=================================================================
TRANS WORLD AIRLINES, INC.
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Trustee
INDENTURE
Dated as of June 16, 1998
$13,000,000
10 1/4% Mandatory Conversion Equity Notes due 1999
=================================================================
TABLE OF CONTENTS
Page
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ARTICLE 1.
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Definitions........................................ 1
Section 1.2 Rules of Construction.............................. 1
ARTICLE 2.
THE SECURITIES
Section 2.1 Designation, Form and Dating...................... 1
Section 2.2 Execution, Amount, Authentication and Delivery.... 2
Section 2.3 Registrar and Paying Agent........................ 4
Section 2.4 Paying Agent to Hold Payments In Trust............ 4
Section 2.5 Securityholder Lists.............................. 6
Section 2.6 Transfer and Exchange............................. 6
Section 2.7 Mutilated, Defaced, Destroyed, Lost and
Stolen Securities................................. 7
Section 2.8 Treasury Securities............................... 8
Section 2.9 Temporary Securities.............................. 9
Section 2.10 Cancellation...................................... 9
Section 2.11 Defaulted Interest; Interest on Defaulted
Principal......................................... 9
Section 2.12 CUSIP Numbers..................................... 10
ARTICLE 3.
REDEMPTIONS........................... 10
ARTICLE 4.
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 4.1 Payment of Securities............................. 10
Section 4.2 Maintenance of Office or Agency................... 11
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Section 4.3 Limitation on Dividends and Acquisition of
Common Stock...................................... 11
Section 4.4 Corporate Existence............................... 12
Section 4.5 Payment of Taxes and Other Claims................. 12
Section 4.6 Notices........................................... 13
Section 4.7 Maintenance of Properties and Insurance........... 13
Section 4.8 Default Notices and Compliance Certificates....... 14
Section 4.9 SEC Reports....................................... 14
Section 4.10 Waiver of Stay, Extension or Usury Laws........... 15
Section 4.11 Amendment to Certain Agreements .................. 16
Section 4.12 Title to Collateral and Limitation on Liens;
Sale of Aircraft; Total Loss With Respect to
Aircraft.......................................... 16
Section 4.13 Books, Records, Access; Confidentiality........... 17
Section 4.14 Security Interests................................ 18
Section 4.15 Repurchase of Securities Upon a Change in
Control........................................... 18
Section 4.16 Restrictions on Becoming an Investment
Company........................................... 18
ARTICLE 5.
SUCCESSOR CORPORATION
Section 5.1 Covenant Not to Consolidate, Merge,
Convey or Transfer Except Under Certain
Conditions........................................ 18
Section 5.2 Successor Person Substituted...................... 19
Section 5.3 Limitation on Lease of Properties................. 20
ARTICLE 6.
DEFAULT AND REMEDIES
Section 6.1 Events of Default................................. 20
Section 6.2 Acceleration...................................... 22
Section 6.3 Other Remedies.................................... 22
Section 6.4 Waiver of Past Defaults........................... 23
Section 6.5 Control by Majority............................... 23
Section 6.6 Limitation on Suits............................... 23
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(Continued)
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Section 6.7 Rights of Holders to Receive Payment.............. 24
Section 6.8 Collection Suit by Trustee........................ 24
Section 6.9 Trustee May File Proofs of Claim.................. 24
Section 6.10 Application of Proceeds........................... 25
Section 6.11 Undertaking for Costs............................. 26
Section 6.12 Restoration of Rights on Abandonment of
Proceedings....................................... 26
Section 6.13 Powers and Remedies Cumulative; Delay or
Omission Not Waiver of Default.................... 27
ARTICLE 7.
TRUSTEE
Section 7.1 Duties of Trustee................................. 27
Section 7.2 Rights of Trustee................................. 28
Section 7.3 Individual Rights of Trustee...................... 29
Section 7.4 Trustee's Disclaimer.............................. 29
Section 7.5 Notice of Defaults................................ 29
Section 7.6 Reports by Trustee to Holders..................... 29
Section 7.7 Compensation and Indemnity........................ 29
Section 7.8 Replacement of Trustee............................ 30
Section 7.9 Successor Trustee by Merger, etc.................. 31
Section 7.10 Eligibility; Disqualification..................... 31
Section 7.11 Preferential Collection of Claims Against
Company........................................... 31
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations.............. 32
Section 8.2 Application of Trust Money........................ 33
Section 8.3 Repayment to Company.............................. 33
Section 8.4 Reinstatement..................................... 34
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(Continued)
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ARTICLE 9.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Without Consent of Holders........................ 35
Section 9.2 With Consent of Holders........................... 35
Section 9.3 Compliance with Trust Indenture Act............... 36
Section 9.4 Revocation and Effect of Consents................. 36
Section 9.5 Notation on or Exchange of Securities............. 37
Section 9.6 Trustee to Sign Amendments, etc................... 37
Section 9.7 Effect of Supplement and/or Amendment............. 37
ARTICLE 10.
SECURITY
Section 10.1 Other Operative Documents......................... 37
Section 10.2 Opinions, Certificates and Appraisals............. 38
Section 10.3 Authorization of Actions to be Taken by the
Trustee Under the Operative Documents............. 38
Section 10.4 Payment of Expenses............................... 39
Section 10.5 Authorization of Receipt of Funds by the
Trustee Under the Operative Documents............. 39
ARTICLE 11.
MISCELLANEOUS
Section 11.1 Conflict with Trust Indenture Act of 1939......... 39
Section 11.2 Notices; Waivers.................................. 39
Section 11.3 Communications by Holders with Other
Holders........................................... 40
Section 11.4 Certificate and Opinion as to Conditions
Precedent......................................... 41
Section 11.5 Statements Required in Certificate or
Opinion........................................... 41
Section 11.6 Rules by Trustee, Paying Agent, Registrar......... 42
Section 11.7 Holidays.......................................... 42
Section 11.8 Governing Law; Waiver of Jury Trial............... 42
Section 11.9 No Adverse Interpretation of Other...............
Agreements........................................ 43
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Section 11.10 No Recourse Against Others........................ 43
Section 11.11 Benefits of Indenture and the Securities
Restricted........................................ 43
Section 11.12 Successors and Assigns............................ 43
Section 11.13 Counterpart Originals............................. 43
Section 11.14 Severability...................................... 43
Section 11.15 Effect of Headings................................ 44
ARTICLE 12.
RELEASE OF COLLATERAL
Section 12.1 Release of Collateral............................. 44
ARTICLE 13.
MANDATORY CONVERSION OF SECURITIES
Section 13.1 Mandatory Conversion and Conversion
Price............................................. 44
Section 13.2 Effect of Consolidation, Merger or
Conveyance on Conversion.......................... 45
Section 13.3 Costs of Conversion............................... 47
Section 13.4 No Liability to Trustee........................... 47
Section 13.5 Applicable Laws................................... 48
Section 13.6 Other Funds....................................... 48
Section 13.7 Release of Collateral Upon Conversion............. 48
Section 13.8 Company to Provide Stock.......................... 48
APPENDIX I Definitions Appendix
EXHIBIT A Form of 10 1/4% Mandatory Conversion Equity Note
EXHIBIT B Form of Aircraft Second Mortgage and Security Agreement
v
INDENTURE dated as of June 16, 1998 between TRANS WORLD
AIRLINES, INC., a Delaware corporation (the "Company"), and FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the
Company's 10 1/4% Mandatory Conversion Equity Notes due 1999
(the "Securities").
ARTICLE 1.
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Definitions.
-----------
Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in Section
1 of the Definitions Appendix attached hereto as Appendix I,
which shall be a part of this Indenture as if fully set forth in
this place.
Section 1.2 Rules of Construction.
---------------------
The rules of construction for this Indenture are set forth
in Section 2 of the Definitions Appendix.
ARTICLE 2.
THE SECURITIES
Section 2.1 Designation, Form and Dating.
----------------------------
The Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A
hereto (with such appropriate insertions, omissions,
substitutions and other variations as are required by this
Indenture) and is hereby incorporated in and expressly made a
part of this Indenture. The Securities may have imprinted or
otherwise reproduced thereon such notations, legends or
endorsements, not inconsistent with the provisions of this
Indenture, as may be required to comply with any law or with any
rules or regulations pursuant thereto, or with the rules of any
securities market in which the Securities are admitted to
trading, or to conform to general usage. The Company shall
approve the form of the Securities and any notation, legend or
endorsement on them. Each Security shall be dated the date of its
authentication and shall bear interest from the applicable date
set forth herein or in the form of Security and shall be payable,
unless previously Tendered, on the dates as specified herein or
in the form of the Security.
The Person in whose name any Security is registered at the
close of business on any Record Date with respect to any Interest
Payment Date shall be entitled to receive the interest and
Special Interest, if any, payable on such Interest Payment Date
to the extent provided by
2
such Security, except if and to the extent the Company shall
default in the payment of the interest or Special Interest due on
such Interest Payment Date, in which case defaulted interest or
Special Interest, as the case may be, shall be paid to the Person
in whose name the Outstanding Security is registered at the close
of business on the subsequent record date (which shall be not
less than five (5) Business Days prior to the date of payment of
such defaulted interest) established by notice given by mail by
or on behalf of the Company to the Holders of Securities not less
than fifteen (15) days preceding such subsequent record date (a
"Special Record Date").
Section 2.2 Execution, Amount, Authentication and Delivery.
----------------------------------------------
The Securities shall be signed for the Company by the
manual or facsimile signatures of an Officer and a Certifying
Officer. The Company's seal shall be affixed to or reproduced on
the Securities. Typographical or other errors or defects in any
such reproduction of the seal or any such signature shall not
affect the validity or enforceability of any Security which has
been duly authenticated and delivered by the Trustee.
If an officer whose signature is on a Security no longer
holds that office at the time the Trustee authenticates the
Security, the Security shall be valid nevertheless.
A Security shall not be valid until the Trustee manually
signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to
$13,000,000 except for Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu
of, other Securities pursuant to Sections 2.6, 2.7, 2.9, 4.15 or
9.5.
The Securities shall be known and designated as the
"10 1/4% Mandatory Conversion Equity Notes due 1999" of the
Company. Their Stated Maturity shall be June 15, 1999, and,
subject to the increases in the rate of interest set forth in the
Securities, they shall bear interest at the rate of 10 1/4% per
annum, from June 16, 1998 or from the most recent Interest
Payment Date to which interest and Special Interest, if any, have
been paid or duly provided for, as the case may be, payable in
arrears on each Interest Payment Date, until the principal
thereof is paid or made available for payment. In the event a
Registration Default shall occur and be continuing and the
Company shall have failed to use its reasonable best efforts to
avoid or cure such Registration Default, Holders shall be
entitled to make a claim for damages incurred as a result of such
Registration Default which damages shall not necessarily be
limited to the increases in the interest rate set forth in the
Securities; provided, however, that any amount of interest paid
pursuant to such increases shall be credited against any amount
of damages to be paid by the Company in connection with such
claim.
Subject to the limits set forth in the second preceding
paragraph of this Indenture, the Trustee shall authenticate
Securities for original issue upon written order of the Company
signed by an Officer and by a Certifying Officer of the Company.
The order shall specify the amount of Securities to be
authenticated and the date on which the original issue of
Securities is to be
3
authenticated, shall provide instructions with respect to the
delivery thereof and shall be accompanied by the documents
specified in Sections 10.2 and 11.4 and by the following
(provided, however, that the Trustee shall be authorized
conclusively to rely upon the documents specified in Section
11.4):
(a) the grant to the Trustee, by assignment, pledge, or
otherwise pursuant to the Mortgage, of a security interest in the
Collateral;
(b) Officers' Certificates or other satisfactory
confirmation (i) with respect to the Mortgage and the Collateral,
that the Company is the legal and beneficial owner of the
Collateral, free and clear of all Liens except Permitted Liens;
and (ii) describing the actions taken to make, obtain and
accomplish all necessary filings, confirmations and
identifications referred to in Section 4.14 hereof;
(c) compliance with all applicable provisions of
Sections 4.12 and 4.14 hereof;
(d) an Officers' Certificate confirming all representations
and warranties of the Company contained in this Indenture and the
other Operative Documents as of the date of authentication;
(e) an Officers' Certificate containing representations and
warranties of the type usual and customary to the issuance of the
Securities such as, but not limited to, representations regarding
due authorization of this Indenture; due authorization of the
issuance and delivery of the Securities; that the Securities,
when so issued and delivered against delivery of the Aircraft
under the Aircraft Sale Agreement will be duly and validly
issued, and constitute valid and binding obligations of the
Company, enforceable in accordance with their terms; that the
Common Stock issuable upon conversion of the Securities has been
duly authorized and reserved for issuance and, when issued and
delivered by the Company upon conversion of the Securities, will
be duly and validly issued, fully paid and non-assessable and
free of preemptive rights; that no consent, approval or
authorization of, or designation, declaration, or filing with,
any governmental authority or any other person or entity is
required of the Company in connection with the execution and
delivery of this Indenture or the issuance and delivery of the
Securities; and that the Securities have been registered under
the Securities Act or that registration is not required in
connection with the offer, issuance and delivery of the
Securities, nor does the Securities Act require registration of
the conversion of the Securities into shares of Common Stock as
provided in Article 13;
(f) an Opinion of Counsel to the effect that the Company
has the requisite corporate power and authority to execute,
deliver and perform its obligations under this Indenture and the
other Operative Documents; that the Securities have been duly
authorized and validly issued; and that the offer and issuance of
the Securities have been registered or will be exempt from the
registration requirements under the Securities Act and that the
Securities Act does not require registration of the conversion of
the Securities into shares of Common Stock as provided in Article
13; and
4
(g) execution and delivery by the Company of the Securities and
by all parties thereto of this Indenture and all other Operative
Documents;
provided, however, that any Securities in fact authenticated by
the Trustee upon written order of the Company as set forth in the
first sentence of this paragraph shall be deemed to have been
duly authenticated hereunder and to constitute an enforceable
contractual obligation of the Company and shall be entitled to
all the benefits of this Indenture and the other Operative
Documents equally and proportionately with any and all other
Securities duly authenticated and delivered hereunder, in each
case, notwithstanding any failure of the Company to deliver any
of the documents specified in Sections 10.2 and 11.4 or above in
this sentence.
The Securities shall be issuable only in registered form,
without coupons, in denominations of $1,000 and any integral
multiple thereof.
The Trustee may appoint an authenticating agent acceptable
to the Company to authenticate Securities. An authenticating
agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent
has the same rights as an Agent to deal with the Company, any
guarantor or any Affiliate of the Company.
Section 2.3 Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency where
Securities eligible for transfer or exchange may be presented for
registration of transfer or for exchange ("Registrar") and an
office or agency where Securities may be presented for payment or
repurchase ("Paying Agent"). The Registrar shall keep a register
of the Securities and of their transfer and exchange
("Register"). Such Register shall be in written form in the
English language or any other form capable of being converted
into such form within a reasonable time. At all reasonable times
such Register shall be open for inspection by the Trustee. The
Company may have one or more co-Registrars and one or more
additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company may enter into an appropriate agency agreement
with any Agent not a party to this Indenture. Such agency
agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of the
name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar
and Paying Agent.
Section 2.4 Paying Agent to Hold Payments In Trust.
--------------------------------------
Each Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all Payments held by the Paying
Agent for the payment of principal of, repurchase price, if any,
of, interest on, and Special Interest, if any, with respect to,
the Securities (whether such Payment has been paid to it by the
Company or any other obligor on the Securities), and shall
promptly notify
5
the Trustee of any default by the Company (or any other obligor
on the Securities) in making any such Payment. The Company at any
time may require a Paying Agent to Pay all Payments held by it to
the Trustee and account for any funds disbursed and the Trustee
may at any time during the continuance of any payment default,
upon written request to a Paying Agent, require such Paying Agent
to Pay all Payments held by it to the Trustee and to account for
any Payments distributed. Upon doing so the Paying Agent shall
have no further liability for the Payments.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of,
repurchase price, if any, of, interest on, or Special Interest,
if any, with respect to, any of the Securities, segregate and
hold in trust for the benefit of the Persons entitled thereto
Payments sufficient to pay the principal, repurchase price, if
any, interest or Special Interest, if any, so becoming due until
such Payments shall be Paid to such Persons or otherwise disposed
of as herein provided, and will promptly notify the Trustee of
such action or any failure so to act.
The Company will, on or before each due date for the
payment of the principal of, repurchase price, if any, of,
interest on, or Special Interst, if any, with respect to, any of
the Securities, deposit with a Paying Agent Payments (in same day
funds) sufficient to pay the principal, repurchase price, if any,
interest or Special Interest, if any, so becoming due, such
Payments to be held in trust for the benefit of the Persons
entitled to such principal, repurchase price, if any, interest or
Special Interest, if any, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of such
action or any failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(a) hold all Payments received by it as such agent for the
payment of the principal of, repurchase price, if any, of,
interest on, or Special Interest, if any, with respect to, the
Securities (whether such Payments have been paid to it by the
Company or by any other obligor on the Securities) in trust for
the benefit of the Persons entitled thereto until such Payments
shall be paid to such Persons or otherwise disposed of as herein
provided;
(b) promptly give the Trustee notice of any failure by the
Company (or any other obligor upon the Securities) to make any
payment of the principal of, repurchase price, if any, of, or
interest, if any, on, the Securities when the same shall be due
and payable; and
(c) at any time during the continuance of any such failure,
upon the written request of the Trustee, forthwith pay to the
Trustee all Payments so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other
purpose, Pay, or direct any Paying Agent to Pay, to the Trustee
all Payments held in trust by the Company or such Paying Agent,
such Payments to be held by the Trustee upon the same trusts as
those upon which such Payments were held by the Company or such
Paying Agent; and, upon such Payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further
liability with respect to such Payments held
6
by it as Paying Agent.
Any Payments deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of, repurchase price, if any, of, interest on or
Special Interest, if any, with respect to, any Security and
unclaimed for two (2) years after such principal, repurchase
price, interest or Special Interest has become due and payable
shall be paid to the Company on its request, or (if then held by
the Company) shall be discharged from such trust, unless
otherwise required by mandatory provisions of applicable escheat
or abandoned or unclaimed property law, and the Holder of such
Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof and all liability of the
Trustee or such Paying Agent with regard to such Payments, and
all liability of the Company as trustee thereof, shall thereupon
cease.
Section 2.5 Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of Securityholders. If the Trustee is not
the Registrar, the Company shall furnish to the Trustee on or
before each Interest Payment Date and at such other times as the
Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and
addresses of Securityholders.
Section 2.6 Transfer and Exchange.
---------------------
When Securities are presented to the Registrar or a
co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Securities of
other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements
for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's request.
All Securities presented for registration of transfer, exchange
or payment shall (if so required by the Company or the Trustee)
be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company and
the Trustee, duly executed by the Holder or his attorney duly
authorized in writing. The Company may require payment of a sum
sufficient to pay all taxes, assessments or other governmental
charges in connection with any registration of transfer or
exchange, but not for any exchange pursuant to Sections 2.9, 4.15
or 9.5 or any other Tender not involving any transfer of
Securities (other than to the Company). No service charge shall
be made for any such transaction.
In the case of any Security which is Tendered in part only,
upon such Tender the Company shall execute and the Trustee shall
authenticate and make available for delivery to the Holder
thereof, without service charge, a new Security or Securities of
any authorized denomination as requested by such Holder in
aggregate principal amount equal to the non- Tendered portion of
the principal of such Security. No Securities will be issued in
denominations of less than $1,000 upon tender of the Securities.
7
All Securities issued upon any transfer or exchange of Securities
shall be valid obligations of the Company, evidencing the same
debt of the same series and entitled to the same benefits under
this Indenture, as the Securities surrendered upon such transfer
or exchange.
Section 2.7 Mutilated, Defaced, Destroyed, Lost and
---------------------------------------
Stolen Securities.
-----------------
In case any temporary or definitive Security shall become
mutilated, defaced or be apparently destroyed, lost or stolen,
subject to compliance with the following sentence and in the
absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company
shall execute, and the Trustee shall authenticate and deliver, a
new Security, bearing a number not contemporaneously outstanding,
in exchange and substitution for the mutilated or defaced
Security, or in lieu of and substitution for the Security so
apparently destroyed, lost or stolen. In every case the applicant
for a substitute Security shall furnish to the Company and to the
Trustee and any agent of the Company or the Trustee such security
or indemnity as may reasonably be required by them to indemnify
and defend and to save each of them harmless and, in every case
of destruction, loss or theft, evidence to their satisfaction of
the apparent destruction, loss or theft of such Security and of
the ownership thereof.
Upon the issuance of any substitute Security pursuant to
the preceding paragraph, the Company may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected
therewith. In case any Security which has matured or is about to
mature, or has been tendered for repurchase pursuant to any of
the provisions hereof (as evidenced by an irrevocable written
notice from the Holder to the Company and the Trustee), shall
become mutilated or defaced or be apparently destroyed, lost or
stolen, the Company may, instead of issuing a substitute
Security, pay or authorize the payment of such Security (without
surrender of such Security except in the case of a mutilated or
defaced Security), as applicable, if the applicant for such
payment shall furnish to the Company and to the Trustee and any
agent of the Company or the Trustee such security or indemnity as
any of them may reasonably require to save each of them harmless
from all risks, however remote, and, in every case of apparent
destruction, loss or theft, the applicant shall also furnish to
the Company and the Trustee and any agent of the Company or the
Trustee evidence to their satisfaction of the apparent
destruction, loss or theft of such Security and of the ownership
thereof.
Every substitute Security issued pursuant to the provisions
of this Section by virtue of the fact that any Security is
apparently destroyed, lost or stolen shall constitute an
additional contractual obligation of the Company, whether or not
the apparently destroyed, lost or stolen Security shall be at any
time enforceable by anyone and shall be entitled to all the
benefits of (but shall also be subject to all the limitations of
rights set forth in) this Indenture equally and proportionately
with any and all other Securities duly authenticated and
delivered hereunder. Every substitute Security issued pursuant to
the provisions of this Section by virtue of the fact that any
Security is mutilated or defaced shall constitute an additional
contractual obligation of the Company and shall be entitled to
all the benefits of (but shall also be subject to all the
limitations of rights set forth in) this Indenture equally and
proportionately with any and all other Securities of the same
series duly authenticated and delivered hereunder. All Securities
shall be
8
held and owned upon the express condition that, to the extent
permitted by law, the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated or defaced or
apparently destroyed, lost or stolen Securities and shall
preclude any and all other rights or remedies notwithstanding any
law or statute existing or hereafter enacted to the contrary with
respect to the replacement or payment of negotiable instruments
or other securities without their surrender.
Section 2.8 Treasury Securities.
-------------------
In determining whether the Holders of the required
principal amount of Securities have given or concurred in any
amendment, request, demand, authorization, direction, notice,
consent or waiver under this Indenture or any other Operative
Document, Securities owned by the Company (including Securities
Tendered), an Affiliate of the Company, any other obligor upon
the Securities, any Affiliate of such obligor upon the Securities
or any Person who has given or concurred in any such amendment,
request, demand, authorization, direction, notice, consent or
waiver under the direction of, by agreement with, or as a
condition or in consideration of any exchange offer by or
transfer of such Person's Securities to the Company, an Affiliate
of the Company, any other obligor, any Affiliate of such obligor
or any such Person, shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination, except
that, for the purposes of determining whether the Trustee shall
be protected in relying on any such amendment, request, demand,
authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee that neither the Company nor
any such other obligor, Affiliate or Person is affiliated with
the pledgee or any Affiliate of the pledgee and that the pledgee
has the present right (subject to no contrary obligation or
understanding) so to act with respect to the Securities on the
basis of its best interests as a Holder independently of any
direction by or interest of the Company. In case of a dispute as
to such right, the Trustee in good faith shall be entitled to
rely upon the advice of counsel, including counsel for the
Company. Upon request of the Trustee, the Company shall promptly
furnish to the Trustee a certificate of a Certifying Officer
listing and identifying all Securities, if any, known by the
Company to be owned or held by or for the account of any of the
above-described Persons; and subject to Sections 7.1 and 7.2
herein, the Trustee shall be entitled to accept such certificate
as conclusive evidence of the facts therein set forth and of the
fact that all Securities not listed therein are Outstanding for
the purpose of any such determination. The Company shall not,
directly or indirectly, pay or cause to be paid any remuneration,
whether by way of supplemental or additional interest, fee or
otherwise, or grant any additional security, to any Holder of
Securities as consideration for or as an inducement to giving or
concurring in any amendment, request, demand, authorization,
direction, notice, consent or waiver under this Indenture or any
other Operative Document unless such remuneration is concurrently
paid, or such security is concurrently granted, as the case may
be, on the same terms ratably to the Holders of all Securities
then Outstanding (regardless of whether any such Holder has given
or concurred in such amendment, request, demand, authorization,
direction, notice, consent or waiver under this Indenture or any
other Operative Document).
9
For purposes of this Section and without limiting the
generality of the foregoing, Securities which are subject to a
binding contract or irrevocable tender offer (including an offer
which is in any way conditioned upon or simultaneous with, or
requires as a condition precedent (whether by contract or
otherwise) or which cannot be effected without, the agreement or
consent of the transferor to any amendment, request, demand,
authorization, direction, notice, consent or waiver hereunder)
pursuant to which ownership (direct or indirect) is to be
transferred (including for example, Securities tendered to the
Company or any other Person in an exchange transaction) shall be
deemed owned by such transferee, and therefore, any such
simultaneous agreement or consent by the transferor shall be
invalid.
Section 2.9 Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the
Company may prepare, and, upon written order of the Company, the
Trustee shall authenticate, temporary Securities in any
authorized denominations. Temporary Securities shall be
substantially in the form of definitive Securities of the same
series but may have variations that the Company reasonably
considers appropriate and necessary for temporary Securities.
Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate and deliver definitive Securities in
exchange for temporary Securities. Until so exchanged, the
temporary Securities shall be entitled to the same benefits under
this Indenture as definitive Securities of the same series.
Section 2.10 Cancellation.
------------
The Company may at any time deliver Securities to the
Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them
for transfer, exchange, repurchase or payment. All Securities
purchased pursuant to any Offer to Purchase shall be canceled.
The Trustee and no one else shall cancel all Securities
surrendered for transfer, exchange, repurchase or cancellation.
The Company may not issue new Securities to replace Securities it
has paid or that have been converted (upon Tender or otherwise)
or which have been delivered to the Trustee for cancellation. The
Trustee shall destroy all canceled Securities and, if requested,
deliver a certificate of such destruction to the Company. If the
Company shall acquire any of the Securities, such acquisition
shall not operate as a satisfaction of the indebtedness
represented by such Securities unless and until the same are
delivered to the Trustee for cancellation.
Section 2.11 Defaulted Interest; Interest on Defaulted Principal.
---------------------------------------------------
If the Company defaults in a payment of any interest on, or
Special Interest, if any, with respect to, the Securities, it
shall pay the defaulted interest or Special Interest, as the case
may be, plus interest on such defaulted interest or Special
Interest at the rate then borne by the Securities to the extent
permitted by law and the terms thereof, to the persons who are
Securityholders on a subsequent Special Record Date. The Company
shall fix the Special Record Date and payment date. At least
fifteen (15) days before the Special Record Date, the Company
shall mail to each Securityholder a notice that states the
Special Record Date, the payment date and the amount of defaulted
interest to be paid. If the Company defaults in the payment of
principal on the Securities (whether on acceleration, at
maturity, upon tender for repurchase or otherwise), it shall
10
pay interest on such defaulted principal at the rate then borne
by the Securities to the Trustee upon demand. The Trustee shall
apply any such payment in accordance with the provisions of
Section 6.10.
Section 2.12 CUSIP Numbers.
-------------
The Company in issuing the Securities may use "CUSIP"
numbers (if then generally in use) and, if so, the Trustee may
use "CUSIP" numbers in notices to the Holders regarding the
Securities as a convenience to Holders; provided, however, that
any such notice may state that no representation is made as to
the correctness of such numbers either as printed on the
Securities or as contained in any such notice and that reliance
may be placed only on the other identification numbers printed on
the Securities, and any such notice shall not be affected by any
defect in or omission of such numbers.
ARTICLE 3.
REDEMPTIONS
The Securities Outstanding shall not be subject to
redemption in whole or in part at any time.
ARTICLE 4.
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 4.1 Payment of Securities.
---------------------
The Company shall pay the principal of, interest on and
Special Interest, if any, with respect to, the Securities on the
dates and in the manner provided in this Indenture and in the
Securities. All interest and Special Interest, if any, due and
payable on the Securities shall be paid in cash, except that the
Company may at its option, make such Payments by check mailed to
the address of the Person entitled thereto as it appears in the
Register; provided, however, that such Payments on a certificated
Security will be made by wire transfer to a U.S. dollar account
maintained by a Holder with a bank in New York City if such
Holder owns at least $250,000 in aggregate principal amount of
certificated Securities and elects payment by wire transfer by
giving written notice to the Company and the Trustee to such
effect designating such account no later than 10 days immediately
preceding the relevant due date for payment (or such other date
as the Company and the Trustee may accept in their discretion).
An installment of principal, interest or Special Interest,
if any, shall be considered paid on the date due if the Trustee
or Paying Agent (other than the Company or any Affiliate thereof)
holds on that date Payments designated for and sufficient to pay
such installment and the Trustee or Paying Agent is not
prohibited from Paying such Payments to the Holders of the
Securities pursuant to this Indenture.
11
The Company shall pay interest and Special Interest, if any, at
the rate set forth in this Indenture and the Securities, and the
Company shall pay interest on unpaid interest or Special
Interest, if any, at the same rate to the extent legally
permitted.
Section 4.2 Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency where Securities may be
surrendered for registration of transfer or exchange or for
presentation for payment, repurchase or conversion and where
notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. At the request of
the Company, said office or agency may be the office of an agent
appointed by the Trustee for such purpose. The Company shall give
prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency not designated
or appointed by the Trustee. If at any time the Company shall
fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office.
The Company may also from time to time designate one or
more other offices or agencies where the Securities may be
presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York, for
such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
Section 4.3 Limitation on Dividends and Acquisition
---------------------------------------
of Common Stock.
---------------
The Company will not declare or pay any dividend or make
any distribution on its Common Stock, Employee Preferred Stock or
other Capital Stock of the Company (other than dividends or
distributions payable in the Company's Common Stock or Employee
Preferred Stock or options, warrants or other rights to acquire,
subscribe for or purchase the Company's Common Stock or Employee
Preferred Stock) and will not, and will not permit any of its
Subsidiaries to, purchase, redeem or otherwise acquire for value
any shares of its Common Stock, Employee Preferred Stock or other
Capital Stock of the Company, whether in cash or Property or in
obligations of the Company, if, at the time of such declaration,
payment, distribution, purchase, redemption or other acquisition
or, after giving effect thereto, a Default or Event of Default
shall have occurred and be continuing; provided, that
notwithstanding anything to the contrary written above, this
Section 4.3 shall not apply to: (a) any purchase or redemption of
Common Stock or Preferred Stock by the Company or an employee
stock ownership or benefit plan (i) from union employees or
former union employees, or their respective transferees, pursuant
to the terms of agreements with labor unions existing on the date
hereof; (ii) from recipients or their transferees of such stock
from employee stock ownership or benefit plans subject to ERISA;
(iii) from employee stock ownership or benefit plans subject to
ERISA in order to provide cash benefits to employees pursuant to
the terms of such plans; and (iv) as required by ERISA; (b) any
purchase or redemption of Common Stock or Preferred Stock by an
12
employee stock ownership or benefit plan subject to ERISA for an
aggregate consideration, without regard to purchases or
redemptions pursuant to clause (a) above, of up to $200,000,000;
(c) the payment of fixed or mandatory dividends on or scheduled
redemptions or exchanges of any of the Company's 8% Preferred
Stock and 9 1/4% Preferred Stock and the payment of any interest
on the securities issuable upon such exchange; (d) the payment of
any dividends on or the purchase, redemption or other acquisition
or retirement of the Common Stock or Preferred Stock of the
Company within sixty (60) days after the date of declaration of
such dividend or the commitment to make such purchase, redemption
or other acquisition or retirement, if at said date of
declaration or commitment such payment or commitment complied
with this Section 4.3; (e) the purchase, redemption, retirement
or other acquisition of any shares of the Company's Common Stock
or Preferred Stock in exchange for, or out of the proceeds of the
substantially concurrent sale of, Common Stock or Preferred Stock
of the Company; (f) any consolidation or merger with or into any
Person or conveyance or transfer of all or substantially all of
the Company's Property to one or more Persons substantially as an
entirety, not prohibited by the terms of Section 5.1; and (g) the
conversion of Employee Preferred Stock into Common Stock.
Section 4.4 Corporate Existence.
-------------------
(a) Except as otherwise provided in Article 5, the Company
shall do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and the
corporate existence of each of its Subsidiaries engaged in
substantial business activity each in accordance with the
respective organizational documents of the Company and each such
Subsidiary and the rights (charter and statutory), licenses,
permits, approvals and governmental franchises of the Company and
each such Subsidiary necessary to the conduct of its respective
business; provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or to
preserve the corporate existence of any such Subsidiary, if the
Board of Directors shall determine that the preservation thereof
is no longer in the interest of the Company and that termination
of the corporate existence is not disadvantageous to the Holders
in any material respect.
(b) The Company shall continue to be an air carrier
certificated under Section 604(b) of the Federal Aviation Act.
(c) The Company is and, to the extent required to operate
its business as presently conducted and to perform its
obligations under this Indenture and the Operative Documents,
shall remain a "citizen of the United States" as defined in
Section 101(16) of the Federal Aviation Act.
Section 4.5 Payment of Taxes and Other Claims.
---------------------------------
The Company shall, and shall cause each of its Subsidiaries
to, pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company and each
Subsidiary or upon the income, profits or Property of the Company
and each Subsidiary or upon the Collateral and (b) all lawful
claims for labor, materials and supplies which, if unpaid, might
by law become a Lien upon the Collateral or the other Property of
the Company or a Subsidiary; provided, however, that the Company
or a Subsidiary, as the case may be, shall not be required to pay
or
13
discharge or cause to be paid or discharged any such tax,
assessment, charge or claim (i) the amount, applicability or
validity of which is being contested in good faith by appropriate
proceedings as permitted by and in accordance with the provisions
of the Operative Documents, to the extent applicable, and for
which adequate reserves have been established in accordance with
GAAP, as in effect from time to time, or (ii) if the Company
delivers to the Trustee a Certificate of an Officer stating that
such non-payment and non-discharge is in the interest of the
Company and not prejudicial in any material respect to the
Holders.
Nothing contained herein or in the Securities shall be
deemed to impose on the Trustee or on the Company any obligation
to pay on behalf of the Holder of any Securities any tax,
assessment or governmental charge required by any present or
future law of the U.S. or of any state, county, municipality or
other taxing authority thereof to be paid on behalf of, or
withheld from the amount payable to, the Holder of any
Securities; rather any tax, assessment or governmental charge
shall, to the extent required by law, be withheld from the
amounts provided for herein.
Section 4.6 Notices.
-------
The Company shall notify the Trustee in writing of any of
the following promptly (and in any event within five (5) Business
Days after an Officer learns of the occurrence thereof)
describing the same and, if applicable, the steps being taken by
the Person(s) affected with respect thereto:
(a) In the event that any Indebtedness of the Company or
any Significant Subsidiary of the Company in a principal amount
in excess of $10,000,000 (i) is declared due and payable before
its stated maturity because of the occurrence of any default (or
any event which, with notice or the lapse of time, or both, shall
constitute such default) under such Indebtedness or (ii) is not
paid at its stated maturity; or
(b) Any litigation, arbitration proceeding or governmental
proceeding involving damages or potential liability in excess of
$10,000,000 is instituted against the Company or any of its
Subsidiaries which, if adversely determined, would have a
material adverse effect on the business, operations or financial
condition of the Company and its Subsidiaries taken as a whole.
Section 4.7 Maintenance of Properties and Insurance.
---------------------------------------
Except as otherwise provided in this Indenture, the Company
shall, and shall cause each of its Subsidiaries to, cause all
Collateral and other Properties owned by or leased to it and used
or useful in the conduct of the business of the Company or any
such Subsidiary, as the case may be, to be maintained and kept in
good repair, working order and condition, except for reasonable
wear and use, and supplied with all necessary equipment and shall
cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of
the Company may be necessary, so that the business carried on in
connection therewith may be properly and advantageously conducted
at all times, except, in every case, as and to the extent that
the Company or any such Subsidiary may be prevented by fire,
strikes, lockouts, acts of God, inability to obtain labor or
materials, governmental restrictions, enemy action, civil
14
commotion or unavoidable casualty or similar causes beyond the
control of the Company or such Subsidiary; provided, however,
that subject to all requirements of the Operative Documents,
nothing in this Section 4.7 shall prevent the Company or any such
Subsidiary from discontinuing the use, operation or maintenance
of any such Properties, or disposing of any of them, if such
discontinuance or disposal is, in the good faith judgment of an
Officer of the Company (or other agent employed by the Company)
having managerial responsibility for any such Property (or, in
the case of any materially important item, with respect to
operations or value, in the good faith judgment of the Company as
expressed in a resolution of the Board of Directors), desirable
in the conduct of the Company's business or that of its
Subsidiaries.
For so long as any Collateral or Property is deemed to be
useful to the conduct of the business of the Company or its
Subsidiaries, the Company shall, or shall cause such Subsidiaries
to, maintain appropriate insurance, in accordance with industry
practice, on such Collateral and Properties and as required under
the provisions of the applicable Operative Documents.
Notwithstanding the provisions of this Section 4.7, to the
extent there exists any inconsistency between the provisions
hereof and the provisions of the Mortgage relating to Property
which constitutes Collateral, the provisions of the Mortgage
shall prevail as to all Collateral.
Section 4.8 Default Notices and Compliance Certificates.
-------------------------------------------
Contemporaneously with furnishing quarterly financial
reports to the Trustee under Section 4.9(a) or mailing quarterly
statements to the Trustee and Holders under Section 4.9(c), the
Company shall furnish to the Trustee a Certifying Officer's
Certificate to the effect that no Default or Event of Default has
occurred or is continuing, or, if there is any such Default or
Event of Default, describing it and the steps, if any, being
taken to cure it.
The Company shall deliver to the Trustee within one hundred
twenty (120) days after the end of each fiscal year in which any
of the Securities remain Outstanding a certificate of the
principal executive officer, principal financial officer or
principal accounting officer of the Company (which need not
comply with the provisions of Section 11.5) stating whether or
not, to the knowledge of the signer after due inquiry, the
Company is in compliance with all conditions and covenants under
this Indenture and the Operative Documents (determined without
regard to any period of grace or requirement of notice), and if
the Company is not in compliance with all such conditions and
covenants, describing each Default or Event of Default and its
status. The first certificate to be delivered by the Company
pursuant to this Section 4.8 shall be for the fiscal year ending
December 31, 1998.
Section 4.9 SEC Reports.
-----------
(a) The Company shall deliver to the Trustee as soon as
practicable after it files them with the SEC, copies of the
annual reports and of the information, documents, and other
reports (or copies of such portions of any of the foregoing as
the SEC may by rules and regulations prescribe) which the Company
is required to file with the SEC pursuant to Sections 13 or 15(d)
of the Exchange Act. The Company also shall comply with the other
provisions of TIA ss. 314(a).
15
(b) So long as any of the Securities remain Outstanding, the
Company shall cause its annual report to stockholders and any
quarterly or other financial reports furnished by it to
stockholders generally, to be mailed to the Holders of such
Outstanding Securities at their addresses appearing in the
Register.
(c) At any time the Company does not have a class of
securities registered, or is not otherwise required to file
quarterly and other reports under the Exchange Act, the Company
will prepare or cause to be prepared, for each of the first three
(3) quarters of each fiscal year, an unaudited balance sheet of
the Company and its consolidated Subsidiaries as at the end of
such quarter and related unaudited consolidated statements of
income and retained earnings and cash flow of the Company and its
consolidated Subsidiaries for such quarter and the portion of the
fiscal year through such date, setting forth in each case in
comparative form the figures for the corresponding year-to-date
period in the previous year, certified by the principal financial
officer of the Company, and for each fiscal year, an audited
balance sheet of the Company and its consolidated Subsidiaries as
at the end of such year and related audited consolidated
statements of income and retained earnings and cash flow of the
Company and its consolidated Subsidiaries for such year, setting
forth in comparative form the figures for the previous year,
reported on without a qualification arising out of the scope of
the audit, by the Company's independent public accountants. All
financial statements will be prepared by a nationally recognized
auditing firm and will be prepared in accordance with generally
accepted accounting principles, as in effect from time to time,
consistently applied, except for changes with which the Company's
independent public accountants concur and except that quarterly
statements may be subject to year-end adjustments. The Company
will cause a copy of the respective financial statements to be
mailed to the Trustee and each of the Holders of the Securities
within forty-five (45) days after the close of each of the first
three (3) quarters of each fiscal year and within one hundred
twenty (120) days after the close of each fiscal year, to the
addresses set forth in Section 11.2 or, in the case of each of
the Holders, to such Holder's address as set forth in the
Register of the Securities.
Section 4.10 Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim, and will resist any and all efforts
to be compelled to take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit
or forgive the Company from paying all or any portion of the
principal of, interest on, or Special Interest, if any, with
respect to, the Securities as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture and the
Operative Documents; and (to the extent that it may lawfully do
so) the Company hereby expressly waives all benefit or advantage
of any such law, and covenants that it will not hinder, delay or
impede the execution of any power granted to the Trustee herein
and in the Operative Documents, but will suffer and permit the
execution of every such power as though no such law had been
enacted.
16
Section 4.11 Amendment to Certain Agreements.
-------------------------------
The Company shall not enter into or consent to any
amendment, supplement or other modification of the Operative
Documents except as permitted under Article 9 hereof.
Section 4.12 Title to Collateral and Limitation on Liens;
--------------------------------------------
Sale of Aircraft; Total Loss With Respect to Aircraft.
-----------------------------------------------------
(a) The Company represents and warrants that it has, and
covenants that it shall continue to have, full power and lawful
authority to grant, release, convey, assign, transfer, mortgage,
pledge, hypothecate and otherwise create the security interests
in the Collateral referred to in Article 10; the Company shall
warrant, preserve and defend the interest and title of the
Trustee to the Collateral, against the claims of all persons and
will maintain and preserve the security interests contemplated by
Article 10; and the Company shall not, and not permit any of its
Subsidiaries to, directly or indirectly, incur, assume or suffer
to exist any Lien of any nature whatsoever upon or with respect
to the Collateral, other than Permitted Liens. The Company shall
cause the Operative Documents, including all necessary financing
statements, notifications of secured transactions and other
assurances or instruments to be properly recorded, registered and
filed and to be kept, recorded, registered and filed in such
manner and in such places as may be required by law and shall
take all such other actions as may be required in order to make
effective the security interests intended to be created in
connection with this Indenture. The Company shall furnish to the
Trustee the Opinions of Counsel required by Section 10.2 to
confirm such action.
(b) The Company shall not, directly or indirectly,
consummate any sale, lease, transfer or other disposition of any
Collateral for so long as any of the Securities remain
Outstanding.
(c) In the event that there shall occur a Total Loss with
respect to the Aircraft, the Company shall (subject to the
provisions of Section 4.12(d)) make an Offer to Purchase an
aggregate principal amount of Outstanding Securities (the "Total
Loss OTP Amount") equal to the aggregate principal amount of the
Securities Outstanding on the date such Offer to Purchase is
required to be commenced hereunder, at a purchase price equal to
100% of the aggregate principal amount of Securities to be
purchased, plus accrued and unpaid interest and Special Interest,
if any, on such Securities, to and including the Payment Date.
The Company shall commence such Offer to Purchase within thirty
(30) days after the Total Loss Date with respect to any such
Total Loss. Upon Request by the Company and payment by the
Company of the purchase price with respect to such Offer to
Purchase and the Trustee's costs (including reasonable legal fees
and disbursements) incurred in complying with such Request, the
Trustee shall release from the Lien of the Operative Documents,
all right, title and interest of the Trustee in and to the
Collateral.
(d) At its option the Company may reduce in whole or in
part its obligation to pay the Total Loss OTP Amount in cash by
delivering to the Trustee at least 15 days before the date the
related Offer to Purchase is or would be required to be commenced
under Section 4.12(c), (i) Securities which have been acquired by
the Company in open market purchases (and, for
17
avoidance of doubt, not acquired by way of any Offer to Purchase
hereunder), together with (ii) an Officers' Certificate directing
the Trustee to cancel such Securities and stating the election of
the Company to have credited against the Total Loss OTP Amount a
specified principal amount of Securities so delivered. All
Securities made the basis of credit against the Total Loss OTP
Amount shall be credited at 100% of their principal amount. In
case of the failure of the Company to deliver such Officers'
Certificate, the Total Loss OTP Amount due on the Payment Date
therefor shall be paid entirely in cash without the option to
reduce the Company's obligation to make such payment as specified
in this Section 4.12(d). The Trustee shall promptly authenticate
and mail to the Company a new Security or Securities in an
aggregate principal amount equal to that portion (if any) of the
Securities delivered to the Trustee and not used by the Company
as a credit under this Section 4.12(d) (provided, that the
Company has previously delivered to the Trustee sufficient
executed Securities to enable the Trustee to so authenticate such
Securities).
Section 4.13 Books, Records, Access; Confidentiality.
---------------------------------------
(a) The Company shall, and shall cause each of its
Subsidiaries to, (i) maintain complete and accurate books and
records in which full and correct entries in conformity with GAAP
shall be made of all dealings and transactions in relation to its
respective business and activities, and (ii) permit authorized
representatives of the Trustee to visit and inspect the
Properties of the Company or its Subsidiaries, and any or all
books, records and documents in the possession of the Company
relating to the Collateral, including the records, logs and other
materials referred to in Section 2.1(c) of the Mortgage, and to
make copies and take extracts therefrom and to visit and inspect
the Collateral, all upon reasonable notice and at such reasonable
times during normal business hours and as often as may be
reasonably requested.
(b) The Trustee and its authorized representatives referred
to in clause (a) above agree not to use any information obtained
pursuant to this Section 4.13 for any purpose other than as
required in order to discharge their respective duties hereunder
and under the Operative Documents and except as otherwise
required for such purpose to keep confidential and not to
disclose any such information to any person except that (i) the
recipient of the information may disclose any information which
becomes publicly available other than as a result of disclosure
by such recipient, (ii) the recipient of the information may
disclose any information which its counsel reasonably concludes
is necessary to be disclosed by law or legal process, pursuant to
any court or administrative order or ruling or in any pending
legal or administrative proceeding or investigation after notice
to the Company adequate, subject to applicable laws, to allow the
Company to obtain a protective order or other appropriate remedy,
provided that the recipient of the information will (if not
otherwise required in order to discharge its duties as aforesaid)
cooperate at the Company's expense with the Company's efforts to
obtain a protective order or other reliable assurance that
confidential treatment will be accorded any such information
required to be so disclosed, and (iii) the recipient of the
information may disclose any information necessary to be
disclosed pursuant to any provision of the TIA.
18
Section 4.14 Security Interests.
------------------
The Company and its Subsidiaries shall perform any and all
acts and execute any and all documents (including, without
limitation, the execution, amendment or supplementation of any
financing statement and continuation statement or other
statement) for filing under the provisions of the Federal
Aviation Act and the applicable Uniform Commercial Code and the
rules and regulations thereunder or any other statute, rule or
regulation of any applicable federal, state or local
jurisdiction, which are necessary or advisable, from time to
time, in order to grant and maintain in favor of the Trustee for
the benefit of the Holders a valid, perfected Lien on the
Collateral.
The Company and its Subsidiaries shall deliver or cause to
be delivered to the Trustee from time to time such other
documentation, consents, authorizations, approvals and orders in
form and substance satisfactory to the Trustee as it shall deem
reasonably necessary or advisable to perfect or maintain the
Liens for the benefit of the Holders.
Section 4.15 Repurchase of Securities Upon a Change in Control.
-------------------------------------------------
(a) In the event that there shall occur a Change in
Control, the Company shall make an Offer to Purchase all of the
Outstanding Securities, at a purchase price equal to 101% of the
aggregate principal amount of the Securities Outstanding, plus
accrued and unpaid interest and Special Interest, if any, to and
including the repurchase date. The right to require such
repurchase of Securities shall not continue after a discharge of
the Company from its obligations with respect to the Securities
in accordance with Article 8.
(b) The Company shall commence such Offer to Purchase
within thirty (30) days after the occurrence of a Change in
Control.
Section 4.16 Restrictions on Becoming an Investment Company.
----------------------------------------------
The Company shall not become an investment company within
the meaning of the Investment Company Act of 1940 as such statute
and the regulations thereunder and any successor statute or
regulations thereto may from time to time be in effect.
ARTICLE 5.
SUCCESSOR CORPORATION
Section 5.1 Covenant Not to Consolidate, Merge, Convey or
---------------------------------------------
Transfer Except Under Certain Conditions.
----------------------------------------
The Company shall not consolidate with, or merge with or
into, or convey or transfer (excluding by way of lease) all or
substantially all of its Properties (as determined at the time of
such transfer without regard to any prior conveyance or transfer
or series of conveyances or transfers made on unrelated
transactions) to any other Person, or permit any Person to
convey, lease or transfer all or substantially all of its
Properties to the Company, unless:
19
(a) The Company shall be the continuing Person or the Person (if
other than the Company) formed by such consolidation or into
which the Company is merged or to which all or substantially all
of the Properties of the Company are conveyed or transferred (the
"surviving Person"): (i) shall be a corporation organized and
existing under the laws of the United States of America or any
state thereof or the District of Columbia; (ii) shall expressly
assume prior to or simultaneously with the consummation of such
transaction, by an indenture and other agreements supplemental
hereto and to the Operative Documents, executed and delivered to
the Trustee in form reasonably satisfactory to the Trustee, the
due and punctual payment of the principal of, interest on and
Special Interest, if any, with respect to, all the Securities and
the observance and performance of every covenant, condition and
obligation of this Indenture, the Securities and the Operative
Documents on the part of the Company to be observed or performed;
(b) Immediately before and immediately after giving effect
to such transaction, no Default or Event of Default shall have
occurred and be continuing hereunder;
(c) In the case of any such conveyance or transfer, such
conveyance or transfer includes, without limitation, all of the
Collateral and in any event such consolidation, merger,
conveyance or transfer shall be on such terms as shall fully
preserve the Lien and security of each of the Operative
Documents, the priority thereof purported to be established
thereby and the rights and powers of the Trustee and the Holders
of the Securities under each of the Operative Documents; and
(d) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that (i) such
merger, consolidation, transfer, conveyance, or acquisition of
assets and such supplemental indenture (if any) comply with the
terms of this Indenture, (ii) this Indenture and the Securities
constitute the valid and legally binding obligations of the
surviving Person, and (iii) this Indenture and the other
Operative Documents are enforceable against the surviving Person
in accordance with their terms.
Section 5.2 Successor Person Substituted.
----------------------------
Upon any consolidation or merger, or any conveyance or
transfer (excluding by way of lease) of all or substantially all
of the Properties of the Company in accordance with Section 5.1,
the surviving entity formed by such consolidation or into which
the Company is merged or the surviving entity to which such
conveyance or transfer is made shall succeed to, and be
substituted for, and be bound by and obligated to pay the
obligations of, and may exercise every right and power of, the
Company under this Indenture, the Securities and the Operative
Documents with the same effect as if such successor had been
named as the Company herein and therein; but the predecessor
Company in the event of any such conveyance or transfer shall not
be released from the obligation to pay the principal of, interest
on and Special Interest, if any, with respect to, the Securities.
Such surviving entity may cause to be signed, and may issue
either in its own name or in the name of the Company prior to
such succession any or all of the Securities issuable hereunder
which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such surviving
entity, instead of the Company, and subject to all the terms,
20
conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver any Securities which
previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any
Securities which such surviving entity thereafter shall cause to
be signed and delivered to the Trustee for that purpose. All of
the Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of
this Indenture as though all of such Securities had been issued
at the date of the execution hereof.
In case of any such consolidation, merger, sale, transfer
or conveyance such changes in phraseology and form (but not in
substance) may be made in the Securities thereafter to be issued
as may be appropriate.
Section 5.3 Limitation on Lease of Properties.
---------------------------------
Without limitation of the prohibitions set forth in the
other Operative Documents, the Company shall not lease all or
substantially all of its Properties to any Person.
ARTICLE 6.
DEFAULT AND REMEDIES
Section 6.1 Events of Default.
-----------------
An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest on, or
Special Interest, if any, with respect to, any Security when the
same becomes due and payable and the default continues for thirty
(30) days;
(b) the Company defaults in the payment of the principal
amount of any Securities when the same becomes due and payable at
maturity, upon acceleration, tender for repurchase or otherwise;
(c) the Company fails to comply with the agreements or
covenants contained in Article 13 hereof or in Sections 4.3 or
4.12 hereof, takes or agrees to take any action prohibited by
Section 5.1 hereof, discontinues or agrees to discontinue
substantially all of its commercial airlines operations or fails
to comply with the covenants contained in Sections 3, 6.3, 6.5 or
6.8 of the Mortgage within the time periods (if any) provided
therein;
(d) (i) the Company fails in any material respect to comply
with any of its other agreements contained in the Securities,
this Indenture or the other Operative Documents or (ii) any
representation or warranty made by the Company in this Indenture,
the other Operative Documents or any Mortgage Supplement or in
any certificate of the Company delivered hereunder or under any
such document shall prove to have been untrue in any material
respect when made, and in any such case such default continues
for the period and after the notice specified below;
21
(e) there shall be a default or an event under or with
respect to any Indebtedness of the Company or any of its
Significant Subsidiaries in excess of $10,000,000 in principal
amount, whether such Indebtedness now exists or shall hereafter
be created, and the effect of any such default or event is to
cause the principal amount of any such Indebtedness to become
due, to have the date of payment thereof fixed prior to its
stated maturity or the date it would otherwise become due and
while any Securities are Outstanding, or to be unpaid at maturity
while any Securities are Outstanding;
(f) the Company or any of its Significant Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law (as
hereinafter defined):
(i) commences a voluntary case or proceeding,
(ii) consents to the entry of an order for relief
against it in an involuntary case or proceeding,
(iii) consents to the appointment of a Custodian
(as hereinafter defined) of it or for all or substantially
all of its Property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is unable to pay its debts as the same
become due;
(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Subsidiaries in an involuntary case or proceeding,
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries for all or substantially all of
its properties, or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries,
and in each case the order and decree remains unstayed and in
effect for sixty (60) consecutive days;
(h) final, non-appealable judgments for the payment of
money, which judgments, in the aggregate, exceed $10,000,000
shall be rendered against the Company or any of its Significant
Subsidiaries by a court of competent jurisdiction and remain
undischarged, unstayed and unsatisfied for the period and after
the notice specified below; or
(i) any of the Operative Documents ceases, without the
consent of the Trustee, to be in full force and effect.
22
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
A Default under clause (d), (e) or (h) of this Section 6.1
is not an Event of Default until the Trustee notifies the
Company, or the Holders of at least twenty-five percent (25%) in
aggregate principal amount of the Securities Outstanding notify
the Company and the Trustee, of the Default and the Company does
not cure the Default within sixty (60) days with respect to
clauses (d) and (h), or within thirty (30) days with respect to
clause (e), after receipt of the notice; provided, however, that
the Company shall be permitted such longer period of time, if
any, as may be provided for under the other Operative Documents
in respect of any particular Default. The notice must specify the
Default, demand that it be remedied and state that the notice is
a "Notice of Default." When a Default is cured, it ceases.
Section 6.2 Acceleration.
------------
If an Event of Default (other than an Event of Default
specified in Section 6.1(f) or (g)) occurs, and is continuing,
the Trustee may, by notice to the Company, or the Holders of at
least twenty-five percent (25%) in aggregate principal amount of
the Securities Outstanding may, by notice to the Company and the
Trustee, and the Trustee shall, upon the request of such Holders,
declare all unpaid principal of and accrued interest and Special
Interest, if any, to the date of acceleration on the Securities
Outstanding (if not then due and payable) to be due and payable
and upon any such declaration, the same shall become and be
immediately due and payable. If an Event of Default specified in
Section 6.1(f) or (g) occurs, all unpaid principal of and accrued
interest and Special Interest, if any, on the Securities
Outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the
Trustee or any Securityholder. Upon payment of such principal
amount, interest and Special Interest, if any, all of the
Company's obligations under the Securities and this Indenture,
other than obligations under Sections 7.7 and 8.4, shall
terminate. The Holders of a majority in principal amount of the
Securities then Outstanding by notice to the Trustee may rescind
an acceleration and its consequences if (a) all existing Events
of Default, other than the non-payment as to the Securities of
the principal, interest or Special Interest, if any, which has
become due solely by such declaration of acceleration, have been
cured or waived, (b) to the extent the payment of such interest
is permitted by law, interest on overdue installments of interest
or Special Interest and on overdue principal which has become due
otherwise than by such declaration of acceleration, has been
paid, (c) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction, and (d) all payments
due to the Trustee and any predecessor Trustee under Section 7.7
have been made.
Section 6.3 Other Remedies.
--------------
If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of, interest on or
Special Interest, if any, with respect to, the Securities or to
enforce the performance of any provision of the Securities or
this Indenture including, without limitation, instituting
proceedings
23
and exercising and enforcing, or directing exercise and
enforcement of, all rights and remedies of the Trustee under the
other Operative Documents.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in
the proceeding. A delay or omission by the Trustee or any
Securityholder in exercising any right or remedy accruing upon an
Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default.
No remedy is exclusive of any other remedy. All available
remedies are cumulative.
Section 6.4 Waiver of Past Defaults.
-----------------------
Subject to Sections 6.7, 9.2 and 9.6, the Holders of a
majority in aggregate principal amount of the Securities
Outstanding by notice to the Trustee may authorize the Trustee to
waive an existing Default or Event of Default and its
consequences, except a Default (a) in the payment of principal
of, or interest on, or Special Interest, if any, with respect to,
any Security as specified in clauses (a) and (b) of Section 6.1
or (b) in respect of a covenant or provision hereof which cannot
be modified or amended without the consent of the Holder of each
Security affected. When a Default or Event of Default is waived,
it is cured and ceases, and the Company, the Holders and the
Trustee shall be restored to their former positions and rights
hereunder respectively; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any
right consequent thereon.
Section 6.5 Control by Majority.
-------------------
The Holders of a majority in aggregate principal amount of
the Securities Outstanding may direct the time, method and place
of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on it;
provided that the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction. The
Trustee may refuse to follow any direction hereunder or
authorization under Section 6.4 that legal counsel to the Trustee
determines in good faith conflicts with law or this Indenture,
that the Trustee reasonably determines may be unduly prejudicial
to the rights of another Securityholder, or that the Trustee
reasonably determines may subject the Trustee to personal
liability. However, the Trustee shall have no liability for any
actions or omissions to act which are in accordance with any such
direction or authorization.
Section 6.6 Limitation on Suits.
-------------------
A Securityholder may not pursue any remedy with respect to
this Indenture or the Securities unless:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least twenty-five percent (25%) in
principal amount of the Securities Outstanding make a written
request to the Trustee to pursue the remedy;
24
(c) such Holder or Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within
sixty (60) days after receipt of the request and the offer of
indemnity; and
(e) during such 60-day period the Holders of a majority in
aggregate principal amount of the Securities Outstanding do not
give the Trustee a direction which, in the reasonable opinion of
the Trustee, is inconsistent with such request.
A Securityholder may not use this Indenture to prejudice
the rights of another Securityholder or to obtain a preference or
priority over such other Securityholder.
Section 6.7 Rights of Holders to Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal
of, interest on, and Special Interest, if any, with respect to,
the Security in cash, on or after the respective due dates
expressed in the Security, or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of the Holder.
It is hereby expressly understood, intended and agreed that
any and all actions which a Holder of the Securities may take to
enforce the provisions of this Indenture and/or collect Payments
due hereunder or under the Securities, except to the extent that
such action is determined to be on behalf of all Holders of the
Securities, shall be in addition to and shall not in any way
change, adversely affect or impair the rights and remedies of the
Trustee or any other Holder of the Securities thereunder or under
this Indenture and the other Operative Documents, including the
right to foreclose upon and sell the Collateral or any part
thereof and to apply any proceeds realized in accordance with the
provisions of this Indenture.
Section 6.8 Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of interest or principal
specified in clause (a) or (b) of Section 6.1 occurs and is
continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company or any other
obligor on the Securities for the whole amount of principal,
accrued interest and Special Interest, if any, remaining unpaid,
together with interest on overdue principal and on overdue
installments of interest to the extent that payment of such
interest is permitted by law, in each case at the rate per annum
provided for by the Securities, and such further amount as shall
be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
Section 6.9 Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the
25
reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and the Securityholders
allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Securities), its creditors or its
Property and shall be entitled and empowered to collect and
receive any moneys or other Property payable or deliverable on
any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each
Securityholder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such
payments directly to the Securityholders, to pay to the Trustee
any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel,
and any other amounts due the Trustee under Section 7.7, and
unless prohibited by law or applicable regulations to vote on
behalf of the Holders of Securities for the election of a trustee
in bankruptcy or other person performing similar functions.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights
of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Securityholder in any such proceeding
except, as aforesaid, for the election of a trustee in bankruptcy
or person performing similar functions.
Section 6.10 Application of Proceeds.
-----------------------
Any moneys collected by the Trustee pursuant to this
Article shall be applied in the following order at the date or
dates fixed by the Trustee and, in case of the distribution of
such moneys on account of principal, interest, or Special
Interest, if any, upon presentation of the several Securities and
stamping (or otherwise noting) thereon the payment, or issuing
Securities in reduced principal amounts in exchange for the
presented Securities if only partially paid, or upon surrender
thereof if fully paid:
FIRST: To the payment of reasonable costs and expenses
actually incurred, including reasonable compensation to the
Trustee, its predecessors, if any, and their respective
agents and attorneys (including amounts due and unpaid
under Section 7.7), and of all reasonable costs, fees,
expenses and liabilities incurred, and all advances made,
by any and all of the foregoing (including amounts due and
unpaid under Section 7.7), except as a result of negligence
or bad faith;
SECOND: In case the entire principal of the Securities
shall not have become and be then due and payable, as to
any Securities (a) first to the payment of interest and
Special Interest, if any, in default in the order of the
maturity of the installments of such interest and Special
Interest, with interest (to the extent that such interest
has been collected by the Trustee) upon the overdue
installments of interest or Special Interest, if any, at
the rate of interest specified in the Securities and (b)
second to the payment of principal of the Securities as the
same shall become due and payable, such payments to be made
ratably to the Persons entitled thereto, without
discrimination or preference;
THIRD: In case the entire principal of the Securities
shall have become and shall be then due and payable, as to
any Securities, to the payment of the whole amount
26
then owing and unpaid upon all the Securities for
principal, interest and Special Interest, with interest
upon the overdue principal, and (to the extent that such
interest has been collected by the Trustee) upon overdue
installments of interest or Special Interest, if any, at
the same rate as the rate of interest specified in this
Indenture or in the Securities; and in case such moneys
shall be insufficient to pay in full the whole amount so
due and unpaid upon the Securities, then to the payment of
such principal, interest and Special Interest, without
preference or priority of any of principal, interest or
Special Interest, if any, over the other, or any
installment of interest or Special Interest, if any, over
any other installment of interest or Special Interest, if
any, or of any Security over any other Security, ratably to
the aggregate of such principal, and accrued and unpaid
interest and Special Interest; and
FOURTH: To the payment of the remainder, if any, after
payment in full of the entire principal balance, if any, of
the Securities and all interest, Special Interest and other
amounts due upon or in respect of such Securities, to the
Company or any other Person lawfully entitled thereto.
The Trustee, upon prior written notice to the Company, may
fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have
agreed, that any court of competent jurisdiction in its
discretion may require in any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the
Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess
reasonable costs, including reasonable attorneys' fees, against
any party litigant in the suit, having due regard to the merits
and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.7, or a suit by
Holders of more than ten percent (10%) in principal amount of the
Securities Outstanding.
Section 6.12 Restoration of Rights on Abandonment of Proceedings.
---------------------------------------------------
In case the Trustee shall have proceeded to enforce any
right under this Indenture and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been
determined adversely to the Trustee, then and in every such case
the Company, the Trustee and the Securityholders shall be
restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Company,
the Trustee and the Securityholders shall continue as though no
such proceedings had been taken.
27
Section 6.13 Powers and Remedies Cumulative; Delay
-------------------------------------
or Omission Not Waiver of Default.
---------------------------------
No right or remedy herein conferred upon or reserved to the
Trustee or to the Securityholders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
No delay or omission of the Trustee or of any Holder of any
of the Securities to exercise any right or power accruing upon
any Event of Default occurring and continuing as aforesaid shall
impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein;
and, subject to the other applicable provisions of this
Indenture, every power and remedy given by this Indenture or by
law to the Trustee or to the Securityholders may be exercised
from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Securityholders.
Any right or remedy herein conferred upon or reserved to
the Trustee may be exercised by it in its capacity as Trustee, as
it may deem most efficacious, if it is then acting in such
capacity.
ARTICLE 7.
TRUSTEE
Section 7.1 Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested
in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties as are
specifically set forth in this Indenture and the other
Operative Documents and no others.
(ii) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act, or its
own willful misconduct or bad faith, except that:
28
(i) This paragraph (c) does not limit the effect of
paragraph (b) of this Section 7.1 or of Section 7.2.
(ii) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it
is proved that the Trustee was negligent in ascertaining
the pertinent facts.
(iii) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.5.
(d) The Trustee shall be under no obligation to exercise
any of the rights, trusts or powers vested in it by this
Indenture at the request, order or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request, order or direction.
(e) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b), (c) and
(d) of this Section 7.1.
(f) Funds held in trust for the benefit of the Holders of
the Securities by the Trustee or any Paying Agent on deposit with
itself or elsewhere shall be held in distinct, identifiable
accounts, and other funds or investments of any nature or from
any source whatsoever may be held in such accounts, except, in
each case, to the extent required by law. The Trustee shall not
be liable for interest on any money received by it except as the
Trustee may agree with the Company.
Section 7.2 Rights of Trustee.
-----------------
(a) The Trustee may rely on any document reasonably
believed by it to be genuine and to have been signed or presented
by the proper person. Subject to Section 7.1(b)(ii), the Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which
shall conform to Section 11.5. The Trustee shall not be liable
for any action it takes or omits to take in good faith in
reliance on such certificate or opinion.
(c) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through its attorneys and agents and the Trustee shall not be
responsible for the misconduct or negligence of any agent or
attorney appointed with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
29
Section 7.3 Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal
with and collect obligations owed to it by the Company or
Affiliates of the Company with the same rights it would have if
it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the
Securities, and it shall not be responsible for any statement in
the Securities or in this Indenture other than its certificate of
authentication.
Section 7.5 Notice of Defaults.
------------------
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Securityholder notice
of the Default within ninety (90) days after the occurrence
thereof except as otherwise permitted by the TIA. Except in the
case of a Default in payment of principal of, or interest on, or
Special Interest, if any, with respect to, any Security, the
Trustee may withhold the notice if and so long as it, in good
faith, determines that withholding the notice is in the interests
of the Securityholders.
Section 7.6 Reports by Trustee to Holders.
-----------------------------
If circumstances require any report to Holders under TIA
ss. 313(a), it shall be mailed to Securityholders within sixty
(60) days after each May 15 (beginning with the May 15 following
the date of this Indenture) as of which such circumstances exist.
The Trustee also shall comply with the remainder of TIA ss. 313.
The Company shall promptly notify the Trustee if the
Securities become listed on or delisted from any stock exchange
or other recognized trading market.
The Trustee shall, upon the written request of any Holder
of Securities but subject to applicable laws and contractual
limitations, provide to such Holder copies of any reports,
certificates, opinions or other materials of any kind or nature
required to be delivered to the Trustee under this Indenture or
any of the other Operative Documents or otherwise delivered by or
on behalf of the Company to the Trustee.
Section 7.7 Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time
reasonable compensation, as agreed upon from time to time, for
its services hereunder and under the other Operative Documents.
The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it in
any such capacities.
30
Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel
and all agents and other persons not regularly in its employ.
The Company shall indemnify the Trustee and each
predecessor Trustee for, and hold each of them harmless against,
any loss or liability incurred by each of them in connection with
the administration of this Indenture and its duties hereunder. In
connection with any defense of such a claim, the Trustee may have
separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not reimburse any
expense or indemnify against any loss or liability incurred by
the Trustee or any predecessor Trustee through the negligence or
bad faith of such Trustee or each such predecessor Trustee.
To secure the Company's payment obligations in this Section
7.7, the Trustee shall have a Lien (legal and equitable) prior to
the Securities on all money or Property held or collected by the
Trustee, in its capacity as Trustee, or otherwise distributable
to Securityholders, except money, securities or Property held in
trust to pay principal of or interest on particular Securities
(including, without limitation, pursuant to Section 8.1(b)
hereof).
When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.1(f) or (g) occurs,
the expenses and the compensation for the services are intended
to constitute expenses of administration under any Bankruptcy
Law.
Section 7.8 Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company and the
Holders in writing. The Holders of a majority in aggregate
principal amount of the Securities Outstanding may remove the
Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the Company's consent, which consent shall
not be unreasonably refused or delayed. The Company may remove
the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its Property;
(d) the Trustee becomes incapable of acting; or
(e) no Default or Event of Default has occurred and is
continuing and the Company determines in good faith to remove the
Trustee.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee. Within one year after any
such successor Trustee takes office, the Holders of a majority in
aggregate principal amount of the Securities Outstanding may
appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
31
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company.
Immediately after that, the retiring Trustee shall transfer all
Property held by it as Trustee to the successor Trustee, subject
to the Lien provided in Section 7.7, the resignation or removal
of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Securityholder.
No resignation or removal of the Trustee and no appointment
of a successor Trustee, pursuant to this Article, shall become
effective until the acceptance of appointment by the successor
Trustee under this Section 7.8. If a successor Trustee does not
take office within sixty (60) days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company or the
Holders of at least ten percent (10%) in principal amount of the
Securities Outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Holder of Securities may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment
of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 shall
continue for the benefit of the retiring Trustee which shall
retain its claim pursuant to Section 7.7.
Section 7.9 Successor Trustee by Merger, etc.
--------------------------------
If the Trustee consolidates with, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the resulting, surviving or
transferee corporation without any further act shall be the
successor Trustee.
Section 7.10 Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies
the requirements of TIA ss. 310(a)(1). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth
in its most recent, published annual report of condition. The
Trustee shall comply with TIA ss. 310(b); provided, however, that
there shall be excluded from the operation of TIA ss. 310(b)(1)
any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of
the Company are outstanding, if the requirements for such
exclusion set forth in TIA ss. 310(b)(1) are met.
Section 7.11 Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has
resigned or been removed shall be subject to TIA ss. 311(a) to
the extent indicated.
32
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations.
------------------------------------
(a) The Company may terminate its obligations under this
Indenture, except those obligations referred to in the last
paragraph of Section 8.1(b), if all Securities previously
authenticated and delivered (other than destroyed, lost or stolen
Securities which have been replaced or paid or Securities for
whose payment Payments have theretofore been held in trust and
thereafter repaid to the Company, as provided in Section 8.3)
have been delivered to the Trustee for cancellation and the
Company has paid all sums payable by it hereunder.
(b) The Company may terminate all its obligations under
this Indenture except those obligations referred to in the
immediately succeeding paragraph if
(i) the Company has irrevocably deposited or caused
to be irrevocably deposited with the Trustee or a Paying
Agent, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee and any such
Paying Agent, as trust funds in trust solely for the
benefit of the Holders for that purpose, cash or U.S.
Government Obligations maturing as to principal and
interest, in such amounts and at such times as are
sufficient without consideration of any reinvestment of any
such interest to pay the then maximum possible principal
of, and the then maximum possible interest and Special
Interest with respect to, the Securities Outstanding to
maturity, provided, that the Trustee or such Paying Agent
shall have been irrevocably instructed to apply such money
or the proceeds of such U.S. Government Obligations to the
payment of said principal, interest and Special Interest,
if any, with respect to the Securities.
(ii) No Default or Event of Default with respect to
the Securities shall have occurred and be continuing (A) on
the date of such deposit described in clause (i), or (B)
insofar as paragraph (f) of Section 6.1 is concerned, at
any time during the period ending on the 91st day after the
date of such deposit or, if longer, ending on the day
following the expiration of the longest preference period
applicable to the Company in respect of such deposit (it
being understood that the condition in this clause (B) is a
condition subsequent and shall not be deemed satisfied
until the expiration of such period);
(iii) Such termination and deposit described in clause
(i) shall not (A) cause the Trustee to have a conflicting
interest as defined in TIA Section 310(b) or otherwise for
purposes of the TIA with respect to any securities of the
Company, or (B) result in the trust arising from such
deposit to constitute, unless it is qualified as, a
regulated investment company under the Investment Company
Act of 1940, as amended;
(iv) Such termination and deposit described in clause
(i) shall not result in a breach or violation of or
constitute a default under, this Indenture or any other
material agreement or instrument to which the Company is a
party or by which it is bound;
33
(v) The Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the
Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such termination
and deposit described in clause (i) and will be subject to
federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such
termination and deposit had not occurred; and
(vi) The Company shall have delivered to the Trustee
and any Paying Agent an Officer's Certificate and an
Opinion of Counsel, each stating that all conditions
precedent and subsequent provided for above in this Section
8.1(b) have been complied with.
Notwithstanding the foregoing paragraph, the Company's
obligations in Article 13 and in Sections 2.3, 2.4, 2.5, 2.6,
2.7, 4.1, 4.2, 4.8, 7.7, 7.8, 8.2, 8.3, 8.4 and 10.4 shall
survive until the Securities are no longer Outstanding.
Thereafter, the Company's obligations in Sections 7.7 and 8.3
shall survive.
(c) After the effectiveness of any termination of its
obligations (except, in the case of Section 8.1(b), as set forth
in the last paragraph thereof), under this Indenture in
accordance with Section 8.1(a) or (b) above (such effective date,
the "Indenture Discharge Date") and payment of all obligations of
the Company accrued under Section 7.7, the Trustee upon Request
shall acknowledge in writing the discharge of the Company's
obligations under this Indenture except for those surviving
obligations specified above.
Section 8.2 Application of Trust Money.
--------------------------
The Trustee or Paying Agent shall hold in trust money or
U.S. Government Obligations deposited with it pursuant to Section
8.1, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with this Indenture to the
payment of principal of, and interest and Special Interest, if
any, on, the Securities. The obligations of the Trustee and
Paying Agent under this Section 8.2 shall survive,
notwithstanding any termination or discharge of the Company's
obligations pursuant to Section 8.1, until all Securities are
paid in full.
The Company shall pay and indemnify the Trustee or Paying
Agent, as the case may be, against any tax, fee or other charge
imposed on or assessed against the money or U.S. Government
Obligations deposited pursuant to Section 8.1(b)(i) or the
principal and interest received in respect thereof.
Section 8.3 Repayment to Company.
--------------------
Anything in Section 8.1(b) to the contrary notwithstanding,
the Trustee or Paying Agent, as the case may be, shall deliver or
pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations (or other Property and any
proceeds therefrom) held by it as provided in Section 8.1(b)
which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee and to the Paying
Agent, if applicable, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent
termination under
34
said Section 8.1(b). The Trustee and the Paying Agent shall Pay
to the Company any Payments held by them for the payment of
principal, interest and Special Interest, if any, that remains
unclaimed for two (2) years after the Stated Maturity of such
payment of principal, interest or Special Interest, as the case
may be; provided, however, that the Trustee or such Paying Agent
before making any Payment shall at the expense of the Company
cause to be published once in the national edition of The New
York Times or The Wall Street Journal or, if such newspapers are
not then in circulation, in a newspaper of general circulation in
the City of New York and mail to each Holder entitled to such
money, notice that such Payments remain unclaimed and that, after
a date specified therein which shall be at least thirty (30) days
from the date of such publication or mailing, any unclaimed
balance of such Payments then remaining will be repaid to the
Company. After payment to the Company, Securityholders entitled
to Payments must look to the Company for payment as general
creditors unless an applicable abandoned property law designates
another person.
Section 8.4 Reinstatement.
-------------
Anything herein to the contrary notwithstanding, (i) if the
Trustee or Paying Agent, as the case may be, is unable to apply
any money or U.S. Government Obligations in accordance with
Section 8.1 by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application,
or (ii) the deposited money or U.S. Government Obligations (or
the proceeds thereof) are, for any reason (including any
repayment to the Company under Section 8.3), insufficient in
amount, then the Company's obligations under this Indenture shall
be revived and reinstated as though no deposit had occurred
pursuant to Section 8.1 until such time as the Trustee, or Paying
Agent, as the case may be, is permitted to apply all such money
or U.S. Government Obligations and the proceeds of the investment
thereof in accordance with Section 8.1, or the deficiency is
cured in the manner set forth in Section 8.1(b), as the case may
be. In such event, the Trustee will invest all such money or the
proceeds from U.S. Government Obligations at the Company's
request in other U.S. Government Obligations and, upon written
notice from the Company, so long as there exists no Event of
Default, to the extent and only to the extent provided in the
first sentence of Section 8.3 return to the Company any money or
U.S. Government Obligations deposited with the Trustee pursuant
to Section 8.1. If the Company has made any payment of interest
on, principal of, or Special Interest, if any, with respect to
any Securities because of an event described in clause (i) of the
first sentence of this Section 8.4, the Company shall be
subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent, as the case may
be.
35
ARTICLE 9.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Without Consent of Holders.
--------------------------
The Company and the Trustee, as the case may be, may amend
or supplement this Indenture, the Securities or the other
Operative Documents without notice to or consent of any
Securityholder:
(a) to provide for uncertificated Securities in addition to
or in place of certificated Securities;
(b) to provide for the assumption of the Company's
obligations to the Holders of the Securities in the case of a
merger or consolidation or transfer of all or substantially all
of the assets of the Company or otherwise to comply with Article
5;
(c) to comply with any requirements of the SEC in
connection with the qualification of this Indenture under the
TIA; or
(d) to cure any ambiguity, defect or inconsistency or to
make any other change, in each case, provided that such action
does not materially adversely affect the interests of any
Securityholder.
Section 9.2 With Consent of Holders.
-----------------------
Subject to Section 6.7, the Company (by resolution of its
Board of Directors if required) and the Trustee may amend or
supplement this Indenture, the Securities or the other Operative
Documents without notice to any Securityholder but with the
written consent of the Required Holders. Subject to Sections 6.4,
6.5 and 6.7, the Required Holders may authorize the Trustee to,
and the Trustee, subject to Section 9.6, upon such authorization
shall, waive compliance by the Company with any provision of this
Indenture, the Securities or the other Operative Documents.
However, an amendment, supplement or waiver, including a waiver
pursuant to any provision of Section 6.4, may not without the
consent of each Securityholder affected:
(a) reduce the amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the rate or extend the time for payment of
interest on, or Special Interest, if any, with respect to, any
Security;
(c) reduce the principal of (whether on repurchase or
otherwise), or change the fixed maturity of any Security;
(d) change the place of payment where, or the coin or
currency in which, any Security (or the repurchase price
thereof), interest thereon or Special Interest, if any, with
respect thereto, is payable;
36
(e) waive a default in the payment of the principal of, or
interest on, or Special Interest with respect to any Security;
(f) make any changes in Article 3, Sections 2.8, 6.4, 6.7
or 6.10, or the third sentence of this Section 9.2;
(g) reduce any amount payable upon exercise of any
repurchase rights thereof or otherwise change any repurchase
right provision or impair the right of any Holder to institute
suit for the enforcement of any such payment on any Security when
due or adversely effect any repurchase rights hereunder; or
(h) except as otherwise permitted or required under this
Indenture, change the Conversion Date or the Conversion Price or
otherwise modify or affect Article 13 or any other provision of
this Indenture in any manner that would adversely affect any
Holder's conversion rights hereunder.
It shall not be necessary for the consent of the Holders
under this Section to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
9.2 becomes effective, the Company shall mail to the Holders
affected thereby a brief notice describing such amendment,
supplement or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such amendment, supplement
or waiver.
Section 9.3 Compliance with Trust Indenture Act.
-----------------------------------
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents.
---------------------------------
Until an amendment or waiver becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even
if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to
his Security or portion of a Security. Such revocation shall be
effective only if the Trustee receives the notice of revocation
before the date the amendment, supplement or waiver becomes
effective.
After an amendment, supplement or waiver becomes effective,
it shall bind every Securityholder, unless it makes a change
described in any of clauses (a) through (h) of Section 9.2. In
that case the amendment, supplement or waiver shall bind each
Holder of a Security who has consented to it and every subsequent
Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security; provided, however,
37
that no amendment, supplement or waiver relating to any
impairment of the right to receive principal, interest and
Special Interest, if any, when due and payable consented to by a
Holder shall be binding upon any subsequent Holder of a Security
or a portion of a Security that evidences the same debt as the
consenting Holder's Security unless notation with regard thereto
is made upon such Security or the Security representing such
portion.
Section 9.5 Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of
a Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue
and the Trustee shall authenticate a new Security that reflects
the changed terms.
Section 9.6 Trustee to Sign Amendments, etc.
-------------------------------
The Trustee shall be entitled to receive and rely upon an
Officers' Certificate and an Opinion of Counsel stating that the
execution of any amendment, supplement or waiver authorized
pursuant to this Article 9 has been duly authorized by the
Company and is authorized or permitted by this Indenture and the
other applicable Operative Documents. The Trustee may, but shall
not be obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 9.7 Effect of Supplement and/or Amendment.
-------------------------------------
Upon the execution of any supplemental indenture and/or any
such amendment or supplement to the other Operative Documents
pursuant to the provisions of this Article 9, this Indenture and
such Operative Documents shall be and be deemed to be modified
and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under
this Indenture and the other Operative Documents of the Trustee,
the Company and the Holders of Securities shall thereafter be
determined, exercised and enforced hereunder and thereunder
subject in all respects to such modifications and amendments, and
all terms and conditions of any such supplemental indenture
and/or any such amendment or supplement to the other Operative
Documents shall be and be deemed to be part of the terms and
conditions of this Indenture and the other Operative Documents
for any and all purposes.
ARTICLE 10.
SECURITY
Section 10.1 Other Operative Documents.
-------------------------
To secure the due and punctual payment, performance and
observance of the Obligations (but not to exceed, in any event,
the aggregate amount of $10,250,000), the Company has
38
simultaneously with the execution of this Indenture entered into
or caused to be assigned to the Trustee the other Operative
Documents and has made an assignment and pledge of or otherwise
transferred or caused to be transferred its right, title and
interest in and to the Collateral to the Trustee pursuant to the
other Operative Documents and in the manner and to the extent
therein provided. Each Securityholder, by accepting a Security,
agrees to all of the terms and provisions of each Operative
Document (including, without limitation, the provisions providing
for the release of Collateral and for the subordination of the
Lien of the Mortgage to the Lien of the First Mortgage), as the
same may be in effect or may be amended from time to time
pursuant to its terms and the terms hereof. The Company will
execute, acknowledge and deliver to the Trustee such further
assignments, transfers, assurances or other instruments as the
Trustee may reasonably require or request, and will do or cause
to be done all such acts and things as may be necessary or
proper, or as may be reasonably required by the Trustee to assure
and confirm to the Trustee the security interest in the
Collateral contemplated hereby and by the other Operative
Documents or any part thereof, as from time to time constituted,
so as to render the same available for the security and benefit
of this Indenture and of the Securities secured hereby, according
to the intent and purposes herein expressed.
Section 10.2 Opinions, Certificates and Appraisals.
-------------------------------------
(a) The Company shall furnish to the Trustee promptly after
the execution and delivery of this Indenture but prior to
authentication of any Securities, Opinions of Counsel covering
such jurisdictions as the Trustee may reasonably request either
(i) stating that in the opinion of such Counsel the actions
necessary to be taken under the Federal Aviation Act, the Uniform
Commercial Code of all applicable jurisdictions, or otherwise
with respect to the recording, registering and filing of this
Indenture, the other Operative Documents, financing statements or
other instruments to make effective and to perfect the Liens
intended to be created by the Mortgage have been taken and
reciting with respect to the security interests in the
Collateral, the details of such actions, or (ii) stating that, in
the opinion of such Counsel, no such action is necessary to make
such Liens effective and perfected.
(b) [Intentionally omitted.]
(c) The release of any Collateral from the terms of the
Mortgage will not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the
extent the Collateral is released pursuant to the Mortgage or
this Indenture, as applicable. To the extent applicable, the
Company shall cause TIA ss. 314(d) relating to the release of
Property or securities from the Lien of the Mortgage and relating
to the substitution therefor of any Property or securities to be
subjected to the Lien of the Mortgage, to be complied with. Any
certificate or opinion required by TIA ss. 314(d) may be made by
an Officer of the Company, except in cases where TIA ss. 314(d)
requires that such certificate or opinion be made by an
independent person.
Section 10.3 Authorization of Actions to be Taken by the
-------------------------------------------
Trustee Under the Operative Documents.
-------------------------------------
The Trustee may, in its sole discretion and without the
consent of the Securityholders, take all actions it deems
necessary or appropriate to (a) enforce any of the terms of the
Operative
39
Documents and (b) collect and receive any and all amounts payable
in respect of the obligations of the Company hereunder and
thereunder. Subject to the provisions of this Indenture and the
other Operative Documents, the Trustee shall have power to
institute and to maintain such suits and proceedings as it may
deem expedient to prevent any impairment of the Collateral by any
acts which may be unlawful or in violation of the other Operative
Documents or this Indenture, and such suits and proceedings as it
may deem expedient to preserve or protect its interest and the
interests of the Securityholders in the Collateral (including
power to institute and maintain suits or proceedings to restrain
the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitu-
tional or otherwise invalid if the enforcement of, or compliance
with, such enactment, rule or order would impair the security
interest hereunder or be prejudicial to the interests of the
Securityholders or of the Trustee).
Section 10.4 Payment of Expenses.
-------------------
On demand of the Trustee, the Company forthwith shall pay
or satisfactorily provide for all reasonable expenditures
incurred by the Trustee under this Article 10, and all such sums
shall be a Lien upon the Collateral and shall be secured thereby.
Section 10.5 Authorization of Receipt of Funds by the Trustee
------------------------------------------------
Under the Operative Documents.
-----------------------------
The Trustee is authorized to receive any funds for the
benefit of Securityholders distributed under the Operative
Documents, and to make further distributions of such funds to the
Holders according to the provisions of this Indenture and the
other Operative Documents.
ARTICLE 11.
MISCELLANEOUS
Section 11.1 Conflict with Trust Indenture Act of 1939.
-----------------------------------------
If and to the extent that any provision of this Indenture
limits, qualifies, or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the TIA, such imposed duties
shall control.
Section 11.2 Notices; Waivers.
----------------
Any request, demand, authorization, direction, notice,
consent, waiver or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with
(a) the Company shall be sufficient for every purpose
hereunder if in writing (including telecopied communications) and
made, given, furnished or filed by personal delivery or mailed by
registered or certified mail or by nationally recognized
overnight courier, postage or courier charges, as the case may
be, prepaid, to or with the Company at:
40
Trans World Airlines, Inc.
One City Centre
000 X. 0xx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Senior Vice President & General Counsel
Telecopier No.: (000) 000-0000
(b) the Trustee shall be sufficient for every purpose
hereunder if in writing (including telecopied communications) and
made, given, furnished or filed by personal delivery or mailed by
registered or certified mail or by nationally recognized
overnight courier, postage or courier charges, as the case may
be, prepaid, to or with the Trustee at:
First Security Bank, National Association
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Corporate Trust Services
Telecopier No.: (000) 000-0000
or to any of the above parties at any other address or telecopier
number subsequently furnished in writing by it to each of the
other parties listed above. An affidavit by any person
representing or acting on behalf of the Company or the Trustee as
to such mailing, having any registry receipt required by this
Section attached, shall be conclusive evidence of the giving of
such demand, notice or communication.
Any notice or communication mailed to a Holder shall be
mailed to such holder by first-class mail or by nationally
recognized overnight courier, postage or courier charges, as the
case may be, prepaid, at such holder's address as it appears on
the Register and shall be sufficiently given to such holder if so
mailed within the time prescribed.
Failure to mail a notice or send a communication to a
Holder or any defect in it shall not affect its sufficiency with
respect to other Holders. Notices to the Trustee or to the
Company are deemed given only when received. Where this Indenture
provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by the Holders shall
be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in
reliance upon such waiver.
Section 11.3 Communications by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under
this Indenture or the Securities. The Company, the Trustee, the
Registrar and any other person shall have the protection of TIA
ss. 312(c).
41
Section 11.4 Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any Request or application by the Company to the
Trustee to take any action under this Indenture or the other
Operative Documents, the Company shall furnish to the Trustee:
(a) an Officers' Certificate, and (b) an Opinion of Counsel, each
stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, provided, that in the
case of any such application or Request as to which the
furnishing of an Officers' Certificate or Opinion of Counsel is
specifically required by any provision of this Indenture or the
other Operative Documents relating to such particular application
or Request, no additional certificate or opinion, as the case may
be, need be furnished.
Section 11.5 Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion provided for and delivered to
the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture or the other Operative
Documents shall include: (a) a statement that the Person signing
such certificate or opinion has read such condition or covenant
and the definitions herein or therein relating thereto; (b) a
brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based; (c) a statement that, in
the opinion of such Person, he has made such examination or
investigation as is necessary to enable him to express an
informed opinion as to whether or not such condition or covenant
has been complied with; and (d) a statement as to whether or not
in the opinion of such Person, such condition or covenant has
been complied with.
Any certificate or opinion of an Officer or an engineer,
insurance broker, accountant or other expert may be based,
insofar as it relates to legal matters, upon a certificate or
opinion of or upon representations by counsel, unless such
officer, engineer, insurance broker, accountant or other expert
knows that the certificate or opinion or representations with
respect to the matters upon which his opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care
should have known that the same were erroneous.
Any certificate or Opinion of Counsel may be based, insofar
as it relates to factual matters, upon the certificate or opinion
of or representations by an officer or officers of the Company
stating that the information with respect to such factual matters
is in possession of the Company, unless such counsel knows that
the certificate or opinion or representations with respect to the
matters upon which his opinion may be based as aforesaid are
erroneous and insofar as it relates to legal matters in a
jurisdiction or area of law beyond the expertise of such counsel,
such counsel may rely upon the opinion of counsel qualified in
such other jurisdiction or area of law.
Wherever in this Indenture or the other Operative Documents
in connection with any application, certificate or report to the
Trustee it is provided that the Company shall deliver any
document as a condition of the granting of such application or as
evidence of the Company's compliance with any term hereof, it is
intended that the truth and accuracy at the time of the granting
of such application or at the effective date of such certificate
or report, as the case may
42
be, of the facts and opinions stated in such document shall in
each such case be a condition precedent to the right of the
Company to have such application granted or to the sufficiency of
such certificate or report. Nevertheless, in the case of any such
application, certificate or report, any document required by any
provision of this Indenture or the other Operative Documents to
be delivered to the Trustee as a condition of the granting of
such application or as evidence of such compliance may be
received by the Trustee as conclusive evidence of any statement
therein contained and shall be full warrant, authority and
protection to the Trustee acting on the faith thereof.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Whenever any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements or opinions or other instruments under this Indenture
or any other Operative Document such Person may, but need not,
consolidate such instruments into one.
Section 11.6 Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Registrar or Paying Agent may
make reasonable rules for their respective functions.
Section 11.7 Holidays.
--------
In the event that any date for the payment of any amount
due hereunder shall not be a Business Day, then (notwithstanding
any other provision of this Indenture) such payment need not be
made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the due
date, and no interest or Special Interest, if any, shall accrue
from such due date to and including the next succeeding Business
Day.
Section 11.8 Governing Law; Waiver of Jury Trial.
-----------------------------------
(a) The laws of the State of New York shall govern this
Indenture and the Securities without regard to principles of
conflict of laws.
(b) The Company and the Trustee each waive any right to
have a jury participate in resolving any dispute, whether
sounding in contract, tort, or otherwise arising out of,
connected with, related to or incidental to the relationship
established between them in connection with this Indenture.
Instead, any disputes resolved in court will be resolved in a
bench trial without a jury.
43
Section 11.9 No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret any agreement
of the Company or any of its Subsidiaries which is unrelated to
this Indenture, the Securities or the other Operative Documents.
Any such agreement may not be used to interpret this Indenture.
Section 11.10 No Recourse Against Others.
--------------------------
A director, officer, employee or stockholder, as such, of
the Company shall not have any liability for any obligations of
the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or
their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
Section 11.11 Benefits of Indenture and the Securities Restricted.
---------------------------------------------------
Subject to the provisions of Section 11.12 hereof, nothing
in this Indenture or the Securities, express or implied, shall
give or be construed to give to any Person, firm or corporation,
other than the parties hereto and the Holders, any legal or
equitable right, remedy or claim under or in respect of this
Indenture or under any covenant, condition, or provision herein
contained, all such covenants, conditions and provisions, subject
to Section 11.12 hereof, being for the sole benefit of the
parties hereto and of the Holders.
Section 11.12 Successors and Assigns.
----------------------
This Indenture and all obligations of the Company hereunder
shall be binding upon the successors and permitted assigns of the
Company, and shall, together with the rights and remedies of the
Trustee hereunder, inure to the benefit of the Trustee, the
Holders, and their respective successors and assigns. Any
assignment in violation hereof shall be null and void ab initio.
Section 11.13 Counterpart Originals.
---------------------
This Indenture may be signed in two or more counterparts,
each of which shall be deemed an original, but all of which shall
together constitute one and the same agreement.
Section 11.14 Severability.
------------
The provisions of this Indenture are severable, and if any
clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect in that jurisdiction
only such clause or provision, or part thereof, and shall not in
any manner affect such clause or provision in any other
jurisdiction or any other clause or provision of this Indenture
in any jurisdiction, and a Holder shall have no claim therefor
against any party hereto.
44
Section 11.15 Effect of Headings.
------------------
The Article and Section headings and the Table of Contents
contained in this Indenture have been inserted for convenience of
reference only, and are and shall be without substantive meaning
or content of any kind whatsoever and are not a part of this
Indenture.
ARTICLE 12.
RELEASE OF COLLATERAL
Section 12.1 Release of Collateral.
---------------------
The Collateral securing the obligations evidenced by the
Securities shall be subject to release from the Lien of this
Indenture and the other Operative Documents from and to the
extent provided by this Indenture and the other Operative
Documents.
ARTICLE 13.
MANDATORY CONVERSION OF SECURITIES
Section 13.1 Mandatory Conversion and Conversion Price.
-----------------------------------------
(a) Subject to the other provisions of this Article 13, on
the Conversion Date, so long as no Default or Event of Default
shall then exist, each then Outstanding Security shall be
automatically converted into that number of fully paid and
non-assessable shares of Common Stock equal to the sum of (i) the
then outstanding principal amount of such Security, plus (ii)
accrued and unpaid interest and Special Interest, if any, on such
Security to the Conversion Date, divided by the product of (A)
1.00 multiplied by (B) the Closing Price per share of Common
Stock on the Trading Day immediately preceding the Conversion
Date (such product being hereinafter referred to as the
"Conversion Price"); provided, however, that the aggregate number
of shares of Common Stock issuable upon any such conversion shall
not exceed the Maximum Share Amount. If, on the Conversion Date,
the Company has taken all action required to authorize the
issuance of the Common Stock in conversion of the Securities and
no Default or Event of Default shall then exist, then,
notwithstanding that such Securities have not been Tendered, from
and after the Conversion Date, all of the Securities shall no
longer be deemed Outstanding and all rights relating to such
Securities shall terminate, except only the right to receive,
upon Tender of the Securities therefore, the Common Stock and
cash (if any) pursuant to the provisions hereof, and the Person
or Persons entitled to receive the Common Stock issuable upon the
conversion shall be treated for all purposes as the record holder
or holders of such Common Stock. If all the foregoing conditions
have been satisfied, interest and Special Interest, if any, will
cease to accrue on the Securities on the Conversion Date. Except
as expressly provided herein, no other payment or adjustment will
be made for dividends or distributions on shares of Common Stock
issued upon conversion which were declared for payment to holders
of Common Stock of record as of a date prior to the Conversion
Date.
45
(b) As promptly as practicable on the Shelf Effective Date, the
Company shall send (or cause to be sent) a notice to each Holder
and the Trustee (which notice shall be sent to such Holder and
the Trustee by telex or telecopier if (with respect to such
Holder) such Holder has, at least five Business Days prior
thereto, provided such telex or telecopier information to the
Company or the Trustee), stating the Shelf Effective Date and, to
the extent then known, the following: (i) the Conversion Date,
(ii) the Conversion Price, (iii) the office or offices
(including, in any event, the office required to be maintained by
the Company pursuant to the first paragraph of Section 4.1) to
which the Securities should be Tendered for Common Stock, (iv)
that unless otherwise notified by such Holder, the certificate or
certificates of Common Stock issuable to such Holder on such
Conversion Date will be issued in the name of and delivered to
the address of such Holder as shown on the Register as of the
close of business of the Registrar on such Conversion Date and
(v) that interest and Special Interest, if any, will cease to
accrue on the Securities on the Conversion Date. Such a notice
containing the information in the foregoing clauses (i) through
(v) shall in any event be so sent as promptly as practicable on
the Conversion Date.
(c) As promptly as practicable (but in any event not later
than five Business Days) after receipt of a Security at any
office set forth in the notice referred to in paragraph (b)
above, the Company shall issue, execute and deliver to the Holder
of such Security, in such Holder's name and to such Holder's
address as shown on the Register as of the close of business of
the Registrar on the Conversion Date (or otherwise in accordance
with such Holder's written order received by the Company), a
certificate or certificates for the number of shares of Common
Stock resulting from such conversion, together with any cash
adjustment in lieu of fractional shares or cash payable as a
result of the Maximum Share Amount, as hereinafter provided.
(d) No fractional shares of Common Stock shall be issued
upon any conversion of Securities. In lieu of any fraction of a
share of Common Stock to which any Holder would otherwise be
entitled upon conversion of any Security, the Company shall pay
to such Holder (in accordance with paragraph (c) above) a cash
adjustment for such fraction in an amount equal to the same
fraction of the Conversion Price.
(e) The principal amount, if any, of any Security that
cannot be converted into Common Stock as a result of the Maximum
Share Amount (excluding any amount payable pursuant to paragraph
(d) above), shall be paid by the Company to the Holder thereof,
together with accrued and unpaid interest and Special Interest,
if any, thereon. Any such amounts shall be paid in cash in
accordance with paragraph (c) above.
Section 13.2 Effect of Consolidation, Merger or
----------------------------------
Conveyance on Conversion.
------------------------
(a) If any of the following shall occur, namely: (i) any
consolidation or merger to which the Company is a constituent
party other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification of,
or change (other than a change in name, or in par value, or from
par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination) in, outstanding
shares of Common Stock; (ii) any conveyance or transfer of all or
substantially all of the assets of the Company; or (iii) any
46
share exchange pursuant to which all of the outstanding shares of
Common Stock are converted into or exchanged for other securities
or Property (including cash), then the Company, or such successor
or purchasing corporation, as the case may be, shall, as a
condition precedent to such consolidation, merger, conveyance,
transfer or share exchange, execute and deliver to the Trustee a
supplemental indenture providing that immediately after the
consummation of such consolidation, merger, conveyance, transfer
or share exchange, the Securities shall automatically convert
into and the Holder of each Security then outstanding shall have
the right thereafter to receive the kind and amount of shares of
stock and other securities and Property (including cash)
receivable upon such consolidation, merger, conveyance, transfer
or share exchange by a holder of the number of shares of Common
Stock deliverable upon conversion of such Security immediately
prior to the effective date of such consolidation, merger,
conveyance, transfer or share exchange, assuming that the Closing
Price is determined utilizing the Trading Day immediately prior
to such effective date. If, in the case of any such
consolidation, merger, conveyance, transfer or share exchange,
the stock or other securities and Property (including cash)
receivable thereupon by a holder of Common Stock include shares
of stock or other securities and Property of a corporation other
than the successor or purchasing corporation, as the case may be,
in such consolidation, merger, conveyance, transfer or share
exchange, then such supplemental indenture shall also be executed
by such other corporation and shall contain such additional
provisions to protect the interests of the Holders as the Board
of Directors shall reasonably consider necessary by reason of the
foregoing. If in connection with any such consolidation, merger,
conveyance, transfer, or share exchange each holder of shares of
Common Stock is entitled to elect to receive either securities,
cash or other assets (or any combination thereof) upon completion
of such transaction, the Company will provide or cause to be
provided to each Holder the right to elect to receive the
securities, cash or other assets into which the Securities held
by such Holder will be convertible after completion of any such
transaction on the same terms and subject to the same conditions
applicable to holders of the Common Stock (including, without
limitation, notice of the right to elect, limitations on the
period in which such election will be made and the effect of
failing to exercise the election). In the case of any such
consolidation, merger, conveyance, transfer or share exchange,
where the Holders of shares of Common Stock will be entitled to
receive securities upon completion of such transaction, the
Company will cause such successor or purchasers respectively to
provide that the securities issuable upon conversion of the
Securities will be freely transferable without any restrictions
imposed by federal, state or foreign securities laws. The
provisions of this Section 13.2 shall similarly apply to
successive consolidations, mergers, conveyances, transfers or
share exchanges. In the event the Company shall execute a
supplemental indenture pursuant to this Section 13.2, the Company
shall promptly file with the Trustee (x) an Officers' Certificate
briefly stating the reasons therefor, the kind or amount of
shares of stock or securities or Property (including cash)
receivable by Holders upon the automatic conversion of their
Securities immediately after any such consolidation, merger,
conveyance, transfer or share exchange, any adjustment to be made
with respect thereto and that all conditions precedent have been
complied with and (y) an Opinion of Counsel that all conditions
precedent have been complied with.
(b) The Trustee, subject to the provisions of Section 7.1,
shall not be responsible for any such consolidation, merger,
conveyance, transfer or share exchange, the form or substance of
any plan relating thereto, or the consequences thereof to any
Holder or the correctness of any
47
provision contained in any such supplemental indenture relating
to the kind or amount of shares of stock or securities or
Property receivable by any Holder upon conversion of Securities
immediately after any such consolidation, merger, conveyance,
transfer or share exchange.
(c) As evidence of the kind and amount of stock or other
securities or Property into which Securities will be
automatically converted after any such consolidation, merger,
conveyance, transfer or share exchange, the Trustee, subject to
the provisions of Section 7.1, may accept the certificate of a
nationally recognized firm of independent public accountants with
respect thereto; and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely thereon, and shall
not be responsible or accountable to any Holder for any provision
in conformity therewith which may be contained in the said
supplemental indenture.
(d) The Company or the Trustee may retain accountants to
make any computation required under this Article 13, and the
certificate of a nationally recognized firm of independent public
accountants shall be conclusive evidence of the correctness of
any computation made under this Article 13.
Section 13.3 Costs of Conversion.
-------------------
The issuance of certificates for shares of Common Stock
issued upon the conversion of Securities shall be made without
charge to the Holders for such certificates or for any
documentary, stamp or similar issue or transfer tax in respect of
the issuance of such certificates; provided, however, that the
Company shall not be required to pay any such tax which may be
payable in respect of any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the
Holder as shown on the Register as of the close of business of
the Registrar on the Conversion Date, and the Company shall not
be required to issue or deliver such certificates unless or until
the Person or Persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has
been paid. Nothing herein shall preclude any tax withholding
required by applicable law.
Section 13.4 No Liability to Trustee.
-----------------------
The Trustee shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist
which may require any adjustment of the Conversion Price, or with
respect to the nature or extent of any such adjustment when made,
or with respect to the method employed, or herein or in any
supplemental indenture provided to be employed, in making the
same. The Trustee shall not be accountable with respect to the
validity or value (or the kind or amount) of any Common Stock or
of any securities or Property which may at any time be issued or
delivered upon the conversion of any Security; and it does not
make any representation with respect thereto. The Trustee shall
not be responsible for any failure of the Company to make any
cash payment or to issue, transfer or deliver any shares of
Common Stock or stock certificates or other securities or
Property upon the conversion of any Security or to comply with
any of the covenants of the Company contained in this Article 13.
48
Section 13.5 Applicable Laws.
---------------
Anything herein to the contrary notwithstanding, the rights
and obligations of the Holders and the Company to convert the
Securities into Common Stock or to vote said stock shall be
subject to all applicable laws then in effect.
Section 13.6 Other Funds.
-----------
Anything elsewhere contained in this Indenture to the
contrary notwithstanding, any funds which at any time shall have
been deposited by the Company or on its behalf with the Trustee
or any other Paying Agent for the purpose of paying any
Securities which shall have been converted pursuant to the
provisions of this Article 13 into Common Stock, shall forthwith
upon such conversion be repaid upon demand to the Company by the
Trustee or such other Paying Agent.
Section 13.7 Release of Collateral Upon Conversion.
-------------------------------------
On or after the effectiveness of the conversion pursuant to
this Article 13, upon request by the Company and payment by the
Company of the Trustee's costs (including reasonable legal fees
and disbursements) incurred in complying with such Request, the
Trustee shall release from the Lien of the Operative Documents,
all right, title and interest of the Trustee in and to any
Collateral.
Section 13.8 Company to Provide Stock.
------------------------
The Company shall, prior to issuance of any Securities
hereunder, and from time to time as it may be necessary, reserve,
out of its authorized but unissued Common Stock, a sufficient
number of shares of Common Stock to permit the conversion of all
outstanding Securities into shares of Common Stock.
All shares of Common Stock delivered upon conversion of the
Securities shall be newly issued shares or treasury shares, shall
be duly authorized, validly issued, fully paid and nonassessable
and shall be free from preemptive rights and free of any lien or
adverse claim.
The Company will use its reasonable best efforts to list or
cause to have quoted all shares of Common Stock deliverable upon
conversion of the Securities on the American Stock Exchange and
each other national securities exchange or in the
over-the-counter market or such other market on which the Common
Stock is then listed or quoted.
49
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, all as of the date first written above.
TRANS WORLD AIRLINES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice-President & Deputy
General Counsel
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Trustee
By: /s/ Arge Pavlos
--------------------------
Name: Arge Pavlos
Title: Assistant Trust Officer
DEFINITIONS APPENDIX
Appendix I
To the Indenture between
Trans World Airlines, Inc.
and
First Security Bank, National Association, as Trustee
dated as of June 16, 1998
for the Company's 10 1/4% Mandatory Conversion
Equity Notes due 1999
and the Aircraft Second Mortgage and Security Agreement
dated as of an even date therewith
TABLE OF CONTENTS
Page
Section 1. Definitions................................... 1
Act........................................... 1
Affiliate..................................... 1
Agent......................................... 1
Aircraft...................................... 1
Aircraft Sale Agreement....................... 1
Airframe...................................... 1
Applicable Percentage......................... 1
Bankruptcy Law................................ 1
Bills of Sale................................. 2
Board of Directors............................ 2
Business Day.................................. 2
Capital Stock................................. 2
Capitalized Lease Obligation.................. 2
Certificated Air Carrier...................... 2
Certifying Officer............................ 2
Change in Control............................. 2
Closing Price................................. 3
Code.......................................... 3
Collateral.................................... 3
Common Stock.................................. 3
Company....................................... 3
Conversion Date............................... 3
Conversion Price.............................. 4
Corporate Trust Office........................ 4
Custodian..................................... 4
Default....................................... 4
Definitions Appendix.......................... 4
8% Preferred Stock............................ 4
Employee Preferred Stock...................... 4
Engine........................................ 4
ERISA......................................... 4
Event of Default.............................. 4
Exchange Act.................................. 4
FAA........................................... 4
FAA Xxxx of Sale.............................. 5
Federal Aviation Act.......................... 5
First Mortgage................................ 5
GAAP.......................................... 5
Holder or Holder of Securities................ 5
Indebtedness.................................. 5
(ii)
TABLE OF CONTENTS
(Continued)
Page
Indenture..................................... 6
Indenture Discharge Date...................... 6
Indenture Trustee............................. 6
Interest Payment Date......................... 6
Issue Date.................................... 6
Lazard........................................ 6
Legal Holiday................................. 6
Lien.......................................... 6
Maximum Share Amount.......................... 6
Mortgage...................................... 6
Mortgage Supplement........................... 6
9 1/4% Preferred Stock........................ 7
Notes Indenture............................... 7
Notes Trustee................................. 7
Obligations................................... 7
Offer to Purchase............................. 7
Officer....................................... 8
Officers' Certificate......................... 8
Operative Documents........................... 9
Opinion of Counsel............................ 9
Outstanding or outstanding.................... 9
Owner Trustee................................. 9
Parts......................................... 9
Paying Agent.................................. 10
Payment Date.................................. 10
Payments...................................... 10
Permitted Liens............................... 10
Person........................................ 11
Preferred Stock............................... 11
principal..................................... 11
Property...................................... 11
Record Date................................... 11
Register...................................... 11
Registrar..................................... 11
Registration Default.......................... 11
Registration Rights Agreement................. 11
Replacement Engine............................ 11
Request....................................... 12
Required Holders.............................. 12
SEC........................................... 12
Securities.................................... 12
Securities Act................................ 12
(ii)
TABLE OF CONTENTS
(Continued)
Page
Securityholder................................ 12
Seven Leasing................................. 12
Shelf Effective Date.......................... 12
Shelf Registration Statement.................. 12
Significant Subsidiary........................ 12
Special Interest.............................. 12
Special Record Date........................... 12
Stated Maturity............................... 12
Subsidiary.................................... 13
Taxes......................................... 13
10 1/4% Secured Notes......................... 13
Tender........................................ 13
TIA........................................... 13
Total Loss and Total Loss Date................ 13
Total Loss OTP Amount......................... 13
Trading Day................................... 13
Trust Agreement............................... 13
Trust Officer................................. 14
Trustee....................................... 14
TWA........................................... 14
U.S. or United States......................... 14
U.S. Government Obligations................... 14
Warranty Xxxx of Sale......................... 14
Section 2. Rules of Construction........................ 14
(iii)
DEFINITIONS APPENDIX
Section 1. Definitions. Unless the context otherwise requires,
each of the terms included in this Section 1 shall have the
respective meanings given in this Section 1 for all purposes of
the Indenture and the other Operative Documents (including this
appendix and any other appendices, exhibits or schedules to any
thereof) and of such other agreements as may incorporate this
appendix by reference except as otherwise specifically provided
herein or therein.
"Act" means the Federal Aviation Act.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified Person. For
the purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar
or co-Paying Agent.
"Aircraft" means the Airframe together with the two
associated Engines identified by manufacturer's serial number in
the Mortgage Supplement for the Airframe executed and delivered
on the Issue Date, whether or not any of such Engines may at any
time be installed on the Airframe or installed on any other
airframe.
"Aircraft Sale Agreement" means the Aircraft Sale and Note
Purchase Agreement, made and entered into as of the 16th day of
June, 1998, among the Company, the Owner Trustee, Seven Leasing
and Lazard.
"Airframe" means the Boeing Model 767-231 ETOPS airframe
(excluding any Engines and any other engines, but including any
and all Parts which may from time to time be incorporated or
installed in, or attached to such airframe, and including any and
all Parts removed therefrom so long as the removed Parts remain
subject to the Lien of the Mortgage under the terms thereof)
purchased by the Company under the Aircraft Sale Agreement and
identified by the FAA registration number and manufacturer's
serial number in the Mortgage Supplement executed and delivered
on the Issue Date.
"Applicable Percentage" means (i) with respect to any
amendment, supplement or waiver of the Indenture or any other
Operative Document that would (A) terminate the Lien of the
Mortgage with respect to any Collateral or permit the release of
any Collateral (other than releases permitted by the applicable
Operative Document, which releases shall not require any consent
of the Holders) or permit the creation of any Lien on any
Collateral (other than Permitted Liens), (B) increase the
aggregate principal amount of Securities that may be issued under
the Indenture or (C) modify this definition, 66 2/3%, and (ii)
otherwise, a majority.
"Bankruptcy Law" has the meaning provided in Section 6.1 of
the Indenture.
2
"Bills of Sale" means the FAA Xxxx of Sale and the Warranty
Xxxx of Sale.
"Board of Directors" means the Board of Directors of the
Company or any committee of such board duly authorized to act in
respect of any particular matter.
"Business Day" means each day which is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations
or other equivalents of or interests in (however designated)
equity of such Person, including any Preferred Stock, but
excluding any debt securities convertible into such equity.
"Capitalized Lease Obligation" means, as applied to any
Person for any period, an obligation of such Person to pay rent
or other amounts under a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP, and the
amount of such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP.
"Certificated Air Carrier" means a United States "air
carrier" within the meaning of the Act, holding an air carrier
operating certificate issued pursuant to chapter 447 of the Act
and of the type referred to in 11 U.S.C. ss. 1110, or if such
certification shall cease to be available, a carrier of
comparable status under the laws of the United States then in
force.
"Certifying Officer" means an Officer or an assistant
secretary of the Company.
"Change in Control" means the occurrence of any of the
following events: (i) any person (including any entity or group
deemed to be a "person" under Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) is or becomes the direct or
indirect beneficial owner (as determined in accordance with Rule
13d-3 under the Exchange Act) of shares of the Company's Capital
Stock representing greater than 50% of the total voting power of
all shares of Capital Stock of the Company entitled to vote in
the election of directors of the Company under ordinary
circumstances or to elect a majority of the Board of Directors of
the Company, (ii) the Person then constituting the "Company"
under the Indenture sells, transfers or otherwise disposes of all
or substantially all of its assets (regardless of whether such
Person thereupon ceases to constitute the "Company" under the
Indenture pursuant to Section 5.2 thereof), (iii) when, during
any period of 12 consecutive months after the date of original
issuance of the Securities, individuals who at the beginning of
any such 12-month period constituted the Board of Directors
(together with any new directors whose election by such Board or
whose nomination for election by the stockholders of the Company
was approved by a vote of majority of the directors still in
office entitled to vote with respect to such nomination who were
either directors at the beginning of such period or whose
election or nomination for election was previously so approved,
but excluding any of the individuals who at the beginning of such
12-month period constituted such Board but who ceased to be a
member of the Board pursuant to the Company's mandatory
retirement policy as in effect as of the Issue Date), cease for
any reason to constitute a majority of the Board of Directors
then in office or (iv) the date of the consummation of the merger
or consolidation of the Person then constituting the "Company"
under the Indenture with another
3
corporation where the stockholders of such Person, immediately
prior to the merger or consolidation, would not beneficially own,
immediately after the merger or consolidation, shares entitling
such stockholders to 50% or more of all votes (without
consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all stockholders of
the corporation issuing cash or securities in the merger or
consolidation would be entitled in the election of directors or
where members of the Board of Directors of the Person then
constituting the "Company" under the Indenture, immediately prior
to the merger or consolidation, would not, immediately after the
merger or consolidation, constitute a majority of the board of
directors of the corporation issuing cash or securities in the
merger or consolidation.
"Closing Price" means, for any day, the last reported sales
price, regular way, per share of Common Stock, or, in case no
such reported sale takes place on such date, the average of the
reported closing bid and asked prices, regular way, per share of
Common Stock, in either case on the American Stock Exchange, or,
if the Common Stock is not listed or admitted to trading on the
American Stock Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to
trading, or, if not listed or admitted to trading on any national
securities exchange, the closing sales price, regular way, of the
Common Stock as quoted by National Association of Securities
Dealers Automated Quotation System ('NASDAQ"), or, in case no
reported sale takes place, the average of the closing bid and
asked prices, regular way, as quoted by NASDAQ or any comparable
system, or, if the Common Stock is not quoted on NASDAQ or any
comparable system, the closing sales price, regular way, or, in
case no reported sale takes place, the average of the closing bid
and asked prices, regular way, as furnished by any two members of
the National Association of Securities Dealers, Inc. selected
from time to time by the Company for that purpose.
"Code" means the United States Internal Revenue Code of
1986, as amended from time to time, or any similar legislation of
the United States enacted to supersede, amend or supplement such
Code, and any reference to a provision or provisions of the Code
shall also mean and refer to any successor provision or
provisions, however designated or distributed.
"Collateral" has the meaning specified in Section 2.1 of
the Mortgage.
"Common Stock" includes any stock of any class of the
Company which has no preference in respect to dividends or of
amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company and which
is not subject to redemption by the Company; initially it refers
to the common stock, $0.01 par value, of the Company.
"Company" means the party named as such in the Indenture or
any obligor on the Securities until a successor replaces it
pursuant to the Indenture and thereafter means the successor.
"Conversion Date" means the first Business Day following
the earliest date on which either (a) both of the following
statements shall be true: (i) the Shelf Effective Date shall have
occurred and (ii) the Common Stock issuable on conversion of the
Equity Notes shall be listed on the American Stock Exchange or
such other stock exchange or market as the Common Stock
4
of the
Company is then principally traded or (b) a transaction
contemplated by Section 13.2 (a) of the Indenture has been
consummated.
"Conversion Price" has the meaning provided in Section 13.1
of the Indenture.
"Corporate Trust Office" when used with respect to the
Trustee means the office of the Trustee at which at any
particular time its corporate trust business is administered and
which, at the Issue Date, is located at First Security Bank,
National Association, as Trustee, 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx
Xxxx, Xxxx 00000, Attention: Corporate Trust Services.
"Custodian" has the meaning provided in Section 6.1 of the
Indenture.
"Default" means any event which is, or after notice or
passage of time, or both, would be, an Event of Default.
"Definitions Appendix" means this Definitions Appendix
attached as Appendix I to the Indenture and the Mortgage and
constituting a part of the Indenture and each other Operative
Document.
"8% Preferred Stock" means the 8% Cumulative Convertible
Exchangeable Preferred Stock of the Company.
"Employee Preferred Stock" means the IFFA Preferred Stock,
the ALPA Preferred Stock and the IAM Preferred Stock of the
Company.
"Engine" means (i) each of the Xxxxx & Xxxxxxx Model
JT9D-7R4D aircraft engines identified by manufacturer's serial
number in the Mortgage Supplement executed and delivered on the
Issue Date, so long as a Replacement Engine shall not have been
substituted therefor pursuant to the Mortgage, and (ii) each
Replacement Engine, so long as another Replacement Engine shall
not have been substituted therefor pursuant to the Mortgage,
whether or not such engine or Replacement Engine, as the case may
be, is from time to time installed on the Airframe or installed
on another airframe, and including, in each case all Parts
incorporated or installed in or attached thereto and any and all
Parts removed therefrom so long as such Parts remain subject to
the Lien of the Mortgage under the terms thereof.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Event of Default" has the meaning provided in Section 6.1
of the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time.
"FAA" means the Federal Aviation Administration or similar
regulatory authority established to replace it.
5
"FAA Xxxx of Sale" means the xxxx of sale for the Aircraft
on AC Form 8050-2 or such other form as may be acceptable to the
FAA for recordation with it, executed by the Owner Trustee in
favor of the Company.
"Federal Aviation Act" means Title 49 of the United States
Code, "Transportation," as amended from time to time, or any
similar legislation of the United States enacted in substitution
or replacement thereof. In the event there is enacted any
legislation replacing, modifying or repealing, in whole or in
part, the Federal Aviation Act, then the term "certificated,"
when used with reference to the Federal Aviation Act or any
particular provision thereof, shall mean authorized to provide,
or not prohibited from providing, air transportation services.
"First Mortgage" means the Aircraft Mortgage and Security
Agreement, dated as of the Issue Date, between the Company and
the Notes Trustee, securing, among other things, the obligations
of the Company under the Notes Indenture.
"GAAP" means generally accepted accounting principles in
the United States of America as in effect as of the Issue Date,
including those set forth in (i) the opinions and pronouncements
of the Accounting Principles Board of the American Institute of
Certified Public Accountants, (ii) statements and pronouncements
of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant
segment of the accounting profession and (iv) the rules and
regulations of the SEC governing the inclusion of financial
statements (including pro forma financial statements) in periodic
reports required to be filed pursuant to Section 13 of the
Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the
accounting staff of the SEC.
"Holder" or "Holder of Securities" means the Person in
whose name a Security is registered on the Registrar's books.
"Indebtedness" means, with respect to any Person at any
date, without duplication, (a) all indebtedness, obligations and
other liabilities (contingent or otherwise) of such Person for
borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such Person or only to a portion
thereof), (b) all obligations and other liabilities (contingent
or otherwise) of such Person evidenced by bonds, notes or other
similar instruments, (c) all obligations and other liabilities
(contingent or otherwise) of such Person in respect of letters of
credit or other similar instruments (and reimbursement
obligations with respect thereto), (d) all obligations and other
liabilities (contingent or otherwise) of such Person to pay the
deferred and unpaid purchase price of property or services (other
than any such obligations that represent trade payables or
accrued expenses incurred in the ordinary course of business),
(e) all Capitalized Lease Obligations of such Person, (f) all
Indebtedness of others secured by a Lien on any asset or assets
of such Person, whether or not such Indebtedness is assumed by
such Person (and, if not assumed, such Indebtedness shall be
limited to the fair market value of such asset or assets as
determined on the date such Indebtedness was incurred), and (g)
all Indebtedness of others guaranteed by such Person to the
extent of such guarantee. The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date
of all unconditional obligations as described above and the
maximum liability of such Person for any such contingent
obligations
6
at such date. A change in GAAP that results in an obligation of
the Company existing at the time of such change becoming
Indebtedness shall not be deemed an incurrence of such
Indebtedness.
"Indenture" means the Indenture dated as of the Issue Date
between the Company and the Trustee, under which the Securities
are issued, as amended or supplemented from time to time.
"Indenture Discharge Date" means the date of the
effectiveness of the termination of the Company's obligations
under the Indenture pursuant to Section 8.1(a) or (b) thereof.
"Indenture Trustee" means the Trustee.
"Interest Payment Date" means (a) so long as no
Registration Default exists, the date on which the Securities
mature and (b) upon the occurrence of a Registration Default, the
15th day of each month during which any Security is Outstanding
(commencing the 15th day of the month next succeeding the month
in which such Registration Default occurs) and the date on which
the Securities mature, if different.
"Issue Date" means June 16, 1998 (the date on which the
Securities are originally issued).
"Lazard" means Lazard Freres & Co. LLC, a New York limited
liability company.
"Legal Holiday" means a Saturday, Sunday or any other day
on which banks located in New York City or the city and state of
the Trustee's Corporate Trust Office as of the Issue Date are
authorized or obligated by law to remain closed.
"Lien" means any conveyance in trust, assignment, mortgage,
pledge, security interest, encumbrance, lien or charge of any
kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Maximum Share Amount" means the maximum number of shares
of Common Stock that can be issued upon conversion of the
Securities on the Conversion Date without causing the Company to
be (without prior stockholder approval) in violation of any
applicable listing requirement of the American Stock Exchange.
"Mortgage" means the Aircraft Second Mortgage and Security
Agreement, dated as of the Issue Date, between the Company and
the Trustee in substantially the form attached to the Indenture
as Exhibit B.
"Mortgage Supplement" means (i) the Second Mortgage and
Security Agreement Supplement executed and delivered on the Issue
Date for the Aircraft, in substantially the form attached to the
Mortgage as Exhibit A, which describes with particularity the
Airframe and Engines associated with the Aircraft, (ii) each
other Second Mortgage and Security Agreement Supplement from time
to time executed and delivered, in substantially the form
attached to the Mortgage as Exhibit A, which shall describe with
particularity any Replacement Engine and (iii) any other
supplement to the Mortgage from time to time executed and
delivered in accordance with the provisions of the Mortgage or
any other Operative Document.
7
"9 1/4% Preferred Stock" means the 9 1/4% Cumulative
Convertible Exchangeable Preferred Stock of the Company.
"Notes Indenture" means the Indenture dated as of the Issue
Date between the Company and First Security Bank, National
Association, as trustee, pursuant to which the Company is issuing
the 10 1/4% Secured Notes.
"Notes Trustee" means First Security Bank, National
Association, as trustee under the Notes Indenture, and its
successors and assigns in such capacity.
"Obligations" has the meaning provided in Section 2.1 of
the Mortgage.
"Offer to Purchase" means an offer to purchase all or a
portion, as the case may be, of the Securities by the Company
from the Holders commenced by the mailing (by first class mail,
postage prepaid) by the Company (or if requested by the Company
on at least five Business Days' prior notice to the Trustee and
at the Company's expense, by the Trustee) of a notice to each
Holder (and, if mailed by the Company, to the Trustee) at such
Holder's address appearing in the Register, stating: (i) the
covenant pursuant to which the offer is being made and that all
Securities validly tendered will be accepted for payment; (ii)
the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed) (the "Payment Date"); (iii) that
any Security not tendered will continue to accrue interest and
Special Interest (if any) pursuant to its terms; (iv) that,
unless the Company defaults in the payment of the purchase price
on the Payment Date, any Security accepted for payment pursuant
to the Offer to Purchase shall cease to accrue interest or
Special Interest (if any) on and after the Payment Date; (v) that
Holders electing to have a Security purchased pursuant to the
Offer to Purchase will be required to surrender the Security,
together with the form entitled "Option of the Holder to Elect
Purchase" attached to or on the reverse side of the Security
completed, to the Paying Agent at the address specified in the
notice at any time beginning with the date of such notice but
prior to the close of business on the Business Day immediately
preceding the Payment Date, and such Holder shall be entitled to
receive from the Paying Agent a non-transferable receipt of
deposit evidencing such deposit; (vi) that, unless the Company
defaults in making the payment of the purchase price or shall
otherwise, in its sole discretion, consent thereto, Holders will
be entitled to withdraw their election only if the Trustee
receives, not later than the close of business on the fifth
Business Day immediately preceding the Payment Date, a telegram,
facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Securities delivered for purchase
and a statement that such Holder is withdrawing his election to
have such Securities purchased; and (vii) that Holders whose
Securities are being purchased only in part will be promptly
issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered (which new
Securities, if such Offer to Purchase is being made pursuant to
Section 4.12(c) of the Indenture, will cease to be secured by the
Collateral); provided that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or
integral multiples thereof. The Company shall place such notice
in the national edition of The New York Times or The Wall Street
Journal or, if such newspapers are not then in circulation, in a
financial newspaper of general circulation in New York City. No
failure of the Company to give the foregoing notice shall limit
any Holder's
8
right to exercise a repurchase right. On the Payment Date, the
Company shall (i) accept for payment Securities or portions
thereof tendered pursuant to an Offer to Purchase; (ii) deposit
with the Trustee money sufficient to pay the purchase price of
all Securities or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the Trustee all Securities
or portions thereof so accepted together with an Officers'
Certificate specifying the Securities or portions thereof
accepted for payment by the Company. The Trustee shall promptly
mail to the Holders of Securities so accepted payment in an
amount equal to the purchase price, and the Trustee shall
promptly authenticate, and the Company shall promptly execute and
mail (or cause to be mailed) to such Holders a new Security equal
in principal amount to any unpurchased portion of the Securities
surrendered; provided that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or
integral multiples thereof; provided, further, that if the
Payment Date is between a regular Record Date and the next
succeeding Interest Payment Date, Securities to be repurchased
must be accompanied by payment of an amount equal to the interest
and Special Interest, if any, payable on such succeeding Interest
Payment Date on the principal amount to be repurchased, and the
interest on the principal amount of the Security being
repurchased, and Special Interest, if any, with respect thereto,
will be paid on such next succeeding Interest Payment Date to the
registered holder of such Security on the immediately preceding
Record Date. A Security repurchased on an Interest Payment Date
need not be accompanied by any such payment, and the interest on
the principal amount of the Security being repurchased and
Special Interest, if any, with respect thereto, will be paid on
such Interest Payment Date to the registered holder of such
Security on the corresponding Record Date. The Company will
publicly announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the
Paying Agent for an Offer to Purchase. The Company will comply
with Rule 14e-l under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that the Company is
required to repurchase Securities pursuant to an Offer to
Purchase. Both the notice of the Company and the notice of the
Holder having been given as specified above, the Securities so to
be repurchased shall, on the Payment Date become due and payable
at the purchase price applicable thereto and from and after such
date (unless the Company shall default in the payment of such
purchase price) such Securities shall cease to bear interest or
Special Interest (if any). If any Security shall not be paid upon
surrender thereof for repurchase, the principal shall, until
paid, bear interest and Special Interest (if any) from the
Payment Date at the rate and in accordance with the provisions
set forth in such Security and the Indenture. Any Security which
is to be submitted for repurchase only in part shall be delivered
pursuant to the above provisions with (if the Company or Trustee
so requires) due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or such Holder's attorney duly
authorized in writing.
"Officer" means the Chairman of the Board, the President,
any Vice President of any grade, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Secretary or the
Controller of the Company.
"Officers' Certificate" means a certificate signed by an
Officer and by a Certifying Officer satisfying the requirements
of Sections 11.4 and 11.5 of the Indenture.
9
"Operative Documents" means the Indenture, the Mortgage and
the Mortgage Supplements.
"Opinion of Counsel" means a written opinion from the
General Counsel of the Company, legal counsel to the Company or
another legal counsel who is reasonably acceptable to the
Trustee, which Opinion of Counsel shall comply with Sections 11.4
and 11.5 of the Indenture. The counsel may be an employee of the
Company. The acceptance by the Trustee (without written objection
to the Company during the fifteen (15) Business Days following
receipt) of, or its action on, an opinion of counsel not
specifically referred to above shall be sufficient evidence that
such counsel is acceptable to the Trustee.
"Outstanding" or "outstanding" when used with respect to
Securities or a Security, means all Securities theretofore
authenticated and delivered under the Indenture, except:
(a) Securities theretofore canceled by the Trustee,
delivered to the Trustee for cancellation or converted in
accordance with Article 13 of the Indenture;
(b) Securities for which payment has been deposited
with the Trustee or any Paying Agent in trust other than
deposits pursuant to Section 8.1 of the Indenture; and
(c) Securities which have been paid, or for which
other Securities shall have been authenticated and
delivered in lieu thereof or in substitution therefor
pursuant to the terms of Section 2.7 of the Indenture,
unless proof satisfactory to the Trustee is presented that
any such Securities are held by holders in due course.
A Security does not cease to be Outstanding because the Company
or one of its Affiliates holds the Security; provided, however,
that in determining whether the Holders of the requisite
aggregate principal amount of Securities Outstanding have given
any request, demand, authorization, direction, notice, consent or
waiver under the Indenture, Section 2.8 of the Indenture shall be
applicable.
"Owner Trustee" means First Security Bank, National
Association (f/k/a First Security Bank of Utah, National
Association), not in its individual capacity (except as otherwise
expressly set forth) but as trustee under the Trust Agreement.
"Parts" means any and all appliances, parts, spare parts,
instruments, appurtenances, accessories, furnishings, seats and
other equipment of whatever nature (other than Engines or
engines) which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine, or which have been
removed therefrom but which remain subject to the Lien of the
Mortgage in accordance with the terms thereof, exclusive of any
items (i) permitted by the Mortgage to be leased by the Company
in the ordinary course of business from third parties (and
installed without discrimination with respect to other Boeing
Model 767-231 ETOPS aircraft (or improved models) owned or
operated by the Company) and (ii) not required in the navigation
of the Aircraft. The terms "spare parts" and "appliances" (as
used in this definition) shall include, but not be limited to,
the definitions assigned to those terms by Section 40102 of Title
49 of the
00
Xxxxxx Xxxxxx Code as amended from time to time or any recodifi-
cation thereof or any regulation of the FAA.
"Paying Agent" has the meaning provided in Section 2.3 of
the Indenture, except that for the purposes of Article 8 of the
Indenture and any Offer to Purchase, the Paying Agent shall not
be the Company.
"Payment Date" with respect to any Offer to Purchase, has
the meaning specified in the definition herein of Offer to
Purchase.
"Payments" means such monies as the Company shall cause to
be delivered to the Trustee or any Paying Agent for the purpose
of paying principal or purchase price of, or interest on or
Special Interest, if any, with respect to, the Securities on any
Interest Payment Date, Payment Date or acceleration; and "Pay"
means paying such monies.
"Permitted Liens" shall mean any of the following Liens:
(a) Liens in favor of the Trustee arising by reason of
the Mortgage or any other Operative Document and Liens in
favor of the Notes Trustee arising by reason of the First
Mortgage or any other Operative Document (as defined in the
Notes Indenture);
(b) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter
payable without penalty or being contested by the Company
in good faith by appropriate proceedings and for which
adequate reserves have been established if required in
accordance with GAAP, and which Lien presents no material
risk of sale, forfeiture or loss of any Collateral;
(c) Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the Company's
ordinary course of business for sums not overdue or being
contested by the Company in good faith by appropriate
proceedings and for which adequate reserves have been
established if required in accordance with GAAP, and which
Lien presents no material risk of sale, forfeiture or loss
of any Collateral;
(d) Liens incurred in the ordinary course of business
in connection with workmen's compensation, unemployment
insurance or other forms of governmental insurance or
benefits, or to secure performance of tenders and statutory
obligations entered into in the ordinary course of business
or to secure obligations on surety or appeal bonds;
(e) judgment Liens (so long as the related judgments
do not, individually or in the aggregate, constitute an
Event of Default) in existence less than sixty (60) days
after the entry thereof or with respect to which execution
has been stayed or the payment of which is covered in full
by insurance;
11
(f) Liens on the Aircraft in favor of a permitted
lessee of the Aircraft which result solely from the lease
(so long as it is a permitted lease under the Mortgage) on
the Aircraft; and
(g) Liens on the Aircraft which are "Permitted Liens"
arising under, and defined by definitions substantially
similar to above subparagraphs (b) and (c) in, the lease
(if any) for the Aircraft; provided, however, that such
lease is permitted under the Mortgage.
"Person" means any individual, corporation, partnership,
limited liability issuer, joint venture, association, joint-stock
issuer, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any
Person means Capital Stock of any class or classes (however
designated) which is preferred as to the payment of dividends or
distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such
Person.
"principal" of a Security means the principal of the
Security plus the premium, if any, payable on the Security which
is due or overdue or is to become due at the relevant time.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, present or future, or
tangible or intangible.
"Record Date" means the fifteenth (15th) day preceding any
Interest Payment Date, whether or not a Business Day.
"Register" has the meaning provided in Section 2.3 of the
Indenture.
"Registrar" has the meaning provided in Section 2.3 of the
Indenture.
"Registration Default" means the occurrence of any of the
following events: (a) the Company shall fail to file with the SEC
the Shelf Registration Statement on or before the sixtieth (60th)
day following the Issue Date, (b) the Shelf Effective Date shall
not occur on or before the one hundred and fiftieth (150th) day
following the Issue Date or (c) the Company shall fail to list,
on or prior to the Shelf Effective Date, the Common Stock
issuable on conversion of the Equity Notes on the American Stock
Exchange or such other stock exchange or market as the Common
Stock of the Company is then principally traded.
"Registration Rights Agreement" means the Registration
Rights Agreement, made and entered into as of the Issue Date, by
and among the Company, the Owner Trustee and Lazard, relating to
the shares of Common Stock to be issuable upon conversion of the
Securities.
"Replacement Engine" means a Xxxxx & Xxxxxxx Model
JT9D-7R4D aircraft engine (or engine of the same or another
manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe) (i) which has a value,
utility and remaining useful life at
12
least equal to the Engine which it is replacing, assuming such
Engine was of the value and utility required by the terms of the
Mortgage; provided that any such engine shall be of the same make
and model as the other engine then installed on the Airframe,
shall be an engine model then being utilized by the Company on
other Boeing Model 767-231 ETOPS aircraft operated by the Company
and, for so long as such engine has been operated by the Company,
shall have been maintained, serviced, repaired and overhauled in
substantially the same manner as the Company maintains, services,
repairs and overhauls similar engines utilized by the Company,
and (ii) which shall have been made subject to the Lien of the
Mortgage pursuant to Section 2 and Section 3.3 of the Mortgage.
"Request" means a written request for the action therein
specified signed on behalf of the Company by any Officer and
delivered to the Trustee. Each Request shall be accompanied by an
Officers' Certificate if and to the extent required by Section
11.4 of the Indenture.
"Required Holders" means from time to time the Holders of
the Applicable Percentage in principal amount of the Securities
then Outstanding.
"SEC" means the Securities and Exchange Commission and any
government agency succeeding to its functions.
"Securities" means the "Securities" (as defined in the
preamble to the Indenture and includes the Company's 10 1/4%
Mandatory Conversion Equity Notes due 1999), as amended or
supplemented from time to time, that are issued under the
Indenture.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Seven Leasing" means 767 Leasing HY, LLC, a Delaware
limited liability company.
"Shelf Effective Date" means the date that the Shelf
Registration Statement shall become effective as declared by the
SEC.
"Shelf Registration Statement" has the meaning provided in
Section 3(a) of the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary which is a
Significant Subsidiary within the meaning of Article I of
Regulation S-X under the Exchange Act.
"Special Interest" has the meaning provided in Paragraph
No. 1 of the Form of Reverse Side of Security attached to the
Indenture as part of Exhibit A.
"Special Record Date" has the meaning provided in Section
2.1 of the Indenture.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the
final payment of principal of such security is due and payable,
13
including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening
of any contingency unless such contingency has occurred).
"Subsidiary" means, in respect of any Person, any
corporation, association, partnership or other business entity of
which more than 50% of the total voting power of shares of
Capital Stock or other interests (including membership or
partnership interests) entitled (without regard to the occurrence
of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (i) such Person, (ii) such Person and
one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
"Taxes" means any and all fees (including, without
limitation, license, documentation and registration fees), taxes
(including, without limitation, income, gross receipts, sales,
rental, use, turnover, value-added, property (tangible and
intangible), excise and stamp taxes), levies, imposts, duties,
recording charges or fees, charges, assessments or withholdings
of any nature whatsoever, together with any and all assessments,
penalties, additions to tax, fines or interest thereon.
"10 1/4% Secured Notes" means the 10 1/4% Senior Secured
Notes due 2003 of the Company issued concurrently with the
Securities.
"Tender" means, with respect to any Security, the effective
tender of such Security (in whole or in part) for repurchase or
conversion in accordance with the provisions of the Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
xx.xx. 77aaa-77bbbb) as in effect on the date of the Indenture;
provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to
the extent required by any such amendment, the Trust Indenture
Act of 1939 as so amended.
"Total Loss" and "Total Loss Date" have the meanings
provided in Section 1.1 of the Mortgage.
"Total Loss OTP Amount" has the meaning provided in Section
4.12 of the Indenture.
"Trading Day" means, with respect to any Common Stock, each
Monday, Tuesday, Wednesday, Thursday and Friday, other than any
day on which securities are not generally traded on the exchange
or market in which such Common Stock is principally traded.
"Trust Agreement" means the Trust Agreement N607TW, dated
as of March 28, 1995, between Seven Leasing, as assignee of ING
Lease Delaware, Inc. (f/k/a Internationale Nederlanden Aviation
Lease Delaware, Inc.), and First Security Bank, National
Association (f/k/a First Security Bank of Utah, National
Association), not in its individual capacity, except as expressly
stated therein, but solely as trustee thereunder.
14
"Trust Officer" means any officer in the corporate trust
department of the Trustee, or any other officer or assistant
officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
"Trustee" means the party named as such in the Indenture
until a successor replaces it in accordance with the provisions
of the Indenture and thereafter means the successor.
"TWA" means the Company.
"U.S." or "United States" means the United States of
America.
"U.S. Government Obligations" means securities which are
(i) direct obligations of the United State government or (ii)
obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States government, are
full faith and credit obligations of the United States government
and are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a
bank or trust Company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such
custodian for the account of the holder of a depository receipt,
provided that (except as required by law) 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 Obligation or the
specific payment of interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt.
"Warranty Xxxx of Sale" means, the warranty (as to title)
xxxx of sale covering the Aircraft executed by the Owner Trustee
in favor of the Company.
Section 2. Rules of Construction. Unless the context otherwise
requires, the following rules of construction shall apply to all
purposes of the Indenture and the other Operative Documents
(including this appendix) and of such agreements as may
incorporate this appendix by reference.
(a) a term has the meaning assigned to it;
(b) whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and
neuter forms;
(c) the words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without
limitation";
(d) all terms used in Article 9 of the Uniform
Commercial Code as in effect in the State of New York that
are used but not defined herein shall have the meaning
assigned to such terms therein;
(e) references to a specific Person shall include the
Person and (except as limited by any agreement by which
such Person is bound) the successors and assigns of such
Person;
15
(f) references to "applicable laws" shall include
statutes, ordinances, rules, regulations, court and
administrative decisions and conditions, restrictions and
limitations in licenses, permits, approvals and
authorizations issued or granted by federal, state or local
United States or foreign governmental bodies and agencies;
(g) unless otherwise specified in the computation of a
period of time from a specified date to a later specified
date, the word "from" means "from and including", and the
words "to" and "until" each mean "to but excluding";
(h) words in the singular include the plural, and
words in the plural include the singular;
(i) provisions apply to successive events and
transactions;
(j) "herein", "hereto" and other words of similar
import in any agreement refer to that agreement as a whole
and not to any particular Article, Section or other
subsection of that agreement;
(k) unless otherwise specified, all references in any
Operative Document to Sections, Articles, Exhibits,
Appendices and Schedules are to Sections of, Articles of,
Exhibits to, Appendices to and Schedules to such Operative
Document;
(l) all accounting terms used herein and not expressly
defined shall have the meanings given to them in accordance
with GAAP; and
(m) unless otherwise specified, references in this
Definitions Appendix to any instrument, contract, agreement
or other document shall be deemed to be references to such
instrument, agreement or other document as it may be
amended, restated, supplemented or otherwise modified from
time to time pursuant to and as permitted by the terms
thereof, whether or not so stated in any particular
definition.
EXHIBIT A
to
INDENTURE
[FORM OF FACE OF SECURITY]
[Restricted Securities Legend]
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT, OR ANY STATE SECURITIES LAWS. NEITHER THESE
SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THE HOLDER OF THESE SECURITIES BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL, OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE RESALE RESTRICTION TERMINATION DATE WHICH
IS THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE DATE OF
ORIGINAL ISSUANCE OF THESE SECURITIES AND THE LAST DATE ON WHICH
THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THESE SECURITIES (OR ANY PREDECESSOR OF THESE SECURITIES) ONLY
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a)(1), (2) (3), OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE, OR TRANSFER (i) PURSUANT TO CLAUSES (C) OR
(D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM ATTACHED TO OR ON THE REVERSE
SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
2
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
DELIVER TO THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS
THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.
3
No. CUSIP No.
$
10 1/4% Mandatory Conversion Equity Note due 1999
TRANS WORLD AIRLINES, INC., a Delaware corporation
promises to pay to __________, or registered assigns, the
principal sum of __________ Dollars on June 15, 1999.
Interest Payment Dates: (a) So long as no Registration
Default exists, the date on which the Securities mature and (b)
upon the occurrence of a Registration Default, the 15th day of
each month during which any Security is Outstanding (commencing
the 15th day of the month next succeeding the month in which such
Registration Default occurs) and the date on which the Securities
mature, if different.
Record Dates: The 15th day preceding any Interest
Payment Date, whether or not a Business Day.
Additional provisions of this Security are set forth
on the other side of this Security.
Dated:
TRANS WORLD AIRLINES, INC.
By: _______________________
Name:
Title:
Attest:
_______________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
First Security Bank,
National Association,
as Trustee, certifies
that this is one of the
Securities referred to
in the Indenture.
By:_______________________
Authorized Signatory
4
[FORM OF REVERSE SIDE OF SECURITY]
10 1/4% Mandatory Conversion Equity Note due 1999
This Security is one of a duly authorized issue of
securities of the Company designated as its 10 1/4% Mandatory
Conversion Equity Notes due 1999 (hereinafter called the
"Securities"), limited in aggregate principal amount Outstanding
to $13,000,000, issued or to be issued pursuant to an Indenture,
dated as of June 16, 1998 (hereinafter called the "Indenture")
between the Company and First Security Bank, National
Association, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture).
1. Interest; Special Interest. The Company promises to pay
interest on the principal amount of this Security at the rate of
ten and one-quarter percent (10 1/4%) per annum; provided,
however, that upon a Registration Default (and for so long as
such Registration Default shall continue uncured and unwaived)
(each period during which a Registration Default has occurred and
is continuing referred to herein as a "Registration Default
Period"), additional interest will accrue on this Security at a
per annum rate of 0.50% for the first 90 days of the Registration
Default Period, at a per annum rate of 1.0% for the second 90
days of the Registration Default Period, at a per annum rate of
1.5% for the third 90 days of the Registration Default Period and
at a per annum rate of 1.5% thereafter for the remaining portion
of the Registration Default Period (such additional interest is
referred to herein as "Special Interest"). The Company will pay
interest and Special Interest, if any, on the Interest Payment
Dates set forth on the face of this Security. Interest on the
Securities will accrue from June 16, 1998 or the most recent
Interest Payment Date to which interest and Special Interest, if
any, have been paid. Interest will be computed on the basis of a
360-day year of twelve 30-day months. The Company and each Holder
of a Security, by the acceptance hereof, agree that in the event
a Registration Default shall occur and be continuing and the
Company shall have failed to use its reasonable best efforts to
avoid or cure such Registration Default, Holders shall be
entitled to make a claim for damages incurred as a result of such
Registration Default, which damages shall not necessarily be
limited to the increases in the interest rate set forth herein;
provided, however, that any amount of interest paid pursuant to
this provision shall be credited against any amount of damages to
be paid by the Company in connection with such claim.
2. Method of Payment. Subject to the provisions of
paragraph 8 hereof, the Company will pay interest on and Special
Interest, if any, with respect to, the Securities (except
defaulted interest and interest on defaulted principal) to the
persons who are registered Holders of Securities at the close of
business on the Record Date set forth on the face of this
Security next preceding the applicable Interest Payment Date.
Defaulted interest and interest on defaulted principal will be
paid by the Company in accordance with the applicable provisions
of the Indenture. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay
principal and interest and Special Interest, if any, at the
office or agency of the Company maintained for that purpose in
the Borough of Manhattan, The City of New York and at any other
office or agency maintained by the Company for such purpose in
money of the United States that at the time of payment is legal
tender for payment of public and private
5
debts; provided, however, that at the option of the Company,
payment of interest on and Special Interest, if any, with respect
to, the Securities may be by check payable in such money and
mailed to a Holder's registered address; provided further,
however, that payments on a certificated Security will be made by
wire transfer to a U.S. dollar account maintained by a Holder
with a bank in New York City if such Holder owns at least
$250,000 in aggregate principal amount of certificated Securities
and elects payment by wire transfer by giving written notice to
the Company and the Trustee to such effect designating such
account no later than 10 days immediately preceding the relevant
due date for payment (or such other date as the Company and the
Trustee may accept in their discretion). If a payment date is a
legal holiday at a place of payment, payment may be made at that
place on the next succeeding Business Day, and no interest shall
accrue for the intervening period.
3. Registrar, Paying Agent and Tender Agent. Initially, the
Trustee will act as Registrar and Paying Agent. The Company may
change any Paying Agent or Registrar or co-registrar without
prior notice to any Securityholder. The Company may act in any
such capacity, except in certain circumstances.
4. Indenture. The Company issued the Securities under the
Indenture. The terms of the Securities include those stated in
the Indenture and those made applicable to the Indenture by the
TIA. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and such Act for a
statement of such terms. Until converted as described in
paragraph 8 hereof and in the Indenture and subject to paragraph
6 hereof, the Securities are senior secured obligations of the
Company limited to $13,000,000 aggregate principal amount, except
as otherwise provided in the Indenture. Terms used in this
Security and not defined in this Security shall have the meaning
set forth in Section 1 of the Definitions Appendix attached as
Appendix I to the Indenture, which shall be a part of this
Security as if fully set forth in this place. The rules of
construction for this Security are set forth in Section 2 of the
Definitions Appendix.
5. Redemption. This Security is not subject to redemption
in whole or in part at any time.
6. Security. The Securities are secured by second priority
Liens on certain Properties of the Company pursuant to the
Mortgage and the other Operative Documents described in the
Indenture and such Liens are subject to release as provided
herein and in the Mortgage and the other Operative Documents.
Enforcement of the Lien of the Mortgage is limited to an
aggregate amount of Obligations not exceeding $10,250,000 and is
further restricted due to its second priority status, as more
fully set forth in the Mortgage, and each Holder, by accepting a
Security, agrees to all the provisions thereof.
7. Offers to Purchase. In the event that there shall occur
a Change in Control, the Company shall make an Offer to Purchase
all of the Outstanding Securities, at a purchase price equal to
101% of the aggregate principal amount of the Securities
Outstanding, plus accrued and unpaid interest, if any, to and
including the repurchase date. The right to require such
repurchase of Securities shall not continue after a discharge of
the Company from its obligations with respect to the Securities
in accordance with Article 8 of the Indenture. The Company shall
6
commence such Offer to Purchase within thirty (30) days after the
occurrence of a Change in Control.
In the event that there shall occur a Total Loss with
respect to any Aircraft, the Company shall (subject to the
provisions of Section 4.12 of the Indenture) make an Offer to
Purchase an aggregate principal amount of Outstanding Securities
(the "Total Loss OTP Amount") equal to the aggregate principal
amount of the Securities Outstanding on the date such Offer to
Purchase (if any) is required to be commenced under the
Indenture, at a purchase price equal to 100% of the aggregate
principal amount of Securities to be purchased, plus accrued and
unpaid interest and Special Interest, if any, on such Securities,
to and including the Payment Date, and the Aircraft shall be
released from the Lien of the Operative Documents in accordance
with the provisions thereof. The Company shall commence such
Offer to Purchase (if any) within thirty (30) days after the
Total Loss Date with respect to any such Total Loss. The Company
may receive credit against any or all of the Total Loss OTP
Amount for open market purchases of Securities as provided in the
Indenture.
"Offer to Purchase" means an offer to purchase all, or a
portion, as the case may be, of the Securities by the Company
from the Holders commenced by the mailing (by first class mail,
postage prepaid) by the Company (or, if requested by the Company
on at least five Business Days' prior notice to the Trustee and
at the Company's expense, by the Trustee) of a notice to each
Holder (and, if mailed by the Company, to the Trustee) at such
Holder's address appearing in the Register, stating: (i) the
covenant pursuant to which the offer is being made and that all
Securities validly tendered will be accepted for payment; (ii)
the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed) (the "Payment Date"); (iii) that
any Security not tendered will continue to accrue interest and
Special Interest (if any) pursuant to its terms; (iv) that,
unless the Company defaults in the payment of the purchase price
on the Payment Date, any Security accepted for payment pursuant
to the Offer to Purchase shall cease to accrue interest or
Special Interest, if any, on and after the Payment Date; (v) that
Holders electing to have a Security purchased pursuant to the
Offer to Purchase will be required to surrender the Security,
together with the form entitled "Option of the Holder to Elect
Purchase" attached to or on the reverse side of the Security
completed, to the Paying Agent at the address specified in the
notice at any time beginning with the date of such notice but
prior to the close of business on the Business Day immediately
preceding the Payment Date, and such Holder shall be entitled to
receive from the Paying Agent a non-transferable receipt of
deposit evidencing such deposit; (vi) that, unless the Company
defaults in making the payment of the purchase price or shall
otherwise, in its sole discretion, consent thereto, Holders will
be entitled to withdraw their election only if the Trustee
receives, not later than the close of business on the fifth
Business Day immediately preceding the Payment Date, a telegram,
facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Securities delivered for purchase
and a statement that such Holder is withdrawing his election to
have such Securities purchased; and (vii) that Holders whose
Securities are being purchased only in part will be promptly
issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered (which new
Securities, if such Offer to Purchase is being made pursuant to
Section 4.12(c) of the Indenture, will cease to be secured by the
Collateral); provided that each Security purchased and each new
Security
7
issued shall be in a principal amount of $1,000 or integral
multiples thereof. The Company shall place such notice in the
national edition of The New York Times or The Wall Street Journal
or, if such newspapers are not then in circulation, in a
financial newspaper of general circulation in New York City. No
failure of the Company to give the foregoing notice shall limit
any Holder's right to exercise a repurchase right. On the Payment
Date, the Company shall (i) accept for payment Securities or
portions thereof tendered pursuant to an Offer to Purchase; (ii)
deposit with the Trustee money sufficient to pay the purchase
price of all Securities or portions thereof so accepted; and
(iii) deliver, or cause to be delivered, to the Trustee all
Securities or portions thereof so accepted together with an
Officers' Certificate specifying the Securities or portions
thereof accepted for payment by the Company. The Trustee shall
promptly mail to the Holders of Securities so accepted payment in
an amount equal to the purchase price, and the Trustee shall
promptly authenticate, and the Company shall promptly execute and
mail (or cause to be mailed) to such Holders a new Security equal
in principal amount to any unpurchased portion of the Securities
surrendered; provided that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or
integral multiples thereof; provided, further, that if the
Payment Date is between a regular Record Date and the next
succeeding Interest Payment Date, Securities to be repurchased
must be accompanied by payment of an amount equal to the interest
and Special Interest, if any, payable on such succeeding Interest
Payment Date on the principal amount to be repurchased, and the
interest on the principal amount of the Security being
repurchased, and Special Interest, if any, with respect thereto,
will be paid on such next succeeding Interest Payment Date to the
registered holder of such Security on the immediately preceding
Record Date. A Security repurchased on an Interest Payment Date
need not be accompanied by any such payment, and the interest on
the principal amount of the Security being repurchased, and
Special Interest, if any, with respect thereto, will be paid on
such Interest Payment Date to the registered holder of such
Security on the corresponding Record Date. The Company will
publicly announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the
Paying Agent for an Offer to Purchase. The Company will comply
with Rule 14e-l under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that the Company is
required to repurchase Securities pursuant to an Offer to
Purchase. Both the notice of the Company and the notice of the
Holder having been given as specified above, the Securities so to
be repurchased shall, on the Payment Date become due and payable
at the purchase price applicable thereto and from and after such
date (unless the Company shall default in the payment of such
purchase price) such Securities shall cease to bear interest or
Special Interest (if any). If any Security shall not be paid upon
surrender thereof for repurchase, the principal shall, until
paid, bear interest and Special Interest (if any) from the
Payment Date at the rate and in accordance with the provisions
set forth in this Security and the Indenture. Any Security which
is to be submitted for repurchase only in part shall be delivered
pursuant to the above provisions with (if the Company or Trustee
so requires) due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or such Holder's attorney duly
authorized in writing.
8. Mandatory Conversion. Subject to the provisions of
Article 13 of the Indenture, on the Conversion Date, so long as
no Default or Event of Default shall then exist, this Security
(if then Outstanding) shall be automatically converted into that
number of fully paid and non-
7
assessable shares of Common Stock equal to the sum of (i) the
then outstanding principal amount of this Security, plus (ii)
accrued and unpaid interest and Special Interest, if any, on this
Security to the Conversion Date, divided by the product of (A)
1.00 multiplied by (B) the Closing Price per share of Common
Stock on the Trading Day immediately preceding the Conversion
Date.
Any such conversion is subject to the procedures,
restrictions and adjustments as set forth in Article 13 of the
Indenture, and on or after the effectiveness of the conversion,
the Liens on the Collateral are subject to release as provided in
the Indenture.
9. Denominations, Transfer, Exchange. The Securities shall
be issuable only in registered form without coupons and in
denominations of $1,000 and integral multiples thereof. The
transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes required by law or
permitted by the Indenture.
10. Persons Deemed Owners. The Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose
name the Security is registered with the Registrar as the owner
for all purposes.
11. Discharge. Subject to certain conditions set forth in
Article 8 of the Indenture, the Company may terminate its
obligations under the Securities and the Indenture, except those
obligations referred to in Section 8.1(b) of the Indenture, if
the Company deposits with the Trustee or a Paying Agent cash or
U.S. Government Obligations for the payment of principal of,
interest, if any, on the Securities to Stated Maturity.
12. Amendments and Waivers. Subject to certain exceptions,
the Indenture, the Securities, or the other Operative Documents
may be amended with the consent of the Holders of at least a
majority in principal amount of the then Outstanding Securities,
and any existing Default, Event of Default or acceleration may be
waived with the consent of the Holders of a majority in principal
amount of the then Securities Outstanding. Without the consent of
any Holder, the Indenture, the Securities or any of the Operative
Documents may be amended to, among other things, cure any
ambiguity, defect or inconsistency.
13. Defaults and Remedies. Events of Default under the
Indenture include the following: default for the period specified
in the Indenture in payment of interest on or Special Interest,
if any, with respect to, the Securities; default in payment of
the principal amount of any Securities when the same becomes due
and payable (at maturity, upon acceleration, tender for
repurchase or otherwise); failure by the Company to comply with
specific covenants of the Indenture or of the Mortgage within the
time periods provided therein, discontinuing substantially all of
its commercial airlines operations, or failure to pay over
amounts required under the Mortgage; failure to comply in any
material respect with any of its other agreements contained in
the Indenture, the other Operative Documents or the Securities
within the time periods (if any) and after the notice (if any)
provided in any thereof; a representation or warranty of the
Company in the Indenture, the other Operative Documents or any
Mortgage Supplement or in any certificate of the Company
delivered under any such document proves to be untrue in
9
any material respect when made, and the failure to cure such
default within the time periods and after the notice specified in
the Indenture; the occurrence of certain defaults under any
Indebtedness of the Company or any of its Significant
Subsidiaries in excess of $10,000,000 in principal amount; the
rendering of final judgments by a court of competent jurisdiction
against the Company or any of its Significant Subsidiaries in an
aggregate amount of $10,000,000 or more which remain undischarged
for a period (during which execution is not stayed) of sixty (60)
days after the date on which the right to appeal has expired;
cessation of effectiveness of the Operative Documents without the
consent of the Trustee; and certain events of bankruptcy,
insolvency or reorganization. Subject to certain limitations in
the Indenture, if an Event of Default occurs and is continuing,
the Trustee or the Holders of twenty-five percent (25%) in
principal amount of the Securities Outstanding may declare all
the Securities to be due and payable immediately, except that in
the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all Securities Outstanding become due
and payable immediately without further action or notice.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture and the Mortgage. Enforcement
of the Lien of the Mortgage is limited to an aggregate amount of
Obligations not exceeding $10,250,000 and is further restricted
due to its second priority status, as more fully set forth in the
Mortgage. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to
certain limitations, Holders of a majority in principal amount of
the then Outstanding Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a
default in payment of principal or interest) if it determines
that withholding notice is in their interests. The Company must
furnish compliance certificates to the Trustee. The above
description of Events of Default and remedies is qualified by
reference, and subject in its entirety to the more complete
description thereof contained in the Indenture and the other
Operative Documents.
14. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with
and collect obligations owed to it by the Company or Affiliates
of the Company with the same rights it would have if it were not
Trustee.
15. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have
any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the
consideration for the issue of the Securities.
16. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an
authenticating agent.
17. Unclaimed Money. If money for the payment of principal
of, or interest, if any, on, or the purchase price for the
Securities remains unclaimed for two (2) years, the Trustee or
Paying Agent will pay the money back to the Company at its
request. After such payment, Holders entitled to any portion of
such money must look to the Company for payment unless an
applicable law designates another person.
10
18. Abbreviations. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants
in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
19. CUSIP Numbers. The Company in issuing this Security may
use a "CUSIP" number (if then generally in use) and, if so, the
Trustee may use "CUSIP" numbers in notices to the Holders
regarding the Securities as a convenience to Holders; provided,
however, that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on
the Securities or as contained in any such notice and that
reliance may be placed only on the other identification numbers
printed on the Securities, and any such notice shall not be
affected by any defect in or omission of such numbers.
20. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement,
including, without limitation, the obligations of the Holders
with respect to a registration and the indemnification of the
Company to the extent provided therein.
21. Governing Law. THIS SECURITY SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAWS.
The Company will furnish to any Holder of this
Security, upon written request and without charge, a copy of the
Indenture. Request may be made to: Trans World Airlines, Inc.,
One City Centre, 000 X. 0xx Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000,
Attention: Corporate Secretary.
11
ASSIGNMENT FORM
To assign this Security, fill in the form below: I or we assign
and transfer this Security to:
(Insert Assignee's Soc. Sec. or Tax I.D. No.)
(Print or type assignee's name, address and zip
code)
and irrevocably appoint ______________ agent
to transfer this Security on the books of the
Company. The agent may substitute another to
act for him.
Date:____________________________ Signature(s):__________________________
__________________________
(Sign exactly as your name(s) appear(s)
on the other side of this Security)
Signature(s) guaranteed by:
________________________________________
(All signatures must be guaranteed by
a member of a national securities
exchange or of the National Association
of Securities Dealers, Inc. or by a
commercial bank or trust company located
in the United States)
12
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security repurchased
by the Company pursuant to any Offer to Purchase under the
Indenture, check the box:
|_|
If you want to elect to have only part of this
Security repurchased by the Company pursuant to any Offer to
Purchase under the Indenture, state the amount to be repurchased:
$ _________________________________
(in an integral multiple of $1,000)
Date:______________________________ Signature(s):___________________________
________________________________________
(Sign exactly as your name(s) appear(s)
on the other side of this Security)
Signature(s) guaranteed by:
________________________________________
(All signatures must be guaranteed by
a member of a national securities
exchange or of the National Association
of Securities Dealers, Inc. or by a
commercial bank or trust company located
in the United States)
CERTIFICATE OF TRANSFER
Re: 10 1/4% Mandatory Conversion Equity Notes due 1999 (the "Notes")
of Trans World Airlines, Inc. (the "Company")
This Certificate relates to Notes held in definitive
form by ___________ (the "Transferor").
The Transferor has requested the Registrar by written
order to exchange or register the transfer of a Note or Notes. In
connection with such request and in respect of each such Note,
the Transferor does hereby certify that the Transferor is
familiar with the Indenture relating to the above captioned Notes
and that the transfer of this Note does not require registration
under the Securities Act of 1933 (the "Securities Act"),
because:*
|_| Such Note is being transferred to the Company.
|_| Such Note is being transferred pursuant to an
effective Registration Statement under the Securities Act.
|_| Such Note is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Securities
Act) in reliance on Rule 144A.
|_| Such Note is being transferred to an Institutional
"Accredited Investor" within the meaning of Subparagraph (a)(1),
(2), (3) or (7) of Rule 501 under the Securities Act.
|_| Such Note is being transferred in a transaction
meeting the requirements of Rule 144 under the Securities Act.
The Registrar and the Company are entitled to rely
upon this Certificate and are irrevocably authorized to produce
this Certificate or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
____________________________
[INSERT NAME OF TRANSFEROR]
By:________________________
Date:_____________________________
__________________________________
* Please check applicable box.
EXHIBIT B
=================================================================
AIRCRAFT SECOND MORTGAGE AND SECURITY AGREEMENT
Dated as of June 16, 1998
Between
TRANS WORLD AIRLINES, INC.,
as Mortgagor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Trustee,
as Mortgagee
=================================================================
Covering Boeing Model 767-231 ETOPS Aircraft
TABLE OF CONTENTS
Page
1. DEFINITIONS ........................................... 1
1.1 Definitions ...................................... 1
1.2 Rules of Construction ............................ 3
2. SECURITY INTEREST ..................................... 3
2.1 Granting of Security Interest .................... 3
2.2 Certain Releases of Lien ......................... 5
2.3 Liability of Mortgagor ........................... 7
2.4 No Segregation of Moneys; No Interest ............ 7
3. OPERATION, REPLACEMENT OF PARTS AND POSSESSION
OF AIRCRAFT ........................................... 7
3.1 Operation ........................................ 7
3.2 Transfer of Possession ........................... 8
3.3 Total Loss of Engine and not Airframe; Total
Loss of Airframe ................................. 8
3.4 Replacement of Parts ............................. 9
3.5 Installation of Video Equipment and Telephone
Systems owned by Third Parties on the Aircraft ... 9
3.6 Interchange and Pooling Agreements ............... 10
4. EVENTS OF DEFAULT; DISPOSITION OF COLLATERAL;
APPLICATION OF PROCEEDS AND LIMITATIONS ON AND
SUBORDINATION OF LIEN ................................. 10
4.1 Judicial Proceedings, etc., Following Event
of Default ....................................... 10
4.2 Delivery of Collateral, Power of Sale, etc. ...... 12
4.3 Right to Possession, etc. ........................ 12
4.4 Application of Proceeds .......................... 14
(i)
TABLE OF CONTENTS
(Continued)
Page
4.5 Matters Involving Manner of Sale ................. 15
4.6 Limitations on and Subordination of Lien ......... 16
5. REPRESENTATIONS AND WARRANTIES ........................ 17
5.1 Corporate Status ................................. 17
5.2 Governmental Approvals ........................... 17
5.3 Binding .......................................... 18
5.4 No Breach ........................................ 18
5.5 Filings .......................................... 18
5.6 Licenses ......................................... 18
5.7 No Suits ......................................... 18
5.8 Taxes ............................................ 18
5.9 No Event of Default or Total Loss ................ 19
5.10 Aircraft Certification ........................... 19
5.11 Investment Company Act ........................... 19
5.12 Condition of Aircraft ............................ 19
5.13 Title ............................................ 19
5.14 No Default ....................................... 19
5.15 Mortgage Liens ................................... 19
5.16 Engines .......................................... 19
5.17 FAA Aircraft Registry ............................ 19
5.18 Insurances ....................................... 20
6. COVENANTS ............................................. 20
6.1 This Agreement ................................... 20
(ii)
TABLE OF CONTENTS
(Continued)
Page
6.2 Certain Rights ................................... 20
6.3 Insurance ........................................ 20
6.4 Compliance with Laws ............................. 22
6.5 Subleasing or Leasing ............................ 22
6.6 Further Assurances ............................... 24
6.7 Maintenance ...................................... 24
6.8 Registration ..................................... 25
6.9 Insignia ......................................... 25
6.10 Inspection ....................................... 26
6.11 Alterations, Modifications and Additions ......... 26
6.12 Notice of Change of Mortgagor's Chief
Executive Office ................................. 27
7. CONDEMNATION .......................................... 27
7.1 Dedication to CRAF ............................... 27
7.2 Notice to Mortgagee .............................. 28
7.3 Requisition of Engine ............................ 28
7.4 Government Indemnification ....................... 28
7.5 No Geographic Limits ............................. 28
7.6 Notice of Default ................................ 28
7.7 Receipts of Payments ............................. 28
8. GENERAL INDEMNIFICATION ............................... 29
8.1 General Indemnification and Waiver of
Certain Claims ................................... 29
8.2 Tax Indemnification .............................. 32
8.3 Survival of Indemnities .......................... 36
(iii)
TABLE OF CONTENTS
(Continued)
Page
9. MISCELLANEOUS ......................................... 36
9.1 Performance by Mortgagee ......................... 36
9.2 Power of Attorney ................................ 37
9.3 Waiver, etc., by Mortgagor ....................... 37
9.4 Amendment, etc. .................................. 38
9.5 [Intentionally Omitted.] ......................... 38
9.6 Successors and Assigns ........................... 38
9.7 Severability ..................................... 38
9.8 Governing Law; Waiver of Jury Trial .............. 39
9.9 Notices; Waivers ................................. 39
9.10 No Adverse Interpretation of Other Agreements .... 39
9.11 Benefits of Agreement Restricted ................. 39
9.12 Counterpart Originals ............................ 39
9.13 Effect of Headings ............................... 39
9.14 Section 1110 of the Bankruptcy Code .............. 39
EXHIBIT A Form of Mortgage Supplement
EXHIBIT B Insurance
EXHIBIT C Pre-Approved List
(iv)
AIRCRAFT SECOND MORTGAGE AND SECURITY AGREEMENT
THIS AIRCRAFT SECOND MORTGAGE AND SECURITY AGREEMENT (this
"Agreement"), dated as of June 16, 1998, is entered into between
TRANS WORLD AIRLINES, INC., a Delaware corporation (together with
its successors and permitted assigns, "Mortgagor"), and FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, as Trustee under the Indenture hereinafter referred
to (together with its successors and assigns, "Mortgagee") for
the benefit of Mortgagee and the Holders (as defined in such
Indenture), in light of the following facts:
RECITALS
WHEREAS, Mortgagor and First Security Bank, National
Association (f/k/a First Security Bank of Utah, National
Association), not in its individual capacity, except as expressly
stated therein, but soley as Owner Trustee ("Owner Trustee")
under the Trust Agreement N607TW, dated as of March 28, 1995
between 767 Leasing HY, LLC ("Beneficiary") as assignee of ING
Lease Delaware, Inc. (f/k/a Internationale, Nederlanden Aviation
Lease Delaware, Inc.) and Owner Trustee, have entered into that
certain Aircraft Sale and Note Purchase Agreement, made and
entered into as of the 16th day of June, 1998 among Mortgagor,
Owner Trustee, Beneficiary and Lazard Freres & Co. LLC, (the
"Aircraft Sale Agreement"), pursuant to which Mortgagor agreed to
purchase, and Owner Trustee agreed to sell, the Aircraft (as
hereinafter defined);
WHEREAS, Mortgagor and Mortgagee are contemporaneously
herewith entering into that certain Indenture, dated as of even
date herewith (the "Indenture"), pursuant to which Mortgagor will
issue its 10 1/4% Mandatory Conversion Equity Notes due 1999 (the
"Securities") to a certain holder or holders (the "Holders"), as
payment of part of the purchase price of the Aircraft under the
Aircraft Sale Agreement; and
WHEREAS, it is a condition precedent to Mortgagee's
authentication of the Securities that Mortgagor grant to
Mortgagee a second priority security interest in the Aircraft in
order to secure, among other things, (a) Mortgagor's obligations
to the Holders and Mortgagee under the Indenture and (b)
Mortgagor's obligation to the Holders and Mortgagee hereunder.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS
1.1 Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to such
terms in Section 1 of the Definitions Appendix attached hereto as
Appendix I, which shall be a part of this Agreement as if fully
set forth in this place. In addition, the following terms shall
have the respective meanings set forth below:
2
"CRAF" means the Civil Reserve Air Fleet Program authorized
under 10 U.S.C. ss. 9511 et seq. or any substantially similar
program.
"Government Entity" means any (a) national, state or local
government, (b) board, commission, department, division,
instrumentality, court, agency or political subdivision thereof
and (c) association, organization or institution of which any
thereof is a member or in whose activities any thereof is a
participant.
"Law" means any (a) statute, decree, constitution,
regulation, order or any directive of any Government Entity, (b)
treaty, pact, compact or other agreement to which any Government
Entity is a signatory or party and (c) judicial or administrative
interpretation or application of any of the foregoing.
"Total Loss" means any of the following in relation to the
Aircraft, Airframe or any Engine and "Total Loss Date" means the
date set forth in parentheses after each Total Loss:
(i) Destruction, damage beyond repair or being
rendered permanently unfit for normal use for any
reason whatsoever (the date such event occurs or, if
not known, the date on which the Aircraft, Airframe or
Engine was last heard of).
(ii) Actual, constructive, compromised, arranged
or agreed total loss (the earlier of the date on which
the loss is agreed or compromised by the insurers or
thirty (30) days after the date of notice to
Mortgagor's brokers or insurers claiming such total
loss).
(iii) Requisition of title, confiscation,
forfeiture or any compulsory acquisition whatsoever,
except for an acquisition of the Aircraft, Airframe or
Engines by the Air Mobility Command pursuant to CRAF
(the date on which the same takes effect).
(iv) Sequestration, detention or seizure for more
than thirty (30) consecutive days (the earlier of the
date on which insurers make payment on the basis of a
total loss or the date of expiration of such period).
(v) Requisition for use for more than one hundred
eighty (180) consecutive days (the earlier of the date
on which the insurers make payment on the basis of a
total loss or the date of expiration of such period).
(vi) Loss or loss of use due to theft or
disappearance for a period greater than sixty (60)
consecutive days (the date of expiration of such
period).
(vii) Any other occurrence which deprives
Mortgagor of use or possession for a period of one
hundred eighty (180) consecutive days or longer (the
one hundred eightieth (180th) day of such period).
3
A Total Loss with respect to the Aircraft shall be deemed
to have occurred if a Total Loss has occurred with respect to the
Airframe constituting part of the Aircraft.
1.2 Rules of Construction. The rules of construction for
this Agreement are set forth in Section 2 of the Definitions
Appendix.
2. SECURITY INTEREST
2.1 Granting of Security Interest. Mortgagor does hereby
transfer, convey, mortgage, hypothecate, assign and grant to
Mortgagee a second priority purchase-money security interest in,
and second priority mortgage lien on (subject and subordinate
only to the first priority interests of the Notes Trustee under
the First Mortgage), all right, title, interest, claims and
demands of Mortgagor in and to the Properties, rights, interests
and privileges described in clauses (a) through (h) below,
whether now or hereafter acquired (which Properties, rights,
interests and privileges described in clauses (a) through (h)
below, including all such Properties, rights, interests and
privileges hereafter subjected to the Lien of this Agreement by
any Mortgage Supplement, are included in and defined as the
"Collateral"), to wit:
(a) the Airframe and Engines, each of which Engines is
of 750 or more rated takeoff horsepower or the equivalent of such
horsepower, and in the case of each such Engine, whether or not
such Engine shall be installed in or attached to the Airframe or
any other airframe, and the Parts, together with all accessories,
equipment, parts and appurtenances appertaining or attached to
the Airframe or an Engine, whether now owned or hereafter
acquired, and all substitutions, renewals and replacements of and
additions, alterations, modifications, improvements, accessions
and accumulations to the Airframe, any Engine or any Part;
(b) all proceeds from the sale or other disposition
of, all proceeds of insurance due to Mortgagor on, and all
proceeds of any condemnation or requisition of title or use due
to Mortgagor with respect to, any of the Properties described in
clause (a) above;
(c) all logs, books, records (including, without
limitation, all inspection, modification, maintenance and
overhaul records), data, manuals and other documents, in each
case, maintained in respect of the Airframe or any Engine,
including, without limitation, all such logs, books, records,
data, manuals and other documents maintained pursuant to
requirements of the FAA;
(d) the Aircraft Sale Agreement and the Bills of Sale
to the extent the same relate to continuing rights of Mortgagor
in respect of any warranty, indemnity or agreement, express or
implied, as to title, materials, workmanship, design or patent
infringement matters with respect to the Airframe or any Engine
(reserving to Mortgagor, however, all of Mortgagor's other rights
and interest in and to the Aircraft Sale Agreement) together with
all rights, powers, privileges, options and other benefits of
Mortgagor thereunder (subject to such reservation) with respect
to the Airframe or the Engines, including, without limitation,
the right to make all waivers and agreements, to give and receive
all notices and other instruments or communications, to take such
action upon the occurrence of a default thereunder, including the
commencement, conduct and consummation of legal, administrative
or other proceedings, as
4
shall be permitted thereby or by law, and to do any and all other
things which Mortgagor is or may be entitled to do thereunder
(subject to such reservation, and all warranties and any other
rights of Mortgagor against any manufacturer relating to the
Airframe, any Engine or any Part);
(e) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with
Mortgagee by or for the account of Mortgagor pursuant to any term
hereof or held or required to be held by Mortgagee hereunder;
(f) all other items of equipment and furnishings,
wherever located, appertaining to the Aircraft, including without
limitation, the auxiliary power unit bearing Manufacturer's
Serial No. P40261 delivered with the Aircraft on the Issue Date,
and all substitutions, renewals and replacements thereof and
additions, modifications and accessories thereto;
(g) all rents, issues, profits, revenues and other
income of the Property intended, subjected or required to be
subjected to the Lien of this Agreement hereby, by the other
Operative Documents or by any Mortgage Supplement; and
(h) all proceeds, howsoever arising, of any of the
foregoing;
TO HAVE AND TO HOLD the Collateral unto Mortgagee, for the
benefit of the Holders and Mortgagee and their respective
successors and assigns, as security for (subject to Section 4.6):
(i) the due and punctual indefeasible payment in
full of (A) all sums, together with interest, Special
Interest, or premium, if any, thereon, owing or
outstanding under the Securities or that may be or
become due and payable to Mortgagee, any of the
Holders, or their respective successors and assigns,
by Mortgagor under or in connection with the
Securities, the Indenture, this Agreement or the other
Operative Documents, (B) the reasonable costs and
expenses of collection and foreclosure with respect to
the indebtedness and obligations secured hereby,
whether now existing or hereafter arising, including
without limitation reasonable attorneys' fees and
other costs and expenses expended or incurred by
Mortgagee under or pursuant to this Agreement, the
Securities, the Indenture or any other Operative
Document or otherwise in connection with discovering,
locating, satisfying Liens and charges on, protecting
and taking possession of the Collateral or any part
thereof, the returning of the Collateral or any part
thereof to any place in the continental United States
designated by Mortgagee (including, without
limitation, costs of repairing, rehabilitating and
storing the Collateral or any part thereof), and the
enforcement of, or collection of amounts owing or
outstanding or due and payable under or in connection
with the Securities, the Indenture, and the other
agreements and instruments referred to in this clause
(i) and (C) interest (to the extent permitted by
applicable Law) on all costs and expenses described in
this clause (i), at a rate of interest per annum equal
to the highest rate that may, under any circumstance
(whether or not such circumstance has or could
actually occur), be applicable to
5
the Securities thereunder or under the Indenture,
computed on the basis of a 360-day year and the actual
number of days elapsed; and
(ii) the timely and faithful performance and
observance by Mortgagor of all agreements, promises
and covenants undertaken by it hereunder, in the
Indenture and the other instruments, agreements and
obligations referred to in clause (i) above (the
foregoing, together with all the sums, interest,
Special Interest, premium, expenses, costs and other
amounts referred to in clause (i) above, being
hereinafter referred to collectively as the
"Obligations"); provided, however, that, and these
presents are subject to the condition that, if
Mortgagor shall have paid or caused to be paid in
full, and Mortgagor shall have well and faithfully
performed and observed, all the Obligations at the
time and in the manner specified therefor, and any
other indebtedness, obligation or account whatsoever
(whether presently existing or subsequently arising)
secured hereby, or made provision therefor pursuant to
Article 8 of the Indenture then, upon the request of
Mortgagor, delivered to Mortgagee, Mortgagee shall, at
the cost and expense of Mortgagor, execute and deliver
to Mortgagor, such instruments of satisfaction and
discharge as may be appropriate (without, however,
being under any duty to cause such instruments to be
filed or recorded in the public records wherein this
Agreement shall have been filed and/or recorded), and
otherwise the same shall be and remain in full force
and effect.
2.2 Certain Releases of Lien. (a) At any time and from time
to time prior to or upon the release of the Lien of this
Agreement pursuant to this Section 2.2, upon the Total Loss of an
Engine in accordance with the express terms of this Agreement, or
the replacement of any Part of the Aircraft in accordance with
the express terms of this Agreement, Mortgagee shall, upon the
Request of and at the cost and expense of Mortgagor and provided,
that no Default or Event of Default shall have occurred and be
continuing, release such Engine or such Part, as the case may be,
from the Lien of this Agreement so long as the Replacement Engine
and Part complies with the terms and conditions of this Agreement
on Replacement Engines and Parts. In connection with the release
of the Lien on any Engine, Mortgagee shall execute and deliver
such instrument as aforesaid upon a Request from Mortgagor,
requesting such release and describing the Property so to be
released only upon receipt by or deposit with Mortgagee of the
following:
(i) An Officers' Certificate stating the
following:
(A) a description of the Engine to be
released, which shall be identified by
manufacturer's serial number;
(B) a description of the Replacement Engine
to be received as consideration for the Engine to
be released pursuant to the provisions of this
Agreement;
(C) that no Default or Event of Default has
occurred that has not been remedied or waived and
that Mortgagor will not be in default, by
6
the making and granting of the request for
release, in the performance of any of the terms
and covenants of any Operative Document; and
(D) that the release of the Engine so to be
released will not be inconsistent with any of the
provisions of this Agreement, the Indenture or
any other Operative Document.
(ii) The appropriate instruments transferring
title to the Replacement Engine to be received as
consideration for the Engine to be released to
Mortgagor, subjecting such Replacement Engine to the
Lien of this Agreement including, without limitation,
any Mortgage Supplement if so required by Mortgagee.
(iii) Upon the request of Mortgagee, an Opinion
of Counsel (and, as to matters relating to title and
perfection under the Federal Aviation Act, an opinion
of special FAA counsel) satisfactory to Mortgagee:
(A) stating that the certificates, opinions
and other instruments and/or Property that have
been or are therewith delivered to and deposited
with Mortgagee conform to the requirements of
this Agreement and that, upon the basis of such
application, the Property so sold or disposed of
may be released from the Lien of this Agreement
in accordance with the provisions of this
Agreement, and that all conditions precedent
herein provided for relating to such release have
been complied with; and
(B) stating that Mortgagor has good title to
the Replacement Engine to be received as
consideration for the Engine to be released, free
of any Liens or encumbrances whatsoever, except
the Lien hereof and Permitted Liens, that such
Replacement Engine has been validly subjected to
the Lien of this Agreement, that the instruments
subjecting such Replacement Engine to the Lien of
this Agreement have been duly filed for
recordation pursuant to the Federal Aviation Act
and that no further action or filing or recording
of any document is necessary or advisable in
order to establish and perfect the title of
Mortgagor to, and the Lien of this Agreement on,
such Replacement Engine.
(iv) Uniform Commercial Code financing statements
covering the security interests created by this
Agreement as are deemed necessary or desirable by
Mortgagee to protect the security interests of
Mortgagee in the Replacement Engine.
(v) to the extent assignable, an assignment to
Mortgagee as security under this Agreement of all
representations, warranties, agreements and
indemnities given to Mortgagor by the manufacturer or
vendor of such Replacement Engine.
7
(vi) an appraisal from a nationally recognized
firm of independent aircraft appraisers reasonably
acceptable to Mortgagee as to the fair market value of
the Replacement Engine (which shall not be less than
the fair market value of the Engine it replaces,
assuming such replaced Engine had been maintained in
the condition and repair required hereunder) and of
the Aircraft after giving effect to such replacement
(which shall not be less than the fair market value of
the Aircraft prior to such replacement, assuming the
Aircraft had been maintained in the condition required
hereunder).
(b) In the event of the substitution of a Replacement
Engine, all provisions of this Agreement relating to the Airframe
or Engine being replaced shall be applicable to such Replacement
Engine with the same force and effect as if such Replacement
Engine were the same engine, as the case may be, as the Engine
being replaced but for the Total Loss with respect to the Engine
being replaced.
2.3 Liability of Mortgagor. Mortgagor shall be personally
liable hereunder for any and all amounts from time to time due
and payable hereunder. Mortgagor hereby agrees that Mortgagee may
proceed directly against it in connection with its liability
hereunder without first proceeding to enforce its rights or
remedies against Mortgagor or in the Collateral. Mortgagor hereby
authorizes Mortgagee to exercise in any order any right or remedy
it might have, including, without limitation, any right of
judicial foreclosure or power of sale of the Collateral, with
respect to the Obligations. All rights, powers and remedies of
Mortgagee hereunder and under the other Operative Documents are
cumulative and not alternative and are in addition to all rights,
power and remedies given to Mortgagee by applicable Law.
2.4 No Segregation of Moneys; No Interest. Moneys received
by Mortgagee hereunder need not be segregated in any manner
except to the extent required by applicable Law or any Operative
Document, and may be deposited under such general conditions as
may be prescribed by applicable Law, and Mortgagee shall not be
liable for any interest thereon, provided that, to the extent
such information is or was available to Mortgagee, any payments
received or applied hereunder by Mortgagee shall be accounted for
by Mortgagee so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.
3. OPERATION, REPLACEMENT OF PARTS AND
POSSESSION OF AIRCRAFT
3.1 Operation. Mortgagor agrees that it will not use or
operate, or permit any permitted lessee or sublessee (if any) of
the Aircraft or any other Person to use or operate the Aircraft
in violation of any law or any rule, regulation or order
(including, without limitation, concerning alcoholic beverages or
prohibited substances) of any Government Entity having
jurisdiction (domestic or foreign) or in violation of any
airworthiness certificate, license or registration relating to
the Aircraft or any Engine issued by any such authority, except
to the extent the validity or application of any such law, rule,
regulation or order is being contested in good faith and by
appropriate proceedings and for the payment of which adequate
reserves have been provided and are being maintained on the books
of Mortgagor (but only so long as
8
Mortgagee has been given notice of such proceedings and such
proceedings do not, in Mortgagee's reasonable opinion, involve
any danger of the attachment, sale, forfeiture or loss of the
Aircraft, any Engine, or any Part thereof or otherwise materially
adversely affect the Lien of this Agreement or subject Mortgagee
or any Holder to any risk of civil or criminal penalty). In the
event that any such law, rule, regulation or order requires
alteration of the Aircraft, any Engine, or any Part thereof,
unless the validity thereof is being contested in good faith and
by appropriate proceedings and for the payment of which adequate
reserves have been provided and are being maintained on the books
of Mortgagor (but only so long as Mortgagee has been given notice
of such proceedings and such proceedings do not, in Mortgagee's
reasonable opinion, involve any danger of the attachment, sale,
forfeiture or loss of any item of the Aircraft, any Engine, or
any Part thereof or otherwise materially adversely affect the
Lien of this Agreement or subject Mortgagee or any Holder to any
risk of civil or criminal penalty), Mortgagor will conform
thereto or obtain conformance therewith at no expense to
Mortgagee and will maintain the Aircraft in proper operating
condition under such laws, rules, regulations and orders.
Mortgagor agrees that it will not permit the Aircraft or any
Engine to be operated, used or located (a) in any area excluded
from coverage by the insurance required by the terms of Section
6.3, except in the case of a requisition by the United States of
America where Mortgagor obtains indemnity from the United States
of America against substantially the same risks and for at least
the amounts of the insurance required by Section 6.3 covering
such area, or (b) outside the United States or Canada in any
recognized or, in the Mortgagor's reasonable judgment, threatened
area of hostilities unless, notwithstanding the provisions of
Section 6.3, covered by war risk and allied perils insurance, or
in either case unless the Aircraft is operated or used under
contract with the government of the United States or any agency
or instrumentality thereof (backed by the full faith and credit
of the United States Government) under which contract such
government assumes liability for substantially the same risks in
at least the same amounts as would be covered by such insurance.
3.2 Transfer of Possession. Except as expressly set forth
herein or in the Indenture, Mortgagor will not, without the prior
written consent of Mortgagee, lease, sublease or otherwise in any
manner deliver, transfer or relinquish possession of the Aircraft
or any Engine, except that Mortgagor may install an Engine on
another aircraft in Mortgagor's fleet to the extent consistent
with Section 6.2 below.
3.3 Total Loss of Engine and not Airframe; Total Loss of
Airframe.
(a) Upon a Total Loss of any Engine not installed on
the Aircraft or a Total Loss of an Engine installed on the
Airframe not involving a Total Loss of the Airframe, Mortgagor
will give Mortgagee prompt (but in any event, within five
Business Days after the Total Loss Date) written notice thereof.
Mortgagor will, as soon as reasonably possible and in any event
within 120 days of the Total Loss Date with respect to such Total
Loss, and on at least five days' written notice to Mortgagee,
replace such Engine by duly obtaining title to a Replacement
Engine free of all liens and encumbrances other than Permitted
Liens and such Replacement Engine will have a value and utility
at least equal to, and of the same model, service bulletin, and
modification status and in at least as good operating condition
as, the Engine which sustained such Total Loss. Such Replacement
Engine will be an Engine as defined herein.
9
(b) Mortgagor agrees at its own expense to take such
action as Mortgagee may reasonably request in order that any such
Replacement Engine becomes the Property of Mortgagor and is
subject to the Lien provided by this Agreement.
(c) Upon a Total Loss of the Airframe, Mortgagor will
give Mortgagee prompt (but in any event, within five Business
Days after the Total Loss Date) written notice thereof and will
comply with the provisions of Section 4.12 (d) of the Indenture.
3.4 Replacement of Parts. Mortgagor, at its own cost and
expense, will promptly replace or cause the replacement of all
Parts that may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever,
with Parts of at least equivalent model, operating condition and
modification status as the replaced Part if the replaced Part had
been maintained in accordance with the provisions hereof.
Mortgagor may substitute for any Part a Part that does not meet
the foregoing requirements if a complying Part could not be
procured or installed within the available ground time of the
Aircraft and as soon as practicable the noncomplying part is
removed and replaced by a complying Part. All Parts at any time
removed from the Aircraft or any Engine shall remain part of the
Aircraft or any Engine no matter where located, until such time
as such Parts shall be replaced by Parts which have been
incorporated in the Aircraft or any Engine and which meet the
requirements for replacement Parts specified above. Immediately
upon any replacement Part becoming incorporated or installed in
or attached to the Aircraft or any Engine as above provided,
without further act, (i) such replacement Part shall be deemed
part of the Aircraft or Engine, as applicable, for all purposes
hereof to the same extent as the Parts originally incorporated in
the Aircraft or Engine, as applicable, and (ii) the replaced Part
shall no longer be deemed a Part hereunder.
3.5 Installation of Video Equipment and Telephone Systems
owned by Third Parties on the Aircraft. Mortgagor may lease or
purchase subject to a security lien equipment for the Aircraft
(including video systems and telephone systems) from third
parties and install such equipment on the Aircraft. The
installation of such equipment on the Aircraft is considered a
modification to the Aircraft and Mortgagor must comply (or, with
respect to such equipment existing and already installed on the
Issue Date, have complied) with the requirements of Section 6.11
prior to the installation of such equipment on the Aircraft. Such
equipment will remain the Property of its owner, unless such
equipment has not been removed from the Aircraft prior to the
repossession of the Aircraft by Mortgagee or the owner or holder
of the security interest in such equipment shall not have
requested in writing that the same be removed in accordance with
this Section (at which time title will pass to Mortgagee). Prior
to repossession of the Aircraft by Mortgagee, Mortgagor or the
holder of the security interest may remove any such equipment
from the Aircraft, so long as Mortgagor restores and repairs any
of the alterations made to the Aircraft in connection with the
installation of such equipment on the Aircraft to the same
condition that the Aircraft was in prior to the installation of
such equipment on the Aircraft. In the event that the Aircraft is
repossessed by Mortgagee in any manner permitted by this
Agreement which does not allow the removal of the equipment prior
to such repossession, upon written notice to Mortgagee by any
such lessor or holder of a security interest within ten days of
such termination requesting removal of the equipment, Mortgagee
shall remove or cause to be
10
removed such equipment, restore and repair the Aircraft to the
condition that such Aircraft was in prior to the installation of
such equipment on the Aircraft and return such equipment to the
lessor or holder of the security interest, all of which will be
at the cost and expense of the lessor or security holder of such
security interest. As a condition precedent to removal and
return, the owner or security holder must provide Mortgagee with
the security requested by Mortgagee to cover the costs of such
removal, restoration and return and the associated downtime.
3.6 Interchange and Pooling Agreements. Mortgagor may
subject the Engines and Parts to normal interchange or pooling
agreements with responsible international scheduled commercial
air carriers customary in the airline industry and entered into
by Mortgagor in the ordinary course of its business with respect
to its entire Boeing 767-200 fleet so long as (i) in the case of
pooling of an Engine, such Engine is returned to Mortgagor within
one (1) month, (ii) no reregistration of the Engine occurs, (iii)
all other terms of this Agreement continue to be observed with
respect to the Engines or Parts, and (iv) Mortgagor continues to
be fully responsible to Mortgagee for the performance of all of
its obligations hereunder.
4. EVENTS OF DEFAULT; DISPOSITION OF
COLLATERAL; APPLICATION OF PROCEEDS
AND LIMITATIONS ON AND SUBORDINATION OF
LIEN
4.1 Judicial Proceedings, etc., Following Event of Default.
Subject to Section 4.6, if any Event of Default shall occur and
be continuing, then, and in any such event, Mortgagee may,
forthwith upon notice to Mortgagor (it being understood and
agreed that such provision of notice to Mortgagor shall not be
deemed to limit or otherwise restrict Mortgagee's rights and
remedies hereunder or under any other Operative Document or
agreement): (a) apply to a court of competent jurisdiction to
obtain specific performance or observance by Mortgagor of any
covenant, agreement or undertaking on the part of Mortgagor
hereunder that Mortgagor shall have failed to observe or perform
or to obtain aid in the execution of any power granted herein;
and/or (b) proceed to foreclose against the Collateral or any
part thereof pursuant to this Agreement, and according to the
applicable Law of the jurisdiction or jurisdictions in which such
Collateral or part thereof shall at the time be located, by doing
any one or more or all of the acts described in Sections 2.1 or
4.2 and/or the following acts, as Mortgagee, in its sole and
complete discretion (acting in good faith), may then elect to:
(i) exercise all the rights and remedies, in
foreclosure and otherwise, available to it as a
mortgagee and secured party under the provisions of
applicable Law, including, in any event, all of the
rights, powers and remedies under the Uniform
Commercial Code of the State of New York;
(ii) institute legal proceedings to obtain a
judgment conferring on Mortgagee the right to
immediate possession or requiring Mortgagor to deliver
immediate possession of all or part of the Collateral
to Mortgagee;
(iii) institute legal proceedings to foreclose
upon and against the security interest granted in and
by this Agreement, to recover judgment for all
11
Obligations then due and owing, and to collect the
same out of any of the Collateral or the proceeds of
any sale thereof;
(iv) institute legal proceedings for the sale,
under the judgment or decree of any court of competent
jurisdiction, of any or all of the Collateral;
(v) without regard to the adequacy of the
security for the Indenture or any other Operative
Document or agreement between Mortgagee and Mortgagor,
Mortgagor and its Affiliates, by virtue of this
Agreement or otherwise, or any other collateral or
other security or to the solvency of Mortgagor,
institute legal proceedings for the appointment of a
receiver or receivers pending foreclosure hereunder or
for the sale of any of the Collateral under the order
of a court of competent jurisdiction or under other
legal process; or
(vi) personally, or by agents or attorneys, enter
upon any premises where the Collateral or any part
thereof may then be located, and take possession of
and remove all or any part thereof or render it
unusable; and without being responsible for loss or
damage to such Collateral, hold, store and keep idle,
or lease, operate or otherwise use or permit the use
of, the same or any part thereof, for such time and
upon such terms as Mortgagee may in its sole and
complete discretion deem to be in its own best
interests, and demand, collect and retain all hire,
earnings and other sums due and to become due in
respect of the same from any party whomsoever,
accounting for net earnings, if any, arising from such
use and charging against all receipts from the use of
the same or from the sale thereof, by court
proceedings or pursuant to Section 4.2, all other
costs, expenses, charges, damages and other losses
resulting from such use in good faith.
All expenses of obtaining any such judgment, bringing any such
legal proceeding or of pursuing, searching for and taking such
Property shall, until paid, be secured by the Lien of this
Agreement.
4.2 Delivery of Collateral, Power of Sale, etc. If
Mortgagee should elect to foreclose upon and against the security
interest created in and by this Agreement, Mortgagor shall, upon
demand of Mortgagee, deliver to Mortgagee all or any part of the
Collateral at such time or times and to such airport within the
continental United States of America as Mortgagee may specify;
and Mortgagee is hereby authorized and empowered, in accordance
with applicable Law and without being responsible for loss or
damage to such Collateral incurred other than solely by reason of
Mortgagee's willful misconduct, to enter upon any premises where
the Collateral or any part thereof may be located and take
possession of and remove the same. Mortgagee may thereafter sell
and dispose of, or cause to be sold and disposed of, all or any
part of the Collateral at one or more public or private sales, at
such places and times and on such terms and conditions as
Mortgagee may deem fit in good faith, with or without any
previous demand to Mortgagor or any other person, or
advertisement of any such sale or other disposal upon notice to
Mortgagor (it being understood and agreed that such provision of
notice to Mortgagor shall not be deemed to limit or otherwise
restrict Mortgagee's rights and remedies hereunder or under any
other
12
Operative Document or agreement); and for the aforesaid purpose,
any other notice of sale, any advertisement and other notice or
demand, any right of equity of redemption and any obligation of a
prospective purchaser to inquire as to the power and authority of
Mortgagee to sell or the application by Mortgagee of the proceeds
of sale or otherwise that would otherwise be required by, or
available to Mortgagor under, applicable Law are hereby expressly
waived by Mortgagor to the fullest extent permitted by such Law.
In the event that any mandatory requirement of applicable Law
shall obligate Mortgagee to give different, additional or prior
notice to Mortgagor of any of the foregoing acts, Mortgagor
hereby agrees that, to the extent permitted by applicable Law, a
written notice sent to it by mail or by telecopy, so as
reasonably to be expected to be delivered to Mortgagor at least
ten (10) Business Days before the date of any such act shall be
deemed to be reasonable notice of such act and, specifically,
reasonable notification of the time after which any private sale
or other disposition intended to be made hereunder is to be made.
4.3 Right to Possession, etc.
(a) To the fullest extent Mortgagor may lawfully
agree, the right of Mortgagee to take possession of and sell any
of the Collateral in compliance with the provisions of this
Section 4 shall not be affected by the provisions of any
applicable reorganization or other similar law or any
jurisdiction; and Mortgagor shall not take advantage of any such
law or agree to allow any agent, assignee or other party to take
advantage of such law in its place, to which end Mortgagor, for
itself and all who may claim through it, as far as it or they now
or hereafter lawfully may do so, hereby waives, to the fullest
extent permitted under applicable Law, any rights or defenses
arising under any such law, and all rights to have the Collateral
marshaled upon any foreclosure hereof, and hereby agrees that any
court having jurisdiction to foreclose upon and against the
security interest created in this Agreement may order the sale of
the Collateral subject to such jurisdiction as an entirety or
severally.
(b) Mortgagee shall not have any duty or obligation to
use, operate, store, lease, control, manage, sell, dispose of or
otherwise deal with the Aircraft or any other part of the
Collateral, or otherwise to take or refrain from taking any
action under, or in connection with, this Agreement. If an Event
of Default shall occur and be continuing and Mortgagee shall have
obtained possession of or title to the Aircraft or any Engines,
Mortgagee shall not be obligated to use or operate the Aircraft
or Engines or cause the Aircraft or Engines to be used or
operated directly or indirectly by itself or through agents or
other representatives or to lease, license or otherwise permit or
provide for the use or operation of the Aircraft or Engines by
any other Person, provided, however, that if Mortgagee in its
sole discretion elects to so use or operate the Aircraft or
Engines, Mortgagee may obtain insurance in kinds, at rates and in
amounts satisfactory to it in its reasonable opinion to protect
the Collateral and Mortgagee and the Holders against any and all
liability for loss or damage to the Aircraft or Engines and for
public liability and Property damage resulting from the use or
operation of the Aircraft or Engines by application of any funds
available in the Collateral to pay for all such insurance or, in
lieu of such insurance, Mortgagee is furnished with
indemnification from any other Person upon terms and in amounts
satisfactory to Mortgagee in its sole discretion to protect the
Collateral and Mortgagee, both as Mortgagee and individually, and
the Holders, against any and all such liabilities. Upon every
taking of possession of any Collateral under this Section 4,
Mortgagee
13
may (but shall not be obligated to), from time to time, at the
expense of the Collateral, make all such expenditures for
maintenance, storage, insurance, leasing, control, management,
disposition, repairs, replacements, alterations, additions and
improvements to and of the Collateral, as it may deem proper. In
each such case, Mortgagee shall have the right to maintain,
store, insure, lease, control, modify, alter, sell, transfer,
convey or otherwise dispose of or manage the Collateral and to
exercise all rights and powers of Mortgagor relating to the
Collateral in connection therewith, as Mortgagee shall deem
appropriate, including the right to enter into any and all such
agreements with respect to the maintenance, insurance, storage,
leasing, control, management, disposition, modification or
alteration of the Collateral or any part thereof as Mortgagee may
determine, all as may be reasonably necessary or desirable for
the general upkeep of the Collateral or to prepare any Collateral
for sale or other disposition hereunder; and Mortgagee shall be
entitled to collect and receive directly all tolls, rents,
revenues, issues, income, products and profits of the Collateral
and every part thereof, without prejudice, however, to the right
of Mortgagee under any provision of this Agreement to collect and
receive all cash held by, or required to be deposited with,
Mortgagee hereunder.
(c) Mortgagor does hereby irrevocably constitute and
appoint Mortgagee the true and lawful attorney of Mortgagor
(which appointment is coupled with an interest) with full power
(in the name of Mortgagor or otherwise) to ask, require, demand
and receive any and all moneys and claims for moneys (in each
case including insurance and requisition proceeds) due and to
become due under or arising out of or which now or hereafter
constitute 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 proceeding which
Mortgagee may deem to be necessary or advisable in the premises;
provided, Mortgagee shall not exercise any such rights except
upon the occurrence and during the continuance of an Event of
Default.
4.4 Application of Proceeds. Subject to Section 4.6:
(a) All payments or proceeds received by Mortgagee
under or pursuant to this Agreement the application of which is
not otherwise provided for herein shall be applied or in the
absolute discretion of Mortgagee (exercised in good faith)
retained for application in the manner set forth in Section 6.10
of the Indenture.
(b) All payments and proceeds received and amounts
realized by Mortgagee after an Event of Default has occurred and
is continuing which funds would, but for the provisions of this
paragraph (b), be distributed to Mortgagor, shall be held by
Mortgagee as collateral security (and part of the Collateral) for
the Obligations, may be applied by the Mortgagee in the manner
set forth in Section 6.10 of the Indenture, and at such time as
no Event of Default shall be continuing, any such funds remaining
shall be distributed to Mortgagor to the extent so distributable
hereunder or under the Indenture.
(c) All payments received by Mortgagee with respect to
a Total Loss of any Aircraft shall be held as part of the
Collateral until Mortgagor has complied with Section 4.12(c) of
the Indenture. On the Payment Date with respect to the Offer to
Purchase required under such Section, Mortgagee shall, upon
Request, release such payments with respect to such Total Loss
14
to Mortgagor for payment to the Holders of all or any part of the
purchase price with respect to such Offer to Purchase.
(d) All payments received by Mortgagee with respect to
a Total Loss of any Engine not installed on the Aircraft or a
Total Loss of an Engine installed on the Airframe not involving a
Total Loss of the Airframe, shall be held as part of the
Collateral until Mortgagor shall comply with Sections 2.2 and 3.3
with respect to such Engine and shall promptly thereafter be
turned over to Mortgagor.
(e) All payments received by Mortgagee with respect to
loss or damage to the Aircraft not involving a Total Loss shall
be held as part of the Collateral and paid over to Mortgagor upon
Request therefor and upon receipt by Mortgagee of an Officers'
Certificate and such other documents or instruments as Mortgagee
may reasonably request to evidence compliance by Mortgagor with
its repair or replacement obligations hereunder.
(f) All amounts from time to time distributable under
this Section 4.4 by Mortgagee to Mortgagor shall be paid by
Mortgagee to Mortgagor at its address set forth in Section 11.2
of the Indenture and, to the extent so timely received, in funds
of the same type as received.
If the payments or proceeds received by Mortgagee under this
Agreement or any other Operative Document shall be insufficient
to indefeasibly pay in full the Obligations then due and payable
to Mortgagee and as set forth above in this Section 4.4,
Mortgagor shall forthwith pay any balance of such amounts
remaining unpaid to Mortgagee or as Mortgagee directs, and any
deficiencies remaining thereafter may be entered as a judgment
against Mortgagor in any court of competent jurisdiction.
4.5 Matters Involving Manner of Sale.
(a) At any sale pursuant to this Section 4, whether by
virtue of judicial proceedings contemplated in Section 4.1 or
under the power of sale granted in Section 4.2, it shall not be
necessary for Mortgagee or a public officer under order of a
court to have present physical or constructive possession of the
Collateral to be sold. The recitals contained in any conveyances
and receipts made and given by Mortgagee in good faith or such
public officer to any purchaser at any sale made pursuant to this
Agreement shall, to the extent permitted by applicable Law,
conclusively establish the truth and accuracy of the matters
therein stated (including, without limiting the generality of the
foregoing, the amounts due and payable under the Indenture and
any other indebtedness secured hereby, the accrual and nonpayment
thereof and advertisement and conduct of such sale in the manner
provided herein and by applicable Law); and all prerequisites to
such sale shall be presumed to have been satisfied and performed.
(b) At any sale or sales made pursuant to this Section
4, Mortgagee, any Holder or their respective agents may bid for
or purchase, free from any right or equity of redemption in favor
of Mortgagor and any Person claiming by, through or under
Mortgagor (all such rights being in this Section 4 waived and
released), any part of or all of the Collateral offered for sale,
and may make payment on account thereof by using any claim for
moneys then
15
due and payable to Mortgagee by Mortgagor as a credit against the
purchase price; and Mortgagee, upon compliance with the terms of
sale, may hold, retain and dispose of such Collateral without
further accountability therefor to Mortgagor or any third party,
except as expressly required by applicable Law. In any such sale
Mortgagee shall not be obligated to make any representations or
warranties with respect to the Collateral or any part thereof,
and Mortgagee shall not be chargeable with any of the obligations
or liabilities of Mortgagor with respect thereto. Mortgagor
hereby agrees (i) that it will indemnify and hold Mortgagee
harmless from and against any and all claims with respect to the
Collateral asserted before the taking of actual possession or
control thereof by Mortgagee or its agents pursuant to this
Section 4, or arising out of any act of, or omission to act on
the part of, any party other than Mortgagee or any of its agents
prior to such taking of actual possession or control by
Mortgagee, or arising out of any act of, or omission to act on
the part of, Mortgagor or any Person claiming by, through or
under Mortgagor or any of its Affiliates or agents before or
after the commencement of such actual possession or control by
Mortgagee or any of its agents; and (ii) that Mortgagee shall
have no liability or obligation arising out of any such claim;
except, however, in each of clause (i) and (ii) with respect to
claims arising from the willful misconduct of Mortgagee.
(c) Except as provided in Section 4.6, nothing herein
contained shall be deemed to impair in any manner the absolute
right of Mortgagee to sell and convey title to the Collateral to
the purchaser(s) at such public or private sale(s) or to grant
options with respect to or otherwise to realize upon all or such
portion of the Collateral, at such time, and in such order as it
may elect in its sole and complete discretion in good faith, or
to enforce any one or more remedies relative hereto either
successively or concurrently; and Mortgagor hereby agrees that
the security interest, options and other rights hereby given to
Mortgagee shall remain unimpaired and unprejudiced until all the
Collateral shall have been sold or this Agreement shall otherwise
have ceased to be of any force or effect according to its terms,
and that the enforcement of any right or remedy shall not operate
to bar or estop Mortgagee from exercising any other right or
remedy available hereunder or under any other Operative Document
or agreement between Mortgagee and any of its Affiliates, on the
one hand, and Mortgagor or any Person claiming by, through or
under Mortgagor and its Affiliates on the other hand, or
otherwise, available at law, in equity or otherwise.
(d) Upon the completion of any sale under this Section
4, Mortgagor shall deliver, in accordance with the instructions
of Mortgagee (including flying the Aircraft or any Engine or
causing the same to be flown to such airports in the continental
United States as Mortgagee may specify) such Collateral so sold.
Mortgagee may execute and deliver to the accepted purchaser or
purchasers a good and sufficient instrument or instruments of
conveyance, sale and transfer of all of the Property sold; and
Mortgagee is hereby irrevocably appointed the true and lawful
attorney of Mortgagor, with full power of substitution, in its
name and stead, to make all necessary conveyances of the Property
thus sold. Nevertheless, if so requested by Mortgagee or by any
purchaser, Mortgagor shall confirm any such sale or transfer by
executing and delivering to Mortgagee or to such purchaser all
proper instruments of conveyance and transfer and releases as may
be designated in any such request.
16
4.6 Limitations on and Subordination of Lien.
Notwithstanding anything herein or in the Indenture to the
contrary, Mortgagee and each of the Holders, by their acceptance
of the Securities, agree that the maximum aggregate amount of
Obligations that are secured by this Agreement is $10,250,000,
and they further agree, for the benefit of the Notes Trustee, the
holders of the 10 1/4% Secured Notes and Mortgagor that so long
as the First Mortgage shall be in effect:
(a) The Lien of this Agreement shall be subject and
subordinate to the Lien of the First Mortgage, and in furtherance
thereof, Mortgagee and the Holders shall not take any action
against the Collateral, or any part thereof, including without
limitation, foreclosure, sale or other transfer pursuant to the
exercise of remedies contained herein relating to such
Collateral, without the prior written consent of the holders of
at least 66 2/3% in aggregate principal amount of the 10 1/4%
Secured Notes then outstanding, unless and until all obligations
under the 10 1/4% Secured Notes and the Notes Indenture have been
fully paid or provided for.
(b) Mortgagee and the Holders shall be obligated to
hold in trust for the benefit of the Notes Trustee and the
holders of the 10 1/4% Secured Notes and shall promptly pay over
to or as instructed by the Notes Trustee for its benefit and the
benefit of the holders of the 10 1/4% Secured Notes (i) any
proceeds of or amounts received with respect to the Collateral
(including insurance proceeds with respect to loss of or damage
to any Collateral) which, under the terms of the First Mortgage
or the Notes Indenture are payable to or required to be turned
over to the Notes Trustee and (ii) any proceeds realized on
foreclosure, sale or other transfer of the Collateral, in each
case, until the 10 1/4% Secured Notes shall have been fully paid
or provided for.
(c) Mortgagee and the Holders, to the full extent that
they may lawfully so agree, shall not challenge, hinder or delay
any foreclosure, sale or other transfer of the Collateral
pursuant to the exercise of remedies in accordance with the First
Mortgage and in accordance with the requirements of applicable
law, and Mortgagee and the Holders shall have, if any such
transaction is challenged by it or any of them, the burden of
showing that such transaction was not commercially reasonable and
they acknowledge that the fact that a better price could have
been obtained by a sale at a different time or in a different
method from that selected in the exercise of remedies under the
First Mortgage is not of itself sufficient to establish that the
sale or sales were not made in a commercially reasonable manner.
For purposes of this Section 4.6, the term
"Collateral" shall have the definition specified for such term in
the First Mortgage.
5. REPRESENTATIONS AND WARRANTIES
Mortgagor makes the following representations and
warranties which shall be true and correct in all material
respects as of the Issue Date and such representations and
warranties shall survive the execution and delivery of this
Agreement and the issuance of the Securities:
5.1 Corporate Status. Mortgagor is a corporation duly
incorporated, validly existing and in good standing under the
Laws of the State of Delaware, is an "air carrier" within the
17
meaning of the Federal Aviation Act operating under a certificate
of public convenience and necessity issued pursuant to Section
41102 thereof, holds an "air carrier operating certificate"
issued pursuant to chapter 447 of the Act and of the type
referred to in 11 U.S.C. ss. 1110, is a "citizen of the United
States" as defined in Section 40102(a)(15) of the Act, and has
the corporate power and authority to own or hold under lease its
Properties and to enter into and perform its obligations under
the Operative Documents. It is duly qualified to do business as a
foreign corporation in the state of Missouri and in each other
state of the United States in which failure to so qualify would
have a material adverse effect on its financial condition or on
its ability to perform its Obligations. It holds all material
licenses, certificates, permits and franchises from the
appropriate United States or other governmental agencies
necessary to authorize it to engage in air transport and to
conduct scheduled passenger service as presently conducted. Its
chief executive office (as such term is used in sections 9-103
and 9-401 of the Uniform Commercial Code as in effect in New York
and Missouri) is located at One City Centre, 000 Xxxxx Xxxxx
Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000. Its correct U.S. tax
identification number is 00-0000000.
5.2 Governmental Approvals. No authorization, approval,
consent, license or order of, or registration with, or the giving
of notice to the FAA or any other Government Entity is required
for the valid authorization, execution, delivery and performance
by Mortgagor of this Agreement, the Securities, the Indenture or
any other Operative Document except as will have been duly
effected as of the date of purchase of the Aircraft.
5.3 Binding. The execution, delivery and performance by
Mortgagor of the Securities and the other Operative Documents and
the consummation or performance by Mortgagor of the transactions
contemplated thereby have been duly authorized by all necessary
corporate action and do not require any stockholder approval or
the approval or consent of or notice to any trustee or holder of
any indebtedness or obligations of Mortgagor. This Agreement, the
Securities, the Indenture and the other Operative Documents have
been duly executed and delivered by Mortgagor and represent the
valid, enforceable and binding obligations of Mortgagor except as
enforceability may be limited by bankruptcy, insolvency,
reorganization or other Laws of general application affecting the
enforcement of creditors' rights.
5.4 No Breach. The execution and delivery of this
Agreement, the Securities, the Indenture and the other Operative
Documents, the consummation by Mortgagor of the transactions
contemplated herein and therein and compliance by Mortgagor with
the terms and provisions hereof and thereof do not and will not
contravene any Law applicable to Mortgagor, or result in any
breach of or constitute any default under or result in the
creation of any Lien (except the Liens in favor of the Trustee
created hereby or thereby) upon any Property of Mortgagor,
pursuant to any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement,
corporate charter, by-law or other agreement or instrument to
which Mortgagor is a party or by which Mortgagor or its
Properties or assets may be bound or affected.
5.5 Filings. Except for filing this Agreement and the
Mortgage Supplements with the FAA and filing Uniform Commercial
Code financing statements in the offices of the Secretary of
18
State of Missouri and the offices of the Clerks of St. Louis City
and Platte Counties, Missouri (all of which filings have been
made), no filing or recording of any instrument or document is
necessary under the Laws of the U.S. in order for this Agreement
to create a valid and second priority perfected security interest
of record relating to the Aircraft and the other Collateral.
5.6 Licenses. Mortgagor holds all licenses, certificates
and permits from applicable Government Entities in the U.S. for
the conduct of its business as a certificated air carrier and
performance of its obligations under this Agreement, the
Securities, the Indenture and the other Operative Documents.
5.7 No Suits. There are no suits, arbitrations,
investigations or other proceedings pending or threatened against
Mortgagor before any court or administrative agency against or
affecting Mortgagor with respect to this Agreement, the
Collateral, the Securities, the Indenture or the other Operative
Documents or the transactions contemplated thereby.
5.8 Taxes. Mortgagor has filed or caused to be filed all
material tax returns which are required to be filed by it and has
paid or caused to be paid all Taxes which have been shown to be
due and payable by such returns or (except to the extent being
contested in good faith and for the payment of which adequate
reserves have been provided) tax assessments received by
Mortgagor to the extent that such Taxes have become due and
payable.
5.9 No Event of Default or Total Loss. There has not
occurred any event which constitutes a Default, an Event of
Default, a Total Loss or an event which, but for the passage of
time or the giving of notice, or both, would constitute a Total
Loss, and no such Default, Event of Default, Total Loss or event
will result from Mortgagor's purchasing and mortgaging the
Collateral as contemplated hereby.
5.10 Aircraft Certification. The Aircraft has been duly
certified by the FAA as to type and airworthiness, has a
currently valid Standard Certificate of Airworthiness issued by
the FAA, has been insured by Mortgagor in accordance with the
terms of this Agreement and is in the condition and state of
repair required under the terms of this Agreement.
5.11 Investment Company Act. Neither Mortgagor nor any
subsidiary thereof is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
5.12 Condition of Aircraft. The Aircraft is fully equipped
to operate in United States commercial service and complies with
all material governmental requirements governing such service.
5.13 Title. Mortgagor has good and marketable title to the
Aircraft, free and clear of all Liens other than Permitted Liens.
5.14 No Default. Mortgagor is not in default in the
performance of any term or condition of the Aircraft Sale
Agreement.
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5.15 Mortgage Liens. Mortgagor has and will have at all
times full power and authority to xxxxx x Xxxx on and security
interest in the Collateral in the manner set forth in this
Agreement, and this Agreement constitutes a valid second priority
mortgage Lien on and security interest in the Collateral, duly
securing the Obligations.
5.16 Engines. Each Engine is of 750 or more rated takeoff
horsepower.
5.17 FAA Aircraft Registry. As of the Issue Date, the
Aircraft is duly registered in the name of Mortgagor, the
Aircraft is not registered under the laws of any country other
than the United States, this Agreement and the Mortgage
Supplement covering the Aircraft being purchased by Mortgagor on
the Issue Date pursuant to the Aircraft Sale Agreement are in due
form for recording with the FAA Aircraft Registry and this
Agreement and the Mortgage Supplement has been duly filed for
recording with the FAA Aircraft Registry in favor of Mortgagee in
accordance with applicable law.
5.18 Insurances. As of the Issue Date, all insurance
policies required pursuant to this Agreement are in full force
and effect.
6. COVENANTS.
6.1 This Agreement. So long as this Agreement remains in
effect Mortgagor shall duly observe and perform its obligations
under the Securities and the Operative Documents to which it is a
party and pay to Mortgagee all amounts due and owing hereunder
and under the Securities and the other Operative Documents. All
such covenants are specifically incorporated herein and made a
part hereof.
6.2 Certain Rights. Mortgagor and Mortgagee agree each for
itself and for the benefit of any lessor, seller or secured party
of any engines leased, operated or purchased by Mortgagor that
neither Mortgagee nor its successors and assigns will acquire or
claim, as against such lessor, seller or secured party, any
right, title or interest in any such engine as the result of such
engine being installed on the Airframe at any time while such
engine is subject to such lease, conditional sale or other
security agreement and owned by such lessor or seller or subject
to a security interest in favor of such secured party; provided,
that such agreement of Mortgagor and Mortgagee shall not be for
the benefit of any lessor, seller or secured party of any such
engines unless such lessor, seller or secured party has agreed to
substantially the same extent as provided above (which agreement
may be contained in such lease, conditional sale or other
security agreement) that neither it nor its successors or assigns
will acquire, as against Mortgagor or Mortgagee, any right, title
or interest in any Engine as a result of such Engine being
installed on any airframe owned by, leased to or held under any
security agreement by such lessor, seller or secured party.
6.3 Insurance.
(a) Categories of Insurance. From the date of purchase
of the Aircraft by Mortgagor through the date which is two (2)
years after the Stated Maturity of the Securities, Mortgagor
will, at its own expense, effect and maintain in full force and
effect the insurance
20
described in this Section 6.3 and in Exhibit B through such
brokers and with such insurers which are internationally
recognized and have a good reputation.
(b) Insurance for Indemnities. The insurance referred
to in Section 6.3(a) will in each case include and insure (to the
extent of the risks covered by the policies) the indemnity
provisions of Section 8.1 and Mortgagor will maintain such
insurance of the indemnities for a minimum of two (2) years
following the Stated Maturity of the Securities.
(c) Renewal. Mortgagor will use its best reasonable
efforts to try and provide to Mortgagee at least five (5)
Business Days prior to the date of termination or expiration of
any insurance, telex or fax confirmation from Mortgagor's
insurance brokers that renewed certificates of insurance
evidencing the renewal or replacement will be issued on the
termination date of the prior certificate. But in any event, not
less than one (1) Business Day before the expiration or
termination date of any insurance required hereunder, Mortgagor
will provide Mortgagee with telex or fax confirmation from
Mortgagor's insurance brokers that renewed certificates of
insurance evidencing the renewal or replacement of such insurance
and complying with this Section 6.3 and Exhibit B will be issued
on the termination date of the prior certificate. Within seven
(7) days after such renewal, Mortgagor will furnish its brokers'
certificates of insurance to Mortgagee.
(d) Assignment of Rights by Mortgagee. If Mortgagee
assigns all or any of its rights under this Agreement as
permitted by this Agreement or the Indenture or otherwise
disposes of any interest in the Aircraft to any other Person as
permitted by this Agreement or the Indenture, Mortgagor will,
upon request, procure that such Person hereunder be added as loss
payee and/or additional assured in the policies effected
hereunder and enjoy the same rights and insurance enjoyed by
Mortgagee under such policies. Mortgagee will nevertheless
continue to be covered by such policies.
(e) [Intentionally omitted.]
(f) Other Insurance. Mortgagee may from time to time
by notice to Mortgagor require Mortgagor at Mortgagor's expense
to effect such other insurance or such variations to the terms of
the existing insurance as may then be customary in the airline
industry for aircraft of the same type as the Aircraft and at the
time commonly available in the insurance market.
(g) Information. Mortgagor will provide Mortgagee with
any information reasonably requested by Mortgagee from time to
time concerning the insurance maintained with respect to the
Aircraft or in connection with any claim being made or proposed
to be made thereunder.
(h) Currency. All proceeds of insurance pursuant to
this Agreement will be payable in Dollars except as may be
otherwise agreed by Mortgagee.
(i) Grounding of Aircraft. If at any time any of the
insurance required pursuant to this Agreement will cease to be in
full force and effect, Mortgagor will forthwith
21
ground the Aircraft and keep the Aircraft grounded until such
time as such insurance is in full force and effect again. Nothing
contained in this paragraph (i) shall be deemed to release
Mortgagor from its obligation to maintain insurance as required
herein.
(j) Failure to Insure. If at any time Mortgagor fails
to maintain insurance in compliance with this Section 6.3,
Mortgagee will be entitled but not bound to do any of the
following (without prejudice to any other rights which it may
have under this Agreement by reason of such failure):
(i) To effect or maintain insurance satisfactory
to Mortgagee or otherwise remedy such failure in such
manner as Mortgagee considers appropriate (and
Mortgagor will upon demand reimburse Mortgagee in full
for any amount so expended in that connection).
(ii) At any time while such failure is
continuing, to require the Aircraft to remain at any
airport or (as the case may be), proceed to and remain
at any airport designated by Mortgagee, until such
failure is remedied to Mortgagee's satisfaction.
(k) Reinsurance. If in the future any reinsurance
placed by Mortgagor or a permitted lessee or sublessee (if any)
of Mortgagor is maintained on the Aircraft, then such
reinsurance will be maintained with reinsurers and brokers
approved by Mortgagee. Such reinsurance will contain each of the
following terms and will in all other respects (including amount)
be satisfactory to Mortgagee:
(i) The same terms as the original insurance.
(ii) A cut-through and assignment clause
satisfactory to Mortgagee.
(iii) Payment will be made notwithstanding (A)
any bankruptcy, insolvency, liquidation or dissolution
of any of the original insurers and/or (B) that the
original insurers have made no payment under the
original insurance policies.
6.4 Compliance with Laws. Mortgagor shall exercise all due
diligence in order to comply with the requirements of all
applicable laws, rules, regulations and orders of any
governmental authority, noncompliance with which would have a
material adverse effect on Mortgagor.
6.5 Subleasing or Leasing.
(a) No Sublease or Lease without Consent. Except as
permitted under the Indenture or as set forth below in this
Section 6.5, MORTGAGOR WILL NOT SUBLEASE, LEASE OR PART WITH
POSSESSION OF THE AIRCRAFT OR ANY ENGINE (EXCEPT FOR MAINTENANCE
AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF THE
REQUIRED HOLDERS (THE GRANT OR REFUSAL OF WHICH WILL
22
BE IN THE DISCRETION OF SUCH HOLDERS) AND IN ACCORDANCE WITH SUCH
REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING
BETWEEN THE REQUIRED HOLDERS AND MORTGAGOR. The wet leasing of
the Aircraft in the ordinary course of Mortgagor's business (in
which Mortgagor and its crews retain operational control of the
Aircraft) will not be considered a sublease of the Aircraft and
shall be permitted hereunder so long as no Default or Event of
Default then exists.
(b) Pre-Approved Subleasing or Leasing. Attached
hereto as Exhibit C is a list (the "Pre-Approved List") of
airlines to whom the Holders hereby agree Mortgagor may, subject
to paragraph (c) below, sublease or lease the Aircraft, without
requiring the consent of the Holders. Mortgagor shall have the
right to provide Mortgagee and the Holders with a new list (the
"New Pre-Approved List") from time to time which the Required
Holders shall approve, disapprove or disapprove in part and
approve in part within fifteen (15) days of receipt, provided
that any such approval will not be unreasonably withheld. In the
event that the Required Holders fail to respond within such
fifteen (15) day period, Mortgagor will once again deliver the
New Pre-Approved List to Mortgagee and the Holders and if the
Required Holders then fail to respond within five (5) Business
Days of receipt of the New Pre-Approved List (the second time it
is sent), the Required Holders shall be deemed not to have
consented to the New Pre-Approved List. The New Pre-Approved
List, as approved by the Required Holders, shall constitute the
Pre-Approved List from the date of such approval. Notwithstanding
the foregoing, Mortgagor shall not lease or sublease (including
renewals thereof) the Aircraft to any Person otherwise permitted
hereunder if at the time such lease or sublease would be entered
into or renewed such Person is subject to any bankruptcy,
insolvency, liquidation reorganization, dissolution or similar
proceeding, is seeking any reorganization or any readjustment of
its debts, has substantially all of its Property in the
possession of any liquidator, trustee, receiver or similar
Person, or is not generally paying its debts as and when they are
due.
(c) Any Approved Sublease or Lease. Any sublease or
lease (hereinafter in this paragraph (c), a "Sublease") of the
Aircraft or any Engine will be fully subject to fulfillment of
the following conditions:
(i) The Mortgagor shall provide at least ten (10)
Business Days' prior notice to Mortgagee of any
proposed Sublease, setting forth the identity of the
sublessee, the Property to be subject to such Sublease
and the term of such Sublease, and such Sublease shall
contain an express agreement by the sublessee to the
effect that: (A) such Sublease is fully subject and
subordinate in all respects to this Agreement and to
Mortgagee's rights, powers and remedies hereunder, (B)
such Sublease shall prohibit any assignment or further
sublease of the Property subject thereto, and (C) upon
notice of the occurrence of an Event of Default given
by Mortgagee to such sublessee, Mortgagee may avoid
such Sublease, and the sublessee shall forthwith
deliver the Aircraft or Engine to Mortgagee;
(ii) All necessary action shall have been taken
which is required to continue the perfection of
Mortgagee's security interest in the Aircraft and
Engine
23
and the Mortgagee's rights under this Agreement and
the Sublease and all other necessary documents shall
have been filed, registered or recorded in such public
offices as may be required to fully preserve the
priority of the interest of Mortgagee in the Aircraft
and Engine under all applicable Laws;
(iii) Mortgagor shall deliver to Mortgagee,
promptly after execution thereof, a duly executed copy
of such Sublease;
(iv) Each Sublease shall be assigned by Mortgagor
to Mortgagee as security for Mortgagor's obligations
hereunder, and the sublessee shall be required upon
the occurrence and during the continuance of an Event
of Default to make all payments under such Sublease
directly to Mortgagee; provided that if such Event of
Default shall cease or shall be waived pursuant to the
provisions of the Indenture, Mortgagee shall
immediately pay to Mortgagor all funds so received and
not yet applied in accordance with the provisions
hereof or of the Indenture;
(v) Any such Sublease shall include provisions
for the maintenance, operation, possession, inspection
or insurance of the Property subject thereto that are
the same in all material respects as the applicable
provisions of this Agreement;
(vi) Mortgagor shall furnish to Mortgagee
evidence reasonably satisfactory to Mortgagee that the
insurance required by Section 6.3 remains in effect;
(vii) Mortgagor shall pay or reimburse Mortgagee
for all reasonable out-of-pocket fees and expenses,
including, without limitation, reasonable fees and
disbursements of counsel, incurred by Mortgagee in
connection with any such Sublease;
(viii) For all purposes of this Section 6.5, the
term "Sublease" shall be deemed to include interchange
agreements with respect to the Aircraft or Airframe;
and
(ix) Mortgagor shall remain primarily liable
hereunder for the performance of all the terms of this
Agreement to the same extent as if such Sublease had
not occurred, and no transfer of possession of the
Aircraft, the Airframe, any Engine or any Part shall
in any way discharge or diminish any of Mortgagor's
obligations hereunder or under any other Operative
Document.
In its sole discretion, Mortgagee may require an
Opinion of Counsel in connection with such Sublease, including
Mortgagee's rights to repossess the Aircraft in the event of an
Event of Default hereunder or under the Sublease. Mortgagor will
not amend the terms of any approved Sublease without the prior
written consent of the Mortgagee, which will not be unreasonably
withheld.
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6.6 Further Assurances. At any time or from time to time
upon the reasonable request of Mortgagee, Mortgagor shall cause
the appropriate Person to execute, acknowledge, deliver, and
cause to be recorded or registered (if so requested) all such
additional instruments and documents and further assurances of
title and shall do or cause to be done all such further acts and
things as may reasonably be necessary or desirable to effectuate
fully the intent and purposes of this Agreement, the Securities,
the Operative Documents, and any other agreement entered into in
connection therewith.
6.7 Maintenance. So long as the Lien of this Agreement
shall not have been discharged, Mortgagor, at its own cost and
expense, shall service, repair, maintain, overhaul and test the
Airframe and Engines (and each engine and part which is not an
Engine or Part, respectively, but is installed on the Airframe)
or cause the same to be done in accordance with a maintenance
program approved by the FAA (and in compliance with all
airworthiness directives thereof), and shall keep or cause to be
kept the Airframe and Engines (and each such other engine or
part) (i) in such operating condition as may be necessary to
enable the airworthiness certification of the Aircraft to be
maintained in good standing at all times under the applicable
rules and regulations of the FAA and the FAA-approved maintenance
program of Mortgagor and (ii) in good operating condition in
accordance with all mandatory service bulletins and
airworthiness directives of the United States Government and in
substantially the same manner as Mortgagor services, repairs,
maintains, overhauls and tests similar aircraft operated by
Mortgagor in similar circumstances and in accordance with
Mortgagor's maintenance program approved by the FAA and without
discriminating against the Aircraft with respect to its
maintenance, repair, condition or overhaul status based upon the
existence of this Agreement. Notwithstanding the foregoing, when
aircraft of the same type, model or series as the Airframe
(powered by engines of the same type as those with which the
Airframe shall be equipped at the time of grounding) have been
grounded by the FAA, Mortgagor shall not be required to maintain
such certification of airworthiness so long as it continues to
comply with all the other provisions of this Agreement with
respect to the Aircraft. Nothing herein shall be deemed to
prevent Mortgagor from taking the Aircraft out of service for
maintenance or modifications permitted hereunder or storage in
accordance with applicable FAA requirements, as appropriate and
sound practice for such storage. Mortgagor shall maintain or
cause to be maintained in the English language all records, logs
and other documents required by the FAA to be maintained in
respect of the Aircraft.
6.8 Registration. Except as otherwise permitted by this
Agreement or as otherwise required by the Federal Aviation Act or
rules, regulations, or orders promulgated thereunder, so long as
the Lien of this Agreement shall not have been discharged, the
Aircraft shall be duly registered in the name of Mortgagor under
such Act at all times. Mortgagee shall, at Mortgagor's expense,
execute and deliver all such documents as Mortgagor may
reasonably request for the purpose of effecting or continuing
such registration.
6.9 Insignia. Mortgagor shall for so long as the Aircraft
shall be subject to the Lien of this Agreement maintain or cause
to be maintained in the cockpit of the Airframe in a location
reasonably adjacent to the airworthiness certificate and on each
Engine, a metal nameplate identifying the security interest of
Mortgagee in the Aircraft, as follows:
25
"Subject to a security interest in favor
of [Name of current Mortgagee], as Trustee"
Mortgagor will not allow the name of any Person other than
Mortgagee, or its successors or assigns, to be placed on the
Airframe or any Engine as a designation that might be interpreted
as a claim of ownership or of any security interest therein,
except that Mortgagor or any permitted lessee may operate the
Airframe and Engines in its livery, including its name and logo
and except that so long as the First Mortgage is in effect,
Mortgagor may comply with Section 6.9 of the First Mortgage.
6.10 Inspection. At all reasonable times so long as the
Aircraft is subject to the Lien of this Agreement, Mortgagee or
its authorized representatives may at its own expense (unless an
Event of Default shall have occurred and be continuing, or unless
such inspection discloses any material failure by Mortgagor to
comply with the provisions of this Agreement in which case, at
Mortgagor's expense) and risk conduct a visual walk-around
inspection of the Aircraft and any Engine (including, without
limitation, a visual walk-around inspection of the Aircraft
during any "C" check or other heavy maintenance) and may inspect
the books, logs and records of Mortgagor (and make copies of such
books, logs and records) relating to the operation and
maintenance thereof; provided that (a) 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 and (b) in the case
of an inspection during a maintenance visit, such inspection
shall not interfere with the normal conduct of such maintenance
visit or extend the time required for such maintenance visit or,
in any event, at any time interfere with the use or operation of
the Airframe or any Engine or with the normal conduct of
Mortgagor's business. All information obtained in connection with
any such inspection shall be held confidential by Mortgagee and
the Holders and shall not be furnished or disclosed by them to
anyone other than each other, their bank examiners, regulators,
auditors, accountants, agents and legal counsel and any Person
with whom any Holder is in good faith conducting negotiations
relating to the possible transfer and sale of such Holder's
interest in any Security, if such Person shall have entered into
an agreement similar to that contained in this Section 6.10
whereby such Person agrees to hold such information confidential,
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 or as may be necessary to
enforce the terms of this Agreement. Neither Mortgagee nor any
Holder shall have any duty to make any such inspection or incur
any liability or obligation by reason of not making any such
inspection. No inspection under this Section 6.10 shall relieve
Mortgagor of any of its obligations under this Agreement.
If requested by Mortgagee, Mortgagor shall give reasonable
prior written notice to Mortgagee of the date on which the
Aircraft, Airframe or any Engine undergoes its next scheduled
maintenance visit and next major check, and with respect to any
Engine the next off-the-wing maintenance, and shall advise
Mortgagee of the name and location of the relevant maintenance
provider and shall, at least five days prior to commencement of
such major check or maintenance, make available for inspection by
Mortgagee all relevant records, logs and documents relating to
the Aircraft.
26
6.11 Alterations, Modifications and Additions. Mortgagor,
at its own expense, shall make alterations and modifications in
and additions to the Airframe and each Engine as may be required
to be made from time to time to comply with the applicable rules
and regulations of the FAA, to maintain the Standard Certificate
of Airworthiness for the Aircraft and as otherwise required by
applicable Law regardless of upon whom such requirements are, by
their terms, nominally imposed; provided that Mortgagor may, in
good faith, contest the validity or application of any such
standard in any reasonable manner which does not materially
adversely affect the Lien of this Agreement or subject Mortgagee
or any Holder to any risk of civil or criminal penalty. In
addition, Mortgagor, at its own expense, may from time to time
make or cause to be made such alterations and modifications in
and additions to the Airframe and any Engine as Mortgagor may
deem desirable in the proper conduct of its business (including,
without limitation, removal of Parts), provided further that no
such alteration, modification or addition diminishes, in
Mortgagee's reasonable judgment, the value, utility, condition,
airworthiness or remaining useful life of the Airframe or Engine
below the value, utility, condition, airworthiness or remaining
useful life thereof immediately prior to such alteration,
modification or addition, assuming the Airframe or Engine was
then in the condition required to be maintained by the terms of
this Agreement, except that the value (but not the utility,
condition, airworthiness or remaining useful life) of the
Aircraft may be reduced by the value of Parts which Mortgagor
deems obsolete or no longer suitable or appropriate for use in
the Airframe or Engine which shall have been removed and not
replaced, if the aggregate value of all such obsolete or
unsuitable Parts removed from the Aircraft and not replaced shall
not exceed $500,000. All Parts incorporated or installed in or
attached or added to the Airframe or any Engine as the result of
any alteration modification or addition effected by Mortgagor
shall be free and clear of any Liens except Permitted Liens and,
without further act, become subject to the Lien of this
Agreement; provided that Mortgagor may remove any such Part from
the Airframe or Engine if (i) such Part is in addition to, and
not in replacement of or in substitution for, any Part originally
incorporated or installed in or attached to the Airframe or
Engine at the time of delivery thereof hereunder or any Part in
replacement of, or in substitution for, any such original Part,
(ii) such Part is not required to be incorporated or installed in
or attached or added to the Airframe or Engine pursuant to the
terms hereof and (iii) such Part can be removed from the Airframe
or Engine without diminishing or impairing the value, condition,
utility, airworthiness or remaining useful life which the
Airframe or Engine would have had at the time of removal had such
alteration, modification or addition not been effected by
Mortgagor assuming the Aircraft was otherwise maintained in the
condition required by this Agreement. Upon the removal by
Mortgagor of any such Part as above provided, title thereto
shall, without further act, be free and clear of all rights of
Mortgagee and such Part shall no longer be deemed a Part
hereunder. Any such Part not so removed shall, so long as the
Lien of this Agreement shall not have been discharged, remain
subject to such Lien.
6.12 Notice of Change of Mortgagor's Chief Executive
Office. So long as the Lien of this Agreement shall not have been
discharged, Mortgagor shall notify Mortgagee at least 30 days
prior to any change in the location of the chief executive office
of Mortgagor.
27
7. CONDEMNATION
7.1 Dedication to CRAF. Mortgagor may transfer possession
of the Airframe or any Engine to the United States of America or
any instrumentality or agency thereof as part of the Civil
Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 et
seq. (or any substantially similar program) ("CRAF Program") for
a period which includes (collectively, the "CRAF Program
Requisition Period") (a) the entire period of requisition under
the CRAF Program and (b) an additional six (6) months after the
expiration of the requisition under the CRAF Program.
7.2 Notice to Mortgagee. Mortgagor will promptly notify
Mortgagee in writing in the event of the requisition for use of
the Aircraft under CRAF activation by the U.S. Government. All of
Mortgagor's obligations under this Agreement will continue to the
same extent as if such requisition had not occurred.
7.3 Requisition of Engine. If there is a requisition for
use of any Engine (but not the Airframe) by the U.S. Government
in connection with the CRAF Program, Mortgagor will replace such
Engine by complying with the terms of Section 3.3 to the same
extent as if a Total Loss had occurred with respect to such
Engine.
7.4 Government Indemnification. Any provisions of this
Agreement to the contrary notwithstanding, if there is a
requisition for use of the Aircraft pursuant to the CRAF Program
and/or CRAF activation, Mortgagee agrees that Mortgagor's
insurances described in Section 6.3 and in Exhibit B hereof may
be supplemented by insurances provided under Title XIII of the
Federal Aviation Act of 1958, as amended, and/or U.S. Government
indemnification (which Title XIII insurances and indemnification
will be, as to the Aircraft, in an amount not less than the
Agreed Value (as defined in Exhibit B) and, as to all other
insurances, in amounts not less than those established in Exhibit
B hereof); provided, however, that Mortgagor will remain
responsible for full compliance with all the provisions of this
Agreement, to the extent Title XIII and/or the U.S. Government
indemnification do not satisfy Mortgagor's obligations under this
Agreement and the Indenture.
7.5 No Geographic Limits. If there is a requisition for use
of the Aircraft pursuant to the CRAF Program and/or CRAF
activation, there will be no limitation on the geographic area in
which the Aircraft may be operated so long as, taken as a whole,
Mortgagor's insurance, the Title XIII insurance and/or the
indemnification provided by the U.S. Government fully cover
(without any geographic exclusions) Mortgagor's Section 6.3 and
Exhibit B insurance requirements.
7.6 Notice of Default. If an Event of Default occurs under
this Agreement during a CRAF Program Requisition Period with
respect to the Airframe and Mortgagee elects to pursue its
remedies under Section 4 to terminate this Agreement and
repossess the Airframe, Mortgagee will so notify the U.S.
Government by sending a written communication as follows:
Headquarters Air Mobility Command
AMC Contracting Office -- XOKA
Xxxxx Air Force Xxxx, Xxxxxxxx 00000-0000
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7.7 Receipts of Payments. So long as no Event of Default
has occurred and is continuing, all payments received by
Mortgagee or Mortgagor from such Government Entity in connection
with the requisition of the Aircraft under the CRAF Program will
be paid over to or retained by Mortgagor. If an Event of Default
has occurred and is continuing, all payments received by
Mortgagor or Mortgagee from such Government Entity in connection
with the requisition of the Aircraft under the CRAF Program may
be used by Mortgagee to satisfy any Obligations owing by
Mortgagor in the order provided in Section 6.10 of the Indenture.
8. GENERAL INDEMNIFICATION
8.1 General Indemnification and Waiver of Certain Claims.
(a) Claims Defined. For the purposes of this Section
8.1, "Claims" shall mean any and all costs, liabilities
(including strict or absolute liability without fault in tort or
otherwise), losses, damages, penalties, actions or suits or
claims which may be imposed on, incurred by, suffered by, or
asserted against an Indemnified Person, as defined herein, and,
except as otherwise expressly provided in this Section 8.1, shall
include all reasonable out-of-pocket costs, disbursements and
expenses (including legal fees and expenses) paid or incurred by
an Indemnified Person in connection therewith.
(b) Indemnified Person Defined. For the purposes of
this Section 8.1, "Indemnified Person" means Mortgagee and each
Holder, and each of their respective successors, transferees or
assigns permitted under the terms of the Securities or the
Operative Documents, and all directors, officers, employees,
agents, servants and Affiliates of any such Person; provided
that, as a condition precedent to any performance by Mortgagor in
connection with such indemnity with respect to any Person which
is not a signatory to this Agreement, such Person shall adhere to
and expressly agree in writing to be bound by all the terms of
this Section 8.1.
(c) Claims Indemnified. Subject to the exclusions
stated in subsection (d) below, Mortgagor hereby indemnifies and
agrees to indemnify, defend and hold harmless, on an after-tax
basis as defined in Section 8.2(d), each Indemnified Person
against Claims arising out of or resulting from:
(i) the operation, possession, use, nonuse,
purchase, airworthiness, control, return, transfer,
maintenance, overhaul, testing, registration, title,
lease, reregistration, storage, modification,
replacement, repair, substitution, pooling or
interchange of the Aircraft, the Airframe, any Engine
or any Part, or any engine used in connection with the
Airframe, or any part thereof, or any other Property
used in connection therewith, or any other Collateral,
by Mortgagor, any lessee or any other Person
whatsoever, whether or not such operation, possession,
use, nonuse, title, lease, purchase, airworthiness,
control, return, transfer, maintenance, overhaul,
testing, registration, reregistration, storage,
modification, replacement, repair, substitution,
pooling or interchange is in compliance with the terms
of this Agreement or any other Operative Document,
including, without limitation, claims for death,
personal injury or Property damage or other loss or
harm to any
29
Person whatsoever and Claims relating to any laws,
rules or regulations pertaining to such operations,
possession, use, nonuse, title, lease, purchase,
airworthiness, control, return, transfer maintenance,
overhaul, testing, registration, reregistration,
storage, modification, replacement, repair,
substitution, pooling or interchange, including
environmental control, noise and pollution laws, rules
or regulations;
(ii) the manufacture, design, purchase,
acceptance, rejection, delivery, nondelivery,
condition or ownership of the Aircraft, any Engine or
any Part, or any engine used in connection with the
Airframe, or any part thereof, or any other
Collateral, including, without limitation, latent and
other defects, whether or not discoverable, and
patent, trademark or copyright infringement; and
(iii) any breach of or failure to perform or
observe, or any other noncompliance with, any covenant
or agreement to be performed by, or other obligation
of Mortgagor under, the Securities or any of the
Operative Documents, or the falsity, inaccuracy or
breach of any representation or warranty of Mortgagor
in any of the Operative Documents.
(d) Claims Excluded. The following are excluded from
Mortgagor's agreement to indemnify under this Section 8.1:
(i) Claims attributable to acts or events
occurring after the repayment in full of the
Securities and the payment and performance of all
other Obligations;
(ii) Claims which are attributable to Taxes
(other than the obligations to "gross up" set forth in
Section 8.1(c)), whether or not Mortgagor is required
to indemnify therefor under Section 8.2; or
(iii) With respect to any particular Indemnified
Person, Claims to the extent attributable to the gross
negligence or willful misconduct (other than gross
negligence or willful misconduct imputed to such
Indemnified Person solely by reason of its interest in
the Aircraft) of, or to the breach of any contractual
obligation by, or the falsity or inaccuracy or breach
of any representation or warranty of, such Indemnified
Person (unless such breach or falsity or inaccuracy is
a result of Mortgagor's failure to comply with the
terms of any Operative Document or any representation
or warranty therein).
(e) Insured Claims. In the case of any Claim
indemnified by Mortgagor hereunder which is covered by a policy
of insurance maintained by Mortgagor pursuant to Section 6.3 or
otherwise, Mortgagor shall not be obligated to indemnify such
Indemnified Person with respect to such Claim to the extent of
any loss of benefits of such insurance resulting from the failure
of such Indemnified Person to cooperate with the insurers in the
exercise of their rights to investigate, defend or compromise
such Claim as may be required to retain the benefits of such
insurance with respect to such Claim.
30
(f) Claims Procedure. An Indemnified Person shall
promptly notify Mortgagor of any Claim as to which
indemnification is sought, provided that failure of an
Indemnified Person to provide such notice shall not release
Mortgagor from any of its obligations to indemnify hereunder to
the extent such failure does not impair the rights of Mortgagor
with respect to the availability or extent of coverage of
insurance or otherwise result in any material adverse
consequences to Mortgagor. Subject to the rights of insurers
under policies of insurance maintained by Mortgagor, Mortgagor
shall have the right to investigate, and the right to defend or
compromise, employing counsel reasonably acceptable to such
Indemnified Person (except as may otherwise be required by any
applicable policy of insurance), any Claim for which
indemnification is sought under this Section 8.1; provided that,
Mortgagor shall not be entitled to defend or compromise any such
Claim if an Event of Default shall have occurred and be
continuing or if such proceedings involve a material risk of the
sale, forfeiture, or loss of, or the creation of any Lien (other
than a Permitted Lien) on, the Aircraft or other Collateral,
unless Mortgagor shall have posted a bond or other security
satisfactory to the relevant Indemnified Persons with respect to
such risk. The Indemnified Person shall cooperate with all
reasonable requests of Mortgagor in connection with any of the
foregoing. Where Mortgagor or the insurers under a policy of
insurance maintained by Mortgagor undertake the defense of an
Indemnified Person with respect to a Claim, no additional legal
fees or expenses of such Indemnified Person in connection with
the defense of such Claim shall be indemnified hereunder unless
such fees or expenses were incurred at the written request of
Mortgagor or such insurers; provided, however, that if (i) in the
written opinion of counsel to such Indemnified Person an actual
or potential material conflict of interest exists where it is
advisable for such Indemnified Person to be represented by
separate counsel or (ii) such Indemnified Person has been
indicted or otherwise charged in a criminal complaint and such
Indemnified Person informs Mortgagor that such Indemnified Person
desires to be represented by separate counsel, the reasonable
fees and expenses of any such separate counsel shall be borne by
Mortgagor. Subject to the requirements of any policy of insurance
applicable to a Claim, an Indemnified Person may participate at
its own cost and expense in any judicial proceeding controlled by
Mortgagor or its insurers pursuant to the preceding provisions,
provided that such party's participation does not, in the opinion
of the independent counsel appointed by Mortgagor or its insurers
to conduct such proceedings, unduly interfere with such control;
and such participation shall not constitute a waiver of the
indemnification provided in this Section 8.1. Nothing contained
in this Section 8.1(f) shall be deemed to require an Indemnified
Person to contest any Claim or to assume responsibility for or
control of any judicial proceeding with respect thereto. Payments
required to be made pursuant to this Section 8.1 to each
Indemnified Person shall be made directly to such Indemnified
Person in immediately available funds within 30 days after
written demand upon Mortgagor by such Indemnified Person. To the
extent permitted by applicable Law, interest at the highest rate
that may, under any circumstance (whether or not such
circumstance has or could actually occur), be applicable to the
Securities thereunder or under the terms of the Indenture shall
be paid, on demand, on any amount or indemnity not paid when due
pursuant to this Section 8.1 until the same shall be paid.
(g) Subrogation. To the extent that a Claim
indemnified by or on behalf of Mortgagor under this Section 8.1
is in fact paid in full by or on behalf of Mortgagor and/or an
insurer under a policy of insurance maintained by or on behalf of
Mortgagor, Mortgagor and/or
31
such insurer, as the case may be, shall be subrogated to the
extent of such payment to the rights and remedies of the
Indemnified Person on whose behalf such Claim was paid with
respect to the transaction or event giving rise to such Claim.
Should an Indemnified Person receive any refund, in whole or in
part, with respect to any Claim paid by Mortgagor hereunder
(other than a refund pursuant to a separate insurance policy
maintained by an Indemnified Person, it shall (so long as no
Default or Event of Default has occurred and is continuing)
promptly pay over the amount refunded, together with any interest
received with respect to such amount for the period between the
indemnification payment and the receipt of such refund, to
Mortgagor.
(h) Waiver of Certain Claims. Mortgagor hereby waives
and releases any claim now or hereafter existing against any
Indemnified Person arising out of death or personal injury to
personnel of Mortgagor, loss or damage to Property of Mortgagor,
or the loss of use of any Property of Mortgagor, which results
from or arises out of the condition, use or operation of the
Aircraft prior to the payment in full of the Securities and all
other Obligations, including, without limitation, any latent or
patent defect whether or not discoverable, except as otherwise
provided in the Aircraft Sale Agreement.
(i) Certain Limitations. The general indemnification
provisions of this Section 8.1 are not intended to waive or
supersede any specific provisions of, or any rights or remedies
Mortgagor or Mortgagee may have under or with respect to, the
Aircraft Sale Agreement, the Indenture or any other Operative
Document to the extent such provisions, rights or remedies apply
to any Claim.
(j) Effect of Other Indemnities. The indemnification
obligations of Mortgagor under this Section 8.1 shall be those of
a primary obligor whether or not an Indemnified Person shall also
be indemnified with respect to the same matter under the terms of
any other instrument, and the Indemnified Person seeking
indemnification from Mortgagor pursuant to this Section 8 may
proceed directly against Mortgagor without first seeking to
enforce any other right of indemnification.
8.2 Tax Indemnification.
(a) Indemnitee Defined. For purposes of this Section
8.2, "Indemnitee" means Mortgagee, the Holders and their
respective Affiliates, successors and permitted transferees and
assigns.
(b) Taxes Indemnified. Subject to the exclusions
stated in Section 8.2(c), Mortgagor shall indemnify, pay, defend,
protect and hold harmless each Indemnitee against all Taxes,
howsoever imposed (whether imposed upon any Indemnitee,
Mortgagor, all or any part of the Aircraft, any other Collateral
or otherwise), by any federal, state or local government,
political subdivision, or taxing authority in the United States,
by any government or taxing authority of or in a foreign country
or of or in a territory or possession of the United States, or by
any international authority, upon or with respect to or in
connection with, based upon or measured by, in whole or in part:
32
(i) the Aircraft, the Airframe, the Engines, the
Parts, or any other Collateral or any part of any of
the foregoing or interest therein;
(ii) the manufacture, purchase, financing,
ownership, delivery, registration or reregistration,
redelivery, leasing, charter, possession, use,
location, operation, return, storage, transfer of
title, sale, acceptance, rejection or other
disposition of or action or event with respect to the
Aircraft, the Airframe, the Engines, the Parts, or any
other Collateral or any part of any of the foregoing
or interest therein;
(iii) the rentals, receipts, income or earnings
arising from the purchase, financing, ownership,
delivery, redelivery, leasing, possession, use,
operation, return, storage, transfer of title, sale or
other disposition of the Aircraft, the Airframe, the
Engines, the Parts, or any other Collateral or any
part of any of the foregoing or interest therein;
(iv) the Securities, their issuance or
acquisition, or the payments of any amounts
thereunder;
(v) the Property, or other proceeds received with
respect to the Property, held by Mortgagee hereunder;
or
(vi) the Operative Documents or amendments or
supplements thereto, their execution or the
transactions contemplated thereby.
(c) Taxes Excluded. The indemnity provided for in
Section 8.2(b) shall not extend to any of the following:
(i) Taxes on, based on, or measured by income
(including gross income), receipts, capital,
franchises, excess profits or conduct of business of
an Indemnitee, except to the extent Taxes of such type
would not have been imposed on such Indemnitee but for
the location of the Aircraft, activities or place of
incorporation or principal place of business of
Mortgagor or any other user of the Aircraft or any
Affiliate of any of the foregoing, registration of the
Aircraft, or payment of amounts due under any Security
or other Operative Document from, the jurisdiction of
the taxing authority imposing such Taxes;
(ii) Taxes imposed against a transferee of an
Indemnitee to the extent of the excess of such Taxes
over the amount of such Taxes which would have been
imposed had there not been a transfer by an Indemnitee
other than Mortgagee or its Affiliates of any interest
of such Indemnitee in the Aircraft, any Security, or
any Operative Document;
(iii) in the case of any Indemnitee, Taxes which
arise out of or are caused by (a) the willful
misconduct or gross negligence of such Indemnitee or a
Related Party (as defined below) with respect to such
Indemnitee or (b) such
33
Indemnitee's making a representation under any
Operative Document which proves to be untrue;
(iv) in the case of any Indemnitee, Taxes upon
(x) any voluntary transfer by such Indemnitee or a
Related Party with respect to such Indemnitee of all
or any portion of its interest in the Aircraft or any
part thereof, any Operative Document or any Security
(other than transfers which occur or result from the
exercise of any rights under Section 4) or (y) any
involuntary transfer of the Aircraft or any interest
therein or any Security, any Operative Document, or
shares of stock by an Indemnitee resulting from any
bankruptcy, foreclosure or similar proceedings in
which any Indemnitee is the debtor;
(v) United States withholding taxes imposed on
payments to a foreign Person;
(vi) Taxes imposed with respect to any fees
received by Mortgagee; or
(vii) Taxes imposed by Section 4795 of the Code
or any successor provision thereto.
For purposes of this Section 8.2, each transferee or
assignee of Mortgagee or a Holder shall be a "Related Party" with
respect to each other.
(d) Calculation of Indemnities. The amount Mortgagor
shall be required to pay with respect to any Tax indemnified
against under this Section 8.2 or with respect to any claim under
Section 8.1 shall be an amount that after taking into account any
Taxes, fees and other charges imposed upon the receipt of an
indemnity under this Section 8.2 or under Section 8.1 and any Tax
benefits recognized upon payment of such Taxes, equals the amount
otherwise due under Section 8.1. All computations for the
purposes hereof shall be based on the assumption that the
Indemnitee is taxable on all of its income at the highest
marginal rate in effect on the date payment pursuant to this
Section 8 is made.
(e) Procedures. Any amount payable to an Indemnitee
pursuant to this Section 8.2 shall be paid within 60 days after
receipt of a written demand therefor from such Indemnitee
accompanied by a written statement describing in reasonable
detail the basis for such indemnity and the computation of the
amount so payable; provided that such amount need not be paid
prior to the earlier of (i) the time such Taxes are paid or (ii)
in the case of amounts which are being contested by Mortgagor in
good faith or by the Indemnitee pursuant to this Section 8.2, the
time such contest is finally resolved. Within 30 days following
Mortgagor's receipt of the computation of the amount of the
indemnity, Mortgagor may request that an accounting firm to be
jointly selected by Mortgagor and such Indemnitee (but not
including the accounting firm that regularly prepares the
certified financial statements of Mortgagor or such Indemnitee)
determine whether such computations of the Indemnitee are
correct. The computations of such accounting firm shall be final,
binding and conclusive upon the parties, and Mortgagor shall have
no right to inspect the books, records or tax returns of the
Indemnitee to verify such computation. All fees and expenses
payable under this Section 8.2 in connection with such
verification shall be borne
34
by Mortgagor, unless such verification discloses an error adverse
to Mortgagor of 5% or more of the amount calculated by the
Indemnitee, in which case such fees shall be paid by the
Indemnitee.
(f) Contest. If a written claim is made against an
Indemnitee for Taxes with respect to which Mortgagor is liable
for payment or indemnity hereunder, such Indemnitee shall give
Mortgagor prompt notice in writing of such claim and shall
furnish Mortgagor with copies of any requests for information
from any taxing authority relating to such Taxes with respect to
which Mortgagor may be required to indemnify hereunder, but a
failure to give such notice or to furnish such requests shall not
diminish Mortgagor's obligations hereunder except to the extent
such failure precludes Mortgagor from exercising its contest
rights hereunder. The Indemnitee shall in good faith, and at
Mortgagor's expense, if timely requested in writing by Mortgagor,
contest in the name of the Indemnitee the validity, applicability
or amount of such Taxes by:
(i) resisting payment thereof if practical;
(ii) not paying the same except under protest if
protest is necessary and proper;
(iii) if the payment be made, using reasonable
efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings; or
(iv) taking such other action as is reasonably
requested by Mortgagor from time to time.
Notwithstanding the foregoing provisions of this Section
8.2(f), such Indemnitee shall not be required to take, and shall
not be required to permit Mortgagor to take, any administrative
or judicial action to contest any such Tax unless (A) Mortgagor
shall have agreed to pay such Indemnitee on demand and shall pay
all reasonable out-of-pocket costs and expenses which such
Indemnitee may incur in connection with contesting such Taxes,
(B) no payment Event of Default shall have occurred and be
continuing unless Mortgagor shall have posted a satisfactory bond
with respect to such claim or provided other security therefor
reasonably satisfactory to such Indemnitee, (C) in the event of a
contest by or in the name of an Indemnitee or in the event of a
judicial contest, upon written request of the Indemnitee
Mortgagor shall provide to such Indemnitee within 30 days after
such request an Officers' Certificate to the effect that a
reasonable basis exists for contesting such claim, (D) prior to
commencing any judicial action, Mortgagor acknowledges its
liability hereunder on the contested amount, and (E) it shall
have been reasonably determined that the action to be taken will
not (i) result in the material danger of a sale, forfeiture or
loss of the Aircraft or Airframe (except if Mortgagor shall have
adequately bonded any Lien that results in such material danger
or otherwise made adequate provision reasonably satisfactory to
such Indemnitee to protect the interest of such Indemnitee) or
(ii) subject such Indemnitee to any material risk of criminal
prosecution. To the extent not inconsistent with the provisions
contained elsewhere in this Section 8.2(f), the Indemnitee shall
have control over the conduct of a contest of a claim hereunder
(except to the extent that a contest is being conducted by
Mortgagor in accordance with the provisions hereof).
Notwithstanding the foregoing, if any Indemnitee shall release,
waive, compromise or settle any
35
claim which may be indemnifiable by Mortgagor pursuant to the
foregoing provisions of this Section 8.2 without the express
written permission of Mortgagor, Mortgagor's obligation to
indemnify such Indemnitee with respect to such claim shall
terminate to that extent. Nothing contained in this Section 8.2
shall require any Indemnitee to contest, or require any
Indemnitee to permit Mortgagor to contest, a claim which such
Indemnitee would otherwise be required to contest pursuant to
this Section 8.2(f), if such Indemnitee shall waive its rights to
any indemnity payment by Mortgagor which would otherwise be
payable by Mortgagor pursuant to this Section 8.2 in respect of
such claim.
(g) Refund. Upon receipt by an Indemnitee of a refund
or credit of all or part of any Taxes which Mortgagor shall have
paid for such Indemnitee or for which Mortgagor shall have
reimbursed, advanced funds to or indemnified such Indemnitee,
such Indemnitee shall pay or repay to Mortgagor an amount which,
after the subtraction of the amount of any further net tax
savings realized by such Indemnitee as a result of the payment
under this Section 8.2(g), and the addition of any net tax
detriment realized by such Indemnitee as a result of the receipt
or accrual of such refund and any interest received or accrued by
such Indemnitee in such refund, is equal to the amount of such
refund and any interest received or accrued by such Indemnitee on
such refund; provided, that such amount shall be reduced by the
amount of any payment or indemnity then due from Mortgagor to or
on behalf of such Indemnitee pursuant to the Securities or the
Operative Documents and not made (and any amount so withheld
shall not be payable before such time and to such extent as
Mortgagor shall have made such payments or indemnities). Any
subsequent loss of such refund and interest as an erroneous
refund shall be indemnifiable in accordance with the provisions
of this Section 8.2 (disregarding Section 8.2(c)).
(h) Return. So long as the Aircraft is subject to the
Lien of this Agreement Mortgagor will prepare and file all
property tax returns with respect to the Aircraft, except with
respect to any such return that Mortgagor is not permitted to
file under applicable Law.
8.3 Survival of Indemnities. The agreement and indemnities
contained in Sections 8.1 and 8.2 shall survive the discharge of
this Agreement (but only with respect to any Person who was
entitled to the benefit of such agreements and indemnities at or
prior to the time of such termination) but only to the extent
relating to claims, obligations and other liabilities arising out
of acts or events occurring, or otherwise attributable to the
period, prior to the payment in full of the Securities and all
other Obligations.
9. MISCELLANEOUS
9.1 Performance by Mortgagee. If Mortgagor shall fail to
maintain, or cause to be maintained, any insurance required to be
carried pursuant to this Agreement, Mortgagee may obtain the same
for the account of Mortgagor; and Mortgagor shall pay to
Mortgagee interest (to the extent permitted by applicable Law) at
the highest rate that may, under any circumstance (whether or not
such circumstance has or could actually occur), be applicable to
the Securities thereunder or under the Indenture, computed on the
basis of a 360-day year and the actual number of days elapsed, on
the amount of any such payment from the date made until the date
reimbursed by Mortgagor pursuant hereto. If Mortgagor shall fail
in a timely and effective
36
manner to take and complete any other action that it has herein
undertaken to perform, strictly in accordance with the provisions
hereof, Mortgagee may do or cause the same to be done; and there
shall be added to the indebtedness secured hereby any loss, cost
or expense incurred by or on behalf of Mortgagee incurring such
default or failure, or caused to be suffered by Mortgagee through
the incorrectness or breach of any of the covenants, agreements,
representations or warranties of Mortgagor herein or by any other
default of Mortgagor hereunder; and all sums so lost or expended
shall be payable on demand and shall bear interest as provided in
the first sentence of this Section 9.1, and Mortgagee shall be
subrogated to all of the rights against Mortgagor of any Person
to whom it shall have made any payment or payments under the
foregoing authority.
9.2 Power of Attorney. Mortgagor hereby irrevocably
appoints Mortgagee, and its successors and assigns, the true and
lawful attorney of Mortgagor (with the full power of
substitution), in the name and place and at the expense of
Mortgagor, (i) to give any necessary receipts or acquittance for
amounts collected or received pursuant to Section 4 hereof, (ii)
at any time after the occurrence of an Event of Default and so
long as the same shall be continuing, to make all necessary
transfers of all or any part of the Collateral in connection with
any sale or other disposition thereof made pursuant to such
Section 4, (iii) at any time after the occurrence of any such
Event of Default and so long as the same shall be continuing, to
execute and deliver for value all necessary instruments of
negotiation, assignment and transfer, (iv) at any time after the
occurrence of any such Event of Default and so long as the same
shall be continuing, to employ legal counsel and to appear in its
name in any court in any jurisdiction to commit and compromise
and discharge any alleged Lien, charge or other encumbrance
asserted against any of the Collateral, in any manner and by any
means that shall to it or them, in its or their sole and complete
discretion, seem proper; provided, however, that any such
undertaking on the part of Mortgagee shall not qualify in any
manner or to any extent or degree the obligation of Mortgagor so
to defend its title to, and the security interest of Mortgagee
in, the Collateral and every part thereof and (v) to file and
record such copies or memoranda hereof and financing statements,
continuation statements and other instruments or documents with
respect to the security interest created hereby as Mortgagee may
deem desirable fully to protect its interest hereunder, and for
such purpose Mortgagor hereby authorizes Mortgagee to effect any
such filings or recordings without the signature of Mortgagor to
the extent permitted by applicable Law, Mortgagor hereby
ratifying and confirming all that its said attorney shall
lawfully do hereunder and pursuant hereto and acknowledging that
its said attorney shall have no duty, by virtue of this Section
9.2 or at the risk of otherwise waiving or qualifying the
obligation of Mortgagor to do so, to do any of the above acts.
9.3 Waiver, etc., by Mortgagor. To the fullest extent that
it may now and hereafter lawfully so agree, Mortgagor hereby
agrees that it shall not at any time plead, claim or take the
benefit of any appraisal, valuation, extension, moratorium,
redemption or other law now or hereafter in effect in any
jurisdiction in order to prevent or delay the enforcement of any
provision of this Agreement or the indebtedness or agreements
secured hereby, or the absolute sale of any portion of or all the
Collateral to any purchaser at any sale under Section 4 hereof;
and Mortgagor, for itself and all who may claim through it, to
the fullest extent that it or they now and hereafter may lawfully
so agree, hereby waives the benefit of all such laws. Any sale
37
of, grant of options to purchase or other realization against all
or any part of the Collateral shall operate to divest all right,
title and interest, at law, in equity and otherwise, of Mortgagor
in and to the Collateral so sold, optioned or realized upon, and
shall be a perpetual bar, at law, in equity and otherwise,
against Mortgagor and against any and all persons claiming or
attempting to claim the Collateral so sold, optioned or realized
upon, or any part thereof, from, through or under Mortgagor. No
delay on the part of Mortgagee in exercising any power of sale,
Lien or option, or any other right or remedy hereunder, or
otherwise, and no notice or demand that may be given to or made
upon Mortgagor with respect to any such power, right or remedy,
shall constitute a waiver thereof or limit or impair the right of
Mortgagee to take any other or similar action or to exercise any
power of sale, Lien or option, or any other right or remedy
granted in this Agreement or in any other agreement secured
hereby or otherwise available to Mortgagee; nor shall any single
or partial exercise of any such power, right or remedy preclude
any other or further exercise thereof, or the exercise of any
power, right or remedy granted in this Agreement or otherwise
available to Mortgagee, or prejudice its rights against Mortgagor
in any respect. Each and every remedy of Mortgagee shall, to the
extent permitted by applicable Law, be cumulative and in addition
to any other remedy granted hereunder or now or hereafter
available to it at law, in equity or otherwise.
9.4 Amendment, etc. Neither this Agreement nor any
provision hereof may be amended, modified, waived or discharged
orally, but only by an instrument in writing in accordance with
Article 9 of the Indenture. No waiver by Mortgagee of any breach
or default of or by Mortgagor under this Agreement, any other
agreement or indebtedness secured hereby, or otherwise, shall be
deemed a waiver of any other or similar, previous or subsequent
breach or default.
9.5 [Intentionally Omitted.]
9.6 Successors and Assigns. This Agreement and all
obligations of Mortgagor hereunder shall be binding upon the
successors and assigns of Mortgagor permitted under the
Indenture, and shall, together with the rights and remedies of
Mortgagee hereunder, inure to the benefit of Mortgagee, the
Holders, and their respective successors and assigns. Any
assignment in violation hereof shall be null and void ab initio.
9.7 Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid,
illegal or unenforceable in whole or in part in any jurisdiction,
then such invalidity or unenforceability shall affect in that
jurisdiction only such clause or provision, or part thereof, and
shall not in any manner affect such clause or provision in any
other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction. Any impairment or invalidity,
under the laws of any jurisdiction, of this Agreement, in its
aspect as security for any portion of the Obligations, hereunder
or under the Securities, the Indenture or the other Operative
Documents, for any portion of any other indebtedness or
obligation secured hereby, shall not impair or invalidate this
Agreement as security for any other portion thereof.
38
9.8 Governing Law; Waiver of Jury Trial.
(a) The laws of the State of New York shall govern
this Agreement without regard to principles of conflict of laws.
(b) Mortgagee and Mortgagor each waive any right to
have a jury participate in resolving any dispute, whether
sounding in contract, tort, or otherwise arising out of,
connected with, related to or incidental to the relationship
established between them in connection with this Agreement.
Instead, any disputes resolved in court will be resolved in a
bench trial without a jury.
9.9 Notices; Waivers. Any request, demand, authorization,
direction, notice, consent, waiver or other document provided or
permitted by this Agreement to be made upon, given or furnished
to, or filed with the parties hereto and/or the Holders, as the
case may be, shall be made, given, furnished or filed in the
manner and subject to the provisions of Section 11.2 of the
Indenture.
9.10 No Adverse Interpretation of Other Agreements. This
Agreement may not be used to interpret any agreement of Mortgagor
or any of its Subsidiaries which is unrelated to this Agreement
or the other Operative Documents. Any such agreement may not be
used to interpret this Agreement.
9.11 Benefits of Agreement Restricted. Subject to the
provisions of Section 9.6 hereof, nothing in this Agreement,
express or implied, shall give or be construed to give to any
Person, firm or corporation, other than the parties hereto and
the Holders, any legal or equitable right, remedy or claim under
or in respect of this Agreement or under any covenant, condition,
or provision herein contained, all such covenants, conditions and
provisions, subject to Section 9.6 hereof, being for the sole
benefit of the parties hereto and of the Holders.
9.12 Counterpart Originals. This Agreement may be signed in
two or more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and the
same agreement.
9.13 Effect of Headings. The Section headings and the Table
of Contents contained in this Agreement have been inserted for
convenience of reference only, and are and shall be without
substantive meaning or content of any kind whatsoever and are not
a part of this Agreement.
9.14 Section 1110 of the Bankruptcy Code. It is the
intention of the parties that the security interest created by
this Agreement shall be a security interest within the meaning of
Section 1110 of the Bankruptcy Code (11 U.S.C. ss. 1110) which
shall entitle Mortgagee to all of the benefits of such Section or
any similar successor provision with respect to the right to
repossess the Airframe, Engines and Parts as provided herein; and
in any circumstances where more than one construction of the
terms and conditions of this Agreement is possible, a
construction which would preserve such benefits shall control
over any construction which would not preserve such benefits or
would render them doubtful. In that regard, the parties
39
acknowledge and agree that the security interest created by this
Agreement is intended to be a purchase-money security interest
retained and taken by Mortgagee for the benefit of the holders of
the Securities as seller of the Collateral to Mortgagor to secure
the purchase price of the Collateral as evidenced by the
Operative Documents. To the extent consistent with the provisions
of such Section 1110 or any analogous Section of the Federal
bankruptcy laws, as amended from time to time, it is hereby
expressly agreed and provided that, notwithstanding any other
provisions of the Federal bankruptcy laws, as amended from time
to time, any right of Mortgagee to take possession of the
Aircraft in compliance with the provisions of this Agreement
shall not be affected by the provisions of 11 U.S.C. ss. 362 or
ss. 363, as amended from time to time, or any analogous
provisions of any superseding statute or any power of the
bankruptcy court to enjoin such taking of possession. It is the
intention of the parties that the entitlement to such benefits
shall not be adversely affected by any sale or other transfer of
any Security to a subsequent Holder or by any modification of the
terms hereof, of the Securities or of the other Operative
Documents.
40
IN WITNESS WHEREOF, the parties hereto have, by their indicated
officers thereunto duly authorized, caused this Aircraft Second
Mortgage and Security Agreement to be executed as of the day and
year first above written.
Mortgagor,
TRANS WORLD AIRLINES, INC.
By:__________________________
Name:
Title:
Mortgagee,
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Trustee
By:__________________________
Name:
Title:
EXHIBIT A
SECOND MORTGAGE AND
SECURITY AGREEMENT SUPPLEMENT NO.
Second Mortgage and Security Agreement Supplement No.
__, dated _______, ("Mortgage Supplement"), of TRANS WORLD
AIRLINES, INC. (the "Company") under the Agreement (as
hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Second Aircraft Mortgage and Security
Agreement dated as of June __, 1998 (the "Agreement"), between
the Company and First Security Bank, National Association, as
Trustee under the Indenture referred to in the Agreement (the
"Mortgagee"), provides for the execution and delivery of one or
more supplements thereto substantially in the form hereof which
shall particularly describe the [Aircraft]* [Engine(s)]** (such
term and other defined terms in the Agreement being used herein
with the same meanings) being delivered on [the date thereof]*
[insert applicable date],** and shall specifically grant an
equipment security interest in the Company's interest in such
[Aircraft]* [Engine(s)]** to the Mortgagee; and
[WHEREAS, it is intended that an executed counterpart
of the Agreement be duly recorded pursuant to the Federal
Aviation Act concurrently with the recording pursuant to such Act
of an executed counterpart of this Mortgage Supplement and,
accordingly, such executed counterpart of this Mortgage
Supplement shall be attached to and constitute a part of the
Agreement for all purposes and shall be recorded together with
such Agreement pursuant to such Act; and]*
[WHEREAS, the Agreement was duly recorded pursuant to
the Federal Aviation Act on June __, 1998 and has been assigned
Conveyance No. __________; and]**
WHEREAS, the Company hereby acknowledges that the
[Aircraft]* [Engine(s)]** referred to in Annex A attached hereto
and made a part hereof has been delivered to the Company, and is
included in the Property of the Company covered by the terms and
conditions of the Agreement, subject to the equipment security
interest created thereunder;
NOW, THEREFORE, in order to secure all Obligations for
the benefit of Mortgagee and the Holders, subject to the terms
and conditions of the Agreement, and in consideration of the
premises and of the covenants contained in the Agreement, and of
other good and valuable consideration, the receipt whereof is
hereby acknowledged, the Company has transferred, assigned,
granted, bargained, sold, conveyed, mortgaged, hypothecated,
pledged, set over and confirmed and does hereby transfer, assign,
grant, bargain, sell, convey, mortgage, hypothecate, pledge, set
over and confirm, a second priority equipment security interest
in and a
--------
* For Mortgage Supplement executed and delivered on the Issue
Date.
** For Mortgage Supplement executed and delivered after the Issue
Date for any Replacement Engine(s).
2
mortgage lien on, the Property comprising all its right, title
and interest in and to [each of the Airframe and Engines]* [the
Engine(s)]** described in Annex A attached hereto whether or not
any such Engine(s) shall be installed in or attached to the
Airframe or any other aircraft, to the Mortgagee, its successors
and assigns;
To have and to hold all and singular the aforesaid
Property unto the Mortgagee, its successors, transferees and
assigns, for the uses and purposes and subject to the terms and
provisions set forth in the Agreement.
This Mortgage Supplement shall be construed as
supplemental to the Agreement and shall form a part thereof, and
the Agreement is hereby incorporated by reference herein and is
hereby ratified, approved and confirmed and terms not otherwise
defined herein shall have the meanings provided in the Agreement.
This Mortgage Supplement is being delivered in the
State of New York and shall be in all respects, including all
matters of construction, validity and performance, be governed by
the laws of the State of New York without regard to principles of
conflict of laws.
* * *
--------
* For Mortgage Supplement executed and delivered on the Issue
Date.
** For Mortgage Supplement executed and delivered after the Issue
Date for any Replacement Engine(s).
3
IN WITNESS WHEREOF, the Company has caused this
Mortgage Supplement to be duly executed by one of its duly
authorized officers, as of the day and year first above written.
TRANS WORLD AIRLINES, INC.
By:_________________________
Name:_______________________
Title:______________________
Annex A to
Second Mortgage and
Security Agreement Supplement
No. ___
DESCRIPTION OF AIRFRAME AND ENGINES
AIRFRAME
FAA Regis- Manufacturer's
Manufacturer Model tration No. Serial No.
The Boeing _______ _______ _________
Company
ENGINES
Manufacturer Model Manufacturer's Serial Nos.
Xxxxx & Xxxxxxx __________ __________
Xxxxx & Whitney __________ __________
Each Engine is of 750 or more "rated take-off horsepower"
or the equivalent of such horsepower.
EXHIBIT B
INSURANCE
[Refer to the Aircraft Second Mortgage and Security
Agreement dated as of June 16, 1998 between Mortgagor and
Mortgagee (the "Agreement"). Capitalized terms used in this
Exhibit and not otherwise defined herein or in the insurance
policies referred to herein shall have the meanings ascribed to
such terms in Section 1 of the Definitions Appendix attached to
the Agreement as Appendix I. If applicable, insurance
certificates from the insurers will be provided.]
To: First Security Bank, National Association, as Trustee
("Mortgagee")
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Corporate Trust Services
TRANS WORLD AIRLINES, INC.
Boeing 767-231 ETOPS
Manufacturer's Serial No.: 22570
FAA Registration Xxxx: N607TW (the "Aircraft")
The following underwriters have subscribed to the insurance
policies:
[LIST COMPANIES & PERCENTAGES]
THIS IS TO CERTIFY THAT, as insurance brokers, we have
effected fleet insurance in respect of aircraft owned or operated
by Mortgagor (including the Aircraft) as specified below.
AIRCRAFT HULL ALL RISKS
COVERING:
All risks of physical loss or damage to the Aircraft from
any cause (subject only to the exclusions as specified
below), for an agreed value of the Aircraft in an amount
equal to $27,500,000 (the "Agreed Value").
DEDUCTIBLES:
US$ 1,000,000 each and every loss. Not applicable to Total
Loss/Constructive Total Loss or Arranged Total Loss.
GEOGRAPHICAL COVERAGE:
Worldwide
2
AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY
COVERING:
Aircraft Third Party, Passenger, Baggage, Cargo and Mail
Liability and Airline General Third Party Liability
(including but not limited to Premises, Hangarkeepers,
Contractual and Products Liability) for combined single
limit of not less than US$ 600,000,000 (or such higher
amount as Mortgagor may carry on any other aircraft in its
fleet) any one accident/occurrence (but in the aggregate in
relation to Products Liability), extended to cover
Mortgagor's liability under the Agreement to the extent of
the risks covered by the policy; including war and allied
perils under Extended Coverage Endorsement as per AVN 52;
subject only to exclusions as specified below.
GEOGRAPHICAL LIMITS:
Worldwide
HULL WAR AND ALLIED PERILS
COVERING:
Hull War Risks as per RJM Airline One, but including (i)
confiscation or requisition (including by State of
Registration), (ii) hijacking or other unlawful seizure or
wrongful exercise of control of the Aircraft or crew in
flight (including any attempt at such seizure or control)
and including "All Risks" Continuation Clause and Extortion
Risks (including expenses) and covering claims excluded
from Hull All Risks Policy while Aircraft outside Assured's
control by reason of perils insured under this policy, for
the Agreed Value.
DEDUCTIBLE:
US$ 1,000,000
GEOGRAPHICAL LIMITS:
Worldwide
AIRCRAFT SPARES ALL RISKS INSURANCE
COVERING:
All risks of physical loss or damage to Aircraft Parts or
spares or Engines at all times when removed from the
Aircraft from whatever cause, subject only to the
exclusions specified below, including the risks set down in
AVN 48B other than paragraphs (a) and (b) thereof (but
including paragraph (a) in respect of transit risks) for
limits of:
3
US$ 18,000,000
and covering replacement cost.
DEDUCTIBLE:
US$ 250,000 each and every loss
GEOGRAPHICAL COVERAGE:
Worldwide
CONTRACTUAL INDEMNITY
Mortgagor has insurance coverage for the indemnities agreed
to by Mortgagor pursuant to Section 6.3 of the Agreement
but only to the extent of the risks covered by the
policies.
PERIOD OF COVERAGE (ALL POLICIES)
From Issue Date to [EXPIRATION DATE]
It is further certified that Mortgagee has an interest in
respect of the Aircraft under the Agreement. Accordingly,
with respect to losses occurring during the period from the
Issue Date until the expiry of the Insurance or until the
expiry or agreed termination of the Agreement or until the
obligations under the Agreement are terminated by any
action of Mortgagor or Mortgagee and it is confirmed that
the Insurance afforded by the Policy is in full force and
effect and it is further agreed that the following
provisions are specifically endorsed to the Policy.
1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND
AIRCRAFT SPARES INSURANCES
[MORTGAGEE ONLY-NO OTHER CONTRACT PARTIES] In respect of
any claim on the Aircraft that becomes payable on the basis of a
total loss, settlement shall be made to, or to the order of
Mortgagee and Notes Trustee, as their interests may appear, and
no other loss payee, up to the Agreed Value. With respect to
repairable damage to the Aircraft or any Engine, Mortgagee will
receive all insurance proceeds in excess of US$ 500,000; provided
that upon receipt by the insurance broker of written notice of a
Default on the part of Mortgagor, all insurance proceeds which
otherwise would be payable to Mortgagor will be made directly to
Mortgagee. In respect of any other claim, settlement (net of any
relevant policy deductible) shall be made with such party(ies) as
may be necessary to repair the Aircraft unless otherwise agreed
after consultation between the Insurers and the insured and,
where necessary under the terms of the Agreement with Mortgagee.
Such payments shall only be made provided they are in compliance
with all applicable laws and regulations.
Insurers agree 50/50 settlement in terms of AVS 103.
4
Insurers have no right to replace the Aircraft on a Total
Loss (arranged, constructive or otherwise).
Insurers recognize that Mortgagor and Mortgagee have agreed
that a Total Loss of the Airframe will constitute a Total Loss of
the Aircraft.
"Constructive Total Loss" means any physical damage loss
for which the cost to repair equals or exceeds one-half of the
Agreed Value of the Aircraft. As part of a constructive total
loss of the Aircraft, the insured will abandon the Aircraft to
the underwriter.
In the event of Total Loss of the Aircraft, Insurers agree
to pay Mortgagee all amounts up to the Agreed Value based solely
upon Mortgagee's (not Mortgagor's) execution of the appropriate
form of release/discharge document; Mortgagee may sign any
required release in lieu of the Insured in the event of a Total
Loss, Constructive Total Loss or Arranged Total Loss.
"Cut-through clause": The Reinsurers and the Insurers
confirm and agree that in the event of any claim arising under
the hull reinsurances where such claim is to be paid to the
person named as sole loss payee under the primary insurances, the
Reinsurers shall in lieu of payment to the Insurers, their
successors in interest and assigns, pay to the person named as
sole loss payee under the primary insurances that portion of any
loss due for which the Reinsurers would otherwise be liable to
pay the Insurers (subject to proof of loss), it being understood
and agreed that any such payment by any Reinsurers shall (to the
extent of such payment) fully discharge and release such
Reinsurer from any and all further liability in connection
therewith and provide for payment to be made notwithstanding (a)
any bankruptcy, insolvency, liquidation or dissolution of the
Insurers; and (b) that the Insurers have made no payment under
the original insurance policies.
Insurers confirm that if the Airframe and not the Engines
suffers a Total Loss, Constructive Total Loss or Arranged Total
Loss that Mortgagee will receive the entire Agreed Value
regardless of any claim by any third party to the insurance
proceeds on account of their engines being installed on the
airframe at the time of the Total Loss, Constructive Total Loss
or Arranged Total Loss.
2. UNDER THE LEGAL LIABILITY INSURANCE
Subject to the provisions of this Endorsement, the
Insurance shall operate in all respects as if a separate Policy
had been issued covering each party insured hereunder, but this
provision shall not operate to include any claim howsoever
arising in respect of loss or damage to the Aircraft insured
under the Hull or Spares Insurance of the Insured.
Notwithstanding the foregoing the total liability of Insurers in
respect of any and all Insureds shall not exceed the limits of
liability stated in the Policy.
The Insurance provided hereunder shall be primary and
without right of contribution from any other insurance which may
be available to Mortgagee.
5
This Endorsement does not provide coverage for Mortgagee
with respect to claims arising out of its legal liability as
manufacturer, repairer, or servicing agent of the Aircraft.
3. UNDER ALL INSURANCES
Mortgagee, its successors and assigns, and (with respect to
Aviation and Airline General Third Party Liability only) its
directors, officers and employees for their respective rights and
interests, are included as Additional Insured.
The cover afforded to Mortgagee by the Policy in accordance
with this Endorsement shall not be invalidated by any act or
omission (including misrepresentation and non-disclosure) of any
other person or party which results in a breach of any term,
condition or warranty of the Policy.
Additional Insureds shall have no responsibility for
premium and insurers shall waive any right of set-off or
counterclaim against Additional Insureds.
Upon payment of any loss or claim to or on behalf of
Mortgagee, Insurers will not have, and shall waive all rights
with respect to, subrogation against, any Additional Insured.
Except in respect of any provision for Cancellation or
Automatic Termination specified in the Policy or any endorsement
thereof, cover provided by this Endorsement may only be canceled
or materially altered in a manner adverse to Mortgagee by the
giving of not less than thirty (30) days notice in writing to the
appointed broker except with respect to nonpayment of premium, in
which event the Insurers will provide Mortgagee with not less
than ten (10) days prior written notice of the cancellation.
Notice shall be deemed to commence from the date such notice is
given by the Insurers. Such notice will NOT, however, be given at
normal expiry date of the Policy or any endorsement.
The insurance policy is being delivered in the United
States and will in all respects be governed by and construed in
accordance with the Laws of the United States or any applicable
State thereof. The underwriter consents to the non-exclusive
jurisdiction of the federal courts of the United States.
4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF
THE ENDORSEMENT:
MORTGAGOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS,
CONDITIONS, LIMITATIONS, WARRANTIES, EXCLUSIONS AND CANCELLATION
PROVISIONS THEREOF.
THE POLICY SHALL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN
THE AGREEMENT WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR
AMENDMENT TO THE POLICY.
6
SUBJECT (save as specifically stated in this Certificate)
to policy terms, conditions, limitations and exclusions.
EXHIBIT C
PRE-APPROVED LIST
America West Airlines, Inc.
American Airlines, Inc.
Air Canada
British Airways Plc.
Delta Air Lines, Inc.
United Airlines, Inc.
