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EXHIBIT 4.28
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TRUST INDENTURE AND MORTGAGE
(1997 747-1)
Dated as of December 23, 1997
between
UNITED AIR LINES, INC.,
Owner
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Indenture Trustee
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Equipment Notes Covering
One Boeing 747-422 Aircraft
Bearing U.S. Registration No. N193UA
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TABLE OF CONTENTS
Page
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RECITALS...................................................................................1
GRANTING CLAUSE............................................................................1
HABENDUM CLAUSE............................................................................3
ARTICLE 1
DEFINITIONS................................................................................5
1.01. Definitions................................................................5
ARTICLE 2
THE EQUIPMENT NOTES.......................................................................19
2.01. Equipment Notes; Title and Terms..........................................19
2.02. Execution and Authentication..............................................21
2.03. Registrar and Paying Agent................................................21
2.04. Transfer and Exchange.....................................................22
2.05. Noteholder Lists; Ownership of Equipment Notes............................22
2.06. Mutilated, Destroyed, Lost or Stolen Equipment Notes......................23
2.07. Cancellation..............................................................23
2.08. Payment on Equipment Notes................................................23
2.09. Termination of Interest in the Indenture Estate...........................24
2.10. Withholding Taxes.........................................................24
2.11. Subordination.............................................................26
2.12. Certain Agreements Regarding Primary Liquidity Facilities.................26
ARTICLE 3
RECEIPT, DISTRIBUTION AND APPLICATION OF FUNDS............................................27
3.01. Basic Distributions.......................................................27
3.02. Event of Loss; Optional Redemption........................................29
3.03. Payments After Indenture Event of Default.................................30
3.04. Certain Payments..........................................................33
3.05. Other Payments............................................................33
ARTICLE 4
COVENANTS OF OWNER........................................................................33
4.01. Registration, Maintenance and Operation; Possession and
Permitted Leases; Insignia..............................................33
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4.02. Replacement and Pooling of Parts; Alterations, Modifications
and Additions.............................................................38
4.03. Insurance...................................................................40
4.04. Inspection..................................................................45
ARTICLE 5
EVENT OF LOSS...............................................................................46
5.01. (a) Event of Loss with Respect to the Aircraft.........................46
(b) Event of Loss with Respect to an Engine............................49
(c) Application of Payments from Governmental Authorities
for Requisition of Title, etc......................................50
(d) Requisition for Use of the Aircraft by the United States
Government or Government of Registry of the Aircraft...............51
(e) Requisition for Use of an Engine by the United States
Government or the Government of Registry of the Aircraft...........51
(f) Application of Payments During Existence of Certain Indenture
Defaults and Events of Default.....................................52
5.02. Liens.......................................................................52
ARTICLE 6
REDEMPTION OF EQUIPMENT NOTES...............................................................52
6.01. Redemption of Equipment Notes upon Certain Events...........................52
6.02. Notice of Redemption to Noteholders.........................................53
6.03. Deposit of Redemption Price.................................................53
6.04. Equipment Notes Payable on Redemption Date..................................53
ARTICLE 7
MATTERS CONCERNING UNCLAIMED MONIES.........................................................54
7.01. Repayment of Monies for Equipment Note Payments Held
by the Indenture Trustee..................................................54
ARTICLE 8
DEFAULTS AND REMEDIES.......................................................................54
8.01. Indenture Events of Default.................................................54
8.02. Acceleration; Rescission and Annulment......................................56
8.03. Other Remedies Available to Indenture Trustee...............................57
8.04. Waiver of Existing Defaults.................................................59
8.05. Control by Majority.........................................................59
8.06. Rights of Noteholders to Receive Payment....................................60
8.07. Indenture Trustee May File Proofs of Claim..................................60
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ARTICLE 9
INDENTURE TRUSTEE..........................................................................60
9.01. Duties of Indenture Trustee................................................60
9.02. Rights of Indenture Trustee................................................60
9.03. Individual Rights of Indenture Trustee.....................................61
9.04. Funds May Be Held by Indenture Trustee or Paying Agent; Investments........61
9.05. Notice of Defaults.........................................................62
9.06. Compensation and Indemnity.................................................62
9.07. Replacement of Indenture Trustee...........................................63
9.08. Successor Indenture Trustee, Agents by Merger, etc.........................64
9.09. Eligibility; Disqualification..............................................64
9.10. Trustee's Liens............................................................64
ARTICLE 10
TERMINATION OF TRUST INDENTURE ............................................................65
10.01. Termination of Trust Indenture.............................................65
ARTICLE 11
AMENDMENTS AND WAIVERS.....................................................................66
11.01. Amendments to this Agreement Without Consent of Noteholders...............67
11.02. Amendments to this Agreement with Consent of Noteholders..................68
11.03. Revocation and Effect of Consents.........................................69
11.04. Notation on or Exchange of Equipment Notes................................69
11.05. Indenture Trustee Protected...............................................69
11.06. Amendments, Waivers, etc. of Other Operative Documents....................69
ARTICLE 12
MISCELLANEOUS..............................................................................69
12.01. Notices...................................................................69
12.02. GOVERNING LAW.............................................................71
12.03. Execution in Counterparts.................................................71
SIGNATURES.................................................................................72
Exhibit A Form of Equipment Notes
Exhibit B-1 Description of Series A Equipment Notes
Exhibit B-2 Description of Series B Equipment Notes
Exhibit B-3 Description of Series C Equipment Notes
Exhibit B-4 Description of Series D Equipment Notes, if any
Exhibit C Certain Economic Terms
Exhibit D Form of Indenture Supplement
Exhibit E Schedule of Countries Authorized for Domicile of Permitted Lessee
Exhibit F Schedule of Countries for Aircraft Registration
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TRUST INDENTURE AND MORTGAGE (1997 747-1)
This TRUST INDENTURE AND MORTGAGE (1997 747-1) dated as of
December 23, 1997 is between UNITED AIR LINES, INC., a Delaware corporation
("Owner"), and FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, as Indenture Trustee hereunder (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, all capitalized terms used and not otherwise defined
herein shall have the respective meanings set forth or referred to in Article 1
hereof;
WHEREAS, the parties desire by this Agreement, among other
things, (i) to provide for the issuance by the Owner of the Equipment Notes, and
(ii) to provide for the assignment, mortgage and pledge by the Owner to the
Indenture Trustee, as part of the Indenture Estate hereunder, among other
things, of certain of the Owner's right, title and interest in and to the
Aircraft and certain payments and other amounts received hereunder or thereunder
in accordance with the terms hereof, as security for, among other things, the
Owner's obligations to the Indenture Trustee, for the ratable benefit and
security of the Noteholders, subject to Section 2.11 and Article 3 hereof;
WHEREAS, all things have been done to make the Equipment
Notes, when executed by the Owner and authenticated and delivered by the
Indenture Trustee hereunder, the valid, binding and enforceable obligations of
the Owner; and
WHEREAS, all things necessary to make this Agreement the
legal, valid and binding obligation of the Owner and the Indenture Trustee, for
the uses and purposes herein set forth, in accordance with its terms, have been
done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH,
that, to secure the prompt payment of the principal of, Break Amount, if any,
Make-Whole Amount, if any, and interest on, and all other amounts due with
respect to, all Equipment Notes from time to time outstanding hereunder, all
other amounts due hereunder and to secure the performance and observance by the
Owner of all the agreements, covenants and provisions contained herein and in
the other Fundamental Documents to which it is a party, for the benefit of the
Noteholders and each of the Indenture Indemnitees, and the prompt payment of any
and all amounts from time to time owing hereunder and under the
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Participation Agreement by the Owner to the Noteholders and the Indenture
Indemnitees, and for the uses and purposes and subject to the terms and
provisions hereof, and in consideration of the premises and of the covenants
herein contained, and of the acceptance of the Equipment Notes by the
Noteholders, and of other good and valuable consideration the receipt and
adequacy whereof are hereby acknowledged, the Owner has granted, bargained,
sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and
does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the Noteholders and the Indenture Indemnitees from time
to time, a first priority security interest in and first priority mortgage lien
on all estate, right, title and interest of the Owner in, to and under the
following described property, rights, interests and privileges whether now or
hereafter acquired and subject to the Lien hereof (which collectively, including
all property hereafter specifically subjected to the lien of this Agreement by
any instrument supplemental hereto, are herein called the "Indenture Estate"):
(1) the Airframe and Engines (each such Engine having 750 or
more rated take-off horsepower or the equivalent thereof) as the same
is now and will hereafter be constituted, whether now or hereafter
acquired and subjected to the Lien hereof, and in the case of such
Engines, whether or not any such Engine shall be installed in or
attached to the Airframe or any other airframe and all substitutions or
replacements therefor, as provided in this Agreement, together with all
Parts of whatever nature which are from time to time included in the
"Airframe" or the "Engines", whether now or hereafter acquired and
subjected to the Lien hereof, and all renewals, substitutions,
replacements, additions, improvements, accessories and accumulations
with respect to any of the foregoing, and all records, logs and other
related materials with respect to any of the foregoing as may be
required to be maintained by the FAA;
(2) The Purchase Agreement to the extent the same relates to
continuing rights of the Owner in respect of any warranty, indemnity or
agreement, express or implied, as to title, materials, workmanship,
design or patent infringement or related matters with respect to the
Airframe or the Engines (reserving to the Owner, however, all of the
Owner's other rights and interest in and to the Purchase Agreement),
the Consent and Agreement and the Bills of Sale, together in each case
with all rights, powers, privileges, options and other benefits of the
Owner thereunder (subject to such reservation) with respect to the
Airframe or the Engines, including, without limitation, the right to
make all waivers and agreements, to give and receive all notices and
other instruments or communications, to take such action upon the
occurrence of a default thereunder, including the commencement, conduct
and consummation of legal, administrative or other proceedings, as
shall be permitted thereby or by law, and to do any and all other
things which the Owner is or may be entitled to do thereunder (subject
to such reservation), subject to the terms and conditions of the
Consent and Agreement;
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(3) without limiting the generality of the foregoing, all
requisition proceeds with respect to the Aircraft or any Part thereof
or any other property described in any of the Granting Clauses and all
insurance proceeds with respect to the Aircraft or any Part thereof or
any other property described in any of the Granting Clauses from
insurance required to be maintained by the Owner under Section 4.03,
but excluding any insurance maintained by the Owner and not required
under Section 4.03 and all proceeds from the sale or disposition of the
Aircraft or any other property described in these Granting Clauses;
(4) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Indenture
Trustee by or for the account of the Owner pursuant to any term of any
Operative Document and held or required to be held by the Indenture
Trustee hereunder; and
(5) all proceeds of the foregoing.
PROVIDED, HOWEVER, that notwithstanding any of the foregoing
provisions, so long as no Indenture Event of Default shall have occurred and be
continuing, (a) the Indenture Trustee shall not take or cause to be taken any
action contrary to the Owner's right hereunder to quiet enjoyment of the
Airframe and Engines, and to possess, use, retain and control the Airframe and
Engines and all revenues, income and profits derived therefrom, and (b) the
Owner shall have the right, to the exclusion of the Indenture Trustee, with
respect to the Purchase Agreement, to exercise in the Owner's name all rights
and powers of the buyer under the Purchase Agreement (other than to amend,
modify or waive any of the warranties or indemnitees contained therein, except
in the exercise of the Owner's reasonable business judgment) and to retain any
recovery or benefit resulting from the enforcement of any warranty or indemnity
under the Purchase Agreement; and provided, further, that, notwithstanding the
occurrence or continuation of an Indenture Event of Default, the Indenture
Trustee shall not enter into any amendment of the Purchase Agreement which would
increase the obligations of the Owner thereunder or in any way affect the right
and interest of Owner under the Purchase Agreement to the extent not assigned
hereunder.
HABENDUM CLAUSE
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Indenture Trustee, its successors and assigns, in trust for the benefit
and security of the Indenture Trustee and the Noteholders from time to time,
except as provided in Section 2.11 and Article 3 hereof, without any preference,
distinction or priority of any one Equipment Note over any other by reason of
series, priority of time of issue, sale, negotiation, date of maturity thereof
or otherwise for any reason whatsoever, and for the uses and purposes and
subject to the terms and provisions set forth in this Agreement.
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1. It is expressly agreed that anything herein contained to
the contrary notwithstanding, the Owner shall remain liable under each of the
Operative Documents to which it is a party to perform all of the obligations
assumed by it thereunder, all in accordance with and pursuant to the terms and
provisions thereof, and the Indenture Trustee and the Noteholders shall have no
obligation or liability under any of the Operative Documents to which the Owner
is a party by reason of or arising out of the assignment hereunder, nor shall
the Indenture Trustee or the Noteholders be required or obligated in any manner
to perform or fulfill any obligations of the Owner under any of the Operative
Documents to which the Owner is a party, or, except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim, or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
2. The Owner does hereby constitute the Indenture Trustee the
true and lawful attorney of the Owner, irrevocably, for good and valuable
consideration and coupled with an interest and with full power of substitution
with full power (in the name of the Owner or otherwise) subject to the terms and
conditions of this Agreement, to ask, require, demand, receive, ▇▇▇ for,
compound and give acquittance for any and all moneys and claims for moneys due
and to become due to the Owner under or arising out of the Operative Documents,
to endorse any checks or other instruments or orders in connection therewith, to
file any claims or take any action or institute any proceedings which the
Indenture Trustee may deem to be necessary or advisable in the premises as fully
as the Owner itself could do; provided that the Indenture Trustee shall not
exercise any such rights except upon the occurrence and during the continuance
of an Event of Default hereunder.
3. The Owner agrees that at any time and from time to time,
upon the written request of the Indenture Trustee, the Owner will promptly and
duly execute and deliver or cause to be duly executed and delivered any and all
such further instruments and documents as the Indenture Trustee may reasonably
deem desirable in obtaining the full benefits of the assignment hereunder and of
the rights and powers herein granted.
4. The Owner does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that it will not assign or pledge, so
long as the Lien of this Indenture has not been discharged in accordance with
the terms hereof, any of its rights, titles or interests hereby assigned to any
Person other than the Indenture Trustee.
5. It is hereby further agreed that any and all property
described or referred to in the granting clause hereof which is hereafter
acquired by the Owner shall ipso facto, and without any other conveyance,
assignment or act on the part of the Owner or the Indenture Trustee, become and
be subject to the Lien herein granted as fully and completely as though
specifically described herein.
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IT IS HEREBY FURTHER COVENANTED AND AGREED by and among the
parties hereto as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions. (a) For all purposes of this
Agreement and the other Operative Documents, except as otherwise expressly
provided or unless the context otherwise requires:
(1) each of "Owner," "Indenture Trustee," "Noteholder," "Pass
Through Trustee," "Subordination Agent," "Primary Liquidity Provider,"
or any other Person includes, without prejudice to the provisions of
any Operative Documents, any successor in interest to it and any
permitted transferee, permitted purchaser or permitted assignee of it;
(2) the terms defined in this Article 1 have the meanings
assigned to them in this Article 1, and include the plural as well as
the singular;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles in the United States;
(4) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision; and
(5) all references in this Agreement to Articles, Sections and
Exhibits refer to Articles, Sections and Exhibits of this Agreement.
(b) For all purposes of this Agreement, the following
capitalized terms have the following respective meanings:
"Acceptable Alternate Engine" means a ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Model
PW4056 engine or an engine of the same or another manufacturer of equivalent or
greater value and utility, and suitable for installation and use on the
Airframe; provided that such engine shall (i) be of the same make, model and
manufacturer as the other engine installed on the Airframe and (ii) be an engine
of a type then being utilized by Owner on other Boeing 747- 422 aircraft
operated by Owner.
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"Additional Insured" means the Indenture Trustee, Owner in its
capacity as lessor under any Permitted Lease, the Subordination Agent (so long
as it is the registered holder of any Equipment Note on behalf of the Pass
Through Trustees), each Pass Through Trustee (so long as it is a Noteholder),
each Primary Liquidity Provider and each of their respective Affiliates,
successors and permitted assigns, and the respective directors, officers and
employees of each of the foregoing.
"Affiliate" with respect to a specified Person, means any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person. For the purposes of this
definition, "control" when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent" means any Paying Agent or Registrar.
"Aircraft" means the Airframe together with the two Engines
whether or not such Engines are installed on the Airframe or any other airframe.
"Airframe" means: (i) the Boeing Company Model 747-422
aircraft (excluding Engines or engines from time to time installed thereon)
specified by United States Registration Number and Manufacturer's serial number
in the initial Indenture Supplement; (ii) any Replacement Airframe which may
from time to time be substituted pursuant to Section 5.01(a)(ii) hereof and
(iii) in either case any and all Parts which are from time to time incorporated
or installed in or attached thereto or which have been removed therefrom, unless
the Lien of this Agreement shall not be applicable to such Part in accordance
with Section 4.02.
"Amortization Amount" means, with respect to any Equipment
Note, as of any Payment Date, the amount determined by multiplying the
percentage set forth opposite such Payment Date on the Amortization Schedule by
the original principal amount of such Equipment Note.
"Amortization Schedule" means, with respect to each Series of
Equipment Notes, the amortization schedule for such Series as set forth on
Exhibit ▇-▇, ▇-▇, ▇-▇ or, if Series D Equipment Notes are issued, B-4, as the
case may be.
"Applicable Date" has the meaning specified therefor in the
definition of "Break Amount".
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"Applicable Margin" means, with respect to any Series of
Equipment Notes, the Series A Margin, the Series B Margin, the Series C Margin,
or, if Series D Equipment Notes are issued, the Series D Margin, as the case may
be.
"Applicable Rate" means for each Interest Period for each
Series of Equipment Notes, a rate per annum equal to the Three-Month LIBOR for
such Interest Period plus the Applicable Margin.
"Appraisers" means, collectively, Aircraft Information
Services, Inc., BK Associates, Inc. and AvSolutions Inc., or such other
independent aircraft appraiser as may be acceptable to Owner and the Indenture
Trustee.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended from time to time.
"Basic Pass Through Trust Agreement" means the Pass Through
Trust Agreement dated as of December 23, 1997 between Owner and Pass Through
Trustee, but does not include any Pass Through Trust Supplement.
"Bills of Sale" means, collectively, the FAA ▇▇▇▇ of Sale and
the Warranty ▇▇▇▇ of Sale.
"Break Amount" means, as of any date of payment, redemption or
acceleration for any Series of Equipment Notes (the "Applicable Date"), an
amount determined by the Calculation Agent on the date that is two (2) LIBOR
Business Days prior to the Applicable Date pursuant to the formula set forth
below:
The Break Amount shall be calculated as follows:
Break Amount = Z-Y
Where:
X = with respect to any applicable Interest Period, the sum
of (i) the amount of the outstanding principal amount
for such Series of Equipment Notes as of the first day
of the then applicable Interest Period plus (ii)
interest payable thereon during such entire Interest
Period at then effective Three-Month LIBOR.
Y = X, discounted to present value from the last day of the
then applicable Interest Period to the Applicable Date
using then effective Three-Month LIBOR as the discount
rate.
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Z = X, discounted to present value from the last day of the
then applicable Interest Period to the Applicable Date
using a rate equal to the applicable London interbank
offered rate for a period commencing on the Applicable
Date and ending on the last day of the applicable
Interest Period, determined by the Calculation Agent as
of two LIBOR Business Days prior to the Applicable Date
as the discount rate.
No Break Amount will be payable (x) if the Break Amount, as calculated pursuant
to the formula set forth above, is equal to or less than zero or (y) on, or in
respect of, any Applicable Date that is an Interest Payment Date.
"Business Day"means any day (x) other than a Saturday or
Sunday or a day on which commercial banks are required or authorized to close
in: Chicago, Illinois; New York, New York; Frankfurt, Germany; and, so long as
any Equipment Note is outstanding, the city and state in which the Indenture
Trustee, the Subordination Agent or any Pass Through Trustee has its principal
place of business or receives and disburses funds and (y) on which dealings are
carried on in the London interbank market.
"Calculation Agent" means the Indenture Trustee.
"Certificated Air Carrier" means a Citizen of the United
States holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United States Code,
for aircraft capable of carrying ten or more individuals or 6,000 pounds or more
of cargo or that otherwise is certified or registered to the extent required to
fall within the purview of 11 U.S.C. Section 1110 or any analogous successor
provision of the Bankruptcy Code.
"Citizen of the United States" has the meaning given such term
in Section 40102(a)(15) of Title 49 of the United States Code.
"Closing" means the closing of the transactions contemplated
by the Participation Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended
through the Closing Date.
"Consent and Agreement" means the Consent and Agreement (1997
747-1) dated as of the date hereof executed by the Manufacturer.
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"Co-Registrar" shall have the meaning specified therefor in
Section 2.03.
"Corporate Trust Department" means the principal office of the
Indenture Trustee located at the Indenture Trustee's address for notices under
the Participation Agreement or such other office at which the Indenture
Trustee's corporate trust business shall be administered which the Indenture
Trustee shall have specified by notice in writing to Owner and each Noteholder.
"Eligible Institution" means (a) the corporate trust
department of the Indenture Trustee, the Subordination Agent or any Pass Through
Trustee, as applicable, or (b) a depository institution organized under the laws
of the United States of America or any one of the States thereof or the District
of Columbia (or any U.S. branch of a foreign bank), which has a long-term
unsecured debt rating from Moody's and Standard & Poor's of at least "A-3" or
its equivalent.
"Engine" means (i) each of the two ▇▇▇▇▇ & Whitney Model
PW4056 engines listed by manufacturer's serial numbers in the initial Indenture
Supplement, and whether or not from time to time installed on such Airframe or
any other airframe; (ii) any Replacement Engine which may from time to time be
substituted for any of such two engines pursuant to the terms hereof; and (iii)
in either case, any and all Parts which are from time to time incorporated or
installed in or attached to any such engine and any and all Parts removed
therefrom unless the Lien of this Agreement shall not apply to such Parts in
accordance with Section 4.02.
"Equipment Note" or "Equipment Notes" means any equipment note
or notes issued under this Agreement, including each of the Series A, Series B,
Series C and, if Series D Equipment Notes are issued, Series D Equipment Notes
issued hereunder, substantially in the form of Exhibit A hereto as such form may
be varied pursuant to the terms hereof and any and all Equipment Notes issued in
replacement or exchange therefor in accordance with the provisions hereof.
"Event of Loss" with respect to the Aircraft, Airframe or any
Engine means any of the following events with respect to such property: (i) the
loss of such property or of the use thereof due to the destruction of or damage
to such property which renders repair uneconomic or which renders such property
permanently unfit for normal use by Owner for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect to
such property on the basis of a total loss, or a constructive or compromised
total loss; (iii) the theft or disappearance of such property, or the
confiscation, condemnation, or seizure of, or requisition of title to, or use
of, such property by any governmental or purported governmental authority (other
than a requisition for use by the U.S. Government or any government of registry
of the Aircraft or any agency or instrumentality thereof), which in the case of
any event referred to in this clause (iii) shall
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[Trust Indenture and Mortgage (1997 747-1)]
have resulted in the loss of title or possession of such property by Owner for a
period in excess of 180 consecutive days; (iv) as a result of any law, rule,
regulation, order or other action by the FAA or other governmental body of the
government of registry of the Aircraft having jurisdiction, use of such property
in the normal course of the business of air transportation shall have been
prohibited for a period in excess of 180 consecutive days, unless Owner, prior
to the expiration of such 180-day period, shall have undertaken and shall be
diligently carrying forward, in a manner that does not discriminate against the
Aircraft, all steps which are necessary or desirable to permit the normal use of
such property by Owner, and Owner, within two years from the time of grounding,
shall have conformed at least one such aircraft in its fleet to the requirements
of any such law, rule, regulation, order or other action and commenced regular
commercial use of the same in such jurisdiction; (v) the requisition for use by
any government of registry of the Aircraft (other than the U.S. government) or
any instrumentality or agency thereof, which shall have occurred during the Term
and shall have continued for more than two years; and (vi) any divestiture of
title to an Engine treated as an Event of Loss pursuant to Section 5.02 hereof.
An Event of Loss with respect to the Aircraft shall be deemed to have occurred
if an Event of Loss occurs with respect to the Airframe.
"Expenses" means any and all liabilities, obligations, losses,
damages, penalties, claims (including, but not limited to, negligence, strict or
absolute liability, liability in tort and liabilities arising out of the
violations of laws or regulatory requirements of any kind), actions, suits,
costs, expenses and disbursements (including reasonable legal fees and
expenses).
"FAA ▇▇▇▇ of Sale" means an FAA AC Form 8050-2 ▇▇▇▇ of sale
executed by Manufacturer in favor of Owner and dated the date of delivery of the
Aircraft from Manufacturer to Owner pursuant to the terms of the Purchase
Agreement.
"Federal Aviation Act" means part A of subtitle VII of title
49, United States Code.
"Federal Aviation Administration" and "FAA" mean the United
States Federal Aviation Administration and any successor agency or agencies
thereto.
"Final Expected Distribution Date" means December 2, 2002.
"FSB" means First Security Bank, National Association.
"Fundamental Documents" means, collectively, the Operative
Documents and the Pass Through Documents.
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[Trust Indenture and Mortgage (1997 747-1)]
"Indemnitee" means (i) FSB and the Indenture Trustee, (ii) so
long as it holds any Equipment Notes on behalf of any Pass Through Trustee, the
Subordination Agent, (iii) the Paying Agent, (iv) so long as it is the holder of
any Equipment Notes, each Pass Through Trustee, (v) each Primary Liquidity
Provider, and (vi) each of their respective affiliates, successors and permitted
assigns and each of their respective directors, officers, employees, agents and
servants.
"Indenture Default" means any event which is, or after notice
or passage of time, or both, would be, an Indenture Event of Default.
"Indenture Estate" shall have the meaning specified therefor
in the Granting Clause hereof.
"Indenture Event of Default" shall have the meaning specified
therefor in Article 8.
"Indenture Indemnitee" means (i) the Indenture Trustee in its
individual capacity and as Indenture Trustee, (ii) each separate or additional
trustee appointed pursuant to this Agreement, (iii) the Subordination Agent,
(iv) each Primary Liquidity Provider, (v) each Pass Through Trustee, and (vi)
each of the respective directors, officers, employees, agents and servants of
the persons described in clauses (i) through (v) inclusive above.
"Indenture Supplement" means a supplement to this Agreement in
the form of Exhibit D hereto.
"Indenture Trustee" means First Security Bank, National
Association and each other Person which may from time to time be acting as
Indenture Trustee in accordance with the provisions of this Agreement.
"Insured Amount" has the meaning specified therefor on
Exhibit C.
"Intercreditor Agreement" means that certain Intercreditor
Agreement among the Pass Through Trustees, the Primary Liquidity Providers and
the Subordination Agent, dated as of December 23, 1997; provided that, for
purposes of any obligation of Owner, no amendment, modification or supplement
to, or substitution or replacement of, such Intercreditor Agreement shall be
effective unless consented to by Owner.
"Interest Payment Date" means March 2, 1998 and each March 2,
June 2, September 2 and December 2 of each year thereafter.
"Interest Period" means, with respect to each Series of
Equipment Notes initially, the period from (and including) the Issuance Date for
such Series and ending on
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[Trust Indenture and Mortgage (1997 747-1)]
(but excluding) the first Interest Payment Date following such Issuance Date,
and thereafter each successive quarterly period from (and including) the final
day of the preceding Interest Period for such Series of Equipment Notes and
ending on (but excluding) the next succeeding Interest Payment Date.
"Issuance Date" means, with respect to each Series of
Equipment Notes, the date such Equipment Notes are issued by the Owner pursuant
to the terms hereof.
"LIBOR Business Day" means any day other than Saturday, Sunday
or any other day on which banks in New York, New York or London, England are
required or authorized to be closed.
"Lien" means any mortgage, pledge, lien, charge, encumbrance,
lease, exercise of rights, security interest or claim.
"London Reference Banks" means the principal London offices of
National Westminster Bank Plc, Barclays Bank Plc and Bayerische Landesbank
Girozentrale, or such other bank or banks as may from time to time be agreed by
Owner and the Calculation Agent.
"Loss Payee Amount" has the meaning specified therefor on
Exhibit C.
"Loss Payment Date" shall have the meaning specified in
Section 5.01(a).
"Majority in Interest of Noteholders" means as of a particular
date of determination and subject to Section 2.6 of the Intercreditor Agreement,
the holders of a majority in aggregate unpaid principal amount of all Equipment
Notes outstanding as of such date (excluding any Equipment Notes held by Owner,
Indenture Trustee or any Affiliate of any such party or any interests of Owner
therein unless all Equipment Notes shall be held by any such entity or an
Affiliate thereof); provided that for the purposes of directing any action or
casting any vote or giving any consent, waiver or instruction hereunder, any
Noteholder of an Equipment Note or Equipment Notes may allocate, in such
Noteholder's sole discretion, any fractional portion of the principal amount of
such Equipment Note or Equipment Notes in favor of or in opposition to any such
action, vote, consent, waiver or instruction.
"Make-Whole Amount" with respect to each of the Series A
Equipment Notes or the Series B Equipment Notes to be redeemed or purchased on
any redemption or purchase date, means an amount which an independent investment
banking institution of national standing selected by the Owner (or, following
the occurrence and during the continuance of an Indenture Event of Default, the
Indenture Trustee) shall determine to be equal to the excess of (i) the sum of
the present values, discounted to such redemption or
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[Trust Indenture and Mortgage (1997 747-1)]
purchase date, of all the remaining scheduled payments of principal and
interest, using then effective Three-Month LIBOR plus the Applicable Margin for
each such Series for all remaining interest payments discounted quarterly on
each Interest Payment Date, using then effective Three-Month LIBOR less 0.05% as
the discount rate over (ii) the aggregate unpaid principal amount of such Series
of Equipment Notes plus accrued but unpaid interest thereon.
"Manufacturer" means The Boeing Company, and its successors
and assigns.
"Minimum Liability Insurance Amount" has the meaning specified
therefor on Exhibit C.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. (or any
successor thereto).
"Non-U.S. Person" means any Person other than a United States
person, as defined in Section 7701(a)(30) of the Code.
"Noteholder" means a person in whose name an Equipment Note is
registered on the Register (including, so long as it holds any Series A, Series
B, Series C or, if Series D Equipment Notes are issued and financed by a Pass
Through Trustee, Series D Equipment Notes issued hereunder, the Subordination
Agent on behalf of the Pass Through Trustee under the applicable Pass Through
Trust Agreement pursuant to the provisions of the Intercreditor Agreement).
"Note Purchase Agreement" has the meaning specified therefor
in the Intercreditor Agreement.
"Obsolete Parts Caps" has the meaning specified therefor on
Exhibit C.
"Operative Documents" means this Agreement, the Participation
Agreement, the Consent and Agreement, the Purchase Agreement (to the extent
assigned pursuant hereto), Bills of Sale, the Equipment Notes and the initial
Indenture Supplement.
"Owner" means United Air Lines, Inc., a Delaware corporation
and its successors and permitted assigns.
"Participation Agreement" means the Participation Agreement
(1997 747-1) dated as of the date hereof among Owner, the Pass Through Trustees,
the Subordination Agent and the Indenture Trustee.
"Parts" means all appliances, parts, components, instruments,
appurtenances, accessories, furnishings, seats and other equipment of whatever
nature (other than (a) complete Engines or engines, and (b) any Passenger
Convenience Equipment), that may from time to time be installed or incorporated
in or attached or appurtenant to the Airframe or any Engine.
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[Trust Indenture and Mortgage (1997 747-1)]
"Pass Through Certificates" means any of the Credit Enhanced
Pass Through Certificates issued pursuant to any of the Pass Through Trust
Agreements.
"Pass Through Documents" means the Pass Through Trust
Agreements, the Intercreditor Agreement, the Registration Rights Agreement, Note
Purchase Agreement and the Primary Liquidity Facilities.
"Pass Through Trust" means each of the four separate pass
through trusts created pursuant to the related Pass Through Trust Agreement.
"Pass Through Trust Agreements" means each of the four
separate Pass Through Trust Supplements, together in each case with the Basic
Pass Through Trust Agreement, each dated as of December 23, 1997 and entered
into by and between the Owner and a Pass Through Trustee.
"Pass Through Trust Supplement" shall have the meaning
specified for the term "Trust Supplement" in the Basic Pass Through Trust
Agreement.
"Pass Through Trustee" means First Security Bank, National
Association in its capacity as trustee under each Pass Through Trust Agreement,
and such other Person that may from time to time be acting as successor trustee
under any such Pass Through Trust Agreement.
"Passenger Convenience Equipment" means severable components
or systems installed on or affixed to the Airframe that are used to provide
individual telecommunications or electronic entertainment to passengers aboard
the Aircraft, if and for so long as such equipment shall be owned by, or shall
be subject to a security interest, license or other interest of, another Person
(other than any Affiliate of Owner) in accordance with the provisions of Section
4.02(d) hereof.
"Past Due Rate" means, with respect to the principal of or
interest, Break Amount, if any, or Make-Whole Amount, if any, on any Equipment
Note not paid in full when due (whether at stated maturity, by acceleration or
otherwise), or with respect to any other amount payable to the holder thereof
thereon or under this Agreement not so paid in full when due, a rate of interest
per annum equal to 1.00% per annum above the Three- Month LIBOR for the period
applicable thereto plus, in the case of the Series C Equipment Notes, the
Applicable Margin payable thereunder (computed on the basis of a year of 360
days and actual days elapsed); but in no event shall such rate exceed the
maximum rate permitted by applicable law.
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[Trust Indenture and Mortgage (1997 747-1)]
"Paying Agent" means any Person acting as Paying Agent
hereunder pursuant to Section 2.03.
"Payment Date" means, with respect to each Series of Equipment
Notes, each Interest Payment Date listed on the Amortization Schedule for such
Series of Equipment Notes set forth in Exhibit ▇-▇, ▇-▇, ▇-▇ or, if Series D
Equipment Notes are issued, B-4, as the case may be.
"Permitted Air Carrier" means any Certificated Air Carrier or
any air carrier principally domiciled in a country listed on Exhibit E hereto.
"Permitted Investment" means (a) investments in obligations
of, or guaranteed by, the United States Government having maturities no later
than 90 days following the date of such investment; (b) investments in open
market commercial paper of any corporation incorporated under the laws of the
United States of America or any state thereof with a short-term unsecured debt
rating issued by Moody's and Standard & Poor's of at least"A-1" and "P-1,"
respectively, having maturities no later than 90 days following the date of such
investment; or (c) investments in negotiable certificates of deposit, time
deposits, banker's acceptances, commercial paper or other direct obligations of,
or obligations guaranteed by, commercial banks organized under the laws of the
United States or of any political subdivision thereof (or any U.S. branch of a
foreign bank) with issuer ratings of at least "B/C" by Thomson Bankwatch, having
maturities no later than 90 days following the date of such investment;
provided, however, that : (x) all Permitted Investments that are bank
obligations shall be denominated in U.S. dollars; and (y) the aggregate amount
of Permitted Investments at any one time that are bank obligations issued by any
one bank shall not be in excess of 5% of such bank's capital and surplus;
provided further that (1) any investment of the types described in clauses (a),
(b) and (c) above may be made through a repurchase agreement in commercially
reasonable form with a bank or other financial institution qualifying as an
Eligible Institution so long as such investment is held by a third party
custodian also qualifying as an Eligible Institution, and (2) all such
investments set forth in clauses (a), (b) and (c) above mature no later than the
Business Day preceding the next Interest Payment Date; and provided further,
that in the case of any Permitted Investment issued by a domestic branch of a
foreign bank, the income from such investment shall be from sources within the
United States for purposes of the Code.
"Permitted Lien" means (i) the rights of Owner as herein
provided (including the rights of any Permitted Lessee under a Permitted Lease),
and any other rights of Owner or any other Person existing pursuant to the
Operative Documents, (ii) Liens attributable to the Indenture Trustee (both in
its capacity as trustee under this Agreement and in its individual capacity),
any Pass Through Trustee (in its individual capacity, as Noteholder and as
trustee under the Pass Through Trust Agreements) and the Subordination Agent (in
its individual capacity, as registered holder of the Equipment Notes on behalf
of the Pass
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[Trust Indenture and Mortgage (1997 747-1)]
Through Trustees and as agent under the Intercreditor Agreement),
(iii) Liens for Taxes of Owner (or any Permitted Lessee) either not yet due or
being contested in good faith by appropriate proceeding so long as such
proceedings do not involve any material risk of the sale, forfeiture or loss of
the Airframe or any Engine or any interest thereon, (iv)
materialmen's, mechanics', workmen's, repairmen's, employees' or other like
liens arising in the ordinary course of Owner's or any Permitted Lessee's
business securing obligations that are not overdue for a period of more than 60
days or are being contested in good faith by appropriate proceedings so long as
during such 60-day period there is not, or such proceedings do not involve, any
material risk of the sale, forfeiture or loss of the Airframe or any Engine or
any interest therein, (v) Liens arising out of any judgment or award against
Owner (or any Permitted Lessee), unless there exists a material risk of the
sale, forfeiture or loss of the Airframe or any Engine or any interest therein
or unless the judgment secured shall not, within 60 days after the entry
thereof, have been discharged, vacated, reversed or execution thereof stayed
pending appeal or shall not have been discharged, vacated or reversed within 60
days after the expiration of such stay, and (vi) any other Lien with respect to
which Owner (or any Permitted Lessee) shall have provided a bond, cash
collateral or other security in an amount and under terms reasonably
satisfactory to the Indenture Trustee.
"Permitted Lease" means a lease permitted under Section
4.01(b) hereof.
"Permitted Lessee" means the lessee under a Permitted Lease.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Primary Liquidity Facilities" means the two (2) Revolving
Credit Agreements (consisting of a separate Revolving Credit Agreement with each
Primary Liquidity Provider with respect to each of the Class A Trust and the
Class B Trust) between the Subordination Agent, as borrower, and a Primary
Liquidity Provider, each dated as of December 23, 1997; provided that, for
purposes of any obligation of Owner, no amendment, modification or supplement
to, or substitution or replacement of, any such Primary Liquidity Facility shall
be effective unless consented to by Owner.
"Primary Liquidity Providers" means Kreditanstalt fur
Wiederaufbau, as the Primary Liquidity Provider under the Class A Primary
Liquidity Facility and the Class B Primary Liquidity Facility (as such terms are
defined in the Intercreditor Agreement) or any successor thereto.
"Purchase Agreement" means the agreement between Owner and the
Manufacturer relating to the purchase by Owner of the Aircraft, as originally
executed or as
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[Trust Indenture and Mortgage (1997 747-1)]
modified, amended or supplemented in accordance with the terms thereof, but only
insofar as the foregoing relates to the Aircraft.
"Record Date" for the interest or Amortization Amount payable
on any Equipment Note on any Interest Payment Date or Payment Date (other than
the maturity date) for such Equipment Note, as the case may be, means the
calendar day (whether or not a Business Day) which is 15 calendar days prior to
the related Interest Payment Date or Payment Date.
"Redemption Date" means the date on which the Equipment Notes
are to be redeemed or purchased pursuant to Section 6.01 or Section 6.02, as the
case may be, as specified in the notice delivered pursuant to Section 6.03
hereof.
"Redemption Price" means the price at which the Equipment
Notes are to be redeemed or purchased, determined as of the applicable
Redemption Date, pursuant to Section 6.01 or Section 6.02, as the case may be.
"Register" shall have the meaning specified therefor in
Section 2.03.
"Registrar" means any person acting as Registrar hereunder
pursuant to Section 2.03.
"Registration Rights Agreement" has the meaning specified
therefor in the Note Purchase Agreement.
"Replacement Airframe" means any airframe substituted for an
airframe in accordance with Section 5.01(a)(ii) hereof.
"Replacement Engine" means any engine substituted for an
Engine in accordance with Sections 4.01(d), 5.01(a)(ii) or 5.01(b) hereof.
"SEC" means the Securities and Exchange Commission.
"Secured Obligations" shall have the meaning specified
therefor in Section 2.09.
"Senior Noteholder" is defined in Section 2.11(c) hereof.
"Series" means any of Series A, Series B, Series C or, if
issued, Series D.
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[Trust Indenture and Mortgage (1997 747-1)]
"Series A" or "Series A Equipment Notes" means Equipment Notes
issued hereunder and designated as "Series A", in the original principal amount
and maturities and bearing interest as specified in Exhibit B-1.
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued hereunder and designated as "Series B", in the original principal amount
and maturities and bearing interest as specified in Exhibit B-2.
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued hereunder and designated as "Series C", in the original principal amount
and maturities and bearing interest as specified in Exhibit B-3.
"Series D" or "Series D Equipment Notes" means, if Series D
Equipment Notes are issued, the Equipment Notes issued hereunder and designated
as "Series D", in the original principal amount and maturities and bearing
interest as specified in Exhibit B-4.
"Series A Margin" means the margin applicable to the Series A
Equipment Notes, as the same is specified on Exhibit B-1.
"Series B Margin" means the margin applicable to the Series B
Equipment Notes, as the same is specified on Exhibit B-2.
"Series C Margin" means the margin applicable to the Series C
Equipment Notes, as the same is specified on Exhibit B-3.
"Series D Margin" means, if Series D Equipment Notes are
issued, the margin applicable to the Series D Equipment Notes, as the same is
specified on Exhibit B-4.
"Standard & Poor's" means Standard & Poor's Ratings Services,
a division of ▇▇▇▇▇▇-▇▇▇▇ Inc. ( or any successor thereto).
"Subordination Agent" means FSB, as subordination agent under
the Intercreditor Agreement, or any successor thereto.
"Taxes" means any and all fees (including, without limitation,
license, documentation and registration fees), taxes (including, without
limitation, income, gross receipts, sales, rental, use, turnover, value added,
property (tangible and intangible), excise and stamp taxes), licenses, levies,
imposts, duties, recording charges or fees, charges, assessments, or
withholdings of any nature whatsoever, together with any assessments, penalties,
fines, additions to tax and interest thereon (each, individually, a "Tax").
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[Trust Indenture and Mortgage (1997 747-1)]
"Three-Month LIBOR" means, in relation to any Interest Period,
the interest rate per annum (calculated on the basis of a 360-day year and
actual days elapsed) at which deposits in United States dollars are offered to
prime banks in the London interbank market as indicated on display page 3750
(British Bankers Association-LIBOR) of the Dow ▇▇▇▇▇ Markets Service (or such
other page as may replace such display page 3750 for the purpose of displaying
London interbank offered rates for Dollar deposits) or, if not so indicated, the
average (rounded upwards to the nearest 1/100%), as determined by the
Calculation Agent, of such rates as indicated on the Reuters Screen LIBO Page
(or such other page as may replace such Reuters Screen LIBO Page for the purpose
of displaying London interbank offered rates for Dollar deposits) or, if neither
such alternative is indicated, the average (rounded upwards to the nearest
1/100%), as determined by the Calculation Agent, of such rates offered by the
London Reference Banks to prime banks in the London interbank market, in each
case at or about 11:00 a.m. (London time) on the LIBOR Business Day that is two
LIBOR Business Days prior to the first day of such Interest Period for deposits
of a duration equal to such Interest Period (or other period most nearly
corresponding to such period) in an amount substantially equal to the principal
amount of the Equipment Notes outstanding as of the first day of such Interest
Period. The Calculation Agent will, if necessary, request that each of the
London Reference Banks provide a quotation of its rate. If at least two such
quotations are provided, the rate will be the average of the quotations (rounded
upwards to the nearest 1/100%). If no such quotation can be obtained, the rate
will be the Three-Month LIBOR for the immediately preceding Interest Period.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
"Trust Indenture and Mortgage" or "this Agreement" or "this
Indenture" means this Trust Indenture and Mortgage (1997 747-1), as the same may
from time to time be supplemented, amended or modified.
"Trustee's Liens" shall have the meaning specified therefor in
Section 9.10.
"United States" or "U.S." means the United States of America.
"United States Government" means the federal government of the
United States or any instrumentality or agency thereof.
"Warranty ▇▇▇▇ of Sale" means a full warranty ▇▇▇▇ of sale
executed by the Manufacturer in favor of Owner and dated the date of delivery of
the Aircraft to Owner pursuant to the terms of the Purchase Agreement.
"Wet Lease" means any arrangement whereby Owner (or any
Permitted Lessee) agrees to furnish the Airframe and Engines or engines
installed thereon to a third party pursuant to which such Airframe and Engines
or engines (i) shall remain in the operational control of Owner (or such
Permitted Lessee) and (ii) shall be maintained, insured and otherwise used and
operated in accordance with the provisions hereof.
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[Trust Indenture and Mortgage (1997 747-1)]
ARTICLE 2
THE EQUIPMENT NOTES
Section 2.01. Equipment Notes; Title and Terms. The Equipment
Notes shall be issued in three separate series (or, if Series D Equipment Notes
are issued, four separate series) designated as Series A, Series B, Series C
and, if issued, Series D, shall be dated the applicable Issuance Date with
respect to such Series, and shall be in the maturities and principal amounts and
shall bear interest as specified in Exhibit ▇-▇, ▇-▇, ▇-▇ or, if Series D
Equipment Notes are issued, B-4, as the case may be. Each Series A, Series B and
Series C Equipment Note shall be issued to the Subordination Agent as nominee
for the Pass Through Trustee under the applicable Pass Through Trust Agreement.
The Issuance Date for the Series A, Series B and Series C Equipment Notes will
be the Closing Date. Owner shall have the option to issue the Series D Equipment
Notes at any time at or after the Closing Date, subject to compliance with the
applicable terms of the Intercreditor Agreement. In the event Owner exercises
such option to issue the Series D Equipment Notes, the parties hereto agree to
execute and deliver a supplement to this Agreement specifying the original
principal amount, maturity date, Series D Margin and Amortization Schedule
necessary to complete Exhibit B-4 with respect to such Series and otherwise
amending this Agreement as may be necessary or reasonably appropriate in
connection with such issuance but without affecting the rights of the holders of
Series A, Series B or Series C Equipment Notes.
Each Series of Equipment Notes shall bear interest at the
Applicable Rate for such Series (calculated on the basis of a year of 360 days
and the actual number of days elapsed) on the unpaid principal amount thereof
from time to time outstanding, payable in arrears on each Interest Payment Date
until maturity. The principal of each Equipment Note shall be payable in
installments, on each Payment Date, in amounts equal to the Amortization Amount
for such Payment Date. Notwithstanding the foregoing, the final payment made
under each Equipment Note shall be in an amount sufficient to discharge in full
the unpaid principal amount and all accrued and unpaid interest on, and any
other amounts due under, such Equipment Note. Each Equipment Note shall bear
interest at the Past Due Rate (calculated on the basis of a year of 360 days and
the actual number of days elapsed) on any part of the principal amount, Break
Amount, if any, Make-Whole Amount, if any, and, to the extent permitted by
applicable law, interest and any other amounts payable thereunder not paid when
due for any period during which the same shall be overdue, in each case for the
period the same is overdue. Amounts shall be overdue if not paid when due
(whether as stated maturity, by acceleration or otherwise). Notwithstanding
anything to the contrary contained herein, if any date on which a payment under
any Equipment Note becomes due and payable is not a Business Day, then such
payment shall not be made on such scheduled
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[Trust Indenture and Mortgage (1997 747-1)]
date but shall be made on the next succeeding Business Day and if such payment
is made on such next succeeding Business Day, interest at the then effective
Applicable Rate shall accrue on the amount of such payment during such
extension.
The Equipment Notes are not redeemable or subject to purchase
prior to maturity except as provided in this Agreement.
In the case of the Series A and Series B Equipment Notes, if
the Owner has failed to effect a Registration Event (as defined in the
Registration Rights Agreement) on or prior to July 1, 1998, or if the Shelf
Registration Statement (as defined in the Registration Rights Agreement) ceases
to be effective for more than 60 days in any twelve-month period, whether or not
consecutive, the Applicable Margin shall be increased by .50% per annum from
July 1, 1998, if no Registration Event has occurred, or from the 61st day of
such twelve-month period in the case of such Shelf Registration Statement
ceasing to be effective, until the Owner effects a Registration Event, or causes
such Shelf Registration Statement to be effective, as more particularly set
forth in the Registration Rights Agreement.
Section 2.02. Execution and Authentication. (a) Equipment
Notes shall be executed on behalf of the Owner by the manual or facsimile
signature of one of its authorized officers.
(b) If any officer of the Owner executing an Equipment Note no
longer holds that office at the time such Equipment Note is executed on behalf
of the Owner, such Equipment Note shall be valid nevertheless.
(c) At any time and from time to time after the execution of
the Equipment Notes, the Owner may deliver such Equipment Notes to the Indenture
Trustee for authentication and, subject to the provisions of Section 2.10, the
Indenture Trustee shall authenticate the Equipment Notes by manual signature
upon written orders of the Owner. Equipment Notes shall be authenticated on
behalf of the Indenture Trustee by any authorized officer or signatory of the
Indenture Trustee.
(d) An Equipment Note shall not be valid or obligatory for any
purpose or entitled to any security or benefit hereunder until executed on
behalf of the Owner by the manual or facsimile signature of an officer of the
Owner as provided in Section 2.02(a) and until authenticated on behalf of the
Indenture Trustee by the manual signature of an authorized officer or signatory
of the Indenture Trustee as provided in Section 2.02(c). Such signatures shall
be conclusive evidence that such Equipment Note has been duly executed,
authenticated and issued under this Agreement.
Section 2.03. Registrar and Paying Agent. The Indenture
Trustee shall maintain an office or agency where the Equipment Notes may be
presented for registration of
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[Trust Indenture and Mortgage (1997 747-1)]
transfer or for exchange (the "Registrar") and an office or agency where
(subject to Sections 2.04 and 2.08) the Equipment Notes may be presented for
payment or for exchange (the "Paying Agent"). The Registrar shall keep a
register (the "Register") with respect to the Equipment Notes and to their
transfer and exchange and the payments of Amortization Amounts thereon, if any.
The Indenture Trustee may appoint one or more co-registrars (the
"Co-Registrars") and one or more additional Paying Agents for the Equipment
Notes and the Indenture Trustee may terminate the appointment of any
Co-Registrar or Paying Agent at any time upon written notice. The term
"Registrar" includes any Co-Registrar. The term "Paying Agent" includes any
additional Paying Agent.
The Indenture Trustee shall initially act as Registrar and
Paying Agent.
Section 2.04. Transfer and Exchange. At the option of the
Noteholder thereof, Equipment Notes may be exchanged for an equal aggregate
principal amount of other Equipment Notes of the same Series, maturity and type
and of any authorized denominations or transferred upon surrender of the
Equipment Notes to be exchanged or transferred at the principal corporate trust
office of the Indenture Trustee, or at any office or agency maintained for such
purpose pursuant to Section 2.03. Whenever any Equipment Notes are so
surrendered for exchange, the Owner shall execute, and the Indenture Trustee
shall authenticate and deliver, the replacement Equipment Notes, dated the same
date as the Equipment Note or Equipment Notes being replaced which the
Noteholder making the exchange is entitled to receive.
All Equipment Notes issued upon any registration of transfer
or exchange of Equipment Notes shall be the valid obligations of the Owner,
evidencing the same obligations, and entitled to the same security and benefits
under this Agreement, as the Equipment Notes surrendered upon such registration
of transfer or exchange.
Every Equipment Note presented or surrendered for registration
of transfer or exchange shall (if so required by the Registrar) be duly endorsed
by, or be accompanied by a written instrument of transfer in form satisfactory
to the Registrar duly executed by, the Noteholder thereof or his attorney duly
authorized in writing. Indenture Trustee may require such evidence reasonably
satisfactory to it as to the compliance of any such transfer with the Securities
Act, and the securities laws of any applicable state. Each initial Noteholder
and each transferee of an Equipment Note, by its acceptance of an Equipment
Note, agrees to be bound by and comply with the provisions of the Participation
Agreement, this Indenture, the Note Purchase Agreement and each other
Fundamental Document applicable to a Noteholder.
No service charge shall be made to a Noteholder for any
registration of transfer or exchange of Equipment Notes, but the Registrar may,
as a condition to any transfer or exchange hereunder, require payment of a sum
sufficient to cover any tax or other
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[Trust Indenture and Mortgage (1997 747-1)]
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes.
The Registrar shall not be required to register the transfer
of or to exchange any Equipment Note called for redemption or purchase pursuant
to such Section 6.01 or 6.02.
Section 2.05. Noteholder Lists; Ownership of Equipment Notes.
(a) The Indenture Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Noteholders, which list shall be available to the Owner or its
representative (which may be the Owner Participant) and the Owner for
inspection. If the Indenture Trustee is not the Registrar, the Registrar shall
be required to furnish to the Indenture Trustee quarterly on or before each
Interest Payment Date, and at such other times as the Indenture Trustee may
request in writing, a list, in such form and as of such date as the Indenture
Trustee may reasonably require, containing all the information in the possession
or control of the Registrar as to the names and addresses of the Noteholders.
(b) Ownership of the Equipment Notes shall be proved by the
Register kept by the Registrar. Prior to due presentment for registration of
transfer of any Equipment Note, the Owner, the Indenture Trustee, the Paying
Agent and the Registrar may deem and treat the Person in whose name any
Equipment Note is registered as the absolute owner of such Equipment Note for
the purpose of receiving payment of principal (including, subject to the
provisions herein regarding the applicable Record Dates, Amortization Amounts)
of, Break Amount, if any, Make-Whole Amount, if any, and interest on such
Equipment Note and for all other purposes whatsoever, whether or not such
Equipment Note is overdue, and none of the Owner, the Indenture Trustee, the
Paying Agent or the Registrar shall be affected by notice to the contrary.
Section 2.06. Mutilated, Destroyed, Lost or Stolen Equipment
Notes. If any Equipment Note shall become mutilated, destroyed, lost or stolen,
the Owner shall, upon the written request of the Noteholder of such Equipment
Note, issue and execute, and the Indenture Trustee shall authenticate and
deliver, in replacement thereof, as applicable, a new Equipment Note of the same
Series and having the same maturity, payable to the same Noteholder in the same
principal amount and dated the same date as the Equipment Note so mutilated,
destroyed, lost or stolen. If the Equipment Note being replaced has become
mutilated, such Equipment Note shall be surrendered to the Indenture Trustee. If
the Equipment Note being replaced has been destroyed, lost or stolen, the
Noteholder of such Equipment Note shall furnish to the Owner and the Indenture
Trustee such security or indemnity as may be required by it to save the Owner
and the Indenture Trustee harmless and evidence satisfactory to the Owner and
the Indenture Trustee of the destruction, loss or theft of such Equipment Note
and of the ownership thereof.
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Section 2.07. Cancellation. The Registrar and any Paying Agent
shall forward to the Indenture Trustee all Equipment Notes surrendered to them
for replacement, redemption, registration of transfer, exchange or payment. The
Indenture Trustee shall cancel all Equipment Notes surrendered for replacement,
redemption, registration of transfer, exchange, payment or cancellation and
shall destroy cancelled Equipment Notes.
Section 2.08. Payment on Equipment Notes. The principal amount
of, interest on, Break Amount, if any, Make-Whole Amount, if any, and other
amounts due under each Equipment Note or hereunder will be payable in Dollars by
wire transfer of immediately available funds not later than 11:00 a.m., Chicago,
Illinois time, on the due date of payment to the Indenture Trustee at the
Corporate Trust Department for distribution among the Noteholders in the manner
provided herein. The Owner shall not have any responsibility for the
distribution of such payment to any Noteholder. Notwithstanding the foregoing or
any provision in any Equipment Note to the contrary, the Indenture Trustee will
use reasonable efforts to pay or cause to be paid, if so directed in writing by
any Noteholder (with a copy to the Owner), all amounts paid by the Owner
hereunder and under such holder's Equipment Note or Equipment Notes to such
holder or a nominee therefor (including all amounts distributed pursuant to
Article 3 of this Agreement) by transferring, or causing to be transferred, by
wire transfer of immediately available funds in Dollars, prior to 1:00 p.m.,
Chicago, Illinois time, on the due date of payment, to an account maintained by
such holder with a bank located in the continental United States the amount to
be distributed to such holder, for credit to the account of such holder
maintained at such bank. If the Indenture Trustee shall fail to make any such
payment as provided in the immediately foregoing sentence after its receipt of
funds at the place and prior to the time specified above, the Indenture Trustee,
in its individual capacity and not as trustee, agrees to compensate such holders
for loss of use of funds at the Applicable Rate until such payment is made and
the Indenture Trustee shall be entitled to any interest earned on such funds
until such payment is made. Any payment made hereunder shall be made free and
clear of and without deduction for or on account of all wire and like charges
without any presentment or surrender of any Equipment Note, except that, in the
case of the final payment in respect of any Equipment Note, such Equipment Note
shall be surrendered to the Applicable Trustee for cancellation promptly after
such payment. Notwithstanding any other provision of this Agreement to the
contrary, the Indenture Trustee shall not be required to make, or cause to be
made, wire transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so in view of the time of day when
the funds to be so transferred were received by it if such funds were received
after 11:00 a.m., Chicago, Illinois time, at the place of payment.
Section 2.09. Termination of Interest in the Indenture Estate.
No Noteholder or Indenture Indemnitee shall have any further interest in, or
other right with respect to, the Indenture Estate when and if the principal
amount of, Break Amount, if any, Make-Whole Amount, if any, and interest on all
Equipment Notes held by such Noteholder and all other
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[Trust Indenture and Mortgage (1997 747-1)]
sums payable to such Noteholder or Indenture Indemnitee, as the case may be,
hereunder, under such Equipment Notes and under the other Fundamental Documents
(collectively, the "Secured Obligations") shall have been paid in full.
Section 2.10. Withholding Taxes. The Indenture Trustee, as
agent for the Owner, shall exclude and withhold at the appropriate rate from
each payment of principal amount of, interest on, Break Amount, if any,
Make-Whole Amount, if any, and other amounts due hereunder or under each
Equipment Note (and such exclusion and withholding shall constitute payment in
respect of such Equipment Note) any and all United States withholding taxes
applicable thereto as required by law. The Indenture Trustee agrees to act as
such withholding agent and, in connection therewith, whenever any present or
future United States taxes or similar charges are required to be withheld with
respect to any amounts payable hereunder or in respect of the Equipment Notes,
to withhold such amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Noteholders, that it will file any necessary
United States withholding tax returns or statements when due, and that as
promptly as possible after the payment thereof (but in no event later than 30
days after the due date thereof) it will deliver to each Noteholder (with a copy
to the Owner) appropriate receipts and a U.S. Treasury Form 1042-S and Form 8109
or Form 8109-B (or similar form at any relevant time in effect) showing the
payment thereof, together with such additional documentary evidence as any such
Noteholder may reasonably request from time to time.
If a Noteholder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed, accurate and currently effective
U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms
as may be required by the United States Treasury Department) during the calendar
year in which the payment hereunder or under the Equipment Note(s) held by such
Noteholder is made (but prior to the making of such payment), or in either of
the two preceding calendar years or such other previous period if such forms
continue to apply under applicable law with respect to the year in which such
payment is made, and has not notified the Indenture Trustee of the withdrawal or
inaccuracy of such form prior to the date of such payment (and the Indenture
Trustee has no reason to believe that any information set forth in such form is
inaccurate), the Indenture Trustee shall withhold only the amount, if any,
required by law (after taking into account any applicable exemptions properly
claimed by the Noteholder) to be withheld from payments hereunder or under the
Equipment Notes held by such Noteholder in respect of United States federal
income tax. If a Noteholder (x) which is a Non-U.S. Person has furnished to the
Indenture Trustee a properly completed, accurate and currently effective U.S.
Internal Revenue Service Form 4224 in duplicate (or such successor certificate,
form or forms as may be required by the United States Treasury Department as
necessary in order to properly avoid withholding of United States federal income
tax), for each calendar year in which a payment is made or for any other period
in which such form applies under applicable law and in which a payment is made
(but prior to the making of any payment for such year or other period), and
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[Trust Indenture and Mortgage (1997 747-1)]
has not notified the Indenture Trustee of the withdrawal or inaccuracy of such
certificate or form prior to the date of such payment (and the Indenture Trustee
has no reason to believe that any information set forth in such form is
inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee
a properly completed, accurate and currently effective U.S. Internal Revenue
Service Form W-9, if applicable, prior to a payment hereunder or under the
Equipment Notes held by such Noteholder, no amount shall be withheld from
payments in respect of United States federal income tax. If any Noteholder has
notified the Indenture Trustee that any of the foregoing forms or certificates
is withdrawn or inaccurate, or if such Noteholder has not filed a form claiming
an exemption from United States withholding tax which is applicable to any
relevant period in which a payment is made or if the Code or the regulations
thereunder or the administrative interpretation thereof is at any time after the
date hereof amended to require such withholding of United States federal income
taxes from payments under the Equipment Notes held by such Noteholder, the
Indenture Trustee agrees to withhold from each payment due to the relevant
Noteholder withholding taxes at the appropriate rate under law and will, on a
timely basis as more fully provided above, deposit such amounts with an
authorized depository and make such returns, statements, receipts and other
documentary evidence in connection therewith as required by law.
Owner shall not have any liability for the failure of the
Indenture Trustee to withhold taxes in the manner provided for herein or for any
false, inaccurate or untrue evidence provided by any Noteholder hereunder.
Section 2.11. Subordination. (a) The Indenture Trustee and, by
acceptance of its Equipment Notes of any Series, each Noteholder of such Series,
hereby agree that no payment or distribution shall be made on or in respect of
the Secured Obligations owed to such Noteholder of such Series, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in Section 8.01(e) or (f) hereof, except
as expressly provided in Article 3 hereof.
(b) By the acceptance of its Equipment Notes of any Series
(other than Series A), each Noteholder of such Series agrees that in the event
that such Noteholder, in its capacity as a Noteholder, shall receive any payment
or distribution on any Secured Obligations in respect of such Series which it is
not entitled to receive under this Section 2.11 or Article 3 hereof, it will
hold any amount so received in trust for the Senior Noteholder (as defined in
Section 2.11(c) hereof) and will forthwith turn over such payment to the
Indenture Trustee in the form received to be applied as provided in the Article
3 hereof.
(c) As used in this Section 2.11, the term "Senior Noteholder"
shall mean, (i) the Noteholders of Series A until the Secured Obligations in
respect of
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[Trust Indenture and Mortgage (1997 747-1)]
Series A Equipment Notes have been paid in full, (ii) after the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, the
Noteholders of Series B until the Secured Obligations in respect of Series B
Equipment Notes have been paid in full and (iii) after the Secured Obligations
in respect of Series B Equipment Notes have been paid in full and if any Series
D Equipment Notes have been issued, the Noteholders of Series C until the
Secured Obligations in respect of Series C Equipment Notes have been paid in
full; provided, however, that in the event that a Series of Equipment Notes
shall be redeemed pursuant to the provisions of Section 6.01(b), the amounts
received by the Indenture Trustee in connection with such redemption shall be
applied in accordance with the provisions of Section 3.02(b) notwithstanding
anything contained in this Section 2.11 to the contrary.
Section 2.12. Certain Agreements Regarding Primary Liquidity
Facilities. The Owner agrees to pay to the Indenture Trustee for distribution in
accordance with Section 3.04 hereof: (i) an amount equal to the fees payable to
the relevant Primary Liquidity Provider under the related Fee Letter (as defined
in the Intercreditor Agreement as originally in effect or as amended with the
consent of the Owner Participant) multiplied by a fraction the numerator of
which shall be the sum of the then outstanding aggregate principal amount of the
Series A Equipment Notes and Series B Equipment Notes and the denominator of
which shall be the sum of the then outstanding aggregate principal amount of all
"Series A Equipment Notes" and "Series B Equipment Notes" (each as defined in
the Intercreditor Agreement); (ii) (x) the amount equal to interest on any
Downgrade Advance (other than any Applied Downgrade Advance) payable under
Section 3.07 of each Primary Liquidity Facility minus Investment Earnings from
such Downgrade Advance multiplied by (y) the fraction specified in the foregoing
clause (i); (iii) (x) any amounts owed to the Primary Liquidity Providers by the
Subordination Agent as borrower under Section 3.01 (other than in respect of an
Unpaid Advance or Applied Downgrade Advance), 3.02, 3.03 (other than in respect
of an Unpaid Advance or Applied Downgrade Advance), 7.05 or 7.07 of each Primary
Liquidity Facility (or similar provisions of any succeeding Primary Liquidity
Facility) multiplied by (y) the fraction specified in the foregoing clause (i);
and (iv) if any payment default shall have occurred and be continuing with
respect to interest on any Series A Equipment Note or Series B Equipment Note,
(x) the excess, if any, of (1) the sum of (x) the amount equal to interest on
any Unpaid Advance or Applied Downgrade Advance payable under Section 3.07 of
each Primary Liquidity Facility plus (y) any other amounts payable in respect of
such Unpaid Advance or Applied Downgrade Advance under Section 3.01, 3.03 or
3.09 of the applicable Primary Liquidity Facility over (2) the sum of Investment
Earnings from any such Unpaid Advance or Applied Downgrade Advance plus any
amount of interest at the Past Due Rate actually payable (whether or not in fact
paid) by the Owner on the overdue scheduled interest on the Equipment Notes in
respect of which such Unpaid Advance or Applied Downgrade Advance was made,
multiplied by (y) a fraction the numerator of which shall be the then aggregate
overdue amounts of interest on the Series A Equipment Notes and Series B
Equipment Notes (other than interest becoming due and payable solely as a result
of acceleration of any such Equipment Notes) and the denominator of which shall
be the then aggregate overdue amounts of interest on all "Series A Equipment
Notes" and
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[Trust Indenture and Mortgage (1997 747-1)]
"Series B Equipment Notes" (each as defined in the Intercreditor Agreement)
(other than interest becoming due and payable solely as a result of acceleration
of any such "Equipment Notes"). For purposes of this paragraph, the terms
"Applied Downgrade Advance", "Downgrade Advance", "Final Advance", "Investment
Earnings" and "Unpaid Advance" shall have the meanings specified in each Primary
Liquidity Facility or the Intercreditor Agreement referred to therein.
ARTICLE 3
RECEIPT, DISTRIBUTION AND
APPLICATION OF FUNDS
Section 3.01. Basic Distributions. Except as otherwise
provided in Section 3.03 hereof, each periodic payment of principal or interest
on the Equipment Notes received by the Indenture Trustee shall be promptly
distributed in the following order of priority:
First, (i) so much of such payment as shall be required to pay in
full the aggregate amount of the payment or payments of
principal amount and interest (as well as any interest on
any overdue principal amount and, to the extent permitted by
applicable law, on any overdue interest) then due under all
Series A Equipment Notes shall be distributed to the holders
of Series A Equipment Notes ratably, without priority of one
over the other, in the proportion that the amount of such
payment or payments then due under all Series A Equipment
Notes held by such Noteholder bears to the aggregate amount
of the payments then due under all Series A Equipment Notes;
(ii) after giving effect to paragraph (i) above, so much of
such payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of principal
amount and interest (as well as any interest on any overdue
principal amount and, to the extent permitted by applicable
law, on any overdue interest) then due under all Series B
Equipment Notes shall be distributed to the holders of Series
B Equipment Notes ratably, without priority of one over the
other, in the proportion that the amount of such payment or
payments then due under all Series B Equipment Notes held by
such Noteholder bears to the aggregate amount of the payments
then due under all Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, so much of
such payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of principal
amount and interest (as well as any interest on any overdue
principal amount and, to the extent permitted by applicable
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[Trust Indenture and Mortgage (1997 747-1)]
law, on any overdue interest) then due under all Series C
Equipment Notes shall be distributed to the holders of Series
C Equipment Notes ratably, without priority of one over the
other, in the proportion that the amount of such payment or
payments then due under all Series C Equipment Notes held by
such Noteholders bears to the aggregate amount of the payments
then due under all Series C Equipment Notes; and
(iv) if any Series D Equipment Notes have been issued, after
giving effect to paragraph (iii) above, so much of such
payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of principal
amount and interest (as well as any interest on any overdue
principal amount and, to the extent permitted by applicable
law, on any overdue interest) then due under all Series D
Equipment Notes shall be distributed to the holders of Series
D Equipment Notes ratably, without priority of one over the
other, in the proportion that the amount of such payment or
payments then due under all Series D Equipment Notes held by
such Noteholders bears to the aggregate amount of the payments
then due under all Series D Equipment Notes.
Second, the balance, if any, of such installment remaining thereafter
shall be distributed to the Owner.
Section 3.02. Event of Loss; Optional Redemption. (a) Except
as otherwise provided in Section 3.03 hereof, any payments received by the
Indenture Trustee in connection with a mandatory redemption of the Equipment
Notes pursuant to Section 6.01(a) following an Event of Loss respect to the
Aircraft shall be applied to redemption of the Equipment Notes and to all other
Secured Obligations by applying such funds in the following order of priority:
First, (i) to reimburse the Indenture Trustee and the Noteholders
for any reasonable costs or expenses incurred in connection
with such redemption for which they are entitled to
reimbursement, or indemnity by Owner, under the Operative
Documents and then (ii) to pay any other amounts then due
(except as provided in clause "Second" below) to the
Indenture Trustee, the Noteholders and the other Indenture
Indemnitees under this Indenture, the Participation
Agreement, the Equipment Notes or any other Fundamental
Documents;
Second, (i) to pay the amounts specified in paragraph (i) of clause
"First" of Section 3.01 hereof;
(ii) after giving effect to paragraph (i) above, to pay the
amounts specified in paragraph (ii) of clause "First" of
Section 3.01 hereof; and
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[Trust Indenture and Mortgage (1997 747-1)]
(iii) after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause "First" of
Section 3.01 hereof; and
(iv) if any Series D Equipment Notes have been issued after
giving effect to paragraph (iii) above, to pay the amounts
specified in paragraph (iv) of clause "First" of Section 3.01
hereof; and
Third, as provided in clause "Second" of Section 3.01 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 5.01 hereof, any insurance, condemnation or similar proceeds which
result from such Event of Loss and are paid over to the Indenture Trustee shall
be held by the Indenture Trustee as permitted by Section 5.01 hereof (provided
that such moneys shall be invested as provided in Section 9.04 hereof) as
additional security for the obligations of Owner under the Operative Documents
and such proceeds (and such investment earnings), to the extent not theretofore
applied as provided herein, shall be released to the Owner at the Owner's
written request upon the release of such Airframe or Engine and the replacement
thereof as provided herein.
(b) Except as otherwise provided in Section 3.03 hereof, any
payments received by the Indenture Trustee in connection with an optional
redemption of any Series of the Equipment Notes pursuant to Section 6.01(b)
shall be applied to redemption of such Series of Equipment Notes and to all
other Secured Obligations due and owing the holders of such Series by applying
such funds in the following order of priority:
First, to reimburse the Indenture Trustee and the holders of such
Series for any reasonable costs or expenses incurred in
connection with such redemption for which they are entitled to
reimbursement or indemnity by Owner under the Operative
Documents;
Second, so much of such payment as shall be required to pay in full
the aggregate amount of the payment or payments of principal
amount and interest (as well as any interest on any overdue
principal amount and, to the extent permitted by applicable
law, on any overdue interest) then due under such Series of
Equipment Notes and all other Secured Obligations due and
owing to the holders of such Series of Equipment Notes shall
be distributed to the holders of such Series ratably,
without priority of one over the other, in the proportion
that the amount of such payment or payments then due under
all Equipment Notes of such Series held by such Noteholders
bears to the aggregate amount of the payments then due under
all Equipment Notes of such Series; and
Third, as provided in clause "Second" of Section 3.01 hereof.
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[Trust Indenture and Mortgage (1997 747-1)]
Section 3.03. Payments After Indenture Event of Default.
Except as otherwise provided in Section 3.04 hereof, all
payments received and amounts held or realized by the Indenture Trustee
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Article 8 hereof) after an Indenture Event of Default
shall have occurred and be continuing and after the declaration specified in
Section 8.02 hereof, as well as all payments or amounts then held by the
Indenture Trustee as part of the Indenture Estate, shall be promptly distributed
by the Indenture Trustee in the following order of priority:
First, so much of such payments or amounts as shall be required to
(i) reimburse the Indenture Trustee or FSB for any Tax
(except to the extent resulting from a failure of the
Indenture Trustee to withhold taxes pursuant to Section 2.10
hereof), expense or other loss (including, without
limitation, all amounts to be expended at the expense of, or
charged upon the proceeds of, the Indenture Estate pursuant
to Section 8.03 hereof) incurred by the Indenture Trustee or
FSB (to the extent not previously reimbursed), the expenses
of any sale, or other proceeding, reasonable attorneys' fees
and expenses, court costs, and any other expenditures
incurred or expenditures or advances made by the Indenture
Trustee, FSB or the Noteholders in the protection, exercise or
enforcement of any right, power or remedy or any damages
sustained by the Indenture Trustee, FSB or any Noteholder,
liquidated or otherwise, upon such Event of Default shall be
applied by the Indenture Trustee as between itself, FSB and
the Noteholders in reimbursement of such expenses and any
other expenses for which the Indenture Trustee, FSB or the
Noteholders are entitled to reimbursement under any Operative
Document; and (ii) pay all amounts payable to the other
Indenture Indemnitees hereunder and under the other
Fundamental Documents; and in the case the aggregate amount to
be so distributed is insufficient to pay as aforesaid in
clauses (i) and (ii), then ratably, without prior of one over
the other, in proportion to the amounts owed each hereunder
and under the other Fundamental Documents;
Second, so much of such payments or amounts remaining as shall be
required to reimburse the then existing or prior Noteholders
for payments made pursuant to Section 9.06 hereof (to the
extent not previously reimbursed), shall be distributed to
such then existing or prior Noteholders ratably, without
priority of one over the other, in accordance with the
amount of the payment or payments made by each such then
existing or prior Noteholder pursuant to said Section 9.06
hereof;
Third, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid principal
amount of all Series A Equipment Notes,
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[Trust Indenture and Mortgage (1997 747-1)]
and the accrued but unpaid interest and other amounts due
thereon (including Break Amount, if any) and all other
Secured Obligations owed in respect of the Series A
Equipment Notes to the date of distribution, shall be
distributed to the Noteholders of Series A Equipment Notes,
and in case the aggregate amount so to be distributed shall
be insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion
that the aggregate unpaid principal amount of all Series A
Equipment Notes held by each Noteholder plus the accrued but
unpaid interest and other amounts due hereunder or
thereunder (including Break Amount, if any) to the date of
distribution, bears to the aggregate unpaid principal amount
of all Series A Equipment Notes held by all such Noteholders
plus the accrued but unpaid interest and other amounts due
thereon (including Break Amount, if any) to the date of
distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid principal amount of all Series B
Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon (including Break Amount, if any) and all
other Secured Obligations in respect of the Series B Equipment
Notes to the date of distribution, shall be distributed to the
Noteholders of Series B Equipment Notes, and in case the
aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority
of one over the other, in the proportion that the aggregate
unpaid principal amount of all Series B Equipment Notes held
by each holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder (including Break
Amount, if any) 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 (including
Break Amount, if any) to the date of distribution; and
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid principal amount of all Series C
Equipment Notes, and the accrued but unpaid interest and
other amounts due thereon (including Break Amount, if any)
and all other Secured Obligations in respect of the Series C
Equipment Notes to the date of distribution, shall be
distributed to the Noteholders of Series C Equipment Notes,
and in case the aggregate amount so to be distributed shall
be insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion
that the aggregate unpaid principal amount of all Series C
Equipment Notes held by each Noteholder plus the accrued but
unpaid interest and other amounts due hereunder or
thereunder (including Break Amount, if any) to the date of
distribution, bears to the aggregate
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[Trust Indenture and Mortgage (1997 747-1)]
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 (including Break Amount, if any)
to the date of distribution; and
(iv) if any Series D Equipment Notes have been issued, after giving
effect to paragraph (iii) above, so much of such payments or
amounts remaining as shall be required to pay in full the
aggregate unpaid principal amount of all Series D Equipment
Notes, and the accrued but unpaid interest and other amounts
due thereon (including Break Amount, if any) and all other
Secured Obligations in respect of the Series D Equipment
Notes to the date of distribution, shall be distributed to
the Noteholders of Series D Equipment Notes, and in case the
aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority
of one over the other, in the proportion that the aggregate
unpaid principal amount of all Series D Equipment Notes held
by each Noteholder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder (including Break
Amount, if any) 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 (including
Break Amount, if any) to the date of distribution;
Fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner.
No Make-Whole Amount shall be payable in connection with an
Indenture Event of Default or distributable under this Section 3.03.
Section 3.04. Certain Payments.
(a) Any payments received by the Indenture Trustee for which
no provision as to the application thereof is made in this Agreement and for
which such provision is made in any other 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, as the case may be.
(b) Notwithstanding anything to the contrary contained in this
Article 3, the Indenture Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Owner in respect of the Indenture
Trustee in its individual capacity, any Noteholder or any other Indenture
Indemnitee, in each case whether or not pursuant to Section 5(b) of the
Participation Agreement, directly to the Person entitled thereto. Subject to the
foregoing sentence of this Section 3.04(b), any payment under Section 2.12 shall
be distributed to the Subordination Agent to the distributed in accordance with
the terms of the Intercreditor Agreement.
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[Trust Indenture and Mortgage (1997 747-1)]
Section 3.05. Other Payments.
Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Agreement or
in any other Operative Document shall be distributed by the Indenture Trustee to
the extent received or realized at any time prior to payment of all Secured
Obligations, in the order of priority specified in Section 3.01 hereof, and
after payment in full of all amounts then due in accordance with Section 3.01 in
the manner provided in clause "Fourth" of Section 3.03 hereof.
ARTICLE 4
COVENANTS OF OWNER
So long as the Airframe or any Engine is subject to the Lien
of this Agreement, the Owner covenants and agrees as follows:
Section 4.01. Registration, Maintenance and Operation;
Possession and Permitted Leases; Insignia.
(a) (1) Registration and Maintenance. The Owner, at its own
cost and expense, shall (or shall cause any Permitted Lessee to): (i)
on or prior to the Closing Date, cause the Aircraft to be duly
registered in its name, and, subject to subparagraph (3) of this
Section 4.01(a), to remain duly registered in its name under the
Federal Aviation Act; (ii) maintain, service, repair, and overhaul (or
cause to be maintained, serviced, repaired, and overhauled) the
Aircraft (and any engine which is not an Engine but which is installed
on the Aircraft) (x) so as at all times to keep the Aircraft in as good
an operating condition, ordinary wear and tear excepted, as may be
necessary to enable the airworthiness certification for the Aircraft to
be maintained in good standing at all times (other than during
temporary periods of storage in accordance with applicable regulations)
under (I) the Federal Aviation Act, except when all of Owner's Boeing
Model 747-422 aircraft (powered by engines of the same type as those
with which the Airframe shall be equipped at the time of such
grounding) registered in the United States have been grounded by the
FAA unless such grounding was caused by the failure of Owner to
maintain, service, repair and overhaul the Aircraft in accordance with
the terms hereof, or (II) the applicable laws of any other jurisdiction
in which the Aircraft may then be registered from time to time, except
when all of Owner's Boeing Model 747-422 aircraft (powered by engines
of the same type as those with which the Airframe shall be equipped at
the time of
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[Trust Indenture and Mortgage (1997 747-1)]
such grounding) registered in such jurisdiction have been grounded by
the aeronautical authority of such jurisdiction unless such grounding
was caused by the failure of Owner to maintain, service, repair and
overhaul the Aircraft in accordance with the terms hereof and (y) in
in substantially the same manner as Owner (or any Permitted Lessee)
maintains, services, repairs or overhauls similar aircraft operated by
Owner (or Permitted Lessee) in similar circumstances and without
discriminating against the Aircraft; and (iii) maintain or cause to be
maintained all records, logs and other materials required to be
maintained in respect of the Aircraft by the FAA or the applicable
regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered.
(2) Operation. Owner will not (or permit any Permitted Lessee
to) maintain, use, service, repair, overhaul or operate the Aircraft in
violation of any material law or any rule, regulation, treaty, order or
certificate of any government or governmental authority (domestic or
foreign) having jurisdiction, or in violation of any airworthiness
certificate, license or registration relating to the Aircraft issued by
any such authority, except that, Owner or any Permitted Lessee may
contest in good faith the validity or application of any such law,
rule, regulation, order, certificate, license, registration or
violation in any reasonable manner which does not materially adversely
affect the Lien of this Agreement. If the indemnities or insurance
specified in Section 4.03(f), or some combination thereof in amounts
equal to amounts required by Section 4.03(f), have not been obtained,
Owner will not operate the Aircraft, or permit any Permitted Lessee to
operate the Aircraft, in or to any area excluded from coverage by any
insurance required to be maintained by the terms of Section 4.03;
provided, however, that the failure of Owner to comply with the
provisions of this sentence shall not give rise to an Indenture Event
of Default where such failure is attributable to a hijacking, medical
emergency, equipment malfunction, weather conditions, navigational
error or other isolated extraordinary event beyond the control of Owner
and Owner is taking all reasonable steps to remedy such failure as soon
as is reasonably practicable.
(3) Reregistration. Subject to the terms and conditions of
Section 6(a) of the Participation Agreement, the Owner may at any time
cause the Aircraft to be re- registered under the laws of another
country.
(b) Possession and Permitted Leases. Owner will not, without
the prior written consent of Indenture Trustee, lease or otherwise in any manner
deliver, transfer or relinquish possession of the Airframe or any Engine or
install or permit any Engine to be installed on any airframe other than the
Airframe; provided that, so long as such action shall not deprive the Indenture
Trustee of the perfected Lien of this Agreement on the Airframe or any Engine,
Owner may, without the prior written consent of Indenture Trustee:
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[Trust Indenture and Mortgage (1997 747-1)]
(i) subject the Airframe and the Engines or engines
then installed thereon to normal interchange agreements or any Engine
to normal pooling or similar arrangements, in each case customary in
the airline industry and entered into by Owner (or any Permitted
Lessee) in the ordinary course of its business with any air carrier;
provided, that (A) no such agreement or arrangement contemplates or
requires the transfer of title to the Airframe, and (B) if Owner's
title to any Engine shall be divested under any such agreement or
arrangement, such divestiture shall be deemed to be an Event of Loss
with respect to such Engine and the Owner shall (or shall cause any
Permitted Lessee to) comply with Section 5.01(b) hereof in respect
thereof;
(ii) deliver possession of the Airframe or any
Engine to the manufacturer thereof or to any other Person for testing,
service, repair, maintenance or overhaul work on the Airframe or in or
Engine or any Part of any thereof or for alterations or modifications
additions to such Airframe or Engine to the extent required or
permitted by the terms hereof;
(iii) install an Engine on an airframe owned by Owner
(or any Permitted Lessee) which airframe is free and clear of all
Liens, except: (A) Permitted Liens and those which apply only to the
engines (other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment (other than
Parts) installed on such airframe (but not to the airframe as an
entirety), (B) the rights of third parties under interchange agreements
which would be permitted under clause (i) above, provided that Owner's
title to such Engine shall not be divested as a result thereof and (C)
mortgage Liens or other security interests, provided, that (as regards
this clause (C)), such mortgage Liens or other security interests
effectively provide that such Engine shall not become subject to the
lien of such mortgage or security interest, notwithstanding the
installation thereof on such airframe;
(iv) install an Engine on an airframe leased to Owner
(or any Permitted Lessee) or purchased by Owner (or any Permitted
Lessee) subject to a conditional sale or other security agreement,
provided that (x) such airframe is free and clear of all Liens, except:
(A) the rights of the parties to the lease or conditional sale or other
security agreement covering such airframe, or their assignees, and (B)
Liens of the type permitted by subparagraph (iii) of this Section
4.01(b) and (y) such lease, conditional sale or other security
agreement effectively provides that such Engine shall not become
subject to the lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such airframe;
(v) install an Engine on an airframe owned by Owner
(or any Permitted Lessee), leased to Owner (or any Permitted Lessee) or
purchased by Owner
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[Trust Indenture and Mortgage (1997 747-1)]
(or any Permitted Lessee) subject to a conditional sale or other
security agreement under circumstances where neither subparagraph
(iii) nor subparagraph (iv) of this Section 4.01(b) is applicable,
provided that any divestiture of title to such Engine resulting from
such installation shall be deemed an Event of Loss with respect to
such Engine and Owner shall (or shall cause any Permitted Lessee to)
comply with Section 5.01(b) hereof in respect thereof;
(vi) transfer (or permit any Permitted Lessee to
transfer) possession of the Airframe or any Engine to the United States
of America or any instrumentality or agency thereof pursuant to the
Civil Reserve Air Fleet Program so long as Owner (or any Permitted
Lessee) shall promptly notify Indenture Trustee (x) upon transferring
possession of the Airframe or any Engine to the United States of
America or any agency or instrumentality thereof pursuant to the Civil
Reserve Air Fleet Program and (y) of the name and the address of the
Contracting Office Representative for the Military Airlift Command of
the United States Air Force to whom notice must be given pursuant to
Section 15 hereof;
(vii) transfer possession of the Airframe or any
Engine to the United States of America or any instrumentality or agency
thereof pursuant to a lease, contract or other instrument; or
(viii) Owner may, at any time so long as no Indenture
Default under Section 8.01(a), (e) or (f) hereof or any Indenture
Event of Default shall have occurred and be continuing, enter into a
lease of the Aircraft, Airframe or any Engine with (1) a Certificated
Air Carrier, (2) any other Permitted Air Carrier, or (3) any other
Person; provided that (A) no such lease shall be permitted to a lessee
that is subject to a proceeding or final order under applicable
bankruptcy, insolvency or reorganization laws on the date the lease is
entered into, (B) in the case of a lease under subclause (2) or (3)
above, on the date of such lease, the United States and the country in
which such lessee is domiciled and principally located maintain
diplomatic relations (which for purposes of this clause (viii) shall
include Taiwan and any other country that is similarly situated) and
(C) in the case only of a lease to any Person under subclause (3)
above, the Indenture Trustee receives at the time of such lease an
opinion of counsel to the effect that there exist no possessory rights
in favor of the lessee under the laws of such lessee's country which
would, upon bankruptcy or insolvency of or other default by the Owner
or the lessee, prevent the return of such Engine or Airframe and such
Engine or engine to the Indenture Trustee in accordance with and when
permitted by the terms of Section 8.03 upon the exercise by the
Indenture Trustee of its remedies pursuant to such Section.
The rights of any Permitted Lessee or other transferee (other
than a transferee where the transfer is of an Engine which is to be an Event of
Loss) shall be subject and subordinate to, all the terms of this Agreement (and
any Permitted Lease shall expressly state
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[Trust Indenture and Mortgage (1997 747-1)]
that it is so subject and subordinate), including, without limitation, the
Indenture Trustee's right to repossess the Aircraft and to void any lease upon
such repossession, and Owner shall remain primarily liable for the performance
of all of the terms of this Agreement, and the terms of any such Permitted Lease
shall not permit any Permitted Lessee to take any action not permitted to be
taken by Owner in this Agreement with respect to the Aircraft. No pooling
agreement, Permitted Lease or other relinquishment of possession of the Airframe
or any Engine shall in any way discharge or diminish any of Owner's obligations
to the Indenture Trustee under this Agreement or constitute a waiver of
Indenture Trustee's rights or remedies hereunder. The Indenture Trustee agrees,
for the benefit of Owner (and any Permitted Lessee) and for the benefit of any
mortgagee or other holder of a security interest in any engine owned by Owner
(or any Permitted Lessee), any lessor of any engine other than an Engine leased
to Owner (or any Permitted Lessee) and any conditional vendor of any engine
other than an Engine purchased by Owner (or any Permitted Lessee) subject to a
conditional sale agreement or any other security agreement, that no interest
shall be created under this Agreement in any engine so owned, leased or
purchased and that neither the Indenture Trustee nor its successors or assigns
will acquire or claim, as against Owner (or any Permitted Lessee) or any such
mortgagee, lessor or conditional vendor or other holder of a security interest
or any successor or assignee of any thereof, any right, title or interest in
such engine as the result of such engine being installed on the Airframe;
provided, however, that such agreement of Indenture Trustee shall not be for the
benefit of any lessor or secured party of an airframe leased to Owner (or any
Permitted Lessee) or purchased by Owner (or any Permitted Lessee) subject to a
conditional sale or other security agreement or for the benefit of any mortgagee
or any other holder of a security interest in an airframe owned by Owner (or any
Permitted Lessee), on which airframe Owner (or any Permitted Lessee) then
proposes to install an Engine, unless such lessor, conditional vendor, other
secured party or mortgagee has expressly agreed (which agreement may be
contained in such lease, conditional sale or other security agreement or
mortgage) that neither it nor its successors or assigns will acquire, as against
Indenture Trustee, any right, title or interest in an Engine as a result of such
Engine being installed on such airframe. Owner shall provide the Indenture
Trustee with a copy of any Permitted Lease or any instrument evidencing a
transfer pursuant to paragraph (vii) of this Section 4.01(b), in either case
having a term of more than one (1) year, as promptly as practicable after
entering into such Permitted Lease or other transfer.
Any Wet Lease or similar arrangement under which Owner
maintains operational control of the Aircraft shall not constitute a delivery,
transfer or relinquishment of possession for purposes of this Section 4.01. The
Indenture Trustee acknowledges that any consolidation or merger of Owner or
conveyance, transfer or lease of all or substantially all of Owner's assets
permitted by the Operative Documents shall not be prohibited by this Section
4.01.
(c) Insignia. On or prior to the Closing Date, or as soon
thereafter as practicable, Owner agrees to affix and maintain (or cause to be
affixed and maintained) in the cockpit of the Airframe adjacent to the
registration certificate therein and on each Engine a nameplate bearing the
inscription:
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[Trust Indenture and Mortgage (1997 747-1)]
Mortgaged To
First Security Bank, National Association, as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Indenture Trustee, in each case as permitted under the
Operative Documents).
Except as above provided, Lessee will not allow the name of
any Person to be placed on the Airframe or on any Engine as a designation that
might be interpreted as a claim of ownership; provided, that nothing herein
contained shall prohibit Owner (or any Permitted Lessee) from placing its
customary colors and insignia on the Airframe or any Engine.
(d) Substitution of Engines. The Owner may at any time, at no
cost to the Indenture Trustee, replace any Engine subjected to the Lien hereof
by causing an Acceptable Alternate Engine to be substituted for such Engine
hereunder in accordance with the provisions of Section 5.01(b) hereof to the
same extent as if an Event of Loss has occurred with respect to such Engine.
Section 4.02. Replacement and Pooling of Parts; Alterations,
Modifications and Additions.
(a) Replacement of Parts. Owner, at its own cost and expense,
will promptly replace or cause to be replaced all Parts which may from time to
time become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason whatsoever,
except as otherwise provided in Section 4.02(c). All replacement Parts shall be
owned by Owner free and clear of all Liens (except Permitted Liens, pooling
arrangements permitted by Section 4.02(b) hereof and replacement Parts
temporarily installed on an emergency basis) and shall be in as good operating
condition as, and shall have a value and utility substantially equal to, the
Parts replaced assuming such replaced Parts were in the condition and repair
required to be maintained by the terms hereof. All Parts at any time removed
from the Airframe or any Engine shall remain subject to the Lien of this
Agreement, no matter where located, until such time as such Parts shall be
replaced by Parts which meet the requirements for replacement Parts specified
above. Immediately upon any replacement Part becoming incorporated or installed
in or attached to the Airframe or any Engine, without further act (subject only
to Permitted Liens and any pooling arrangement permitted by Section 4.02(b)
hereof and except replacement Parts temporarily installed on an emergency
basis), (i) such replacement Part shall become subject to the Lien of this
Agreement and be deemed a Part
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[Trust Indenture and Mortgage (1997 747-1)]
for all purposes hereof to the same extent as the Parts originally incorporated
or installed in or attached to the Airframe or such Engine and (ii) the replaced
Part shall be free and clear of all rights of the Indenture Trustee and shall no
longer be deemed a Part hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe or
any Engine as provided in Section 4.02(a) hereof may be subjected by Owner (or
any Permitted Lessee) to a pooling arrangement of the type which is permitted by
Section 4.01(b)(i) hereof; provided, that the Part replacing such removed Part
shall be incorporated or installed in or attached to such Airframe or Engine in
accordance with Section 4.02(a) as promptly as practicable after the removal of
such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or an Engine in accordance with such
Sections may be owned by any third party subject to such a pooling arrangement,
provided, that Owner (or any Permitted Lessee), at its expense, as promptly
thereafter as practicable, either (i) causes such replacement Part to become
subject to the Lien of this Agreement, free and clear of all Liens other than
Permitted Liens or (ii) replaces such replacement Part with a further
replacement Part owned by Owner (or any Permitted Lessee) which shall become
subject to the Lien of this Agreement, free and clear of all Liens other than
Permitted Liens.
(c) Alterations, Modifications and Additions. Owner, at its
own expense, will make (or cause to be made) such alterations and modifications
in and additions to the Airframe and Engines as may be required to be made from
time to time so as to comply with any law, rule, regulation or order of any
regulatory agency or body of any jurisdiction in which the Aircraft may then be
registered; provided, however, that, Owner or any Permitted Lessee may, in good
faith, and by appropriate proceedings contest the validity or application of any
such law, rule, regulation or order in any reasonable manner which does not
materially adversely affect the Lien of this Agreement. In addition, Owner (or
any Permitted Lessee), at its own expense, may from time to time make such
alterations and modifications in and additions to the Airframe or any Engine as
Owner (or any Permitted Lessee) may deem desirable in the proper conduct of its
business, including removal of Parts which Owner (or any Permitted Lessee) deems
to be obsolete or no longer suitable or appropriate for use on the Airframe or
such Engine (such parts, "Obsolete Parts"); provided that no such alteration,
modification, removal or addition diminishes the condition or airworthiness of
the Airframe or such Engine, or materially diminishes the value, utility or, in
regard to the Airframe, remaining useful life of the Airframe or such Engine
below the condition, airworthiness, value, utility or, in regard to the
Airframe, remaining useful life thereof immediately prior to such alteration,
modification, removal or addition assuming the Airframe or such Engine was then
in the condition required to be maintained by the terms of this Agreement. In
addition, the value (but not the utility, condition or airworthiness) of the
Airframe or any Engine may be reduced by the value, if any, of Obsolete Parts
which shall have been removed so long as the aggregate value of all Obsolete
Parts which shall have been removed and not replaced shall not exceed the
Obsolete Parts Cap. All Parts incorporated or installed in or attached or added
to the Airframe or an Engine as the result of
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[Trust Indenture and Mortgage (1997 747-1)]
such alteration, modification or addition (except those parts which are excluded
from the definition of Parts or which may be removed by Owner pursuant to the
next sentence) (the "Additional Parts") shall, without further act, become
subject to the Lien of this Agreement. Notwithstanding the foregoing sentence,
Owner (or any Permitted Lessee), may, at its own expense, at any time remove or
suffer to be removed any Additional Part, provided that such Additional Part (i)
is in addition to, and not in replacement of or substitution for, any Part
originally incorporated or installed in or attached to such Airframe or any
Engine at the time of delivery thereof hereunder or any Part in replacement of
or substitution for any such Part, (ii) is not required to be incorporated or
installed in or attached or added to the Airframe or any Engine pursuant to the
first sentence of this paragraph (c) and (iii) can be removed from the Airframe
or such Engine without diminishing the condition, airworthiness, value or
utility of the Airframe or such Engine which the Airframe or such Engine would
have had at such time had such alteration, modification or addition not
occurred. Upon the removal thereof as provided above, such Additional Part shall
no longer be deemed to be subject to the Lien of this Agreement or part of the
Airframe or Engine from which it was removed.
(d) Certain Matters Regarding Passenger Convenience Equipment.
Owner may at any time and from time to time install on the Airframe Passenger
Convenience Equipment that is (i) owned by another Person and leased to Owner,
(ii) sold to Owner by another Person subject to a conditional sale contract or
other retained security interest, (iii) leased to Owner pursuant to a lease
which is subject to a security interest in favor of another Person or (iv)
installed on the Aircraft subject to a license granted to Owner by another
Person, and in any such case the Indenture Trustee will not acquire or claim, as
against any such other Person, any right, title or interest in any such
Passenger Convenience Equipment solely as a result of its installation on the
Airframe.
Section 4.03. Insurance.
(a) Public Liability and Property Damage Insurance.
(1) Except as provided in clause (2) of this Section 4.03(a), and subject to
self-insurance to the extent permitted by Section 4.03 hereof, Owner will carry
or cause to be carried with respect to the Aircraft at its or any Permitted
Lessee's expense (i) comprehensive airline liability (including, without
limitation, passenger, contractual, bodily injury, and property damage
liability) insurance (exclusive of manufacturer's product liability insurance
and including, without limitation, aircraft war risk and hijacking insurance, if
and to the extent the same is maintained by Owner (or Permitted Lessee) with
respect to other aircraft owned or leased, and operated by Owner (or Permitted
Lessee) on the same routes) and (ii) cargo liability insurance, (A) in an amount
not less than the greater of (x) the amounts of comprehensive airline liability
insurance from time to time applicable to aircraft owned or leased and operated
by Owner of the same type as the Aircraft and (y) the Minimum Liability
Insurance Amount, (B) of the type and covering the same risks as from time to
time are applicable to aircraft owned or leased and operated by Owner of the
same type as the Aircraft, and (C) which is maintained
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[Trust Indenture and Mortgage (1997 747-1)]
in effect with insurers of recognized reputation and responsibility; provided,
however, that Owner need not maintain cargo liability insurance, or may maintain
such insurance in an amount less than the Minimum Liability Insurance Amount, as
long as the amount of cargo liability insurance, if any, maintained with respect
to the Aircraft is the same as the cargo liability insurance, if any, maintained
for other Boeing Model 747-422 aircraft owned or leased, and operated by Owner.
(2) During any period that the Airframe or an Engine, as the
case may be, is on the ground and not in operation, Owner may carry or cause to
be carried as to such non-operating property, in lieu of the insurance required
by clause (1) above, and subject to the self-insurance to the extent permitted
by Section 4.03(d) hereof, insurance by insurers of recognized reputation and
responsibility otherwise conforming with the provisions of clause (1) except
that (A) the amounts of coverage shall not be required to exceed the amounts of
comprehensive airline liability insurance from time to time applicable to
property owned or leased by Owner of the same type as such non-operating
property and which is on the ground and not in operation; and (B) the scope of
the risks covered and the type of insurance shall be the same as from time to
time shall be applicable to property owned or leased by Owner of the same type
as such non-operating property and which is on the ground and not in operation.
(b) Insurance Against Loss or Damage to the Aircraft. (1)
Except as provided in clause (2) of this Section 4.03(b), and subject to the
provisions of Section 4.03(d) hereof permitting self-insurance, Owner shall
maintain or cause to be maintained in effect, at its or any Permitted Lessee's
expense, with insurers of recognized reputation and responsibility, all-risk
aircraft hull insurance covering the Aircraft and fire and extended coverage and
all-risk aircraft hull insurance covering Engines and Parts while temporarily
removed from the Aircraft and not replaced by similar components (including,
without limitation, aircraft war risk and governmental confiscation and
expropriation (other than by the government of registry of the Aircraft) and
hijacking insurance, if and to the extent the same is maintained by Owner (or
any Permitted Lessee) with respect to other aircraft owned or leased, and
operated by Owner (or such Permitted Lessee) on the same routes); provided,
that such insurance shall at all times while the Aircraft is subject to this
Agreement be for an amount (taking into account self-insurance to the extent
permitted by Section 4.03(d) hereof) not less than the Insured Amount for the
Aircraft; and provided further, that subject to compliance with Section 4.03(d)
hereof, such all-risk property damage insurance covering Engines and Parts while
temporarily removed from the Airframe or an airframe of (in the case of Parts)
an Engine need be obtained only to the extent available at reasonable cost (as
reasonably determined by Owner). In the case of a loss with respect to an engine
(other than an Engine) installed on the Airframe in circumstances which do not
constitute an Event of Loss with respect to the Airframe, the Indenture Trustee
shall promptly remit any payment made to it of any insurance proceeds in respect
of such loss to Owner or any other third party that is entitled to receive such
proceeds.
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[Trust Indenture and Mortgage (1997 747-1)]
All losses will be adjusted by Owner with the insurers;
provided, however, that during a period when any Indenture Event of Default
shall have occurred and be continuing, Owner shall not agree to any such
adjustment without the consent of the Indenture Trustee. As between the
Indenture Trustee and Owner, it is agreed that all proceeds of insurance
maintained in compliance with the preceding paragraph and received as the result
of the occurrence of an Event of Loss will be applied as follows:
(x) if such payments are received with respect to the
Airframe (or the Airframe and the Engines installed thereon), (i)
unless such property is replaced pursuant to the last paragraph of
Section 5.01(a) hereof, such payments shall be applied in reduction of
Owner's obligation to pay such amounts payable under Section 5.01(a)
hereof, if not already paid by Owner, or, if already paid by Owner,
shall be applied to reimburse Owner for its payment of such amounts
payable under Section 5.01(a) hereof, and the balance, if any, of such
payments remaining thereafter will be paid over to, or retained by,
Owner (or if directed by Owner, any Permitted Lessee); or (ii) if such
property is replaced pursuant to the last paragraph of Section 5.01(a)
hereof, such payments shall be paid over to, or retained by, Owner (or
if directed by Owner, any Permitted Lessee), provided that Owner shall
have fully performed or, concurrently therewith, will fully perform the
terms of the last paragraph of Section 5.01(a) hereof with respect to
the Event of Loss for which such payments are made; and
(y) if such payments are received with respect to an
Engine under the circumstances contemplated by Section 5.01(b) hereof,
such payments shall be paid over to, or retained by, Owner (or if
directed by Owner, any Permitted Lessee), provided that either (i) such
payments are less than the Loss Payee Amount or (ii) Owner shall have
fully performed or, concurrently therewith, will fully perform the
terms of Section 5.01(b) hereof with respect to the Event of Loss for
which such payments are made.
(2) During any period that the Aircraft is on the ground and
not in operation, Owner may carry or cause to be carried, in lieu of the
insurance required by clause (1) above, and subject to the self-insurance to the
extent permitted by Section 4.03(d) hereof, insurance otherwise conforming with
the provisions of said clause (1) except that the scope of the risks and the
type of insurance shall be the same as from time to time applicable to aircraft
owned or leased by Owner of the same type as the Aircraft similarly on the
ground and not in operation, provided that, subject to the self-insurance to the
extent permitted by Section 4.03(d) hereof, Owner shall maintain insurance
against risk of loss or damage to the Aircraft in an amount at least equal to
the Insured Amount of the Aircraft during such period that the Aircraft is on
the ground and not in operation.
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[Trust Indenture and Mortgage (1997 747-1)]
(c) Reports, etc. Owner will furnish, or cause to be
furnished, to the Indenture Trustee on or before the Closing Date, and each
annual renewal of the applicable insurances, a report, signed by AON Risk
Services of Illinois, Inc. or any other independent firm of insurance brokers
reasonably acceptable to the Indenture Trustee which brokers may be in the
regular employ of Owner (the "Insurance Brokers"), describing in reasonable
detail the hull and liability insurance (and property insurance for detached
engines and parts) then carried and maintained with respect to the Aircraft and
stating the opinion of such firm that such insurance complies with the terms
hereof; provided that all information contained in the foregoing report shall
not be made available by the Indenture Trustee to anyone except (A) to any
Noteholder's or to prospective and permitted transferees of Indenture Trustee's
or any Noteholder's interest or its respective counsel, independent certified
public accountants, independent insurance brokers or other agents, who agree to
hold such information confidential, (B) to the Indenture Trustee's counsel or
independent certified public accountants, independent insurance brokers or other
agents who agree to hold such information confidential, (C) as may be required
by any statute, court or administrative order or decree or governmental ruling
or regulation, or (D) as may be necessary for purposes of protecting the
interest of any such Person or for enforcement of this Agreement by the
Indenture Trustee; provided, further, that any and all disclosures permitted by
clauses (C) or (D) above shall be made only to the extent necessary to meet the
specific requirements or needs of the Persons to whom such disclosures are
hereby permitted. Owner will cause such Insurance Broker to agree to advise the
Indenture Trustee in writing of any act or omission on the part of Owner of
which it has knowledge and which might invalidate or render unenforceable, in
whole or in part, any insurance on the Aircraft and to advise the Indenture
Trustee in writing at least 30 days (7 days in the case of war risk and allied
perils coverage) prior to the cancellation or material adverse change of any
insurance maintained pursuant to this Section 4.03; provided that if the notice
period specified above is not reasonably obtainable, the Insurance Broker shall
provide for as long a period of prior notice as shall then be reasonably
obtainable. In the event that Owner or any Permitted Lessee shall fail to
maintain or cause to be maintained insurance as herein provided, the Indenture
Trustee or Pass Through Trustee may, at its sole option, but shall be under no
duty to, provide such insurance and, in such event, Owner shall, upon demand,
reimburse the Indenture Trustee or Pass Through Trustee, as Supplemental Rent,
for the cost thereof to the Indenture Trustee or Pass Through Trustee, as the
case may be; provided, however, that no exercise by the Indenture Trustee or
Pass Through Trustee, as the case may be, of said option shall affect the
provisions of this Agreement, including the provisions that failure by Owner to
maintain the prescribed insurance shall constitute an Event of Default.
(d) Self-Insurance. Owner may self-insure the risks required
to be insured against pursuant to this Section 4.03 under a program applicable
to all aircraft (whether owned or leased) in Owner's fleet, but in no case shall
the aggregate amount of such self-insurance in regard to Sections 4.03(a) and
4.03(b) hereof exceed for any calendar year, with respect to all of the aircraft
(whether owned or leased) in Owner's fleet (including,
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without limitation, the Aircraft) the lesser of (A) the highest replacement
value of any single aircraft in Owner's fleet or (B) 1-1/2% of the average
aggregate insurable value (during the preceding calendar year) of all aircraft
(including, without limitation, the Aircraft) on which Owner carries insurance.
In addition to the foregoing right to self-insure, Owner (and any Permitted
Lessee) may self-insure, to the extent of any applicable mandatory minimum per
aircraft (or, if applicable, per annum or other period) the hull or liability
insurance deductible imposed by the aircraft hull or liability insurer.
(e) Additional Insurance by Owner. Owner (and any Permitted
Lessee) may at its own expense carry insurance with respect to its interest in
the Aircraft in amounts in excess of that required to be maintained by this
Section 4.03.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 4.03 requiring insurance, the
Indenture Trustee agrees to accept, in lieu of insurance against any risk with
respect to the Aircraft, indemnification from, or insurance provided by, the
United States Government, against such risk in an amount which, when added to
the amount of insurance against such risk maintained by Owner (or any Permitted
Lessee) shall be at least equal to the amount of insurance against such risk
otherwise required by this Section 4.03 (taking into account self-insurance
permitted by Section 4.03(d) hereof).
(g) Terms of Insurance Policies. Any policies carried in
accordance with Sections 4.03(a) and 4.03(b) hereof covering the Aircraft, and
any policies taken out in substitution or replacement for any such policies, (A)
shall name the Additional Insureds as additional insureds, or, if appropriate
(but subject to clause (H) below), loss payees, as their respective interests
may appear (but without imposing on any such party liability to pay premiums
with respect to such insurance), (B) may provide for self-insurance to the
extent permitted in Section 4.03(d) hereof, (C) shall provide that if the
insurers cancel such insurance for any reason whatever, or if the same is
allowed to lapse for non-payment of premium or if any material change is made in
the insurance which adversely affects the interest of any Additional Insured,
such lapse, cancellation or change shall not be effective as to any Additional
Insured for thirty days (seven days in the case of war risk and allied perils
coverage) after receipt by such Additional Insured of written notice by such
insurers of such lapse, cancellation or change; provided, however, that if any
notice period specified above is not reasonably obtainable, such policies shall
provide for as long a period of prior notice as shall then be reasonably
obtainable, (D) shall provide that in respect of the respective interests of
each Additional Insured in such policies the insurance shall not be invalidated
by any action or inaction of Owner (or any Permitted Lessee) or any other Person
and shall insure the respective interests of the Additional Insureds, as they
appear, regardless of any breach or violation of any warranty, declaration or
condition contained in such policies by Owner (or any Permitted Lessee) or by
any other Person, (E) shall be primary without any right of contribution from
any other insurance which is carried by any Additional Insured,
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(F) shall expressly provide that all of the provisions thereof, except the
limits of liability, shall operate in the same manner as if there were a
separate policy covering each insured, (G) shall waive any right of the insurers
to set-off or counterclaim or any other deduction, whether by attachment or
otherwise, in respect of any liability of any Additional Insured, and (H) shall
provide that (i) in the event of a loss involving the Aircraft, Airframe, or an
Engine for which proceeds are in excess of the Loss Payee Amount, the proceeds
in respect of such loss up to the amount of the Insured Amount for the Aircraft
shall be payable to the Indenture Trustee, it being understood and agreed that
in the case of any payment to the Indenture Trustee otherwise than in respect of
an Event of Loss, the Indenture Trustee shall, upon receipt of evidence
reasonably satisfactory to it that the damages giving rise to such payment shall
have been repaired or that such payment shall then be required to pay for
repairs then being made, pay the amount of such payment, and any interest or
income earned thereon in accordance with Section 9.04 hereof, to Owner or its
order, and (ii) the entire amount of any such loss for which proceeds are equal
to or less than the Loss Payee Amount or the amount of any proceeds of any such
loss in excess of the Insured Amount for the Aircraft shall be paid to Owner or
its order unless a Section 8.01(a)(i), 8.01(e) or 8.01(f) Indenture Default or
any Indenture Event of Default shall have occurred and be continuing and the
insurers have been notified thereof the Indenture Trustee in which case such
proceeds shall be payable to the Indenture Trustee.
(h) Application of Payments During Existence of Certain
Indenture Events of Default. Any amount referred to in this Section 4.03 which
is payable to or retainable by Owner (or any Permitted Lessee) shall not be paid
to or retained by Owner (or any Permitted Lessee) if at the time of such payment
or retention an Indenture Default of the type described in Section 8.01(a)(i),
8.01(e) or 8.01(f) or any Indenture Event of Default shall have occurred and be
continuing, but shall be held by or paid over to Indenture Trustee as security
for the obligations of Owner under this Agreement and applied against Owner's
obligations hereunder as and when due. At such time as there shall not be
continuing any such Indenture Event of Default, such amount shall be paid to
Owner to the extent not previously applied in accordance with the preceding
sentence.
Section 4.04. Inspection. At reasonable times not more often
than once in any twelve (12) month period, and upon at least 20 days prior
written notice to Owner (provided however that if an Indenture Event of Default
shall have occurred and be continuing, any such inspection shall be at
reasonable times without any limit on the number of times and upon at least 5
days prior written notice to Owner), the Indenture Trustee or its respective
authorized representatives may inspect the Aircraft and inspect and make copies
of the books and records of Owner and any Permitted Lessee required to be
maintained by the FAA or the regulatory agency or body of another jurisdiction
in which the Aircraft is then registered relating to the maintenance of the
Aircraft (at the Indenture Trustee's risk and expense) and shall keep any
information or copies obtained thereby confidential and shall not disclose the
same to any Person, except (A) to the Pass Through Trustees and to prospective
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and permitted transferees of any Pass Through Trustee's or the Indenture
Trustee's interest (and such prospective and permitted transferee's counsel,
independent insurance advisors or other agents) who agree to hold such
information confidential, (B) to any Pass Through Trustee's or the Indenture
Trustee's counsel, independent insurance advisors or other agents who agree to
hold such information confidential, (C) as may be required by any statute, court
or administrative order or decree or governmental ruling or regulation, and (D)
as may be necessary for purposes of protecting the interest of any such Person
or for enforcement of this Agreement by the Indenture Trustee; provided,
however, that any and all disclosures permitted by clauses (C) and (D) above
shall be made only to the extent necessary to meet the specific requirements or
needs of Persons for whom such disclosures are hereby permitted. Any such
inspection of the Aircraft shall be subject to Owner's safety and security rules
applicable at the location of the Aircraft, shall be a visual, walk-around
inspection of the interior and exterior of the Aircraft and shall not include
opening any panels, bays or the like without the express consent of Owner
(except in connection with a heavy maintenance visit when a panel, bay or the
like is scheduled or required to be open), which consent Owner may in its sole
discretion withhold; provided that no exercise of such inspection right shall
interfere with the normal operation or maintenance of the Aircraft by, or the
business of, Owner (or any Permitted Lessee). The Indenture Trustee shall have
no duty to make any such inspection and shall incur no liability or obligation
by reason of not making any such inspection.
ARTICLE 5
EVENT OF LOSS
Section 5.01. (a) Event of Loss with Respect to the Aircraft.
Upon the occurrence of an Event of Loss with respect to the Airframe or the
Airframe and the Engines and/or engines then installed thereon, Owner shall (1)
forthwith (and in any event, within fifteen days after such occurrence) give the
Indenture Trustee written notice of such Event of Loss and (2) within 60 days
after such occurrence, give the Indenture Trustee written notice of its election
to perform one of the following options (it being understood that the failure to
give such notice shall be deemed to be an election of the option set forth in
clause (i) below):
(i) Not later than the earlier of (x) the Interest
Payment Date next succeeding the 100th day following the occurrence of
such Event of Loss or (y) the first Interest Payment Date that is at
least three Business Days after receipt by the loss payee of the
insurance proceeds with respect to such Event of Loss (but not earlier
than the first Business Day next succeeding the 65th day following the
occurrence of such Event of Loss) (the applicable day being the "Loss
Payment Date"), Owner shall, to the extent not paid to the Indenture
Trustee as insurance proceeds, pay or cause to be paid to the
Indenture Trustee an amount sufficient to redeem the Notes as provided
in Section 6.01(b); or
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(ii) Not later than the Interest Payment Date next
succeeding the 100th day following the occurrence of such Event of
Loss, Lessee shall substitute an aircraft or an airframe or an airframe
and one or more engines, as the case may be, in accordance with the
terms hereof, provided that if (A) an Indenture Event of Default shall
have occurred and be continuing as of such election date or (B) Lessee
shall have elected to make a substitution under this clause (ii) and
shall fail for any reason to make such substitution in accordance with
the terms hereof, then Lessee shall make the payments required by
clause (i) above on such date.
At such time as Lessor shall have received the sum of the
amounts specified in clause (i) above, the Indenture Trustee shall release from
the Lien of this Agreement the Aircraft by executing and delivering to the Owner
all documents and instruments as the Owner may reasonably request to evidence
such release.
The Owner's right to substitute a Replacement Airframe and
Replacement Engines, if any, as provided in Section 5.01(a)(ii) shall be subject
to the fulfillment, at the Owner's sole cost and expense, to conditions
precedent:
(i) on the date when the Replacement Airframe and Replacement
Engines, if any, is subjected to the Lien of this Agreement (such date
being referred to in this Section 5.01 as the "Replacement Closing
Date"), the following documents shall have been duly authorized,
executed and delivered by the respective party or parties thereto and
shall be in full force and effect, and an executed counterpart of each
thereof (or, in the case of the FAA ▇▇▇▇ of Sale and full warranty ▇▇▇▇
of sale referred to below, a photocopy thereof) shall have been
delivered to the Indenture Trustee:
(A) an Indenture Supplement covering the Replacement
Airframe and Replacement Engines, if any, which shall have
been duly filed for recordation pursuant to the Federal
Aviation Act or such other applicable law of such jurisdiction
other than the United States in which the Replacement Airframe
and Replacement Engines, if any, are to be registered in
accordance with Section 4.01(a)(3), as the case may be;
(B) an FAA ▇▇▇▇ of Sale (or a comparable document, if
any, of another aviation authority, if applicable) covering
the Replacement Airframe and Replacement Engines, if any,
executed by the former owner thereof in favor of the Owner;
(C) a full warranty (as to title) ▇▇▇▇ of sale,
covering the Replacement Airframe and Replacement Engines, if
any, executed by the former owner thereof in favor of the
Owner (or, at the Owner's option, other evidence of the
Owner's ownership of such Replacement Airframe and Replacement
Engines, if any, reasonably satisfactory to the Indenture
Trustee); and
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[Trust Indenture and Mortgage (1997 747-1)]
(D) Uniform Commercial Code financing statements (or
any similar statements or other documents required to be filed
or delivered pursuant to the laws of the jurisdiction in which
the Replacement Airframe and Replacement Engines, if any, may
be registered in accordance with Section 4.01(a)(3)) as are
deemed necessary or desirable by counsel for the Indenture
Trustee to protect the security interests of the Indenture
Trustee in the Replacement Airframe and Replacement Engines,
if any;
(ii) the Replacement Airframe shall be of the same or an
improved make and model as the Airframe replaced and each Replacement
Engine shall be an Acceptable Alternate Engine, and the Replacement
Airframe and Replacement Engines, if any, have a value and utility at
least equal to, and be in as good operating condition and repair as,
the Airframe and any Engines replaced (assuming such Airframe and
Engines were in the condition required by the terms hereof) as
evidenced by an appraisal from an independent aircraft appraiser;
(iii) the Indenture Trustee (acting directly or by
authorization to its special counsel) shall have received satisfactory
evidence as to the compliance with Section 4.03 with respect to the
Replacement Airframe and Replacement Engines, if any;
(iv) the Indenture Trustee at the expense of the Owner, shall
have received (acting directly or by authorization to its special
counsel) (A) an opinion of counsel to Owner (which may be Owner's
General Counsel), addressed to the Indenture Trustee, to the effect
that the Replacement Airframe and Replacement Engine, if any, has or
have duly been made subject to the Lien of this Agreement, that all
required action has been taken in order to maintain, and such action
shall maintain, the effectiveness and priority (to the extent the same
existed immediately prior to the occurrence of such Event of Loss,
assuming the Owner was in compliance with all relevant terms hereof) of
the security interests in the Airframe, the Engines and title thereto
created by this Agreement and that the protections afforded to the
Indenture Trustee by Section 1110 of the Bankruptcy Code will
not be less than such protections immediately prior to the occurrence
of such Event of Loss (assuming the Owner was in compliance with all
relevant terms hereof) and (B) an opinion of qualified FAA counsel (or
counsel in any jurisdiction outside the Untied States where the
Aircraft may be registered in accordance with Section 4.01(a)(3)),
addressed to the Indenture Trustee, as to, in the case of FAA counsel,
the due recordation of the Indenture Supplement and all other
documents or instruments the recordation of which is necessary to
perfect and protect the rights of the Indenture Trustee in the
Replacement Airframe and Replacement Engines, if any, or, in the case
of counsel in another jurisdiction, the taking of all action necessary
in such jurisdiction for such purposes; and
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[Trust Indenture and Mortgage (1997 747-1)]
(v) the Indenture Trustee (acting directly or by authorization
to special counsel) shall have received an officer's certificate of
Owner stating that, in the opinion of the signer, all conditions
precedent provided for in this Section 5.01(a) relating to such
replacement have been complied with.
Upon satisfaction of all conditions to such substitution, (x)
the Indenture Trustee shall execute and deliver to the Owner such documents and
instruments, prepared at the Owner's expense, as the Owner shall reasonably
request to evidence the release of such replaced Airframe and Engines, if any,
from the Lien of this Agreement, (y) the Indenture Trustee shall assign to the
Owner all claims it may have against any other Person relating to any Event of
Loss giving rise to such substitution and (z) the Owner shall receive all
insurance proceeds and proceeds in respect of any Event of Loss giving rise to
such replacement. For all purposes hereof, the property so substituted shall
after such transfer be deemed to be subjected to the Lien of this Agreement and
shall be deemed an "Aircraft," "Airframe" and "Engine," as the case may be, as
defined herein.
(b) Event of Loss with Respect to an Engine. Upon the
occurrence of an Event of Loss with respect to an Engine under circumstances in
which there has not occurred an Event of Loss with respect to the Airframe,
Owner shall forthwith (and in any event, within fifteen days after such
occurrence) give the Indenture Trustee written notice thereof and shall, within
sixty (60) days after the occurrence of such Event of Loss, substitute an
Acceptable Alternate Engine free and clear of all Liens (other than Permitted
Liens) in as good an operating condition as, the Engine subject to such Event of
Loss (assuming that such Engine had been maintained in accordance with this
Agreement) and cause such Acceptable Alternate Engine to be subjected to the
Lien of this Agreement. The Owner's right to make a replacement hereunder shall
be subject to the fulfillment (which may be simultaneous with such replacement)
of the following conditions precedent at the Owner's sole cost and expense and
the Indenture Trustee agrees to cooperate with the Owner to the extent necessary
to enable it to timely satisfy such conditions:
(i) the following documents shall be duly authorized, executed
and delivered by the respective party or parties thereto, and an
executed counterpart of each shall be delivered to the Indenture
Trustee:
(A) an Indenture Supplement covering the Replacement
Engine, which shall have been duly filed for recordation
pursuant to the Federal Aviation Act or such other applicable
law of the jurisdiction other than the United States in which
the Aircraft of which such Engine is a part is registered in
accordance with Section 4.01(a)(3), as the case may be;
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[Trust Indenture and Mortgage (1997 747-1)]
(B) a full warranty ▇▇▇▇ of sale (as to title)
covering the Replacement Engine, executed by the former owner
thereof in favor of the Owner (or, at the Owner's option,
other evidence of the Owner's ownership of such Replacement
Engine, reasonably satisfactory to the Indenture Trustee); and
(C) Uniform Commercial Code financing statements
covering the security interests created by this Agreement (or
any similar statements or other documents required to be filed
or delivered pursuant to the laws of the jurisdiction in which
such Aircraft may be registered) as are deemed necessary or
desirable by counsel for the Indenture Trustee to protect the
security interests of the Indenture Trustee in the Replacement
Engine;
(ii) the Owner shall cause to be delivered to the Indenture
Trustee, if requested by it, an opinion of counsel (which may be
Owner's General Counsel) to the effect that the Lien of this Agreement
continues to be in full force and effect with respect to the
Replacement Engine; and
(iii) the Owner shall deliver to the Indenture Trustee an
officer's certificate stating that in the opinion of such signer, all
conditions precedent provided for in this Section 5.01(b) relating to
such replacement have been complied with.
Upon satisfaction of all conditions to such substitution, (x)
the Indenture Trustee shall execute and deliver to the Owner such documents and
instruments, prepared at the Owner's expense, as the Owner shall reasonably
request to evidence the release of such replaced Engine from the Lien of this
Agreement, (y) the Indenture Trustee shall assign to the Owner all claims it may
have against any other Person relating to any Event of Loss giving rise to such
substitution and (z) the Owner shall receive all insurance proceeds and proceeds
in respect of any Event of Loss giving rise to such replacement. For all
purposes hereof, each such replacement engine shall, after such conveyance, be
deemed to be subjected to the Lien of this Agreement and shall be deemed an
"Engine."
(c) Application of Payments from Governmental Authorities for
Requisition of Title, etc. Any payments (other than insurance proceeds the
application of which is provided for in Section 4.03) received at any time by
the Indenture Trustee or by Owner from any governmental authority or other
Person with respect to an Event of Loss, other than a requisition for use by the
United States Government or other government of registry of the Aircraft or any
instrumentality or agency of any thereof not constituting an Event of Loss, will
be applied as follows:
(i) if payments are received with respect to the Airframe
(or the Airframe and any Engine or engines then installed thereon),
(A) unless the same are replaced pursuant to the last paragraph of
Section 5.01(a), such payments as shall not
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[Trust Indenture and Mortgage (1997 747-1)]
exceed the amounts payable under Section 5.01(a) hereof required to be
paid by Owner pursuant to Section 5.01(a), shall be applied in
reduction of Owner's obligation to pay the amounts payable under
Section 5.01(a) hereof, if not already paid by Owner, or, if already
paid by Owner, shall be applied to reimburse Owner for its payment of
such amounts, and following the foregoing application, the balance, if
any, of such payments shall be paid over to, or retained by, Owner; or
(B) if such property is replaced pursuant to the last paragraph of
Section 5.01(a), such payments shall be paid over to or retained by,
Owner; provided, that Owner shall have fully performed or,
concurrently therewith, will fully perform the terms of the last
paragraph of Section 5.01(a) with respect to the Event of Loss for
which such payments are made; and
(ii) if such payments are received with respect to an
Engine under circumstances contemplated by Section 5.01(b) hereof, such
payments shall be paid over to, or retained by, Owner, provided that
either (x) such payments are less than the Loss Payee Amount or (y)
Owner shall have fully performed, or concurrently therewith will
perform, the terms of Section 5.01(b) with respect to the Event of Loss
for which such payments are made.
(d) Requisition for Use of the Aircraft by the United States
Government or Government of Registry of the Aircraft. In the event of the
requisition for use of the Airframe and the Engines or engines installed on the
Airframe by the United States Government or any other government of registry of
the Aircraft or any instrumentality or agency of any thereof, Owner shall
promptly notify the Indenture Trustee of such requisition, and all of Owner's
obligations under this Agreement with respect to the Aircraft shall continue to
the same extent as if such requisition had not occurred. All payments received
by the Indenture Trustee or Owner from such government for the use of such
Airframe and Engines or engines shall be paid over to, or retained by, Owner
(or, if directed by Owner, any Permitted Lessee).
(e) Requisition for Use of an Engine by the United States
Government or the Government of Registry of the Aircraft. In the event of the
requisition for use of an Engine by the United States Government or any other
government of registry of the Aircraft or any agency or instrumentality of any
thereof (other than in the circumstances contemplated by subsection (d)), Owner
shall replace (or cause any Permitted Lessee to replace) such Engine hereunder
and Indenture Trustee and Owner (or Permitted Lessee as the case may be) shall
comply with the terms of Section 5.01(b) hereof to the same extent as if an
Event of Loss had occurred with respect to such Engine. Upon compliance with
Section 5.01(b) hereof, any payments received by Indenture Trustee or Owner from
such government with respect to such requisition shall be paid over to, or
retained by Owner.
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[Trust Indenture and Mortgage (1997 747-1)]
(f) Application of Payments During Existence of Certain
Indenture Defaults and Events of Default. Any amount referred to in this Section
5.01 which is payable to or retainable by Owner (or any Permitted Lessee) shall
not be paid to or retained by Owner (or any Permitted Lessee) if at the time of
such payment or retention an Indenture Default of the type described in Section
8.01(a)(i), 8.01(e) or 8.01(f) or any Indenture Event of Default shall have
occurred and be continuing, but shall be held by or paid over to Indenture
Trustee as security for the obligations of Owner (or such Permitted Lessee)
under this Agreement and applied against Owner's obligations hereunder as and
when due. At such time as there shall not be continuing any such Indenture Event
of Default, such amount shall be paid to Owner to the extent not previously
applied in accordance with the preceding sentence.
Section 5.02. Liens. The Owner will not directly or indirectly
create, incur, assume or suffer to exist any Lien on or with respect to the
Airframe on any Engine or any interest therein, except Permitted Liens. The
Owner shall promptly, at its own expense, take such action as may be necessary
to duly discharge (by bonding or otherwise) any Lien other than a Permitted Lien
arising at any time.
ARTICLE 6
REDEMPTION OF EQUIPMENT NOTES
Section 6.01. Redemption of Equipment Notes upon Certain
Events. (a) If there shall be an Event of Loss to the Aircraft or Airframe and
the Aircraft or Airframe is not replaced pursuant to Section 5.01(a)(ii), each
outstanding Equipment Note shall be redeemed in whole at a price (the
"Redemption Price") equal to 100% of the outstanding principal amount of such
Equipment Note, together with accrued and unpaid interest thereon to but
excluding the applicable Redemption Date and Break Amount, if any. No
Make-Whole Amount shall be payable in connection with a redemption under this
Section 6.01.
(b) Each of the Series A and Series B Equipment Notes may be
redeemed by the Owner on any date, upon notice as specified in Section 6.02, and
in such event, each outstanding Equipment Note of such Series shall be redeemed
in whole at a Redemption Price to 100% of the outstanding principal amount of
such Equipment Note, together with accrued and unpaid interest thereon to but
excluding the applicable Redemption Date plus Break Amount, if any, and/or
Make-Whole Amount, if any, payable with respect thereto. The Series C Equipment
Notes may not be redeemed by the Owner.
Section 6.02. Notice of Redemption to Noteholders. Irrevocable
notice of redemption shall be given by first-class mail, postage prepaid, mailed
not less than 26 nor
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[Trust Indenture and Mortgage (1997 747-1)]
more than 60 days prior to the Redemption Date, to each Noteholder of Equipment
Notes to be redeemed or purchased, at such Noteholder's address appearing in the
Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the applicable basis for determining the Redemption Price;
(3) that on the Redemption Date, the Redemption Price will
become due and payable upon each such Equipment Note, and that interest
on Equipment Notes shall cease to accrue on and after such Redemption
Date;
(4) the amount of Break Amount, if any, payable with respect
to such redemption;
(5) the amount of Make-Whole Amount, if any, payable with
respect to such redemption; and
(6) the place or places where such Equipment Notes are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Equipment Notes to be redeemed shall be given by the
Indenture Trustee.
Section 6.03. Deposit of Redemption Price. On or before the
Redemption Date, the Owner shall, to the extent an amount equal to the
Redemption Price for the Equipment Notes to be redeemed on the Redemption Date
shall not then be held in the Indenture Estate, deposit or cause to be deposited
with the Indenture Trustee or the Paying Agent by 11:00 a.m., Chicago time, in
immediately available funds the Redemption Price of the Equipment Notes to be
redeemed on the Redemption Date.
Section 6.04. Equipment Notes Payable on Redemption Date.
Notice of redemption or purchase having been given as aforesaid, the Equipment
Notes shall, on the applicable Redemption Date, become due and payable at the
Corporate Trust Department of the Indenture Trustee or at any office or agency
maintained for such purposes pursuant to Section 2.03, and from and after such
Redemption Date (unless there shall be a default in the deposit of the
Redemption Price pursuant to Section 6.03) any Equipment Notes then outstanding
shall cease to bear interest or be deemed to be outstanding for any purpose.
Upon surrender of any such Equipment Note for redemption in accordance with said
notice such Equipment Note shall be paid at the Redemption Price.
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[Trust Indenture and Mortgage (1997 747-1)]
If any Equipment Note called for redemption shall not be so
paid upon surrender thereof for redemption, the principal amount thereof shall,
until paid, continue to bear interest from the applicable Redemption Date at the
interest rate applicable to such Equipment Note.
ARTICLE 7
MATTERS CONCERNING UNCLAIMED MONIES
Section 7.01. Repayment of Monies for Equipment Note Payments
Held by the Indenture Trustee. Any money held by the Indenture Trustee or any
Paying Agent in trust for any payment of the principal of, Break Amount, if any,
Make-Whole Amount, if any, or interest on any Equipment Note, including without
limitation any money deposited pursuant to Section 6.03 or Article 10 and
remaining unclaimed for two years after the due date for such payment, shall be
paid to the Owner. The Noteholders of any outstanding Equipment Notes shall
thereafter, as unsecured general creditors, look only to the Owner for payment
thereof, and all liability of the Indenture Trustee or any such Paying Agent
with respect to such trust money shall thereupon cease; provided that the
Indenture Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Owner cause to be mailed to each such
Noteholder notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of
mailing, any unclaimed balance of such money then remaining will be repaid to
the Owner as provided herein.
ARTICLE 8
DEFAULTS AND REMEDIES
Section 8.01. Indenture Events of Default. The following
events shall constitute "Indenture Events of Default" under this Agreement
(whether any such event shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) Owner shall fail to pay (i) any amount of interest on,
Break Amount, if any, Make-Whole Amount, if any, or principal of any
Equipment Note when due and payable (whether upon redemption or
purchase, final maturity, acceleration or otherwise) and such failure
shall continue unremedied for 10 days after such amount shall have
become due and payable or (ii) any other amount payable by Owner
hereunder or under the Participation Agreement when due and payable and
such
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failure shall continue unremedied for more than 20 Business Days
after receipt by Owner of written notice from the Indenture Trustee; or
(b) Owner shall fail to carry and maintain on or with respect
to the Aircraft (or cause to be carried and maintained) insurance
required to be maintained in accordance with the provisions of Section
4.03 hereof; provided that such lapse or cancellation shall not
constitute an Indenture Event of Default until the earlier of (i) 30
days after receipt by the Indenture Trustee of written notice of such
lapse or cancellation or (ii) the date that such lapse or cancellation
is effective as to the Indenture Trustee; or
(c) Owner shall have failed to perform or observe (or caused
to be performed and observed) in any material respect any other
covenant or agreement to be performed or observed by it under any
Operative Document, and such failure shall continue unremedied for a
period of 60 days after receipt by Owner of written notice thereof from
Indenture Trustee; provided, however, that if Owner shall have
undertaken to cure any such failure and, notwithstanding the reasonable
diligence of Owner in attempting to cure such failure, such failure is
not cured within said 60-day period there shall exist no Indenture
Event of Default under this Section 8.01 so long as Owner is proceeding
with due diligence to cure such failure and such failure is in fact
cured within 360 days; or
(d) any representation or warranty made by Owner herein or in
any Operative Document shall prove to have been incorrect in any
material respect at the time made and shall remain material at the time
in question; provided, however, such incorrectness shall constitute a
default hereunder only if such incorrectness shall continue uncured for
a period of 60 days after the receipt by Owner of a written notice from
Indenture Trustee or, subject to Section 2.6 of the Intercreditor
Agreement, holders of 25% in outstanding principal amount of Equipment
Notes advising Owner of the existence of such incorrectness; or
(e) the commencement of an involuntary case or other
proceeding in respect of Owner in an involuntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law
in the United States or seeking the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of Owner or for all or substantially all of its property, or
seeking the winding-up or liquidation of its affairs and the
continuation of any such case or other proceeding undismissed or
unstayed for a period of ninety (90) consecutive days or an order for
relief under Chapter 11 of the Bankruptcy Code with respect to Owner as
debtor or any other order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without
the consent of Owner, a receiver, trustee
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[Trust Indenture and Mortgage (1997 747-1)]
or liquidator of Owner, or for all or substantially all of its
property, or sequestering of all or substantially all of the property
of Owner and any such order, judgment or decree or appointment or
sequestration shall be final or shall remain in force undismissed,
unstayed or unvacated for a period of ninety (90) days after the date
of entry thereof; or
(f) the commencement by Owner of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or
any other applicable federal or state bankruptcy, insolvency or other
similar law in the United States, or the consent by Owner to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of Owner or for all or substantially all of its property, or the making
by Owner of any assignment for the benefit of creditors or Owner shall
take any corporate action to authorize any of the foregoing; or
(g) Owner shall fail to maintain its status as a Certificated
Air Carrier and such failure shall continue for 5 consecutive Business
Days;
provided, however, that, notwithstanding anything to the contrary contained in
this Section 8.01, any failure of Owner to perform or observe any covenant,
condition, agreement or any error in a representation or warranty shall not
constitute an Indenture Event of Default if such failure or error is caused
solely by reason of any event that constitutes an Event of Loss so long as Owner
is continuing to comply with all of the terms of Section 5.01 hereof.
Section 8.02. Acceleration; Rescission and Annulment. If an
Indenture Event of Default under Section 8.01(e) or 8.01(f) shall have occurred
and is continuing, then the principal of the all Equipment Notes, together with
accrued but unpaid interest thereon, and all other amounts due thereunder and
hereunder shall immediately become due and payable without presentment, demand,
protest or notice, all of which are hereby waived, and if any other Indenture
Event of Default occurs and is continuing, the Indenture Trustee may (and shall,
subject to Section 2.6 of the Intercreditor Agreement, upon receipt of a written
demand therefor from the holders of 25% in outstanding principal amount of
Equipment Notes of Noteholders), by notice to the Owner declare the principal of
all the Equipment Notes to be immediately due and payable. Upon such
declaration, the principal of all Equipment Notes together with accrued interest
thereon from the date in respect of which interest was last paid hereunder to
the date payment of such principal has been made or duly provided for, and Break
Amount, if any, but without Make-Whole Amount, shall be immediately due and
payable without presentment, demand, protest or other notice, all of which are
hereby waived. At any time after such declaration and prior to the sale or
disposition of the Indenture Estate, the Indenture Trustee may (and shall upon
receipt of a written demand therefor from a Majority in Interest of Noteholders)
by notice to the Owner, rescind such a declaration and thereby annul its
consequences if (i) an amount sufficient to pay all principal
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[Trust Indenture and Mortgage (1997 747-1)]
on any Equipment Notes which have become due otherwise than by such declaration
and any interest thereon and interest due or past due, if any, and all sums due
and payable to the Indenture Trustee have been deposited with the Indenture
Trustee, (ii) the rescission would not conflict with any judgment or decree and
(iii) all existing Indenture Defaults and Indenture Events of Default under this
Agreement have been cured or waived except nonpayment of principal of, or
interest on, the Equipment Notes that has become due solely because of such
acceleration. No such rescission shall affect any subsequent default or impair
any right consequent thereon.
Section 8.03. Other Remedies Available to Indenture Trustee.
(a) After an Indenture Event of Default shall have occurred and so long as such
Indenture Event of Default shall be continuing, then and in every such case the
Indenture Trustee, as holder of a security interest in the Aircraft or Engines
may, and when required pursuant to the provisions of Article 9 shall, exercise,
any or all of the rights and powers and pursue any and all of the remedies
accorded to a secured party under applicable law, may recover judgment in its
own name as Indenture Trustee against the Indenture Estate and may take
possession of all or any part of the Indenture Estate and may exclude the Owner
and all Persons claiming under any of them wholly or partly therefrom.
(b) After an Indenture Event of Default shall have occurred
and so long as such Indenture Event of Default shall be continuing, the
Indenture Trustee may, if at the time such action may be lawful and always
subject to compliance with any mandatory legal requirements, either with or
without taking possession, and either before or after taking possession and
without instituting any legal proceedings whatsoever, and having first given
notice of such sale by registered mail to the Owner, at least 30 days prior to
the date of such sale, and any other notice which may be required by law, sell
and dispose of the Indenture Estate, or any part thereof, or interest therein,
at public auction or private sale, in one lot as an entirety or in separate
lots, and either for cash or on credit and on such terms as the Indenture
Trustee may determine, and at any place (whether or not it be the location of
the Indenture Estate or any part thereof) and time designated in the notice
above referred to; provided, however, that, notwithstanding any provision herein
to the contrary, the Indenture Trustee may not provide the notice provided for
above of its intention to sell any of the Indenture Estate, exercise remedies
against the Indenture Estate seeking to deprive the Owner of its rights therein
unless a declaration of acceleration has been made pursuant to Section 8.02 or
the Equipment Notes have otherwise theretofore become due and payable through
redemption or otherwise. Any such sale or sales may be adjourned from time to
time by announcement at the time and place appointed for such sale or sales, or
for any such adjourned sale or sales, without further notice, and the Indenture
Trustee and the Noteholder or Noteholders of any Equipment Notes, or any
interest therein, may bid and become the purchaser at any such sale and each
Noteholder shall be entitled at any sale to credit against any purchase price
bid at such sale by such Noteholder all or any part of the unpaid Secured
Obligations owing to such Noteholder secured by the Lien of this Agreement. The
Indenture
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[Trust Indenture and Mortgage (1997 747-1)]
Trustee may exercise such right without possession or production of
the Equipment Notes or proof of ownership thereof, and as representative of the
Noteholders may exercise such right without notice to the Noteholders or
including the Noteholders as parties to any suit or proceeding relating to
foreclosure of any property in the Indenture Estate.
(c) If an Indenture Event of Default has occurred and is
continuing, the Indenture Trustee shall also be entitled to pursue all or any
part of the Indenture Estate wherever it may be found and may enter any of the
premises of the Owner or any other Person wherever the Indenture Estate may be
or be supposed to be and search for the Indenture Estate and take possession of
any item of the Indenture Estate pursuant to this Section 8.03(c). The Indenture
Trustee may, from time to time, at the expense of the Indenture Estate, make all
such expenditures for maintenance, insurance, repairs, replacements,
alterations, additions and improvements to and of the Indenture Estate, as it
may deem proper. In each such case, the Indenture Trustee shall have the right
to maintain, use, insure, operate, store, lease, control or manage the Indenture
Estate, and to carry on business and exercise all rights and powers of the Owner
relating to the Indenture Estate as the Indenture Trustee shall deem
appropriate, including the right to enter into any and all such agreements with
respect to the maintenance, use, insurance, operation, storage, leasing, control
or management of the Indenture Estate or any part thereof. The Indenture Trustee
shall be entitled to collect and receive directly all tolls, rents (including
Rent), issues, profits, products, revenues or other income pursuant to this
Section 8.03(c). In accordance with the terms of this Section 8.03(c), such
tolls, rents (including Rent), issues, profits, products, revenues and other
income shall be applied to pay the expenses of using, operating, storing,
leasing, controlling or managing the Indenture Estate, and of all maintenance,
insurance, repairs, replacements, alterations, additions and improvements, and
to make all payments which the Indenture Trustee may be required or may elect to
make, if any, for taxes, assessments, insurance or other proper charges upon the
Indenture Estate or any part thereof (including the employment of engineers and
accountants to examine, inspect and make reports upon the properties and books
and records of the Owner), and all other payments which the Indenture Trustee
may be required or authorized to make under any provision of this Agreement,
including this Section 8.03(c), as well as just and reasonable compensation for
the services of the Indenture Trustee, and of all persons properly engaged and
employed by the Indenture Trustee.
If an Indenture Event of Default occurs and is continuing and
the Indenture Trustee shall have obtained possession of or title to the
Aircraft, the Indenture Trustee shall not be obligated to use or operate the
Aircraft or cause the Aircraft to be used or operated directly or indirectly by
itself or through agents or other representatives or to lease, license or
otherwise permit or provide for the use or operation of the Aircraft by any
other Person unless (i) the Indenture Trustee shall have been able to obtain
insurance in kinds, at rates and in amounts satisfactory to it in its discretion
to protect the Indenture Estate and the Indenture Trustee, as trustee and
individually, against any and all liability for loss or damage to the
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[Trust Indenture and Mortgage (1997 747-1)]
Aircraft and for public liability and property damage resulting from use or
operation of the Aircraft and (ii) funds are available in the Indenture Estate
to pay for all such insurance or, in lieu of such insurance, the Indenture
Trustee is furnished with indemnification from the Noteholders or any other
Person upon terms and in amounts satisfactory to the Indenture Trustee in its
discretion to protect the Indenture Estate and the Indenture Trustee, as trustee
and individually, against any and all such liabilities.
(d) Subject to Sections 8.03(b), the Indenture Trustee may
proceed to protect and enforce this Agreement and the Equipment Notes by suit or
suits or proceedings in equity, at law or in bankruptcy, and whether for the
specific performance of any covenant or agreement herein contained or in
execution or aid of any power herein granted; or for foreclosure hereunder, or
for the appointment of a receiver or receivers for the Indenture Estate or any
part thereof, or for the recovery of judgment for the indebtedness secured by
the Lien created under this Agreement or for the enforcement of any other
proper, legal or equitable remedy available under applicable law.
(e) Each and every right, power and remedy herein given to the
Indenture Trustee specifically or otherwise in this Agreement shall be
cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time and as often in
such order as may be deemed expedient by the Indenture Trustee, and the exercise
or the beginning of the exercise of any power or remedy shall not be construed
to be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by the Indenture Trustee in the
exercise of any right, remedy or power or in pursuing any remedy shall impair
any such right, power or remedy or be construed to be a waiver of any default on
the part of the Owner or to be an acquiescence therein.
(f) Notwithstanding anything contained herein to the contrary,
so long as the Subordination Agent (acting on behalf of the Pass Through
Trustees) or any Pass Through Trustee is a Noteholder, the Indenture Trustee is
not authorized or empowered to acquire title to the Indenture Estate, or to take
any action with respect to any of the Indenture Estate so acquired by it, if
such acquisition or action would cause any Pass Through Trust to fail to qualify
as a "grantor trust" for federal income tax purposes.
Section 8.04. Waiver of Existing Defaults. The Majority in
Interest of Noteholders by notice to the Indenture Trustee may waive on behalf
of the Noteholders an existing Indenture Default or Indenture Event of Default
and its consequences except (i) an Indenture Default or Indenture Event of
Default in the payment of the principal of or interest on any Equipment Note or
(ii) in respect of a covenant or provision hereof which pursuant to Section
11.02 can not be amended or modified without the consent of each Noteholder
affected thereby.
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[Trust Indenture and Mortgage (1997 747-1)]
Section 8.05. Control by Majority. (a) Except as otherwise
expressly provided herein, the Majority in Interest of Noteholders may direct
the time, method and place of conducting any proceeding for any remedy available
to the Indenture Trustee or exercising any trust or power conferred on it by
this Agreement. However, the Indenture Trustee may refuse to follow any
direction that conflicts with law or this Agreement, that is unduly prejudicial
to the rights of the Noteholders so affected, or that would subject the
Indenture Trustee to personal liability.
Section 8.06. Rights of Noteholders to Receive Payment.
Notwithstanding any other provision of this Agreement the right of any
Noteholder to receive payment of principal of, Break Amount, if any, Make-Whole
Amount, if any, and interest on such Equipment Note on or after the respective
due dates expressed in such Equipment Note, or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Noteholder.
Section 8.07. Indenture Trustee May File Proofs of Claim. The
Indenture Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee and of the Noteholders allowed in any judicial proceedings relating to
any obligor on the Equipment Notes, its creditors, or its property.
ARTICLE 9
INDENTURE TRUSTEE
Section 9.01. Duties of Indenture Trustee. (a) The Indenture
Trustee may refuse to perform any duty or exercise any right or power unless it
receives indemnity satisfactory to it against any loss, liability or expense.
(b) Subject to the provisions of Sections 2.08 and 9.04, the
Indenture Trustee shall not be liable for interest on any money received except
as otherwise provided in any other Operative Document. Money held in trust by
the Indenture Trustee need not be segregated from other funds except to the
extent required by law.
Section 9.02. Rights of Indenture Trustee. (a) The Indenture
Trustee may rely on any document believed by it to be genuine and to have been
signed or presented by the proper person. The Indenture Trustee need not
investigate any fact or matter stated in the document.
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[Trust Indenture and Mortgage (1997 747-1)]
(b) Before the Indenture Trustee acts or refrains from acting,
it may consult with counsel or require an officer's certificate or an opinion of
counsel from the Owner after which it will take such action or refrain from
acting as it deems appropriate. The Indenture Trustee shall not be liable for
any action it takes or omits to take in good faith and in accordance herewith in
reliance on a resolution of the Board of Directors of the Owner, the written
advice of counsel acceptable to the Owner and the Indenture Trustee, officer's
certificate or opinions of counsel provided by the Owner.
(c) The Indenture Trustee may act through agents and shall not
be responsible for the misconduct or negligence of any such agent appointed with
due care; provided that, no such agents shall be appointed by the Indenture
Trustee without the consent of the Owner, such consent not to be unreasonably
withheld.
(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith which it believes to be authorized or
within its rights or powers.
(e) If an Indenture Event of Default under this Agreement has
occurred and is continuing, the Indenture Trustee shall exercise its rights and
powers under this Agreement, and shall use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
Section 9.03. Individual Rights of Indenture Trustee. The
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Equipment Notes and may otherwise deal with the Owner or an
Affiliate of the Owner or a subsidiary of the Owner with the same rights it
would have if it were not the Indenture Trustee. Any Agent may do the same with
like rights.
Section 9.04. Funds May Be Held by Indenture Trustee or Paying
Agent; Investments. Any monies (including without limitation for purpose of this
Section 9.04 Permitted Investments constituting the proceeds of the maturity,
sale or other disposition of any Permitted Investment) held by the Indenture
Trustee or the Paying Agent hereunder as part of the Indenture Estate, until
paid out by the Indenture Trustee or the Paying Agent as herein provided, (i)
subject to clause (ii) below, may be carried by the Indenture Trustee or the
Paying Agent on deposit with itself or on deposit to its account with any bank,
trust company or national banking association incorporated or doing business
under the laws of the United States of America or one of the States thereof
having combined capital and surplus and retained earnings of at least
$75,000,000, and neither the Indenture Trustee nor the Paying Agent shall have
any liability for interest upon any such monies except as otherwise agreed in
writing or (ii) at any time and from time to time, at the request of the Owner,
shall be invested and reinvested in Permitted Investments as specified in such
request (if such investments are reasonably available for purchase) and sold, in
any case at such prices, including accrued interest or its equivalent, as are
set forth in such request, and such
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[Trust Indenture and Mortgage (1997 747-1)]
Permitted Investments shall be held by the Indenture Trustee in trust as part of
the Indenture Estate until so sold; provided that the Owner shall upon demand
pay to the Indenture Trustee the amount of any loss realized upon maturity, sale
or other disposition of any such Permitted Investment and be entitled to receive
from the Indenture Trustee, and the Indenture Trustee shall promptly pay to the
Owner, any profit, income, interest, dividend or gain realized upon maturity,
sale or other disposition of any Permitted Investment. The Indenture Trustee
shall not be responsible for any losses on any investments or sales of Permitted
Investments made pursuant to the procedure specified in this Section 9.04. All
Permitted Investments held by the Indenture Trustee or the Paying Agent pursuant
to this Section 9.04 shall either be (a) registered in the name of, payable to
the order of, or specially indorsed to, the Indenture Trustee or the Paying
Agent, as the case may be, or (b) held in an Eligible Account. For purposes of
this Section 9.04, "Eligible Account" means an account established by and with
an Eligible Institution at the request of the Indenture Trustee or the Paying
Agent, as the case may be, which institution agrees, for all purposes of the
applicable Uniform Commercial Code ("UCC") including Article 8 thereof, that (a)
such account shall be a "securities account" (as defined in Section 8-501 of the
UCC), (b) all property (other than cash) credited to such account shall be
treated as a "financial asset" (as defined in Section 8-102(9) of the UCC), (c)
the Indenture Trustee or the Paying Agent, as the case may be, shall be the
"entitlement holder" (as defined in Section 8-102(7) of the UCC) in respect of
such account, (d) the Eligible Institution will comply with all entitlement
orders issued by the Indenture Trustee or the Paying Agent, as the case may be,
to the exclusion of the Owner, and (e) the "securities intermediary
jurisdiction" (under Section 8-110(e) of the UCC) shall be the State of
Illinois. For purposes of this Section 9.04, "Eligible Institution" means the
corporate trust department of (a) First Security Bank, National Association,
acting solely in its capacity as a "securities intermediary" (as defined in
Section 8-102(14) of the UCC), or (b) a depository institution organized under
the laws of the United States of America or any one of the states thereof or the
District of Columbia (or any U.S. branch of a foreign bank), which has a
long-term unsecured debt rating from Moody's and Standard & Poor's of at least
A-3 or its equivalent.
Section 9.05. Notice of Defaults. If an Indenture Default or
Indenture Event of Default under this Agreement occurs and is continuing and the
Indenture Trustee has actual knowledge of same, the Indenture Trustee shall (i)
promptly send written notice thereof to the Owner and (ii) within 90 days after
the occurrence of an Indenture Event of Default, mail to each Noteholder notice
of all uncured Indenture Events of Default under this Agreement. Except in the
case of a default in the payment of the principal of, Break Amount, if any,
Make-Whole Amount, if any, or interest on any Equipment Note, the Indenture
Trustee shall be protected in withholding the notice required under clause (ii)
above if and so long as the executive committee or trust committee of directors
of the Indenture Trustee and/or other responsible officers thereof in good faith
determines that withholding such notice is in the best interests of the
Noteholders.
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[Trust Indenture and Mortgage (1997 747-1)]
Section 9.06. Compensation and Indemnity. The Indenture Trustee
shall not be required to take any action or refrain from taking any action under
Section 9.05 (other than the first sentence thereof) or Article 8 hereof unless
the Indenture Trustee shall have been indemnified to its reasonable satisfaction
against any liability, cost or expense (including counsel fees) which may be
incurred in connection therewith pursuant to a written agreement with one or
more Noteholders. The Indenture Trustee agrees that it shall look solely to the
Noteholders for the satisfaction of any indemnity (except expenses for
foreclosure of the type referred to in clause "First" of Section 3.03 hereof)
owed to it pursuant to this Section 9.06. The Indenture Trustee shall not be
under any obligation to take any action under this Agreement or any other
Operative Document and nothing herein or therein shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur the risk of any
financial ability in the performance of any of its rights or powers if it shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. The
Indenture Trustee shall not be required to take any action under Section 9.05
(other than the first sentence thereof) or Article 8 hereof, nor shall any other
provision of this Agreement or any other Operative Document be deemed to impose
a duty on the Indenture Trustee to take any action, if the Indenture Trustee
shall have been advised by counsel that such action is contrary to the terms
hereof or is otherwise contrary to law.
Section 9.07. Replacement of Indenture Trustee. (a) The
resignation or removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee shall become effective only upon the successor
Indenture Trustee's acceptance of appointment as provided in this Section.
(b) The Indenture Trustee may resign by giving at least 30
days' prior written notice to the Owner. A Majority in Interest of Noteholders
may remove the Indenture Trustee by giving at least 30 days' prior written
notice to the Indenture Trustee and the Owner and may appoint a successor
Indenture Trustee for such Equipment Notes with the Owner's consent. The Owner
may remove the Indenture Trustee at any time no Indenture Default under Section
8.01(a), (e) or (f) or any Indenture Event of Default shall have occurred and be
continuing, if the Owner determines in its reasonable business judgment that
such removal would be appropriate or if:
(1) the Indenture Trustee fails to comply with Section 9.09;
(2) the Indenture Trustee is adjudged a bankrupt or an
insolvent;
(3) a receiver or public officer takes charge of the Indenture
Trustee or its property; or
(4) the Indenture Trustee becomes incapable of acting.
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(c) If a vacancy exists in the office of Indenture Trustee for
any reason, the Owner shall promptly appoint a successor Indenture Trustee.
(d) If a successor Indenture Trustee does not take office
within 30 days after the retiring Indenture Trustee resigns or is removed, the
retiring Indenture Trustee, the Owner or a Majority in Interest of Noteholders
may petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee.
(e) If the Indenture Trustee fails to comply with Section
9.09, any Noteholder may petition any court of competent jurisdiction for the
removal of such Indenture Trustee and the appointment of a successor Indenture
Trustee.
(f) A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee and to the
Owner. Thereupon, the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the retiring Indenture Trustee for which the
successor Indenture Trustee is to be acting as Indenture Trustee under this
Agreement. The retiring Indenture Trustee shall promptly transfer all property
and all books and records relating to the administration of the Indenture Estate
held by it as Indenture Trustee to the successor Indenture Trustee. The
Indenture Trustee shall give notice of each appointment of a successor Indenture
Trustee to the Noteholders, by mailing written notice of such event by
first-class mail to the Noteholders.
Section 9.08. Successor Indenture Trustee, Agents by Merger,
etc. If the Indenture Trustee or any Agent consolidates with, merges or converts
into, or transfers all or substantially all of its corporate trust business
assets to, another corporation, the successor corporation, without any further
act, shall be the successor Indenture Trustee or Agent, as the case may be.
Section 9.09. Eligibility; Disqualification. This Agreement
shall at all times have an Indenture Trustee which (i) shall have a combined
capital and surplus of at least $75,000,000 or (ii) shall have a combined
capital and surplus in excess of $7,500,000 and the obligations of which,
whether now in existence or hereafter incurred, are fully and unconditionally
guaranteed by a corporation organized and doing business under the laws of the
United States, any State or Territory thereof or of the District of Columbia and
having a combined capital and surplus of at least $75,000,000, and which, in any
case, shall be a Citizen of the United States. If such corporation publishes
reports of conditions at least annually, pursuant to law or to the requirements
of Federal, State, Territorial, or District of Columbia supervising or examining
authority, then for the purposes of this Section 9.09, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of conditions so published.
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[Trust Indenture and Mortgage (1997 747-1)]
In case at any time the Indenture Trustee shall cease to be
eligible in accordance with the provisions of this Section 9.09, the Indenture
Trustee shall resign immediately in the manner and with the effect specified in
Section 9.07.
Section 9.10. Trustee's Liens. The Indenture Trustee in its
individual capacity agrees that it will at its own cost and expense promptly
take such action as may be necessary to duly discharge and satisfy in full all
Liens ("Trustee's Liens") on the Indenture Estate which are either (i)
attributable to the Indenture Trustee in its individual capacity and which are
unrelated to the transactions contemplated by the Operative Documents, or (ii)
which are attributable to the Indenture Trustee as trustee hereunder or in its
individual capacity and which arise out of acts or omissions which are not
expressly contemplated by this Agreement.
ARTICLE 10
TERMINATION OF TRUST INDENTURE
Section 10.01. Termination of Trust Indenture. Upon (or at
any time after):
(x) payment in full of the outstanding principal amount of,
Break Amount, if any, Make-Whole Amount, if any, and interest on and all other
amounts due under all Equipment Notes and provided that all other Secured
Obligations due to the Noteholders and the Indenture Indemnitees shall have been
satisfied or paid in full; or
(y) at any time after there has been irrevocably deposited
(except as provided in Section 10.04) with the Indenture Trustee as funds in
trust, specifically pledged as security for, and dedicated solely to, the
benefit of the Noteholders, (1) money in an amount, or (2) Permitted Investments
which, through the payment of interest and principal in respect thereof in
accordance with their terms, will provide (not later than one Business Day
before the due date of any payment referred to below in this paragraph) money in
an amount, or (3) a combination of money and Permitted Investments referred to
in the foregoing clause (2), sufficient, in the opinion of a nationally
recognized firm of independent certified public accountants expressed in a
written certification thereof delivered to the Indenture Trustee, to pay in full
the outstanding principal amount of, Break Amount, if any, Make-Whole Amount, if
any, and interest on the Equipment Notes on the dates such amounts are due
(including as a result of redemption in respect of which irrevocable notice has
been given to the Indenture Trustee on or prior to the date of such deposit);
provided, however, that
(A) upon the making of the deposit referred to above in this
clause (y), the right of the Owner to cause the redemption of Equipment
Notes (except a redemption in respect of which irrevocable notice has
theretofore been given) shall terminate;
66
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[Trust Indenture and Mortgage (1997 747-1)]
(B) the Owner has delivered to the Indenture Trustee an
officer's certificate and an opinion of counsel to the effect that
there has been published by the Internal Revenue Service a ruling to
the effect that Noteholders will not recognize income, gain or loss for
Federal income tax purposes as a result of the exercise by the Owner of
its option under Clause (y) of this Section 10.01 and will be subject
to Federal income tax on the same amount and in the same manner and at
the same times, as would have been the case if such option had not been
exercised;
(C) all other amounts then due and payable hereunder have been
paid; and
(D) the Owner has delivered to the Indenture Trustee an
officer's certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the satisfaction and
discharge of this Agreement contemplated by this Section 10.01 have
been complied with;
the Owner shall direct the Indenture Trustee to execute and deliver to or as
directed in writing by the Owner an appropriate instrument releasing the
Aircraft and the Engines and all other property included in the Indenture Estate
from the Lien of this Agreement and the Indenture Trustee shall execute and
deliver such instrument as aforesaid; provided, however, that this Agreement and
the trusts created hereby shall earlier terminate and this Agreement shall be of
no further force or effect upon any sale or other final disposition by the
Indenture Trustee of all property constituting part of the Indenture Estate and
the final distribution by the Indenture Trustee of all monies or other property
or proceeds constituting part of the Indenture Estate in accordance with the
terms hereof. Except as aforesaid otherwise provided, this Agreement and the
trusts created hereby shall continue in full force and effect in accordance with
the terms hereof.
Section 10.02. Survival of Certain Obligations.
Notwithstanding the provisions of Section 10.01, the obligations of the
Indenture Trustee contained in Sections 2.01 through 2.08, Section 7.01, Section
9.10, Section 10.03 and Section 10.04, and the other rights, duties, immunities
and privileges hereunder of the Indenture Trustee shall survive.
Section 10.03. Monies to Be Held in Trust. All moneys and
Permitted Investments deposited with the Indenture Trustee pursuant to Section
10.01 shall be held in trust and applied by it, in accordance with the
provisions of the Equipment Notes and this Agreement, to the payment either
directly or through any Paying Agent, as the Indenture Trustee may determine, to
the Noteholders, of all sums due and to become due thereon for principal, Break
Amount, if any, Make-Whole Amount, if any, and interest, but such money need not
be segregated from other funds except to the extent required by law.
67
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[Trust Indenture and Mortgage (1997 747-1)]
Section 10.04. Monies to Be Returned to Owner Trustee. The
Indenture Trustee and any Paying Agent shall promptly pay or return to the Owner
upon request of the Owner any money or Permitted Investments held by them at any
time that are not required for the payment of the amounts described above in
Section 10.03 on the Equipment Notes for which money or Permitted Investments
have been deposited pursuant to Section 10.01.
ARTICLE 11
AMENDMENTS AND WAIVERS
Section 11.01. Amendments to this Agreement Without Consent of
Noteholders. The Owner and the Indenture Trustee may enter into one or more
agreements supplemental hereto without the consent of any Noteholder for any of
the following purposes:
(1) to correct any mistake or cure any ambiguity, defect or
inconsistency herein or in the Equipment Notes or to make any change
not inconsistent with the provisions hereof; provided that such change
does not adversely affect the interests of any Noteholder;
(2) to evidence the succession of another party as the Owner
in accordance with the terms of the Trust Agreement or to evidence (in
accordance with Article 9) the succession of a new trustee hereunder,
the removal of the trustee hereunder or the appointment of any
co-trustee or co-trustees or any separate or additional trustee or
trustees;
(3) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other
provisions with respect to matters or questions arising hereunder so
long as such action shall not adversely affect the interests of the
Noteholders;
(4) to correct or amplify the description of any property at
any time subject to the Lien of this Agreement or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subject to the Lien of this Agreement or to subject to
the Lien of this Agreement the Airframe or Engines or airframe or
engines substituted for the Airframe or Engines in accordance herewith;
(5) to add to the covenants of the Owner, for the benefit of
the Noteholders, or to surrender any rights or power herein conferred
upon the Owner;
(6) to add to the rights of the Noteholders;
68
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[Trust Indenture and Mortgage (1997 747-1)]
(7) to provide for the issuance of Series D Equipment Notes
and Pass Through Certificates issued by the Class D Pass Through Trust
and to make changes relating thereto, provided that the Series D
Equipment Notes are issued in accordance with the terms hereof and of
the Participation Agreement; or
(8) to provide for the re-issuance of any Series of Equipment
Notes that has previously been prepaid pursuant to Section 6.01(b),
provided that such Series of Equipment Notes is issued in accordance
with the Series hereof; or
(9) to include on the Equipment Notes any legend as may be
required by applicable law.
Section 11.02. Amendments to this Agreement with Consent of
Noteholders. (a) With the written consent of a Majority in Interest of
Noteholders, the Owner and the Indenture Trustee may enter into such
supplemental agreements to add any provisions to or to change or eliminate any
provisions of this Agreement or of any such supplemental agreements or to modify
the rights of the Noteholders; provided, however, that, an amendment under this
Section 11.02 may not without the consent of each of the Noteholders of the
applicable Series of Equipment Notes and, in the case of the Series A or Series
B Equipment Notes, the applicable Primary Liquidity Provider:
(1) reduce the principal amount of, Break Amount, if any,
Make-Whole Amount, if any, or any installment of interest on, such
Series of Equipment Notes; or
(2) change the date on which any principal amount of, any
Amortization Amount payable with respect to, Break Amount, if any,
Make-Whole Amount, if any, or interest on such Series of Equipment
Notes, is due or payable; or
(3) with respect to each Series of Equipment Notes, create any
Lien on the Indenture Estate prior to or pari passu with the Lien
thereon under this Agreement except such as are permitted by this
Agreement, or deprive any Noteholder of the benefit of the Lien on the
Indenture Estate created by this Agreement; or
(4) with respect to such Series of Equipment Notes, reduce the
percentage in principal amount of the outstanding Equipment Notes, the
consent of whose Noteholders is required for any such supplemental
agreement, or the consent of whose Noteholders is required for any
waiver (of compliance with certain provisions of this Agreement or of
certain defaults hereunder or their consequences) provided for in this
Agreement; or
(5) make any change in Article 3, Article 6, Section 8.01
(except to add Indenture Events of Default) or this Section 11.02(a).
69
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[Trust Indenture and Mortgage (1997 747-1)]
(b) It is not necessary under this Section 11.02 for the
Noteholders to consent to the particular form of any proposed supplemental
agreement, but it is sufficient if they consent to the substance thereof.
(c) Promptly after the execution by the Owner and the
Indenture Trustee of any supplemental agreement pursuant to the provisions of
this Section 11.02, the Indenture Trustee shall transmit by first-class mail a
notice, setting forth in general terms the substance of such supplemental
agreement, to all Noteholders, as the names and addresses of such Noteholders
appear on the Register. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental agreement.
Section 11.03. Revocation and Effect of Consents. Until an
amendment or waiver becomes effective, a consent to it by a Noteholder is a
continuing consent by the Noteholder and every subsequent Noteholder, even if
notation of the consent is not made on any Equipment Note. However, any such
Noteholder or subsequent Noteholder may revoke the consent as to his Equipment
Note if the Indenture Trustee receives the notice of revocation before the date
the amendment or waiver becomes effective. After an amendment or waiver becomes
effective, it shall bind every Noteholder affected by such amendment or waiver.
Section 11.04. Notation on or Exchange of Equipment Notes. The
Indenture Trustee may place an appropriate notation about an amendment or waiver
on any Equipment Note thereafter executed. The Indenture Trustee in exchange for
such Equipment Notes may execute new Equipment Notes that reflect the amendment
or waiver.
Section 11.05. Indenture Trustee Protected. The Indenture
Trustee need not sign any supplemental agreement that adversely affects its
rights.
Section 11.06. Amendments, Waivers, etc. of Other Operative
Documents. (a) Subject to Section 11.01, without the consent of a Majority in
Interest of Noteholders, the respective parties to the Participation Agreement
may not modify, amend or supplement such agreement, or give any consent, waiver,
authorization or approval thereunder, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions thereof or of
modifying in any manner the rights of the respective parties thereunder;
provided, however, that, without the consent of the Indenture Trustee or any
Noteholder, the Participation Agreement may be modified, amended or supplemented
in order to cure any ambiguity, to correct or supplement any provisions thereof
which may be defective or inconsistent with any other provision thereof or of
any provision of this Agreement, or to make any other provision with respect to
matters or questions arising thereunder or under this Agreement which shall not
be inconsistent with the provisions of this Agreement, provided the making of
any such other provision shall not adversely affect the interests of the
Noteholders.
70
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[Trust Indenture and Mortgage (1997 747-1)]
Section 11.07. Notices to Primary Liquidity Providers. Any
request made to any Noteholder for consent to any amendment or supplement
pursuant to this Article 11 shall be promptly furnished by the Indenture Trustee
to each Primary Liquidity Provider.
ARTICLE 12
MISCELLANEOUS
Section 12.01. Notices. (a) Unless otherwise specifically
provided for herein, all notices required under the terms and provisions of this
Agreement shall be in English and in writing, and any such notice may be given
by hand-delivery, overnight courier service, mail, or telecopier (to be
confirmed by hand delivery, overnight courier service or mail) addressed as
indicated below and any such notice shall be effective, in the case of
hand-delivery, when delivered, in the case of overnight courier service, one
Business Day after delivery with charges paid to a courier service with
instructions for overnight delivery, in the case of mail, three Business Days
after delivery to the postal service with certified or registered mail charges
paid, and, in the case of telecopier, upon confirmed transmittal:
if to the Owner, to:
United Air Lines, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President and Treasurer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or if by overnight courier, to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President and Treasurer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
71
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[Trust Indenture and Mortgage (1997 747-1)]
if to the Indenture Trustee, to:
First Security Bank,
National Association
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) The Owner or the Indenture Trustee by notice to the others
may designate additional or different addresses for subsequent notices or
communications.
(c) Any notice or communication to the Noteholders shall be
mailed by first-class mail to the respective addresses for the Noteholders shown
on the Register kept by the Registrar and to addresses filed with the Indenture
Trustee for other Noteholders. Failure so to mail a notice or communication or
any defect in such notice or communication shall not affect its sufficiency with
respect to other Noteholders of such Equipment Notes of that or any other Series
entitled to receive notice.
(d) If a notice or communication is mailed in the manner
provided above within the time prescribed, it is conclusively presumed to have
been duly given, whether or not the addressee receives it.
(e) If the Owner mails a notice or communication to the
Noteholders, it shall mail a copy to the Indenture Trustee and to the Paying
Agent at the same time.
Section 12.02. GOVERNING LAW. THIS AGREEMENT AND THE EQUIPMENT
NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF
THE STATE OF ILLINOIS.
Section 12.03. Execution in Counterparts. This Agreement may
be executed in any number of counterparts, each of which shall be an original
but such counterparts shall together constitute but one instrument.
* * *
72
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[Trust Indenture and Mortgage (1997 747-1)]
IN WITNESS WHEREOF, the Owner and the Indenture Trustee have
caused this Trust Indenture and Mortgage to be duly executed by their respective
officers thereunto duly authorized.
UNITED AIR LINES, INC.
By:
------------------------------------------
Name:
Title:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Indenture Trustee
By:
-----------------------------------------
Name:
Title:
73
78
EXHIBIT A
to Trust Indenture and
Mortgage
FORM OF EQUIPMENT NOTES
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT
AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
UNITED AIR LINES, INC.
SERIES [______] EQUIPMENT NOTE DUE [_____] ISSUED IN CONNECTION
WITH THE BOEING MODEL ________ AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N_____.
No.______ Date: [___________,____]
Original Principal Amount Maturity Date
------------------------- -------------
$____________________ _____________
UNITED AIR LINES, INC., a Delaware corporation ("Owner") for
value received, hereby promises to pay to __________________________________, or
registered assigns, the principal sum of _____________________________ Dollars
($_____________) in installments, one such installment to be due and payable on
each Payment Date, each such installment to be in an amount equal to the amount
set forth in Schedule 1 hereto, together with interest on the unpaid principal
amount hereof from time to time outstanding from and including the date hereof
until such principal amount is paid in full. Interest shall accrue with respect
to each Interest Period at the Applicable Rate (calculated on the basis of a
year of 360 days and the actual number of days elapsed) in effect for such
Interest Period and shall be payable in arrears on each Interest Payment Date
and on the date this Equipment Note is paid in full. Interest shall be payable
with respect to the first but not the last day of each Interest Period.
Notwithstanding the foregoing, the final payment made on this Equipment Note
shall be in an amount sufficient to discharge in full the unpaid principal
amount and all accrued and unpaid interest on, and any other amounts due under,
this Equipment Note. Notwithstanding anything to the contrary contained herein,
if any date on which a payment
79
[Trust Indenture and Mortgage (1997 747-1)]
under this Equipment Note becomes due and payable is not a Business Day, then
such payment shall not be made on such scheduled date but shall be made on the
next succeeding Business Day and if such payment is made on such next succeeding
Business Day, interest at the then Applicable Rate shall accrue on the amount of
such payment during such extension.
For purposes hereof, the term "Indenture" means the Trust
Indenture and Mortgage (1997 747-1) dated as of December 23, 1997), between the
Owner and First Security Bank, National Association (the "Indenture Trustee"),
as the same may be amended or supplemented from time to time. All other
capitalized terms used in this Equipment Note and not defined herein shall have
the respective meanings assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days and the actual
number of days elapsed) on any overdue principal amount, any overdue Break
Amount, if any, Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest and any other amounts payable hereunder
which are overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated maturity, by
acceleration or otherwise).
[The interest rate borne by this Equipment Note shall be
subject to adjustments to the extent, and under the circumstances, specified by
the Registration Rights Agreement as more particularly set forth in the fourth
paragraph of Section 2.01 of the Indenture.](1)
This Equipment Note shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose unless this Equipment
Note has been executed on behalf of the Owner by the manual or facsimile
signature of an authorized officer of the Owner, and authenticated by the
Indenture Trustee by the manual signature of an authorized officer or signatory
of the Indenture Trustee, in each case as specified in Section 2.02 of the
Indenture.
This Equipment Note is one of the Equipment Notes referred to
in the Indenture which have been or are to be issued by the Owner pursuant to
the terms of the Indenture. Reference is made to the Indenture and all
supplements and amendments thereto (a copy of which is on file with the
Indenture Trustee at its Corporate Trust Department) for a more complete
statement of the terms and provisions thereof, including a statement of the
properties thereby conveyed, pledged and assigned, the nature and extent of the
security, the respective rights thereunder of the Owner, the Indenture Trustee
and the Noteholders of the Equipment Notes, and the terms upon which the
Equipment Notes are, and are to be, executed and delivered, as well as for a
statement of the terms and conditions of the trust created by the Indenture, to
all of which terms and conditions in the Indenture each Noteholder hereof agrees
by its acceptance of this Equipment Note.
----------
(1) To be inserted only in the case of a Series A or Series B Equipment Note.
A-2
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[Trust Indenture and Mortgage (1997 747-1)]
This Equipment Note is subject to redemption, refinancing,
purchase or prepayment as provided in Article 6 of the Indenture but not
otherwise.
If an Indenture Event of Default shall occur and be
continuing, the principal amount remaining unpaid of the Equipment Notes may be
declared due and payable in the manner and with the effect provided in the
Indenture.
As provided in the Indenture, in certain circumstances this
Equipment Note is transferable, and upon surrender of this Equipment Note for
registration of transfer at the principal corporate trust office of the
Registrar, or at the office or agency maintained for such purpose, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Registrar duly executed by, the Noteholder or his attorney duly authorized
in writing, one or more new Equipment Notes of the same maturity and type and of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.
The Equipment Notes are issuable only as registered Equipment
Notes. As provided in the Indenture and subject to certain limitations therein
set forth, Equipment Notes are exchangeable for a like aggregate principal
amount of Equipment Notes of the same series, maturity and type and of
authorized denominations, as requested by the Noteholder surrendering the same,
upon presentation thereof for such purpose at the principal corporate trust
office of the Registrar, or at an office or agency maintained for such purpose.
No service charge shall be made for any such registration of transfer or
exchange, but the Registrar may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner, the Indenture Trustee, the Paying Agent and the
Registrar may deem and treat the person in whose name this Equipment Note is
registered as the absolute owner hereof for the purpose of receiving payment of
the principal of and interest on this Equipment Note and for all other purposes
whatsoever whether or not this Equipment Note be overdue, and neither the Owner,
the Indenture Trustee, the Paying Agent nor the Registrar shall be affected by
notice to the contrary.
[The indebtedness evidenced by this Equipment Note is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of
A-3
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[Trust Indenture and Mortgage (1997 747-1)]
[Series A Equipment Notes](2) [Series A and Series B Equipment Notes](3) [Series
A, Series B and Series C Equipment Notes](4) 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 and each other
provision applicable to it in the Indenture, the Note Purchase Agreement, the
Participation Agreement and each other Fundamental Document and the
Participation Agreement, (b) authorizes and directs the Indenture Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.
AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THIS EQUIPMENT
NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF ILLINOIS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE
STATE OF ILLINOIS.
* * *
----------
(2) To be inserted in the case of a Series B Equipment Note.
(3) To be inserted in the case of a Series C Equipment Note.
(4) To be inserted in the case of a Series D Equipment Note.
A-4
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[Trust Indenture and Mortgage (1997 747-1)]
IN WITNESS WHEREOF, the Owner has caused this Equipment Note
to be duly executed.
UNITED AIR LINES, INC.
By:
----------------------------
Title:
A-5
83
[Trust Indenture and Mortgage (1997 747-1)]
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Indenture Trustee
By:
---------------------------------------
Authorized officer and signatory
A-6
84
[Trust Indenture and Mortgage (1997 747-1)]
SCHEDULE I
AMORTIZATION SCHEDULE
Payment Date Principal Amount (Expressed as a
------------ Percentage of Original Principal Amount
---------------------------------------
[SEE EXHIBIT [B-1] [B-2] [B-3] [B-4] TO INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
A-7
85
[Trust Indenture and Mortgage (1997 747-1)]
EXHIBIT D
to Trust Indenture
and Mortgage
TRUST INDENTURE AND MORTGAGE SUPPLEMENT (1997 747-1)
This TRUST INDENTURE AND MORTGAGE SUPPLEMENT (1997 747-1)
dated December __, 1997 (herein called the "Indenture Supplement") between
UNITED AIR LINES, INC., a Delaware corporation (herein called the "Owner") and
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association as
Indenture Trustee (the "Indenture Trustee").
WITNESSETH:
WHEREAS, the Trust Indenture and Mortgage (1997 747-1), dated
as of December 23, 1997 (herein called the "Indenture"), between the Owner and
Indenture Trustee, provides for the execution and delivery of a supplement
thereto substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Indenture
Trustee; and
WHEREAS, the Indenture relates to the Airframe and Engines
described below, and a counterpart of the Indenture is attached hereto and made
a part hereof and this Indenture Supplement, together with such counterpart of
the Indenture, is being filed for recordation on the date hereof with the
Federal Aviation Administration as one document;
NOW, THEREFORE, this Indenture Supplement Witnesseth, that to
secure the prompt payment of the principal of, Break Amount, if any, Make-Whole
Amount, if any, and interest on, and all other amounts due with respect to, all
Equipment Notes from time to time outstanding under the Indenture and the
performance and observance by the Owner of all the agreements, covenants and
provisions contained in the Indenture and in the Participation Agreement, for
the benefit of the Noteholders, and each of the Indenture Indemnitees, and the
prompt payment of any and all amounts from time to time owing hereunder, under
the Lease and under the Participation Agreement by the Owner Trustee, the Owner
Participant or the Lessee to the Noteholders and the Indenture Indemnitees, and
for the uses and purposes and subject to the terms and provisions of the
Indenture, and in consideration of the premises and of the covenants contained
in the Indenture, and of the acceptance of the Equipment Notes by the
Noteholders, and of other good and valuable consideration the receipt and
adequacy whereof are hereby acknowledged, the Owner has granted, bargained,
sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and
does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge
and
86
[Trust Indenture and Mortgage (1997 747-1)]
confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the Noteholders and the Indenture Indemnitees from time
to time, a first priority security interest in the following described property:
AIRFRAME
One Airframe Identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------------- -------------
The Boeing Company 747-422 N_____ _____
together with all Parts which are from time to time incorporated or installed in
or attached thereto or which have been removed therefrom, unless the Lien of the
Indenture shall not be applicable to such Part pursuant to the provisions of the
Indenture.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated take-off
horsepower or the equivalent thereof, whether or not such engines shall be
installed in or attached to the Airframe or any other airframe, identified as
follows:
Manufacturer Model Serial Number
------------ ----- --------------
▇▇▇▇▇ & ▇▇▇▇▇▇▇ PW____ _______
▇▇▇▇▇ & Whitney PW____ _______
in each case, together with all Parts which are from time to time incorporated
or installed in or attached thereto or which have been removed therefrom, unless
the Lien of the Indenture shall not be applicable to such Part pursuant to the
provisions of the Indenture.
TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Indenture Trustee, its successors and assigns, in trust for the equal
and proportionate benefit and security of the Indenture Trustee and the
Noteholders from time to time of the Equipment Notes outstanding, except as
provided in Section 2.10 and Article 3 of the Indenture, without any preference,
distinction or priority of any one Equipment Note over any other by reason of
series, priority of time of issue, sale, negotiation, date of maturity
D-2
87
[Trust Indenture and Mortgage (1997 747-1)]
thereof or otherwise for any reason whatsoever, and for the uses and purposes
and subject to the terms and provisions set forth in the Indenture.
This Indenture Supplement shall be construed as a supplemental
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
* * *
D-3
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[Trust Indenture and Mortgage (1997 747-1)]
IN WITNESS WHEREOF, each of the parties hereto have caused
this Indenture Supplement to be duly executed by one of its officers, thereunto
duly authorized, on the day and year first above written.
UNITED AIR LINES, INC.
By:
---------------------------------------
Title:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Indenture Trustee
By:
---------------------------------------
Title:
D-4