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EXHIBIT 4.25
EXHIBIT C-2 to
Note Purchase Agreement
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FORM OF OWNED AIRCRAFT INDENTURE
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FORM OF TRUST INDENTURE AND MORTGAGE
Dated as of __________ __, ____
Between
ATLAS AIR, INC.,
Owner
and
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Mortgagee,
Mortgagee
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EQUIPMENT NOTES COVERING
ONE BOEING 747-47UF FREIGHTER AIRCRAFT
BEARING U.S. REGISTRATION ▇▇▇▇ N MC
AND MANUFACTURER'S SERIAL NO.
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS
ARTICLE II THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes..............................................5
SECTION 2.02. Issuance and Terms of Equipment Notes...............................11
SECTION 2.03. [Intentionally Omitted].............................................13
SECTION 2.04. Method of Payment...................................................13
SECTION 2.05. Application of Payments.............................................16
SECTION 2.06. Termination of Interest in Collateral...............................16
SECTION 2.07. Registration Transfer and Exchange of Equipment Notes...............17
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes................18
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.......................19
SECTION 2.10. Mandatory Redemptions of Equipment Notes............................19
SECTION 2.11. Voluntary Redemptions of Equipment Notes............................19
SECTION 2.12. Redemptions; Notice of Redemption...................................20
SECTION 2.13. Subordination.......................................................21
SECTION 2.14. Assumption of Equipment Notes.......................................21
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS
SECTION 3.01. Basic Distributions.................................................22
SECTION 3.02. Event of Loss; Replacement; Optional Redemption.....................23
SECTION 3.03. Payments After Event of Default.....................................24
SECTION 3.04. Certain Payments....................................................27
SECTION 3.05. Other Payments......................................................28
ARTICLE IV COVENANTS OF THE OWNER
SECTION 4.01. Liens...............................................................28
SECTION 4.02. Possession, Operation and Use, Maintenance and Repair,
Registration and Markings........................................28
SECTION 4.03. Inspection..........................................................34
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SECTION 4.04. Replacement and Pooling of Parts, Alterations, Modifications
and Additions; Substitution of Engines...........................35
SECTION 4.05. Loss, Destruction or Requisition....................................39
SECTION 4.06. Insurance...........................................................44
SECTION 4.07. Merger of Owner.....................................................45
ARTICLE V EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE
SECTION 5.01. Event of Default....................................................46
SECTION 5.02. Remedies............................................................48
SECTION 5.03. Return of Aircraft, Etc.............................................49
SECTION 5.04. Remedies Cumulative.................................................50
SECTION 5.05. Discontinuance of Proceedings.......................................51
SECTION 5.06. Waiver of Past Defaults.............................................51
SECTION 5.07. Appointment of Receiver.............................................51
SECTION 5.08. Mortgagee Authorized to Execute Bills of Sale, Etc..................52
SECTION 5.09. Rights of Note Holders to Receive Payment...........................52
ARTICLE VI DUTIES OF THE MORTGAGEE
SECTION 6.01. Notice of Event of Default..........................................52
SECTION 6.02. Action upon Instructions; Certain Rights and Limitations............53
SECTION 6.03. Indemnification.....................................................53
SECTION 6.04. No Duties Except as Specified in Trust Indenture or Instructions....54
SECTION 6.05. No Action Except Under Trust Indenture or Instructions..............54
SECTION 6.06. Investment of Amounts Held by Mortgagee.............................55
ARTICLE VII THE MORTGAGEE
SECTION 7.01. Acceptance of Trusts and Duties.....................................55
SECTION 7.02. Absence of Duties...................................................56
SECTION 7.03. No Representations or Warranties as to Aircraft or Documents........56
SECTION 7.04. No Segregation of Monies; No Interest...............................57
SECTION 7.05. Reliance; Agreements; Advice of Counsel.............................57
SECTION 7.06. Compensation........................................................57
SECTION 7.07. Instructions from Note Holders......................................58
ARTICLE VIII INDEMNIFICATION
SECTION 8.01. Scope of Indemnification............................................58
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ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. Resignation of Mortgagee; Appointment of Successor..................58
SECTION 9.02. Appointment of Additional and Separate Trustees.....................60
ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 10.01. Instructions of Majority; Limitations...............................62
SECTION 10.02. Mortgagee Protected.................................................63
SECTION 10.03. Documents Mailed to Note Holders....................................63
SECTION 10.04. No Request Necessary for Trust Indenture Supplement.................64
ARTICLE XI MISCELLANEOUS
SECTION 11.01. Termination of Trust Indenture......................................64
SECTION 11.02. No Legal Title to Collateral in Note Holders........................64
SECTION 11.03. Sale of Aircraft by Mortgagee Is Binding............................64
SECTION 11.04. Trust Indenture for Benefit of Owner, Mortgagee, Note Holders
and the Other Indenture Indemnitees..............................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.........................................66
SECTION 11.11. Governing Law; Counterpart Form.....................................67
SECTION 11.12. Voting by Note Holders..............................................67
SECTION 11.13. Bankruptcy..........................................................67
ANNEX A Definitions
ANNEX B Insurance
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization and Interest Rates
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TRUST INDENTURE AND MORTGAGE
TRUST INDENTURE AND MORTGAGE, dated as of ________ __, ____ ("Trust
Indenture"), between ATLAS AIR, INC., a Delaware corporation ("Owner"), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual
capacity, except as expressly stated herein, but solely as Mortgagee hereunder
(together with its successors hereunder, the "Mortgagee").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the parties hereto desire by this Trust Indenture, among
other things, (i) to provide for the issuance by the Owner of the Equipment
Notes and (ii) to provide for the assignment, mortgage and pledge by the Owner
to the Mortgagee, as part of the Collateral hereunder, among other things, of
all of the Owner's right, title and interest in and to the Aircraft and, except
as hereinafter expressly provided, all payments and other amounts received
hereunder in accordance with the terms hereof, as security for, among other
things, the Owner's obligations to the Note Holders and the Indenture
Indemnitees;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner and authenticated and delivered by the Mortgagee
hereunder, the valid, binding and enforceable obligations of the Owner; and
WHEREAS, all things necessary to make this Trust Indenture the valid,
binding and legal obligation of the Owner for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH, that, to
secure the prompt payment of the Original Amount of, interest on, Make-Whole
Amount, if any, and all other amounts due with respect to, all Equipment Notes
from time to time outstanding hereunder according to their tenor and effect and
to secure the performance and observance by the Owner of all the agreements,
covenants and provisions contained herein and in the Participation Agreement and
in the Equipment Notes, for the benefit of the Note Holders and each of the
Indenture Indemnitees, and in consideration of the premises and of the covenants
herein contained, and of the acceptance of the Equipment Notes by the holders
thereof, and for other good and valuable consideration the receipt and adequacy
whereof are hereby acknowledged, the Owner has granted, bargained, sold,
assigned, transferred,
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conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain,
sell, assign, transfer, convey, mortgage, pledge and confirm, unto the
Mortgagee, its successors in trust and assigns, for the security and benefit of,
the Note Holders and each of the Indenture Indemnitees, a first priority
security interest in and mortgage lien on all right, title and interest of the
Owner in, to and under the following described property, rights and privileges,
whether now or hereafter acquired (which, collectively, together with all
property hereafter specifically subject to the Lien of this Trust Indenture by
the terms hereof or any supplement hereto, are included within, and are referred
to as, the "Collateral"), to wit:
(1) The Airframe which is one Boeing 747-47UF aircraft with the FAA
Registration number of N MC and the manufacturer's serial number of _____
and four Engines, each of which Engines is a General Electric
CF6-80C2B5FG04 engine with the manufacturer's serial numbers ___-___,
___-___, ___-___ and ___-___, is of 750 or more rated takeoff horsepower or
the equivalent of such horsepower (such Airframe and Engines more
particularly described in the Trust Indenture Supplement executed and
delivered as provided herein) as the same are now and will hereafter be
constituted, whether now owned by the Owner or hereafter acquired, and in
the case of such Engines, whether or not any such Engine shall be installed
in or attached to the Airframe or any other airframe, together with (a) all
Parts of whatever nature, which are from time to time included within the
definitions of "Airframe" or "Engines," whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations
which constitute appliances, parts, instruments, appurtenances,
accessories, furnishings or other equipment excluded from the definition of
Parts) and (b) all Aircraft Documents;
(2) The Purchase Agreement and the Bills of Sale to the extent the
same relate to continuing rights of the Owner in respect of any warranty,
indemnity or agreement, express or implied, as to title, materials,
workmanship, design or patent infringement or related matters with respect
to the Airframe or the Engines (reserving to the Owner, however, all of the
Owner's other rights and interest in and to the Purchase Agreement)
together with all rights, powers, privileges, options and other benefits of
the Owner thereunder (subject to such reservation) with respect to the
Airframe or the Engines, including, without limitation, the right to make
all waivers and agreements, to give and receive all notices and other
instruments or communications, to take such action upon the occurrence of a
default thereunder, including the commencement, conduct and consummation of
legal, administrative or other proceedings, as shall be permitted thereby
or by law, and to do any and all other things which the Owner is or
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may be entitled to do thereunder (subject to such reservation), subject,
with respect to the Purchase Agreement, to the terms and conditions of the
Consent and Agreement and the Engine Consent and Agreement;
(3) All proceeds with respect to the requisition of title to or use of
the Aircraft or any Engine by any Government Entity or from the sale or
other disposition of the Aircraft, the Airframe, any Engine or other
property described in any of these Granting Clauses by the Mortgagee
pursuant to the terms of this Trust Indenture, and all insurance proceeds
with respect to the Aircraft, the Airframe, any Engine or any part thereof,
but excluding any insurance maintained by the Owner and not required under
Section 4.06;
(4) All rents, revenues and other proceeds (other than rents, revenues
and proceeds from any ACMI Contract) collected by the Mortgagee pursuant to
Section 5.03(b) and all monies and securities from time to time deposited
or required to be deposited with the Mortgagee by or for the account of the
Owner pursuant to any terms of this Trust Indenture held or required to be
held by the Mortgagee hereunder; and
(5) All proceeds of the foregoing.
PROVIDED, HOWEVER, that notwithstanding any of the foregoing
provisions, so long as no Event of Default shall have occurred and be
continuing, (a) the Mortgagee shall not take or cause to be taken any action
contrary to the Owner's right hereunder to quiet enjoyment of the Airframe and
Engines, and to possess, use, retain and control the Airframe and Engines and
all revenues, income and profits derived therefrom, and (b) the Owner shall have
the right, to the exclusion of the Mortgagee, with respect to the Purchase
Agreement, to exercise in the Owner's name all rights and powers of the buyer
under the Purchase Agreement (other than to amend, modify or waive any of the
warranties or indemnities contained therein, except in the exercise of the
Owner's reasonable business judgment) and to retain any recovery or benefit
resulting from the enforcement of any warranty or indemnity under the Purchase
Agreement; and provided further that, notwithstanding the occurrence or
continuation of an Event of Default, the Mortgagee shall not enter into any
amendment of the Purchase Agreement which would increase the obligations of the
Owner thereunder.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, and its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.13 and Article III hereof, without
any preference, distinction or priority of any one Equipment Note over any other
by reason of priority of time of issue, sale, negotiation, date of maturity
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thereof or otherwise for any reason whatsoever, and for the uses and purposes
and in all cases and as to all property specified in paragraphs (1) through (5)
inclusive above, subject to the terms and provisions set forth in this Trust
Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Owner shall remain liable under the Indenture Agreements to
perform all of the obligations assumed by it thereunder, except to the extent
prohibited or excluded from doing so pursuant to the terms and provisions
thereof, and the Mortgagee, the Note Holders and the Indenture Indemnitees shall
have no obligation or liability under the Indenture Agreements by reason of or
arising out of the assignment hereunder, nor shall the Mortgagee, the Note
Holders or the Indenture Indemnitees be required or obligated in any manner to
perform or fulfill any obligations of the Owner under or pursuant to the
Indenture Agreements, or, except as herein expressly provided, to make any
payment, or to make any inquiry as to the nature or sufficiency of any payment
received by it, or present or file any claim, or take any action to collect or
enforce the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
The Owner does hereby constitute the Mortgagee the true and lawful
attorney of the Owner, irrevocably, granted for good and valuable consideration
and coupled with an interest and with full power of substitution, and with full
power (in the name of the Owner or otherwise) to ask for, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies (in each case including insurance and requisition proceeds) due and to
become due under or arising out of the Indenture Agreements, and all other
property which now or hereafter constitutes part of the Collateral, to endorse
any checks or other instruments or orders in connection therewith and to file
any claims or to take any action or to institute any proceedings which the
Mortgagee may deem to be necessary or advisable in the premises; provided that
the Mortgagee shall not exercise any such rights except upon the occurrence and
during the continuance of an Event of Default hereunder.
The Owner agrees that at any time and from time to time, upon the
written request of the Mortgagee, the Owner will promptly and duly execute and
deliver or cause to be duly executed and delivered any and all such further
instruments and documents (including without limitation UCC continuation
statements) as the Mortgagee may reasonably deem necessary to perfect, preserve
or protect the mortgage, security interests and assignments created or intended
to be created hereby or to obtain for the Mortgagee the full benefits of the
assignment hereunder and of the rights and powers herein granted.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
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ARTICLE I DEFINITIONS
Capitalized terms used but not defined herein shall have the
respective meanings set forth or incorporated by reference, and shall be
construed in the manner described, in Annex A hereto.
ARTICLE II THE EQUIPMENT NOTES
SECTION 2.01. FORM OF EQUIPMENT NOTES
The Equipment Notes shall be substantially in the form set forth
below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE.
ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER
THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS
IS AVAILABLE.
ATLAS AIR, INC.
SERIES 2000-1 ____ EQUIPMENT NOTE DUE _______ ISSUED IN CONNECTION WITH THE
BOEING MODEL 747-47UF FREIGHTER AIRCRAFT BEARING UNITED STATES REGISTRATION
NUMBER N MC.
No. Date: ,
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INTEREST RATE MATURITY DATE
[______________] [______________]
ATLAS AIR, INC., a Delaware corporation ("Owner"), hereby promises to
pay to _______________, or the registered assignee thereof, the principal sum of
$__________ (the "Original Amount"), together with interest on the amount of the
Original Amount remaining unpaid from time to time (calculated on the basis of a
year of 360 days comprised of twelve 30-day months) from the date hereof until
paid in full at a rate per annum equal to the Debt Rate. The Original Amount of
this Equipment Note shall be payable in installments on the dates set forth in
Schedule I hereto equal to the corresponding percentage of the Original Amount
of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid
interest shall be due and payable in arrears in semiannual installments
commencing on _________, ___ , and thereafter on _______ _ and ____ _ of each
year, to and including ___________. Notwithstanding the foregoing, the final
payment made on this Equipment Note shall be in an amount sufficient to
discharge in full the unpaid Original Amount and all accrued and unpaid interest
on, and any other amounts due under, this Equipment Note. Notwithstanding
anything to the contrary contained herein, if any date on which a payment under
this Equipment Note becomes due and payable is not a Business Day, then such
payment shall not be made on such scheduled date but shall be made on the next
succeeding Business Day and if such payment is made on such next succeeding
Business Day, no interest shall accrue on the amount of such payment during such
extension.
For purposes hereof, the term "Trust Indenture" means the Trust
Indenture and Mortgage dated as of __________, ____, between the Owner and
Wilmington Trust Company (the "Mortgagee"), as the same may be amended or
supplemented from time to time. All other capitalized terms used in this
Equipment Note and not defined herein shall have the respective meanings
assigned in the Trust Indenture.
This Equipment Note shall bear interest, payable on demand, at the
Payment Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Original Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable Law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
There shall be maintained an Equipment Note Register for the purpose
of registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.07 of the Trust Indenture.
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The Original Amount and interest and other amounts due hereunder shall
be payable in Dollars in immediately available funds at the Corporate Trust
Office of the Mortgagee, or as otherwise provided in the Trust Indenture. Each
such payment shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note, except that in the case of any
final payment with respect to this Equipment Note, this Equipment Note shall be
surrendered promptly thereafter to the Mortgagee for cancellation.
The holder hereof, by its acceptance of this Equipment Note, agrees
that, except as provided in the Trust Indenture, each payment of the Original
Amount, Make-Whole Amount, if any, and interest received by it hereunder shall
be applied, first, to the payment of accrued interest on this Equipment Note (as
well as any interest on any overdue Original Amount, any overdue Make-Whole
Amount, if any, or, to the extent permitted by Law, any overdue interest and
other amounts hereunder) to the date of such payment, second, to the payment of
the Original Amount of this Equipment Note then due, third, to the payment of
Make-Whole Amount, if any, and any other amount due hereunder or under the Trust
Indenture, and fourth, the balance, if any, remaining thereafter, to the payment
of installments of the Original Amount of this Equipment Note remaining unpaid
in the inverse order of their maturity.
This Equipment Note is one of the Equipment Notes referred to in the
Trust Indenture which have been or are to be issued by the Owner pursuant to the
terms of the Trust Indenture. The Collateral is held by the Mortgagee as
security, in part, for the Equipment Notes. The provisions of this Equipment
Note are subject to the Trust Indenture. Reference is hereby made to the Trust
Indenture for a complete statement of the rights and obligations of the holder
of, and the nature and extent of the security for, this Equipment Note and the
rights and obligations of the holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the Trust
Indenture, as well as for a statement of the terms and conditions of the Trust
created by the Trust Indenture, to all of which terms and conditions in the
Trust Indenture each holder hereof agrees by its acceptance of this Equipment
Note.
As provided in the Trust Indenture and subject to certain limitations
therein set forth, this Equipment Note is exchangeable for a like aggregate
Original Amount of Equipment Notes of different authorized denominations, as
requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner and the Mortgagee shall treat the person in whose name
this Equipment Note is registered
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as the owner hereof for all purposes, whether or not this Equipment Note be
overdue, and neither the Owner nor the Mortgagee shall be affected by notice to
the contrary.
This Equipment Note is subject to redemption as provided in Sections
2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. In addition, this
Equipment Note may be accelerated as provided in Section 5.02 of the Trust
Indenture.
[The indebtedness evidenced by this Equipment Note is, to the extent
and in the manner provided in the Trust Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Trust Indenture) in respect of [Series A Equipment Notes](1)
[Series A and Series B Equipment Notes](2) [Series A, Series B and Series C
Equipment Notes](3) and this Equipment Note is issued subject to such
provisions. The Note Holder of this Equipment Note, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Mortgagee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination as provided in the Trust Indenture and (c)
appoints the Mortgagee his attorney-in-fact for such purpose.](4)
Unless the certificate of authentication hereon has been executed by
or on behalf of the Mortgagee by manual signature, this Equipment Note shall not
be entitled to any benefit under the Trust Indenture or be valid or obligatory
for any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner has caused this Equipment Note to be
executed in its corporate name by its officer thereunto duly authorized on the
date hereof.
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(1) To be inserted in the case of a Series B Equipment Note.
(2) To be inserted in the case of a Series C Equipment Note.
(3) To be inserted in the case of a Series D Equipment Note.
(4) To be inserted for each Equipment Note other than any Series A Equipment
Note.
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ATLAS AIR, INC.
By:
--------------------------------
Name:
Title:
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MORTGAGEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the within-mentioned
Trust Indenture.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Mortgagee
By:
-----------------------------------------
Name:
Title:
SCHEDULE I
EQUIPMENT NOTE AMORTIZATION
Payment Date Percentage of Original Amount to Be Paid
SEE SCHEDULE I TO TRUST INDENTURE
THE APPLICABLE PORTION OF WHICH IS
INSERTED UPON ISSUANCE
* * *
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SECTION 2.02. ISSUANCE AND TERMS OF EQUIPMENT NOTES
The Equipment Notes shall be dated the date of issuance thereof, shall
be issued in up to three separate series (or if the Series D is issued, four
separate series) consisting of Series A, Series B, Series C and, if issued,
Series D and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto (or, in the case of the Series D if issued after
the Closing Date, as specified in an amendment to this Trust Indenture). On the
date thereof, each Series specified in Schedule I hereto shall be issued to the
Subordination Agent on behalf of the Pass Through Trustee under the applicable
Pass Through Trust Agreement. Owner shall have the option to issue the Series D
Equipment Notes at or after the Closing. The Equipment Notes shall be issued in
registered form only. The Equipment Notes shall be issued in denominations of
$1,000 and integral multiples thereof, except that one Equipment Note of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the applicable Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Original Amount thereof from time to time outstanding,
payable in arrears in semi-annual installments on each January 2 and July 2
until maturity commencing on the first such date after issuance thereof. The
Original Amount of each Equipment Note shall be payable on the dates and in the
installments equal to the corresponding percentage of the Original Amount as set
forth in Schedule I hereto the applicable portion of which shall be attached as
Schedule I to the Equipment Notes (or, in the case of the Series D Equipment
Notes if issued after the Closing Date, as set forth in an amendment to this
Trust Indenture, which payment schedule shall be attached as Schedule I to the
Series D Equipment Notes). Notwithstanding the foregoing, the final payment made
under each Equipment Note shall be in an amount sufficient to discharge in full
the unpaid Original Amount and all accrued and unpaid interest on, and any other
amounts due under, such Equipment Note. Each Equipment Note shall bear interest
at the Payment Due Rate (calculated on the basis of a year of 360 days comprised
of twelve 30-day months) on any part of the Original Amount, Make-Whole Amount,
if any, and, to the extent permitted by applicable Law, interest and any other
amounts payable thereunder not paid when due for any period during which the
same shall be overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated maturity, by
acceleration or otherwise). Notwithstanding anything to the contrary contained
herein, if any date on which a payment under any Equipment Note becomes due and
payable is not a Business Day then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business Day and if such
payment is made on such next succeeding Business Day, no interest shall accrue
on the amount of such payment during such extension.
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The Owner agrees to pay to the Mortgagee for distribution in
accordance with Section 3.04 hereof: (i) to the extent not payable (whether or
not in fact paid) under Section 6(a) of the Note Purchase Agreement, an amount
equal to the fees payable to the relevant Liquidity Provider under Section 2.03
of each Liquidity Facility and the related Fee Letter (as defined in the
Intercreditor Agreement) multiplied by a fraction the numerator of which shall
be the then outstanding aggregate principal amount of the Series A Equipment
Notes, Series B Equipment Notes and Series C Equipment Notes and the denominator
of which shall be the then outstanding aggregate principal amount of all "Series
A Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes"
(each as defined in the Note Purchase Agreement); (ii) (x) the amount equal to
interest on any Downgrade Advance (other than any Applied Downgrade Advance)
payable under Section 3.07(e) of each Liquidity Facility minus Investment
Earnings from such Downgrade Advance multiplied by (y) the fraction specified in
the foregoing clause (i); (iii) (x) the amount equal, to interest on any
Non-Extension Advance (other than any Applied Non-Extension Advance) payable
under Section 3.07(a)(i) of the Class A Liquidity Facility minus Investment
Earnings from such Non-Extension Advance multiplied by (y) the fraction
specified in the foregoing clause (i); (iv) if any payment default shall have
occurred and be continuing with respect to interest on any Series A Equipment
Notes, Series B Equipment Notes or Series C Equipment Notes, (x) the excess, if
any, of (1) an amount equal to interest on any Unpaid Advance, Applied Downgrade
Advance or Applied Non-Extension Advance payable under Section 3.07(a)(i) of
each Liquidity Facility over (2) the sum of Investment Earnings from any Final
Advance plus any amount of interest at the Payment Due Rate actually payable
(whether or not in fact paid) by Owner on the overdue scheduled interest on the
Equipment Notes in respect of which such Unpaid Advance, Applied Downgrade
Advance or Applied Non-Extension Advance was made multiplied by (y) a fraction
the numerator of which shall be the then aggregate overdue amounts of interest
on the Series A Equipment Notes, Series B Equipment Notes and Series C Equipment
Notes (other than interest becoming due and payable solely as a result of
acceleration of any such Equipment Notes) and the denominator of which shall be
the then aggregate overdue amounts of interest on all "Series A Equipment
Notes," "Series B Equipment Notes" and "Series C Equipment Notes" (each as
defined in the Note Purchase Agreement) (other than interest becoming due and
payable solely as a result of acceleration of any such "Equipment Notes"); and
(v) Owner's pro rata share of any other amounts owed to the Liquidity Providers
by the Subordination Agent as borrower under each Liquidity Facility other than
amounts due as repayment of advances thereunder or as interest on such advances,
except to the extent payable pursuant to clause (ii), (iii) or (iv) above, (c)
Owner's pro rata share of all compensation and reimbursement of expenses,
disbursements and advances payable by Owner under the Pass Through Trust
Agreements, (d) Owner's pro rata share of all compensation and reimbursement of
expenses and disbursements payable to the Subordination Agent under the
Intercreditor
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Agreement except with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions contemplated by the
Intercreditor Agreement and (e) in the event Owner requests any amendment to any
Operative Agreement or Pass Through Agreement, Owner's pro rata share of all
reasonable fees and expenses (including, without limitation, fees and
disbursements of counsel) of the Escrow Agents and the Paying Agents in
connection therewith payable by the Pass Through Trustees under the Escrow
Agreements. As used herein, "Owner's pro rata share" means as of any time a
fraction, the numerator of which is the principal balance then outstanding of
Equipment Notes and the denominator of which is the aggregate principal balance
then outstanding of all "Equipment Notes" (as such term is defined in each of
the Operative Indentures). For purposes of this paragraph, the terms "Applied
Downgrade Advance," "Applied Non-Extension Advance," "Cash Collateral Account,"
"Downgrade Advance," "Final Advance," "Investment Earnings," "Non-Extension
Advance" and "Unpaid Advance" shall have the meanings specified in each
Liquidity Facility.
The Equipment Notes shall be executed on behalf of the Owner by one of
its authorized officers. Equipment Notes bearing the signatures of individuals
who were at any time the proper officers of the Owner shall bind the Owner,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Equipment Notes or did
not hold such offices at the respective dates of such Equipment Notes. The Owner
may from time to time execute and deliver Equipment Notes with respect to the
Aircraft to the Mortgagee for authentication upon original issue and such
Equipment Notes shall thereupon be authenticated and delivered by the Mortgagee
upon the written request of the Owner signed by an authorized officer of the
Owner. No Equipment Note shall be secured by or entitled to any benefit under
this Trust Indenture or be valid or obligatory for any purposes, unless there
appears on such Equipment Note a certificate of authentication in the form
provided for herein executed by the Mortgagee by the manual signature of one of
its authorized officers and such certificate upon any Equipment Notes be
conclusive evidence, and the only evidence, that such Equipment Note has been
duly authenticated and delivered hereunder.
The aggregate Original Amount of the Equipment Notes issued hereunder
shall not exceed the amount set forth as the maximum therefor on Schedule I
hereto.
SECTION 2.03. [INTENTIONALLY OMITTED]
SECTION 2.04. METHOD OF PAYMENT
(a) The Original Amount of, interest on, Make-Whole Amount, if any,
and other amounts due under each Equipment Note or hereunder will be payable in
Dollars by
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wire transfer of immediately available funds not later than 12 noon, New York
time, on the due date of payment to the Mortgagee at the Corporate Trust Office
for distribution among the Note Holders in the manner provided herein. The Owner
shall not have any responsibility for the distribution of such payment to any
Note Holder. Notwithstanding the foregoing or any provision in any Equipment
Note to the contrary, the Mortgagee will use reasonable efforts to pay or cause
to be paid, if so directed in writing by any Note Holder (with a copy to the
Owner), all amounts paid by the Owner hereunder and under such holder's
Equipment Note or Equipment Notes to such holder or a nominee therefor
(including all amounts distributed pursuant to Article III of this Trust
Indenture) by transferring, or causing to be transferred, by wire transfer of
immediately available funds in Dollars, prior to 12:30 P.M., New York City time,
on the due date of payment, to an account maintained by such holder with a bank
located in the continental United States the amount to be distributed to such
holder, for credit to the account of such holder maintained at such bank. Any
payment made hereunder shall be made without any presentment or surrender of any
Equipment Note, except that, in the case of the final payment in respect of any
Equipment Note, such Equipment Note shall be surrendered to the Mortgagee for
cancellation promptly after such payment. Notwithstanding any other provision of
this Trust Indenture to the contrary, the Mortgagee shall not be required to
make, or cause to be made, wire transfers as aforesaid prior to the first
Business Day on which it is practicable-for the Mortgagee to do so in view of
the time of day when the funds to be so transferred were received by it if such
funds were received after 12 noon, New York time, at the place of payment. Prior
to the due presentment for registration of transfer of any Equipment Note, the
Owner and the Mortgagee shall deem and treat the Person in whose name any
Equipment Note is registered on the Equipment Note Register as the absolute
owner and holder of such Equipment Note for the purpose of receiving payment of
all amounts payable with respect to such Equipment Note and for all other
purposes, and none of the Owner or the Mortgagee shall be affected by any notice
to the contrary. So long as any signatory to the Participation Agreement or
nominee thereof shall be a registered Note Holder, all payments to it shall be
made to the account of such Note Holder specified in Schedule I thereto and
otherwise in the manner provided in or pursuant to the Participation Agreement
unless it shall have specified some other account or manner of payment by notice
to the Mortgagee consistent with this Section 2.04.
(b) The Mortgagee, as agent for the Owner, shall exclude and withhold
at the appropriate rate from each payment of Original Amount of, interest on,
Make-Whole Amount, if any, and other amounts due hereunder or under each
Equipment Note (and such exclusion and withholding shall constitute payment in
respect of such Equipment Note) any and all United States withholding taxes
applicable thereto as required by Law. The Mortgagee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
United States taxes or similar charges are required to be withheld with respect
to any amounts
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payable hereunder or in respect of the Equipment Notes, to withhold such amounts
and timely pay the same to the appropriate authority in the name of and on
behalf of the Note Holders, that it will file any necessary United States
withholding tax returns or statements when due, and that as promptly as possible
after the payment thereof it will deliver to each Note Holder (with a copy to
the Owner) appropriate receipts showing the payment thereof, together with such
additional documentary evidence as any such Note Holder may reasonably request
from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to the
Mortgagee a properly completed, accurate and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such holder
is made (but prior to the making of such payment), or in either of the two
preceding calendar years, and has not notified the Mortgagee of the withdrawal
or inaccuracy of such form prior to the date of such payment (and the Mortgagee
has no reason to believe that any information set forth in such form is
inaccurate), the Mortgagee shall withhold only the amount, if any, required by
Law (after taking into account any applicable exemptions properly claimed by the
Note Holder) to be withheld from payments hereunder or under the Equipment Notes
held by such holder in respect of United States federal income tax. If a Note
Holder (x) which is a Non-U.S. Person has furnished to the Mortgagee a properly
completed, accurate and currently effective U.S. Internal Revenue Service Form
4224 in duplicate (or such successor certificate, form or forms as may be
required by the United States Treasury Department as necessary in order to
properly avoid withholding of United States federal income tax), for each
calendar year in which a payment is made (but prior to the making of any payment
for such year), and has not notified the Mortgagee of the withdrawal or
inaccuracy of such certificate or form prior to the date of such payment (and
the Mortgagee has no reason to believe that any information set forth in such
form is inaccurate) or (y) which is a U.S. Person has furnished to the Mortgagee
a properly completed, accurate and currently effective U.S. Internal Revenue
Service Form W9, if applicable, prior to a payment hereunder or under the
Equipment Notes held by such holder, no amount shall be withheld from payments
in respect of United States federal income tax. If any Note Holder has notified
the Mortgagee that any of the foregoing forms or certificates is withdrawn or
inaccurate, or if such holder has not filed a form claiming an exemption from
United States withholding tax or if the Code or the regulations thereunder or
the administrative interpretation thereof is at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Equipment Notes held by such holder, the Mortgagee agrees to
withhold from each payment due to the relevant Note Holder withholding taxes at
the appropriate rate under Law and will, on a timely basis as more fully
provided above, deposit such amounts with an authorized depository and make such
returns,
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statements, receipts and other documentary evidence in connection therewith as
required by Law.
Owner shall not have any liability for the failure of the Mortgagee to
withhold taxes in the manner provided for herein or for any false, inaccurate or
untrue evidence provided by any Note Holder hereunder.
SECTION 2.05. APPLICATION OF PAYMENTS
In the case of each Equipment Note, each payment of Original Amount,
Make-Whole Amount, if any, and interest due thereon shall be applied:
First: to the payment of accrued interest on such Equipment Note (as
well as any interest on any overdue Original Amount, any overdue Make-Whole
Amount, if any, and to the extent permitted by Law, any overdue interest
and any other overdue amounts thereunder) to the date of such payment;
Second: to the payment of the Original Amount of such Equipment Note
(or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Equipment Note: and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Original Amount of such Equipment Note remaining unpaid (provided that
such Equipment Note shall not be subject to redemption except as provided
in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Original Amount of such Equipment Note in the inverse order of
their maturity.
SECTION 2.06. TERMINATION OF INTEREST IN COLLATERAL
No Note Holder nor any other Indenture Indemnitee shall, as such, have
any further interest in, or other right with respect to, the Collateral when and
if the Original Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Equipment Notes held by such Note Holder and any other
sums then due and payable to such Note Holder, such Indenture Indemnitee or the
Mortgagee hereunder (including, without limitation, under the third paragraph of
Section 2.02 hereof) and under the other Operative
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Agreements by the Owner (collectively, the "Secured Obligations") shall have
been paid in full.
SECTION 2.07. REGISTRATION TRANSFER AND EXCHANGE OF EQUIPMENT NOTES
The Mortgagee shall keep a register (the "Equipment Note Register") in
which the Mortgagee shall provide for the registration of Equipment Notes and
the registration of transfers of Equipment Notes. No such transfer shall be
given effect unless and until registration hereunder shall have occurred. The
Equipment Note Register shall be kept at the Corporate Trust Office of the
Mortgagee. The Mortgagee is hereby appointed "Equipment Note Registrar" for the
purpose of registering Equipment Notes and transfers of Equipment Notes as
herein provided. A holder of any Equipment Note intending to exchange such
Equipment Note shall surrender such Equipment Note to the Mortgagee at the
Corporate Trust Office, together with a written request from the registered
holder thereof for the issuance of a new Equipment Note, specifying, in the case
of a surrender for transfer, the name and address of the new holder or holders.
Upon surrender for registration of transfer of any Equipment Note, the Owner
shall execute, and the Mortgagor shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Equipment Notes of a
like aggregate Original Amount and of the same series. At the option of the Note
Holder, Equipment Notes may be exchanged for other Equipment Notes of any
authorized denominations of a like aggregate Original Amount, upon surrender of
the Equipment Notes to be exchanged to the Mortgagee at the Corporate Trust
Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner
shall execute, and the Mortgagee shall authenticate and deliver, the Equipment
Notes which the Note Holder making the exchange is entitled to receive. All
Equipment Notes issued upon any registration of transfer or exchange of
Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or
otherwise under this Trust Indenture) shall be the valid obligations of the
Owner evidencing the same respective obligations, and entitled to the same
security and benefits under this Trust Indenture, as the Equipment Notes
surrendered upon such registration of transfer or exchange. Every Equipment Note
presented or surrendered for registration of transfer, shall (if so required by
the Mortgagee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Mortgagee duly executed by the Note Holder
or such holder's attorney duly authorized in writing, and the Mortgagee shall
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act, and the securities Laws of any applicable state. The
Mortgagee shall make a notation on each new Equipment Note of the amount of all
payments of Original Amount previously made on the old Equipment Note or
Equipment Notes with respect to which such new Equipment Note is issued and the
date to which interest on such old Equipment Note or Equipment Notes has been
paid. Interest shall be
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deemed to have been paid on such new Equipment Note to the date on which
interest shall have been paid on such old Equipment Note, and all payments of
the Original Amount marked on such new Equipment Note, as provided above, shall
be deemed to have been made thereon. The Owner shall not be required to exchange
any surrendered Equipment Notes as provided above during the ten-day period
preceding the due date of any payment on such Equipment Note. The Owner shall in
all cases deem the Person in whose name any Equipment Note shall have been
issued and registered as the absolute owner and holder of such Equipment Note
for the purpose of receiving payment of all amounts payable by the Owner with
respect to such Equipment Note and for all purposes until a notice stating
otherwise is received from the Mortgagee and such change is reflected on the
Equipment Note Register. The Mortgagee will promptly notify the Owner of each
registration of a transfer of an Equipment Note. Any such transferee of an
Equipment Note, by its acceptance of an Equipment Note, agrees to the provisions
of this Trust Indenture and the Participation Agreement applicable to Note
Holders, including Sections 6.3, 6.4 and 9.1 thereof and shall be deemed to have
covenanted to the parties to the Participation Agreement as to the matters
covenanted by the original Note Holder in the Participation Agreement. Subject
to compliance by the Note Holder and its transferee (if any) of the requirements
set forth in this Section 2.07, Mortgagee and Owner shall use all reasonable
efforts to issue new Equipment Notes upon transfer or exchange within 10
Business Days of the date an Equipment Note is surrendered for transfer or
exchange.
SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN EQUIPMENT NOTES
If any Equipment Note shall become mutilated, destroyed, lost or
stolen, the Owner shall, upon the written request of the holder of such
Equipment Note, execute and the Mortgagee shall authenticate and deliver in
replacement thereof a new Equipment Note, payable in the same Original Amount
dated the same date and captioned as issued in connection with the Aircraft. If
the Equipment Note being replaced has become mutilated, such Equipment Note
shall be surrendered to the Mortgagee and a photocopy thereof shall be furnished
to the Owner. If the Equipment Note being replaced has been destroyed, lost or
stolen, the holder of such Equipment Note shall furnish to the Owner and the
Mortgagee such security or indemnity as may be required by them to save the
Owner and the Mortgagee harmless and evidence satisfactory to the Owner and the
Mortgagee of the destruction, loss or theft of such Equipment Note and of the
ownership thereof. If a "qualified institutional buyer" of the type referred to
in paragraph (a)(1)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act
(a "QIB") is the holder of any such destroyed, lost or stolen Equipment Note,
then the written indemnity of such QIB, signed by an authorized officer thereof,
in favor of, delivered to and in form reasonably satisfactory to the Owner shall
be accepted as satisfactory indemnity and
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security and no further indemnity or security shall be required as a condition
to the execution and delivery of such new Equipment Note. Subject to compliance
by the Note Holder with the requirements set forth in this Section 2.08,
Mortgagee and Owner shall use all reasonable efforts to issue new Equipment
Notes within 10 Business Days of the date of the written request therefor from
the Note Holder.
SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION
(a) No service charge shall be made to a Note Holder for any
registration of transfer or exchange of Equipment Notes, but the Mortgagee, as
Equipment Note Registrar, may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Equipment Notes.
(b) The Mortgagee shall cancel all Equipment Notes surrendered for
replacement, redemption, transfer, exchange, payment or cancellation and shall
destroy the canceled Equipment Notes.
SECTION 2.10. MANDATORY REDEMPTIONS OF EQUIPMENT NOTES
On the date on which the Owner is required pursuant to Section 4.05
hereof to make payment for an Event of Loss with respect to the Airframe, all of
the Equipment Notes shall be redeemed in whole at a redemption price equal to
100% of the unpaid Original Amount thereof, together with all accrued interest
thereon to the date of redemption and all other Secured Obligations owed or then
due and payable to the Note Holders but without Make-Whole Amount.
SECTION 2.11. VOLUNTARY REDEMPTIONS OF EQUIPMENT NOTES
All (but not less than all) of the Equipment Notes may be redeemed by
the Owner upon at least 20 days revocable prior written notice to the Mortgagee
and the Note Holders, and the Equipment Notes shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Original Amount thereof, together
with accrued interest thereon to the date of redemption and all other Secured
Obligations owed or then-due and payable to the Note Holders plus Make-Whole
Amount, if any.
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SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION
(a) No redemption of any Equipment Note may be made except to the
extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Equipment Note may be made by the Mortgagee.
(b) Notice of redemption with respect to the Equipment Notes shall be
given by the Mortgagee by first-class mail, postage prepaid, mailed not less
than 15 nor more than 60 days prior to the applicable redemption date, to each
Note Holder of such Equipment Notes to be redeemed, at such Note Holder's
address appearing in the Equipment Note Register; provided that such notice
shall be revocable by written notice from the Owner to Mortgagee given not later
than three days prior to the redemption date. All notices of redemption shall
state: (1) the redemption date, (2) the applicable basis for deter-mining the
redemption price, (3) that on the redemption date, the redemption price will
become due and payable upon each such Equipment Note, and that, if any such
Equipment Notes are then outstanding, interest on such Equipment Notes shall
cease to accrue on and after such redemption date, and (4) the place or places
where such Equipment Notes are to be surrendered for payment of the redemption
price.
(c) On or before the redemption date (unless the notice with respect
thereto shall have been revoked pursuant to Section 2.12(b)), the Owner (or any
person on behalf of the Owner) shall, to the extent an amount equal to the
redemption price for the Equipment Notes to be redeemed on the redemption date
shall not then be held by the Mortgagee, deposit or cause to be deposited with
the Mortgagee by 12:30 PM New York time on the redemption date in immediately
available funds the redemption price of the Equipment Notes to be redeemed.
(d) Notice of redemption having been given as aforesaid (and not
revoked as contemplated in the proviso to Section 2.12(b)), the Equipment Notes
to be redeemed shall, on the redemption date, become due and payable at the
Corporate Trust Office of the Mortgagee or at any office or agency maintained
for such purposes pursuant to Section 2.07, and from and after such redemption
date (unless there shall be a default in the payment of the redemption price)
any such Equipment Notes then outstanding shall cease to bear interest. Upon
surrender of any such Equipment Note for redemption in accordance with said
notice, such Equipment Note shall be redeemed at the redemption price. If any
Equipment Note called for redemption shall not be so paid upon surrender thereof
for redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Equipment Note as of such redemption date.
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SECTION 2.13. SUBORDINATION
(a) The Owner and, by acceptance of its Equipment Notes of any Series,
each Note Holder of such Series, hereby agree that no payment or distribution
shall be made on or in respect of the Secured Obligations owed to such Note
Holder of such Series, including any payment or distribution of cash, property
or securities after the commencement of a proceeding of the type referred to in
Section 5.01(e), (f) or (g) hereof, except as expressly provided in Article III
hereof.
(b) By the acceptance of its Equipment Notes of any Series (other than
Series A), each Note Holder of such Series agrees that in the event that such
Note Holder, in its capacity as a Note Holder, shall receive any payment or
distribution on any Secured Obligations in respect of such Series which it is
not entitled to receive under this Section 2.13 or Article III hereof, it will
hold any amount so received in trust for the Senior Holder (as defined in
Section 2.13(c) hereof) and will forthwith turn over such payment to the
Mortgagee in the form received to be applied as provided in Article III hereof.
(c) As used in this Section 2.13, the term "Senior Holder" shall mean,
(i) the Note Holders of Series A until the Secured Obligations in respect of
Series A Equipment Notes have been paid in full, (ii) after the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, the
Note Holders of Series B until the Secured Obligations in respect of Series B
Equipment Notes have been paid in full and (iii) after the Secured Obligations
in respect of Series B Equipment Notes have been paid in full, the Note Holders
of Series C until the Secured Obligations in respect of Series C Equipment Notes
have been paid in full.
SECTION 2.14. ASSUMPTION OF EQUIPMENT NOTES
Pursuant to the provisions of Section 13 of the Participation
Agreement, an owner trustee shall be entitled to assume on a non-recourse basis
all of the obligations of the Owner hereunder and under the Equipment Notes by
an amended and restated trust indenture, an amended and restated participation
agreement, and the issuance of new equipment notes having substantially the same
tenor as the Equipment Notes. If an owner trustee shall assume such obligations
of the Owner, the Owner shall be released and discharged form any further
obligations hereunder and under the Equipment Notes (except with respect to any
such obligations that accrued prior thereto) and the Equipment Notes shall be
delivered to the Indenture Trustee for cancellation.
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ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS
SECTION 3.01. BASIC DISTRIBUTIONS
Except as otherwise provided in Sections 3.02 and 3.03 hereof, each
periodic payment of principal or interest on the Equipment Notes received by the
Mortgagee shall be promptly distributed in the following order of priority:
(i) so much of such payment as shall be required to pay in full the
aggregate amount of the payment or payments of Original Amount and
interest (as well as any interest on any overdue Original Amount
and, to the extent permitted by Law, on any overdue interest) then
due under all Series A Equipment Notes shall be distributed to the
Note Holders of Series A ratably, without priority of one over the
other, in the proportion that the amount of such payment or
payments then due under each Series A Equipment Note bears to the
aggregate amount of the payments then due under all Series A
Equipment Notes;
(ii) after giving effect to paragraph (i) above, so much of such
payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of Original Amount and
interest (as well as any interest on any overdue Original Amount
and, to the extent permitted by Law, on any overdue interest) then
due under all Series B Equipment Notes shall be distributed to the
Note Holders of Series B ratably, without priority of one over the
other, in the proportion that the amount of such payment or
payments then due under each Series B Equipment Note bears to the
aggregate amount of the payments then due under all Series B
Equipment Notes;
(iii) after giving effect to paragraph (ii) above, so much of such
payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of Original Amount and
interest (as well as any interest on any overdue Original Amount
and, to the extent permitted by Law, on any overdue interest) then
due under all Series C Equipment Notes shall be distributed to the
Note Holders of Series C ratably, without priority of one over the
other, in the proportion that the amount of such payment or
payments then due under each Series C Equipment Note bears to the
aggregate amount of the payments then due under all Series C
Equipment Notes; and
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(iv) if any Series D Equipment Notes have been issued, after giving
effect to paragraph (iii) above, so much of such payment remaining
as shall be required to pay in full the aggregate amount of the
payment or payments of Original Amount and interest (as well as
any interest on any overdue Original Amount and, to the extent
permitted by Law, on any overdue interest) then due under all
Series D Equipment Notes shall be distributed to the Note Holders
of Series D ratably, without priority of one over the other, in
the proportion that the amount of such payment or payments then
due under each Series D Equipment Note bears to the aggregate
amount of the payments then due under all Series D Equipment
Notes.
SECTION 3.02. EVENT OF LOSS; REPLACEMENT; OPTIONAL REDEMPTION
Except as otherwise provided in Section 3.03 hereof, any payments
received by the Mortgagee (i) with respect to the Airframe or the Airframe and
one or more Engines as the result of an Event of Loss or (ii) pursuant to an
optional redemption of the Equipment Notes pursuant to Section 2.11 hereof shall
be applied to redemption of the Equipment Notes and to all other Secured
Obligations by applying such funds in the following order of priority:
First, (a) to reimburse the Mortgagee and the Note Holders for any reasonable
costs or expenses incurred in connection with such redemption for
which they are entitled to reimbursement, or indemnity by Owner,
under the Operative Agreements and then (b) to pay any other
amounts then due (except as provided in clause "Second" below) to
the Mortgagee, the Note Holders and the other Indenture
Indemnitees under this Trust Indenture, the Participation
Agreement or the Equipment Notes;
Second, (i) to pay the amounts specified in paragraph (i) of clause "Third" of
Section 3.03 hereof plus Make-Whole Amount, if any, then due and
payable in respect of the Series A Equipment Notes;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "Third" of Section 3.03
hereof plus Make-Whole Amount, if any, then due and payable in
respect of the Series B Equipment Notes;
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(iii) after giving effect to paragraph (ii) above, to pay the amounts
specified in paragraph (iii) of clause "Third" of Section 3.03
hereof plus Make-Whole Amount, if any, then due and payable in
respect of the Series C Equipment Notes; and
(iv) if any Series D Equipment Notes have been issued, after giving
effect to paragraph (iii) above, to pay the amounts specified in
paragraph (iv) of clause "Third" of Section 3.03 hereof plus
Make-Whole Amount, if any, then due and payable in respect of the
Series D Equipment Notes; and
Third, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 4.05 hereof, any insurance, condemnation or similar proceeds which
result from such Event of Loss and are paid over to the Mortgagee shall be held
by the Mortgagee as permitted by Section 7.04 hereof (provided that such moneys
shall be invested as provided in Section 6.06 hereof) as additional security for
the obligations of Owner secured by this Trust Indenture and such proceeds (and
such investment earnings), to the extent not theretofore applied as provided
herein, shall be released to the Owner at the Owner's written request upon the
release of such Airframe or Engine and the replacement thereof as provided
herein.
SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT
Except as otherwise provided in Section 3.04 hereof, all payments
received and amounts held or realized by the Mortgagee (including any amounts
realized by the Mortgagee from the exercise of any remedies pursuant to Article
V hereof) after an Event of Default shall have occurred and be continuing and
after the Equipment Notes shall have become due and payable, as well as all
payments or amounts then held by the Mortgagee as part of the Collateral, shall
be promptly distributed by the Mortgagee in the following order of priority:
First, so much of such payments or amounts as shall be required to (i)
reimburse the Mortgagee or WTC for any tax (except to the extent
resulting from a failure of the Mortgagee to withhold taxes
pursuant to Section 2.04(b) hereof), expense or other loss
(including, without limitation, all amounts to be expended at the
expense of, or charged upon the rents, revenues, issues, products
and profits of, the property included in the Collateral (all such
property being herein called the "Mortgaged Property") pursuant to
Section 5.03(b) hereof) incurred by the Mortgagee or WTC (to the
extent
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not previously reimbursed), the expenses of any sale, or other
proceeding, reasonable attorneys' fees and expenses, court costs,
and any other expenditures incurred or expenditures or advances
made by the Mortgagee, WTC or the Note Holders in the protection,
exercise or enforcement of any right, power or remedy or any
damages sustained by the Mortgagee, WTC or any Note Holder,
liquidated or otherwise, upon such Event of Default shall be
applied by the Mortgagee as between itself, WTC and the Note
Holders in reimbursement of such expenses and any other expenses
for which the Mortgagee, WTC or the Note Holders are entitled to
reimbursement under any Operative Agreement and (ii) pay all
amounts payable to the other Indenture Indemnitees hereunder and
under the Participation Agreement; and in the case the aggregate
amount to be so distributed is insufficient to pay as aforesaid in
clauses (i) and (ii), then ratably, without priority of one over
the other, in proportion to the amounts owed each hereunder;
Second, so much of such payments or amounts remaining as shall be required
to reimburse the then existing or prior Note Holders for payments
made pursuant to Section 6.03 hereof (to the extent not previously
reimbursed) shall be distributed to such then existing or prior
Note Holders ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made by each
such then existing or prior Note Holder pursuant to said Section
6.03 hereof;
Third, (i) so much of such payments or amounts remaining as shall be required
to pay in full the aggregate unpaid Original Amount of all Series
A Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon (other than Make-Whole Amount which shall not
be due and payable) and all other Secured Obligations in respect
of the Series A Equipment Notes (other than Make-Whole Amount) to
the date of distribution, shall be distributed to the Note Holders
of Series A, and in case the aggregate amount so to be distributed
shall be insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion that the
aggregate unpaid Original Amount of all Series A Equipment Notes
held by each holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole Amount,
if any) to the date of distribution, bears to the aggregate unpaid
Original Amount of all Series A Equipment Notes held by all such
holders plus the accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Amount) to the date of
distribution;
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(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Original Amount of all Series B Equipment
Notes, and the accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Amount which shall not be due and
payable) and all other Secured Obligations in respect of the
Series B Equipment Notes (other than Make-Whole Amount) to the
date of distribution, shall be distributed to the Note Holders of
Series B, and in case the aggregate amount so to be distributed
shall be insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion that the
aggregate unpaid Original Amount of all Series B Equipment Notes
held by each holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole Amount,
if any) to the date of distribution, bears to the aggregate unpaid
Original Amount of all Series B Equipment Notes held by all such
holders plus the accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Amount) to the date of
distribution;
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Original Amount of all Series C Equipment
Notes, and the accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Amount which shall not be due and
payable) and all other Secured Obligations in respect of the
Series C Equipment Notes (other than Make-Whole Amount) to the
date of distribution, shall be distributed to the Note Holders of
Series C, and in case the aggregate amount so to be distributed
shall be insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion that the
aggregate unpaid Original Amount of all Series C Equipment Notes
held by each holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole Amount,
if any) to the date of distribution, bears to the aggregate unpaid
Original Amount of all Series C Equipment Notes held by all such
holders plus the accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Amount) to the date of
distribution; and
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(iv) if any Series D Equipment Notes have been issued, after giving
effect to paragraph (iii) above, so much of such payments or
amounts remaining as shall be required to pay in full the
aggregate unpaid Original Amount of all Series D Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon
(other than Make-Whole Amount which shall not be due and payable)
and all other Secured Obligations in respect of the Series D
Equipment Notes (other than Make-Whole Amount) to the date of
distribution, shall be distributed to the Note Holders of Series
D, and in case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably, without
priority of one over the other, in the proportion that the
aggregate unpaid Original Amount of all Series D Equipment Notes
held by each holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole Amount,
if any) to the date of distribution, bears to the aggregate unpaid
Original Amount of all Series D Equipment Notes held by all such
holders plus the accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Amount) to the date of
distribution; and
Fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner.
No Make-Whole Amount shall be due and payable on the Equipment Notes
as a consequence of the acceleration of the Equipment Notes as a result of an
Event of Default.
SECTION 3.04. CERTAIN PAYMENTS
(a) Any payments received by the Mortgagee for which no provision as
to the application thereof is made in this Trust Indenture and for which such
provision is made in any other Operative Agreement shall be applied forthwith to
the purpose for which such payment was made in accordance with the terms of such
other Operative Agreement, as the case may be.
(b) Notwithstanding anything to the contrary contained in this Article
III, the Mortgagee will distribute promptly upon receipt any indemnity payment
received by it from the Owner in respect of the Mortgagee in its individual
capacity, any Note Holder or any other Indenture Indemnitee, in each case
whether or not pursuant to Section 8 of the Participation Agreement, directly to
the Person entitled thereto. Any payment received by the Mortgagee under the
third paragraph of Section 2.02 shall be distributed to the Subordination Agent
in its
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capacity as Note Holder to be distributed in accordance with the terms of the
Intercreditor Agreement.
SECTION 3.05. OTHER PAYMENTS
Any payments received by the Mortgagee for which no provision as to
the application thereof is made elsewhere in this Trust Indenture or in any
other Operative Agreement shall be distributed by the Mortgagee to the extent
received or realized at any time, in the order of priority specified in Section
3.01 hereof, and after payment in full of all amounts then due in accordance
with Section 3.01 in the manner provided in clause "Fourth" of Section 3.03
hereof.
ARTICLE IV COVENANTS OF THE OWNER
SECTION 4.01. LIENS
The Owner will not directly or indirectly create, incur, assume or
suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any
Engine or any Part, title to any of the foregoing or any interest of Owner
therein, except Permitted Liens. The Owner shall promptly, at its own expense,
take such action as may be necessary, to duly discharge (by bonding or
otherwise) any Lien other than a Permitted Lien arising at any time.
SECTION 4.02. POSSESSION, OPERATION AND USE, MAINTENANCE AND REPAIR,
REGISTRATION AND MARKINGS
(a) General. Except as otherwise expressly provided herein, the Owner
shall be entitled to operate, use, locate, employ or otherwise utilize or not
utilize the Airframe, any Engine or any Parts in any lawful manner or place in
accordance with the Owner's business judgment.
(b) Possession. The Owner, without the prior consent of Mortgagee,
shall not lease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine, or
permit any Engine to be installed, on any airframe other than the Airframe;
except that the Owner may, without such prior written consent of Mortgagee:
(i) Subject or permit any Permitted Lessee to subject any Engine to
normal interchange agreements or pooling agreements or arrangements, in
each case customary
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in the commercial airline industry and entered into by Owner or such
Permitted Lessee, as the case may be, in the ordinary course of business;
provided, however, that if Owner's title to any such Engine is divested
under any such agreement or arrangement, then such Engine shall be deemed
to have suffered an Event of Loss as of the date of such divestiture, and
Owner shall comply with Section 4.04(e) in respect thereof;
(ii) Deliver or permit any Permitted Lessee to deliver possession of
the Aircraft, Airframe, any Engine or any Part (x) to the manufacturer
thereof or to any third-party maintenance provider for testing, service,
repair, maintenance or overhaul work on the Aircraft, Airframe, any Engine
or any Part, or, to the extent required or permitted by Section 4.04, for
alterations or modifications in or additions to the Aircraft, Airframe or
any Engine or (y) to any Person for the purpose of transport to a Person
referred to in the preceding clause (x);
(iii) Install or permit any Permitted Lessee to install an Engine on
an airframe owned by Owner or such Permitted Lessee, as the case may be,
free and clear of all Liens, except (x) Permitted Liens and those that do
not apply to the Engines, and (y) the rights of third parties under normal
interchange or pooling agreements and arrangements of the type that would
be permitted under Section 4.02(b)(i);
(iv) Install or permit any Permitted Lessee to install an Engine on an
airframe leased to Owner or such Permitted Lessee, or purchased by Owner or
such Permitted Lessee subject to a mortgage, security agreement,
conditional sale or other secured financing arrangement, but only if (x)
such airframe is free and clear of all Liens, except (A) the rights of the
parties to such lease, or any such secured financing arrangement, covering
such airframe and (B) Liens of the type permitted by clause (iii) above and
(y) Owner or Permitted Lessee, as the case may be, shall have received from
the lessor, mortgagee, secured party or conditional seller, in respect of
such airframe, a written agreement (which may be a copy of the lease,
mortgage, security agreement, conditional sale or other agreement covering
such airframe), whereby such Person agrees that it will not acquire or
claim any right, title or interest in, or Lien on, such Engine by reason of
such Engine being installed on such airframe at any time while such Engine
is subject to the Lien of this Trust Indenture;
(v) Install or permit any Permitted Lessee to install an Engine on an
airframe owned by Owner or such Permitted Lessee, leased to Owner or such
Permitted Lessee, or purchased by Owner or such Permitted Lessee subject to
a conditional sale or other security agreement under circumstances where
neither clause (iii) or (iv) above is applicable;
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provided, however, that any such installation shall be deemed an Event of
Loss with respect to such Engine, and Owner shall comply with Section
4.04(e) hereof in respect thereof;
(vi) Transfer or permit any Permitted Lessee to transfer possession of
the Aircraft, Airframe or any Engine to the U.S. Government, in which event
Owner shall promptly notify Mortgagee in writing of any such transfer of
possession and, in the case of any transfer pursuant to CRAF, in such
notification shall identify by name, address and telephone numbers the
Contracting Office Representative or Representatives for the Military
Airlift Command of the United States Air Force to whom notices must be
given and to whom requests or claims must be made to the extent applicable
under CRAF;
(vii) So long as no Event of Default shall have occurred and be
continuing, and subject to the provisions of the immediately following
paragraph, enter into a lease with respect to the Aircraft, Airframe or any
Engine to any Permitted Air Carrier that is not then subject to any
bankruptcy, insolvency, liquidation, reorganization, dissolution or similar
proceeding and shall not have substantially all of its property in the
possession of any liquidator, trustee, receiver or similar person; provided
that, in the case only of a lease to a Permitted Foreign Air Carrier, (A)
the United States maintains diplomatic relations with the country of
domicile of such Permitted Foreign Air Carrier (or, in the case of Taiwan,
diplomatic relations at least as good as those in effect on the Closing
Date) and (B) Owner shall have furnished Mortgagee a favorable opinion of
counsel, reasonably satisfactory to Mortgagee, in the country of domicile
of such Permitted Foreign Air Carrier, that (v) the terms of such lease are
the legal, valid and binding obligations of the parties thereto enforceable
under the laws of such jurisdiction, (w) it is not necessary for Mortgagee
to register or qualify to do business in such jurisdiction, if not already
so registered or qualified, as a result, in whole or in part, of the
proposed lease, (x) Mortgagee's Lien in respect of the Aircraft, Airframe
and Engines, will be recognized in such jurisdiction, (y) the Laws of such
jurisdiction of domicile require fair compensation by the government of
such jurisdiction, payable in a currency freely convertible into Dollars,
for the loss of title to the Aircraft, Airframe or Engines in the event of
the requisition by such government of such title (unless Owner shall
provide insurance in the amounts required with respect to hull insurance
under this Trust Indenture covering the requisition of title to the
Aircraft, Airframe or Engines by the government of such jurisdiction so
long as the Aircraft, Airframe or Engines are subject to such lease) and
(z) the agreement of such Permitted Air Carrier that its rights under the
lease are subject and subordinate to all the terms of
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this Trust Indenture is enforceable against such Permitted Air Carrier
under applicable law;
provided that (1) the rights of any transferee who receives possession by reason
of a transfer permitted by this Section 4.02(b) (other than by a transfer of an
Engine which is deemed an Event of Loss) shall be subject and subordinate to all
the terms of this Trust Indenture, (2) the Owner shall remain primarily liable
for the performance of all of the terms of this Trust Indenture and all the
terms and conditions of this Trust Indenture and the other Operative Agreements
shall remain in effect and (3) no lease or transfer of possession otherwise in
compliance with this Section 4.02(b) shall (x) result in any registration or
re-registration of an Aircraft, except to the extent permitted by Section
4.02(e) or the maintenance, operation or use thereof except in compliance with
Sections 4.02(c) and 4.02(d) or (y) permit any action not permitted to the Owner
hereunder.
In the case of any lease permitted under this Section 4.02(b), the
Owner will include in such lease appropriate provisions which (t) make such
lease expressly subject and subordinate to all of the terms of this Trust
Indenture, including the rights of the Mortgagee to avoid such lease in the
exercise of its rights to repossession of the Airframe and Engines hereunder;
(u) require the Permitted Lessee to comply with the terms of Section 4.06; and
(v) require that the Airframe or any Engine subject thereto be used in
accordance with the limitations applicable to the Owner's possession and use
provided in this Trust Indenture. No lease permitted under this Section 4.02(b)
shall be entered into unless (w) Owner shall provide written notice to Mortgagee
and Standard & Poor's (such notice in the event of a lease to a U.S. Air Carrier
to be given promptly after entering into any such lease or, in the case of a
lease to any other Permitted Air Carrier, 10 days in advance of entering into
such lease); (x) Owner shall furnish to Mortgagee evidence reasonably
satisfactory to Mortgagee that the insurance required by Section 4.06 remains in
effect; (y) all necessary documents shall have been duly filed, registered or
recorded in such public offices as may be required fully to preserve the first
priority security interest (subject to Permitted Liens) of Mortgagee in the
Aircraft, Airframe and Engines; and (z) Owner shall reimburse Mortgagee for all
of its reasonable out-of-pocket fees and expenses, including, without
limitation, reasonable fees and disbursements of counsel, incurred by Mortgagee
in connection with any such lease. For all purposes of this Section, the term
"lease" shall be deemed to include interchange agreements with respect to the
Aircraft or Airframe. Except as otherwise provided herein and without in any way
relieving the Owner from its primary obligation for the performance of its
obligations under this Trust Indenture, the Owner may in its sole discretion
permit a lessee to exercise any or all rights which the Owner would be entitled
to exercise under Sections 4.02 and 4.04, and may cause a lessee to perform any
or all of the Owner's obligations under Article IV, and the
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Mortgagee agrees to accept actual and full performance thereof by a lessee in
lieu of performance by the Owner.
Mortgagee hereby agrees, and each Note Holder by acceptance of an
Equipment Note agrees, for the benefit of each lessor, conditional seller,
indenture trustee or secured party of any engine leased to, or purchased by,
Owner or any Permitted Lessee subject to a lease, conditional sale, trust
indenture or other security agreement that Mortgagee, each Note Holder and their
respective successors and assigns will not acquire or claim, as against such
lessor, conditional seller, indenture trustee or secured party, any right, title
or interest in any engine as the result of such engine being installed on the
Airframe at any time while such engine is subject to such lease, conditional
sale, trust indenture or other security agreement and owned by such lessor or
conditional seller or subject to a trust indenture or security interest in favor
of such indenture trustee or secured party.
Notwithstanding anything to the contrary contained in this Trust
Indenture or any other Operative Agreement, any charter, Wet Lease or ACMI
Contract shall not constitute a delivery, transfer or relinquishment of
possession for purposes of this Section 4.02(b) and shall not be prohibited by
the terms hereof, but shall be subject and subordinate to the terms of this
Trust Indenture. Neither a charter, Wet Lease nor ACMI contract shall be deemed
to be a "lease" or "sublease", and the counterparty of a charter, Wet Lease or
ACMI Contract shall not be deemed to be a lessee or sublessee for any purposes
under this Trust Indenture. Any contract that is part of the United States Civil
Reserve Air Fleet Program shall not be deemed to be a lease or sublease for any
purposes under this Trust Indenture.
(c) Operation and Use. So long as the Aircraft, Airframe or any Engine
is subject to the Lien of this Trust Indenture, the Owner shall not operate, use
or locate the Aircraft, Airframe or any Engine, or allow the Aircraft, Airframe
or any Engine to be operated, used or located, (i) in any area excluded from
coverage by any insurance required by the terms of Section 4.06, except in the
case of a requisition by the U.S. Government where the Owner obtains indemnity
in lieu of such insurance from the U.S. Government, or insurance from the U.S.
Government, against substantially the same risks and for at least the amounts of
the insurance required by Section 4.06 covering such area, or (ii) in any
recognized area of hostilities unless covered in accordance with Section 4.06 by
war risk insurance, or in either case unless the Aircraft, the Airframe or any
Engine is only temporarily operated, used or located in such area as a result of
an emergency, equipment malfunction, navigational error, hijacking, weather
condition or other similar unforeseen circumstance, so long as Owner diligently
and in good faith proceeds to remove the Aircraft from such area. So long as the
Aircraft, the Airframe or any Engine is subject to the Lien of this Trust
Indenture, the Owner shall not permit such Aircraft, Airframe or any Engine, as
the case may be, to be used, operated, maintained,
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serviced, repaired or overhauled (x) in violation of any Law binding on or
applicable to such Aircraft, Airframe or Engine or (y) in violation of any
airworthiness certificate, license or registration of any Government Entity
relating to the Aircraft, the Airframe or any Engine, except (i) immaterial or
non-recurring violations with respect to which corrective measures are taken
promptly by Owner or Permitted Lessee, as the case may be, upon discovery
thereof, or (ii) to the extent the validity or application of any such Law or
requirement relating to any such certificate, license or registration is being
contested in good faith by Owner or Permitted Lessee in any reasonable manner
which does not involve any material risk of the sale, forfeiture or loss of the
Aircraft, Airframe or any Engine, any material risk of criminal liability or
material civil penalty against Mortgagee or impair the Mortgagee's security
interest in the Aircraft, Airframe or any Engine.
(d) Maintenance and Repair. So long as the Aircraft, Airframe or any
Engine is subject to the Lien of this Trust Indenture, the Owner shall cause the
Aircraft, Airframe and each Engine to be maintained, serviced, repaired and
overhauled in accordance with (i) maintenance standards required by or
substantially equivalent to those required by the FAA or the central aviation
authority of Canada, France, Germany, Japan, the Netherlands or the United
Kingdom for the Aircraft, Airframe and Engines, so as to (A) keep the Aircraft,
the Airframe and each Engine in as good operating condition as on the Closing
Date, ordinary wear and tear excepted, (B) keep the Aircraft in such operating
condition as may be necessary to enable the applicable airworthiness
certification of such Aircraft to be maintained under the regulations of the FAA
or other Aviation Authority then having jurisdiction over the operation of the
Aircraft, except during (x) temporary periods of storage in accordance with
applicable regulations, (y) maintenance and modification permitted hereunder or
(z) periods when the FAA or such other Aviation Authority has revoked or
suspended the airworthiness certificates for Similar Aircraft; and (ii) except
during periods when a Permitted Lease is in effect, the same standards as Owner
uses with respect to similar aircraft of similar size in its fleet operated by
Owner in similar circumstances and, during any period in which a Permitted Lease
is in effect, the same standards used by the Permitted Lessee with respect to
similar aircraft of similar size in its fleet and operated by the Permitted
Lessee in similar circumstances. Owner further agrees that the Aircraft,
Airframe and Engines will be maintained, used, serviced, repaired, overhauled or
inspected in compliance with applicable Laws with respect to the maintenance of
the Aircraft and in compliance with each applicable airworthiness certificate,
license and registration relating to the Aircraft, Airframe or any Engine issued
by the Aviation Authority, other than minor or nonrecurring violations with
respect to which corrective measures are taken upon discovery thereof and except
to the extent Owner or Permitted Lessee is contesting in good faith the validity
or application of any such Law or requirement relating to any such certificate,
license or registration in any reasonable manner which does not create a
material risk of sale, loss or forfeiture of the Aircraft, the Airframe or any
Engine or the interest of
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Mortgagee therein, or any material risk of criminal liability or material civil
penalty against Mortgagee. The Owner shall maintain or cause to be maintained
the Aircraft Documents in the English language.
(e) Registration. The Owner on or prior to the date of the Closing
shall cause the Aircraft to be duly registered in its name under the Act and
except as otherwise permitted by this Section 4.02(e) at all times thereafter
shall cause the Aircraft to remain so registered. So long as no Special Default
or Event of Default shall have occurred and be continuing, Owner may, by written
notice to Mortgagee, request to change the country of registration of the
Aircraft. Any such change in registration shall be effected only in compliance
with, and subject to all of the conditions set forth in, Section 6.4.5 of the
Participation Agreement. Unless the Trust Indenture has been discharged, Owner
shall also cause the Trust Indenture to be duly recorded and at all times
maintained of record as a first-priority perfected mortgage (subject to
Permitted Liens) on the Aircraft, the Airframe and each of the Engines (except
to the extent such perfection or priority cannot be maintained solely as a
result of the failure by Mortgagee to execute and deliver any necessary
documents).
(f) Markings. If permitted by applicable Law, on or reasonably
promptly after the Closing Date, Owner will cause to be affixed to, and
maintained in, the cockpit of the Airframe and on each Engine, in each case, in
a clearly visible location, a placard of a reasonable size and shape bearing the
legend: "Subject to a security interest in favor of Wilmington Trust Company,
not in its individual capacity but solely as Mortgagee." Such placards may be
removed temporarily, if necessary, in the course of maintenance of the Airframe
or Engines. If any such placard is damaged or becomes illegible, Owner shall
promptly replace it with a placard complying with the requirements of this
Section.
SECTION 4.03. INSPECTION
(a) At all reasonable times, so long as the Aircraft is subject to the
Lien of this Trust Indenture, Mortgagee and its authorized representatives (the
"Inspecting Parties") may (not more than once every 12 months unless an Event of
Default has occurred and is continuing then such inspection right shall not be
so limited) inspect the Aircraft, Airframe and Engines (including without
limitation, the Aircraft Documents) and any such Inspecting Party may make
copies of such Aircraft Documents not reasonably deemed confidential by Owner or
any Permitted Lessee.
(b) Any inspection of the Aircraft hereunder shall be limited to a
visual, walk-around inspection and shall not include the opening of any panels,
bays or other components
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of the Aircraft, and no such inspection shall interfere with Owner's or any
Permitted Lessee's maintenance and operation of the Aircraft, Airframe and
Engines.
(c) With respect to such rights of inspection, Mortgagee shall not
have any duty or liability to make, or any duty or liability by reason of not
making, any such visit, inspection or survey.
(d) Each Inspecting Party shall bear its own expenses in connection
with any such inspection (including the cost of any copies made in accordance
with Section 4.03(a)).
SECTION 4.04. REPLACEMENT AND POOLING OF PARTS, ALTERATIONS,
MODIFICATIONS AND ADDITIONS; SUBSTITUTION OF ENGINES
(a) Replacement of Parts. Except as otherwise provided herein, so long
as the Aircraft, Airframe or Engine is subject to the Lien of this Trust
Indenture, Owner, at its own cost and expense, will, or will cause a Permitted
Lessee to, at its own cost and expense, promptly replace (or cause to be
replaced) all Parts which may from time to time be incorporated or installed in,
or attached to, the Aircraft, Airframe or any Engine and which may from time to
time become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason whatsoever.
In addition, Owner may, at its own cost and expense, or may permit a Permitted
Lessee at its own cost and expense to, remove (or cause to be removed) in the
ordinary course of maintenance, service, repair, overhaul or testing any Parts,
whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use; provided, however, that
Owner, except as otherwise provided herein, at its own cost and expense, will,
or will cause a Permitted Lessee at its own cost and expense to, replace such
Parts as promptly as practicable. All replacement Parts shall be free and clear
of all Liens, except for Permitted Liens and pooling arrangements to the extent
permitted by Section 4.04(c) below (and except in the case of replacement
property temporarily installed on an emergency basis) and shall be in good
operating condition and have a value and utility not less than the value and
utility of the Parts replaced (assuming such replaced Parts were in the
condition required hereunder).
(b) Parts. Except as otherwise provided herein, any Part at any time
removed from the Airframe or any Engine shall remain subject to the Lien of this
Trust Indenture, no matter where located, until such time as such Part shall be
replaced by a Part that has been incorporated or installed in, or attached to,
such Airframe or any Engine and that meets the requirements for replacement
Parts specified above. Immediately upon any replacement Part
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becoming incorporated or installed in or attached to such Airframe or any Engine
as provided in Section 4.04(a), without further act, (i) the replaced Part shall
thereupon be free and clear of all rights of the Mortgagee and shall no longer
be deemed a Part hereunder, and (ii) such replacement Part shall become subject
to this Trust Indenture and be deemed part of such Airframe or any Engine, as
the case may be, for all purposes hereof to the same extent as the Parts
originally incorporated or installed in, or attached to, such Airframe or any
Engine.
(c) Pooling of Parts. Any Part removed from the Aircraft, Airframe or
an Engine may be subjected by the Owner or a Permitted Lessee to a normal
pooling arrangement customary in the airline industry and entered into in the
ordinary course of business of Owner or such Permitted Lessee, provided that the
part replacing such removed Part shall be incorporated or installed in, or
attached to, such Airframe or any Engine in accordance with Sections 4.04(a) and
4.04(b) as promptly as practicable after the removal of such removed Part. In
addition, any replacement part when incorporated or installed in, or attached
to, the Airframe or any Engine may be owned by any third party, subject to a
normal pooling arrangement, so long as the Owner or a Permitted Lessee, at its
own cost and expense, as promptly thereafter as reasonably possible, either (i)
causes such replacement part to become subject to the Lien of this Trust
Indenture, free and clear of all Liens except Permitted Liens, at which time
such replacement part shall become a Part or (ii) replaces (or causes to be
replaced) such replacement part by incorporating or installing in, or attaching
to, the Aircraft, Airframe or any Engine a further replacement Part owned by the
Owner free and clear of all Liens except Permitted Liens and which shall become
subject to the Lien of this Trust Indenture in accordance with Section 4.04(b).
(d) Alterations, Modifications and Additions. The Owner shall, or
shall cause a Permitted Lessee to, make (or cause to be made) such alterations
and modifications in and additions to the Aircraft, Airframe and each Engine as
may be required to be made from time to time to meet the applicable standards of
the FAA or other Aviation Authority having jurisdiction over the operation of
the Aircraft, to the extent made mandatory in respect of the Aircraft (a
"Mandatory Modification"); provided, however, that the Owner or a Permitted
Lessee may, in good faith and by appropriate procedure, contest the validity or
application of any law, rule, regulation or order in any reasonable manner which
does not materially adversely affect Mortgagee's interest in the Aircraft and
does not involve any material risk of sale, forfeiture or loss of the Aircraft
or the interest of Mortgagee therein, or any material risk of material civil
penalty or any material risk of criminal liability being imposed on Mortgagee or
the holder of any Equipment Note. In addition, the Owner, at its own expense,
may, or may permit a Permitted Lessee at its own cost and expense to, from time
to time make or cause to be made such alterations and modifications in and
additions to the Airframe or any Engine (each an "Optional Modification") as the
Owner or such Permitted Lessee may deem desirable in
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the proper conduct of its business including, without limitation, removal of
Parts which Owner deems are obsolete or no longer suitable or appropriate for
use in the Aircraft, Airframe or such Engine; provided, however, that no such
Optional Modification shall (i) materially diminish the fair market value,
utility, or useful life of the Aircraft or any Engine below its fair market
value, utility or useful life immediately prior to such Optional Modification
(assuming the Aircraft or such Engine was in the condition required by the Trust
Indenture immediately prior to such Optional Modification) or (ii) cause the
Aircraft to cease to have the applicable standard certificate of airworthiness.
All Parts incorporated or installed in or attached to any Airframe or any Engine
as the result of any alteration, modification or addition effected by the Owner
shall be free and clear of any Liens except Permitted Liens and become subject
to the Lien of this Trust Indenture; provided that the Owner or any Permitted
Lessee may, at any time so long as the Airframe or any Engine is subject to the
Lien of this Trust Indenture, remove any such Part (such Part being referred to
herein as a "Removable Part") if (i) such Part is in addition to, and not in
replacement of or in substitution for, any Part originally incorporated or
installed in, or attached to, such Airframe or any Engine at the time of
delivery thereof hereunder or any Part in replacement of, or in substitution
for, any such original Part, (ii) such Part is not required to be incorporated
or installed in, or attached or added to, the Aircraft, Airframe or such Engine
pursuant to the terms of Section 4.02(d) or the first sentence of this Section
4.04(d) and (iii) such Part can be removed from the Aircraft, Airframe or any
Engine without materially diminishing the fair market value, utility or
remaining useful life which such Aircraft, Airframe or Engine would have had at
the time of removal had such removal not been effected by the Owner, assuming
the Aircraft was otherwise maintained in the condition required by this Trust
Indenture. Upon the removal by the Owner of any such Part as above provided,
title thereto shall, without further act, be free and clear of all rights of the
Mortgagee and such Part shall no longer be deemed a Part hereunder. Removable
Parts may not be leased from or financed by third parties other than Mortgagee.
(e) Substitution of Engines. Upon the occurrence of an Event of Loss
with respect to an Engine under circumstances in which an Event of Loss with
respect to the Airframe has not occurred, Owner shall promptly (and in any event
within 15 days after such occurrence) give the Mortgagee written notice of such
Event of Loss. The Owner shall have the right at its option at any time, on at
least 5 Business Days prior notice to the Mortgagee, to substitute, and if an
Event of Loss shall have occurred with respect to an Engine under circumstances
in which an Event of Loss with respect to the Airframe has not occurred, shall
within 90 days of the occurrence of such Event of Loss substitute, a Replacement
Engine for any Engine. In such event, immediately upon the effectiveness of such
substitution and without further act, (i) the replaced Engine shall thereupon be
free and clear of all rights of the Mortgagee and the Lien of this Trust
Indenture and shall no longer be deemed an Engine hereunder and (ii) such
Replacement Engine shall become subject to this Trust Indenture and
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be deemed part of the Aircraft for all purposes hereof to the same extent as the
replaced Engine. Such Replacement Engine shall be an engine manufactured by
Engine Manufacturer that is the same model as the Engine to be replaced thereby,
or an improved model, and that is suitable for installation and use on the
Airframe, and that has a value, utility and remaining useful life (without
regard to hours and cycles remaining until overhaul) at least equal to the
Engine to be replaced thereby (assuming that such Engine had been maintained in
accordance with this Trust Indenture). The Owner's right to make a replacement
hereunder shall be subject to the fulfillment (which may be simultaneous with
such replacement) of the following conditions precedent at the Owner's sole cost
and expense, and the Mortgagee agrees to cooperate with the Owner to the extent
necessary to enable it to timely satisfy such conditions:
(i) an executed counterpart of each of the following documents shall
be delivered to the Mortgagee:
(A) a Trust Indenture Supplement covering the Replacement Engine,
which shall have been duly filed for recordation pursuant to the Act
or such other applicable law of the jurisdiction other than the United
States in which the Aircraft of which such Engine is a part is
registered in accordance with Section 4.02(e), as the case may be;
(B) a full warranty ▇▇▇▇ of sale (as to title), covering the
Replacement Engine, executed by the former owner thereof in favor of
the Owner (or, at the Owner's option, other evidence of the Owner's
ownership of such Replacement Engine, reasonably satisfactory to the
Mortgagee); and
(C) UCC financing statements covering the security interests
created by this Trust Indenture (or any similar statements or other
documents required to be filed or delivered pursuant to the laws of
the jurisdiction in which such Aircraft may be registered) as are
deemed necessary or desirable by counsel for the Mortgagee to protect
the security interests of the Mortgagee, in the Replacement Engine;
(ii) the Owner shall cause to be delivered to the Mortgagee an opinion
of counsel to the effect that the Lien of this Trust Indenture continues to
be in full force and effect with respect to the Replacement Engine and such
evidence of compliance with the insurance provisions of Section 4.06 with
respect to such Replacement Engine as Mortgagee shall reasonably request;
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(iii) the Owner shall have furnished to Mortgagee an opinion of
Owner's aviation law counsel reasonably satisfactory to Mortgagee and
addressed to Mortgagee as to the due filing for recordation of the Trust
Indenture Supplement with respect to such Replacement Engine under the Act
or such other applicable law of the jurisdiction other than the United
States in which the Aircraft is registered in accordance with Section
4.02(e), as the case may be; and
(iv) the Owner shall have furnished to Mortgagee a certificate of a
qualified aircraft engineer (who may be an employee of Owner) certifying
that such Replacement Engine has a value and utility and remaining useful
life (without regard to hours and cycles remaining until overhaul) at least
equal to the Engine so replaced (assuming that such Engine had been
maintained in accordance with this Trust Indenture).
Upon satisfaction of all conditions to such substitution, (x) the
Mortgagee shall execute and deliver to the Owner such documents and instruments,
prepared at the Owner's expense, as the Owner shall reasonably request to
evidence the release of such replaced Engine from the Lien of this Trust
Indenture, (y) the Mortgagee shall assign to the Owner all claims it may have
against any other Person relating to any Event of Loss giving rise to such
substitution and (z) the Owner shall receive all insurance proceeds (other than
those reserved to others under Section 4.06(b)) and proceeds in respect of any
Event of Loss giving rise to such replacement to the extent not previously
applied to the purchase price of the Replacement Engine as provided in Section
4.05(d).
SECTION 4.05. LOSS, DESTRUCTION OR REQUISITION
(a) Event of Loss with Respect to the Airframe.
Upon the occurrence of an Event of Loss with respect to the Airframe,
the Owner shall promptly (and in any event within 15 days after such occurrence)
give the Mortgagee written notice of such Event of Loss. The Owner shall, within
60 days after such occurrence, give the Mortgagee written notice of Owner's
election to either replace the Airframe as provided under Section 4.05(a)(i) or
to make payment in respect of such Event of Loss as provided under Section
4.05(a)(ii) (it being agreed that if Owner shall not have given the Mortgagee
such notice of such election within the above specified time period, the Owner
shall be deemed to have elected to make payment in respect of such Event of Loss
as provided under Section 4.05(a)(ii)):
(i) if Owner elects to replace the Airframe, Owner shall, subject to
the satisfaction of the conditions contained in Section 4.05(c), as
promptly as possible and in
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any event within 180 days after the occurrence of such Event of Loss, cause
to be subjected to the Lien of this Trust Indenture, in replacement of the
Airframe with respect to which the Event of Loss occurred, a Replacement
Airframe and, if any Engine shall have been installed on the Airframe when
it suffered the Event of Loss, a Replacement Engine therefor, such
Replacement Airframe and Replacement Engines to be free and clear of all
Liens except Permitted Liens and to have a value, utility and remaining
useful life (without regard to hours or cycles remaining until the next
regular maintenance check) at least equal to the Airframe or Engine, as the
case may be, to be replaced thereby (assuming that such Airframe or Engine
had been maintained in accordance with this Trust Indenture); provided that
if the Owner shall not perform its obligation to effect such replacement
under this clause (i) during the 180-day period of time provided herein, it
shall pay the amounts required to be paid pursuant to and within the time
frame specified in clause (ii) below; or
(ii) if Owner elects to make a payment in respect of such Event of
Loss of the Airframe, Owner shall make a payment to the Mortgagee for
purposes of redeeming Equipment Notes in accordance with Section 2.10
hereof on a date on or before the earlier of (x) the Business Day next
following the 180th day following the date of the occurrence of such Event
of Loss, and (y) a date irrevocably designated by Owner upon at least 20
days prior notice to the Mortgagee ; and upon such payment and payment of
all other Secured Obligations then due and payable, the Mortgagee shall, at
the cost and expense of the Owner, release from the Lien of this Trust
Indenture the Airframe and the Engines, by executing and delivering to the
Owner all documents and instruments as the Owner may reasonably request to
evidence such release.
(b) Effect of Replacement. Should the Owner have provided a
Replacement Airframe and Replacement Engines, if any, as provided for in Section
4.05(a)(i), (i) the Lien of this Trust Indenture shall continue with respect to
such Replacement Airframe and Replacement Engines, if any, as though no Event of
Loss had occurred; (ii) the Mortgagee shall, at the cost and expense of the
Owner, release from the Lien of this Trust Indenture the replaced Airframe and
Engines, if any, by executing and delivering to the Owner such documents and
instruments as the Owner may reasonably request to evidence such release; and
(iii) in the case of a replacement upon an Event of Loss, the Mortgagee shall
assign to the Owner all claims the Mortgagee may have against any other Person
arising from the Event of Loss and the Owner shall receive all insurance
proceeds (other than those reserved to others under Section 4.06(b)) and
proceeds from any award in respect of condemnation, confiscation, seizure or
requisition, including, any investment interest thereon, to the extent not
previously applied to the purchase price of the Replacement Airframe and
Replacement Engines, if any, as provided in Section 4.05(d).
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(c) Conditions to Airframe and Engine Replacement. The Owner's right
to substitute a Replacement Airframe and Replacement Engines, if any, as
provided in Section 4.05(a)(i) shall be subject to the fulfillment, at the
Owner's sole cost and expense, in addition to the conditions contained in such
Section 4.05(a)(i), of the following conditions precedent:
(i) on the date when the Replacement Airframe and Replacement Engines,
if any, are subjected to the Lien of this Trust Indenture (such date being
referred to in this Section 4.05 as the "Replacement Closing Date"), an
executed counterpart of each of the following documents (or, in the case of
the FAA ▇▇▇▇ of Sale and full warranty ▇▇▇▇ of sale referred to below, a
photocopy thereof) shall have been delivered to the Mortgagee:
(A) a Trust Indenture Supplement covering the Replacement
Airframe and Replacement Engines, if any, which shall have been duly
filed for recordation pursuant to the Act or such other applicable law
of such jurisdiction other than the United States in which the
Replacement Airframe and Replacement Engines, if any, are to be
registered in accordance with Section 4.02(e), as the case may be;
(B) an FAA ▇▇▇▇ of Sale (or a comparable document, if any, of
another Aviation Authority, if applicable) covering the Replacement
Airframe and Replacement Engines, if any, executed by the former owner
thereof in favor of the Owner;
(C) a full warranty (as to title) ▇▇▇▇ of sale, covering the
Replacement Airframe and Replacement Engines, if any, executed by the
former owner thereof in favor of the Owner (or, at the Owner's option,
other evidence of the Owner's ownership of such Replacement Airframe
and Replacement Engines, if any, reasonably satisfactory to the
Mortgagee); and
(D) UCC financing statements (or any similar statements or other
documents required to be filed or delivered pursuant to the laws of
the jurisdiction in which the Replacement Airframe and Replacement
Engines, if any, may be registered in accordance with Section 4.02(e))
as are deemed necessary or desirable by counsel for the Mortgagee to
protect the security interests of the Mortgagee in the Replacement
Airframe and Replacement Engines, if any;
(ii) the Replacement Airframe and Replacement Engines, if any, shall
be of the same model as the Airframe or Engines, as the case may be, or an
improved model
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of such aircraft or engines of the manufacturer thereof, shall have a
value, utility and remaining useful life (without regard to hours or cycles
remaining until the next regular maintenance check) at least equal to the
Airframe and any Engines replaced (assuming such Airframe and Engines had
been maintained in accordance with this Trust Indenture);
(iii) the Mortgagee (acting directly or by authorization to its
special counsel) shall have received satisfactory evidence as to the
compliance with Section 4.06 with respect to the Replacement Airframe and
Replacement Engines, if any;
(iv) on the Replacement Closing Date, (A) the Owner shall cause the
Replacement Airframe and Replacement Engines, if any, to be subject to the
Lien of this Trust Indenture free and clear of Liens (other than Permitted
Liens), (B) the Replacement Airframe shall have been duly certified by the
FAA as to type and airworthiness in accordance with the terms of this Trust
Indenture and (C) application for registration of the Replacement Airframe
in accordance with Section 4.02(e) shall have been duly made with the FAA
or other applicable Aviation Authority and the Owner shall have authority
to operate the Replacement Airframe;
(v) the Mortgagee at the expense of the Owner, shall have received
(acting directly or by authorization to its special counsel) (A) an opinion
of counsel, addressed to the Mortgagee, to the effect that the Replacement
Airframe and Replacement Engine, if any, has or have duly been made subject
to the Lien of this Trust Indenture, and Mortgagee will be entitled to the
benefits of Section 1110 with respect to the Replacement Airframe, provided
that such opinion with respect to Section 1110 need not be delivered to the
extent that immediately prior to such replacement the benefits of Section
1110 were not, solely by reason of a change in law or court interpretation
thereof, available to Mortgagee, and (B) an opinion of Owner's aviation law
counsel reasonably satisfactory to and addressed to Mortgagee as to the due
registration of any such Replacement Airframe and the due filing for
recordation of each Trust Indenture Supplement with respect to such
Replacement Airframe or Replacement Engine under the Act or such other
applicable law of the jurisdiction other than the United States in which
the Replacement Airframe is to be registered in accordance with Section
4.02(e), as the case may be; and
(vi) the Owner shall have furnished to the Mortgagee a certificate of
a qualified aircraft engineer (who may be an employee of Owner) certifying
that the Replacement Airframe and Replacement Engines, if any, have a value
and utility and remaining useful life (without regard to hours and cycles
remaining until overhaul) at
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least equal to the Airframe and any Engines so replaced (assuming that such
Airframe and Engines had been maintained in accordance with this Trust
Indenture).
(d) Non-Insurance Payments Received on Account of an Event of Loss.
Any amounts, other than insurance proceeds in respect of damage or loss not
constituting an Event of Loss (the application of which is provided for in Annex
B), received at any time by Mortgagee or Owner from any Government Entity or any
other Person in respect of any Event of Loss will be applied as follows:
(i) If such amounts are received with respect to the Airframe, and any
Engine installed thereon at the time of such Event of Loss, upon compliance
by Owner with the applicable terms of Section 4.05(c) with respect to the
Event of Loss for which such amounts are received, such amounts shall be
paid over to, or retained by, Owner;
(ii) If such amounts are received with respect to an Engine (other
than an Engine installed on the Airframe at the time such Airframe suffers
an Event of Loss), upon compliance by Owner with the applicable terms of
Section 4.04(e) with respect to the Event of Loss for which such amounts
are received, such amounts shall be paid over to, or retained by, Owner;
(iii) If such amounts are received, in whole or in part, with respect
to the Airframe, and Owner makes, has made or is deemed to have made the
election set forth in Section 4.05(a)(ii), such amounts shall be applied as
follows:
first, if the sum described in Section 4.05(a)(ii) has not then
been paid in full by Owner, such amounts shall be paid to Mortgagee to
the extent necessary to pay in full such sum; and
second, the remainder, if any, shall be paid to Owner.
(e) Requisition for Use. In the event of a requisition for use by any
Government Entity of the Airframe and the Engines, if any, or engines installed
on such Airframe while such Airframe is subject to the Lien of this Trust
Indenture, the Owner shall promptly notify the Mortgagee of such requisition and
all of the Owner's obligations under this Trust Indenture shall continue to the
same extent as if such requisition had not occurred except to the extent that
the performance or observance of any obligation by the Owner shall have been
prevented or delayed by such requisition provided that the Owner's obligations
under this Section 4.05 with respect to the occurrence of an Event of Loss for
the payment of money and under Section 4.06 (except while an assumption of
liability by the U.S. Government of the
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scope referred to in Section 4.02(c) is in effect) shall not be reduced or
delayed by such requisition. Any payments received by the Mortgagee or the Owner
or Permitted Lessee from such Government Entity with respect to such requisition
of use shall be paid over to, or retained by, the Owner. In the event of an
Event of Loss of an Engine resulting from the requisition for use by a
Government Entity of such Engine (but not the Airframe), the Owner will replace
such Engine hereunder by complying with the terms of Section 4.04(e) and any
payments received by the Mortgagee or the Owner from such Government Entity with
respect to such requisition shall be paid over to, or retained by, the Owner.
(f) Certain Payments to Be Held as Security. Any amount referred to in
this Section 4.05 or Section 4.06 which is payable or creditable to, or
retainable by, the Owner shall not be paid or credited to, or retained by the
Owner if at the time of such payment, credit or retention a Special Default or
an Event of Default shall have occurred and be continuing, but shall be paid to
and held by the Mortgagee as security for the obligations of the Owner under
this Trust Indenture and the Operative Agreements, and at such time as there
shall not be continuing any such Special Default or Event of Default such amount
and any gain realized as a result of investments required to be made pursuant to
Section 6.06 shall to the extent not theretofore applied as provided herein, be
paid over to the Owner.
SECTION 4.06. INSURANCE
(a) Owner's Obligation to Insure. Owner shall comply with, or cause to
be complied with, each of the provisions of Annex B, which provisions are hereby
incorporated by this reference as if set forth in full herein.
(b) Insurance for Own Account. Nothing in Section 4.06 shall limit or
prohibit (a) Owner from maintaining the policies of insurance required under
Annex B with higher limits than those specified in Annex B, or (b) Mortgagee
from obtaining insurance for its own account (and any proceeds payable under
such separate insurance shall be payable as provided in the policy relating
thereto); provided, however, that no insurance may be obtained or maintained
that would limit or otherwise adversely affect the coverage of any insurance
required to be obtained or maintained by Owner pursuant to this Section 4.06 and
Annex B.
(c) Indemnification by Government in Lieu of Insurance. Mortgagee
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft described in Annex B, indemnification from, or insurance provided by,
the U.S. Government, or upon the written consent of Mortgagee, other Government
Entity, against such risk in an amount that, when added to the amount of
insurance (including permitted self-insurance), if any, against such risk that
Owner (or any Permitted Lessee) may continue to maintain, in accordance with
this
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Section 4.06, during the period of such requisition or transfer, shall be at
least equal to the amount of insurance against such risk otherwise required by
this Section 4.06.
(d) Application of Insurance Proceeds. As between Owner and Mortgagee,
all insurance proceeds received as a result of the occurrence of an Event of
Loss with respect to the Aircraft or any Engine under policies required to be
maintained by Owner pursuant to this Section 4.06 will be applied in accordance
with this Section 4.05(d). All proceeds of insurance required to be maintained
by Owner, in accordance with Section 4.06 and Section B of Annex B, in respect
of any property damage or loss not constituting an Event of Loss with respect to
the Aircraft, Airframe or any Engine will be applied in payment (or to reimburse
Owner) for repairs or for replacement property, and any balance remaining after
such repairs or replacement with respect to such damage or loss shall be paid
over to, or retained by, Owner.
SECTION 4.07. MERGER OF OWNER
(a) In General. Owner shall not consolidate with or merge into any
other person under circumstances in which Owner is not the surviving
corporation, or convey, transfer or lease in one or more transactions all or
substantially all of its assets to any other person, unless:
(i) such person is organized, existing and in good standing under the
Laws of the United States, any State of the United States or the District
of Columbia and, upon consummation of such transaction, such person will be
a U.S. Air Carrier;
(ii) such person executes and delivers to Mortgagee a duly authorized,
legal, valid, binding and enforceable agreement, reasonably satisfactory in
form and substance to Mortgagee, containing an effective assumption by such
person of the due and punctual performance and observance of each covenant,
agreement and condition in the Operative Agreements to be performed or
observed by Owner;
(iii) such person makes such filings and recordings with the FAA
pursuant to the Act as shall be necessary to evidence such consolidation or
merger; and
(iv) immediately after giving effect to such consolidation or merger
no Event of Default shall have occurred and be continuing.
(b) Effect of Merger. Upon any such consolidation or merger of Owner
with or into, or the conveyance, transfer or lease by Owner of all or
substantially all of its assets to, any Person in accordance with this Section
4.07, such Person will succeed to, and be substituted
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for, and may exercise every right and power of, Owner under the Operative
Agreements with the same effect as if such person had been named as "Owner"
therein. No such consolidation or merger, or conveyance, transfer or lease,
shall have the effect of releasing Owner or such Person from any of the
obligations, liabilities, covenants or undertakings of Owner under the Trust
Indenture.
ARTICLE V EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE
SECTION 5.01. EVENT OF DEFAULT
"Event of Default" means any of the following events (whatever the
reason for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) the failure of the Owner to pay (i) principal of, interest on or
Make-Whole Amount, if any, under any Equipment Note when due, and such
failure shall continue unremedied for a period of 10 Business Days, or (ii)
any other amount payable by it to the Note Holders under this Trust
Indenture or the Participation Agreement when due, and such failure shall
continue for a period in excess of 10 Business Days after Owner has
received written notice from Mortgagee or any Note Holder of the failure to
make such payment when due;
(b) Owner shall fail to carry and maintain, or cause to be carried and
maintained, insurance on and in respect of the Aircraft, Airframe and
Engines in accordance with the provisions of Section 4.06;
(c) Owner shall fail to observe or perform (or cause to be observed or
performed) in any material respect any other covenant, agreement or
obligation set forth herein or in any other Operative Agreement to which
Owner is a party and such failure continues to be material and adverse to
the interests of the Mortgagee and the Note Holders and shall continue
unremedied for a period of 60 days from and after the date of written
notice thereof to Owner from Mortgagee, unless such failure is capable of
being corrected and Owner shall be diligently proceeding to correct such
failure, in which case there shall be no Event of Default unless and until
such failure shall continue unremedied for a period of 180 days after
receipt of such notice;
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(d) any representation or warranty made by Owner herein, in the
Participation Agreement or in any other Operative Agreement to which Owner
is a party (a) shall prove to have been false or inaccurate in any material
respect as of the date made, (b) shall continue to be material and adverse
to the interests of the Mortgagee or Note Holders, and (c) the same shall
remain uncured (to the extent of the material and adverse impact of such
incorrectness on the interest of the Mortgagee or Note Holders) for a
period in excess of 60 days from and after the date of written notice
thereof from Mortgagee to Owner;
(e) the Owner shall consent to the appointment of or taking possession
by a receiver, trustee or liquidator of itself or of a substantial part of
its property, or the Owner shall admit in writing its inability to pay its
debts generally as they come due or shall make a general assignment for the
benefit of its creditors, or the Owner shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization,
liquidation or other relief under any bankruptcy laws or insolvency laws
(as in effect at such time), or an answer admitting the material
allegations of a petition filed against it in any such case, or the Owner
shall seek relief by voluntary petition, answer or consent, under the
provisions of any other bankruptcy or similar law providing for the
reorganization or winding-up of corporations (as in effect at such time),
or the Owner shall seek an agreement, composition, extension or adjustment
with its creditors under such laws or the Owner's board of directors shall
adopt a resolution authorizing corporate action in furtherance of any of
the foregoing;
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Owner, a
receiver, trustee or liquidator of the Owner or of any substantial part of
its property, or any substantial part of the property of the Owner shall be
sequestered, or granting any other relief in respect of the Owner as a
debtor under any bankruptcy laws or other insolvency laws (as in effect at
such time), and any such order, judgment, decree, or decree of appointment
or sequestration shall remain in force undismissed, unstayed or unvacated
for a period of 90 days after the date of entry thereof; or
(g) a petition against the Owner in a proceeding under any bankruptcy
laws or other insolvency laws (as in effect at such time) is filed and not
withdrawn or dismissed within 90 days thereafter, or if, under the
provisions of any law providing for reorganization or winding-up of
corporations which may apply to the Owner, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Owner of
any substantial part of its property and such jurisdiction, custody or
control shall remain in force unrelinquished, unstayed or unterminated for
a period of 60 days.
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SECTION 5.02. REMEDIES
(a) If an Event of Default shall have occurred and be continuing and
so long as the same shall continue unremedied, then and in every such case the
Mortgagee may exercise any or all of the rights and powers and pursue any and
all of the remedies pursuant to this Article V and shall have and may exercise
all of the rights and remedies of a secured party under the Uniform Commercial
Code and may take possession of all or any part of the properties covered or
intended to be covered by the Lien created hereby or pursuant hereto and may
exclude the Owner and all persons claiming under it wholly or partly therefrom;
provided that the Mortgagee shall give the Owner 20 days prior written notice of
its intention to sell the Aircraft. Without limiting any of the foregoing, it is
understood and agreed that the Mortgagee may exercise any right of sale of the
Aircraft available to it, even though it shall not have taken possession of the
Aircraft and shall not have possession thereof at the time of such sale.
(b) If an Event of Default shall have occurred and be continuing, then
and in every such case the Mortgagee may (and shall, upon receipt of a written
demand therefor from a Majority in Interest of Note Holders), at any time, by
delivery of written notice or notices to the Owner, declare all the Equipment
Notes to be due and payable, whereupon the unpaid Original Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest
thereon (without Make-Whole Amount) and other amounts due thereunder or
otherwise payable hereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived; provided
that if an Event of Default referred to in clause (e), (f) or (g) of Section
5.01 hereof shall have occurred, then and in every such case the unpaid Original
Amount then outstanding, together with accrued but unpaid interest and all other
amounts due hereunder and under the Equipment Notes shall immediately and
without further act become due and payable without presentment, demand, protest
or notice, all of which are hereby waived.
This Section 5.02(b), however, is subject to the condition that, if at
any time after the Original Amount of the Equipment Notes shall have become so
due and payable, and before any judgment or decree for the payment of the money
so due, or any thereof, shall be entered, all overdue payments of interest upon
the Equipment Notes and all other amounts payable hereunder or under the
Equipment Notes (except the Original Amount of the Equipment Notes which by such
declaration shall have become payable) shall have been duly paid, and every
other Default and Event of Default with respect to any covenant or provision of
this Trust Indenture shall have been cured, then and in every such case a
Majority in Interest of Note Holders may (but shall not be obligated to), by
written instrument filed with the Mortgagee, rescind and annul the Mortgagee's
declaration (or such automatic acceleration) and its
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consequences; but no such rescission or annulment shall extend to or affect any
subsequent Default or Event of Default or impair any right consequent thereon.
(c) The Note Holders shall be entitled, at any sale pursuant to this
Section 5.02, to credit against any purchase price bid at such sale by such
holder all or any part of the unpaid obligations owing to such Note Holder and
secured by the Lien of this Trust Indenture (only to the extent that such
purchase price would have been paid by such Note Holder pursuant to Article III
hereof if such purchase price were paid in cash and the foregoing provisions of
this subsection (c) were not given effect).
(d) In the event of any sale of the Collateral, or any part thereof,
pursuant to any judgment or decree of any court or otherwise in connection with
the enforcement of any of the terms of this Trust Indenture, the unpaid Original
Amount of all Equipment Notes then outstanding, together with accrued interest
thereon (without Make-Whole Amount), and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement (or its designee) is a
Note Holder, the Mortgagee will not be authorized or empowered to acquire title
to any Collateral or take any action with respect to any Collateral so acquired
by it if such acquisition or action would cause any Trust to fail to qualify as
a "grantor trust" for federal income tax purposes.
SECTION 5.03. RETURN OF AIRCRAFT, ETC.
(a) If an Event of Default shall have occurred and be continuing and
the Equipment Notes have been accelerated, at the request of the Mortgagee, the
Owner shall promptly execute and deliver to the Mortgagee such instruments of
title and other documents as the Mortgagee may deem necessary or advisable to
enable the Mortgagee or an agent or representative designated by the Mortgagee,
at such time or times and place or places as the Mortgagee may specify, to
obtain possession of all or any part of the Collateral to which the Mortgagee
shall at the time be entitled hereunder. If the Owner shall for any reason fail
to execute and deliver such instruments and documents after such request by the
Mortgagee, the Mortgagee may (i) obtain a judgment conferring on the Mortgagee
the right to immediate possession and requiring the Owner to execute and deliver
such instruments and documents to the Mortgagee, to the entry of which judgment
the Owner hereby specifically consents to the fullest extent permitted by Law,
and (ii) pursue all or part of such Collateral wherever it may be found and may
enter any of the premises of Owner wherever such Collateral may be or be
supposed to be and search for such Collateral and take possession of and remove
such Collateral.
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All expenses of obtaining such judgment or of pursuing, searching for and taking
such property shall, until paid, be secured by the Lien of this Trust Indenture.
(b) Upon every such taking of possession, the Mortgagee may, from time
to time, at the expense of the Collateral, make all such expenditures for
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modifications or alterations to and of the Collateral, as it may
deem proper. In each such case, the Mortgagee shall have the right to maintain,
use, operate, store, insure, lease, control, manage, dispose of, modify or alter
the Collateral and to exercise all rights and powers of the Owner relating to
the Collateral, as the Mortgagee shall deem best, including the right to enter
into any and all such agreements with respect to the maintenance, use,
operation, storage, insurance, leasing, control, management, disposition,
modification or alteration of the Collateral or any part thereof as the
Mortgagee may determine, and the Mortgagee shall be entitled to collect and
receive directly all rents, revenues and other proceeds of the Collateral and
every part thereof, without prejudice, however, to the right of the Mortgagee
under any provision of this Trust Indenture to collect and receive all cash held
by, or required to be deposited with, the Mortgagee hereunder. Such rents,
revenues and other proceeds shall be applied to pay the expenses of the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, improvement, modification or alteration of the Collateral and of
conducting the business thereof, and to make all payments which the Mortgagee
may be required or may elect to make, if any, for taxes, assessments, insurance
or other proper charges upon the Collateral or any part thereof (including the
employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner), and all other payments
which the Mortgagee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Mortgagee, and of all persons properly engaged and employed by
the Mortgagee with respect hereto.
SECTION 5.04. REMEDIES CUMULATIVE
Each and every right, power and remedy given to the Mortgagee
specifically or otherwise in this Trust Indenture shall be cumulative and shall
be in addition to every other right, power and remedy herein specifically given
or now or hereafter existing at Law, in equity or by statute, and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by the Mortgagee, and the exercise or the beginning of the
exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Mortgagee in the exercise of any right,
remedy or power or in the pursuance of any remedy
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shall impair any such right, power or remedy or be construed to be a waiver of
any default on the part of the Owner or to be an acquiescence therein.
SECTION 5.05. DISCONTINUANCE OF PROCEEDINGS
In case the Mortgagee shall have instituted any proceeding to enforce
any right, power or remedy under this Trust Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Mortgagee, then and in
every such case the Owner and the Mortgagee shall, subject to any determination
in such proceedings, be restored to their former positions and rights hereunder
with respect to the Collateral, and all rights, remedies and powers of the Owner
or the Mortgagee shall continue as if no such proceedings had been instituted.
SECTION 5.06. WAIVER OF PAST DEFAULTS
Upon written instruction from a Majority in Interest of Note Holders,
the Mortgagee shall waive any past Default hereunder and its consequences and
upon any such waiver such Default shall cease to exist and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Trust Indenture, but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon, provided, that in the absence of
written instructions from all the Note Holders, the Mortgagee shall not waive
any Default (i) in the payment of the Original Amount, Make-Whole Amount, if
any, and interest and other amounts due under any Equipment Note then
outstanding, or (ii) in respect of a covenant or provision hereof which, under
Article X hereof, cannot be modified or amended without the consent of each Note
Holder.
SECTION 5.07. APPOINTMENT OF RECEIVER
The Mortgagee shall, as a matter of right, be entitled to the
appointment of a receiver (who may be the Mortgagee or any successor or nominee
thereof) for all or any part of the Collateral, whether such receivership be
incidental to a proposed sale of the Collateral or the taking of possession
thereof or otherwise, and the Owner hereby consents to the appointment of such a
receiver and will not oppose any such appointment. Any receiver appointed for
all or any part of the Collateral shall be entitled to exercise all the rights
and powers of the Mortgagee with respect to the Collateral.
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SECTION 5.08. MORTGAGEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC.
The Owner irrevocably appoints, while an Event of Default has occurred
and is continuing, the Mortgagee the true and lawful attorney-in-fact of the
Owner (which appointment is coupled with an interest) in its name and stead and
on its behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments as
may be necessary or appropriate, with full power of substitution, the Owner
hereby ratifying and confirming all that such attorney or any substitute shall
do by virtue hereof in accordance with applicable law. Nevertheless, if so
requested by the Mortgagee or any purchaser, the Owner shall ratify and confirm
any such sale, assignment, transfer or delivery, by executing and delivering to
the Mortgagee or such purchaser all bills of sale, assignments, releases and
other proper instruments to effect such ratification and confirmation as may be
designated in any such request.
SECTION 5.09. RIGHTS OF NOTE HOLDERS TO RECEIVE PAYMENT
Notwithstanding any other provision of this Trust Indenture, the right
of any Note Holder to receive payment of principal of, and premium, if any, and
interest on an Equipment Note on or after the respective due dates expressed in
such Equipment Note, or to bring suit for the enforcement of any such payment on
or after such respective dates in accordance with the terms hereof, shall not be
impaired or affected without the consent of such Note Holder.
ARTICLE VI DUTIES OF THE MORTGAGEE
SECTION 6.01. NOTICE OF EVENT OF DEFAULT
If the Mortgagee shall have Actual Knowledge of an Event of Default or
of a Default arising from a failure to pay any installment of principal and
interest on any Equipment Note, the Mortgagee shall give prompt written notice
thereof to each Note Holder. Subject to the terms of Sections 5.06, 6.02 and
6.03 hereof, the Mortgagee shall take such action, or refrain from taking such
action, with respect to such Event of Default or Default (including with respect
to the exercise of any rights or remedies hereunder) as the Mortgagee shall be
instructed in writing by a Majority in Interest of Note Holders. Subject to the
provisions of Section 6.03, if the Mortgagee shall not have received
instructions as above provided within 20 days after mailing notice of such Event
of Default to the Note Holders, the Mortgagee
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may, subject to instructions thereafter received pursuant to the preceding
provisions of this Section 6.01, take such action, or refrain from taking such
action, but shall be under no duty to take or refrain from taking any action,
with respect to such Event of Default or Default as it shall determine advisable
in the best interests of the Note Holders; provided, however, that the Mortgagee
may not sell the Aircraft or any Engine without the consent of a Majority in
Interest of Note Holders. For all purposes of this Trust Indenture, in the
absence of Actual Knowledge on the part of the Mortgagee, the Mortgagee shall
not be deemed to have knowledge of a Default or an Event of Default (except, the
failure of Owner to pay any installment of principal or interest within one
Business Day after the same shall become due, which failure shall constitute
knowledge of a Default) unless notified in writing by the Owner or one or more
Note Holders.
SECTION 6.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS
Subject to the terms of Sections 5.02(a), 5.06, 6.01 and 6.03 hereof,
upon the written instructions at any time and from time to time of a Majority in
Interest of Note Holders, the Mortgagee shall, subject to the terms of this
Section 6.02, take such of the following actions as may be specified in such
instructions: (i) give such notice or direction or exercise such right, remedy
or power hereunder as shall be specified in such instructions and (ii) give such
notice or direction or exercise such right, remedy or power hereunder with
respect to any part of the Collateral as shall be specified in such
instructions; it being understood that without the written instructions of a
Majority in Interest of Note Holders, the Mortgagee shall not, except as
provided in Section 6.01, approve any such matter as satisfactory to the
Mortgagee.
The Mortgagee will execute and the Owner will file such continuation
statements with respect to financing statements relating to the security
interest created hereunder in the Collateral as may be specified from time to
time in written instructions of a Majority in Interest of Note Holders (which
instructions shall be accompanied by the form of such continuation statement so
to be filed). The Mortgagee will furnish to each Note Holder, promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates and other instruments furnished to the Mortgagee
hereunder.
SECTION 6.03. INDEMNIFICATION
The Mortgagee shall not be required to take any action or refrain from
taking any action under Section 6.01 (other than the first sentence thereof),
Section 6.02 or Article V hereof unless the Mortgagee shall have been
indemnified to its reasonable satisfaction against any liability, cost or
expense (including counsel fees) which may be incurred in connection
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therewith pursuant to a written agreement with one or more Note Holders. The
Mortgagee agrees that it shall look solely to the Note Holders for the
satisfaction of any indemnity (except expenses for foreclosure of the type
referred to in clause "First" of Section 3.03 hereof) owed to it pursuant to
this Section 6.03. The Mortgagee shall not be under any obligation to take any
action under this Trust Indenture or any other Operative Agreement and nothing
herein or therein shall require the Mortgagee to expend or risk its own funds or
otherwise incur the risk of any financial liability in the performance of any of
its rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it (the written indemnity of any Note Holder who is a
QIB, signed by an authorized officer thereof, in favor of, delivered to and in
form reasonably satisfactory to the Mortgagee shall be accepted as reasonable
assurance of adequate indemnity). The Mortgagee shall not be required to take
any action under Section 6.01 (other than the first sentence thereof), Section
6.02 or Article V hereof, nor shall any other provision of this Trust Indenture
or any other Operative Agreement be deemed to impose a duty on the Mortgagee to
take any action, if the Mortgagee shall have been advised by counsel that such
action is contrary to the terms hereof or is otherwise contrary to Law.
SECTION 6.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR
INSTRUCTIONS
The Mortgagee shall not have any duty or obligation to use, operate,
store, lease, control, manage, sell, dispose of or otherwise deal with the
Aircraft or any other part of the Collateral, or to otherwise take or refrain
from taking any action under, or in connection with, this Trust Indenture or any
part of the Collateral, except as expressly provided by the terms of this Trust
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Trust Indenture; and no implied duties or obligations shall be
read into this Trust Indenture against the Mortgagee. The Mortgagee agrees that
it will in its individual capacity and at its own cost and expense (but without
any right of indemnity in respect of any such cost or expense under Section 8.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Collateral which result from claims
against it in its individual capacity not related to the administration of the
Collateral or any other transaction pursuant to this Trust Indenture or any
document included in the Collateral.
SECTION 6.05. NO ACTION EXCEPT UNDER TRUST INDENTURE OR INSTRUCTIONS
The Mortgagee will not use, operate, store, lease, control, manage,
sell, dispose of or otherwise deal with the Aircraft or any other part of the
Collateral except in accordance
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with the powers granted to, or the authority conferred upon, the Mortgagee
pursuant to this Trust Indenture and in accordance with the express terms
hereof.
SECTION 6.06. INVESTMENT OF AMOUNTS HELD BY MORTGAGEE
Any amounts held by the Mortgagee pursuant to the proviso to the first
sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision
of any other Operative Agreement providing for amounts to be held by the
Mortgagee which are not distributed pursuant to the other provisions of Article
III hereof shall be invested by the Mortgagee from time to time in Cash
Equivalents as directed by the Owner (so long as no Event of Default has
occurred and is continuing) or, in the absence of such direction, by the
Majority in Interest of Note Holders so long as the Mortgagee may acquire the
same using its best efforts. Unless otherwise expressly provided in this Trust
Indenture, any income realized as a result of any such investment, net of the
Mortgagee's reasonable fees and expenses in making such investment, shall be
held and applied by the Mortgagee in the same manner as the principal amount of
such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Mortgagee shall not be liable for any loss resulting from any
investment required to be made by it under this Trust Indenture other than by
reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Mortgagee without
instructions whenever such sale is necessary to make a distribution required by
this Trust Indenture.
ARTICLE VII THE MORTGAGEE
SECTION 7.01. ACCEPTANCE OF TRUSTS AND DUTIES
The Mortgagee accepts the duties hereby created and applicable to it
and agrees to perform the same but only upon the terms of this Trust Indenture
and agrees to receive and disburse all monies constituting part of the
Collateral in accordance with the terms hereof. The Mortgagee, in its individual
capacity, shall not be answerable or accountable under any circumstances, except
(i) for its own willful misconduct or gross negligence (other than for the
handling of funds, for which the standard of accountability shall be willful
misconduct or negligence), (ii) as provided in the fourth sentence of Section
2.04(a) hereof and the last sentence of Section 6.04 hereof, and (iii) from the
inaccuracy of any representation or warranty of the Mortgagee (in its individual
capacity) in the Participation Agreement or hereunder.
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SECTION 7.02. ABSENCE OF DUTIES
Except in accordance with written instructions furnished pursuant to
Section 6.01 or 6.02 hereof, and except as provided in, and without limiting the
generality of, Sections 6.03, 6.04 and 7.07 hereof the Mortgagee shall have no
duty (i) to see to any registration of the Aircraft or any recording or filing
of this Trust Indenture or any other document, or to see to the maintenance of
any such registration, recording or filing, (ii) to see to any insurance on the
Aircraft or to effect or maintain any such insurance, whether or not Owner shall
be in default with respect thereto, (iii) to see to the payment or discharge of
any lien or encumbrance of any kind against any part of the Collateral, (iv) to
confirm, verify or inquire into the failure to receive any financial statements
from Owner, or (v) to inspect the Aircraft at any time or ascertain or inquire
as to the performance or observance of any of Owner's covenants herein or any
Permitted Lessee's covenants under any assigned Permitted Lease with respect to
the Aircraft.
SECTION 7.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR
DOCUMENTS
THE MORTGAGEE IN ITS INDIVIDUAL OR TRUST CAPACITY DOES NOT MAKE AND
SHALL NOT BE DEEMED TO HAVE MADE AND HEREBY EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS,
VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE
AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR
NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK
OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN,
TORT OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER. The Mortgagee, in its
individual or trust capacities, does not make or shall not be deemed to have
made any representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Participation Agreement, the
Equipment Notes, or the Purchase Agreement, or as to the correctness of any
statement contained in any thereof, except for the representations and
warranties of the Owner made in its individual capacity and the representations
and warranties of the Mortgagee in its individual capacity, in each case
expressly made in this Trust Indenture or in the Participation Agreement. The
Note Holders make no representation or warranty hereunder whatsoever.
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SECTION 7.04. NO SEGREGATION OF MONIES; NO INTEREST
Any monies paid to or retained by the Mortgagee pursuant to any
provision hereof and not then required to be distributed to the Note Holders or
the Owner as provided in Article III hereof need not be segregated in any manner
except to the extent required by Law or Section 6.06 hereof, and may be
deposited under such general conditions as may be prescribed by Law, and the
Mortgagee shall not be liable for any interest thereon (except that the
Mortgagee shall invest all monies held in accordance with Section 6.06 hereof;
provided, however, that any payments received, or applied hereunder, by the
Mortgagee shall be accounted for by the Mortgagee so that any portion thereof
paid or applied pursuant hereto shall be identifiable as to the source thereof.
SECTION 7.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL
The Mortgagee shall not incur any liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Mortgagee may accept a copy of a resolution of the Board of Directors (or
Executive Committee thereof) of the Owner, certified by the Secretary or an
Assistant Secretary thereof as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted and that the same
is in full force and effect. As to the aggregate unpaid Original Amount of
Equipment Notes outstanding as of any date, the Owner may for all purposes
hereof rely on a certificate signed by any Vice President or other authorized
corporate trust officer of the Mortgagee. As to any fact or matter relating to
the Owner the manner of which is not specifically described herein, the
Mortgagee may for all purposes hereof rely on a certificate, signed by a duly
authorized officer of the Owner, as to such fact or matter, and such certificate
shall constitute full protection to the Mortgagee for any action taken or
omitted to be taken by it in good faith in reliance thereon. In the
administration of the trusts hereunder, the Mortgagee may execute any of the
trusts or powers hereof and perform its powers and duties hereunder directly or
through agents or attorneys and may, at the expense of the Collateral, advise
with counsel, accountants and other skilled persons to be selected and retained
by it, and the Mortgagee shall not be liable for anything done, suffered or
omitted in good faith by it in accordance with the written advice or written
opinion of any such counsel, accountants or other skilled persons.
SECTION 7.06. COMPENSATION
The Mortgagee shall be entitled to reasonable compensation, including
expenses and disbursements (including the reasonable fees and expenses of
counsel), for all
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services rendered hereunder and shall, on and subsequent to an Event of Default
hereunder, have a priority claim on the Collateral for the payment of such
compensation, to the extent that such compensation shall not be paid by Owner,
and shall have the right, on and subsequent to an Event of Default hereunder, to
use or apply any monies held by it hereunder in the Collateral toward such
payments. The Mortgagee agrees that it shall have no right against the Note
Holders for any fee as compensation for its services as trustee under this Trust
Indenture.
SECTION 7.07. INSTRUCTIONS FROM NOTE HOLDERS
In the administration of the trusts created hereunder, the Mortgagee
shall have the right to seek instructions from a Majority in Interest of Note
Holders should any provision of this Trust Indenture appear to conflict with any
other provision herein or should the Mortgagee's duties or obligations hereunder
be unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions. The Mortgagee shall be fully protected by
the Note Holders for acting in accordance with any instructions received under
this Section 7.07.
ARTICLE VIII INDEMNIFICATION
SECTION 8.01. SCOPE OF INDEMNIFICATION
The Mortgagee shall be indemnified by the Owner to the extent and in
the manner provided in Section 8 of the Participation Agreement.
ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. RESIGNATION OF MORTGAGEE; APPOINTMENT OF SUCCESSOR
(a) The Mortgagee or any successor thereto may resign at any time
without cause by giving at least 30 days prior written notice to the Owner and
each Note Holder. such resignation to be effective upon the acceptance of the
trusteeship by a successor Mortgagee. In addition, a Majority in Interest of
Note Holders may at any time (but only with the consent of Owner, which consent
shall not be unreasonably withheld, except that such consent shall not be
necessary if an Event of Default is continuing) remove the Mortgagee without
cause by an instrument in writing delivered to the Owner and the Mortgagee, and
the Mortgagee shall
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promptly notify each Note Holder thereof in writing, such removal to be
effective upon the acceptance of the trusteeship by a successor Mortgagee. In
the case of the resignation or removal of the Mortgagee, a Majority in Interest
of Note Holders may appoint a successor Mortgagee by an instrument signed by
such holders, which successor, so long as no Event of Default shall have
occurred and be continuing, shall be subject to Owner's reasonable approval. If
a successor Mortgagee shall not have been appointed within 30 days after such
notice of resignation or removal, the Mortgagee, the Owner or any Note Holder
may apply to any court of competent jurisdiction to appoint a successor
Mortgagee to act until such time, if any, as a successor shall have been
appointed as above provided. The successor Mortgagee so appointed by such court
shall immediately and without further act be superseded by any successor
Mortgagee appointed as above provided.
(b) Any successor Mortgagee, however appointed, shall execute and
deliver to the Owner and the predecessor Mortgagee an instrument accepting such
appointment and assuming the obligations of the Mortgagee arising from and after
the time of such appointment, and thereupon such successor Mortgagee, without
further act, shall become vested with all the estates, properties, rights,
powers and duties of the predecessor Mortgagee hereunder in the trust hereunder
applicable to it with like effect as if originally named the Mortgagee herein;
but nevertheless upon the written request of such successor Mortgagee, such
predecessor Mortgagee shall execute and deliver an instrument transferring to
such successor Mortgagee, upon the trusts herein expressed applicable to it, all
the estates, properties, rights and powers of such predecessor Mortgagee, and
such predecessor Mortgagee shall duly assign, transfer, deliver and pay over to
such successor Mortgagee all monies or other property then held by such
predecessor Mortgagee hereunder.
(c) Any successor Mortgagee, however appointed, shall be a bank or
trust company having its principal place of business in the Borough of
Manhattan, City and State of New York; Chicago, Illinois; Hartford, Connecticut;
Wilmington, Delaware; or Boston, Massachusetts and having (or whose obligations
under the Operative Agreements are guaranteed by an affiliated entity having) a
combined capital and surplus of at least $100,000,000, if there be such an
institution willing, able and legally qualified to perform the duties of the
Mortgagee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Mortgagee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Mortgagee shall be a
party, or any corporation to which substantially all the corporate trust
business of the Mortgagee may be transferred, shall, subject to the terms of
paragraph (c) of this Section 9.01, be a successor Mortgagee and the Mortgagee
under this Trust Indenture without further act.
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SECTION 9.02. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES
(a) Whenever (i) the Mortgagee shall deem it necessary or desirable in
order to conform to any Law of any jurisdiction in which all or any part of the
Collateral shall be situated or to make any claim or bring any suit with respect
to or in connection with the Collateral, this Trust Indenture, any other
Indenture Agreement, the Equipment Notes or any of the transactions contemplated
by the Participation Agreement, (ii) the Mortgagee shall be advised by counsel
satisfactory to it that it is so necessary or prudent in the interests of the
Note Holders (and the Mortgagee shall so advise the Owner), or (iii) the
Mortgagee shall have been requested to do so by a Majority in Interest of Note
Holders, then in any such case, the Mortgagee and, upon the written request of
the Mortgagee, the Owner, shall execute and deliver an indenture supplemental
hereto and such other instruments as may from time to time be necessary or
advisable either (1) to constitute one or more bank or trust companies or one or
more persons approved by the Mortgagee, either to act jointly with the Mortgagee
as additional trustee or trustees of all or any part of the Collateral, or to
act as separate trustee or trustees of all or any part of the Collateral, in
each case with such rights, powers, duties and obligations consistent with this
Trust Indenture as may be provided in such supplemental indenture or other
instruments as the Mortgagee or a Majority in Interest of Note Holders may deem
necessary or advisable, or (2) to clarify, add to or subtract from the rights,
powers, duties and obligations theretofore granted any such additional or
separate trustee, subject in each case to the remaining provisions of this
Section 9.02. If the Owner shall not have taken any action requested of it under
this Section 9.02(a) that is permitted or required by its terms within 15 days
after the receipt of a written request from the Mortgagee so to do, or if an
Event of Default shall have occurred and be continuing, the Mortgagee may act
under the foregoing provisions of this Section 9.02(a) without the concurrence
of the Owner, and the Owner hereby irrevocably appoints (which appointment is
coupled with an interest) the Mortgagee, its agent and attorney-in-fact to act
for it under the foregoing provisions of this Section 9.02(a) in either of such
contingencies. The Mortgagee may, in such capacity, execute, deliver and perform
any such supplemental indenture, or any such instrument, as may be required for
the appointment of any such additional or separate trustee or for the
clarification of, addition to or subtraction from the rights, powers, duties or
obligations theretofore granted to any such additional or separate trustee. In
case any additional or separate trustee appointed under this Section 9.02(a)
shall die, become incapable of acting, resign or be removed, all the assets,
property, rights, powers, trusts, duties and obligations of such additional or
separate trustee shall revert to the Mortgagee until a successor additional or
separate trustee is appointed as provided in this Section 9.02(a).
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(b) No additional or separate trustee shall be entitled to exercise
any of the rights, powers, duties and obligations conferred upon the Mortgagee
in respect of the custody, investment and payment of monies and all monies
received by any such additional or separate trustee from or constituting part of
the Collateral or otherwise payable under any Operative Agreement to the
Mortgagee shall be promptly paid over by it to the Mortgagee. All other rights,
powers, duties and obligations conferred or imposed upon any additional or
separate trustee shall be exercised or performed by the Mortgagee and such
additional or separate trustee jointly except to the extent that applicable Law
of any jurisdiction in which any particular act is to be performed renders the
Mortgagee incompetent or unqualified to perform such act, in which event such
rights, powers, duties and obligations (including the holding of title to all or
part of the Collateral in any such jurisdiction) shall be exercised and
performed by such additional or separate trustee. No additional or separate
trustee shall take any discretionary action except on the instructions of the
Mortgagee or a Majority in Interest of Note Holders. No trustee hereunder shall
be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Mortgagee shall be liable for the consequences of its
lack of reasonable care in selecting, and the Mortgagee's own actions in acting
with, any additional or separate trustee. Each additional or separate trustee
appointed pursuant to this Section 9.02 shall be subject to, and shall have the
benefit of Articles V through IX and Article XI hereof insofar as they apply to
the Mortgagee. The powers of any additional or separate trustee appointed
pursuant to this Section 9.02 shall not in any case exceed those of the
Mortgagee hereunder.
(c) If at any time the Mortgagee shall deem it no longer necessary or
desirable in order to conform to any such Law or take any such action or shall
be advised by such counsel that it is no longer so necessary or desirable in the
interest of the Note Holders, or in the event that the Mortgagee shall have been
requested to do so in writing by a Majority in Interest of Note Holders, the
Mortgagee and, upon the written request of the Mortgagee, the Owner, shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional or separate trustee.
The Mortgagee may act on behalf of the Owner under this Section 9.02(c) when and
to the extent it could so act under Section 9.02(a) hereof.
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ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 10.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS
(a) Without limiting the provisions of this Section 10.01, the
Mortgagee agrees with the Note Holders that it shall not enter into any
amendment, waiver or modification of, supplement or consent to this Trust
Indenture, or any other Operative Agreement to which it is a party, unless such
supplement, amendment, waiver, modification or consent is consented to in
writing by a Majority in Interest of Note Holders, but upon the written request
of a Majority in Interest of Note Holders, the Mortgagee shall from time to time
enter into any such supplement or amendment, or execute and deliver any such
waiver, modification or consent, as may be specified in such request and as may
be (in the case of any such amendment, supplement or modification), to the
extent such agreement is required, agreed to by the Owner and, as may be
appropriate, the Airframe Manufacturer or the Engine Manufacturer; provided,
however, that, without the consent of each holder of an affected Equipment Note
then outstanding and of each Liquidity Provider, no such amendment, waiver or
modification of the terms of, or consent under, any thereof, shall (i) modify
any of the provisions of this Section 10.01, or of Article II or III or Section
5.01. 5.02(c), 5.02(d), or 6.02 hereof, the definitions of "Event of Default,"
"Default," "Majority in Interest of Note Holders," "Make-Whole Amount" or "Note
Holder," or the percentage of Note Holders required to take or approve any
action hereunder, (ii) reduce the amount, or change the time of payment or
method of calculation of any amount, or Original Amount, Make-Whole Amount, if
any, or interest with respect to any Equipment Note, (iii) reduce, modify or
amend any indemnities in favor of the Mortgagee or the Note Holders (except that
the Mortgagee may consent to any waiver or reduction of an indemnity payable to
it), or (iv) permit the creation of any Lien on the Trust Indenture Estate or
any part thereof other than Permitted Liens or deprive any Note Holder of the
benefit of the Lien of this Trust Indenture on the Collateral, except as
provided in connection with the exercise of remedies under Article V hereof.
Notwithstanding the foregoing, without the consent of the affected Liquidity
Providers, neither the Owner nor the Mortgagee shall enter into any amendment,
waiver or modification of, supplement or consent to this Trust Indenture or the
other Operative Agreements which shall reduce, modify or amend any indemnities
in favor of such Liquidity Providers.
(b) The Owner and the Mortgagee may enter into one or more agreements
supplemental hereto without the consent of any Note Holder for any of the
following purposes: (i) (a) to cure any defect or inconsistency herein or in the
Equipment Notes, or to make any change not inconsistent with the provisions
hereof (provided that such change does not
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adversely affect the interests of any Note Holder in its capacity solely as Note
Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence
the succession of another party as the Owner in accordance with the terms hereof
or to evidence the succession of a new trustee hereunder pursuant hereto, the
removal of the trustee hereunder or the appointment of any co-trustee or
co-trustees or any separate or additional trustee or trustees; (iii) to convey,
transfer, assign, mortgage or pledge any property to or with the Mortgagee or to
make any other provisions with respect to matters or questions arising hereunder
so long as such action shall not adversely affect the interests of the Note
Holders in its capacity solely as Note Holder; (iv) to correct or amplify the
description of any property at any time subject to the Lien of this Trust
Indenture or better to assure, convey and confirm unto the Mortgagee any
property subject or required to be subject to the Lien of this Trust Indenture,
the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v)
to add to the covenants of the Owner for the benefit of the Note Holders, or to
surrender any rights or power herein conferred upon the Owner; (vi) to add to
the rights of the Note Holders; (vii) to provide for the issuance of Series D
Equipment Notes and Pass Through Certificates issued by the Class D Pass Through
Trust and to make changes relating thereto, provided that the Series D Equipment
Notes are issued in accordance with the Note Purchase Agreement; and (viii) to
include on the Equipment Notes any legend as may be required by Law.
SECTION 10.02. MORTGAGEE PROTECTED
If, in the opinion of the institution acting as Mortgagee hereunder,
any document required to be executed by it pursuant to the terms of Section
10.01 hereof affects any right, duty, immunity or indemnity with respect to such
institution under this Trust Indenture, such institution may in its discretion
decline to execute such document.
SECTION 10.03. DOCUMENTS MAILED TO NOTE HOLDERS
Promptly after the execution by the Owner or the Mortgagee of any
document entered into pursuant to Section 10.01 hereof, the Mortgagee shall
mail, by first class mail, postage prepaid, a copy thereof to Owner (if not a
party thereto) and to each Note Holder at its address last set forth in the
Equipment Note Register, but the failure of the Mortgagee to mail such copies
shall not impair or affect the validity of such document.
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SECTION 10.04. NO REQUEST NECESSARY FOR TRUST INDENTURE SUPPLEMENT
No written request or consent of the Note Holders pursuant to Section
10.01 hereof shall be required to enable the Mortgagee to execute and deliver a
Trust Indenture Supplement specifically required by the terms hereof.
ARTICLE XI MISCELLANEOUS
SECTION 11.01. TERMINATION OF TRUST INDENTURE
Upon (or at any time after) payment in full of the Original Amount of,
Make-Whole Amount, if any, and interest on and all other amounts due under all
Equipment Notes and provided that there shall then be no other Secured
Obligations due to the Indenture Indemnitees, the Note Holders and the Mortgagee
hereunder or under the Participation Agreement or other Operative Agreement, the
Owner shall direct the Mortgagee to execute and deliver to or as directed in
writing by the Owner an appropriate instrument releasing the Aircraft and the
Engines and all other Collateral from the Lien of the Trust Indenture and the
Mortgagee shall execute and deliver such instrument as aforesaid; provided,
however, that this Trust Indenture and the trusts created hereby shall earlier
terminate and this Trust Indenture shall be of no further force or effect upon
any sale or other final disposition by the Mortgagee of all property
constituting part of the Collateral and the final distribution by the Mortgagee
of all monies or other property or proceeds constituting part of the Collateral
in accordance with the terms hereof. Except as aforesaid otherwise provided,
this Trust Indenture and the trusts created hereby shall continue in full force
and effect in accordance with the terms hereof.
SECTION 11.02. NO LEGAL TITLE TO COLLATERAL IN NOTE HOLDERS
No holder of an Equipment Note shall have legal title to any part of
the Collateral. No transfer, by operation of law or otherwise, of any Equipment
Note or other right, title and interest of any Note Holder in and to the
Collateral or hereunder shall 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.
SECTION 11.03. SALE OF AIRCRAFT BY MORTGAGEE IS BINDING
Any sale or other conveyance of the Collateral, or any part thereof
(including any part thereof or interest therein), by the Mortgagee made pursuant
to the terms of this Trust
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Indenture shall bind the Note Holders and shall be effective to transfer or
convey all right, title and interest of the Mortgagee, the Owner and such
holders in and to such Collateral or part thereof. No purchaser or other grantee
shall be required to inquire as to the authorization, necessity, expediency or
regularity of such sale or conveyance or as to the application of any sale or
other proceeds with respect thereto by the Mortgagee.
SECTION 11.04. TRUST INDENTURE FOR BENEFIT OF OWNER, MORTGAGEE, NOTE
HOLDERS AND THE OTHER INDENTURE INDEMNITEES
Nothing in this Trust Indenture, whether express or implied, shall be
construed to give any person other than the Owner, the Mortgagee, the Note
Holders and the other Indenture Indemnitees, any legal or equitable right,
remedy or claim under or in respect of this Trust Indenture, except that the
persons referred to in the last paragraph of Section 4.02(b) shall be third
party beneficiaries of such paragraph.
SECTION 11.05. NOTICES
Unless otherwise expressly specified or permitted by the terms hereof,
all notices, requests, demands, authorizations, directions, consents, waivers or
documents provided or permitted by this Trust Indenture to be made, given,
furnished or filed shall be in writing, and shall be personally delivered or
sent by certified mail, postage prepaid, by prepaid courier service or by
facsimile followed by overnight courier service for next Business Day receipt,
and (i) if to the Owner, addressed to it at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Chief Financial Officer, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, (ii)
if to Mortgagee, addressed to it at its office at ▇▇▇▇▇▇ Square North, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, (iii) if to any Note Holder or
any Indenture Indemnitee, addressed to such party at such address as such party
shall have furnished by notice to the Owner and the Mortgagee, or, until an
address is so furnished, addressed to the address of such party (if any) set
forth on Schedule I to the Participation Agreement or in the Equipment Note
Register. Whenever any notice in writing is required to be given by the Owner or
the Mortgagee or any Note Holder to any of the other of them, such notice shall
be deemed given and such requirement satisfied when such notice is received,
provided, in the case of facsimile, there is receipt of such notice the next
Business Day from an overnight courier service or if such notice is mailed by
certified mail, postage prepaid, three Business Days after being mailed,
addressed as provided above. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Trust Indenture.
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SECTION 11.06. SEVERABILITY
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 11.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS
No term or provision of this Trust Indenture or the Equipment Notes
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the Owner and the Mortgagee, in compliance with
Section 10.01 hereof. Any waiver of the terms hereof or of any Equipment Note
shall be effective only in the specific instance and for the specific purpose
given.
SECTION 11.08. SUCCESSORS AND ASSIGNS
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Note Holder
shall bind the successors and assigns of such holder. Each Note Holder by its
acceptance of an Equipment Note agrees to be bound by this Trust Indenture and
all provisions of the Operative Agreements applicable to a Note Holder.
SECTION 11.09. HEADINGS
The headings of the various Articles and sections herein and in the
table of contents hereto are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 11.10. NORMAL COMMERCIAL RELATIONS
Anything contained in this Trust Indenture to the contrary
notwithstanding, Owner and Mortgagee may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with Owner,
fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Owner for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
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SECTION 11.11. GOVERNING LAW; COUNTERPART FORM
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate counterparts (or upon separate
signature pages bound together into one or more counterparts), each of which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 11.12. VOTING BY NOTE HOLDERS
All votes of the Note Holders shall be governed by a vote of a
Majority in Interest of Note Holders, except as otherwise provided herein.
SECTION 11.13. BANKRUPTCY
It is the intention of the parties that the Mortgagee shall be
entitled to the benefits of Section 1110 with respect to the right to take
possession of the Aircraft, Airframe, Engines and Parts as provided herein in
the event of a case under Chapter 11 of the Bankruptcy Code in which Owner is a
debtor, and in any instance where more than one construction is possible of the
terms and conditions hereof or any other pertinent Operative Agreement, each
such party agrees that a construction which would preserve such benefits shall
control over any construction which would not preserve such benefits.
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture and Mortgage to be duly executed by their respective officers thereof
duly authorized as of the day and year first above written.
ATLAS AIR, INC.
By:
--------------------------------
Name:
Title:
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WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
provided herein, but solely as Mortgagee
By:
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Name:
Title: