by the Loan
Trustee of its remedies under Section 4.02, (y) in the case of a lease to
any foreign air carrier (other than a foreign air carrier principally based
in Taiwan), the United States maintains diplomatic relations with the
country in which such foreign air carrier is based at the time such lease
is entered into and (z) in the case of any lease to a foreign air carrier,
such carrier 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 the rights of any lessee or other transferee who receives
possession of the Aircraft, the Airframe or any Engine by reason of a transfer
permitted by this Section 7.02(a) (other than the transfer of an Engine which is
deemed an Event of Loss) shall be subject and subordinate to, and any permitted
lease shall be made expressly subject and subordinate to, all the terms of this
Indenture, including the Loan Trustee's rights to repossess pursuant to Section
4.02 and to avoid such lease upon such repossession, and the Company shall
remain primarily liable hereunder for the performance and observance of all of
the terms and conditions of this Indenture to the same extent as if such lease
or transfer had not occurred, any such lease shall include appropriate
provisions for the maintenance and insurance of the Aircraft, the Airframe or
such Engine, and no lease or transfer or possession otherwise in compliance with
this Section shall (x) result in any registration or re-registration of the
Aircraft except to the extent permitted in Section 7.02(e) or the maintenance,
operation or use thereof that does not comply with Section 7.02(b) and (c) or
(y) permit any action not permitted to be taken by the Company with respect to
the Aircraft hereunder. The Company
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shall promptly notify the Loan Trustee and the Rating Agencies of the existence
of any such lease with a term in excess of one year.
The Loan Trustee, and each Noteholder by acceptance of an Equipment
Note, agrees, for the benefit of the lessor or secured party of any airframe or
engine leased to the Company (or any Permitted Lessee) or purchased or owned by
the Company (or any Permitted Lessee) subject to a conditional sale or other
security agreement, that the Loan Trustee and the Noteholders will not acquire
or claim, as against such lessor or secured party, any right, title or interest
in (A) any engine or engines owned by the lessor under such lease or subject to
a security interest in favor of the secured party under such conditional sale or
other security agreement as the result of such engine or engines being installed
on the Airframe at any time while such engine or engines are subject to such
lease or conditional sale or other security agreement or (B) any airframe owned
by the lessor under such lease or subject to a security interest in favor of the
secured party under such conditional sale or other security agreement as the
result of any Engine being installed on such airframe at any time while such
airframe is subject to such lease or conditional sale or other security
agreement.
The Loan Trustee acknowledges that any "wet lease" or other similar
arrangement under which the Company maintains operational control of the
Aircraft shall not constitute a delivery, transfer or relinquishment of
possession for purposes of this Section 7.02(a).
(b) Operation and Use. The Company agrees that the Aircraft will not be
maintained, used or operated in violation of any law, rule or regulation of any
government of any country having jurisdiction over the Aircraft or in violation
of any airworthiness certificate, license or registration relating to the
Aircraft issued by any such government, except to the extent the Company is
contesting in good faith the validity or application of any such law, rule or
regulation in any manner that does not involve any material risk of sale,
forfeiture or loss of the Aircraft or materially impair the Lien of this
Indenture; and provided, that the Company shall not be in default under, or
required to take any action set forth in, this sentence if it is not possible
for it to comply with the laws of a jurisdiction other than the United States
(or other than any jurisdiction in which the Aircraft is then registered)
because of a conflict with the applicable laws of the United States (or such
jurisdiction in which the Aircraft is then registered). The Company will not
operate the Aircraft, or permit the Aircraft to be operated or located, (i) in
any area excluded from coverage by any insurance required by the terms of
Section 7.06 or (ii) in any war zone or recognized or, in the Company's
judgment, threatened areas of hostilities unless covered by war risk insurance
in accordance with Section 7.06, unless in the case of either clause (i) or
(ii), (x) indemnification complying with Section 7.06 (a) and (b) has been
provided or (y) the Aircraft is only temporarily located in such area as a
result of an isolated occurrence or isolated series of occurrences attributable
to a hijacking, medical emergency, equipment malfunction, weather conditions,
navigational error or other similar unforseen circumstances and the Company is
using its good faith efforts to remove the Aircraft from such area as promptly
as practicable.
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(c) Maintenance. The Company shall maintain, service, repair and
overhaul the Aircraft (or cause the same to be done) so as to keep the Aircraft
in good operating condition, ordinary wear and tear excepted, and in such
condition as may be necessary to enable the airworthiness certification of the
Aircraft to be maintained in good standing at all times (other than during
temporary periods of storage, during maintenance or modification permitted
hereunder, or during periods of grounding by applicable governmental
authorities) under the Transportation Code, during such periods in which the
Aircraft is registered under the laws of the United States, or, if the Aircraft
is registered under the laws of any other jurisdiction, the applicable laws of
such jurisdiction. In any case the Aircraft will be maintained in accordance
with the maintenance standards required by or substantially equivalent to those
required by the FAA or the central aviation authority of Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland or the United
Kingdom. The Company shall maintain or cause to be maintained all records, logs
and other documents required to be maintained in respect of the Aircraft by
appropriate authorities in the jurisdiction in which the Aircraft is registered.
(d) Identification of Loan Trustee's Interest. The Company agrees to
affix as promptly as practicable after the Closing Date and thereafter to
maintain in the cockpit of the Aircraft, in a clearly visible location, and (if
not prevented by applicable law or regulations or by any government) on each
Engine, a nameplate bearing the inscription "MORTGAGED TO STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, AS LOAN TRUSTEE" (such
nameplate to be replaced, if necessary, with a nameplate reflecting the name of
any successor Loan Trustee).
(e) Registration. The Company shall cause the Aircraft to remain duly
registered, under the laws of the United States, in the name of the Company
except as otherwise required by the Transportation Code; provided that the Loan
Trustee shall, at the Company's expense, execute and deliver all such documents
as the Company may reasonably request for the purpose of continuing such
registration. Notwithstanding the preceding sentence, the Company, at its own
expense, may cause or allow the Aircraft to be duly registered under the laws of
any foreign jurisdiction in which a Permitted Lessee could be principally based,
in the name of the Company or of any nominee of the Company, or, if required by
applicable law, in the name of any other Person (and, following any such foreign
registration, may cause the Aircraft to be re-registered under the laws of the
United States); provided, that in the case of jurisdictions other than those
approved by the Loan Trustee with the consent of a Majority in Interest of the
Noteholders (i) if such jurisdiction is at the time of registration listed on
Exhibit B, the Loan Trustee shall have received at the time of such registration
an opinion of counsel to the Company to the effect that (A) this Indenture and
the Loan Trustee's right to repossession thereunder is valid and enforceable
under the laws of such country, (B) after giving effect to such change in
registration, the Lien of this Indenture shall continue as a valid Lien and
shall be duly perfected in the new jurisdiction of registration and that all
filing, recording or other action necessary to perfect and protect the Lien of
this Indenture has been accomplished (or if such opinion cannot be given at such
time, (x) the opinion shall detail
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what filing, recording or other action is necessary and (y) the Loan Trustee
shall have received a certificate from a Responsible Officer of the Company that
all possible preparations to accomplish such filing, recording and other action
shall have been done, and such filing, recording and other action shall be
accomplished and a supplemental opinion to that effect shall be promptly
delivered to the Loan Trustee subsequent to the effective date of such change in
registration), (C) the obligations of the Company under this Indenture shall
remain valid, binding and (subject to customary bankruptcy and equitable
remedies exceptions and to other exceptions customary in foreign opinions
generally) enforceable under the laws of such jurisdiction (or the laws of the
jurisdiction to which the laws of such jurisdiction would refer as the
applicable governing law) and (D) all approvals or consents of any government in
such jurisdiction having jurisdiction required for such change in registration
shall have been duly obtained and shall be in full force and effect, and (ii) if
such jurisdiction is at the time of registration not listed on Exhibit B, the
Loan Trustee shall have received (in addition to the opinions set forth in
clause (i) above) at the time of such registration an opinion of counsel to the
Company to the effect that (A) the terms of this Indenture are legal, valid,
binding and enforceable in such jurisdiction (subject to exceptions customary in
such jurisdiction, provided, that, subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally, and to general principles of equity, any applicable laws limiting the
remedies provided in Section 4.02 do not in the opinion of such counsel make the
remedies provided in Section 4.02 inadequate for the practical realization of
the rights and benefits provided thereby), (B) that it is not necessary for the
Loan Trustee to register or qualify to do business in such jurisdiction, (C)
that there is no tort liability of the lender of an aircraft not in possession
thereof under the laws of such jurisdiction other than tort liability that might
have been imposed on such lender under the laws of the United States or any
state thereof (it being understood that such opinion shall be waived if
insurance reasonably satisfactory to the Loan Trustee is provided, at the
Company's expense, to cover such risk) and (D) (unless the Company shall have
agreed to provide insurance covering the risk of requisition of use or title of
the Aircraft by the government of such jurisdiction so long as the Aircraft is
registered under the laws of such jurisdiction) that the laws of such
jurisdiction require fair compensation by the government of such jurisdiction
payable in currency freely convertible into Dollars for the loss of use or title
of the Aircraft in the event of requisition by such government of such use or
title. The Loan Trustee will cooperate with the Company in effecting such
foreign registration. Notwithstanding the foregoing, prior to any such change in
the country of registry of the Aircraft, the following conditions shall be met
(or waived as provided in Section 6.01(b) of the Participation Agreement):
(i) no Event of Default shall have occurred and be continuing
at the effective date of the change in registration; provided, that it
shall not be necessary to comply with this condition if the change in
registration results in the registration of the Aircraft under the laws of
the United States or if a Majority in Interest of Noteholders consents to
such change in registration;
(ii) the Loan Trustee shall have received evidence of
compliance with the insurance provisions contained herein after giving
effect to such change in registration; and
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(iii) the Company shall have paid or made provision reasonably
satisfactory to the Loan Trustee for the payment of all reasonable expenses
(including reasonable attorneys' fees) of the Loan Trustee and the
Noteholders in connection with such change in registration.
Section 7.03. Inspection; Financial Information. (a) Inspection. At all
reasonable times, but upon at least 15 Business Days' prior written notice to
the Company, the Loan Trustee or its authorized representative may, subject to
the other conditions of this Section 7.03(a), inspect the Aircraft and may
inspect the books and records of the Company required to be maintained by the
FAA or the government of another jurisdiction in which the Aircraft is then
registered relating to the maintenance of the Aircraft; provided that (i) such
Loan Trustee or its representative, as the case may be, shall be fully insured
at no cost to the Company in a manner satisfactory to the Company with respect
to any risks incurred in connection with any such inspection or shall provide to
the Company a written release satisfactory to the Company with respect to such
risks, (ii) any such inspection shall be subject to the safety, security and
workplace rules applicable at the location where such inspection is conducted
and any applicable governmental rules or regulations, (iii) any such inspection
of the Aircraft shall be a visual, walk-around inspection of the interior and
exterior of the Aircraft and shall not include opening any panels, bays or the
like without the Company's express consent, which consent the Company may in its
sole discretion withhold, and (iv) no exercise of such inspection right shall
interfere with the use, operation or maintenance of the Aircraft by, or the
business of, the Company and the Company shall not be required to undertake or
incur any additional liabilities in connection therewith. All information
obtained in connection with any such inspection of the Aircraft and of such
books and records shall be Confidential Information and shall be treated by the
Loan Trustee and its representatives in accordance with the provisions of
Section 10.16. Any inspection pursuant to this Section 7.03(a) shall be at the
sole risk (including, without limitation, any risk of personal injury or death)
and expense of the Loan Trustee (or its representative) making such inspection.
Except during the continuance of an Event of Default, all inspections by the
Loan Trustee and its representatives provided for under this Section 7.03(a)
shall be limited to one inspection of any kind contemplated by this Section
7.03(a) during any calendar year.
(b) Financial Information. So long as any of the Equipment Notes remain
unpaid, the Company agrees to furnish to the Loan Trustee and the Liquidity
Provider: (i) within 60 days after the end of each of the first three quarterly
periods in each fiscal year of the Company, either (x) a consolidated balance
sheet of the Company and its consolidated subsidiaries prepared by it as of the
close of such period, together with the related consolidated statements of
income for such period or (y) a report of the Company on Form 10-Q in respect of
such period in the form filed with the Securities and Exchange Commission and
(ii) within 120 days after the close of each fiscal year of the Company, either
(x) a consolidated balance sheet of the Company and its consolidated
subsidiaries as of the close of such fiscal year, together with the related
consolidated statements of income for such fiscal year, certified by independent
public accountants, or (y) a report of the
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Company on Form 10-K in respect of such year in the form filed with the
Securities and Exchange Commission.
(c) Annual Opinion. The Company will furnish to the Loan Trustee
annually (but not later than March 15th of each year) after the execution hereof
until such time as the principal of, and interest on, and all other amounts with
respect to, the Equipment Notes shall have been paid in full, commencing with
the year 2000, an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., or other counsel reasonably
acceptable to the Loan Trustee, stating either (i) that in the opinion of such
counsel such action has been taken with respect to the recording, filing,
re-recording and refiling of this Indenture and any supplements thereto,
including any financing or continuation statements, and such other filings and
recordings as are necessary to maintain, for the 15-month period succeeding the
date of such opinion, the perfection of the security interests created thereby
and reciting the details of such action or (ii) that in the opinion of such
counsel no such action is necessary to maintain, for the 15-month period
succeeding the date of such opinion, the perfection of such security interests.
Section 7.04. Replacement and Pooling of Parts; Alterations,
Modifications and Additions; Substitution of Engines. (a) Replacement of Parts.
The Company shall promptly replace all Parts that may from time to time be
incorporated or installed in or attached to the Airframe or any Engine and that
may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or rendered permanently unfit for use for any
reason whatsoever, except as otherwise provided in Section 7.04(c) or if the
Airframe or an Engine to which a Part relates has suffered an Event of Loss. In
addition, the Company may remove in the ordinary course of maintenance, service,
repair, overhaul or testing, any Parts, whether or not worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or rendered permanently
unfit for use; provided that the Company, except as otherwise provided in
Section 7.04(c), will replace such Parts as promptly as practicable. All
replacement Parts shall be free and clear of all Liens (except for Permitted
Liens and except in the case of replacement property temporarily installed on an
emergency basis) and shall have a value and utility at least equal to the Parts
replaced, assuming such replaced Parts were in the condition and repair required
to be maintained by the terms hereof. Except as otherwise provided in Section
7.04(c), all Parts at any time removed from the Airframe or any Engine shall
remain subject to the Lien of this Indenture no matter where located until such
time as such Parts shall be replaced by parts that have been incorporated or
installed in or attached to the Airframe or such Engine and that meet the
requirements for replacement Parts specified above. Immediately upon any
replacement Part becoming incorporated or installed in or attached to the
Airframe or any Engine as above provided (except in the case of replacement
property temporarily installed on an emergency basis), without further act, (i)
the replaced Part shall thereupon be free and clear of all rights of the Loan
Trustee and of the Lien of this Indenture and shall no longer be deemed a Part
hereunder and (ii) such replacement Part shall become subject to the Lien of
this Indenture and be deemed a Part of the Airframe or such Engine for all
purposes to the same extent as the Parts originally incorporated or installed in
or attached to the Airframe or such Engine. Upon request of the Company from
time to time, the Loan Trustee
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shall execute and deliver to the Company an appropriate instrument confirming
the release of any such replaced Part from the Lien of this Indenture.
(b) Pooling of Parts. Any Part removed from the Airframe or any Engine
as provided in Section 7.04(a) may be subjected by the Company or a Person
permitted to be in possession of the Aircraft to a pooling arrangement customary
in the airline industry entered into in the ordinary course of the Company's or
such Person's business; provided that the part replacing such removed Part shall
be incorporated or installed in or attached to the Airframe or such Engine in
accordance with Section 7.04(a) as promptly as practicable after the removal of
such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine may be owned by any third
party subject to such a pooling arrangement; provided that the Company, at its
expense, as promptly thereafter as practicable, either (i) causes title to such
replacement Part to vest in the Company free and clear of all Liens (except
Permitted Liens), or (ii) replaces such replacement Part by incorporating or
installing in or attaching to the Airframe or such Engine a further replacement
Part in the manner contemplated by Section 7.04(a).
(c) Alterations, Modifications and Additions. The Company will make
such alterations and modifications in and additions to the Airframe and the
Engines as may be required from time to time to meet the applicable requirements
of the FAA or any applicable government of any other jurisdiction in which the
Aircraft may then be registered; provided, however, that the Company may, in
good faith, contest the validity or application of any such requirement in any
manner that does not involve any material risk of sale, loss or forfeiture of
the Aircraft and does not materially adversely affect the Loan Trustee's
interest in the Aircraft. In addition, the Company, at its own expense, may from
time to time add further parts or accessories and make or cause to be made such
alterations and modifications in and additions to the Airframe or any Engine as
the Company may deem desirable in the proper conduct of its business, including,
without limitation, removal (without replacement) of Parts, provided that no
such alteration, modification or addition shall materially diminish the value or
utility of the Airframe or such Engine below its value or utility, immediately
prior to such alteration, modification or addition, assuming that the Airframe
or such Engine was then in the condition required to be maintained by the terms
of this Indenture, except that the value (but not the utility) of the Airframe
or any Engine may be reduced by the value of any such Parts that shall have been
removed that the Company deems obsolete or no longer suitable or appropriate for
use on the Airframe or any Engine. All Parts incorporated or installed in or
attached or added to the Airframe or any Engine as the result of such
alteration, modification or addition shall, without further act, be subject to
the Lien of this Indenture. Notwithstanding the foregoing, the Company may, at
any time, remove any Part from the Airframe or any Engine if such Part: (i) is
in addition to, and not in replacement of or substitution for, any Part
originally incorporated or installed in or attached to the Airframe or such
Engine at the time of delivery thereof to the Company or any Part in replacement
of, or substitution for, any such Part, (ii) is not required to be incorporated
or installed in or attached or added to the Airframe or such Engine pursuant to
the first sentence of this Section 7.04(c) or (iii) can be removed from the
Airframe or
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such Engine without materially diminishing the value or utility required to be
maintained by the terms of this Indenture that the Airframe or such Engine would
have had at such time had such removal not occurred. Upon the removal by the
Company of any Part as permitted by this Section 7.04(c), such removed Part
shall, without further act, be free and clear of all rights and interests of the
Loan Trustee and the Lien of this Indenture and shall no longer be deemed a Part
hereunder. Upon request of the Company from time to time, the Loan Trustee shall
execute and deliver to the Company an appropriate instrument confirming the
release of any such removed Part from the Lien of this Indenture.
(d) Substitution of Engines. The Company shall have the right at its
option at any time, on at least 30 days' prior written notice to the Loan
Trustee, to substitute a Replacement Engine for any Engine. In such event, and
prior to the date of such substitution, the Company shall replace such Engine
hereunder by complying with the terms of Section 7.05(b) to the same extent as
if an Event of Loss had occurred with respect to such Engine.
Section 7.05. 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 or the Airframe and the Engines then installed thereon, the Company
shall forthwith (and, in any event, within 15 days after such occurrence) give
the Loan Trustee written notice of such Event of Loss, and, within 90 days after
such Event of Loss, the Company shall give the Loan Trustee written notice of
its election to perform one of the following options (it being agreed that if
the Company shall not have given such notice of election within such 90-day
period, the Company shall be deemed to have elected to perform the option set
forth in the following clause (ii)). The Company may elect either to:
(i) on or before the Loss Payment Date (as defined below) substitute,
as replacement for the Airframe or Airframe and Engines with respect to
which an Event of Loss has occurred, a Replacement Airframe (together with
a number of Replacement Engines equal to the number of Engines, if any,
with respect to which the Event of Loss occurred), such Replacement
Airframe and Replacement Engines to be owned by the Company free and clear
of all Liens (other than Permitted Liens); provided that if the Company
shall not perform its obligation to effect such substitution under this
clause (i) on or prior to the Loss Payment Date, then the Company shall on
the Loss Payment Date prepay the Equipment Notes in full in accordance with
Section 2.10; or
(ii) on or before the Loss Payment Date, redeem the Equipment Notes in
full in accordance with Section 2.10. The Company shall give the Loan
Trustee 20 days prior written notice if it elects to redeem the Equipment
Notes on any day prior to the Loss Payment Date.
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The "Loss Payment Date" with respect to an Event of Loss means the
Business Day next succeeding the 120th day following the date of occurrence of
such Event of Loss.
If the Company elects to substitute a Replacement Airframe (or a
Replacement Airframe and one or more Replacement Engines, as the case may be)
the Company shall, at its sole expense, not later than the Loss Payment Date,
(A) cause an Indenture Supplement for such Replacement Airframe and Replacement
Engines, if any, to be delivered to the Loan Trustee for execution and, upon
such execution, to be filed for recordation pursuant to the Transportation Code
or the applicable laws of such other jurisdiction in which the Aircraft may then
be registered, (B) cause a financing statement or statements with respect to the
Replacement Airframe and Replacement Engines, if any, or other requisite
documents or instruments to be filed in such place or places as necessary in
order to perfect the Loan Trustee's interest therein in the United States, or in
any other jurisdiction in which the Aircraft may then be registered, (C) furnish
the Loan Trustee with an opinion of the Company's counsel (which may be the
Company's General Counsel or such other internal counsel of the Company as shall
be reasonably satisfactory to the Loan Trustee) addressed to the Loan Trustee to
the effect that upon such replacement, such Replacement Airframe and Replacement
Engines, if any, will be subject to the Lien of this Indenture and addressing
the matters set forth in clauses (A) and (B), (D) furnish the Loan Trustee with
a certificate of an independent aircraft engineer or appraiser, certifying that
the Replacement Airframe and Replacement Engines, if any, have a value and
utility at least equal to the Airframe and Engines, if any, so replaced,
assuming the Airframe and such Engines were in the condition and repair required
by the terms hereof immediately prior to the occurrence of such Event of Loss,
(E) furnish the Loan Trustee with evidence of compliance with the insurance
provisions of Section 7.06 with respect to such Replacement Airframe and
Replacement Engines, if any, and (F) furnish the Loan Trustee with an opinion of
the Company's counsel (which may be the Company's General Counsel or such other
internal counsel of the Company as shall be reasonably satisfactory to the Loan
Trustee) to the effect that the Loan Trustee will be entitled to the benefits of
Section 1110 with respect to the Replacement Airframe, provided that (i) such
opinion need not be delivered to the extent that the benefits of Section 1110
were not, by reason of a change in law or governmental or judicial
interpretation thereof, available to the Loan Trustee with respect to the
Aircraft immediately prior to such substitution and (ii) such opinion may
contain qualifications and assumptions of the tenor contained in the opinion of
the Company's counsel delivered pursuant to Section 3.01 of the Participation
Agreement on the Closing Date and such other qualifications and assumptions as
shall at the time be customary in opinions rendered in comparable circumstances.
In the case of each Replacement Airframe or Replacement Airframe and one or
more Replacement Engines subjected to the Lien of this Indenture under this
Section 7.05(a), promptly upon the recordation of the Indenture Supplement
covering such Replacement Airframe and Replacement Engines, if any, pursuant to
the Transportation Code (or pursuant to the applicable law of such other
jurisdiction in which such Replacement Airframe and Replacement Engines, if any,
are registered), the Company will cause to be delivered to the Loan Trustee a
favorable opinion of the Company's counsel (which may be the Company's General
Counsel or such other internal
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counsel to the Company as shall be reasonably satisfactory to the Loan Trustee)
addressed to the Loan Trustee as to the due registration of such Replacement
Aircraft and the due recordation of such Indenture Supplement or such other
requisite documents or instruments and the validity and perfection of the
security interest in the Replacement Aircraft granted to the Loan Trustee under
this Indenture.
For all purposes hereof, upon the attachment of the Lien of this
Indenture thereto, the Replacement Aircraft and Replacement Engines, if any,
shall become part of the Collateral, the Replacement Airframe shall be deemed an
"Airframe" as defined herein, and each such Replacement Engine shall be deemed
an "Engine" as defined herein. Upon compliance with clauses (A) through (F) of
the second preceding paragraph, the Loan Trustee shall execute and deliver to
the Company an appropriate instrument releasing such replaced Airframe and
Engines (if any) installed thereon at the time such Event of Loss occurred, all
proceeds (including, without limitation, insurance proceeds), the Warranty
Rights in respect of such replaced Airframe and Engines (if any) and all rights
relating to the foregoing, from the Lien of this Indenture and assigning to the
Company all claims against third Persons for damage to or loss of the Airframe
and Engines arising from the Event of Loss.
In the event that, after an Event of Loss, the Company performs the
option set forth in clause (ii) of the first paragraph of this Section 7.05(a),
the Loan Trustee shall execute and deliver to the Company an appropriate
instrument releasing the Aircraft, all proceeds (including, without limitation,
insurance proceeds), the Warranty Rights in respect of the Aircraft and all
rights relating to the foregoing from the Lien of this Indenture and assigning
to the Company all claims against third Persons for damage to or loss of the
Aircraft arising from the Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon the occurrence of an
Event of Loss with respect to an Engine under circumstances in which there has
not occurred an Event of Loss with respect to the Airframe, the Company shall
give the Loan Trustee prompt written notice thereof and shall, within 120 days
after the occurrence of such Event of Loss, cause to be subjected to the Lien of
this Indenture, as replacement for the Engine with respect to which such Event
of Loss occurred, a Replacement Engine free and clear of all Liens (other than
Permitted Liens).
Prior to or at the time of any replacement under this Section 7.05(b),
the Company will (i) cause an Indenture Supplement covering such Replacement
Engine to be delivered to the Loan Trustee for execution and, upon such
execution, to be filed for recordation pursuant to the Transportation Code or
the applicable laws of any other jurisdiction in which the Aircraft may be
registered, (ii) cause a financing statement or statements with respect to such
Replacement Engine or other requisite documents or instruments to be filed in
such place or places as necessary in order to perfect the Loan Trustee's
interest therein in the United States, or in such other jurisdiction in which
the Engine may then be registered, (iii) furnish the Loan Trustee with an
opinion of the Company's counsel (which may be the Company's General Counsel or
such other internal counsel to the Company as shall be reasonably satisfactory
to the Loan Trustee) addressed to the Loan
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Trustee to the effect that, upon such replacement, the Replacement Engine will
be subject to the Lien of this Indenture, (iv) furnish the Loan Trustee with a
certificate of an aircraft engineer or appraiser (who may be an employee of the
Company) certifying that such Replacement Engine has a value and utility at
least equal to the Engine so replaced assuming such Engine was in the condition
and repair required by the terms hereof immediately prior to the occurrence of
such Event of Loss and (v) furnish the Loan Trustee with evidence of compliance
with the insurance provisions of Section 7.06 with respect to such Replacement
Engine. In the case of each Replacement Engine subjected to the Lien of this
Indenture under this Section 7.05(b), promptly upon the recordation of the
Indenture Supplement covering such Replacement Engine pursuant to the
Transportation Code (or pursuant to the applicable law of such other
jurisdiction in which the Aircraft is registered), the Company will cause to be
delivered to the Loan Trustee an opinion of counsel to the Company (which may be
the Company's General Counsel or such other internal counsel of the Company as
shall be reasonably satisfactory to the Loan Trustee) addressed to the Loan
Trustee as to the due recordation of such Indenture Supplement or such other
requisite documents or instruments and the validity and perfection of the
security interest in the Replacement Engine granted to the Loan Trustee under
this Indenture. For all purposes hereof, upon the attachment of the Lien of this
Indenture thereto, the Replacement Engine shall become part of the Collateral
and shall be deemed an "Engine" as defined herein. Upon compliance with clauses
(i) through (v) of this paragraph, the Loan Trustee shall execute and deliver to
the Company an appropriate instrument releasing such replaced Engine, any
proceeds (including, without limitation, insurance proceeds), the Warranty
Rights in respect of such replaced Engine and all rights relating to any of the
foregoing from the Lien of this Indenture and assigning to the Company all
claims against third Persons for damage to or loss of such Engine arising from
the Event of Loss.
(c) Application of Payments for Event of Loss from Requisition of Title
or Use. Any payments (other than insurance proceeds the application of which is
provided for in Section 7.06) received at any time by the Company or by the Loan
Trustee from any government or other Person with respect to an Event of Loss to
the Airframe or any Engine, will be applied as follows:
(i) if such payments are received with respect to the Airframe or the
Airframe and the Engines installed on the Airframe that has been or is
being replaced by the Company pursuant to Section 7.05(a), such payments
shall be paid over to, or retained by, the Loan Trustee and upon completion
of such replacement shall be paid over to, or retained by, the Company;
(ii) if such payments are received with respect to the Airframe or the
Airframe and the Engines installed on the Airframe that has not been and
will not be replaced pursuant to Section 7.05(a), so much of such payments
remaining after reimbursement of the Loan Trustee for costs and expenses
that shall not exceed the amounts required to be paid to the Noteholders
pursuant to Section 2.10 shall be applied in reduction of the Company's
obligation to pay such amounts, if not already paid by the Company, or, if
already paid by the Company, shall be applied to reimburse the Company for
its payment of such amount
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and the balance, if any, of such payment remaining thereafter will be paid
over to, or retained by, the Company; and
(iii) if such payments are received with respect to an Engine with
regard to which an Event of Loss has occurred as contemplated by Section
7.05(b), so much of such payments remaining after reimbursement of the Loan
Trustee for costs and expenses shall be paid over to, or retained by, the
Company; provided that the Company shall have fully performed the terms of
Section 7.05(b) with respect to the Event of Loss for which such payments
are made.
(d) Requisition for Use by the Government of the Airframe and the
Engines Installed Thereon. In the event of the requisition for use by any
government, including, without limitation, pursuant to the CRAF Program, of the
Airframe and the Engines or engines installed on the Airframe that does not
constitute an Event of Loss, all of the Company's rights and obligations under
this Indenture with respect to the Airframe and such Engines shall continue to
the same extent as if such requisition had not occurred; provided that,
notwithstanding the foregoing, the Company's obligations other than payment
obligations shall only continue to the extent feasible. All payments received by
the Company or the Loan Trustee from such government for such use of the
Airframe and Engines or engines shall be paid over to, or retained by, the
Company.
(e) Requisition for Use by the Government of an Engine not Installed on
the Airframe. In the event of the requisition for use by any government of any
Engine not then installed on the Airframe, the Company will replace such Engine
by complying with the terms of Section 7.05(b) to the same extent as if an Event
of Loss had occurred with respect to such Engine. Upon such replacement, any
payments received by the Company or the Loan Trustee from such government with
respect to such requisition shall be paid over to, or retained by, the Company.
(f) Application of Payments During Existence of Event of Default. Any
amount referred to in Section 7.05 that is payable to or retainable by the
Company shall not be paid to or retained by the Company if at the time of such
payment or retention an Event of Default or Payment Default shall have occurred
and be continuing, but shall be held by or paid over to the Loan Trustee as
security for the obligations of the Company under this Indenture. At such time
as there shall not be continuing any such Event of Default or Payment Default,
such amount shall be paid to the Company.
Section 7.06. Insurance. (a) Aircraft Liability Insurance. (i) Except
as provided in clause (ii) of this subsection (a), and subject to the rights of
the Company to establish and maintain self-insurance in the manner and to the
extent specified in Section 7.06(c), the Company will carry, or cause to be
carried, at no expense to the Loan Trustee, aircraft liability insurance
(including, but not limited to, bodily injury, personal injury and property
damage liability, exclusive of manufacturer's product liability insurance) and
contractual liability insurance with respect to the Aircraft (A) in amounts that
are not less than the aircraft liability insurance applicable to similar
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aircraft and engines in the Company's fleet on which the Company carries
insurance; provided that such liability insurance shall not be less than the
amount certified in the insurance report delivered to the Loan Trustee on the
Closing Date, (B) of the type usually carried by corporations engaged in the
same or similar business, similarly situated with the Company and owning or
operating similar aircraft and engines and covering risks of the kind
customarily insured against by the Company, and (C) that is maintained in effect
with insurers of recognized responsibility. Any policies of insurance carried in
accordance with this Section 7.06(a) and any policies taken out in substitution
or replacement for any of such policies shall (A) name the Loan Trustee, the
Subordination Agent, each Pass Through Trustee and the Liquidity Provider as
their Interests (as defined below in this Section 7.06) may appear, as
additional insured (the "Additional Insureds"), (B) subject to the condition of
clause (C) below, provide that, in respect of the interest of the Additional
Insureds in such policies, the insurance shall not be invalidated by any action
or inaction of the Company and shall insure the Additional Insureds' Interests
as they appear, regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Company, (C) provide
that, if such insurance is canceled for any reason whatever, or if any change is
made in the policy that materially reduces the amount of insurance or the
coverage certified in the insurance report delivered on the Closing Date to the
Loan Trustee and the Liquidity Provider, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall not be
effective as to any Additional Insured for 30 days (seven days, or such other
period as is customarily available in the industry, in the case of any war risk
or allied perils coverage) after receipt by such Additional Insured of written
notice from such insurers of such cancellation, change or lapse, (D) provide
that the Additional Insureds shall have no obligation or liability for premiums,
commissions, assessments or calls in connection with such insurance, (E) provide
that the insurers shall waive any rights of (1) set-off, counterclaim or any
other deduction, whether by attachment or otherwise, in respect of any liability
of the Additional Insureds to the extent of any moneys due to the Additional
Insureds and (2) subrogation against the Additional Insureds to the extent that
the Company has waived its rights by its agreements to indemnify the Additional
Insureds pursuant to the Operative Documents, (F) be primary without right of
contribution from any other insurance that may be carried by each Additional
Insured with respect to its interests as such in the Aircraft and (G) expressly
provide that all of the provisions thereof, except the limits of liability,
shall operate in the same manner as if there were a separate policy covering
each insured. "Interests" as used in this Section 7.06(a) and in Section 7.06(b)
with respect to any Person means the interests of such Person in the
transactions contemplated by the Operative Documents. In the case of a lease or
contract with any government in respect of the Aircraft or any Engine, or in the
case of any requisition for use of the Aircraft or any Engine by any government,
a valid agreement by such government to indemnify the Company, or an insurance
policy issued by such government, against any of the risks that the Company is
required hereunder to insure against shall be considered adequate insurance for
purposes of this Section 7.06(a) to the extent of the risks (and in the amounts)
that are the subject of such indemnification or insurance.
(ii) During any period that the Airframe or an Engine, as the case may
be, is on the ground and not in operation, the Company may carry or cause to be
carried as to such
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non-operating Airframe or Engine, in lieu of the insurance required by clause
(i) above, and subject to self-insurance to the extent permitted by Subsection
7.06(c), insurance otherwise conforming with the provisions of said clause (i)
except that: (A) the amounts of coverage shall not be required to exceed the
amounts of airline liability insurance from time to time applicable to airframes
or engines owned or leased by the Company of the same type as such non-operating
Airframe or Engine and that are on the ground and not in operation and (B) the
scope of the risks covered and the type of insurance shall be the same as from
time to time shall be applicable to airframes or engines owned or leased by the
Company of the same type as such non-operating Airframe or Engine and that are
on the ground and not in operation.
(b) Insurance Against Loss or Damage to Aircraft. (i) Except as
provided in clause (ii) of this subsection (b), and subject to the rights of the
Company to establish and maintain self-insurance in the manner and to the extent
specified in Section 7.06(c), the Company shall maintain, or cause to be
maintained, in effect with insurers of recognized responsibility, at no expense
to the Loan Trustee, all-risk aircraft hull insurance covering the Aircraft and
all-risk coverage with respect to any Engines or Parts while removed from the
Aircraft (including, without limitation, war risk insurance if and to the extent
the same is maintained by the Company or any Permitted Lessee with respect to
other aircraft owned or operated by the Company or such Permitted Lessee, as the
case may be, on the same routes) that is of the type and in substantially the
amount usually carried by corporations engaged in the same or similar business
and similarly situated with the Company; provided that (A) such insurance
(including the permitted self-insurance) shall at all times while the Aircraft
is subject to this Indenture be for an amount not less than 110% of the
aggregate outstanding principal amount of the Equipment Notes from time to time,
(B) such insurance need not cover an Engine while attached to an airframe not
owned, leased or operated by the Company and (C) such insurance covering Engines
and Parts removed from an Airframe or an airframe or (in the case of Parts) an
Engine need be obtained only to the extent available at reasonable cost (as
reasonably determined by the Company). Any policies carried in accordance with
this Section 7.06(b) and any policies taken out in substitution or replacement
for any such policies shall (A) provide that any insurance proceeds up to an
amount equal to the outstanding principal amount of the Equipment Notes,
together with accrued but unpaid interest thereon, plus an amount equal to the
interest that would accrue on the outstanding principal amount of the Equipment
Notes at the Debt Rate in effect on the date of payment of such insurance
proceeds to the Loan Trustee (as provided for in this sentence) during the
period commencing on the day following the date of such payment to the Loan
Trustee and ending on the Loss Payment Date (the "Loan Amount"), payable for any
loss or damage constituting an Event of Loss with respect to the Aircraft and
any insurance proceeds in excess of the amount set forth on Exhibit C up to the
amount of the Loan Amount for any loss or damage to the Aircraft (or Engines)
not constituting an Event of Loss with respect to the Aircraft (or Engines),
shall be paid to the Loan Trustee as long as the Indenture shall not have been
discharged, and that all other amounts shall be payable to the Company, unless
the insurer shall have received notice that an Event of Default exists, in which
case all insurance proceeds for any loss or damage to the Aircraft (or Engines)
up to the Loan Amount shall be payable to the Loan Trustee, (B) subject to the
conditions of clause (C)
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below, provide that, in respect of the interests of the Additional Insureds in
such policies, the insurance shall not be invalidated by any action or inaction
of the Company and shall insure the Additional Insureds' Interests as they
appear, regardless of any breach or violation of any warranty, declaration or
condition contained in such policies by the Company, (C) provide that if such
insurance is canceled for any reason whatsoever, or if any change is made in the
policy that materially reduces the amount of insurance or the coverage certified
in the insurance report delivered on the Closing Date to the Loan Trustee and
the Liquidity Provider or if such insurance is allowed to lapse for nonpayment
of premium, such cancellation, change or lapse shall not be effective as to the
Additional Insureds for 30 days (seven days, or such other period as is
customarily available in the industry, in the case of war risk or allied perils
coverage) after receipt by the Additional Insureds of written notice from such
insurers of such cancellation, change or lapse, (D) provide that the Additional
Insureds shall have no obligation or liability for premiums, commissions,
assessments or calls in connection with such insurance, (E) provide that the
insurers shall waive rights of (1) setoff, counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of the
Additional Insureds to the extent of any moneys due to the Additional Insureds
and (2) subrogation against the Additional Insureds to the extent the Company
has waived its rights by its agreement to indemnify the Additional Insureds
pursuant to the Operative Documents and (F) be primary without right of
contribution from any other insurance that may be carried by any Additional
Insured with respect to its Interests as such in the Aircraft. In the case of a
lease or contract with any government in respect of the Aircraft or any Engine,
or in the case of any requisition for use of the Aircraft or any Engine by any
government, a valid agreement by such government to indemnify the Company, or an
insurance policy issued by such government, against any risks which the Company
is required hereunder to insure against shall be considered adequate insurance
for purposes of this Section 7.06(b) to the extent of the risks (and in the
amounts) that are the subject of such indemnification or insurance.
(ii) During any period that the Airframe or an Engine is on the ground
and not in operation, the Company may carry or cause to be carried as to such
non-operating Airframe or Engine, in lieu of the insurance required by clause
(i) above, and subject to self-insurance to the extent permitted by Subsection
7.06(c), insurance otherwise conforming with the provisions of said clause (i)
except that the scope of the risks covered and the type of insurance shall be
the same as from time to time applicable to airframes and engines owned or
leased by the Company (or, if a lease is then in effect, by the Permitted
Lessee) of the same type as such non-operating Airframe or Engine and that are
on the ground and not in operation; provided that, subject to self-insurance to
the extent permitted by Subsection 7.06(c), the Company shall maintain insurance
against risk of loss or damage to such non-operating Airframe or Engine in an
amount at least equal to 110% of the aggregate outstanding principal amount of
the Equipment Notes during such period that such Airframe or Engine is on the
ground and not in operation.
(c) Self-Insurance. The Company may from time-to-time self-insure, by
way of deductible, self-insured retention, premium adjustment or franchise or
otherwise (including, with respect to insurance maintained pursuant to
Subsections 7.06(a) or 7.06(b), insuring for a maximum
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amount that is less than the amounts set forth in Sections 7.06(a) and 7.06(b)),
the risks required to be insured against pursuant to Sections 7.06(a) and
7.06(b), but in no case shall the self-insurance with respect to all of the
aircraft and engines in the Company's fleet (including, without limitation, the
Aircraft) exceed for any 12-month policy year 1% of the average aggregate
insurable value (for the preceding policy year) of all aircraft (including,
without limitation, the Aircraft) on which the Company carries insurance, unless
an insurance broker of national standing shall certify that the standard among
all other major United States airlines is a higher level of self-insurance, in
which case the Company may self-insure the Aircraft to such higher level. In
addition to the foregoing right to self-insure, the Company may self-insure to
the extent of (1) any deductible per occurrence that, in the case of the
Aircraft, is not in excess of the amount customarily allowed as a deductible in
the industry or is required to facilitate claims handling or (2) any applicable
mandatory minimum per aircraft (or if applicable per annum or other period) hull
or liability insurance deductibles imposed by the aircraft or hull liability
insurers.
(d) Application of Insurance Payments. All losses will be adjusted by
the Company with the insurers. As between the Loan Trustee and the Company it is
agreed that all insurance payments received under policies required to be
maintained by the Company hereunder, exclusive of any payments received in
excess of the Loan Amount for the Aircraft from such policies, as the result of
the occurrence of an Event of Loss with respect to the Airframe or an Engine
will be applied as follows:
(i) if such payments are received with respect to the Airframe or the
Airframe and any Engines installed on the Airframe that has been or is
being replaced by the Company pursuant to Section 7.05(a), such payments
shall be paid over to, or retained by, the Loan Trustee and upon completion
of such replacement shall be paid over to, or retained by, the Company.
(ii) if such payments are received with respect to the Airframe or the
Airframe and any Engines installed on the Airframe that has not been and
will not be replaced as contemplated by Section 7.05(a), so much of such
payments remaining after reimbursement of the Loan Trustee for its costs
and expenses as shall not exceed the amounts required to be paid by the
Company pursuant to Section 2.10 shall be applied in reduction of the
Company's obligation to pay such amounts, if not already paid by the
Company, or, if already paid by the Company, shall be applied to reimburse
the Company for its payment of such amounts and the balance, if any, of
such payment remaining thereafter will be paid over to, or retained by, the
Company; and
(iii) if such payments are received with respect to an Engine with
regard to which an Event of Loss contemplated by Section 7.05(b) has
occurred, so much of such payments remaining after reimbursement of the
Loan Trustee for its costs and expenses shall be paid over to, or retained
by, the Company; provided that the Company shall have fully performed
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the terms of Section 7.05(b) with respect to the Event of Loss for which
such payments are made.
In all events, the insurance payment of any property damage loss received
under policies maintained by the Company in excess of the Loan Amount for the
Aircraft shall be paid to the Company.
The insurance payments for any loss or damage to the Airframe or an
Engine not constituting an Event of Loss with respect to the Airframe or such
Engine will be applied in payment (or to reimburse the Company) for repairs or
for replacement property in accordance with the terms of Sections 7.02 and 7.04,
and any balance remaining after compliance with such Sections with respect to
such loss or damage shall be paid to the Company. Any amount referred to in the
preceding sentence or in clause (i), (ii) or (iii) of the second preceding
paragraph that is payable to the Company shall not be paid to the Company (or,
if it has been previously paid directly to the Company, shall not be retained by
the Company) if at the time of such payment an Event of Default or Payment
Default shall have occurred and be continuing, but shall be paid to and held by
the Loan Trustee as security for the obligations of the Company under this
Indenture, and at such time as there shall not be continuing any such Event of
Default or Payment Default, such amount shall, to the extent not theretofore
applied as provided herein, be paid to the Company.
(e) Reports, Etc. On or before the Closing Date and annually upon
renewal of the Company's insurance coverage, the Company will furnish to the
Loan Trustee and the Liquidity Provider a report signed by a firm of independent
aircraft insurance brokers appointed by the Company (which brokers may be in the
regular employ of the Company), stating the opinion of such firm that the
insurance then carried and maintained on the Aircraft complies with the terms
hereof; provided that all information contained in such report shall be
Confidential Information and shall be treated by the Loan Trustee and the
Liquidity Provider and each of their affiliates and officers, directors, agents
and employees in accordance with the provisions of Section 10.16. The Company
will cause such firm to advise the Loan Trustee and the Liquidity Provider in
writing of any act or omission on the part of the Company of which such firm has
knowledge that might invalidate or render unenforceable, in whole or in part,
any insurance on the Aircraft. The Company will also cause such firm to advise
the Loan Trustee and the Liquidity Provider in writing as promptly as
practicable after such firm acquires knowledge that an interruption of any
insurance carried and maintained on the Aircraft pursuant to this Section 7.06
will occur. Such information may only be provided to other Persons in accordance
with Section 10.16.
(f) Salvage Rights; Other. All salvage rights to the Airframe and each
Engine shall remain with the Company's insurers at all times, and any insurance
policies of the Loan Trustee insuring the Airframe or any Engine shall provide
for a release to the Company of any and all salvage rights in and to the
Airframe or any Engine. Neither the Loan Trustee nor any Noteholder may,
directly or indirectly, obtain insurance for its own account with respect to the
Airframe or any Engine if such insurance would limit or otherwise adversely
affect the coverage or
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amounts payable under, or increase the premiums for, any insurance required to
be maintained pursuant to this Section 7.06 or any other insurance maintained
with respect to the Aircraft of any other aircraft in the Company's fleet.
ARTICLE VIII
SUCCESSOR AND ADDITIONAL TRUSTEES
Section 8.01 Resignation or Removal; Appointment of Successor. (a) The
resignation or removal of the Loan Trustee and the appointment of a successor
Loan Trustee shall become effective only upon the successor Loan Trustee's
acceptance of appointment as provided in this Section 8.01. The Loan Trustee or
any successor thereto must resign if at any time it ceases to be eligible in
accordance with the provisions of Section 8.01(c) and may resign at any time
without cause by giving at least 60 days' prior written notice to the Company
and each Noteholder. In addition, either the Company (so long as no Event of
Default or Payment Default shall have occurred and be continuing) or a Majority
in Interest of Noteholders (but only with the consent of the Company so long as
no Event of Default or Payment Default shall have occurred and be continuing),
may at any time remove the Loan Trustee without cause by an instrument in
writing delivered to the Loan Trustee and each Noteholder, and, in case of a
removal by a Majority in Interest of Noteholders, to the Company.
In the case of the resignation or removal of the Loan Trustee, the
Company shall promptly appoint a successor Loan Trustee. If a successor Loan
Trustee shall not have been appointed within 60 days after such notice of
resignation or removal, the Loan Trustee, the Company or any Noteholder may
apply to any court of competent jurisdiction to appoint a successor Loan Trustee
to act until such time, if any, as a successor shall have been appointed as
above provided. The successor Loan Trustee so appointed by such court shall
immediately and without further act be superseded by any successor Loan Trustee
appointed as above provided.
(b) Any successor Loan Trustee, however appointed, shall execute and
deliver to the predecessor Loan Trustee and the Company an instrument accepting
such appointment and assuming the obligations of the Loan Trustee arising from
and after the time of such appointment, and thereupon such successor Loan
Trustee, without further act, shall become vested with all the estates,
properties, rights, powers and duties of the predecessor Loan Trustee hereunder
in the trust hereunder applicable to it with like effect as if originally named
the Loan Trustee herein; but nevertheless upon the written request of such
successor Loan Trustee, such predecessor Loan Trustee shall execute and deliver
an instrument transferring to such successor Loan Trustee all the estates,
properties, rights and powers of such predecessor Loan Trustee, and such
predecessor Loan Trustee shall duly assign, transfer, deliver and pay over to
such successor Loan Trustee all monies or other property and all other books and
records, or true, correct and complete copies thereof, then held by such
predecessor Loan Trustee hereunder.
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(c) This Indenture shall at all times have a Loan Trustee, however
appointed, that is a Citizen of the United States (without the use of a voting
trust) and a bank or trust company having a combined capital and surplus of at
least $75,000,000 (or a combined capital and surplus in excess of $5,000,000 and
the obligations of which, whether now in existence or hereafter incurred, are
fully and unconditionally guaranteed by a corporation organized and doing
business under the laws of the United States or any state or territory thereof
or the District of Columbia and having a combined capital and surplus of at
least $75,000,000) or a corporation with a net worth of at least $75,000,000, if
there be such an institution willing, able and legally qualified to perform the
duties of the Loan Trustee hereunder upon reasonable or customary terms. If such
bank, trust company or corporation publishes reports of conditions at least
annually, pursuant to law or to the requirements of federal, state, territorial
or District of Columbia supervising or examining authority, then for the
purposes of this Section 8.01(c) the combined capital and surplus of such bank,
trust company or corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of conditions so published. In
case at any time the Loan Trustee shall cease to be eligible in accordance with
the provisions of this Section 8.01(c), the Loan Trustee shall resign
immediately in the manner and with the effect specified in Section 8.01(a).
(d) Any corporation into which the Loan Trustee 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 Loan Trustee shall be
a party, or any corporation to which substantially all the corporate trust
business of the Loan Trustee may be transferred, shall, subject to the terms of
Section 8.01(c), be a successor Loan Trustee under this Indenture without
further act.
Section 8.02. Appointment of Additional and Separate Trustees. (a)
Whenever (i) the Loan Trustee 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, any Operative Document or any of the
transactions contemplated by the Operative Documents, (ii) the Loan Trustee
shall be advised by counsel satisfactory to it that it is necessary or prudent
in the interests of the Noteholders (and the Loan Trustee shall so advise the
Company) or (iii) the Loan Trustee shall have been requested to do so by a
Majority in Interest of Noteholders, then in any such case, the Loan Trustee
and, upon the written request of the Loan Trustee, the Company, shall execute
and deliver an indenture supplemental hereto and such other instruments as may
from time to time be necessary or advisable either (1) to constitute one or more
banks or trust companies or corporations meeting the requirements of Section
8.01(c) and approved by the Loan Trustee, either to act jointly with the Loan
Trustee 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 Indenture as may be provided in such supplemental indenture or other
instruments as the Loan Trustee or a Majority in Interest of Noteholders 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 8.02. If no Event of Default has occurred and is continuing, no
additional
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or supplemental trustee shall be appointed without the Company's consent. If an
Event of Default shall have occurred and be continuing, the Loan Trustee may act
under the foregoing provisions of this Section 8.02(a) without the concurrence
of the Company, and the Company hereby irrevocably appoints (which appointment
is coupled with an interest) the Loan Trustee as its agent and attorney-in-fact
to act for it under the foregoing provisions of this Section 8.02(a). The Loan
Trustee 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, subject in each
case to the remaining provisions of this Section 8.02. In case any additional or
separate trustee appointed under this Section 8.02(a) shall become incapable of
acting, resign or be removed, all the assets, property, rights, powers, trusts,
duties and obligations of such additional or separate trustee shall revert to
the Loan Trustee until a successor additional or separate trustee is appointed
as provided in this Section 8.02(a).
(b) No additional or separate trustee shall be entitled to exercise any
of the rights, powers, duties and obligations conferred upon the Loan Trustee 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 Documents to the Loan
Trustee shall be promptly paid over by it to the Loan Trustee. All other rights,
powers, duties and obligations conferred or imposed upon any additional or
separate trustee shall be exercised or performed by the Loan Trustee 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
Loan Trustee 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
Loan Trustee or a Majority in Interest of Noteholders. No trustee hereunder
shall be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Loan Trustee shall be liable for the consequences of
its lack of reasonable care in selecting, and the Loan Trustee's own actions in
acting with, any additional or separate trustee. Each additional or separate
trustee appointed pursuant to this Section 8.02 shall be subject to, and shall
have the benefit of Articles IV, V, VI, VIII, IX and X hereof insofar as they
apply to the Loan Trustee. The powers of any additional or separate trustee
appointed pursuant to this Section 8.02 shall not in any case exceed those of
the Loan Trustee hereunder.
(c) If at any time the Loan Trustee shall deem it no longer necessary
or desirable or in the event that the Loan Trustee shall have been requested to
do so in writing by a Majority in Interest of Noteholders, the Loan Trustee and,
upon the written request of the Loan Trustee, the Company, 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
Loan Trustee may act on behalf of the Company under this Section 8.02(c) when
and to the extent it could so act under Section 8.02(a) hereof. In any case, the
Company may remove an additional or separate trustee in the manner set forth in
Section 8.01.
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ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.01. Amendments to this Indenture without Consent of Holders.
At any time after the date hereof, the Company and the Loan Trustee may enter
into one or more agreements supplemental hereto without notice to or consent of
any Noteholder for any of the following purposes: (i) to evidence the succession
of another Person to the Company and the assumption by any such successor of the
covenants of the Company contained in any Operative Documents pursuant to
Section 6.02(e) of the Participation Agreement; (ii) to cure any defect or
inconsistency herein or in the Equipment Notes; (iii) to cure any ambiguity or
correct any mistake; (iv) to evidence the succession of a new trustee hereunder
pursuant hereto or the removal of the trustee hereunder or to provide for or
facilitate the appointment of an additional or separate trustee pursuant to
Section 8.02 hereof; (v) to convey, transfer, assign, mortgage or pledge any
property to or with the Loan Trustee; (vi) to make any other provisions or
amendments with respect to matters or questions arising hereunder or under the
Equipment Notes, or to amend, modify or supplement any provision hereof or
thereof, so long as such action shall not adversely affect the interests of the
Noteholders or the Liquidity Provider; (vii) to correct or amplify the
description of any property at any time subject to the Lien of this Indenture,
or better to assure, convey and confirm unto the Loan Trustee any property
subject or required to be subject to the Lien of this Indenture or to subject to
the Lien of this Indenture the Airframe or Engines or any Replacement Airframe
or Replacement Engine; (viii) to add to the covenants of the Company for the
benefit of the Noteholders, or to surrender any rights or power herein conferred
upon the Company; (ix) to add to the rights of the Noteholders; (x) to include
on the Equipment Notes any legend as may be required by law or as may otherwise
be necessary or advisable; (xi) to comply with any applicable requirements of
the Trust Indenture Act of 1939, as amended, or any other requirements of
applicable law or of any regulatory body and (xii) to provide for the issuance
of Series D Equipment Notes and/or Pass Through Certificates issued by the Class
D Pass Through Trust and to make changes relating thereto, provided that (A) the
Company shall have obtained written confirmation from each Rating Agency that
the issuance of the Series D Equipment Notes would not result in a reduction of
the rating for any class of Pass Through Certificates below the then current
rating for such class of Pass Through Certificates or a withdrawal or suspension
of the rating of any class of Pass Through Certificates and (B) (1) if the
Series D Equipment Notes are issued to a Class D Pass Through Trust, the Pass
Through Trustee thereof shall become a party to the Intercreditor Agreement or
(2) if Series D Equipment Notes are issued to any person other than a Class D
Pass Through Trust, the Series D Equipment Notes will be subject to the
provisions of the Intercreditor Agreement that allow the "Controlling Party" (as
defined in the Intercreditor Agreement), during the continuance of an "Indenture
Event of Default" (as defined in the Intercreditor Agreement) to direct the Loan
Trustee in taking action under this Indenture.
Section 9.02. Amendments to this Indenture with Consent of Holders. (a)
With the written consent of a Majority in Interest of Noteholders, the Company
may, and the Loan Trustee
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shall, subject to Section 9.06, at any time and from time to time, enter into
such supplemental agreements to add any provisions to or to change or eliminate
any provisions of this Indenture or of any such supplemental agreements or to
modify in any manner the rights and obligations of the Company, the Loan Trustee
and of the Noteholders under this Indenture; provided, however, that without the
consent of each Noteholder affected thereby, an amendment under this Section
9.02 may not:
(1) reduce the principal amount of, Make-Whole Amount, if any, or
interest on, any Equipment Note;
(2) change the date on which any principal amount of, Make-Whole
Amount, if any, or interest on any Equipment Note, is due or payable;
(3) create any Lien with respect to the Collateral prior to or pari
passu with the Lien thereon under this Indenture except such as are
permitted by this Indenture, or deprive any Noteholder of the benefit of
the Lien on the Collateral created by this Indenture;
(4) reduce the percentage of the outstanding principal amount of the
Equipment Notes the consent of whose holders is required for any such
supplemental agreement, or the consent of whose holders is required for any
waiver of compliance with certain provisions of this Indenture or of
certain defaults hereunder or their consequences provided for in this
Indenture; or
(5) make any change in Section 4.05 or this Section 9.02, except to
provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of each Noteholder affected thereby.
(b) It is not necessary under this Section 9.02 for the Noteholders to
consent to the particular form of any proposed supplemental agreement, but it is
sufficient if they consent to the substance thereof.
(c) Promptly after the execution by the Company and the Loan Trustee of
any supplemental agreement pursuant to the provisions of this Section 9.02, the
Loan Trustee shall transmit by first-class mail a notice, setting forth in
general terms the substance of such supplemental agreement, to all Noteholders,
as the names and addresses of such Noteholders appear on the Equipment Note
Register. Any failure of the Loan Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental agreement.
Section 9.03. Amendments, Waivers, Etc. of the Participation Agreement.
Without the consent of a Majority in Interest of Noteholders, the respective
parties to the Participation Agreement may not modify, amend or supplement such
agreement, or give any consent, waiver,
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authorization or approval thereunder, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions thereof or of
modifying in any manner the rights of the respective parties thereunder;
provided, however, that, without the consent of the Loan Trustee or any
Noteholder, the Participation Agreement may be modified, amended or supplemented
in order (i) to cure any defect or inconsistency therein or to cure any
ambiguity or correct any mistake, (ii) to amend, modify or supplement any
provision thereof or make any other provision with respect to matters or
questions arising thereunder or under this Indenture, provided that the making
of any such other provision shall not materially adversely affect the interests
of the Noteholders or (iii) to make any other change, or reflect any other
matter, of the kind referred to in clauses (i) through (xi) of Section 9.01.
Notwithstanding the foregoing, without the consent of the Liquidity Provider,
the Company shall not enter into any amendment, waiver or modification of or
supplement or consent to the Participation Agreement which shall reduce, modify
or amend any indemnities in favor of the Liquidity Provider contained therein.
Section 9.04. Revocation and Effect of Consents. Until an amendment or
waiver becomes effective, a consent to it by a Noteholder is a continuing
consent by the Noteholder and every subsequent Noteholder, even if notation of
the consent is not made on any Equipment Note. Section 9.05. Notation on or
Exchange of Equipment Notes. The Loan Trustee may place an appropriate notation
about an amendment or waiver on any Equipment Note thereafter executed. The Loan
Trustee in exchange for such Equipment Notes may execute new Equipment Notes
that reflect the amendment or waiver.
Section 9.06. Trustee Protected. If, in the reasonable opinion of the
institution acting as Loan Trustee hereunder, any document required to be
executed by it pursuant to the terms of Section 9.01 or 9.02 adversely affects
any right, duty, immunity or indemnity with respect to such institution under
this Indenture, such institution may in its discretion decline to execute such
document.
ARTICLE X
MISCELLANEOUS
Section 10.01. Termination of Indenture. (a) Upon (or at any time
after):
(i) payment in full of the principal amount, 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 Noteholders,
the Indenture Indemnitees and the Loan Trustee hereunder or under the
Participation Agreement;
(ii) the 91st day after there has been irrevocably deposited (except as
provided in Section 2.15 or 10.01(d)) with the Loan Trustee as funds in trust,
specifically pledged as security
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for, and dedicated solely to, the benefit of the Noteholders, (A) money in an
amount, (B) U.S. Government Obligations that, through the payment of interest
and principal in respect thereof in accordance with their terms, will provide
(not later than one Business Day before the due date of any payment referred to
below in this paragraph) money in an amount, or (C) a combination of money and
U.S. Government Obligations referred to in the foregoing clause (B), sufficient,
in the opinion of a nationally recognized firm of independent certified public
accountants expressed in a written certification thereof delivered to the Loan
Trustee, to pay in full the outstanding principal amount of and interest on all
the Equipment Notes on the dates such amounts are due; provided, however, that
(1) if any Equipment Note will become due more than one year after the
deposit of such funds, the Company has delivered to the Loan Trustee an
officer's certificate and an opinion of counsel to the effect that there
has been a change in tax law since September 23, 1999 or has been published
by the Internal Revenue Service a ruling to the effect that Noteholders and
the holders of the Pass Through Certificates will not recognize income,
gain or loss for United States Federal income tax purposes as a result of
the exercise by the Company of its option under this subsection (ii) and
will be subject to United States Federal income tax on the same amounts and
in the same manner and at the same times, as would have been the case if
such option had not been exercised;
(2) all other amounts then due and payable hereunder have been paid;
(3) the Company has delivered to the Loan Trustee an officer's
certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the satisfaction and discharge of this
Indenture contemplated by this Section 10.01 have been complied with;
(4) such deposit will not result in a breach or violation of, or
constitute an Event of Default under, this Indenture or a default or event
of default under any other agreement or instrument to which the Company is
a party or by which it is bound; and
(5) no Event of Default set forth in Sections 4.01(f), (g), (h) or (i)
shall have occurred and be continuing on the date of such deposit or at any
time during the period ending on the 91st day after the date of such
deposit;
the Company and the Loan Trustee shall be deemed to have been released and
discharged from their respective obligations hereunder and under the Equipment
Notes, and the Loan Trustee shall, upon the written request of the Company,
execute and deliver to, or as directed in writing by, the Company an appropriate
instrument (in due form for recording) releasing the Aircraft and the balance of
the Collateral from the Lien of this Indenture, and, in such event, this
Indenture and the
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trusts created hereby shall terminate and this Indenture shall be of no further
force or effect; provided, however, that this Indenture and the trusts created
hereby shall earlier terminate and this Indenture shall be of no further force
or effect upon any sale or other final disposition by the Loan Trustee of all
property constituting part of the Collateral and the final distribution by the
Loan Trustee of all monies or other property or proceeds constituting part of
the Collateral in accordance with the terms hereof. Except as otherwise provided
above, this Indenture and the trusts created hereby shall continue in full force
and effect in accordance with the terms hereof. Upon making of the deposit of
the defeasance funds as described above, the right of the Company to cause
redemption of the Equipment Notes shall cease.
(b) Notwithstanding the provisions of Section 10.01(a)(ii), the
obligations of the Loan Trustee contained in Sections 2.01, 2.02, 2.03, 2.04,
2.05, 2.07, 2.08, 2.09, 2.13, 2.15, 2.16, 3.01, 10.01(c) and 10.01(d) of this
Section 10.01, and the other rights, duties, immunities and privileges hereunder
of the Loan Trustee, shall survive.
(c) All monies and U.S. Government Obligations deposited with the Loan
Trustee pursuant to Section 10.01(a)(ii) shall be held in trust and applied by
it, in accordance with the provisions of the Equipment Notes and this Indenture,
to the payment to the Noteholders of all sums due and to become due thereon for
principal and interest, but such money need not be segregated from other funds
except to the extent required by law.
(d) The Loan Trustee shall promptly pay or return to the Company upon
request of the Company any money or U.S. Government Obligations held by it at
any time that are not required for the payment of the amounts described above in
Section 10.01(c) on the Equipment Notes for which money or U.S. Government
Obligations have been deposited pursuant to Section 10.01(a)(ii).
Section 10.02. No Legal Title to Collateral in Noteholders. No
Noteholder 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 Noteholder in and to the Collateral or hereunder shall operate
to terminate this Indenture or entitle such Noteholder or any successor or
transferee of such holder to an accounting or to the transfer to it of any legal
title to any part of the Collateral.
Section 10.03. Sale of Aircraft by Loan Trustee is Binding. Any sale or
other conveyance of the Aircraft, the Airframe, any Engine or any interest
therein by the Loan Trustee made pursuant to the terms of this Indenture shall
bind the Noteholders and the Company and shall be effective to transfer or
convey all right, title and interest of the Loan Trustee, the Company and such
Noteholders in and to such Aircraft, Airframe, Engine or interest therein. 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
Noteholders.
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Section 10.04. Indenture for Benefit of the Company, Loan Trustee and
Noteholders. Nothing in this Indenture, whether express or implied, shall be
construed to give any Person other than the Company, the Loan Trustee, the
Noteholders or the other Indenture Indemnitees any legal or equitable right,
remedy or claim under or in respect of this Indenture.
Section 10.05. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents required or permitted under the terms
and provisions of this Indenture shall be in English and in writing, and may be
given by United States mail, courier service or any other customary means of
communication, and any notices shall be effective when delivered (or, if mailed,
three Business Days after deposit, postage prepaid in the first class United
States mail and, if delivered by facsimile, upon completion of transmission and
confirmation by the sender (by a telephone call to a representative of the
recipient or by machine confirmation) that such transmission was received)
addressed as follows:
(i) if to the Company, addressed to:
American Airlines, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
Maildrop 5662
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Loan Trustee, to:
State Street Bank And Trust Company of Connecticut,
National Association
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Square
Hartford, Connecticut 06103
Attention: Corporate Trust Division
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or if to any Noteholder, addressed to such Noteholder at its address set forth
in the Equipment Note Register maintained pursuant to Section 2.07 hereof.
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Any party, by notice to the other parties hereto, may designate
additional or different addresses for subsequent notices or communications.
Section 10.06. Severability. Any provision of this Indenture that 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 10.07. No Oral Modification or Continuing Waivers. No terms or
provisions of this Indenture or of the Equipment Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the Company and the Loan Trustee, in compliance with Article IX. 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 10.08. Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of, and be enforceable by,
each of the parties hereto and the successors and permitted assigns of each, all
as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successors and permitted
assigns of such Noteholder. Each Noteholder by its acceptance of an Equipment
Note agrees to be bound by this Indenture and all provisions of the
Participation Agreement applicable to a Noteholder.
Section 10.09. 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 10.10. Normal Commercial Relations. Anything contained in this
Indenture to the contrary notwithstanding, the Loan Trustee, any Noteholder or
any other party to any of the Operative Documents or the Pass Through Documents
or any of their affiliates may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with the
Company, fully to the same extent as if this Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to the Company for any purpose whatsoever, whether related to any of the
transactions contemplated hereby or otherwise.
Section 10.11. Voting by Noteholders. All votes of the Noteholders
shall be governed by a vote of a Majority in Interest of Noteholders, except as
otherwise provided herein.
Section 10.12. Section 1110. It is the intention of the parties hereto
that the security interest created hereby, to the fullest extent available under
applicable law, entitles the Loan Trustee, on behalf of the Noteholders, to all
of the benefits of Section 1110 with respect to the Aircraft.
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Section 10.13. The Company's Performance and Rights. Any obligation
imposed on the Company herein shall require only that the Company perform or
cause to be performed such obligation, even if stated as a direct obligation,
and the performance of any such obligation by any permitted assignee, lessee or
transferee under an assignment, lease or transfer agreement then in effect and
in accordance with the provisions of the Operative Documents shall constitute
performance by the Company and, to the extent of such performance, discharge
such obligation by the Company. Except as otherwise expressly provided herein,
any right granted to the Company in this Indenture shall grant the Company the
right to permit such right to be exercised by any such assignee, lessee or
transferee. The inclusion of specific references to obligations or rights of any
such assignee, lessee or transferee in certain provisions of this Indenture
shall not in any way prevent or diminish the application of the provisions of
the two sentences immediately preceding with respect to obligations or rights in
respect of which specific reference to any such assignee, lessee or transferee
has not been made in this Indenture.
Section 10.14. Counterparts. This Indenture may be executed in any
number of counterparts (and each of the parties hereto shall not be required to
execute the same counterpart). Each counterpart of this Indenture including a
signature page or pages executed by each of the parties hereto shall be an
original counterpart of this Indenture, but all of such counterparts together
shall constitute one instrument.
Section 10.15. Governing Law. THIS INDENTURE HAS BEEN DELIVERED IN THE
STATE OF NEW YORK AND THIS INDENTURE, ANY INDENTURE SUPPLEMENT AND THE EQUIPMENT
NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.16. Confidential Information. The term "Confidential
Information" means: (a) the existence and terms of any lease of the Airframe or
Engines pursuant to Section 7.02(a) and the identity of the Permitted Lessee
thereunder; (b) all information obtained in connection with any inspection
conducted by the Loan Trustee or its representative pursuant to Section 7.03(a);
(c) each certification furnished to the Loan Trustee pursuant to Sections
7.06(a) and 7.06(b); (d) all information contained in each report furnished to
the Loan Trustee pursuant to Section 7.06(e); and (e) all information regarding
the Warranty Rights. All Confidential Information shall be held confidential by
the Loan Trustee and each Noteholder and each affiliate, agent, officer,
director, or employee of any thereof and shall not be furnished or disclosed by
any of them to anyone other than (i) the Loan Trustee or any Noteholder and (ii)
their respective bank examiners, auditors, accountants, agents and legal
counsel, and except as may be required by an order of any court or
administrative agency or by any statute, rule, regulation or order of any
governmental authority.
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Section 10.17. Submission to Jurisdiction. Each of the parties hereto,
and by acceptance of Equipment Notes, each Noteholder, to the extent it may do
so under applicable law, for purposes hereof and of all other Operative
Agreements hereby (a) irrevocably submits itself to the non-exclusive
jurisdiction of the courts of the State of New York sitting in the City of New
York and to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Indenture, the subject matter hereof or any
of the transactions contemplated hereby brought by any party or parties hereto
or thereto, or their successors or permitted assigns and (b) waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or that this Indenture or the Equipment Notes or the subject matter hereof or
any of the transactions contemplated hereby may not be enforced in or by such
courts.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers thereof duly authorized, as of the
date first above written.
AMERICAN AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President - Corporate
Development and Treasurer
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Loan Trustee
By: /s/ ALISON DELLA BELLA
-------------------------------------
Name: Alison Della Bella
Title:
73
EXHIBIT A to
INDENTURE AND SECURITY AGREEMENT
INDENTURE SUPPLEMENT NO. ___
INDENTURE SUPPLEMENT NO. __ , dated _____________, ____ ("Indenture
Supplement"), between AMERICAN AIRLINES, INC. (the "Company") and STATE STREET
BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Loan Trustee under the Indenture (each as
hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Indenture and Security Agreement (N___AN), dated as of
October 6, 1999 (the "Indenture"; capitalized terms used herein without
definition shall have the meanings specified therefor in Annex A to the
Indenture), between the Company and State Street Bank and Trust Company of
Connecticut, National Association, as Loan Trustee (the "Loan Trustee"),
provides for the execution and delivery of supplements thereto substantially in
the form hereof which shall particularly describe the Aircraft, and shall
specifically grant a security interest in the Aircraft to the Loan Trustee; and
[WHEREAS, the Indenture relates to the Airframe and Engines described
in Annex A attached hereto and made a part hereof, and a counterpart of the
Indenture is attached to and made a part of this Indenture Supplement;]*
[WHEREAS, the Company has, as provided in the Indenture, heretofore
executed and delivered to the Loan Trustee Indenture Supplement(s) for the
purpose of specifically subjecting to the Lien of the Indenture certain
airframes and/or engines therein described, which Indenture Supplement(s) is/are
dated and has/have been duly recorded with the FAA as set forth below, to wit:
Date Recordation Date FAA Document Number]**
---- ---------------- ----------------------
NOW, THEREFORE, to secure the prompt and complete payment (whether at
stated maturity, by acceleration or otherwise) of principal of, Make-Whole
Amount, if any, and interest on, the Equipment Notes and all other amounts
payable by the Company under the Operative
--------
* Use for Indenture Supplement No. 1 only.
** Use for all Indenture Supplements other than Indenture Supplement No. 1.
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Documents and the performance and observance by the Company of all the
agreements and covenants to be performed or observed by the Company for the
benefit of the Noteholders and the Indenture Indemnitees contained in the
Operative Documents, and in consideration of the premises and of the covenants
contained in the Operative Documents, and for other good and valuable
consideration given by the Loan Trustee, the Noteholders and the Indenture
Indemnitees to the Company at or before the Closing Date, the receipt of which
is hereby acknowledged, the Company does hereby grant, bargain, sell, convey,
transfer, mortgage, assign, pledge and confirm unto the Loan Trustee and its
successors in trust and permitted assigns, for the security and benefit of the
Loan Trustee, the Noteholders and the Indenture Indemnitees, a first priority
security interest in, and mortgage lien on, all estate, right, title and
interest of the Company in, to and under the Aircraft, including the Airframe
and Engines described in Annex A attached hereto, whether or not any such Engine
may from time to time be installed on the Airframe or any other airframe or any
other aircraft, and any and all Parts relating thereto, and, to the extent
provided in the Indenture, all substitutions and replacements of, and additions,
improvements, accessions and accumulations to, the Aircraft, including the
Airframe, the Engines and any and all Parts (in each case other than any
substitutions, replacements, additions, improvements, accessions and
accumulations that constitute items excluded from the definition of Parts by
clauses (b), (c) and (d) thereof) relating thereto;
To have and to hold all and singular the aforesaid property unto the
Loan Trustee, and its successors and assigns, in trust for the ratable benefit
and security of the Noteholders and the Indenture Indemnitees, except as
otherwise provided in the Indenture, including Section 2.13 and Article III of
the 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 Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
THIS INDENTURE SUPPLEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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IN WITNESS WHEREOF, the undersigned have caused this Indenture
Supplement No. __ to be duly executed by their respective duly authorized
officers, on the date first above written.
AMERICAN AIRLINES, INC.
By:
-------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Loan Trustee
By:
-------------------------------------
Name:
Title:
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Annex A to
Indenture Supplement No. __
DESCRIPTION OF AIRFRAME AND ENGINES
AIRFRAME
FAA Regis- Manufacturer's
Manufacturer Model tration No. Serial No.
------------ ----- ----------- ----------
ENGINES
Manufacturer's
Manufacturer Model Serial No.
Each Engine is of 750 or more "rated take-off horsepower" or the equivalent of
such horsepower.
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EXHIBIT B to
INDENTURE AND SECURITY AGREEMENT
LIST OF PERMITTED COUNTRIES
Argentina Kuwait
Australia Liechtenstein
Austria Luxembourg
Bahamas Malaysia
Barbados Malta
Belgium Mexico
Bermuda Islands Monaco
Brazil Morocco
British Virgin Islands the Netherlands
Canada Netherlands Antilles
Cayman Islands New Zealand
Chile Norway
Czech Republic Paraguay
Denmark Peoples' Republic of China
Ecuador Philippines
Egypt Poland
Finland Portugal
France Republic of China (Taiwan)
Germany Singapore
Greece South Africa
Grenada South Korea
Guatemala Spain
Hong Kong Sweden
Hungary Switzerland
Iceland Thailand
India Trinidad and Tobago
Indonesia United Kingdom
Ireland Uruguay
Italy Venezuela
Jamaica
Japan
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EXHIBIT C to
INDENTURE AND SECURITY AGREEMENT
AIRCRAFT TYPE VALUES FOR SECTION 7.06(b)
Boeing 737 - $8,000,000
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SCHEDULE I to
INDENTURE AND SECURITY AGREEMENT
DESCRIPTION OF EQUIPMENT NOTES
Original
Principal Amount Interest Rate Maturity Date
---------------- ------------- -------------
Series A-1
Equipment Notes:
Series A-2
Equipment Notes:
Series B
Equipment Notes:
Series C
Equipment Notes:
EQUIPMENT NOTES AMORTIZATION
SERIES A-1 EQUIPMENT NOTES
Percentage of
Original Principal Amount
Payment Date to be Paid
------------ -------------------------
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SCHEDULE II to
INDENTURE AND SECURITY AGREEMENT
PASS THROUGH TRUST AGREEMENT AND
PASS THROUGH TRUST SUPPLEMENTS
Pass Through Trust Agreement, dated as of October 1, 1999, between American
Airlines, Inc. and State Street Bank and Trust Company of Connecticut, National
Association, as trustee, as supplemented by Trust Supplement No. 1999-1A-1,
dated as of October 6, 1999, Trust Supplement No. 1999-1A-2, dated as of October
6, 1999, Trust Supplement No. 1999-1B, dated as of October 6, 1999, and Trust
Supplement No.1999-1C, dated as of October 6, 1999.
II-1