Exhibit 4(f)(2)
INDENTURE AND SECURITY AGREEMENT
Dated as of September 24, 2002
between
AMERICAN AIRLINES, INC.,
and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Loan Trustee
One Boeing 757-223 Aircraft
U.S. Registration No. N604AA
DEFINITIONS
Section 1.01. Definitions.................................................................................... 4
Section 1.02. Other Definitional Provisions.................................................................. 4
ARTICLE II
THE EQUIPMENT NOTES
Section 2.01. Form of Equipment Notes........................................................................ 5
Section 2.02. Issuance and Terms of Equipment Notes.......................................................... 11
Section 2.03. Method of Payment.............................................................................. 13
Section 2.04. Withholding Taxes.............................................................................. 13
Section 2.05. Application of Payments........................................................................ 14
Section 2.06. Termination of Interest in Collateral.......................................................... 14
Section 2.07. Registration, Transfer and Exchange of Equipment Notes......................................... 15
Section 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes........................................... 16
Section 2.09. Payment of Expenses on Transfer; Cancellation.................................................. 16
Section 2.10. Mandatory Redemption of Equipment Notes........................................................ 16
Section 2.11. Voluntary Redemption of Equipment Notes........................................................ 17
Section 2.12. Redemptions; Notice of Redemptions; Repurchases................................................ 17
Section 2.13. Subordination.................................................................................. 18
Section 2.14. Certain Payments............................................................................... 19
Section 2.15. Repayment of Monies for Equipment Note Payments
Held by the Loan Trustee.............................................................. 21
Section 2.16. Directions by Subordination Agent.............................................................. 21
ARTICLE III
RECEIPT, DISTRIBUTION AND
APPLICATION OF INCOME FROM THE COLLATERAL
Section 3.01. Basic Distributions............................................................................ 21
Section 3.02. Event of Loss; Optional Redemption............................................................. 23
Section 3.03. Optional Redemption in connection with a Refunding............................................. 23
Section 3.04. Payments after Event of Default................................................................ 24
Section 3.05. Certain Payments............................................................................... 26
Section 3.06. Payments to the Company........................................................................ 27
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ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF
LOAN TRUSTEE
Section 4.01. Events of Default.............................................................................. 27
Section 4.02. Remedies....................................................................................... 29
Section 4.03. Remedies Cumulative............................................................................ 32
Section 4.04. Discontinuance of Proceedings.................................................................. 32
Section 4.05. Waiver of Past Defaults........................................................................ 32
Section 4.06. Noteholders May Not Bring Suit Except Under Certain Conditions................................. 33
ARTICLE V
DUTIES OF THE LOAN TRUSTEE
Section 5.01. Notice of Event of Default..................................................................... 33
Section 5.02. Action upon Instructions; Certain Rights and Limitations....................................... 34
Section 5.03. Indemnification................................................................................ 35
Section 5.04. No Duties Except as Specified in Indenture or Instructions..................................... 35
Section 5.05. No Action Except under Indenture or Instructions............................................... 35
Section 5.06. Investment of Amounts Held by the Loan Trustee................................................. 35
ARTICLE VI
THE LOAN TRUSTEE
Section 6.01. Acceptance of Trusts and Duties................................................................ 36
Section 6.02. Absence of Certain Duties...................................................................... 36
Section 6.03. No Representations or Warranties as to the Documents........................................... 37
Section 6.04. No Segregation of Monies; No Interest.......................................................... 37
Section 6.05. Reliance; Agents; Advice of Counsel............................................................ 37
Section 6.06. Instructions from Noteholders.................................................................. 37
ARTICLE VII
OPERATING COVENANTS OF THE
COMPANY
Section 7.01. Liens.......................................................................................... 38
Section 7.02. Possession, Operation and Use, Maintenance and Registration.................................... 39
Section 7.03. Inspection; Financial Information.............................................................. 45
Section 7.04. Replacement and Pooling of Parts; Alterations, Modifications and Additions;
Substitution of Engines............................................................... 46
Section 7.05. Loss, Destruction or Requisition............................................................... 48
Section 7.06. Insurance...................................................................................... 52
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ARTICLE VIII
SUCCESSOR AND ADDITIONAL
TRUSTEES
Section 8.01. Resignation or Removal; Appointment of Successor .............................................. 58
Section 8.02. Appointment of Additional and Separate Trustees................................................ 59
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.01. Amendments to this Indenture without Consent of Holders........................................ 61
Section 9.02. Amendments to this Indenture with Consent of Holders........................................... 62
Section 9.03. Amendments, Waivers, Etc. of the Participation Agreement....................................... 63
Section 9.04. Revocation and Effect of Consents.............................................................. 64
Section 9.05. Notation on or Exchange of Equipment Notes..................................................... 64
Section 9.06. Trustee Protected.............................................................................. 64
ARTICLE X
MISCELLANEOUS
Section 10.01. Termination of Indenture....................................................................... 64
Section 10.02. No Legal Title to Collateral in Noteholders.................................................... 66
Section 10.03. Sale of Aircraft by Loan Trustee is Binding.................................................... 66
Section 10.04. Indenture for Benefit of the Company, Loan Trustee and Noteholders............................. 67
Section 10.05. Notices........................................................................................ 67
Section 10.06. Severability................................................................................... 67
Section 10.07. No Oral Modification or Continuing Waivers..................................................... 67
Section 10.08. Successors and Assigns......................................................................... 67
Section 10.09. Headings....................................................................................... 68
Section 10.10. Normal Commercial Relations.................................................................... 68
Section 10.11. Voting by Noteholders.......................................................................... 68
Section 10.12. Section 1110................................................................................... 68
Section 10.13. The Company's Performance and Rights........................................................... 68
Section 10.14. Counterparts................................................................................... 68
Section 10.15. Governing Law.................................................................................. 68
Section 10.16. Confidential Information....................................................................... 69
Section 10.17. Submission to Jurisdiction..................................................................... 69
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Exhibit A - Form of Indenture Supplement
Exhibit B - List of Permitted Countries
Exhibit C - Aircraft Type Values for Section 7.06(b)
Schedule I - Description of Equipment Notes
Schedule II - Pass Through Trust Agreement and Pass Through Trust Supplements
Annex A - Definitions
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INDENTURE AND SECURITY AGREEMENT
This INDENTURE AND SECURITY AGREEMENT, dated as of September 24, 2002
is made by and between AMERICAN AIRLINES, INC., a Delaware corporation (together
with its successors and permitted assigns, the "Company"), and STATE STREET BANK
AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, as Loan Trustee hereunder (together with its permitted successors
hereunder, the "Loan Trustee").
W I T N E S S E T H:
WHEREAS, the parties desire by this Indenture (such term and other
capitalized terms used herein without definition being defined as provided in
Article I), among other things, to provide for (i) the issuance by the Company
of the Equipment Notes and (ii) the assignment, mortgage and pledge by the
Company to the Loan Trustee, as part of the Collateral hereunder, among other
things, of all of the Company's estate, right, title and interest in and to the
Aircraft, as security for, among other things, the Company's obligations to the
Loan Trustee, for the ratable benefit and security of the Noteholders, subject
to Section 2.13 and Article III;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Company and authenticated and delivered by the Loan Trustee
hereunder, the valid, binding and enforceable obligations of the Company; and
WHEREAS, all things necessary to make this Indenture a legal, valid and
binding obligation of the Company for the uses and purposes herein set forth, in
accordance with its terms, have been done and performed and have occurred;
GRANTING CLAUSE
NOW, THEREFORE, to secure the prompt and complete payment (whether at
stated maturity, by acceleration or otherwise) of principal of, interest on, and
Break Amount, if any, Prepayment Premium, if any, and Make-Whole Amount, if any,
with respect to, the Equipment Notes and all other amounts payable by the
Company under the Operative Documents and the performance and observance by the
Company of all the agreements and covenants to be performed or observed by the
Company for the benefit of the Noteholders and the Indenture Indemnitees
contained in the Operative Documents, and in consideration of the premises and
of the covenants contained in the Operative Documents, and for other good and
valuable consideration given by the Loan Trustee, the Noteholders and the
Indenture Indemnitees to the Company at or before the Closing Date, the receipt
of which is hereby acknowledged, the Company does hereby grant, bargain, sell,
convey, transfer, mortgage, assign, pledge and confirm unto the Loan Trustee and
its successors in trust and permitted assigns, for the security and benefit of
the Loan Trustee, the Noteholders and the Indenture Indemnitees, a first
priority security interest in, and mortgage lien on, all estate, right, title
and interest of the Company in, to and under, all and singular, the following
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described properties, rights, interests and privileges whether now owned or
hereafter acquired (hereinafter sometimes referred to as the "Collateral"):
(1) the Aircraft, including the Airframe and the Engines,
whether or not any such Engine may from time to time be installed on
the Airframe or any other airframe or any other aircraft, and any and
all Parts relating thereto, and, to the extent provided herein, all
substitutions and replacements of, and additions, improvements,
accessions and accumulations to, the Aircraft, including the Airframe,
the Engines and any and all Parts (in each case other than any
substitutions, replacements, additions, improvements, accessions and
accumulations that constitute items excluded from the definition of
Parts by clauses (b), (c) and (d) thereof) relating thereto (such
Airframe and Engines as more particularly described in the Indenture
Supplement executed and delivered with respect to the Aircraft on the
Closing Date or with respect to any substitutions or replacements
therefor), and together with all flight records, logs, manuals,
maintenance data and inspection, modification and overhaul records and
other documents at any time required to be maintained with respect to
the foregoing, in accordance with the rules and regulations of the FAA
if the Aircraft is registered under the laws of the United States or
the rules and regulations of the government of the country of registry
if the Aircraft is registered under the laws of a jurisdiction other
than the United States;
(2) the Warranty Rights, together with all rights, powers,
privileges, options and other benefits of the Company under the same;
(3) all requisition proceeds with respect to the Aircraft or
any Part thereof, and all insurance proceeds with respect to the
Aircraft or any Part thereof, but excluding all proceeds of, and rights
under, any insurance maintained by the Company and not required under
Section 7.06(b);
(4) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Loan
Trustee by or for the account of the Company pursuant to any term of
any Operative Document and held or required to be held by the Loan
Trustee hereunder or thereunder; 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, the Company shall have the right, to the exclusion of the Loan
Trustee, (i) to quiet enjoyment of the Aircraft, the Airframe, the Parts and the
Engines, and to possess, use, retain and control the Aircraft, the Airframe, the
Parts and the Engines and all revenues, income and profits derived therefrom and
(ii) with respect to the Warranty Rights, to exercise in the Company's name all
rights and powers of the Buyer (as defined in the Purchase Agreement) under the
Warranty Rights and to retain any recovery or benefit resulting from the
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enforcement of any warranty or indemnity or other obligation under the Warranty
Rights; provided, further, that notwithstanding the occurrence and continuation
of an Event of Default, the Loan Trustee shall not enter into any amendment or
modification of the Purchase Agreement that would alter the rights, benefits or
obligations of the Company thereunder;
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Loan Trustee, and its successors and permitted assigns, in trust for the ratable
benefit and security of the Noteholders and the Indenture Indemnitees, except as
otherwise provided in this Indenture, including Section 2.13 and Article III,
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 Indenture.
It is expressly agreed that notwithstanding anything herein to the
contrary, the Company shall remain liable under the Purchase Agreement to
perform all of its obligations thereunder, and, except to the extent expressly
provided in any Operative Document, none of the Loan Trustee, any Noteholders or
any Indenture Indemnitee shall be required or obligated in any manner to perform
or fulfill any obligations of the Company under or pursuant to any thereof, 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 amount that may have been assigned to it or to which it may be
entitled at any time or times.
Notwithstanding anything herein to the contrary (but without in any way
releasing the Company from any of its duties or obligations under the Purchase
Agreement), the Loan Trustee, the Noteholders and the Indenture Indemnitees
confirm for the benefit of the Manufacturer that in exercising any rights under
the Warranty Rights, or in making any claim with respect to the Aircraft or
other goods and services delivered or to be delivered pursuant to the Purchase
Agreement, the terms and conditions of the Purchase Agreement relating to the
Warranty Rights, including, without limitation, the warranty disclaimer
provisions for the benefit of the Manufacturer, shall apply to and be binding
upon the Loan Trustee, the Noteholders and the Indenture Indemnitees to the same
extent as the Company. The Company hereby directs the Manufacturer, so long as
an Event of Default shall have occurred and be continuing, to pay all amounts,
if any, payable to the Company pursuant to the Warranty Rights directly to the
Loan Trustee to be held and applied as provided herein. Nothing contained herein
shall subject the Manufacturer to any liability to which it would not otherwise
be subject under the Purchase Agreement or modify in any respect the contract
rights of the Manufacturer thereunder except as provided in the Manufacturer's
Consent.
The Company does hereby constitute the Loan Trustee the true and lawful
attorney of the Company (which appointment is coupled with an interest) with
full power (in the name of the Company or otherwise) to ask, 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 to the
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Company under or arising out of the Purchase Agreement (to the extent assigned
hereby), 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 Loan Trustee may deem to be necessary or advisable in the
premises; provided that the Loan Trustee shall not exercise any such rights
except during the continuance of an Event of Default. The Company agrees that
promptly upon receipt thereof, to the extent required by the Operative
Documents, it will transfer to the Loan Trustee any and all monies from time to
time received by the Company constituting part of the Collateral, for
distribution by the Loan Trustee pursuant to this Indenture.
The Company does hereby warrant and represent that it has not sold,
assigned or pledged, and hereby covenants and agrees that it will not sell,
assign or pledge, so long as this Indenture shall remain in effect and the Lien
hereof shall not have been released pursuant to the provisions hereof, any of
its estate, right, title or interest hereby assigned, to any Person other than
the Loan Trustee, except as otherwise provided in or permitted by any Operative
Document.
The Company agrees that at any time and from time to time, upon the
written request of the Loan Trustee, the Company shall promptly and duly execute
and deliver or cause to be duly executed and delivered any and all such further
instruments and documents as the Loan Trustee 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 Loan Trustee the
full benefit of the assignment hereunder and of the rights and powers herein
granted, provided that any instrument or other document so executed by the
Company will not expand any obligations or limit any rights of the Company in
respect of the transactions contemplated by the Operative Documents.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this Indenture, unless
the context otherwise requires, capitalized terms used but not defined herein
shall have the respective meanings set forth or incorporated by reference in
Annex A.
Section 1.02. Other Definitional Provisions.
(a) The definitions stated herein and in Annex A apply equally to both
the singular and the plural forms of the terms defined.
(b) All references in this Indenture to designated "Articles",
"Sections",
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"Subsections", "Schedules", "Exhibits", "Annexes" and other subdivisions are to
the designated Article, Section, Subsection, Schedule, Exhibit, Annex or other
subdivision of this Indenture, unless otherwise specifically stated.
(c) The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section, Subsection, Schedule, Exhibit, Annex or other subdivision.
(d) Unless the context otherwise, requires, whenever the words
"including", "include" or "includes" are used herein, it shall be deemed to be
followed by the phrase "without limitation".
(e) All references in this Indenture to a "government" are to such
government and any instrumentality or agency thereof.
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 OR OTHER JURISDICTION. ACCORDINGLY, THIS EQUIPMENT NOTE
MAY NOT BE OFFERED FOR SALE OR SOLD UNLESS EITHER REGISTERED UNDER THE
ACT AND SUCH APPLICABLE STATE OR OTHER LAWS OR EXEMPTIONS FROM SUCH
REGISTRATION REQUIREMENTS ARE AVAILABLE.
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AMERICAN AIRLINES, INC.
SERIES 2002 [___] EQUIPMENT NOTE DUE [___]
ISSUED IN CONNECTION WITH THE BOEING [______] AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N[_____]AN
No.____ Date: [______,__] $________________
[DEBT RATE MATURITY DATE
[____]](1) [___________,_____]
AMERICAN AIRLINES, INC. (together with its successors and
permitted assigns, the "Company") hereby promises to pay to
___________, or the registered assignee thereof, the principal amount
of ________________ Dollars ($_________) [on __________](2) [in
installments on the Payment Dates set forth in Schedule I hereto, each
such installment to be in an amount computed by multiplying the
original principal amount of this Equipment Note by the percentage set
forth in Schedule I hereto opposite the Payment Date on which such
installment is due,](3) and to pay, on each Payment Date, interest in
arrears on the principal amount remaining unpaid from time to time from
[______](4) or from the most recent date to which interest has been
paid or duly provided for until paid in full at a rate per annum [for
each Interest Period equal to the Debt Rate for the Series G Equipment
Notes for such Interest Period (calculated on the basis of a year of
360 days and actual days elapsed during the period for which such
amount accrues).](5) [(calculated on the basis of a year of 360 days
comprised of twelve 30-day months) equal to the Debt Rate shown
above.](6) [Interest shall be payable with respect to the first but not
the last day of each Interest Period.](5) [Notwithstanding the
foregoing, the final payment made on this Equipment Note shall be in an
amount sufficient to discharge in full the unpaid principal amount and
all accrued and unpaid interest on, and any other amounts due under,
this Equipment Note.](3) Notwithstanding anything to the contrary
contained herein, if any date on which a payment under this Equipment
Note becomes due and payable is not a Business Day, then such payment
shall not be made on such scheduled date but shall be made on the next
succeeding Business Day [and such extension of time shall be included
in the computation of interest
(1) To be inserted in the case of a Series C or Series D Equipment Note.
(2) To be inserted in Series C Equipment Notes.
(3) To be inserted in Series G and Series D Equipment Notes.
(4) Insert the Closing Date for the Series G, Original Series C and
Original Series D Equipment Notes. Insert the closing date of the
applicable Refunding for New Series C, New Series D, American New
Series D and Second New Series D Equipment Notes.
(5) To be inserted in the case of a Series G Equipment Note.
(6) To be inserted in the case of a Series C or Series D Equipment Note.
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payable.](7) [and if such payment is made on such next succeeding
Business Day, no interest shall accrue on the amount of such payment
from and after such scheduled date.](8)
For purposes hereof, the term "Indenture" means the Indenture
and Security Agreement, dated as of September __, 2002, between the
Company and State Street Bank and Trust Company of Connecticut,
National Association, as Loan Trustee (the "Loan Trustee"), as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms. All capitalized terms used in this Equipment
Note and not defined herein, unless the context otherwise requires,
shall have the respective meanings set forth or incorporated by
reference, and shall be construed and interpreted in the manner
described, in the Indenture.
This Equipment Note shall bear interest, payable on demand, at
the Past Due Rate (and not the Debt Rate) [(calculated on the basis of
a year of 360 days and actual days elapsed during the period for which
such amount accrues)](7) [(calculated on the basis of a year of 360
days comprised of twelve 30-day months)](8) on any principal amount
and (to the extent permitted by applicable law) [Break Amount, if any,
Prepayment Premium, if any,](7) [Make-Whole Amount, if any,](8)
interest and any other amounts payable hereunder 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 in the
manner provided herein or in the Indenture when due (whether at stated
maturity, by acceleration or otherwise).
There shall be maintained an Equipment Note Register for the
purpose of registering transfers and exchanges of Equipment Notes at
the Corporate Trust Office of the Loan Trustee, or at the office of any
successor trustee, in the manner provided in Section 2.07 of the
Indenture.
The principal amount and interest and other amounts due
hereunder shall be payable in Dollars in immediately available funds at
the Corporate Trust Office of the Loan Trustee, or as otherwise
provided in the Indenture. The Company shall not have any
responsibility for the distribution of any such payment to the
Noteholder of this Equipment Note. 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 to the Loan Trustee for cancellation.
The holder hereof, by its acceptance of this Equipment Note,
agrees that, except as provided in the Indenture, including the
subordination provisions referred to below, each payment of an
installment of principal amount, interest [, Break Amount, if any, and
(7) To be inserted in the case of a Series G Equipment Note.
(8) To be inserted in the case of a Series C or Series D Equipment Note.
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Prepayment Premium, if any](9) [and Make-Whole Amount, if any](10),
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 principal amount, and, to the extent permitted by law, any
overdue Break Amount, if any, overdue Prepayment Premium, if any,
overdue interest and other overdue amounts hereunder) to the date of
such payment](9) [to the payment of accrued interest on this Equipment
Note (as well as any interest on any overdue principal amount, and, to
the extent permitted by law, any overdue Make-Whole Amount, if any, any
overdue interest and other overdue amounts hereunder) to the date of
such payment](10); second, [to the payment of Break Amount, if any, and
Prepayment Premium, if any,](9) [to the payment of Make-Whole Amount,
if any]10; third, to the payment of the principal amount of this
Equipment Note (or portion hereof) then due, and any other amount then
due hereunder or under the Indenture with respect to this Equipment
Note; and fourth, the balance remaining thereafter, if any, to the
payment of the principal amount of this Equipment Note applied to any
scheduled installments in the inverse order of their normal maturity
(provided that this Equipment Note shall not be subject to redemption
except as provided in Sections 2.10, 2.11 and 2.12 of the Indenture).
This Equipment Note is one of the Equipment Notes referred to
in the Indenture which have been or are to be issued by the Company
pursuant to the terms of the Indenture. The Collateral is held by the
Loan Trustee as security, in part, for the Equipment Notes. The
provisions of this Equipment Note are subject to the Indenture and the
Participation Agreement. Reference is hereby made to the 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 Indenture, to all of which terms
and conditions in the Indenture and the Participation Agreement each
holder hereof agrees by its acceptance of this Equipment Note.
As provided in the Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for
a like aggregate principal amount of Equipment Notes of the same Series
of different authorized denominations, as requested by the holder
surrendering the same. Prior to the due presentment for registration of
transfer of this Equipment Note, the Company and the Loan Trustee shall
deem and treat the Person in whose name this Equipment Note is
registered on the Equipment Note Register as the absolute owner and
holder hereof for the purpose of receiving all amounts payable with
respect to this Equipment Note and for all purposes, and neither of the
Company nor the Loan Trustee shall be affected by notice to the
contrary.
This Equipment Note is subject to redemption as provided in
Sections 2.10, 2.11 and
(9) To be inserted in the case of a Series G Equipment Note.
(10) To be inserted in the case of a Series C or Series D Equipment Note.
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2.12 of the Indenture but not otherwise.
The indebtedness evidenced by this Equipment Note [shall rank
in right of payment equally with all other Series G Equipment Notes and
shall rank senior in right of payment to Series C Equipment Notes and
Series D Equipment Notes.](11) [is, to the extent and in the manner
provided in the Indenture, subordinate and subject in right of payment
to the prior payment in full of the Secured Obligations (as defined in
the Indenture) in respect of](12) [Series G Equipment Notes](13)
[Series G Equipment Notes and Series C Equipment Notes](14) [Series G
Equipment Notes, Series C Equipment Notes and Series D Equipment
Notes](15) and this Equipment Note is issued subject to such
provisions. The Noteholder of this Equipment Note, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Loan Trustee on such Noteholder's behalf to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Loan
Trustee such Noteholder's attorney-in-fact for such purpose.
[Without limiting the foregoing, the](16) [The](17) Noteholder
of this Equipment Note, by accepting the same, agrees that if such
Noteholder, in its capacity as a Noteholder, shall receive any payment
or distribution on any Secured Obligation in respect of this Equipment
Note that it is not entitled to receive under Section 2.13 or Article
III of the Indenture, it shall hold any amount so received in trust for
the Loan Trustee and forthwith turn over such amount to the Loan
Trustee in the form received to be applied as provided in Article III
of the Indenture.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Loan Trustee by manual signature, this
Equipment Note shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, the Company has caused this Equipment Note
to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
(11) To be inserted in the case of a Series G Equipment Note.
(12) To be inserted in the case of a Series C, Series D or Series E
Equipment Note.
(13) To be inserted in the case of a Series C Equipment Note.
(14) To be inserted in the case of a Series D Equipment Note.
(15) To be inserted in the case of a Series E Equipment Note.
(16) To be inserted in the case of a Series C, Series D, or Series E
Equipment Note.
(17) To be inserted in the case of a Series G Equipment Note.
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AMERICAN AIRLINES, INC.
By:..................................................
Name:
Title:
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the within-mentioned
Indenture.
[----------------------------------]
not in its individual capacity but solely as
Loan Trustee
By: .......................................
Name:
Title:
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SCHEDULE I(18)
EQUIPMENT NOTE AMORTIZATION
Percentage of Original
Principal Amount
Payment Date to be Paid
------------ ----------------------
[SEE "EQUIPMENT NOTES AMORTIZATION" ON SCHEDULE I TO
INDENTURE WHICH IS TO BE 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 (a)
separate series consisting of Series G Equipment Notes, Series C Equipment
Notes, Series D Equipment Notes and, if issued, Series E Equipment Notes and (b)
the maturities and principal amounts and shall bear interest at the applicable
Debt Rates specified in Schedule I (or, in the case of a New Series C Equipment
Note, a New Series D Equipment Note or a Second New Series D Equipment Note, as
specified in the applicable Indenture Refunding Amendment or, in the case of a
Series E Equipment Note issued after the Closing Date, as specified in an
amendment to this Indenture). On the Closing Date, each Series G Equipment Note,
Series C Equipment Note and Series D Equipment Note shall be issued to the
Subordination Agent on behalf of each of the Pass Through Trustees for the Pass
Through Trusts created under the Pass Through Trust Agreements referred to in
Schedule II. Any New Series C Equipment Notes, New Series D Equipment Notes and
Second New Series D Equipment Notes issued as contemplated by Section 2.11(b)
shall be issued to the Subordination Agent on the closing date of the applicable
Refunding. Subject to complying with the conditions set forth in Section 6.02(g)
of the Participation Agreement, the Company shall have the option to issue
Series E Equipment Notes at or after the Closing Date. 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, in the case of the Series G
Equipment Notes, at the Debt Rate for each Interest Period for such Series, and,
in the case of Series C Equipment Notes and Series D Equipment Notes, at the
Debt Rate specified for such Series (in the case of the Series G Equipment
Notes, calculated on the basis of a year of 360 days and actual days elapsed
during the period for which such amount accrues, and in the case of the Series C
---------------
18 To be inserted in installment Equipment Notes.
11
Equipment Notes and the Series D Equipment Notes, calculated on the basis of a
year of 360 days comprised of twelve 30-day months), payable in arrears on each
Payment Date on the unpaid principal amount thereof from time to time
outstanding until such principal amount is paid in full, as further provided in
the form of Equipment Note set forth in Section 2.01. Interest shall be payable
with respect to the first but not the last day of each Interest Period for the
Series G Equipment Notes. The principal amount of each Series G Equipment Note
and Series D Equipment Note shall be payable in installments on the Payment
Dates set forth in Schedule I to such Equipment Note, each such installment to
be in an amount computed by multiplying the original principal amount of such
Equipment Note by the corresponding percentage set forth in Schedule I hereto
applicable to such Series, the applicable portion of which shall be attached as
Schedule I to such Equipment Note, opposite the Payment Date on which such
installment is due. The principal amount of each Series C Equipment Note shall
be due in a single payment on September 23, 2007. The principal amount of each
New Series C Equipment Note, New Series D Equipment Note and Second New Series D
Equipment Note shall be payable as specified in the applicable Indenture
Refunding Amendment. Each Series E Equipment Note shall be payable in
installments or in a single payment as set forth in an amendment to this
Indenture, and if payable in installments, such installments shall be calculated
as set forth in the third preceding sentence. Notwithstanding the foregoing, the
final payment made under each Series G Equipment Note, Series C Equipment Note
and Series D Equipment Note shall be in an amount sufficient to discharge in
full the unpaid principal amount and all accrued and unpaid interest on, and any
other amounts due under, such Equipment Note. Each Equipment Note shall bear
interest, payable on demand, at the Past Due Rate (and not at the Debt Rate) (in
the case of the Series G Equipment Notes , calculated on the basis of a year of
360 days and actual days elapsed during the period for which such amount
accrues, and in the case of the Series C Equipment Notes and the Series D
Equipment Notes calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any principal amount and (to the extent permitted by
applicable law), Break Amount, if any, Prepayment Premium, if any, Make Whole
Amount, if any, 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 under an Equipment Note if
not paid in the manner provided therein or in this Indenture when due (whether
at stated maturity, by acceleration or otherwise). Notwithstanding anything to
the contrary contained herein, if any date on which a payment hereunder or under
any Equipment Note becomes due and payable is not a Business Day, then such
payment shall not be made on such scheduled date but shall be made on the next
succeeding Business Day, and in the case of a Series G Equipment Note, such
extension of time shall be included in the computation of interest payable, and
in the case of the Series C Equipment Notes and the Series D Equipment Notes, if
such payment is made on such next succeeding Business Day, no interest shall
accrue on the amount of such payment from and after such scheduled date.
The Equipment Notes shall be executed on behalf of the Company by the
manual or facsimile signature of one of its authorized officers. Equipment Notes
bearing the signatures of individuals who were at the time of execution the
proper officers of the Company shall bind the
12
Company, 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. No Equipment Note shall be secured by or entitled to any benefit under
this Indenture or be valid or obligatory for any purposes unless there appears
on such Equipment Note a certificate of authentication in the form provided
herein executed by the Loan Trustee by the manual signature of one of its
authorized officers, and such certificate upon any Equipment Notes shall be
conclusive evidence, and the only evidence, that such Equipment Note has been
duly authenticated and delivered hereunder.
Section 2.03. Method of Payment. The principal amount of, interest on,
Break Amount, if any, Prepayment Premium, if any, Make-Whole Amount, if any,
and, except to the extent expressly provided herein, all other amounts due to
any Noteholder under each Equipment Note or otherwise payable hereunder shall be
payable by the Company in Dollars by wire transfer of immediately available
funds not later than 10:00 a.m. (New York City time) on the due date of payment
to the Loan Trustee at the Corporate Trust Office for distribution among the
Noteholders in the manner provided herein. The Company shall not have any
responsibility for the distribution of such payment to any Noteholder.
Notwithstanding the foregoing or any provision in any Equipment Note to the
contrary, the Loan Trustee will use reasonable efforts to pay or cause to be
paid, if so directed in writing by any Noteholder (with a copy to the Company),
all amounts paid by the Company hereunder and under such Noteholder's Equipment
Note or Equipment Notes to such Noteholder or a nominee therefor (including all
amounts distributed pursuant to Article III) by transferring, or causing to be
transferred, by wire transfer of immediately available funds in Dollars, prior
to 12:00 p.m. (New York City time) on the due date of payment, to an account
maintained by such Noteholder with a bank located in the continental United
States the amount to be distributed to such Noteholder, for credit to the
account of such Noteholder maintained at such bank; provided that, in the event
the Equipment Notes are not held by the Subordination Agent on behalf of the
Pass Through Trustees, the Loan Trustee may at its option pay such amounts by
check mailed to the Noteholder's address as it appears on the Equipment Note
Register. If, after its receipt of funds at the place and prior to the time
specified above in the immediately preceding sentence, the Loan Trustee shall
fail (other than as a result of a failure of the Noteholder to provide it with
wire transfer instructions) to make any such payment required to be paid by wire
transfer as provided in the immediately preceding sentence on the Business Day
it receives such funds, the Loan Trustee, in its individual capacity and not as
trustee, agrees to compensate such Noteholders for loss of use of funds at the
Federal Funds Rate until such payment is made and the Loan Trustee shall be
entitled to any interest earned on such funds until such payment is made. Any
payment made hereunder shall be made without any presentment or surrender of any
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 Loan Trustee for
cancellation. Notwithstanding any other provision of this Indenture to the
contrary, the Loan Trustee shall not be required to make, or cause to be made,
wire transfers as aforesaid prior to the first Business Day on which it is
practicable for the Loan Trustee to do so in view of the time of day when the
funds to be so transferred were received by it if such funds
13
were received after 1:00 p.m. (New York City time) at the place of payment.
Section 2.04. Withholding Taxes. The Loan Trustee shall exclude and
withhold at the appropriate rate from each payment of principal amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or under
each Equipment Note (which exclusion and withholding shall constitute payment of
such amounts payable hereunder or in respect of such Equipment Notes, as
applicable) any and all withholding taxes applicable thereto as required by law.
The Loan Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future 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 (which withholding shall
constitute payment of such amounts payable hereunder or in respect of such
Equipment Notes, as applicable) and timely pay the same to the appropriate
authority in the name of and on behalf of the Noteholders, that it will file any
necessary withholding tax returns or statements when due, and that as promptly
as possible after the payment thereof it will deliver to each Noteholder (with a
copy to the Company) appropriate documentation showing the payment thereof,
together with such additional documentary evidence as any such Noteholder may
reasonably request from time to time. The Loan Trustee agrees to file any other
information reports as it may be required to file under United States law.
Section 2.05. Application of Payments. Subject always to Section 2.13
and except as otherwise provided in Article III, in the case of each Equipment
Note, each payment of an installment of principal amount, Break Amount, if any,
Prepayment Premium, if any, Make-Whole Amount, if any, and interest or other
amounts due thereon shall be applied:
first, to the payment of accrued interest on such Equipment
Note (as well as any interest on any overdue principal amount and (to
the extent permitted by law) any overdue Break Amount, any overdue
Prepayment Premium, any overdue Make-Whole Amount, any overdue interest
and any other overdue amounts thereunder) to the date of such payment;
second, to the payment of any Break Amount, if any, Prepayment
Premium, if any, or Make-Whole Amount, if any, with respect to such
Equipment Note;
third, to the payment of principal amount of such Equipment
Note (or portion thereof) then due and any other amount due hereunder
with respect to such Equipment Note; and
fourth, the balance, if any, remaining thereafter, to the
payment of the principal 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).
Section 2.06. Termination of Interest in Collateral. No Noteholder or
Indenture
14
Indemnitee shall, as such, have any further interest in, or other right with
respect to, the Collateral when and if the principal amount of, Break Amount, if
any, Prepayment Premium, if any, Make-Whole Amount, if any, and interest
(including interest on any overdue amounts) on and all other amounts due under
all Equipment Notes held by such Noteholder and all other sums then payable to
such Noteholder or Indenture Indemnitee, as the case may be, hereunder and under
the Participation Agreement and the other Operative Documents by the Company
(collectively, "Secured Obligations") shall have been paid in full.
Section 2.07. Registration, Transfer and Exchange of Equipment Notes.
The Loan Trustee shall keep a register or registers (the "Equipment Note
Register") in which the Loan Trustee 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 Loan Trustee. The Loan Trustee 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 or transfer such Equipment Note shall surrender such Equipment Note to
the Loan Trustee at the Corporate Trust Office, together with a written request
from the registered holder thereof for the issuance of a new Equipment Note of
the same Series, 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 and subject to satisfaction of Section 2.09, the
Company shall execute, and the Loan Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Equipment
Notes of a like aggregate principal amount and of the same Series. At the option
of the Noteholder, Equipment Notes may be exchanged for other Equipment Notes of
the same Series of any authorized denominations of a like aggregate principal
amount, upon surrender of the Equipment Notes to be exchanged to the Loan
Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so
surrendered for exchange, the Company shall execute, and the Loan Trustee shall
authenticate and deliver, the Equipment Notes which the Noteholder 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 or otherwise under this Indenture) shall be
the valid obligations of the Company evidencing the same respective obligations,
and entitled to the same security and benefits under this Indenture, as the
Equipment Notes surrendered upon such registration of transfer or exchange.
Every Equipment Note presented or surrendered for registration of transfer,
shall be duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Loan Trustee, duly executed by the Noteholder or such
Noteholder's attorney duly authorized in writing, and the Loan Trustee shall
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act of 1933, as amended, and the securities laws of any
applicable state or jurisdiction. The Loan Trustee shall make a notation on each
new Equipment Note of the amount of all payments of principal 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. Principal,
15
interest and all other amounts shall be deemed to have been paid on such new
Equipment Note to the date on which such amounts shall have been paid on such
old Equipment Note. The Company shall not be required to exchange any
surrendered Equipment Notes as provided above (a) during the ten-day period
preceding the due date of any payment on such Equipment Note or (b) that has
been called for redemption. The Company and the Loan Trustee shall in all cases
deem and treat the Person in whose name any Equipment Note shall have been
issued and registered on the Equipment Note Register as the absolute owner and
Noteholder 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 neither the Company nor the Loan Trustee shall be affected by any notice to
the contrary. The Loan Trustee will promptly notify the Company 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 the Operative Documents applicable to Noteholders, and shall be deemed to
have represented, warranted and covenanted to the parties to the Participation
Agreement as to the matters represented, warranted and covenanted by the
Noteholders, including the Pass Through Trustees, in the Participation
Agreement. Subject to compliance by the Noteholder and its transferee (if any)
of the requirements set forth in this Section 2.07 and in Section 2.09, the Loan
Trustee and the Company 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 becomes mutilated, destroyed, lost or stolen, the Company
shall, upon the written request of the holder of such Equipment Note and subject
to satisfaction of this Section 2.08 and of Section 2.09, execute and the Loan
Trustee shall authenticate and deliver in replacement thereof a new Equipment
Note of the same Series, payable in the same principal 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 Loan Trustee, and a photocopy thereof shall be furnished to
the Company. If the Equipment Note being replaced has been destroyed, lost or
stolen, the holder of such Equipment Note shall furnish to the Company and the
Loan Trustee such security or indemnity as may be required by them to save the
Company and the Loan Trustee harmless and evidence satisfactory to the Company
and the Loan Trustee of the destruction, loss or theft of such Equipment Note
and of the ownership thereof.
Section 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Noteholder for any
registration of transfer or exchange of Equipment Notes, but the Loan Trustee,
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 Loan Trustee shall cancel all Equipment Notes surrendered for
replacement,
16
redemption, transfer, exchange, payment or cancellation and shall destroy the
canceled Equipment Notes.
Section 2.10. Mandatory Redemption of Equipment Notes. The Company
shall redeem the Equipment Notes in whole in connection with an Event of Loss in
respect of the Airframe or the Airframe and the Engines installed thereon
(unless the Company shall have performed the option set forth in Section
7.05(a)(i) with respect thereto) on or before the Loss Payment Date at a
redemption price equal to 100% of the unpaid principal amount thereof, together
with all accrued and unpaid interest thereon to (but excluding) the date of
redemption, and in the case of Series G Equipment Notes, Break Amount, if any,
but without any Prepayment Premium or Make-Whole Amount.
Section 2.11. Voluntary Redemption of Equipment Notes.
(a) All of the Equipment Notes of any Series may be redeemed in whole
by the Company upon at least 20 days' revocable prior written notice to the Loan
Trustee at a redemption price equal to 100% of the unpaid principal amount of
the Equipment Notes being redeemed, together with accrued interest thereon to
(but excluding) the date of redemption, in the case of the Series G Equipment
Notes, Break Amount, if any, and Prepayment Premium, if any, and in the case of
the Series C and Series D Equipment Notes, Make-Whole Amount, if any, and all
other amounts payable hereunder or under the Participation Agreement to the
Noteholders; provided, however, that, except in connection with a Refunding as
referred to in paragraph (b) below, the Series C Equipment Notes may not be
redeemed unless the Series G Equipment Notes have been redeemed, and the Series
D Equipment Notes may not be redeemed unless the Series G Equipment Notes and
Series C Equipment Notes have been redeemed. Any notice shall become irrevocable
three days before the redemption date if not previously revoked.
(b) In connection with a Refunding as provided in Exhibit A to the
Intercreditor Agreement, (i) all, but not less than all, of the Original Series
C Equipment Notes and the Original Series D Equipment Notes, (ii) all, but not
less than all, of the Original Series C Equipment Notes, (iii) if all the
Original Series C Equipment Notes were redeemed in a prior Refunding, all of the
Original Series D Equipment Notes, and (iv) all, but not less than all, of the
American New Series D Equipment Notes, may be redeemed in whole by the Company
without premium upon at least 2 days revocable prior written notice to the Loan
Trustee at a redemption price equal to 100% of the unpaid principal amount of
the Equipment Notes being redeemed, together with accrued interest thereon to
(but excluding) the date of redemption and all other amounts payable hereunder
or under the Participation Agreement to the applicable Noteholders. All
redemptions pursuant to this Section 2.11(b) shall be subject to the Company
complying with the conditions set forth on Exhibit A to the Intercreditor
Agreement, and the Company shall deliver to the Trustee a certificate of a
Responsible Officer of the Company that all such conditions have been complied
with prior to or on the redemption date. The Loan Trustee agrees to cooperate
with the Company at the Company's reasonable request to carry out any Refunding
on the terms and conditions specified in Exhibit A to the Intercreditor
Agreement.
17
Section 2.12. Redemptions; Notice of Redemptions; Repurchases.
(a) No redemption of any Equipment Note may be made except to the
extent and in the manner expressly permitted by this Indenture.
(b) Notice of redemption pursuant to Section 2.10 or Section 2.11(a)
shall be given by the Loan Trustee by first-class mail, postage prepaid, mailed
not less than 15 nor more than 60 days prior to the applicable redemption date,
to each Noteholder at such Noteholder's address appearing in the Equipment Note
Register. All such 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 Company (or any person on
behalf of the Company) shall, to the extent an amount equal to the redemption
price for the Equipment Notes to be redeemed on the redemption date shall not
then be held in the Collateral, deposit or cause to be deposited with the Loan
Trustee by 11:00 a.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 as aforesaid (and, if
applicable, not revoked as permitted by Section 2.11(a)) (and, in case of a
redemption pursuant to Section 2.11(b), the conditions set forth in Exhibit A to
the Intercreditor Agreement having been satisfied), the Equipment Notes to be
redeemed shall, on the redemption date, become due and payable at the Corporate
Trust Office of the Loan Trustee, and from and after such redemption date
(unless there shall be a default in the deposit of the redemption price pursuant
to Section 2.12(c)) 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.
(e) At such time as no Pass Through Certificates are outstanding, the
Company may at any time repurchase any of the Equipment Notes at any price in
the open market and may hold, resell or surrender such Equipment Notes to the
Loan Trustee for cancellation.
Section 2.13. Subordination.
(a) The indebtedness evidenced by the Series C Equipment Notes is, to
the extent and in the manner provided in this Indenture, subordinate and subject
in right of payment to the prior payment in full of the Secured Obligations in
respect of the Series G Equipment Notes, and the Series C Equipment Notes are
issued subject to such provisions. The indebtedness evidenced by the Series D
Equipment Notes is, to the extent and in the manner provided in this Indenture,
subordinate and subject in right of payment to the prior payment in full of the
Secured
18
Obligations in respect of the Series G Equipment Notes and the Series C
Equipment Notes, and the Series D Equipment Notes are issued subject to such
provisions. The indebtedness evidenced by the Series E Equipment Notes, if
issued, shall be, to the extent and in the manner provided in this Indenture,
subordinate and subject in right of payment to the prior payment in full of the
Secured Obligations in respect of the Series G Equipment Notes, the Series C
Equipment Notes and the Series D Equipment Notes, and the Series E Equipment
Notes, if issued, shall be issued subject to such provisions. By acceptance of
its Equipment Notes of any Series, each Noteholder of such Series (a) agrees to
and shall be bound by such provisions, (b) authorizes and directs the Loan
Trustee on such Noteholder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Indenture and
(c) appoints the Loan Trustee as such Noteholder's attorney-in-fact for such
purpose.
(b) The Company, the Loan Trustee and, by acceptance of its Equipment
Notes of any Series, each Noteholder of such Series, hereby agree that no
payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Noteholder of such Series, including any payment or
distribution of cash, property or securities after the occurrence of any of the
events referred to in Section 4.01(f) or after the commencement of any
proceedings of the type referred to in Sections 4.01(g), (h) or (i), except as
expressly provided in Article III.
(c) By the acceptance of its Equipment Notes of any Series, each
Noteholder of such Series agrees that if such Noteholder, in its capacity as a
Noteholder, shall receive any payment or distribution on any Secured Obligations
in respect of such Series that 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
Loan Trustee and forthwith turn over such amount to the Loan Trustee in the form
received to be applied as provided in Article III.
Section 2.14. Certain Payments. The Company agrees to pay to the Loan
Trustee for distribution in accordance with Section 3.05:
(a) an amount or amounts equal to the fees payable to the
Primary Liquidity Provider under Section 2.03 of each Primary Liquidity
Facility and the related Fee Letter (as defined in the Intercreditor
Agreement), multiplied by a fraction, the numerator of which shall be
the sum of the then outstanding aggregate principal amount of the
Series G Equipment Notes and Series C Equipment Notes and the
denominator of which shall be the sum of the then outstanding aggregate
principal amount of all "Series G Equipment Notes" and "Series C
Equipment Notes" issued under each of the "Indentures" (in each case as
defined in the Intercreditor Agreement);
(b) the fees, expenses and disbursements (including
indemnities) owed to the Policy Provider under the Policy Provider
Agreement, multiplied by a fraction, the numerator of which shall be
the sum of the then outstanding aggregate principal amount of the
Series G Equipment Notes , and the denominator of which shall be the
sum of the outstanding aggregate principal amount of all "Series G
Equipment Notes" issued under
19
each of the "Indentures" (in each case as defined in the Intercreditor
Agreement);
(c) the amount equal to interest on any Downgrade Advance
(other than any Applied Downgrade Advance) payable under Section 3.07
of each Primary Liquidity Facility minus Investment Earnings from such
Downgrade Advance, multiplied by the fraction specified in the
foregoing clause (a);
(d) the amount equal to interest on any Non-Extension Advance
(other than any Applied Non-Extension Advance) payable under Section
3.07 of each Primary Liquidity Facility minus Investment Earnings from
such Non-Extension Advance, multiplied by the fraction specified in the
foregoing clause (a);
(e) if any payment default shall have occurred and be
continuing with respect to interest on any Series G Equipment Note or
Series C Equipment Note, (x) the excess, if any, of (1) the amount
equal to the sum of interest on any Unpaid Advance or Applied Provider
Advance payable under Section 3.07 of each Primary Liquidity Facility
plus any other amounts payable in respect of such Unpaid Advance or
Applied Provider Advance under Section 3.01, 3.03 or 3.09 of the
Primary Liquidity Facility under which such Unpaid Advance or Applied
Provider Advance was made over (2) the sum of Investment Earnings from
any Final Advance plus any amount of interest at the Past Due Rate
actually payable (whether or not in fact paid) by the Company in
respect of the overdue scheduled interest on the Equipment Notes of the
applicable Series corresponding to the Class of Pass Through
Certificates in respect of which such Unpaid Advance or Applied
Provider Advance was made, multiplied by (y) a fraction, the numerator
of which shall be the then aggregate overdue amounts of interest on the
Series G Equipment Notes and Series C Equipment Notes (other than
interest becoming due and payable solely as a result of acceleration of
any such Equipment Notes) and the denominator of which shall be the
then aggregate overdue amounts of interest on all "Series G Equipment
Notes" and "Series C Equipment Notes" issued under each of the
"Indentures" (in each case as defined in the Intercreditor Agreement)
(other than interest becoming due and payable solely as a result of
acceleration of any such "Equipment Notes");
(f) any amounts owed to the Primary Liquidity Provider by the
Subordination Agent as borrower under Section 3.01 (other than in
respect of an Unpaid Advance or Applied Provider Advance), 3.03 (other
than in respect of an Unpaid Advance or Applied Provider Advance ),
7.05 and 7.07 of each Primary Liquidity Facility (or similar provisions
of any Replacement Primary Liquidity Facility) multiplied by the
fraction specified in the foregoing clause (a); and
(g) an amount or amounts equal to the compensation, including
reasonable expenses and disbursements, payable to the Subordination
Agent under Section 6.07 of the Intercreditor Agreement, multiplied by
the fraction specified in the foregoing clause
20
(a) (but in any event without duplication of any amount or amounts
payable by the Company in respect of such compensation under any other
Operative Document or Pass Through Document).
For purposes of this paragraph, the terms "Advance", "Applied Downgrade
Advance", "Applied Non-Extension Advance", "Applied Provider Advance", "Cash
Collateral Account", "Class", "Downgrade Advance", "Final Advance", "Investment
Earnings", "Non-Extension Advance", "Replacement Primary Liquidity Facility" and
"Unpaid Advance" shall have the meanings specified in each Primary Liquidity
Facility or the Intercreditor Agreement.
Section 2.15. Repayment of Monies for Equipment Note Payments Held by
the Loan Trustee. Any money held by the Loan Trustee in trust for any payment of
the principal of, Break Amount, if any, Prepayment Premium, if any, Make-Whole
Amount, if any, or interest or any other amounts due on, any Equipment Note,
including, without limitation, any money deposited pursuant to Section 2.12(c)
or Section 10.01, and remaining unclaimed for two years after the due date for
such payment (or such lesser time as the Loan Trustee shall be satisfied, after
60 days' notice from the Company, is one month prior to the escheat period
provided under applicable state law) shall be paid to the Company. The
Noteholders of any outstanding Equipment Notes shall thereafter, as unsecured
general creditors, look only to the Company for payment thereof, and all
liability of the Loan Trustee with respect to such trust money shall thereupon
cease; provided that the Loan Trustee, before being required to make any such
repayment, may at the expense of the Company cause to be mailed to each such
Noteholder notice that such money remains unclaimed and that, after a date
specified therein which shall not be less than 30 days from the date of mailing,
any unclaimed balance of such money then remaining will be repaid to the Company
as provided herein.
Section 2.16. Directions by Subordination Agent. So long as the
Subordination Agent is a Noteholder, notwithstanding anything contained herein
or in any other Operative Document to the contrary, in exercising its right to
vote the Equipment Notes held by it, or in giving or taking any direction,
consent, request, demand, instruction, authorization, notice, waiver or other
action provided by this Indenture or in respect of the Equipment Notes to be
given or taken by a Noteholder (each such vote or other action, a "Direction")
in respect of such Equipment Notes, the Subordination Agent may act in
accordance with any votes, directions, consents, requests, demands,
instructions, authorizations, notices, waivers or other actions given or taken
by any applicable Pass Through Trustee or the Controlling Party pursuant to the
Intercreditor Agreement, including without limitation pursuant to Section 2.06,
Article IV or Section 8.01(b) thereof. The Subordination Agent shall be
permitted (x) to give a Direction with respect to less than the entire principal
amount of any single Equipment Note held by it, and (y) to give different
Directions with respect to different portions of the principal amount of any
single Equipment Note held by it. Any Direction given by the Subordination Agent
at any time with respect to more than a majority in aggregate unpaid principal
amount of all of the Equipment Notes issued and then outstanding hereunder shall
be deemed to have been given by a Majority
21
in Interest of Noteholders.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME
FROM THE COLLATERAL
Section 3.01. Basic Distributions. Except as otherwise provided in
Sections 3.02, 3.03, 3.04 and 3.05, each periodic payment by the Company of
regularly scheduled installments of principal or interest on the Equipment Notes
received by the Loan Trustee shall be promptly distributed in the following
order of priority:
first, so much of such payment as shall be required to pay in
full the aggregate amount of the payment or payments of principal
amount and interest (as well as any interest on any overdue principal
amount and, to the extent permitted by applicable law, on any overdue
interest and any other overdue amounts) then due under all Series G
Equipment Notes shall be distributed to the Noteholders of Series G
Equipment Notes 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;
second, after giving effect to clause "first" above, so much
of such payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of principal amount and
interest (as well as any interest on any overdue principal amount and,
to the extent permitted by applicable law, on any overdue interest and
other overdue amounts) then due under all Series C Equipment Notes
shall be distributed to the Noteholders of Series C Equipment Notes
ratably, without priority of one over the other, in the proportion that
the amount of such payment or payments then due under each Series C
Equipment Note bears to the aggregate amount of the payments then due
under all Series C Equipment Notes;
third, after giving effect to clause "second" above, so much
of such payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of principal amount and
interest (as well as any interest on any overdue principal amount and,
to the extent permitted by applicable law, on any overdue interest and
any other overdue amounts) then due under all Series D Equipment Notes
shall be distributed to the Noteholders of Series D Equipment Notes
ratably, without priority of one over the other, in the proportion that
the amount of such payment or payments then due under each Series D
Equipment Note bears to the aggregate amount of the payments then due
under all Series D Equipment Notes;
22
fourth, after giving effect to clause "third" above, if any
Series E Notes have been issued hereunder, so much of such payment
remaining as shall be required to pay in full the aggregate amount of
the payment or payments of principal amount and interest (as well as
any interest on any overdue principal amount and, to the extent
permitted by applicable law, on any overdue interest and any other
overdue amounts) then due under all Series E Equipment Notes shall be
distributed to the Noteholders of Series E Equipment Notes ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series E
Equipment Note bears to the aggregate amount of the payments then due
under all Series E Equipment Notes; and
fifth, the balance, if any, of such installment remaining
thereafter shall be distributed to the Company.
Section 3.02. Event of Loss; Optional Redemption. Except as otherwise
provided in Sections 3.03, 3.04 and 3.05 and subject to the following proviso,
any payments received by the Loan Trustee with respect to the Aircraft as the
result of (a) an Event of Loss (including amounts paid by the Company pursuant
to Section 2.10) or (b) an optional redemption of all of the Equipment Notes
pursuant to Section 2.11(a) shall be applied to redemption of the Equipment
Notes pursuant to Section 2.10 or Section 2.11(a), as applicable, and to payment
of all other Secured Obligations by applying such funds in the following order
of priority:
first, (i) to reimburse the Loan Trustee and the Noteholders
for any reasonable costs or expenses incurred in connection with such
redemption for which they are entitled to reimbursement, or indemnity
by the Company, under the Operative Documents; and then (ii) to pay any
other amounts then due (except as provided in clause "second" below) to
the Loan Trustee, the Noteholders and the Indenture Indemnitees under
this Indenture, the Participation Agreement or the Equipment Notes;
second, (i) to pay the amounts specified in subclause (i) of
clause "third" of Section 3.04 plus Prepayment Premium, if any, then
due and payable in respect of the Series G Equipment Notes ; (ii) after
giving effect to subclause (i) above, to pay the amounts specified in
subclause (ii) of clause "third" of Section 3.04 plus Make-Whole
Amount, if any, then due and payable in respect of the Series C
Equipment Notes; (iii) after giving effect to subclause (ii) above, to
pay the amounts specified in subclause (iii) of clause "third" of
Section 3.04 plus Make-Whole Amount, if any, then due and payable in
respect of the Series D Equipment Notes; and (iv) after giving effect
to subclause (iii) above, if any Series E Equipment Notes shall have
been issued hereunder, to pay the amounts specified in subclause (iv)
of clause "third" of Section 3.04 plus Make-Whole Amount, if any, then
due and payable in respect of the Series E Equipment Notes; and
third, the balance, if any, of such payments shall be
distributed to the Company.
23
provided, however, that (x) any insurance, condemnation or similar proceeds
resulting from an Event of Loss that are received by the Loan Trustee shall be
held or disbursed by the Loan Trustee as provided by Sections 7.05(c) and
7.06(d) (provided that such money held by the Loan Trustee shall be invested as
provided in Section 5.06) and (y) no Make-Whole Amount or Prepayment Premium
shall be payable on the Equipment Notes in connection with their redemption as a
result of an Event of Loss in respect of the Airframe.
Section 3.03 Optional Redemption in connection with a Refunding. Any
payments received by the Loan Trustee as the result of an optional redemption of
the Original Series C Equipment Notes, the Original Series D Equipment Notes or
the American New Series D Equipment Notes pursuant to Section 2.11(b) shall be
applied to redemption of such Series of Equipment Notes pursuant to Section
2.11(b) and to payment of all other Secured Obligations in respect of such
Series of Equipment Notes by applying such funds in the following order of
priority:
first, (i) to reimburse the Loan Trustee and the Noteholders
for any reasonable costs or expenses incurred in connection with such
redemption for which they are entitled to reimbursement, or indemnity
by the Company, under the Operative Documents; and then (ii) to pay any
other amounts then due (except as provided in clause "second" below) to
the Loan Trustee, the Noteholders and the Indenture Indemnitees under
this Indenture, the Participation Agreement or the Equipment Notes;
second, (i) if the Original Series C Equipment Notes are being
redeemed, to pay the amounts specified in subclause (ii) of clause
"third" of Section 3.04 then due and payable in respect of the Original
Series C Equipment Notes and (ii) after giving effect to subclause (i)
above, if the Original Series D Equipment Notes or the American New
Series D Equipment Notes are being redeemed, to pay the amounts
specified in subclause (iii) of clause "third" of Section 3.04 then due
and payable in respect of such Original Series D Equipment Notes or
American New Series D Equipment Notes, as applicable; and
third, the balance, if any, of such payments shall be
distributed to the Company.
No Make-Whole Amount shall be payable on the Original Series C Equipment Notes,
the Original Series D Equipment Notes or the American New Series D Equipment
Notes in connection with their redemption pursuant to Section 2.11(b).
Section 3.04. Payments after Event of Default. Except as otherwise
provided in Section 3.05, all payments received and amounts held or realized by
the Loan Trustee (including any amounts realized by the Loan Trustee from the
exercise of any remedies pursuant to Article IV) after both an Event of Default
shall have occurred and be continuing and the Equipment Notes shall have become
due and payable pursuant to Section 4.02(a), as well as all payments or amounts
then held by the Loan Trustee as part of the Collateral, shall be promptly
distributed by
24
the Loan Trustee in the following order of priority:
first, so much of such payments or amounts as shall be
required to (i) reimburse the Loan Trustee, to the extent the Loan
Trustee is entitled to be reimbursed or indemnified under the Operative
Documents, for any Tax, expense or other loss (including, without
limitation, all amounts to be expended at the expense of, or charged
upon the tolls, rents, revenues, issues, products and profits of, the
Collateral and every part thereof pursuant to Section 4.02(a)) incurred
by the Loan Trustee (to the extent not previously reimbursed), the
expenses of any sale, taking or other proceeding, reasonable attorneys'
fees and expenses, court costs and any other expenditures incurred or
expenditures or advances made by the Loan Trustee or the Noteholders in
the protection, exercise or enforcement of any right, power or remedy
or any damages sustained by the Loan Trustee or any Noteholder,
liquidated or otherwise, upon such Event of Default shall be applied by
the Loan Trustee as between itself and the Noteholders in reimbursement
of such expenses and any other expenses for which the Loan Trustee or
the Noteholders are entitled to reimbursement under any Operative
Document, and (ii) to pay all amounts payable (except as provided in
clauses "second" and "third" below) to the other Indenture Indemnitees
hereunder and under the Participation Agreement; and in case the
aggregate amount so to be distributed is insufficient to pay as
aforesaid, then ratably, without priority of one over the other, in
proportion to the amounts owed each hereunder;
second, so much of such payments or amounts remaining as shall
be required to reimburse the then existing or prior Noteholders for
payments made pursuant to Section 5.03 (to the extent not previously
reimbursed) shall be distributed to such then existing or prior
Noteholders ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made by each such
then existing or prior Noteholder pursuant to Section 5.03;
third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate unpaid principal amount
of all Series G Equipment Notes and the accrued but unpaid interest ,
Break Amount, if any, and all other Secured Obligations in respect of
the Series G Equipment Notes to the date of distribution shall be
distributed to the Noteholders of Series G Equipment Notes ratably,
without priority of one over the other, in the proportion that the
aggregate unpaid principal amount of all Series G Equipment Notes held
by each Noteholder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder to the date of distribution bears
to the aggregate unpaid principal amount of all Series G Equipment
Notes held by all such Noteholders plus the accrued but unpaid interest
and other amounts due thereon to the date of distribution; (ii) after
giving effect to subclause (i) above, so much of such payments or
amounts remaining as shall be required to pay in full the aggregate
unpaid principal amount of all Series C Equipment Notes and the accrued
but unpaid interest and all other
25
Secured Obligations in respect of the Series C Equipment Notes to the
date of distribution shall be distributed to the Noteholders of Series
C Equipment Notes ratably, without priority of one over the other, in
the proportion that the aggregate unpaid principal amount of all Series
C Equipment Notes held by each Noteholder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder to the date of
distribution bears to the aggregate unpaid principal amount of all
Series C Equipment Notes held by all such Noteholders plus the accrued
but unpaid interest and other amounts due thereon to the date of
distribution; (iii) after giving effect to subclause (ii) above, so
much of such payments or amounts remaining as shall be required to pay
in full the aggregate unpaid principal amount of all Series D Equipment
Notes and the accrued but unpaid interest and all other Secured
Obligations in respect of the Series D Equipment Notes to the date of
distribution shall be distributed to the Noteholders of Series D
Equipment Notes ratably, without priority of one over the other, in the
proportion that the aggregate unpaid principal amount of all Series D
Equipment Notes held by each Noteholder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder to the date of
distribution bears to the aggregate unpaid principal amount of all
Series D Equipment Notes held by all such Noteholders plus the accrued
but unpaid interest and other amounts due thereon to the date of
distribution; and (iv) after giving effect to subclause (iii) above, if
any Series E Equipment Notes shall have been issued hereunder, so much
of such payments or amounts remaining as shall be required to pay in
full the aggregate unpaid principal amount of all Series E Equipment
Notes and the accrued but unpaid interest and all other Secured
Obligations in respect of the Series E Equipment Notes to the date of
distribution shall be distributed to the Noteholders of Series E
Equipment Notes ratably, without priority of one over the other, in the
proportion that the aggregate unpaid principal amount of all Series E
Equipment Notes held by each Noteholder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder to the date of
distribution bears to the aggregate unpaid principal amount of all
Series E Equipment Notes held by all such Noteholders plus the accrued
but unpaid interest and other amounts due thereon to the date of
distribution;
fourth, the balance, if any, of such payments or amounts shall
be distributed to the Company.
No Make-Whole Amount or Prepayment Premium shall be payable on the
Equipment Notes as a consequence of or in connection with an Event of Default or
the acceleration of the Equipment Notes.
Section 3.05. Certain Payments.
(a) Any payments received by the Loan Trustee for which provision as to
the application thereof is made in this Indenture other than in this Article III
shall be applied as provided in those provisions. Without limiting the
foregoing, any payments received by the Loan Trustee which are payable to the
Company pursuant to any of the provisions of this
26
Indenture other than those set forth in this Article III (including Sections
5.06, 7.05 and 7.06 hereof) shall be so paid to the Company. Any payments
received by the Loan Trustee for which no provision as to the application
thereof is made in this Indenture and for which such provision is made in any
other Operative Document shall be applied forthwith to the purpose for which
such payment was made in accordance with the terms of such other Operative
Document.
(b) The Loan Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Company pursuant to Section 4.02 of
the Participation Agreement in respect of (i) State Street and the Loan Trustee,
(ii) the Subordination Agent, (iii) the Pass Through Trustees, (iv) any
Liquidity Provider and (v) the Policy Provider, in each case, directly to the
Person entitled thereto. Any payment received by the Loan Trustee from the
Company under Section 2.14 shall be distributed to the Subordination Agent to be
distributed in accordance with Section 2.03(c) of the Intercreditor Agreement.
(c) Any payments received by the Loan Trustee not constituting part of
the Collateral or otherwise for which no provision as to the application thereof
is made in any Operative Document shall be distributed by the Loan Trustee to
the Company. Further, and except as otherwise provided in Sections 3.02, 3.03,
3.04 and 3.05, all payments received and amounts realized by the Loan Trustee
with respect to the Aircraft, to the extent received or realized at any time
after payment in full of all Secured Obligations or after the conditions set
forth in Section 10.01(a)(ii) for the defeasance of this Indenture have been
satisfied, as well as any amounts remaining as part of the Collateral after the
occurrence of such payment in full or defeasance, shall be distributed by the
Loan Trustee to the Company.
Section 3.06. Payments to the Company. Any amounts distributed
hereunder by the Loan Trustee to the Company shall be paid to the Company
(within the time limits contemplated by Section 2.03) by wire transfer of funds
of the type received by the Loan Trustee at such office and to such account or
accounts of such entity or entities as shall be designated by notice from the
Company to the Loan Trustee from time to time.
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE
Section 4.01. Events of Default. Each of the following events shall
constitute an "Event of Default" whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body and each such Event of
Default shall be deemed to exist and continue so long as, but only as long as,
it shall not have been remedied:
(a) the Company shall fail to make any payment within 15 days
after the same shall have become due of principal amount of, interest
on, or Make-Whole Xxxxxx,
00
Prepayment Premium or Break Amount, if any, with respect to, any
Equipment Note;
(b) the Company shall fail to make payment when the same shall
become due of any amount (other than amounts referred to in Section
4.01(a)) due hereunder, under any Equipment Note or under any other
Operative Document, and such failure shall continue unremedied for 30
days after the receipt by the Company of written notice thereof from
the Loan Trustee or any Noteholder;
(c) the Company shall fail to carry and maintain insurance or
indemnity on or with respect to the Aircraft in accordance with the
provisions of Section 7.06; provided that no such failure to carry and
maintain insurance shall constitute an Event of Default until the
earlier of (i) the date such failure shall have continued unremedied
for a period of 30 days after receipt by the Loan Trustee of the notice
of cancellation or lapse referred to in Section 7.06 or (ii) the date
such insurance is not in effect as to the Loan Trustee;
(d) the Company shall fail to perform or observe any other
covenant, condition or agreement to be performed or observed by it
under any Operative Document, and such failure shall continue
unremedied for a period of 60 days after receipt by the Company of
written notice thereof from the Loan Trustee or any Noteholder;
provided that, if such failure is capable of being remedied, no such
failure shall constitute an Event of Default for a period of one year
after such notice is received by the Company so long as the Company is
diligently proceeding to remedy such failure;
(e) any representation or warranty made by the Company in any
Operative Document shall prove to have been incorrect in any material
respect at the time made, and such incorrectness shall continue to be
material to the transactions contemplated hereby and continue
unremedied for a period of 60 days after receipt by the Company of
written notice thereof from the Loan Trustee or any Noteholder;
provided that, if such incorrectness is capable of being remedied, no
such incorrectness shall constitute an Event of Default for a period of
one year after such notice is received by the Company so long as the
Company is diligently proceeding to remedy such incorrectness;
(f) the Company shall consent to the appointment of or the
taking of possession by a receiver, trustee or liquidator of itself or
of a substantial part of its property, 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 creditors;
(g) the Company shall file a voluntary petition in bankruptcy
or a voluntary petition or an answer seeking reorganization,
liquidation or other relief in a case 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 the Company in any
such case, or the Company shall seek relief by voluntary petition,
answer or consent, under the provisions of any other bankruptcy or
other similar law providing for the reorganization or winding-
28
up of corporations (as in effect at such time), or the Company shall
seek an agreement, composition, extension or adjustment with its
creditors under such laws;
(h) an order, judgment or decree shall be entered by any court
of competent jurisdiction appointing, without the consent of the
Company, a receiver, trustee or liquidator of the Company or of any
substantial part of its property, or any substantial part of its
property shall be sequestered, or granting any other relief in respect
of the Company as a debtor under any bankruptcy laws or insolvency laws
(as in effect at such time), and any such order, judgment or decree of
appointment or sequestration shall remain in force undismissed,
unstayed or unvacated for a period of 90 days after the date of entry
thereof; or
(i) a petition against the Company in a case under the federal
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 that may apply to the Company, any court of
competent jurisdiction assumes jurisdiction, custody or control of the
Company or 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;
provided, however, that notwithstanding anything to the contrary
contained in this Section 4.01, any failure of the Company to perform or observe
any covenant, condition or agreement shall not constitute an Event of Default if
such failure arises by reason of an event referred to in the definition of
"Event of Loss" so long as the Company is continuing to comply with all of the
terms of Section 7.05.
29
Section 4.02. Remedies.
(a) If an Event of Default shall have occurred and be continuing and so
long as the same shall continue unremedied, then and in every such case the Loan
Trustee may, and upon the written instructions of a Majority in Interest of
Noteholders, the Loan Trustee shall, do one or more of the following to the
extent permitted by, and subject to compliance with the requirements of,
applicable law then in effect (provided, however, that during any period the
Aircraft is subject to the CRAF Program and is in possession of or being
operated under the direction of the United States government or an agency or
instrumentality of the United States, the Loan Trustee shall not, on account of
any Event of Default, be entitled to exercise or pursue any of the powers,
rights or remedies described in this Section 4.02 in such manner as to limit the
Company's control under this Indenture (or any Permitted Lessee's control under
any Lease) of the Airframe or any Engines installed thereon, unless at least 60
days' (or such lesser period as may then be applicable under the Military
Airlift Command Program of the United States government) prior written notice of
default hereunder shall have been given by the Loan Trustee by registered or
certified mail to the Company (and any such Permitted Lessee) with a copy
addressed to the Contracting Office Representative or other appropriate person
for the Military Airlift Command of the United States Air Force under any
contract with the Company relating to the Aircraft):
(i) declare by written notice to the Company all the Equipment
Notes to be due and payable, whereupon the aggregate unpaid principal
amount of all Equipment Notes then outstanding, together with accrued but
unpaid interest thereon, Break Amount (in the case of the Series G
Equipment Notes) and all other amounts due thereunder (but for the
avoidance of doubt, without Make-Whole Amount or Prepayment Premium) 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 Subsections 4.01(f), (g), (h) or (i) shall have
occurred and be continuing, then and in every such case the unpaid
principal amount then outstanding, together with accrued but unpaid
interest thereon, Break Amount (in the case of the Series G Equipment
Notes) and all other amounts due thereunder (but for the avoidance of
doubt, without Make-Whole Amount or Prepayment Premium) shall immediately
and without further act become due and payable without presentment,
demand, protest or notice, all of which are hereby waived; and, following
such declaration or deemed declaration:
(ii) (A) cause the Company, upon the written demand of the Loan
Trustee, at the Company's expense, to deliver promptly, and the Company
shall deliver promptly, all or such part of the Airframe or any Engine as
the Loan Trustee may so demand to the Loan Trustee or its order, or, if
the Company shall have failed to so deliver the Airframe or any Engine
after such demand, the Loan Trustee, at its option, may enter upon the
premises where all or any part of the Airframe or any Engine are located
and take immediate possession of and remove the same together with any
engine which is not an
30
Engine but which is installed on the Airframe, subject to all of the
rights of the owner, lessor, lienor or secured party of such engine;
provided that the Airframe with an engine (which is not an Engine)
installed thereon may be flown or returned only to a location within the
continental United States, and such engine shall be held for the account
of any such owner, lessor, lienor, secured party or, if such engine is
owned by the Company, may at the option of the Company with the consent of
the Loan Trustee (which will not be unreasonably withheld) or at the
option of the Loan Trustee with the consent of the Company (which will not
be unreasonably withheld), be exchanged with the Company for an Engine in
accordance with the provisions of Section 7.05(b); (B) sell all or any
part of the Airframe and any Engine at public or private sale, whether or
not the Loan Trustee shall at the time have possession thereof, as the
Loan Trustee may determine, or otherwise dispose of, hold, use, operate,
lease to others or keep idle all or any part of the Airframe or such
Engine as the Loan Trustee, in its sole discretion, may determine, all
free and clear of any rights or claims of the Company, and the proceeds of
such sale or disposition shall be applied as set forth in Section 3.04; or
(C) exercise any other remedy of a secured party under the Uniform
Commercial Code of the State of New York (whether or not in effect in the
jurisdiction in which enforcement is sought).
Upon every such taking of possession of Collateral under this Section
4.02, the Loan Trustee may, from time to time, at the expense of the Collateral,
make all such expenditures for maintenance, insurance, repairs, alterations,
additions and improvements to and of the Collateral as it may deem proper. In
each such case, the Loan Trustee shall have the right to maintain, use, operate,
store, lease, control or manage the Collateral and to exercise all rights and
powers of the Company relating to the Collateral as the Loan Trustee shall
reasonably deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, leasing,
control, management or disposition of the Collateral or any part thereof as the
Loan Trustee may reasonably determine; and the Loan Trustee shall be entitled to
collect and receive directly all tolls, rents, revenues, issues, income,
products and profits of the Collateral and every part thereof. Such tolls,
rents, revenues, issues, income, products and profits shall be applied to pay
the expenses of the use, operation, storage, leasing, control, management or
disposition of the Collateral, and of all maintenance, repairs, replacements,
alterations, additions and improvements, and to make all payments that the Loan
Trustee may be required or may elect to make, if any, for Taxes, insurance or
other proper charges assessed against or otherwise imposed upon the Collateral
or any part thereof, and all other payments which the Loan Trustee may be
required or expressly authorized to make under any provision of this Indenture,
as well as just and reasonable compensation for the services of the Loan
Trustee, and shall otherwise be applied in accordance with Article III.
If an Event of Default shall have occurred and be continuing and the
Equipment Notes shall either have been accelerated pursuant to this Section 4.02
or have become due at maturity and the Loan Trustee shall be entitled to
exercise rights hereunder, at the request of the Loan Trustee, the Company shall
promptly execute and deliver to the Loan Trustee such instruments
31
of title and other documents as the Loan Trustee may reasonably deem necessary
or advisable to enable the Loan Trustee or an agent or representative designated
by the Loan Trustee, at such time or times and place or places as the Loan
Trustee may specify, to obtain possession of all or any part of the Collateral
to which the Loan Trustee shall at the time be entitled hereunder. If the
Company shall for any reason fail to execute and deliver such instruments and
documents after such request by the Loan Trustee, the Loan Trustee may obtain a
judgment conferring on the Loan Trustee the right to immediate possession and
requiring the Company to execute and deliver such instruments and documents to
the Loan Trustee, to the entry of which judgment the Company hereby specifically
consents to the fullest extent it may lawfully do so.
(b) The Loan Trustee shall give the Company at least 30 days' prior
written notice of any public sale or of the date on or after which any private
sale will be held, which notice the Company hereby agrees to the extent
permitted by applicable law is reasonable notice. Any Noteholder or Noteholders
shall be entitled to bid for and become the purchaser of any Collateral offered
for sale pursuant to this Section 4.02 and to credit against the purchase price
bid at such sale by such Noteholders all or any part of the unpaid amounts owing
to such Noteholders under the Operative Documents and secured by the Lien of
this Indenture (but only to the extent that such purchase price would have been
paid to such Noteholders pursuant to Article III if such purchase price were
paid in cash and the foregoing provision of this Section 4.02(b) were not given
effect). The Loan Trustee may exercise such right without possession or
production of the Equipment Notes or proof of ownership thereof, and as a
representative of the Noteholders may exercise such right without notice to the
Noteholders as parties to any suit or proceeding relating to the foreclosure of
any Collateral. The Company shall also be entitled to bid for and become the
purchaser of any Collateral offered for sale pursuant to this Section 4.02.
(c) To the extent permitted by applicable law, the Company irrevocably
appoints, while an Event of Default has occurred and is continuing, the Loan
Trustee the true and lawful attorney-in-fact of the Company (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 Indenture, whether pursuant to foreclosure or
power of sale, or otherwise, to execute and deliver all such bills of sale,
assignments and other instruments as may be necessary or appropriate, with full
power of substitution, the Company hereby ratifying and confirming all that such
attorney or any substitute shall do by virtue hereof in accordance with
applicable law; provided that if so requested by the Loan Trustee or any
purchaser, the Company shall ratify and confirm any such sale, assignment or
transfer of delivery, by executing and delivering to the Loan Trustee or such
purchaser all bills of sale, assignments, releases and other proper instruments
to effect such ratification and confirmation as may be designated in any such
request.
(d) At any time after the Loan Trustee has declared the unpaid principal
amount of all Equipment Notes then outstanding to be due and payable and prior
to the sale of any part of the Collateral pursuant to this Article IV, a
Majority in Interest of Noteholders, by written notice to
32
the Company and the Loan Trustee, may rescind and annul such declaration and its
consequences if: (i) there has been paid to or deposited with the Loan Trustee
an amount sufficient to pay all overdue installments of principal amount of, and
interest on, the Equipment Notes, and all other amounts owing under the
Operative Documents, that have become due otherwise than by such declaration of
acceleration and (ii) all other Events of Default, other than nonpayment of
principal amount or interest on the Equipment Notes that have become due solely
because of such acceleration, have been cured or waived.
(e) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Noteholder, the Loan Trustee 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
Pass Through Trust to fail to qualify as a "grantor trust" for federal income
tax purposes.
Section 4.03. Remedies Cumulative. To the extent permitted under
applicable law, each and every right, power and remedy specifically given to the
Loan Trustee herein or otherwise in this Indenture shall be cumulative and shall
be in addition to every other right, power and remedy specifically given herein
or now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically given herein or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by the Loan Trustee, and the exercise or the beginning of the
exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Loan Trustee in the exercise of any right,
remedy or power or in the pursuance of any remedy shall, to the extent permitted
by applicable law, impair any such right, power or remedy or be construed to be
a waiver of any default on the part of the Company or to be an acquiescence
therein.
Section 4.04. Discontinuance of Proceedings. In case the Loan Trustee
shall have instituted any proceedings to enforce any right, power or remedy
under this 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 Loan Trustee, then and in every such case the
Company and the Loan Trustee 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 Loan
Trustee shall continue as if no such proceedings had been undertaken (but
otherwise without prejudice).
Section 4.05. Waiver of Past Defaults. Upon written instruction from a
Majority in Interest of Noteholders, the Loan Trustee shall waive any past
default hereunder and its consequences, and upon any such waiver such default
shall cease to exist and any Event of Default arising therefrom shall be deemed
to have been cured for every purpose of the Operative Documents, but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon; provided, however, that in the absence of written
instructions from
33
each of the affected Noteholders, the Loan Trustee shall not waive any default
(i) in the payment of the principal amount, Break Amount, if any, Prepayment
Premium, if any, Make-Whole Amount, if any, or interest due under any Equipment
Note then outstanding (other than with the consent of the holder thereof), or
(ii) in respect of a covenant or provision hereof which, under Article IX,
cannot be modified or amended without the consent of each such affected
Noteholder.
Section 4.06. Noteholders May Not Bring Suit Except Under Certain
Conditions. A Noteholder of any Series shall not have the right to institute any
suit, action or proceeding at law or in equity or otherwise with respect to this
Indenture for the appointment of a receiver or for the enforcement of any other
remedy under this Indenture, unless:
(1) such Noteholder previously shall have given written notice to
the Loan Trustee of a continuing Event of Default;
(2) A Majority in Interest of Noteholders shall have requested the
Loan Trustee in writing to institute such action, suit or proceeding and
shall have offered to the Loan Trustee indemnity as provided in Section
5.03;
(3) the Loan Trustee shall have refused or neglected to institute
any such action, suit or proceeding for 60 days after receipt of such
notice, request and offer of indemnity; and
(4) no direction inconsistent with such written request shall have
been given to the Loan Trustee during such 60-day period by a Majority in
Interest of Noteholders.
Except to the extent provided in the Intercreditor Agreement or in any
Indenture Supplement, it is understood and intended that no one or more of the
Noteholders of any Series shall have any right in any manner whatsoever
hereunder or under the Indenture Supplement or under the Equipment Notes of such
Series to (i) surrender, impair, waive, affect, disturb or prejudice any
Collateral, or the Lien of the Indenture on any Collateral, or the rights of the
Noteholders of such Series, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Noteholder of such Series or (iii)
enforce any right under this Indenture, except in the manner provided in this
Indenture and for the equal, ratable and common benefit of all the Noteholders
of such Series subject to the provisions of this Indenture.
ARTICLE V
DUTIES OF THE LOAN TRUSTEE
Section 5.01. Notice of Event of Default. If the Loan Trustee shall have
knowledge of an Event of Default or of a default arising from a failure by the
Company to pay when due any payment of principal amount of, interest on, or
Break Amount, Prepayment Premium or Make-Whole Amount, if any, with respect to,
any Equipment Note, the Loan Trustee shall
34
promptly give notice thereof to the Company and each Noteholder by telegram,
cable, facsimile or telephone (to be promptly confirmed in writing); provided,
however, that except in the case of a default in the payment of the principal
amount, interest or Break Amount, Prepayment Premium or Make-Whole Amount, if
any, due and payable under any Equipment Note, the Loan Trustee shall be
protected in withholding the notice to the Noteholders required in the foregoing
part of this sentence if and so long as the executive committee or trust
committee of directors of the Loan Trustee and/or trust officers thereof in good
faith determine that withholding such notice is in the interest of the
Noteholders. Subject to the terms of Sections 4.02, 4.05, 5.02 and 5.03, the
Loan Trustee shall take such action, or refrain from taking such action, with
respect to such Event of Default (including with respect to the exercise of any
rights or remedies hereunder) as the Loan Trustee shall be instructed in writing
by a Majority in Interest of Noteholders. Subject to the provisions of Section
5.03, if the Loan Trustee shall not have received instructions as above provided
within 20 Business Days after giving notice of such Event of Default to the
Noteholders, the Loan Trustee may, subject to instructions thereafter received
pursuant to the preceding provisions of this Section 5.01, take such action, or
refrain from taking such action, but shall be under no duty to take or refrain
from taking any action, with respect to such Event of Default as it shall
reasonably determine to be advisable in the best interests of the Noteholders
and shall use the same degree of care and skill in connection therewith as a
prudent person would use under the circumstances in the conduct of his or her
own affairs; provided that the Loan Trustee may not sell the Airframe or any
Engine without the consent of a Majority in Interest of Noteholders.
For all purposes of this Indenture, in the absence of actual knowledge,
the Loan Trustee shall not be deemed to have knowledge of a default or an Event
of Default unless notified in writing by the Company or one or more Noteholders;
and "actual knowledge" (as used in the foregoing clause) of the Loan Trustee
shall mean actual knowledge of an officer in the Corporate Trust Division of the
Loan Trustee; provided, however, that the Loan Trustee shall be deemed to have
actual knowledge of (i) the failure of the Company to pay any principal amount
of, or interest on, the Equipment Notes directly to the Loan Trustee when the
same shall become due or (ii) the failure of the Company to maintain insurance
as required under Section 7.06 if the Loan Trustee receives written notice
thereof from an insurer or insurance broker.
Section 5.02. Action upon Instructions; Certain Rights and Limitations.
Subject to the terms of Article IV and this Article V, upon the written
instructions at any time of a Majority in Interest of Noteholders, the Loan
Trustee shall promptly (i) give such notice, direction, consent, waiver or
approval or exercise such right, remedy or power hereunder in respect of all or
any part of the Collateral or (ii) take such other action, as shall be specified
in such instructions.
The Loan Trustee will cooperate with the Company in connection with the
recording, filing, re-recording and refiling of the Indenture and any
supplements to it and any financing statements or other documents as is
necessary to maintain the perfection hereof or otherwise protect the security
interests created hereby. The Loan Trustee shall furnish to the Company
35
upon request such information and copies of such documents as the Loan Trustee
may have and as are necessary for the Company to perform its duties under
Article II hereof.
Section 5.03. Indemnification. The Loan Trustee shall not be required to
take any action or refrain from taking any action under Sections 5.01 (other
than the first sentence thereof) or 5.02 or Article IV unless it shall have
received indemnification against any risks incurred in connection therewith in
form and substance reasonably satisfactory to it, including, without limitation,
adequate advances against costs that may be incurred by it in connection
therewith. The Loan Trustee shall not be required to take any action under
Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV, nor
shall any other provision of any Operative Document be deemed to impose a duty
on the Loan Trustee to take any action, if the Loan Trustee shall have been
advised by outside counsel that such action is contrary to the terms hereof or
is otherwise contrary to law.
Section 5.04. No Duties Except as Specified in Indenture or Instructions.
The Loan Trustee shall not have any duty or obligation to manage, control,
lease, use, sell, operate, store, 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 Indenture, except as expressly
provided by the terms of this Indenture or the Participation Agreement or as
expressly provided in written instructions received pursuant to the terms of
Section 5.01 or 5.02; and no implied duties or obligations shall be read into
this Indenture against the Loan Trustee.
Section 5.05. No Action Except under Indenture or Instructions. The Loan
Trustee agrees that it will not manage, control, use, sell, lease, operate,
store, 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 Loan Trustee pursuant to this Indenture and in accordance
with the express terms hereof.
Section 5.06. Investment of Amounts Held by the Loan Trustee. Any monies
(including for the purpose of this Section 5.06 any cash deposited with the Loan
Trustee by the Company, any cash received by the Loan Trustee pursuant to
Sections 7.05(c) or 7.06(d) or otherwise) or Permitted Investments purchased by
the use of such cash pursuant to this Section 5.06 or any cash constituting the
proceeds of the maturity, sale or other disposition of any Permitted
Investments) held by the Loan Trustee hereunder as part of the Collateral, until
paid out by the Loan Trustee as herein provided, (i) subject to clause (ii)
below, may be carried by the Loan Trustee on deposit with itself or on deposit
to its account with any bank, trust company or national banking association
incorporated or doing business under the laws of the United States or one of the
states thereof having combined capital and surplus and retained earnings of at
least $75,000,000, and the Loan Trustee shall not have any liability for
interest upon any such monies except as otherwise agreed in writing with the
Company, or (ii) at any time and from time to time, so long as no Event of
Default shall have occurred and be continuing, at the request of the Company,
shall be invested and reinvested in Permitted Investments as specified in such
request (if such investments are reasonably available for purchase) and sold, in
any case at such prices,
36
including accrued interest or its equivalent, as are set forth in such request,
and such Permitted Investments shall be held by the Loan Trustee in trust as
part of the Collateral until so sold; provided that the Company shall upon
demand pay to the Loan Trustee the amount of any loss realized upon maturity,
sale or other disposition of any such Permitted Investment and, so long as no
Event of Default or Payment Default shall have occurred and be continuing, the
Company shall be entitled to receive from the Loan Trustee, and the Loan Trustee
shall promptly pay to the Company, any profit, income, interest, dividend or
gain realized upon maturity, sale or other disposition of any Permitted
Investment. If an Event of Default or Payment Default shall have occurred and be
continuing, any net income, profit, interest, dividend or gain realized upon
maturity, sale or other disposition of any Permitted Investment shall be held as
part of the Collateral and shall be applied by the Loan Trustee at the same
time, on the same conditions and in the same manner as the amounts in respect of
which such income, profit, interest, dividend or gain was realized are required
to be distributed in accordance with the provisions hereof pursuant to which
such amounts were required to be held. The Loan Trustee shall not be responsible
for any losses on any investments or sales of Permitted Investments made
pursuant to the procedure specified in this Section 5.06 other than by reason of
its willful misconduct or negligence. If any moneys or investments are held by
the Loan Trustee solely because an Event of Default has occurred and is
continuing and such moneys or investments have been held for a period of 90
consecutive days during which such Event of Default is continuing without any
remedial action being taken by the Loan Trustee in respect of such Event of
Default pursuant to Section 4.02 hereof, and provided that there is no stay,
moratorium or injunction in effect preventing the taking of such action, then,
notwithstanding any other provision of the Operative Documents, all such moneys
and investments held by the Loan Trustee shall be released to the Company on
such 90th day, or as soon thereafter as practicable.
ARTICLE VI
THE LOAN TRUSTEE
Section 6.01. Acceptance of Trusts and Duties. State Street accepts the
trusts and duties hereby created and applicable to it and agrees to perform such
duties, but only upon the terms of this Indenture and agrees to receive, handle
and disburse all monies received by it as Loan Trustee constituting part of the
Collateral in accordance with the terms hereof. State Street shall have no
liability hereunder except (a) for its own willful misconduct or negligence, (b)
as provided in the fourth sentence of Section 2.03(a) and the penultimate
sentence of Section 5.06, (c) for liabilities that may result from the
inaccuracy of any representation or warranty of State Street in the
Participation Agreement or expressly made hereunder and (d) as otherwise
expressly provided in the Operative Documents.
Section 6.02. Absence of Certain Duties. Except in accordance with written
instructions furnished pursuant to Sections 5.01, 5.02 or 6.06, and except as
provided in, and without limiting the generality of, Sections 5.02, 5.03 and
5.04, the Loan Trustee, shall have no duty (a) to see to any registration of the
Aircraft or any recording or filing of this Indenture or any other document,
37
or to see to the maintenance of any such registration, recording or filing, (b)
to see to any insurance on the Aircraft or to effect or maintain any such
insurance, whether or not the Company shall be in default with respect thereto,
(c) to confirm, verify or inquire into the failure to receive any financial
statements of the Company or (d) to inspect the Aircraft at any time or
ascertain or inquire as to the performance or observance of any of the Company's
covenants hereunder with respect to the Aircraft.
Section 6.03. No Representations or Warranties as to the Documents. Except
as provided in Article V of the Participation Agreement, the Loan Trustee shall
not be deemed to have made any representation or warranty as to the validity,
legality or enforceability of any Operative Document or any other document or
instrument, or as to the correctness of any statement (other than a statement by
the Loan Trustee) contained herein or therein, except that the Loan Trustee
hereby represents and warrants that each of said specified documents to which it
is a party has been or will be duly executed and delivered by one of its
officers who is and will be duly authorized to execute and deliver such document
on its behalf.
Section 6.04. No Segregation of Monies; No Interest. Subject to Section
5.06 hereof, all moneys received by the Loan Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law, and neither the Loan Trustee nor any
agent of the Loan Trustee shall be under any liability for interest on any
moneys received by it hereunder; provided, however, that any payments received,
or applied hereunder, by the Loan Trustee shall be accounted for by the Loan
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof.
Section 6.05. Reliance; Agents; Advice of Counsel. The Loan Trustee shall
not incur any liability to anyone in acting upon any signature, instrument,
notice, resolution, request, consent, order, certificate, report, opinion, bond
or other document or paper reasonably believed by it to be genuine and
reasonably believed by it to be signed by the proper party or parties. The Loan
Trustee may accept a copy of a resolution of the Board of Directors of any party
to the Participation Agreement, certified by the Secretary or an Assistant
Secretary of such party 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 any fact or matter the manner of
ascertainment of which is not specifically described herein, the Loan Trustee
may for all purposes hereof rely on a certificate, signed by a duly authorized
officer of the Company, as to such fact or matter, and such certificate shall
constitute full protection to the Loan Trustee for any action taken or omitted
to be taken by it in good faith in reliance thereon. In the administration of
the trusts hereunder, the Loan Trustee may, with the consent of the Company
(such consent not to be unreasonably withheld), (a) execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents (including paying agents or registrars) or attorneys, and (b) at the
expense of the Collateral, consult with counsel, accountants and other skilled
Persons to be selected and retained by it. The Loan Trustee shall
38
not be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel, accountants or other
skilled Persons acting within such counsel's, accountants' or Person's area of
competence (so long as the Loan Trustee shall have exercised reasonable care and
judgment in selecting such Persons).
Section 6.06. Instructions from Noteholders. In the administration of the
trusts created hereunder, the Loan Trustee shall have the right to seek
instructions from a Majority in Interest of Noteholders should any provision of
this Indenture appear to conflict with any other provision herein or any other
Operative Document or Pass Through Document or should the Loan Trustee's duties
or obligations hereunder be unclear, and the Loan Trustee shall incur no
liability in refraining from acting until it receives such instructions. The
Loan Trustee shall be fully protected for acting in accordance with any
instructions received under this Section 6.06.
ARTICLE VII
OPERATING COVENANTS OF THE COMPANY
Section 7.01. Liens. The Company will not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Aircraft,
its title thereto or any of its interest therein, except:
(a) the respective rights of the Loan Trustee and the Company as
provided in the Operative Documents, the Lien of this Indenture, the
rights of any Permitted Lessee under a Lease permitted hereunder and the
rights of any Person existing pursuant to the Operative Documents or the
Pass Through Documents;
(b) the rights of others under agreements or arrangements to the
extent expressly permitted by this Indenture;
(c) Loan Trustee Liens, Noteholder Liens and Other Party Liens;
(d) Liens for Taxes either not yet due or payable or being
contested in good faith by appropriate proceedings so long as such
proceedings do not involve any material risk of the sale, forfeiture or
loss of the Airframe or any Engine or the Loan Trustee's interest therein
or materially impair the Lien of this Indenture;
(e) materialmen's, mechanics', workers', repairmen's, employees'
or other like Liens arising in the ordinary course of business (including
those arising under maintenance agreements entered into in the ordinary
course of business) securing obligations that either are not yet overdue
for a period of more than 60 days or are being contested in good faith by
appropriate proceedings so long as such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Airframe or any
Engine or
39
the Loan Trustee's interest therein or materially impair the Lien of this
Indenture;
(f) Liens arising out of any judgment or award, so long as such
judgment shall, within 60 days after the entry thereof, have been
discharged, vacated or reversed, or execution thereof stayed pending
appeal or other judicial review or shall have been discharged, vacated or
reversed within 60 days after the expiration of such stay;
(g) any other Lien with respect to which the Company shall have
provided a bond, cash collateral or other security adequate in the
reasonable opinion of the Loan Trustee;
(h) salvage or similar rights of insurers under insurance policies
maintained by the Company; and
(i) Liens approved in writing by the Loan Trustee with the consent
of a Majority in Interest of the Noteholders.
Liens described in clauses (a) through (i) above are referred to herein as
"Permitted Liens". The Company shall promptly, at its own expense, take (or
cause to be taken) such action as may be necessary duly to discharge (by bonding
or otherwise) any Lien other than a Permitted Lien arising at any time with
respect to the Aircraft, its title thereto or any of its interest therein.
Section 7.02. Possession, Operation and Use, Maintenance and Registration.
(a) Possession. The Company shall not, without the prior written consent
of the Loan Trustee, lease or otherwise in any manner deliver, transfer or
relinquish possession of the Airframe or any Engine or install any Engine, or
permit any Engine to be installed, on any airframe other than the Airframe;
provided that, so long as the Company shall comply with the provisions of
Section 7.06, the Company may without the prior written consent of the Loan
Trustee:
(i) subject the Airframe to interchange agreements or subject any
Engine to interchange or pooling agreements or arrangements, in each case
customary in the airline industry and entered into by the Company in the
ordinary course of its business; provided that (A) no such agreement or
arrangement contemplates or requires the transfer of title to the Airframe
and (B) if the Company's title to any such Engine shall be divested under
any such agreement or arrangement, such divestiture shall be deemed to be
an Event of Loss with respect to such Engine, and the Company shall comply
with Section 7.05(b) in respect thereof;
(ii) deliver possession of the Airframe or any Engine to any Person
for testing, service, repair, maintenance, overhaul work or other similar
purposes or for alterations, modifications or additions to the Airframe or
such Engine to the extent required or
40
permitted by the terms hereof;
(iii) transfer or permit the transfer of possession of the Airframe
or any Engine to any Government pursuant to a lease, contract or other
instrument;
(iv) subject the Airframe or any Engine to the CRAF Program or
transfer possession of the Airframe or any Engine to the United States
government in accordance with applicable laws, rulings, regulations or
orders (including, without limitation, any transfer of possession pursuant
to the CRAF Program); provided, that the Company (A) shall promptly notify
the Loan Trustee upon transferring possession of the Airframe or any
Engine pursuant to this clause (iv) and (B) in the case of a transfer of
possession pursuant to the CRAF Program, shall notify the Loan Trustee of
the name and address of the responsible Contracting Office Representative
for the Military Airlift Command of the United States Air Force or other
appropriate Person to whom notices must be given and to whom requests or
claims must be made to the extent applicable under the CRAF Program;
(v) install an Engine on an airframe owned by the Company (or any
Permitted Lessee) free and clear of all Liens, except (A) Permitted Liens
and Liens that apply only to the engines (other than Engines), appliances,
parts, instruments, appurtenances, accessories, furnishings and other
equipment (other than Parts) installed on such airframe (but not to the
airframe as an entirety) and (B) the rights of third parties under
interchange agreements or pooling or similar arrangements that would be
permitted under clause (i) above;
(vi) install an Engine on an airframe leased to the Company (or
any Permitted Lessee) or purchased or owned by the Company (or any
Permitted Lessee) subject to a conditional sale or other security
agreement; provided that (A) such airframe is free and clear of all Liens
except (1) the rights of the parties to the lease or conditional sale or
other security agreement covering such airframe, or their successors and
assigns, and (2) Liens of the type permitted by clause (v) of this Section
7.02(a) and (B) either (1) the Company shall have obtained from the lessor
or secured party of such airframe a written agreement (which may be the
lease, conditional sale or other security agreement covering such
airframe), in form and substance satisfactory to the Loan Trustee (it
being understood that an agreement from such lessor or secured party
substantially in the form of the final sentence of the penultimate
paragraph of this Section 7.02(a) shall be deemed to be satisfactory to
the Loan Trustee), whereby such lessor or secured party expressly agrees
that neither it nor its successors or assigns will acquire or claim any
right, title or interest in any Engine by reason of such Engine being
installed on such airframe at any time while such Engine is subject to the
Lien of this Indenture or (2) such lease, conditional sale or other
security agreement provides that such Engine shall not become subject to
the Lien of such lease, conditional sale or other security agreement at
any time while such Engine is subject to the Lien of this Indenture,
notwithstanding the installation
41
thereof on such airframe;
(vii) install an Engine on an airframe owned by the Company (or any
Permitted Lessee), leased to the Company (or any Permitted Lessee) or
purchased by the Company (or any Permitted Lessee) subject to a
conditional sale or other security agreement under circumstances where
neither clause (v) nor clause (vi) of this Section 7.02(a) is applicable;
provided that such installation shall be deemed an Event of Loss with
respect to such Engine, and the Company shall comply with Section 7.05(b)
in respect thereof, if such installation shall adversely affect the Loan
Trustee's security interest in such Engine, the Loan Trustee not intending
hereby to waive any right or interest it may have to or in such Engine
under applicable law until compliance by the Company with Section 7.05(b);
(viii) lease any Engine or the Airframe and Engines to any United
States air carrier as to which there is in force a certificate issued
pursuant to the Transportation Code (49 U.S.C. Sections 41101-41112)
or successor provision that gives like authority; and
(ix) lease any Engine or the Airframe and Engines to (A) any
foreign air carrier other than those set forth in clause (B), (B) any
foreign air carrier that is at the inception of the lease based in and a
domiciliary of a country listed in Exhibit B hereto and (C) any foreign
air carrier consented to in writing by the Loan Trustee with the consent
of a Majority in Interest of Noteholders; provided that (x) in the case of
a lease to a foreign air carrier under clause (A) above, the Loan Trustee
receives at the time of such lease (1) written confirmation from each of
the Rating Agencies that such lease would not result in a reduction of the
rating for any class of Pass Through Certificates below the then current
rating for such class of Pass Through Certificates or a withdrawal or
suspension of the rating of any class of Pass Through Certificates and (2)
an opinion of counsel to the Company (such counsel to be reasonably
satisfactory to the Loan Trustee) to the effect that there exist no
possessory rights in favor of the lessee under the laws of such lessee's
country which would, upon bankruptcy or insolvency of or other default by
the Company and assuming at such time such lessee is not insolvent or
bankrupt, prevent the taking of possession of any such Engine or the
Airframe and any such Engine by the Loan Trustee in accordance with and
when permitted by the terms of Section 4.02 upon the exercise by the Loan
Trustee of its remedies under Section 4.02, (y) in the case of a lease to
any foreign air carrier (other than a foreign air carrier principally
based in Taiwan), the United States maintains diplomatic relations with
the country in which such foreign air carrier is based at the time such
lease is entered into and (z) in the case of any lease to a foreign air
carrier, such carrier is not then subject to any bankruptcy, insolvency,
liquidation, reorganization, dissolution or similar proceeding and shall
not have substantially all of its property in the possession of any
liquidator, trustee, receiver or similar person;
provided that the rights of any lessee or other transferee who receives
possession of the Aircraft,
42
the Airframe or any Engine by reason of a transfer permitted by this Section
7.02(a) (other than the transfer of an Engine which is deemed an Event of Loss)
shall be subject and subordinate to, and any permitted lease shall be made
expressly subject and subordinate to, all the terms of this Indenture, including
the Loan Trustee's rights to repossess pursuant to Section 4.02 and to avoid
such lease upon such repossession, and the Company shall remain primarily liable
hereunder for the performance and observance of all of the terms and conditions
of this Indenture to the same extent as if such lease or transfer had not
occurred, any such lease shall include appropriate provisions for the
maintenance and insurance of the Aircraft, the Airframe or such Engine, and no
lease or transfer or possession otherwise in compliance with this Section shall
(x) result in any registration or re-registration of the Aircraft except to the
extent permitted in Section 7.02(e) or the maintenance, operation or use thereof
that does not comply with Section 7.02(b) and (c) or (y) permit any action not
permitted to be taken by the Company with respect to the Aircraft hereunder. The
Company shall promptly notify the Loan Trustee and the Rating Agencies of the
existence of any such lease with a term in excess of one year.
The Loan Trustee, and each Noteholder by acceptance of an Equipment Note,
agrees, for the benefit of the lessor or secured party of any airframe or engine
leased to the Company (or any Permitted Lessee) or purchased or owned by the
Company (or any Permitted Lessee) subject to a conditional sale or other
security agreement, that the Loan Trustee and the Noteholders will not acquire
or claim, as against such lessor or secured party, any right, title or interest
in (A) any engine or engines owned by the lessor under such lease or subject to
a security interest in favor of the secured party under such conditional sale or
other security agreement as the result of such engine or engines being installed
on the Airframe at any time while such engine or engines are subject to such
lease or conditional sale or other security agreement or (B) any airframe owned
by the lessor under such lease or subject to a security interest in favor of the
secured party under such conditional sale or other security agreement as the
result of any Engine being installed on such airframe at any time while such
airframe is subject to such lease or conditional sale or other security
agreement.
The Loan Trustee acknowledges that any "wet lease" or other similar
arrangement under which the Company maintains operational control of the
Aircraft shall not constitute a delivery, transfer or relinquishment of
possession for purposes of this Section 7.02(a).
(b) Operation and Use. The Company agrees that the Aircraft will not be
maintained, used or operated in violation of any law, rule or regulation of any
government of any country having jurisdiction over the Aircraft or in violation
of any airworthiness certificate, license or registration relating to the
Aircraft issued by any such government, except to the extent the Company is
contesting in good faith the validity or application of any such law, rule or
regulation in any manner that does not involve any material risk of sale,
forfeiture or loss of the Aircraft or materially impair the Lien of this
Indenture; and provided, that the Company shall not be in default under, or
required to take any action set forth in, this sentence if it is not possible
for it to comply with the laws of a jurisdiction other than the United States
(or other than any
43
jurisdiction in which the Aircraft is then registered) because of a conflict
with the applicable laws of the United States (or such jurisdiction in which the
Aircraft is then registered). The Company will not operate the Aircraft, or
permit the Aircraft to be operated or located, (i) in any area excluded from
coverage by any insurance required by the terms of Section 7.06 or (ii) in any
war zone or recognized or, in the Company's judgment, threatened areas of
hostilities unless covered by war risk insurance in accordance with Section
7.06, unless in the case of either clause (i) or (ii), (x) indemnification
complying with Section 7.06(a) and (b) has been provided or (y) the Aircraft is
only temporarily located in such area as a result of an isolated occurrence or
isolated series of occurrences attributable to a hijacking, medical emergency,
equipment malfunction, weather conditions, navigational error or other similar
unforeseen circumstances and the Company is using its good faith efforts to
remove the Aircraft from such area as promptly as practicable.
(c) Maintenance. The Company shall maintain, service, repair and
overhaul the Aircraft (or cause the same to be done) so as to keep the Aircraft
in good operating condition, ordinary wear and tear excepted, and in such
condition as may be necessary to enable the airworthiness certification of the
Aircraft to be maintained in good standing at all times (other than during
temporary periods of storage, during maintenance or modification permitted
hereunder, or during periods of grounding by applicable governmental
authorities) under the Transportation Code, during such periods in which the
Aircraft is registered under the laws of the United States, or, if the Aircraft
is registered under the laws of any other jurisdiction, the applicable laws of
such jurisdiction. In any case the Aircraft will be maintained in accordance
with the maintenance standards required by or substantially equivalent to those
required by the FAA or the central aviation authority of Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland or the United
Kingdom. The Company shall maintain or cause to be maintained all records, logs
and other documents required to be maintained in respect of the Aircraft by
appropriate authorities in the jurisdiction in which the Aircraft is registered.
(d) Identification of Loan Trustee's Interest. The Company agrees to
affix as promptly as practicable after the Closing Date and thereafter to
maintain in the cockpit of the Aircraft, in a clearly visible location, and (if
not prevented by applicable law or regulations or by any government) on each
Engine, a nameplate bearing the inscription "MORTGAGED TO STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, AS LOAN TRUSTEE" (such
nameplate to be replaced, if necessary, with a nameplate reflecting the name of
any successor Loan Trustee).
(e) Registration. The Company shall cause the Aircraft to remain duly
registered, under the laws of the United States, in the name of the Company
except as otherwise required by the Transportation Code; provided that the Loan
Trustee shall, at the Company's expense, execute and deliver all such documents
as the Company may reasonably request for the purpose of continuing such
registration. Notwithstanding the preceding sentence, the Company, at its
44
own expense, may cause or allow the Aircraft to be duly registered under the
laws of any foreign jurisdiction in which a Permitted Lessee could be
principally based, in the name of the Company or of any nominee of the Company,
or, if required by applicable law, in the name of any other Person (and,
following any such foreign registration, may cause the Aircraft to be
re-registered under the laws of the United States); provided, that in the case
of jurisdictions other than those approved by the Loan Trustee with the consent
of a Majority in Interest of the Noteholders (i) if such jurisdiction is at the
time of registration listed on Exhibit B, the Loan Trustee shall have received
at the time of such registration an opinion of counsel to the Company to the
effect that (A) this Indenture and the Loan Trustee's right to repossession
thereunder is valid and enforceable under the laws of such country, (B) after
giving effect to such change in registration, the Lien of this Indenture shall
continue as a valid Lien and shall be duly perfected in the new jurisdiction of
registration and that all filing, recording or other action necessary to perfect
and protect the Lien of this Indenture has been accomplished (or if such opinion
cannot be given at such time, (x) the opinion shall detail what filing,
recording or other action is necessary and (y) the Loan Trustee shall have
received a certificate from a Responsible Officer of the Company that all
possible preparations to accomplish such filing, recording and other action
shall have been done, and such filing, recording and other action shall be
accomplished and a supplemental opinion to that effect shall be promptly
delivered to the Loan Trustee subsequent to the effective date of such change in
registration), (C) the obligations of the Company under this Indenture shall
remain valid, binding and (subject to customary bankruptcy and equitable
remedies exceptions and to other exceptions customary in foreign opinions
generally) enforceable under the laws of such jurisdiction (or the laws of the
jurisdiction to which the laws of such jurisdiction would refer as the
applicable governing law) and (D) all approvals or consents of any government in
such jurisdiction having jurisdiction required for such change in registration
shall have been duly obtained and shall be in full force and effect, and (ii) if
such jurisdiction is at the time of registration not listed on Exhibit B, the
Loan Trustee shall have received (in addition to the opinions set forth in
clause (i) above) at the time of such registration an opinion of counsel to the
Company to the effect that (A) the terms of this Indenture are legal, valid,
binding and enforceable in such jurisdiction (subject to exceptions customary in
such jurisdiction, provided, that, subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally, and to general principles of equity, any applicable laws limiting the
remedies provided in Section 4.02 do not in the opinion of such counsel make the
remedies provided in Section 4.02 inadequate for the practical realization of
the rights and benefits provided thereby), (B) that it is not necessary for the
Loan Trustee to register or qualify to do business in such jurisdiction, (C)
that there is no tort liability of the lender of an aircraft not in possession
thereof under the laws of such jurisdiction other than tort liability that might
have been imposed on such lender under the laws of the United States or any
state thereof (it being understood that such opinion shall be waived if
insurance reasonably satisfactory to the Loan Trustee is provided, at the
Company's expense, to cover such risk) and (D) (unless the Company shall have
agreed to provide insurance covering the risk of requisition of use or title of
the Aircraft by the government of such jurisdiction so long as the Aircraft is
registered under the laws of such jurisdiction) that the laws of such
jurisdiction require fair compensation by the
45
government of such jurisdiction payable in currency freely convertible into
Dollars for the loss of use or title of the Aircraft in the event of requisition
by such government of such use or title. The Loan Trustee will cooperate with
the Company in effecting such foreign registration. Notwithstanding the
foregoing, prior to any such change in the country of registry of the Aircraft,
the following conditions shall be met (or waived as provided in Section 6.01(b)
of the Participation Agreement):
(i) no Event of Default shall have occurred and be continuing at
the effective date of the change in registration; provided, that it shall
not be necessary to comply with this condition if the change in
registration results in the registration of the Aircraft under the laws of
the United States or if a Majority in Interest of Noteholders consents to
such change in registration;
(ii) the Loan Trustee shall have received evidence of compliance
with the insurance provisions contained herein after giving effect to such
change in registration; and
(iii) the Company shall have paid or made provision reasonably
satisfactory to the Loan Trustee for the payment of all reasonable
expenses (including reasonable attorneys' fees) of the Loan Trustee and
the Noteholders in connection with such change in registration.
Section 7.03. Inspection; Financial Information.
(a) Inspection. At all reasonable times, but upon at least 15 Business
Days' prior written notice to the Company, the Loan Trustee or its authorized
representative may, subject to the other conditions of this Section 7.03(a),
inspect the Aircraft and may inspect the books and records of the Company
required to be maintained by the FAA or the government of another jurisdiction
in which the Aircraft is then registered relating to the maintenance of the
Aircraft, and upon any such inspection by the Loan Trustee or its authorized
representative of such books and records, the Policy Provider or its authorized
representative may also inspect and make copies (at the Policy Provider's
expense) of such books and records; provided that (i) such Loan Trustee or its
representative, or the Policy Provider or its representative, as the case may
be, shall be fully insured at no cost to the Company in a manner satisfactory to
the Company with respect to any risks incurred in connection with any such
inspection or shall provide to the Company a written release satisfactory to the
Company with respect to such risks, (ii) any such inspection shall be subject to
the safety, security and workplace rules applicable at the location where such
inspection is conducted and any applicable governmental rules or regulations,
(iii) any such inspection of the Aircraft shall be a visual, walk-around
inspection of the interior and exterior of the Aircraft and shall not include
opening any panels, bays or the like without the Company's express consent,
which consent the Company may in its sole discretion withhold, and (iv) no
exercise of such inspection right shall interfere with the use, operation or
maintenance of the Aircraft by, or the business of, the Company and the Company
shall not be required to undertake
46
or incur any additional liabilities in connection therewith. All information
obtained in connection with any such inspection of the Aircraft and of such
books and records shall be Confidential Information and shall be treated by the
Loan Trustee, the Policy Provider, if applicable, and representatives in
accordance with the provisions of Section 10.16. Any inspection pursuant to this
Section 7.03(a) shall be at the sole risk (including, without limitation, any
risk of personal injury or death) and expense of the Loan Trustee (or its
representative) or the Policy Provider (or its representative), as the case may
be, making such inspection. Except during the continuance of an Event of
Default, all inspections by the Loan Trustee and its representatives provided
for under this Section 7.03(a) shall be limited to one inspection of any kind
contemplated by this Section 7.03(a) during any calendar year.
(b) Financial Information. So long as any of the Equipment Notes remain
unpaid, the Company agrees to furnish to the Loan Trustee, each Liquidity
Provider and the Policy Provider: (i) within 60 days after the end of each of
the first three quarterly periods in each fiscal year of the Company, either (x)
a consolidated balance sheet of the Company and its consolidated subsidiaries
prepared by it as of the close of such period, together with the related
consolidated statements of income for such period or (y) a report of the Company
on Form 10-Q in respect of such period in the form filed with the Securities and
Exchange Commission; (ii) within 120 days after the close of each fiscal year of
the Company, either (x) a consolidated balance sheet of the Company and its
consolidated subsidiaries as of the close of such fiscal year, together with the
related consolidated statements of income for such fiscal year, certified by
independent public accountants, or (y) a report of the Company on Form 10-K in
respect of such year in the form filed with the Securities and Exchange
Commission and (iii) within 60 days of the filing thereof, a copy of any Current
Report on Form 8-K filed by the Company with the Securities and Exchange
Commission.
(c) Annual Opinion. The Company will furnish to the Loan Trustee
annually (but not later than March 15th of each year) after the execution hereof
until such time as the principal of, and interest on, and all other amounts with
respect to, the Equipment Notes shall have been paid in full, commencing with
the year 2002, an opinion of Xxxxx & Xxxxxxx, P.C., or other counsel reasonably
acceptable to the Loan Trustee, stating either (i) that in the opinion of such
counsel such action has been taken with respect to the recording, filing,
re-recording and refiling of this Indenture and any supplements thereto,
including any financing or continuation statements, and such other filings and
recordings as are necessary to maintain, for the 15-month period succeeding the
date of such opinion, the perfection of the security interests created thereby
and reciting the details of such action or (ii) that in the opinion of such
counsel no such action is necessary to maintain, for the 15-month period
succeeding the date of such opinion, the perfection of such security interests.
Section 7.04. Replacement and Pooling of Parts; Alterations, Modifications
and Additions; Substitution of Engines.
(a) Replacement of Parts. The Company shall promptly replace all Parts
that may
47
from time to time be incorporated or installed in or attached to the Airframe or
any Engine and that may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or rendered permanently
unfit for use for any reason whatsoever, except as otherwise provided in Section
7.04(c) or if the Airframe or an Engine to which a Part relates has suffered an
Event of Loss. In addition, the Company may remove in the ordinary course of
maintenance, service, repair, overhaul or testing, any Parts, whether or not
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
rendered permanently unfit for use; provided that the Company, except as
otherwise provided in Section 7.04(c), will replace such Parts as promptly as
practicable. All replacement Parts shall be free and clear of all Liens (except
for Permitted Liens and except in the case of replacement property temporarily
installed on an emergency basis) and shall have a value and utility at least
equal to the Parts replaced, assuming such replaced Parts were in the condition
and repair required to be maintained by the terms hereof. Except as otherwise
provided in Section 7.04(c), all Parts at any time removed from the Airframe or
any Engine shall remain subject to the Lien of this Indenture no matter where
located until such time as such Parts shall be replaced by parts that have been
incorporated or installed in or attached to the Airframe or such Engine and that
meet the requirements for replacement Parts specified above. Immediately upon
any replacement Part becoming incorporated or installed in or attached to the
Airframe or any Engine as above provided (except in the case of replacement
property temporarily installed on an emergency basis), without further act, (i)
the replaced Part shall thereupon be free and clear of all rights of the Loan
Trustee and of the Lien of this Indenture and shall no longer be deemed a Part
hereunder and (ii) such replacement Part shall become subject to the Lien of
this Indenture and be deemed a Part of the Airframe or such Engine for all
purposes to the same extent as the Parts originally incorporated or installed in
or attached to the Airframe or such Engine. Upon request of the Company from
time to time, the Loan Trustee shall execute and deliver to the Company an
appropriate instrument confirming the release of any such replaced Part from the
Lien of this Indenture.
(b) Pooling of Parts. Any Part removed from the Airframe or any Engine
as provided in Section 7.04(a) may be subjected by the Company or a Person
permitted to be in possession of the Aircraft to a pooling arrangement customary
in the airline industry entered into in the ordinary course of the Company's or
such Person's business; provided that the part replacing such removed Part shall
be incorporated or installed in or attached to the Airframe or such Engine in
accordance with Section 7.04(a) as promptly as practicable after the removal of
such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine may be owned by any third
party subject to such a pooling arrangement; provided that the Company, at its
expense, as promptly thereafter as practicable, either (i) causes title to such
replacement Part to vest in the Company free and clear of all Liens (except
Permitted Liens), or (ii) replaces such replacement Part by incorporating or
installing in or attaching to the Airframe or such Engine a further replacement
Part in the manner contemplated by Section 7.04(a).
(c) Alterations, Modifications and Additions. The Company will make such
48
alterations and modifications in and additions to the Airframe and the Engines
as may be required from time to time to meet the applicable requirements of the
FAA or any applicable government of any other jurisdiction in which the Aircraft
may then be registered; provided, however, that the Company may, in good faith,
contest the validity or application of any such requirement in any manner that
does not involve any material risk of sale, loss or forfeiture of the Aircraft
and does not materially adversely affect the Loan Trustee's interest in the
Aircraft. In addition, the Company, at its own expense, may from time to time
add further parts or accessories and make or cause to be made such alterations
and modifications in and additions to the Airframe or any Engine as the Company
may deem desirable in the proper conduct of its business, including, without
limitation, removal (without replacement) of Parts, provided that no such
alteration, modification or addition shall materially diminish the value or
utility of the Airframe or such Engine below its value or utility, immediately
prior to such alteration, modification or addition, assuming that the Airframe
or such Engine was then in the condition required to be maintained by the terms
of this Indenture, except that the value (but not the utility) of the Airframe
or any Engine may be reduced by the value of any such Parts that shall have been
removed that the Company deems obsolete or no longer suitable or appropriate for
use on the Airframe or any Engine. All Parts incorporated or installed in or
attached or added to the Airframe or any Engine as the result of such
alteration, modification or addition shall, without further act, be subject to
the Lien of this Indenture. Notwithstanding the foregoing, the Company may, at
any time, remove any Part from the Airframe or any Engine if such Part: (i) is
in addition to, and not in replacement of or substitution for, any Part
originally incorporated or installed in or attached to the Airframe or such
Engine at the time of delivery thereof to the Company or any Part in replacement
of, or substitution for, any such Part, (ii) is not required to be incorporated
or installed in or attached or added to the Airframe or such Engine pursuant to
the first sentence of this Section 7.04(c) or (iii) can be removed from the
Airframe or such Engine without materially diminishing the value or utility
required to be maintained by the terms of this Indenture that the Airframe or
such Engine would have had at such time had such removal not occurred. Upon the
removal by the Company of any Part as permitted by this Section 7.04(c), such
removed Part shall, without further act, be free and clear of all rights and
interests of the Loan Trustee and the Lien of this Indenture and shall no longer
be deemed a Part hereunder. Upon request of the Company from time to time, the
Loan Trustee shall execute and deliver to the Company an appropriate instrument
confirming the release of any such removed Part from the Lien of this Indenture.
(d) Substitution of Engines. The Company shall have the right at its
option at any time, on at least 30 days' prior written notice to the Loan
Trustee, to substitute a Replacement Engine for any Engine. In such event, and
prior to the date of such substitution, the Company shall replace such Engine
hereunder by complying with the terms of Section 7.05(b) to the same extent as
if an Event of Loss had occurred with respect to such Engine.
Section 7.05. Loss, Destruction or Requisition.
49
(a) Event of Loss with Respect to the Airframe. Upon the occurrence of
an Event of Loss with respect to the Airframe or the Airframe and the Engines
then installed thereon, the Company shall forthwith (and, in any event, within
15 days after such occurrence) give the Loan Trustee written notice of such
Event of Loss, and, within 90 days after such Event of Loss, the Company shall
give the Loan Trustee written notice of its election to perform one of the
following options (it being agreed that if the Company shall not have given such
notice of election within such 90-day period, the Company shall be deemed to
have elected to perform the option set forth in the following clause (ii)). The
Company may elect either to:
(i) on or before the Loss Payment Date (as defined below)
substitute, as replacement for the Airframe or Airframe and Engines with
respect to which an Event of Loss has occurred, a Replacement Airframe
(together with a number of Replacement Engines equal to the number of
Engines, if any, with respect to which the Event of Loss occurred), such
Replacement Airframe and Replacement Engines to be owned by the Company
free and clear of all Liens (other than Permitted Liens); provided that if
the Company shall not perform its obligation to effect such substitution
under this clause (i) on or prior to the Loss Payment Date, then the
Company shall on the Loss Payment Date prepay the Equipment Notes in full
in accordance with Section 2.10; or
(ii) on or before the Loss Payment Date, redeem the Equipment Notes
in full in accordance with Section 2.10. The Company shall give the Loan
Trustee 20 days prior written notice if it elects to redeem the Equipment
Notes on any day prior to the Loss Payment Date.
The "Loss Payment Date" with respect to an Event of Loss means the
Business Day next succeeding the 120th day following the date of occurrence of
such Event of Loss.
If the Company elects to substitute a Replacement Airframe (or a
Replacement Airframe and one or more Replacement Engines, as the case may be)
the Company shall, at its sole expense, not later than the Loss Payment Date,
(A) cause an Indenture Supplement for such Replacement Airframe and Replacement
Engines, if any, to be delivered to the Loan Trustee for execution and, upon
such execution, to be filed for recordation pursuant to the Transportation Code
or the applicable laws of such other jurisdiction in which the Aircraft may then
be registered, (B) cause a financing statement or statements with respect to the
Replacement Airframe and Replacement Engines, if any, or other requisite
documents or instruments to be filed in such place or places as necessary in
order to perfect the Loan Trustee's interest therein in the United States, or in
any other jurisdiction in which the Aircraft may then be registered, (C) furnish
the Loan Trustee with an opinion of the Company's counsel (which may be the
Company's General Counsel or such other internal counsel of the Company as shall
be reasonably satisfactory to the Loan Trustee) addressed to the Loan Trustee to
the effect that upon such replacement, such Replacement Airframe and Replacement
Engines, if any, will be subject to the Lien of this Indenture and addressing
the matters set forth in clauses (A) and (B), (D) furnish the Loan Trustee with
a certificate of an independent aircraft engineer or appraiser,
50
certifying that the Replacement Airframe and Replacement Engines, if any, have a
value and utility at least equal to the Airframe and Engines, if any, so
replaced, assuming the Airframe and such Engines were in the condition and
repair required by the terms hereof immediately prior to the occurrence of such
Event of Loss, (E) furnish the Loan Trustee with evidence of compliance with the
insurance provisions of Section 7.06 with respect to such Replacement Airframe
and Replacement Engines, if any, and (F) furnish the Loan Trustee with an
opinion of the Company's counsel (which may be the Company's General Counsel or
such other internal counsel of the Company as shall be reasonably satisfactory
to the Loan Trustee) to the effect that the Loan Trustee will be entitled to the
benefits of Section 1110 with respect to the Replacement Airframe, provided that
(i) such opinion need not be delivered to the extent that the benefits of
Section 1110 were not, by reason of a change in law or governmental or judicial
interpretation thereof, available to the Loan Trustee with respect to the
Aircraft immediately prior to such substitution and (ii) such opinion may
contain qualifications and assumptions of the tenor contained in the opinion of
the Company's counsel delivered pursuant to Section 3.01 of the Participation
Agreement on the Closing Date and such other qualifications and assumptions as
shall at the time be customary in opinions rendered in comparable circumstances.
In the case of each Replacement Airframe or Replacement Airframe and one
or more Replacement Engines subjected to the Lien of this Indenture under this
Section 7.05(a), promptly upon the recordation of the Indenture Supplement
covering such Replacement Airframe and Replacement Engines, if any, pursuant to
the Transportation Code (or pursuant to the applicable law of such other
jurisdiction in which such Replacement Airframe and Replacement Engines, if any,
are registered), the Company will cause to be delivered to the Loan Trustee a
favorable opinion of the Company's counsel (which may be the Company's General
Counsel or such other internal counsel to the Company as shall be reasonably
satisfactory to the Loan Trustee) addressed to the Loan Trustee as to the due
registration of such Replacement Aircraft and the due recordation of such
Indenture Supplement or such other requisite documents or instruments and the
validity and perfection of the security interest in the Replacement Aircraft
granted to the Loan Trustee under this Indenture.
For all purposes hereof, upon the attachment of the Lien of this Indenture
thereto, the Replacement Aircraft and Replacement Engines, if any, shall become
part of the Collateral, the Replacement Airframe shall be deemed an "Airframe"
as defined herein, and each such Replacement Engine shall be deemed an "Engine"
as defined herein. Upon compliance with clauses (A) through (F) of the second
preceding paragraph, the Loan Trustee shall execute and deliver to the Company
an appropriate instrument releasing such replaced Airframe and Engines (if any)
installed thereon at the time such Event of Loss occurred, all proceeds
(including, without limitation, insurance proceeds), the Warranty Rights in
respect of such replaced Airframe and Engines (if any) and all rights relating
to the foregoing, from the Lien of this Indenture and assigning to the Company
all claims against third Persons for damage to or loss of the Airframe and
Engines arising from the Event of Loss.
51
In the event that, after an Event of Loss, the Company performs the option
set forth in clause (ii) of the first paragraph of this Section 7.05(a), the
Loan Trustee shall execute and deliver to the Company an appropriate instrument
releasing the Aircraft, all proceeds (including, without limitation, insurance
proceeds), the Warranty Rights in respect of the Aircraft and all rights
relating to the foregoing from the Lien of this Indenture and assigning to the
Company all claims against third Persons for damage to or loss of the Aircraft
arising from the Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon the occurrence of an
Event of Loss with respect to an Engine under circumstances in which there has
not occurred an Event of Loss with respect to the Airframe, the Company shall
give the Loan Trustee prompt written notice thereof and shall, within 120 days
after the occurrence of such Event of Loss, cause to be subjected to the Lien of
this Indenture, as replacement for the Engine with respect to which such Event
of Loss occurred, a Replacement Engine free and clear of all Liens (other than
Permitted Liens).
Prior to or at the time of any replacement under this Section 7.05(b), the
Company will (i) cause an Indenture Supplement covering such Replacement Engine
to be delivered to the Loan Trustee for execution and, upon such execution, to
be filed for recordation pursuant to the Transportation Code or the applicable
laws of any other jurisdiction in which the Aircraft may be registered, (ii)
cause a financing statement or statements with respect to such Replacement
Engine or other requisite documents or instruments to be filed in such place or
places as necessary in order to perfect the Loan Trustee's interest therein in
the United States, or in such other jurisdiction in which the Engine may then be
registered, (iii) furnish the Loan Trustee with an opinion of the Company's
counsel (which may be the Company's General Counsel or such other internal
counsel to the Company as shall be reasonably satisfactory to the Loan Trustee)
addressed to the Loan Trustee to the effect that, upon such replacement, the
Replacement Engine will be subject to the Lien of this Indenture, (iv) furnish
the Loan Trustee with a certificate of an aircraft engineer or appraiser (who
may be an employee of the Company) certifying that such Replacement Engine has a
value and utility at least equal to the Engine so replaced assuming such Engine
was in the condition and repair required by the terms hereof immediately prior
to the occurrence of such Event of Loss and (v) furnish the Loan Trustee with
evidence of compliance with the insurance provisions of Section 7.06 with
respect to such Replacement Engine. In the case of each Replacement Engine
subjected to the Lien of this Indenture under this Section 7.05(b), promptly
upon the recordation of the Indenture Supplement covering such Replacement
Engine pursuant to the Transportation Code (or pursuant to the applicable law of
such other jurisdiction in which the Aircraft is registered), the Company will
cause to be delivered to the Loan Trustee an opinion of counsel to the Company
(which may be the Company's General Counsel or such other internal counsel of
the Company as shall be reasonably satisfactory to the Loan Trustee) addressed
to the Loan Trustee as to the due recordation of such Indenture Supplement or
such other requisite documents or instruments and the validity and perfection of
the security interest in the Replacement Engine granted to the Loan Trustee
under this Indenture. For all purposes hereof, upon the attachment of the Lien
of this Indenture thereto, the
52
Replacement Engine shall become part of the Collateral and shall be deemed an
"Engine" as defined herein. Upon compliance with clauses (i) through (v) of this
paragraph, the Loan Trustee shall execute and deliver to the Company an
appropriate instrument releasing such replaced Engine, any proceeds (including,
without limitation, insurance proceeds), the Warranty Rights in respect of such
replaced Engine and all rights relating to any of the foregoing from the Lien of
this Indenture and assigning to the Company all claims against third Persons for
damage to or loss of such Engine arising from the Event of Loss.
(c) Application of Payments for Event of Loss from Requisition of Title
or Use. Any payments (other than insurance proceeds the application of which is
provided for in Section 7.06) received at any time by the Company or by the Loan
Trustee from any government or other Person with respect to an Event of Loss to
the Airframe or any Engine, will be applied as follows:
(i) if such payments are received with respect to the Airframe or
the Airframe and the Engines installed on the Airframe that has been or is
being replaced by the Company pursuant to Section 7.05(a), such payments
shall be paid over to, or retained by, the Loan Trustee and upon
completion of such replacement shall be paid over to, or retained by, the
Company;
(ii) if such payments are received with respect to the Airframe or
the Airframe and the Engines installed on the Airframe that has not been
and will not be replaced pursuant to Section 7.05(a), so much of such
payments remaining after reimbursement of the Loan Trustee for costs and
expenses that shall not exceed the amounts required to be paid to the
Noteholders pursuant to Section 2.10 shall be applied in reduction of the
Company's obligation to pay such amounts, if not already paid by the
Company, or, if already paid by the Company, shall be applied to reimburse
the Company for its payment of such amount and the balance, if any, of
such payment remaining thereafter will be paid over to, or retained by,
the Company; and
(iii) if such payments are received with respect to an Engine with
regard to which an Event of Loss has occurred as contemplated by Section
7.05(b), so much of such payments remaining after reimbursement of the
Loan Trustee for costs and expenses shall be paid over to, or retained by,
the Company; provided that the Company shall have fully performed the
terms of Section 7.05(b) with respect to the Event of Loss for which such
payments are made.
(d) Requisition for Use by the Government of the Airframe and the
Engines Installed Thereon. In the event of the requisition for use by any
government, including, without limitation, pursuant to the CRAF Program, of the
Airframe and the Engines or engines installed on the Airframe that does not
constitute an Event of Loss, all of the Company's rights and obligations under
this Indenture with respect to the Airframe and such Engines shall continue to
the same extent as if such requisition had not occurred; provided that,
notwithstanding the
53
foregoing, the Company's obligations other than payment obligations shall only
continue to the extent feasible. All payments received by the Company or the
Loan Trustee from such government for such use of the Airframe and Engines or
engines shall be paid over to, or retained by, the Company.
(e) Requisition for Use by the Government of an Engine not Installed on
the Airframe. In the event of the requisition for use by any government of any
Engine not then installed on the Airframe, the Company will replace such Engine
by complying with the terms of Section 7.05(b) to the same extent as if an Event
of Loss had occurred with respect to such Engine. Upon such replacement, any
payments received by the Company or the Loan Trustee from such government with
respect to such requisition shall be paid over to, or retained by, the Company.
(f) Application of Payments During Existence of Event of Default. Any
amount referred to in Section 7.05 that is payable to or retainable by the
Company shall not be paid to or retained by the Company if at the time of such
payment or retention an Event of Default or Payment Default shall have occurred
and be continuing, but shall be held by or paid over to the Loan Trustee as
security for the obligations of the Company under this Indenture. At such time
as there shall not be continuing any such Event of Default or Payment Default,
such amount shall be paid to the Company.
Section 7.06. Insurance.
(a) Aircraft Liability Insurance.
(i) Except as provided in clause (ii) of this subsection (a), and
subject to the rights of the Company to establish and maintain
self-insurance in the manner and to the extent specified in Section
7.06(c), the Company will carry, or cause to be carried, at no expense to
the Loan Trustee, aircraft liability insurance (including, but not limited
to, bodily injury, personal injury and property damage liability,
exclusive of manufacturer's product liability insurance) and contractual
liability insurance with respect to the Aircraft (A) in amounts that are
not less than the aircraft liability insurance applicable to similar
aircraft and engines in the Company's fleet on which the Company carries
insurance; provided that such liability insurance shall not be less than
the amount certified in the insurance report delivered to the Loan Trustee
on the Closing Date, (B) of the type usually carried by corporations
engaged in the same or similar business, similarly situated with the
Company and owning or operating similar aircraft and engines and covering
risks of the kind customarily insured against by the Company, and (C) that
is maintained in effect with insurers of recognized responsibility. Any
policies of insurance carried in accordance with this Section 7.06(a) and
any policies taken out in substitution or replacement for any of such
policies shall (A) name the Loan Trustee, the Subordination Agent, each
Pass Through Trustee, each Liquidity Provider and the Policy Provider as
their Interests (as defined below in this Section 7.06) may appear, as
additional insured
54
(the "Additional Insureds"), (B) subject to the condition of clause (C)
below, provide that, in respect of the interest of the Additional Insureds
in such policies, the insurance shall not be invalidated by any action or
inaction of the Company and shall insure the Additional Insureds'
Interests as they appear, regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by the
Company, (C) provide that, if such insurance is canceled for any reason
whatever, or if any change is made in the policy that materially reduces
the amount of insurance or the coverage certified in the insurance report
delivered on the Closing Date to the Loan Trustee and each Liquidity
Provider, or if such insurance is allowed to lapse for nonpayment of
premium, such cancellation, change or lapse shall not be effective as to
any Additional Insured for 30 days (seven days, or such other period as is
customarily available in the industry, in the case of any war risk or
allied perils coverage) after receipt by such Additional Insured of
written notice from such insurers of such cancellation, change or lapse,
(D) provide that the Additional Insureds shall have no obligation or
liability for premiums, commissions, assessments or calls in connection
with such insurance, (E) provide that the insurers shall waive any rights
of (1) set-off, counterclaim or any other deduction, whether by attachment
or otherwise, in respect of any liability of the Additional Insureds to
the extent of any moneys due to the Additional Insureds and (2)
subrogation against the Additional Insureds to the extent that the Company
has waived its rights by its agreements to indemnify the Additional
Insureds pursuant to the Operative Documents, (F) be primary without right
of contribution from any other insurance that may be carried by each
Additional Insured with respect to its interests as such in the Aircraft
and (G) expressly provide that all of the provisions thereof, except the
limits of liability, shall operate in the same manner as if there were a
separate policy covering each insured. "Interests" as used in this Section
7.06(a) and in Section 7.06(b) with respect to any Person means the
interests of such Person in the transactions contemplated by the Operative
Documents. In the case of a lease or contract with any government in
respect of the Aircraft or any Engine, or in the case of any requisition
for use of the Aircraft or any Engine by any government, a valid agreement
by such government to indemnify the Company, or an insurance policy issued
by such government, against any of the risks that the Company is required
hereunder to insure against shall be considered adequate insurance for
purposes of this Section 7.06(a) to the extent of the risks (and in the
amounts) that are the subject of such indemnification or insurance.
(ii) During any period that the Airframe or an Engine, as the case
may be, is on the ground and not in operation, the Company may carry or
cause to be carried as to such non-operating Airframe or Engine, in lieu
of the insurance required by clause (i) above, and subject to
self-insurance to the extent permitted by Subsection 7.06(c), insurance
otherwise conforming with the provisions of said clause (i) except that:
(A) the amounts of coverage shall not be required to exceed the amounts of
airline liability insurance from time to time applicable to airframes or
engines owned or leased by the
55
Company of the same type as such non-operating Airframe or Engine and that
are on the ground and not in operation and (B) the scope of the risks
covered and the type of insurance shall be the same as from time to time
shall be applicable to airframes or engines owned or leased by the Company
of the same type as such non-operating Airframe or Engine and that are on
the ground and not in operation.
(b) Insurance Against Loss or Damage to Aircraft.
(i) Except as provided in clause (ii) of this subsection (b), and
subject to the rights of the Company to establish and maintain
self-insurance in the manner and to the extent specified in Section
7.06(c), the Company shall maintain, or cause to be maintained, in effect
with insurers of recognized responsibility, at no expense to the Loan
Trustee, all-risk aircraft hull insurance covering the Aircraft and
all-risk coverage with respect to any Engines or Parts while removed from
the Aircraft (including, without limitation, war risk insurance if and to
the extent the same is maintained by the Company or any Permitted Lessee
with respect to other aircraft owned or operated by the Company or such
Permitted Lessee, as the case may be, on the same routes) that is of the
type and in substantially the amount usually carried by corporations
engaged in the same or similar business and similarly situated with the
Company; provided that (A) such insurance (including the permitted
self-insurance) shall at all times while the Aircraft is subject to this
Indenture be for an amount not less than 110% of the aggregate outstanding
principal amount of the Equipment Notes from time to time, (B) such
insurance need not cover an Engine while attached to an airframe not
owned, leased or operated by the Company and (C) such insurance covering
Engines and Parts removed from an Airframe or an airframe or (in the case
of Parts) an Engine need be obtained only to the extent available at
reasonable cost (as reasonably determined by the Company). Any policies
carried in accordance with this Section 7.06(b) and any policies taken out
in substitution or replacement for any such policies shall (A) provide
that any insurance proceeds up to an amount equal to the outstanding
principal amount of the Equipment Notes, together with accrued but unpaid
interest thereon, plus an amount equal to the interest that would accrue
on the outstanding principal amount of the Equipment Notes at the Debt
Rate in effect on the date of payment of such insurance proceeds to the
Loan Trustee (as provided for in this sentence) during the period
commencing on the day following the date of such payment to the Loan
Trustee and ending on the Loss Payment Date, plus Break Amount with
respect to the Series G Notes (the "Loan Amount"), payable for any loss or
damage constituting an Event of Loss with respect to the Aircraft and any
insurance proceeds in excess of the amount set forth on Exhibit C up to
the amount of the Loan Amount for any loss or damage to the Aircraft (or
Engines) not constituting an Event of Loss with respect to the Aircraft
(or Engines), shall be paid to the Loan Trustee as long as the Indenture
shall not have been discharged, and that all other amounts shall be
payable to the Company, unless the insurer shall have received notice that
an Event of Default exists, in which case all insurance proceeds for any
loss or damage to the Aircraft (or Engines) up
56
to the Loan Amount shall be payable to the Loan Trustee, (B) subject to
the conditions of clause (C) below, provide that, in respect of the
interests of the Additional Insureds in such policies, the insurance shall
not be invalidated by any action or inaction of the Company and shall
insure the Additional Insureds' Interests as they appear, regardless of
any breach or violation of any warranty, declaration or condition
contained in such policies by the Company, (C) provide that if such
insurance is canceled for any reason whatsoever, or if any change is made
in the policy that materially reduces the amount of insurance or the
coverage certified in the insurance report delivered on the Closing Date
to the Loan Trustee and each Liquidity Provider, or if such insurance is
allowed to lapse for nonpayment of premium, such cancellation, change or
lapse shall not be effective as to the Additional Insureds for 30 days
(seven days, or such other period as is customarily available in the
industry, in the case of war risk or allied perils coverage) after receipt
by the Additional Insureds of written notice from such insurers of such
cancellation, change or lapse, (D) provide that the Additional Insureds
shall have no obligation or liability for premiums, commissions,
assessments or calls in connection with such insurance, (E) provide that
the insurers shall waive rights of (1) setoff, counterclaim or any other
deduction, whether by attachment or otherwise, in respect of any liability
of the Additional Insureds to the extent of any moneys due to the
Additional Insureds and (2) subrogation against the Additional Insureds to
the extent the Company has waived its rights by its agreement to indemnify
the Additional Insureds pursuant to the Operative Documents and (F) be
primary without right of contribution from any other insurance that may be
carried by any Additional Insured with respect to its Interests as such in
the Aircraft. In the case of a lease or contract with any government in
respect of the Aircraft or any Engine, or in the case of any requisition
for use of the Aircraft or any Engine by any government, a valid agreement
by such government to indemnify the Company, or an insurance policy issued
by such government, against any risks which the Company is required
hereunder to insure against shall be considered adequate insurance for
purposes of this Section 7.06(b) to the extent of the risks (and in the
amounts) that are the subject of such indemnification or insurance.
(ii) During any period that the Airframe or an Engine is on the
ground and not in operation, the Company may carry or cause to be carried
as to such non-operating Airframe or Engine, in lieu of the insurance
required by clause (i) above, and subject to self-insurance to the extent
permitted by Subsection 7.06(c), insurance otherwise conforming with the
provisions of said clause (i) except that the scope of the risks covered
and the type of insurance shall be the same as from time to time
applicable to airframes and engines owned or leased by the Company (or, if
a lease is then in effect, by the Permitted Lessee) of the same type as
such non-operating Airframe or Engine and that are on the ground and not
in operation; provided that, subject to self-insurance to the extent
permitted by Subsection 7.06(c), the Company shall maintain insurance
against risk of loss or damage to such non-operating Airframe or Engine in
an amount at least equal to 110% of the aggregate outstanding principal
amount of the Equipment Notes
57
during such period that such Airframe or Engine is on the ground and not
in operation.
(c) Self-Insurance. The Company may from time-to-time self-insure, by
way of deductible, self-insured retention, premium adjustment or franchise or
otherwise (including, with respect to insurance maintained pursuant to
Subsections 7.06(a) or 7.06(b), insuring for a maximum amount that is less than
the amounts set forth in Sections 7.06(a) and 7.06(b)), the risks required to be
insured against pursuant to Sections 7.06(a) and 7.06(b), but in no case shall
the self-insurance with respect to all of the aircraft and engines in the
Company's fleet (including, without limitation, the Aircraft) exceed for any
12-month policy year 1% of the average aggregate insurable value (for the
preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which the Company carries insurance, unless an insurance broker of
national standing shall certify that the standard among all other major United
States airlines is a higher level of self-insurance, in which case the Company
may self-insure the Aircraft to such higher level. In addition to the foregoing
right to self-insure, the Company may self-insure to the extent of (1) any
deductible per occurrence that, in the case of the Aircraft, is not in excess of
the amount customarily allowed as a deductible in the industry or is required to
facilitate claims handling or (2) any applicable mandatory minimum per aircraft
(or if applicable per annum or other period) hull or liability insurance
deductibles imposed by the aircraft or hull liability insurers.
(d) Application of Insurance Payments. All losses will be adjusted by
the Company with the insurers. As between the Loan Trustee and the Company it is
agreed that all insurance payments received under policies required to be
maintained by the Company hereunder, exclusive of any payments received in
excess of the Loan Amount for the Aircraft from such policies, as the result of
the occurrence of an Event of Loss with respect to the Airframe or an Engine
will be applied as follows:
(i) if such payments are received with respect to the Airframe or
the Airframe and any Engines installed on the Airframe that has been or is
being replaced by the Company pursuant to Section 7.05(a), such payments
shall be paid over to, or retained by, the Loan Trustee and upon
completion of such replacement shall be paid over to, or retained by, the
Company.
(ii) if such payments are received with respect to the Airframe or
the Airframe and any Engines installed on the Airframe that has not been
and will not be replaced as contemplated by Section 7.05(a), so much of
such payments remaining after reimbursement of the Loan Trustee for its
costs and expenses as shall not exceed the amounts required to be paid by
the Company pursuant to Section 2.10 shall be applied in reduction of the
Company's obligation to pay such amounts, if not already paid by the
Company, or, if already paid by the Company, shall be applied to reimburse
the Company for its payment of such amounts and the balance, if any, of
such payment remaining thereafter will be paid over to, or retained by,
the Company; and
58
(iii) if such payments are received with respect to an Engine with
regard to which an Event of Loss contemplated by Section 7.05(b) has
occurred, so much of such payments remaining after reimbursement of the
Loan Trustee for its costs and expenses shall be paid over to, or retained
by, the Company; provided that the Company shall have fully performed the
terms of Section 7.05(b) with respect to the Event of Loss for which such
payments are made.
In all events, the insurance payment of any property damage loss received
under policies maintained by the Company in excess of the Loan Amount for the
Aircraft shall be paid to the Company.
The insurance payments for any loss or damage to the Airframe or an Engine
not constituting an Event of Loss with respect to the Airframe or such Engine
will be applied in payment (or to reimburse the Company) for repairs or for
replacement property in accordance with the terms of Sections 7.02 and 7.04, and
any balance remaining after compliance with such Sections with respect to such
loss or damage shall be paid to the Company. Any amount referred to in the
preceding sentence or in clause (i), (ii) or (iii) of the second preceding
paragraph that is payable to the Company shall not be paid to the Company (or,
if it has been previously paid directly to the Company, shall not be retained by
the Company) if at the time of such payment an Event of Default or Payment
Default shall have occurred and be continuing, but shall be paid to and held by
the Loan Trustee as security for the obligations of the Company under this
Indenture, and at such time as there shall not be continuing any such Event of
Default or Payment Default, such amount shall, to the extent not theretofore
applied as provided herein, be paid to the Company.
(e) Reports, Etc. On or before the Closing Date and annually upon
renewal of the Company's insurance coverage, the Company will furnish to the
Loan Trustee, each Liquidity Provider and the Policy Provider a report signed by
a firm of independent aircraft insurance brokers appointed by the Company (which
brokers may be in the regular employ of the Company), stating the opinion of
such firm that the insurance then carried and maintained on the Aircraft
complies with the terms hereof; provided that all information contained in such
report shall be Confidential Information and shall be treated by the Loan
Trustee, each Liquidity Provider and the Policy Provider and each of their
affiliates and officers, directors, agents and employees in accordance with the
provisions of Section 10.16. The Company will cause such firm to advise the Loan
Trustee, each Liquidity Provider and the Policy Provider in writing of any act
or omission on the part of the Company of which such firm has knowledge that
might invalidate or render unenforceable, in whole or in part, any insurance on
the Aircraft. The Company will also cause such firm to advise the Loan Trustee,
each Liquidity Provider and the Policy Provider in writing as promptly as
practicable after such firm acquires knowledge that an interruption of any
insurance carried and maintained on the Aircraft pursuant to this Section 7.06
will occur. Such information may only be provided to other Persons in accordance
with Section 10.16.
59
(f) Salvage Rights; Other. All salvage rights to the Airframe and each
Engine shall remain with the Company's insurers at all times, and any insurance
policies of the Loan Trustee insuring the Airframe or any Engine shall provide
for a release to the Company of any and all salvage rights in and to the
Airframe or any Engine. Neither the Loan Trustee nor any Noteholder may,
directly or indirectly, obtain insurance for its own account with respect to the
Airframe or any Engine if such insurance would limit or otherwise adversely
affect the coverage or amounts payable under, or increase the premiums for, any
insurance required to be maintained pursuant to this Section 7.06 or any other
insurance maintained with respect to the Aircraft or any other aircraft in the
Company's fleet.
ARTICLE VIII
SUCCESSOR AND ADDITIONAL TRUSTEES
Section 8.01. Resignation or Removal; Appointment of Successor.
(a) The resignation or removal of the Loan Trustee and the appointment
of a successor Loan Trustee shall become effective only upon the successor Loan
Trustee's acceptance of appointment as provided in this Section 8.01. The Loan
Trustee or any successor thereto must resign if at any time it ceases to be
eligible in accordance with the provisions of Section 8.01(c) and may resign at
any time without cause by giving at least 60 days' prior written notice to the
Company and each Noteholder. In addition, either the Company (so long as no
Event of Default or Payment Default shall have occurred and be continuing) or a
Majority in Interest of Noteholders (but only with the consent of the Company so
long as no Event of Default or Payment Default shall have occurred and be
continuing), may at any time remove the Loan Trustee without cause by an
instrument in writing delivered to the Loan Trustee and each Noteholder, and, in
case of a removal by a Majority in Interest of Noteholders, to the Company.
In the case of the resignation or removal of the Loan Trustee, the Company
shall promptly appoint a successor Loan Trustee. If a successor Loan Trustee
shall not have been appointed within 60 days after such notice of resignation or
removal, the Loan Trustee, the Company or any Noteholder may apply to any court
of competent jurisdiction to appoint a successor Loan Trustee to act until such
time, if any, as a successor shall have been appointed as above provided. The
successor Loan Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Loan Trustee appointed as above
provided.
(b) Any successor Loan Trustee, however appointed, shall execute and
deliver to the predecessor Loan Trustee and the Company an instrument accepting
such appointment and assuming the obligations of the Loan Trustee arising from
and after the time of such appointment, and thereupon such successor Loan
Trustee, without further act, shall become vested with all the estates,
properties, rights, powers and duties of the predecessor Loan Trustee hereunder
in the trust hereunder applicable to it with like effect as if originally named
the Loan Trustee herein; but nevertheless upon the written request of such
successor Loan Trustee, such
60
predecessor Loan Trustee shall execute and deliver an instrument transferring to
such successor Loan Trustee all the estates, properties, rights and powers of
such predecessor Loan Trustee, and such predecessor Loan Trustee shall duly
assign, transfer, deliver and pay over to such successor Loan Trustee all monies
or other property and all other books and records, or true, correct and complete
copies thereof, then held by such predecessor Loan Trustee hereunder.
(c) This Indenture shall at all times have a Loan Trustee, however
appointed, that is a Citizen of the United States (without the use of a voting
trust) and a bank or trust company having a combined capital and surplus of at
least $75,000,000 (or a combined capital and surplus in excess of $5,000,000 and
the obligations of which, whether now in existence or hereafter incurred, are
fully and unconditionally guaranteed by a corporation organized and doing
business under the laws of the United States or any state or territory thereof
or the District of Columbia and having a combined capital and surplus of at
least $75,000,000) or a corporation with a net worth of at least $75,000,000, if
there be such an institution willing, able and legally qualified to perform the
duties of the Loan Trustee hereunder upon reasonable or customary terms. If such
bank, trust company or corporation publishes reports of conditions at least
annually, pursuant to law or to the requirements of federal, state, territorial
or District of Columbia supervising or examining authority, then for the
purposes of this Section 8.01(c) the combined capital and surplus of such bank,
trust company or corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of conditions so published. In
case at any time the Loan Trustee shall cease to be eligible in accordance with
the provisions of this Section 8.01(c), the Loan Trustee shall resign
immediately in the manner and with the effect specified in Section 8.01(a).
(d) Any corporation into which the Loan Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Loan Trustee shall be
a party, or any corporation to which substantially all the corporate trust
business of the Loan Trustee may be transferred, shall, subject to the terms of
Section 8.01(c), be a successor Loan Trustee under this Indenture without
further act.
Section 8.02. Appointment of Additional and Separate Trustees.
(a) Whenever (i) the Loan Trustee shall deem it necessary or desirable
in order to conform to any law of any jurisdiction in which all or any part of
the Collateral shall be situated or to make any claim or bring any suit with
respect to or in connection with the Collateral, any Operative Document or any
of the transactions contemplated by the Operative Documents, (ii) the Loan
Trustee shall be advised by counsel satisfactory to it that it is necessary or
prudent in the interests of the Noteholders (and the Loan Trustee shall so
advise the Company) or (iii) the Loan Trustee shall have been requested to do so
by a Majority in Interest of Noteholders, then in any such case, the Loan
Trustee and, upon the written request of the Loan Trustee, the Company, 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 banks or trust
61
companies or corporations meeting the requirements of Section 8.01(c) and
approved by the Loan Trustee, either to act jointly with the Loan Trustee as
additional trustee or trustees of all or any part of the Collateral or to act as
separate trustee or trustees of all or any part of the Collateral, in each case
with such rights, powers, duties and obligations consistent with this Indenture
as may be provided in such supplemental indenture or other instruments as the
Loan Trustee or a Majority in Interest of Noteholders 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 8.02. If no
Event of Default has occurred and is continuing, no additional or supplemental
trustee shall be appointed without the Company's consent. If an Event of Default
shall have occurred and be continuing, the Loan Trustee may act under the
foregoing provisions of this Section 8.02(a) without the concurrence of the
Company, and the Company hereby irrevocably appoints (which appointment is
coupled with an interest) the Loan Trustee as its agent and attorney-in-fact to
act for it under the foregoing provisions of this Section 8.02(a). The Loan
Trustee may, in such capacity, execute, deliver and perform any such
supplemental indenture, or any such instrument, as may be required for the
appointment of any such additional or separate trustee or for the clarification
of, addition to or subtraction from the rights, powers, duties or obligations
theretofore granted to any such additional or separate trustee, subject in each
case to the remaining provisions of this Section 8.02. In case any additional or
separate trustee appointed under this Section 8.02(a) shall become incapable of
acting, resign or be removed, all the assets, property, rights, powers, trusts,
duties and obligations of such additional or separate trustee shall revert to
the Loan Trustee until a successor additional or separate trustee is appointed
as provided in this Section 8.02(a).
(b) No additional or separate trustee shall be entitled to exercise any
of the rights, powers, duties and obligations conferred upon the Loan Trustee in
respect of the custody, investment and payment of monies and all monies received
by any such additional or separate trustee from or constituting part of the
Collateral or otherwise payable under any Operative Documents to the Loan
Trustee shall be promptly paid over by it to the Loan Trustee. All other rights,
powers, duties and obligations conferred or imposed upon any additional or
separate trustee shall be exercised or performed by the Loan Trustee and such
additional or separate trustee jointly except to the extent that applicable law
of any jurisdiction in which any particular act is to be performed renders the
Loan Trustee incompetent or unqualified to perform such act, in which event such
rights, powers, duties and obligations (including the holding of title to all or
part of the Collateral in any such jurisdiction) shall be exercised and
performed by such additional or separate trustee. No additional or separate
trustee shall take any discretionary action except on the instructions of the
Loan Trustee or a Majority in Interest of Noteholders. No trustee hereunder
shall be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Loan Trustee shall be liable for the consequences of
its lack of reasonable care in selecting, and the Loan Trustee's own actions in
acting with, any additional or separate trustee. Each additional or separate
trustee appointed pursuant to this Section 8.02 shall be subject to, and shall
have the benefit of Articles IV, V, VI, VIII, IX and X hereof insofar as
62
they apply to the Loan Trustee. The powers of any additional or separate trustee
appointed pursuant to this Section 8.02 shall not in any case exceed those of
the Loan Trustee hereunder.
(c) If at any time the Loan Trustee shall deem it no longer necessary or
desirable or in the event that the Loan Trustee shall have been requested to do
so in writing by a Majority in Interest of Noteholders, the Loan Trustee and,
upon the written request of the Loan Trustee, the Company, 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
Loan Trustee may act on behalf of the Company under this Section 8.02(c) when
and to the extent it could so act under Section 8.02(a) hereof. In any case, the
Company may remove an additional or separate trustee in the manner set forth in
Section 8.01.
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.01. Amendments to this Indenture without Consent of Holders. At
any time after the date hereof, the Company and the Loan Trustee may enter into
one or more agreements supplemental hereto and to amend the Equipment Notes,
without notice to or consent of any Noteholder for any of the following
purposes: (i) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company contained
in any Operative Documents pursuant to Section 6.02(e) of the Participation
Agreement; (ii) to cure any defect or inconsistency herein or in the Equipment
Notes; (iii) to cure any ambiguity or correct any mistake; (iv) to evidence the
succession of a new trustee hereunder pursuant hereto or the removal of the
trustee hereunder or to provide for or facilitate the appointment of an
additional or separate trustee pursuant to Section 8.02 hereof; (v) to convey,
transfer, assign, mortgage or pledge any property to or with the Loan Trustee;
(vi) to make any other provisions or amendments with respect to matters or
questions arising hereunder or under the Equipment Notes, or to amend, modify or
supplement any provision hereof or thereof, so long as such action shall not
adversely affect the interests of the Noteholders, the Policy Provider or any
Liquidity Provider; (vii) to correct or amplify the description of any property
at any time subject to the Lien of this Indenture, or better to assure, convey
and confirm unto the Loan Trustee any property subject or required to be subject
to the Lien of this Indenture or to subject to the Lien of this Indenture the
Airframe or Engines or any Replacement Airframe or Replacement Engine; (viii) to
add to the covenants of the Company for the benefit of the Noteholders, or to
surrender any rights or power herein conferred upon the Company; (ix) to add to
the rights of the Noteholders; (x) to include on the Equipment Notes any legend
as may be required by law or as may otherwise be necessary or advisable; (xi) to
comply with any applicable requirements of the Trust Indenture Act of 1939, as
amended, or any other requirements of applicable law or of any regulatory body;
(xii) to provide for the issuance of New Series C Equipment Notes, New Series D
Equipment Notes and/or Second New Series D Equipment Notes and/or Pass Through
Certificates issued by a New Trust in connection with a Refunding and to make
changes relating thereto; (xiii) to provide for the guaranty by AMR Corporation
or another entity of this Indenture
63
or one or more Series of Equipment Notes (other than in connection with the
issuance of New Series C Equipment Notes, New Series D Equipment Notes, Second
New Series D Equipment Notes and Series E Equipment Notes, subject to obtaining
a Ratings Confirmation) and (xiv) to provide for the issuance of Series E
Equipment Notes and/or Pass Through Certificates issued by the Class E Trust and
to make changes relating thereto, provided that (A) the Company shall have
obtained written confirmation from each Rating Agency that the issuance of the
Series E Equipment Notes would not result in a reduction of the rating for any
class of Pass Through Certificates that is then rated below the then current
rating for such class of Pass Through Certificates (without regard to the Policy
in the case of the Class G Certificates) or a withdrawal or suspension of the
rating of such class of Pass Through Certificates and (B) (1) if the Series E
Equipment Notes are issued to a Class E Trust, the Pass Through Trustee thereof
shall become a party to the Intercreditor Agreement as provided therein or (2)
if Series E Equipment Notes are issued to any person other than a Class E Trust,
the Series E Equipment Notes will be subject to the provisions of the
Intercreditor Agreement that allow the "Controlling Party" (as defined in the
Intercreditor Agreement), during the continuance of an "Indenture Event of
Default" (as defined in the Intercreditor Agreement) to direct the Loan Trustee
in taking action under this Indenture; provided further that, unless there shall
have been obtained from each Rating Agency written confirmation that a
supplemental agreement described in any of clauses (i) through (xiv) of this
Section 9.01 would not result in a reduction of the rating for any class of Pass
Through Certificates that is then rated below the then current rating for such
class of Pass Through Certificates (without regard to the Policy in the case of
the Class G Certificates) or a withdrawal or suspension of the rating of such
class of Pass Through Certificates, if any Pass Through Certificates are then
outstanding, the Company shall provide each relevant Pass Through Trustee with
an opinion of counsel (y) if an Event of Default shall have occurred and be
continuing, to the effect that such supplemental agreement will not cause the
relevant Pass Through Trust to become an association taxable as a corporation
for United States federal income tax purposes or (z) in other circumstances, to
the effect that such supplemental agreement will not cause the relevant Pass
Through Trust to be treated as other than a grantor trust for United States
federal income tax purposes.
Section 9.02. Amendments to this Indenture with Consent of Holders.
(a) With the written consent of a Majority in Interest of Noteholders,
the Company may, and the Loan Trustee shall, subject to Section 9.06, at any
time and from time to time, enter into such supplemental agreements to add any
provisions to or to change or eliminate any provisions of this Indenture or of
any such supplemental agreements or to modify in any manner the rights and
obligations of the Company, the Loan Trustee and of the Noteholders under this
Indenture; provided, however, that without the consent of each Noteholder
affected thereby, an amendment under this Section 9.02 may not:
(1) reduce the principal amount of, interest on, or Break Amount,
Prepayment Premium or Make-Whole Amount with respect to, any Equipment
Note;
64
(2) change the date on which any principal amount of, interest on,
or Break Amount, Prepayment Premium or Make-Whole Amount with respect to,
any Equipment Note, is due or payable;
(3) create any Lien with respect to the Collateral prior to or
pari passu with the Lien thereon under this Indenture except such as are
permitted by this Indenture, or deprive any Noteholder of the benefit of
the Lien on the Collateral created by this Indenture;
(4) reduce the percentage of the outstanding principal amount of
the Equipment Notes the consent of whose holders is required for any such
supplemental agreement, or the consent of whose holders is required for
any waiver of compliance with certain provisions of this Indenture or of
certain defaults hereunder or their consequences provided for in this
Indenture; or
(5) make any change in Section 4.05 or this Section 9.02, except
to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of each Noteholder affected
thereby.
(b) It is not necessary under this Section 9.02 for the Noteholders to
consent to the particular form of any proposed supplemental agreement, but it is
sufficient if they consent to the substance thereof.
(c) Promptly after the execution by the Company and the Loan Trustee of
any supplemental agreement pursuant to the provisions of this Section 9.02, the
Loan Trustee shall transmit by first-class mail a notice, setting forth in
general terms the substance of such supplemental agreement, to all Noteholders,
as the names and addresses of such Noteholders appear on the Equipment Note
Register. Any failure of the Loan Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental agreement.
Section 9.03. Amendments, Waivers, Etc. of the Participation Agreement.
Without the consent of a Majority in Interest of Noteholders, the respective
parties to the Participation Agreement may not modify, amend or supplement such
agreement, or give any consent, waiver, authorization or approval thereunder,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions thereof or of modifying in any manner the
rights of the respective parties thereunder; provided, however, that, without
the consent of the Loan Trustee or any Noteholder, the Participation Agreement
may be modified, amended or supplemented in order (i) to cure any defect or
inconsistency therein or to cure any ambiguity or correct any mistake, (ii) to
amend, modify or supplement any provision thereof or make any other provision
with respect to matters or questions arising thereunder or under this Indenture,
provided that the making of any such other provision shall not materially
adversely affect the interests of the Noteholders or (iii) to make any other
change, or reflect any other matter, of the
65
kind referred to in clauses (i) through (xiv) of Section 9.01. Notwithstanding
the foregoing, without the consent of the applicable Liquidity Provider, the
Company shall not enter into any amendment, waiver or modification of or
supplement or consent to the Participation Agreement which shall reduce, modify
or amend any indemnities in favor of such Liquidity Provider contained therein.
Section 9.04. Revocation and Effect of Consents. Until an amendment or
waiver becomes effective, a consent to it by a Noteholder is a continuing
consent by the Noteholder and every subsequent Noteholder, even if notation of
the consent is not made on any Equipment Note.
Section 9.05. Notation on or Exchange of Equipment Notes. The Loan Trustee
may place an appropriate notation about an amendment or waiver on any Equipment
Note thereafter executed. The Loan Trustee in exchange for such Equipment Notes
may execute new Equipment Notes that reflect the amendment or waiver.
Section 9.06. Trustee Protected. If, in the reasonable opinion of the
institution acting as Loan Trustee hereunder, any document required to be
executed by it pursuant to the terms of Section 9.01 or 9.02 adversely affects
any right, duty, immunity or indemnity with respect to such institution under
this Indenture, such institution may in its discretion decline to execute such
document.
ARTICLE X
MISCELLANEOUS
Section 10.01. Termination of Indenture.
(a) Upon (or at any time after):
(i) payment in full of the principal amount of, interest on, Break
Amount, if any, Prepayment Premium, if any, and Make-Whole Amount, if any,
with respect to, and all other amounts due under, all Equipment Notes, and
provided that there shall then be no other Secured Obligations due to the
Noteholders, the Indenture Indemnitees and the Loan Trustee hereunder or
under the Participation Agreement;
(ii) if the Series G Equipment Notes have been fully paid or
redeemed, the 91st day after there has been irrevocably deposited (except
as provided in Section 2.15 or 10.01(d)) with the Loan Trustee as funds in
trust, specifically pledged as security for, and dedicated solely to, the
benefit of the Noteholders of the Series C Equipment Notes and the Series
D Equipment Notes, or if the Series C Equipment Notes have also been fully
paid or redeemed, the Noteholders of the Series D Equipment Notes, (A)
money in an amount, (B) U.S. Government Obligations that, through the
payment of interest and
66
principal in respect thereof in accordance with their terms, will provide
(not later than one Business Day before the due date of any payment
referred to below in this paragraph) money in an amount, or (C) a
combination of money and U.S. Government Obligations referred to in the
foregoing clause (B), sufficient, in the opinion of a nationally
recognized firm of independent certified public accountants expressed in a
written certification thereof delivered to the Loan Trustee, to pay in
full the outstanding principal amount of and interest on all the Series C
Equipment Notes and/or the Series D Equipment Notes, as applicable, on the
dates such amounts are due; provided, however, that
(1) the Company shall have delivered to the Loan Trustee an
opinion of counsel to the effect that there has been a change in tax
law since September 24, 2002 or has been published by the Internal
Revenue Service a ruling to the effect that Noteholders and the
holders of the Pass Through Certificates will not recognize income,
gain or loss for United States Federal income tax purposes as a
result of the exercise by the Company of its option under this
subsection (ii) and will be subject to United States Federal income
tax on the same amounts and in the same manner and at the same
times, as would have been the case if such option had not been
exercised and (y) the Company shall have obtained a Ratings
Confirmation with respect to the exercise by the Company of its
option under this subsection (ii);
(2) all other amounts then due and payable hereunder have
been paid;
(3) the Company has delivered to the Loan Trustee an
officer's certificate and an opinion of counsel, each stating that
all conditions precedent provided for relating to the satisfaction
and discharge of this Indenture contemplated by this Section 10.01
have been complied with;
(4) such deposit will not result in a breach or violation
of, or constitute an Event of Default under, this Indenture or a
default or event of default under any other agreement or instrument
to which the Company is a party or by which it is bound; and
(5) no Event of Default set forth in Sections 4.01(f), (g),
(h) or (i) shall have occurred and be continuing on the date of such
deposit or at any time during the period ending on the 91st day
after the date of such deposit;
the Company and the Loan Trustee shall be deemed to have been released and
discharged from their respective obligations hereunder and under the Equipment
Notes (but only with respect to the Series C Equipment Notes and/or the Series D
Equipment Notes in the case of clause (ii) above), and the Loan Trustee shall,
if no Series of Equipment Notes other than the Series C Equipment Notes and the
Series D Equipment Notes remains outstanding, upon the written
67
request of the Company, execute and deliver to, or as directed in writing by,
the Company an appropriate instrument (in due form for recording) releasing the
Aircraft and the balance of the Collateral from the Lien of this Indenture, and,
in such event, this Indenture and the trusts created hereby shall terminate and
this Indenture shall be of no further force or effect; provided, however, that
this Indenture and the trusts created hereby shall earlier terminate and this
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Loan Trustee of all property constituting part of the
Collateral and the final distribution by the Loan Trustee of all monies or other
property or proceeds constituting part of the Collateral in accordance with the
terms hereof. Except as otherwise provided above, this Indenture and the trusts
created hereby shall continue in full force and effect in accordance with the
terms hereof. Upon making of the deposit of the defeasance funds as described
above, the right of the Company to cause redemption of the Equipment Notes shall
cease.
(b) Notwithstanding the provisions of Section 10.01(a)(ii), the
obligations of the Loan Trustee contained in Sections 2.01, 2.02, 2.03, 2.04,
2.05, 2.07, 2.08, 2.09, 2.13, 2.15, 2.16, 3.01, 10.01(c) and 10.01(d) of this
Section 10.01, and the other rights, duties, immunities and privileges hereunder
of the Loan Trustee, shall survive.
(c) All monies and U.S. Government Obligations deposited with the Loan
Trustee pursuant to Section 10.01(a)(ii) shall be held in trust and applied by
it, in accordance with the provisions of the related series of Equipment Notes
and this Indenture, to the payment to the Noteholders of the related series of
Equipment Notes of all sums due and to become due thereon for principal and
interest, but such money need not be segregated from other funds except to the
extent required by law.
(d) The Loan Trustee shall promptly pay or return to the Company upon
request of the Company any money or U.S. Government Obligations held by it at
any time that are not required for the payment of the amounts described above in
Section 10.01(c) on the Equipment Notes for which money or U.S. Government
Obligations have been deposited pursuant to Section 10.01(a)(ii).
Section 10.02. No Legal Title to Collateral in Noteholders. No Noteholder
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 Noteholder in and to the Collateral or hereunder shall operate to terminate
this Indenture or entitle such Noteholder 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 10.03. Sale of Aircraft by Loan Trustee is Binding. Any sale or
other conveyance of the Aircraft, the Airframe, any Engine or any interest
therein by the Loan Trustee made pursuant to the terms of this Indenture shall
bind the Noteholders and the Company and shall be effective to transfer or
convey all right, title and interest of the Loan Trustee, the Company and such
Noteholders in and to such Aircraft, Airframe, Engine or interest therein. No
purchaser or
68
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 Noteholders.
Section 10.04. Indenture for Benefit of the Company, Loan Trustee and
Noteholders. Nothing in this Indenture, whether express or implied, shall be
construed to give any Person other than the Company, the Loan Trustee, the
Noteholders or the other Indenture Indemnitees any legal or equitable right,
remedy or claim under or in respect of this Indenture.
Section 10.05. Notices. Unless otherwise expressly specified or permitted
by the terms hereof, all notices, requests, demands, authorizations, directions,
consents, waivers or documents required or permitted under the terms and
provisions of this Indenture shall be in English and in writing, and may be
given by United States mail, courier service or any other customary means of
communication, and any notices shall be effective when delivered (or, if mailed,
three Business Days after deposit, postage prepaid in the first class United
States mail and, if delivered by facsimile, upon completion of transmission and
confirmation by the sender (by a telephone call to a representative of the
recipient or by machine confirmation) that such transmission was received)
addressed as follows: (a) if to the Company or the Loan Trustee to its
respective address (including facsimile number) set forth on Schedule I to the
Participation Agreement, or (b) if to any Noteholder, addressed to such
Noteholder at its address set forth in the Equipment Note Register maintained
pursuant to Section 2.07 hereof.
Any party, by notice to the other parties hereto, may designate additional
or different addresses for subsequent notices or communications.
Section 10.06. Severability. Any provision of this Indenture that 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 10.07. No Oral Modification or Continuing Waivers. No terms or
provisions of this Indenture or of the Equipment Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the Company and the Loan Trustee, in compliance with Article IX. 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 10.08. Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of, and be enforceable by,
each of the parties hereto and the successors and permitted assigns of each, all
as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successors and permitted
assigns of such Noteholder. Each Noteholder by its acceptance of an Equipment
Note agrees to be bound by this Indenture and all provisions of the
Participation Agreement applicable
69
to a Noteholder.
Section 10.09. 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 10.10. Normal Commercial Relations. Anything contained in this
Indenture to the contrary notwithstanding, the Loan Trustee, any Noteholder or
any other party to any of the Operative Documents or the Pass Through Documents
or any of their affiliates may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with the
Company, fully to the same extent as if this Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to the Company for any purpose whatsoever, whether related to any of the
transactions contemplated hereby or otherwise.
Section 10.11. Voting by Noteholders. All votes of the Noteholders shall
be governed by a vote of a Majority in Interest of Noteholders, except as
otherwise provided herein.
Section 10.12. Section 1110. It is the intention of the parties hereto
that the security interest created hereby, to the fullest extent available under
applicable law, entitles the Loan Trustee, on behalf of the Noteholders, to all
of the benefits of Section 1110 with respect to the Aircraft.
Section 10.13. The Company's Performance and Rights. Any obligation
imposed on the Company herein shall require only that the Company perform or
cause to be performed such obligation, even if stated as a direct obligation,
and the performance of any such obligation by any permitted assignee, lessee or
transferee under an assignment, lease or transfer agreement then in effect and
in accordance with the provisions of the Operative Documents shall constitute
performance by the Company and, to the extent of such performance, discharge
such obligation by the Company. Except as otherwise expressly provided herein,
any right granted to the Company in this Indenture shall grant the Company the
right to permit such right to be exercised by any such assignee, lessee or
transferee. The inclusion of specific references to obligations or rights of any
such assignee, lessee or transferee in certain provisions of this Indenture
shall not in any way prevent or diminish the application of the provisions of
the two sentences immediately preceding with respect to obligations or rights in
respect of which specific reference to any such assignee, lessee or transferee
has not been made in this Indenture.
Section 10.14. Counterparts. This Indenture may be executed in any number
of counterparts (and each of the parties hereto shall not be required to execute
the same counterpart). Each counterpart of this Indenture including a signature
page or pages executed by each of the parties hereto shall be an original
counterpart of this Indenture, but all of such counterparts together shall
constitute one instrument.
Section 10.15. Governing Law. THIS INDENTURE HAS BEEN DELIVERED IN THE
70
STATE OF NEW YORK AND THIS INDENTURE, ANY INDENTURE SUPPLEMENT AND THE EQUIPMENT
NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.16. Confidential Information. The term "Confidential
Information" means: (a) the existence and terms of any lease of the Airframe or
Engines pursuant to Section 7.02(a) and the identity of the Permitted Lessee
thereunder; (b) all information obtained in connection with any inspection
conducted by the Loan Trustee, the Policy Provider or their respective
representatives pursuant to Section 7.03(a); (c) each certification furnished to
the Loan Trustee and the Liquidity Providers pursuant to Sections 7.06(a) and
7.06(b); (d) all information contained in each report furnished to the Loan
Trustee, the Policy Provider and the Liquidity Providers pursuant to Section
7.06(e); and (e) all information regarding the Warranty Rights. All Confidential
Information shall be held confidential by the Loan Trustee, the Policy Provider
(in the case of information obtained by it pursuant to Section 7.03(a) and the
reports furnished to it pursuant to Section 7.06(e)), each Liquidity Provider
(in the case of the certifications furnished to it pursuant to Sections 7.06(a)
and 7.06(b) and the reports furnished to it pursuant to Section 7.06(e)) and
each Noteholder and each affiliate, agent, officer, director, or employee of any
thereof and shall not be furnished or disclosed by any of them to anyone other
than (i) the Loan Trustee, the Policy Provider (in the case of information
obtained by it pursuant to Section 7.03(a)) or any Noteholder and (ii) their
respective bank examiners, auditors, accountants, agents and legal counsel, and
except as may be required by an order of any court or administrative agency or
by any statute, rule, regulation or order of any governmental authority.
Section 10.17. Submission to Jurisdiction. Each of the parties hereto, and
by acceptance of Equipment Notes, each Noteholder, to the extent it may do so
under applicable law, for purposes hereof and of all other Operative Documents
hereby (a) irrevocably submits itself to the non-exclusive jurisdiction of the
courts of the State of New York sitting in the City of New York and to the
non-exclusive jurisdiction of the United States District Court for the Southern
District of New York, for the purposes of any suit, action or other proceeding
arising out of this Indenture, the subject matter hereof or any of the
transactions contemplated hereby brought by any party or parties hereto or
thereto, or their successors or permitted assigns and (b) waives, and agrees not
to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or that this Indenture or the Equipment Notes or the subject matter hereof or
any of the transactions contemplated hereby may not be enforced in or by such
courts.
71
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers thereof duly authorized, as of the
date first above written.
AMERICAN AIRLINES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director, Corporate
Finance & Banking
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Loan Trustee
By: /s/ Alison X.X. Xxxxxx
--------------------------------
Name: Alison X.X. Xxxxxx
Title: Vice President
72
EXHIBIT A to
INDENTURE AND SECURITY AGREEMENT
INDENTURE SUPPLEMENT NO. __
INDENTURE SUPPLEMENT NO. __ , dated _____________, ____ ("Indenture
Supplement"), between AMERICAN AIRLINES, INC. (the "Company") and STATE STREET
BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Loan Trustee under the Indenture (each as
hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Indenture and Security Agreement, dated as of September 24,
2002 (the "Indenture"; capitalized terms used herein without definition shall
have the meanings specified therefor in Annex A to the Indenture), between the
Company and State Street Bank and Trust Company of Connecticut, National
Association, as Loan Trustee (the "Loan Trustee"), provides for the execution
and delivery of supplements thereto substantially in the form hereof which shall
particularly describe the Aircraft, and shall specifically grant a security
interest in the Aircraft to the Loan Trustee; and
[WHEREAS, the Indenture relates to the Airframe and Engines described in
Annex A attached hereto and made a part hereof, and a counterpart of the
Indenture is attached to and made a part of this Indenture Supplement;](19)
[WHEREAS, the Company has, as provided in the Indenture, heretofore
executed and delivered to the Loan Trustee Indenture Supplement(s) for the
purpose of specifically subjecting to the Lien of the Indenture certain
airframes and/or engines therein described, which Indenture Supplement(s) is/are
dated and has/have been duly recorded with the FAA as set forth below, to wit:
Date Recordation Date FAA Document Number](20)
---- ---------------- -----------------------
NOW, THEREFORE, to secure the prompt and complete payment (whether at
stated maturity, by acceleration or otherwise) of principal of, interest on,
Break Amount, if any, Prepayment Premium, if any, and Make-Whole Amount, if any,
with respect to, the Equipment Notes, and all other amounts payable by the
Company under the Operative Documents and the
----------
(19) Use for Indenture Supplement No. 1 only.
(20) Use for all Indenture Supplements other than Indenture Supplement No. 1
performance and observance by the Company of all the agreements and covenants to
be performed or observed by the Company for the benefit of the Noteholders and
the Indenture Indemnitees contained in the Operative Documents, and in
consideration of the premises and of the covenants contained in the Operative
Documents, and for other good and valuable consideration given by the Loan
Trustee, the Noteholders and the Indenture Indemnitees to the Company at or
before the Closing Date, the receipt of which is hereby acknowledged, the
Company does hereby grant, bargain, sell, convey, transfer, mortgage, assign,
pledge and confirm unto the Loan Trustee and its successors in trust and
permitted assigns, for the security and benefit of the Loan Trustee, the
Noteholders and the Indenture Indemnitees, a first priority security interest
in, and mortgage lien on, all estate, right, title and interest of the Company
in, to and under the Aircraft, including the Airframe and Engines described in
Annex A attached hereto, whether or not any such Engine may from time to time be
installed on the Airframe or any other airframe or any other aircraft, and any
and all Parts relating thereto, and, to the extent provided in the Indenture,
all substitutions and replacements of, and additions, improvements, accessions
and accumulations to, the Aircraft, including the Airframe, the Engines and any
and all Parts (in each case other than any substitutions, replacements,
additions, improvements, accessions and accumulations that constitute items
excluded from the definition of Parts by clauses (b), (c) and (d) thereof)
relating thereto;
To have and to hold all and singular the aforesaid property unto the Loan
Trustee, and its successors and assigns, in trust for the ratable benefit and
security of the Noteholders and the Indenture Indemnitees, except as otherwise
provided in the Indenture, including Section 2.13 and Article III of the
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
Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
THIS INDENTURE SUPPLEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the undersigned have caused this Indenture Supplement
No. __ to be duly executed by their respective duly authorized officers, on the
date first above written.
AMERICAN AIRLINES, INC.
By: _________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Loan Trustee
By: _________________________
Name:
Title:
Annex A to
Indenture Supplement No. __
DESCRIPTION OF AIRFRAME AND ENGINES
AIRFRAME
Manufacturer Model FAA Registration No. Manufacturer's Serial No.
------------ ----- -------------------- -------------------------
ENGINES
Manufacturer Model Manufacturer's Serial No.
------------ ----- -------------------------
Each Engine is of 750 or more "rated take-off horsepower" or the equivalent of
such horsepower.
EXHIBIT B to
INDENTURE AND SECURITY AGREEMENT
LIST OF PERMITTED COUNTRIES
Argentina Kuwait
Australia Liechtenstein
Austria Luxembourg
Bahamas Malaysia
Barbados Malta
Belgium Mexico
Bermuda Islands Monaco
Brazil Morocco
British Virgin Islands the Netherlands
Canada Netherlands Antilles
Cayman Islands New Zealand
Chile Norway
Czech Republic Paraguay
Denmark Peoples' Republic of China
Ecuador Philippines
Egypt Poland
Finland Portugal
France Republic of China (Taiwan)
Germany Singapore
Greece South Africa
Grenada South Korea
Guatemala Spain
Hong Kong Sweden
Hungary Switzerland
Iceland Thailand
India Trinidad and Tobago
Indonesia United Kingdom
Ireland Uruguay
Italy Venezuela
Jamaica
Japan
EXHIBIT C to
INDENTURE AND SECURITY AGREEMENT
AIRCRAFT TYPE VALUES FOR SECTION 7.06(b)
Boeing 757-223 - $15,000,000
Boeing 767-323 - $15,000,000
Boeing 777-223 - $24,000,000
SCHEDULE I to
INDENTURE AND SECURITY AGREEMENT
DESCRIPTION OF EQUIPMENT NOTES
Original Principal Amount Maturity Date
------------------------- -------------------------
Series G
Equipment Notes: $18,742,856.07 September 23, 2007
Series C
Equipment Notes: $3,299,137.54 September 23, 2007
Series D
Equipment Notes: $2,776,342.69 September 23, 2007
CERTAIN DEFINED TERMS
DEFINED TERM DEFINITION
------------ ----------
Debt Rate for Series G Equipment Notes With respect to (i) the first Interest Period 2.42% per annum,
and (ii) any subsequent Interest Period, LIBOR for such
Interest Period as determined pursuant to the Reference Agency
Agreement plus a margin of 0.62% per annum.
Debt Rate for Series C Equipment Notes 8.25% per annum.
Debt Rate for Series D Equipment Notes 9.50% per annum.
Prepayment Premium: In the case of the prepayment of the unpaid principal amount
of Series G Equipment Notes, an amount equal to the following
percentage of the principal amount prepaid:
IF REDEEMED DURING
THE YEAR PRIOR TO
THE ANNIVERSARY OF
THE CLOSING DATE PREPAYMENT
INDICATED BELOW PREMIUM
------------------ ----------
1st 1.50%
2nd 1.00%
3rd 0.50%
Thereafter 0.00%
EQUIPMENT NOTES AMORTIZATION
SERIES G EQUIPMENT NOTES
Percentage of Original Principal
Payment Date Amount to be Paid
December 23, 2002 0.0000000%
March 23, 2003 0.0000000%
June 23, 2003 6.4543109%
September 23, 2003 0.0000000%
December 23, 2003 0.0000000%
March 23, 2004 0.0000000%
June 23, 2004 11.9985642%
September 23, 2004 0.0000000%
December 23, 2004 0.0000000%
March 23, 2005 0.0000000%
June 23, 2005 11.9985643%
September 23, 2005 0.0000000%
December 23, 2005 0.0000000%
March 23, 2006 0.0000000%
June 23, 2006 11.9985642%
September 23, 2006 0.0000000%
December 23, 2006 0.0000000%
March 23, 2007 0.0000000%
June 23, 2007 11.9985642%
September 23, 2007 45.5514322%
SERIES D EQUIPMENT NOTES
Percentage of Original Principal
Payment Date Amount to be Paid
December 23, 2002 0.0000000%
March 23, 2003 0.0000000%
June 23, 2003 2.3172374%
September 23, 2003 2.3751682%
December 23, 2003 2.4345474%
March 23, 2004 2.4954113%
June 23, 2004 2.5577966%
September 23, 2004 2.6217416%
December 23, 2004 4.9764538%
March 23, 2005 5.1008649%
June 23, 2005 5.2283866%
September 23, 2005 5.3590964%
December 23, 2005 5.4930737%
March 23, 2006 5.6304004%
June 23, 2006 5.7711604%
September 23, 2006 5.9154394%
December 23, 2006 6.0633257%
March 23, 2007 6.2149086%
June 23, 2007 6.3702813%
September 23, 2007 23.0747063%
SCHEDULE II to
INDENTURE AND SECURITY AGREEMENT
PASS THROUGH TRUST AGREEMENT AND
PASS THROUGH TRUST SUPPLEMENTS
Pass Through Trust Agreement, dated as of March 21, 2002, between American
Airlines, Inc. and State Street Bank and Trust Company of Connecticut, National
Association, as trustee, as supplemented by Trust Supplement No. 2002-1G, dated
as of September 24, 2002, Trust Supplement No. 2002-1C, dated as of September
24, 2002, and Trust Supplement No. 2002-1D, dated as of September 24, 2002.
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Participation Agreement and
Indenture and Security Agreement
DEFINITIONS
"Above-Cap Liquidity Agreement" means, initially, the ISDA Master
Agreement, dated as of the Closing Date, between the Subordination Agent, as
agent and trustee for the Class G Trust (as defined in the Intercreditor
Agreement), and the initial Above-Cap Liquidity Provider, together with the
Schedule and Confirmation attached thereto, relating to the Class G Certificates
(as defined in the Intercreditor Agreement), and, from and after the replacement
of such ISDA Master Agreement pursuant to the Intercreditor Agreement, the
Replacement Above-Cap Liquidity Facility (as defined in the Intercreditor
Agreement) therefor, if any, in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Above-Cap Liquidity Provider" means Credit Suisse First Boston
International, or any Replacement Above-Cap Liquidity Provider (as defined in
the Intercreditor Agreement) that has issued a Replacement Above-Cap Liquidity
Facility (as defined in the Intercreditor Agreement) pursuant to the
Intercreditor Agreement.
"Additional Insureds" has the meaning specified in Section 7.06(a) of
the Indenture.
"Agreement" and "Participation Agreement" mean that certain
Participation Agreement, dated on or before the Closing Date, among the Company,
State Street, the Pass Through Trustee under each Pass Through Trust Agreement,
the Subordination Agent and the Loan Trustee, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Aircraft" means the Airframe (or any Replacement Airframe substituted
therefor pursuant to Section 7.05 of the Indenture) together with the two
Engines described in the Indenture Supplement originally executed and delivered
under the Indenture (or any Replacement Engine that may from time to time be
substituted for any of such Engines pursuant to Section 7.04 or Section 7.05 of
the Indenture), whether or not any of such initial or substituted Engines may
from time to time be installed on such Airframe or installed on any other
airframe or on any other aircraft. The term "Aircraft" shall include any
Replacement Aircraft.
"Airframe" means (a) the Boeing aircraft further described in Annex A
to the Indenture Supplement (except (i) the Engines or engines from time to time
installed thereon and any and all Parts related to such Engine or engines and
(ii) items installed or incorporated in or attached to such aircraft that are
excluded from the definition of Parts (except Engines or engines)) originally
executed and delivered under the Indenture and (b) any and all related Parts.
The term "Airframe" shall include any Replacement Airframe that may from time to
time be substituted for the Airframe
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Indenture and Security Agreement
pursuant to Section 7.05 of the Indenture. At such time as the Replacement
Airframe shall be so substituted and the Airframe for which such substitution is
made shall be released from the Lien of the Indenture, such replaced Airframe
shall cease to be an Airframe under the Indenture.
"American New Series D Equipment Notes" means any New Series D
Equipment Notes that are purchased by a New Trust with proceeds of New Class D
Certificates (as defined in Exhibit A to the Intercreditor Agreement) that are
sold to a Person affiliated with the Company.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 United
States Codes Section 101 et seq., as amended, or any successor statutes thereto.
"Basic Pass Through Trust Agreement" means that certain Pass Through
Trust Agreement, dated as of the March 21, 2002, between the Company and State
Street, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms (but does not include any Trust
Supplement).
"Bills of Sale" means the FAA Xxxx of Sale and the Warranty Xxxx of
Sale.
"Break Amount" means, as of any date of payment, redemption or
acceleration of any Series G Equipment Note (the "Applicable Date"), an amount
determined by the Reference Agent on the date that is two Business Days prior to
the Applicable Date pursuant to the formula set forth below; provided, however,
that no Break Amount will be payable (x) if the Break Amount, as calculated
pursuant to the formula set forth below, is equal to or less than zero or (y) on
or in respect of any Applicable Date that is a Payment Date.
Break Amount = Z-Y
Where:
X = with respect to any applicable Interest Period, the sum of
(i) the then outstanding principal amount of such Equipment
Note as of the first day of the then applicable Interest
Period plus (ii) interest payable thereon during such entire
Interest Period at then effective LIBOR.
Y = X, discounted to present value from the last day of the then
applicable Interest Period to the Applicable Date, using then
effective LIBOR as the discount rate.
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Z = X, discounted to present value from the last day of the then
applicable Interest Period to the Applicable Date, using a
rate equal to the applicable London interbank offered rate
(determined on the same basis as LIBOR) for a period
commencing on the Applicable Date and ending on the last day
of the then applicable Interest Period, determined by the
Reference Agent as of two Business Days prior to the
Applicable Date as the discount rate.
"Business Day" means (i) any day other than a Saturday, a Sunday or a
day on which commercial banks are required or authorized to close in New York,
New York, Dallas, Texas or the city and state in which the Loan Trustee
maintains its Corporate Trust Office or receives and disburses funds or (ii)
solely as it relates to determination of LIBOR, any day on which commercial
banks are open for general business in London, England.
"Certificated Air Carrier" means any Citizen of the United States
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United States Code for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo or that otherwise is certified or registered to the extent required to
fall within the purview of Section 1110.
"Citizen of the United States" has the meaning specified for such term
in Section 40102(a)(15) of Title 49 of the United States Code or any similar
legislation of the United States enacted in substitution or replacement
therefor.
"Claim" has the meaning specified in Section 4.02(a) of the
Participation Agreement.
"Class E Trust" has the meaning specified in the Intercreditor
Agreement.
"Closing" has the meaning specified in Section 2.03 of the
Participation Agreement.
"Closing Date" means the date set forth on the cover page of the
Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning specified in the granting clause of the
Indenture.
"Company" means American Airlines, Inc., and its successors and
permitted assigns.
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"Compulsory Acquisition" means requisition of title or other compulsory
acquisition, capture, seizure, deprivation, confiscation or detention for any
reason of the Aircraft by any government that results in the loss of title or
use of the Aircraft by the Company (or any Permitted Lessee) for a period in
excess of 180 days, but shall exclude requisition for use or hire not involving
requisition of title.
"Confidential Information" has the meaning specified in Section 10.16
of the Indenture.
"Controlling Party" has the meaning specified in Section 2.06 of the
Intercreditor Agreement.
"Corporate Trust Office" means the Corporate Trust Division of the Loan
Trustee located at State Street Bank and Trust Company of Connecticut, National
Association, 000 Xxxxxx Xxxxxx, Xxxxxxx Square, Hartford, Connecticut, 06103,
Attention: Corporate Trust Division, or such other office at which the Loan
Trustee's corporate trust business shall be administered that the Loan Trustee
shall have specified by notice in writing to the Company.
"CRAF Program" means the Civil Reserve Air Fleet Program authorized
under 10 U.S.C. Section 9511 et seq. or any similar or substitute program under
the laws of the United States.
"Debt Rate" means (i) with respect to the Series G Equipment Notes, the
Original Series C Equipment Notes and the Original Series D Equipment Notes, the
rate per annum specified as the "Debt Rate" in Schedule I to the Indenture, (ii)
with respect to any New Series C Equipment Notes, New Series D Equipment Notes
and Second New Series D Equipment Notes, the rate per annum specified as such in
an Indenture Refunding Amendment applicable to such Series and (iii) with
respect to any Series E Equipment Notes, the rate per annum specified in an
amendment to the Indenture at the time of issuance of such Series E Equipment
Notes.
"Department of Transportation" means the United States Department of
Transportation and any agency or instrumentality of the United States government
succeeding to its functions.
"Direction" has the meaning specified in Section 2.16 of the Indenture.
"Dollars" and "$" mean the lawful currency of the United States.
"Engine" means (a) each of the two engines listed by manufacturer's
serial number and further described in Annex A to the Indenture Supplement
originally executed and delivered under the Indenture, whether or not from time
to time installed on the Airframe or installed on any other airframe or on any
other aircraft and (b) any Replacement Engine that may from time to time be
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Indenture and Security Agreement
substituted for an Engine pursuant to Section 7.04 or 7.05 of the Indenture;
together in each case with any and all related Parts. At such time as a
Replacement Engine shall be so substituted and the Engine for which substitution
is made shall be released from the Lien of the Indenture, such replaced Engine
shall cease to be an Engine under the Indenture.
"Equipment Note" means and includes any Series G Equipment Note,
Original Series C Equipment Note, Original Series D Equipment Note, Series E
Equipment Note, New Series C Equipment Note, New Series D Equipment Note or
Second New Series D Equipment Note, and any Equipment Note issued in exchange
therefor or replacement thereof pursuant to Section 2.07 and 2.08 of the
Indenture.
"Equipment Note Register" has the meaning specified in Section 2.07 of
the Indenture.
"Equipment Note Registrar" has the meaning specified in Section 2.07 of
the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA as in effect at the date of
the Participation Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"Event of Default" has the meaning specified in Section 4.01 of the
Indenture.
"Event of Loss" means, with respect to the Aircraft, Airframe or any
Engine, any of the following events with respect to such property:
(a) the loss of such property or of the use thereof due to destruction,
damage beyond repair or rendition of such property permanently unfit for normal
use for any reason whatsoever;
(b) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a total loss, a
compromised total loss or a constructive total loss;
(c) the theft or disappearance of such property for a period in excess
of 180 days;
(d) the requisition for use of such property by any government (other
than a requisition for use by a Government or the government of the country of
registry of the Aircraft) that shall have resulted in the loss of possession of
such property by the Company (or any Permitted Lessee) for a period in excess of
12 consecutive months;
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(e) the operation or location of the Aircraft, while under requisition
for use by any government, in any area excluded from coverage by any insurance
policy in effect with respect to the Aircraft required by the terms of Section
7.06 of the Indenture, unless the Company shall have obtained indemnity or
insurance in lieu thereof from such government;
(f) any Compulsory Acquisition;
(g) as a result of any law, rule, regulation, order or other action by
the FAA or other government of the country of registry, the use of the Aircraft
or Airframe in the normal business of air transportation shall have been
prohibited by virtue of a condition affecting all aircraft of the same type for
a period of 18 consecutive months, unless the Company shall be diligently
carrying forward all steps that are necessary or desirable to permit the normal
use of the Aircraft or Airframe or, in any event, if such use shall have been
prohibited for a period of three consecutive years; and
(h) with respect to an Engine only, any divestiture of title to or
interest in an Engine or any event with respect to an Engine that is deemed to
be an Event of Loss with respect to such Engine pursuant to Section 7.02(a)(vii)
of the Indenture.
An Event of Loss with respect to the Aircraft shall be deemed to have
occurred if an Event of Loss occurs with respect to the Airframe unless the
Company elects to substitute a Replacement Airframe pursuant to Section
7.05(a)(i) of the Indenture.
"FAA" means the United States Federal Aviation Administration and any
agency or instrumentality of the United States government succeeding to its
functions.
"FAA Xxxx of Sale" means, collectively, (a) the xxxx of sale for the
Aircraft on AC Form 8050-2, executed by the Manufacturer in favor of Boeing
Domestic Sales Corporation and recorded with the FAA and (b) the xxxx of sale
for the Aircraft on AC Form 8050-2, executed by Boeing Domestic Sales
Corporation in favor of the Company and recorded with the FAA.
"Federal Funds Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day in not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or if such rate
is not so published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by State Street from
three Federal funds brokers of recognized standing selected by it.
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"Government" means the government of any of Canada, France, Germany,
Japan, The Netherlands, Sweden, Switzerland, the United Kingdom or the United
States and any instrumentality or agency thereof.
"Indemnitee" has the meaning specified in Section 4.02(b) of the
Participation Agreement.
"Indenture" means that certain Indenture and Security Agreement, dated
as of the Closing Date, between the Company and the Loan Trustee, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms, including by an Indenture Refunding Amendment or an
Indenture Supplement.
"Indenture Indemnitee" means (i) the Loan Trustee, (ii) State Street,
(iii) so long as it holds any Equipment Note as agent and trustee of any Pass
Through Trustee, the Subordination Agent, (iv) each Liquidity Provider and the
Policy Provider and (v) so long as it is the holder of any Equipment Notes, each
Pass Through Trustee and each of their respective directors, officers,
employees, agents and servants. No holder of a Pass Through Certificate in its
capacity as such shall be an Indenture Indemnitee.
"Indenture Refunding Amendment" means an amendment to the Indenture
entered into for purposes of effecting a Refunding.
"Indenture Supplement" means a supplement to the Indenture,
substantially in the form of Exhibit A to the Indenture, which shall
particularly describe the Aircraft, and any Replacement Airframe and/or
Replacement Engine included in the property subject to the Lien of the
Indenture.
"Intercreditor Agreement" means that certain Intercreditor Agreement,
dated as of the Closing Date, among the Pass Through Trustees, the Liquidity
Providers, the Policy Provider and the Subordination Agent, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.
"Interest Period" means (i) in the case of the first Interest Period,
the period commencing on (and including) the Closing Date and ending on (but
excluding) the first Payment Date following the Closing Date and (ii) in the
case of each subsequent Interest Period, the period commencing on (and
including) the last day of the immediately preceding Interest Period, and ending
on (but excluding) the next Payment Date.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
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"Interests" has the meaning specified in Section 7.06(a) of the
Indenture.
"Lease" means any lease permitted by the terms of Section 7.02(a) of
the Indenture.
"LIBOR" means, with respect to any period, LIBOR for such period as
determined pursuant to the Reference Agency Agreement.
"Lien" means any mortgage, pledge, lien, charge, claim, encumbrance,
lease, sublease, sub-sublease or security interest.
"Liquidity Facilities" means, collectively, the Above-Cap Liquidity
Agreement and the Primary Liquidity Facilities.
"Liquidity Provider" means, at any time, any Primary Liquidity Provider
or the Above-Cap Liquidity Provider, as applicable.
"Loan Amount" has the meaning specified in Section 7.06(b) of the
Indenture.
"Loan Trustee" has the meaning specified in the introductory paragraph
of the Indenture.
"Loan Trustee Liens" means any Lien attributable to State Street or the
Loan Trustee with respect to the Aircraft, any interest therein or any other
portion of the Collateral arising as a result of (i) claims against State Street
or the Loan Trustee not related to its interest in the Aircraft or the
administration of the Collateral pursuant to the Indenture, (ii) acts of State
Street or the Loan Trustee not permitted by, or the failure of State Street or
the Loan Trustee to take any action required by, the Operative Documents or the
Pass Through Documents, (iii) claims against State Street or the Loan Trustee
relating to Taxes or Claims that are excluded from the indemnification provided
by Section 4.02 of the Participation Agreement pursuant to said Section 4.02 or
(iv) claims against State Street or the Loan Trustee arising out of the transfer
by any such party of all or any portion of its interest in the Aircraft, the
Collateral, the Operative Documents or the Pass Through Documents, except while
an Event of Default is continuing and prior to the time that the Loan Trustee
has received all amounts due to it pursuant to the Indenture.
"Loss Payment Date" has the meaning specified in Section 7.05(a) of the
Indenture.
"Majority in Interest of Noteholders" means, as of a particular date of
determination and subject to Section 2.16 of the Indenture, the holders of at
least a majority in aggregate unpaid principal amount of all Equipment Notes
outstanding as of such date (excluding any Equipment Notes held by the Company,
any affiliate thereof or a Pass Through Trust the pass through
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Indenture and Security Agreement
certificates issued by which are owned, directly or indirectly, by the Company,
unless all Equipment Notes are held by the Company, any affiliate thereof or a
Pass Through Trust the pass through certificates issued by which are owned,
directly or indirectly, by the Company).
"Make-Whole Amount" means: (a) with respect to any Original Series C
Equipment Note or Original Series D Equipment Note, the amount (as determined by
an investment bank of national standing selected by the Company), if any, by
which (i) the present value of the remaining scheduled payments of principal and
interest from the redemption date to maturity of such Equipment Note computed by
discounting each such payment on a semiannual basis from its respective Payment
Date (assuming a 360-day year of twelve 30-day months) using a discount rate
equal to the Treasury Yield exceeds (ii) the outstanding principal amount of
such Equipment Note plus accrued but unpaid interest thereon to the date of
redemption; (b) with respect to any New Series C Equipment Note, New Series D
Equipment Note or Second New Series D Equipment Note, the amount computed in the
manner set forth in an Indenture Refunding Amendment applicable to such Series;
and (c) with respect to any Series E Equipment Note, the amount computed in the
manner set forth in an amendment to the Indenture at the time of issuance of the
Series E Equipment Notes. For purposes of determining the Make-Whole Amount,
"Treasury Yield" means, at the time of determination, the interest rate
(expressed as a quarterly equivalent and as a decimal and, in the case of United
States Treasury bills, converted to a bond equivalent yield) determined to be
the per annum rate equal to the quarterly yield to maturity for United States
Treasury securities maturing on the Average Life Date and trading in the public
securities market either as determined by interpolation between the most recent
weekly average yield to maturity for two series of United States Treasury
securities trading in the public securities markets, (A) one maturing as close
as possible to, but earlier than, the Average Life Date and (B) the other
maturing as close as possible to, but later than, the Average Life Date, in each
case as published in the most recent H.15(519) or, if a weekly average yield to
maturity for United States Treasury securities maturing on the Average Life Date
is reported on the most recent H.15(519), such weekly average yield to maturity
as published in such H.15(519). "H.15(519)" means the weekly statistical release
designated as such, or any successor publication, published by the Board of
Governors of the Federal Reserve System. The date of determination of a
Make-Whole Amount shall be the third Business Day prior to the applicable
redemption date and the "most recent H.15(519)" means the H.15(519) published
prior to the close of business on the third Business Day prior to the applicable
redemption date. "Average Life Date" means, for each Equipment Note to be
redeemed, the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Equipment Note.
"Remaining Weighted Average Life" of an Equipment Note, at the redemption date
of such Equipment Note, means the number of days equal to the quotient obtained
by dividing: (i) the sum of the products obtained by multiplying (A) the amount
of each then remaining installment of principal, including
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Indenture and Security Agreement
the payment due on the maturity date of such Equipment Note, by (B) the number
of days from and including the redemption date to but excluding the scheduled
payment date of such principal installment by (ii) the then unpaid principal
amount of such Equipment Note.
"Manufacturer" means The Boeing Company, a Delaware corporation, and
its successors and assigns.
"Manufacturer's Consent" means the Manufacturer's Consent and Agreement
to Assignment of Warranties, dated as of the Closing Date, substantially in the
form of Exhibit E to the Participation Agreement.
"Mortgage Convention" means the Convention on the International
Recognition of Rights in Aircraft as in effect on the date hereof or as
hereafter amended, modified or supplemented.
"New Series" has the meaning specified in Exhibit A to the
Intercreditor Agreement.
"New Series C Equipment Notes" means Equipment Notes that are issued as
a New Series in connection with a Refunding of the Original Series C Equipment
Notes, in the original principal amount and maturities and bearing interest as
specified in Schedule I to the applicable Indenture Refunding Amendment under
the heading "Series C Equipment Notes".
"New Series D Equipment Notes" means Equipment Notes that are issued as
a New Series in connection with a Refunding of the Original Series D Equipment
Notes, in the original principal amount and maturities and bearing interest as
specified in Schedule I to the applicable Indenture Refunding Amendment under
the heading "Series D Equipment Notes".
"New Trust" has the meaning specified in Exhibit A to the Intercreditor
Agreement.
"Noteholder" means any Person in whose name an Equipment Note is
registered on the Equipment Note Register (including, for so long as it is the
registered holder of any Equipment Notes, the Subordination Agent on behalf of
the Pass Through Trustees pursuant to the provisions of the Intercreditor
Agreement).
"Noteholder Liens" means any Lien attributable to any Noteholder on or
against the Aircraft, any interest therein or any portion of the Collateral,
arising out of any claim against such Noteholder that is not related to the
Operative Documents or Pass Through Documents, or out of any act or omission of
such Noteholder that is not related to the transactions contemplated by, or that
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constitutes a breach by such Noteholder of its obligations under, the Operative
Documents or the Pass Through Documents.
"Operative Documents" means, collectively, the Participation Agreement,
the Indenture, each Indenture Supplement, the Manufacturer's Consent and the
Equipment Notes.
"Original Series C Equipment Notes" means Equipment Notes issued on the
Closing Date and designated as "Series C Equipment Notes" under the Indenture,
in the original principal amount and maturities and bearing interest as
specified in Schedule I to the Indenture under the heading "Series C Equipment
Notes."
"Original Series D Equipment Notes" means Equipment Notes issued on the
Closing Date and designated as "Series D Equipment Notes" under the Indenture,
in the original principal amount and maturities and bearing interest as
specified in Schedule I to the Indenture under the heading "Series D Equipment
Notes."
"Other Party Liens" means any Lien attributable to the Pass Through
Trustee (other than in its capacity as Noteholder), the Subordination Agent
(other than in its capacity as Noteholder), any Liquidity Provider or the Policy
Provider on or against the Aircraft, any interest therein, or any portion of the
Collateral arising out of any claim against such party that is not related to
the Operative Documents or Pass Through Documents, or out of any act or omission
of such party that is not related to the transactions contemplated by, or that
constitutes a breach by such party of its obligations under, the Operative
Documents or the Pass Through Documents.
"Participation Agreement" has the meaning set forth under the
definition of "Agreement".
"Parts" means any and all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than (a) complete Engines or engines, (b) any items leased by the Company
or any Permitted Lessee, (c) cargo containers and (d) components or systems
installed on or affixed to the Airframe that are used to provide individual
telecommunications or electronic entertainment to passengers aboard the
Aircraft) so long as the same shall be incorporated or installed in or attached
to the Airframe or any Engine or so long as the same shall be subject to the
Lien of the Indenture in accordance with the terms of Section 7.04 thereof after
removal from the Airframe or any such Engine.
"Pass Through Certificates" means the pass through certificates issued
by the Pass Through Trustees.
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"Pass Through Documents" means the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities, the Policy Provider Agreement
and the Policy.
"Pass Through Trust" means each of the separate grantor trusts then
holding Equipment Notes, which grantor trusts have been or will be created
pursuant to the Pass Through Trust Agreements to facilitate certain of the
transactions contemplated by the Operative Documents.
"Pass Through Trust Agreement" means each of the separate Trust
Supplements relating to the Pass Through Trusts, together in each case with the
Basic Pass Through Trust Agreement, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
"Pass Through Trustee" has the meaning specified in the introductory
paragraph to the Participation Agreement and also includes any New Trustee (as
defined in Exhibit A to the Intercreditor Agreement).
"Pass Through Trustees" means, collectively, the Pass Through Trustees
under each Pass Through Trust Agreement.
"Past Due Rate" means, with respect to a particular Series, a rate per
annum equal to the then applicable Debt Rate plus 1% and, in any case other than
with respect to a particular Series, the Debt Rate for the Series G Equipment
Notes plus 1%.
"Payment Date" means, for any Equipment Note, each March 23, June 23,
September 23 and December 23 commencing with December 23, 2002 (or, in the case
of a Series G Note, if any such day is not a Business Day, the immediately
succeeding Business Day).
"Payment Default" means the occurrence of an event that would give rise
to an Event of Default under Section 4.01(a) of the Indenture upon the giving of
notice or the passing of time or both.
"Permitted Investments" means each of (a) direct obligations of the
United States and agencies thereof; (b) obligations fully guaranteed by the
United States; (c) certificates of deposit issued by, or bankers' acceptances
of, or time deposits with, any bank, trust company or national banking
association incorporated or doing business under the laws of the United States
or one of the states thereof having combined capital and surplus and retained
earnings of at least $100,000,000 and having a rating of A, its equivalent or
better by Xxxxx'x Investors Service, Inc. ("Moody's") or Standard & Poor's
Ratings Services, a division of The XxXxxx-Xxxx Companies, Inc. ("S&P") (or,
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if neither such organization shall rate such institution at any time, by any
nationally recognized rating organization in the United States); (d) commercial
paper of any holding company of a bank, trust company or national banking
association described in clause (c); (e) commercial paper of companies having a
rating assigned to such commercial paper by either Moody's or S&P (or, if
neither such organization shall rate such commercial paper at any time, by any
nationally recognized rating organization in the United States) equal to either
of the two highest ratings assigned by such organization; (f) Dollar-denominated
certificates of deposit issued by, or time deposits with, the European
subsidiaries of (i) any bank, trust company or national banking association
described in clause (c), or (ii) any other bank or financial institution
described in clause (h) or (i) below; (g) United States-issued Yankee
certificates of deposit issued by, or bankers' acceptances of, or commercial
paper issued by, any bank having combined capital and surplus and retained
earnings of at least $100,000,000 and headquartered in Canada, Japan, the United
Kingdom, France, Germany, Switzerland or The Netherlands and having a rating of
A, its equivalent or better by Moody's or S&P (or, if neither such organization
shall rate such institution at any time, by any nationally recognized rating
organization in the United States); (h) Dollar-denominated time deposits with
any Canadian bank having a combined capital and surplus and retained earnings of
at least $100,000,000 and having a rating of A, its equivalent or better by
Moody's or S&P (or, if neither such organization shall rate such institution at
any time, by any nationally recognized rating organization in the United
States); (i) Canadian Treasury Bills fully hedged to Dollars; (j) repurchase
agreements with any financial institution having combined capital and surplus
and retained earnings of at least $100,000,000 collateralized by transfer of
possession of any of the obligations described in clauses (a) through (i) above;
(k) bonds, notes or other obligations of any state of the United States, or any
political subdivision of any state, or any agencies or other instrumentalities
of any such state, including, but not limited to, industrial development bonds,
pollution control revenue bonds, public power bonds, housing bonds, other
revenue bonds or any general obligation bonds, provided that, at the time of
their purchase, such obligations are rated A, its equivalent or better by
Moody's or S&P (or, if neither such organization shall rate such obligations at
any time, by any nationally recognized rating organization in the United
States); (l) bonds or other debt instruments of any company, if such bonds or
other debt instruments, at the time of their purchase, are rated A, its
equivalent or better by Moody's or S&P (or, if neither such organization shall
rate such obligations at such time, by any nationally recognized rating
organization in the United States); (m) mortgage backed securities guaranteed by
the Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation or the Government National Mortgage Association or rated AAA, its
equivalent or better by Moody's or S&P (or, if neither such organization shall
rate such obligations at any time, by any nationally recognized rating
organization in the United States) or, if unrated, deemed to be of a comparable
quality by the Loan Trustee; (n) asset-backed securities rated A, its equivalent
or better by Moody's or S&P (or, if neither such organization shall rate such
obligations
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at any time, by any nationally recognized rating organization in the United
States) or, if unrated, deemed to be of a comparable quality by the Loan
Trustee; and (o) such other investments approved in writing by the Loan Trustee;
provided that, the instruments described in the foregoing clauses shall have a
maturity no later than the earliest date when such investments may be required
for distribution. Any of the investments described herein may be made through or
with, as applicable, the bank acting as Pass Through Trustee or Loan Trustee or
any of their affiliates.
"Permitted Lessee" means any Person to whom the Company is permitted to
lease the Airframe or any Engine pursuant to Section 7.02(a) of the Indenture.
"Permitted Lien" has the meaning specified in Section 7.01 of the
Indenture.
"Person" means any person, including any individual, corporation,
limited liability company, partnership, joint venture, association, joint-stock
company, trust, trustee, unincorporated organization or government or any agency
or political subdivision thereof.
"Policy" means the Financial Guaranty Insurance Policy No. 37875,
issued as of the Closing Date by the Policy Provider in favor of the
Subordination Agent, for the benefit of the Class G Certificateholders (as
defined in the Intercreditor Agreement), as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Policy Provider" means MBIA Insurance Corporation, a New
York-domiciled stock insurance company.
"Policy Provider Agreement" means the Insurance and Indemnity
Agreement, dated as of the Closing Date, among the Company, the Subordination
Agent, the Class G Trustee and the Policy Provider, including the related Policy
Provider Fee Letter referred to therein, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Prepayment Premium" is defined in Schedule I to the Indenture.
"Primary Liquidity Facilities" means the two Revolving Credit
Agreements, each dated as of the Closing Date, each between the Subordination
Agent, as agent and trustee for the applicable Pass Through Trust, and the
initial Primary Liquidity Provider, and from and after the replacement of either
such agreement pursuant to the Intercreditor Agreement (including any
replacement of the Revolving Credit Agreement relating to the Pass Through Trust
holding the Original Series C Equipment Notes in connection with a Refunding
thereof), the Replacement Primary Liquidity
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Facility (as defined in the Intercreditor Agreement) therefor, if any, in each
case as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Primary Liquidity Provider" means WestLB AG, a joint stock company
organized under the laws of Germany, acting through its New York Branch, or any
Replacement Primary Liquidity Provider (as defined in the Intercreditor
Agreement) that has issued a Replacement Primary Liquidity Facility (as defined
in the Intercreditor Agreement) to replace a Primary Liquidity Facility pursuant
to the Intercreditor Agreement.
"Purchase Agreement" means the Purchase Agreement as described in
Schedule I to the Participation Agreement.
"Rating Agencies" has the meaning specified in the Intercreditor
Agreement.
"Ratings Confirmation" has the meaning specified in the Intercreditor
Agreement.
"Reference Agency Agreement" means the Reference Agency Agreement,
dated as of the Closing Date, among State Street, as reference agent thereunder,
the Subordination Agent, the Loan Trustee and the Company.
"Reference Agent" means State Street as reference agent under the
Reference Agency Agreement, and any entity which may from time to time be acting
as reference agent under the Reference Agency Agreement.
"Refunding" has the meaning specified in Exhibit A to the
Intercreditor Agreement.
"Related Indemnitee Group" has the meaning specified in Section 4.02(b)
of the Participation Agreement.
"Replacement Aircraft" means the Aircraft of which a Replacement
Airframe is part.
"Replacement Airframe" means a Boeing aircraft of the model further
described in Annex A to the Indenture Supplement dated the Closing Date or a
comparable or improved model of the Manufacturer (except (a) Engines or engines
from time to time installed thereon and any and all Parts related to such Engine
or engines and (b) items excluded from the definition of Parts (except Engines
or engines)), that shall have been made subject to the Lien of the Indenture
pursuant to Section 7.05 thereof, together with all Parts relating to such
aircraft.
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"Replacement Engine" means an engine of the make and model specified in
Annex A to the Indenture Supplement dated the Closing Date (or an engine of the
same or another manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe with the other Engine (or any other
Replacement Engine being substituted simultaneously therewith)) that shall have
been made subject to the Lien of the Indenture pursuant to Section 7.04 or
Section 7.05 thereof, together with all Parts relating to such engine.
"Responsible Officer" means, with respect to the Company, its Chairman
of the Board, its President, any Senior Vice President, the Chief Financial
Officer, any Vice President, the Treasurer, the Secretary or any other
management employee (a) whose power to take the action in question has been
authorized, directly or indirectly, by the Board of Directors of the Company,
(b) working under the supervision of such Chairman of the Board, President,
Senior Vice President, Chief Financial Officer, Vice President, Treasurer or
Secretary and (c) whose responsibilities include the administration of the
transactions and agreements contemplated by the Participation Agreement and the
Indenture.
"Second New Series D Equipment Notes" means Equipment Notes that are
issued as a New Series in connection with a Refunding of any American New Series
D Equipment Notes, in the original principal amount and maturities and bearing
interest as specified in Schedule I to the applicable Indenture Refunding
Amendment.
"Section 1110" means Section 1110 of the Bankruptcy Code, as in effect
on the Closing Date or any successor or analogous section of the federal
bankruptcy law in effect from time to time.
"Secured Obligations" has the meaning specified in Section 2.06 of the
Indenture.
"Series" means any series of Equipment Notes, including the Series G
Equipment Notes, the Series C Equipment Notes, the Series D Equipment Notes or
the Series E Equipment Notes.
"Series C Equipment Notes" means the Original Series C Equipment Notes
or, following a Refunding of the Original Series C Equipment Notes, New Series C
Equipment Notes.
"Series D Equipment Notes" means (a) the Original Series D Equipment
Notes, or (b) following a Refunding of the Original Series D Equipment Notes,
the New Series D Equipment Notes, or (c), following a Refunding of the American
New Series D Equipment Notes, the Second New Series D Equipment Notes.
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"Series E Equipment Notes" means Equipment Notes, if any, issued and
designated as "Series E Equipment Notes" under the Indenture, in the original
principal amount and maturities and bearing interest as specified in an
amendment to the Indenture at the time of issuance of the Series E Equipment
Notes.
"Series G Equipment Notes" means Equipment Notes issued and designated
as "Series G Equipment Notes" under the Indenture, in the original principal
amount and maturities and bearing interest as specified in Schedule I to the
Indenture under the heading "Series G Equipment Notes."
"State Street" has the meaning specified in the introductory paragraph
to the Participation Agreement.
"Subordination Agent" has the meaning specified in the introductory
paragraph to the Participation Agreement.
"Tax" and "Taxes" means all governmental fees (including, without
limitation, license, filing and registration fees) and all taxes (including,
without limitation, franchise, excise, stamp, value added, income, gross
receipts, sales, use and property taxes), withholdings, assessments, levies,
imposts, duties or charges, of any nature whatsoever, together with any related
penalties, fines, additions to tax or interest thereon imposed, withheld, levied
or assessed by any country, taxing authority or governmental subdivision thereof
or therein or by any international authority, including any taxes imposed on any
Person as a result of such Person being required to collect and pay over
withholding taxes.
"Transportation Code" means that portion of Title 49 of the United
States Code comprising those provisions formerly referred to as the Federal
Aviation Act of 1958, as amended, or any subsequent legislation that amends,
supplements or supersedes such provisions.
"Trust Supplements" means those agreements supplemental to the Basic
Pass Through Trust Agreement referred to in Schedule II to the Participation
Agreement.
"Underwriting Agreement" means that certain Underwriting Agreement,
dated as of September 17, 2002, among the Company and the underwriters named
therein, relating to the purchase of the Class G Certificates (as defined in the
Intercreditor Agreement) by such underwriters, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
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"United States" means the United States of America.
"U.S. Government Obligations" means securities that are direct
obligations of the United States for the payment of which its full faith and
credit is pledged which are not callable or redeemable, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligations or a specific payment of interest on or
principal of any such U.S. Government Obligations held by such custodian for the
account of the holder of a depository receipt so long as such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligations or the specific payment of interest on or principal
of the U.S. Government Obligations evidenced by such depository receipt.
"Warranty Xxxx of Sale" means, collectively, (a) the warranty (as to
title) xxxx of sale covering the Aircraft, executed by the Manufacturer in favor
of Boeing Domestic Sales Corporation and specifically referring to each Engine,
as well as the Airframe, constituting a part of the Aircraft and (b) the
warranty (as to title) xxxx of sale covering the Aircraft, executed by Boeing
Domestic Sales Corporation in favor of the Company and specifically referring to
each Engine, as well as the Airframe, constituting a part of the Aircraft.
"Warranty Rights" means the Warranty Rights as described in Schedule I
to the Participation Agreement.
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