EXHIBIT C-2 to
Note Purchase Agreement
FORM OF OWNED AIRCRAFT INDENTURE
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FORM OF TRUST INDENTURE AND MORTGAGE
Dated as of __________ __, ____
Between
ATLAS AIR, INC.,
Owner
and
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Mortgagee,
Mortgagee
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EQUIPMENT NOTES COVERING
ONE BOEING 747-47UF FREIGHTER AIRCRAFT
BEARING U.S. REGISTRATION ▇▇▇▇ N MC
AND MANUFACTURER'S SERIAL NO.
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
ARTICLE II THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes.........................................5
SECTION 2.02. Issuance and Terms of Equipment Notes..........................11
SECTION 2.03. [Intentionally Omitted]........................................14
SECTION 2.04. Method of Payment..............................................14
SECTION 2.05. Application of Payments........................................16
SECTION 2.06. Termination of Interest in Collateral..........................17
SECTION 2.07. Registration Transfer and Exchange of Equipment Notes..........17
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes...........18
SECTION 2.09. Payment of Expenses on Transfer; Cancellation..................19
SECTION 2.10. Mandatory Redemptions of Equipment Notes.......................19
SECTION 2.11. Voluntary Redemptions of Equipment Notes.......................20
SECTION 2.12. Redemptions; Notice of Redemption..............................20
SECTION 2.13. Subordination..................................................21
SECTION 2.14. Assumption of Equipment Notes..................................22
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS
SECTION 3.01. Basic Distributions............................................22
SECTION 3.02. Event of Loss; Replacement; Optional Redemption................23
SECTION 3.03. Payments After Event of Default................................25
SECTION 3.04. Certain Payments...............................................28
SECTION 3.05. Other Payments.................................................28
ARTICLE IV COVENANTS OF THE OWNER
SECTION 4.01. Liens..........................................................29
SECTION 4.02. Possession, Operation and Use, Maintenance and Repair,
Registration and Markings....................................29
SECTION 4.03. Inspection.....................................................35
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SECTION 4.04. Replacement and Pooling of Parts, Alterations,
Modifications and Additions; Substitution of Engines ........36
SECTION 4.05. Loss, Destruction or Requisition...............................40
SECTION 4.06. Insurance......................................................45
SECTION 4.07. Merger of Owner................................................46
ARTICLE V EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE
SECTION 5.01. Event of Default...............................................47
SECTION 5.02. Remedies.......................................................49
SECTION 5.03. Return of Aircraft, Etc........................................50
SECTION 5.04. Remedies Cumulative............................................51
SECTION 5.05. Discontinuance of Proceedings..................................52
SECTION 5.06. Waiver of Past Defaults........................................52
SECTION 5.07. Appointment of Receiver........................................52
SECTION 5.08. Mortgagee Authorized to Execute Bills of Sale, Etc.............53
SECTION 5.09. Rights of Note Holders to Receive Payment......................53
ARTICLE VI DUTIES OF THE MORTGAGEE
SECTION 6.01. Notice of Event of Default.....................................53
SECTION 6.02. Action upon Instructions; Certain Rights and Limitations.......54
SECTION 6.03. Indemnification................................................55
SECTION 6.04. No Duties Except as Specified in Trust Indenture
or Instructions..............................................55
SECTION 6.05. No Action Except Under Trust Indenture or Instructions.........56
SECTION 6.06. Investment of Amounts Held by Mortgagee........................56
ARTICLE VII THE MORTGAGEE
SECTION 7.01. Acceptance of Trusts and Duties................................57
SECTION 7.02. Absence of Duties..............................................57
SECTION 7.03. No Representations or Warranties as to Aircraft or Documents...58
SECTION 7.04. No Segregation of Monies; No Interest..........................58
SECTION 7.05. Reliance; Agreements; Advice of Counsel........................59
SECTION 7.06. Compensation...................................................59
SECTION 7.07. Instructions from Note Holders.................................60
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ARTICLE VIII INDEMNIFICATION
SECTION 8.01. Scope of Indemnification.......................................60
ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. Resignation of Mortgagee; Appointment of Successor.............60
SECTION 9.02. Appointment of Additional and Separate Trustees................62
ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 10.01.Instructions of Majority; Limitations..........................64
SECTION 10.02.Mortgagee Protected............................................65
SECTION 10.03.Documents Mailed to Note Holders...............................65
SECTION ▇▇.▇▇.▇▇ Request Necessary for Trust Indenture Supplement............66
ARTICLE XI MISCELLANEOUS
SECTION 11.01.Termination of Trust Indenture.................................66
SECTION ▇▇.▇▇.▇▇ Legal Title to Collateral in Note Holders...................66
SECTION ▇▇.▇▇.▇▇▇▇ of Aircraft by Mortgagee Is Binding.......................67
SECTION ▇▇.▇▇.▇▇▇▇▇ Indenture for Benefit of Owner, Mortgagee,
Note Holders and the Other Indenture Indemnitees ............................67
SECTION 11.05.Notices........................................................67
SECTION 11.06.Severability...................................................68
SECTION ▇▇.▇▇.▇▇ Oral Modification or Continuing Waivers.....................68
SECTION 11.08.Successors and Assigns.........................................68
SECTION 11.09.Headings.......................................................69
SECTION 11.10.Normal Commercial Relations....................................69
SECTION 11.11.Governing Law; Counterpart Form................................69
SECTION ▇▇.▇▇.▇▇▇▇▇▇ by Note Holders.........................................69
SECTION 11.13.Bankruptcy.....................................................70
ANNEX A Definitions
ANNEX B Insurance
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization and Interest Rates
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TRUST INDENTURE AND MORTGAGE
TRUST INDENTURE AND MORTGAGE, dated as of ________ __, ____ ("Trust
Indenture"), between ATLAS AIR, INC., a Delaware corporation ("Owner"), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual
capacity, except as expressly stated herein, but solely as Mortgagee hereunder
(together with its successors hereunder, the "Mortgagee").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the parties hereto desire by this Trust Indenture, among other
things, (i) to provide for the issuance by the Owner of the Equipment Notes and
(ii) to provide for the assignment, mortgage and pledge by the Owner to the
Mortgagee, as part of the Collateral hereunder, among other things, of all of
the Owner's right, title and interest in and to the Aircraft and, except as
hereinafter expressly provided, all payments and other amounts received
hereunder in accordance with the terms hereof, as security for, among other
things, the Owner's obligations to the Note Holders and the Indenture
Indemnitees;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner and authenticated and delivered by the Mortgagee
hereunder, the valid, binding and enforceable obligations of the Owner; and
WHEREAS, all things necessary to make this Trust Indenture the valid,
binding and legal obligation of the Owner for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH, that, to
secure the prompt payment of the Original Amount of, interest on, Make-Whole
Amount, if any, and all other amounts due with respect to, all Equipment Notes
from time to time outstanding hereunder according to their tenor and effect and
to secure the performance and observance by the Owner of all the agreements,
covenants and provisions contained herein and in the Participation Agreement and
in the Equipment Notes, for the benefit of the Note Holders and each of the
Indenture Indemnitees, and in consideration of the premises and of the covenants
herein contained, and of the acceptance of the Equipment Notes by the holders
thereof, and for other good and valuable consideration the receipt and adequacy
whereof are hereby acknowledged, the Owner has granted, bargained,
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sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and
does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Mortgagee, its successors in trust and assigns, for the
security and benefit of, the Note Holders and each of the Indenture Indemnitees,
a first priority security interest in and mortgage lien on all right, title and
interest of the Owner in, to and under the following described property, rights
and privileges, whether now or hereafter acquired (which, collectively, together
with all property hereafter specifically subject to the Lien of this Trust
Indenture by the terms hereof or any supplement hereto, are included within, and
are referred to as, the "Collateral"), to wit:
(1) The Airframe which is one Boeing 747-47UF aircraft with the FAA
Registration number of N MC and the manufacturer's serial number of _____
and four Engines, each of which Engines is a General Electric
CF6-80C2B5FG04 engine with the manufacturer's serial numbers ___-___,
___-___, ___-___ and ___-___, is of 750 or more rated takeoff horsepower or
the equivalent of such horsepower (such Airframe and Engines more
particularly described in the Trust Indenture Supplement executed and
delivered as provided herein) as the same are now and will hereafter be
constituted, whether now owned by the Owner or hereafter acquired, and in
the case of such Engines, whether or not any such Engine shall be installed
in or attached to the Airframe or any other airframe, together with (a) all
Parts of whatever nature, which are from time to time included within the
definitions of "Airframe" or "Engines," whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations
which constitute appliances, parts, instruments, appurtenances,
accessories, furnishings or other equipment excluded from the definition of
Parts) and (b) all Aircraft Documents;
(2) The Purchase Agreement and the Bills of Sale to the extent the
same relate 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)
together with all rights, powers, privileges, options and other benefits of
the Owner thereunder (subject to such reservation) with respect to the
Airframe or the Engines, including, without limitation, the right to make
all waivers and agreements, to give and receive all notices and other
instruments or communications, to take such action upon the occurrence of a
default thereunder, including the commencement, conduct and consummation of
legal, administrative or other proceedings, as shall be permitted thereby
or by law, and to do any and all
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other things which the Owner is or may be entitled to do thereunder
(subject to such reservation), subject, with respect to the Purchase
Agreement, to the terms and conditions of the Consent and Agreement and the
Engine Consent and Agreement;
(3) All proceeds with respect to the requisition of title to or use of
the Aircraft or any Engine by any Government Entity or from the sale or
other disposition of the Aircraft, the Airframe, any Engine or other
property described in any of these Granting Clauses by the Mortgagee
pursuant to the terms of this Trust Indenture, and all insurance proceeds
with respect to the Aircraft, the Airframe, any Engine or any part thereof,
but excluding any insurance maintained by the Owner and not required under
Section 4.06;
(4) All rents, revenues and other proceeds (other than rents, revenues
and proceeds from any ACMI Contract) collected by the Mortgagee pursuant to
Section 5.03(b) and all monies and securities from time to time deposited
or required to be deposited with the Mortgagee by or for the account of the
Owner pursuant to any terms of this Trust Indenture held or required to be
held by the Mortgagee hereunder; and
(5) All proceeds of the foregoing.
PROVIDED, HOWEVER, that notwithstanding any of the foregoing provisions, so
long as no Event of Default shall have occurred and be continuing, (a) the
Mortgagee shall not take or cause to be taken any action contrary to the Owner's
right hereunder to quiet enjoyment of the Airframe and Engines, and to possess,
use, retain and control the Airframe and Engines and all revenues, income and
profits derived therefrom, and (b) the Owner shall have the right, to the
exclusion of the Mortgagee, with respect to the Purchase Agreement, to exercise
in the Owner's name all rights and powers of the buyer under the Purchase
Agreement (other than to amend, modify or waive any of the warranties or
indemnities contained therein, except in the exercise of the Owner's reasonable
business judgment) and to retain any recovery or benefit resulting from the
enforcement of any warranty or indemnity under the Purchase Agreement; and
provided further that, notwithstanding the occurrence or continuation of an
Event of Default, the Mortgagee shall not enter into any amendment of the
Purchase Agreement which would increase the obligations of the Owner thereunder.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, and its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.13 and Article III hereof, without
any preference, distinction or priority of any one Equipment Note over any other
by reason of priority of time of issue, sale, negotiation,
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date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes and in all cases and as to all property specified in
paragraphs (1) through (5) inclusive above, subject to the terms and provisions
set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Owner shall remain liable under the Indenture Agreements to
perform all of the obligations assumed by it thereunder, except to the extent
prohibited or excluded from doing so pursuant to the terms and provisions
thereof, and the Mortgagee, the Note Holders and the Indenture Indemnitees shall
have no obligation or liability under the Indenture Agreements by reason of or
arising out of the assignment hereunder, nor shall the Mortgagee, the Note
Holders or the Indenture Indemnitees be required or obligated in any manner to
perform or fulfill any obligations of the Owner under or pursuant to the
Indenture Agreements, or, except as herein expressly provided, to make any
payment, or to make any inquiry as to the nature or sufficiency of any payment
received by it, or present or file any claim, or take any action to collect or
enforce the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
The Owner does hereby constitute the Mortgagee the true and lawful attorney
of the Owner, irrevocably, granted for good and valuable consideration and
coupled with an interest and with full power of substitution, and with full
power (in the name of the Owner or otherwise) to ask for, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies (in each case including insurance and requisition proceeds) due and to
become due under or arising out of the Indenture Agreements, and all other
property which now or hereafter constitutes part of the Collateral, to endorse
any checks or other instruments or orders in connection therewith and to file
any claims or to take any action or to institute any proceedings which the
Mortgagee may deem to be necessary or advisable in the premises; provided that
the Mortgagee shall not exercise any such rights except upon the occurrence and
during the continuance of an Event of Default hereunder.
The Owner agrees that at any time and from time to time, upon the written
request of the Mortgagee, the Owner will promptly and duly execute and deliver
or cause to be duly executed and delivered any and all such further instruments
and documents (including without limitation UCC continuation statements) as the
Mortgagee may reasonably deem necessary to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Mortgagee the full benefits of the assignment
hereunder and of the rights and powers herein granted.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as
follows:
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ARTICLE I definitions
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed in the
manner described, in Annex A hereto.
ARTICLE II the equipment notes
SECTION 2.01. Form of Equipment Notes
The Equipment Notes shall be substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED
UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
ATLAS AIR, INC.
SERIES 1999-1 ____ EQUIPMENT NOTE DUE ISSUED IN CONNECTION WITH THE
BOEING MODEL 747-47UF FREIGHTER AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N MC.
No. Date: ,
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INTEREST RATE MATURITY DATE
[ ] [ ]
ATLAS AIR, INC., a Delaware corporation ("Owner"), hereby promises to pay
to , or the registered assignee thereof, the principal sum of $ (the "Original
Amount"), together with interest on the amount of the Original Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Debt Rate. The Original Amount of this Equipment
Note shall be [payable in installments on the dates set forth in Schedule I
hereto equal to the corresponding percentage of the Original Amount of this
Equipment Note set forth in Schedule I hereto.](1) [paid in full on __, __.](2)
Accrued but unpaid interest shall be due and payable in arrears in semiannual
installments commencing on , ___ , and thereafter on _______ _ and ____ _ of
each year, to and including . Notwithstanding the foregoing, the final payment
made on this Equipment Note shall be in an amount sufficient to discharge in
full the unpaid Original Amount and all accrued and unpaid interest on, and any
other amounts due under, this Equipment Note. Notwithstanding anything to the
contrary contained herein, if any date on which a payment under this Equipment
Note becomes due and payable is not a Business Day, then such payment shall not
be made on such scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business Day, no
interest shall accrue on the amount of such payment during such extension.
For purposes hereof, the term "Trust Indenture" means the Trust Indenture
and Mortgage dated as of , ____, between the Owner and Wilmington Trust Company
(the "Mortgagee"), 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 Trust Indenture.
This Equipment Note shall bear interest, payable on demand, at the Payment
Due Rate (calculated on the basis of a year of 360 days comprised of twelve
30-day months) on any overdue Original Amount, any overdue Make-Whole Amount, if
any, and (to the extent permitted by applicable Law) any overdue interest and
any other amounts payable hereunder which are overdue, in each case for the
period the same is overdue. Amounts
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1 Not included in the case of Series A-2 Equipment Notes.
2 To be isnerted in the case of Series A-2 Equipment Notes.
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shall be overdue if not paid when due (whether at stated maturity, by
acceleration or otherwise).
There shall be maintained an Equipment Note Register for the purpose of
registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.07 of the Trust Indenture.
The Original Amount and interest and other amounts due hereunder shall be
payable in Dollars in immediately available funds at the Corporate Trust Office
of the Mortgagee, or as otherwise provided in the Trust Indenture. Each such
payment shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note, except that in the case of any
final payment with respect to this Equipment Note, this Equipment Note shall be
surrendered promptly thereafter to the Mortgagee for cancellation.
The holder hereof, by its acceptance of this Equipment Note, agrees that,
except as provided in the Trust Indenture, each payment of the Original Amount,
Make-Whole Amount, if any, and interest received by it hereunder shall be
applied, first, to the payment of accrued interest on this Equipment Note (as
well as any interest on any overdue Original Amount, any overdue Make-Whole
Amount, if any, or, to the extent permitted by Law, any overdue interest and
other amounts hereunder) to the date of such payment, second, to the payment of
the Original Amount of this Equipment Note then due, third, to the payment of
Make-Whole Amount, if any, and any other amount due hereunder or under the Trust
Indenture, and fourth, the balance, if any, remaining thereafter, to the payment
of installments of the Original Amount of this Equipment Note remaining unpaid
in the inverse order of their maturity.
This Equipment Note is one of the Equipment Notes referred to in the Trust
Indenture which have been or are to be issued by the Owner pursuant to the terms
of the Trust Indenture. The Collateral is held by the Mortgagee as security, in
part, for the Equipment Notes. The provisions of this Equipment Note are subject
to the Trust Indenture. Reference is hereby made to the Trust Indenture for a
complete statement of the rights and obligations of the holder of, and the
nature and extent of the security for, this Equipment Note and the rights and
obligations of the holders of, and the nature and extent of the security for,
any other Equipment Notes executed and delivered under the Trust Indenture, as
well as for a statement of the terms and conditions of the Trust created by the
Trust Indenture, to all of which terms and conditions in the Trust Indenture
each holder hereof agrees by its acceptance of this Equipment Note.
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As provided in the Trust Indenture and subject to certain limitations
therein set forth, this Equipment Note is exchangeable for a like aggregate
Original Amount of Equipment Notes of different authorized denominations, as
requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this Equipment
Note, the Owner and the Mortgagee shall treat the person in whose name this
Equipment Note is registered as the owner hereof for all purposes, whether or
not this Equipment Note be overdue, and neither the Owner nor the Mortgagee
shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as provided in Sections 2.10,
2.11 and 2.12 of the Trust Indenture but not otherwise. In addition, this
Equipment Note may be accelerated as provided in Section 5.02 of the Trust
Indenture.
[The indebtedness evidenced by this Equipment Note is, to the extent and in
the manner provided in the Trust Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Trust Indenture) in respect of [Series A-1 and Series A-2 Equipment
Notes](3) [Series A-1, Series A-2 and Series B Equipment Notes](4) [Series ▇-▇,
▇▇▇▇▇▇ ▇-▇, Series B and Series C Equipment Notes](5) and this Equipment Note is
issued subject to such provisions. The Note Holder of this Equipment Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Mortgagee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in the
Trust Indenture and (c) appoints the Mortgagee his attorney-in-fact for such
purpose. ](6)
Unless the certificate of authentication hereon has been executed by or on
behalf of the Mortgagee by manual signature, this Equipment Note shall not be
entitled to any benefit under the Trust Indenture or be valid or obligatory for
any purpose.
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3 To be inserted in the case of a Series B Equipment Note.
4 To be inserted in the case of a Series C Equipment Note.
5 To be inserted in the case of a Series D Equipment Note.
6 To be inserted for each Equipment Note other than any Series A-1 and Series
A-2 Equipment Note.
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THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner has caused this Equipment Note to be executed
in its corporate name by its officer thereunto duly authorized on the date
hereof.
ATLAS AIR, INC.
By:
----------------------------------
Name:
Title:
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MORTGAGEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the within-mentioned
Trust
Indenture.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Mortgagee
By:
------------------------------------------
Name:
Title:
SCHEDULE I
EQUIPMENT NOTE AMORTIZATION
Payment Date Percentage of Original Amount to Be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
THE APPLICABLE PORTION OF WHICH IS
INSERTED UPON ISSUANCE](7)
* * *
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7 Not included in the case of Series A-2 Equipment Notes.
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SECTION 2.02. Issuance and Terms of Equipment Notes
The Equipment Notes shall be dated the date of issuance thereof, shall be
issued in up to four separate series (or if the Series D is issued, five
separate series) consisting of Series A-1, Series A-2, Series B, Series C and,
if issued, Series D and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto (or, in the case of the Series D if
issued after the Closing Date, as specified in an amendment to this Trust
Indenture). If the amount specified in Schedule I hereto for the Series A-2
Equipment Notes shall be zero, all references herein to the Series A-2 Equipment
Notes shall be disregarded. On the date thereof, each Series specified in
Schedule I hereto shall be issued to the Subordination Agent on behalf of the
Pass Through Trustee under the applicable Pass Through Trust Agreement. Owner
shall have the option to issue the Series D Equipment Notes at or after the
Closing. The Equipment Notes shall be issued in registered form only. The
Equipment Notes shall be issued in denominations of $1,000 and integral
multiples thereof, except that one Equipment Note of each Series may be in an
amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the applicable Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Original Amount thereof from time to time outstanding,
payable in arrears in semi-annual installments on each January 2 and July 2
until maturity commencing on the first such date after issuance thereof. The
Original Amount of each Equipment Note (i) in the case of Equipment Notes other
than Series A-2, shall be payable on the dates and in the installments equal to
the corresponding percentage of the Original Amount as set forth in Schedule I
hereto the applicable portion of which shall be attached as Schedule I to the
Equipment Notes (or, in the case of the Series D Equipment Notes if issued after
the Closing Date, as set forth in an amendment to this Trust Indenture, which
payment schedule shall be attached as Schedule I to the Series D Equipment
Notes) and (ii) in the case of the Series A-2 Equipment Notes, shall be paid in
full on ___, __. Notwithstanding the foregoing, the final payment made under
each Equipment Note shall be in an amount sufficient to discharge in full the
unpaid Original Amount and all accrued and unpaid interest on, and any other
amounts due under, such Equipment Note. Each Equipment Note shall bear interest
at the Payment Due Rate (calculated on the basis of a year of 360 days comprised
of twelve 30-day months) on any part of the Original Amount, Make-Whole Amount,
if any, and, to the extent permitted by applicable Law, interest and any other
amounts payable thereunder not paid when due for any period during which the
same shall be overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated maturity, by
acceleration or otherwise). Notwithstanding anything to the contrary
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contained herein, if any date on which a payment under any Equipment Note
becomes due and payable is not a Business Day then such payment shall not be
made on such scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business Day, no
interest shall accrue on the amount of such payment during such extension.
The Owner agrees to pay to the Mortgagee for distribution in accordance
with Section 3.04 hereof: (i) to the extent not payable (whether or not in fact
paid) under Section 6(a) of the Note Purchase Agreement, an amount equal to the
fees payable to the relevant Liquidity Provider under Section 2.03 of each
Liquidity Facility and the related Fee Letter (as defined in the Intercreditor
Agreement) multiplied by a fraction the numerator of which shall be the then
outstanding aggregate principal amount of the Series A-1 Equipment Notes, Series
A-2 Equipment Notes, Series B Equipment Notes and Series C Equipment Notes and
the denominator of which shall be the then outstanding aggregate principal
amount of all "Series A-1 Equipment Notes," "Series A-2 Equipment Notes,"
"Series B Equipment Notes" and "Series C Equipment Notes" (each as defined in
the Note Purchase Agreement); (ii) (x) the amount equal to interest on any
Downgrade Advance (other than any Applied Downgrade Advance) payable under
Section 3.07(e) of each Liquidity Facility minus Investment Earnings from such
Downgrade Advance multiplied by (y) the fraction specified in the foregoing
clause (i); (iii) (x) the amount equal, to interest on any Non-Extension Advance
(other than any Applied Non-Extension Advance) payable under Section 3.07(a)(i)
of the Class A Liquidity Facility minus Investment Earnings from such
Non-Extension Advance multiplied by (y) the fraction specified in the foregoing
clause (i); (iv) if any payment default shall have occurred and be continuing
with respect to interest on any Series A-1 Equipment Notes, Series A-2 Equipment
Notes, Series B Equipment Notes or Series C Equipment Notes, (x) the excess, if
any, of (1) an amount equal to interest on any Unpaid Advance, Applied Downgrade
Advance or Applied Non-Extension Advance payable under Section 3.07(a)(i) of
each Liquidity Facility over (2) the sum of Investment Earnings from any Final
Advance plus any amount of interest at the Payment Due Rate actually payable
(whether or not in fact paid) by Owner on the overdue scheduled interest on the
Equipment Notes in respect of which such Unpaid Advance, Applied Downgrade
Advance or Applied Non-Extension Advance was made multiplied by (y) a fraction
the numerator of which shall be the then aggregate overdue amounts of interest
on the Series A-1 Equipment Notes, Series A-2 Equipment Notes, Series B
Equipment Notes and Series C Equipment Notes (other than interest becoming due
and payable solely as a result of acceleration of any such Equipment Notes) and
the denominator of which shall be the then aggregate overdue amounts of interest
on all "Series A-1 Equipment Notes," "Series A-2 Equipment Notes," "Series B
Equipment Notes" and "Series C Equipment Notes" (each as defined in the Note
Purchase Agreement) (other than interest becoming due and payable solely as a
result of acceleration of any such "Equipment Notes"); and (v) Owner's
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pro rata share of any other amounts owed to the Liquidity Providers by the
Subordination Agent as borrower under each Liquidity Facility other than amounts
due as repayment of advances thereunder or as interest on such advances, except
to the extent payable pursuant to clause (ii), (iii) or (iv) above, (c) Owner's
pro rata share of all compensation and reimbursement of expenses, disbursements
and advances payable by Owner under the Pass Through Trust Agreements, (d)
Owner's pro rata share of all compensation and reimbursement of expenses and
disbursements payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions contemplated by the
Intercreditor Agreement and (e) in the event Owner requests any amendment to any
Operative Agreement or Pass Through Agreement, Owner's pro rata share of all
reasonable fees and expenses (including, without limitation, fees and
disbursements of counsel) of the Escrow Agents and the Paying Agents in
connection therewith payable by the Pass Through Trustees under the Escrow
Agreements. As used herein, "Owner's pro rata share" means as of any time a
fraction, the numerator of which is the principal balance then outstanding of
Equipment Notes and the denominator of which is the aggregate principal balance
then outstanding of all "Equipment Notes" (as such term is defined in each of
the Operative Indentures). For purposes of this paragraph, the terms "Applied
Downgrade Advance," "Applied Non-Extension Advance," "Cash Collateral Account,"
"Downgrade Advance," "Final Advance," "Investment Earnings," "Non-Extension
Advance" and "Unpaid Advance" shall have the meanings specified in each
Liquidity Facility.
The Equipment Notes shall be executed on behalf of the Owner by one of its
authorized officers. Equipment Notes bearing the signatures of individuals who
were at any time the proper officers of the Owner shall bind the Owner,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Equipment Notes or did
not hold such offices at the respective dates of such Equipment Notes. The Owner
may from time to time execute and deliver Equipment Notes with respect to the
Aircraft to the Mortgagee for authentication upon original issue and such
Equipment Notes shall thereupon be authenticated and delivered by the Mortgagee
upon the written request of the Owner signed by an authorized officer of the
Owner. No Equipment Note shall be secured by or entitled to any benefit under
this Trust Indenture or be valid or obligatory for any purposes, unless there
appears on such Equipment Note a certificate of authentication in the form
provided for herein executed by the Mortgagee by the manual signature of one of
its authorized officers and such certificate upon any Equipment Notes be
conclusive evidence, and the only evidence, that such Equipment Note has been
duly authenticated and delivered hereunder.
The aggregate Original Amount of the Equipment Notes issued hereunder shall
not exceed the amount set forth as the maximum therefor on Schedule I hereto.
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SECTION 2.03. [Intentionally Omitted]
SECTION 2.04. Method of Payment
(a) The Original Amount of, interest on, Make-Whole Amount, if any, and
other amounts due under each Equipment Note or hereunder will be payable in
Dollars by wire transfer of immediately available funds not later than 12 noon,
New York time, on the due date of payment to the Mortgagee at the Corporate
Trust Office for distribution among the Note Holders in the manner provided
herein. The Owner shall not have any responsibility for the distribution of such
payment to any Note Holder. Notwithstanding the foregoing or any provision in
any Equipment Note to the contrary, the Mortgagee will use reasonable efforts to
pay or cause to be paid, if so directed in writing by any Note Holder (with a
copy to the Owner), all amounts paid by the Owner hereunder and under such
holder's Equipment Note or Equipment Notes to such holder or a nominee therefor
(including all amounts distributed pursuant to Article III of this Trust
Indenture) by transferring, or causing to be transferred, by wire transfer of
immediately available funds in Dollars, prior to 12:30 P.M., New York City time,
on the due date of payment, to an account maintained by such holder with a bank
located in the continental United States the amount to be distributed to such
holder, for credit to the account of such holder maintained at such bank. Any
payment made hereunder shall be made without any presentment or surrender of any
Equipment Note, except that, in the case of the final payment in respect of any
Equipment Note, such Equipment Note shall be surrendered to the Mortgagee for
cancellation promptly after such payment. Notwithstanding any other provision of
this Trust Indenture to the contrary, the Mortgagee shall not be required to
make, or cause to be made, wire transfers as aforesaid prior to the first
Business Day on which it is practicable-for the Mortgagee to do so in view of
the time of day when the funds to be so transferred were received by it if such
funds were received after 12 noon, New York time, at the place of payment. Prior
to the due presentment for registration of transfer of any Equipment Note, the
Owner and the Mortgagee shall deem and treat the Person in whose name any
Equipment Note is registered on the Equipment Note Register as the absolute
owner and holder of such Equipment Note for the purpose of receiving payment of
all amounts payable with respect to such Equipment Note and for all other
purposes, and none of the Owner or the Mortgagee shall be affected by any notice
to the contrary. So long as any signatory to the Participation Agreement or
nominee thereof shall be a registered Note Holder, all payments to it shall be
made to the account of such Note Holder specified in Schedule I thereto and
otherwise in the manner provided in or pursuant to the Participation Agreement
unless it shall have specified some other account or manner of payment by notice
to the Mortgagee consistent with this Section 2.04.
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(b) The Mortgagee, as agent for the Owner, shall exclude and withhold at
the appropriate rate from each payment of Original Amount of, interest on,
Make-Whole Amount, if any, and other amounts due hereunder or under each
Equipment Note (and such exclusion and withholding shall constitute payment in
respect of such Equipment Note) any and all United States withholding taxes
applicable thereto as required by Law. The Mortgagee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
United States taxes or similar charges are required to be withheld with respect
to any amounts payable hereunder or in respect of the Equipment Notes, to
withhold such amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Note Holders, that it will file any necessary
United States withholding tax returns or statements when due, and that as
promptly as possible after the payment thereof it will deliver to each Note
Holder (with a copy to the Owner) appropriate receipts showing the payment
thereof, together with such additional documentary evidence as any such Note
Holder may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to the Mortgagee
a properly completed, accurate and currently effective U.S. Internal Revenue
Service Form 1001 or W-8 (or such successor form or forms as may be required by
the United States Treasury Department) during the calendar year in which the
payment hereunder or under the Equipment Note(s) held by such holder is made
(but prior to the making of such payment), or in either of the two preceding
calendar years, and has not notified the Mortgagee of the withdrawal or
inaccuracy of such form prior to the date of such payment (and the Mortgagee has
no reason to believe that any information set forth in such form is inaccurate),
the Mortgagee shall withhold only the amount, if any, required by Law (after
taking into account any applicable exemptions properly claimed by the Note
Holder) to be withheld from payments hereunder or under the Equipment Notes held
by such holder in respect of United States federal income tax. If a Note Holder
(x) which is a Non-U.S. Person has furnished to the Mortgagee a properly
completed, accurate and currently effective U.S. Internal Revenue Service Form
4224 in duplicate (or such successor certificate, form or forms as may be
required by the United States Treasury Department as necessary in order to
properly avoid withholding of United States federal income tax), for each
calendar year in which a payment is made (but prior to the making of any payment
for such year), and has not notified the Mortgagee of the withdrawal or
inaccuracy of such certificate or form prior to the date of such payment (and
the Mortgagee has no reason to believe that any information set forth in such
form is inaccurate) or (y) which is a U.S. Person has furnished to the Mortgagee
a properly completed, accurate and currently effective U.S. Internal Revenue
Service Form W9, if applicable, prior to a payment hereunder or under the
Equipment Notes held by such holder, no amount shall be withheld from payments
in respect of United States federal income tax. If any Note Holder has notified
the Mortgagee that any of the foregoing forms or certificates is withdrawn or
inaccurate, or if such holder has not filed a
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form claiming an exemption from United States withholding tax or if the Code or
the regulations thereunder or the administrative interpretation thereof is at
any time after the date hereof amended to require such withholding of United
States federal income taxes from payments under the Equipment Notes held by such
holder, the Mortgagee agrees to withhold from each payment due to the relevant
Note Holder withholding taxes at the appropriate rate under Law and will, on a
timely basis as more fully provided above, deposit such amounts with an
authorized depository and make such returns, statements, receipts and other
documentary evidence in connection therewith as required by Law.
Owner shall not have any liability for the failure of the Mortgagee to
withhold taxes in the manner provided for herein or for any false, inaccurate or
untrue evidence provided by any Note Holder hereunder.
SECTION 2.05. Application of Payments
In the case of each Equipment Note, each payment of Original Amount,
Make-Whole Amount, if any, and interest due thereon shall be applied:
First: to the payment of accrued interest on such Equipment Note (as
well as any interest on any overdue Original Amount, any overdue Make-Whole
Amount, if any, and to the extent permitted by Law, any overdue interest
and any other overdue amounts thereunder) to the date of such payment;
Second: to the payment of the Original Amount of such Equipment Note
(or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Equipment Note: and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Original Amount of such Equipment Note remaining unpaid (provided that
such Equipment Note shall not be subject to redemption except as provided
in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Original Amount of such Equipment Note in the inverse order of
their maturity.
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SECTION 2.06. Termination of Interest in Collateral
No Note Holder nor any other Indenture Indemnitee shall, as such, have any
further interest in, or other right with respect to, the Collateral when and if
the Original Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Equipment Notes held by such Note Holder and any other
sums then due and payable to such Note Holder, such Indenture Indemnitee or the
Mortgagee hereunder (including, without limitation, under the third paragraph of
Section 2.02 hereof) and under the other Operative Agreements by the Owner
(collectively, the "Secured Obligations") shall have been paid in full.
SECTION 2.07. Registration Transfer and Exchange of Equipment Notes
The Mortgagee shall keep a register (the "Equipment Note Register") in
which the Mortgagee shall provide for the registration of Equipment Notes and
the registration of transfers of Equipment Notes. No such transfer shall be
given effect unless and until registration hereunder shall have occurred. The
Equipment Note Register shall be kept at the Corporate Trust Office of the
Mortgagee. The Mortgagee is hereby appointed "Equipment Note Registrar" for the
purpose of registering Equipment Notes and transfers of Equipment Notes as
herein provided. A holder of any Equipment Note intending to exchange such
Equipment Note shall surrender such Equipment Note to the Mortgagee at the
Corporate Trust Office, together with a written request from the registered
holder thereof for the issuance of a new Equipment Note, specifying, in the case
of a surrender for transfer, the name and address of the new holder or holders.
Upon surrender for registration of transfer of any Equipment Note, the Owner
shall execute, and the Mortgagor shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Equipment Notes of a
like aggregate Original Amount and of the same series. At the option of the Note
Holder, Equipment Notes may be exchanged for other Equipment Notes of any
authorized denominations of a like aggregate Original Amount, upon surrender of
the Equipment Notes to be exchanged to the Mortgagee at the Corporate Trust
Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner
shall execute, and the Mortgagee shall authenticate and deliver, the Equipment
Notes which the Note Holder making the exchange is entitled to receive. All
Equipment Notes issued upon any registration of transfer or exchange of
Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or
otherwise under this Trust Indenture) shall be the valid obligations of the
Owner evidencing the same respective obligations, and entitled to the same
security
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and benefits under this Trust Indenture, as the Equipment Notes surrendered upon
such registration of transfer or exchange. Every Equipment Note presented or
surrendered for registration of transfer, shall (if so required by the
Mortgagee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Mortgagee duly executed by the Note Holder
or such holder's attorney duly authorized in writing, and the Mortgagee shall
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act, and the securities Laws of any applicable state. The
Mortgagee shall make a notation on each new Equipment Note of the amount of all
payments of Original Amount previously made on the old Equipment Note or
Equipment Notes with respect to which such new Equipment Note is issued and the
date to which interest on such old Equipment Note or Equipment Notes has been
paid. Interest shall be deemed to have been paid on such new Equipment Note to
the date on which interest shall have been paid on such old Equipment Note, and
all payments of the Original Amount marked on such new Equipment Note, as
provided above, shall be deemed to have been made thereon. The Owner shall not
be required to exchange any surrendered Equipment Notes as provided above during
the ten-day period preceding the due date of any payment on such Equipment Note.
The Owner shall in all cases deem the Person in whose name any Equipment Note
shall have been issued and registered as the absolute owner and holder of such
Equipment Note for the purpose of receiving payment of all amounts payable by
the Owner with respect to such Equipment Note and for all purposes until a
notice stating otherwise is received from the Mortgagee and such change is
reflected on the Equipment Note Register. The Mortgagee will promptly notify the
Owner of each registration of a transfer of an Equipment Note. Any such
transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees
to the provisions of this Trust Indenture and the Participation Agreement
applicable to Note Holders, including Sections 6.3, 6.4 and 9.1 thereof and
shall be deemed to have covenanted to the parties to the Participation Agreement
as to the matters covenanted by the original Note Holder in the Participation
Agreement. Subject to compliance by the Note Holder and its transferee (if any)
of the requirements set forth in this Section 2.07, Mortgagee and Owner shall
use all reasonable efforts to issue new Equipment Notes upon transfer or
exchange within 10 Business Days of the date an Equipment Note is surrendered
for transfer or exchange.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes
If any Equipment Note shall become mutilated, destroyed, lost or stolen,
the Owner shall, upon the written request of the holder of such Equipment Note,
execute and the Mortgagee shall authenticate and deliver in replacement thereof
a new Equipment Note,
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payable in the same Original Amount dated the same date and captioned as issued
in connection with the Aircraft. If the Equipment Note being replaced has become
mutilated, such Equipment Note shall be surrendered to the Mortgagee and a
photocopy thereof shall be furnished to the Owner. If the Equipment Note being
replaced has been destroyed, lost or stolen, the holder of such Equipment Note
shall furnish to the Owner and the Mortgagee such security or indemnity as may
be required by them to save the Owner and the Mortgagee harmless and evidence
satisfactory to the Owner and the Mortgagee of the destruction, loss or theft of
such Equipment Note and of the ownership thereof. If a "qualified institutional
buyer" of the type referred to in paragraph (a)(1)(i)(A), (B), (D) or (E) of
Rule 144A under the Securities Act (a "QIB") is the holder of any such
destroyed, lost or stolen Equipment Note, then the written indemnity of such
QIB, signed by an authorized officer thereof, in favor of, delivered to and in
form reasonably satisfactory to the Owner shall be accepted as satisfactory
indemnity and security and no further indemnity or security shall be required as
a condition to the execution and delivery of such new Equipment Note. Subject to
compliance by the Note Holder with the requirements set forth in this Section
2.08, Mortgagee and Owner shall use all reasonable efforts to issue new
Equipment Notes within 10 Business Days of the date of the written request
therefor from the Note Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation
(a) No service charge shall be made to a Note Holder for any registration
of transfer or exchange of Equipment Notes, but the Mortgagee, as Equipment Note
Registrar, may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes.
(b) The Mortgagee shall cancel all Equipment Notes surrendered for
replacement, redemption, transfer, exchange, payment or cancellation and shall
destroy the canceled Equipment Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes
On the date on which the Owner is required pursuant to Section 4.05 hereof
to make payment for an Event of Loss with respect to the Airframe, all of the
Equipment Notes shall be redeemed in whole at a redemption price equal to 100%
of the unpaid Origi-
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nal Amount thereof, together with all accrued interest thereon to the date of
redemption and all other Secured Obligations owed or then due and payable to the
Note Holders but without Make-Whole Amount.
SECTION 2.11. Voluntary Redemptions of Equipment Notes
All (but not less than all) of the Equipment Notes may be redeemed by the
Owner upon at least 20 days revocable prior written notice to the Mortgagee and
the Note Holders, and the Equipment Notes shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Original Amount thereof, together
with accrued interest thereon to the date of redemption and all other Secured
Obligations owed or then-due and payable to the Note Holders plus Make-Whole
Amount, if any.
SECTION 2.12. Redemptions; Notice of Redemption
(a) No redemption of any Equipment Note may be made except to the extent
and in the manner expressly permitted by this Trust Indenture. No purchase of
any Equipment Note may be made by the Mortgagee.
(b) Notice of redemption with respect to the Equipment Notes shall be given
by the Mortgagee by first-class mail, postage prepaid, mailed not less than 15
nor more than 60 days prior to the applicable redemption date, to each Note
Holder of such Equipment Notes to be redeemed, at such Note Holder's address
appearing in the Equipment Note Register; provided that such notice shall be
revocable by written notice from the Owner to Mortgagee given not later than
three days prior to the redemption date. All notices of redemption shall state:
(1) the redemption date, (2) the applicable basis for deter-mining the
redemption price, (3) that on the redemption date, the redemption price will
become due and payable upon each such Equipment Note, and that, if any such
Equipment Notes are then outstanding, interest on such Equipment Notes shall
cease to accrue on and after such redemption date, and (4) the place or places
where such Equipment Notes are to be surrendered for payment of the redemption
price.
(c) On or before the redemption date (unless the notice with respect
thereto shall have been revoked pursuant to Section 2.12(b)), the Owner (or any
person on behalf of the Owner) shall, to the extent an amount equal to the
redemption price for the Equipment Notes to be redeemed on the redemption date
shall not then be held by the Mortgagee, deposit or cause to be deposited with
the Mortgagee by 12:30 PM New York time on the
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redemption date in immediately available funds the redemption price of the
Equipment Notes to be redeemed.
(d) Notice of redemption having been given as aforesaid (and not revoked as
contemplated in the proviso to Section 2.12(b)), the Equipment Notes to be
redeemed shall, on the redemption date, become due and payable at the Corporate
Trust Office of the Mortgagee or at any office or agency maintained for such
purposes pursuant to Section 2.07, and from and after such redemption date
(unless there shall be a default in the payment of the redemption price) any
such Equipment Notes then outstanding shall cease to bear interest. Upon
surrender of any such Equipment Note for redemption in accordance with said
notice, such Equipment Note shall be redeemed at the redemption price. If any
Equipment Note called for redemption shall not be so paid upon surrender thereof
for redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Equipment Note as of such redemption date.
SECTION 2.13. Subordination
(a) The Owner and, by acceptance of its Equipment Notes of any Series, each
Note Holder of such Series, hereby agree that no payment or distribution shall
be made on or in respect of the Secured Obligations owed to such Note Holder of
such Series, including any payment or distribution of cash, property or
securities after the commencement of a proceeding of the type referred to in
Section 5.01(e), (f) or (g) hereof, except as expressly provided in Article III
hereof.
(b) By the acceptance of its Equipment Notes of any Series (other than
Series A-1 and Series A-2), each Note Holder of such Series agrees that in the
event that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.13 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder (as
defined in Section 2.13(c) hereof) and will forthwith turn over such payment to
the Mortgagee in the form received to be applied as provided in Article III
hereof.
(c) As used in this Section 2.13, the term "Senior Holder" shall mean, (i)
the Note Holders of Series A-1 and Series A-2 until the Secured Obligations in
respect of Series A-1 and Series A-2 Equipment Notes have been paid in full,
(ii) after the Secured Obligations in respect of Series A-1 and Series A-2
Equipment Notes have been paid in full, the Note Holders 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, the Note Holders of Series C until the Secured
Obligations in respect of Series C Equipment Notes have been paid in full.
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SECTION 2.14. Assumption of Equipment Notes
Pursuant to the provisions of Section 13 of the Participation Agreement, an
owner trustee shall be entitled to assume on a non-recourse basis all of the
obligations of the Owner hereunder and under the Equipment Notes by an amended
and restated trust indenture, an amended and restated participation agreement,
and the issuance of new equipment notes having substantially the same tenor as
the Equipment Notes. If an owner trustee shall assume such obligations of the
Owner, the Owner shall be released and discharged form any further obligations
hereunder and under the Equipment Notes (except with respect to any such
obligations that accrued prior thereto) and the Equipment Notes shall be
delivered to the Indenture Trustee for cancellation.
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS
SECTION 3.01. Basic Distributions
Except as otherwise provided in Sections 3.02 and 3.03 hereof, each
periodic payment of principal or interest on the Equipment Notes received by the
Mortgagee shall be promptly distributed in the following order of priority:
(i) so much of such payment as shall be required to pay in full the
aggregate amount of the payment or payments of Original Amount and
interest (as well as any interest on any overdue Original Amount and,
to the extent permitted by Law, on any overdue interest) then due
under all Series A-1 and Series A-2 Equipment Notes shall be
distributed to the Note Holders of Series A-1 and Series A-2 ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series A-1 and
Series A-2 Equipment Note bears to the aggregate amount of the
payments then due under all Series A-1 and Series A-2 Equipment Notes;
(ii) after giving effect to paragraph (i) above, so much of such payment
remaining as shall be required to pay in full the aggregate amount of
the payment or payments of Original Amount and interest (as well as
any
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interest on any overdue Original Amount and, to the extent permitted
by Law, on any overdue interest) then due under all Series B Equipment
Notes shall be distributed to the Note Holders of Series B ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series B
Equipment Note bears to the aggregate amount of the payments then due
under all Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, so much of such payment
remaining as shall be required to pay in full the aggregate amount of
the payment or payments of Original Amount and interest (as well as
any interest on any overdue Original Amount and, to the extent
permitted by Law, on any overdue interest) then due under all Series C
Equipment Notes shall be distributed to the Note Holders of Series C
ratably, without priority of one over the other, in the proportion
that the amount of such payment or payments then due under each Series
C Equipment Note bears to the aggregate amount of the payments then
due under all Series C Equipment Notes; and
(iv) 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 Original Amount and interest (as well as any interest on
any overdue Original Amount and, to the extent permitted by Law, on
any overdue interest) then due under all Series D Equipment Notes
shall be distributed to the Note Holders of Series D ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series D Equipment Note
bears to the aggregate amount of the payments then due under all
Series D Equipment Notes.
SECTION 3.02. Event of Loss; Replacement; Optional Redemption
Except as otherwise provided in Section 3.03 hereof, any payments received
by the Mortgagee (i) with respect to the Airframe or the Airframe and one or
more Engines as the result of an Event of Loss or (ii) pursuant to an optional
redemption of the Equipment Notes pursuant to Section 2.11 hereof shall be
applied to redemption of the Equipment
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Notes and to all other Secured Obligations by applying such funds in the
following order of priority:
First, (a) to reimburse the Mortgagee and the Note Holders for any
reasonable costs or expenses incurred in connection with such
redemption for which they are entitled to reimbursement, or indemnity
by Owner, under the Operative Agreements and then (b) to pay any other
amounts then due (except as provided in clause "Second" below) to the
Mortgagee, the Note Holders and the other Indenture Indemnitees under
this Trust Indenture, the Participation Agreement or the Equipment
Notes;
Second, (i) to pay the amounts specified in paragraph (i) of clause "Third" of
Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in
respect of the Series A-1 and Series A-2 Equipment Notes;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "Third" of Section 3.03 hereof
plus Make-Whole Amount, if any, then due and payable in respect of the
Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, to pay the amounts
specified in paragraph (iii) of clause "Third" of Section 3.03 hereof
plus Make-Whole Amount, if any, then due and payable in respect of the
Series C Equipment Notes; and
(iv) 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 "Third" of Section 3.03 hereof plus Make-Whole Amount,
if any, then due and payable in respect of the Series D Equipment
Notes; and
Third, as provided in clause "Fourth" of Section 3.03 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 4.05 hereof, any insurance, condemnation or similar proceeds which
result from such Event of Loss and are paid over to the Mortgagee shall be held
by the Mortgagee as permitted by Section 7.04 hereof (provided that such moneys
shall be invested as provided in Section 6.06 hereof) as additional security for
the obligations of Owner secured by this Trust Indenture 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
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upon the release of such Airframe or Engine and the replacement thereof as
provided herein.
SECTION 3.03. Payments After Event of Default
Except as otherwise provided in Section 3.04 hereof, all payments received
and amounts held or realized by the Mortgagee (including any amounts realized by
the Mortgagee from the exercise of any remedies pursuant to Article V hereof)
after an Event of Default shall have occurred and be continuing and after the
Equipment Notes shall have become due and payable, as well as all payments or
amounts then held by the Mortgagee as part of the Collateral, shall be promptly
distributed by the Mortgagee in the following order of priority:
First, so much of such payments or amounts as shall be required to (i) reimburse
the Mortgagee or WTC for any tax (except to the extent resulting from a
failure of the Mortgagee to withhold taxes pursuant to Section 2.04(b)
hereof), expense or other loss (including, without limitation, all amounts
to be expended at the expense of, or charged upon the rents, revenues,
issues, products and profits of, the property included in the Collateral
(all such property being herein called the "Mortgaged Property") pursuant
to Section 5.03(b) hereof) incurred by the Mortgagee or WTC (to the extent
not previously reimbursed), the expenses of any sale, or other proceeding,
reasonable attorneys' fees and expenses, court costs, and any other
expenditures incurred or expenditures or advances made by the Mortgagee,
WTC or the Note Holders in the protection, exercise or enforcement of any
right, power or remedy or any damages sustained by the Mortgagee, WTC or
any Note Holder, liquidated or otherwise, upon such Event of Default shall
be applied by the Mortgagee as between itself, WTC and the Note Holders in
reimbursement of such expenses and any other expenses for which the
Mortgagee, WTC or the Note Holders are entitled to reimbursement under any
Operative Agreement and (ii) pay all amounts payable to the other Indenture
Indemnitees hereunder and under the Participation Agreement; and in the
case the aggregate amount to be so distributed is insufficient to pay as
aforesaid in clauses (i) and (ii), then ratably, without priority of one
over the other, in proportion to the amounts owed each hereunder;
Second, so much of such payments or amounts remaining as shall be required to
reimburse the then existing or prior Note Holders for payments made
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pursuant to Section 6.03 hereof (to the extent not previously reimbursed)
shall be distributed to such then existing or prior Note Holders ratably,
without priority of one over the other, in accordance with the amount of
the payment or payments made by each such then existing or prior Note
Holder pursuant to said Section 6.03 hereof;
Third, (i) so much of such payments or amounts remaining as shall be required to
pay in full the aggregate unpaid Original Amount of all Series A-1 and
Series A-2 Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon (other than Make-Whole Amount which shall not be due
and payable) and all other Secured Obligations in respect of the Series A-1
and Series A-2 Equipment Notes (other than Make-Whole Amount) to the date
of distribution, shall be distributed to the Note Holders of Series A-1 and
Series A-2, and in case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably, without priority of
one over the other, in the proportion that the aggregate unpaid Original
Amount of all Series A-1 and Series A-2 Equipment Notes held by each holder
plus the accrued but unpaid interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Original Amount of all Series
A-1 and Series A-2 Equipment Notes held by all such holders plus the
accrued but unpaid interest and other amounts due thereon (other than
Make-Whole Amount) to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such payments
or amounts remaining as shall be required to pay in full the aggregate
unpaid Original Amount of all Series B Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon (other than
Make-Whole Amount which shall not be due and payable) and all other
Secured Obligations in respect of the Series B Equipment Notes (other
than Make-Whole Amount) to the date of distribution, shall be
distributed to the Note Holders of Series B, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in
the proportion that the aggregate unpaid Original Amount of all Series
B Equipment Notes held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series B Equipment Notes held
by all such holders plus the accrued
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but unpaid interest and other amounts due thereon (other than
Make-Whole Amount) to the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of such payments
or amounts remaining as shall be required to pay in full the aggregate
unpaid Original Amount of all Series C Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon (other than
Make-Whole Amount which shall not be due and payable) and all other
Secured Obligations in respect of the Series C Equipment Notes (other
than Make-Whole Amount) to the date of distribution, shall be
distributed to the Note Holders of Series C, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in
the proportion that the aggregate unpaid Original Amount of all Series
C Equipment Notes held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series C Equipment Notes held
by all such holders plus the accrued but unpaid interest and other
amounts due thereon (other than Make-Whole Amount) 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
Original Amount of all Series D Equipment Notes, and the accrued but
unpaid interest and other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and all other Secured
Obligations in respect of the Series D Equipment Notes (other than
Make-Whole Amount) to the date of distribution, shall be distributed
to the Note Holders of Series D, and in case the aggregate amount so
to be distributed shall be insufficient to pay in full as aforesaid,
then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Original Amount of all Series D
Equipment Notes held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series D Equipment Notes held
by all such holders plus the accrued but unpaid interest and other
amounts due thereon (other than Make-Whole Amount) to the date of
distribution; and
Fourth, the balance, if any, of such payments or amounts remaining thereafter
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shall be distributed to the Owner.
No Make-Whole Amount shall be due and payable on the Equipment Notes as a
consequence of the acceleration of the Equipment Notes as a result of an Event
of Default.
SECTION 3.04. Certain Payments
(a) Any payments received by the Mortgagee for which no provision as to the
application thereof is made in this Trust Indenture and for which such provision
is made in any other Operative Agreement shall be applied forthwith to the
purpose for which such payment was made in accordance with the terms of such
other Operative Agreement, as the case may be.
(b) Notwithstanding anything to the contrary contained in this Article III,
the Mortgagee will distribute promptly upon receipt any indemnity payment
received by it from the Owner in respect of the Mortgagee in its individual
capacity, any Note Holder or any other Indenture Indemnitee, in each case
whether or not pursuant to Section 8 of the Participation Agreement, directly to
the Person entitled thereto. Any payment received by the Mortgagee under the
third paragraph of Section 2.02 shall be distributed to the Subordination Agent
in its capacity as Note Holder to be distributed in accordance with the terms of
the Intercreditor Agreement.
SECTION 3.05. Other Payments
Any payments received by the Mortgagee for which no provision as to the
application thereof is made elsewhere in this Trust Indenture or in any other
Operative Agreement shall be distributed by the Mortgagee to the extent received
or realized at any time, in the order of priority specified in Section 3.01
hereof, and 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.
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ARTICLE IV COVENANTS OF THE OWNER
SECTION 4.01. Liens
The Owner will not directly or indirectly create, incur, assume or suffer
to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine
or any Part, title to any of the foregoing or any interest of Owner therein,
except Permitted Liens. The Owner shall promptly, at its own expense, take such
action as may be necessary, to duly discharge (by bonding or otherwise) any Lien
other than a Permitted Lien arising at any time.
SECTION 4.02. Possession, Operation and Use, Maintenance and Repair,
Registration and Markings
(a) General. Except as otherwise expressly provided herein, the Owner shall
be entitled to operate, use, locate, employ or otherwise utilize or not utilize
the Airframe, any Engine or any Parts in any lawful manner or place in
accordance with the Owner's business judgment.
(b) Possession. The Owner, without the prior consent of Mortgagee, shall
not lease or otherwise in any manner deliver, transfer or relinquish possession
of the Aircraft, the Airframe or any Engine or install any Engine, or permit any
Engine to be installed, on any airframe other than the Airframe; except that the
Owner may, without such prior written consent of Mortgagee:
(i) Subject or permit any Permitted Lessee to subject any Engine to
normal interchange agreements or pooling agreements or arrangements, in
each case customary in the commercial airline industry and entered into by
Owner or such Permitted Lessee, as the case may be, in the ordinary course
of business; provided, however, that if Owner's title to any such Engine is
divested under any such agreement or arrangement, then such Engine shall be
deemed to have suffered an Event of Loss as of the date of such
divestiture, and Owner shall comply with Section 4.04(e) in respect
thereof;
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(ii) Deliver or permit any Permitted Lessee to deliver possession of
the Aircraft, Airframe, any Engine or any Part (x) to the manufacturer
thereof or to any third-party maintenance provider for testing, service,
repair, maintenance or overhaul work on the Aircraft, Airframe, any Engine
or any Part, or, to the extent required or permitted by Section 4.04, for
alterations or modifications in or additions to the Aircraft, Airframe or
any Engine or (y) to any Person for the purpose of transport to a Person
referred to in the preceding clause (x);
(iii) Install or permit any Permitted Lessee to install an Engine on
an airframe owned by Owner or such Permitted Lessee, as the case may be,
free and clear of all Liens, except (x) Permitted Liens and those that do
not apply to the Engines, and (y) the rights of third parties under normal
interchange or pooling agreements and arrangements of the type that would
be permitted under Section 4.02(b)(i);
(iv) Install or permit any Permitted Lessee to install an Engine on an
airframe leased to Owner or such Permitted Lessee, or purchased by Owner or
such Permitted Lessee subject to a mortgage, security agreement,
conditional sale or other secured financing arrangement, but only if (x)
such airframe is free and clear of all Liens, except (A) the rights of the
parties to such lease, or any such secured financing arrangement, covering
such airframe and (B) Liens of the type permitted by clause (iii) above and
(y) Owner or Permitted Lessee, as the case may be, shall have received from
the lessor, mortgagee, secured party or conditional seller, in respect of
such airframe, a written agreement (which may be a copy of the lease,
mortgage, security agreement, conditional sale or other agreement covering
such airframe), whereby such Person agrees that it will not acquire or
claim any right, title or interest in, or Lien on, such Engine by reason of
such Engine being installed on such airframe at any time while such Engine
is subject to the Lien of this Trust Indenture;
(v) Install or permit any Permitted Lessee to install an Engine on an
airframe owned by Owner or such Permitted Lessee, leased to Owner or such
Permitted Lessee, or purchased by Owner or such Permitted Lessee subject to
a conditional sale or other security agreement under circumstances where
neither clause (iii) or (iv) above is applicable; provided, however, that
any such installation shall be deemed an Event of Loss with respect to such
Engine, and Owner shall comply with Section 4.04(e) hereof in respect
thereof;
(vi) Transfer or permit any Permitted Lessee to transfer possession of
the Aircraft, Airframe or any Engine to the U.S. Government, in which event
Owner shall promptly notify Mortgagee in writing of any such transfer of
possession and, in the case of any transfer pursuant to CRAF, in such
notification shall identify by
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name, address and telephone numbers the Contracting Office Representative
or Representatives for the Military Airlift Command of the United States
Air Force to whom notices must be given and to whom requests or claims must
be made to the extent applicable under CRAF;
(vii) So long as no Event of Default shall have occurred and be
continuing, and subject to the provisions of the immediately following
paragraph, enter into a lease with respect to the Aircraft, Airframe or any
Engine to any Permitted Air Carrier that is not then subject to any
bankruptcy, insolvency, liquidation, reorganization, dissolution or similar
proceeding and shall not have substantially all of its property in the
possession of any liquidator, trustee, receiver or similar person; provided
that, in the case only of a lease to a Permitted Foreign Air Carrier, (A)
the United States maintains diplomatic relations with the country of
domicile of such Permitted Foreign Air Carrier (or, in the case of Taiwan,
diplomatic relations at least as good as those in effect on the Closing
Date) and (B) Owner shall have furnished Mortgagee a favorable opinion of
counsel, reasonably satisfactory to Mortgagee, in the country of domicile
of such Permitted Foreign Air Carrier, that (v) the terms of such lease are
the legal, valid and binding obligations of the parties thereto enforceable
under the laws of such jurisdiction, (w) it is not necessary for Mortgagee
to register or qualify to do business in such jurisdiction, if not already
so registered or qualified, as a result, in whole or in part, of the
proposed lease, (x) Mortgagee's Lien in respect of the Aircraft, Airframe
and Engines, will be recognized in such jurisdiction, (y) the Laws of such
jurisdiction of domicile require fair compensation by the government of
such jurisdiction, payable in a currency freely convertible into Dollars,
for the loss of title to the Aircraft, Airframe or Engines in the event of
the requisition by such government of such title (unless Owner shall
provide insurance in the amounts required with respect to hull insurance
under this Trust Indenture covering the requisition of title to the
Aircraft, Airframe or Engines by the government of such jurisdiction so
long as the Aircraft, Airframe or Engines are subject to such lease) and
(z) the agreement of such Permitted Air Carrier that its rights under the
lease are subject and subordinate to all the terms of this Trust Indenture
is enforceable against such Permitted Air Carrier under applicable law;
provided that (1) the rights of any transferee who receives possession by reason
of a transfer permitted by this Section 4.02(b) (other than by a transfer of an
Engine which is deemed an Event of Loss) shall be subject and subordinate to all
the terms of this Trust Indenture, (2) the Owner shall remain primarily liable
for the performance of all of the terms of this Trust Indenture and all the
terms and conditions of this Trust Indenture and the other Operative Agreements
shall remain in effect and (3) no lease or transfer of possession otherwise in
compliance with this Section 4.02(b) shall (x) result in any registration or
re-
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registration of an Aircraft, except to the extent permitted by Section
4.02(e) or the maintenance, operation or use thereof except in compliance with
Sections 4.02(c) and 4.02(d) or (y) permit any action not permitted to the Owner
hereunder.
In the case of any lease permitted under this Section 4.02(b), the Owner
will include in such lease appropriate provisions which (t) make such lease
expressly subject and subordinate to all of the terms of this Trust Indenture,
including the rights of the Mortgagee to avoid such lease in the exercise of its
rights to repossession of the Airframe and Engines hereunder; (u) require the
Permitted Lessee to comply with the terms of Section 4.06; and (v) require that
the Airframe or any Engine subject thereto be used in accordance with the
limitations applicable to the Owner's possession and use provided in this Trust
Indenture. No lease permitted under this Section 4.02(b) shall be entered into
unless (w) Owner shall provide written notice to Mortgagee (such notice in the
event of a lease to a U.S. Air Carrier to be given promptly after entering into
any such lease or, in the case of a lease to any other Permitted Air Carrier, 10
days in advance of entering into such lease); (x) Owner shall furnish to
Mortgagee evidence reasonably satisfactory to Mortgagee that the insurance
required by Section 4.06 remains in effect; (y) all necessary documents shall
have been duly filed, registered or recorded in such public offices as may be
required fully to preserve the first priority security interest (subject to
Permitted Liens) of Mortgagee in the Aircraft, Airframe and Engines; and (z)
Owner shall reimburse Mortgagee for all of its reasonable out-of-pocket fees and
expenses, including, without limitation, reasonable fees and disbursements of
counsel, incurred by Mortgagee in connection with any such lease. For all
purposes of this Section, the term "lease" shall be deemed to include
interchange agreements with respect to the Aircraft or Airframe. Except as
otherwise provided herein and without in any way relieving the Owner from its
primary obligation for the performance of its obligations under this Trust
Indenture, the Owner may in its sole discretion permit a lessee to exercise any
or all rights which the Owner would be entitled to exercise under Sections 4.02
and 4.04, and may cause a lessee to perform any or all of the Owner's
obligations under Article IV, and the Mortgagee agrees to accept actual and full
performance thereof by a lessee in lieu of performance by the Owner.
Mortgagee hereby agrees, and each Note Holder by acceptance of an Equipment
Note agrees, for the benefit of each lessor, conditional seller, indenture
trustee or secured party of any engine leased to, or purchased by, Owner or any
Permitted Lessee subject to a lease, conditional sale, trust indenture or other
security agreement that Mortgagee, each Note Holder and their respective
successors and assigns will not acquire or claim, as against such lessor,
conditional seller, indenture trustee or secured party, any right, title or
interest in any engine as the result of such engine being installed on the
Airframe at any time while such engine is subject to such lease, conditional
sale, trust indenture or other
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security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such indenture trustee or
secured party.
Notwithstanding anything to the contrary contained in this Trust Indenture
or any other Operative Agreement, any charter, Wet Lease or ACMI Contract shall
not constitute a delivery, transfer or relinquishment of possession for purposes
of this Section 4.02(b) and shall not be prohibited by the terms hereof, but
shall be subject and subordinate to the terms of this Trust Indenture. Neither a
charter, Wet Lease nor ACMI contract shall be deemed to be a "lease" or
"sublease", and the counterparty of a charter, Wet Lease or ACMI Contract shall
not be deemed to be a lessee or sublessee for any purposes under this Trust
Indenture. Any contract that is part of the United States Civil Reserve Air
Fleet Program shall not be deemed to be a lease or sublease for any purposes
under this Trust Indenture.
(c) Operation and Use. So long as the Aircraft, Airframe or any Engine is
subject to the Lien of this Trust Indenture, the Owner shall not operate, use or
locate the Aircraft, Airframe or any Engine, or allow the Aircraft, Airframe or
any Engine to be operated, used or located, (i) in any area excluded from
coverage by any insurance required by the terms of Section 4.06, except in the
case of a requisition by the U.S. Government where the Owner obtains indemnity
in lieu of such insurance from the U.S. Government, or insurance from the U.S.
Government, against substantially the same risks and for at least the amounts of
the insurance required by Section 4.06 covering such area, or (ii) in any
recognized area of hostilities unless covered in accordance with Section 4.06 by
war risk insurance, or in either case unless the Aircraft, the Airframe or any
Engine is only temporarily operated, used or located in such area as a result of
an emergency, equipment malfunction, navigational error, hijacking, weather
condition or other similar unforeseen circumstance, so long as Owner diligently
and in good faith proceeds to remove the Aircraft from such area. So long as the
Aircraft, the Airframe or any Engine is subject to the Lien of this Trust
Indenture, the Owner shall not permit such Aircraft, Airframe or any Engine, as
the case may be, to be used, operated, maintained, serviced, repaired or
overhauled (x) in violation of any Law binding on or applicable to such
Aircraft, Airframe or Engine or (y) in violation of any airworthiness
certificate, license or registration of any Government Entity relating to the
Aircraft, the Airframe or any Engine, except (i) immaterial or non-recurring
violations with respect to which corrective measures are taken promptly by Owner
or Permitted Lessee, as the case may be, upon discovery thereof, or (ii) to the
extent the validity or application of any such Law or requirement relating to
any such certificate, license or registration is being contested in good faith
by Owner or Permitted Lessee in any reasonable manner which does not involve any
material risk of the sale, forfeiture or loss of the Aircraft, Airframe or any
Engine, any material risk of criminal liability or material civil
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penalty against Mortgagee or impair the Mortgagee's security interest in the
Aircraft, Airframe or any Engine.
(d) Maintenance and Repair. So long as the Aircraft, Airframe or any Engine
is subject to the Lien of this Trust Indenture, the Owner shall cause the
Aircraft, Airframe and each Engine to be maintained, serviced, repaired and
overhauled in accordance with (i) maintenance standards required by or
substantially equivalent to those required by the FAA or the central aviation
authority of Canada, France, Germany, Japan, the Netherlands or the United
Kingdom for the Aircraft, Airframe and Engines, so as to (A) keep the Aircraft,
the Airframe and each Engine in as good operating condition as on the Closing
Date, ordinary wear and tear excepted, (B) keep the Aircraft in such operating
condition as may be necessary to enable the applicable airworthiness
certification of such Aircraft to be maintained under the regulations of the FAA
or other Aviation Authority then having jurisdiction over the operation of the
Aircraft, except during (x) temporary periods of storage in accordance with
applicable regulations, (y) maintenance and modification permitted hereunder or
(z) periods when the FAA or such other Aviation Authority has revoked or
suspended the airworthiness certificates for Similar Aircraft; and (ii) except
during periods when a Permitted Lease is in effect, the same standards as Owner
uses with respect to similar aircraft of similar size in its fleet operated by
Owner in similar circumstances and, during any period in which a Permitted Lease
is in effect, the same standards used by the Permitted Lessee with respect to
similar aircraft of similar size in its fleet and operated by the Permitted
Lessee in similar circumstances. Owner further agrees that the Aircraft,
Airframe and Engines will be maintained, used, serviced, repaired, overhauled or
inspected in compliance with applicable Laws with respect to the maintenance of
the Aircraft and in compliance with each applicable airworthiness certificate,
license and registration relating to the Aircraft, Airframe or any Engine issued
by the Aviation Authority, other than minor or nonrecurring violations with
respect to which corrective measures are taken upon discovery thereof and except
to the extent Owner or Permitted Lessee is contesting in good faith the validity
or application of any such Law or requirement relating to any such certificate,
license or registration in any reasonable manner which does not create a
material risk of sale, loss or forfeiture of the Aircraft, the Airframe or any
Engine or the interest of Mortgagee therein, or any material risk of criminal
liability or material civil penalty against Mortgagee. The Owner shall maintain
or cause to be maintained the Aircraft Documents in the English language.
(e) Registration. The Owner on or prior to the date of the Closing shall
cause the Aircraft to be duly registered in its name under the Act and except as
otherwise permitted by this Section 4.02(e) at all times thereafter shall cause
the Aircraft to remain so registered. So long as no Special Default or Event of
Default shall have occurred and be continuing, Owner may, by written notice to
Mortgagee, request to change the country of
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registration of the Aircraft. Any such change in registration shall be effected
only in compliance with, and subject to all of the conditions set forth in,
Section 6.4.5 of the Participation Agreement. Unless the Trust Indenture has
been discharged, Owner shall also cause the Trust Indenture to be duly recorded
and at all times maintained of record as a first-priority perfected mortgage
(subject to Permitted Liens) on the Aircraft, the Airframe and each of the
Engines (except to the extent such perfection or priority cannot be maintained
solely as a result of the failure by Mortgagee to execute and deliver any
necessary documents).
(f) Markings. If permitted by applicable Law, on or reasonably promptly
after the Closing Date, Owner will cause to be affixed to, and maintained in,
the cockpit of the Airframe and on each Engine, in each case, in a clearly
visible location, a placard of a reasonable size and shape bearing the legend:
"Subject to a security interest in favor of Wilmington Trust Company, not in its
individual capacity but solely as Mortgagee." Such placards may be removed
temporarily, if necessary, in the course of maintenance of the Airframe or
Engines. If any such placard is damaged or becomes illegible, Owner shall
promptly replace it with a placard complying with the requirements of this
Section.
SECTION 4.03. Inspection
(a) At all reasonable times, so long as the Aircraft is subject to the Lien
of this Trust Indenture, Mortgagee and its authorized representatives (the
"Inspecting Parties") may (not more than once every 12 months unless an Event of
Default has occurred and is continuing then such inspection right shall not be
so limited) inspect the Aircraft, Airframe and Engines (including without
limitation, the Aircraft Documents) and any such Inspecting Party may make
copies of such Aircraft Documents not reasonably deemed confidential by Owner or
any Permitted Lessee.
(b) Any inspection of the Aircraft hereunder shall be limited to a visual,
walk-around inspection and shall not include the opening of any panels, bays or
other components of the Aircraft, and no such inspection shall interfere with
Owner's or any Permitted Lessee's maintenance and operation of the Aircraft,
Airframe and Engines.
(c) With respect to such rights of inspection, Mortgagee shall not have any
duty or liability to make, or any duty or liability by reason of not making, any
such visit, inspection or survey.
(d) Each Inspecting Party shall bear its own expenses in connection with
any such inspection (including the cost of any copies made in accordance with
Section 4.03(a)).
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SECTION 4.04. Replacement and Pooling of Parts, Alterations, Modifications
and Additions; Substitution of Engines
(a) Replacement of Parts. Except as otherwise provided herein, so long as
the Aircraft, Airframe or Engine is subject to the Lien of this Trust Indenture,
Owner, at its own cost and expense, will, or will cause a Permitted Lessee to,
at its own cost and expense, promptly replace (or cause to be replaced) all
Parts which may from time to time be incorporated or installed in, or attached
to, the Aircraft, Airframe or any Engine and which may from time to time become
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever. In addition, Owner
may, at its own cost and expense, or may permit a Permitted Lessee at its own
cost and expense to, remove (or cause to be removed) in the ordinary course of
maintenance, service, repair, overhaul or testing any Parts, whether or not worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use; provided, however, that Owner, except as
otherwise provided herein, at its own cost and expense, will, or will cause a
Permitted Lessee at its own cost and expense to, replace such Parts as promptly
as practicable. All replacement Parts shall be free and clear of all Liens,
except for Permitted Liens and pooling arrangements to the extent permitted by
Section 4.04(c) below (and except in the case of replacement property
temporarily installed on an emergency basis) and shall be in good operating
condition and have a value and utility not less than the value and utility of
the Parts replaced (assuming such replaced Parts were in the condition required
hereunder).
(b) Parts. Except as otherwise provided herein, any Part at any time
removed from the Airframe or any Engine shall remain subject to the Lien of this
Trust Indenture, no matter where located, until such time as such Part shall be
replaced by a Part that has been incorporated or installed in, or attached to,
such Airframe or any Engine and that meets the requirements for replacement
Parts specified above. Immediately upon any replacement Part becoming
incorporated or installed in or attached to such Airframe or any Engine as
provided in Section 4.04(a), without further act, (i) the replaced Part shall
thereupon be free and clear of all rights of the Mortgagee and shall no longer
be deemed a Part hereunder, and (ii) such replacement Part shall become subject
to this Trust Indenture and be deemed part of such Airframe or any Engine, as
the case may be, for all purposes hereof to the same extent as the Parts
originally incorporated or installed in, or attached to, such Airframe or any
Engine.
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(c) Pooling of Parts. Any Part removed from the Aircraft, Airframe or an
Engine may be subjected by the Owner or a Permitted Lessee to a normal pooling
arrangement customary in the airline industry and entered into in the ordinary
course of business of Owner or such Permitted Lessee, provided that the part
replacing such removed Part shall be incorporated or installed in, or attached
to, such Airframe or any Engine in accordance with Sections 4.04(a) and 4.04(b)
as promptly as practicable after the removal of such removed Part. In addition,
any replacement part when incorporated or installed in, or attached to, the
Airframe or any Engine may be owned by any third party, subject to a normal
pooling arrangement, so long as the Owner or a Permitted Lessee, at its own cost
and expense, as promptly thereafter as reasonably possible, either (i) causes
such replacement part to become subject to the Lien of this Trust Indenture,
free and clear of all Liens except Permitted Liens, at which time such
replacement part shall become a Part or (ii) replaces (or causes to be replaced)
such replacement part by incorporating or installing in, or attaching to, the
Aircraft, Airframe or any Engine a further replacement Part owned by the Owner
free and clear of all Liens except Permitted Liens and which shall become
subject to the Lien of this Trust Indenture in accordance with Section 4.04(b).
(d) Alterations, Modifications and Additions. The Owner shall, or shall
cause a Permitted Lessee to, make (or cause to be made) such alterations and
modifications in and additions to the Aircraft, Airframe and each Engine as may
be required to be made from time to time to meet the applicable standards of the
FAA or other Aviation Authority having jurisdiction over the operation of the
Aircraft, to the extent made mandatory in respect of the Aircraft (a "Mandatory
Modification"); provided, however, that the Owner or a Permitted Lessee may, in
good faith and by appropriate procedure, contest the validity or application of
any law, rule, regulation or order in any reasonable manner which does not
materially adversely affect Mortgagee's interest in the Aircraft and does not
involve any material risk of sale, forfeiture or loss of the Aircraft or the
interest of Mortgagee therein, or any material risk of material civil penalty or
any material risk of criminal liability being imposed on Mortgagee or the holder
of any Equipment Note. In addition, the Owner, at its own expense, may, or may
permit a Permitted Lessee at its own cost and expense to, from time to time make
or cause to be made such alterations and modifications in and additions to the
Airframe or any Engine (each an "Optional Modification") as the Owner or such
Permitted Lessee may deem desirable in the proper conduct of its business
including, without limitation, removal of Parts which Owner deems are obsolete
or no longer suitable or appropriate for use in the Aircraft, Airframe or such
Engine; provided, however, that no such Optional Modification shall (i)
materially diminish the fair market value, utility, or useful life of the
Aircraft or any Engine below its fair market value, utility or useful life
immediately prior to such Optional Modification (assuming the Aircraft or such
Engine was in the condition required by the Trust Indenture immediately prior to
such Optional Modification) or (ii) cause the Aircraft to cease to have the
applicable standard certificate of air-
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worthiness. All Parts incorporated or installed in or attached to any Airframe
or any Engine as the result of any alteration, modification or addition effected
by the Owner shall be free and clear of any Liens except Permitted Liens and
become subject to the Lien of this Trust Indenture; provided that the Owner or
any Permitted Lessee may, at any time so long as the Airframe or any Engine is
subject to the Lien of this Trust Indenture, remove any such Part (such Part
being referred to herein as a "Removable Part") if (i) such Part is in addition
to, and not in replacement of or in substitution for, any Part originally
incorporated or installed in, or attached to, such Airframe or any Engine at the
time of delivery thereof hereunder or any Part in replacement of, or in
substitution for, any such original Part, (ii) such Part is not required to be
incorporated or installed in, or attached or added to, the Aircraft, Airframe or
such Engine pursuant to the terms of Section 4.02(d) or the first sentence of
this Section 4.04(d) and (iii) such Part can be removed from the Aircraft,
Airframe or any Engine without materially diminishing the fair market value,
utility or remaining useful life which such Aircraft, Airframe or Engine would
have had at the time of removal had such removal not been effected by the Owner,
assuming the Aircraft was otherwise maintained in the condition required by this
Trust Indenture. Upon the removal by the Owner of any such Part as above
provided, title thereto shall, without further act, be free and clear of all
rights of the Mortgagee and such Part shall no longer be deemed a Part
hereunder. Removable Parts may not be leased from or financed by third parties
other than Mortgagee.
(e) Substitution of Engines. Upon the occurrence of an Event of Loss with
respect to an Engine under circumstances in which an Event of Loss with respect
to the Airframe has not occurred, Owner shall promptly (and in any event within
15 days after such occurrence) give the Mortgagee written notice of such Event
of Loss. The Owner shall have the right at its option at any time, on at least 5
Business Days prior notice to the Mortgagee, to substitute, and if an Event of
Loss shall have occurred with respect to an Engine under circumstances in which
an Event of Loss with respect to the Airframe has not occurred, shall within 90
days of the occurrence of such Event of Loss substitute, a Replacement Engine
for any Engine. In such event, immediately upon the effectiveness of such
substitution and without further act, (i) the replaced Engine shall thereupon be
free and clear of all rights of the Mortgagee and the Lien of this Trust
Indenture and shall no longer be deemed an Engine hereunder and (ii) such
Replacement Engine shall become subject to this Trust Indenture and be deemed
part of the Aircraft for all purposes hereof to the same extent as the replaced
Engine. Such Replacement Engine shall be an engine manufactured by Engine
Manufacturer that is the same model as the Engine to be replaced thereby, or an
improved model, and that is suitable for installation and use on the Airframe,
and that has a value, utility and remaining useful life (without regard to hours
and cycles remaining until overhaul) at least equal to the Engine to be replaced
thereby (assuming that such Engine had been maintained in accordance with this
Trust Indenture). The Owner's right to make a
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replacement hereunder shall be subject to the fulfillment (which may be
simultaneous with such replacement) of the following conditions precedent at the
Owner's sole cost and expense, and the Mortgagee agrees to cooperate with the
Owner to the extent necessary to enable it to timely satisfy such conditions:
(i) an executed counterpart of each of the following documents shall
be delivered to the Mortgagee:
(A) a Trust Indenture Supplement covering the Replacement Engine,
which shall have been duly filed for recordation pursuant to the Act
or such other applicable law of the jurisdiction other than the United
States in which the Aircraft of which such Engine is a part is
registered in accordance with Section 4.02(e), as the case may be;
(B) a full warranty ▇▇▇▇ of sale (as to title), covering the
Replacement Engine, executed by the former owner thereof in favor of
the Owner (or, at the Owner's option, other evidence of the Owner's
ownership of such Replacement Engine, reasonably satisfactory to the
Mortgagee); and
(C) UCC financing statements covering the security interests
created by this Trust Indenture (or any similar statements or other
documents required to be filed or delivered pursuant to the laws of
the jurisdiction in which such Aircraft may be registered) as are
deemed necessary or desirable by counsel for the Mortgagee to protect
the security interests of the Mortgagee, in the Replacement Engine;
(ii) the Owner shall cause to be delivered to the Mortgagee an opinion
of counsel to the effect that the Lien of this Trust Indenture continues to
be in full force and effect with respect to the Replacement Engine and such
evidence of compliance with the insurance provisions of Section 4.06 with
respect to such Replacement Engine as Mortgagee shall reasonably request;
(iii) the Owner shall have furnished to Mortgagee an opinion of
Owner's aviation law counsel reasonably satisfactory to Mortgagee and
addressed to Mortgagee as to the due filing for recordation of the Trust
Indenture Supplement with respect to such Replacement Engine under the Act
or such other applicable law of the jurisdiction other than the United
States in which the Aircraft is registered in accordance with Section
4.02(e), as the case may be; and
(iv) the Owner shall have furnished to Mortgagee a certificate of a
qualified aircraft engineer (who may be an employee of Owner) certifying
that such Replace-
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ment Engine has a value and utility and remaining useful life (without
regard to hours and cycles remaining until overhaul) at least equal to the
Engine so replaced (assuming that such Engine had been maintained in
accordance with this Trust Indenture).
Upon satisfaction of all conditions to such substitution, (x) the Mortgagee
shall execute and deliver to the Owner such documents and instruments, prepared
at the Owner's expense, as the Owner shall reasonably request to evidence the
release of such replaced Engine from the Lien of this Trust Indenture, (y) the
Mortgagee shall assign to the Owner all claims it may have against any other
Person relating to any Event of Loss giving rise to such substitution and (z)
the Owner shall receive all insurance proceeds (other than those reserved to
others under Section 4.06(b)) and proceeds in respect of any Event of Loss
giving rise to such replacement to the extent not previously applied to the
purchase price of the Replacement Engine as provided in Section 4.05(d).
SECTION 4.05. Loss, Destruction or Requisition
(a) Event of Loss with Respect to the Airframe.
Upon the occurrence of an Event of Loss with respect to the Airframe, the
Owner shall promptly (and in any event within 15 days after such occurrence)
give the Mortgagee written notice of such Event of Loss. The Owner shall, within
60 days after such occurrence, give the Mortgagee written notice of Owner's
election to either replace the Airframe as provided under Section 4.05(a)(i) or
to make payment in respect of such Event of Loss as provided under Section
4.05(a)(ii) (it being agreed that if Owner shall not have given the Mortgagee
such notice of such election within the above specified time period, the Owner
shall be deemed to have elected to make payment in respect of such Event of Loss
as provided under Section 4.05(a)(ii)):
(i) if Owner elects to replace the Airframe, Owner shall, subject to
the satisfaction of the conditions contained in Section 4.05(c), as
promptly as possible and in any event within 180 days after the occurrence
of such Event of Loss, cause to be subjected to the Lien of this Trust
Indenture, in replacement of the Airframe with respect to which the Event
of Loss occurred, a Replacement Airframe and, if any Engine shall have been
installed on the Airframe when it suffered the Event of Loss, a Replacement
Engine therefor, such Replacement Airframe and Replacement Engines to be
free and clear of all Liens except Permitted Liens and to have a value,
utility and remaining useful life (without regard to hours or cycles
remaining until the next regular maintenance check) at least equal to the
Airframe or Engine, as the
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case may be, to be replaced thereby (assuming that such Airframe or Engine
had been maintained in accordance with this Trust Indenture); provided that
if the Owner shall not perform its obligation to effect such replacement
under this clause (i) during the 180-day period of time provided herein, it
shall pay the amounts required to be paid pursuant to and within the time
frame specified in clause (ii) below; or
(ii) if Owner elects to make a payment in respect of such Event of
Loss of the Airframe, Owner shall make a payment to the Mortgagee for
purposes of redeeming Equipment Notes in accordance with Section 2.10
hereof on a date on or before the earlier of (x) the Business Day next
following the 180th day following the date of the occurrence of such Event
of Loss, and (y) a date irrevocably designated by Owner upon at least 20
days prior notice to the Mortgagee ; and upon such payment and payment of
all other Secured Obligations then due and payable, the Mortgagee shall, at
the cost and expense of the Owner, release from the Lien of this Trust
Indenture the Airframe and the Engines, by executing and delivering to the
Owner all documents and instruments as the Owner may reasonably request to
evidence such release.
(b) Effect of Replacement. Should the Owner have provided a Replacement
Airframe and Replacement Engines, if any, as provided for in Section 4.05(a)(i),
(i) the Lien of this Trust Indenture shall continue with respect to such
Replacement Airframe and Replacement Engines, if any, as though no Event of Loss
had occurred; (ii) the Mortgagee shall, at the cost and expense of the Owner,
release from the Lien of this Trust Indenture the replaced Airframe and Engines,
if any, by executing and delivering to the Owner such documents and instruments
as the Owner may reasonably request to evidence such release; and (iii) in the
case of a replacement upon an Event of Loss, the Mortgagee shall assign to the
Owner all claims the Mortgagee may have against any other Person arising from
the Event of Loss and the Owner shall receive all insurance proceeds (other than
those reserved to others under Section 4.06(b)) and proceeds from any award in
respect of condemnation, confiscation, seizure or requisition, including, any
investment interest thereon, to the extent not previously applied to the
purchase price of the Replacement Airframe and Replacement Engines, if any, as
provided in Section 4.05(d).
(c) Conditions to Airframe and Engine Replacement. The Owner's right to
substitute a Replacement Airframe and Replacement Engines, if any, as provided
in Section 4.05(a)(i) shall be subject to the fulfillment, at the Owner's sole
cost and expense, in addition to the conditions contained in such Section
4.05(a)(i), of the following conditions precedent:
(i) on the date when the Replacement Airframe and Replacement Engines,
if any, are subjected to the Lien of this Trust Indenture (such date being
referred to
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in this Section 4.05 as the "Replacement Closing Date"), an executed
counterpart of each of the following documents (or, in the case of the FAA
▇▇▇▇ of Sale and full warranty ▇▇▇▇ of sale referred to below, a photocopy
thereof) shall have been delivered to the Mortgagee:
(A) a Trust Indenture Supplement covering the Replacement
Airframe and Replacement Engines, if any, which shall have been duly
filed for recordation pursuant to the Act or such other applicable law
of such jurisdiction other than the United States in which the
Replacement Airframe and Replacement Engines, if any, are to be
registered in accordance with Section 4.02(e), as the case may be;
(B) an FAA ▇▇▇▇ of Sale (or a comparable document, if any, of
another Aviation Authority, if applicable) covering the Replacement
Airframe and Replacement Engines, if any, executed by the former owner
thereof in favor of the Owner;
(C) a full warranty (as to title) ▇▇▇▇ of sale, covering the
Replacement Airframe and Replacement Engines, if any, executed by the
former owner thereof in favor of the Owner (or, at the Owner's option,
other evidence of the Owner's ownership of such Replacement Airframe
and Replacement Engines, if any, reasonably satisfactory to the
Mortgagee); and
(D) UCC financing statements (or any similar statements or other
documents required to be filed or delivered pursuant to the laws of
the jurisdiction in which the Replacement Airframe and Replacement
Engines, if any, may be registered in accordance with Section 4.02(e))
as are deemed necessary or desirable by counsel for the Mortgagee to
protect the security interests of the Mortgagee in the Replacement
Airframe and Replacement Engines, if any;
(ii) the Replacement Airframe and Replacement Engines, if any, shall
be of the same model as the Airframe or Engines, as the case may be, or an
improved model of such aircraft or engines of the manufacturer thereof,
shall have a value, utility and remaining useful life (without regard to
hours or cycles remaining until the next regular maintenance check) at
least equal to the Airframe and any Engines replaced (assuming such
Airframe and Engines had been maintained in accordance with this Trust
Indenture);
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(iii) the Mortgagee (acting directly or by authorization to its
special counsel) shall have received satisfactory evidence as to the
compliance with Section 4.06 with respect to the Replacement Airframe and
Replacement Engines, if any;
(iv) on the Replacement Closing Date, (A) the Owner shall cause the
Replacement Airframe and Replacement Engines, if any, to be subject to the
Lien of this Trust Indenture free and clear of Liens (other than Permitted
Liens), (B) the Replacement Airframe shall have been duly certified by the
FAA as to type and airworthiness in accordance with the terms of this Trust
Indenture and (C) application for registration of the Replacement Airframe
in accordance with Section 4.02(e) shall have been duly made with the FAA
or other applicable Aviation Authority and the Owner shall have authority
to operate the Replacement Airframe;
(v) the Mortgagee at the expense of the Owner, shall have received
(acting directly or by authorization to its special counsel) (A) an opinion
of counsel, addressed to the Mortgagee, to the effect that the Replacement
Airframe and Replacement Engine, if any, has or have duly been made subject
to the Lien of this Trust Indenture, and Mortgagee will be entitled to the
benefits of Section 1110 with respect to the Replacement Airframe, provided
that such opinion with respect to Section 1110 need not be delivered to the
extent that immediately prior to such replacement the benefits of Section
1110 were not, solely by reason of a change in law or court interpretation
thereof, available to Mortgagee, and (B) an opinion of Owner's aviation law
counsel reasonably satisfactory to and addressed to Mortgagee as to the due
registration of any such Replacement Airframe and the due filing for
recordation of each Trust Indenture Supplement with respect to such
Replacement Airframe or Replacement Engine under the Act or such other
applicable law of the jurisdiction other than the United States in which
the Replacement Airframe is to be registered in accordance with Section
4.02(e), as the case may be; and
(vi) the Owner shall have furnished to the Mortgagee a certificate of
a qualified aircraft engineer (who may be an employee of Owner) certifying
that the Replacement Airframe and Replacement Engines, if any, have a value
and utility and remaining useful life (without regard to hours and cycles
remaining until overhaul) at least equal to the Airframe and any Engines so
replaced (assuming that such Airframe and Engines had been maintained in
accordance with this Trust Indenture).
(d) Non-Insurance Payments Received on Account of an Event of Loss. Any
amounts, other than insurance proceeds in respect of damage or loss not
constituting an Event of Loss (the application of which is provided for in Annex
B), received at any time by Mortgagee or Owner from any Government Entity or any
other Person in respect of any Event of Loss will be applied as follows:
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(i) If such amounts are received with respect to the Airframe, and any
Engine installed thereon at the time of such Event of Loss, upon compliance
by Owner with the applicable terms of Section 4.05(c) with respect to the
Event of Loss for which such amounts are received, such amounts shall be
paid over to, or retained by, Owner;
(ii) If such amounts are received with respect to an Engine (other
than an Engine installed on the Airframe at the time such Airframe suffers
an Event of Loss), upon compliance by Owner with the applicable terms of
Section 4.04(e) with respect to the Event of Loss for which such amounts
are received, such amounts shall be paid over to, or retained by, Owner;
(iii) If such amounts are received, in whole or in part, with respect
to the Airframe, and Owner makes, has made or is deemed to have made the
election set forth in Section 4.05(a)(ii), such amounts shall be applied as
follows:
first, if the sum described in Section 4.05(a)(ii) has not then
been paid in full by Owner, such amounts shall be paid to Mortgagee to
the extent necessary to pay in full such sum; and
second, the remainder, if any, shall be paid to Owner.
(e) Requisition for Use. In the event of a requisition for use by any
Government Entity of the Airframe and the Engines, if any, or engines installed
on such Airframe while such Airframe is subject to the Lien of this Trust
Indenture, the Owner shall promptly notify the Mortgagee of such requisition and
all of the Owner's obligations under this Trust Indenture shall continue to the
same extent as if such requisition had not occurred except to the extent that
the performance or observance of any obligation by the Owner shall have been
prevented or delayed by such requisition provided that the Owner's obligations
under this Section 4.05 with respect to the occurrence of an Event of Loss for
the payment of money and under Section 4.06 (except while an assumption of
liability by the U.S. Government of the scope referred to in Section 4.02(c) is
in effect) shall not be reduced or delayed by such requisition. Any payments
received by the Mortgagee or the Owner or Permitted Lessee from such Government
Entity with respect to such requisition of use shall be paid over to, or
retained by, the Owner. In the event of an Event of Loss of an Engine resulting
from the requisition for use by a Government Entity of such Engine (but not the
Airframe), the Owner will replace such Engine hereunder by complying with the
terms of Section 4.04(e) and any payments received by the Mortgagee or the Owner
from such Government Entity with respect to such requisition shall be paid over
to, or retained by, the Owner.
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(f) Certain Payments to Be Held as Security. Any amount referred to in this
Section 4.05 or Section 4.06 which is payable or creditable to, or retainable
by, the Owner shall not be paid or credited to, or retained by the Owner if at
the time of such payment, credit or retention a Special Default or an Event of
Default shall have occurred and be continuing, but shall be paid to and held by
the Mortgagee as security for the obligations of the Owner under this Trust
Indenture and the Operative Agreements, and at such time as there shall not be
continuing any such Special Default or Event of Default such amount and any gain
realized as a result of investments required to be made pursuant to Section 6.06
shall to the extent not theretofore applied as provided herein, be paid over to
the Owner.
SECTION 4.06. Insurance
(a) Owner's Obligation to Insure. Owner shall comply with, or cause to be
complied with, each of the provisions of Annex B, which provisions are hereby
incorporated by this reference as if set forth in full herein.
(b) Insurance for Own Account. Nothing in Section 4.06 shall limit or
prohibit (a) Owner from maintaining the policies of insurance required under
Annex B with higher limits than those specified in Annex B, or (b) Mortgagee
from obtaining insurance for its own account (and any proceeds payable under
such separate insurance shall be payable as provided in the policy relating
thereto); provided, however, that no insurance may be obtained or maintained
that would limit or otherwise adversely affect the coverage of any insurance
required to be obtained or maintained by Owner pursuant to this Section 4.06 and
Annex B.
(c) Indemnification by Government in Lieu of Insurance. Mortgagee agrees to
accept, in lieu of insurance against any risk with respect to the Aircraft
described in Annex B, indemnification from, or insurance provided by, the U.S.
Government, or upon the written consent of Mortgagee, other Government Entity,
against such risk in an amount that, when added to the amount of insurance
(including permitted self-insurance), if any, against such risk that Owner (or
any Permitted Lessee) may continue to maintain, in accordance with this Section
4.06, during the period of such requisition or transfer, shall be at least equal
to the amount of insurance against such risk otherwise required by this Section
4.06.
(d) Application of Insurance Proceeds. As between Owner and Mortgagee, all
insurance proceeds received as a result of the occurrence of an Event of Loss
with respect to the Aircraft or any Engine under policies required to be
maintained by Owner pursuant to this Section 4.06 will be applied in accordance
with this Section 4.05(d). All proceeds of insurance required to be maintained
by Owner, in accordance with Section 4.06
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and Section B of Annex B, in respect of any property damage or loss not
constituting an Event of Loss with respect to the Aircraft, Airframe or any
Engine will be applied in payment (or to reimburse Owner) for repairs or for
replacement property, and any balance remaining after such repairs or
replacement with respect to such damage or loss shall be paid over to, or
retained by, Owner.
SECTION 4.07. Merger of Owner
(a) In General. Owner shall not consolidate with or merge into any other
person under circumstances in which Owner is not the surviving corporation, or
convey, transfer or lease in one or more transactions all or substantially all
of its assets to any other person, unless:
(i) such person is organized, existing and in good standing under the
Laws of the United States, any State of the United States or the District
of Columbia and, upon consummation of such transaction, such person will be
a U.S. Air Carrier;
(ii) such person executes and delivers to Mortgagee a duly authorized,
legal, valid, binding and enforceable agreement, reasonably satisfactory in
form and substance to Mortgagee, containing an effective assumption by such
person of the due and punctual performance and observance of each covenant,
agreement and condition in the Operative Agreements to be performed or
observed by Owner;
(iii) such person makes such filings and recordings with the FAA
pursuant to the Act as shall be necessary to evidence such consolidation or
merger; and
(iv) immediately after giving effect to such consolidation or merger
no Event of Default shall have occurred and be continuing.
(b) Effect of Merger. Upon any such consolidation or merger of Owner with
or into, or the conveyance, transfer or lease by Owner of all or substantially
all of its assets to, any Person in accordance with this Section 4.07, such
Person will succeed to, and be substituted for, and may exercise every right and
power of, Owner under the Operative Agreements with the same effect as if such
person had been named as "Owner" therein. No such consolidation or merger, or
conveyance, transfer or lease, shall have the effect of releasing Owner or such
Person from any of the obligations, liabilities, covenants or undertakings of
Owner under the Trust Indenture.
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ARTICLE V EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE
SECTION 5.01. Event of Default
"Event of Default" means any of the following events (whatever the reason
for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) the failure of the Owner to pay (i) principal of, interest on or
Make-Whole Amount, if any, under any Equipment Note when due, and such
failure shall continue unremedied for a period of 10 Business Days, or (ii)
any other amount payable by it to the Note Holders under this Trust
Indenture or the Participation Agreement when due, and such failure shall
continue for a period in excess of 10 Business Days after Owner has
received written notice from Mortgagee or any Note Holder of the failure to
make such payment when due;
(b) Owner shall fail to carry and maintain, or cause to be carried and
maintained, insurance on and in respect of the Aircraft, Airframe and
Engines in accordance with the provisions of Section 4.06;
(c) Owner shall fail to observe or perform (or cause to be observed or
performed) in any material respect any other covenant, agreement or
obligation set forth herein or in any other Operative Agreement to which
Owner is a party and such failure continues to be material and adverse to
the interests of the Mortgagee and the Note Holders and shall continue
unremedied for a period of 60 days from and after the date of written
notice thereof to Owner from Mortgagee, unless such failure is capable of
being corrected and Owner shall be diligently proceeding to correct such
failure, in which case there shall be no Event of Default unless and until
such failure shall continue unremedied for a period of 180 days after
receipt of such notice;
(d) any representation or warranty made by Owner herein, in the
Participation Agreement or in any other Operative Agreement to which Owner
is a party (a) shall prove to have been false or inaccurate in any material
respect as of the date made, (b) shall continue to be material and adverse
to the interests of the Mortgagee
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or Note Holders, and (c) the same shall remain uncured (to the extent of
the material and adverse impact of such incorrectness on the interest of
the Mortgagee or Note Holders) for a period in excess of 60 days from and
after the date of written notice thereof from Mortgagee to Owner;
(e) the Owner shall consent to the appointment of or taking possession
by a receiver, trustee or liquidator of itself or of a substantial part of
its property, or the Owner shall admit in writing its inability to pay its
debts generally as they come due or shall make a general assignment for the
benefit of its creditors, or the Owner shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization,
liquidation or other relief under any bankruptcy laws or insolvency laws
(as in effect at such time), or an answer admitting the material
allegations of a petition filed against it in any such case, or the Owner
shall seek relief by voluntary petition, answer or consent, under the
provisions of any other bankruptcy or similar law providing for the
reorganization or winding-up of corporations (as in effect at such time),
or the Owner shall seek an agreement, composition, extension or adjustment
with its creditors under such laws or the Owner's board of directors shall
adopt a resolution authorizing corporate action in furtherance of any of
the foregoing;
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Owner, a
receiver, trustee or liquidator of the Owner or of any substantial part of
its property, or any substantial part of the property of the Owner shall be
sequestered, or granting any other relief in respect of the Owner as a
debtor under any bankruptcy laws or other insolvency laws (as in effect at
such time), and any such order, judgment, decree, or decree of appointment
or sequestration shall remain in force undismissed, unstayed or unvacated
for a period of 90 days after the date of entry thereof; or
(g) a petition against the Owner in a proceeding under any bankruptcy
laws or other insolvency laws (as in effect at such time) is filed and not
withdrawn or dismissed within 90 days thereafter, or if, under the
provisions of any law providing for reorganization or winding-up of
corporations which may apply to the Owner, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Owner of
any substantial part of its property and such jurisdiction, custody or
control shall remain in force unrelinquished, unstayed or unterminated for
a period of 60 days.
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SECTION 5.02. Remedies
(a) If an Event of Default shall have occurred and be continuing and so
long as the same shall continue unremedied, then and in every such case the
Mortgagee may exercise any or all of the rights and powers and pursue any and
all of the remedies pursuant to this Article V and shall have and may exercise
all of the rights and remedies of a secured party under the Uniform Commercial
Code and may take possession of all or any part of the properties covered or
intended to be covered by the Lien created hereby or pursuant hereto and may
exclude the Owner and all persons claiming under it wholly or partly therefrom;
provided that the Mortgagee shall give the Owner 20 days prior written notice of
its intention to sell the Aircraft. Without limiting any of the foregoing, it is
understood and agreed that the Mortgagee may exercise any right of sale of the
Aircraft available to it, even though it shall not have taken possession of the
Aircraft and shall not have possession thereof at the time of such sale.
(b) If an Event of Default shall have occurred and be continuing, then and
in every such case the Mortgagee may (and shall, upon receipt of a written
demand therefor from a Majority in Interest of Note Holders), at any time, by
delivery of written notice or notices to the Owner, declare all the Equipment
Notes to be due and payable, whereupon the unpaid Original Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest
thereon (without Make-Whole Amount) and other amounts due thereunder or
otherwise payable hereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived; provided
that if an Event of Default referred to in clause (e), (f) or (g) of Section
5.01 hereof shall have occurred, then and in every such case the unpaid Original
Amount then outstanding, together with accrued but unpaid interest and all other
amounts due hereunder and under the Equipment Notes shall immediately and
without further act become due and payable without presentment, demand, protest
or notice, all of which are hereby waived.
This Section 5.02(b), however, is subject to the condition that, if at any
time after the Original Amount of the Equipment Notes shall have become so due
and payable, and before any judgment or decree for the payment of the money so
due, or any thereof, shall be entered, all overdue payments of interest upon the
Equipment Notes and all other amounts payable hereunder or under the Equipment
Notes (except the Original Amount of the Equipment Notes which by such
declaration shall have become payable) shall have been duly paid, and every
other Default and Event of Default with respect to any covenant or provision of
this Trust Indenture shall have been cured, then and in every such case a
Majority in Interest of Note Holders may (but shall not be obligated to), by
written instrument filed with the Mortgagee, rescind and annul the Mortgagee's
declaration (or such automatic
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acceleration) and its consequences; but no such rescission or annulment shall
extend to or affect any subsequent Default or Event of Default or impair any
right consequent thereon.
(c) The Note Holders shall be entitled, at any sale pursuant to this
Section 5.02, to credit against any purchase price bid at such sale by such
holder all or any part of the unpaid obligations owing to such Note Holder and
secured by the Lien of this Trust Indenture (only to the extent that such
purchase price would have been paid by such Note Holder pursuant to Article III
hereof if such purchase price were paid in cash and the foregoing provisions of
this subsection (c) were not given effect).
(d) In the event of any sale of the Collateral, or any part thereof,
pursuant to any judgment or decree of any court or otherwise in connection with
the enforcement of any of the terms of this Trust Indenture, the unpaid Original
Amount of all Equipment Notes then outstanding, together with accrued interest
thereon (without Make-Whole Amount), and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the Pass Through
Trustee under any Pass Through Trust Agreement (or its designee) is a Note
Holder, the Mortgagee will not be authorized or empowered to acquire title to
any Collateral or take any action with respect to any Collateral so acquired by
it if such acquisition or action would cause any Trust to fail to qualify as a
"grantor trust" for federal income tax purposes.
SECTION 5.03. Return of Aircraft, Etc.
(a) If an Event of Default shall have occurred and be continuing and the
Equipment Notes have been accelerated, at the request of the Mortgagee, the
Owner shall promptly execute and deliver to the Mortgagee such instruments of
title and other documents as the Mortgagee may deem necessary or advisable to
enable the Mortgagee or an agent or representative designated by the Mortgagee,
at such time or times and place or places as the Mortgagee may specify, to
obtain possession of all or any part of the Collateral to which the Mortgagee
shall at the time be entitled hereunder. If the Owner shall for any reason fail
to execute and deliver such instruments and documents after such request by the
Mortgagee, the Mortgagee may (i) obtain a judgment conferring on the Mortgagee
the right to immediate possession and requiring the Owner to execute and deliver
such instruments and documents to the Mortgagee, to the entry of which judgment
the Owner hereby specifically consents to the fullest extent permitted by Law,
and (ii) pursue all or part of such Collateral wherever it may be found and may
enter any of the premises of Owner wherever such Collateral may be or be
supposed to be and search for such Collateral and
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take possession of and remove such Collateral. All expenses of obtaining such
judgment or of pursuing, searching for and taking such property shall, until
paid, be secured by the Lien of this Trust Indenture.
(b) Upon every such taking of possession, the Mortgagee may, from time to
time, at the expense of the Collateral, make all such expenditures for
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modifications or alterations to and of the Collateral, as it may
deem proper. In each such case, the Mortgagee shall have the right to maintain,
use, operate, store, insure, lease, control, manage, dispose of, modify or alter
the Collateral and to exercise all rights and powers of the Owner relating to
the Collateral, as the Mortgagee shall deem best, including the right to enter
into any and all such agreements with respect to the maintenance, use,
operation, storage, insurance, leasing, control, management, disposition,
modification or alteration of the Collateral or any part thereof as the
Mortgagee may determine, and the Mortgagee shall be entitled to collect and
receive directly all rents, revenues and other proceeds of the Collateral and
every part thereof, without prejudice, however, to the right of the Mortgagee
under any provision of this Trust Indenture to collect and receive all cash held
by, or required to be deposited with, the Mortgagee hereunder. Such rents,
revenues and other proceeds shall be applied to pay the expenses of the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, improvement, modification or alteration of the Collateral and of
conducting the business thereof, and to make all payments which the Mortgagee
may be required or may elect to make, if any, for taxes, assessments, insurance
or other proper charges upon the Collateral or any part thereof (including the
employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner), and all other payments
which the Mortgagee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Mortgagee, and of all persons properly engaged and employed by
the Mortgagee with respect hereto.
SECTION 5.04. Remedies Cumulative
Each and every right, power and remedy given to the Mortgagee specifically
or otherwise in this Trust Indenture shall be cumulative and shall be in
addition to every other right, power and remedy herein specifically given or now
or hereafter existing at Law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Mortgagee, and the exercise or the beginning of the exercise of
any power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy. No
delay or omission by the Mortgagee in the exercise of any right, remedy or power
or in the
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pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner or to be an
acquiescence therein.
SECTION 5.05. Discontinuance of Proceedings
In case the Mortgagee shall have instituted any proceeding to enforce any
right, power or remedy under this Trust Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Mortgagee, then and in
every such case the Owner and the Mortgagee shall, subject to any determination
in such proceedings, be restored to their former positions and rights hereunder
with respect to the Collateral, and all rights, remedies and powers of the Owner
or the Mortgagee shall continue as if no such proceedings had been instituted.
SECTION 5.06. Waiver of Past Defaults
Upon written instruction from a Majority in Interest of Note Holders, the
Mortgagee shall waive any past Default hereunder and its consequences and upon
any such waiver such Default shall cease to exist and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Trust Indenture, but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon, provided, that in the absence of
written instructions from all the Note Holders, the Mortgagee shall not waive
any Default (i) in the payment of the Original Amount, Make-Whole Amount, if
any, and interest and other amounts due under any Equipment Note then
outstanding, or (ii) in respect of a covenant or provision hereof which, under
Article X hereof, cannot be modified or amended without the consent of each Note
Holder.
SECTION 5.07. Appointment of Receiver
The Mortgagee shall, as a matter of right, be entitled to the appointment
of a receiver (who may be the Mortgagee or any successor or nominee thereof) for
all or any part of the Collateral, whether such receivership be incidental to a
proposed sale of the Collateral or the taking of possession thereof or
otherwise, and the Owner hereby consents to the appointment of such a receiver
and will not oppose any such appointment. Any receiver appointed for all or any
part of the Collateral shall be entitled to exercise all the rights and powers
of the Mortgagee with respect to the Collateral.
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SECTION 5.08. Mortgagee Authorized to Execute Bills of Sale, Etc.
The Owner irrevocably appoints, while an Event of Default has occurred and
is continuing, the Mortgagee the true and lawful attorney-in-fact of the Owner
(which appointment is coupled with an interest) in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments as
may be necessary or appropriate, with full power of substitution, the Owner
hereby ratifying and confirming all that such attorney or any substitute shall
do by virtue hereof in accordance with applicable law. Nevertheless, if so
requested by the Mortgagee or any purchaser, the Owner shall ratify and confirm
any such sale, assignment, transfer or delivery, by executing and delivering to
the Mortgagee or such purchaser all bills of sale, assignments, releases and
other proper instruments to effect such ratification and confirmation as may be
designated in any such request.
SECTION 5.09. Rights of Note Holders to Receive Payment
Notwithstanding any other provision of this Trust Indenture, the right of
any Note Holder to receive payment of principal of, and premium, if any, and
interest on an Equipment Note on or after the respective due dates expressed in
such Equipment Note, or to bring suit for the enforcement of any such payment on
or after such respective dates in accordance with the terms hereof, shall not be
impaired or affected without the consent of such Note Holder.
ARTICLE VI DUTIES OF THE MORTGAGEE
SECTION 6.01. Notice of Event of Default
If the Mortgagee shall have Actual Knowledge of an Event of Default or of a
Default arising from a failure to pay any installment of principal and interest
on any Equipment Note, the Mortgagee shall give prompt written notice thereof to
each Note Holder. Subject to the terms of Sections 5.06, 6.02 and 6.03 hereof,
the Mortgagee shall
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take such action, or refrain from taking such action, with respect to such Event
of Default or Default (including with respect to the exercise of any rights or
remedies hereunder) as the Mortgagee shall be instructed in writing by a
Majority in Interest of Note Holders. Subject to the provisions of Section 6.03,
if the Mortgagee shall not have received instructions as above provided within
20 days after mailing notice of such Event of Default to the Note Holders, the
Mortgagee may, subject to instructions thereafter received pursuant to the
preceding provisions of this Section 6.01, take such action, or refrain from
taking such action, but shall be under no duty to take or refrain from taking
any action, with respect to such Event of Default or Default as it shall
determine advisable in the best interests of the Note Holders; provided,
however, that the Mortgagee may not sell the Aircraft or any Engine without the
consent of a Majority in Interest of Note Holders. For all purposes of this
Trust Indenture, in the absence of Actual Knowledge on the part of the
Mortgagee, the Mortgagee shall not be deemed to have knowledge of a Default or
an Event of Default (except, the failure of Owner to pay any installment of
principal or interest within one Business Day after the same shall become due,
which failure shall constitute knowledge of a Default) unless notified in
writing by the Owner or one or more Note Holders.
SECTION 6.02. Action upon Instructions; Certain Rights and Limitations
Subject to the terms of Sections 5.02(a), 5.06, 6.01 and 6.03 hereof, upon
the written instructions at any time and from time to time of a Majority in
Interest of Note Holders, the Mortgagee shall, subject to the terms of this
Section 6.02, take such of the following actions as may be specified in such
instructions: (i) give such notice or direction or exercise such right, remedy
or power hereunder as shall be specified in such instructions and (ii) give such
notice or direction or exercise such right, remedy or power hereunder with
respect to any part of the Collateral as shall be specified in such
instructions; it being understood that without the written instructions of a
Majority in Interest of Note Holders, the Mortgagee shall not, except as
provided in Section 6.01, approve any such matter as satisfactory to the
Mortgagee.
The Mortgagee will execute and the Owner will file such continuation
statements with respect to financing statements relating to the security
interest created hereunder in the Collateral as may be specified from time to
time in written instructions of a Majority in Interest of Note Holders (which
instructions shall be accompanied by the form of such continuation statement so
to be filed). The Mortgagee will furnish to each Note Holder, promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates and other instruments furnished to the Mortgagee
hereunder.
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SECTION 6.03. Indemnification
The Mortgagee shall not be required to take any action or refrain from
taking any action under Section 6.01 (other than the first sentence thereof),
Section 6.02 or Article V hereof unless the Mortgagee shall have been
indemnified to its reasonable satisfaction against any liability, cost or
expense (including counsel fees) which may be incurred in connection therewith
pursuant to a written agreement with one or more Note Holders. The Mortgagee
agrees that it shall look solely to the Note Holders for the satisfaction of any
indemnity (except expenses for foreclosure of the type referred to in clause
"First" of Section 3.03 hereof) owed to it pursuant to this Section 6.03. The
Mortgagee shall not be under any obligation to take any action under this Trust
Indenture or any other Operative Agreement and nothing herein or therein shall
require the Mortgagee to expend or risk its own funds or otherwise incur the
risk of any financial liability in the performance of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it (the written indemnity of any Note Holder who is a QIB, signed by
an authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Mortgagee shall be accepted as reasonable assurance of
adequate indemnity). The Mortgagee shall not be required to take any action
under Section 6.01 (other than the first sentence thereof), Section 6.02 or
Article V hereof, nor shall any other provision of this Trust Indenture or any
other Operative Agreement be deemed to impose a duty on the Mortgagee to take
any action, if the Mortgagee shall have been advised by counsel that such action
is contrary to the terms hereof or is otherwise contrary to Law.
SECTION 6.04. No Duties Except as Specified in Trust Indenture or
Instructions
The Mortgagee shall not have any duty or obligation to use, operate, store,
lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or
any other part of the Collateral, or to otherwise take or refrain from taking
any action under, or in connection with, this Trust Indenture or any part of the
Collateral, except as expressly provided by the terms of this Trust Indenture or
as expressly provided in written instructions from Note Holders as provided in
this Trust Indenture; and no implied duties or obligations shall be read into
this Trust Indenture against the Mortgagee. The Mortgagee agrees that it will in
its individual capacity and at its own cost and expense (but without any right
of indemnity in respect of any such cost or expense under Section 8.01 hereof),
promptly take such action as may be necessary duly to discharge all liens and
encumbrances on any part of the Collateral which result from claims against it
in its individual capacity not related to the
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administration of the Collateral or any other transaction pursuant to this Trust
Indenture or any document included in the Collateral.
SECTION 6.05. No Action Except Under Trust Indenture or Instructions
The Mortgagee will not use, operate, store, lease, control, manage, sell,
dispose of or otherwise deal with the Aircraft or any other part of the
Collateral except in accordance with the powers granted to, or the authority
conferred upon, the Mortgagee pursuant to this Trust Indenture and in accordance
with the express terms hereof.
SECTION 6.06. Investment of Amounts Held by Mortgagee
Any amounts held by the Mortgagee pursuant to the proviso to the first
sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision
of any other Operative Agreement providing for amounts to be held by the
Mortgagee which are not distributed pursuant to the other provisions of Article
III hereof shall be invested by the Mortgagee from time to time in Cash
Equivalents as directed by the Owner (so long as no Event of Default has
occurred and is continuing) or, in the absence of such direction, by the
Majority in Interest of Note Holders so long as the Mortgagee may acquire the
same using its best efforts. Unless otherwise expressly provided in this Trust
Indenture, any income realized as a result of any such investment, net of the
Mortgagee's reasonable fees and expenses in making such investment, shall be
held and applied by the Mortgagee in the same manner as the principal amount of
such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Mortgagee shall not be liable for any loss resulting from any
investment required to be made by it under this Trust Indenture other than by
reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Mortgagee without
instructions whenever such sale is necessary to make a distribution required by
this Trust Indenture.
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ARTICLE VII THE MORTGAGEE
SECTION 7.01. Acceptance of Trusts and Duties
The Mortgagee accepts the duties hereby created and applicable to it and
agrees to perform the same but only upon the terms of this Trust Indenture and
agrees to receive and disburse all monies constituting part of the Collateral in
accordance with the terms hereof. The Mortgagee, in its individual capacity,
shall not be answerable or accountable under any circumstances, except (i) for
its own willful misconduct or gross negligence (other than for the handling of
funds, for which the standard of accountability shall be willful misconduct or
negligence), (ii) as provided in the fourth sentence of Section 2.04(a) hereof
and the last sentence of Section 6.04 hereof, and (iii) from the inaccuracy of
any representation or warranty of the Mortgagee (in its individual capacity) in
the Participation Agreement or hereunder.
SECTION 7.02. Absence of Duties
Except in accordance with written instructions furnished pursuant to
Section 6.01 or 6.02 hereof, and except as provided in, and without limiting the
generality of, Sections 6.03, 6.04 and 7.07 hereof the Mortgagee shall have no
duty (i) to see to any registration of the Aircraft or any recording or filing
of this Trust Indenture or any other document, or to see to the maintenance of
any such registration, recording or filing, (ii) to see to any insurance on the
Aircraft or to effect or maintain any such insurance, whether or not Owner shall
be in default with respect thereto, (iii) to see to the payment or discharge of
any lien or encumbrance of any kind against any part of the Collateral, (iv) to
confirm, verify or inquire into the failure to receive any financial statements
from Owner, or (v) to inspect the Aircraft at any time or ascertain or inquire
as to the performance or observance of any of Owner's covenants herein or any
Permitted Lessee's covenants under any assigned Permitted Lease with respect to
the Aircraft.
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SECTION 7.03. No Representations or Warranties as to Aircraft or Documents
THE MORTGAGEE IN ITS INDIVIDUAL OR TRUST CAPACITY DOES NOT MAKE AND SHALL
NOT BE DEEMED TO HAVE MADE AND HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE
WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR
ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN, TORT
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER. The Mortgagee, in its
individual or trust capacities, does not make or shall not be deemed to have
made any representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Participation Agreement, the
Equipment Notes, or the Purchase Agreement, or as to the correctness of any
statement contained in any thereof, except for the representations and
warranties of the Owner made in its individual capacity and the representations
and warranties of the Mortgagee in its individual capacity, in each case
expressly made in this Trust Indenture or in the Participation Agreement. The
Note Holders make no representation or warranty hereunder whatsoever.
SECTION 7.04. No Segregation of Monies; No Interest
Any monies paid to or retained by the Mortgagee pursuant to any provision
hereof and not then required to be distributed to the Note Holders or the Owner
as provided in Article III hereof need not be segregated in any manner except to
the extent required by Law or Section 6.06 hereof, and may be deposited under
such general conditions as may be prescribed by Law, and the Mortgagee shall not
be liable for any interest thereon (except that the Mortgagee shall invest all
monies held in accordance with Section 6.06 hereof; provided, however, that any
payments received, or applied hereunder, by the Mortgagee shall be accounted for
by the Mortgagee so that any portion thereof paid or applied pursuant hereto
shall be identifiable as to the source thereof.
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SECTION 7.05. Reliance; Agreements; Advice of Counsel
The Mortgagee shall not incur any liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper believed by it to be genuine
and believed by it to be signed by the proper party or parties. The Mortgagee
may accept a copy of a resolution of the Board of Directors (or Executive
Committee thereof) of the Owner, certified by the Secretary or an Assistant
Secretary thereof as duly adopted and in full force and effect, as conclusive
evidence that such resolution has been duly adopted and that the same is in full
force and effect. As to the aggregate unpaid Original Amount of Equipment Notes
outstanding as of any date, the Owner may for all purposes hereof rely on a
certificate signed by any Vice President or other authorized corporate trust
officer of the Mortgagee. As to any fact or matter relating to the Owner the
manner of which is not specifically described herein, the Mortgagee may for all
purposes hereof rely on a certificate, signed by a duly authorized officer of
the Owner, as to such fact or matter, and such certificate shall constitute full
protection to the Mortgagee for any action taken or omitted to be taken by it in
good faith in reliance thereon. In the administration of the trusts hereunder,
the Mortgagee may execute any of the trusts or powers hereof and perform its
powers and duties hereunder directly or through agents or attorneys and may, at
the expense of the Collateral, advise with counsel, accountants and other
skilled persons to be selected and retained by it, and the Mortgagee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 7.06. Compensation
The Mortgagee shall be entitled to reasonable compensation, including
expenses and disbursements (including the reasonable fees and expenses of
counsel), for all services rendered hereunder and shall, on and subsequent to an
Event of Default hereunder, have a priority claim on the Collateral for the
payment of such compensation, to the extent that such compensation shall not be
paid by Owner, and shall have the right, on and subsequent to an Event of
Default hereunder, to use or apply any monies held by it hereunder in the
Collateral toward such payments. The Mortgagee agrees that it shall have no
right against the Note Holders for any fee as compensation for its services as
trustee under this Trust Indenture.
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SECTION 7.07. Instructions from Note Holders
In the administration of the trusts created hereunder, the Mortgagee shall
have the right to seek instructions from a Majority in Interest of Note Holders
should any provision of this Trust Indenture appear to conflict with any other
provision herein or should the Mortgagee's duties or obligations hereunder be
unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions. The Mortgagee shall be fully protected by
the Note Holders for acting in accordance with any instructions received under
this Section 7.07.
ARTICLE VIII INDEMNIFICATION
SECTION 8.01. Scope of Indemnification
The Mortgagee shall be indemnified by the Owner to the extent and in the
manner provided in Section 8 of the Participation Agreement.
ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. Resignation of Mortgagee; Appointment of Successor
(a) The Mortgagee or any successor thereto may resign at any time without
cause by giving at least 30 days prior written notice to the Owner and each Note
Holder. such resignation to be effective upon the acceptance of the trusteeship
by a successor Mortgagee. In addition, a Majority in Interest of Note Holders
may at any time (but only with the consent of Owner, which consent shall not be
unreasonably withheld, except that such consent shall not be necessary if an
Event of Default is continuing) remove the Mortgagee without cause by an
instrument in writing delivered to the Owner and the Mortgagee, and the
Mortgagee shall promptly notify each Note Holder thereof in writing, such
removal to be effective upon the acceptance of the trusteeship by a successor
Mortgagee. In the case
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of the resignation or removal of the Mortgagee, a Majority in Interest of Note
Holders may appoint a successor Mortgagee by an instrument signed by such
holders, which successor, so long as no Event of Default shall have occurred and
be continuing, shall be subject to Owner's reasonable approval. If a successor
Mortgagee shall not have been appointed within 30 days after such notice of
resignation or removal, the Mortgagee, the Owner or any Note Holder may apply to
any court of competent jurisdiction to appoint a successor Mortgagee to act
until such time, if any, as a successor shall have been appointed as above
provided. The successor Mortgagee so appointed by such court shall immediately
and without further act be superseded by any successor Mortgagee appointed as
above provided.
(b) Any successor Mortgagee, however appointed, shall execute and deliver
to the Owner and the predecessor Mortgagee an instrument accepting such
appointment and assuming the obligations of the Mortgagee arising from and after
the time of such appointment, and thereupon such successor Mortgagee, without
further act, shall become vested with all the estates, properties, rights,
powers and duties of the predecessor Mortgagee hereunder in the trust hereunder
applicable to it with like effect as if originally named the Mortgagee herein;
but nevertheless upon the written request of such successor Mortgagee, such
predecessor Mortgagee shall execute and deliver an instrument transferring to
such successor Mortgagee, upon the trusts herein expressed applicable to it, all
the estates, properties, rights and powers of such predecessor Mortgagee, and
such predecessor Mortgagee shall duly assign, transfer, deliver and pay over to
such successor Mortgagee all monies or other property then held by such
predecessor Mortgagee hereunder.
(c) Any successor Mortgagee, however appointed, shall be a bank or trust
company having its principal place of business in the Borough of Manhattan, City
and State of New York; Chicago, Illinois; Hartford, Connecticut; Wilmington,
Delaware; or Boston, Massachusetts and having (or whose obligations under the
Operative Agreements are guaranteed by an affiliated entity having) a combined
capital and surplus of at least $100,000,000, if there be such an institution
willing, able and legally qualified to perform the duties of the Mortgagee
hereunder upon reasonable or customary terms.
(d) Any corporation into which the Mortgagee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Mortgagee shall be a party, or any
corporation to which substantially all the corporate trust business of the
Mortgagee may be transferred, shall, subject to the terms of paragraph (c) of
this Section 9.01, be a successor Mortgagee and the Mortgagee under this Trust
Indenture without further act.
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SECTION 9.02. Appointment of Additional and Separate Trustees
(a) Whenever (i) the Mortgagee shall deem it necessary or desirable in
order to conform to any Law of any jurisdiction in which all or any part of the
Collateral shall be situated or to make any claim or bring any suit with respect
to or in connection with the Collateral, this Trust Indenture, any other
Indenture Agreement, the Equipment Notes or any of the transactions contemplated
by the Participation Agreement, (ii) the Mortgagee shall be advised by counsel
satisfactory to it that it is so necessary or prudent in the interests of the
Note Holders (and the Mortgagee shall so advise the Owner), or (iii) the
Mortgagee shall have been requested to do so by a Majority in Interest of Note
Holders, then in any such case, the Mortgagee and, upon the written request of
the Mortgagee, the Owner, shall execute and deliver an indenture supplemental
hereto and such other instruments as may from time to time be necessary or
advisable either (1) to constitute one or more bank or trust companies or one or
more persons approved by the Mortgagee, either to act jointly with the Mortgagee
as additional trustee or trustees of all or any part of the Collateral, or to
act as separate trustee or trustees of all or any part of the Collateral, in
each case with such rights, powers, duties and obligations consistent with this
Trust Indenture as may be provided in such supplemental indenture or other
instruments as the Mortgagee or a Majority in Interest of Note Holders may deem
necessary or advisable, or (2) to clarify, add to or subtract from the rights,
powers, duties and obligations theretofore granted any such additional or
separate trustee, subject in each case to the remaining provisions of this
Section 9.02. If the Owner shall not have taken any action requested of it under
this Section 9.02(a) that is permitted or required by its terms within 15 days
after the receipt of a written request from the Mortgagee so to do, or if an
Event of Default shall have occurred and be continuing, the Mortgagee may act
under the foregoing provisions of this Section 9.02(a) without the concurrence
of the Owner, and the Owner hereby irrevocably appoints (which appointment is
coupled with an interest) the Mortgagee, its agent and attorney-in-fact to act
for it under the foregoing provisions of this Section 9.02(a) in either of such
contingencies. The Mortgagee may, in such capacity, execute, deliver and perform
any such supplemental indenture, or any such instrument, as may be required for
the appointment of any such additional or separate trustee or for the
clarification of, addition to or subtraction from the rights, powers, duties or
obligations theretofore granted to any such additional or separate trustee. In
case any additional or separate trustee appointed under this Section 9.02(a)
shall die, become incapable of acting, resign or be removed, all the assets,
property, rights, powers, trusts, duties and obligations of such additional or
separate trustee shall revert to the Mortgagee until a successor additional or
separate trustee is appointed as provided in this Section 9.02(a).
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(b) No additional or separate trustee shall be entitled to exercise any of
the rights, powers, duties and obligations conferred upon the Mortgagee in
respect of the custody, investment and payment of monies and all monies received
by any such additional or separate trustee from or constituting part of the
Collateral or otherwise payable under any Operative Agreement to the Mortgagee
shall be promptly paid over by it to the Mortgagee. All other rights, powers,
duties and obligations conferred or imposed upon any additional or separate
trustee shall be exercised or performed by the Mortgagee and such additional or
separate trustee jointly except to the extent that applicable Law of any
jurisdiction in which any particular act is to be performed renders the
Mortgagee incompetent or unqualified to perform such act, in which event such
rights, powers, duties and obligations (including the holding of title to all or
part of the Collateral in any such jurisdiction) shall be exercised and
performed by such additional or separate trustee. No additional or separate
trustee shall take any discretionary action except on the instructions of the
Mortgagee or a Majority in Interest of Note Holders. No trustee hereunder shall
be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Mortgagee shall be liable for the consequences of its
lack of reasonable care in selecting, and the Mortgagee's own actions in acting
with, any additional or separate trustee. Each additional or separate trustee
appointed pursuant to this Section 9.02 shall be subject to, and shall have the
benefit of Articles V through IX and Article XI hereof insofar as they apply to
the Mortgagee. The powers of any additional or separate trustee appointed
pursuant to this Section 9.02 shall not in any case exceed those of the
Mortgagee hereunder.
(c) If at any time the Mortgagee shall deem it no longer necessary or
desirable in order to conform to any such Law or take any such action or shall
be advised by such counsel that it is no longer so necessary or desirable in the
interest of the Note Holders, or in the event that the Mortgagee shall have been
requested to do so in writing by a Majority in Interest of Note Holders, the
Mortgagee and, upon the written request of the Mortgagee, the Owner, shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional or separate trustee.
The Mortgagee may act on behalf of the Owner under this Section 9.02(c) when and
to the extent it could so act under Section 9.02(a) hereof.
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ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 10.01. Instructions of Majority; Limitations
(a) Without limiting the provisions of this Section 10.01, the Mortgagee
agrees with the Note Holders that it shall not enter into any amendment, waiver
or modification of, supplement or consent to this Trust Indenture, or any other
Operative Agreement to which it is a party, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Note Holders, but upon the written request of a Majority in Interest
of Note Holders, the Mortgagee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner and, as may be appropriate, the Airframe
Manufacturer or the Engine Manufacturer; provided, however, that, without the
consent of each holder of an affected Equipment Note then outstanding and of
each Liquidity Provider, no such amendment, waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 10.01, or of Article II or III or Section 5.01. 5.02(c), 5.02(d),
or 6.02 hereof, the definitions of "Event of Default," "Default," "Majority in
Interest of Note Holders," "Make-Whole Amount" or "Note Holder," or the
percentage of Note Holders required to take or approve any action hereunder,
(ii) reduce the amount, or change the time of payment or method of calculation
of any amount, or Original Amount, Make-Whole Amount, if any, or interest with
respect to any Equipment Note, (iii) reduce, modify or amend any indemnities in
favor of the Mortgagee or the Note Holders (except that the Mortgagee may
consent to any waiver or reduction of an indemnity payable to it), or (iv)
permit the creation of any Lien on the Trust Indenture Estate or any part
thereof other than Permitted Liens or deprive any Note Holder of the benefit of
the Lien of this Trust Indenture on the Collateral, except as provided in
connection with the exercise of remedies under Article V hereof. Notwithstanding
the foregoing, without the consent of the affected Liquidity Providers, neither
the Owner nor the Mortgagee shall enter into any amendment, waiver or
modification of, supplement or consent to this Trust Indenture or the other
Operative Agreements which shall reduce, modify or amend any indemnities in
favor of such Liquidity Providers.
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(b) The Owner and the Mortgagee may enter into one or more agreements
supplemental hereto without the consent of any Note Holder for any of the
following purposes: (i) (a) to cure any defect or inconsistency herein or in the
Equipment Notes, or to make any change not inconsistent with the provisions
hereof (provided that such change does not adversely affect the interests of any
Note Holder in its capacity solely as Note Holder) or (b) to cure any ambiguity
or correct any mistake; (ii) to evidence the succession of another party as the
Owner in accordance with the terms hereof or to evidence the succession of a new
trustee hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Mortgagee or to make any other provisions with respect
to matters or questions arising hereunder so long as such action shall not
adversely affect the interests of the Note Holders in its capacity solely as
Note Holder; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Trust Indenture or better to assure, convey and
confirm unto the Mortgagee any property subject or required to be subject to the
Lien of this Trust Indenture, the Airframe or Engines or any Replacement
Airframe or Replacement Engine; (v) to add to the covenants of the Owner for the
benefit of the Note Holders, or to surrender any rights or power herein
conferred upon the Owner; (vi) to add to the rights of the Note Holders; (vii)
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 Note Purchase Agreement; and (viii) to include on the
Equipment Notes any legend as may be required by Law.
SECTION 10.02. Mortgagee Protected
If, in the opinion of the institution acting as Mortgagee hereunder, any
document required to be executed by it pursuant to the terms of Section 10.01
hereof affects any right, duty, immunity or indemnity with respect to such
institution under this Trust Indenture, such institution may in its discretion
decline to execute such document.
SECTION 10.03. Documents Mailed to Note Holders
Promptly after the execution by the Owner or the Mortgagee of any document
entered into pursuant to Section 10.01 hereof, the Mortgagee shall mail, by
first class mail, postage prepaid, a copy thereof to Owner (if not a party
thereto) and to each Note Holder at its address last set forth in the Equipment
Note Register, but the failure of the Mortgagee to mail such copies shall not
impair or affect the validity of such document.
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SECTION 10.04. No Request Necessary for Trust Indenture Supplement
No written request or consent of the Note Holders pursuant to Section 10.01
hereof shall be required to enable the Mortgagee to execute and deliver a Trust
Indenture Supplement specifically required by the terms hereof.
ARTICLE XI MISCELLANEOUS
SECTION 11.01. Termination of Trust Indenture
Upon (or at any time after) payment in full of the Original Amount of,
Make-Whole Amount, if any, and interest on and all other amounts due under all
Equipment Notes and provided that there shall then be no other Secured
Obligations due to the Indenture Indemnitees, the Note Holders and the Mortgagee
hereunder or under the Participation Agreement or other Operative Agreement, the
Owner shall direct the Mortgagee to execute and deliver to or as directed in
writing by the Owner an appropriate instrument releasing the Aircraft and the
Engines and all other Collateral from the Lien of the Trust Indenture and the
Mortgagee shall execute and deliver such instrument as aforesaid; provided,
however, that this Trust Indenture and the trusts created hereby shall earlier
terminate and this Trust Indenture shall be of no further force or effect upon
any sale or other final disposition by the Mortgagee of all property
constituting part of the Collateral and the final distribution by the Mortgagee
of all monies or other property or proceeds constituting part of the Collateral
in accordance with the terms hereof. Except as aforesaid otherwise provided,
this Trust Indenture and the trusts created hereby shall continue in full force
and effect in accordance with the terms hereof.
SECTION 11.02. No Legal Title to Collateral in Note Holders
No holder of an Equipment Note shall have legal title to any part of the
Collateral. No transfer, by operation of law or otherwise, of any Equipment Note
or other right, title and interest of any Note Holder in and to the Collateral
or hereunder shall oper-
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ate to terminate this Trust Indenture or entitle such holder or any successor or
transferee of such holder to an accounting or to the transfer to it of any legal
title to any part of the Collateral.
SECTION 11.03. Sale of Aircraft by Mortgagee Is Binding
Any sale or other conveyance of the Collateral, or any part thereof
(including any part thereof or interest therein), by the Mortgagee made pursuant
to the terms of this Trust Indenture shall bind the Note Holders and shall be
effective to transfer or convey all right, title and interest of the Mortgagee,
the Owner and such holders in and to such Collateral or part thereof. No
purchaser or other grantee shall be required to inquire as to the authorization,
necessity, expediency or regularity of such sale or conveyance or as to the
application of any sale or other proceeds with respect thereto by the Mortgagee.
SECTION 11.04. Trust Indenture for Benefit of Owner, Mortgagee, Note
Holders and the Other Indenture Indemnitees
Nothing in this Trust Indenture, whether express or implied, shall be
construed to give any person other than the Owner, the Mortgagee, the Note
Holders and the other Indenture Indemnitees, any legal or equitable right,
remedy or claim under or in respect of this Trust Indenture, except that the
persons referred to in the last paragraph of Section 4.02(b) shall be third
party beneficiaries of such paragraph.
SECTION 11.05. Notices
Unless otherwise expressly specified or permitted by the terms hereof, all
notices, requests, demands, authorizations, directions, consents, waivers or
documents provided or permitted by this Trust Indenture to be made, given,
furnished or filed shall be in writing, and shall be personally delivered or
sent by certified mail, postage prepaid, by prepaid courier service or by
facsimile followed by overnight courier service for next Business Day receipt,
and (i) if to the Owner, addressed to it at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Chief Financial Officer, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, (ii)
if to Mortgagee, addressed to it at its office at ▇▇▇▇▇▇ Square North, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration, facsimile
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number (▇▇▇) ▇▇▇-▇▇▇▇, (iii) if to any Note Holder or any Indenture Indemnitee,
addressed to such party at such address as such party shall have furnished by
notice to the Owner and the Mortgagee, or, until an address is so furnished,
addressed to the address of such party (if any) set forth on Schedule I to the
Participation Agreement or in the Equipment Note Register. Whenever any notice
in writing is required to be given by the Owner or the Mortgagee or any Note
Holder to any of the other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, provided, in the case of
facsimile, there is receipt of such notice the next Business Day from an
overnight courier service or if such notice is mailed by certified mail, postage
prepaid, three Business Days after being mailed, addressed as provided above.
Any party hereto may change the address to which notices to such party will be
sent by giving notice of such change to the other parties to this Trust
Indenture.
SECTION 11.06. Severability
Any provision of this Trust Indenture which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 11.07. No Oral Modification or Continuing Waivers
No term or provision of this Trust Indenture or the Equipment Notes may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the Owner and the Mortgagee, in compliance with Section 10.01
hereof. Any waiver of the terms hereof or of any Equipment Note shall be
effective only in the specific instance and for the specific purpose given.
SECTION 11.08. Successors and Assigns
All covenants and agreements contained herein shall be binding upon, and
inure to the benefit of, each of the parties hereto and the permitted successors
and assigns of each, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by any Note Holder shall bind the
successors and assigns of such holder. Each Note Holder by its acceptance of an
Equipment Note agrees to be bound by
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this Trust Indenture and all provisions of the Operative Agreements applicable
to a Note Holder.
SECTION 11.09. Headings
The headings of the various Articles and sections herein and in the table
of contents hereto are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.10. Normal Commercial Relations
Anything contained in this Trust Indenture to the contrary notwithstanding,
Owner and Mortgagee may conduct any banking or other financial transactions, and
have banking or other commercial relationships, with Owner, fully to the same
extent as if this Trust Indenture were not in effect, including without
limitation the making of loans or other extensions of credit to Owner for any
purpose whatsoever, whether related to any of the transactions contemplated
hereby or otherwise.
SECTION 11.11. Governing Law; Counterpart Form
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING
DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be executed by the
parties hereto in separate counterparts (or upon separate signature pages bound
together into one or more counterparts), each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.12. Voting by Note Holders
All votes of the Note Holders shall be governed by a vote of a Majority in
Interest of Note Holders, except as otherwise provided herein.
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SECTION 11.13. Bankruptcy
It is the intention of the parties that the Mortgagee shall be entitled to
the benefits of Section 11.10 with respect to the right to take possession of
the Aircraft, Airframe, Engines and Parts as provided herein in the event of a
case under Chapter 11 of the Bankruptcy Code in which Owner is a debtor, and in
any instance where more than one construction is possible of the terms and
conditions hereof or any other pertinent Operative Agreement, each such party
agrees that a construction which would preserve such benefits shall control over
any construction which would not preserve such benefits.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture and
Mortgage to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
ATLAS AIR, INC.
By:
------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
provided herein, but solely as Mortgagee
By:
------------------------------------
Name:
Title:
ANNEX A
TO THE TRUST INDENTURE
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly provided, a
reference to:
(i) each of "Owner," "Mortgagee," "Note Holder" or any other person
includes, without prejudice to the provisions of any Operative
Agreement, any successor in interest to it and any permitted
transferee, permitted purchaser or permitted assignee of it;
(ii) words importing the plural include the singular and words importing
the singular include the plural;
(iii) any agreement, instrument or document, or any annex, schedule or
exhibit thereto, or any other part thereof includes, without prejudice
to the provisions of any Operative Agreement, that agreement,
instrument or document, or annex, schedule or exhibit, or part,
respectively, as amended, modified or supplemented from time to time
in accordance with its terms and in accordance with the Operative
Agreements, and any agreement, instrument or document entered into in
substitution or replacement therefor;
(iv) any provision of any Law includes any such provision as amended,
modified, supplemented, substituted, reissued or reenacted prior to
the Closing Date, and thereafter from time to time;
(v) the words "Agreement, "this Agreement, "hereby," herein," "hereto,"
"hereof" and "hereunder" and words of similar import when used in any
Operative Agreement refer to such Operative Agreement as a whole and
not to any particular provision of such Operative Agreement;
(vi) the words "including," "including, without limitation," "including,
but not limited to," and terms or phrases of similar import when used
in any Operative Agreement, with respect to any matter or thing, mean
including, without limitation, such matter or thing; and
(vii) a "Section," an "Exhibit," an "Annex" or a "Schedule" in any
Operative Agreement, or in any annex thereto, is a reference to a
section of, or an exhibit, an annex or a schedule to, such Operative
Agreement or such annex, respectively.
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(b) Each exhibit, annex and schedule to each Operative Agreement is
incorporated in, and shall be deemed to be a part of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative Agreement, all
accounting terms therein shall be construed and all accounting determinations
thereunder shall be made in accordance with GAAP.
(d) Headings used in any Operative Agreement are for convenience only and
shall not in any way affect the construction of, or be taken into consideration
in interpreting, such Operative Agreement.
(e) For purposes of each Operative Agreement, the occurrence and
continuance of a Default or Event of Default referred to in Section 5.01(e), (f)
or (g) of the Trust Indenture shall not be deemed to prohibit the Owner from
taking any action or exercising any right that's conditioned on no Special
Default, Default or Event of Default having occurred and be continuing if such
Special Default, Default or Event of Default consists of the institution of
reorganization proceedings with respect to Owner under Chapter II of the
Bankruptcy Code and the trustee or debtor-in-possession in such proceedings
shall have agreed to perform its obligations under the Trust Indenture with the
approval of the applicable court and thereafter shall have continued to perform
such obligations in accordance with Section 1110.
DEFINED TERMS
"ACMI Contract" means (i) any contract entered into by Owner pursuant to
which Owner furnishes the aircraft, crew, maintenance and insurance and the
other party to such contract bears all other operating expenses and (ii) any
similar contract in which the other party to such contract provides the flight
crew, all substantially in accordance with Owner's historical practice.
"Act" means part A of subtitle VII of title 49, United States Code.
"Actual Knowledge" means (a) as it applies to Mortgagee, actual knowledge
of a responsible officer in the Corporate Trust Office, and (b) as it applies to
Owner, actual knowledge of a Vice President or more senior officer of Owner or
any other officer of Owner having responsibility for the transactions
contemplated by the Operative Agreements; provided that each of Owner and
Mortgagee shall be deemed to have "Actual Knowledge" of any matter as to which
it has received notice from Owner, any Note Holder or Mortgagee, such notice
having been given pursuant to Section 11.05 of the Trust Indenture.
"Affiliate" means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with such person.
For purposes of this definition, "control" means the power, directly or
indirectly, to direct or cause
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the direction of the management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise and "controlling,"
"controlled by" and "under common control with" have correlative meanings.
"Aircraft" means, collectively, the Airframe and Engines.
"Aircraft ▇▇▇▇ of Sale" means the full warranty ▇▇▇▇ of sale covering the
Aircraft delivered by Airframe Manufacturer to Owner on the Closing Date.
"Aircraft Documents" means all technical data, manuals and log books, and
all inspection, modification and overhaul records and other service, repair,
maintenance and technical records that are required by the FAA (or the relevant
Aviation Authority), to be maintained with respect to the Aircraft, Airframe,
Engines or Parts, and such term shall include all additions, renewals, revisions
and replacements of any such materials from time to time made, or required to be
made, by the FAA (or other Aviation Authority) regulations, and in each case in
whatever form and by whatever means or medium (including, without limitation,
microfiche, microfilm, paper or computer disk) such materials may be maintained
or retained by or on behalf of Owner (provided that all such materials shall he
maintained in the English language).
"Airframe" means (a) the aircraft (excluding Engines or engines from time
to time installed thereon) manufactured by Airframe Manufacturer and identified
by Airframe Manufacturer's model number, United States registration number and
Airframe Manufacturer's serial number set forth in the initial Trust Indenture
Supplement and any Replacement Airframe and (b) any and all Parts incorporated
or installed in or attached or appurtenant to such airframe, and any and all
Parts removed from such airframe, unless the Lien of the Trust Indenture shall
not be applicable to such Parts in accordance with Section 4.04 of the Trust
Indenture. Upon substitution of a Replacement Airframe under and in accordance
with the Trust Indenture, such Replacement Airframe shall become subject to the
Trust Indenture and shall be the "Airframe" for all purposes of the Trust
Indenture and the other Operative Agreements and thereupon the Airframe for
which the substitution is made shall no longer be subject to the Trust
Indenture, and such replaced Airframe shall cease to be the "Airframe."
"Airframe Manufacturer" means The Boeing Company, a Delaware corporation.
"Average Life Date" for any Equipment Note shall be the date which follows
the time of determination by a period equal to the Remaining Weighted Average
Life of such Equipment Note. "Remaining Weighted Average Life" on a given date
with respect to any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products obtained by
multiplying (i) the amount of each then remaining scheduled payment of principal
of such Equipment Note by (ii) the number of days from and including such
determination date to but excluding the date on which such pay-
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ment of principal is scheduled to be made, by (b) the then outstanding principal
amount of such Equipment Note.
"Aviation Authority" means the FAA or, if the Aircraft is permitted to be,
and is, registered with any Government Entity under and in accordance with
Section 4.02(e) of the Trust Indenture and Section 6.4.5 of the Participation
Agreement, such other Government Entity.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C.
Sections 101 et seq.
"Bills of Sale" means the FAA ▇▇▇▇ of Sale and the Aircraft ▇▇▇▇ of Sale.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by law to close in New York,
New York, Denver, Colorado, Wilmington, Delaware or Chicago, Illinois.
"Cash Equivalents" means the following securities (which shall mature
within 90 days of the date of purchase thereof): (a) direct obligations of the
U.S. Government; (b) obligations fully guaranteed by the U.S. Government; (c)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Mortgagee or any bank, trust company or national
banking association incorporated or doing business under the laws of the United
States or any state thereof having a combined capital, and surplus and retained
earnings of at least $500,000,000 and having a rate of "C" or better from the
Thomson Bank Watch Service; or (d) commercial paper of any issuer doing business
under the laws of the United States or one of the states thereof and in each
case having a rating assigned to such commercial paper by Standard & Poor's
Rating Services or ▇▇▇▇▇'▇ Investors Service, Inc. equal to Al or P1 or higher.
"Citizen of the United States" is defined in 49 U.S.C. ss. 40102(a)(15).
"Class D Pass Through Trust" means the Atlas Air Pass Through Trust 1999-1D
created by the Pass Through Trust Agreement and the Pass Through Trust
Supplement providing for the issuance of the Class D Certificates.
"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; provided that,
when used in relation to a Plan, "Code" shall mean the Internal Revenue Code of
1986 and any regulations and rulings issued thereunder, all as amended and in
effect from time to time.
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"Collateral" is defined in the Granting Clause of the Trust Indenture.
"Consent and Agreement" means the Manufacturer Consent and Agreement dated
as of even date with the Participation Agreement, of Airframe Manufacturer.
"Corporate Trust Office" means the principal office of Mortgagee located at
Mortgagee's address for notices under the Participation Agreement or such other
office at which Mortgagee's corporate trust business shall be administered which
Mortgagee shall have specified by notice in writing to Owner and each Note
Holder.
"CRAF" means the Civil Reserve Air Fleet Program established pursuant to 10
U.S.C. Section 9511-13 or any similar substitute program.
"Debt" means any liability for borrowed money, or any liability for the
payment of money in connection with any letter of credit transaction or any
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments.
"Debt Rate" means, with respect to (i) any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Trust Indenture and (ii) for any other purpose, with respect to any period, the
weighted average interest rate per annum during such period borne by the
outstanding Equipment Notes, excluding any interest payable at the Payment Due
Rate.
"Default" means any event or condition that with the giving of notice or
the lapse of time or both would become an Event of Default.
"Deposit Agreement" means each of the four Deposit Agreements between the
Escrow Agent and the Depositary, dated as of the Issuance Date, each of which
relates to one of the Pass Through Trusts, provided that, for purposes of any
obligation of Owner, no amendment, modification or supplement to, or
substitution or replacement of, any such Deposit Agreement shall be effective
unless consented to by Owner.
"Depositary" means , as Depositary under each Deposit Agreement.
"Dollars," "United States Dollars" or "$" means the lawful currency of the
United States.
"Engine" means (a) each of the engines manufactured by Engine Manufacturer
and identified by Engine Manufacturer's model number and Engine Manufacturer's
serial number set forth in the initial Trust Indenture Supplement and originally
installed on the Airframe on the Closing Date, and any Replacement Engine, in
any case whether or not from time to time installed on such Airframe or
installed on any other airframe or aircraft, and (b) any and all Parts
incorporated or installed in or attached or appurtenant to such en-
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gine, and any and all Parts removed from such engine, unless the Lien of the
Trust Indenture shall not apply to such Parts in accordance with Section 4.04 of
the Trust Indenture. Upon substitution of a Replacement Engine under and in
accordance with the Trust Indenture, such Replacement Engine shall become
subject to the Trust Indenture and shall be an "Engine" for all purposes of the
Trust Indenture and the other Operative Agreements and thereupon the Engine for
which the substitution is made shall no longer be subject to the Trust
Indenture, and such replaced Engine shall cease to be an "Engine."
"Engine Consent and Agreement" means the Engine Manufacturer Consent and
Agreement dated as of even date with Participation Agreement, of Engine
Manufacturer.
"Engine Manufacturer" means General Electric Company, a corporation
organized under the laws of New York.
"Equipment Note Register" is defined in Section 2.07 of the Trust
Indenture.
"Equipment Notes" means and includes any equipment notes issued under the
Trust Indenture in the form specified in Section 2.01 thereof (as such form may
be varied pursuant to the terms of the Trust Indenture) and any Equipment Note
issued under the Trust Indenture in exchange for or replacement of any Equipment
Note.
"ERISA" means the Employee Retirement Income Security Act of 1974, and any
regulations and rulings issued thereunder all as amended and in effect from time
to time.
"Escrow Agent" means First Security Bank, National Association, as Escrow
Agent under each of the Escrow Agreements.
"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, underwriters of the Pass
Through Certificates named therein and one of the Pass Through Trustees, dated
as of the Issuance Date, each of which relates to one of the Pass Through
Trusts, that, for purposes of any obligation of Owner, no amendment,
modification or supplement to, or substitution or replacement of, any such
Escrow Agreement shall be effective unless consented to by Owner.
"Event of Default" is defined in Section 5.01 of the Trust Indenture.
"Event of Loss" means. with respect to the Aircraft, Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:
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(a) the destruction of such property, damage to such property beyond
economic repair or rendition of such property permanently unfit for normal
use by Owner;
(b) the actual or constructive total loss of such property or any
damage to such property, or requisition of title or use of such property,
which results in an insurance settlement with respect to such property on
the basis of a total loss or constructive or compromised total loss;
(c) any theft, hijacking or disappearance of such property for a
period of 180 consecutive days or more;
(d) any seizure, condemnation, confiscation, taking or requisition
(including loss of title) of such property by any Government Entity or
purported Government Entity (other than a requisition of use by a Permitted
Government Entity) for a period exceeding 180 consecutive days;
(e) as a result of any law, rule, regulation, order or other action by
the Aviation Authority or by any Government Entity of the government of
registry of the Aircraft or by any Government Entity otherwise having
jurisdiction over the operation or use of the Aircraft, the use of such
property in the normal course of Owner's business of cargo air
transportation is prohibited for a period of 180 consecutive days unless
Owner, prior to the expiration of such 180-day period, shall have
undertaken and shall be diligently carrying forward such steps as may be
necessary or desirable to permit the normal use of such property by Owner,
but in any event if such use shall have been prohibited for a period of two
consecutive years, provided that no Event of Loss shall be deemed to have
occurred if such prohibition has been applicable to Owner's entire U.S.
fleet of such property and Owner, prior to the expiration of such two-year
period, shall have conformed at least one unit of such property in its
fleet to the requirements of any such law, rule, regulation, order or other
action and commenced regular commercial use of the same in such
jurisdiction and shall be diligently carrying forward, in a manner which
does not discriminate against such property in so conforming such property,
steps which are necessary or desirable to permit the normal use of the
Aircraft by Owner, but in any event if such use shall have been prohibited
for a period of three years.
"Expenses" means any and all liabilities, obligations, losses, damages,
settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other professionals,
and costs of investigation).
"FAA" means the Federal Aviation Administration of the United States or any
Government Entity succeeding to the functions of such Federal Aviation
Administration.
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"FAA ▇▇▇▇ of Sale" means a ▇▇▇▇ of sale for the Aircraft on AC Form 8050-2
(or such other form as may be approved by the FAA) delivered to Owner on the
Closing Date by Airframe Manufacturer.
"FAA Filed Documents" means the Trust Indenture, the initial Trust
Indenture Supplement, the FAA ▇▇▇▇ of Sale and an application for registration
of the Aircraft with the FAA in the name of Owner.
"FAA Regulations" means the Federal Aviation Regulations issued or
promulgated pursuant to the Act from time to time.
"Financing Statements" means, collectively, UCC-1 (and, where appropriate,
UCC-3) financing statements covering the Collateral, by Owner, as debtor,
showing Mortgagee as secured party, for filing in Colorado and each other
jurisdictions that, in the opinion of Mortgagee, is necessary or reasonably
desirable to perfect its Lien on the Collateral.
"GAAP" means generally accepted accounting principles as set forth in the
statements of financial accounting standards issued by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants, as
such principles may at any time or from time to time be varied by any applicable
financial accounting rules or regulations issued by the SEC and, with respect to
any person, shall mean such principles applied on a basis consistent with prior
periods except as may be disclosed in such person's financial statements.
"Government Entity" means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government or (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Indemnitee" means (i) WTC and Mortgagee, (ii) each separate or additional
trustee appointed pursuant to the Trust Indenture, (iii) the Subordination
Agent, the Paying Agent and the Escrow Agent, (iv) each Liquidity Provider, (v)
the Pass Through Trustees, (vi) each Affiliate of the persons described in
clauses (i) and (ii), (vii) each Affiliate of the persons described in clauses
(iii), (iv) and (v), (viii) the respective directors, officers, employees,
agents and servants of each of the persons described in clauses (i), (ii) and
(vi), (ix) the respective directors, officers, employees, agents and servants,
of each of the persons described in clauses (iii), (iv), (v) and (vii), (x) the
successors and permitted assigns of the persons described in clauses (i), (ii)
and (viii), and (xi) the successors and permitted assigns of the persons
described in clauses (iii), (iv), (v) and (ix); provided that the persons
described in clauses (iii), (iv), (v), (vii), (ix) and (xi) are Indemnitees only
for purposes of Section 8.1 of the Participation Agreement. If any Indemnitee is
Airframe Manufacturer or
A-8
Engine Manufacturer or any subcontractor or supplier of either thereof, such
Person shall be an Indemnitee only in its capacity as Note Holder.
"Indenture Agreements" means the Purchase Agreement and the Bills of Sale,
to the extent included in Granting Clause (2) of the Trust Indenture, and any
other contract, agreement or instrument from time to time assigned or pledged
under the Trust Indenture.
"Indenture Indemnitee" means (i) WTC and the Mortgagee, (ii) each separate
or additional trustee appointed pursuant to the Trust Indenture, (iii) the
Subordination Agent, (iv) each Liquidity Provider, (v) each Pass Through
Trustee, (vi) the Paying Agent, (vii) the Escrow Agent and (viii) each of the
respective directors, officers, employees, agents and servants of each of the
persons described in clauses (i) through (vii) inclusive above.
"Inspecting Parties" is defined in Section 4.03 of the Trust Indenture.
"Intercreditor Agreement" means that certain Intercreditor Agreement among
the Pass Through Trustees, the Liquidity Providers and the Subordination Agent,
dated as of the Issuance Date, provided that, for purposes of any obligation of
Owner, no amendment, modification or supplement to, or substitution or
replacement of, such Intercreditor Agreement shall be effective unless consented
to by Owner.
"IRS" means the Internal Revenue Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.
"Issuance Date" means ________ _, .
"Law" means (a) any constitution, treaty, statute, law, decree, regulation.
order, rule or directive of any Government Entity, and (b) any judicial or
administrative interpretation or application of, or decision under, any of the
foregoing.
"Lien" means any mortgage, pledge, lien, charge, claim, encumbrance, lease
or security interest affecting the title to or any interest in property.
"Liquidity Facilities" means the four Revolving Credit Agreements
(consisting of a separate Revolving Credit Agreement with each Liquidity
Provider with respect to each Pass Through Trust) between the Subordination
Agent, as borrower, and a Liquidity Provider, each dated as of the Issuance
Date, provided that, for purposes of any obligation of Owner, no amendment,
modification or supplement to, or substitution or replacement of, any such
Liquidity Facility shall be effective unless consented to by Owner.
"Liquidity Provider" (as the Class A-1 and A-2 Liquidity Provider) (as the
Class B and the Class C
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Liquidity Provider) (as such terms are defined in the Intercreditor Agreement),
under their respective Liquidity Facilities, or any successor thereto.
"Majority in Interest of Note Holders" means as of a particular date of
determination, the holders of a majority in aggregate unpaid Original Amount of
all Equipment Notes outstanding as of such date (excluding any Equipment Notes
held by Owner or any of its Affiliates (unless all Equipment Notes then
outstanding shall be held by Owner or any Affiliate of Owner); provided that for
the purposes of directing any action or casting any vote or giving any consent,
waiver or instruction hereunder, any Note Holder of an Equipment Note or
Equipment Notes may allocate, in such Note Holder's sole discretion, any
fractional portion of the principal amount of such Equipment Note or Equipment
Notes in favor of or in opposition to any such action, vote, consent, waiver or
instruction.
"Make-Whole Amount" means, with respect to any Equipment Note, an amount
(as determined by an independent investment banker of national standing) equal
to the excess, if any, of (a) the present value of the remaining scheduled
payments of principal and interest to maturity of such Equipment Note computed
by discounting such payments on a semiannual basis on each Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate equal to
the Treasury Yield over (b) the outstanding principal amount of such Equipment
Note plus accrued interest to the date of determination. For purposes of
determining Make-Whole Amount, "Treasury Yield" means, at the date of
determination with respect to any Equipment Note, the interest rate (expressed
as a decimal and, in the case of United States Treasury bills, converted to a
bond equivalent yield) determined to be the per annum rate equal to the
semiannual yield to maturity for United States Treasury securities maturing on
the Average Life Date of such Equipment Note and trading in the public
securities markets either as determined by interpolation between the most recent
weekly average yield to maturity for two series of United States Treasury
securities, trading in the public securities markets, (A) one maturing as close
as possible to, but earlier than, the Average Life Date of such Equipment Note
and (B) the other maturing as close as possible to, but later than, the Average
Life Date of such Equipment Note, in each case as published in the most recent
H.15(5.19) or, if a weekly average yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Equipment Note is reported
on the most recent H.15(519), such weekly average yield to maturity as published
in such H.15(519). "H.15(519)" means the weekly statistical release designated
as such, or any successor publication, published by the Board of Governors of
the Federal Reserve System. The date of determination of a Make-Whole Amount
shall be the third Business Day prior to the applicable payment or redemption
date and the "most recent H.15(519) " means the H.15(519) published prior to the
close of business on the third Business Day prior to the applicable payment or
redemption date.
"Mandatory Modification" is defined in Section 4.04(d) of the Trust
Indenture.
A-10
"Material Adverse Change" means, with respect to any person, any event,
condition or circumstance that materially and adversely affects such person's
business or consolidated financial condition, or its ability to observe or
perform its obligations, liabilities and agreements under the Operative
Agreements.
"Minimum Liability Insurance Amount" is defined in Schedule 3 to the
Participation Agreement.
"Mortgaged Property" is defined in Section 3.03 of the Trust Indenture.
"Mortgagee" means Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity but solely as mortgagee under the Trust
Indenture.
"Non-U.S. Person" means any Person other than a United States person, as
defined in Section 7701(a)(30) of the Code.
"Note Holder" means at any time each registered holder of one or more
Equipment Notes.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of
the Issuance Date, among Atlas Air, Inc., the Subordination Agent, the Escrow
Agent, the Paying Agent and the Pass Through Trustee under each Pass Through
Trust Agreement providing for, among other things, the issuance and sale of
certain equipment notes.
"Officer's Certificate" means, in respect of any party to the Participation
Agreement, a certificate signed by the Chairman, the President, any Vice
President (including those with varying ranks such as Executive, Senior,
Assistant or Staff Vice President), the Treasurer or the Secretary of such
party.
"Operative Agreements" means, collectively, the Participation Agreement,
the Trust Indenture, the initial Trust Indenture Supplement, the Bills of Sale,
and the Equipment Notes.
"Operative Indentures" means each of the indentures under which notes have
been issued and purchased by the Pass Through Trustees pursuant to the Note
Purchase Agreement.
"Optional Modification" is defined in Section 4.04(d) of the Trust
Indenture.
"Original Amount," with respect to an Equipment Note, means the stated
original principal amount of such Equipment Note and, with respect to all
Equipment Notes, means the aggregate stated original principal amounts of all
Equipment Notes.
"Owner Person" means Owner, any lessee, assignee, successor or other user
or person in possession of the Aircraft, Airframe or an Engine with or without
color of
A-11
right, or any Affiliate of any of the foregoing (excluding any Tax Indemnitee or
any related Tax Indemnitee with respect thereto, or any person using or claiming
any rights with respect to the Aircraft, Airframe or an Engine directly by or
through any of the persons in this parenthetical).
"Participation Agreement" means the Participation Agreement dated as of
________ __, among Owner, the Pass Through Trustees, the Subordination Agent and
Mortgagee.
"Parts" means all appliances, parts, components, instruments,
appurtenances, accessories, furnishings, seats and other equipment of whatever
nature (other than (a) Engines or engines, and (b) any Removable Part leased by
Owner from a third party or subject to a security interest granted to a third
party), that may from time to time be installed or incorporated in or attached
or appurtenant to the Airframe or any Engine.
"Pass Through Agreements" means the Pass Through Trust Agreements, the Note
Purchase Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Liquidity Facilities and the Fee Letters referred
to in Section 2.03 of each of the Liquidity Facilities, provided that no
amendment, modification or supplement to, or substitution or replacement of, any
such Fee Letter shall be effective for purposes of any obligation of Owner,
unless consented to by Owner.
"Pass Through Certificates" means the pass through certificates issued by
the Pass Through Trusts (and any other pass through certificates for which such
pass through certificates may be exchanged).
"Pass Through Trust" means each of the four separate pass through trusts
created under the Pass Through Trust Agreements.
"Pass Through Trust Agreements" means the Pass Through Trust Agreement
dated as of April 1, 1999 and the four Pass Through Trust Supplements by and
between the Owner and a Pass Through Trustee.
"Pass Through Trustee" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as trustee under each Pass Through Trust Agreement.
"Pass Through Trustee Agreements" means the Participation Agreement, the
Pass Through Trust Agreements, the Note Purchase Agreement, the Deposit
Agreements, the Escrow Agreements, and the Intercreditor Agreement.
"Paying Agent" means Wilmington Trust Company, as paying agent under each
of the Escrow Agreements.
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"Payment Date" means each January 2 and July 2, commencing on January 2,
2000.
"Payment Due Rate" means, with respect to (i) any payment made to a Note
Holder under any Series of Equipment Notes, the lesser of (a) the Debt Rate
applicable to such Series plus 2% and (b) the maximum rate permitted by
applicable law and (ii) any other payment made under any Operative Agreement to
any other Person, 9.59% per annum (computed on the basis of a year of 360 days
comprised of twelve 30-day months).
"Permitted Air Carrier" means (i) any manufacturer of airframes or aircraft
engines, or any Affiliate of a manufacturer of airframes or aircraft engines,
(ii) any Permitted Foreign Air Carrier, (iii) any person approved in writing by
Mortgagee or (iv) any U.S. Air Carrier.
"Permitted Country" means any country listed on Schedule 4 to the
Participation Agreement.
"Permitted Foreign Air Carrier" means any air carrier with its principal
executive offices in any Permitted Country and which is authorized to conduct
commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.
"Permitted Government Entity" means (i) the U.S. Government or (ii) any
Government Entity if the Aircraft is then registered under the laws of the
country of such Government Entity.
"Permitted Lease" means a lease permitted under Section 4.02(b) of the
Trust Indenture.
"Permitted Lessee" means the lessee under a Permitted Lease.
"Permitted Lien" means (a) the rights of Mortgagee under the Operative
Agreements, or of any Permitted Lessee under any Permitted Lease; (b) Liens
attributable to Mortgagee (both in its capacity as trustee under the Trust
Indenture and in its individual capacity); (c) the rights of others under
agreements or arrangements to the extent expressly permitted by the terms of
Section 4.02(b) or 4.04 of the Trust Indenture; (d) Liens of Taxes of Owner or
any Permitted Lessee (and their respective U.S. federal tax law consolidated
group), or Liens for Taxes of any Tax Indemnitee (and its U.S. federal tax law
consolidated group) for which Owner is obligated to indemnify such Tax
Indemnitee under any of the Operative Agreements, in any such case either not
yet due or being contested in good faith by appropriate proceedings so long as
such Liens and such proceedings do not involve any material risk of the sale,
forfeiture or loss of the Aircraft, the Airframe, or any Engine or the interest
of Mortgagee therein or impair the Lien of the Trust Indenture; (e)
materialmen's, mechanics', workers', repairers', employees' or other like Liens
arising in the ordi-
A-13
nary course of business for amounts the payment of which is either not yet
delinquent for more than 60 days or is being contested in good faith by
appropriate proceedings, so long as such Liens and such proceedings do not
involve any material risk of the sale, forfeiture or loss of the Aircraft, the
Airframe, or any Engine or the interest of Mortgagee therein or impair the Lien
of the Trust Indenture; (f) Liens arising out of any judgment or award against
Owner (or any Permitted Lessee), so long as such judgment shall, within 60 days
after the entry thereof, have been discharged or vacated, or execution thereof
stayed pending appeal or shall have been discharged, vacated or reversed within
60 days after the expiration of such stay, and so long as during any such 60-day
period there is not, or any such judgment or award does not involve, any
material risk of the sale, forfeiture or loss of the Aircraft, the Airframe, or
any Engine or the interest of Mortgagee therein or impair the Lien of the Trust
Indenture; and (g) any other Lien with respect to which Owner (or any Permitted
Lessee) shall have provided a bond, cash collateral or other security adequate
in the reasonable opinion of Mortgagee. Owner shall promptly take (or cause to
be taken) such action as may be necessary duly to discharge (by bonding or
otherwise) any Lien not excepted above if the same shall at any time arise in
respect of the Aircraft, the Airframe, any Engine or any Part so long as there
exists the Lien of this Trust Indenture.
"Persons" or "persons" means individuals, firms, partnerships, joint
ventures, trusts, trustees, Government Entities, organizations, associations,
corporations, government agencies, committees, departments, authorities and
other bodies, corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
"Plan" means any employee benefit plan within the meaning of Section 3(3)
of ERISA, or any plan within the meaning of Section 4975(e)(1) of the Code.
"Purchase Agreement" means the Purchase Agreement, dated as of June 6,
1997, between Airframe Manufacturer and Owner (including all exhibits thereto,
together with all letter agreements entered into that by their terms constitute
part of such Purchase Agreement), to the extent included in the Granting Clause
(2) of the Trust Indenture.
"QIB" is defined in Section 2.08 of the Trust Indenture.
"Removable Part" is defined in Section 4.04(d) of the Trust Indenture.
"Replacement Airframe" means any airframe substituted for the Airframe
pursuant to Article IV of the Trust Indenture.
"Replacement Closing Date" is defined in Section 4.05(c)(i) of the Trust
Indenture.
"Replacement Engine" means an engine substituted for an Engine pursuant to
Article IV of the Trust Indenture.
A-14
"SEC" means the Securities and Exchange Commission of the United States, or
any Government Entity succeeding to the functions of such Securities and
Exchange Commission.
"Section 1110" means 11 U.S.C. Section 1110 of the Bankruptcy Code or any
successor or analogous section of the federal bankruptcy law in effect from time
to time.
"Secured Obligations" is defined in Section 2.06 of the Trust Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security" means a "security" as defined in Section 2(l) of the Securities
Act.
"Senior Holder" is defined in Section 2.13(c) of the Trust Indenture.
"Series" means any of Series A-1, Series A-2, Series B, Series C or Series
D.
"Series A-1" or "Series A-1 Equipment Notes" means Equipment Notes issued
under the Trust Indenture and designated as "Series A-1" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series A-1."
"Series A-2" or "Series A-2 Equipment Notes" means Equipment Notes issued
under the Trust Indenture and designated as "Series A-2" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series A-2."
"Series B" or "Series B Equipment Notes" means Equipment Notes issued under
the Trust Indenture and designated as "Series B" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes issued under
the Trust Indenture and designated as "Series C" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes issued under
the Trust Indenture and designated as "Series D" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series D" (or, if the Series D are issued
after the Closing Date, as specified in an amendment to the Trust Indenture at
the time of issuance of the Series D).
A-15
"Similar Aircraft" means a Boeing Model 747-400 aircraft.
"Special Default" means (i) the failure by Owner to pay any amount of
principal of or interest on any Equipment Note when due or (ii) the occurrence
of any Default or Event of Default referred to in Section 5.01(e), (f) or (g) of
the Trust Indenture.
"Subordination Agent" means Wilmington Trust Company, as subordination
agent under the Intercreditor Agreement, or any successor thereto.
"Tax Indemnitee" means (a) WTC and Mortgagee, (b) each separate or
additional trustee appointed pursuant to the Trust Indenture, (c) each Note
Holder and (d) the respective successors, assigns, agents and servants of the
foregoing.
"Taxes" means all license, recording, documentary, registration and other
similar fees and all taxes, levies, imposts, duties, charges, assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority, together
with any penalties, additions to tax, fines or interest thereon or additions
thereto.
"Taxing Authority" means any federal, state or local government or other
taxing authority in the United States, any foreign government or any political
subdivision or taxing authority thereof, any international taxing authority or
any territory or possession of the United States or any taxing authority
thereof.
"Threshold Amount" is defined in Schedule 3 to the Participation Agreement.
"Transaction Expenses" means all costs and expenses incurred by Mortgagee
in connection with (a) the preparation, execution and delivery of the Operative
Agreements and the recording or filing of any documents, certificates or
instruments in accordance with any Operative Agreement, including, without
limitation, the FAA Filed Documents and the Financing Statements, (b) the
initial fee of Mortgagee under the Trust Indenture and (c) the reasonable fees
and disbursements of counsel for each Mortgagee and special counsel in Oklahoma
City, Oklahoma, in each case, in connection with the Closing.
"Transactions" means the transactions contemplated by the Participation
Agreement.
"Transfer" means the transfer, sale, assignment or other conveyance of all
or any interest in any property, right or interest.
"Transferee" means a person to which any Note Holder purports or intends to
Transfer any or all of its right, title or interest in an Equipment Note, as
described in Section 9 of the Participation Agreement.
A-16
"Trust" means the trust created by the Trust Indenture.
"Trust Indenture" means the Trust Indenture and Mortgage dated as of the
date of the Participation Agreement between Owner and Mortgagee.
"Trust Indenture Supplement" means a Trust Indenture and Mortgage
Supplement, substantially in the form of Exhibit A to the Trust Indenture, with
appropriate modifications to reflect the purpose for which it is being used.
"UCC" means the Uniform Commercial Code as in effect in any applicable
jurisdiction.
"United States" or "U.S." means the United States of America; provided that
for geographic purposes, "United States" means, in aggregate, the 50 states and
the District of Columbia of the United States of America.
"U.S. Air Carrier" means any United States air carrier that is a Citizen of
the United States holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to chapter 447 of title 49 of the United
States Code for aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the FAA Regulations, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provisions therefor or in the absence thereof.
"U.S. Government" means the federal government of the United States, or-any
instrumentality or agency thereof the obligations of which are guaranteed by the
full faith and credit of the federal government of the United States.
"U.S. Person" means any Person described in Section 7701(a)(30) of the
Code.
"Weighted Average Life to Maturity" means, with respect to any specified
Debt, at the time of the determination thereof the number of years obtained by
dividing the then Remaining Dollar-years of such Debt by the then outstanding
principal amount of such Debt. The term "Remaining Dollar-years" shall mean the
amount obtained by (1) multiplying the amount of each then-remaining principal
payment on such Debt by the number of years (calculated at the nearest
one-twelfth) that will elapse between the date of determination of the Weighted
Average Life to Maturity of such Debt and the date of such remaining principal
payment and (2) totaling all the products obtained in clause (1) above.
"Wet Lease" means any arrangement whereby Owner or a Permitted Lessee
agrees to furnish the Aircraft, Airframe or any Engine to a third party pursuant
to which the Aircraft, Airframe or Engine shall at all times be in the
operational control of Owner or
A-17
a Permitted Lessee, provided that Owner's obligations under the Trust Indenture
shall continue in full force and effect notwithstanding any such arrangement.
"WTC" means Wilmington Trust Company, a Delaware banking corporation, not
in its capacity as Mortgagee under the Trust Indenture, but in its individual
capacity.
A-18
ANNEX B
TO THE TRUST INDENTURE
INSURANCE
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference in Annex A to the Trust
Indenture.
A. Liability Insurance
1. Except as provided in Section A.2 below, Owner will carry or cause to be
carried at all times, at no expense to Mortgagee, comprehensive airline legal
liability (including, but not limited to passenger liability insurance for up to
ten non-revenue passengers, property damage, baggage liability, cargo and mail
liability, hangarkeeper's liability and contractual liability insurance) with
respect to the Aircraft, the Airframe and the Engines, which is (i) in an amount
not less than the greater of (x) the amount of comprehensive airline legal
liability insurance from time to time applicable to aircraft owned or leased and
operated by Owner of the same type and operating on similar routes as the
Aircraft and (y) the Minimum Liability Insurance Amount per occurrence; (ii) of
the type and covering the same risks as from time to time applicable to aircraft
operated by Owner of the same type as the Aircraft; and (iii) maintained in
effect with insurers of nationally or internationally recognized responsibility
(such insurers being referred to herein as "Approved Insurers").
2. During any period that the Aircraft is on the ground and not in
operation, Owner may carry or cause to be carried, in lieu of the insurance
required by Section A.1 above, insurance otherwise conforming with the
provisions of said Section A.1 except that (i) the amounts of coverage shall not
be required to exceed the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or leased and operated
by Owner of the same type as the Aircraft which are on the ground and not in
operation and (ii) the scope of the risks covered and the type of insurance
shall be the same as from time to time shall be applicable to aircraft owned or
leased and operated by Owner of the same type which are on the ground and not in
operation.
▇. ▇▇▇▇ Insurance
3. Except as provided in Section B.2 below, Owner will carry or cause to be
carried at all times, at no expense to Mortgagee, with Approved Insurers
"all-risk" ground and flight aircraft hull insurance covering each Aircraft
(including the Engines when they are installed on the Airframe or any other
airframe) which is of the type as from time to time applicable to aircraft owned
by Owner of the same type as the Aircraft for an amount denominated in United
States Dollars not less than the unpaid Original Amount together with six months
of interest accrued thereon (the "Debt Balance").
B-1
Any policies of insurance carried in accordance with this Section B.1
covering the Aircraft and any policies taken out in substitution or replacement
for any such policies (i) shall name Mortgagee as exclusive loss payee for any
proceeds to be paid under such policies up to an amount equal to the Debt
Balance and (ii) shall provide that (A) in the event of a loss involving
proceeds in excess of the Threshold Amount, the proceeds in respect of such loss
up to an amount equal to the Debt Balance shall be payable to the Mortgagee,
except in the case of a loss with respect to an Engine installed on an airframe
other than the Airframe, in which case Owner (or any Permitted Lessee) shall
endeavor to arrange for any payment of insurance proceeds in respect of such
loss to be held for the account of the Mortgagee whether such payment is made to
Owner (or any Permitted Lessee) or any third party, it being understood and
agreed that in the case of any payment to Mortgagee otherwise than in respect of
an Event of Loss, the Mortgagee shall, upon receipt of evidence satisfactory to
it that the damage giving rise to such payment shall have been repaired or that
such payment shall then be required to pay for repairs then being made, pay the
amount of such payment to Owner or its order, and (B) the entire amount of any
loss involving proceeds of the Threshold Amount or less or the amount of any
proceeds of any loss in excess of the Debt Balance shall be paid to Owner or its
order unless an Event of Default shall have occurred and be continuing and the
insurers have been notified thereof by the Mortgagee. In the case of a loss with
respect to an engine (other than an Engine) installed on the Airframe, Mortgagee
shall hold any payment to it of any insurance proceeds in respect of such loss
for the account of Owner or any other third party that is entitled to receive
such proceeds.
4. During any period that the Aircraft is on the ground and not in
operation. Owner may carry or cause to be carried, in lieu of the insurance
required by Section B.1 above, insurance otherwise conforming with the
provisions of said Section B.1 except that the scope of the risks and the type
of insurance shall be the same as from time to time applicable to aircraft owned
by Owner of the same type similarly on the ground and not in operation, provided
that Owner shall maintain insurance against risk of loss or damage to the
Aircraft in an amount equal to the Debt Balance during such period that the
Aircraft is on the ground and not in operation.
C. War-Risk, Hijacking and Allied Perils Insurance
If Owner (or any Permitted Lessee) shall at any time operate or propose to
operate the Aircraft, Airframe or any Engine (i) in any area of recognized
hostilities or (ii) on international routes and war-risk, hijacking or allied
perils insurance is maintained by Owner (or any Permitted Lessee) with respect
to other aircraft owned or operated by Owner (or any Permitted Lessee) on such
routes or in such areas, Owner shall maintain or cause to be maintained
war-risk, hijacking and related perils insurance of substantially the same type
carried by major United States commercial air cargo carriers operating the same
or comparable models of aircraft on similar routes or in such areas and in no
event in an amount less than the unpaid Original Amount.
B-2
D. General Provisions
Any policies of insurance carried in accordance with Sections A, B and C,
including any policies taken out in substitution or replacement for such
policies:
(i) shall name Mortgagee, each Note Holder and each Liquidity
Provider as an additional insured (collectively, the "Additional
Insureds"), as their interests may appear.
(ii) shall apply worldwide and have no territorial restrictions or
limitations (except, in the case of war-risk, hijacking and
related perils insurance, as otherwise permitted under Section
C);
(iii) shall provide that, in respect of the interests of the
Additional Insureds in such policies, the insurance shall not be
invalidated or impaired by any act or omission (including
misrepresentation and nondisclosure) by Owner (or any Permitted
Lessee) or any other Person (including, without limitation, use
for illegal purposes of the Aircraft or any Engine) and shall
insure the Additional Insureds regardless of any breach or
violation of any representation, warranty, declaration, term or
condition contained in such policies by Owner (or any Permitted
Lessee);
(iv) shall provide that, if the insurers cancel such insurance for any
reason whatsoever, or if the same is allowed to lapse for
nonpayment of premium, or if any material change is made in the
insurance which adversely affects the interest of any of the
Additional Insureds, such cancellation, lapse or change shall not
be effective as to the Additional Insureds for 30 days (10 days
in the case of non-payment of premium and seven days in the case
of war-risk, hijacking and allied perils insurance) after receipt
by the Additional Insureds of written notice by such insurers of
such cancellation, lapse or change, provided that if any notice
period specified above is not reasonably obtainable, such
policies shall provide for as long a period of prior notice as
shall then be reasonably obtainable; provided, further, that
changes that are substantially the same as contained in the
policies of other major U.S. air cargo carriers shall not be
considered material;
(v) shall waive any rights of recourse, subrogation, setoff
(including for unpaid premiums), recoupment, counterclaim or
other deduction, whether by attachment or otherwise, against each
Additional Insured;
(vi) shall be primary without right of contribution from any other
insurance that may be available to any Additional Insured;
B-3
(vii) shall provide that all of the liability insurance provisions
thereof, except the limits of liability, shall operate in all
respects as if a separate policy had been issued covering each
party insured thereunder:
(viii) shall provide that none of the Additional Insureds shall be
liable for any insurance premium; and
(ix) shall contain a 50/50% Clause per Lloyd's Aviation Underwriters'
Association Standard Policy Form AVS 103.
E. Reports and Certificates; Other Information
On or prior to the Delivery Date and on or prior to each renewal date of
the insurance policies required hereunder, Owner will furnish or cause to be
furnished to Mortgagee insurance certificates describing in reasonable detail
the insurance maintained by Owner hereunder and a report, signed by Owner's
regularly retained independent insurance broker (the "Insurance Broker"),
stating the opinion of such Insurance Broker that (a) all premiums in connection
with the insurance then due have been paid and (b) such insurance complies with
the terms of this Annex B. To the extent such agreement is reasonably
obtainable, Owner will also cause the Insurance Broker to agree to advise
Mortgagee in writing of any default in the payment of any premium and of any
other act or omission on the part of Owner of which it has knowledge and which
might invalidate or render unenforceable, in whole or in part, any insurance on
the Aircraft or Engines or cause the cancellation or termination of such
insurance, and to advise Mortgagee in writing at least 30 days (ten days in the
case of non-payment of premium and seven days in the case of war-risk and allied
perils coverage or such shorter period as may be available in the international
insurance market, as the case may be) prior to the cancellation, lapse or
material adverse change of any insurance maintained pursuant to this Annex B.
F. Right to Pay Premiums
The Additional Insureds shall have the rights but not the obligations of a
named insured. None of Mortgagee and the other Additional Insureds shall have
any obligation to pay any premium, commission, assessment or call due on any
such insurance (including reinsurance). Notwithstanding the foregoing, in the
event of cancellation of any insurance due to the nonpayment of premiums,
Mortgagee shall have the option, in its sole discretion, to pay any such premium
in respect of the Aircraft that is due in respect of the coverage pursuant to
this Trust Indenture and to maintain such coverage, as Mortgagee may require,
until the scheduled expiry date of such insurance and, in such event, Owner
shall, upon demand, reimburse Mortgagee for amounts so paid by them.
B-4
G. Deductibles; Self-insurance
Owner may self-insure by way of deductible, premium adjustment or franchise
provisions or otherwise (including, with respect to insurance maintained
pursuant to Section B, insuring for a maximum amount which is less than the Debt
Balance) in the insurance covering the risks required to be insured against
pursuant to Section 4.06 and this Annex B under a program generally applicable
to all aircraft in Owner's fleet, but in no case shall the aggregate amount of
self-insurance in regard to Section 4.06 and this Annex B exceed the lesser of
(a) 50% of the largest replacement value of any single aircraft in Owner's fleet
and (b) 1 1/2% of the average aggregate insurable value (during the preceding
policy year) of all aircraft (including, without limitation, the Aircraft) on
which Owner carries insurance, unless an insurance broker of national standing
shall certify that the standard among other major U.S. air cargo carriers is a
higher level of self-insurance, in which case Owner may self-insure to such
higher level. In addition, Owner (and any Permitted Lessee) may self insure to
the extent of any applicable deductible per aircraft that does not exceed
industry standards for major U.S. air cargo carriers.
B-5
EXHIBIT A
TO
TRUST INDENTURE
TRUST INDENTURE AND MORTGAGE SUPPLEMENT
This TRUST INDENTURE AND MORTGAGE SUPPLEMENT NO. 1, dated , (herein called
this "Trust Indenture Supplement") of ATLAS AIR, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage, dated as of , (as amended and
supplemented to the date hereof, the "Trust Indenture") between the Owner and
Wilmington Trust Company, as Mortgagee (the "Mortgagee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof,
which shall particularly describe the Aircraft, and shall specifically mortgage
such Aircraft to the Mortgagee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines described
below, and a counterpart of the Trust Indenture is attached hereto and made a
part hereof and this Trust Indenture Supplement, together with such counterpart
of the Trust Indenture, is being filed for recordation on the date hereof with
the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner
hereby confirms that the Lien of the Trust Indenture on the Collateral covers
all of Owner's right, title and interest in and to the following described
property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------ -------------
The Boeing Company 747-47UF N MC
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in, or attached to, said airframe.
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AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated take-off
horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
General Electric CF6-80C2B5FG04
General Electric CF6-80C2B5FG04
General Electric CF6-80C2B5FG04
General Electric CF6-80C2B5FG04
together with all of Owner's right, title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.
Together with all of Owner's right, title and interest in and to (a) all
Parts of whatever nature, which from time to time are included within the
definition of "Airframe" or "Engine," whether now owned or hereafter acquired,
including all substitutions, renewals and replacements of and additions,
improvements. accessions and accumulations to the Airframe and Engines (other
than additions, improvements, accessions and accumulations which constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment excluded from the definition of Parts) and (b) all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, its successors and assigns, in trust for the equal and proportionate
benefit and security of the Note Holders and the Indenture Indemnitees, except
as provided in Section 2.13 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Equipment Note over any other by
reason of priority of time of issue, sale, negotiation, date of maturity thereof
or otherwise for any reason whatsoever, and for the uses and purposes and
subject to the terms and provisions set forth in the Trust Indenture.
This Trust Indenture Supplement shall be construed as supplemental to the
Trust Indenture and shall form a part thereof. The Trust Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft referred to
in this Trust Indenture Supplement has been delivered to the Owner and is
included in
-3-
the property of the Owner subject to the pledge and mortgage thereof
under the Trust Indenture.
-4-
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture Supplement to
be duly executed by one of its officers, thereunto duly authorized, on the day
and year first above written.
ATLAS AIR, INC.
By:
---------------------------------
Name:
Title:
SCHEDULE I
Original Amount Interest Rate
Series A-1: %
Series A-2: %
Series B: %
Series C: %
Series D %
Maximum Aggregate
Original Amount:
-2-
Trust Indenture and Mortgage
Equipment Note Amortization
SERIES A-1
Percentage of Original
Payment Date Amount to Be Paid
-3-
Trust Indenture and Mortgage
Equipment Note Amortization
SERIES A-2
Percentage of Original
Payment Date Amount to Be Paid
-4-
SERIES B
Percentage of Original
Payment Date Amount to Be Paid
-5-
SERIES C
Percentage of Original
Payment Date Amount to Be Paid
-6-
SERIES D
Percentage of Original
Payment Date Amount to Be Paid
ANNEX B
TO THE TRUST INDENTURE