EXHIBIT 4.2
TRUST INDENTURE AND MORTGAGE
[ATA 2000-1]
Dated as of _______ __, ____
Between
AMERICAN TRANS AIR, INC.,
Owner
and
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Mortgagee,
Mortgagee
EQUIPMENT NOTES COVERING
ONE BOEING 757-200ER AIRCRAFT
BEARING U.S. REGISTRATION XXXX N_____
AND MANUFACTURER'S SERIAL NO. _____
TABLE OF CONTENTS
Page
GRANTING CLAUSE..............................................................1
ARTICLE I DEFINITIONS.......................................................4
ARTICLE II THE EQUIPMENT NOTES..............................................4
SECTION 2.01. Form of Equipment Notes..................................4
SECTION 2.02. Issuance and Terms of Equipment Notes....................9
SECTION 2.03. [Intentionally Omitted].................................11
SECTION 2.04. Method of Payment.......................................11
SECTION 2.05. Application of Payments.................................13
SECTION 2.06. Termination of Interest in Collateral...................14
SECTION 2.07. Registration Transfer and Exchange of
Equipment Notes.......................................14
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment
Notes............................................15
SECTION 2.09. Payment of Expenses on Transfer; Cancellation...........16
SECTION 2.10. Mandatory Redemptions of Equipment Notes................16
SECTION 2.11. Voluntary Redemptions of Equipment Notes................16
SECTION 2.12. Redemptions; Notice of Redemption.......................16
SECTION 2.13. Subordination...........................................17
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS..............18
SECTION 3.01. Basic Distributions.....................................18
SECTION 3.02. Event of Loss; Replacement; Optional
Redemption............................................18
SECTION 3.03. Payments After Event of Default.........................19
SECTION 3.04. Certain Payments........................................21
SECTION 3.05. Other Payments..........................................21
SECTION 3.06. Application of Payments Under Guarantee.................21
ARTICLE IV COVENANTS OF THE OWNER..........................................21
SECTION 4.01. Liens .................................................21
SECTION 4.02. Possession, Operation and Use, Registration and
Markings..............................................22
SECTION 4.03. Inspection..............................................27
SECTION 4.04. Replacement and Pooling of Parts, Alterations,
Modifications and Additions; Substitution of
Engines...............................................27
SECTION 4.05. Loss, Destruction or Requisition........................30
SECTION 4.06. Insurance...............................................34
SECTION 4.07. Merger of Owner.........................................35
ARTICLE V EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE.........................36
SECTION 5.01. Event of Default........................................36
SECTION 5.02. Remedies................................................37
SECTION 5.03. Return of Aircraft, Etc.................................38
Page
SECTION 5.04. Remedies Cumulative.....................................39
SECTION 5.05. Discontinuance of Proceedings...........................40
SECTION 5.06. Waiver of Past Defaults.................................40
SECTION 5.07. Appointment of Receiver.................................40
SECTION 5.08. Mortgagee Authorized to Execute Bills of Sale,
Etc....................................................40
SECTION 5.09. Rights of Note Holders to Receive Payment...............41
ARTICLE VI DUTIES OF THE MORTGAGEE.........................................41
SECTION 6.01. Notice of Event of Default..............................41
SECTION 6.02. Action Upon Instructions; Certain Rights and
Limitations...........................................41
SECTION 6.03. Indemnification.........................................42
SECTION 6.04. No Duties Except as Specified in Trust Indenture
or Instructions.......................................42
SECTION 6.05. No Action Except Under Trust Indenture
or Instructions.......................................43
SECTION 6.06. Investment of Amounts Held by Mortgagee.................43
ARTICLE VII THE MORTGAGEE..................................................43
SECTION 7.01. Acceptance of Trusts and Duties.........................43
SECTION 7.02. Absence of Duties.......................................44
SECTION 7.03. No Representations or Warranties as to Aircraft
or Documents.....................................44
SECTION 7.04. No Segregation of Monies; No Interest...................44
SECTION 7.05. Reliance; Agreements; Advice of Counsel.................45
SECTION 7.06. Compensation............................................45
SECTION 7.07. Instructions from Note Holders..........................46
ARTICLE VIII INDEMNIFICATION...............................................46
SECTION 8.01. Scope of Indemnification................................46
ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES.................................46
SECTION 9.01. Resignation of Mortgagee; Appointment of
Successor.............................................46
SECTION 9.02. Appointment of Additional and Separate Trustees.........47
ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS TRUST
INDENTURE AND OTHER DOCUMENTS..................................49
SECTION 10.01. Instructions of Majority; Limitations..................49
SECTION 10.02. Mortgagee Protected....................................50
SECTION 10.03. Documents Mailed to Note Holders.......................50
SECTION 10.04. No Request Necessary for Mortgage
Supplement...........................................50
Page
SECTION 10.05. Notices to Liquidity Provider and Policy
Provider............................................50
ARTICLE XI MISCELLANEOUS...................................................50
SECTION 11.01. Termination of Trust Indenture.........................50
SECTION 11.02. No Legal Title to Collateral in Note Holders...........51
SECTION 11.03. Sale of Aircraft by Mortgagee Is Binding...............51
SECTION 11.04. Trust Indenture for Benefit of Owner,
Mortgagee, Note Holders and the other
Mortgage Indemnitees.................................51
SECTION 11.05. Notices................................................51
SECTION 11.06. Severability...........................................52
SECTION 11.07. No Oral Modification or Continuing Waivers.............52
SECTION 11.08. Successors and Assigns.................................52
SECTION 11.09. Headings...............................................52
SECTION 11.10. Normal Commercial Relations............................52
SECTION 11.11 Governing Law; Counterpart Form.........................53
SECTION 11.12. Voting By Note Holders.................................53
SECTION 11.13. Bankruptcy.............................................53
SECTION 11.14. Payments With Respect to Insured Obligations...........53
ANNEX A Definitions
ANNEX B Insurance
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization and Interest Rates
TRUST INDENTURE AND MORTGAGE
[ATA 2000-1]
TRUST INDENTURE AND MORTGAGE [ATA 2000-1], dated as of
______________ __, ____ ("Trust Indenture"), between AMERICAN TRANS AIR,
INC., an Indiana 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 Mortgage 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 Mortgage 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, 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 Mortgage
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 757-200ER aircraft with the
FAA Registration number of NAT and the manufacturer's serial number of
_____ and Engines, each of which is a ____________________________ engine
with the manufacturer's serial numbers of _____ and _____, is of 750 or
more rated takeoff horsepower or the equivalent of such horsepower (such
Airframe and Engines more particularly described in the Mortgage Supplement
executed and delivered as provided herein) as the same is 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 (to the extent such Agreement relates
to the Aircraft) 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 in
respect of such provisions (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, and to take such action upon the occurrence
of a default in respect of such provisions, including the commencement,
conduct and consummation of legal, administrative or other proceedings, as
shall be permitted thereby or by law, and to do any and all other things
which the Owner is or may be entitled to do in respect of such provisions
(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 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 or any Permitted Lessee'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 assigned hereunder under the
Purchase Agreement (other than to amend, modify or waive any of the
warranties or indemnities contained therein and assigned hereunder, 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 Mortgage
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 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
Mortgage 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 Mortgage
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 and receive 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:
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.
AMERICAN TRANS AIR, INC.
SERIES [_____] EQUIPMENT NOTE DUE [____] ISSUED IN CONNECTION WITH THE
BOEING MODEL 757-200ER AIRCRAFT BEARING UNITED STATES REGISTRATION
NUMBER NXXXAT.
No. ____ Date: [__________, ____]
______________________
INTEREST RATE MATURITY DATE
[_________________] [__________]
AMERICAN TRANS AIR, INC., an Indiana corporation ("Owner"),
hereby promises to pay to WILMINGTON TRUST COMPANY, as Subordination Agent
under the Intercreditor Agreement, 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 quarterly installments commencing on ______ __, ____,
and thereafter on January 15, April 15, July 15 and October 15 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, whenever the
date scheduled for any payment to be made hereunder or under the Trust
Indenture shall not be a Business Day, then such payment shall not be due
on such scheduled date but shall be due on the next succeeding Business Day
with the same effect as if paid on the originally scheduled due date.
For purposes hereof, the term "Trust Indenture" means the Trust
Indenture and Mortgage [NXXXAT] 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 Past 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).
The interest rate borne by this Equipment Note shall be subject
to adjustments to the extent, and under the circumstances, specified by the
Registration Rights Agreement.
There shall be maintained an Equipment Note Register for the
purpose of registering transfers and exchanges of Equipment Notes at the
Corporate Trust Office of the Mortgagee or at the office of any successor
in the manner provided in Section 2.07 of the Trust Indenture.
The Original Amount and interest and other amounts due hereunder
shall be payable in Dollars in immediately available funds at the Corporate
Trust Office of the Mortgagee, or as otherwise provided in the Trust
Indenture. Each such payment shall be made on the date such payment is due
and without any presentment or surrender of this Equipment Note, except
that in the case of any final payment with respect to this Equipment Note,
the 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 and the Participation Agreement for a complete
statement of the rights and obligations of the holder of, and the nature
and extent of the security for, this Equipment Note and the rights and
obligations of the holders of, and the nature and extent of the security
for, any other Equipment Notes executed and delivered under the Trust
Indenture, as well as for a statement of the terms and conditions of the
Trust created by the Trust Indenture, to all of which terms and conditions
in the Trust Indenture and the Participation Agreement each holder hereof
agrees by its acceptance of this 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 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 G
Equipment Notes 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.]
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 LAW 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.
AMERICAN TRANS AIR, INC.
By:___________________________
Name:
Title:
MORTGAGEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Trust Indenture.
WILMINGTON TRUST COMPANY, 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
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes
The Equipment Notes shall be dated the date of issuance thereof,
shall be issued in two separate series consisting of Series G and Series C
and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date thereof, each Equipment Note
shall be issued to the Subordination Agent on behalf of the Pass Through
Trustee under the Pass Through Trust Agreements. 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 Debt Rate for the
applicable Series of such Equipment Note (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 on _____
__, ____, and on each January 15, April 15, July 15 and October 15
thereafter until maturity. 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 which
shall be attached as Schedule I to the 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 Past 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, whenever the date scheduled for any payment to be made
hereunder or under any Equipment Note shall not be a Business Day, then
such payment shall not be due on such scheduled date but shall be due on
the next succeeding Business Day with the same effect as if paid on the
originally scheduled due date. The interest rate borne by the Equipment
Notes shall be subject to adjustments to the extent, and under the
circumstances, specified by the Registration Rights Agreement.
The Owner agrees to pay to the Mortgagee for distribution in
accordance with Section 3.04 hereof all Expenses, Transaction Expenses, and
all other amounts, liabilities, indemnities, and obligations (including any
Make-Whole Amount) that Owner assumes or becomes obligated to pay or agrees
to pay under any Operative Agreement to or on behalf of Mortgagee or any
other Person including indemnity payments under Section 7 of the
Participation Agreement, but excluding any amount as to which Owner is
obligated to pay a pro rata share pursuant to clause (5) of this
definition, (2)(a) to the extent not payable (whether or not in fact paid)
under Section 6(a) or Section 6(b), as applicable, of the Note Purchase
Agreement (as originally in effect or amended with Mortgagee's consent),
the fees payable to (x) Liquidity Provider under Section 2.3 of each
Liquidity Facility, multiplied by a fraction the numerator of which is the
then-outstanding aggregate principal amount of all the series of Equipment
Notes, and the denominator of which is the then-outstanding aggregate principal
amount of all "Series G Equipment Notes" and "Series C Equipment Notes"
(each as defined in
the Note Purchase Agreement) and (y) the Policy Provider under Section
3.2(d)(i) of the Policy Provider Agreement and the related Policy Fee
Letter (as defined in the Policy Provider Agreement) multiplied by a
fraction the numerator of which shall be the then outstanding aggregate
principal amount of the Series G Equipment Notes and the denominator of
which shall be the then outstanding aggregate principal amount of all
"Series G Equipment Notes" (as defined in the Note Purchase Agreement); (b)
(x) the amount equal to interest on any Downgrade Advance (other than any
Applied Downgrade Advance) payable under Section 3.7 of each Liquidity
Facility minus Investment Earnings from such Downgrade Advance, multiplied
by (y) the fraction specified in the foregoing clause (a); (c) (x) the
amount equal to interest on any Non-Extension Advance (other than any
Applied Non-Extension Advance) payable under Section 3.7 of each Liquidity
Facility, multiplied by (y) the fraction specified in the forgoing clause
(a); (d) if any payment default exists with respect to interest on any
series of Equipment Notes, (x) an amount equal to interest on any Unpaid
Advance, Applied Downgrade Advance, or Applied Non-Extension Advance
payable under Section 3.7 of each Liquidity Facility (or if the Policy
Provider has made a payment in respect of such Advance to the Liquidity
Provider or, in the case of the Series G Equipment Notes, if the Policy
Provider has made a payment equivalent to such an Advance, as would have
been payable under Section 3.7 of the Liquidity Facility in respect of the
Class G Certificates had such Advance been made) plus any interest at the
Past-Due Rate actually payable (whether or not in fact paid) by Owner in
respect of 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 by the applicable Liquidity Provider (or, in
the case of the Series G Equipment Notes, an equivalent payment was made by
the Policy Provider) multiplied by (y) a fraction the numerator of which is
the sum of all then-overdue interest on the Equipment Notes (other than
interest becoming due and payable solely as a result of acceleration of any
Equipment Notes), and the denominator of which shall be the sum of all
then-overdue interest on all "Series G 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 (e) Owner's pro rata share of any other
amounts owed to Liquidity Provider by 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 (a), (b), (c), or (d) above, (3) Owner's pro rata share
of all compensation and reimbursement of expenses, disbursements, and
advances payable by Owner under the Pass-Through Trust Agreements, (4)
Owner's pro rata share of all compensation and reimbursement of expenses
and disbursements (including payments of indemnities) payable either (a) to
Subordination Agent under the Intercreditor Agreement, except with respect
to any income or franchise taxes incurred by Subordination Agent in
connection with the transactions contemplated by the Intercreditor
Agreement, or (b) by the Owner to the Policy Provider under the Policy
Provider Agreement, (5) Owner's pro rata share of any amount payable under
Section 7.1 (and, if attributable thereto, Section 7.5) of the
Participation Agreement to any Pass-Through Indemnitee to the extent such
amount relates to, results from, or arises out of or in connection with (a)
the Pass-Through Agreements or the enforcement of any of the terms of any
of the Pass-Through Agreements, (b) the offer, sale, or delivery of the
Pass- Through Certificates or any interest therein or represented thereby,
or (c) any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement or other obligation to be
performed by Owner under any Pass-Through Agreement, or the falsity of any
representation or warranty of Owner in any Pass-Through Agreement, and (6)
if Owner requests any amendment to any Operative Agreement or Pass-Through
Agreement, Owner's pro rata share of all
reasonable fees and expenses (including fees and disbursements of counsel)
of Escrow Agents and Paying Agents in connection therewith payable by
Pass-Through Trustees under the Escrow Agreements. As used herein, (1)
"Owner's pro rata share" means as of any time a fraction, the numerator of
which is the then-outstanding principal balance of Equipment Notes, and the
denominator of which is the aggregate then-outstanding principal balance of
all "Equipment Notes" (as each such term is defined in each of the
Operative Indentures), "(2) "Policy" means the Certificate Guaranty
Insurance Policy (including the endorsement attached thereto and
constituting a part thereof) issued by the Policy Provider pursuant to the
Policy Provider Agreement, and (3) "Policy Provider Agreement" means the
Insurance and Indemnity Agreement dated as of the Policy issuance date
among the Owner, the Subordination Agent, and the Policy Provider. For
purposes of this definition, "Applied Downgrade Advance", "Applied
Non-Extension Advance", "Cash Collateral Account", "Downgrade Advance",
"Final Advance", "Investment Earnings", "Non-Extension Advance", and
"Unpaid Advance" have the same meanings as in each Liquidity Facility.
The Equipment Notes shall be executed on behalf of the Owner by
its President or one of its Vice Presidents, Assistant Vice Presidents or
Assistant Secretaries or other authorized officer. 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 a Vice President or Assistant Vice
President or other authorized officer of the Owner; provided, however, that
each such request shall specify the aggregate Original Amount of all
Equipment Notes to be authenticated hereunder on original issue with
respect to the Aircraft. 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 _________________.
SECTION 2.03. [Intentionally Omitted]
SECTION 2.04. Method of Payment
(a) The Original Amount of, interest on, Make-Whole Amount, if
any, and other amounts due under each Equipment Note or hereunder will be
payable in Dollars by wire transfer of immediately available funds not
later than 11:00 a.m., New York City 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 2:00 p.m., New
York City time, on the due date of payment, to an account maintained by
such holder with a bank located in the continental United States the amount
to be distributed to such holder, for credit to the account of such holder
maintained at such bank. If the Mortgagee shall fail to make any such
payment as provided in the immediately foregoing sentence after its receipt
of funds at the place and prior to the time specified above, the Mortgagee,
in its individual capacity and not as trustee, agrees to compensate such
holders for loss of use of funds at Debt Rate until such payment is made
and the Mortgagee shall be entitled to any interest earned on such funds
until such payment is made. Any payment made hereunder shall be made
without any presentment or surrender of any Equipment Note, except that, in
the case of the final payment in respect of any Equipment Note, such
Equipment Note shall be surrendered to the 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 12:00 noon, New York City 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 payable
hereunder or in respect of the Equipment Notes, to withhold such amounts
(and such withholding shall constitute payment in respect of such Equipment
Note) 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 W-8BEN (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 (and such
withholding shall constitute payment in respect of such Equipment Note). 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 W-8ECI 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 W-9, 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, 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 normal maturity.
SECTION 2.06. Termination of Interest in Collateral
No Note Holder or any other Mortgage 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 all other sums then due and payable to such Note
Holder, such Mortgage Indemnitee or the Mortgagee hereunder (including,
without limitation, under the third paragraph of Section 2.02 hereof) and
under the other Operative Agreements by the Owner (collectively, the
"Secured Obligations") shall have been paid in full.
SECTION 2.07. Registration Transfer and Exchange of Equipment
Notes
The Mortgagee shall keep a register (the "Equipment Note
Register") in which the Mortgagee shall provide for the registration of
Equipment Notes and the registration of transfers of Equipment Notes. No
such transfer shall be given effect unless and until registration hereunder
shall have occurred. The Equipment Note Register shall be kept at the
Corporate Trust Office of the Mortgagee. The Mortgagee is hereby appointed
"Equipment Note Registrar" for the purpose of registering Equipment Notes
and transfers of Equipment Notes as herein provided. A holder of any
Equipment Note intending to exchange such Equipment Note shall surrender
such Equipment Note to the Mortgagee at the Corporate Trust Office,
together with a written request from the registered holder thereof for the
issuance of a new Equipment Note, specifying, in the case of a surrender
for transfer, the name and address of the new holder or holders. Upon
surrender for registration of transfer of any Equipment Note, the Owner
shall execute, and the Mortgagee 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 and of the same Series, 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 surendered upon such registration of transfer or exchange.
Every Equipment Note presented or surrendered for registration of transfer,
shall (if so required by the Mortgagee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Mortgagee
duly executed by the Note Holder or such holder's attorney duly authorized
in writing, and the Mortgagee shall require evidence satisfactory to it as
to the compliance of any such transfer with the Securities Act, and the
securities Laws of any applicable state. The Mortgagee shall make a
notation on each new Equipment Note of the amount of all payments of
Original Amount previously made on the old Equipment Note or Equipment
Notes with respect to which such new Equipment Note is issued and the date
to which interest on such old Equipment Note or Equipment Notes has been
paid. Interest shall be deemed to have been paid on such new Equipment Note
to the date on which interest shall have been paid on such old Equipment
Note, and all payments of the Original Amount marked on such new Equipment
Note, as provided above, shall be deemed to have been made thereon. The
Owner shall not be required to exchange any surrendered Equipment Notes as
provided above during the ten-day period preceding the due date of any
payment on such Equipment Note. The Owner shall in all cases deem the
Person in whose name any Equipment Note shall have been issued and
registered as the absolute owner and holder of such Equipment Note for the
purpose of receiving payment of all amounts payable by the Owner with
respect to such Equipment Note and for all purposes until a notice stating
otherwise is received from the Mortgagee and such change is reflected on
the Equipment Note Register. The Mortgagee will promptly notify the Owner
of each registration of a transfer of an Equipment Note. Any such
transferee of an Equipment Note, by its acceptance of an Equipment Note,
agrees to the provisions of this Indenture and the Participation Agreement
applicable to Note Holders, including Sections 5.3, 5.4 and 8.1 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 ten Business Days of the date an
Equipment Note is surrendered for transfer or exchange.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment
Notes
If any Equipment Note 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 of the same Series 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 Owner and the Mortgagee shall be accepted as satisfactory
indemnity and security and no further indemnity or security shall be
required as a condition to
the execution and delivery of such new Equipment Note. Subject to
compliance by the Note Holder with the requirements set forth in this
Section 2.08, Mortgagee and Owner shall use all reasonable efforts to issue
new Equipment Notes within ten 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 30 days' revocable prior written notice
to the Mortgagee and the Note Holders, and the Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the unpaid
Original Amount thereof, together with accrued interest thereon to the date
of redemption and all other Secured Obligations owed or then due and
payable to the Note Holders plus Make- Whole Amount, if any.
SECTION 2.12. Redemptions; Notice of Redemption
(a) No redemption of any Equipment Note may be made except to the
extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Equipment Note may be made by the Mortgagee.
(b) Notice of redemption with respect to the Equipment Notes
shall be given by the Mortgagee by first-class mail, postage prepaid,
mailed not less than 25 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 determining the redemption price, (3)
that on the redemption date, the redemption price will become due and
payable upon each such Equipment Note, and that, if any such Equipment
Notes are then outstanding, interest on such Equipment
Notes shall cease to accrue on and after such redemption date, and (4) the
place or places where such Equipment Notes are to be surrendered for
payment of the redemption price.
(c) On or before the redemption date, the 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 p.m. New York City time on the redemption date in
immediately available funds the redemption price of the Equipment Notes to
be redeemed.
(d) Notice of redemption having been given and not revoked as
aforesaid, the Equipment Notes to be redeemed shall, on the redemption
date, become due and payable at the Corporate Trust Office of the Mortgagee
or at any office or agency maintained for such purposes pursuant to Section
2.07, and from and after such redemption date (unless there shall be a
default in the payment of the redemption price) any such Equipment Notes
then outstanding shall cease to bear interest. Upon surrender of any such
Equipment Note for redemption in accordance with said notice, such
Equipment Note shall be redeemed at the redemption price. If any Equipment
Note called for redemption shall not be so paid upon surrender thereof for
redemption, the principal amount thereof shall, until paid, continue to
bear interest from the applicable redemption date at the interest rate in
effect for such Equipment Note as of such redemption date.
SECTION 2.13. Subordination
(a) The Owner and, by acceptance of its Equipment Notes of any
Series, each Note Holder of such Series, hereby agree that no payment or
distribution shall be made on or in respect of the Secured Obligations owed
to such Note Holder of such Series, including any payment or distribution
of cash, property or securities after the commencement of a proceeding of
the type referred to in Section 5.01(vi) hereof, except as expressly
provided in Article III hereof.
(b) By the acceptance of its Equipment Notes of any Series (other
than Series G), 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 G until the Secured Obligations in
respect of Series G Equipment Notes have been paid in full and (ii) after
the Secured Obligations in respect of Series G 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.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS
SECTION 3.01. Basic Distributions
Except as otherwise provided in Section 3.03 hereof, each
periodic payment of principal or interest on the 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 G Equipment Notes
shall be distributed to the Note Holders of Series G ratably,
without priority of one over the other, in the proportion that
the amount of such payment or payments then due under each Series
G Equipment Note bears to the aggregate amount of the payments
then due under all Series G Equipment Notes; and
(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 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.
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 Mortgage
Indemnitees under this Trust Indenture (other than the
amounts specified in clause "Second" below), 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 G Equipment Notes; and
(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 C
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 under Operative Agreements 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;
provided, further, that no Make-Whole Amount shall be payable in connection
with a redemption resulting from an Event of Loss.
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 declaration specified in Section 5.02(b)
hereof, 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, expense or
other loss (including, without limitation, all amounts to be
expended at the expense of, or charged upon the rents,
revenues, issues, products and profits of, the property
included in the Collateral (all such property being herein
called the "Mortgaged Property") ------------------ pursuant
to Section 5.03(b) hereof) incurred by the Mortgagee or WTC
(to the extent not previously reimbursed), the expenses of
any sale, or other proceeding, reasonable attorneys' fees
and expenses, court costs, and any other expenditures
incurred or expenditures or advances made by the Mortgagee,
WTC or the Note Holders in the protection, exercise or
enforcement of any right, power or remedy or any damages
sustained by the Mortgagee, WTC or any Note Holder,
liquidated or otherwise, upon such Event of Default shall be
applied by the Mortgagee as between itself, WTC and the Note
Holders in reimbursement of such expenses and any other
expenses for which the Mortgagee, WTC or the Note Holders
are
entitled to reimbursement under any Operative Agreement and
(ii) all amounts payable to the other Mortgage 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 G 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 G
Equipment Notes (other than Make-Whole Amount) to the date
of distribution, shall be distributed to the Note Holders of
Series G, 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 G 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 G 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
(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 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 the 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 the 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 Mortgage
Indemnitee, in each case whether pursuant to Section 7 of the Participation
Agreement or otherwise, 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 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.
SECTION 3.06. Application of Payments Under Guarantee
All payments received by the Mortgagee pursuant to the Guarantee
shall be distributed forthwith by the Mortgagee in the same order of
priority, and in the same manner, as it would have distributed the payment
in respect of which such payment under the Guarantee was received.
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 or with respect to the Aircraft, the Airframe
or 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 (or cause to be taken) such action as may be necessary to
duly discharge (by bonding or otherwise) any Lien other than a Permitted
Lien arising at any time in respect of the Aircraft, the Airframe, any
Engine or any Part.
SECTION 4.02. Possession, Operation and Use, 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 so long as
no Event of Default shall have occurred and be continuing at the time of
such lease, delivery, transfer or relinquishment, the Owner may, without
such prior written consent of Mortgagee:
(i) Subject or permit any Permitted Lessee to subject (aa) the
Airframe to normal interchange agreements, or (bb) any Engine to
normal interchange agreements or pooling agreements or arrangements,
in each case customary in the commercial airline industry and entered
into by Owner or such Permitted Lessee, as the case may be, in the
ordinary course of business; provided, however, that if Owner's title
to any such Engine is divested under any such agreement or
arrangement, then such Engine shall be deemed to have suffered an
Event of Loss as of the date of such divestiture, and Owner shall
comply with Section 4.04(e) in respect thereof;
(ii) Deliver or permit any Permitted Lessee to deliver possession
of the Aircraft, Airframe, any Engine or any Part (x) to the
manufacturer thereof or to any third- party maintenance provider for
testing, service, repair, maintenance or overhaul work on the
Aircraft, Airframe, any Engine or any Part, or, to the extent required
or permitted by Section 4.04, for alterations or modifications in or
additions to the Aircraft, Airframe or any Engine or (y) to any Person
for the purpose of transport to a Person referred to in the preceding
clause (x);
(iii) Install or permit any Permitted Lessee to install an Engine
on an airframe owned by Owner or such Permitted Lessee, as the case
may be, free and clear of all Liens, except (x) Permitted Liens and
those that do not apply to the Engines, and (y) the rights of third
parties under normal interchange or pooling agreements and
arrangements of the type that would be permitted under Section
4.02(b)(i);
(iv) Install or permit any Permitted Lessee to install an Engine
on an airframe leased to Owner or such Permitted Lessee, or purchased
by Owner or such Permitted Lessee subject to a mortgage, security
agreement, conditional sale or other secured financing arrangement,
but only if (x) such airframe is free and clear of all Liens, except
(A) the rights of the parties to such lease, or any such secured
financing arrangement, covering such airframe and (B) Liens of the
type permitted by clause (iii) above and (y) Owner or Permitted
Lessee, as the case may be, shall have received from the lessor,
mortgagee, secured party or conditional seller, in respect of such
airframe, a written agreement (which may be a copy of the lease,
mortgage, security agreement, conditional sale or other agreement
covering such airframe), whereby such Person agrees that it will not
acquire or claim any right, title or interest in, or Lien on, such
Engine by reason of such Engine being installed on such airframe at
any time while such Engine is subject to the Lien of this Trust
Indenture;
(v) Install or permit any Permitted Lessee to install an Engine
on an airframe owned by Owner or such Permitted Lessee, leased to
Owner or such Permitted Lessee, or purchased by Owner or such
Permitted Lessee subject to a conditional sale or other security
agreement under circumstances where neither clause (iii) or (iv) above
is applicable; provided, however, that any such installation shall be
deemed an Event of Loss with respect to such Engine, and Owner shall
comply with Section 4.04(e) hereof in
respect thereof;
(vi) Transfer or permit any Permitted Lessee to transfer
possession of the Aircraft, Airframe or any Engine to the U.S.
Government, in which event Owner shall promptly notify Mortgagee in
writing of any such transfer of possession and, in the case of any
transfer pursuant to CRAF, in such notification shall identify by
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) Enter into a charter or Wet Lease or other similar
arrangement with respect to the Aircraft or any other aircraft on
which any Engine may be installed (which shall not be considered a
transfer of possession hereunder); provided that the Owner's
obligations hereunder shall continue in full force and effect
notwithstanding any such charter or Wet Lease or other similar
arrangement;
(viii) 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 with any Permitted Air Carrier that is not the 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 (subject to customary
exceptions), (w) it is not necessary for Mortgagee to register or
qualify to do business in such jurisdiction, if not already so
registered or qualified, as a result, in whole or in part, of the
proposed lease, (x) Mortgagee's Lien in respect of, the Aircraft,
Airframe and Engines will be recognized in such jurisdiction, (y) the
Laws of such jurisdiction of domicile require fair compensation by the
government of such jurisdiction, payable in a currency freely
convertible into Dollars, for the loss of title to the Aircraft,
Airframe or Engines in the event of the requisition by such government
of such title (unless Owner shall provide insurance in the amounts
required with respect to hull insurance under this Trust Indenture
covering the requisition of title to the Aircraft, Airframe or Engines
by the government of such jurisdiction so long as the Aircraft,
Airframe or Engines are subject to such lease) and (z) the agreement
of such Permitted Air Carrier that its rights under the lease are
subject and subordinate to all the terms of this Trust Indenture is
enforceable against such Permitted Air Carrier under applicable law
(subject to customary exceptions);
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) Owner shall
ensure that no lease or transfer of possession otherwise in compliance with
this Section 4.02(b) shall (x) adversely affect the United States
registration of the Aircraft, unless the Aircraft is subject to
reregistration in accordance with the provisions of Section 4.02(d) or the
maintenance, operation or use thereof except in compliance with Sections
4.02(c) and 4.04(a) 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 and provisions
for the maintenance and inspection of the Aircraft that are the same in all
material respects as are contained herein. No lease permitted under this
Section 4.02(b) shall be entered into unless (w) Owner shall provide
written notice to Mortgagee, Standard & Poor's and Moody'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, at least 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, and
any such lease for a term of more than a year shall be assigned to
Mortgagee to secure Owner's obligations hereunder. Except as otherwise
provided herein and without in any way relieving the Owner from its primary
obligation for the performance of its obligations under this Trust
Indenture, the Owner may in its sole discretion permit a lessee to exercise
any or all rights which the Owner would be entitled to exercise under
Sections 4.02 and 4.04, and may cause a lessee to perform any or all of the
Owner's obligations under Article IV, and the Mortgagee agrees to accept
actual and full performance thereof by a lessee in lieu of performance by
the Owner.
Mortgagee hereby agrees, and each Note Holder by acceptance of an
Equipment Note agrees, for the benefit of each lessor, conditional seller,
indenture trustee or secured party of any engine leased to, or purchased
by, Owner or any Permitted Lessee subject to a lease, conditional sale,
trust indenture or other security agreement that Mortgagee, each Note
Holder and their respective successors and assigns will not acquire or
claim, as against such lessor, conditional seller, indenture trustee or
secured party, any right, title or interest in any engine as the result of
such engine being installed on the Airframe at any time while such engine
is subject to such lease, conditional sale, trust indenture or other
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.
(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 covering such area in accordance with
Section 4.06(c), or (ii) in any recognized area of hostilities unless
covered in accordance with Annex B by War Risk Insurance as required by the
terms of Section 4.06 (including, without limitation, Section 4.06(c)),
unless in any case referred to in this Section 4.02(c) the Aircraft, the
Airframe or any Engine is only temporarily operated, used or located in
such area as a result of an emergency, equipment malfunction, navigational
error, hijacking, weather condition or other similar unforeseen
circumstance, so long as Owner diligently and in good faith proceeds to
remove the Aircraft from such area. So long as the Aircraft, the Airframe
or any Engine is subject to the Lien of this Trust Indenture, the Owner
shall not permit such Aircraft, Airframe or any Engine, as the case may be,
to be used, operated, maintained, serviced, repaired or overhauled (x) in
violation of any Law binding on or applicable to such Aircraft, Airframe or
Engine or (y) in violation of any airworthiness certificate, license or
registration of any Government Entity relating to the Aircraft, the
Airframe or any Engine, except (i) immaterial or non-recurring violations
with respect to which corrective measures are taken promptly by Owner or
Permitted Lessee, as the case may be, upon discovery thereof, or (ii) to
the extent the validity or application of any such Law or requirement
relating to any such certificate, license or registration is being
contested in good faith by Owner or Permitted Lessee in any reasonable
manner which does not involve any material risk of the sale, forfeiture or
loss of the Aircraft, Airframe or any Engine or materially and adversely
affect the interest of any Note Holder therein, any material risk of
criminal liability 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, Japan, or the Joint Aviation
Authority (being the central aviation authority of France, Germany, Japan,
the Netherlands, and the United Kingdom, inter alia) for the Aircraft,
Airframe and Engines (the "Maintenance Program"), so as to (A) keep the
Aircraft, the Airframe and each Engine in as good operating condition as on
the Closing Date, ordinary wear and tear excepted, (B) keep the Aircraft in
such operating condition as may be necessary to enable the applicable
airworthiness certification of such Aircraft to be maintained under the
regulations of the FAA or other Aviation Authority then having jurisdiction
over the operation of the Aircraft, except during (x) temporary periods of
storage in accordance with applicable regulations, (y) maintenance and
modification permitted hereunder or (z) periods when the FAA or such other
Aviation Authority has revoked or suspended the airworthiness certificates
for Similar Aircraft; and (ii) except during periods when a Permitted Lease
is in effect, the same standards as Owner uses with respect to similar
aircraft of similar size in its fleet operated by Owner in similar
circumstances and, during any period in which a Permitted Lease is in
effect, the same standards used by the Permitted Lessee with respect to
similar aircraft of similar size in its fleet and operated by the Permitted
Lessee in similar circumstances. Owner further agrees that the Aircraft,
Airframe and Engines will be maintained, used, serviced, repaired,
overhauled or inspected in compliance with applicable Laws with respect to
the
maintenance of the Aircraft and in compliance with each applicable
airworthiness certificate, license and registration relating to the
Aircraft, Airframe or any Engine issued by the Aviation Authority, other
than minor or nonrecurring violations with respect to which corrective
measures are taken upon discovery thereof and except to the extent Owner or
Permitted Lessee is contesting in good faith the validity or application of
any such Law or requirement relating to any such certificate, license or
registration in any reasonable manner which does not create a material risk
of sale, loss or forfeiture of the Aircraft, the Airframe or any Engine or
the interest of Mortgagee therein, or any materialrisk 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 with the FAA 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 5.4.5 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 4.02(e).
SECTION 4.03. Inspection
(a) At all reasonable times and upon reasonable advance notice
(taking into consideration the availability of the Aircraft and Owner (or
Permitted Lessee) personnel), 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 such Permitted Lessee.
(b) Any inspection of the Aircraft hereunder shall be limited to
a visual, walk- around inspection and shall not include the opening of any
panels, bays or other components of the Aircraft, and no such inspection
shall interfere with Owner's or any Permitted Lessee's maintenance and
operation of the Aircraft, Airframe and Engines.
(c) With respect to such rights of inspection, Mortgagee shall
not have any duty or liability to make, or any duty or liability by reason
of not making, any such visit, inspection or survey.
(d) Each Inspecting Party shall bear its own expenses in
connection with any such inspection (including the cost of any copies made
in accordance with Section 4.03(a)).
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 Airframe or Engine is subject to the Lien of this Trust
Indenture, Owner, at its own cost and expense, will, or will cause a
Permitted Lessee to, at its own cost and expense, promptly replace (or
cause to be replaced) all Parts which may from time to time be incorporated
or installed in or attached to the Aircraft, Airframe or any Engine and
which may from time to time become worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently rendered unfit
for use for any reason whatsoever. In addition, Owner may, at its own cost
and expense, or may permit a Permitted Lessee at its own cost and expense
to, remove (or cause to be removed) in the ordinary course of maintenance,
service, repair, overhaul or testing any Parts, whether or not worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use; provided, however, that Owner, except
as otherwise provided herein, at its own cost and expense, will, or will
cause a Permitted Lessee at its own cost and expense to, replace such Parts
as promptly as practicable. All replacement Parts shall be free and clear
of all Liens, except for Permitted Liens and pooling arrangements to the
extent permitted by Section 4.04(c) below (and except in the case of
replacement property temporarily installed on an emergency basis) and shall
be in good operating condition and have a value and utility not less than
the value and utility of the Parts replaced (assuming such replaced Parts
were in the condition required hereunder).
(b) Parts. Except as otherwise provided herein, any Part at any
time removed from the Airframe or any Engine shall remain subject to the
Lien of this Trust Indenture, no matter where located, until such time as
such Part shall be replaced by a Part that has been incorporated or
installed in or attached to such Airframe or any Engine and that meets the
requirements for replacement Parts specified above. Immediately upon any
replacement Part becoming incorporated or installed in or attached to such
Airframe or any Engine as provided in Section 4.04(a), without further act,
(i) the replaced Part shall thereupon be free and clear of all rights of
the Mortgagee and shall no longer be deemed a Part hereunder, and (ii) such
replacement Part shall become subject to this Trust Indenture and be deemed
part of such Airframe or any Engine, as the case may be, for all purposes
hereof to the same extent as the Parts originally incorporated or installed
in or attached to such Airframe or any Engine.
(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 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) alterations
and modifications in and additions to the Aircraft, Airframe and each
Engine as may be required to be made from time to time to meet the
applicable standards of the FAA or other Aviation Authority having
jurisdiction over the operation of the Aircraft, to the extent made
mandatory in respect of the Aircraft (a "Mandatory Modification"); provided
however, that the Owner or a Permitted Lessee may, in good faith and by
appropriate procedure, contest the validity or application of any law,
rule, regulation or order in any reasonable manner which does not
materially adversely affect Mortgagee's interest in the Aircraft and does
not involve any material risk of sale, forfeiture or loss of the Aircraft
or the interest of Mortgagee therein, or any material risk of material
civil penalty or any material risk of criminal liability being imposed on
Mortgagee or the holder of any Equipment Note. In addition, the Owner, at
its own expense, may, or may permit a Permitted Lessee at its own cost and
expense to, from time to time make or cause to be made such alterations and
modifications in and additions to the Airframe or any Engine (each an
"Optional Modification") as the Owner or such Permitted Lessee may deem
desirable in the proper conduct of its business including, without
limitation, removal of Parts which Owner deems are obsolete or no longer
suitable or appropriate for use in the Aircraft, Airframe or such Engine;
provided, however, that no such Optional Modification shall (i) materially
diminish the fair market value, utility, or useful life of the Aircraft or
any Engine below its fair market value, utility or useful life immediately
prior to such Optional Modification (assuming the Aircraft or such Engine
was in the condition required by the Trust Indenture immediately prior to
such Optional Modification) or (ii) cause the Aircraft to cease to have the
applicable standard certificate of 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") from such Airframe or an Engine
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 such Airframe or any 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 such Airframe or any Engine
without materially diminishing the fair market value, utility or remaining
useful life which such Airframe or any 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 and such Removable Part had not been incorporated or installed in
or attached to the
Aircraft, Airframe or such Engine. 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 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 five 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 60 days of the
occurrence of such Event of Loss substitute, a Replacement Engine for any
Engine. In such event, immediately upon the effectiveness of such
substitution and without further act, (i) the replaced Engine shall
thereupon be free and clear of all rights of the Mortgagee and the Lien of
this Trust Indenture and shall no longer be deemed an Engine hereunder and
(ii) such Replacement Engine shall become subject to this Trust Indenture
and be deemed part of the Aircraft for all purposes hereof to the same
extent as the replaced Engine. Such Replacement Engine shall be an engine
manufactured by Engine Manufacturer that is the same model as the Engine to
be replaced thereby, or an improved model, and that is suitable for
installation and use on the Airframe, and that has a value, utility and
remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to the Engine to be replaced thereby (assuming
that such Engine had been maintained in accordance with this Trust
Indenture). The Owner's right to make a replacement hereunder shall be
subject to the fulfillment (which may be simultaneous with such
replacement) of the applicable conditions precedent set forth in Section
4.05(c) 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.
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 45 days after such occurrence, give the Mortgagee
written notice of Owner's election to either replace the Airframe as
provided under Section 4.05(a)(i) or to make payment in respect of such
Event of Loss as provided under Section 4.05(a)(ii) (it being agreed that
if Owner shall not have given the Mortgagee such notice of such election
within the above specified time period, the Owner shall be deemed to have
elected to make payment in respect of such Event of Loss as provided under
Section 4.05(a)(ii)):
(i) if Owner elects to replace the Airframe, Owner shall, subject
to the satisfaction of the conditions contained in Section 4.05(c), as
promptly as possible and in any event within 120 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 120-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 Business Day next following the
earlier of (x) the 120th day following the date of the occurrence of
such Event of Loss with respect to an Airframe or within 60 days of
such Event of Loss with respect to any Engine, and (y) the fourth
Business Day following the receipt of insurance proceeds with respect
to such Event of Loss (but in any event not earlier than the date of
Owner's election under Section 4.05(a) to make payment under this
Section 4.05 (a)(ii)); 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
(or if directed by the Owner, the insurers having made payment in respect
of the applicable Event of Loss) 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
Sections 4.05(d).
(c) Conditions to Airframe and Engine Replacement. The Owner's
right to substitute a Replacement Airframe and Replacement Engines, if any,
as provided in Section 4.04(e) or 4.05(a)(i), as the case may be, shall be
subject to the fulfillment, at the Owner's sole cost and expense, in
addition to the conditions contained in such Section 4.04(e) or 4.05(a)(i),
as the case may be, of the following conditions precedent:
(i) on the date when the Replacement Airframe and Replacement
Engines, if any, is 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 Xxxx of Sale and full
warranty xxxx of sale referred to below, a photocopy thereof) shall
have been delivered to the Mortgagee:
(A) a Mortgage 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(d), as the case may
be;
(B) an FAA Xxxx 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) xxxx 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) Uniform Commercial Code financing statements (or any
similar statements or other documents required to be filed or
delivered pursuant to the laws of the jurisdiction in which the
Replacement Airframe and Replacement Engines, if any, may be
registered in accordance with Section 4.02(d)) as are deemed
necessary or desirable by counsel for the Mortgagee to protect
the security interests of the Mortgagee in the Replacement
Airframe and Replacement Engines, if any;
(ii) the Replacement Airframe and Replacement Engines, if any,
shall be of the same model as the Airframe or Engines, as the case may
be, or an improved model of such aircraft or engines of the
manufacturer thereof, shall have a value and utility (without regard
to hours or cycles remaining until the next regular maintenance check)
at least equal to, and be in as good operating condition and repair
as, the Airframe and any Engines replaced (assuming such Airframe and
Engines 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 or other applicable Aviation Authority
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 (1) 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 (2) the FAA Bills of Sale
constitutes an effective instrument for the conveyance of title to the
Replacement Airframe or Replacement Engine, 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 Mortgage
Supplement with respect to such Replacement Airframe or Replacement
Engine under the Act or such other applicable law of the jurisdiction
other than the United States in which the Replacement Airframe is to
be registered in accordance with Section 4.02(e), as the case may be;
and
(vi) the Owner shall have furnished to the Mortgagee a
certificate of a qualified aircraft engineer (who may be an employee
of Owner) certifying that the Replacement Airframe and Replacement
Engines, if any, have a value and utility and remaining useful life
(without regard to hours and cycles remaining until overhaul) at least
equal to the Airframe and any Engines so replaced (assuming that such
Airframe and Engines had been maintained in accordance with this Trust
Indenture).
Owner and Mortgagee understand and agree that if, at the time of
any replacement of the Airframe or any Engine(s) as contemplated in this
Section 4.05, the Airframe was registered in a jurisdiction other than the
United States, then the requirements set forth above in this Section 4.05
relating to compliance with the requirements of the Transportation Code or
the FAA shall be deemed to refer to the comparable applicable Law of, and
the Aviation Authority of, such other jurisdiction.
(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.
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 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) to the same extent as if an Event of Loss in respect of
such Engine had occurred 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 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 such amount and any
gain realized as a result of investments required to be made pursuant to
Section 6.06 shall to the extent not theretofore applied as provided
herein, be paid over to the Owner.
SECTION 4.06. Insurance
(a) Owner's Obligation to Insure. Owner shall comply with, or
cause to be complied with, each of the provisions of Annex B, which
provisions are hereby incorporated by this reference as if set forth in
full herein.
(b) Insurance for Own Account. Nothing in Section 4.06 shall
limit or prohibit (a) Owner from maintaining the policies of insurance
required under Annex B with higher limits than those specified in Annex B,
or (b) Mortgagee from obtaining insurance for its own account (and any
proceeds payable under such separate insurance shall be payable as provided
in the policy relating thereto); provided, however, that no insurance may
be obtained or maintained that would limit or otherwise adversely affect
the coverage of any insurance required to be obtained or maintained by
Owner pursuant to this Section 4.06 and Annex B.
(c) Indemnification by Government in Lieu of Insurance. Mortgagee
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft described in Annex B, indemnification from, or insurance provided
by, the U.S. Government, or upon the written
consent of Mortgagee, other Government Entity, against such risk in an
amount that, when added to the amount of insurance (including permitted
self-insurance), if any, against such risk that Owner (or any Permitted
Lessee) may continue to maintain, in accordance with this Section 4.06,
during the period of such requisition or transfer, shall be at least equal
to the amount of insurance against such risk otherwise required by this
Section 4.06.
(d) Application of Insurance Proceeds. As between Owner and
Mortgagee, all insurance proceeds received as a result of the occurrence of
an Event of Loss with respect to the Aircraft or any Engine under policies
required to be maintained by Owner pursuant to this Section 4.06 will be
applied in accordance with 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 or any Permitted
Lessee) 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 (or as Owner shall direct).
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) if the Aircraft is, at the time, registered with the
FAA, such person makes such filings and recordings with the FAA
pursuant to the Act as shall be necessary to evidence such
consolidation or merger or, if the Aircraft is, at the time, not
registered with the FAA, such person makes such filings and
recordings with the Aviation Authority as shall be necessary to
evidence such consolidation or merger; and
(iv) Owner furnishes Mortgagee an opinion of counsel
reasonably satisfactory to Mortgagee (and, while the Policy is in
effect, reasonably satisfactory to Policy Provider) to the effect
that such consolidation or merger has satisfied at the closing of
such consolidation or merger items (i), (ii) and (iii) above; and
(v) immediately after giving effect to such consolidation or
merger no Event of Default shall have occurred and be continuing.
(b) Effect of Merger.
Upon any such consolidation or merger of Owner with or into, or
the conveyance, transfer or lease by Owner of all or substantially all of
its assets to, any Person in accordance with this Section 4.07, such Person
will succeed to, and be substituted for, and may exercise every right and
power of, Owner under the Operative Agreements with the same effect as if
such person had been named as "Owner" therein. No such consolidation or
merger, or conveyance, transfer or lease, shall have the effect of
releasing Owner or such Person from any of the obligations, liabilities,
covenants or undertakings of Owner under the Trust Indenture.
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 Entity):
(i) the failure of the Owner or Guarantor 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
ten Business Days, or (ii) any other amount payable by it to the Note
Holders or any Mortgage Indemnitee under this Trust Indenture or the
Participation Agreement when due, and such failure shall continue for
a period in excess of 10 days after Owner has received written notice
from Mortgagee of the failure to make such payment when due;
(ii) Owner or Guarantor 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;
(iii) Owner or Guarantor shall fail to observe or perform (or
caused to be observed and performed) in any material respect any other
covenant, agreement or obligation set forth herein or in any other
Operative Agreement to which it is a party and such failure shall
continue unremedied for a period of 30 days from and after the date of
written notice thereof to Owner or Guarantor, as the case may be, from
Mortgagee, unless such failure is capable of being corrected and Owner
or Guarantor 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 270 days after
receipt of such notice;
(iv) any representation or warranty made by Owner or Guarantor
herein, in the Participation Agreement or in any other Operative
Agreement to which it is a party (a) shall prove to have been untrue
or inaccurate in any material respect as of the date made, (b) is
material at the time in question, and (c) remains uncured (to the
extent of the adverse impact of such incorrectness on the interest of
the Mortgagee) for a period
in excess of 30 days from and after the date of written notice thereof
from Mortgagee to Owner or Guarantor;
(v) the Owner or Guarantor 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 or Guarantor 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 or Guarantor 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 or Guarantor 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
or Guarantor shall seek an agreement, composition, extension or
adjustment with its creditors under such laws;
(vi) 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;
(vii) 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 90 days; or
(viii) the Guarantee shall for any reason whatsoever cease to be
in full force and effect or Guarantor shall, in writing, repudiate the
Guarantee or deny that its obligations thereunder are valid, binding
and enforceable.
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 fifteen 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 (v), (vi) or (vii) 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 (without Make-Whole Amount) 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 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 to 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. 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 poperly 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 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.
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, effective during the continuance
of any Event of Default, 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 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), 6.02 or Article V hereof unless the Mortgagee shall have been
indemnified to its reasonable satisfaction against any liability, cost or
expense (including counsel fees) which may be incurred in connection
therewith pursuant to a written agreement with one or more Note Holders.
The Mortgagee agrees that it shall look solely to the Note Holders for the
satisfaction of any indemnity (except expenses for foreclosure of the type
referred to in clause "First" of Section 3.03 hereof) owed to it pursuant
to this Section 6.03. The Mortgagee shall not be under any obligation to
take any action under this Trust Indenture or any other Operative Agreement
and nothing herein or therein shall require the Mortgagee to expend or risk
its own funds or otherwise incur the risk of any financial liability in the
performance of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it (the written
indemnity of any Note Holder who is a QIB, signed by an authorized officer
thereof, in favor of, delivered to and in form reasonably satisfactory to
the Mortgagee shall be accepted as reasonable assurance of adequate
indemnity). The Mortgagee shall not be required to take any action under
Section 6.01 (other than the first sentence thereof) or 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
ownership of the Aircraft or the administration of the Collateral or any
other transaction pursuant to this Trust Indenture or any document included
in the Collateral.
SECTION 6.05. No Action Except Under Trust Indenture or
Instructions
The Mortgagee will not use, operate, store, lease, control,
manage, sell, dispose of or otherwise deal with the Aircraft or any other
part of the Collateral except in accordance with the powers granted to, or
the authority conferred upon the Mortgagee pursuant to this Trust Indenture
and in accordance with the express terms hereof.
SECTION 6.06. Investment of Amounts Held by Mortgagee
Any amounts held by the Mortgagee pursuant to the proviso to the
first sentence of Section 3.01, pursuant to Section 3.02, or pursuant to
any provision of any other Operative Agreement providing for amounts to be
held by the Mortgagee which are not distributed pursuant to the other
provisions of Article III hereof shall be invested by the Mortgagee from
time to time in Cash Equivalents as directed by the Owner so long as the
Mortgagee may acquire the same using its best efforts. All Cash Equivalents
held by the Mortgagee pursuant to this Section 6.06 shall either be (a)
registered in the name of, payable to the order of, or specially endorsed
to, the Mortgagee, or (b) held in an Eligible Account. 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 or negligence in the handling of funds, 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 Trust Indenture Estate 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 expressly made hereunder.
SECTION 7.02. Absence of Duties
Except in accordance with written instructions furnished pursuant
to Section 6.01 or 6.02 hereof, and except as provided in, and without
limiting the generality of, Sections 6.03, 6.04 and 7.07 hereof the
Mortgagee shall have no duty (i) to see to any registration of the Aircraft
or any recording or filing of this Trust Indenture or any other document,
or to see to the maintenance of any such registration, recording or filing,
(ii) to see to any insurance on the Aircraft or to effect or maintain any
such insurance, whether or not Owner shall be in default with respect
thereto, (iii) to see to the payment or discharge of any lien or
encumbrance of any kind against any part of the Collateral, (iv) to
confirm, verify or inquire into the failure to receive any financial
statements from Owner, or (v) to inspect the Aircraft at any time or
ascertain or inquire as to the performance or observance of any of Owner's
covenants herein or any Permitted Lessee's covenants under any assigned
Permitted Lease with respect to the Aircraft.
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 the Guarantee, or as to the correctness of any
statement contained in any thereof, except for the representations and
warranties of the Owner made in its individual capacity and the
representations and warranties of the Mortgagee in its individual capacity,
in each case expressly made in this Trust Indenture or in the Participation
Agreement. The Note Holders make no representation or warranty hereunder
whatsoever.
SECTION 7.04. No Segregation of Monies; No Interest
Any monies paid to or retained by the Mortgagee pursuant to any
provision
hereof and not then required to be distributed to the Note Holders, or the
Owner as provided in Article III hereof need not be segregated in any
manner except to the extent required by Law or Section 6.06 hereof, and may
be deposited under such general conditions as may be prescribed by Law, and
the Mortgagee shall not be liable for any interest thereon (except that the
Mortgagee shall invest all monies held as directed by Owner so long as no
Event of Default or Default has occurred and is continuing (or in the
absence of such direction, by the Majority In Interest of Note Holders) in
Cash Equivalents either registered in the name of the Mortgagee or credited
to an Eligible Account of the type described in clause (a) of the
definition thereof; 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
(a) The Mortgagee shall be entitled to reasonable compensation
for all services rendered hereunder and shall, on and subsequent to an
Event of Default hereunder, have a priority claim on the Collateral for the
payment of such compensation (and for expenses and disbursements, including
the reasonable fees and expenses of counsel), 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.
(b) The Owner agrees to indemnify the Mortgagee against any taxes
imposed upon it relating to, or arising out of the performance of its
responsibilities hereunder other than
taxes, fees or charges based on, or measured by any fees or compensation
received by the Mortgagee for services rendered in connection with the
Transaction.
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 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 7 of the Participation Agreement.
ARTICLE IX
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. Resignation of Mortgagee; Appointment of Successor
(a) The Mortgagee or any successor thereto may resign at any time
without cause by giving at least 30 days' prior written notice to the Owner
and each Note Holder, such resignation to be effective upon the acceptance
of the trusteeship by a successor Mortgagee. In addition, a Majority in
Interest of Note Holders may at any time (but only with the consent of
Owner, which consent shall not be unreasonably withheld, except that such
consent shall not be necessary if an Event of Default is continuing) remove
the Mortgagee without cause by an instrument in writing delivered to the
Owner and the Mortgagee, and the Mortgagee shall promptly notify each Note
Holder thereof in writing, such removal to be effective upon the acceptance
of the trusteeship by a successor Mortgagee. In the case 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 acceptingsuch
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 Salt Lake City, Utah; 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.
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 f 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 moved, 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).
(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 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.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 10.01. Instructions of Majority; Limitations
(a) 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, 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 the Liquidity Provider and Policy 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), 6.01 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, of 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.
(b) The Owner and the Mortgagee may enter into one or more
agreements supplemental hereto without the consent of any Note Holder for
any of the following purposes: (i) (a) to cure any defect or inconsistency
herein or in the Equipment Notes, or to make any change not inconsistent
with the provisions hereof (provided that such change does not adversely
affect the interests of any Note Holder in its capacity solely as Note
Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to
evidence the succession of another party as the Owner in accordance with
the terms hereof or to evidence the succession of a new trustee hereunder
pursuant hereto, the removal of the trustee hereunder or the appointment of
any co-trustee or co- trustees or any separate or additional trustee or
trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Mortgagee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action
shall not adversely affect the interests of the Note Holders in its
capacity solely as Note Holder; (iv) to correct or amplify the description
of any property at any time subject to the Lien of this Trust Indenture or
better to assure, convey and confirm unto the Mortgagee any property
subject or required to be subject to the Lien of this Trust Indenture, the
Airframe or Engines or any Replacement Airframe or Replacement Engine; (v)
to add to the covenants of the Owner for the benefit of the Note
Holders, or to surrender any rights or power herein conferred upon the
Owner; (vi) to add to the rights of the Note Holders; (vii) to include on
the Equipment Notes any legend as may be required by Law; and (viii)
subject to the provisions of Section 8.3 of the Participation Agreement and
Section 1 (j) of the Note Purchase Agreement, to give effect to a
sale-leaseback transaction.
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.
SECTION 10.04. No Request Necessary for Mortgage 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 Mortgage Supplement specifically required by the terms
hereof.
SECTION 10.05. Notices to Liquidity Provider and Policy Provider.
Any request made to any Note Holder for consent to any amendment or
supplement to this Trust Indenture or the Equipment Notes pursuant to this
Article X shall be promptly furnished by the Loan Trustee to each Liquidity
Provider and the Policy Provider.
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 Mortgage 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 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 Mortgage 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 Mortgage 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,
personally delivered or mailed by certified mail, postage prepaid, or by
facsimile or confirmed telex, and (i) if to the Owner, addressed to it at
Indianapolis International Airport, 0000 Xxxx Xxxxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxx 00000, Attention: Executive Vice President and Chief
Financial Officer, facsimile number (000) 000-0000, (ii) if to Mortgagee,
addressed to it at its office at Xxxxxx Square North, 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust
Administration, facsimile number (000) 000-0000, (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 1 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, or if made, given, furnished or filed by
facsimile or telecommunication transmission, when received unless received
outside of business hours, in which case on the next open of business on a
Business Day. Any party hereto may change the address to which notices to
such party will be sent by giving notice of such change to the other
parties to this Trust Indenture.
SECTION 11.06. Severability
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.07. No Oral Modification or Continuing Waivers
No term or provision of this Trust Indenture or the Equipment
Notes may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the Owner and the Mortgagee, in
compliance with Section 10.01 hereof. Any waiver of the terms hereof or of
any Equipment Note shall be effective only in the specific instance and for
the specific purpose given.
SECTION 11.08. Successors and Assigns
All covenants and agreements contained herein shall be binding
upon, and inure to the benefit of, each of the parties hereto and the
permitted successors and assigns of each, all as herein provided. Any
request, notice, direction, consent, waiver or other instrument or action
by any Note Holder shall bind the successors and assigns of such holder.
Each Note Holder by its acceptance of an Equipment Note agrees to be bound
by this Trust Indenture and all provisions of the Operative Agreements
applicable to a Note Holder.
SECTION 11.09. Headings
The headings of the various Articles and sections herein and in
the table of contents hereto are for convenience of reference only and
shall not define or limit any of the terms or provisions hereof.
SECTION 11.10. Normal Commercial Relations
Anything contained in this Trust Indenture to the contrary
notwithstanding. Owner and Mortgagee may conduct any banking or other
financial transactions, and have banking or other commercial relationships,
with Owner, fully to the same extent as if this Trust Indenture were not in
effect, including without limitation the making of loans or other
extensions of credit to Owner for any purpose whatsoever, whether related
to any of the transactions contemplated hereby or otherwise.
SECTION 11.11 Governing Law; Counterpart Form
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW 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.
SECTION 11.14. Payments With Respect to Insured Obligations.
Anything in this Trust Indenture or the Equipment Notes to the
contrary notwithstanding, any payment with respect to the Insured Obligations
(as defined in the Policy) that is made with funds received pursuant to the
terms of the Policy shall not be considered payment on the Equipment Notes by
the Owner, shall not discharge any obligations of the Owner to make such
payment and shall not result in the payment of (or the provisions for the
payment of) any Insured Obligations for the purposes of Section 2.05.
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.
AMERICAN TRANS AIR, INC.
By:___________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
as Mortgagee
By:___________________________________
Name:
Title:
ANNEX A
DEFINITIONS
[From Participation Agreement]
ANNEX B
INSURANCE
Capitalized terms used but not defined herein shall have the
respective meanings set forth or incorporated by reference in Annex A to
the Trust Indenture.
A. Liability Insurance
1. Except as provided in Section A.2 below, Owner will carry or
cause to be carried at all times, at no expense to Mortgagee, comprehensive
airline legal liability (including, but not limited to passenger liability,
property damage, and contractual liability insurance) with respect to the
Aircraft, the Airframe and the Engines, which is (i) in an amount not less
than the greater of (x) the amount of comprehensive airline legal liability
insurance from time to time applicable to aircraft owned or leased and
operated by Owner of the same type and operating on similar routes as the
Aircraft and (y) the Minimum Liability Insurance Amount per occurrence;(ii)
of the type and covering the same risks as from time to time applicable to
aircraft operated by Owner of the same type as the Aircraft; and (iii)
maintained in effect with insurers of nationally or internationally
recognized responsibility (such insurers being referred to herein as
"Approved Insurers").
2. During any period that the Aircraft is on the ground and not
in operation, Owner may carry or cause to be carried, in lieu of the
insurance required by Section A.1 above, insurance otherwise conforming
with the provisions of said Section A.1 except that (i) the amounts of
coverage shall not be required to exceed the amounts of public liability
and property damage insurance from time to time applicable to aircraft
owned or operated by Owner of the same type as the Aircraft which are on
the ground and not in operation and (ii) the scope of the risks covered and
the type of insurance shall be the same as from time to time shall be
applicable to aircraft owned or operated by Owner of the same type which
are on the ground and not in operation.
X. Xxxx Insurance
1. Except as provided in Section B.2 below, Owner will carry or
cause to be carried at all times, at no expense to Mortgagee, with Approved
Insurers "all-risk" ground and flight aircraft hull insurance covering each
Aircraft (including the Engines when they are installed on the Airframe or
any other airframe) which is of the type as from time to time applicable to
aircraft owned by Owner of the same type as the Aircraft for an amount
denominated in United States Dollars not less than the unpaid Original
Amount together with six months of interest accrued thereon (the "Debt
Balance").
Any policies of insurance carried in accordance with this Section
B.1 covering the Aircraft and any policies taken out in substitution or
replacement for any such policies (i) shall name Mortgagee as exclusive
loss payee for any proceeds to be paid under such policies up to an amount
equal to the Debt Balance and (ii) shall provide that (A) in the event of a
loss involving proceeds in excess of the Threshold Amount, the proceeds in
respect of such loss up to an
1
amount equal to the Debt Balance shall be payable to the Mortgagee, except
in the case of a loss with respect to an Engine installed on an airframe
other than the Airframe, in which case Owner (or any Permitted Lessee)
shall endeavor to arrange for any payment of insurance proceeds in respect
of such loss to be held for the account of the Mortgagee whether such
payment is made to Owner (or any Permitted Lessee) or any third party, it
being understood and agreed that in the case of any payment to Mortgagee
otherwise than in respect of an Event of Loss, the Mortgagee shall, upon
receipt of evidence satisfactory to it that the damage giving rise to such
payment shall have been repaired or that such payment shall then be
required to pay for repairs then being made, pay the amount of such payment
to Owner or its order, and (B) the entire amount of any loss involving
proceeds of the Threshold Amount or less or the amount of any proceeds of
any loss in excess of the Debt Balance shall be paid to Owner or its order
unless an Event of Default shall have occurred and be continuing and the
insurers have been notified thereof by the Mortgagee. In the case of a loss
with respect to an engine (other than an Engine) installed on the Airframe,
Mortgagee shall hold any payment to it of any insurance proceeds in respect
of such loss for the account of Owner or any other third party that is
entitled to receive such proceeds.
2. During any period that the Aircraft is on the ground and not
in operation, Owner may carry or cause to be carried, in lieu of the
insurance required by Section B.1 above, insurance otherwise conforming
with the provisions of said Section B.1 except that the scope of the risks
and the type of insurance shall be the same as from time to time applicable
to aircraft owned by Owner of the same type similarly on the ground and not
in operation, provided that Owner shall maintain insurance against risk of
loss or damage to the Aircraft in an amount equal to the Debt Balance
during such period that the Aircraft is on the ground and not in operation.
C. War-Risk, Hijacking and Allied Perils Insurance
If Owner (or any Permitted Lessee) shall at any time operate or
propose to operate the Aircraft, Airframe or any Engine (i) in any area of
recognized hostilities or (ii) on international routes and war-risk,
hijacking or allied perils insurance is maintained by Owner (or any
Permitted Lessee) with respect to other aircraft owned or operated by Owner
(or any Permitted Lessee) on such routes or in such areas, Owner shall
maintain or cause to be maintained war-risk, hijacking and allied perils
insurance of substantially the same type carried by similar United States
commercial air carriers operating the same or comparable models of aircraft
on similar routes or in such areas and in no event in an amount less than
the unpaid Original Amount.
D. General Provisions
Any policies of insurance carried in accordance with Sections A,
B and C, including any policies taken out in substitution or replacement
for such policies:
(i) shall name Mortgagee, each Note Holder, each Liquidity
Provider and the Policy Provider as an additional insured
(collectively, the "Additional Insureds"), as its interests may
appear;
2
(ii) shall apply worldwide and have no territorial restrictions
or limitations (except only in the case of war, hijacking and allied
perils insurance required under Section C, which shall apply to the
fullest extent available in the international insurance market);
(iii) shall provide that, in respect of the interests of the
Additional Insureds in such policies, the insurance shall not be
invalidated or impaired by any act or omission (including
misrepresentation and nondisclosure) by Owner (or any Permitted
Lessee) or any other Person (including, without limitation, use for
illegal purposes of the Aircraft or any Engine) and shall insure the
Additional Insureds regardless of any breach or violation of any
representation, warranty, declaration, term or condition contained in
such policies by Owner (or any Permitted Lessee);
(iv) shall provide that, if the insurers cancel such insurance
for any reason whatsoever, or if the same is allowed to lapse for
nonpayment of premium, or if any material change is made in the
insurance which adversely affects the interest of any of the
Additional Insureds, such cancellation, lapse or change shall not be
effective as to the Additional Insureds for 30 (seven days in the case
of war risk, hijacking and allied perils insurance) days after receipt
by the Additional Insureds of written notice by such insurers of such
cancellation, lapse or change, provided that if any notice period
specified above is not reasonably obtainable, such policies shall
provide for as long a period of prior notice as shall then be
reasonably obtainable;
(v) shall waive any rights of recourse, subrogation, setoff
(including for unpaid premiums), recoupment, counterclaim or other
deduction, whether by attachment or otherwise, against each Additional
Insured;
(vi) shall be primary without right of contribution from any
other insurance that may be available to any Additional Insured;
(vii) shall provide that all of the liability insurance
provisions thereof, except the limits of liability, shall operate in
all respects as if a separate policy had been issued covering each
party insured thereunder;
(ix) shall provide that none of the Additional Insureds shall be
liable for any insurance premium; and
(x) shall contain a 50/50% Clause per Lloyd's Aviation
Underwriters' Association Standard Policy Form AVS 103;
3
provided, that any such endorsements may be subject to any limitations
on endorsements generally prevailing in the airline insurance
marketplace at the time (e.g. AVN67B).
E. Reports and Certificates; Other Information
On or prior to the Closing Date and on or prior to each renewal
date of the insurance policies required hereunder, Owner will furnish or
cause to be furnished to Mortgagee insurance certificates describing in
reasonable detail the insurance maintained by Owner hereunder and a report,
signed by Owner's or Permitted Lessee's regular independent insurance
broker (the "Insurance Broker"), stating the opinion of such Insurance
Broker that (a) all premiums in connection with the insurance then due have
been paid and (b) such insurance complies with the terms of this Annex B.
To the extent such agreement is reasonably obtainable Owner will also cause
the Insurance Broker to agree to notify Mortgagee in writing of any default
in the payment of any premium and of any other act or omission on the part
of Owner of which it has knowledge and which might invalidate or render
unenforceable, in whole or in part, any insurance on the Aircraft or
Engines or cause the cancellation or termination of such insurance, and to
notify Mortgagee in writing at least 30 days (seven days in the case of
war-risk and allied perils coverage or such shorter period as may be
available in the international insurance market, as the case may be) prior
to the cancellation, lapse or material adverse change of any insurance
maintained pursuant to this Annex B.
F. Right to Pay Premiums
Each Additional Insured shall have the rights but not the
obligations of an additional named insured. No Additional Insured shall
have any obligation to pay any premium, commission, assessment or call due
on any such insurance (including reinsurance). Notwithstanding the
foregoing, in the event of cancellation of any required insurance due to
the nonpayment of premium, Mortgagee shall have the option, in its sole
discretion, to pay any such premium in respect of the Aircraft that is due
in respect of the coverage pursuant to this Trust Indenture and to maintain
such coverage, as Mortgagee may require, until the scheduled expiry date of
such insurance and, in such event, Owner shall, upon demand, reimburse
Mortgagee for amounts so paid by them.
4
G. Deductibles; Self-insurance
Owner may self-insure by way of deductible, premium adjustment or
franchise provisions or otherwise (including, with respect to insurance
maintained pursuant to Section B, insuring for a maximum amount which is
less than the Debt Balance) in the insurance covering the risks required to
be insured against pursuant to Section 4.06 and this Annex B under a
program applicable to all aircraft in Owner's fleet, but in no case shall
the aggregate amount of self- insurance in regard to Section 11 and this
Annex B exceed during any policy year, with respect to all of the aircraft
in Owner's fleet (including, without limitation, the Aircraft), the lesser
of (a) 50% of the largest replacement value of any single aircraft in
Owner's fleet and (b) 1-1/2% of the average aggregate insurable value
(during the preceding policy year) of all aircraft (including, without
limitation, the Aircraft) on which Owner carries insurance, unless an
insurance broker of national standing shall certify that the standard among
all other major U.S. airlines is a higher level of self-insurance, in which
case Owner may self-insure to such higher level. In addition, Owner (and
any Permitted Lessee) may self-insure to the extent of any applicable
deductible per aircraft that does not exceed industry standards for major
U.S. airlines.
5
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
TRUST INDENTURE AND MORTGAGE [NXXXAW] SUPPLEMENT
This TRUST INDENTURE AND MORTGAGE ATA 2000 SUPPLEMENT NO. 1,
dated ______________ ___, ____ (herein called this "Mortgage Supplement")
of AMERICAN TRANSAIR, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage, dated as of
______________ __, ____ (as amended and supplemented to the date hereof,
the "Trust Indenture") between the Owner and Wilmington Trust Company, as
Mortgagee (the "Mortgagee"), provides for the execution and delivery of a
supplement thereto substantially in the form hereof, which shall
particularly describe the Aircraft, and shall specifically mortgage such
Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture relates
to the Airframe and Engines described below, and a counterpart of the Trust
Indenture is attached hereto and made a part hereof and this Mortgage
Supplement, together with such counterpart of the Trust Indenture, is being
filed for recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Mortgage Supplement WITNESSETH that the
Owner hereby confirms that the Lien of the Trust Indenture on the
Collateral covers all of Owner's right, title and interest in and to the
following described property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
The Boeing Company
together with all of the Owner's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and
which are from time to time incorporated or installed in or attached to
said airframe.
1
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
together with all of Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to either of
such engines.
Together with all of Owner's right, title and interest in and to
(a) all Parts of whatever nature, which from time to time are included
within the definition of "Airframe" or "Engine", whether now owned or
hereafter acquired, including all substitutions, renewals and replacements
of and additions, improvements, accessions and accumulations to the
Airframe and Engines (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment excluded from
the definition of Parts) and (b) all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property unto
the Mortgagee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Mortgage
Indemnitees, except as provided in Section 2.14 and Article III of the
Trust Indenture without any preference, distinction or priority of any one
Equipment Note over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason
whatsoever, and for the uses and purposes and subject to the terms and
provisions set forth in the Trust Indenture.
This Mortgage Supplement shall be construed as supplemental to
the Trust Indenture and shall form a part thereof. The Trust Indenture is
each hereby incorporated by reference herein and is hereby ratified,
approved and confirmed.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft
referred to in this Mortgage Supplement has been delivered to the Owner and
is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
* * *
2
IN WITNESS WHEREOF, the Owner has caused this Mortgage Supplement
to be duly executed by one of its officers, thereunto duly authorized, on
the day and year first above written.
AMERICAN TRANS AIR, INC.
By:___________________________________
Name:
Title:
3
SCHEDULE I
Original Amount Interest Rate
Series G:
Series C:
4
Trust Indenture and Mortgage
Equipment Note Amortization
Percentage of Original
Payment Date Amount to be Paid
5
