================================================================================
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1999 _]
Dated as of [_______________]
Between
NORTHWEST AIRLINES, INC.,
Owner
and
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Indenture Trustee,
Indenture Trustee
================================================================================
SECURED CERTIFICATES COVERING
ONE BOEING 747-451 AIRCRAFT
BEARING U.S. REGISTRATION ▇▇▇▇ N[______]
OWNED BY NORTHWEST AIRLINES, INC.
================================================================================
TABLE OF CONTENTS
Page
----
GRANTING CLAUSE................................................................1
ARTICLE I DEFINITIONS..........................................................4
ARTICLE II THE SECURED CERTIFICATES............................................4
SECTION 2.01. Form of Secured Certificates....................................4
SECTION 2.02. Issuance and Terms of Secured Certificates......................9
SECTION 2.03. [Intentionally Omitted]........................................11
SECTION 2.04. Method of Payment..............................................11
SECTION 2.05. Application of Payments........................................13
SECTION 2.06. Termination of Interest in Collateral..........................14
SECTION 2.07. Registration, Transfer and Exchange of Secured Certificates....14
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured Certificates......16
SECTION 2.09. Payment of Expenses on Transfer; Cancellation..................16
SECTION 2.10. Mandatory Redemptions of Secured Certificates..................16
SECTION 2.11. Voluntary Redemptions of Secured Certificates..................17
SECTION 2.12. Redemptions; Notice of Redemption..............................17
SECTION 2.13. Assumption of Secured Certificates.............................18
SECTION 2.14. [Intentionally Omitted]........................................18
SECTION 2.15. Subordination..................................................18
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS.................19
SECTION 3.01. Basic Distributions............................................19
SECTION 3.02. Event of Loss; Replacement; Optional Redemption................20
SECTION 3.03. Payments After Event of Default................................21
SECTION 3.04. Certain Payments...............................................23
SECTION 3.05. Other Payments.................................................23
SECTION 3.06. Payments to the Owner..........................................23
SECTION 3.07. Application of Payments Under Guarantee........................24
ARTICLE IV EVENTS OF DEFAULT, REMEDIES OF INDENTURE TRUSTEE...................24
SECTION 4.01. Event of Default...............................................24
SECTION 4.02. Remedies.......................................................26
SECTION 4.03. Return of Aircraft, Etc........................................28
SECTION 4.04. Remedies Cumulative............................................29
SECTION 4.05. Discontinuance of Proceedings..................................29
SECTION 4.06. Waiver of Past Defaults........................................29
-i-
Page
----
SECTION 4.07. Appointment of Receiver........................................30
SECTION 4.08. Indenture Trustee Authorized to Execute Bills of Sale, Etc.....30
SECTION 4.09. Rights of Certificate Holders to Receive Payment...............30
ARTICLE V DUTIES OF THE INDENTURE TRUSTEE.....................................31
SECTION 5.01. Notice of Event of Default.....................................31
SECTION 5.02. Action upon Instructions; Certain Rights and Limitations.......31
SECTION 5.03. Indemnification................................................32
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions.................................................32
SECTION 5.05. No Action Except Under Trust Indenture or Instructions.........33
SECTION 5.06. Investment of Amounts Held by Indenture Trustee................33
ARTICLE VI THE INDENTURE TRUSTEE..............................................33
SECTION 6.01. Acceptance of Trusts and Duties................................33
SECTION 6.02. Absence of Duties..............................................34
SECTION 6.03. No Representations or Warranties as to Aircraft or Documents...34
SECTION 6.04. No Segregation of Monies; No Interest..........................35
SECTION 6.05. Reliance; Agreements; Advice of Counsel........................35
SECTION 6.06. Compensation...................................................36
SECTION 6.07. Instructions from Certificate Holders..........................36
ARTICLE VII COVENANTS OF THE OWNER............................................36
SECTION 7.01. Liens..........................................................36
SECTION 7.02. Registration, Maintenance and Operation; Possession and
Leases; Insignia.............................................37
SECTION 7.03. Replacement and Pooling of Parts; Alterations, Modifications
and Additions................................................42
SECTION 7.04. Insurance......................................................45
SECTION 7.05. Inspection.....................................................50
SECTION 7.06. Loss, Destruction, Requisition, etc............................50
SECTION 7.07. Interests in the Purchase Agreement............................56
ARTICLE VIII INDEMNIFICATION..................................................58
SECTION 8.01. Scope of Indemnification.......................................58
ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES....................................59
SECTION 9.01. Resignation of Indenture Trustee; Appointment of Successor.....59
SECTION 9.02. Appointment of Additional and Separate Trustees................61
ARTICLE X SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER
DOCUMENTS.........................................................62
-ii-
Page
----
SECTION 10.01. Instructions of Majority; Limitations.........................62
SECTION 10.02. Indenture Trustees Protected..................................64
SECTION 10.03. Documents Mailed to Certificate Holders.......................64
SECTION 10.04. No Request Necessary for Trust Indenture Supplement...........64
ARTICLE XI MISCELLANEOUS......................................................64
SECTION 11.01. Termination of Trust Indenture................................64
SECTION 11.02. No Legal Title to Collateral in Certificate Holders...........65
SECTION 11.03. Sale of Aircraft by Indenture Trustee Is Binding..............65
SECTION 11.04. Trust Indenture for Benefit of the Owner, Indenture Trustee
and Certificate Holders.....................................65
SECTION 11.05. Notices.......................................................65
SECTION 11.06. Severability..................................................66
SECTION 11.07. No Oral Modification or Continuing Waivers....................66
SECTION 11.08. Successors and Assigns........................................66
SECTION 11.09. Headings......................................................66
SECTION 11.10. Normal Commercial Relations...................................67
SECTION 11.11. Governing Law; Counterpart Form...............................67
SECTION 11.12. Voting By Certificate Holders.................................67
SECTION 11.13. Bankruptcy....................................................67
ANNEX A Definitions
EXHIBIT A Form of Trust Indenture Supplement
SCHEDULE I Secured Certificates Amortization
SCHEDULE II Pass Through Trust Agreements
SCHEDULE III Schedule of Permitted Lessees
-iii-
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1999 _]
TRUST INDENTURE AND SECURITY AGREEMENT [NW 1999 _], dated as of
[_______________] ("Trust Indenture") between NORTHWEST AIRLINES, INC., a
Minnesota corporation (the "Owner") and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not in its individual capacity, except as expressly
stated herein, but solely as Indenture Trustee hereunder (together with its
successors hereunder, the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, all capitalized terms used herein shall have the respective
meanings referred to in Article I hereof;
WHEREAS, the parties desire by this Trust Indenture, among other
things, (i) to provide for the issuance by the Owner to the Pass Through
Trustees (or their designee) of the Secured Certificates specified on Schedule I
hereto (it being understood that not all Series may be issued, in which case,
references in this Trust Indenture to Series not issued shall be disregarded)
and (ii) to provide for the assignment, mortgage and pledge by the Owner to the
Indenture Trustee, 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 Indenture Trustee, for the ratable
benefit and security of the Certificate Holders, subject to Section 2.15 and
Article III hereof;
WHEREAS, all things have been done to make the Secured Certificates,
when executed by the Owner and authenticated and delivered by the Indenture
Trustee hereunder, the valid, binding and enforceable obligations of the Owner;
and
WHEREAS, all things necessary to make this 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 SECURITY AGREEMENT
WITNESSETH, that, to secure the prompt payment of the Principal Amount of,
interest on, Make-Whole Amount, if any, and all other amounts due with respect
to, all Secured Certificates from time to time outstanding hereunder and the
performance and observance by the Owner of all the agreements, covenants and
provisions herein and in the
Participation Agreement and the Secured Certificates contained, for the benefit
of the Certificate Holders and the prompt payment of all amounts from time to
time owing hereunder and under the Participation Agreement to the Certificate
Holders by the Owner and for the uses and purposes and subject to the terms and
provisions hereof, and in consideration of the premises and of the covenants
herein contained, and of the acceptance of the Secured Certificates by the
holders thereof, and for other good and valuable consideration the receipt and
adequacy whereof are hereby acknowledged, the Owner has granted, bargained,
sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and
does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors in trust and assigns, for
the security and benefit of the Certificate Holders, 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, (including
all property hereafter specifically subjected to the Lien of this Trust
Indenture by the Trust Indenture Supplement or any mortgage supplemental
hereto), to wit:
(1) the Aircraft (including the Airframe and the Engines and all
replacements thereof and substitutions therefor as provided herein), all as more
particularly described in the Trust Indenture Supplement executed and delivered
with respect to the Aircraft or any such replacements or substitutions therefor,
as provided in this Trust Indenture;
(2) the Contract Rights, but subject always to the provisions of
Section 7.07 hereof;
(3) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under Section 7.04
hereof, but excluding any insurance maintained by the Owner and not required
under Section 7.04 hereof;
(4) all monies and securities from time to time deposited or
required to be deposited with the Indenture Trustee pursuant to any terms of
this Indenture or required hereby to be held by the Indenture Trustee hereunder;
and
(5) all proceeds of the foregoing.
SUBJECT TO all of the terms and conditions of this Trust Indenture
and the rights of the Owner hereunder.
Concurrently with the delivery hereof, the Owner is delivering to
the Indenture Trustee executed copies of the Participation Agreement and the
Consent and Agreement.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, and its successors and assigns, in trust for the benefit and
security of the Certificate Holders, except as provided in Section 2.15 and
Article III hereof without any preference, distinction or priority of any one
Secured Certificate over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason
-2-
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 each of the
Indenture Agreements to which it is a party 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 Indenture Trustee and
the Certificate Holders shall have no obligation or liability under the
Indenture Agreements, by reason of or arising out of the assignment hereunder,
nor shall the Indenture Trustee or the Certificate Holders be required or
obligated in any manner to perform or fulfill any obligations of the Owner under
or pursuant to any of the Indenture Agreements to which it is a party, or,
except as herein expressly provided, to make any payment, or to make any inquiry
as to the nature or sufficiency of any payment received by it, or present or
file any claim, or take any action to collect or enforce the payment of any
amounts which may have been assigned to it or to which it may be entitled at any
time or times.
The Owner does hereby constitute the Indenture Trustee 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
Indenture Trustee may deem to be necessary or advisable in the premises. Without
limiting the generality of the foregoing, but subject to the rights of the Owner
hereunder, during the continuance of any Event of Default under this Trust
Indenture, the Indenture Trustee shall have the right under such power of
attorney to accept any offer in connection with the exercise of remedies as set
forth herein of any purchaser to purchase the Airframe and Engines and upon such
purchase to execute and deliver in the name of and on behalf of the Owner an
appropriate ▇▇▇▇ of sale and other instruments of transfer relating to the
Airframe and Engines, when purchased by such purchaser, and to perform all other
necessary or appropriate acts with respect to any such purchase, and in its
discretion to file any claim or take any other action or proceedings, either in
its own name or in the name of the Owner or otherwise, which the Indenture
Trustee may deem necessary or appropriate to protect and preserve the right,
title and interest of the Indenture Trustee in and to such other sums and the
security intended to be afforded hereby; provided, however, that no action of
the Indenture Trustee pursuant to this paragraph shall increase the obligations
or liabilities of the Owner to any Person beyond those obligations and
liabilities specifically set forth in this Trust Indenture and in the other
Operative Documents.
The Owner agrees that at any time and from time to time, upon the
written request of the Indenture Trustee, the Owner will promptly and duly
execute and deliver or cause to be duly executed and delivered any and all such
further instruments and documents as
-3-
the Indenture Trustee may reasonably deem necessary or desirable to perfect,
preserve or protect the mortgage, security interests and assignments created or
intended to be created hereby or to obtain for the Indenture Trustee the full
benefits of the assignment hereunder and of the rights and powers herein
granted.
The Owner does hereby warrant and represent that it has not assigned
or pledged, and hereby covenants and agrees that it will not assign or pledge,
so long as the assignment hereunder shall remain in effect, and the Lien hereof
shall not have been released pursuant to Section 11.01 hereof, any of its right,
title or interest hereby assigned, to anyone other than the Indenture Trustee
and its predecessor(s) in this transaction.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined herein or the context requires otherwise,
capitalized terms utilized but not defined herein shall have the respective
meanings set forth or incorporated by reference in Annex A hereto for all
purposes of the Trust Indenture.
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. Form of Secured Certificates.
The Secured Certificates shall be substantially in the form set
forth below:
THIS SECURED CERTIFICATE 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 SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER
REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
SUCH REGISTRATIONS IS AVAILABLE.
NORTHWEST AIRLINES, INC. SERIES [___] SECURED CERTIFICATE DUE [_____] ISSUED IN
CONNECTION WITH THE BOEING 747-451 AIRCRAFT BEARING UNITED STATES REGISTRATION
NUMBER N[_____].
No.____ Date: [________]
$__________________
-4-
INTEREST RATE MATURITY DATE
[________]
[________,_______]
NORTHWEST AIRLINES, INC. (the "Owner"), hereby promises to pay to
___________, or the registered assignee thereof, the principal sum of $_________
(the "Principal Amount"), together with interest on the amount of the Principal
Amount remaining unpaid from time to time (calculated on the basis of a year of
360 days comprised of twelve 30-day months) from the date hereof until paid in
full at a rate per annum equal to the Interest Rate indicated above. The
Principal Amount of this Secured Certificate shall be payable in installments on
the dates set forth in Schedule I hereto equal to the corresponding percentage
of the Principal Amount of this Secured Certificate set forth in Schedule I
hereto. Accrued but unpaid interest shall be due and payable in semi-annual
installments commencing [February/August 1, _____], and thereafter on [August 1]
and [February 1] of each year, to and including [____________]. Notwithstanding
the foregoing, the final payment made on this Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, this Secured
Certificate. Notwithstanding anything to the contrary contained herein, if any
date on which a payment under this Secured Certificate 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 Security Agreement [NW 1999 _], dated as of [_______________],
between the Owner and State Street Bank and Trust Company (the "Indenture
Trustee"), as the same may be amended or supplemented from time to time. All
other capitalized terms used in this Secured Certificate and not defined herein
shall have the respective meanings assigned in the Trust Indenture.
This Secured Certificate shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
There shall be maintained a Secured Certificate Register for the
purpose of registering transfers and exchanges of Secured Certificates at the
Corporate Trust Office of the Indenture Trustee or at the office of any
successor in the manner provided in Section 2.07 of the Trust Indenture.
The Principal Amount and interest and other amounts due hereunder
shall be payable in Dollars in immediately available funds at the Corporate
Trust Office of the Indenture Trustee, or as otherwise provided in the Trust
Indenture. Each such payment shall
-5-
be made on the date such payment is due and without any presentment or surrender
of this Secured Certificate, except that in the case of any final payment with
respect to this Secured Certificate, the Secured Certificate shall be
surrendered promptly thereafter to the Indenture Trustee for cancellation.
The holder hereof, by its acceptance of this Secured Certificate,
agrees that, except as provided in the Trust Indenture, each payment received by
it hereunder shall be applied, first, to the payment of accrued interest on this
Secured Certificate (as well as any interest on any overdue Principal 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 Principal Amount of this Secured Certificate 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 Principal Amount of this Secured
Certificate remaining unpaid in the inverse order of their normal maturity.
This Secured Certificate is one of the Secured Certificates 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
Indenture Trustee as security, in part, for the Secured Certificates. The
provisions of this Secured Certificate are subject to the Trust Indenture.
Reference is hereby made to the Trust Indenture and the Participation Agreement
for a complete statement of the rights and obligations of the holder of, and the
nature and extent of the security for, this Secured Certificate and the rights
and obligations of the holders of, and the nature and extent of the security
for, any other Secured Certificates 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 and the Participation Agreement each holder hereof agrees by its
acceptance of this Secured Certificate.
As provided in the Trust Indenture and subject to certain
limitations therein set forth, this Secured Certificate is exchangeable for a
like aggregate Principal Amount of Secured Certificates of different authorized
denominations, as requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this
Secured Certificate, the Owner and the Indenture Trustee shall treat the person
in whose name this Secured Certificate is registered as the owner hereof for all
purposes whether or not this Secured Certificate be overdue, and neither of the
Owner nor the Indenture Trustee shall be affected by notice to the contrary.
This Secured Certificate is subject to redemption as provided in
Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by an owner trustee as
provided in Section 2.13 of the Trust Indenture.
[The indebtedness evidenced by this Secured Certificate is, to the
extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the
-6-
prior payment in full of the Secured Obligations (as defined in the Trust
Indenture) in respect of [Series A Secured Certificates](1) [Series A and Series
B Secured Certificates](2), and this Secured Certificate is issued subject to
such provisions. The Certificate Holder of this Secured Certificate, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Indenture Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination as provided
in the Trust Indenture and (c) appoints the Indenture Trustee his
attorney-in-fact for such purpose.]**
Unless the certificate of authentication hereon has been executed by
or on behalf of the Indenture Trustee by manual signature, this Secured
Certificate shall not be entitled to any benefit under the Trust Indenture or be
valid or obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
----------
(1) To be inserted in the case of a Series B Secured Certificate.
(2) To be inserted in the case of a Series C Secured Certificate.
** To be inserted for each Secured Certificate other than any Series A
Secured Certificate.
-7-
IN WITNESS WHEREOF, the Owner has caused this Secured Certificate to
be executed in its corporate name by its officer thereunto duly authorized on
the date hereof.
NORTHWEST AIRLINES, INC.,
By ______________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity but
solely as Indenture Trustee
By ______________________________________
Name:
Title:
-8-
SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
Percentage of
Principal Amount
Payment Date to be Paid
------------------------ ------------------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Secured Certificates.
The Secured Certificates shall be dated the date of issuance
thereof, shall be issued in [three] separate series consisting of Series A,
Series B and Series C and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto. On the date hereof, each Secured
Certificate shall be issued to the Pass Through Trustees (or their designee)
under the Pass Through Agreements as set forth in Schedule II hereto in
connection therewith. The Secured Certificates shall be issued in registered
form only. The Secured Certificates shall be issued in denominations of $1,000
and integral multiples thereof, except that one Secured Certificate of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on [February/August 1, ____], and on each [August 1] and
[February 1] thereafter until maturity. The Principal Amount of each Secured
Certificate shall be payable on the dates and in the installments equal to the
corresponding percentage of the Principal Amount as set forth in Schedule I
hereto which shall be attached as Schedule I to the Secured Certificates.
Notwithstanding the foregoing, the final payment made under each Secured
Certificate shall be in an amount sufficient to discharge in full the unpaid
Principal Amount and all accrued and unpaid interest on, and any other amounts
due under, such Secured Certificate. Each Secured Certificate shall bear
interest at the Past Due Rate (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) on any part of the Principal Amount,
Make-Whole Amount, if any, and to the extent permitted by applicable law,
interest and any other amounts payable thereunder not paid when due for any
period during which the same shall be overdue, in each case for the period the
same is overdue. Amounts shall be overdue if not paid when due (whether at
stated maturity, by acceleration or otherwise). Notwithstanding anything to the
contrary contained herein, if any date on which a payment under any Secured
Certificate becomes due and payable is not a Business Day then such payment
shall not be made on such scheduled date but
-9-
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 Indenture Trustee for distribution in
accordance with Section 3.04 hereof Owner's pro rata share of all amounts owed
to the Liquidity Provider by the Subordination Agent under each Liquidity
Facility other than amounts due as (i) repayments of the principal of advances
thereunder, (ii) interest on Interest Drawings, Final Drawings, and Applied
Downgrade Advances and Applied Non-Extension Advances (as defined in the
Liquidity Facilities) under any Liquidity Facility except to the extent included
in Net Interest and Related Charges, and (iii) fees payable to the Liquidity
Provider payable (whether or not in fact paid) under Section 7(a) of the Note
Purchase Agreement (as originally in effect or amended). As used in this
Section, "Owner's pro rata share" means as of any time:
(A) with respect to all amounts other than Net Interest and Related
Charges, a fraction the numerator of which is the aggregate principal
balance then outstanding of the Secured Certificates and the denominator
of which is the aggregate principal balance then outstanding of all
Equipment Notes, plus
(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default under any Secured Certificate a fraction,
the numerator of which is the aggregate principal balance then outstanding
of the Secured Certificates and the denominator of which is the aggregate
principal balance then outstanding of all Equipment Notes issued under
Indentures under which there exists a Payment Default or (y) at all other
times, zero.
As used in this Section, "Net Interest and Related Charges" means the sum of (i)
the amount, if any, by which interest payable to the Liquidity Provider on any
Interest Drawing, Final Drawing, Applied Downgrade Advance and/or Applied
Non-Extension Advance (as defined in the Liquidity Facilities) exceeds the
amount which would be payable if such drawings bore interest at the Designated
Interest Rate plus (ii) any amounts payable under Section 3.1, Section 3.2,
Section 3.3 or Section 7.7 of each Liquidity Facility (or similar provisions of
any succeeding Liquidity Facility) which result from any Interest Drawing, Final
Drawing, Applied Downgrade Advance or Applied Non-Extension Advance (as defined
in the Liquidity Facilities). As used in this Section "Designated Interest Rate"
means the weighted average Past Due Rate (as defined in the applicable
Indentures) except with respect to that portion of any Final Drawing (or Applied
Downgrade Advance or Applied Non-Extension Advance which becomes a Final
Drawing) which remains in a Cash Collateral Account, Designated Interest Rate
means the weighted average Investment Earnings of funds in the Cash Collateral
Accounts. As used in this Section, a Payment Default when used in connection
with a Secured Certificate or Equipment Note means a default in the payment of
principal thereof or interest thereon which has not been cured other than solely
because of acceleration. The following terms are used in this Section as defined
in the Intercreditor Agreement without regard to any amendment, modification or
supplement thereto after the Closing Date: Cash Collateral
-10-
Accounts, Equipment Notes, Final Drawing, Indentures, Interest Drawing and
Investment Earnings.
The Secured Certificates shall be executed on behalf of the Owner by
its President or one of its Vice Presidents, its Treasurer or Assistant
Secretaries or other authorized officer. Secured Certificates 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
Secured Certificates or did not hold such offices at the respective dates of
such Secured Certificates. The Owner may from time to time execute and deliver
Secured Certificates with respect to the Aircraft to the Indenture Trustee for
authentication upon original issue and such Secured Certificates shall thereupon
be authenticated and delivered by the Indenture Trustee upon the written request
of the Owner signed by a Vice President, its Treasurer or other authorized
officer of the Owner; provided, however, that each such request shall specify
the aggregate Principal Amount of all Secured Certificates to be authenticated
hereunder on original issue with respect to the Aircraft. No Secured Certificate
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 Secured
Certificate a certificate of authentication in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized officers and such certificate upon any Secured Certificates shall be
conclusive evidence, and the only evidence, that such Secured Certificate has
been duly authenticated and delivered hereunder.
SECTION 2.03. [Intentionally Omitted].
SECTION 2.04. Method of Payment.
(a) The Principal Amount of, interest on, Make-Whole Amount, if any,
and other amounts due under each Secured Certificate or hereunder will be
payable in Dollars by wire transfer of immediately available funds not later
than 12:00 noon, New York City time, on the due date of payment to the Indenture
Trustee at the Corporate Trust Office for distribution among the Certificate
Holders in the manner provided herein. The Owner shall not have any
responsibility for the distribution of such payment to any Certificate Holder.
Notwithstanding the foregoing or any provision in any Secured Certificate to the
contrary, the Indenture Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by any Certificate Holder (with a copy to the
Owner), all amounts paid by the Owner hereunder and under such holder's Secured
Certificate or Secured Certificates to such holder or a nominee therefor
(including all amounts distributed pursuant to Article III of this Trust
Indenture) by transferring, or causing to be transferred, by wire transfer of
immediately available funds in Dollars, prior to 2:00 p.m., New York City time,
on the due date of payment, to an account maintained by such holder with a bank
located in the continental United States the amount to be distributed to such
holder, for credit to the account of such holder maintained at such bank. If the
Indenture Trustee shall fail to make any such payment as provided in the
immediately preceding sentence after its receipt of funds at the place and
-11-
prior to the time specified above, the Indenture Trustee, in its individual
capacity and not as trustee, agrees to compensate such holders for loss of use
of funds at the Debt Rate until such payment is made and the Indenture Trustee
shall be entitled to any interest earned on such funds until such payment is
made. Any payment made hereunder shall be made without any presentment or
surrender of any Secured Certificate, except that, in the case of the final
payment in respect of any Secured Certificate, such Secured Certificate shall be
surrendered to the Indenture Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Trust Indenture to the
contrary, the Indenture Trustee shall not be required to make, or cause to be
made, wire transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so in view of the time of day when
the funds to be so transferred were received by it if such funds were received
after 12:00 noon, New York City time, at the place of payment. Prior to the due
presentment for registration of transfer of any Secured Certificate, the Owner
and the Indenture Trustee shall deem and treat the Person in whose name any
Secured Certificate is registered on the Secured Certificate Register as the
absolute owner and holder of such Secured Certificate for the purpose of
receiving payment of all amounts payable with respect to such Secured
Certificate and for all other purposes, and none of the Owner or the Indenture
Trustee 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 Certificate Holder, all payments to it shall be made to the account
of such Certificate 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
Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner, shall exclude and
withhold at the appropriate rate from each payment of Principal Amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or under
each Secured Certificate (and such exclusion and withholding shall constitute
payment in respect of such Secured Certificate) any and all United States
withholding taxes applicable thereto as required by Law. The Indenture Trustee
agrees to act as such withholding agent and, in connection therewith, whenever
any present or future United States taxes or similar charges are required to be
withheld with respect to any amounts payable hereunder or in respect of the
Secured Certificates, to withhold such amounts (and such withholding shall
constitute payment in respect of such Secured Certificate) and timely pay the
same to the appropriate authority in the name of and on behalf of the
Certificate 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 Certificate Holder (with a copy to the
Owner) appropriate receipts showing the payment thereof, together with such
additional documentary evidence as any such Certificate Holder may reasonably
request from time to time.
If a Certificate Holder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed 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 Secured Certificate(s) held by such
holder is made (but prior to the making of such payment),
-12-
or in either of the two preceding calendar years, and has not notified the
Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date
of such payment (and the Indenture Trustee has no reason to know that any
information set forth in such form is inaccurate), the Indenture Trustee shall
withhold only the amount, if any, required by Law (after taking into account any
applicable exemptions claimed by the Certificate Holder) to be withheld from
payments hereunder or under the Secured Certificates held by such holder in
respect of United States federal income tax (and such withholding shall
constitute payment in respect of such Secured Certificate). If a Certificate
Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a
properly completed 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 avoid
withholding of United States federal income tax), during the calendar year in
which the payment is made (but prior to the making of such payment), and has not
notified the Indenture Trustee of the withdrawal or inaccuracy of such
certificate or form prior to the date of such payment (and the Indenture Trustee
has no reason to know that any information set forth in such form is inaccurate)
or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly
completed and currently effective U.S. Internal Revenue Service Form W-9, if
applicable, prior to a payment hereunder or under the Secured Certificates held
by such holder, no amount shall be withheld from payments in respect of United
States federal income tax. If any Certificate Holder has notified the Indenture
Trustee that any of the foregoing forms or certificates is withdrawn or
inaccurate, or if such holder has not filed a form claiming an exemption from
United States withholding tax or if the Code or the regulations thereunder or
the administrative interpretation thereof are at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Secured Certificates held by such holder, the Indenture
Trustee agrees to withhold from each payment due to the relevant Certificate
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 applicable law.
The Owner shall not have any liability for the failure of the
Indenture Trustee to withhold taxes in the manner provided for herein or if any
Certificate Holder provides false or inaccurate information on any form required
to be delivered under this Section 2.04.
SECTION 2.05. Application of Payments.
In the case of each Secured Certificate, each payment of Principal
Amount, Make-Whole Amount, if any, and interest or other amounts due thereon
shall be applied:
First: to the payment of accrued interest on such Secured
Certificate (as well as any interest on any overdue Principal 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;
-13-
Second: to the payment of the Principal Amount of such Secured
Certificate (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 Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Principal Amount of such Secured Certificate remaining unpaid
(provided that such Secured Certificate 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 Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
SECTION 2.06. Termination of Interest in Collateral.
A Certificate Holder shall not, as such, have any further interest
in, or other right with respect to, the Collateral when and if the Principal
Amount of, Make-Whole Amount, if any, and interest on and other amounts due
under all Secured Certificates held by such Certificate Holder and all other
sums then payable to such Certificate Holder hereunder and under the other
Operative Documents by the Owner (collectively, the "Secured Obligations") shall
have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Secured
Certificates.
The Indenture Trustee shall keep a register (the "Secured
Certificate Register") in which the Indenture Trustee shall provide for the
registration of Secured Certificates and the registration of transfers of
Secured Certificates. No such transfer shall be given effect unless and until
registration hereunder shall have occurred. The Secured Certificate Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the
purpose of registering Secured Certificates and transfers of Secured
Certificates as herein provided. A holder of any Secured Certificate intending
to exchange such Secured Certificate shall surrender such Secured Certificate to
the Indenture Trustee at the Corporate Trust Office, together with a written
request from the registered holder thereof for the issuance of a new Secured
Certificate, 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 Secured Certificate, the Owner shall execute, and the Indenture
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Secured Certificates of a like aggregate
Principal Amount and of the same series. At the option of the Certificate
Holder, Secured Certificates may be exchanged for other Secured Certificates of
any authorized denominations of a like aggregate Principal Amount, upon
surrender of the Secured Certificates to be exchanged to the Indenture Trustee
at the Corporate Trust Office. Whenever any Secured Certificates are so
surrendered for exchange, the Owner shall execute, and the Indenture Trustee
shall authenticate and deliver, the Secured Certificates which the Certificate
-14-
Holder making the exchange is entitled to receive. All Secured Certificates
issued upon any registration of transfer or exchange of Secured Certificates
(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 and benefits
under this Trust Indenture, as the Secured Certificates surrendered upon such
registration of transfer or exchange. Every Secured Certificate presented or
surrendered for registration of transfer, shall (if so required by the Indenture
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by the Certificate
Holder or such holder's attorney duly authorized in writing, and the Indenture
Trustee 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 Indenture Trustee shall make a notation on each new Secured
Certificate of the amount of all payments of Principal Amount previously made on
the old Secured Certificate or Secured Certificates with respect to which such
new Secured Certificate is issued and the date to which interest on such old
Secured Certificate or Secured Certificates has been paid. Interest shall be
deemed to have been paid on such new Secured Certificate to the date on which
interest shall have been paid on such old Secured Certificate, and all payments
of the Principal Amount marked on such new Secured Certificate, as provided
above, shall be deemed to have been made thereon. The Owner shall not be
required to exchange any surrendered Secured Certificates as provided above
during the ten-day period preceding the due date of any payment on such Secured
Certificate. The Owner shall in all cases deem the Person in whose name any
Secured Certificate shall have been issued and registered as the absolute owner
and holder of such Secured Certificate for the purpose of receiving payment of
all amounts payable by the Owner with respect to such Secured Certificate and
for all purposes until a notice stating otherwise is received from the Indenture
Trustee and such change is reflected on the Secured Certificate Register. The
Indenture Trustee will promptly notify the Owner of each registration of a
transfer of a Secured Certificate. Any such transferee of a Secured Certificate,
by its acceptance of a Secured Certificate, agrees to the provisions of the
Participation Agreement applicable to Certificate Holders, including Sections 6,
8(e), 8(k), 8(l), 8(q), 8(r), 8(t), 8(cc), 10, 13(b), 13(c), 15(b), 15(c) and
16, and shall be deemed to have represented and warranted (except as provided
above), and covenanted, to the parties to the Participation Agreement as to the
matters represented, warranted and covenanted by the Purchasers in the
Participation Agreement. Subject to compliance by the Certificate Holder and its
transferee (if any) of the requirements set forth in this Section 2.07, the
Indenture Trustee and the Owner shall use all reasonable efforts to issue new
Secured Certificates upon transfer or exchange within 10 Business Days of the
date a Secured Certificate is surrendered for transfer or exchange.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured
Certificates.
If any Secured Certificate shall become mutilated, destroyed, lost
or stolen, the Owner shall, upon the written request of the holder of such
Secured Certificate, execute and the Indenture Trustee shall authenticate and
deliver in replacement thereof a new Secured Certificate, payable in the same
Principal Amount dated the same date and captioned as issued
-15-
in connection with the Aircraft. If the Secured Certificate being replaced has
become mutilated, such Secured Certificate shall be surrendered to the Indenture
Trustee and a photocopy thereof shall be furnished to the Owner. If the Secured
Certificate being replaced has been destroyed, lost or stolen, the holder of
such Secured Certificate shall furnish to the Owner and the Indenture Trustee
such security or indemnity as may be required by them to save the Owner and the
Indenture Trustee harmless and evidence satisfactory to the Owner and the
Indenture Trustee of the destruction, loss or theft of such Secured Certificate
and of the ownership thereof. If a "qualified institutional buyer" of the type
referred to in paragraph (a)(l)(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
Secured Certificate, 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 and the Indenture Trustee 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 Secured
Certificate. Subject to compliance by the Certificate Holder of the requirements
set forth in this Section 2.08, the Indenture Trustee and the Owner shall use
all reasonable efforts to issue new Secured Certificates within 10 Business Days
of the date of the written request therefor from the Certificate Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Certificate Holder for any
registration of transfer or exchange of Secured Certificates, but the Indenture
Trustee, as Secured Certificate 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 Secured
Certificates.
(b) The Indenture Trustee shall cancel all Secured Certificates
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Secured Certificates.
SECTION 2.10. Mandatory Redemptions of Secured Certificates.
On the date on which the Owner is required pursuant to Section
7.06(a)(i) hereof to make payment for an Event of Loss with respect to the
Aircraft, all of the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders but without Make-Whole Amount.
SECTION 2.11. Voluntary Redemptions of Secured Certificates.
Any or all of the Secured Certificates may be redeemed by the Owner
upon at least 30 days' revocable prior written notice to the Indenture Trustee
and the Certificate Holders, and the Secured Certificates shall be redeemed in
whole at a redemption price equal to 100% of the unpaid Principal Amount
thereof, together with accrued interest thereon to the
-16-
date of redemption and all other amounts payable hereunder or under the
Participation Agreement to the Certificate Holders plus Make-Whole Amount, if
any.
SECTION 2.12. Redemptions; Notice of Redemption.
(a) No redemption of any Secured Certificate may be made except to
the extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Secured Certificate may be made by the Indenture Trustee.
(b) Notice of redemption with respect to the Secured Certificates
shall be given by the Indenture Trustee by first-class mail, postage prepaid,
mailed not less than 15 nor more than 60 days prior to the applicable redemption
date, to each Certificate Holder of such Secured Certificates to be redeemed, at
such Certificate Holder's address appearing in the Secured Certificate Register;
provided that, in the case of a redemption to be made pursuant to Section 2.11,
such notice shall be revocable and shall be deemed revoked if the Indenture
Trustee receives written notice of such revocation from the Owner not later than
three days prior to the redemption date. All notices of redemption shall state:
(1) the redemption date, (2) the applicable basis for determining the redemption
price, (3) that on the redemption date, the redemption price will become due and
payable upon each such Secured Certificate, and that, if any such Secured
Certificates are then outstanding, interest on such Secured Certificates shall
cease to accrue on and after such redemption date, and (4) the place or places
where such Secured Certificates are to be surrendered for payment of the
redemption price.
(c) On or before the redemption date, the Owner (or any person on
behalf of the Owner) shall, to the extent an amount equal to the redemption
price for the Secured Certificates to be redeemed on the redemption date shall
not then be held in the Collateral, deposit or cause to be deposited with the
Indenture Trustee by 12:00 noon on the redemption date in immediately available
funds the redemption price of the Secured Certificates to be redeemed.
(d) Notice of redemption having been given as aforesaid (and not
deemed revoked as contemplated in the proviso to Section 2.12(b)), the Secured
Certificates to be redeemed shall, on the redemption date, become due and
payable at the Corporate Trust Office of the Indenture Trustee 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 Secured Certificates then outstanding shall cease
to bear interest. Upon surrender of any such Secured Certificate for redemption
in accordance with said notice, such Secured Certificate shall be redeemed at
the redemption price. If any Secured Certificate 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 Secured Certificate as of such
redemption date.
-17-
SECTION 2.13. Assumption of Secured Certificates.
Pursuant to the provisions of Section 16 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 Secured Certificates
by an amended and restated trust indenture, an amended and restated
participation agreement, and the issuance of new secured certificates having
substantially the same tenor as the Secured Certificates. If an owner trustee
shall assume such obligations of the Owner, the Owner shall be released and
discharged from any further obligations hereunder and under the Secured
Certificates (except with respect to any such obligations that accrued prior
thereto) and the Secured Certificates shall be delivered to the Indenture
Trustee for cancellation.
SECTION 2.14. [Intentionally Omitted].
SECTION 2.15. Subordination.
(a) The Owner and, by acceptance of its Secured Certificates of any
Series, each Certificate 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 Certificate 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 4.01(e) or (f) hereof, except as expressly provided in
Article III hereof.
(b) By the acceptance of its Secured Certificates of any Series
(other than Series A), each Certificate Holder of such Series agrees that in the
event that such Certificate Holder, in its capacity as a Certificate 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 2.15 or
Article III hereof, it will hold any amount so received in trust for the Senior
Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such
payment to the Indenture Trustee in the form received to be applied as provided
in Article III hereof.
(c) As used in this Section 2.15, the term "Senior Holder" shall
mean, (i) the Certificate Holders of Series A until the Secured Obligations in
respect of Series A Secured Certificates have been paid in full and (ii) after
the Secured Obligations in respect of Series A Secured Certificates have been
paid in full, the Certificate Holders of Series B until the Secured Obligations
in respect of Series B Secured Certificates have been paid in full.
-18-
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
PAYMENTS
SECTION 3.01. Basic Distributions.
Except as otherwise provided in Section 3.03 hereof, each periodic
payment of principal or interest on the Secured Certificates received by the
Indenture Trustee 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 Principal
Amount and interest and other amounts (as well as any interest
on any overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any other
overdue amounts) then due under all Series A Secured
Certificates shall be distributed to the Certificate Holders
of Series A ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments
then due under each Series A Secured Certificate bears to the
aggregate amount of the payments then due under all Series A
Secured Certificates;
(ii) after giving effect to paragraph (i) above, so much of such
payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest
on any overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any other
overdue amounts) then due under all Series B Secured
Certificates shall be distributed to the Certificate 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 Secured Certificate bears to the
aggregate amount of the payments then due under all Series B
Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, so much of such
payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest
on any overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any other
overdue amounts) then due under all Series C Secured
Certificates shall be distributed to the Certificate 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 Secured Certificate bears to the
aggregate amount of the payments then due under all Series C
Secured Certificates.
-19-
SECTION 3.02. Event of Loss; Replacement; Optional Redemption.
Except as otherwise provided in Section 3.03 hereof, any payments
received by the Indenture Trustee (i) with respect to the Aircraft as the result
of an Event of Loss or (ii) pursuant to the optional redemption of the Secured
Certificates pursuant to Section 2.11 hereof shall be applied to redemption of
the Secured Certificates and to all other amounts payable hereunder or to the
Indenture Trustee or any Certificate Holder under the Participation Agreement by
applying such funds in the following order of priority:
First, (a) to reimburse the Indenture Trustee and the Certificate Holders
for any reasonable costs or expenses incurred in connection
with such redemption for which they are entitled to
reimbursement, or indemnity by the Owner, under the Operative
Documents and then (b) to pay any other amounts then due to
the Indenture Trustee and the Certificate Holders under this
Trust Indenture, the Participation Agreement or the Secured
Certificates;
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 Secured
Certificates;
(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 Secured Certificates; and
(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 Secured Certificates;
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 accordance with Section 7.06 hereof, any insurance, condemnation or similar
proceeds which result from such Event of Loss and are paid over to the Indenture
Trustee shall be held by the Indenture Trustee as permitted by Section 6.04
hereof (provided that such moneys shall be invested as provided in Section 5.06
hereof) as additional security for the obligations of the Owner under the
Operative Documents and such proceeds (and such investment earnings), to the
extent not theretofore applied as provided herein, shall be released to the
Owner at the Owner's written request upon the release of such damaged Airframe
or Engine and the replacement thereof as provided herein.
-20-
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 Indenture Trustee (including any
amounts realized by the Indenture Trustee from the exercise of any remedies
pursuant to Article IV hereof) after both an Event of Default shall have
occurred and be continuing and the Secured Certificates shall have become due
and payable pursuant to Section 4.02(b) hereof, as well as all payments or
amounts then held by the Indenture Trustee as part of the Collateral, shall be
promptly distributed by the Indenture Trustee in the following order of
priority:
First, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense or other loss
(including, without limitation, all amounts to be expended at the
expense of, or charged upon the tolls, rents, revenues, issues,
products and profits of, the property included in the Collateral
(all such property being herein called the "Mortgaged Property")
pursuant to Section 4.03(b) hereof) incurred by the Indenture
Trustee (to the extent not previously reimbursed), the expenses of
any sale, taking or other proceeding, reasonable attorneys' fees and
expenses, court costs, and any other expenditures incurred or
expenditures or advances made by the Indenture Trustee or the
Certificate Holders in the protection, exercise or enforcement of
any right, power or remedy or any damages sustained by the Indenture
Trustee or any Certificate Holder, liquidated or otherwise, upon
such Event of Default shall be applied by the Indenture Trustee as
between itself and the Certificate Holders in reimbursement of such
expenses and any other expenses for which the Indenture Trustee or
the Certificate Holders are entitled to reimbursement under any
Operative Document and in the case the aggregate amount to be so
distributed is insufficient to pay as aforesaid, then ratably,
without priority of one over the other, in proportion to the amounts
owed each hereunder;
Second, so much of such payments or amounts remaining as shall be required
to reimburse the then existing or prior Certificate Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to such then existing or
prior Certificate 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 Certificate Holder pursuant to
said Section 5.03 hereof;
Third, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal Amount
of all Series A Secured Certificates, and the accrued but
unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series A Secured
Certificates to the date of distribution, shall be distributed
to the Certificate Holders of Series A, and in case the
aggregate amount so to be distributed shall be insufficient to
pay in full
-21-
as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal
Amount of all Series A Secured Certificates held by each
holder plus the accrued but unpaid interest and other amounts
due hereunder or thereunder to the date of distribution, bears
to the aggregate unpaid Principal Amount of all Series A
Secured Certificates held by all such holders plus the accrued
but unpaid interest and other amounts due thereon to the date
of distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid Principal Amount of all Series B
Secured Certificates, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations in
respect of the Series B Secured Certificates to the date of
distribution, shall be distributed to the Certificate 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 Principal Amount of all
Series B Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution, bears to the aggregate
unpaid Principal Amount of all Series B Secured Certificates
held by all such holders plus the accrued but unpaid interest
and other amounts due thereon to the date of distribution; and
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid Principal Amount of all Series C
Secured Certificates, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations in
respect of the Series C Secured Certificates to the date of
distribution, shall be distributed to the Certificate 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 Principal Amount of all
Series C Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution, bears to the aggregate
unpaid Principal Amount of all Series C Secured Certificates
held by all such holders plus the accrued but unpaid interest
and other amounts due thereon to the date of distribution; and
Fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
-22-
SECTION 3.04. Certain Payments.
(a) Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in this Trust Indenture and for
which such provision is made in the Participation Agreement or any other
Operative Document shall be applied forthwith to the purpose for which such
payment was made in accordance with the terms of the Participation Agreement or
such other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Owner in respect of (i) the Indenture
Trustee in its individual capacity, (ii) any Certificate Holder, (iii) the
Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through
Trustees, in each case pursuant to Section 7 of the Participation Agreement,
directly to the Person entitled thereto. Any payment received by the Indenture
Trustee under the third paragraph of Section 2.02 shall be distributed to the
Subordination Agent to be distributed in accordance with the terms of the
Intercreditor Agreement.
SECTION 3.05. Other Payments.
Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in the Participation Agreement,
elsewhere in this Trust Indenture or in any other Operative Document shall be
distributed by the Indenture Trustee 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 hereof, in the
manner provided in clause "Fourth" of Section 3.03 hereof.
SECTION 3.06. Payments to the Owner.
Any amounts distributed hereunder by the Indenture Trustee to the
Owner shall be paid to the Owner (within the time limits contemplated by Section
2.04(a)) by wire transfer of funds of the type received by the Indenture Trustee
at such office and to such account or accounts of such entity or entities as
shall be designated by notice from the Owner to the Indenture Trustee from time
to time.
SECTION 3.07. Application of Payments Under Guarantee.
All payments received by the Indenture Trustee pursuant to the
Guarantee shall be distributed forthwith by the Indenture Trustee in the same
order of priority, and in the same manner, as it would have distributed the
payment in respect of which such payment under the Guarantee was received.
-23-
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. 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 Amount of,
interest on, or Make-Whole Amount, under any Secured Certificate when due,
and such failure shall have continued unremedied for a period of ten (10)
Business Days, or (ii) any other amount payable by it to the Certificate
Holders under this Trust Indenture (other than any such failure arising by
virtue of a tax withheld pursuant to Section 2.04(b) hereof) or under the
Participation Agreement, and such failure shall have continued unremedied
for ten (10) Business Days after receipt by the Owner of written demand
therefor from the Indenture Trustee or any Certificate Holder; or
(b) the Owner shall fail to carry and maintain, or cause to be
carried and maintained, insurance on and in respect of the Aircraft in
accordance with the provisions of Section 7.04; or
(c) the Owner shall fail to observe or perform (or caused to be
observed or performed), in any material respect, any covenant or agreement
to be performed or observed by it under any Operative Document, and such
failure shall continue unremedied for a period of thirty (30) days after
receipt by the Owner of written notice thereof from the Indenture Trustee
provided, however, that if the Owner shall have undertaken to cure any
such failure which arises under clause (ii) or clause (iii) of the first
sentence of Section 7.02(a), or under the second sentence of Section
7.02(a) as it relates to maintenance, service, repair or overhaul or under
Section 7.03 and, notwithstanding the diligence of the Owner in attempting
to cure such failure, such failure is not cured within said thirty day
period but is curable with future due diligence, there shall exist no
Event of Default under this Section 4.01 so long as the Owner is
proceeding with due diligence to cure such failure and such failure is
remedied not later than three hundred sixty-five (365) days after receipt
by the Owner of such written notice; or
(d) any representation or warranty made by the Owner herein or in
the Participation Agreement or any document or certificate furnished by
the Owner in connection herewith or therewith or pursuant hereto or
thereto (except the representations and warranties set forth in the Pass
Through Trust Agreement, the Underwriting Agreement or the Note Purchase
Agreement or any document or
-24-
instrument furnished pursuant to any thereof) shall prove to have been
incorrect in any material respect at the time made and such incorrectness
shall not have been cured (to the extent of the adverse impact of such
incorrectness on the interests of the Indenture Trustee or the Certificate
Holders) within thirty (30) days after the receipt by the Owner of a
written notice from the Indenture Trustee advising the Owner of the
existence of such incorrectness; or
(e) the commencement of an involuntary case or other proceeding in
respect of the Owner in an involuntary case under the federal bankruptcy
laws, as now or hereafter constituted, or any other applicable federal or
state bankruptcy, insolvency or other similar law in the United States or
seeking the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Owner or for all or
substantially all of its property, or seeking the winding-up or
liquidation of its affairs and the continuation of any such case or other
proceeding undismissed and unstayed for a period of ninety (90)
consecutive days or an order, judgment or decree shall be entered in any
proceeding 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 sequestering any substantial
part of the property of the Owner and any such order, judgment or decree
or appointment or sequestration shall be final or shall remain in force
undismissed, unstayed or unvacated for a period of ninety (90) days after
the date of entry thereof; or
(f) the commencement by the Owner of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any
other applicable federal or state bankruptcy, insolvency or other similar
law in the United States, or the consent by the Owner to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of the Owner or for
all or substantially all of its property, or the making by the Owner of
any assignment for the benefit of creditors, or the Owner shall take any
corporate action to authorize any of the foregoing.
provided, however, that, notwithstanding anything to the contrary
contained in this Section 4.01, any failure of the Owner to perform or
observe any covenant, condition, agreement or any error in a
representation or warranty shall not constitute an Event of Default if
such failure or error is caused solely by reason of an event that
constitutes an Event of Loss so long as the Owner is continuing to comply
with all of the terms of Section 7.06 hereof.
SECTION 4.02. Remedies.
(a) If an Event of Default shall have occurred and be continuing and
so long as the same shall continue unremedied, then in every such case, the
Indenture Trustee may do one or more of the following, to the extent permitted
by, and subject to compliance with any mandatory requirements of, applicable law
then in effect; provided, however, that during any period the Aircraft is
subject to the Civil Reserve Air Fleet Program in accordance with the
-25-
provisions of Section 7.02(b) hereof and in possession of the United States
Government or an agency or instrumentality of the United States, the Indenture
Trustee shall not, on account of any Event of Default, be entitled to do any of
the following in such manner as to limit the Owner's control under this Trust
Indenture (or any Lessee's control under any Lease) of any Airframe or any
Engines installed thereon, unless at least sixty (60) days' (or such lesser
period as may then be applicable under the Air Mobility Command program of the
United States Government) written notice of default hereunder shall have been
given by the Indenture Trustee by registered or certified mail to the Owner (and
any Lessee) with a copy addressed to the Contracting Office Representative for
the Air Mobility Command of the United States Air Force under any contract with
the Owner (or any Lessee) relating to the Aircraft; provided further, that the
Indenture Trustee shall give the Owner twenty (20) days' prior written notice of
its intention to sell the Aircraft:
subject to the provisions of the Granting Clause hereof:
(i) cause the Owner upon the written demand of the Indenture
Trustee and at the Owner's expense, to deliver promptly, and the
Owner shall deliver promptly, the Airframe or any Engine as the
Indenture Trustee may so demand to the Indenture Trustee;
(ii) sell the Airframe and/or any Engine at public or private
sale, whether or not the Indenture Trustee shall at the time have
possession thereof, as the Indenture Trustee may determine, or lease
or otherwise dispose of, all or any part of the Airframe or any
Engine as the Indenture Trustee, in its sole discretion, may
determine, all free and clear of any rights of the Owner, except as
hereinafter set forth in this Section 4.02; or
(iii) exercise any or all of the rights and powers and pursue
any and all remedies of a secured party under the Uniform Commercial
Code of the State of New York.
(b) If an Event of Default shall have occurred and be continuing,
then and in every such case the Indenture Trustee may (and shall, upon receipt
of a written demand therefor from a Majority in Interest of Certificate Holders)
at any time, by delivery of written notice or notices to the Owner, declare all
the Secured Certificates to be due and payable, whereupon the unpaid Principal
Amount of all Secured Certificates then outstanding, together with accrued but
unpaid 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.
This Section 4.02(b), however, is subject to the condition that, if
at any time after the Principal Amount of the Secured Certificates 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 Secured Certificates and all other amounts payable under the
Secured Certificates (except the Principal Amount of the Secured
-26-
Certificates 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 Certificate Holders may (but shall not
be obligated to), by written instrument filed with the Indenture Trustee,
rescind and annul the Indenture Trustee's declaration 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) Any Certificate Holder shall be entitled, at any sale pursuant
to this Section 4.02, to credit against any purchase price bid at such sale by
such holder all or any part of the unpaid obligations owing to such Certificate
Holder and secured by the Lien of this Trust Indenture (but only to the extent
that such purchase price would have been paid to such Certificate 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
Principal Amount of all Secured Certificates then outstanding, together with
accrued interest thereon, 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 the Subordination
Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any Mortgaged Property or take any
action with respect to any Mortgaged Property so acquired by it if such
acquisition or action would cause any Pass Through Trust to fail to qualify as a
"grantor trust" for federal income tax purposes.
ECTION 4.03. Return of Aircraft, Etc.
(a) If an Event of Default shall have occurred and be continuing and
the Secured Certificates have been accelerated, subject to Section 4.02 hereof,
at the request of the Indenture Trustee, the Owner shall promptly execute and
deliver to the Indenture Trustee such instruments of title and other documents
as the Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify, to
obtain possession of all or any part of the Mortgaged Property included in the
Collateral to which the Indenture Trustee 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 Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession and requiring the Owner to execute and deliver
such instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner hereby specifically consents to the fullest extent permitted
by applicable law, and (ii) pursue all or part of such Mortgaged Property
wherever it may be found and may
-27-
enter any of the premises of the Owner wherever such Mortgaged Property may be
or be supposed to be and search for such Mortgaged Property and take possession
of and remove such Mortgaged Property. 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 Indenture Trustee may,
from time to time, at the expense of the Mortgaged Property, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modifications or alterations to and of the
Mortgaged Property, as it may deem proper. In each such case, the Indenture
Trustee shall have the right to maintain, use, operate, store, insure, lease,
control, manage, dispose of, modify or alter the Mortgaged Property and to carry
on the business and to exercise all rights and powers of the Owner relating to
the Mortgaged Property, as the Indenture Trustee 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 Mortgaged Property or any part thereof as the
Indenture Trustee may determine, and the Indenture Trustee shall be entitled to
collect and receive directly all tolls, rents, revenues, issues, income,
products and profits of the Mortgaged Property and every part thereof, without
prejudice, however, to the right of the Indenture Trustee under any provision of
this Trust Indenture to collect and receive all cash held by, or required to be
deposited with, the Indenture Trustee hereunder. Such tolls, rents, revenues,
issues, income, products and profits shall be applied to pay the expenses of the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, improvement, modification or alteration of the Mortgaged Property
and of conducting the business thereof, and to make all payments which the
Indenture Trustee may be required or may elect to make, if any, for taxes,
assessments, insurance or other proper charges upon the Mortgaged Property or
any part thereof (including the employment of engineers and accountants to
examine, inspect and make reports upon the properties and books and records of
the Owner), and all other payments which the Indenture Trustee may be required
or authorized to make under any provision of this Trust Indenture, as well as
just and reasonable compensation for the services of the Indenture Trustee, and
of all persons properly engaged and employed by the Indenture Trustee with
respect hereto.
SECTION 4.04. Remedies Cumulative.
Each and every right, power and remedy given to the Indenture
Trustee 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 Indenture Trustee, and the exercise or
the beginning of the exercise of any power or remedy shall not be construed to
be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by the Indenture Trustee in the
exercise of any right, remedy or power or in the pursuance of any remedy shall
impair any such right, power or remedy or be construed to be a waiver of any
default on the part of the Owner or to be an acquiescence therein.
-28-
SECTION 4.05. Discontinuance of Proceedings.
In case the Indenture Trustee 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
Indenture Trustee, then and in every such case the Owner and the Indenture
Trustee shall, subject to any determination in such proceedings, be restored to
their former positions and rights hereunder with respect to the Mortgaged
Property, and all rights, remedies and powers of the Owner or the Indenture
Trustee shall continue as if no such proceedings had been instituted.
SECTION 4.06. Waiver of Past Defaults.
Upon written instruction from a Majority in Interest of Certificate
Holders, the Indenture Trustee shall waive any past Default hereunder and its
consequences and upon any such waiver such Default shall cease to exist and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of 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 Certificate Holders,
the Indenture Trustee shall not waive any Default (i) in the payment of the
Principal Amount, Make-Whole Amount, if any, and interest and other amounts due
under any Secured Certificate 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 Certificate Holder.
SECTION 4.07. Appointment of Receiver.
The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any successor
or nominee thereof) for all or any part of the Mortgaged Property, whether such
receivership be incidental to a proposed sale of the Mortgaged Property 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 Mortgaged Property shall be
entitled to exercise all the rights and powers of the Indenture Trustee with
respect to the Mortgaged Property.
ECTION 4.08. Indenture Trustee Authorized to Execute Bills of Sale,
Etc.
The Owner irrevocably appoints the Indenture Trustee the true and
lawful attorney-in-fact of the Owner in its name and stead and on its behalf,
for the purpose, if an Event of Default shall have occurred and be continuing,
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.
-29-
Nevertheless, if so requested by the Indenture Trustee or any purchaser, the
Owner shall ratify and confirm any such sale, assignment, transfer or delivery,
by executing and delivering to the Indenture Trustee or such purchaser all bills
of sale, assignments, releases and other proper instruments to effect such
ratification and confirmation as may be designated in any such request.
SECTION 4.09. Rights of Certificate Holders to Receive Payment.
Notwithstanding any other provision of this Trust Indenture, the
right of any Certificate Holder to receive payment of principal of, and premium,
if any, and interest on a Secured Certificate on or after the respective due
dates expressed in such Secured Certificate, 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 Certificate Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Event of Default.
If the Indenture Trustee shall have Actual Knowledge of an Event of
Default or of a Default arising from a failure to pay any payment of Principal
Amount of, interest on, Make-Whole Amount, if any, due and payable under any
Secured Certificates, the Indenture Trustee shall give prompt written notice
thereof to the Owner and each Certificate Holder. Subject to the terms of
Sections 4.02, 4.06, 5.02 and 5.03 hereof, the Indenture Trustee shall take such
action, or refrain from taking such action, with respect to such Event of
Default or Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Certificate Holders. Subject to the provisions of
Section 5.03, if the Indenture Trustee shall not have received instructions as
above provided within twenty (20) days after mailing notice of such Event of
Default to the Certificate Holders the Indenture Trustee may, subject to
instructions thereafter received pursuant to the preceding provisions of this
Section 5.01, take such action, or refrain from taking such action, but shall be
under no duty to take or refrain from taking any action, with respect to such
Event of Default or Default as it shall determine advisable in the best
interests of the Certificate Holders; provided, however, that the Indenture
Trustee may not sell the Aircraft or any Engine without the consent of a
Majority in Interest of Certificate Holders. For all purposes of this Trust
Indenture, in the absence of Actual Knowledge on the part of the Indenture
Trustee, the Indenture Trustee shall not be deemed to have knowledge of a
Default or an Event of Default (except the failure of the Owner to pay any
payment of Principal Amount or interest within one (1) 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 Certificate Holders.
-30-
SECTION 5.02. Action upon Instructions; Certain Rights and
Limitations.
(a) Subject to the terms of Sections 4.02(a), 4.06, 5.01 and 5.03
hereof, upon the written instructions at any time and from time to time of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall,
subject to the terms of this Section 5.02, 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.
The Indenture Trustee will execute and the Owner will file or cause
to be filed such continuation statements with respect to financing statements
relating to the security interest created hereunder in the Collateral as
specified from time to time in written instructions of a Majority in Interest of
Certificate Holders (which instructions may, by their terms, be operative only
at a future date and which shall be accompanied by the form of such continuation
statement so to be filed). The Indenture Trustee will furnish to each
Certificate Holder promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee hereunder.
SECTION 5.03. Indemnification.
The Indenture Trustee shall not be under any obligation to take any
action under this Trust Indenture and nothing herein or therein shall require
the Indenture Trustee to expend or risk its own funds or otherwise incur the
risk of any financial 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 Certificate Holder who is a QIB,
signed by an authorized officer thereof, in favor of, delivered to and in form
reasonably satisfactory to Indenture Trustee shall be accepted as reasonable
assurance of adequate indemnity). The Indenture Trustee shall not be required to
take any action under Section 5.01 (other than the first sentence thereof) or
5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture
or any other Operative Document be deemed to impose a duty on the Indenture
Trustee to take any action, if the Indenture Trustee shall have been advised by
counsel that such action is contrary to the terms hereof or is otherwise
contrary to Law.
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions.
The Indenture Trustee 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
-31-
from Certificate Holders as provided in this Trust Indenture; and no implied
duties or obligations shall be read into this Trust Indenture against the
Indenture Trustee. The Indenture Trustee 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 ownership of the Aircraft or the administration of
the Collateral or any other transaction pursuant to this Trust Indenture or any
document included in the Collateral.
SECTION 5.05. No Action Except Under Trust Indenture or
Instructions.
The Indenture Trustee agrees that it 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 Indenture Trustee pursuant to this
Trust Indenture and in accordance with the express terms hereof.
SECTION 5.06. Investment of Amounts Held by Indenture Trustee.
Any amounts held by the Indenture Trustee pursuant to Section 3.02,
or pursuant to any provision of any other Operative Document providing for
amounts to be held by the Indenture Trustee which are not distributed pursuant
to the other provisions of Article III hereof shall be invested by the Indenture
Trustee from time to time in Cash Equivalents as directed by the Owner so long
as the Indenture Trustee 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 Indenture Trustee's reasonable fees
and expenses in making such investment, shall be held and applied by the
Indenture Trustee 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 Indenture
Trustee 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 Indenture Trustee without instructions whenever
such sale is necessary to make a distribution required by this Trust Indenture.
-32-
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties.
The Indenture Trustee 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 Indenture Trustee, in
its individual capacity, shall not be answerable or accountable under any
circumstances, except (i) for its own willful misconduct or gross negligence
(other than for the handling of funds, for which the standard of accountability
shall be willful misconduct or negligence), and (ii) as provided in the fourth
sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof.
SECTION 6.02. Absence of Duties.
In the case of the Indenture Trustee, except in accordance with
written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and
except as provided in, and without limiting the generality of, Sections 5.03 and
5.04 hereof, the Indenture Trustee 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 the 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 the
Owner, or (v) to inspect the Aircraft at any time or ascertain or inquire as to
the performance or observance of any of the Owner's covenants herein with
respect to the Aircraft.
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents.
THE INDENTURE TRUSTEE 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 Indenture Trustee, in
-33-
its individual or trust capacities, does not make, nor shall it be deemed to
have made, any representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Participation Agreement, the Secured
Certificates, the Purchase Agreement, the Consent and Agreement or the
Guarantee, or as to the correctness of any statement contained in any thereof,
except for the representations and warranties of the Indenture Trustee, in each
case expressly made in this Trust Indenture or in the Participation Agreement.
The Loan Participants and the Certificate Holders make no representation or
warranty hereunder whatsoever.
SECTION 6.04. No Segregation of Monies; No Interest.
Any monies paid to or retained by the Indenture Trustee pursuant to
any provision hereof and not then required to be distributed to the Certificate
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 5.06, 7.04(g),
7.06(f) or 7.07(c) hereof, and may be deposited under such general conditions as
may be prescribed by Law, and the Indenture Trustee shall not be liable for any
interest thereon (except that the Indenture Trustee shall invest all monies held
as directed by the Owner so long as no Default or Event of Default has occurred
and is continuing (or in the absence of such direction, by the Majority In
Interest of Certificate Holders) in Cash Equivalents; provided, however, that
any payments received, or applied hereunder, by the Indenture Trustee shall be
accounted for by the Indenture Trustee so that any portion thereof paid or
applied pursuant hereto shall be identifiable as to the source thereof.
SECTION 6.05. Reliance; Agreements; Advice of Counsel.
The Indenture Trustee shall not incur any liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed by
it to be genuine and believed by it to be signed by the proper party or parties.
The Indenture Trustee may accept a copy of a resolution of the Board of
Directors (or Executive Committee thereof) of any party to the Participation
Agreement, 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 Principal Amount of Secured Certificates 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
Indenture Trustee. As to any fact or matter relating to the Owner the manner of
ascertainment of which is not specifically described herein, the Indenture
Trustee 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 Indenture Trustee for any action taken
or omitted to be taken by it in good faith in reliance thereon. In the
administration of the trusts hereunder, the Indenture Trustee may execute any of
the trusts or powers hereof and perform its powers and duties hereunder directly
or through agents or attorneys and may
-34-
at the expense of the Collateral, consult with counsel, accountants and other
skilled persons to be selected and retained by it, and the Indenture Trustee
shall not be liable for anything done, suffered or omitted in good faith by them
in accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.06. Compensation.
The Indenture Trustee 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 the 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 Indenture Trustee agrees that it shall have
no right against the Loan Participants or the Certificate Holders for any fee as
compensation for its services as trustee under this Trust Indenture.
SECTION 6.07. Instructions from Certificate Holders.
In the administration of the trusts created hereunder, the Indenture
Trustee shall have the right to seek instructions from a Majority in Interest of
Certificate Holders should any provision of this Trust Indenture appear to
conflict with any other provision herein or should the Indenture Trustee's
duties or obligations hereunder be unclear, and the Indenture Trustee shall
incur no liability in refraining from acting until it receives such
instructions. The Indenture Trustee shall be fully protected for acting in
accordance with any instructions received under this Section 6.07.
ARTICLE VII
COVENANTS OF THE OWNER
SECTION 7.01. Liens.
The Owner will not directly or indirectly create, incur, assume or
suffer to exist any Lien on or with respect to the Aircraft, title thereto or
any interest therein, except (i) the Lien of this Trust Indenture, and any other
rights existing pursuant to the Operative Documents, (ii) the rights of others
under agreements or arrangements to the extent permitted by the terms of
Sections 7.02(b) and 7.03(b) hereof, (iii) Loan Participant Liens and Indenture
Trustee's Liens, (iv) Liens for taxes of the Owner (or any Lessee) either not
yet due or being contested in good faith by appropriate proceedings so long as
such proceedings do not involve any material risk of the sale, forfeiture or
loss of the Airframe or any Engine or any interest therein, or, so long as any
Secured Certificates shall be outstanding, adversely affect the Lien
-35-
of this Trust Indenture, (v) materialmen's, mechanics', workmen's, repairmen's,
employees' or other like Liens arising in the ordinary course of the Owner's
(or, if a Lease is then in effect, Lessee's business (including those arising
under maintenance agreements entered into in the ordinary course of business)
securing obligations that are not overdue for a period of more than sixty (60)
days or are being contested in good faith by appropriate proceedings so long as
such proceedings do not involve any material danger of the sale, forfeiture or
loss of the Airframe or any Engine or any interest therein or, so long as any
Secured Certificates shall be outstanding, adversely affect the Lien of this
Trust Indenture, (vi) Liens arising out of any judgment or award against the
Owner (or any Lessee), unless the judgment secured shall not, within sixty (60)
days after the entry thereof, have been discharged, vacated, reversed or
execution thereof stayed pending appeal or shall not have been discharged,
vacated or reversed within sixty (60) days after the expiration of such stay,
(vii) any other Lien with respect to which the Owner (or any Lessee) shall have
provided a bond, cash collateral or other security adequate in the reasonable
opinion of the Indenture Trustee, and (viii) Liens approved in writing by the
Indenture Trustee. The Owner will promptly, at its own expense, take (or cause
to be taken) such actions as may be necessary duly to discharge any such Lien
not excepted above if the same shall arise at any time.
SECTION 7.02 Registration, Maintenance and Operation; Possession and
Leases; Insignia.
(a)(I) Registration and Maintenance. The Owner, at its own cost and
expense, shall (or shall cause any Lessee to): (i) cause the Aircraft to be duly
registered in its name, and, subject to the second paragraph of this Section
7.02(a) and Section 8(f) of the Participation Agreement, to remain duly
registered in the name of the Owner under the Federal Aviation Act, provided
that the Owner shall not register the Aircraft or permit the Aircraft to be
registered under any laws other than the Federal Aviation Act at any time except
as provided in Section 8(f) of the Participation Agreement and shall cause this
Trust Indenture to be duly recorded and maintained of record as a first mortgage
on the Aircraft; (ii) maintain, service, repair and overhaul (or cause to be
maintained, serviced, repaired and overhauled) the Aircraft so as to keep the
Aircraft in as good an operating condition as when initially subjected to the
Lien hereof, ordinary wear and tear excepted, and as may be necessary to enable
the applicable airworthiness certification for the Aircraft to be maintained in
good standing at all times (other than during temporary periods of storage in
accordance with applicable regulations or during maintenance or modification
permitted hereunder) under the Federal Aviation Act, except when all Boeing
Model 747-400 aircraft powered by engines of the same type as those with which
the Airframe shall be equipped at the time of such grounding and registered in
the United States have been grounded by the FAA (although such certification
need actually be maintained only during such periods as the Aircraft is
registered in the United States), or the applicable laws of any other
jurisdiction in which the Aircraft may then be registered from time to time in
accordance with Section 8(f) of the Participation Agreement, and utilizing,
except during any period that a Lease is in effect, the same manner and standard
of maintenance, service, repair or overhaul used by
-36-
the Owner with respect to similar aircraft operated by the Owner in similar
circumstances and utilizing, during any period that a Lease is in effect, the
same manner and standard of maintenance, service, repair or overhaul used by the
Lessee with respect to similar aircraft operated by the Lessee in similar
circumstances; provided, however, that in all circumstances the Aircraft shall
be maintained by the Owner (or any Lessee) in accordance with maintenance
standards required by, or substantially equivalent to those required by, the FAA
or the central civil aviation authority of Canada, France, Germany, Japan, the
Netherlands or the United Kingdom; and (iii) maintain or cause to be maintained
all records, logs and other materials required to be maintained in respect of
the Aircraft by the FAA or the applicable regulatory agency or body of any other
jurisdiction in which the Aircraft may then be registered. (II) Operation. The
Owner will not maintain, use, service, repair, overhaul or operate the Aircraft
(or permit any Lessee to maintain, use, service, repair, overhaul or operate the
Aircraft) in violation of any law or any rule, regulation, order or certificate
of any government or governmental authority (domestic or foreign) having
jurisdiction, or in violation of any airworthiness certificate, license or
registration relating to the Aircraft issued by any such authority, except to
the extent the Owner (or, if a Lease is then in effect, any Lessee) is
contesting in good faith the validity or application of any such law, rule,
regulation or order in any reasonable manner which does not materially adversely
affect the first priority Lien of this Trust Indenture and does not involve any
material risk of sale, forfeiture or loss of the Aircraft. The Owner will not
operate the Aircraft, or permit any Lessee to operate the Aircraft, in any area
excluded from coverage by any insurance required by the terms of Section 7.04;
provided, however, that the failure of the Owner to comply with the provisions
of this sentence shall not give rise to an Event of Default hereunder where such
failure is attributable to causes beyond the reasonable control of the Owner (or
any Lessee) or to extraordinary circumstances involving an isolated occurrence
or series of incidents not in the ordinary course of the regular operations of
the Owner (or any Lessee) and in each such case the Owner (or such Lessee, as
the case may be) is taking all reasonable steps to remedy such failure as soon
as is reasonably practicable.
The Indenture Trustee, upon compliance with all of the terms of
Section 8(f) of the Participation Agreement, shall, at the request and sole
expense of the Owner, cooperate with the Owner to take all actions required to
change the registration of the Aircraft to another country.
(b) Possession and Leases. The Owner will not, without the prior
written consent of the Indenture Trustee, lease or otherwise in any manner
deliver, transfer or relinquish possession of the Airframe or any Engine or
install or permit any Engine to be installed on any airframe other than the
Airframe or enter into any Wet Lease; provided that, so long as no Default of
the type referred to in Section 4.01(a) or 4.01(e) or Event of Default shall
have occurred and be continuing at the time of such lease, delivery, transfer or
relinquishment of possession or installation or such Wet Lease, and so long as
the action to be taken shall not deprive the Indenture Trustee of the perfected
first priority Lien of this Trust Indenture on the Airframe or (subject to the
further proviso (B) to clause (i) of this Section 7.02(b)) any Engine, and so
long as the Owner (or any Lessee) shall comply with the provisions of Sections
7.02(a) and 7.04 hereof, the Owner (or, except with respect to clause (x) below,
any Lessee) may, without the prior written consent of the Indenture Trustee:
-37-
(i) subject the Airframe and the Engines or engines then
installed thereon to normal interchange agreements or any Engine to
normal pooling or similar arrangements, in each case customary in
the airline industry and entered into by the Owner (or, if a Lease
is then in effect, by Lessee) in the ordinary course of its
business; provided that (A) no such agreement or arrangement
contemplates or requires the transfer of title to the Airframe, (B)
if the Owner's title to any Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to be an
Event of Loss with respect to such Engine and the Owner shall (or
shall cause Lessee to) comply with Section 7.06(b) hereof in respect
thereof, and (C) any interchange agreement to which the Airframe may
be subject shall be with a U.S. Air Carrier or a Foreign Air
Carrier;
(ii) deliver possession of the Airframe or any Engine to the
manufacturer thereof (or for delivery thereto) or to any
organization (or for delivery thereto) for testing, service, repair,
maintenance or overhaul work on the Airframe or Engine or any part
of any thereof or for alterations or modifications in or additions
to such Airframe or Engine to the extent required or permitted by
the terms of Section 7.03(c) hereof;
(iii) install an Engine on an airframe which is owned by the
Owner (or any Lessee) free and clear of all Liens, except: (A)
Permitted Liens and those which apply only to the engines (other
than Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an entirety),
(B) the rights of third parties under interchange agreements which
would be permitted under clause (i) above, provided that the Owner's
title to such Engine and the first priority Lien of this Trust
Indenture shall not be divested or impaired as a result thereof and
(C) mortgage liens or other security interests, provided that (as
regards this clause (C)) such mortgage liens or other security
interests effectively provide that such Engine shall not become
subject to the lien of such mortgage or security interest,
notwithstanding the installation thereof on such airframe;
(iv) install an Engine on an airframe leased to the Owner (or
any Lessee) or purchased by the Owner (or any Lessee) subject to a
conditional sale or other security agreement, provided that (x) such
airframe is free and clear of all Liens, except: (A) the rights of
the parties to the lease or conditional sale or other security
agreement covering such airframe, or their assignees, and (B) Liens
of the type permitted by subparagraph (iii) of this paragraph (b)
and (y) such lease, conditional sale or other security agreement
effectively provides that such Engine shall not become subject to
the lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such
airframe;
-38-
(v) install an Engine on an airframe owned by the Owner (or
any Lessee), leased to the Owner (or any Lessee) or purchased by the
Owner (or any Lessee) subject to a conditional sale or other
security agreement under circumstances where neither subparagraph
(iii) nor subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of Loss
with respect to such Engine and the Owner shall (or shall cause any
Lessee to) comply with Section 7.06(b) hereof in respect thereof,
the Indenture Trustee not intending hereby to waive any right or
interest it may have to or in such Engine under applicable law until
compliance by the Owner with such Section 7.06(b);
(vi) to the extent permitted by Section 7.03(b) hereof,
subject any appliances, Parts or other equipment owned by the Owner
and removed from the Airframe or any Engine to any pooling
arrangement referred to in Section 7.03(b) hereof;
(vii) subject (or permit any Lessee to subject) the Airframe
or any Engine to the Civil Reserve Air Fleet Program and transfer
(or permit any Lessee to transfer) possession of the Airframe or any
Engine to the United States of America or any instrumentality or
agency thereof pursuant to the Civil Reserve Air Fleet Program, so
long as the Owner (or any Lessee) shall (A) promptly notify the
Indenture Trustee upon subjecting the Airframe or any Engine to the
Civil Reserve Air Fleet Program in any contract year and provide the
Indenture Trustee with the name and address of the Contracting
Office Representative for the Air Mobility Command of the United
States Air Force to whom notice must be given pursuant to Section
4.02 hereof, and (B) promptly notify the Indenture Trustee upon
transferring possession of the Airframe or any Engine to the United
States of America or any agency or instrumentality thereof pursuant
to such program;
(viii) enter into a Wet Lease for the Airframe and Engines or
engines then installed thereon with any third party provided that if
the Owner (or any Lessee) shall enter into any Wet Lease for a
period of more than one year (including renewal options) the Owner
shall provide the Indenture Trustee written notice of such Wet Lease
(such notice to be given prior to entering into such Wet Lease, if
practicable, but in any event promptly after entering into such Wet
Lease);
(ix) transfer possession of the Airframe or any Engine to the
United States of America or any instrumentality or agency thereof
pursuant to a contract, a copy of which shall be provided to the
Indenture Trustee; or
(x) the Owner may, at any time, enter into any lease with (1)
a U.S. Air Carrier, (2) any Person approved in writing by the
Indenture Trustee, which approval shall not be unreasonably withheld
or (3) any Permitted Lessee if (A)
-39-
in any such case, the Lessee under such lease is not subject to a
proceeding or final order under applicable bankruptcy, insolvency or
reorganization laws on the date such lease is entered into, (B) in
the event that the Lessee under such lease is a foreign air carrier
(other than a foreign air carrier principally based in Taiwan), the
United States maintains diplomatic relations with the country in
which such proposed Lessee is principally based at the time such
lease is entered into (or, in the case of a lease to a proposed
Lessee principally based in Taiwan, maintains diplomatic relations
at least as good as those in effect on the Closing Date) and (C) in
the event that the Lessee under such lease is a foreign air carrier,
the Indenture Trustee shall have received an opinion of counsel to
the Owner to the effect that (I) the terms of the proposed lease
will be legal, valid, binding and (subject to customary exceptions
in foreign opinions generally) enforceable against the proposed
Lessee in the country in which the proposed Lessee is principally
based, (II) there exist no possessory rights in favor of the Lessee
under such lease under the laws of such Lessee's country of domicile
that would, upon bankruptcy or insolvency of or other default by the
Owner and assuming at such time such Lessee is not insolvent or
bankrupt, prevent the return or repossession of the Aircraft in
accordance with the terms of this Trust Indenture, (III) the laws of
such Lessee's country of domicile require fair compensation by the
government of such jurisdiction payable in currency freely
convertible into Dollars for the loss of use of the Aircraft in the
event of the requisition by such government of such use, and (IV)
the laws of such Lessee's country of domicile would give recognition
to the Owner's title to the Aircraft, to the registry of the
Aircraft in the name of the Owner (or the proposed Lessee, as
"lessee", as appropriate) and to the Lien of this Trust Indenture.
The rights of any Lessee or other transferee who receives possession
by reason of a transfer permitted by this paragraph (b) (other than the transfer
of an Engine which is deemed an Event of Loss) shall be effectively subject and
subordinate to, and any Lease permitted by this paragraph (b) shall be expressly
subject and subordinate to, all the terms of this Trust Indenture and to the
Lien of this Trust Indenture, including, without limitation, the covenants
contained in Section 7.02(a) hereof and the Indenture Trustee's rights to
foreclosure and repossession pursuant to Section 4.02 hereof and to avoid such
Lease upon such repossession, and the Owner shall remain primarily liable
hereunder for the performance of all of the terms of this Trust Indenture to the
same extent as if such Lease or transfer had not occurred, and, except as
otherwise provided herein, the terms of any such Lease shall not permit any
Lessee to take any action not permitted to be taken by the Owner in this Trust
Indenture with respect to the Aircraft. No pooling agreement, lease or other
relinquishment of possession of the Airframe or any Engine or Wet Lease shall in
any way discharge or diminish any of the Owner's obligations to the Indenture
Trustee hereunder or constitute a waiver of the Indenture Trustee's rights or
remedies hereunder. Any lease permitted under this Section 7.02(b) shall
expressly prohibit any further sublease by the Lessee. The Indenture Trustee
agrees, for the benefit of the Owner (and any Lessee) and for the benefit of any
mortgagee or other holder of a security interest in any engine (other than an
Engine) owned by the Owner
-40-
(or any Lessee), any lessor of any engine (other than an Engine) leased to the
Owner (or any Lessee) and any conditional vendor of any engine (other than an
Engine) purchased by the Owner (or any Lessee) subject to a conditional sale
agreement or any other security agreement, that no interest shall be created
hereunder in any engine so owned, leased or purchased and that neither the
Indenture Trustee nor its successors or assigns will acquire or claim, as
against the Owner (or any Lessee) or any such mortgagee, lessor or conditional
vendor or other holder of a security interest or any successor or assignee of
any thereof, any right, title or interest in such engine as the result of such
engine being installed on the Airframe; provided, however, that such agreement
of the Indenture Trustee shall not be for the benefit of any lessor or secured
party of any airframe (other than the Airframe) leased to the Owner (or any
Lessee) or purchased by the Owner (or any Lessee) subject to a conditional sale
or other security agreement or for the benefit of any mortgagee of or any other
holder of a security interest in an airframe owned by the Owner (or any Lessee),
unless such lessor, conditional vendor, other secured party or mortgagee has
expressly agreed (which agreement may be contained in such lease, conditional
sale or other security agreement or mortgage) that neither it nor its successors
or assigns will acquire, as against the Indenture Trustee, any right, title or
interest in an Engine as a result of such Engine being installed on such
airframe. The Owner shall provide to the Indenture Trustee (i) written notice of
any Lease hereunder (such notice to be given not later than five days prior to
entering into such Lease, if practicable, but in any event promptly after
entering into any such Lease) and (ii) a copy of each Lease which has a term of
more than three months.
(c) Insignia. On or prior to the Closing Date, or as soon as
practicable thereafter, the Owner agrees to affix and maintain (or cause to be
affixed and maintained), at its expense, in the cockpit of the Airframe adjacent
to the airworthiness certificate therein and on each Engine, a nameplate bearing
the inscription:
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Indenture Trustee as permitted herein). Except as above
provided, the Owner will not allow the name of any Person (other than the Owner)
to be placed on the Airframe or on any Engine as a designation that might be
interpreted as a claim of the ownership; provided that nothing herein contained
shall prohibit the Owner (or any Lessee) from placing its customary colors and
insignia on the Airframe or any Engine.
SECTION 7.03. Replacement and Pooling of Parts; Alterations,
Modifications and Additions.
(a) Replacement of Parts. The Owner, at its own cost and expense,
will so long as the Airframe or an Engine is subject to the Lien of this Trust
Indenture promptly
-41-
replace or cause to be replaced all Parts which may from time to time be
incorporated or installed in or attached to the 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, except as otherwise provided in paragraph (c) of this Section
7.03 or if the Airframe or an Engine to which a Part relates has suffered an
Event of Loss. In addition, the Owner (or any Lessee) may, at its own cost and
expense, remove in the ordinary course of maintenance, service, repair, overhaul
or testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use,
provided that the Owner (or any Lessee), except as otherwise provided in
paragraph (c) of this Section 7.03, will, at its own cost and expense, 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 paragraph (b) of this Section 7.03 and except in the case of
replacement property temporarily installed on an emergency basis) and shall be
in as good operating condition as, and shall have a value and utility at least
equal to, the Parts replaced assuming such replaced Parts were in the condition
and repair required to be maintained by the terms hereof. Except as otherwise
provided in paragraph (c) of this Section 7.03, all Parts 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 Parts shall be
replaced by Parts which have been incorporated or installed in or attached to
the Airframe or such Engine and which meet the requirements for replacement
Parts specified above. Immediately upon any replacement part becoming
incorporated or installed in or attached to the Airframe or any Engine as above
provided, without further act (subject only to Permitted Liens and any pooling
arrangement to the extent permitted by paragraph (b) of this Section 7.03 and
except in the case of replacement property temporarily installed on an emergency
basis), (i) title to such replacement Part shall be owned by the Owner, (ii)
such replacement Part shall become subject to the Lien of this Trust Indenture
and be deemed part of the Airframe or such Engine for all purposes hereof to the
same extent as the Parts originally incorporated or installed in or attached to
the Airframe or such Engine, and (iii) the replaced Part shall thereupon be free
and clear of all rights of the Indenture Trustee, and shall no longer be subject
to the Lien of this Trust Indenture or be deemed a Part hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe or any
Engine as provided in paragraph (a) of this Section 7.03 may be subjected by the
Owner (or any Lessee) to a normal pooling arrangement customary in the airline
industry of which the Owner (or, if a Lease is then in effect, any Lessee) is a
party entered into in the ordinary course of the Owner's (or any Lessee's)
business; provided that the Part replacing such removed Part shall be
incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided that the Owner (or any Lessee), at its expense, as
promptly thereafter as practicable, 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 (other than pooling arrangements), at which time such
temporary replacement Part shall become a
-42-
Part or (ii) replaces such replacement Part by incorporating or installing in or
attaching to the Airframe or Engine a further replacement Part which is subject
to the Lien of this Trust Indenture, free and clear of all Liens except
Permitted Liens (other than pooling arrangements).
(c) Alterations, Modifications and Additions. The Owner, at its own
expense, will make (or cause to be made) such alterations and modifications in
and additions to the Airframe and Engines as may be required from time to time
to meet the applicable standards of the FAA or any other governmental authority
having jurisdiction; provided, however, that the Owner (or, if a Lease is then
in effect, any Lessee) may, in good faith, contest the validity or application
of any such law, rule, regulation or order in any reasonable manner which does
not adversely affect the Indenture Trustee. In addition, the Owner (or any
Lessee), at its own expense, may from time to time add further parts or
accessories and make such alterations and modifications in and additions to the
Airframe or any Engine as the Owner (or any Lessee) may deem desirable in the
proper conduct of its business, including, without limitation, removal of Parts
which the Owner (or any Lessee) has determined in its reasonable judgment to be
obsolete or no longer suitable or appropriate for use on the Airframe or such
Engine (such parts, "Obsolete Parts"); provided that no such alteration,
modification or addition shall materially diminish the value, utility or
remaining useful life of the Airframe or such Engine below the value, utility or
remaining useful life thereof immediately prior to such alteration, modification
or addition, assuming the Airframe or such Engine was then in the condition
required to be maintained by the terms of this Trust Indenture, except that the
value (but not the utility or remaining useful life) of the Airframe or any
Engine may be reduced by the value of Obsolete Parts which shall have been
removed so long as the aggregate value of all Obsolete Parts which shall have
been removed and not replaced shall not exceed $800,000. All Parts incorporated
or installed in or attached or added to the Airframe or an Engine as the result
of such alteration, modification or addition (the "Additional Parts") shall,
without further act, become subject to the Lien of this Trust Indenture.
Notwithstanding the foregoing sentence, the Owner (or any Lessee) may remove or
suffer to be removed any Additional Part, provided that such Additional Part (i)
is in addition to, and not in replacement of or substitution for, any Part
originally incorporated or installed in or attached to the Airframe or any
Engine on the Closing Date or any Part in replacement of, or substitution for,
any such Part, (ii) is not required to be incorporated or installed in or
attached or added to the Airframe or any Engine pursuant to the terms of Section
7.02 hereof or the first sentence of this paragraph (c) and (iii) can be removed
from the Airframe or such Engine without diminishing or impairing the value,
utility or remaining useful life which the Airframe or such Engine would have
had at the time of removal had such alteration, modification or addition not
occurred, assuming that such Airframe or Engine was in the condition and repair
required to be maintained by the terms hereof. Upon the removal by the Owner (or
any Lessee) of any Part as provided above, such Part shall, without further act,
be free and clear of all rights of the Indenture Trustee, such Part shall not be
subject to the Lien of this Trust Indenture and such Part shall no longer be
deemed part of the Airframe or Engine from which it was removed.
-43-
SECTION 7.04. Insurance.
(a) Public Liability and Property Damage Insurance.
(I) Except as provided in clause (II) of this Section 7.04(a), the
Owner will carry or cause to be carried at its or any Lessee's expense (i)
aircraft public liability (including, without limitation, passenger legal
liability) (and including aircraft war risk and hijacking insurance, if and to
the extent the same is maintained by the Owner (or, if a Lease is then in
effect, if and to the extent maintained by Lessee) with respect to other
aircraft owned or leased, and operated by the Owner (or such Lessee) on the same
routes) insurance and property damage insurance (exclusive of manufacturer's
product liability insurance) with respect to the Aircraft, in an amount not less
than the greater of (x) the amount of public liability and property damage
insurance from time to time applicable to aircraft owned or operated by the
Owner (or, if a Lease is then in effect, by Lessee) of the same type as the
Aircraft and (y) $400,000,000 per occurrence and (ii) cargo liability insurance,
in the case of both clause (i) and clause (ii), (A) of the type and covering the
same risks as from time to time applicable to aircraft operated by the Owner
(or, if a Lease is then in effect, by Lessee) of the same type as the Aircraft
and (B) which is maintained in effect with insurers of recognized
responsibility. Any policies of insurance carried in accordance with this
paragraph (a) and any policies taken out in substitution or replacement for any
of such policies (A) shall be amended to name the Indenture Trustee (but without
imposing on such party liability to pay the premiums for such insurance) (and,
if any Lease shall be in effect, the Owner in its capacity as lessor under the
Lease) as an additional insured as its interest may appear, (B) shall provide
that in respect of the interest of the Indenture Trustee (and, if any Lease
shall be in effect, the Owner in its capacity as lessor under the Lease) in such
policies the insurance shall not be invalidated by any action or inaction of the
Owner (or, if any Lease is then in effect, any Lessee) or any other Person and
shall insure the Indenture Trustee (and, if any Lease shall be in effect, the
Owner in its capacity as lessor under the Lease) regardless of any breach or
violation of any warranty, declaration or condition contained in such policies
by the Owner (or, if any Lease is then in effect, any Lessee), (C) may provide
for self-insurance to the extent permitted by Section 7.04(d) and (D) shall
provide that if the insurers cancel such insurance for any reason whatever or if
any material change is made in such insurance which adversely affects the
interest of the Indenture Trustee (or, if any Lease shall be in effect, the
Owner in its capacity as lessor under the Lease), or such insurance shall lapse
for non-payment of premium, such cancellation, lapse or change shall not be
effective as to the Indenture Trustee (or, if any Lease shall be in effect, the
Owner in its capacity as lessor under the Lease) for thirty (30) days (seven (7)
days in the case of war risk and allied perils coverage) after issuance to the
Indenture Trustee (or, if any Lease shall be in effect, the Owner in its
capacity as lessor under the Lease) of written notice by such insurers of such
cancellation, lapse or change; provided, however, that if any notice period
specified above is not reasonably obtainable, such policies shall provide for as
long a period of prior notice as shall then be reasonably obtainable. Each
liability policy (1) shall be primary without right of contribution from any
other insurance which is carried by the Indenture Trustee (or, if any Lease
shall be in effect, the Owner in its capacity as lessor under the Lease), (2)
shall expressly provide that all of the provisions thereof, except the limits of
liability, shall operate in the same manner as
-44-
if there were a separate policy covering each insured, and (3) shall waive any
right of the insurers to any set-off or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of the Indenture
Trustee (or, if any Lease shall be in effect, the Owner in its capacity as
lessor under the Lease) to the extent of any moneys due to the Indenture Trustee
(or, if any Lease shall be in effect, the Owner in its capacity as lessor under
the Lease).
(II) During any period that the Aircraft is on the ground and not in
operation, the Owner may carry or cause to be carried, in lieu of the insurance
required by clause (I) above, insurance otherwise conforming with the provisions
of said clause (I) except that (A) the amounts of coverage shall not be required
to exceed the amounts of public liability and property damage insurance from
time to time applicable to aircraft owned or operated by the Owner (or, if a
Lease is then in effect, by Lessee) of the same type as the Aircraft which are
on the ground and not in operation; and (B) the scope of the risks covered and
the type of insurance shall be the same as from time to time shall be applicable
to aircraft owned or operated by the Owner (or, if a Lease is then in effect, by
Lessee) of the same type which are on the ground and not in operation.
(b) Insurance Against Loss or Damage to the Aircraft. (I) Except as
provided in clause (II) of this Section 7.04(b), the Owner shall maintain or
cause to be maintained in effect, at its or any Lessee's expense, with insurers
of recognized responsibility, all-risk ground and flight aircraft hull insurance
covering the Aircraft and all-risk ground and flight coverage of Engines and
Parts while temporarily removed from the Aircraft and not replaced by similar
components (including, without limitation, war risk and governmental
confiscation and expropriation (other than by the government of registry of the
Aircraft) and hijacking insurance, if and to the extent the same is maintained
by the Owner (or, if a Lease is then in effect, by Lessee) with respect to other
aircraft owned or operated by the Owner (or such Lessee) on the same routes,
except that the Owner (or such Lessee) shall maintain war risk and governmental
confiscation and expropriation (other than by the government of registry of the
Aircraft) and hijacking insurance if the Aircraft is operated on routes where
the custom is for major international air carriers flying comparable routes to
carry such insurance) which is of the type as from time to time applicable to
aircraft owned or operated by the Owner (or, if a Lease is then in effect, by
Lessee) of the same type as the Aircraft; provided that such insurance shall at
all times while the Aircraft is subject to this Trust Indenture be for an amount
(subject to self-insurance to the extent permitted by Section 7.04(d)) not less
than the 100% of the then aggregate unpaid Principal Amount of the Secured
Certificates (the "Loan Loss Value"). Any policies carried in accordance with
this paragraph (b) covering the Aircraft and any policies taken out in
substitution or replacement for any such policies (i) shall name the Indenture
Trustee (and, if any Lease shall be in effect, the Owner in its capacity as
lessor under the Lease) as an additional insured, as its interest may appear
(but without imposing on such party liability to pay premiums with respect to
such insurance), (ii) may provide for self-insurance to the extent permitted in
Section 7.04(d), (iii) shall provide that (A) in the event of a loss involving
proceeds in excess of $7,000,000 (or, if the Aircraft is then under a Lease, in
excess of $4,000,000), the proceeds in respect of such loss up to an amount
equal to the aggregate unpaid Principal Amount of the Secured Certificates plus
all accrued
-45-
and unpaid interest thereon (the "Balance Due") shall be payable to the
Indenture Trustee (except in the case of a loss with respect to an Engine
installed on an airframe other than the Airframe, in which case the Owner (or
any Lessee) shall arrange for any payment of insurance proceeds in respect of
such loss to be held for the account of the Indenture Trustee whether such
payment is made to the Owner (or any Lessee) or any third party), it being
understood and agreed that in the case of any payment to the Indenture Trustee
otherwise than in respect of an Event of Loss, the Indenture Trustee shall, upon
receipt of evidence 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 the Owner or
its order, and (B) the entire amount of any loss involving proceeds of
$7,000,000 (or, if the Aircraft is then under a Lease, of $4,000,000) or less or
the amount of any proceeds of any loss in excess of the Balance Due shall be
paid to the Owner or its order unless an Event of Default shall have occurred
and be continuing and the insurers have been notified thereof by the Indenture
Trustee, (iv) shall provide that if the insurers cancel such insurance for any
reason whatever, or such insurance lapses for non-payment of premium or if any
material change is made in the insurance which adversely affects the interest of
the Indenture Trustee, such cancellation, lapse or change shall not be effective
as to the Indenture Trustee (or, if any Lease shall be in effect, the Owner in
its capacity as lessor under the Lease) for thirty (30) days (seven (7) days in
the case of hull war risk and allied perils coverage) after issuance to the
Indenture Trustee (or, if any Lease shall be in effect, the Owner in its
capacity as lessor under the Lease), respectively, of written notice by such
insurers of such cancellation, lapse or change, provided, however, that if any
notice period specified above is not reasonably obtainable, such policies shall
provide for as long a period of prior notice as shall then be reasonably
obtainable, (v) shall provide that in respect of the interest of the Indenture
Trustee (and, if any Lease shall be in effect, the Owner in its capacity as
lessor under the Lease) in such policies the insurance shall not be invalidated
by any action or inaction of the Owner (or, if a Lease is then in effect, any
Lessee) or any other Person and shall insure the Indenture Trustee (and, if any
Lease shall be in effect, the Owner in its capacity as lessor under the Lease)
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by the Owner (or, if a Lease is then in effect, any
Lessee), (vi) shall be primary without any right of contribution from any other
insurance which is carried by the Indenture Trustee (or, if any Lease shall be
in effect, the Owner in its capacity as lessor under the Lease), (vii) shall
waive any right of subrogation of the insurers against the Indenture Trustee
(and, if any Lease shall be in effect, the Owner in its capacity as lessor under
the Lease), and (viii) shall waive any right of the insurers to set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Indenture Trustee or the Owner (or any Lessee)
to the extent of any moneys due to the Indenture Trustee. In the case of a loss
with respect to an engine (other than an Engine) installed on the Airframe, the
Indenture Trustee shall hold any payment to it of any insurance proceeds in
respect of such loss for the account of any third party that is entitled to
receive such proceeds.
As between the Indenture Trustee and the Owner, it is agreed that
all insurance payments received as the result of the occurrence of an Event of
Loss will be applied as follows:
-46-
(x) if such payments are received as a result of an Event of
Loss with respect to the Airframe (or the Airframe and the Engines
installed thereon) that has been or is being replaced by the Owner
as contemplated by Section 7.06(a) hereof, such payments shall be
paid over to, or retained by, the Indenture Trustee as security and
upon completion of such replacement shall be paid over to the Owner;
(y) if such payments are received with respect to the Airframe
(or the Airframe and the Engines installed thereon) that has not
been or is not being replaced by the Owner as contemplated by
Section 7.06(a) hereof, so much of such payments remaining, after
reimbursement of the Indenture Trustee for reasonable costs and
expenses, as shall not exceed the Balance Due shall be applied in
reduction of the Owner's obligation to pay such Balance Due, if not
already paid by the Owner, or, if already paid by the Owner, shall
be applied to reimburse the Owner for its payment of such Balance
Due, and the balance, if any, of such payments remaining thereafter
will be paid over to, or retained by, the Owner (or if directed by
the Owner, any Lessee); and
(z) if such payments are received with respect to an Engine or
Part under the circumstances contemplated by Section 7.06(b) hereof,
so much of such payments remaining, after reimbursement of the
Indenture Trustee for reasonable costs and expenses, shall be paid
over to, or retained by, the Owner (or if directed by the Owner, any
Lessee), provided that the Owner shall have fully performed, or
concurrently therewith will fully perform, the terms of Section
7.06(b) hereof with respect to the Event of Loss for which such
payments are made.
As between the Indenture Trustee and the Owner, the insurance
payments for any property damage loss to the Airframe or any engine not
constituting an Event of Loss with respect thereto will be applied in payment
for repairs or for replacement property in accordance with the terms of Sections
7.02 and 7.03, if not already paid for by the Owner (or any Lessee), and any
balance (or if already paid for by the Owner (or any Lessee), all such insurance
proceeds) remaining after compliance with such Sections with respect to such
loss shall be paid to the Owner (or any Lessee if directed by the Owner).
(II) During any period that the Aircraft is on the ground and not in
operation, the Owner may carry or cause to be carried, in lieu of the insurance
required by clause (I) above, insurance otherwise conforming with the provisions
of said clause (I) except that the scope of the risks and the type of insurance
shall be the same as from time to time applicable to aircraft owned or operated
by the Owner (or, if a Lease is then in effect, by Lessee) of the same type
similarly on the ground and not in operation, provided that the Owner shall
maintain insurance against risk of loss or damage to the Aircraft in an amount
equal to the Loan Loss Value of the Aircraft during such period that the
Aircraft is on the ground and not in operation.
-47-
(c) Reports, etc. The Owner will furnish, or cause to be furnished,
to the Indenture Trustee, on or before the Closing Date and on or before July 1
in each year thereafter during the Term commencing July, _____, a report, signed
by Aon Risk Services, Inc., Aon Risk Services of Minnesota, Inc. or any other
independent firm of insurance brokers reasonably acceptable to the Indenture
Trustee (the "Insurance Brokers"), describing in reasonable detail the insurance
and reinsurance then carried and maintained with respect to the Aircraft and
stating the opinion of such firm that the insurance then carried and maintained
with respect to the Aircraft complies with the terms hereof; provided, however,
that all information contained in the foregoing report shall not be made
available by the Indenture Trustee or the Loan Participants to anyone except (A)
to permitted transferees of the Loan Participants' or the Indenture Trustee who
agree to hold such information confidential, (B) to the Loan Participants' or
the Indenture Trustee's counsel or independent certified public accountants or
independent insurance advisors who agree to hold such information confidential
or (C) as may be required by any statute, court or administrative order or
decree or governmental ruling or regulation. The Owner will cause such Insurance
Brokers to agree to advise the Indenture Trustee in writing of any default in
the payment of any premium and of any other act or omission on the part of the
Owner of which it has knowledge and which might invalidate or render
unenforceable, in whole or in part, any insurance on the Aircraft. To the extent
such agreement is reasonably obtainable, the Owner will also cause such
Insurance Brokers to agree to advise the Indenture Trustee in writing at least
thirty (30) days (seven (7) days in the case of war risk and allied perils
coverage), prior to the expiration or termination date of any insurance carried
and maintained on the Aircraft pursuant to this Section 7.04. In addition, the
Owner will also cause such Insurance Brokers to deliver to the Indenture
Trustee, on or prior to the date of expiration of any insurance policy
referenced in a previously delivered certificate of insurance, a new certificate
of insurance, substantially in the same form as delivered by the Owner to such
party on the Closing Date. In the event that the Owner or any Lessee shall fail
to maintain or cause to be maintained insurance as herein provided, the
Indenture Trustee may at its sole option provide such insurance and, in such
event, the Owner shall, upon demand, reimburse the Indenture Trustee for the
cost thereof to Indenture Trustee, without waiver of any other rights Indenture
Trustee may have.
(d) Self-Insurance. The Owner may self-insure by way of deductible,
premium adjustment or franchise provisions or otherwise (including, with respect
to insurance maintained pursuant to Section 7.04(b), insuring for a maximum
amount which is less than the Loan Loss Value of the Aircraft) in the insurance
covering the risks required to be insured against pursuant to this Section 7.04
under a program applicable to all aircraft in the Owner's fleet, but in no case
shall the aggregate amount of self-insurance in regard to Section 7.04(a) and
Section 7.04(b) exceed during any policy year, with respect to all of the
aircraft in the Owner's fleet (including, without limitation, the Aircraft), the
lesser of (a) 50% of the largest replacement value of any single aircraft in the
Owner's fleet or (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 the Owner carries insurance. In addition, the Owner (and any
Lessee) may self-insure to the extent of any applicable mandatory minimum per
aircraft (or, if applicable, per annum or other period) hull or liability
insurance deductible imposed by the aircraft hull or liability insurers.
-48-
(e) Additional Insurance by the Owner. The Owner (and any Lessee)
may at its own expense carry insurance with respect to its interest in the
Aircraft in amounts in excess of that required to be maintained by this Section
7.04.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 7.04 requiring insurance, the
Indenture Trustee agrees to accept, in lieu of insurance against any risk with
respect to the Aircraft, indemnification from, or insurance provided by, the
United States Government or any agency or instrumentality thereof or, upon the
written consent of the Indenture Trustee, other government of registry of the
Aircraft or any agency or instrumentality thereof, against such risk in an
amount which, when added to the amount of insurance against such risk maintained
by the Owner (or any Lessee) with respect to the Aircraft (including permitted
self-insurance) shall be at least equal to the amount of insurance against such
risk otherwise required by this Section 7.04.
(g) Application of Payments During Existence of an Event of Default.
Any amount referred to in paragraph (b) of this Section 7.04 which is payable to
or retainable by the Owner (or any Lessee) shall not be paid to or retained by
the Owner (or any Lessee) if at the time of such payment or retention an Event
of Default shall have occurred and be continuing, but shall be held by or paid
over to the Indenture Trustee as security for the obligations of the Owner (or
any Lessee) under this Trust Indenture and applied against the Owner's
obligations hereunder as and when due. Upon the earlier of (a) such time as
there shall not be continuing any such Event of Default or (b) the termination
of this Trust Indenture in accordance with Section 11.01 hereof, such amount
shall be paid to the Owner (or such Lessee) to the extent not previously applied
in accordance with the preceding sentence.
SECTION 7.05. Inspection.
At all reasonable times and upon at least 15 days' prior written
notice to the Owner, the Indenture Trustee or its authorized representative may
(not more than once every calendar year (unless an Event of Default has occurred
and is continuing when such inspection right shall not be so limited)) inspect
the Aircraft and inspect and make copies (at the Indenture Trustee's expense) of
the books and records of the Owner relating to the maintenance of the Aircraft;
any such inspection of the Aircraft shall be limited to a visual, walk-around
inspection and shall not include opening any panels, bays or the like without
the express consent of the Owner; provided that no exercise of such inspection
right shall interfere with the operation or maintenance of the Aircraft by, or
the business of, the Owner (or any Lessee). The Indenture Trustee shall not have
any duty to make any such inspection nor shall it incur any liability or
obligation by reason of not making such inspection.
SECTION 7.06. Loss, Destruction, Requisition, etc.
(a) Event of Loss with Respect to the Aircraft. Upon the occurrence
of an Event of Loss with respect to the Airframe or the Airframe and the Engines
and/or engines then installed thereon, the Owner shall forthwith (and in any
event, within fifteen (15) days after such occurrence) give the Indenture
Trustee written notice of such Event of Loss, and
-49-
within forty-five (45) days after such Event of Loss the Owner shall give the
Indenture Trustee written notice of its election to perform one of the following
options (it being agreed that if the Owner shall not have given such notice of
election within such period, the Owner shall be deemed to have elected the
option set forth in clause (i) below). The Owner may elect either to:
(i) redeem the Secured Certificates in accordance with Section
2.10 hereof not later than the earlier of (x) the Business Day next
succeeding the 120th day following the occurrence of such Event of
Loss or (y) an earlier Business Day irrevocably specified fifteen
(15) days in advance by notice from the Owner to the Indenture
Trustee; or
(ii) substitute an aircraft or an airframe or an airframe and
one or more engines, as the case may be;
provided that, if the Owner does not perform its obligation to effect such
substitution in accordance with this Section 7.06(a) during the period of time
provided herein, then the Owner shall pay or cause to be paid to the Indenture
Trustee on the Business Day next succeeding the 120th day following the
occurrence of such Event of Loss the amount specified in clause (i) above.
In the event the Owner shall elect to substitute an aircraft (or an
airframe or an airframe and one or more engines, as the case may be), the Owner
shall at its sole expense, not later than the Business Day next succeeding the
120th day following the occurrence of such Event of Loss, (x) 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 an Event
of Loss, a Replacement Engine therefor, such Replacement Airframe and
Replacement Engines, if any, to be free and clear of all Liens (other than
Permitted Liens) and having a value, utility and remaining useful life (without
regard to hours or cycles) at least equal to the Airframe or Engine, as the case
may be, subject to such Event of Loss assuming that the Aircraft had been
maintained in accordance with this Trust Indenture; provided that the
Replacement Airframe and the Replacement Engines, if any, shall be of the same
or improved model as the Airframe or Engine, as the case may be, that are
replaced and (y) prior to or at the time of any such substitution, the Owner (or
any Lessee), at its own expense, will (1) furnish the Indenture Trustee a copy
of the original ▇▇▇▇ of sale respecting such Replacement Airframe and the
Replacement Engines, if any, and appropriate instruments assigning to the
Indenture Trustee the benefits, if any, of all manufacturer's and vendor's
warranties generally available and permitted to be assigned by the Owner with
respect to such Replacement Airframe and Replacement Engines, if any, (2) cause
a Trust Indenture Supplement to be duly executed by the Owner and filed for
recording pursuant to the Federal Aviation Act, or the applicable laws, rules
and regulations of any other jurisdiction in which the Replacement Airframe and
Replacement Engines, if any, may then be registered as permitted by Section 8(f)
of the Participation Agreement, (3) cause a financing statement or statements
with respect to such Replacement Airframe and Replacement Engines, if any, to be
filed in such place or
-50-
places as are deemed necessary or desirable by counsel for the Indenture Trustee
to perfect the Indenture Trustee's interest therein, (4) furnish the Indenture
Trustee with such evidence of compliance with the insurance provisions of
Section 7.04 with respect to such Replacement Airframe and Replacement Engines,
if any, as the Indenture Trustee's counsel may reasonably request, (5) furnish
the Indenture Trustee with (A) an opinion of in-house counsel to the Owner, or
other counsel satisfactory to the Indenture Trustee, stating that the
Replacement Airframe and Replacement Engines, if any, has or have been validly
subjected to the Lien of this Trust Indenture, the instruments subjecting such
Replacement Airframe and Replacement Engines, if any, to the Lien of this Trust
Indenture, have been duly filed for recordation pursuant to the Federal Aviation
Act or any other law then applicable to the registration of the Replacement
Airframe and Replacement Engines, if any, and no further action, filing or
recording of any document is necessary or advisable in order to establish and
perfect the Lien of this Trust Indenture on such Replacement Airframe and
Replacement Engines, if any (B) a certificate signed by a duly authorized
officer of the Owner stating the following: (i) a description of the replaced
Airframe and Engines, if any, which shall be identified by manufacturer, model,
FAA registration number (or other applicable registration information) and
manufacturer's serial number; (ii) a description of the Replacement Airframe and
Replacement Engines, if any, to be received (including the manufacturer, model,
FAA registration number (or other applicable registration information) and
manufacturer's serial number) as consideration for the replaced Airframe and
Engines, if any; (iii) that the Replacement Airframe and Replacement Engines, if
any, is or are of the same or an improved model as the Airframe and Engines, if
any, requested to be released from this Trust Indenture; (iv) the value, utility
and remaining useful life (without regard to hours or cycles) of the Replacement
Airframe and Replacement Engines, if any, as of the date of such certificate
(which in the judgment of the Owner shall be not less than the then value,
utility and remaining useful life (without regard to hours or cycles) of the
Airframe and Engines, if any, requested to be released (assuming such Airframe
and Engines, if any, was or were in the condition and repair required to be
maintained under this Trust Indenture)); and (v) that no Event of Default or
Default has occurred which has not been remedied or waived, and that the Owner
will not be in default, by the making and granting of the request for release
and the addition of a Replacement Airframe and Replacement Engines, if any, in
the performance of any of the terms and covenants of the Owner, and (C) a
certificate from either an aircraft engineer (who may be an employee of the
Owner) or a firm of independent aircraft appraisers selected by the Owner
confirming the accuracy of the information set forth in sub-clause (iv) of the
immediately preceding clause (5)(B) of this Section 7.06(a), and (6) furnish the
Indenture Trustee with an opinion of counsel (which shall be Cadwalader,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ and, if not, other counsel chosen by the Owner and reasonably
acceptable to the Indenture Trustee) reasonably satisfactory to the Indenture
Trustee to the effect that the Indenture Trustee will be entitled to the
benefits of Section 1110 of the U.S. Bankruptcy Code with respect to the
Replacement Airframe, provided that such opinion need not be delivered to the
extent that immediately prior to such substitution the benefits of Section 1110
of the U.S. Bankruptcy Code were not, solely by reason of a change in law or
governmental interpretation thereof, available to the Indenture Trustee. For all
purposes hereof, the property so substituted shall after such transfer be deemed
part of the property subject to the Lien of this
-51-
Trust Indenture and shall be deemed an "Aircraft", "Airframe" and "Engine", as
the case may be, as defined herein.
Upon the Owner having provided a Replacement Airframe and
Replacement Engines, if any, as provided for in this Section 7.06(a), (x) 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; the Indenture Trustee shall, at the cost and expense of the Owner,
release from the Lien of this Trust Indenture the replaced Airframe and Engines,
if any, with respect to which such Event of Loss occurred, by executing and
delivering to the Owner such documents and instruments, prepared at the Owner's
expense, as the Owner may reasonably request to evidence such release; and (y)
the Indenture Trustee shall assign to the Owner all claims it may have against
any other Person arising from the Event of Loss and the Owner shall receive all
insurance proceeds 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 Sections 7.04(b) and
7.06(c)(i) hereof.
(b) Substitution with Respect to an Engine. The Owner shall (i) so
long as no Default or Event of Default has occurred which has not been remedied
or waived, have the right to substitute a Replacement Engine for any Engine at
its option at any time, on at least thirty (30) days' prior written notice to
the Indenture Trustee and (ii) substitute a Replacement Engine for an Engine if
an Event of Loss shall have occurred with respect to such Engine (under
circumstances in which there has not occurred an Event of Loss with respect to
the Airframe) within sixty (60) days after the occurrence of such Event of Loss
(such Replacement Engine to be of the same or another manufacturer of the same,
an equivalent or an improved model and suitable for installation and use on the
Airframe without impairing the value, utility or remaining useful life of the
Aircraft; provided that all Engines shall be of the same make and model) free
and clear of all Liens (other than Permitted Liens) and having a value, utility
and remaining useful life (without regard to hours or cycles) at least equal to
the replaced Engine assuming that such replaced Engine had been maintained in
accordance with the provisions of this Trust Indenture. Prior to or at the time
of any such substitution, the Owner, at its own expense, will (1) furnish the
Indenture Trustee with (A) a copy of the original ▇▇▇▇ of sale with respect to
such Replacement Engine and (B) appropriate instruments assigning to the
Indenture Trustee the benefits, if any, of all manufacturer's and vendor's
warranties generally available and permitted to be assigned by the Owner with
respect to such Replacement Engine, (2) cause a Trust Indenture Supplement to be
duly executed by the Owner and to be filed for recording pursuant to the Federal
Aviation Act, or the applicable laws, rules and regulations of any other
jurisdiction in which the Aircraft may then be registered as permitted by
Section 8(f) of the Participation Agreement, (3) cause a financing statement or
statements covering the Lien created by this Trust Indenture with respect to the
Replacement Engine to be filed in such place or places as are deemed necessary
or desirable by counsel for the Indenture Trustee to perfect the Indenture
Trustee's interest therein, (4) furnish the Indenture Trustee with such evidence
of compliance with the insurance provisions of Section 7.04 hereof with respect
to such Replacement Engine as the Indenture Trustee may reasonably request, and
(5) furnish the Indenture Trustee with (A) an opinion of in-house counsel to the
Owner, or other counsel
-52-
satisfactory to the Indenture Trustee, stating that the Replacement Engine has
been validly subjected to the Lien of this Trust Indenture, the instruments
subjecting such Replacement Engine to the Lien of this Trust Indenture have been
duly filed for recordation pursuant to the Federal Aviation Act or any other law
then applicable to the registration of the Aircraft, and no further action,
filing or recording of any document is necessary or advisable in order to
establish and perfect the Lien of this Trust Indenture on such Replacement
Engine and (B) a certificate signed by a duly authorized officer of the Owner
stating the following: (i) a description of the replaced Engine which shall be
identified by manufacturer's serial number; (ii) a description of the
Replacement Engine (including the manufacturer's name and serial number) as
consideration for the replaced Engine; (iii) that such Replacement Engine is
substantially the same as the replaced Engine (or an improved model); and (iv)
the value, utility and remaining useful life (without regard to hours or cycles)
of the Replacement Engine as of the date of such certificate (which in the
judgment of the Owner shall not be less than the then value, utility and
remaining useful life (without regard to hours or cycles) of the Engine
requested to be released (assuming such Engine was in the condition and repair
required to be maintained under this Trust Indenture).
Upon the Owner having provided a Replacement Engine, as provided for
in this Section 7.06(b), (x) the Lien of this Trust Indenture shall continue
with respect to such Replacement Engine; the Indenture Trustee shall, at the
cost and expense of the Owner, release from the Lien of this Trust Indenture the
replaced Engine by executing and delivering to the Owner such documents and
instruments, prepared at the Owner's expense, as the Owner may reasonably
request to evidence such release; and (y) the Indenture Trustee shall assign to
the Owner all claims it may have against any other Person arising from an Event
of Loss of such replaced Engine giving rise to such substitution and the Owner
shall receive all insurance proceeds 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 Engine, as provided in Sections 7.04(b) and 7.06(c)(ii) hereof.
For all purposes hereof, each such Replacement Engine shall, after such
conveyance, be deemed part of the property subject to the Lien of this Trust
Indenture, and shall be deemed an "Engine".
(c) Application of Payments from Governmental Authorities for
Requisition of Title, etc. Any payments (other than insurance proceeds the
application of which is provided for in Section 7.04) received at any time by
the Indenture Trustee or by the Owner from any governmental authority or other
Person with respect to an Event of Loss will be applied as follows:
(i) if payments are received with respect to the Airframe (or
the Airframe and any Engine then installed thereon), that has been
or is being replaced by the Owner as contemplated by Section 7.06(a)
hereof, such payments shall be paid over to, or retained by the
Indenture Trustee as security and upon completion of such
replacement and compliance by the Owner with the provisions of
Section 7.06(a) with respect to the Event of Loss for which such
payments are made, be paid over to the Owner;
-53-
(ii) if such payments are received with respect to the
Airframe (or the Airframe and any Engines installed thereon) or an
Engine or Part (not involving an Event of Loss as to the Airframe)
that has been or is being replaced by the Owner pursuant to Section
7.06(b) hereof, such payments shall be paid over to, or retained by,
the Owner; and
(iii) if such payments are received with respect to the
Airframe (or the Airframe and any Engines installed thereon) that
has not been replaced by the Owner as contemplated by Section
7.06(a) hereof, so much of such payments remaining, after
reimbursement of the Indenture Trustee for reasonable costs and
expenses as shall not exceed the Balance Due, shall be applied in
reduction of the Owner's obligation to pay such Balance Due, if not
already paid by the Owner, or, if already paid by the Owner, shall
be applied to reimburse the Owner for its payment of such Balance
Due, and the balance, if any, of such payments remaining thereafter
will be paid over to, or retained by, the Owner (or if directed by
the Owner, any Lessee).
(d) Requisition for Use of the Aircraft. In the event of the
requisition for use by any government or any instrumentality or agency thereof,
so long as it does not constitute an Event of Loss, of the Airframe and the
Engines or engines installed on the Airframe, so long as the Airframe or an
Engine is subject to the Lien of this Trust Indenture, the Owner shall promptly
notify the Indenture Trustee of such requisition, and all of the Owner's
obligations under this Trust Indenture with respect to the Aircraft shall
continue to the same extent as if such requisition had not occurred. All
payments received by the Indenture Trustee or the Owner from such government or
instrumentality or agency thereof for the use of such Airframe and Engines or
engines shall be paid over to, or retained by, the Owner (or, if directed by the
Owner, any Lessee).
(e) Requisition for Use of an Engine. In the event of an Event of
Loss of an Engine resulting from the requisition for use of such Engine (but not
the Airframe) by any government or agency or instrumentality the Owner will
replace such Engine hereunder by complying (or causing any Lessee to comply)
with the terms of Section 7.06(b) hereof and any payments received by the
Indenture Trustee or the Owner from such government with respect to such
requisition shall be paid over to, or retained by, the Owner.
(f) Application of Payments During Existence of Event of Default.
Any amount referred to in this Section 7.06 which is payable to or retainable by
the Owner (or any Lessee) shall not be paid to or retained by the Owner (or such
Lessee) if at the time of such payment or retention an Event of Default shall
have occurred and be continuing, but shall be held by or paid over to the
Indenture Trustee as security for the obligations of the Owner (or such Lessee)
under this Trust Indenture and applied against the Owner's obligations hereunder
as and when due. Upon the earlier of (a) such time as there shall not be
continuing any such Event of Default or (b) the termination of this Trust
Indenture in accordance with Section 11.01 hereof, such amount shall be paid to
the Owner (or such Lessee) to the extent not previously applied in accordance
with the preceding sentence.
-54-
Section 7.07. Interests in the Purchase Agreement.
The grant by the Owner to the Indenture Trustee of the Owner's
interests in and to the Contract Rights as set forth in clause (2) of the
Granting Clause hereof is subject to the following:
(a) If and so long as (A) the Aircraft shall be subject to this
Trust Indenture and (B) the Manufacturer shall not have received written notice
from the Indenture Trustee (including by mail, courier, telex, or telecopy
thereof from the Indenture Trustee addressed to the Manufacturer's Vice
President - Contracts at ▇.▇. ▇▇▇ ▇▇▇▇, Mail Code 21-34, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ if by
mail; ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇. ▇.▇., ▇/▇ ▇▇-▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, if by courier;
▇▇▇-▇▇▇-▇▇▇▇ if by telecopy and 32-9430 (answerback BOEINGREN), if by telex)
that an Event of Default under this Trust Indenture has occurred and is
continuing, (1) the Indenture Trustee authorizes the Owner, on behalf of but to
the exclusion of the Indenture Trustee, to exercise in the Owner's own name (i)
such rights and powers of the "Buyer" under the Purchase Agreement and (ii) such
rights as the Indenture Trustee may have with respect to the Aircraft under any
warranty, covenant, representation, service life policy, aircraft performance
guarantee, indemnity or product support agreement of the Manufacturer or any
subcontractor or vendor with respect thereto and, subject to paragraph 7.07(c)
hereof, to retain any recovery or benefit resulting from the enforcement of any
warranty, covenant, representation, service life policy, aircraft performance
guarantee, indemnity, or product support agreement of the Manufacturer or any
subcontractor or vendor under the Purchase Agreement in respect of the Aircraft,
and (2) the Indenture Trustee shall, at the Owner's expense, cooperate with the
Owner and take such actions as the Owner reasonably deems necessary to enable
the Owner to enforce such rights and claims.
(b) Effective upon the receipt by the Manufacturer of written notice
from the Indenture Trustee that an Event of Default under this Trust Indenture
has occurred and is continuing and thereafter until the Manufacturer shall have
received written notice from the Indenture Trustee that such Event of Default
has been cured or waived: (i) at the Indenture Trustee's option, the
authorization given to the Owner under paragraph 7.07(a) hereof to enforce such
rights and claims shall henceforth cease to be effective and the Indenture
Trustee and its successors and permitted assigns shall, to the exclusion of the
Owner, be entitled to assert and enforce such rights and claims as substitute
party plaintiff or otherwise, and the Owner shall, at the request of the
Indenture Trustee or its successors or permitted assigns and at the Owner's
expense, cooperate with and take such action as reasonably necessary to enable
the Indenture Trustee and its successors and permitted assigns to enforce such
rights and claims, and the Indenture Trustee, if it shall elect to enforce such
rights or claims, shall use its best efforts to assert and enforce such rights
and claims, and (ii) the Owner will be deemed to have irrevocably constituted
the Indenture Trustee and its successors and permitted assigns the Owner's true
and lawful attorney (it being acknowledged that such appointment is coupled with
an interest, namely the Indenture Trustee's rights acquired and to be acquired
hereunder) with full power (in the name of the Owner or otherwise) to ask,
require, demand, receive, settle, compromise, compound and give acquittance for
any and all monies and claims for monies due and to become due under, or arising
out of, the Purchase Agreement in respect of
-55-
the Aircraft, to the extent that the same have been assigned pursuant to clause
(2) of the Granting Clause hereof, and for such period as the Indenture Trustee
may exercise rights with respect thereto under this clause (ii), to endorse any
checks or other instruments or orders in connection therewith and to file any
claims or take any action or institute (or, if previously commenced, assume
control of) any proceedings and to obtain any recovery in connection therewith
which the Indenture Trustee may deem to be necessary or advisable in the
premises.
(c) Notwithstanding clause (2) of the Granting Clause hereof, this
Section 7.07 and anything in this Trust Indenture to the contrary, all amounts
that the Manufacturer is obligated to pay to the Owner under the Purchase
Agreement with respect to the Aircraft, including, without limitation, in
respect of refunds thereunder or resulting from the enforcement of any warranty,
service life policy, aircraft performance guarantee or indemnity or product
support agreement thereunder or the enforcement or exercise of any right or
power under the Purchase Agreement or hereunder (a "Manufacturer Payment")
(excluding, however, from the Manufacturer Payments any amounts the Manufacturer
is obligated to pay to the Owner with respect to the rights reserved to the
Owner in clauses (i) through (v) of the definition of Contract Rights, which
shall at all times be paid to the Owner), will be payable and applicable as
follows: all the Manufacturer Payments shall be paid to the Owner unless and
until the Manufacturer shall have received written notice from the Indenture
Trustee that an Event of Default under this Trust Indenture has occurred and is
continuing, whereupon the Manufacturer will, until the Manufacturer shall have
received written notice from the Indenture Trustee that all Events of Default
under this Trust Indenture have been cured or waived, make any and all such
payments directly to the Indenture Trustee. Any amounts received by the
Indenture Trustee pursuant to the immediately preceding sentence shall, to the
extent not theretofore applied in satisfaction of the Secured Obligations, be
returned to the Owner promptly after all Events of Default under this Trust
Indenture have been cured or waived.
(d) For all purposes of this Trust Indenture, the Manufacturer shall
not be deemed to have knowledge of an Event of Default under this Trust
Indenture or of the discontinuance or waiver of an Event of Default unless and
until the Manufacturer shall have received written notice thereof from the
Indenture Trustee (including by mail, courier, telex, or telecopy thereof from
the Indenture Trustee addressed to the Manufacturer's Vice President - Contracts
at ▇.▇. ▇▇▇ ▇▇▇▇, Mail Code 21-34, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ if by mail; ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇. ▇.▇., ▇/▇ ▇▇-▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, if by courier; ▇▇▇-▇▇▇-▇▇▇▇ if by
telecopy and 32-9430 (answerback BOEINGREN), if by telex) and, in acting in
accordance with the terms and conditions of the Purchase Agreement and this
Trust Indenture, the Manufacturer may rely conclusively upon any such notice.
(e) Anything herein contained to the contrary notwithstanding: (i)
the Owner shall at all times remain liable to the Manufacturer under the
Purchase Agreement in respect of the Aircraft to perform all of the duties and
obligations of "Buyer" thereunder to the same extent as if this Trust Indenture
had not been executed; (ii) the exercise by the Indenture Trustee of any of the
rights assigned hereunder shall not release the Owner from any of its duties or
obligations to the Manufacturer under the Purchase Agreement in respect of the
-56-
Aircraft except to the extent that such exercise by the Indenture Trustee shall
constitute performance of such duties and obligations; and (iii) except as
provided in paragraph (f) of this Section 7.07, the Indenture Trustee shall not
have any obligation or liability under the Purchase Agreement by reason of, or
arising out of, this Trust Indenture or be obligated to perform any of the
obligations or duties of the Owner under the Purchase Agreement or to make any
payment or make any inquiry as to the sufficiency of any payment received by it
or to present or to file any claim or to take any other action to collect or
enforce any claim for any payment assigned hereunder.
(f) Without in any way releasing the Owner from any of its duties or
obligations under the Purchase Agreement, the Indenture Trustee confirms for the
benefit of the Manufacturer that, insofar as the provisions of the Purchase
Agreement relate to the Aircraft, in exercising any rights under the Purchase
Agreement, or in making any claim with respect to the Aircraft or other things
delivered or to be delivered pursuant to the Purchase Agreement, the terms and
conditions of the Purchase Agreement (including, without limitation, the
warranty disclaimer and indemnity provisions in the product assurance and
customer support documents, Exhibits B and C, respectively, to the Purchase
Agreement) shall apply to, and be binding upon, the Indenture Trustee to the
same extent as the Owner. The Indenture Trustee hereby confirms that it shall be
deemed for all purposes to have read and be familiar with the Purchase Agreement
(insofar as it relates to the Aircraft) and to understand thoroughly the terms
and conditions thereof.
(g) Nothing contained in this Trust Indenture shall (i) subject the
Manufacturer to any liability to which it would not otherwise be subject under
the Purchase Agreement or (ii) modify in any respect the Manufacturer's contract
rights thereunder, except as provided in the Consent and Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Scope of Indemnification.
The Owner hereby agrees, except as otherwise provided in Section
2.03 hereof, to assume liability for, and does hereby indemnify, protect, save
and keep harmless the Indenture Trustee (in its individual and trust
capacities), and its successors, assigns, agents and servants, from and against
any and all liabilities, obligations, losses, damages, penalties, taxes
(excluding any taxes payable by the Indenture Trustee on or measured by any
compensation received by the Indenture Trustee for its services under this Trust
Indenture), claims, actions, suits, costs, expenses or disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever, which may
be imposed on, incurred by or asserted against the Indenture Trustee (whether or
not also indemnified against by any other Person under any other document) in
any way relating to or arising out of this Trust Indenture or any other
Operative Document to which it is a party or the enforcement of any of the terms
of any
-57-
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, non-acceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft or
any Engine (including, without limitation, latent or other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Collateral or the action or inaction of the Indenture Trustee hereunder.
Without limiting the foregoing, the Indenture Trustee agrees that, prior to
seeking indemnification from the Collateral, it will demand, and take such
action as it may in its discretion determine to be reasonable to pursue,
indemnification available to the Indenture Trustee under the Participation
Agreement. Notwithstanding the foregoing, the Indenture Trustee shall not be
entitled to any indemnification for any Taxes or Expenses to the extent relating
to or arising from the willful misconduct or gross negligence (or negligence in
the case of handling funds) of the Indenture Trustee in the performance of its
duties hereunder or resulting from the inaccuracy of any representation or
warranty of the Indenture Trustee (in its individual capacity) referred to in
Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last
sentence of Section 5.04 hereof, or as otherwise excluded by the terms of
Sections 7(b) and 7(c) of the Participation Agreement from the Owner's
indemnities under such Sections. In addition, if necessary, the Indenture
Trustee shall be entitled to indemnification from the Collateral for any
liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense
or disbursement indemnified against pursuant to this Section 8.01 to the extent
not reimbursed by others, but without releasing any of them from their
respective agreements of reimbursement; and to secure the same the Indenture
Trustee shall have a prior Lien on the Collateral.
ARTICLE IX
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. Resignation of Indenture Trustee; Appointment of
Successor.
(a) The Indenture Trustee 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 Certificate Holder, such resignation to be effective upon the
acceptance of the trusteeship by a successor Indenture Trustee. In addition, a
Majority in Interest of Certificate Holders may at any time (but only with the
consent of the 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 Indenture Trustee without cause by an instrument in writing delivered
to the Owner and the Indenture Trustee, and the Indenture Trustee shall promptly
notify each Certificate Holder thereof in writing, such removal to be effective
upon the acceptance of the trusteeship by a successor Indenture Trustee. In the
case of the resignation or removal of the Indenture Trustee, a Majority in
Interest of Certificate Holders may appoint a successor Indenture Trustee 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 the Owner's
reasonable
-58-
approval. If a successor Indenture Trustee shall not have been appointed within
30 days after such notice of resignation or removal, the Indenture Trustee, the
Owner or any Certificate Holder may apply to any court of competent jurisdiction
to appoint a successor Indenture Trustee to act until such time, if any, as a
successor shall have been appointed as above provided. The successor Indenture
Trustee so appointed by such court shall immediately and without further act be
superseded by any successor Indenture Trustee appointed as above provided.
(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner and the predecessor Indenture Trustee an
instrument accepting such appointment and assuming the obligations of the
Indenture Trustee under the Participation Agreement arising from and after the
time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, 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; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts
and having (or whose obligations under the Operative Documents 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 Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section 9.01, be a successor Indenture
Trustee and the Indenture Trustee under this Trust Indenture without further
act.
SECTION 9.02. Appointment of Additional and Separate Trustees.
(a) Whenever (i) the Indenture Trustee shall deem it necessary or
desirable in order to conform to any law of any jurisdiction in which all or any
part of the Collateral shall be situated or to make any claim or bring any suit
with respect to or in connection with the Collateral, this Trust Indenture, any
other Indenture Agreement, the Secured Certificates or any of the transactions
contemplated by the Participation Agreement, (ii) the Indenture
-59-
Trustee shall be advised by counsel satisfactory to it that it is so necessary
or prudent in the interests of the Certificate Holders (and the Indenture
Trustee shall so advise the Owner), or (iii) the Indenture Trustee shall have
been requested to do so by a Majority in Interest of Certificate Holders, then
in any such case, the Indenture Trustee and, upon the written request of the
Indenture Trustee, 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 Indenture Trustee, either to
act jointly with the Indenture Trustee as additional trustee or trustees of all
or any part of the Collateral, or to act as separate trustee or trustees of all
or any part of the Collateral, in each case with such rights, powers, duties and
obligations consistent with this Trust Indenture as may be provided in such
supplemental indenture or other instruments as the Indenture Trustee or a
Majority in Interest of Certificate 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 and 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 Indenture Trustee so to do, or if an Event of Default
shall have occurred and be continuing, the Indenture Trustee 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 Indenture Trustee, 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 Indenture Trustee may, in such capacity, execute, deliver and
perform any such supplemental indenture, or any such instrument, as may be
required for the appointment of any such additional or separate trustee or for
the clarification of, addition to or subtraction from the rights, powers, duties
or obligations theretofore granted to any such additional or separate trustee.
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 Indenture Trustee until a successor
additional or separate trustee is appointed as provided in this Section 9.02(a).
(b) No additional or separate trustee shall be entitled to exercise
any of the rights, powers, duties and obligations conferred upon the Indenture
Trustee in respect of the custody, investment and payment of monies and all
monies received by any such additional or separate trustee from or constituting
part of the Collateral or otherwise payable under any Operative Document to the
Indenture Trustee shall be promptly paid over by it to the Indenture Trustee.
All other rights, powers, duties and obligations conferred or imposed upon any
additional or separate trustee shall be exercised or performed by the Indenture
Trustee and such additional or separate trustee jointly except to the extent
that applicable Law of any jurisdiction in which any particular act is to be
performed renders the Indenture Trustee incompetent or unqualified to perform
such act, in which event such rights, powers, duties and obligations (including
the holding of title to all or part of the Collateral in any such jurisdiction)
shall be exercised and performed by such additional or separate trustee. No
additional or separate trustee shall take any discretionary action except on the
instructions of the Indenture Trustee or a Majority in Interest of Certificate
Holders. No trustee hereunder
-60-
shall be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Indenture Trustee shall be liable for the
consequences of its lack of reasonable care in selecting, and Indenture
Trustee'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 IV, V, VI, VIII, IX and XI
hereof insofar as they apply to the Indenture Trustee. The powers of any
additional or separate trustee appointed pursuant to this Section 9.02 shall not
in any case exceed those of the Indenture Trustee hereunder.
(c) If at any time the Indenture Trustee 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 Certificate Holders, or in the event that the
Indenture Trustee shall have been requested to do so in writing by a Majority in
Interest of Certificate Holders, the Indenture Trustee and, upon the written
request of the Indenture Trustee, 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 Indenture Trustee
may act on behalf of the Owner under this Section 9.02(c) when and to the extent
it could so act under Section 9.02(a) hereof.
ARTICLE X
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 10.01. Instructions of Majority; Limitations.
(a) The Indenture Trustee agrees with the Certificate Holders that
it shall not enter into any amendment, waiver or modification of, supplement or
consent to the Purchase Agreement, the Consent and Agreement, this Trust
Indenture, the Guarantee or the Participation Agreement, or any other agreement
included in the Collateral, unless such supplement, amendment, waiver,
modification or consent is consented to in writing by a Majority in Interest of
Certificate Holders, or does not adversely affect the Certificate Holders, but
upon the written request of a Majority in Interest of Certificate Holders, the
Indenture Trustee 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 or, as may be appropriate, the Manufacturer;
provided, however, that, without the consent of each holder of an affected
Secured Certificate then outstanding, no such amendment of or supplement to this
Trust Indenture, the Purchase Agreement, the Consent and Agreement, the
Guarantee or the Participation Agreement or 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 Sections 2.02, 2.10, 2.11, 2.15, 4.02, 4.02(c),
4.02(d), 5.02, 7.06(a) or 7.06(b) hereof, the definitions of "Event
-61-
of Default", "Default", "Majority in Interest of Certificate Holders",
"Make-Whole Amount" or "Certificate Holder", or the percentage of Certificate
Holders required to take or approve any action hereunder, (ii) reduce the
amount, or change the time of payment or method of calculation of any amount, of
Principal Amount, Make-Whole Amount, if any, or interest with respect to any
Secured Certificate, or alter or modify the provisions of Article III hereof
with respect to the order of priorities in which distribution thereunder shall
be made as among the Certificate Holders and the Owner, (iii) reduce, modify or
amend any indemnities in favor of the Certificate Holders or (iv) permit the
creation of any Lien on the Collateral or any part thereof other than Permitted
Liens or deprive any Certificate 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 IV hereof.
(b) The Owner and the Indenture Trustee may enter into one or more
agreements supplemental hereto without the consent of any Certificate Holder for
any of the following purposes: (i) (a) to cure any defect or inconsistency
herein or in the Secured Certificates, or to make any change not inconsistent
with the provisions hereof (provided that such change does not adversely affect
the interests of any Certificate Holder in its capacity solely as Certificate
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 of the
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 Indenture
Trustee or to make any other provisions with respect to matters or questions
arising hereunder so long as such action shall not adversely affect the
interests of the Certificate Holders in its capacity solely as Certificate
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 Indenture Trustee 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 Certificate Holders, or to surrender any rights or
power herein conferred upon the Owner; (vi) to add to the rights of the
Certificate Holders; and (vii) to include on the Secured Certificates any legend
as may be required by law.
SECTION 10.02. Indenture Trustee Protected.
If, in the opinion of the institution acting as Indenture Trustee
hereunder, any document required to be executed by it pursuant to the terms of
Section 10.01 hereof adversely 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 Certificate Holders.
Promptly after the execution by the Owner or the Indenture Trustee
of any document entered into pursuant to Section 10.01 hereof, the Indenture
Trustee shall mail, by first class mail, postage prepaid, a copy thereof to the
Owner and to each Certificate Holder at
-62-
its address last set forth in the Secured Certificate Register, but the failure
of the Indenture Trustee to mail such copies shall not impair or affect the
validity of such document.
SECTION 10.04. No Request Necessary for Trust Indenture Supplement.
No written request or consent of the Indenture Trustee or the
Certificate Holders pursuant to Section 10.01 hereof shall be required to enable
the Owner 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 Principal Amount
of, Make-Whole Amount, if any, and interest on and all other amounts due under
all Secured Certificates and provided that there shall then be no other Secured
Obligations due to the Certificate Holders and the Indenture Trustee hereunder
or under the Participation Agreement, the Owner shall direct the Indenture
Trustee to execute and deliver to or as directed in writing by the Owner an
appropriate instrument releasing the Aircraft and the Engines from the Lien of
this Trust Indenture and releasing the Guarantee and the Purchase Agreement from
the assignment and pledge thereof hereunder and the Indenture Trustee shall
execute and deliver such instrument as aforesaid and give written notice thereof
to the Owner; 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
Indenture Trustee of all property constituting part of the Collateral and the
final distribution by the Indenture Trustee 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 Certificate Holders.
No holder of a Secured Certificate shall have legal title to any
part of the Collateral. No transfer, by operation of law or otherwise, of any
Secured Certificate or other right, title and interest of any Certificate Holder
in and to the Collateral or hereunder shall operate to terminate this Trust
Indenture or entitle such holder or any successor or transferee of such holder
to an accounting or to the transfer to it of any legal title to any part of the
Collateral.
-63-
SECTION 11.03. Sale of Aircraft by Indenture Trustee Is Binding.
Any sale or other conveyance of the Collateral, or any part thereof
(including any part thereof or interest therein), by the Indenture Trustee made
pursuant to the terms of this Trust Indenture shall bind the Certificate Holders
and shall be effective to transfer or convey all right, title and interest of
the Indenture Trustee, 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 Indenture Trustee.
SECTION 11.04. Trust Indenture for Benefit of the Owner, Indenture
Trustee, and Certificate Holders.
Nothing in this Trust Indenture, whether express or implied, shall
be construed to give any person other than the Owner, the Indenture Trustee and
the Certificate Holders, any legal or equitable right, remedy or claim under or
in respect of this Trust Indenture.
SECTION 11.05. Notices.
Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, authorizations, directions, consents,
waivers or documents provided or permitted by this Trust Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner, addressed to it at its office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Treasurer (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), (ii) if to
the Indenture Trustee, addressed to it at its office at Two ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Department
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), (iii) if to any Certificate Holder, addressed to
such party at such address as such party shall have furnished by notice to the
Owner and the Indenture Trustee, or, until an address is so furnished, addressed
to the address of such party (if any) set forth on the signature pages to the
Participation Agreement or in the Secured Certificate Register. Whenever any
notice in writing is required to be given by the Owner or the Indenture Trustee
or any Certificate Holder to any of the other of them, such notice shall be
deemed given and such requirement satisfied when such notice is received, or if
such notice is mailed by certified mail, postage prepaid, three Business Days
after being mailed, addressed as provided above. Any party hereto may change the
address to which notices to such party will be sent by giving notice of such
change to the other parties to this Trust Indenture.
SECTION 11.06. Severability.
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
-64-
SECTION 11.07. No Oral Modification or Continuing Waivers.
No term or provision of this Trust Indenture or the Secured
Certificates may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Owner and the Indenture Trustee, in
compliance with Section 10.01 hereof. Any waiver of the terms hereof or of any
Secured Certificate 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 Certificate
Holder shall bind the successors and assigns of such holder. Each Certificate
Holder by its acceptance of a Secured Certificate agrees to be bound by this
Trust Indenture and all provisions of the Participation Agreement applicable to
a Loan Participant or a Certificate 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, the Owner, the Indenture Trustee, any Certificate Holder or any
bank or other Affiliate of such Certificate Holder may conduct any banking or
other financial transactions, and have banking or other commercial
relationships, with the 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 the 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.
-65-
SECTION 11.12. Voting By Certificate Holders.
All votes of the Certificate Holders shall be governed by a vote of
a Majority in Interest of Certificate Holders, except as otherwise provided
herein.
SECTION 11.13. Bankruptcy.
It is the intention of the parties that the Indenture Trustee, shall
be entitled to the benefits of Section 1110 with respect to the right to take
possession of the Aircraft, Airframe, Engines and Parts as provided herein in
the event of a case under Chapter 11 of the Bankruptcy Code in which the 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 Document, each
such party agrees that a construction which would preserve such benefits shall
control over any construction which would not preserve such benefits.
-66-
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.,
By: _____________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
except as expressly provided herein,
but solely as Indenture Trustee,
Indenture Trustee
By: _____________________________________
Name:
Title:
-67-
ANNEX A
DEFINITIONS
Unless the context otherwise requires, the following terms shall
have the following meanings for all purposes of the Trust Indenture and Security
Agreement [NW 1999 _] and shall be equally applicable to both the singular and
the plural forms of the terms herein defined:
"Actual Knowledge" shall mean, as it applies to the Indenture
Trustee, actual knowledge of a Responsible Officer in the Corporate
Trust Office of the Indenture Trustee.
"Affiliate" means, with respect to any person, any other
person directly or indirectly controlling, controlled by or under
common control with such person. For the purposes of this
definition, "control" (including "controlled by" and "under common
control with") shall mean the power, directly or indirectly, to
direct or cause the direction of the management and policies of such
person whether through the ownership of voting securities or by
contract or otherwise.
"Aircraft" means the Airframe (or any airframe from time to
time substituted for such Airframe pursuant to Section 7.06 of the
Trust Indenture) together with the initial Engines (or any engine
substituted for either of such Engines pursuant to the terms of the
Trust Indenture), whether or not any such initial or substituted
Engines may from time to time be installed on such initial or
substituted Airframe or may be installed on any other airframe or on
any other aircraft.
"Airframe" means: (i) the Boeing 747-451 aircraft (except
Engines or engines from time to time installed thereon) identified
by U.S. registration ▇▇▇▇ and manufacturer's serial number in the
initial Trust Indenture Supplement and any aircraft (except Engines
or engines from time to time installed thereon) which may from time
to time be substituted for such aircraft (except Engines or engines
from time to time installed thereon) pursuant to clause (ii) of the
first paragraph of Section 7.06(a) of the Trust Indenture; and (ii)
any and all Parts so long as the same shall be incorporated or
installed in or attached to such aircraft (except Engines or engines
from time to time installed thereon).
"Amortization Amount" shall mean, with respect to any
Principal Amount Repayment Date, the amount set forth opposite such
Date on the Amortization Schedule.
"Amortization Schedule" shall mean the amortization schedule
for the Secured Certificates delivered pursuant to Section 2.02 of
the Trust Indenture.
"Applicable Rate" means as of any date the weighted average of
the interest rates borne by the Secured Certificates then
outstanding and, if no Secured Certificates shall be outstanding,
the Base Rate.
ANNEX A
"Average Life Date" for each Secured Certificate to be
redeemed shall be the date which follows the redemption date by a
period equal to the Remaining Weighted Average Life at the
redemption date of such Secured Certificate. "Remaining Weighted
Average Life" of such Secured Certificate, at the redemption date of
such Secured Certificate, shall be the number of days equal to the
quotient obtained by dividing (a) the sum of the products obtained
by multiplying (i) the amount of each then remaining installment of
principal, including the payment due on the maturity date of such
Secured Certificate, by (ii) the number of days from and including
the redemption date to but excluding the scheduled payment date of
such principal installment; by (b) the then unpaid principal amount
of such Secured Certificate.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended, or any subsequent legislation that amends, supplements or
supersedes such provisions.
"Base Rate" means the rate of interest announced publicly by
Citibank, N.A. in New York, New York from time to time as its base
rate.
"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to
close in the City of New York, New York; Boston, Massachusetts; or
Minneapolis, Minnesota.
"Cash Equivalents" shall mean (i) direct obligations of the
United States of America and agencies guaranteed by the United
States government having a final maturity of ninety (90) days or
less from date of purchase thereof; (ii) certificates of deposit
issued by, bankers' acceptances of, or time deposits with, any bank,
trust company or national banking association incorporated under the
laws of the United States of America or one of the states thereof
having combined capital and surplus and retained earnings as of its
last report of condition of at least $500,000,000 and having a
rating of Aa or better by ▇▇▇▇▇'▇ Investors Service, Inc.
("Moody's") or AA or better by Standard & Poor's Ratings Services, a
division of ▇▇▇▇▇▇-▇▇▇▇, Inc. ("S&P") and having a final maturity of
ninety (90) days or less from date of purchase thereof; and (iii)
commercial paper of any holding company of a bank, trust company or
national banking association described in (ii) and commercial paper
of any corporation or finance company incorporated or doing business
under the laws of the United States of America or any state thereof
having a rating assigned to such commercial paper of A1 by S&P or P1
by Moody's and having a final maturity of ninety (90) days or less
from the date of purchase thereof; provided, however, that the
aggregate amount at any one time so invested in certificates of
deposit issued by any one bank shall not be in excess of 5% of such
bank's capital and surplus.
-2-
ANNEX A
"Certificate Holder" shall mean any holder from time to time
of one or more Secured Certificates.
"Certificated Air Carrier" means a Citizen of the United
States holding a carrier operating certificate issued by the
Secretary of Transportation pursuant to Chapter 447 of Title 49,
United States Code, for aircraft capable of carrying ten or more
individuals or 6,000 pounds or more of cargo or that otherwise is
certified or registered to the extent required to fall within the
purview of 11 U.S.C. Section 1110 or any analogous successor
provision of the Bankruptcy Code.
"Citizen of the United States" has the meaning specified in
Section 40102(a)(15) of Title 49 of the United States Code or any
similar legislation of the United States of America enacted in
substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil Reserve Air
Fleet Program currently administered by the United States Air Force
Air Mobility Command pursuant to Executive Order No. 11490, as
amended, or any substantially similar program.
"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.
"Collateral" shall mean all estate, right, title and interest
of the Indenture Trustee in and to the properties referred to in the
Granting Clause of the Trust Indenture.
"Commitment" means the amount the payment of each Pass Through
Trustee to be made as provided in Section 1 of the Participation
Agreement.
"Contract Rights" means all of the Owner's rights and
interests in and to the Purchase Agreement, as and to the extent
that the same relate to the Aircraft and the operation thereof,
including, without limitation, (a) all claims for damages in respect
of the Aircraft arising as a result of any default by the
Manufacturer under the Purchase Agreement, including, without
limitation, all warranty, service life policy, aircraft performance
guarantee and indemnity provisions in the Purchase Agreement in
respect of the Aircraft and all claims thereunder and (b) any and
all rights of the Owner to compel performance of the terms of the
Purchase Agreement in respect of the Aircraft; reserving to the
Owner, however, (i) all of the Owner's rights and interests in and
to the Purchase Agreement as and to the extent that it relates to
any matters not in respect of the Aircraft, (ii) all of the Owner's
rights and interests under the
-3-
ANNEX A
Purchase Agreement (other than under Articles 8.3 and 8.4 and
Exhibit B (Product Assurance Document) thereof), (iii) all of the
Owner's rights and interests in or arising out of any payments or
deposits made or to be made by the Owner or amounts credited or to
be credited or paid or to be paid by the Manufacturer to the Owner
in respect of the Aircraft under the Purchase Agreement, (iv) all of
the Owner's rights and interests in and to any Spare Parts General
Terms Agreement and (v) with respect to the Aircraft, all rights to
demand, accept and retain all rights in and to property (other than
the Aircraft), data, documents, training and services of any kind
which the Manufacturer is obligated to provide or does provide
pursuant to the Purchase Agreement with respect to the Aircraft.
"Corporate Trust Office" shall mean the principal office of
the Indenture Trustee located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Department,
or such other office at which the Indenture Trustee's corporate
trust business shall be administered which the Indenture Trustee
shall have specified by notice in writing to the Owner, the Loan
Participants and each Certificate Holder.
"Debt" shall mean any liability for borrowed money, or any
liability for the payment of money in connection with any letter of
credit transaction, or other liabilities evidenced or to be
evidenced by bonds, debentures, notes or other similar instruments
or for the deferred purchase price of property, goods or services.
"Debt Rate" shall mean, with respect to any Series, the rate
per annum specified for such Series under the heading "Interest
Rate" in Schedule I to the Trust Indenture.
"Default" means any event which with the giving of notice or
the lapse of time or both would become an Event of Default.
"Dollars" and "$" means the lawful currency of the United
States of America.
"Engine" means (i) each of the four ▇▇▇▇▇ & Whitney Model
PW4056 engines listed by manufacturer's serial number in the initial
Trust Indenture Supplement, whether or not from time to time
thereafter installed on the Airframe or installed on any other
airframe or on any other aircraft; and (ii) any engine which may
from time to time be substituted, pursuant to the terms of the Trust
Indenture, for any of such four engines, together in each case with
any and all Parts incorporated or installed in or attached thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
and rulings issued thereunder. Section references to ERISA are to
ERISA, as in effect at
-4-
ANNEX A
the date of the Participation Agreement and any subsequent
provisions of ERISA, amendatory thereof, supplemental thereto or
substituted therefor.
"Event of Default" shall have the meaning specified in Section
4.01 of the Trust Indenture.
"Event of Loss" with respect to the Aircraft, Airframe or any
Engine means any of the following events with respect to such
property: (i) the loss of such property or of the use thereof due to
the destruction of or damage to such property which renders repair
uneconomic or which renders such property permanently unfit for
normal use by the Owner (or any Lessee) for any reason whatsoever;
(ii) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a total
loss, or a constructive or compromised total loss; (iii) the theft
or disappearance of such property, or the confiscation,
condemnation, or seizure of, or requisition of title to, or use of,
such property (other than a requisition for use by the United States
Government or any other government of registry of the Aircraft, or
any agency or instrumentality of any thereof) which in the case of
any event referred to in this clause (iii) (other than a requisition
of title) shall have resulted in the loss of possession of such
property by the Owner (or any Lessee) for a period in excess of 180
consecutive days or, in the case of a requisition of title, the
requisition of title shall not have been reversed within 90 days
from the date of such requisition of title; (iv) as a result of any
law, rule, regulation, order or other action by the Federal Aviation
Administration or other governmental body of the government of
registry of the Aircraft having jurisdiction, the use of such
property in the normal course of the business of air transportation
shall have been prohibited for a period of 180 consecutive days,
unless the Owner (or any Lessee), prior to the expiration of such
180 day period, shall have undertaken and shall be diligently
carrying forward all steps which are necessary or desirable to
permit the normal use of such property by the Owner (or such
Lessee), 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 the entire U.S. registered fleet of Boeing Model
747-400 aircraft of the Owner (or any Lessee) and the Owner (or a
Lessee), prior to the expiration of such two-year period, shall have
conformed at least one such aircraft in its fleet to the
requirements of any such law, rule, regulation, order or other
action and commenced regular commercial use of the same in such
jurisdiction and shall be diligently carrying forward, in a manner
which does not discriminate against the Aircraft in so conforming
the Aircraft, all steps which are necessary or desirable to permit
the normal use of the Aircraft by the Owner (or such Lessee),
provided, further that, notwithstanding any of the foregoing, such
prohibition shall constitute an Event of Loss if such use shall have
been prohibited for a period of three consecutive years; and (v) any
divestiture of title to or interest in an Engine treated as an Event
of Loss pursuant to Section 7.06(b) of the Trust Indenture. An Event
of
-5-
ANNEX A
Loss with respect to the Aircraft shall be deemed to have occurred
if an Event of Loss occurs with respect to the Airframe.
"Expenses" shall have the meaning attributed thereto in
Section 7(c) of the Participation Agreement.
"Federal Aviation Act" means that portion of the United States
Code comprising those provisions formerly referred to as the Federal
Aviation Act of 1958, as amended, or any subsequent legislation that
amends, supplements or supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the United
States Federal Aviation Administration and any agency or
instrumentality of the United States government succeeding to their
functions.
"Foreign Air Carrier" means any air carrier which is not a
U.S. Air Carrier and which performs maintenance, preventative
maintenance and inspections for the Aircraft, Airframe and/or any
Engine or engine to standards which are approved by, or which are
substantially equivalent to those required by, the Federal Aviation
Administration, the Civil Aviation Authority of the United Kingdom,
the Direction Generale de l'Aviation Civile of the French Republic,
the Luftfahrt Bundesamt of the Federal Republic of Germany, the
Rijksluchtvaartdienst of the Kingdom of the Netherlands, the
Ministry of Transportation of Japan or the Federal Ministry of
Transport of Canada (and any agency or instrumentality of the
applicable government succeeding to the functions of any of the
foregoing entities).
"Government Entity" mean (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.
"Guarantee" means that certain Guarantee [NW 1999 _], dated as
of [ ], made by the Guarantor, as such Guarantee may be
amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"Guarantor" means Northwest Airlines Corporation, a Delaware
corporation.
"Indemnitee" means (i) the Indenture Trustee, (ii) the Loan
Participants and each other Certificate Holder, (iii) the
Subordination Agent, (iv) the Liquidity Provider, (v) the Pass
Through Trustees, (vi) each Affiliate of the
-6-
ANNEX A
Person described in clause (i), (vii) each Affiliate of the Persons
described in clauses (iii), (iv) and (v) inclusive, (viii) the
respective directors, officers, employees, agents and servants of
each of the Persons described in clauses (i) through (v), inclusive,
(ix) the successors and permitted assigns of the Person described in
clause (i), and (x) the successors and permitted assigns of the
Persons described in clauses (ii), (iii), (iv) and (v) inclusive.
"Indenture Agreements" means the Participation Agreement, the
Purchase Agreement, the Guarantee, and any other contract, agreement
or instrument from time to time assigned or pledged under the Trust
Indenture.
"Indenture Trustee" means the Indenture Trustee under the
Trust Indenture, and any entity which may from time to time be
acting as indenture trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation
Agreement and the Trust Indenture.
"Indenture Trustee's Liens" means any Lien which arises as a
result of (A) claims against the Indenture Trustee not related to
its interest in the Aircraft, (B) acts of the Indenture Trustee not
permitted by, or failure of the Indenture Trustee to take any action
required by, the Operative Documents to the extent such acts arise
or such failure arises from or constitutes gross negligence or
willful misconduct, (C) claims against the Indenture Trustee
relating to Taxes or Expenses which are excluded from the
indemnification provided by Section 7 of the Participation Agreement
pursuant to said Section 7, or (D) claims against the Indenture
Trustee arising out of the transfer by the Indenture Trustee of all
or any portion of its interest in the Aircraft, the Collateral or
the Operative Documents other than a transfer of the Aircraft
pursuant to Article IV of the Trust Indenture while an event of
default is continuing and prior to the time that the Indenture
Trustee has received all amounts due pursuant to the Trust
Indenture.
"Intercreditor Agreement" means that certain Intercreditor
Agreement among the Pass Through Trustees, the Liquidity Provider
and the Subordination Agent, as such Intercreditor Agreement may be
amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"Issuance Date" means February 16, 1999.
"Law" shall mean (a) any constitution, treaty, statute, law,
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.
-7-
ANNEX A
"Lease" means any lease permitted by the terms of Section 7.02
of the Trust Indenture.
"Lessee" means any Person for so long, but only so long, as
such Person is in possession of the Airframe and/or any Engine
pursuant to the terms of a Lease which is then in effect pursuant to
Section 7.02(b)(x) of the Trust Indenture.
"Lien" means any mortgage, pledge, lien, charge, claim,
encumbrance, lease, sublease or security interest.
"Liquidity Facilities" means the [three] Revolving Credit
Agreements between the Subordination Agent, as borrower, and the
Liquidity Provider, and any replacement thereof, in each case as the
same may be amended, modified or supplemented.
"Liquidity Provider" means Citibank, N.A., as Class A
Liquidity Provider, Class B Liquidity Provider and Class C Liquidity
Provider under the Liquidity Facilities, or any successor thereto.
"Loan Participant" means each Purchaser and its respective
successors and registered assigns, including any Certificate Holder.
"Loan Participant Liens" means any Lien which arises from acts
or claims against any Loan Participant not related to the
transactions contemplated by the Operative Documents.
"Majority in Interest of Certificate Holders" as of a
particular date of determination shall mean the holders of more than
a majority in aggregate unpaid Principal Amount of all Secured
Certificates outstanding as of such date (excluding any Secured
Certificates held by the Owner or its affiliates (unless all Secured
Certificates then outstanding shall be held by the Owner or its
affiliates)).
"Make-Whole Amount" means, with respect to any Secured
Certificate, the amount (as determined by an independent investment
banker selected by the Owner and reasonably acceptable to the
Indenture Trustee) by which (a) the present value of the remaining
scheduled payments of principal and interest from the redemption
date to maturity of such Secured Certificate computed by discounting
each such payment on a semiannual basis from its respective Payment
Date (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield exceeds (b) the
outstanding principal amount of such Secured Certificate plus
accrued interest. For purposes of determining the Make-Whole Amount,
"Treasury Yield" at the time of determination with respect to any
Secured Certificate means the interest rate (expressed as a
semiannual equivalent and as a decimal and, in the case of
-8-
ANNEX A
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 Secured Certificate and trading in the
public securities market 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 Secured Certificate and
(B) the other maturing as close as possible to, but later than, the
Average Life Date of such Secured Certificate, in each case as
published in the most recent H.15(519) or, if a weekly average yield
to maturity for United States Treasury securities maturing on the
Average Life Date of such Secured Certificate 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 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 redemption date.
"Manufacturer" means The Boeing Company, a Delaware
corporation.
"Manufacturer Documents" means the Purchase Agreement and the
Consent and Agreement.
"Mortgaged Property" shall have the meaning specified in
Section 3.03 of the Trust Indenture.
"Note Purchase Agreement" shall mean the Note Purchase
Agreement, dated as of the Issuance Date, among Northwest Airlines,
Inc., the Subordination Agent, First Security Bank, National
Association, as Escrow Agent, State Street Bank and Trust Company,
as Paying Agent and the Pass Through Trustee under each Pass Through
Trust Agreement providing for, among other things, the issuance and
sale of certain secured certificates.
"Operative Documents" and "Operative Document" means each of
the Participation Agreement, the Trust Indenture, the Trust
Indenture Supplement covering the Aircraft, the Secured
Certificates, the Purchase Agreement (insofar as it relates to the
Aircraft), the Consent and Agreement and the Guarantee.
"Overall Transaction" means all the transactions contemplated
by the Operative Documents.
"Owner Documents" means the Participation Agreement, the Trust
Indenture and the Purchase Agreement (insofar as it relates to the
Aircraft).
-9-
ANNEX A
"Participants" means and includes the Loan Participants.
"Participation Agreement" shall mean that certain
Participation Agreement [NW 1999 _], dated as of [_______________],
among the Owner, the Subordination Agent, the Indenture Trustee, the
Guarantor, and the Purchasers as the same may from time to time be
supplemented or further amended, or the terms thereof waived or
modified, to the extent permitted by, and in accordance with, the
terms thereof.
"Parties" means the Indenture Trustee and the Participants.
"Parts" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of
whatever nature (other than (a) complete Engines or engines, (b) any
items leased by the Owner from a third party (other than Lessor) and
(c) cargo containers) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine.
"Pass Through Certificates" means the pass through
certificates to be issued by the Pass Through Trustee in connection
with the Overall Transaction.
"Pass Through Trust" means each of the [three] separate pass
through trusts created under the Pass Through Trust Agreements.
"Pass Through Trust Agreement" means the pass through trust
agreement and each of the [three] separate pass through trust
supplements referred to on Schedule III to the Participation
Agreement.
"Pass Through Trustee" means State Street Bank and Trust
Company, a Massachusetts trust company, in its capacity as trustee
under each Pass Through Trust Agreement, and each other person that
may from time to time be acting as successor trustee under any such
Pass Through Trust Agreement.
"Past Due Rate" shall mean, with respect to the Secured
Certificates, the rate per annum equal to 2% over the Debt Rate as
in effect from time to time.
"Payment Date" shall mean each February 1 and August 1,
commencing on [February/August _, ____] (or, if any such day is not
a Business Day, the immediately succeeding Business Day) until the
Secured Certificates have been paid in full.
"Permitted Lien" means any Lien referred to in clauses (i)
through (viii) of Section 7.01 of the Trust Indenture.
"Permitted Lessee" means any entity domiciled in a country
listed in Schedule III to the Trust Indenture.
-10-
ANNEX A
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Principal Amount" with respect to a Secured Certificate means
the stated original principal amount of such Secured Certificate
and, with respect to all Secured Certificates, means the aggregate
stated original principal amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date
on which any portion of the Principal Amount is due and payable in
accordance with the Amortization Schedule.
"Purchase Agreement" means that certain Purchase Agreement No.
1630, dated December 1, 1989, between the Manufacturer and the Owner
relating to the purchase by the Owner of the Aircraft, as originally
executed or as modified, amended or supplemented in accordance with
the terms thereof, but only insofar as the foregoing relates to the
Aircraft.
"Purchasers" means the Pass Through Trustees under each Pass
Through Trust Agreement.
"QIB" shall have the meaning specified in Section 2.08 of the
Trust Indenture.
"Related Indemnitee Group" means, with respect to any
Indemnitee, any officer, director, servant, employee, agent or
Affiliate thereof.
"Replacement Airframe" shall mean any airframe substituted for
the Airframe pursuant to Section 7.06 of the Trust Indenture.
"Replacement Engine" shall mean any engine substituted for an
Engine pursuant to Section 7.06 of the Trust Indenture.
"Responsible Officer" means a responsible officer in the
Corporate Trust Office of the Indenture Trustee.
"Secured Certificates" shall mean and include any Secured
Certificates issued hereunder, and issued in exchange therefor or
replacement thereof.
"Secured Obligations" shall have the meaning specified in
Section 2.06 of the Trust Indenture.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
-11-
ANNEX A
"Senior Holder" shall have the meaning specified in Section
2.15(c) of the Trust Indenture.
"Series A" or "Series A Secured Certificates" means Secured
Certificates issued and designated as "Series A" hereunder, in the
Principal Amount and maturities and bearing interest as specified in
Schedule I to the Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the
Principal 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 Secured Certificates" means Secured
Certificates issued and designated as "Series C" hereunder, in the
Principal Amount and maturities and bearing interest as specified in
Schedule I to the Trust Indenture under the heading "Series C."
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture
Trustee under the Trust Indenture, but in its individual capacity.
"Subordination Agent" means State Street Bank and Trust
Company, a Massachusetts trust company, as subordination agent under
the Intercreditor Agreement, or any successor thereto.
"Tax Indemnitee" means (i) the Indenture Trustee, its
successors and permitted assigns and (ii) the Trust Indenture
Estate.
"Taxes" means any and all fees (including, without limitation,
license, recording, documentation and registration fees), taxes
(including, without limitation, income, gross receipts, sales,
rental, use, turnover, value added, property (tangible and
intangible), excise and stamp taxes), license, levies, imposts,
duties, charges, assessments or withholdings of any nature
whatsoever, together with any and all penalties, fines, additions to
tax and interest thereon (each, individually a "Tax").
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Documents.
"Trust Indenture", "this Indenture"," the Trust Indenture",
"Indenture", and "the Indenture" shall mean the Trust Indenture and
Security Agreement [NW 1999 _], dated as of [ ] between the Owner
and the Indenture Trustee, as it may from time to time be
supplemented or amended as herein provided, including supplementing
by a Trust Indenture Supplement pursuant thereto.
-▇▇-
▇▇▇▇▇ ▇
"▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇" shall mean all estate, right, title
and interest of the Indenture Trustee in and to the properties
referred to in the Granting Clause of the Trust Indenture.
"Trust Indenture Supplement" shall mean a supplement to the
Trust Indenture, in substantially the form of Exhibit A thereto,
which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine.
"Underwriting Agreement" means that certain Underwriting
Agreement, dated as of February 4, 1999, among the Owner, the
Guarantor, and the underwriters named therein.
"U.S. Air Carrier" means any Certificated Air Carrier as to
which there is in force an air carrier operating certificate issued
pursuant to Part 121 of the regulations under the Federal Aviation
Act, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provisions therefor or
in the absence thereof.
"Wet Lease" means any arrangement whereby the Owner (or any
Lessee) agrees to furnish the Airframe and Engines or engines
installed thereon to a third party pursuant to which such Airframe
and Engines or engines (i) shall be operated solely by regular
employees of the Owner (or any Lessee) possessing all current
certificates and licenses that would be required under the Federal
Aviation Act or, if the Aircraft is not registered in the United
States, all certificates and licenses required by the laws of the
jurisdiction of registry, for the performance by such employees of
similar functions within the United States of America or such other
jurisdiction of registry (it is understood that cabin attendants
need not be regular employees of the Owner (or any Lessee)) and (ii)
shall be maintained by the Owner (or any Lessee) in accordance with
its normal maintenance practices.
-13-
--------------------------------
EXHIBIT A
TO
TRUST INDENTURE
AND SECURITY AGREEMENT
--------------------------------
TRUST INDENTURE SUPPLEMENT
[NW 1999 _]
This TRUST INDENTURE SUPPLEMENT [NW 1999 _], dated [_____________]
(herein called this "Trust Indenture Supplement") of NORTHWEST AIRLINES, INC.
(the "Owner").
W I T N E S S E T H:
WHEREAS, the TRUST INDENTURE AND SECURITY AGREEMENT [NW 1999 _],
dated as of [_______________] (as amended and supplemented to the date hereof,
the "Trust Indenture") between the Owner and STATE STREET BANK AND TRUST
COMPANY, as Indenture Trustee (the "Indenture Trustee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof,
which shall particularly describe the Aircraft, and shall specifically mortgage
such Aircraft to the Indenture Trustee; and
WHEREAS, the 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 the Owner's right, title and interest in and to the following
described property:
EXHIBIT A-1
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------------------ ----------- ------------------- ------------------
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
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
------------------------ --------------------------- ------------------
together with all of the 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 any of such engines.
Together with all of the Owner's right, title and interest in and to
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).
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate 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.
EXHIBIT A-2
This Trust Indenture Supplement shall be construed as supplemental
to the Trust Indenture and shall form a part thereof. The Trust Indenture is
each hereby incorporated by reference herein and is hereby ratified, approved
and confirmed.
This Trust Indenture Supplement is being delivered in the State of
New York.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
EXHIBIT A-3
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.
NORTHWEST AIRLINES, INC.,
By: _____________________________________
Name:
Title:
EXHIBIT A-4
SCHEDULE I
Principal Amount Interest Rate
---------------------------- ----------------------
Series A . . . . . . $[_________] [_________]%
Series B . . . . . . $[_________] [_________]%
Series C . . . . . . $[_________] [_________]%
SCHEDULE I-1
Secured Certificates Amortization
SERIES A
Aircraft: N[_____]
Percentage of Principal
Payment Date Amount to be Paid
-------------------------- ----------------------------
SCHEDULE I-2
SERIES B
Aircraft: N[_____]
Percentage of Principal
Payment Date Amount to be Paid
-------------------------- ----------------------------
SCHEDULE I-3
SERIES C
Aircraft: N[_____]
Percentage of Principal
Payment Date Amount to be Paid
-------------------------- ----------------------------
SCHEDULE I-4
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1A, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1B, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1C, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
SCHEDULE II-1
SCHEDULE III
SCHEDULE OF DOMICILES OF PERMITTED LESSEES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)(1)
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Trinidad and Tobago
Italy United Kingdom
Japan Uruguay
Luxembourg Venezuela
Malaysia
----------
(1) So long as on the date of entering into the proposed lease such country and
the United States have diplomatic relations at least as good as those in effect
on the Closing Date.