TRUST INDENTURE AND MORTGAGE [____] Dated as of [________ __, 20__] Between CONTINENTAL AIRLINES, INC., Owner and WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly stated herein, but solely as Mortgagee, Mortgagee
TRUST
INDENTURE AND MORTGAGE [____]
Dated
as
of [________ __, 20__]
Between
CONTINENTAL
AIRLINES, INC.,
Owner
and
WILMINGTON
TRUST COMPANY,
not
in
its individual capacity,
except
as
expressly stated herein,
but
solely as Mortgagee,
Mortgagee
EQUIPMENT
NOTES COVERING
ONE
BOEING [______] AIRCRAFT
BEARING
U.S. REGISTRATION XXXX N[______]
AND
MANUFACTURER’S SERIAL NO. [______]
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Page
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1
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ARTICLE
I DEFINITIONS
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4
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ARTICLE
II THE
EQUIPMENT NOTES
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4
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SECTION
2.01.
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4
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SECTION
2.02.
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10
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SECTION
2.03.
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12
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SECTION
2.04.
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12
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SECTION
2.05.
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14
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SECTION
2.06.
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15
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SECTION
2.07.
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15
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SECTION
2.08.
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16
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SECTION
2.09.
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17
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SECTION
2.10.
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17
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SECTION
2.11.
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17
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SECTION
2.12.
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18
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SECTION
2.13.
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19
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20
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SECTION
3.01.
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20
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SECTION
3.02.
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21
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SECTION
3.03.
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22
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SECTION
3.04.
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25
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SECTION
3.05.
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26
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SECTION
3.06.
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26
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SECTION
3.07.
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26
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ARTICLE
IV COVENANTS
OF THE OWNER
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27
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SECTION
4.01.
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27
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SECTION
4.02.
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27
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SECTION
4.03.
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32
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SECTION
4.04.
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33
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SECTION
4.05.
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36
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SECTION
4.06.
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41
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SECTION
4.07.
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41
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SECTION
4.08
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42
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ARTICLE
V EVENTS
OF DEFAULT; REMEDIES OF
MORTGAGEE
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43
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SECTION
5.01.
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43
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TABLE
OF
CONTENTS
(continued)
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Page
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SECTION
5.02.
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44
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SECTION
5.03.
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46
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SECTION
5.04.
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47
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SECTION
5.05.
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47
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SECTION
5.06.
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47
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SECTION
5.07.
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47
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SECTION
5.08.
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48
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SECTION
5.09.
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48
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ARTICLE
VI DUTIES
OF THE MORTGAGEE
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48
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SECTION
6.01.
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48
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SECTION
6.02.
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49
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SECTION
6.03.
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49
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SECTION
6.04.
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50
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SECTION
6.05.
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50
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SECTION
6.06.
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50
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ARTICLE
VII THE
MORTGAGEE
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51
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SECTION
7.01.
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51
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SECTION
7.02.
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51
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SECTION
7.03.
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51
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SECTION
7.04.
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52
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SECTION
7.05.
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52
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SECTION
7.06.
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53
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SECTION
7.07.
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53
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ARTICLE
VIII INDEMNIFICATION
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53
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SECTION
8.01.
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53
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ARTICLE
IX SUCCESSOR
AND SEPARATE TRUSTEES
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53
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SECTION
9.01.
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53
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SECTION
9.02.
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54
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56
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SECTION
10.01.
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56
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SECTION
10.02.
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58
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SECTION
10.03.
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58
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ii
TABLE
OF
CONTENTS
(continued)
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Page
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SECTION
10.04.
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58
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ARTICLE
XI MISCELLANEOUS
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58
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SECTION
11.01.
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58
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SECTION
11.02.
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59
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SECTION
11.03.
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59
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SECTION
11.04.
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59
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SECTION
11.05.
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59
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SECTION
11.06.
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60
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SECTION
11.07.
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60
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SECTION
11.08.
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60
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SECTION
11.09.
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60
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SECTION
11.10.
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60
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SECTION
11.11.
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60
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SECTION
11.12.
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61
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SECTION
11.13.
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61
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ANNEX
A Definitions
ANNEX
B Insurance
TRUST
INDENTURE AND MORTGAGE [____]
TRUST
INDENTURE AND MORTGAGE [____], dated as of [________ __, 20__], (“Trust
Indenture”), between CONTINENTAL AIRLINES, INC., a Delaware corporation
(“Owner”), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in
its individual capacity, except as expressly stated herein, but solely as
Mortgagee hereunder (together with its successors hereunder, the
“Mortgagee”).
WITNESSETH
WHEREAS,
all capitalized terms used herein shall have the respective meanings set forth
or referred to in Article I hereof;
WHEREAS,
the parties hereto desire by this Trust Indenture, among other things, (i)
to
provide for the issuance by the Owner of the Series of Equipment Notes specified
on Schedule I hereto, and Additional Series, and (ii) to provide for the
assignment, mortgage and pledge by the Owner to the Mortgagee, as part of the
Collateral hereunder, among other things, of all of the Owner’s right, title and
interest in and to the Aircraft and, except as hereinafter expressly provided,
all payments and other amounts received hereunder in accordance with the terms
hereof, as security for, among other things, the Owner’s obligations to the Note
Holders and the Indenture Indemnitees;
WHEREAS,
all things have been done to make the Equipment Notes of the Series listed
on
Schedule I hereto, when executed by the Owner and authenticated and delivered
by
the Mortgagee hereunder, the valid, binding and enforceable obligations of
the
Owner; and
WHEREAS,
all things necessary to make this Trust Indenture the valid, binding and legal
obligation of the Owner for the uses and purposes herein set forth, in
accordance with its terms, have been done and performed and have
happened;
NOW,
THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH, that, to secure the
prompt payment of the Original Amount of, interest on, Make-Whole Amount, if
any, and all other amounts due with respect to, all Equipment Notes from time
to
time outstanding hereunder according to their tenor and effect and to secure
the
performance and observance by the Owner of all the agreements, covenants and
provisions contained herein and in the Participation Agreement and in the
Equipment Notes and to secure the Related Secured Obligations and the
performance and observance by the Owner of all agreements, covenants and
provisions contained in the Related Equipment Notes, for the benefit of the
Note
Holders and each of the Indenture Indemnitees, and in consideration of the
premises and of the covenants herein contained, and of the acceptance of the
Equipment Notes and the Related Equipment Notes by the holders thereof, and
for
other good and valuable consideration the receipt and adequacy whereof are
hereby acknowledged, the Owner has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto
the
Mortgagee, its successors in trust and assigns, for the security and benefit
of,
the Note Holders and each of the
Indenture
Indemnitees, a first priority security interest and, in the case of the Airframe
and Engines, an International Interest in and mortgage lien on all right, title
and interest of the Owner in, to and under the following described property,
rights and privileges, whether now or hereafter acquired (which, collectively,
together with all property hereafter specifically subject to the Lien of this
Trust Indenture by the terms hereof or any supplement hereto, are included
within, and are referred to as, the “Collateral”), to wit:
(1) The
Airframe which is one Boeing [______] aircraft with the FAA Registration number
of N[______] and the manufacturer’s serial number of [______] and two Engines,
each of which Engines is a [________________________] jet propulsion aircraft
engine with at least 1750 lb. of thrust, with the manufacturer’s serial numbers
of [______] and [______] (such Airframe and Engines more particularly described
in the Trust Indenture Supplement executed and delivered as provided herein)
as
the same is now and will hereafter be constituted, whether now owned by the
Owner or hereafter acquired, and in the case of such Engines, whether or not
any
such Engine shall be installed in or attached to the Airframe or any other
airframe, together with (a) all Parts of whatever nature, which are from time
to
time included within the definitions of “Airframe” or “Engines”, whether now
owned or hereafter acquired, including all substitutions, renewals and
replacements of and additions, improvements, accessions and accumulations to
the
Airframe and Engines (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments, appurtenances,
accessories, furnishings or other equipment excluded from the definition of
Parts) and (b) all Aircraft Documents;
(2) The
Purchase Agreement and the Bills of Sale to the extent the same relate to
continuing rights of the Owner in respect of any warranty, indemnity or
agreement, express or implied, as to title, materials, workmanship, design
or
patent infringement or related matters with respect to the Airframe or the
Engines (reserving to the Owner, however, all of the Owner’s other rights and
interest in and to the Purchase Agreement) together with all rights, powers,
privileges, options and other benefits of the Owner thereunder (subject to
such
reservation) with respect to the Airframe or the Engines, including, without
limitation, the right to make all waivers and agreements, to give and receive
all notices and other instruments or communications, to take such action upon
the occurrence of a default thereunder, including the commencement, conduct
and
consummation of legal, administrative or other proceedings, as shall be
permitted thereby or by law, and to do any and all other things which the Owner
is or may be entitled to do thereunder (subject to such reservation), subject,
with respect to the Purchase Agreement, to the terms and conditions of the
Consent and Agreement and the Engine Consent and Agreement;
(3) All
proceeds with respect to the requisition of title to or use of the Aircraft
or
any Engine by any Government Entity or from the sale or other disposition of
the
Aircraft, the Airframe, any Engine or other property described in any of these
Granting Clauses by the Mortgagee pursuant to the terms of this Trust Indenture,
and all insurance proceeds with respect to the Aircraft, the Airframe, any
Engine or any part thereof, but excluding any insurance maintained by the Owner
and not required under Section 4.06;
(4) All
rents, revenues and other proceeds collected by the Mortgagee pursuant to
paragraph (v) of clause “Third” of Section 3.03 and Section 5.03(b) and all
monies and securities from time to time deposited or required to be deposited
with the Mortgagee by or for the account of the Owner pursuant to any terms
of
this Trust Indenture held or required to be held by the Mortgagee hereunder,
including the Securities Account and all monies and securities deposited into
the Securities Account; and
(5) All
proceeds of the foregoing.
PROVIDED,
HOWEVER, that notwithstanding any of the foregoing provisions, so long as no
Event of Default shall have occurred and be continuing, (a) the Mortgagee shall
not take or cause to be taken any action contrary to the Owner’s right hereunder
to quiet enjoyment of the Airframe and Engines, and to possess, use, retain
and
control the Airframe and Engines and all revenues, income and profits derived
therefrom, and (b) the Owner shall have the right, to the exclusion of the
Mortgagee, with respect to the Purchase Agreement, to exercise in the Owner’s
name all rights and powers of the buyer under the Purchase Agreement (other
than
to amend, modify or waive any of the warranties or indemnities contained
therein, except in the exercise of the Owner’s reasonable business judgment) and
to retain any recovery or benefit resulting from the enforcement of any warranty
or indemnity under the Purchase Agreement; and provided
further that,
notwithstanding the occurrence or continuation of an Event of Default, the
Mortgagee shall not enter into any amendment of the Purchase Agreement which
would increase the obligations of the Owner thereunder.
TO
HAVE
AND TO HOLD all and singular the aforesaid property unto the Mortgagee, and
its
successors and assigns, in trust for the equal and proportionate benefit and
security of the Note Holders and the Indenture Indemnitees, except as provided
in Section 2.13 and Article III hereof, without any preference, distinction
or
priority of any one Equipment Note over any other, or any Related Equipment
Note
over any other, by reason of priority of time of issue, sale, negotiation,
date
of maturity thereof or otherwise for any reason whatsoever, and for the uses
and
purposes and in all cases and as to all property specified in clauses (1)
through (5) inclusive above, subject to the terms and provisions set forth
in
this Trust Indenture.
It
is
expressly agreed that anything herein contained to the contrary notwithstanding,
the Owner shall remain liable under the Indenture Agreements to perform all
of
the obligations assumed by it thereunder, except to the extent prohibited or
excluded from doing so pursuant to the terms and provisions thereof, and the
Mortgagee, the Note Holders and the Indenture Indemnitees shall have no
obligation or liability under the Indenture Agreements by reason of or arising
out of the assignment hereunder, nor shall the Mortgagee, the Note Holders
or
the Indenture Indemnitees be required or obligated in any manner to perform
or
fulfill any obligations of the Owner under or pursuant to the Indenture
Agreements, or, except as herein expressly provided, to make any payment, or
to
make any inquiry as to the nature or sufficiency of any payment received by
it,
or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may
be
entitled at any time or times.
The
Owner
does hereby constitute the Mortgagee the true and lawful attorney of the Owner,
irrevocably, granted for good and valuable consideration and coupled with an
interest and with full power of substitution, and with full power (in the name
of the Owner or otherwise) to ask for, require, demand, receive, compound and
give acquittance for any and all monies and claims for monies (in each case
including insurance and requisition proceeds) due and to become due under or
arising out of the Indenture Agreements, and all other property which now or
hereafter constitutes part of the Collateral, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or to
take
any action or to institute any proceedings which the Mortgagee may deem to
be
necessary or advisable in the premises; provided
that the
Mortgagee shall not exercise any such rights except upon the occurrence and
during the continuance of an Event of Default hereunder.
The
Owner
agrees that at any time and from time to time, upon the written request of
the
Mortgagee, the Owner will promptly and duly execute and deliver or cause to
be
duly executed and delivered any and all such further instruments and documents
(including without limitation UCC continuation statements) as the Mortgagee
may
reasonably deem necessary to perfect, preserve or protect the mortgage, security
interests and assignments created or intended to be created hereby or to obtain
for the Mortgagee the full benefits of the assignment hereunder and of the
rights and powers herein granted.
IT
IS
HEREBY COVENANTED AND AGREED by and between the parties hereto as
follows:
Capitalized
terms used but not defined herein shall have the respective meanings set forth
or incorporated by reference, and shall be construed in the manner described,
in
Annex A hereto.
THE
EQUIPMENT NOTES
SECTION
2.01. Form of Equipment
Notes
The
Equipment Notes shall be substantially in the form set forth below:
THIS
EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE.
ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER
THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS
IS AVAILABLE.
CONTINENTAL
AIRLINES, INC.
SERIES
[_____]
EQUIPMENT NOTE DUE [____]
ISSUED
IN CONNECTION WITH THE
BOEING
MODEL [_____] AIRCRAFT BEARING UNITED STATES REGISTRATION
NUMBER
N[_____]
|
No.
____
|
Date:
[__________,
____]
|
|
INTEREST
RATE
|
MATURITY
DATE
|
|
[___________]
|
[____________]
|
CONTINENTAL
AIRLINES, INC., a Delaware corporation (“Owner”), hereby promises to pay to
__________________, or the registered assignee thereof, the principal sum of
$____________ (the “Original Amount”), together with interest on the amount of
the Original Amount remaining unpaid from time to time (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) from the date hereof
until paid in full at a rate per annum equal to the Debt Rate. The Original
Amount of this Equipment Note shall be due and payable in installments on the
dates set forth in Schedule I hereto equal to the corresponding percentage
of
the Original Amount of this Equipment Note set forth in Schedule I hereto.
Accrued but unpaid interest shall be due and payable in semi-annual installments
commencing on [______ __, 20__,]1
and
thereafter on April 19 and October 19 of each year, to and including
[_______________]. Notwithstanding the foregoing, the final payment made on
this
Equipment Note shall be in an amount sufficient to discharge in full the unpaid
Original Amount and all accrued and unpaid interest on, and any other amounts
due under, this Equipment Note. Notwithstanding anything to the contrary
contained herein, if any date on which a payment under this Equipment Note
becomes due and payable is not a Business Day, then such payment shall not
be
made on such scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business Day, no
interest shall accrue on the amount of such payment during such
extension.
For
purposes hereof, the term “Trust Indenture” means the Trust Indenture and
Mortgage [____] dated as of [______ __, 20__,] between the Owner and Wilmington
Trust Company (the “Mortgagee”), as the same may be amended or supplemented from
time to time. All other capitalized terms used in this Equipment Note and not
defined herein shall have the respective meanings assigned in the Trust
Indenture.
This
Equipment Note shall bear interest, payable on demand, at the Payment Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any overdue Original Amount, any overdue Make-Whole Amount, if any,
and (to the extent permitted by applicable Law) any overdue interest and any
other amounts payable hereunder which are overdue, in each case for the period
the same is overdue. Amounts shall be overdue if not paid when due (whether
at
stated maturity, by acceleration or otherwise).
1. Insert first April 19 or October 19 after the Closing Date.
There
shall be maintained an Equipment Note Register for the purpose of registering
transfers and exchanges of Equipment Notes at the Corporate Trust Office of
the
Mortgagee or at the office of any successor in the manner provided in Section
2.07 of the Trust Indenture.
The
Original Amount and interest and other amounts due hereunder shall be payable
in
Dollars in immediately available funds at the Corporate Trust Office of the
Mortgagee, or as otherwise provided in the Trust Indenture. Each such payment
shall be made on the date such payment is due and without any presentment or
surrender of this Equipment Note, except that in the case of any final payment
with respect to this Equipment Note, the Equipment Note shall be surrendered
promptly thereafter to the Mortgagee for cancellation.
The
holder hereof, by its acceptance of this Equipment Note, agrees that, except
as
provided in the Trust Indenture, each payment of the Original Amount, Make-Whole
Amount, if any, and interest received by it hereunder shall be applied,
first,
to the
payment of accrued interest on this Equipment Note (as well as any interest
on
any overdue Original Amount, any overdue Make-Whole Amount, if any, or, to
the
extent permitted by Law, any overdue interest and other amounts hereunder)
to
the date of such payment, second,
to the
payment of the Original Amount of this Equipment Note then due, third,
to the
payment of Make-Whole Amount, if any, and any other amount due hereunder or
under the Trust Indenture, and fourth,
the
balance, if any, remaining thereafter, to the payment of installments of the
Original Amount of this Equipment Note remaining unpaid in the inverse order
of
their maturity.
This
Equipment Note is one of the Equipment Notes referred to in the Trust Indenture
which have been or are to be issued by the Owner pursuant to the terms of the
Trust Indenture. The Collateral is held by the Mortgagee as security, in part,
for the Equipment Notes. The provisions of this Equipment Note are subject
to
the Trust Indenture and the Related Indentures. Reference is hereby made to
the
Trust Indenture and the Related Indentures for a complete statement of the
rights and obligations of the holder of, and the nature and extent of the
security for, this Equipment Note (including as a “Related Equipment Note” under
each of the Related Indentures) and the rights and obligations of the holders
of, and the nature and extent of the security for, any other Equipment Notes
executed and delivered under the Trust Indenture, as well as for a statement
of
the terms and conditions of the Trust created by the Trust Indenture, to all
of
which terms and conditions in the Trust Indenture each holder hereof agrees
by
its acceptance of this Equipment Note.
As
provided in the Trust Indenture and subject to certain limitations therein
set
forth, this Equipment Note is exchangeable for a like aggregate Original Amount
of Equipment Notes of different authorized denominations, as requested by the
holder surrendering the same.
Prior
to
due presentment for registration of transfer of this Equipment Note, the Owner
and the Mortgagee shall treat the person in whose name this Equipment Note
is
registered as the owner hereof for all purposes, whether or not this Equipment
Note be overdue, and neither the Owner nor the Mortgagee shall be affected
by
notice to the contrary.
This
Equipment Note is subject to redemption as provided in Sections 2.10, 2.11
and
2.12 of the Trust Indenture but not otherwise. In addition, this Equipment
Note
may be accelerated as provided in Section 5.02 of the Trust
Indenture.
This
Equipment Note is subject to purchase as set forth in Section 2.7 of the
Intercreditor Agreement, and to certain restrictions set forth in Sections
4.1(a)(ii) and 4.1(a)(iii) of the Intercreditor Agreement, as further specified
in Section 2.07 of the Trust Indenture, to all of which terms and conditions
in
the Intercreditor Agreement each holder hereof agrees by its acceptance of
this
Equipment Note.
[The
indebtedness evidenced by this Equipment Note is, to the extent and in the
manner provided in the Trust Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined
in
the Trust Indenture) in respect of [Series A Equipment Notes and Related Series
A Equipment Notes]2
[Series
A Equipment Notes, Series B Equipment Notes, Related Series A Equipment Notes
and Related Series B Equipment Notes]3
[Series
A Equipment Notes, Series B Equipment Notes, Series C Equipment Notes, Related
Series A Equipment Notes, Related Series B Equipment Notes and Related Series
C
Equipment Notes]4 ,
and
certain other Secured Obligations, and this Equipment Note is issued subject
to
such provisions. The Note Holder of this Equipment Note, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and directs
the Mortgagee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Trust Indenture
and (c) appoints the Mortgagee his attorney-in-fact for such
purpose.]5
Unless
the certificate of authentication hereon has been executed by or on behalf
of
the Mortgagee by manual signature, this Equipment Note shall not be entitled
to
any benefit under the Trust Indenture or be valid or obligatory for any
purpose.
THIS
EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF
THE STATE OF NEW YORK.
* * *
2. To
be
inserted in the case of a Series B Equipment Note.
3. To
be
inserted in the case of a Series C Equipment Note.
4. To
be
inserted in the case of an Additional Series Equipment Note.
5. To
be
inserted for each Equipment Note other than any Series A Equipment
Note.
IN
WITNESS WHEREOF, the Owner has caused this Equipment Note to be executed in
its
corporate name by its officer thereunto duly authorized on the date
hereof.
|
CONTINENTAL
AIRLINES, INC.
|
|
|
By:___________________________________
|
|
|
Name:
|
|
|
Title:
|
MORTGAGEE’S
CERTIFICATE OF AUTHENTICATION
This
is
one of the Equipment Notes referred to in the within-mentioned Trust
Indenture.
|
WILMINGTON
TRUST COMPANY, as Mortgagee
|
|
|
By:___________________________________
|
|
|
Name:
|
|
|
Title:
|
SCHEDULE
I
EQUIPMENT
NOTE AMORTIZATION
|
Payment
Date
|
Percentage
of Original Amount to Be Paid
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[SEE
SCHEDULE I TO TRUST INDENTURE
WHICH
IS INSERTED UPON ISSUANCE]
* * *
SECTION
2.02. Issuance and Terms of Equipment
Notes
The
Equipment Notes (other than the Additional Series Equipment Notes) shall be
dated the Closing Date, shall be issued in three separate series consisting
of
Series A, Series B, Series C and in the maturities and principal amounts and
shall bear interest as specified in Schedule I hereto. On the Closing Date,
each
Series specified in Schedule I shall be issued to the Subordination Agent on
behalf of the Applicable Pass Through Trustee under the Applicable Pass Through
Trust Agreement. In addition to the foregoing, Owner shall have the option
to
issue Additional Series Equipment Notes at any time and from time to time
at or after the “Delivery Period Termination Date” (as defined in the Note
Purchase Agreement), subject to the terms of Section 4(a)(vi) of the Note
Purchase Agreement and Section 9.1(d) of the Intercreditor Agreement. The
Additional Series Equipment Notes may be issued in an unlimited number of
separate series (if more than one series of Additional Series Equipment Notes
are so issued, each such series shall have a different designation such as,
for
example, “Series D” and “Series E”), shall be dated the date of original
issuance thereof and shall have such maturities, principal amounts and interest
rates as specified in an amendment to this Trust Indenture. The Equipment Notes
shall be issued in registered form only. The Equipment Notes shall be issued
in
denominations of $1,000 and integral multiples thereof, except that one
Equipment Note of each Series may be in an amount that is not an integral
multiple of $1,000. Without limitation of the foregoing, new Series B Equipment
Notes, Series C Equipment Notes or Additional Series Equipment Notes may be
issued pursuant to the provisions of Section 2.11(b).
Each
Equipment Note shall bear interest at the Debt Rate (calculated on the basis
of
a year of 360 days comprised of twelve 30-day months) on the unpaid Original
Amount thereof from time to time outstanding. Accrued interest shall be payable
in arrears on [____ __], 20[__], and on each April 19 and October 19 thereafter
until maturity. The Original Amount of each Equipment Note shall be payable
on
the dates and in the installments equal to the corresponding percentage of
the
Original Amount as set forth in Schedule I hereto (as amended, in the case
of
any Additional Series, at the time of original issuance of such Additional
Series) which shall be attached as Schedule I to such Equipment Notes.
Notwithstanding the foregoing, the final payment made under each Equipment
Note
shall be in an amount sufficient to discharge in full the unpaid Original Amount
and all accrued and unpaid interest on, and any other amounts due under, such
Equipment Note. Each Equipment Note shall bear interest, payable on demand,
at
the Payment Due Rate (calculated on the basis of a year of 360 days comprised
of
twelve 30-day months) on any part of the Original Amount, Make-Whole Amount,
if
any, and, to the extent permitted by applicable Law, interest and any other
amounts payable thereunder not paid when due for any period during which the
same shall be overdue, in each case for the period the same is overdue. Amounts
under any Equipment Note shall be overdue if not paid when due (whether at
stated maturity, by acceleration or otherwise). Notwithstanding anything to
the
contrary contained herein, if any date on which a payment under any Equipment
Note becomes due and payable is not a Business Day then such payment shall
not
be made on such scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business Day, no
interest shall accrue on the amount of such payment during such extension.
The
Owner
agrees to pay to the Mortgagee for distribution in accordance with Section
3.04
hereof: (a)(i) to the extent not payable (whether or not in fact paid) under
Section 6(a) of the Note Purchase Agreement, an amount equal to the fees payable
to the Liquidity Provider under Section 2.03 of each Liquidity Facility and
the
related Fee Letter (as defined in the Intercreditor Agreement) multiplied by
a
fraction the numerator of which shall be the then outstanding aggregate
principal amount of the Series A Equipment Notes and Series B Equipment Notes
and the denominator of which shall be the then outstanding aggregate principal
amount of all “Series A Equipment Notes” and “Series B Equipment Notes” (each as
defined in the Note Purchase Agreement); (ii) (x) the amount equal to interest
on any Downgrade Advance (other than any Applied Downgrade Advance) payable
under Section 3.07 of each Liquidity Facility minus Investment Earnings from
such Downgrade Advance multiplied by (y) the fraction specified in the foregoing
clause (i); (iii) (x) the amount equal to interest on any Non-Extension Advance
(other than any Applied Non-Extension Advance) payable under Section 3.07 of
each Liquidity Facility minus Investment Earnings from such Non-Extension
Advance multiplied by (y) the fraction specified in the foregoing clause (i);
(iv) if any payment default shall have occurred and be continuing with respect
to interest on any “Series A Equipment Notes” or “Series B Equipment Notes”
(each as defined in the Note Purchase Agreement), (x) the excess, if any, of
(1)
an amount equal to interest on any Unpaid Advance, Applied Downgrade Advance
or
Applied Non-Extension Advance payable under Section 3.07 of each Liquidity
Facility over (2) the sum of Investment Earnings from any Final Advance plus
any
amount of interest at the Payment Due Rate actually payable (whether or not
in
fact paid) by Owner on the overdue scheduled interest on the “Equipment Notes”
(as defined in the Note Purchase Agreement) in respect of which such Unpaid
Advance, Applied Downgrade Advance or Applied Non-Extension Advance was made
by
the Liquidity Provider multiplied by (y) a fraction the numerator of which
shall
be the then aggregate overdue amounts of interest on the Series A Equipment
Notes and Series B Equipment Notes (other than interest becoming due and payable
solely as a result of acceleration of any such Equipment Notes) and the
denominator of which shall be the then aggregate overdue amounts of interest
on
all “Series A Equipment Notes” and “Series B Equipment Notes” (each as defined
in the Note Purchase Agreement) (other than interest becoming due and payable
solely as a result of acceleration of any such “Equipment Notes”); and
(v) any other amounts owed to the Liquidity Provider by the Subordination
Agent as borrower under each Liquidity Facility other than amounts due as
repayment of advances thereunder or as interest on such advances, except to
the
extent payable pursuant to clause (ii), (iii) or (iv) above, multiplied by
the
fraction specified in the foregoing clause (i), (b) Owner’s pro rata share of
all compensation and reimbursement of expenses, disbursements and advances
payable by Owner under the Pass Through Trust Agreements, (c) Owner’s pro rata
share of all compensation and reimbursement of expenses and disbursements
payable to the Subordination Agent under the Intercreditor Agreement except
with
respect to any income or franchise taxes incurred by the Subordination Agent
in
connection with the transactions contemplated by the Intercreditor Agreement
and
(d) in the event Owner requests any amendment to any Operative Agreement or
Pass
Through Agreement, Owner’s pro rata share of all reasonable fees and expenses
(including, without limitation, fees and disbursements of counsel) of the Escrow
Agents and the Paying Agents in connection therewith payable by the Pass Through
Trustees under the Escrow Agreements. As used herein, “Owner’s pro rata share”
means as of any time a fraction, the numerator of which is the principal balance
then outstanding of Equipment Notes and the denominator of which is the
aggregate principal balance then
outstanding
of all “Equipment Notes” (as each such term is defined in each of the Operative
Indentures). For purposes of this paragraph, the terms “Applied Downgrade
Advance”, “Applied Non-Extension Advance”, “Cash Collateral Account”, “Downgrade
Advance”, “Final Advance”, “Investment Earnings”, “Non-Extension Advance” and
“Unpaid Advance” shall have the meanings specified in each Liquidity
Facility.
The
Equipment Notes shall be executed on behalf of the Owner by one of its
authorized officers. Equipment Notes bearing the signatures of individuals
who
were at any time the proper officers of the Owner shall bind the Owner,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Equipment Notes or
did
not hold such offices at the respective dates of such Equipment Notes. The
Owner
may from time to time execute and deliver Equipment Notes with respect to the
Aircraft to the Mortgagee for authentication upon original issue and such
Equipment Notes shall thereupon be authenticated and delivered by the Mortgagee
upon the written request of the Owner signed by an authorized officer of the
Owner. No Equipment Note shall be secured by or entitled to any benefit under
this Trust Indenture or be valid or obligatory for any purposes, unless there
appears on such Equipment Note a certificate of authentication in the form
provided for herein executed by the Mortgagee by the manual signature of one
of
its authorized officers and such certificate upon any Equipment Notes be
conclusive evidence, and the only evidence, that such Equipment Note has been
duly authenticated and delivered hereunder.
The
aggregate Original Amount of any Series of Equipment Notes issued hereunder
shall not exceed the amount set forth as the maximum therefor on Schedule I
hereto (as amended, in the case of any Additional Series, at the time of
original issuance of such Additional Series).
SECTION
2.03. [Intentionally
Omitted]
SECTION
2.04. Method of
Payment
(a) The
Original Amount of, interest on, Make-Whole Amount, if any, and other amounts
due under each Equipment Note or hereunder will be payable in Dollars by wire
transfer of immediately available funds not later than 12:30 PM, New York time,
on the due date of payment to the Mortgagee at the Corporate Trust Office for
distribution among the Note Holders in the manner provided herein, and payment
of such amount by the Owner to the Mortgagee shall be deemed to satisfy the
Owner’s obligation to make such payment. The Owner shall not have any
responsibility for the distribution of such payment to any Note Holder.
Notwithstanding the foregoing or any provision in any Equipment Note to the
contrary, the Mortgagee will use reasonable efforts to pay or cause to be paid,
if so directed in writing by any Note Holder (with a copy to the Owner), all
amounts paid by the Owner hereunder and under such holder’s Equipment Note or
Equipment Notes to such holder or a nominee therefor (including all amounts
distributed pursuant to Article III of this Trust Indenture) by transferring,
or
causing to be transferred, by wire transfer of immediately available funds
in
Dollars, prior to 2:00 p.m., New York City time, on the due date of payment,
to
an account maintained by such holder with a bank located in the continental
United States the amount to be distributed to such holder, for credit to the
account of such holder maintained at such bank. If the Mortgagee shall
fail
to
make any such payment as provided in the immediately foregoing sentence after
its receipt of funds at the place and prior to the time specified above, the
Mortgagee, in its individual capacity and not as trustee, agrees to compensate
such holders for loss of use of funds at Debt Rate until such payment is made
and the Mortgagee shall be entitled to any interest earned on such funds until
such payment is made. Any payment made hereunder shall be made without any
presentment or surrender of any Equipment Note, except that, in the case of
the
final payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Mortgagee for cancellation promptly after such payment.
Notwithstanding any other provision of this Trust Indenture to the contrary,
the
Mortgagee shall not be required to make, or cause to be made, wire transfers
as
aforesaid prior to the first Business Day on which it is practicable for the
Mortgagee to do so in view of the time of day when the funds to be so
transferred were received by it if such funds were received after 12:30 PM,
New York time, at the place of payment. Prior to the due presentment for
registration of transfer of any Equipment Note, the Owner and the Mortgagee
shall deem and treat the Person in whose name any Equipment Note is registered
on the Equipment Note Register as the absolute owner and holder of such
Equipment Note for the purpose of receiving payment of all amounts payable
with
respect to such Equipment Note and for all other purposes, and none of the
Owner
or the Mortgagee shall be affected by any notice to the contrary. So long as
any
signatory to the Participation Agreement or nominee thereof shall be a
registered Note Holder, all payments to it shall be made to the account of
such
Note Holder specified in Schedule 1 thereto and otherwise in the manner provided
in or pursuant to the Participation Agreement unless it shall have specified
some other account or manner of payment by notice to the Mortgagee consistent
with this Section 2.04.
(b) The
Mortgagee, as agent for the Owner, shall exclude and withhold at the appropriate
rate from each payment of Original Amount of, interest on, Make-Whole Amount,
if
any, and other amounts due hereunder or under each Equipment Note (and such
exclusion and withholding shall constitute payment in respect of such Equipment
Note) any and all United States withholding taxes applicable thereto as required
by Law. The Mortgagee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or
in
respect of the Equipment Notes, to withhold such amounts and timely pay the
same
to the appropriate authority in the name of and on behalf of the Note Holders,
that it will file any necessary United States withholding tax returns or
statements when due, and that as promptly as possible after the payment thereof
it will deliver to each Note Holder (with a copy to the Owner) appropriate
receipts showing the payment thereof, together with such additional documentary
evidence as any such Note Holder may reasonably request from time to
time.
If
a Note
Holder which is a Non-U.S. Person has furnished to the Mortgagee a properly
completed, accurate and currently effective U.S. Internal Revenue Service Form
W-8BEN or W-8ECI (or such successor form or forms as may be required by the
United States Treasury Department) during the calendar year in which the payment
hereunder or under the Equipment Note(s) held by such holder is made (but prior
to the making of such payment), or in either of the two preceding calendar
years, and has not notified the Mortgagee of the withdrawal or inaccuracy of
such form prior to the date of such payment (and the Mortgagee has no reason
to
believe that any information set forth in such form is inaccurate), the
Mortgagee shall
withhold
only the amount, if any, required by Law (after taking into account any
applicable exemptions properly claimed by the Note Holder) to be withheld from
payments hereunder or under the Equipment Notes held by such holder in respect
of United States federal income tax. If a Note Holder (x) which is a Non-U.S.
Person has furnished to the Mortgagee a properly completed, accurate and
currently effective U.S. Internal Revenue Service Form W-8ECI in duplicate
(or
such successor certificate, form or forms as may be required by the United
States Treasury Department as necessary in order to properly avoid withholding
of United States federal income tax), for each calendar year in which a payment
is made (but prior to the making of any payment for such year), and has not
notified the Mortgagee of the withdrawal or inaccuracy of such certificate
or
form prior to the date of such payment (and the Mortgagee has no reason to
believe that any information set forth in such form is inaccurate) or (y) which
is a U.S. Person has furnished to the Mortgagee a properly completed, accurate
and currently effective U.S. Internal Revenue Service Form W-9, if applicable,
prior to a payment hereunder or under the Equipment Notes held by such holder,
no amount shall be withheld from payments in respect of United States federal
income tax. If any Note Holder has notified the Mortgagee that any of the
foregoing forms or certificates is withdrawn or inaccurate, or if such holder
has not filed a form claiming an exemption from United States withholding tax
or
if the Code or the regulations thereunder or the administrative interpretation
thereof is at any time after the date hereof amended to require such withholding
of United States federal income taxes from payments under the Equipment Notes
held by such holder, the Mortgagee agrees to withhold from each payment due
to
the relevant Note Holder withholding taxes at the appropriate rate under Law
and
will, on a timely basis as more fully provided above, deposit such amounts
with
an authorized depository and make such returns, statements, receipts and other
documentary evidence in connection therewith as required by Law.
Owner
shall not have any liability for the failure of the Mortgagee to withhold taxes
in the manner provided for herein or for any false, inaccurate or untrue
evidence provided by any Note Holder hereunder.
SECTION
2.05. Application of
Payments
In
the
case of each Equipment Note, each payment of Original Amount, Make-Whole Amount,
if any, and interest due thereon shall be applied:
First:
to
the payment of Make-Whole Amount, if any, with respect to such Equipment Note
and any other amount (other than as covered by any of the following clauses)
due
hereunder or under such Equipment Note;
Second:
to the payment of accrued interest on such Equipment Note (as well as any
interest on any overdue Original Amount, any overdue Make-Whole Amount, if
any,
and to the extent permitted by Law, any overdue interest and any other overdue
amounts thereunder) to the date of such payment;
Third:
to
the payment of the Original Amount of such Equipment Note (or a portion thereof)
then due thereunder; and
Fourth:
the balance, if any, remaining thereafter, to the payment of the Original Amount
of such Equipment Note remaining unpaid (provided that such Equipment Note
shall
not be subject to redemption except as provided in Sections 2.10, 2.11 and
2.12
hereof).
The
amounts paid pursuant to clause “Fourth” above shall be applied to the
installments of Original Amount of such Equipment Note in the inverse order
of
their maturity.
SECTION
2.06. Termination of Interest in
Collateral
No
Note
Holder nor any other Indenture Indemnitee shall, as such, have any further
interest in, or other right with respect to, the Collateral when and if the
Original Amount of, Make-Whole Amount, if any, and interest on and other amounts
due under all Equipment Notes held by such Note Holder and all other sums then
due and payable to such Note Holder, such Indenture Indemnitee or the Mortgagee
hereunder (including, without limitation, under the third paragraph of Section
2.02 hereof) and under the other Operative Agreements by the Owner and all
Related Secured Obligations (collectively, the “Secured Obligations”) shall have
been paid in full.
SECTION
2.07. Registration Transfer and
Exchange of Equipment Notes
The
Mortgagee shall keep a register (the “Equipment Note Register”) in which the
Mortgagee shall provide for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. No such transfer shall be given
effect unless and until registration hereunder shall have occurred. The
Equipment Note Register shall be kept at the Corporate Trust Office of the
Mortgagee. The Mortgagee is hereby appointed “Equipment Note Registrar” for the
purpose of registering Equipment Notes and transfers of Equipment Notes as
herein provided. A holder of any Equipment Note intending to exchange such
Equipment Note shall surrender such Equipment Note to the Mortgagee at the
Corporate Trust Office, together with a written request from the registered
holder thereof for the issuance of a new Equipment Note, specifying, in the
case
of a surrender for transfer, the name and address of the new holder or holders.
Upon surrender for registration of transfer of any Equipment Note, the Owner
shall execute, and the Mortgagee shall authenticate and deliver, in the name
of
the designated transferee or transferees, one or more new Equipment Notes of
a
like aggregate Original Amount and of the same series. At the option of the
Note
Holder, Equipment Notes may be exchanged for other Equipment Notes of any
authorized denominations of a like aggregate Original Amount, upon surrender
of
the Equipment Notes to be exchanged to the Mortgagee at the Corporate Trust
Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner
shall execute, and the Mortgagee shall authenticate and deliver, the Equipment
Notes which the Note Holder making the exchange is entitled to receive. All
Equipment Notes issued upon any registration of transfer or exchange of
Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof
or
otherwise under this Trust Indenture) shall be the valid obligations of the
Owner evidencing the same respective obligations, and entitled to the same
security and benefits under this Trust Indenture, as the Equipment Notes
surrendered upon such registration of transfer or exchange. Every Equipment
Note
presented or surrendered for registration of transfer, shall (if so required
by
the Mortgagee) be duly endorsed, or be
accompanied
by a written instrument of transfer in form satisfactory to the Mortgagee duly
executed by the Note Holder or such holder’s attorney duly authorized in
writing, and the Mortgagee shall require evidence satisfactory to it as to
the
compliance of any such transfer with the Securities Act, and the securities
Laws
of any applicable state. The Mortgagee shall make a notation on each new
Equipment Note of the amount of all payments of Original Amount previously
made
on the old Equipment Note or Equipment Notes with respect to which such new
Equipment Note is issued and the date to which interest on such old Equipment
Note or Equipment Notes has been paid. Interest shall be deemed to have been
paid on such new Equipment Note to the date on which interest shall have been
paid on such old Equipment Note, and all payments of the Original Amount marked
on such new Equipment Note, as provided above, shall be deemed to have been
made
thereon. The Owner shall not be required to exchange any surrendered Equipment
Notes as provided above during the ten-day period preceding the due date of
any
payment on such Equipment Note. The Owner shall in all cases deem the Person
in
whose name any Equipment Note shall have been issued and registered as the
absolute owner and holder of such Equipment Note for the purpose of receiving
payment of all amounts payable by the Owner with respect to such Equipment
Note
and for all purposes until a notice stating otherwise is received from the
Mortgagee and such change is reflected on the Equipment Note Register. The
Mortgagee will promptly notify the Owner of each registration of a transfer
of
an Equipment Note. Any such transferee of an Equipment Note, by its acceptance
of an Equipment Note, (i) agrees to the provisions of this Trust Indenture
and
the Participation Agreement applicable to Note Holders, including Sections
6.3,
6.4 and 9.1 thereof, and shall be deemed to have covenanted to the parties
to
the Participation Agreement as to the matters covenanted by the original Note
Holder in the Participation Agreement, (ii) agrees to the restrictions set
forth
in Sections 4.1(a)(ii) and 4.1(a)(iii) of the Intercreditor Agreement, and
shall
be deemed to have covenanted to the parties to the Intercreditor Agreement
not
to give any direction, or otherwise authorize, the Mortgagee to take any action
that would violate Sections 4.1(a)(ii) or 4.1(a)(iii) of the Intercreditor
Agreement, and (iii) agrees to the provisions of Section 2.7 of the
Intercreditor Agreement, and shall be deemed to have covenanted to the parties
to the Intercreditor Agreement to perform its obligations as a Note Holder
under
Section 2.7 of the Intercreditor Agreement. Subject to compliance by the Note
Holder and its transferee (if any) of the requirements set forth in this Section
2.07, Mortgagee and Owner shall use all reasonable efforts to issue new
Equipment Notes upon transfer or exchange within 10 Business Days of the date
an
Equipment Note is surrendered for transfer or exchange.
SECTION
2.08. Mutilated, Destroyed, Lost or
Stolen Equipment Notes
If
any
Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner
shall, upon the written request of the holder of such Equipment Note, execute
and the Mortgagee shall authenticate and deliver in replacement thereof a new
Equipment Note, payable in the same Original Amount dated the same date and
captioned as issued in connection with the Aircraft. If the Equipment Note
being
replaced has become mutilated, such Equipment Note shall be surrendered to
the
Mortgagee and a photocopy thereof shall be furnished to the Owner. If the
Equipment Note being replaced has been destroyed, lost or stolen, the holder
of
such Equipment Note shall furnish to the Owner and the Mortgagee such security
or indemnity as may be required by them to save the Owner and the Mortgagee
harmless and evidence satisfactory to the Owner and the Mortgagee of the
destruction, loss or theft of such Equipment Note and of the
ownership
thereof. If a “qualified institutional buyer” of the type referred to in
paragraph (a)(1)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act
(a
“QIB”) is the holder of any such destroyed, lost or stolen Equipment Note, then
the written indemnity of such QIB, signed by an authorized officer thereof,
in
favor of, delivered to and in form reasonably satisfactory Owner shall be
accepted as satisfactory indemnity and security and no further indemnity or
security shall be required as a condition to the execution and delivery of
such
new Equipment Note. Subject to compliance by the Note Holder with the
requirements set forth in this Section 2.08, Mortgagee and Owner shall use
all
reasonable efforts to issue new Equipment Notes within 10 Business Days of
the
date of the written request therefor from the Note Holder.
SECTION
2.09. Payment of Expenses on Transfer;
Cancellation
(a) No
service charge shall be made to a Note Holder for any registration of transfer
or exchange of Equipment Notes, but the Mortgagee, as Equipment Note Registrar,
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer
or
exchange of Equipment Notes.
(b) The
Mortgagee shall cancel all Equipment Notes surrendered for replacement,
redemption, transfer, exchange, payment or cancellation and shall destroy the
canceled Equipment Notes.
SECTION
2.10. Mandatory
Redemptions of Equipment Notes
On
the
date on which the Owner is required pursuant to Section 4.05 hereof to make
payment for an Event of Loss with respect to the Airframe, all of the Equipment
Notes shall be redeemed in whole at a redemption price equal to 100% of the
unpaid Original Amount thereof, together with all accrued interest thereon
to
the date of redemption and all other Secured Obligations (other than Related
Secured Obligations) owed or then due and payable to the Note Holders but
without Make-Whole Amount.
SECTION
2.11. Voluntary Redemptions of
Equipment Notes
(a) All
(but
not less than all) of the Equipment Notes may be redeemed by the Owner upon
at
least 30 days’ revocable prior written notice to the Mortgagee and the Note
Holders, and such Equipment Notes shall be redeemed in whole at a redemption
price equal to 100% of the unpaid Original Amount thereof, together with accrued
interest thereon to the date of redemption and all other Secured Obligations
(other than Related Secured Obligations) owed or then due and payable to the
Note Holders plus Make-Whole Amount, if any.
(b) All
of
the Equipment Notes of any of the Series B or Series C or of any particular
series of Additional Series Equipment Notes may be redeemed by the Owner upon
at
least 30 days’ revocable prior written notice to the Mortgagee and the Note
Holders of each Series to be redeemed, and such Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the unpaid Original
Amount thereof, together with accrued interest thereon to the date of redemption
and all other Secured Obligations (other than Related Secured
Obligations)
owed or then due and payable to the Note Holders of such Series plus Make-Whole
Amount, if any; provided
that no
redemption shall be permitted under this Section 2.11(b) unless the
following conditions have been satisfied: (1) simultaneously with such
redemption, the Related Series B Equipment Notes (in the case of redemption
hereunder of the Series B Equipment Notes), Related Series C Equipment Notes
(in
the case of redemption hereunder of the Series C Equipment Notes) or the Related
Additional Series Equipment Notes in respect of the Additional Series Equipment
Notes being redeemed (in the case of redemption of any series of Additional
Series Equipment Notes), as the case may be, shall also be redeemed; and (2)
simultaneously with such redemption, new Series B Equipment Notes (in the case
of redemption hereunder of the Series B Equipment Notes), Series C Equipment
Notes (in the case of redemption hereunder of the Series C Equipment Notes)
or
Additional Series Equipment Notes of the same series being redeemed (in the
case
of redemption hereunder of a series of Additional Series Equipment Notes) shall
be reissued in accordance with Section 4(a)(vi) of the Note Purchase Agreement
and Section 9.1(c) of the Intercreditor Agreement.
SECTION
2.12. Redemptions; Notice of
Redemption
(a) No
redemption of any Equipment Note may be made except to the extent and in the
manner expressly permitted by this Trust Indenture. No purchase of any Equipment
Note may be made by the Mortgagee.
(b) Notice
of
redemption with respect to the Equipment Notes shall be given by the Mortgagee
by first-class mail, postage prepaid, mailed not less than 20 nor more than
60
days prior to the applicable redemption date, to each Note Holder of such
Equipment Notes to be redeemed, at such Note Holder’s address appearing in the
Equipment Note Register; provided that such notice shall be revocable by written
notice from the Owner to Mortgagee given not later than three days prior to
the
redemption date. All notices of redemption shall state: (1) the redemption
date,
(2) the applicable basis for determining the redemption price, (3) that on
the
redemption date, the redemption price will become due and payable upon each
such
Equipment Note, and that, if any such Equipment Notes are then outstanding,
interest on such Equipment Notes shall cease to accrue on and after such
redemption date, and (4) the place or places where such Equipment Notes are
to
be surrendered for payment of the redemption price.
(c) On
or
before the redemption date, the Owner (or any person on behalf of the Owner)
shall, to the extent an amount equal to the redemption price for the Equipment
Notes to be redeemed on the redemption date shall not then be held by the
Mortgagee, deposit or cause to be deposited with the Mortgagee by 12:30 PM
New
York time on the redemption date in immediately available funds the redemption
price of the Equipment Notes to be redeemed.
(d) Notice
of
redemption having been given as aforesaid, the Equipment Notes to be redeemed
shall, on the redemption date, become due and payable at the Corporate Trust
Office of the Mortgagee or at any office or agency maintained for such purposes
pursuant to Section 2.07, and from and after such redemption date (unless there
shall be a default in the payment of the redemption price) any such Equipment
Notes then outstanding shall cease to bear interest. Upon surrender of any
such
Equipment Note for redemption in accordance with
said
notice, such Equipment Note shall be redeemed at the redemption price. If any
Equipment Note called for redemption shall not be so paid upon surrender thereof
for redemption, the principal amount thereof shall, until paid, continue to
bear
interest from the applicable redemption date at the interest rate in effect
for
such Equipment Note as of such redemption date.
SECTION
2.13. Subordination
(a) The
Owner, each Note Holder (by acceptance of its Equipment Notes of any Series)
and
each Related Note Holder (by acceptance of its Related Equipment Note), hereby
agree that no payment or distribution shall be made on or in respect of the
Secured Obligations owed to such Note Holder of such Series or owed to such
Related Note Holder, including any payment or distribution of cash, property
or
securities after the commencement of a proceeding of the type referred to in
Section 5.01(v), (vi) or (vii) hereof, except as expressly provided in Article
III hereof.
(b) By
the
acceptance of its Equipment Notes of any Series (other than Series A), each
Note
Holder of such Series agrees that in the event that such Note Holder, in its
capacity as a Note Holder, shall receive any payment or distribution on any
Secured Obligations in respect of such Series which it is not entitled to
receive under this Section 2.13 or Article III hereof, it will hold any amount
so received in trust for the Senior Holder (as defined in Section 2.13(c)
hereof) and will forthwith turn over such payment to the Mortgagee in the form
received to be applied as provided in Article III hereof. By the acceptance
of
its Related Equipment Notes (other than Related Series A Equipment Notes),
each
Related Note Holder agrees that in the event that such Related Note Holder,
in
its capacity as a Related Note Holder, shall receive any payment or distribution
pursuant to this Trust Indenture on any Related Secured Obligations which it
is
not entitled to receive under this Section 2.13 or Article III hereof, it will
hold any amount so received in trust for the Senior Holder (as defined in
Section 2.13(c) hereof) and will forthwith turn over such payment to the
Mortgagee in the form received to be applied as provided in Article III
hereof.
(c) As
used
in this Section 2.13, the term “Senior Holder” shall mean (i) the Note Holders
of Series A and Related Note Holders of the Related Series A Equipment Notes
until the Secured Obligations in respect of Series A Equipment Notes and Related
Series A Equipment Notes have been paid in full, (ii) after the Secured
Obligations in respect of Series A Equipment Notes and Related Series A
Equipment Notes have been paid in full, the Note Holders of Series B Equipment
Notes and Related Note Holders of the Related Series B Equipment Notes
until the Secured Obligations in respect of Series B Equipment Notes and Related
Series B Equipment Notes have been paid in full, (iii) after the Secured
Obligations in respect of Series B Equipment Notes and Related Series B
Equipment Notes have been paid in full, the Note Holders of Series C Equipment
Notes and Related Note Holders of the Related Series C Equipment Notes
until the Secured Obligations in respect of Series C Equipment Notes and Related
Series C Equipment Notes have been paid in full and (iv) after the
Secured Obligations in respect of the Series C Equipment Notes and Related
Series C Equipment Notes have been paid in full (and except as otherwise
provided in an amendment to this Trust Indenture pursuant to Section 10.01(b)
hereof), the Note Holders of the Additional Series Equipment Notes, if issued,
and Related Note Holders of the Related Additional Series Equipment Notes,
if
issued,
until the Secured Obligations in respect of the Additional Series Equipment
Notes and Related Additional Series Equipment Notes have been paid in
full.
RECEIPT,
DISTRIBUTION AND APPLICATION OF PAYMENTS
SECTION
3.01. Basic
Distributions
Except
as
otherwise provided in Sections 3.02 and 3.03 hereof, each periodic payment
of
principal or interest on the Equipment Notes received by the Mortgagee shall
be
promptly distributed in the following order of priority:
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(i)
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so
much of such payment as shall be required to pay in full the aggregate
amount of the payment or payments of Original Amount and interest
(as well
as any interest on any overdue Original Amount and, to the extent
permitted by Law, on any overdue interest) then due under all Series
A
Equipment Notes shall be distributed to the Note Holders of Series
A
ratably, without priority of one over the other, in the proportion
that
the amount of such payment or payments then due under each Series
A
Equipment Note bears to the aggregate amount of the payments then
due
under all Series A Equipment Notes;
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(ii)
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after
giving effect to paragraph (i) above, so much of such payment remaining
as
shall be required to pay in full the aggregate amount of the payment
or
payments of Original Amount and interest (as well as any interest
on any
overdue Original Amount and, to the extent permitted by Law, on any
overdue interest) then due under all Series B Equipment Notes shall
be
distributed to the Note Holders of Series B ratably, without priority
of
one over the other, in the proportion that the amount of such payment
or
payments then due under each Series B Equipment Note bears to the
aggregate amount of the payments then due under all Series B Equipment
Notes;
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(iii)
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after
giving effect to paragraph (ii) above, so much of such payment remaining
as shall be required to pay in full the aggregate amount of the payment
or
payments of Original Amount and interest (as well as any interest
on any
overdue Original Amount and, to the extent permitted by Law, on any
overdue interest) then due under all Series C Equipment Notes shall
be
distributed to the Note Holders of Series C ratably, without priority
of
one over the other, in the proportion that the amount of such payment
or
payments then due under each Series C Equipment Note bears to the
aggregate amount of the payments then due under all Series C Equipment
Notes; and
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(iv)
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after
giving effect to paragraph (iii) above (and except as otherwise provided
in an amendment to this Trust Indenture pursuant to Section 10.01(b)
hereof), so much of such payment remaining as shall be required to
pay in
full the aggregate amount of the payment or payments of Original
Amount
and interest (as well as
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any
interest on any overdue Original Amount and, to the extent permitted by Law,
on
any overdue interest) then due under all Additional Series Equipment Notes
shall
be distributed to the Note Holders of Additional Series ratably, without
priority of one over the other, in the proportion that the amount of such
payment or payments then due under each Additional Series Equipment Note bears
to the aggregate amount of the payments then due under all Additional Series
Equipment Notes.
SECTION
3.02. Event of Loss; Replacement;
Optional Redemption
Except
as
otherwise provided in Section 3.03 hereof, any payments received by the
Mortgagee (i) with respect to the Airframe or the Airframe and one or more
Engines as the result of an Event of Loss pursuant to Section 2.10 or (ii)
pursuant to an optional redemption of the Equipment Notes pursuant to
Section 2.11 hereof shall be applied to redemption of the Equipment Notes
and to all other Secured Obligations then due by applying such funds in the
following order of priority:
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First,
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(a)
to reimburse the Mortgagee and the Note Holders for any reasonable
costs
or expenses incurred in connection with such redemption for which
they are
entitled to reimbursement, or indemnity by Owner, under the Operative
Agreements and then (b) to pay any other Secured Obligations then
due
(except as provided in clause “Second” and “Third” below) to the
Mortgagee, the Note Holders and the other Indenture Indemnitees
under this
Trust Indenture, the Participation Agreement or the Equipment Notes
(other
than amounts specified in clause “Second” and “Third”
below);
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Second,
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(i)
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to
pay the amounts specified in paragraph (i) of clause “Third” of Section
3.03 hereof plus Make-Whole Amount, if any, then due and payable
in
respect of the Series A Equipment Notes, but excluding distributions
of
amounts of Related Secured Obligations to Related Note
Holders;
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(ii)
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after
giving effect to paragraph (i) above, to pay the amounts specified
in
paragraph (ii) of clause “Third” of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of the Series B
Equipment Notes, but excluding distributions of amounts of Related
Secured
Obligations to Related Note
Holders;
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(iii)
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after
giving effect to paragraph (ii) above, to pay the amounts specified
in
paragraph (iii) of clause “Third” of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of the Series C
Equipment Notes, but excluding distributions of amounts of Related
Secured
Obligations to Related Note Holders;
and
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(iv)
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after
giving effect to paragraph (iii) above, to pay the amounts specified
in
paragraph (iv) of clause “Third” of Section 3.03 hereof, but excluding
distributions of amounts of Related Secured Obligations to Related
Note
Holders; and
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Third,
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(i)
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to
pay the amounts specified in paragraph (i) of clause “Third” of Section
3.03 hereof then due and payable in respect of the Related Series
A
Equipment Notes;
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(ii)
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after
giving effect to paragraph (i) above, to pay the amounts specified
in
paragraph (ii) of clause “Third” of Section 3.03 hereof then due and
payable in respect of the Related Series B Equipment
Notes;
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(iii)
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after
giving effect to paragraph (ii) above, to pay the amounts specified
in
paragraph (iii) of clause “Third” of Section 3.03 hereof then due and
payable in respect of the Related Series C Equipment Notes;
and
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(iv)
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after
giving effect to paragraph (iii) above, to pay the amounts specified
in
paragraph (iv) of clause “Third” of Section 3.03 then due and payable in
respect of the Related Additional Series Equipment Notes;
and
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Fourth,
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as
provided in clause “Fourth” of Section 3.03
hereof;
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provided,
however,
that if
a Replacement Airframe or Replacement Engine shall be substituted for the
Airframe or Engine subject to such Event of Loss as provided in Section 4.05
hereof, any insurance, condemnation or similar proceeds which result from such
Event of Loss and are paid over to the Mortgagee shall be held by the Mortgagee
as permitted by Section 7.04 hereof (provided that such moneys shall be invested
as provided in Section 6.06 hereof) as additional security for the obligations
of Owner under Operative Agreements and such proceeds (and such investment
earnings), to the extent not theretofore applied as provided herein, shall
be
released to the Owner at the Owner’s written request upon the release of such
Airframe or Engine and the replacement thereof as provided herein; provided,
further,
however,
in the
case of a redemption of Equipment Notes pursuant to Section 2.11(b), if a
particular Series is not being redeemed pursuant thereto, no application of
funds shall be made pursuant to the paragraph in clause “Second” above that
refers to such Series in connection with such redemption. No Make-Whole Amount
shall be due and payable on the Equipment Notes as a consequence of the
redemption of the Equipment Notes as a result of an Event of Loss with respect
to the Airframe or the Airframe and one or more Engines.
SECTION
3.03. Payments After Event of
Default
Except
as
otherwise provided in Section 3.04 hereof, all payments received and amounts
held or realized by the Mortgagee (including any amounts realized by the
Mortgagee from the exercise of any remedies pursuant to Article V hereof) after
an Event of Default shall have occurred and be continuing, as well as all
payments or amounts then held by the Mortgagee as part of the Collateral, shall
be promptly distributed by the Mortgagee in the following order of
priority:
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First,
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so
much of such payments or amounts as shall be required to (i) reimburse
the
Mortgagee or WTC for any tax (except to the extent resulting from
a
failure of the Mortgagee to withhold taxes pursuant to Section
2.04(b)
hereof), expense or other loss (including, without limitation,
all amounts
to be expended at the expense of, or charged upon the rents, revenues,
issues, products and profits of, the property
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|
included
in the Collateral (all such property being herein called the “Mortgaged
Property”) pursuant to Section 5.03(b) hereof) incurred by the
Mortgagee or WTC (to the extent not previously reimbursed), the
expenses
of any sale, or other proceeding, reasonable attorneys’ fees and expenses,
court costs, and any other expenditures incurred or expenditures
or
advances made by the Mortgagee, WTC or the Note Holders in the
protection,
exercise or enforcement of any right, power or remedy or any damages
sustained by the Mortgagee, WTC or any Note Holder, liquidated
or
otherwise, upon such Event of Default shall be applied by the Mortgagee
as
between itself, WTC and the Note Holders in reimbursement of such
expenses
and any other expenses for which the Mortgagee, WTC or the Note
Holders
are entitled to reimbursement under any Operative Agreement (including
by
subrogation pursuant to Section 2.7 of the Intercreditor Agreement)
and
(ii) pay all Secured Obligations payable to the other Indenture
Indemnitees hereunder and under the Participation Agreement (other
than
amounts specified in clauses Second and Third below); and in the
case the
aggregate amount to be so distributed is insufficient to pay as
aforesaid
in clauses (i) and (ii), then ratably, without priority of one
over the
other, in proportion to the amounts owed each
hereunder;
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Second,
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so
much of such payments or amounts remaining as shall be required
to
reimburse the then existing or prior Note Holders for payments
made
pursuant to Section 6.03 hereof (to the extent not previously
reimbursed) shall be distributed to such then existing or prior
Note
Holders ratably, without priority of one over the other, in accordance
with the amount of the payment or payments made by each such then
existing
or prior Note Holder pursuant to said Section 6.03
hereof;
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Third,
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(i)
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so
much of such payments or amounts remaining as shall be required
to pay in
full the aggregate unpaid Original Amount of all Series A Equipment
Notes,
and the accrued but unpaid interest and other amounts due thereon
and all
other Secured Obligations in respect of the Series A Equipment
Notes to
the date of distribution and all other Related Secured Obligations
in
respect of Related Series A Equipment Notes then due, shall be
distributed to the Note Holders of Series A and Related Note Holders
of
the Related Series A Equipment Notes, and in case the aggregate
amount so
to be distributed shall be insufficient to pay in full as aforesaid,
then
ratably, without priority of one over the other, in the proportion
that
the aggregate unpaid Original Amount of all Series A Equipment
Notes held
by each holder plus the accrued but unpaid interest and other amounts
due
hereunder or thereunder to the date of distribution and all other
Related
Secured Obligations then due in respect of the Related Series A
Equipment Notes held by such holder, bears to the aggregate unpaid
Original Amount of all Series A Equipment Notes held by all such
holders
plus the accrued but unpaid interest and other amounts due thereon
to the
date of distribution and all other Related Secured Obligations
in respect
of the Related Series A Equipment Notes then
due;
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(ii)
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after
giving effect to paragraph (i) above, so much of such payments
or amounts
remaining as shall be required to pay in full the aggregate unpaid
Original
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Amount
of all Series B Equipment Notes, and the accrued but unpaid interest
and
other amounts due thereon and all other Secured Obligations in
respect of
the Series B Equipment Notes to the date of distribution and all
other
Related Secured Obligations in respect of Related Series B Equipment
Notes then due, shall be distributed to the Note Holders of Series
B and
Related Note Holders of the Related Series B Equipment Notes, and in
case the aggregate amount so to be distributed shall be insufficient
to
pay in full as aforesaid, then ratably, without priority of one
over the
other, in the proportion that the aggregate unpaid Original Amount
of all
Series B Equipment Notes held by each holder plus the accrued but
unpaid
interest and other amounts due hereunder or thereunder to the date
of
distribution and all other Related Secured Obligations then due
in respect
of Related Series B Equipment Notes held by such holder, bears to the
aggregate unpaid Original Amount of all Series B Equipment Notes
held by
all such holders plus the accrued but unpaid interest and other
amounts
due thereon to the date of distribution and all other Related Secured
Obligations in respect of Related Series B Equipment Notes then due;
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(iii)
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after
giving effect to paragraph (ii) above, so much of such payments
or amounts
remaining as shall be required to pay in full the aggregate unpaid
Original Amount of all Series C Equipment Notes, and the accrued
but
unpaid interest and other amounts due thereon and all other Secured
Obligations in respect of the Series C Equipment Notes to the date
of
distribution and all other Related Secured Obligations in respect
of
Related Series C Equipment Notes then due, shall be distributed to
the Note Holders of Series C and Related Note Holders of the Related
Series C Equipment Notes, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid,
then
ratably, without priority of one over the other, in the proportion
that
the aggregate unpaid Original Amount of all Series C Equipment
Notes held
by each holder plus the accrued but unpaid interest and other amounts
due
hereunder or thereunder to the date of distribution and all other
Related
Secured Obligations then due in respect of the Related Series C
Equipment Notes held by such holder, bears to the aggregate unpaid
Original Amount of all Series C Equipment Notes held by all such
holders
plus the accrued but unpaid interest and other amounts due thereon
to the
date of distribution and all other Related Secured Obligations
in respect
of the Related Series C Equipment Notes then due;
and
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(iv)
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after
giving effect to paragraph (iii) above (and except as otherwise
provided
in an amendment to this Trust Indenture pursuant to Section 10.01(b)
hereof), so much of such payments or amounts remaining as shall
be
required to pay in full the aggregate unpaid Original Amount of
all
Additional Series Equipment Notes, and the accrued but unpaid interest
and
other amounts due thereon and all other Secured Obligations in
respect of
the Additional Series Equipment Notes to the date of distribution
and all
other Related Secured Obligations in respect of the Related Additional
Series Equipment Notes then due, shall be distributed to the Note
Holders
of Additional Series and Related Note Holders of the Related Additional
Series Equipment Notes, and in case the aggregate amount so to
be
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distributed
shall be insufficient to pay in full as aforesaid, then ratably,
without
priority of one over the other, in the proportion that the aggregate
unpaid Original Amount of all Additional Series Equipment Notes
held by
each holder plus the accrued but unpaid interest and other amounts
due
hereunder or thereunder to the date of distribution and all other
Related
Secured Obligations then due in respect of Related Additional Series
Equipment Notes held by such holder, bears to the aggregate unpaid
Original Amount of all Additional Series Equipment Notes held by
all such
holders plus the accrued but unpaid interest and other amounts
due thereon
to the date of distribution and all other Related Secured Obligations
in
respect of Related Additional Series Equipment Notes then due;
and
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(v)
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after
giving effect to paragraph (iv) above, if any Related Equipment
Note is
outstanding, any of such payments or amounts remaining and any
invested
Cash Equivalents shall be held by the Mortgagee in an Eligible
Account in
accordance with the provisions of Section 3.07 (and invested as
provided in Section 6.06 hereof) as additional security for the
Related
Secured Obligations, and such amounts (and any investment earnings
thereon) shall be distributed from time to time in accordance with
the
foregoing provisions of this clause “Third” as and to the extent any
Related Secured Obligation shall at any time and from time to time
become
due and remain unpaid after the giving of any required notice and
the
expiration of any applicable grace period; and, upon the payment
in full
of all Related Secured Obligations the balance, if any, of any
such
remaining amounts and investment earnings thereon shall be applied
as
provided in clause Fourth of this Section 3.03;
and
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Fourth,
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the
balance, if any, of such payments or amounts remaining thereafter
shall be
distributed to the Owner.
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No
Make-Whole Amount shall be due and payable on the Equipment Notes as a
consequence of the acceleration of the Equipment Notes as a result of an Event
of Default.
SECTION
3.04. Certain
Payments
(a) Any
payments received by the Mortgagee for which no provision as to the application
thereof is made in this Trust Indenture and for which such provision is made
in
any other Operative Agreement shall be applied forthwith to the purpose for
which such payment was made in accordance with the terms of such other Operative
Agreement, as the case may be.
(b) Notwithstanding
anything to the contrary contained in this Article III, the Mortgagee will
distribute promptly upon receipt any indemnity payment received by it from
the
Owner in respect of the Mortgagee in its individual capacity, any Note Holder
or
any other Indenture Indemnitee, in each case whether or not pursuant to Section
8 of the Participation Agreement, directly to the Person entitled thereto.
Any
payment received by the Mortgagee under the third paragraph of Section 2.02
shall be distributed to the Subordination Agent in its capacity as Note Holder
to be distributed in accordance with the terms of the Intercreditor
Agreement,
except that any portion of any such payment to which a Note Holder has been
subrogated pursuant to Section 2.7 of the Intercreditor Agreement shall instead
be distributed to such Note Holder.
(c) For
the
avoidance of doubt, no amount will be distributed pursuant to this Article
III
to any holder of a note issued under a Related Indenture that is not a Related
Note Holder (as such).
SECTION
3.05. Other
Payments
Any
payments received by the Mortgagee for which no provision as to the application
thereof is made elsewhere in this Trust Indenture or in any other Operative
Agreement shall be distributed by the Mortgagee to the extent received or
realized at any time, in the order of priority specified in Section 3.01 hereof,
and after payment in full of all amounts then due in accordance with
Section 3.01 in the manner provided in clause “Fourth” of Section 3.03
hereof.
SECTION
3.06. Cooperation
Prior
to
making any distribution under this Article III, the Mortgagee shall consult
with
the Related Mortgagees to determine amounts payable with respect to the Related
Secured Obligations. The Mortgagee shall cooperate with the Related Mortgagees
and shall provide such information as shall be reasonably requested by each
Related Mortgagee to enable such Related Mortgagee to determine amounts
distributable under Article III of its Related Indenture.
SECTION
3.07. Securities
Account
In
furtherance of the provisions of Section 3.03 of the Trust Indenture, WTC agrees
to act as an Eligible Institution under the Trust Indenture in accordance with
the provisions of the Trust Indenture (in such capacity, the “Securities
Intermediary”). Except in its capacity as Mortgagee, WTC waives any claim or
lien against any Eligible Account it may have, by operation of law or otherwise,
for any amount owed to it by Owner. The Securities Intermediary hereby agrees
that, notwithstanding anything to the contrary in the Trust Indenture, (i)
any
amounts to be held by the Mortgagee pursuant to paragraph (v) of clause “Third”
of Section 3.03 and any investment earnings thereon or other Cash Equivalents
will be credited to an Eligible Account (the “Securities Account”) for which it
is a “securities intermediary” (as defined in Section 8-102(a)(14) of the NY
UCC) and the Mortgagee is the “entitlement holder” (as defined in Section
8-102(a)(7) of the NY UCC) of the “securities entitlement” (as defined in
Section 8-102(a)(17) of the NY UCC) with respect to each “financial asset” (as
defined in Section 8-102(a)(9) of the NY UCC) credited to such Eligible Account,
(ii) all such amounts, Cash Equivalents and all other property acquired with
cash credited to the Securities Account will be credited to the Securities
Account, (iii) all items of property (whether cash, investment property, Cash
Equivalents, other investments, securities, instruments or other property)
credited to the Securities Account will be treated as a “financial asset” under
Article 8 of the NY UCC, (iv) its “securities intermediary’s jurisdiction” (as
defined in Section 8-110(e) of the NY UCC) with respect to the Securities
Account is the State of New York, and (v) all securities, instruments and other
property in order or registered from and credited to the Securities Account
shall
be
payable to or to the order of, or registered in the name of, the Securities
Intermediary or shall be indorsed to the Securities Intermediary or in blank,
and in no case whatsoever shall any financial asset credited to the Securities
Account be registered in the name of the Owner, payable to or to the order
of
the Owner or specially indorsed to the Owner except to the extent the foregoing
have been specially endorsed by the Owner to the Securities Intermediary or
in
blank. The Mortgagee agrees that it will hold (and will indicate clearly in
its
books and records that it holds) its “securities entitlement” to the “financial
assets” credited to the Securities Account in trust for the benefit of the Note
Holders and each of the Indenture Indemnitees as set forth in the Trust
Indenture. The Owner acknowledges that, by reason of the Mortgagee being the
“entitlement holder” in respect of the Securities Account as provided above, the
Mortgagee shall have the sole right and discretion, subject only to the terms
of
the Trust Indenture, to give all “entitlement orders” (as defined in Section
8-102(a)(8) of the NY UCC) with respect to the Securities Account and any and
all financial assets and other property credited thereto to the exclusion of
the
Owner.
COVENANTS
OF THE OWNER
SECTION
4.01. Liens
The
Owner
will not directly or indirectly create, incur, assume or suffer to exist any
Lien or with respect to the Airframe or any Engine, title to any of the
foregoing or any interest of Owner therein, except Permitted Liens. The Owner
shall promptly, at its own expense, take such action as may be necessary to
duly
discharge (by bonding or otherwise) any Lien other than a Permitted Lien arising
at any time.
SECTION
4.02. Possession, Operation and Use,
Maintenance, Registration and Markings
(a) General.
Except
as otherwise expressly provided herein, the Owner shall be entitled to operate,
use, locate, employ or otherwise utilize or not utilize the Airframe, any Engine
or any Parts in any lawful manner or place in accordance with the Owner’s
business judgment.
(b) Possession.
The
Owner, without the prior consent of Mortgagee, shall not lease or otherwise
in
any manner deliver, transfer or relinquish possession of the Aircraft, the
Airframe or any Engine or install any Engine, or permit any Engine to be
installed, on any airframe other than the Airframe; except that the Owner may,
without such prior written consent of Mortgagee:
(i) Subject
or permit any Permitted Lessee to subject (i) the Airframe to normal
interchange agreements or (ii) any Engine to normal interchange, pooling,
borrowing or similar arrangements, in each case customary in the commercial
airline industry and entered into by Owner or such Permitted Lessee, as the
case
may be, in the ordinary course of business; provided,
however,
that if
Owner’s title to any such Engine is divested under any
such
agreement or arrangement, then such Engine shall be deemed to have suffered
an
Event of Loss as of the date of such divestiture, and Owner shall comply with
Section 4.04(e) in respect thereof;
(ii) Deliver
or permit any Permitted Lessee to deliver possession of the Aircraft, Airframe,
any Engine or any Part (x) to the manufacturer thereof or to any third-party
maintenance provider for testing, service, repair, maintenance or overhaul
work
on the Aircraft, Airframe, any Engine or any Part, or, to the extent required
or
permitted by Section 4.04, for alterations or modifications in or additions
to the Aircraft, Airframe or any Engine or (y) to any Person for the purpose
of
transport to a Person referred to in the preceding clause (x);
(iii) Install
or permit any Permitted Lessee to install an Engine on an airframe owned by
Owner or such Permitted Lessee, as the case may be, free and clear of all Liens,
except (x) Permitted Liens and those that do not apply to the Engines, and
(y)
the rights of third parties under normal interchange or pooling agreements
and
arrangements of the type that would be permitted under Section
4.02(b)(i);
(iv) Install
or permit any Permitted Lessee to install an Engine on an airframe leased to
Owner or such Permitted Lessee, or purchased by Owner or such Permitted Lessee
subject to a mortgage, security agreement, conditional sale or other secured
financing arrangement, but only if (x) such airframe is free and clear of all
Liens, except (A) the rights of the parties to such lease, or any such secured
financing arrangement, covering such airframe and (B) Liens of the type
permitted by clause (iii) above and (y) Owner or Permitted Lessee, as the case
may be, shall have received from the lessor, mortgagee, secured party or
conditional seller, in respect of such airframe, a written agreement (which
may
be a copy of the lease, mortgage, security agreement, conditional sale or other
agreement covering such airframe), whereby such Person agrees that it will
not
acquire or claim any right, title or interest in, or Lien on, such Engine by
reason of such Engine being installed on such airframe at any time while such
Engine is subject to the Lien of this Trust Indenture;
(v) Install
or permit any Permitted Lessee to install an Engine on an airframe owned by
Owner or such Permitted Lessee, leased to Owner or such Permitted Lessee, or
purchased by Owner or such Permitted Lessee subject to a conditional sale or
other security agreement under circumstances where neither clause (iii) or
(iv)
above is applicable; provided,
however,
that
any such installation shall be deemed an Event of Loss with respect to such
Engine, and Owner shall comply with Section 4.04(e) hereof in respect
thereof;
(vi) Transfer
or permit any Permitted Lessee to transfer possession of the Aircraft, Airframe
or any Engine to the U.S. Government, in which event Owner shall promptly notify
Mortgagee in writing of any such transfer of possession and, in the case of
any
transfer pursuant to CRAF, in such notification shall identify by name, address
and telephone numbers the Contracting Office Representative or Representatives
for the Military Airlift Command of the United States Air Force to whom notices
must be given and to whom requests or claims must be made to the extent
applicable under CRAF;
(vii) Enter
into a charter or Wet Lease or other similar arrangement with respect to the
Aircraft or any other aircraft on which any Engine may be installed (which
shall
not be considered a transfer of possession hereunder); provided that
the
Owner’s obligations hereunder shall continue in full force and effect
notwithstanding any such charter or Wet Lease or other similar
arrangement;
(viii) So
long
as no Event of Default shall have occurred and be continuing, and subject to
the
provisions of the immediately following paragraph, enter into a lease with
respect to the Aircraft, Airframe or any Engine to any Permitted Air Carrier
that is not then subject to any bankruptcy, insolvency, liquidation,
reorganization, dissolution or similar proceeding and shall not have
substantially all of its property in the possession of any liquidator, trustee,
receiver or similar person; provided that,
in the
case only of a lease to a Permitted Foreign Air Carrier, (A) the United States
maintains diplomatic relations with the country of domicile of such Permitted
Foreign Air Carrier (or, in the case of Taiwan, diplomatic relations at least
as
good as those in effect on the Closing Date) and (B) Owner shall have furnished
Mortgagee a favorable opinion of counsel, reasonably satisfactory to Mortgagee,
in the country of domicile of such Permitted Foreign Air Carrier, that
(v) the terms of such lease are the legal, valid and binding obligations of
the parties thereto enforceable under the laws of such jurisdiction, (w) it
is not necessary for Mortgagee to register or qualify to do business in such
jurisdiction, if not already so registered or qualified, as a result, in whole
or in part, of the proposed lease, (x) Mortgagee’s Lien in respect of, the
Aircraft, Airframe and Engines will be recognized in such jurisdiction,
(y) the Laws of such jurisdiction of domicile require fair compensation by
the government of such jurisdiction, payable in a currency freely convertible
into Dollars, for the loss of title to the Aircraft, Airframe or Engines in
the
event of the requisition by such government of such title (unless Owner shall
provide insurance in the amounts required with respect to hull insurance under
this Trust Indenture covering the requisition of title to the Aircraft, Airframe
or Engines by the government of such jurisdiction so long as the Aircraft,
Airframe or Engines are subject to such lease) and (z) the agreement of such
Permitted Air Carrier that its rights under the lease are subject and
subordinate to all the terms of this Trust Indenture is enforceable against
such
Permitted Air Carrier under applicable law;
provided
that (1)
the rights of any transferee who receives possession by reason of a transfer
permitted by any of clauses (i) through (viii) of this Section 4.02(b)
(other than by a transfer of an Engine which is deemed an Event of Loss) shall
be subject and subordinate to all the terms of this Trust Indenture, (2) the
Owner shall remain primarily liable for the performance of all of the terms
of
this Trust Indenture and all the terms and conditions of this Trust Indenture
and the other Operative Agreements shall remain in effect and (3) no lease
or
transfer of possession otherwise in compliance with this Section 4.02(b) shall
(x) result in any registration or re-registration of an Aircraft, except to
the
extent permitted by Section 4.02(e) or the maintenance, operation or use thereof
except in compliance with Sections 4.02(c) and 4.02(d) or (y) permit any action
not permitted to the Owner hereunder.
In
the
case of any lease permitted under this Section 4.02(b), the Owner will include
in such lease appropriate provisions which (t) make such lease expressly subject
and subordinate to all of the terms of this Trust Indenture, including the
rights of the Mortgagee to avoid such lease in the exercise of its rights to
repossession of the Airframe and Engines
hereunder;
(u) require the Permitted Lessee to comply with the terms of Section 4.06;
and
(v) require that the Airframe or any Engine subject thereto be used in
accordance with the limitations applicable to the Owner’s possession and use
provided in this Trust Indenture. No lease permitted under this
Section 4.02(b) shall be entered into unless (w) Owner shall provide
written notice to Mortgagee (such notice in the event of a lease to a U.S.
Air
Carrier to be given promptly after entering into any such lease or, in the
case
of a lease to any other Permitted Air Carrier, 10 days in advance of entering
into such lease); (x) Owner shall furnish to Mortgagee evidence reasonably
satisfactory to Mortgagee that the insurance required by Section 4.06
remains in effect; (y) all necessary documents shall have been duly filed,
registered or recorded in such public offices as may be required fully to
preserve the first priority security interest and International Interest
(subject to Permitted Liens) of Mortgagee in the Aircraft, Airframe and Engines;
and (z) Owner shall reimburse Mortgagee for all of its reasonable
out-of-pocket fees and expenses, including, without limitation, reasonable
fees
and disbursements of counsel, incurred by Mortgagee in connection with any
such
lease. Except as otherwise provided herein and without in any way relieving
the
Owner from its primary obligation for the performance of its obligations under
this Trust Indenture, the Owner may in its sole discretion permit a lessee
to
exercise any or all rights which the Owner would be entitled to exercise under
Sections 4.02 and 4.04, and may cause a lessee to perform any or all of the
Owner’s obligations under Article IV, and the Mortgagee agrees to accept actual
and full performance thereof by a lessee in lieu of performance by the Owner.
Mortgagee
hereby agrees, and each Note Holder and Related Note Holder by acceptance of
an
Equipment Note and a Related Equipment Note, respectively, agrees, for the
benefit of each lessor, conditional seller, indenture trustee or secured party
of any engine leased to, or purchased by, Owner or any Permitted Lessee subject
to a lease, conditional sale, trust indenture or other security agreement that
Mortgagee, each Note Holder and Related Note Holder and their respective
successors and assigns will not acquire or claim, as against such lessor,
conditional seller, indenture trustee or secured party, any right, title or
interest in any engine as the result of such engine being installed on the
Airframe at any time while such engine is subject to such lease, conditional
sale, trust indenture or other security agreement and owned by such lessor
or
conditional seller or subject to a trust indenture or security interest in
favor
of such indenture trustee or secured party.
(c) Operation
and Use.
So long
as the Aircraft, Airframe or any Engine is subject to the Lien of this Trust
Indenture, the Owner shall not operate, use or locate the Aircraft, Airframe
or
any Engine, or allow the Aircraft, Airframe or any Engine to be operated, used
or located, (i) in any area excluded from coverage by any insurance required
by
the terms of Section 4.06, except in the case of a requisition by the U.S.
Government where the Owner obtains indemnity in lieu of such insurance from
the
U.S. Government, or insurance from the U.S. Government, against substantially
the same risks and for at least the amounts of the insurance required by Section
4.06 covering such area, or (ii) in any recognized area of hostilities unless
covered in accordance with Section 4.06 by war risk insurance, or in either
case
unless the Aircraft, the Airframe or any Engine is only temporarily operated,
used or located in such area as a result of an emergency, equipment malfunction,
navigational error, hijacking, weather condition or other similar unforeseen
circumstance, so long as Owner diligently and in good faith proceeds to remove
the Aircraft from such area. So long as the Aircraft, the Airframe or any
Engine
is
subject to the Lien of this Trust Indenture, the Owner shall not permit such
Aircraft, Airframe or any Engine, as the case may be, to be used, operated,
maintained, serviced, repaired or overhauled (x) in violation of any Law
binding on or applicable to such Aircraft, Airframe or Engine or (y) in
violation of any airworthiness certificate, license or registration of any
Government Entity relating to the Aircraft, the Airframe or any Engine, except
(i) immaterial or non-recurring violations with respect to which corrective
measures are taken promptly by Owner or Permitted Lessee, as the case may be,
upon discovery thereof, or (ii) to the extent the validity or application of
any
such Law or requirement relating to any such certificate, license or
registration is being contested in good faith by Owner or Permitted Lessee
in
any reasonable manner which does not involve any material risk of the sale,
forfeiture or loss of the Aircraft, Airframe or any Engine, any material risk
of
criminal liability or material civil penalty against Mortgagee or impair the
Mortgagee’s security interest in the Aircraft, Airframe or any
Engine.
(d) Maintenance
and Repair.
So long
as the Aircraft, Airframe or any Engine is subject to the Lien of this Trust
Indenture, the Owner shall cause the Aircraft, Airframe and each Engine to
be
maintained, serviced, repaired and overhauled in accordance with (i) maintenance
standards required by or substantially equivalent to those required by the
FAA
or the central aviation authority of Canada, France, Germany, Japan, the
Netherlands or the United Kingdom for the Aircraft, Airframe and Engines, so
as
to (A) keep the Aircraft, the Airframe and each Engine in as good operating
condition as on the Closing Date, ordinary wear and tear excepted, (B) keep
the
Aircraft in such operating condition as may be necessary to enable the
applicable airworthiness certification of such Aircraft to be maintained under
the regulations of the FAA or other Aviation Authority then having jurisdiction
over the operation of the Aircraft, except during (x) temporary periods of
storage in accordance with applicable regulations, (y) maintenance and
modification permitted hereunder or (z) periods when the FAA or such other
Aviation Authority has revoked or suspended the airworthiness certificates
for
Similar Aircraft; and (ii) except during periods when a Permitted Lease is
in
effect, the same standards as Owner uses with respect to similar aircraft of
similar size in its fleet operated by Owner in similar circumstances and, during
any period in which a Permitted Lease is in effect, the same standards used
by
the Permitted Lessee with respect to similar aircraft of similar size in its
fleet and operated by the Permitted Lessee in similar circumstances (it being
understood that this clause (ii) shall not limit Owner’s obligations under the
preceding clause (i)). Owner further agrees that the Aircraft, Airframe and
Engines will be maintained, used, serviced, repaired, overhauled or inspected
in
compliance with applicable Laws with respect to the maintenance of the Aircraft
and in compliance with each applicable airworthiness certificate, license and
registration relating to the Aircraft, Airframe or any Engine issued by the
Aviation Authority, other than minor or nonrecurring violations with respect
to
which corrective measures are taken upon discovery thereof and except to the
extent Owner or Permitted Lessee is contesting in good faith the validity or
application of any such Law or requirement relating to any such certificate,
license or registration in any reasonable manner which does not create a
material risk of sale, loss or forfeiture of the Aircraft, the Airframe or
any
Engine or the interest of Mortgagee therein, or any material risk of criminal
liability or material civil penalty against Mortgagee. The Owner shall maintain
or cause to be maintained the Aircraft Documents in the English
language.
(e) Registration.
The
Owner on or prior to the date of the Closing shall cause the Aircraft to be
duly
registered in its name under the Act and except as otherwise
permitted
by this Section 4.02(e) at all times thereafter shall cause the Aircraft to
remain so registered. So long as no Special Default or Event of Default shall
have occurred and be continuing, Owner may, by written notice to Mortgagee,
request to change the country of registration of the Aircraft. Any such change
in registration shall be effected only in compliance with, and subject to all
of
the conditions set forth in, Section 6.4.5 of the Participation Agreement.
Unless the Trust Indenture has been discharged, Owner shall also cause the
Trust
Indenture to be duly recorded and at all times maintained of record as a
first-priority perfected mortgage (subject to Permitted Liens) on the Aircraft,
the Airframe and each of the Engines (except to the extent such perfection
or
priority cannot be maintained solely as a result of the failure by Mortgagee
to
execute and deliver any necessary documents). Unless the Lien of this Indenture
has been discharged, Owner shall cause the International Interest granted under
this Indenture in favor of the Mortgagee in each Airframe and Engine to be
registered on the International Registry as an International Interest on such
Airframe and Engine, subject to the Mortgagee providing its consent to the
International Registry with respect thereto, and shall cause the sale to Owner
of the Airframe and each Engine at the Closing to be registered on the
International Registry.
(f) Markings.
If
permitted by applicable Law, on or reasonably promptly after the Closing Date,
Owner will cause to be affixed to, and maintained in, the cockpit of the
Airframe and on each Engine, in each case, in a clearly visible location, a
placard of a reasonable size and shape bearing the legend: “Subject to a
security interest in favor of Wilmington Trust Company, not in its individual
capacity but solely as Mortgagee.” Such placards may be removed temporarily, if
necessary, in the course of maintenance of the Airframe or Engines. If any
such
placard is damaged or becomes illegible, Owner shall promptly replace it with
a
placard complying with the requirements of this Section.
SECTION
4.03. Inspection
(a) At
all
reasonable times, so long as the Aircraft is subject to the Lien of this Trust
Indenture, Mortgagee and its authorized representatives (the “Inspecting
Parties”) may (not more than once every 12 months unless an Event of Default has
occurred and is continuing then such inspection right shall not be so limited)
inspect the Aircraft, Airframe and Engines (including without limitation, the
Aircraft Documents) and any such Inspecting Party may make copies of such
Aircraft Documents not reasonably deemed confidential by Owner or such Permitted
Lessee.
(b) Any
inspection of the Aircraft hereunder shall be limited to a visual, walk-around
inspection and shall not include the opening of any panels, bays or other
components of the Aircraft, and no such inspection shall interfere with Owner’s
or any Permitted Lessee’s maintenance and operation of the Aircraft, Airframe
and Engines.
(c) With
respect to such rights of inspection, Mortgagee shall not have any duty or
liability to make, or any duty or liability by reason of not making, any such
visit, inspection or survey.
(d) Each
Inspecting Party shall bear its own expenses in connection with any such
inspection (including the cost of any copies made in accordance with
Section 4.03(a)).
SECTION
4.04. Replacement and Pooling of Parts,
Alterations, Modifications and Additions; Substitution of
Engines
(a) Replacement
of Parts.
Except
as otherwise provided herein, so long as the Airframe or Engine is subject
to
the Lien of this Indenture, Owner, at its own cost and expense, will, or will
cause a Permitted Lessee to, at its own cost and expense, promptly replace
(or
cause to be replaced) all Parts which may from time to time be incorporated
or
installed in or attached to the Aircraft, Airframe or any Engine and which
may
from time to time become worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use for any reason
whatsoever. In addition, Owner may, at its own cost and expense, or may permit
a
Permitted Lessee at its own cost and expense to, remove (or cause to be removed)
in the ordinary course of maintenance, service, repair, overhaul or testing
any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use; provided,
however,
that
Owner, except as otherwise provided herein, at its own cost and expense, will,
or will cause a Permitted Lessee at its own cost and expense to, replace such
Parts as promptly as practicable. All replacement parts shall be free and clear
of all Liens, except for Permitted Liens and pooling arrangements to the extent
permitted by Section 4.04(c) below (and except in the case of replacement
property temporarily installed on an emergency basis) and shall be in good
operating condition and have a value and utility not less than the value and
utility of the Parts replaced (assuming such replaced Parts were in the
condition required hereunder).
(b) Parts.
Except
as otherwise provided herein, any Part at any time removed from the Airframe
or
any Engine shall remain subject to the Lien of this Trust Indenture, no matter
where located, until such time as such Part shall be replaced by a part that
has
been incorporated or installed in or attached to such Airframe or any Engine
and
that meets the requirements for replacement parts specified above. Immediately
upon any replacement part becoming incorporated or installed in or attached
to
such Airframe or any Engine as provided in Section 4.04(a), without further
act,
(i) the replaced Part shall thereupon be free and clear of all rights of the
Mortgagee and shall no longer be deemed a Part hereunder, and (ii) such
replacement part shall become a Part subject to this Trust Indenture and be
deemed part of such Airframe or any Engine, as the case may be, for all purposes
hereof to the same extent as the Parts originally incorporated or installed
in
or attached to such Airframe or any Engine.
(c) Pooling
of Parts.
Any
Part removed from the Aircraft, Airframe or an Engine may be subjected by the
Owner or a Permitted Lessee to a normal pooling arrangement customary in the
airline industry and entered into in the ordinary course of business of Owner
or
Permitted Lessee, provided that the part replacing such removed Part shall
be
incorporated or installed in or attached to such Airframe or any Engine in
accordance with Sections 4.04(a) and 4.04(b) as promptly as practicable after
the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine may
be
owned by any third party, subject to a normal pooling arrangement, so long
as
the
Owner or a Permitted Lessee, at its own cost and expense, as promptly thereafter
as reasonably possible, either (i) causes such replacement part to become
subject to the Lien of this Trust Indenture, free and clear of all Liens except
Permitted Liens, at which time such replacement part shall become a Part or
(ii)
replaces (or causes to be replaced) such replacement part by incorporating
or
installing in or attaching to the Aircraft, Airframe or any Engine a further
replacement part owned by the Owner free and clear of all Liens except Permitted
Liens and which shall become subject to the Lien of this Trust Indenture in
accordance with Section 4.04(b).
(d) Alterations,
Modifications and Additions.
The
Owner shall, or shall cause a Permitted Lessee to, make (or cause to be made)
alterations and modifications in and additions to the Aircraft, Airframe and
each Engine as may be required to be made from time to time to meet the
applicable standards of the FAA or other Aviation Authority having jurisdiction
over the operation of the Aircraft, to the extent made mandatory in respect
of
the Aircraft (a “Mandatory Modification”); provided however,
that
the Owner or a Permitted Lessee may, in good faith and by appropriate procedure,
contest the validity or application of any law, rule, regulation or order in
any
reasonable manner which does not materially adversely affect Mortgagee’s
interest in the Aircraft, does not impair the Mortgagee’s security interest in
the Aircraft and does not involve any material risk of sale, forfeiture or
loss
of the Aircraft or the interest of Mortgagee therein, or any material risk
of
material civil penalty or any material risk of criminal liability being imposed
on Mortgagee or the holder of any Equipment Note. In addition, the Owner, at
its
own expense, may, or may permit a Permitted Lessee at its own cost and expense
to, from time to time make or cause to be made such alterations and
modifications in and additions to the Airframe or any Engine (each an “Optional
Modification”) as the Owner or such Permitted Lessee may deem desirable in the
proper conduct of its business including, without limitation, removal of Parts
which Owner deems are obsolete or no longer suitable or appropriate for use
in
the Aircraft, Airframe or such Engine; provided,
however,
that no
such Optional Modification shall (i) materially diminish the fair market
value, utility, or useful life of the Aircraft or any Engine below its fair
market value, utility or useful life immediately prior to such Optional
Modification (assuming the Aircraft or such Engine was in the condition required
by this Trust Indenture immediately prior to such Optional Modification) or
(ii) cause the Aircraft to cease to have the applicable standard
certificate of airworthiness except
that such certificate of airworthiness temporarily may be replaced by an
experimental certificate during the process of implementing and testing such
Optional Modification and securing related FAA re-certification of the
Aircraft.
All
Parts incorporated or installed in or attached to any Airframe or any Engine
as
the result of any alteration, modification or addition effected by the Owner
shall be free and clear of any Liens except Permitted Liens and become subject
to the Lien of this Trust Indenture; provided
that the
Owner or any Permitted Lessee may, at any time so long as the Airframe or any
Engine is subject to the Lien of this Trust Indenture, remove any such Part
(such Part being referred to herein as a “Removable
Part”)
from
such Airframe or an Engine if (i) such Part is in addition to, and not in
replacement of or in substitution for, any Part originally incorporated or
installed in or attached to such Airframe or any Engine at the time of delivery
thereof hereunder or any Part in replacement of, or in substitution for, any
such original Part, (ii) such Part is not required to be incorporated or
installed in or attached or added to such Airframe or any Engine pursuant to
the
terms of Section 4.02(d) or the first sentence of this Section 4.04(d) and
(iii)
such Part can be removed from such Airframe or any Engine without materially
diminishing
the fair market value, utility or remaining useful life which such Airframe
or
any Engine would have had at the time of removal had such removal not been
effected by the Owner, assuming the Aircraft was otherwise maintained in the
condition required by this Trust Indenture and such Removable Part had not
been
incorporated or installed in or attached to the Aircraft, Airframe or such
Engine. Upon the removal by the Owner of any such Part as above provided, title
thereto shall, without further act, be free and clear of all rights of the
Mortgagee and such Part shall no longer be deemed a Part hereunder. Removable
Parts may be leased from or financed by third parties other than
Mortgagee.
(e) Substitution
of Engines.
Upon
the occurrence of an Event of Loss with respect to an Engine under circumstances
in which an Event of Loss with respect to the Airframe has not occurred, Owner
shall promptly (and in any event within 15 days after such occurrence) give
the
Mortgagee written notice of such Event of Loss. The Owner shall have the right
at its option at any time, on at least 5 Business Days’ prior notice to the
Mortgagee, to substitute, and if an Event of Loss shall have occurred with
respect to an Engine under circumstances in which an Event of Loss with respect
to the Airframe has not occurred, shall within 60 days of the occurrence of
such
Event of Loss substitute, a Replacement Engine for any Engine. In such event,
immediately upon the effectiveness of such substitution and without further
act,
(i) the replaced Engine shall thereupon be free and clear of all rights of
the Mortgagee and the Lien of this Trust Indenture and shall no longer be deemed
an Engine hereunder and (ii) such Replacement Engine shall become subject to
this Trust Indenture and be deemed part of the Aircraft for all purposes hereof
to the same extent as the replaced Engine. Such Replacement Engine shall be
an
engine manufactured by Engine Manufacturer that is the same model as the Engine
to be replaced thereby, or an improved model, and that is suitable for
installation and use on the Airframe, and that has a value, utility and
remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to the Engine to be replaced thereby (assuming that
such Engine had been maintained in accordance with this Trust Indenture). The
Owner’s right to make a replacement hereunder shall be subject to the
fulfillment (which may be simultaneous with such replacement) of the following
conditions precedent at the Owner’s sole cost and expense, and the Mortgagee
agrees to cooperate with the Owner to the extent necessary to enable it to
timely satisfy such conditions:
(i) an
executed counterpart of each of the following documents shall be delivered
to
the Mortgagee:
(A) a
Trust
Indenture Supplement covering the Replacement Engine, which shall have been
duly
filed for recordation pursuant to the Act or such other applicable law of the
jurisdiction other than the United States in which the Aircraft of which such
Engine is a part is registered in accordance with Section 4.02(e), as the case
may be;
(B) a
full
warranty xxxx of sale (as to title), covering the Replacement Engine, executed
by the former owner thereof in favor of the Owner (or, at the Owner’s option,
other evidence of the Owner’s ownership of such Replacement Engine, reasonably
satisfactory to the Mortgagee); and
(C) UCC
financing statements covering the security interests created by this Trust
Indenture (or any similar statements or other documents required to be filed
or
delivered pursuant to the laws of the jurisdiction in which such Aircraft may
be
registered) as are deemed necessary or desirable by counsel for the Mortgagee
to
protect the security interests of the Mortgagee in the Replacement Engine;
(ii) the
Owner
shall cause to be delivered to the Mortgagee an opinion of counsel to the effect
that the Lien of this Trust Indenture continues to be in full force and effect
with respect to the Replacement Engine and such evidence of compliance with
the
insurance provisions of Section 4.06 with respect to such Replacement
Engine as Mortgagee shall reasonably request;
(iii) the
Owner
shall have furnished to Mortgagee an opinion of Owner’s aviation law counsel
reasonably satisfactory to Mortgagee and addressed to Mortgagee as to the due
filing for recordation of the Trust Indenture Supplement with respect to such
Replacement Engine under the Act or such other applicable law of the
jurisdiction other than the United States in which the Aircraft is registered
in
accordance with Section 4.02(e), as the case may be, and the registration
with the International Registry of the sale to Owner of such Replacement Engine
(if occurring after February 28, 2006) and the International Interest granted
under such Trust Indenture Supplement with respect to such Replacement Engine;
and
(iv) the
Owner
shall have furnished to Mortgagee a certificate of a qualified aircraft engineer
(who may be an employee of Owner) certifying that such Replacement Engine has
a
value and utility and remaining useful life (without regard to hours and cycles
remaining until overhaul) at least equal to the Engine so replaced (assuming
that such Engine had been maintained in accordance with this Trust
Indenture).
Upon
satisfaction of all conditions to such substitution, (x) the Mortgagee shall
execute and deliver to the Owner such documents and instruments, prepared at
the
Owner’s expense, as the Owner shall reasonably request to evidence the release
of such replaced Engine from the Lien of this Trust Indenture, (y) the Mortgagee
shall assign to the Owner all claims it may have against any other Person
relating to any Event of Loss giving rise to such substitution and (z) the
Owner
shall receive all insurance proceeds (other than those reserved to others under
Section 4.06(b)) and proceeds in respect of any Event of Loss giving rise to
such replacement to the extent not previously applied to the purchase price
of
the Replacement Engine as provided in Section 4.05(d).
SECTION
4.05. Loss, Destruction or
Requisition
(a) Event
of Loss With Respect to the Airframe.
Upon
the occurrence of an Event of Loss with respect to the Airframe, the Owner
shall
promptly (and in any event within 15 days after such occurrence) give the
Mortgagee written notice of such Event of Loss. The Owner shall, within 45
days
after such occurrence, give the Mortgagee written notice of Owner’s election to
either replace the Airframe as provided under Section 4.05(a)(i) or to make
payment in respect of such Event of Loss as provided under Section 4.05(a)(ii)
(it being agreed
that
if
Owner shall not have given the Mortgagee such notice of such election within
the
above specified time period, the Owner shall be deemed to have elected to make
payment in respect of such Event of Loss as provided under Section
4.05(a)(ii)):
(i) if
Owner
elects to replace the Airframe, Owner shall, subject to the satisfaction of
the
conditions contained in Section 4.05(c), as promptly as possible and in any
event within 120 days after the occurrence of such Event of Loss, cause to
be
subjected to the Lien of this Trust Indenture, in replacement of the Airframe
with respect to which the Event of Loss occurred, a Replacement Airframe and,
if
any Engine shall have been installed on the Airframe when it suffered the Event
of Loss, a Replacement Engine therefor, such Replacement Airframe and
Replacement Engines to be free and clear of all Liens except Permitted Liens
and
to have a value, utility and remaining useful life (without regard to hours
or
cycles remaining until the next regular maintenance check) at least equal to
the
Airframe or Engine, as the case may be, to be replaced thereby (assuming that
such Airframe or Engine had been maintained in accordance with this Trust
Indenture); provided that
if the
Owner shall not perform its obligation to effect such replacement under this
clause (i) during the 120-day period of time provided herein, it shall pay
the
amounts required to be paid pursuant to and within the time frame specified
in
clause (ii) below; or
(ii) if
Owner
elects to make a payment in respect of such Event of Loss of the Airframe,
Owner
shall make a payment to the Mortgagee for purposes of redeeming Equipment Notes
in accordance with Section 2.10 hereof on a date on or before the Business
Day
next following the earlier of (x) the 120th day following the date of the
occurrence of such Event of Loss, and (y) the fourth Business Day following
the
receipt of insurance proceeds with respect to such Event of Loss (but in any
event not earlier than the date of Owner’s election under Section 4.05(a) to
make payment under this Section 4.05 (a)(ii)); and upon such payment and payment
of all other Secured Obligations then due and payable, the Mortgagee shall,
at
the cost and expense of the Owner, release from the Lien of this Trust Indenture
the Airframe and the Engines, by executing and delivering to the Owner all
documents and instruments as the Owner may reasonably request to evidence such
release.
(b) Effect
of Replacement.
Should
the Owner have provided a Replacement Airframe and Replacement Engines, if
any,
as provided for in Section 4.05(a)(i), (i) the Lien of this Trust Indenture
shall continue with respect to such Replacement Airframe and Replacement
Engines, if any, as though no Event of Loss had occurred; (ii) the Mortgagee
shall, at the cost and expense of the Owner, release from the Lien of this
Trust
Indenture the replaced Airframe and Engines, if any, by executing and delivering
to the Owner such documents and instruments as the Owner may reasonably request
to evidence such release; and (iii) in the case of a replacement upon an Event
of Loss, the Mortgagee shall assign to the Owner all claims the Mortgagee may
have against any other Person arising from the Event of Loss and the Owner
shall
receive all insurance proceeds (other than those reserved to others under
Section 4.06(b)) and proceeds from any award in respect of condemnation,
confiscation, seizure or requisition, including any investment interest thereon,
to the extent not previously applied to the purchase price of the Replacement
Airframe and Replacement Engines, if any, as provided in Section
4.05(d).
(c) Conditions
to Airframe and Engine Replacement.
The
Owner’s right to substitute a Replacement Airframe and Replacement Engines, if
any, as provided in Section 4.05(a)(i) shall be subject to the fulfillment,
at
the Owner’s sole cost and expense, in addition to the conditions contained in
such Section 4.05(a)(i), of the following conditions precedent:
(i) on
the
date when the Replacement Airframe and Replacement Engines, if any, is subjected
to the Lien of this Trust Indenture (such date being referred to in this Section
4.05 as the “Replacement Closing Date”), an executed counterpart of each of the
following documents (or, in the case of the FAA Xxxx of Sale and full warranty
xxxx of sale referred to below, a photocopy thereof) shall have been delivered
to the Mortgagee:
(A) a
Trust
Indenture Supplement covering the Replacement Airframe and Replacement Engines,
if any, which shall have been duly filed for recordation pursuant to the Act
or
such other applicable law of such jurisdiction other than the United States
in
which the Replacement Airframe and Replacement Engines, if any, are to be
registered in accordance with Section 4.02(e), as the case may be;
(B) an
FAA
Xxxx of Sale (or a comparable document, if any, of another Aviation Authority,
if applicable) covering the Replacement Airframe and Replacement Engines, if
any, executed by the former owner thereof in favor of the Owner;
(C) a
full
warranty (as to title) xxxx of sale, covering the Replacement Airframe and
Replacement Engines, if any, executed by the former owner thereof in favor
of
the Owner (or, at the Owner’s option, other evidence of the Owner’s ownership of
such Replacement Airframe and Replacement Engines, if any, reasonably
satisfactory to the Mortgagee); and
(D) UCC
financing statements (or any similar statements or other documents required
to
be filed or delivered pursuant to the laws of the jurisdiction in which the
Replacement Airframe and Replacement Engines, if any, may be registered in
accordance with Section 4.02(e)) as are deemed necessary or desirable by counsel
for the Mortgagee to protect the security interests of the Mortgagee in the
Replacement Airframe and Replacement Engines, if any;
(ii) the
Replacement Airframe and Replacement Engines, if any, shall be of the same
model
as the Airframe or Engines, as the case may be, or an improved model of such
aircraft or engines of the manufacturer thereof, shall have a value and utility
(without regard to hours or cycles remaining until the next regular maintenance
check) at least equal to, and be in as good operating condition and repair
as,
the Airframe and any Engines replaced (assuming such Airframe and Engines had
been maintained in accordance with this Trust Indenture);
(iii) the
Mortgagee (acting directly or by authorization to its special counsel) shall
have received satisfactory evidence as to the compliance with Section 4.06
with
respect to the Replacement Airframe and Replacement Engines, if
any;
(iv) on
the
Replacement Closing Date, (A) the Owner shall cause the Replacement Airframe
and
Replacement Engines, if any, to be subject to the Lien of this Trust Indenture
free and clear of Liens (other than Permitted Liens), (B) the Replacement
Airframe shall have been duly certified by the FAA as to type and airworthiness
in accordance with the terms of this Trust Indenture, (C) application for
registration of the Replacement Airframe in accordance with Section 4.02(e)
shall have been duly made with the FAA or other applicable Aviation Authority
and the Owner shall have authority to operate the Replacement Airframe and
(D) the Owner shall have caused the sale of such Replacement Airframe and
Replacement Engine(s), if any, to the Owner (if occurring after
February 28, 2006) and the International Interest granted under the Trust
Indenture Supplement in favor of the Mortgagee with respect to such Replacement
Airframe and Replacement Engine(s), if any, each to be registered on the
International Registry as a sale or an International Interest, respectively;
(v) the
Mortgagee at the expense of the Owner, shall have received (acting directly
or
by authorization to its special counsel) (A) an opinion of counsel, addressed
to
the Mortgagee, to the effect that the Replacement Airframe and Replacement
Engine, if any, has or have duly been made subject to the Lien of this Trust
Indenture, and Mortgagee will be entitled to the benefits of Section 1110
with respect to the Replacement Airframe, provided that such opinion with
respect to Section 1110 need not be delivered to the extent that immediately
prior to such replacement the benefits of Section 1110 were not, solely by
reason of a change in law or court interpretation thereof, available to
Mortgagee, and (B) an opinion of Owner’s aviation law counsel reasonably
satisfactory to and addressed to Mortgagee as to the due registration of any
such Replacement Airframe and the due filing for recordation of each Trust
Indenture Supplement with respect to such Replacement Airframe or Replacement
Engine under the Act or such other applicable law of the jurisdiction other
than
the United States in which the Replacement Airframe is to be registered in
accordance with Section 4.02(e), as the case may be, and the registration
with the International Registry of the sale of such Replacement Airframe and
Replacement Engine(s), if any, to the Owner (if occurring after
February 28, 2006) and of the International Interest granted under the
Trust Indenture Supplement with respect to such Replacement Aircraft and
Replacement Engine(s), if any; and
(vi) the
Owner
shall have furnished to the Mortgagee a certificate of a qualified aircraft
engineer (who may be an employee of Owner) certifying that the Replacement
Airframe and Replacement Engines, if any, have a value and utility and remaining
useful life (without regard to hours and cycles remaining until overhaul) at
least equal to the Airframe and any Engines so replaced (assuming that such
Airframe and Engines had been maintained in accordance with this Trust
Indenture).
(d) Non-Insurance
Payments Received on Account of an Event of Loss.
Any
amounts, other than insurance proceeds in respect of damage or loss not
constituting an Event of Loss (the application of which is provided for in
Annex B), received at any time by Mortgagee or Owner from any Government
Entity or any other Person in respect of any Event of Loss will be applied
as
follows:
(i) If
such
amounts are received with respect to the Airframe, and any Engine installed
thereon at the time of such Event of Loss, upon compliance by
Owner
with the applicable terms of Section 4.05(c) with respect to the Event of
Loss for which such amounts are received, such amounts shall be paid over to,
or
retained by, Owner;
(ii) If
such
amounts are received with respect to an Engine (other than an Engine installed
on the Airframe at the time such Airframe suffers an Event of Loss), upon
compliance by Owner with the applicable terms of Section 4.04(e) with
respect to the Event of Loss for which such amounts are received, such amounts
shall be paid over to, or retained by, Owner;
(iii) If
such
amounts are received, in whole or in part, with respect to the Airframe, and
Owner makes, has made or is deemed to have made the election set forth in
Section 4.05(a)(ii), such amounts shall be applied as follows:
first,
if the
sum described in Section 4.05(a)(ii) has not then been paid in full by
Owner, such amounts shall be paid to Mortgagee to the extent necessary to pay
in
full such sum; and
second,
the
remainder, if any, shall be paid to Owner.
(e) Requisition
for Use.
In the
event of a requisition for use by any Government Entity of the Airframe and
the
Engines, if any, or engines installed on such Airframe while such Airframe
is
subject to the Lien of this Trust Indenture, the Owner shall promptly notify
the
Mortgagee of such requisition and all of the Owner’s obligations under this
Trust Indenture shall continue to the same extent as if such requisition had
not
occurred except to the extent that the performance or observance of any
obligation by the Owner shall have been prevented or delayed by such
requisition; provided that
the
Owner’s obligations under this Section 4.05 with respect to the occurrence of an
Event of Loss for the payment of money and under Section 4.06 (except while
an
assumption of liability by the U.S. Government of the scope referred to in
Section 4.02(c) is in effect) shall not be reduced or delayed by such
requisition. Any payments received by the Mortgagee or the Owner or Permitted
Lessee from such Government Entity with respect to such requisition of use
shall
be paid over to, or retained by, the Owner. In the event of an Event of Loss
of
an Engine resulting from the requisition for use by a Government Entity of
such
Engine (but not the Airframe), the Owner will replace such Engine hereunder
by
complying with the terms of Section 4.04(e) and any payments received by the
Mortgagee or the Owner from such Government Entity with respect to such
requisition shall be paid over to, or retained by, the Owner.
(f) Certain
Payments to be Held As Security.
Any
amount referred to in this Section 4.05 or Section 4.06 which is payable or
creditable to, or retainable by, the Owner shall not be paid or credited to,
or
retained by the Owner if at the time of such payment, credit or retention a
Special Default or an Event of Default shall have occurred and be continuing,
but shall be paid to and held by the Mortgagee as security for the obligations
of the Owner under this Trust Indenture and the Operative Agreements, and at
such time as there shall not be continuing any such Special Default or Event
of
Default such amount and any gain realized as a result of
investments
required to be made pursuant to Section 6.06 shall to the extent not theretofore
applied as provided herein, be paid over to the Owner.
SECTION
4.06. Insurance
(a) Owner’s
Obligation to Insure.
Owner
shall comply with, or cause to be complied with, each of the provisions of
Annex B, which provisions are hereby incorporated by this reference as if
set forth in full herein.
(b) Insurance
for Own Account.
Nothing
in Section 4.06 shall limit or prohibit (a) Owner from maintaining the policies
of insurance required under Annex B with higher limits than those specified
in
Annex B, or (b) Mortgagee from obtaining insurance for its own account (and
any proceeds payable under such separate insurance shall be payable as provided
in the policy relating thereto); provided,
however,
that no
insurance may be obtained or maintained that would limit or otherwise adversely
affect the coverage of any insurance required to be obtained or maintained
by
Owner pursuant to this Section 4.06 and Annex B.
(c) Indemnification
by Government in Lieu of Insurance.
Mortgagee agrees to accept, in lieu of insurance against any risk with respect
to the Aircraft described in Annex B, indemnification from, or insurance
provided by, the U.S. Government, or upon the written consent of Mortgagee,
other Government Entity, against such risk in an amount that, when added to
the
amount of insurance (including permitted self-insurance), if any, against such
risk that Owner (or any Permitted Lessee) may continue to maintain, in
accordance with this Section 4.06, during the period of such requisition or
transfer, shall be at least equal to the amount of insurance against such risk
otherwise required by this Section 4.06.
(d) Application
of Insurance Proceeds.
As
between Owner and Mortgagee, all insurance proceeds received as a result of
the
occurrence of an Event of Loss with respect to the Aircraft or any Engine under
policies required to be maintained by Owner pursuant to this Section 4.06
will be applied in accordance with Section 4.05(d). All proceeds of
insurance required to be maintained by Owner, in accordance with
Section 4.06 and Section B of Annex B, in respect of any property
damage or loss not constituting an Event of Loss with respect to the Aircraft,
Airframe or any Engine will be applied in payment (or to reimburse Owner) for
repairs or for replacement property, and any balance remaining after such
repairs or replacement with respect to such damage or loss shall be paid over
to, or retained by, Owner.
SECTION
4.07. Merger of
Owner
(a) In
General.
Owner
shall not consolidate with or merge into any other person under circumstances
in
which Owner is not the surviving corporation, or convey, transfer or lease
in
one or more transactions all or substantially all of its assets to any other
person, unless:
(i) such
person is organized, existing and in good standing under the Laws of the United
States, any State of the United States or the District of Columbia and, upon
consummation of such transaction, such person will be a U.S. Air
Carrier;
(ii) such
person executes and delivers to Mortgagee a duly authorized, legal, valid,
binding and enforceable agreement, reasonably satisfactory in form and substance
to Mortgagee, containing an effective assumption by such person of the due
and
punctual performance and observance of each covenant, agreement and condition
in
the Operative Agreements to be performed or observed by Owner;
(iii) if
the
Aircraft is, at the time, registered with the FAA, such person makes such
filings and recordings with the FAA pursuant to the Act or if the Aircraft
is,
at the time, not registered with FAA, such person makes such filings and
recordings with the applicable Aviation Authority as shall be necessary to
evidence such consolidation or merger; and
(iv) immediately
after giving effect to such consolidation or merger no Event of Default shall
have occurred and be continuing.
(b) Effect
of Merger.
Upon
any such consolidation or merger of Owner with or into, or the conveyance,
transfer or lease by Owner of all or substantially all of its assets to, any
Person in accordance with this Section 4.07, such Person will succeed to,
and be substituted for, and may exercise every right and power of, Owner under
the Operative Agreements with the same effect as if such person had been named
as “Owner” therein. No such consolidation or merger, or conveyance, transfer or
lease, shall have the effect of releasing Owner or such Person from any of
the
obligations, liabilities, covenants or undertakings of Owner under the Trust
Indenture.
SECTION
4.08 Claim for Related Secured
Obligations
If
any
Related Secured Obligation shall have become due and remains unpaid at any
time
after the date that is 180 days prior to the Final Maturity Date, the
Subordination Agent shall have the right, at any time from and after such
180th
day to
and including the 90th
day
after the Final Maturity Date, to give written notice to Owner specifying the
amount of such Related Secured Obligation so due and unpaid (separately
identifying the portions thereof comprised of “Original Amount”, interest or
other obligation and each agreement under which such amounts are due) (provided
that the failure to give such notice shall not affect any of the Mortgagee’s or
any Indenture Indemnitee’s rights under this Trust Indenture) and if (a) such
notice has been given, (b) such Related Secured Obligation remains unpaid at
the
Final Maturity Date and (c) any portion of the Collateral is then subject to
the
Lien of this Trust Indenture, then, notwithstanding that no Event of Default
shall have then occurred and be continuing, the Owner shall, on the later of
(x)
the date that is 90 days after receipt of such notice and (y) the Final Maturity
Date, either (i) pay the amount of such Related Secured Obligations that
are due and unpaid to the Mortgagee, which shall be distributed in accordance
with Section 3.03 or (ii) give to the Mortgagee its irrevocable written
consent to (and thereafter permit) the exercise of remedies against the
Collateral or any part thereof by the Mortgagee in the same manner and with
the
same rights as specified in Article V as if an Event of Default shall have
then
occurred and be continuing (and any proceeds of the exercise of such remedies
shall be distributed in accordance with Section 3.03), and the Mortgagee shall
act at the direction of the Subordination Agent in the exercise of any such
remedies. Notwithstanding the foregoing, if at any time an
Event
of
Loss with respect to the Aircraft, the Airframe or any Engine shall have
occurred, the Mortgagee’s rights to exercise remedies pursuant to the preceding
sentence with respect to such item of equipment suffering such Event of Loss
shall terminate, such item of equipment (and any insurance, requisition or
similar proceeds relating thereto) shall be released from the Lien of this
Trust
Indenture and Owner shall have no obligation to make a payment or provide a
replacement item of equipment as a result of such Event of Loss (it being
understood that (i) this sentence shall not affect Owner’s obligations with
respect to such Event of Loss if the Original Amount of the Equipment Notes
and
accrued interest thereon shall have not been paid in full and (ii) if the Owner
shall replace any such item of equipment in accordance with this Trust
Indenture, then this sentence will not apply to the replacement item of
equipment unless it shall subsequently suffer an Event of Loss).
EVENTS
OF DEFAULT; REMEDIES OF MORTGAGEE
SECTION
5.01. Event of
Default
“Event
of
Default” means any of the following events (whatever the reason for such Event
of Default and whether such event shall be voluntary or involuntary or come
about or be effected by operation of Law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation
of
any administrative or governmental body):
(i) the
failure of the Owner to pay (i) principal of, interest on or Make-Whole Amount,
if any, under any Equipment Note when due, and such failure shall continue
unremedied for a period of 10 Business Days, or (ii) any other amount payable
by
it to the Note Holders under this Trust Indenture or the Participation Agreement
when due, and such failure shall continue for a period in excess of 10 Business
Days after Owner has received written notice from Mortgagee of the failure
to
make such payment when due;
(ii) Owner
shall fail to carry and maintain, or cause to be carried and maintained,
insurance on and in respect of the Aircraft, Airframe and Engines in accordance
with the provisions of Section 4.06;
(iii) Owner
shall fail to observe or perform (or caused to be observed and performed) in
any
material respect any other covenant, agreement or obligation set forth herein
or
in any other Operative Agreement to which Owner is a party and such failure
shall continue unremedied for a period of 30 days from and after the date of
written notice thereof to Owner from Mortgagee, unless such failure is capable
of being corrected and Owner shall be diligently proceeding to correct such
failure, in which case there shall be no Event of Default unless and until
such
failure shall continue unremedied for a period of 270 days after receipt of
such notice;
(iv) any
representation or warranty made by Owner herein, in the Participation Agreement
or in any other Operative Agreement to which Owner is a party (a) shall
prove to have been untrue or inaccurate in any material respect as of the date
made, (b) such untrue or inaccurate representation or warranty is material
at the time in question,
(c) and
the same shall remain uncured (to the extent of the adverse impact of such
incorrectness on the interest of the Mortgagee) for a period in excess of 30
days from and after the date of written notice thereof from Mortgagee to
Owner;
(v) the
Owner
shall consent to the appointment of or taking possession by a receiver, trustee
or liquidator of itself or of a substantial part of its property, or the Owner
shall admit in writing its inability to pay its debts generally as they come
due
or shall make a general assignment for the benefit of its creditors, or the
Owner shall file a voluntary petition in bankruptcy or a voluntary petition
or
an answer seeking reorganization, liquidation or other relief under any
bankruptcy laws or insolvency laws (as in effect at such time), or an answer
admitting the material allegations of a petition filed against it in any such
case, or the Owner shall seek relief by voluntary petition, answer or consent,
under the provisions of any other bankruptcy or similar law providing for the
reorganization or winding-up of corporations (as in effect at such time), or
the
Owner shall seek an agreement, composition, extension or adjustment with its
creditors under such laws or the Owner’s board of directors shall adopt a
resolution authorizing corporate action in furtherance of any of the
foregoing;
(vi) an
order,
judgment or decree shall be entered by any court of competent jurisdiction
appointing, without the consent of the Owner, a receiver, trustee or liquidator
of the Owner or of any substantial part of its property, or any substantial
part
of the property of the Owner shall be sequestered, or granting any other relief
in respect of the Owner as a debtor under any bankruptcy laws or other
insolvency laws (as in effect at such time), and any such order, judgment,
decree, or decree of appointment or sequestration shall remain in force
undismissed, unstayed or unvacated for a period of 90 days after the date of
entry thereof; or
(vii) a
petition against the Owner in a proceeding under any bankruptcy laws or other
insolvency laws (as in effect at such time) is filed and not withdrawn or
dismissed within 90 days thereafter, or if, under the provisions of any law
providing for reorganization or winding-up of corporations which may apply
to
the Owner, any court of competent jurisdiction shall assume jurisdiction,
custody or control of the Owner of any substantial part of its property and
such
jurisdiction, custody or control shall remain in force unrelinquished, unstayed
or unterminated for a period of 90 days.
SECTION
5.02. Remedies
(a) If
an
Event of Default shall have occurred and
be
continuing and so long as the same shall continue unremedied, then and in every
such case the Mortgagee may exercise any or all of the rights and powers and
pursue any and all of the remedies pursuant to this Article V and shall have
and
may exercise all of the rights and remedies of a secured party under the Uniform
Commercial Code or of a chargee under the Cape Town Treaty and may take
possession of all or any part of the properties covered or intended to be
covered by the Lien created hereby or pursuant hereto and may exclude the Owner
and all persons claiming under it wholly or partly therefrom; provided,
that
the Mortgagee shall give the Owner twenty days’ prior written notice of its
intention to sell the Aircraft. Without limiting any of the foregoing, it is
understood and agreed that the Mortgagee may exercise any right of sale of
the
Aircraft available
to
it,
even though it shall not have taken possession of the Aircraft and shall not
have possession thereof at the time of such sale.
(b) If
an
Event of Default shall have occurred and be continuing, then and in every such
case the Mortgagee may (and shall, upon receipt of a written demand therefor
from a Majority in Interest of Note Holders), at any time, by delivery of
written notice or notices to the Owner, declare all the Equipment Notes to
be
due and payable, whereupon the unpaid Original Amount of all Equipment Notes
then outstanding, together with accrued but unpaid interest thereon (without
Make-Whole Amount) and other amounts due thereunder or otherwise payable
hereunder, shall immediately become due and payable without presentment, demand,
protest or notice, all of which are hereby waived; provided that if an Event
of
Default referred to in clause (v), (vi) or (vii) of Section 5.01 hereof shall
have occurred, then and in every such case the unpaid Original Amount then
outstanding, together with accrued but unpaid interest (without Make-Whole
Amount) and all other amounts due hereunder and under the Equipment Notes shall
immediately and without further act become due and payable without presentment,
demand, protest or notice, all of which are hereby waived.
This
Section 5.02(b), however, is subject to the condition that, if at any time
after
the Original Amount of the Equipment Notes shall have become so due and payable,
and before any judgment or decree for the payment of the money so due, or any
thereof, shall be entered, all overdue payments of interest upon the Equipment
Notes and all other amounts payable hereunder or under the Equipment Notes
(except the Original Amount of the Equipment Notes and any Make-Whole Amount
which by such declaration shall have become payable) shall have been duly paid,
and every other Default and Event of Default with respect to any covenant or
provision of this Trust Indenture shall have been cured, then and in every
such
case a Majority in Interest of Note Holders may (but shall not be obligated
to),
by written instrument filed with the Mortgagee, rescind and annul the
Mortgagee’s declaration (or such automatic acceleration) and its consequences;
but no such rescission or annulment shall extend to or affect any subsequent
Default or Event of Default or impair any right consequent thereon.
(c) The
Note
Holders shall be entitled, at any sale pursuant to this Section 5.02, to credit
against any purchase price bid at such sale by such holder all or any part
of
the unpaid obligations owing to such Note Holder and secured by the Lien of
this
Trust Indenture (only to the extent that such purchase price would have been
paid to such Note Holder pursuant to Article III hereof if such purchase price
were paid in cash and the foregoing provisions of this subsection (c) were
not
given effect).
(d) In
the
event of any sale of the Collateral, or any part thereof, pursuant to any
judgment or decree of any court or otherwise in connection with the enforcement
of any of the terms of this Trust Indenture, the unpaid Original Amount of
all
Equipment Notes then outstanding, together with accrued interest thereon
(without Make-Whole Amount), and other amounts due thereunder, shall immediately
become due and payable without presentment, demand, protest or notice, all
of
which are hereby waived.
(e) Notwithstanding
anything contained herein, (i) so long as the Pass Through Trustee under any
Pass Through Trust Agreement (or its designee) is a Note Holder, the
Mortgagee
will not be authorized or empowered to acquire title to any Collateral or take
any action with respect to any Collateral so acquired by it if such acquisition
or action would cause any Trust to fail to qualify as a “grantor trust” for
federal income tax purposes, and (ii) the Mortgagee will not take any action
that would violate Sections 4.1(a)(ii) or 4.1(a)(iii) of the Intercreditor
Agreement.
SECTION
5.03. Return of Aircraft,
Etc.
(a) If
an
Event of Default shall have occurred and be continuing and the Equipment Notes
have been accelerated, at the request of the Mortgagee, the Owner shall promptly
execute and deliver to the Mortgagee such instruments of title and other
documents as the Mortgagee may deem necessary or advisable to enable the
Mortgagee or an agent or representative designated by the Mortgagee, at such
time or times and place or places as the Mortgagee may specify, to obtain
possession of all or any part of the Collateral to which the Mortgagee shall
at
the time be entitled hereunder. If the Owner shall for any reason fail to
execute and deliver such instruments and documents after such request by the
Mortgagee, the Mortgagee may (i) obtain a judgment conferring on the Mortgagee
the right to immediate possession and requiring the Owner to execute and deliver
such instruments and documents to the Mortgagee, to the entry of which judgment
the Owner hereby specifically consents to the fullest extent permitted by Law,
and (ii) pursue all or part of such Collateral wherever it may be found and
may
enter any of the premises of Owner wherever such Collateral may be or be
supposed to be and search for such Collateral and take possession of and remove
such Collateral. All expenses of obtaining such judgment or of pursuing,
searching for and taking such property shall, until paid, be secured by the
Lien
of this Trust Indenture.
(b) Upon
every such taking of possession, the Mortgagee may, from time to time, at the
expense of the Collateral, make all such expenditures for maintenance, use,
operation, storage, insurance, leasing, control, management, disposition,
modifications or alterations to and of the Collateral, as it may deem proper.
In
each such case, the Mortgagee shall have the right to maintain, use, operate,
store, insure, lease, control, manage, dispose of, modify or alter the
Collateral and to exercise all rights and powers of the Owner relating to the
Collateral, as the Mortgagee shall deem best, including the right to enter
into
any and all such agreements with respect to the maintenance, use, operation,
storage, insurance, leasing, control, management, disposition, modification
or
alteration of the Collateral or any part thereof as the Mortgagee may determine,
and the Mortgagee shall be entitled to collect and receive directly all rents,
revenues and other proceeds of the Collateral and every part thereof, without
prejudice, however, to the right of the Mortgagee under any provision of this
Trust Indenture to collect and receive all cash held by, or required to be
deposited with, the Mortgagee hereunder. Such rents, revenues and other proceeds
shall be applied to pay the expenses of the maintenance, use, operation,
storage, insurance, leasing, control, management, disposition, improvement,
modification or alteration of the Collateral and of conducting the business
thereof, and to make all payments which the Mortgagee may be required or may
elect to make, if any, for taxes, assessments, insurance or other proper charges
upon the Collateral or any part thereof (including the employment of engineers
and accountants to examine, inspect and make reports upon the properties and
books and records of the Owner), and all other payments which the Mortgagee
may
be required or authorized to make under any provision of this Trust Indenture,
as well as
just
and
reasonable compensation for the services of the Mortgagee, and of all persons
properly engaged and employed by the Mortgagee with respect hereto.
SECTION
5.04. Remedies
Cumulative
Each
and
every right, power and remedy given to the Mortgagee specifically or otherwise
in this Trust Indenture shall be cumulative and shall be in addition to every
other right, power and remedy herein specifically given or now or hereafter
existing at Law, in equity or by statute, and each and every right, power and
remedy whether specifically herein given or otherwise existing may be exercised
from time to time and as often and in such order as may be deemed expedient
by
the Mortgagee, and the exercise or the beginning of the exercise of any power
or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy. No delay or omission
by the Mortgagee in the exercise of any right, remedy or power or in the
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner or to be an
acquiescence therein.
SECTION
5.05. Discontinuance of
Proceedings
In
case
the Mortgagee shall have instituted any proceeding to enforce any right, power
or remedy under this Trust Indenture by foreclosure, entry or otherwise, and
such proceedings shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Mortgagee, then and in every such
case the Owner and the Mortgagee shall, subject to any determination in such
proceedings, be restored to their former positions and rights hereunder with
respect to the Collateral, and all rights, remedies and powers of the Owner
or
the Mortgagee shall continue as if no such proceedings had been
instituted.
SECTION
5.06. Waiver of Past
Defaults
Upon
written instruction from a Majority in Interest of Note Holders, the Mortgagee
shall waive any past Default hereunder and its consequences and upon any such
waiver such Default shall cease to exist and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this Trust
Indenture, but no such waiver shall extend to any subsequent or other Default
or
impair any right consequent thereon; provided, that in the absence of written
instructions from all the Note Holders, the Mortgagee shall not waive any
Default (i) in the payment of the Original Amount, Make-Whole Amount, if any,
and interest and other amounts due under any Equipment Note then outstanding,
or
(ii) in respect of a covenant or provision hereof which, under Article X hereof,
cannot be modified or amended without the consent of each Note
Holder.
SECTION
5.07. Appointment of
Receiver
The
Mortgagee shall, as a matter of right, be entitled to the appointment of a
receiver (who may be the Mortgagee or any successor or nominee thereof) for
all
or any part of the Collateral, whether such receivership be incidental to a
proposed sale of the Collateral or the taking of possession thereof or
otherwise, and the Owner hereby consents to the appointment of such a receiver
and will not oppose any such appointment. Any receiver appointed for all or
any
part
of
the Collateral shall be entitled to exercise all the rights and powers of the
Mortgagee with respect to the Collateral.
SECTION
5.08. Mortgagee Authorized to Execute
Bills of Sale, Etc.
The
Owner
irrevocably appoints, while an Event of Default has occurred and is continuing,
the Mortgagee the true and lawful attorney-in-fact of the Owner (which
appointment is coupled with an interest) in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments
as
may be necessary or appropriate, with full power of substitution, the Owner
hereby ratifying and confirming all that such attorney or any substitute shall
do by virtue hereof in accordance with applicable law. Nevertheless, if so
requested by the Mortgagee or any purchaser, the Owner shall ratify and confirm
any such sale, assignment, transfer or delivery, by executing and delivering
to
the Mortgagee or such purchaser all bills of sale, assignments, releases and
other proper instruments to effect such ratification and confirmation as may
be
designated in any such request.
SECTION
5.09. Rights of Note Holders to Receive
Payment
Notwithstanding
any other provision of this Trust Indenture, the right of any Note Holder to
receive payment of principal of, and premium, if any, and interest on an
Equipment Note on or after the respective due dates expressed in such Equipment
Note, or to bring suit for the enforcement of any such payment on or after
such
respective dates in accordance with the terms hereof, shall not be impaired
or
affected without the consent of such Note Holder.
DUTIES
OF THE MORTGAGEE
SECTION
6.01. Notice of Event of
Default
If
the
Mortgagee shall have Actual Knowledge of an Event of Default or of a Default
arising from a failure to pay any installment of principal and interest on
any
Equipment Note, the Mortgagee shall give prompt written notice thereof to each
Note Holder. Subject to the terms of Sections 5.06, 6.02 and 6.03 hereof, the
Mortgagee shall take such action, or refrain from taking such action, with
respect to such Event of Default or Default (including with respect to the
exercise of any rights or remedies hereunder) as the Mortgagee shall be
instructed in writing by a Majority in Interest of Note Holders. Subject to
the
provisions of Section 6.03, if the Mortgagee shall not have received
instructions as above provided within 20 days after mailing notice of such
Event
of Default to the Note Holders, the Mortgagee may, subject to instructions
thereafter received pursuant to the preceding provisions of this Section 6.01,
take such action, or refrain from taking such action, but shall be under no
duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall determine advisable in the best interests of the Note
Holders; provided,
however,
that
the Mortgagee may not sell the Aircraft or any Engine without the consent of
a
Majority in Interest of Note Holders. For all
purposes
of this Trust Indenture, in the absence of Actual Knowledge on the part of
the
Mortgagee, the Mortgagee shall not be deemed to have knowledge of a Default
or
an Event of Default (except, the failure of Owner to pay any installment of
principal or interest within one Business Day after the same shall become due,
which failure shall constitute knowledge of a Default) unless notified in
writing by the Owner or one or more Note Holders.
SECTION
6.02. Action Upon Instructions; Certain
Rights and Limitations
Subject
to the terms of Sections 5.02(a), 5.06, 6.01 and 6.03 hereof, upon the written
instructions at any time and from time to time of a Majority in Interest of
Note
Holders, the Mortgagee shall, subject to the terms of this Section 6.02, take
such of the following actions as may be specified in such instructions: (i)
give
such notice or direction or exercise such right, remedy or power hereunder
as
shall be specified in such instructions and (ii) give such notice or direction
or exercise such right, remedy or power hereunder with respect to any part
of
the Collateral as shall be specified in such instructions; it being understood
that without the written instructions of a Majority in Interest of Note Holders,
the Mortgagee shall not, except as provided in Section 6.01, approve any
such matter as satisfactory to the Mortgagee.
The
Mortgagee will execute and the Owner will file such continuation statements
with
respect to financing statements relating to the security interest created
hereunder in the Collateral as may be specified from time to time in written
instructions of a Majority in Interest of Note Holders (which instructions
shall
be accompanied by the form of such continuation statement so to be filed).
The
Mortgagee will furnish to each Note Holder, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands, certificates
and other instruments furnished to the Mortgagee hereunder.
SECTION
6.03. Indemnification
The
Mortgagee shall not be required to take any action or refrain from taking any
action under Section 6.01 (other than the first sentence thereof), 6.02 or
Article V hereof unless the Mortgagee shall have been indemnified to its
reasonable satisfaction against any liability, cost or expense (including
counsel fees) which may be incurred in connection therewith pursuant to a
written agreement with one or more Note Holders. The Mortgagee agrees that
it
shall look solely to the Note Holders for the satisfaction of any indemnity
(except expenses for foreclosure of the type referred to in clause “First” of
Section 3.03 hereof) owed to it pursuant to this Section 6.03. The Mortgagee
shall not be under any obligation to take any action under this Trust Indenture
or any other Operative Agreement and nothing herein or therein shall require
the
Mortgagee to expend or risk its own funds or otherwise incur the risk of any
financial liability in the performance of any of its rights or powers if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to
it (the written indemnity of any Note Holder who is a QIB, signed by an
authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Mortgagee shall be accepted as reasonable assurance of
adequate indemnity). The Mortgagee shall not be required to take any action
under Section 6.01 (other than the first sentence thereof) or 6.02 or Article
V
hereof, nor shall any other provision of this Trust Indenture or any other
Operative Agreement be deemed to impose a duty on the Mortgagee to take any
action, if the
Mortgagee
shall have been advised by counsel that such action is contrary to the terms
hereof or is otherwise contrary to Law.
SECTION
6.04. No Duties Except as Specified in
Trust Indenture or Instructions
The
Mortgagee shall not have any duty or obligation to use, operate, store, lease,
control, manage, sell, dispose of or otherwise deal with the Aircraft or any
other part of the Collateral, or to otherwise take or refrain from taking any
action under, or in connection with, this Trust Indenture or any part of the
Collateral, except as expressly provided by the terms of this Trust Indenture
or
as expressly provided in written instructions from Note Holders as provided
in
this Trust Indenture; and no implied duties or obligations shall be read into
this Trust Indenture against the Mortgagee. The Mortgagee agrees that it will
in
its individual capacity and at its own cost and expense (but without any right
of indemnity in respect of any such cost or expense under Section 8.01 hereof),
promptly take such action as may be necessary duly to discharge all liens and
encumbrances on any part of the Collateral which result from claims against
it
in its individual capacity not related to the administration of the Collateral
or any other transaction pursuant to this Trust Indenture or any document
included in the Collateral.
SECTION
6.05. No Action Except Under Trust
Indenture or Instructions
The
Mortgagee will not use, operate, store, lease, control, manage, sell, dispose
of
or otherwise deal with the Aircraft or any other part of the Collateral except
in accordance with the powers granted to, or the authority conferred upon the
Mortgagee pursuant to this Trust Indenture and in accordance with the express
terms hereof.
SECTION
6.06. Investment of Amounts Held by
Mortgagee
Any
amounts held by the Mortgagee pursuant to Section 3.02, 3.03 or 3.07 or pursuant
to any provision of any other Operative Agreement providing for amounts to
be
held by the Mortgagee which are not distributed pursuant to the other provisions
of Article III hereof shall be invested by the Mortgagee from time to time
in
Cash Equivalents as directed by the Owner so long as the Mortgagee may acquire
the same using its best efforts. All Cash Equivalents held by the Mortgagee
pursuant to this Section 6.06 shall either be (a) registered in the name of,
payable to the order of, or specially endorsed to, the Mortgagee, or (b) held
in
an Eligible Account. Unless otherwise expressly provided in this Trust
Indenture, any income realized as a result of any such investment, net of the
Mortgagee’s reasonable fees and expenses in making such investment, shall be
held and applied by the Mortgagee in the same manner as the principal amount
of
such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Mortgagee shall not be liable for any loss resulting from any
investment required to be made by it under this Trust Indenture other than
by
reason of its willful misconduct or gross negligence or negligence in the
handling of funds, and any such investment may be sold (without regard to its
maturity) by the Mortgagee without instructions whenever such sale is necessary
to make a distribution required by this Trust Indenture.
THE
MORTGAGEE
SECTION
7.01. Acceptance of Trusts and
Duties
The
Mortgagee accepts the duties hereby created and applicable to it and agrees
to
perform the same but only upon the terms of this Trust Indenture and agrees
to
receive and disburse all monies constituting part of the Collateral in
accordance with the terms hereof. The Mortgagee, in its individual capacity,
shall not be answerable or accountable under any circumstances, except (i)
for
its own willful misconduct or gross negligence (other than for the handling
of
funds, for which the standard of accountability shall be willful misconduct
or
negligence), (ii) as provided in the fourth sentence of Section 2.04(a) hereof
and the last sentence of Section 6.04 hereof, and (iii) from the inaccuracy
of
any representation or warranty of the Mortgagee (in its individual capacity)
in
the Participation Agreement or expressly made hereunder.
SECTION
7.02. Absence of
Duties
Except
in
accordance with written instructions furnished pursuant to Section 6.01 or
6.02
hereof, and except as provided in, and without limiting the generality of,
Sections 6.03, 6.04 and 7.07 hereof the Mortgagee shall have no duty (i) to
see
to any registration of the Aircraft or any recording or filing of this Trust
Indenture or any other document, or to see to the maintenance of any such
registration, recording or filing, (ii) to see to any insurance on the Aircraft
or to effect or maintain any such insurance, whether or not Owner shall be
in
default with respect thereto, (iii) to see to the payment or discharge of any
lien or encumbrance of any kind against any part of the Collateral, (iv) to
confirm, verify or inquire into the failure to receive any financial statements
from Owner, or (v) to inspect the Aircraft at any time or ascertain or inquire
as to the performance or observance of any of Owner’s covenants herein or any
Permitted Lessee’s covenants under any assigned Permitted Lease with respect to
the Aircraft.
SECTION
7.03. No Representations or Warranties
as to Aircraft or Documents
THE
MORTGAGEE IN ITS INDIVIDUAL OR TRUST CAPACITY DOES NOT MAKE AND SHALL NOT BE
DEEMED TO HAVE MADE AND HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE
WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT
OR
ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK
OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT
OR
ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER. The Mortgagee, in its
individual or trust capacities, does not make or shall not be deemed to have
made any representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Participation
Agreement,
the Equipment Notes, or the Purchase Agreement, or as to the correctness of
any
statement contained in any thereof, except for the representations and
warranties of the Owner made in its individual capacity and the representations
and warranties of the Mortgagee in its individual capacity, in each case
expressly made in this Trust Indenture or in the Participation Agreement. The
Note Holders make no representation or warranty hereunder
whatsoever.
SECTION
7.04. No Segregation of Monies; No
Interest
Except
as
otherwise provided in Section 3.07 hereof, any monies paid to or retained by
the
Mortgagee pursuant to any provision hereof and not then required to be
distributed to the Note Holders, or the Owner as provided in Article III hereof
need not be segregated in any manner except to the extent required by Law or
Section 6.06 hereof, and may be deposited under such general conditions as
may
be prescribed by Law, and the Mortgagee shall not be liable for any interest
thereon (except that the Mortgagee shall invest all monies held as directed
by
Owner so long as no Event of Default has occurred and is continuing (or in
the
absence of such direction, by the Majority In Interest of Note Holders) in
Cash
Equivalents; provided,
however,
that
any payments received, or applied hereunder, by the Mortgagee shall be accounted
for by the Mortgagee so that any portion thereof paid or applied pursuant hereto
shall be identifiable as to the source thereof.
SECTION
7.05. Reliance; Agreements; Advice of
Counsel
The
Mortgagee shall not incur any liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. The Mortgagee may
accept a copy of a resolution of the Board of Directors (or Executive Committee
thereof) of the Owner, certified by the Secretary or an Assistant Secretary
thereof as duly adopted and in full force and effect, as conclusive evidence
that such resolution has been duly adopted and that the same is in full force
and effect. As to the aggregate unpaid Original Amount of Equipment Notes
outstanding as of any date, the Owner may for all purposes hereof rely on a
certificate signed by any Vice President or other authorized corporate trust
officer of the Mortgagee. As to any fact or matter relating to the Owner the
manner of the ascertainment of which is not specifically described herein,
the
Mortgagee may for all purposes hereof rely on a certificate, signed by a duly
authorized officer of the Owner, as to such fact or matter, and such certificate
shall constitute full protection to the Mortgagee for any action taken or
omitted to be taken by it in good faith in reliance thereon. In the
administration of the trusts hereunder, the Mortgagee may execute any of the
trusts or powers hereof and perform its powers and duties hereunder directly
or
through agents or attorneys and may, at the expense of the Collateral, advise
with counsel, accountants and other skilled persons to be selected and retained
by it, and the Mortgagee shall not be liable for anything done, suffered or
omitted in good faith by it in accordance with the written advice or written
opinion of any such counsel, accountants or other skilled persons.
SECTION
7.06. Compensation
The
Mortgagee shall be entitled to reasonable compensation, including expenses
and
disbursements (including the reasonable fees and expenses of counsel), for
all
services rendered hereunder and shall, on and subsequent to an Event of Default
hereunder, have a priority claim on the Collateral for the payment of such
compensation, to the extent that such compensation shall not be paid by Owner,
and shall have the right, on and subsequent to an Event of Default hereunder,
to
use or apply any monies held by it hereunder in the Collateral toward such
payments. The Mortgagee agrees that it shall have no right against the Note
Holders for any fee as compensation for its services as trustee under this
Trust
Indenture.
SECTION
7.07. Instructions from Note
Holders
In
the
administration of the trusts created hereunder, the Mortgagee shall have the
right to seek instructions from a Majority in Interest of Note Holders should
any provision of this Trust Indenture appear to conflict with any other
provision herein or should the Mortgagee’s duties or obligations hereunder be
unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions. The Mortgagee shall be fully protected
for
acting in accordance with any instructions received under this Section
7.07.
INDEMNIFICATION
SECTION
8.01. Scope of
Indemnification
The
Mortgagee shall be indemnified by the Owner to the extent and in the manner
provided in Section 8 of the Participation Agreement.
SUCCESSOR
AND SEPARATE TRUSTEES
SECTION
9.01. Resignation of Mortgagee;
Appointment of Successor
(a) The
Mortgagee or any successor thereto may resign at any time without cause by
giving at least 30 days’ prior written notice to the Owner and each Note Holder,
such resignation to be effective upon the acceptance of the trusteeship by
a
successor Mortgagee. In addition, a Majority in Interest of Note Holders may
at
any time (but only with the consent of Owner, which consent shall not be
unreasonably withheld, except that such consent shall not be necessary if an
Event of Default is continuing) remove the Mortgagee without cause by an
instrument in writing delivered to the Owner and the Mortgagee, and the
Mortgagee shall promptly notify each Note Holder thereof in writing, such
removal to be effective upon the acceptance of the trusteeship by a successor
Mortgagee. In the case of the resignation or removal of the Mortgagee, a
Majority in Interest of Note Holders may appoint a successor
Mortgagee
by an instrument signed by such holders, which successor, so long as no Event
of
Default shall have occurred and be continuing, shall be subject to Owner’s
reasonable approval. If a successor Mortgagee shall not have been appointed
within 30 days after such notice of resignation or removal, the Mortgagee,
the
Owner or any Note Holder may apply to any court of competent jurisdiction to
appoint a successor Mortgagee to act until such time, if any, as a successor
shall have been appointed as above provided. The successor Mortgagee so
appointed by such court shall immediately and without further act be superseded
by any successor Mortgagee appointed as above provided.
(b) Any
successor Mortgagee, however appointed, shall execute and deliver to the Owner
and the predecessor Mortgagee an instrument accepting such appointment and
assuming the obligations of the Mortgagee arising from and after the time of
such appointment, and thereupon such successor Mortgagee, without further act,
shall become vested with all the estates, properties, rights, powers and duties
of the predecessor Mortgagee hereunder in the trust hereunder applicable to
it
with like effect as if originally named the Mortgagee herein; but nevertheless
upon the written request of such successor Mortgagee, such predecessor Mortgagee
shall execute and deliver an instrument transferring to such successor
Mortgagee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Mortgagee, and such
predecessor Mortgagee shall duly assign, transfer, deliver and pay over to
such
successor Mortgagee all monies or other property then held by such predecessor
Mortgagee hereunder.
(c) Any
successor Mortgagee, however appointed, shall be a bank or trust company having
its principal place of business in the Borough of Manhattan, City and State
of
New York; Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware; or
Boston, Massachusetts and having (or whose obligations under the Operative
Agreements are guaranteed by an affiliated entity having) a combined capital
and
surplus of at least $100,000,000, if there be such an institution willing,
able
and legally qualified to perform the duties of the Mortgagee hereunder upon
reasonable or customary terms.
(d) Any
corporation into which the Mortgagee may be merged or converted or with which
it
may be consolidated, or any corporation resulting from any merger, conversion
or
consolidation to which the Mortgagee shall be a party, or any corporation to
which substantially all the corporate trust business of the Mortgagee may be
transferred, shall, subject to the terms of paragraph (c) of this Section 9.01,
be a successor Mortgagee and the Mortgagee under this Trust Indenture without
further act.
(e) The
Owner
consents to any change in the identity of the Mortgagee on the International
Registry occasioned by provisions of this Section 9.01, and if required by
the International Registry to reflect such change, will provide its consent
thereto.
SECTION
9.02. Appointment of Additional and
Separate Trustees
(a) Whenever
(i) the Mortgagee shall deem it necessary or desirable in order to conform
to
any Law of any jurisdiction in which all or any part of the Collateral shall
be
situated or to make any claim or bring any suit with respect to or in connection
with the
Collateral,
this Trust Indenture, any other Indenture Agreement, the Equipment Notes or
any
of the transactions contemplated by the Participation Agreement, (ii) the
Mortgagee shall be advised by counsel satisfactory to it that it is so necessary
or prudent in the interests of the Note Holders (and the Mortgagee shall so
advise the Owner), or (iii) the Mortgagee shall have been requested to do so
by
a Majority in Interest of Note Holders, then in any such case, the Mortgagee
and, upon the written request of the Mortgagee, the Owner, shall execute and
deliver an indenture supplemental hereto and such other instruments as may
from
time to time be necessary or advisable either (1) to constitute one or more
bank
or trust companies or one or more persons approved by the Mortgagee, either
to
act jointly with the Mortgagee as additional trustee or trustees of all or
any
part of the Collateral, or to act as separate trustee or trustees of all or
any
part of the Collateral, in each case with such rights, powers, duties and
obligations consistent with this Trust Indenture as may be provided in such
supplemental indenture or other instruments as the Mortgagee or a Majority
in
Interest of Note Holders may deem necessary or advisable, or (2) to clarify,
add
to or subtract from the rights, powers, duties and obligations theretofore
granted any such additional or separate trustee, subject in each case to the
remaining provisions of this Section 9.02. If the Owner shall not have taken
any
action requested of it under this Section 9.02(a) that is permitted or required
by its terms within 15 days after the receipt of a written request from the
Mortgagee so to do, or if an Event of Default shall have occurred and be
continuing, the Mortgagee may act under the foregoing provisions of this Section
9.02(a) without the concurrence of the Owner, and the Owner hereby irrevocably
appoints (which appointment is coupled with an interest) the Mortgagee, its
agent and attorney-in-fact to act for it under the foregoing provisions of
this
Section 9.02(a) in either of such contingencies. The Mortgagee may, in such
capacity, execute, deliver and perform any such supplemental indenture, or
any
such instrument, as may be required for the appointment of any such additional
or separate trustee or for the clarification of, addition to or subtraction
from
the rights, powers, duties or obligations theretofore granted to any such
additional or separate trustee. In case any additional or separate trustee
appointed under this Section 9.02(a) shall die, become incapable of acting,
resign or be moved, all the assets, property, rights, powers, trusts, duties
and
obligations of such additional or separate trustee shall revert to the Mortgagee
until a successor additional or separate trustee is appointed as provided in
this Section 9.02(a).
(b) No
additional or separate trustee shall be entitled to exercise any of the rights,
powers, duties and obligations conferred upon the Mortgagee in respect of the
custody, investment and payment of monies and all monies received by any such
additional or separate trustee from or constituting part of the Collateral
or
otherwise payable under any Operative Agreement to the Mortgagee shall be
promptly paid over by it to the Mortgagee. All other rights, powers, duties
and
obligations conferred or imposed upon any additional or separate trustee shall
be exercised or performed by the Mortgagee and such additional or separate
trustee jointly except to the extent that applicable Law of any jurisdiction
in
which any particular act is to be performed renders the Mortgagee incompetent
or
unqualified to perform such act, in which event such rights, powers, duties
and
obligations (including the holding of title to all or part of the Collateral
in
any such jurisdiction) shall be exercised and performed by such additional
or
separate trustee. No additional or separate trustee shall take any discretionary
action except on the instructions of the Mortgagee or a Majority in Interest
of
Note Holders. No trustee hereunder shall be personally liable by reason of
any
act or omission of any other trustee hereunder, except that the Mortgagee shall
be liable for the consequences of its lack of reasonable care in selecting,
and
the
Mortgagee’s own actions in acting with, any additional or separate trustee. Each
additional or separate trustee appointed pursuant to this Section 9.02 shall
be
subject to, and shall have the benefit of Articles V through IX and Article
XI
hereof insofar as they apply to the Mortgagee. The powers of any additional
or
separate trustee appointed pursuant to this Section 9.02 shall not in any case
exceed those of the Mortgagee hereunder.
(c) If
at any
time the Mortgagee shall deem it no longer necessary or in order to conform
to
any such Law or take any such action or shall be advised by such counsel that
it
is no longer so necessary or desirable in the interest of the Note Holders,
or
in the event that the Mortgagee shall have been requested to do so in writing
by
a Majority in Interest of Note Holders, the Mortgagee and, upon the written
request of the Mortgagee, the Owner, shall execute and deliver an indenture
supplemental hereto and all other instruments and agreements necessary or proper
to remove any additional or separate trustee. The Mortgagee may act on behalf
of
the Owner under this Section 9.02(c) when and to the extent it could so act
under Section 9.02(a) hereof.
SUPPLEMENTS
AND AMENDMENTS TO THIS TRUST INDENTURE
AND
OTHER DOCUMENTS
SECTION
10.01. Instructions of Majority;
Limitations
(a) The
Mortgagee agrees with the Note Holders that it shall not enter into any
amendment, waiver or modification of, supplement or consent to this Trust
Indenture, or any other Operative Agreement to which it is a party, unless
such
supplement, amendment, waiver, modification or consent is consented to in
writing by a Majority in Interest of Note Holders, but upon the written request
of a Majority in Interest of Note Holders, the Mortgagee shall from time to
time
enter into any such supplement or amendment, or execute and deliver any such
waiver, modification or consent, as may be specified in such request and as
may
be (in the case of any such amendment, supplement or modification), to the
extent such agreement is required, agreed to by the Owner and, as may be
appropriate, the Airframe Manufacturer or the Engine Manufacturer; provided,
however,
that,
without the consent of each holder of an affected Equipment Note then
outstanding and the Liquidity Providers, no such amendment, waiver or
modification of the terms of, or consent under, any thereof, shall (i) modify
any of the provisions of this Section 10.01, or of Article II or III or Section
5.01, 5.02(c), 5.02(d), or 6.02 hereof, the definitions of “Event of Default,”
“Default,” “Majority in Interest of Note Holders,” “Make-Whole Amount” or “Note
Holder,” or the percentage of Note Holders required to take or approve any
action hereunder, (ii) reduce the amount, or change the time of payment or
method of calculation of any amount, of Original Amount, Make-Whole Amount,
if
any, or interest with respect to any Equipment Note, (iii) reduce, modify or
amend any indemnities in favor of the Mortgagee or the Note Holders (except
that
the Mortgagee may consent to any waiver or reduction of an indemnity payable
to
it), or the other Indenture Indemnitees or (iv) permit the creation of any
Lien
on the Trust Indenture Estate or any part thereof other than Permitted Liens
or
deprive any Note Holder of the benefit of the Lien of this Trust Indenture
on
the Collateral,
except
as
provided in connection with the exercise of remedies under Article V hereof;
provided,
further,
that
without the consent of each holder of an affected Related Equipment Note then
outstanding, no such amendment, waiver or modification of terms of, or consent
under, any thereof shall modify Section 3.03 or deprive any Related Note Holder
of the benefit of the Lien of this Trust Indenture on the Collateral, except
as
provided in connection with the exercise of remedies under Article V hereof.
Notwithstanding the foregoing, without the consent of the affected Liquidity
Provider neither the Owner nor the Mortgagee shall enter into any amendment,
waiver or modification of, supplement or consent to this Trust Indenture or
the
other Operative Agreements which shall reduce, modify or amend any indemnities
in favor of such Liquidity Provider.
(b) The
Owner
and the Mortgagee may enter into one or more agreements supplemental hereto
without the consent of any Note Holder for any of the following purposes: (i)
(a) to cure any defect or inconsistency herein or in the Equipment Notes, or
to
make any change not inconsistent with the provisions hereof (provided
that
such change does not adversely affect the interests of any Note Holder in its
capacity solely as Note Holder) or (b) to cure any ambiguity or correct any
mistake; (ii) to evidence the succession of another party as the Owner in
accordance with the terms hereof or to evidence the succession of a new trustee
hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge
any
property to or with the Mortgagee or to make any other provisions with respect
to matters or questions arising hereunder so long as such action shall not
adversely affect the interests of the Note Holders in its capacity solely as
Note Holder; (iv) to correct or amplify the description of any property at
any
time subject to the Lien of this Trust Indenture or better to assure, convey
and
confirm unto the Mortgagee any property subject or required to be subject to
the
Lien of this Trust Indenture, the Airframe or Engines or any Replacement
Airframe or Replacement Engine; (v) to add to the covenants of the Owner for
the
benefit of the Note Holders, or to surrender any rights or power herein
conferred upon the Owner; (vi) to add to the rights of the Note Holders; (vii)
to provide for the reissuance of Series B Equipment Notes (and Related
Series B Equipment Notes) or Series C Equipment Notes (and Related Series C
Equipment Notes) or the issuance or reissuance from time to time of one or
more
series of Additional Series Equipment Notes (and any Related Additional Series
Equipment Notes) and for pass through certificates issued by any pass through
trust that acquires any such Equipment Notes and to make changes relating to
any
of the foregoing (including without limitation to further provide for the
issuance of more than one series of Additional Series Equipment Notes (including
without limitation to provide for the relative priority of different series
of
Additional Series Equipment Notes as between such series) and to provide for
any
credit support for any such issued or reissued Equipment Notes or Related
Equipment Notes (including without limitation to secure claims for fees,
interest, expenses, reimbursement of advances and other obligations arising
from
such credit support (including without limitation to specify such credit support
as a “Liquidity Facility” and the provider of any such credit support as a
“Liquidity Provider”)), provided that such Equipment Notes are issued in
accordance with the Note Purchase Agreement and Section 9.1 of the Intercreditor
Agreement; and (viii) to include on the Equipment Notes any legend as may
be required by Law.
SECTION
10.02. Mortgagee
Protected
If,
in
the opinion of the institution acting as Mortgagee hereunder, any document
required to be executed by it pursuant to the terms of Section 10.01 hereof
affects any right, duty, immunity or indemnity with respect to such institution
under this Trust Indenture, such institution may in its discretion decline
to
execute such document.
SECTION
10.03. Documents Mailed to Note
Holders
Promptly
after the execution by the Owner or the Mortgagee of any document entered into
pursuant to Section 10.01 hereof, the Mortgagee shall mail, by first class
mail,
postage prepaid, a copy thereof to Owner (if not a party thereto) and to each
Note Holder at its address last set forth in the Equipment Note Register, but
the failure of the Mortgagee to mail such copies shall not impair or affect
the
validity of such document.
SECTION
10.04. No Request Necessary for Trust
Indenture Supplement
No
written request or consent of the Note Holders pursuant to Section 10.01 hereof
shall be required to enable the Mortgagee to execute and deliver a Trust
Indenture Supplement specifically required by the terms hereof.
MISCELLANEOUS
SECTION
11.01. Termination of Trust
Indenture
Upon
(or
at any time after) payment in full of the Original Amount of, Make-Whole Amount,
if any, and interest on and all other amounts due under all Equipment Notes
and
provided that (i) there shall then be no other Secured Obligations due to the
Indenture Indemnitees, the Note Holders and the Mortgagee hereunder or under
the
Participation Agreement, any other Operative Agreement, any Related Equipment
Note or any Related Indenture and (ii) in the case of any redemption of all
of
the Equipment Notes pursuant to Section 2.11(a) hereof, the provisions of the
foregoing clause (i) shall apply and no Related Indenture Bankruptcy Default
or
Related Indenture Event of Default shall have occurred and be continuing, the
Owner shall direct the Mortgagee to execute and deliver to or as directed in
writing by the Owner an appropriate instrument releasing the Aircraft and the
Engines and (subject to paragraph (v) of clause “Third” of Section 3.03 hereof,
if applicable) all other Collateral from the Lien of the Trust Indenture and
the
Mortgagee shall execute and deliver such instrument as aforesaid; provided,
however,
that
this Trust Indenture and the trusts created hereby shall earlier terminate
and
this Trust Indenture shall be of no further force or effect upon any sale or
other final disposition by the Mortgagee of all property constituting part
of
the Collateral and the final distribution by the Mortgagee of all monies or
other property or proceeds constituting part of the Collateral in accordance
with the terms hereof. Except as aforesaid otherwise provided, this Trust
Indenture and the trusts created hereby shall continue in full force and effect
in accordance with the terms hereof.
SECTION
11.02. No Legal Title to Collateral in
Note Holders
No
holder
of an Equipment Note or a Related Equipment Note shall have legal title to
any
part of the Collateral. No transfer, by operation of law or otherwise, of any
Equipment Note or Related Equipment Note or other right, title and interest
of
any Note Holder or holder of a Related Equipment Note in and to the Collateral
or hereunder shall operate to terminate this Trust Indenture or entitle such
holder or any successor or transferee of such holder to an accounting or to
the
transfer to it of any legal title to any part of the Collateral.
SECTION
11.03. Sale of Aircraft by Mortgagee
Is Binding
Any
sale
or other conveyance of the Collateral, or any part thereof (including any part
thereof or interest therein), by the Mortgagee made pursuant to the terms of
this Trust Indenture shall bind the Note Holders and shall be effective to
transfer or convey all right, title and interest of the Mortgagee, the Owner
and
such holders in and to such Collateral or part thereof. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance or as to the application
of
any sale or other proceeds with respect thereto by the Mortgagee.
SECTION
11.04. Trust Indenture for Benefit of
Owner, Mortgagee, Note Holders and the other Indenture
Indemnitees
Nothing
in this Trust Indenture, whether express or implied, shall be construed to
give
any person other than the Owner, the Mortgagee, the Note Holders and the other
Indenture Indemnitees (including the Related Note Holders), any legal or
equitable right, remedy or claim under or in respect of this Trust Indenture,
except that the persons referred to in the last paragraph of Section 4.02(b)
shall be third party beneficiaries of such paragraph.
SECTION
11.05. Notices
Unless
otherwise expressly specified or permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers or documents
provided or permitted by this Trust Indenture to be made, given, furnished
or
filed shall be in writing, personally delivered or mailed by certified mail,
postage prepaid, or by facsimile or confirmed telex, and (i) if to the Owner,
addressed to it at 0000 Xxxxx Xxxxxx, XXX-XX, Xxxxxxx, Xxxxx 00000, Attention:
Treasurer, facsimile number (000) 000-0000, (ii) if to Mortgagee, addressed
to
it at its office at Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, Attention: Corporate Trust Administration, facsimile number
(000) 000-0000, (iii) if to any Note Holder or any Indenture Indemnitee,
addressed to such party at such address as such party shall have furnished
by
notice to the Owner and the Mortgagee, or, until an address is so furnished,
addressed to the address of such party (if any) set forth on Schedule 1 to
the Participation Agreement or in the Equipment Note Register. Whenever any
notice in writing is required to be given by the Owner or the Mortgagee or
any
Note Holder to any of the other of them, such notice shall be deemed given
and
such requirement satisfied when such notice is received, or if such notice
is
mailed by certified mail, postage prepaid, three Business Days after being
mailed, addressed as provided above. Any party hereto may change the address
to
which
notices
to such party will be sent by giving notice of such change to the other parties
to this Trust Indenture.
SECTION
11.06. Severability
Any
provision of this Trust Indenture which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any particular
jurisdiction shall not invalidate or render unenforceable such provision in
any
other jurisdiction.
SECTION
11.07. No Oral Modification or
Continuing Waivers
No
term
or provision of this Trust Indenture or the Equipment Notes may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the Owner and the Mortgagee, in compliance with Section 10.01 hereof.
Any waiver of the terms hereof or of any Equipment Note shall be effective
only
in the specific instance and for the specific purpose given.
SECTION
11.08. Successors and
Assigns
All
covenants and agreements contained herein shall be binding upon, and inure
to
the benefit of, each of the parties hereto and the permitted successors and
assigns of each, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by any Note Holder shall bind
the
successors and assigns of such holder. Each Note Holder by its acceptance of
an
Equipment Note agrees to be bound by this Trust Indenture and all provisions
of
the Operative Agreements applicable to a Note Holder.
SECTION
11.09. Headings
The
headings of the various Articles and sections herein and in the table of
contents hereto are for convenience of reference only and shall not define
or
limit any of the terms or provisions hereof.
SECTION
11.10. Normal Commercial
Relations
Anything
contained in this Trust Indenture to the contrary notwithstanding. Owner and
Mortgagee may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with Owner, fully to the same extent
as if this Trust Indenture were not in effect, including without limitation
the
making of loans or other extensions of credit to Owner for any purpose
whatsoever, whether related to any of the transactions contemplated hereby
or
otherwise.
SECTION
11.11. Governing Law; Counterpart
Form
THIS
TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture
may
be executed by the parties hereto in separate counterparts (or upon separate
signature pages bound together into one or more counterparts), each of which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION
11.12. Voting By Note
Holders
All
votes
of the Note Holders shall be governed by a vote of a Majority in Interest of
Note Holders, except as otherwise provided herein.
SECTION
11.13. Bankruptcy
It
is the
intention of the parties that the Mortgagee shall be entitled to the benefits
of
Section 1110 with respect to the right to take possession of the Aircraft,
Airframe, Engines and Parts and to enforce any of its other rights or remedies
as provided herein in the event of a case under Chapter 11 of the Bankruptcy
Code in which Owner is a debtor, and in any instance where more than one
construction is possible of the terms and conditions hereof or any other
pertinent Operative Agreement, each such party agrees that a construction which
would preserve such benefits shall control over any construction which would
not
preserve such benefits.
IN
WITNESS WHEREOF, the parties hereto have caused this Trust Indenture and
Mortgage to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
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CONTINENTAL
AIRLINES, INC.
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By:___________________________________
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Name:
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Title:
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WILMINGTON
TRUST COMPANY,
as
Mortgagee
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By:___________________________________
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Name:
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Title:
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DEFINITIONS
GENERAL
PROVISIONS
(a) In
each
Operative Agreement, unless otherwise expressly provided, a reference
to:
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(i)
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each
of “Owner,” “Mortgagee,” “Note Holder” or any other person includes,
without prejudice to the provisions of any Operative Agreement, any
successor in interest to it and any permitted transferee, permitted
purchaser or permitted assignee of
it;
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(ii)
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words
importing the plural include the singular and words importing the
singular
include the plural;
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(iii)
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any
agreement, instrument or document, or any annex, schedule or exhibit
thereto, or any other part thereof, includes, without prejudice to
the
provisions of any Operative Agreement, that agreement, instrument
or
document, or annex, schedule or exhibit, or part, respectively, as
amended, modified or supplemented from time to time in accordance
with its
terms and in accordance with the Operative Agreements, and any agreement,
instrument or document entered into in substitution or replacement
therefor (including, without limitation, in the case of each Pass
Through
Trust Agreement, the “Related Pass Through Trust Agreement” as defined
therein);
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(iv)
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any
provision of any Law includes any such provision as amended, modified,
supplemented, substituted, reissued or reenacted prior to the Closing
Date, and thereafter from time to
time;
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(v)
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the
words “Agreement,” “this Agreement,” “hereby,” “herein,” “hereto,”
“hereof” and “hereunder” and words of similar import when used in any
Operative Agreement refer to such Operative Agreement as a whole
and not
to any particular provision of such Operative
Agreement;
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(vi)
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the
words “including,” “including, without limitation,” “including, but not
limited to,” and terms or phrases of similar import when used in any
Operative Agreement, with respect to any matter or thing, mean including,
without limitation, such matter or thing; and
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(vii)
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a
“Section,” an “Exhibit,” an “Annex” or a “Schedule” in any Operative
Agreement, or in any annex thereto, is a reference to a section of,
or an
exhibit, an annex or a schedule to, such Operative Agreement or such
annex, respectively.
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(b) Each
exhibit, annex and schedule to each Operative Agreement is incorporated in,
and
shall be deemed to be a part of, such Operative Agreement.
(c) Unless
otherwise defined or specified in any Operative Agreement, all accounting terms
therein shall be construed and all accounting determinations thereunder shall
be
made in accordance with GAAP.
(d) Headings
used in any Operative Agreement are for convenience only and shall not in any
way affect the construction of, or be taken into consideration in interpreting,
such Operative Agreement.
(e) For
purposes of each Operative Agreement, the occurrence and continuance of a
Default or Event of Default referred to in Section 5.01(v),(vi) or (vii)
shall not be deemed to prohibit the Owner from taking any action or exercising
any right that is conditioned on no Special Default, Default or Event of Default
having occurred and be continuing if such Special Default, Default or Event
of
Default consists of the institution of reorganization proceedings with respect
to Owner under Chapter 11 of the Bankruptcy Code and the trustee or
debtor-in-possession in such proceedings shall have agreed to perform its
obligations under the Trust Indenture with the approval of the applicable court
and thereafter shall have continued to perform such obligations in accordance
with Section 1110.
DEFINED
TERMS
“Act”
means
part A of subtitle VII of title 49, United States Code.
“Actual
Knowledge”
means
(a) as it applies to Mortgagee, actual knowledge of a responsible officer in
the
Corporate Trust Office, and (b) as it applies to Owner, actual knowledge of
a
Vice President or more senior officer of Owner or any other officer of Owner
having responsibility for the transactions contemplated by the Operative
Agreements; provided
that
each of Owner and Mortgagee shall be deemed to have “Actual Knowledge” of any
matter as to which it has received notice from Owner, any Note Holder or
Mortgagee, such notice having been given pursuant to Section 11.05 of the Trust
Indenture.
“Additional
Series”
or
“Additional
Series Equipment Notes”
means
Equipment Notes issued under the Trust Indenture and designated as a series
(other than “Series A”, “Series B” or “Series C”) thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture amended at the time of original issuance of such Additional
Series) under the heading for such series.
“Affiliate”
means,
with respect to any person, any other person directly or indirectly controlling,
controlled by or under common control with such person. For purposes of this
definition, “control” means the power, directly or indirectly, to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting securities or by contract or otherwise and
“controlling,” “controlled by” and “under common control with” have correlative
meanings.
“Aircraft”
means,
collectively, the Airframe and Engines.
“Aircraft
Xxxx of Sale”
means
the full warranty xxxx of sale covering the Aircraft delivered by Airframe
Manufacturer to Owner.
“Aircraft
Documents”
means
all technical data, manuals and log books, and all inspection, modification
and
overhaul records and other service, repair, maintenance and technical records
that are required by the FAA (or the relevant Aviation Authority), to be
maintained with respect to the Aircraft, Airframe, Engines or Parts, and such
term shall include all additions, renewals, revisions and replacements of any
such materials from time to time made, or required to be made, by the FAA (or
other Aviation Authority) regulations, and in each case in whatever form and
by
whatever means or medium (including, without limitation, microfiche, microfilm,
paper or computer disk) such materials may be maintained or retained by or
on
behalf of Owner (provided,
that
all such materials shall be maintained in the English language).
“Airframe”
means
(a) the aircraft (excluding Engines or engines from time to time installed
thereon) manufactured by Airframe Manufacturer and identified by Airframe
Manufacturer’s model number, United States registration number and Airframe
Manufacturer’s serial number set forth in the initial Trust Indenture Supplement
and any Replacement Airframe and (b) any and all Parts incorporated or installed
in or attached or appurtenant to such airframe, and any and all Parts removed
from such airframe, unless the Lien of the Trust Indenture shall not be
applicable to such Parts in accordance with Section 4.04 of the Trust Indenture.
Upon substitution of a Replacement Airframe under and in accordance with the
Trust Indenture, such Replacement Airframe shall become subject to the Trust
Indenture and shall be the “Airframe” for all purposes of the Trust Indenture
and the other Operative Agreements and thereupon the Airframe for which the
substitution is made shall no longer be subject to the Trust Indenture, and
such
replaced Airframe shall cease to be the “Airframe.”
“Airframe
Manufacturer”
means
The Boeing Company, a Delaware corporation.
“Applicable
Pass Through Trust”
means
each of the separate pass through trusts created under the Applicable Pass
Through Trust Agreements.
“Applicable
Pass Through Trust Agreement”
means
each of the separate Pass Through Trust Agreements by and between the Owner
and
an Applicable Pass Through Trustee.
“Applicable
Pass Through Trustee”
means
each Pass Through Trustee that is a party to the Participation
Agreement.
“Average
Life Date”
for
any
Equipment Note shall be the date which follows the time of determination by
a
period equal to the Remaining Weighted Average Life of such Equipment Note.
“Remaining Weighted Average Life” on a given date with respect to any Equipment
Note shall be the number of days equal to the quotient obtained by dividing
(a)
the sum of each of the products obtained by multiplying (i) the amount of each
then remaining scheduled payment of principal of such Equipment Note by (ii)
the
number of days from and including such determination date to but excluding
the
date on which such payment of principal is scheduled to be made, by (b) the
then
outstanding principal amount of such Equipment Note.
“Aviation
Authority”
means
the FAA or, if the Aircraft is permitted to be, and is, registered with any
other Government Entity under and in accordance with Section 4.02 (e) of the
Trust Indenture and Section 6.4.5 of the Participation Agreement, such
other Government Entity.
“Bankruptcy
Code”
means
the United States Bankruptcy Code, 11 U.S.C. Sections 101 et
seq.
“Basic
Pass Through Trust Agreement”
means
the Pass Through Trust Agreement, dated September 25, 1997, between Owner and
Pass Through Trustee, but does not include any Trust Supplement.
“Bills
of Sale”
means
the FAA Xxxx of Sale and the Aircraft Xxxx of Sale.
“Business
Day”
means
any day other than a Saturday, Sunday or other day on which commercial banks
are
authorized or required by law to close in New York, New York, Houston, Texas,
or
Wilmington, Delaware.
“Cape
Town Treaty”
means
the Cape Town Convention on International Interests in Mobile Equipment and
the
related Aircraft Equipment Protocol, as in effect in the United
States.
“Cash
Equivalents”
means
the following securities (which shall mature within 90 days of the date of
purchase thereof): (a) direct obligations of the U.S. Government; (b)
obligations fully guaranteed by the U.S. Government; (c) certificates of deposit
issued by, or bankers’ acceptances of, or time deposits or a deposit account
with, Mortgagee or any bank, trust company or national banking association
incorporated or doing business under the laws of the United States or any state
thereof having a combined capital and surplus and retained earnings of at least
$500,000,000 and having a rate of “C” or better from the Thomson BankWatch
Service; or (d) commercial paper of any issuer doing business under the laws
of
the United States or one of the states thereof and in each case having a rating
assigned to such commercial paper by Standard & Poor’s Ratings Services or
Xxxxx’x Investors Service, Inc. equal to A1 (or higher) or P-1,
respectively.
“Certificate
Owner”
is
defined in the Pass Through Trust Agreements.
“Citizen
of the United States”
is
defined in 49 U.S.C. § 40102(a)(15).
“Class A
Pass Through Trust”
means
the Continental Airlines Pass Through Trust 2007-1A.
“Class B
Pass Through Trust”
means
the Continental Airlines Pass Through Trust 2007-1B.
“Class C
Pass Through Trust”
means
the Continental Airlines Pass Through Trust 2007-1C.
“Closing”
means
the closing of the transactions contemplated by the Participation
Agreement.
“Closing
Date”
means
the date on which the Closing occurs.
“Code”
means
the Internal Revenue Code of 1986, as amended; provided that, when used in
relation to a Plan, “Code” shall mean the Internal Revenue Code of 1986 and any
regulations and rulings issued thereunder, all as amended and in effect from
time to time.
“Collateral”
is
defined in the Granting Clause of the Trust Indenture.
“Consent
and Agreement”
means
the Manufacturer Consent and Agreement [____], dated as of even date with the
Participation Agreement, of Airframe Manufacturer.
“Corporate
Trust Office”
means
the principal office of Mortgagee located at Mortgagee’s address for notices
under the Participation Agreement or such other office at which Mortgagee’s
corporate trust business shall be administered which Mortgagee shall have
specified by notice in writing to Owner and each Note Holder.
“CRAF”
means
the Civil Reserve Air Fleet Program established pursuant to 10 U.S.C. Section
9511-13 or any similar substitute program.
“Debt
Rate”
means,
with respect to (i) any Series of Equipment Notes, the rate per annum specified
for such Series under the heading “Interest Rate” in Schedule I to the Trust
Indenture (as amended, in the case of any Additional Series, at the time of
original issuance of such Additional Series), and (ii) any other purpose, with
respect to any period, the weighted average interest rate per annum during
such
period borne by the outstanding Equipment Notes, excluding any interest payable
at the Payment Due Rate.
“Default”
means
any event or condition that with the giving of notice or the lapse of time
or
both would become an Event of Default.
“Deposit
Agreement”
means
each of the three Deposit Agreements between the Escrow Agent and the
Depositary, dated as of the Issuance Date, which relate to the Class A,
Class B or Class C Pass Through Trust, provided
that,
for purposes of any obligation of Owner, no amendment, modification or
supplement to, or substitution or replacement of, any such Deposit Agreement
shall be effective unless consented to by Owner.
“Depositary”
means
Credit Suisse, New York Branch, as Depositary under each Deposit
Agreement.
“Dollars,”
“United
States Dollars”
or
“$”
means
the lawful currency of the United States.
“DOT”
means
the Department of Transportation of the United States or any Government Entity
succeeding to the functions of such Department of Transportation.
“Eligible
Account”
means
an account established by and with an Eligible Institution at the request of
the
Mortgagee, which institution agrees, for all purposes of the UCC including
Article 8 thereof, that (a) such account shall be a “securities account” (as
defined in Section 8-501(a) of the UCC), (b) all property (other than cash)
credited to such account shall be treated as a “financial asset” (as defined in
Section 8-102(a)(9) of the UCC), (c) the Mortgagee shall be the “entitlement
holder” (as defined in Section 8-102(a)(7) of the UCC) in respect of such
account, (d) it will comply with all entitlement orders issued by the Mortgagee
to the exclusion of the Owner, and (e) the “securities intermediary
jurisdiction” (under Section 8-110(e) of the UCC) shall be the State of New
York.
“Eligible
Institution”
means
the corporate trust department of (a) Wilmington Trust Company, acting solely
in
its capacity as a “securities intermediary” (as defined in Section 8-102(a)(14)
of the UCC), or (b) a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured
debt rating from Moody’s and Standard & Poor’s of at least A-3 or its
equivalent.
“Engine”
means
(a) each of the engines manufactured by Engine Manufacturer and identified
by
Engine Manufacturer’s model number and Engine Manufacturer’s serial number set
forth in the initial Trust Indenture Supplement and originally installed on
the
Airframe on the Closing Date, and any Replacement Engine, in any case whether
or
not from time to time installed on such Airframe or installed on any other
airframe or aircraft, and (b) any and all Parts incorporated or installed in
or
attached or appurtenant to such engine, and any and all Parts removed from
such
engine, unless the Lien of the Trust Indenture shall not apply to such Parts
in
accordance with Section 4.04 of the Trust Indenture. Upon substitution of a
Replacement Engine under and in accordance with the Trust Indenture, such
Replacement Engine shall become subject to the Trust Indenture and shall be
an
“Engine” for all purposes of the Trust Indenture and the other Operative
Agreements and thereupon the Engine for which the substitution is made shall
no
longer be subject to the Trust Indenture, and such replaced Engine shall cease
to be an “Engine.”
“Engine
Consent and Agreement”
means
the Engine Manufacturer Consent and Agreement [____] dated as of even date
with
the Participation Agreement, of Engine Manufacturer.
“Engine
Manufacturer”
means
[__________________], a corporation organized under the laws of
[__________].
“Equipment
Note Register”
is
defined in Section 2.07 of the Trust Indenture.
“Equipment
Notes”
means
and includes any equipment notes issued under the Trust Indenture in the form
specified in Section 2.01 thereof (as such form may be varied pursuant to the
terms of the Trust Indenture) and any Equipment Note issued under the Trust
Indenture in exchange for or replacement of any Equipment Note.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, and any regulations and
rulings issued thereunder all as amended and in effect from time to
time.
“Escrow
Agent”
means
Xxxxx Fargo Bank Northwest, National Association, as Escrow Agent under each
of
the Escrow Agreements.
“Escrow
Agreement”
means
each of the three Escrow and Paying Agent Agreements, among the Escrow Agent,
the Paying Agent, certain initial purchasers of the Pass Through Certificates
named therein and one of the Pass Through Trustees, dated as of the Issuance
Date, which relate to the Class A, Class B or Class C Pass Through Trust,
provided
that,
for purposes of any obligation of Owner, no amendment, modification or
supplement to, or substitution or replacement of, any such Escrow Agreement
shall be effective unless consented to by Owner.
“Event
of Default”
is
defined in Section 5.01 of the Trust Indenture.
“Event
of Loss”
means,
with respect to the Aircraft, Airframe or any Engine, any of the following
circumstances, conditions or events with respect to such property, for any
reason whatsoever:
(a) the
destruction of such property, damage to such property beyond economic repair
or
rendition of such property permanently unfit for normal use by
Owner;
(b) the
actual or constructive total loss of such property or any damage to such
property, or requisition of title or use of such property, which results in
an
insurance settlement with respect to such property on the basis of a total
loss
or constructive or compromised total loss;
(c) any
theft, hijacking or disappearance of such property for a period of 180
consecutive days or more;
(d) any
seizure, condemnation, confiscation, taking or requisition (including loss
of
title) of such property by any Government Entity or purported Government Entity
(other than a requisition of use by the U.S. Government) for a period exceeding
180 consecutive days;
(e) as
a
result of any law, rule, regulation, order or other action by the Aviation
Authority or by any Government Entity of the government of registry of the
Aircraft or by any Government Entity otherwise having jurisdiction over the
operation or use of the Aircraft, the use of such property in the normal course
of Owner’s business of passenger air transportation is prohibited for a period
of 180 consecutive days unless Owner, prior to the expiration of such 180-day
period, shall have undertaken and shall be diligently carrying forward such
steps as may be necessary or desirable to permit the normal use of such property
by Owner, but in any event if such use shall have been prohibited for a period
of two consecutive years, provided that no Event of Loss shall be deemed to
have
occurred if such prohibition has been applicable to Owner’s entire U.S. fleet of
such property and Owner, prior to the expiration of such two-year period, shall
have conformed at least one unit of such property in its fleet to the
requirements of any such law, rule, regulation, order or other action and
commenced regular commercial use of the same in such jurisdiction and shall
be
diligently carrying forward, in a manner which does not discriminate against
such property in so conforming such property, steps which are necessary or
desirable
to permit the normal use of the Aircraft by Owner, but in any event if such
use
shall have been prohibited for a period of three years.
“Expenses”
means
any and all liabilities, obligations, losses, damages, settlements, penalties,
claims, actions, suits, costs, expenses and disbursements (including, without
limitation, reasonable fees and disbursements of legal counsel, accountants,
appraisers, inspectors or other professionals, and costs of
investigation).
“FAA”
means
the Federal Aviation Administration of the United States or any Government
Entity succeeding to the functions of such Federal Aviation
Administration.
“FAA
Xxxx of Sale”
means
a
xxxx of sale for the Aircraft on AC Form 8050-2 (or such other form as may
be
approved by the FAA) delivered to Owner by Airframe Manufacturer.
“FAA
Filed Documents”
means
the Trust Indenture, the initial Trust Indenture Supplement, the FAA Xxxx of
Sale, AC Form 8050-135 with respect to the International Interests (or
Prospective International Interests) and an application for registration of
the
Aircraft with the FAA in the name of Owner.
“FAA
Regulations”
means
the Federal Aviation Regulations issued or promulgated pursuant to the Act
from
time to time.
“Final
Maturity Date”
means
April 19, 2022 (or, if not a Business Day, the next Business Day).
“Financing
Statements”
means,
collectively, UCC-1 (and, where appropriate, UCC-3) financing statements
covering the Collateral, by Owner, as debtor, showing Mortgagee as secured
party, for filing in Delaware and each other jurisdiction that, in the opinion
of Mortgagee, is necessary to perfect its Lien on the Collateral.
“GAAP”
means
generally accepted accounting principles as set forth in the statements of
financial accounting standards issued by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants, as such
principles may at any time or from time to time be varied by any applicable
financial accounting rules or regulations issued by the SEC and, with respect
to
any person, shall mean such principles applied on a basis consistent with prior
periods except as may be disclosed in such person’s financial
statements.
“Government
Entity”
means
(a) any federal, state, provincial or similar government, and any body, board,
department, commission, court, tribunal, authority, agency or other
instrumentality of any such government or otherwise exercising any executive,
legislative, judicial, administrative or regulatory functions of such government
or (b) any other government entity having jurisdiction over any matter
contemplated by the Operative Agreements or relating to the observance or
performance of the obligations of any of the parties to the Operative
Agreements.
“Indemnitee”
means
(i) WTC and Mortgagee, (ii) each separate or additional trustee appointed
pursuant to the Trust Indenture, (iii) the Subordination Agent, the Paying
Agent
and
the Escrow Agent, (iv) the Liquidity Providers, (v) the Pass Through Trustees
and each Related Note Holder, (vi) each Affiliate of the persons described
in clauses (i) and (ii), (vii) each Affiliate of the persons described in
clauses (iii), (iv) and (v), (viii) the respective directors, officers,
employees, agents and servants of each of the persons described in
clauses (i), (ii) and (vi), (ix) the respective directors, officers,
employees, agents and servants of each of the persons described in clauses
(iii), (iv), (v) and (vii), (x) the successors and permitted assigns of the
persons described in clauses (i), (ii) and (viii), and (xi) the successors
and
permitted assigns of the persons described in clauses (iii), (iv), (v) and
(ix);
provided that the persons described in clauses (iii), (iv), (v), (vii), (ix)
and
(xi) are Indemnitees only for purposes of Section 8.1 of the Participation
Agreement. If any Indemnitee is Airframe Manufacturer or Engine Manufacturer
or
any subcontractor or supplier of either thereof, such Person shall be an
Indemnitee only in its capacity as Note Holder.
“Indenture
Agreements”
means
the Purchase Agreement and the Bills of Sale, to the extent included in Granting
Clause (2) of the Trust Indenture, and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust
Indenture.
“Indenture
Default”
means
any condition, circumstance, act or event that, with the giving of notice,
the
lapse of time or both, would constitute an Indenture Event of
Default.
“Indenture
Event of Default”
means
any one or more of the conditions, circumstances, acts or events set forth
in
Section 5.01 of the Trust Indenture.
“Indenture
Indemnitee”
means
(i) WTC and the Mortgagee, (ii) each separate or additional trustee
appointed pursuant to the Trust Indenture, (iii) the Subordination Agent,
(iv) each Liquidity Provider, (v) each Pass Through Trustee and each
Related Note Holder, (vi) the Paying Agent, (vii) the Escrow Agent and
(viii) each of the respective directors, officers, employees, agents and
servants of each of the persons described in clauses (i) through (vii) inclusive
above.
“Intercreditor
Agreement”
means
that certain Intercreditor Agreement among the Pass Through Trustees, the
Liquidity Providers and the Subordination Agent, dated as of the Issuance Date,
provided that (i) for purposes of any obligation of Owner, no amendment,
modification or supplement to, or substitution or replacement of, such
Intercreditor Agreement shall be effective unless consented to by Owner and
(ii)
no amendment, modification or supplement to, or substitution or replacement
of,
such Intercreditor Agreement occurring after the date on which an Equipment
Note
ceases to be held of record by the Subordination Agent shall be effective as
against any Note Holder of such Equipment Note in relation to clauses (ii)
and
(iii) of the penultimate sentence of Section 2.07 of the Trust Indenture unless
such amendment, modification, supplement, substitution or replacement has been
consented to by such Note Holder (after which the same shall be effective
against any subsequent Note Holders of such Equipment Note).
“International
Interest”
is
defined in the Cape Town Treaty.
“International
Registry”
is
defined in the Cape Town Treaty.
“IRS”
means
the Internal Revenue Service of the United States or any Government Entity
succeeding to the functions of such Internal Revenue Service.
“Issuance
Date”
means
April 10, 2007.
“Law”
means
(a) any constitution, treaty, statute, law, decree, regulation, order, rule
or
directive of any Government Entity, and (b) any judicial or administrative
interpretation or application of, or decision under, any of the
foregoing.
“Lien”
means
any mortgage, pledge, lien, charge, claim, encumbrance, lease or security
interest affecting the title to or any interest in property.
“Liquidity
Facilities”
means
the two Revolving Credit Agreements (consisting of a separate Revolving Credit
Agreement with the Liquidity Provider with respect to the Class A Pass
Through Trust and the Class B Pass Through Trust) between the Subordination
Agent, as borrower, and the Liquidity Provider, each dated as of the Issuance
Date, provided
that,
for purposes of any obligation of Owner, no amendment, modification or
supplement to, or substitution or replacement of, any such Liquidity Facility
shall be effective unless consented to by Owner.
“Liquidity
Provider”
means
RZB Finance LLC, a limited liability company organized under the laws of
Delaware, as “Class A Liquidity Provider” and “Class B Liquidity Provider” (as
such terms are defined in the Intercreditor Agreement).
“Majority
in Interest of Note Holders”
means
as of a particular date of determination, the holders of a majority in aggregate
unpaid Original Amount of all Equipment Notes outstanding as of such date
(excluding any Equipment Notes held by Owner or any of its Affiliates (unless
all Equipment Notes then outstanding shall be held by Owner or any Affiliate
of
Owner); provided
that for
the purposes of directing any action or casting any vote or giving any consent,
waiver or instruction hereunder, any Note Holder of an Equipment Note or
Equipment Notes may allocate, in such Note Holder’s sole discretion, any
fractional portion of the principal amount of such Equipment Note or Equipment
Notes in favor of or in opposition to any such action, vote, consent, waiver
or
instruction.
“Make-Whole
Amount”
means,
with respect to any Equipment Note, an amount (as determined by an independent
investment bank of national standing) equal to the excess, if any, of (a) the
present value of the remaining scheduled payments of principal and interest
to
maturity of such Equipment Note computed by discounting such payments on a
semiannual basis on each Payment Date (assuming a 360-day year of twelve 30-day
months) using a discount rate equal to the Treasury Yield plus the Make-Whole
Spread, over
(b) the
outstanding principal amount of such Equipment Note plus accrued interest to
the
date of determination. For purposes of determining the Make-Whole Amount,
“Treasury Yield” means, at the date of determination with respect to any
Equipment Note, the interest rate (expressed as a decimal and, in the case
of
United States Treasury bills, converted to a bond equivalent yield) determined
to be the per annum rate equal to the semiannual yield to maturity for United
States Treasury securities maturing on the Average Life Date of such Equipment
Note and trading in the public securities markets either as determined by
interpolation between the most recent weekly average yield to
maturity
for two series of United States Treasury securities, trading in the public
securities markets, (A) one maturing as close as possible to, but earlier than,
the Average Life Date of such Equipment Note and (B) the other maturing as
close
as possible to, but later than, the Average Life Date of such Equipment Note,
in
each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note is reported in the most recent H.15(519),
such
weekly average yield to maturity as published in such H.15(519). “H.15(519)”
means the weekly statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal Reserve System.
The date of determination of a Make-Whole Amount shall be the third Business
Day
prior to the applicable payment or redemption date and the “most recent
H.15(519)” means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable payment or redemption
date.
“Make-Whole
Spread”
means
(i) in the case of Series A Equipment Notes, 0.25%, (ii) in the case of Series
B
Equipment Notes, 0.40%, (iii) in the case of Series C Equipment Notes, 0.50%,
and (iv) in the case of any Additional Series, the percentage specified in
Schedule I hereto (as amended at the time of original issuance of such
Additional Series) as the “Make-Whole Spread” for such Additional
Series.
“Material
Adverse Change”
means,
with respect to any person, any event, condition or circumstance that materially
and adversely affects such person’s business or consolidated financial
condition, or its ability to observe or perform its obligations, liabilities
and
agreements under the Operative Agreements.
“Minimum
Liability Insurance Amount”
is
defined in Schedule 3 to the Participation Agreement.
“Mortgaged
Property”
is
defined in Section 3.03 of the Trust Indenture.
“Mortgagee”
means
Wilmington Trust Company, a Delaware banking corporation, not in its individual
capacity but solely as mortgagee under the Trust Indenture.
“Non-U.S.
Person”
means
any Person other than a United States person, as defined in Section 7701(a)(30)
of the Code.
“Note
Holder”
means
at any time each registered holder of one or more Equipment Notes.
“Note
Purchase Agreement”
means
the Note Purchase Agreement, dated as of the Issuance Date, among Continental
Airlines, Inc., the Subordination Agent, the Escrow Agent, the Paying Agent
and
the Pass Through Trustee under each Pass Through Trust Agreement providing
for,
among other things, the issuance and sale of certain equipment
notes.
“NY
UCC”
means
the UCC as in effect on the date of determination in the State of New
York.
“Officer’s
Certificate”
means,
in respect of any party to the Participation Agreement, a certificate signed
by
the Chairman, the President, any Vice President (including those with varying
ranks such as Executive, Senior, Assistant or Staff Vice President), the
Treasurer or the Secretary of such party.
“Operative
Agreements”
means,
collectively, the Participation Agreement, the Trust Indenture, the initial
Trust Indenture Supplement, the Bills of Sale, and the Equipment
Notes.
“Operative
Indentures”
means
each of the indentures under which notes have been issued and purchased by
the
Pass Through Trustees pursuant to the Note Purchase Agreement (whether before
or
after the date of this Trust Indenture).
“Original
Amount,”
with
respect to an Equipment Note, means the stated original principal amount of
such
Equipment Note and, with respect to all Equipment Notes, means the aggregate
stated original principal amounts of all Equipment Notes.
“Owner
Person”
means
Owner, any lessee, assignee, successor or other user or person in possession
of
the Aircraft, Airframe or an Engine with or without color of right, or any
Affiliate of any of the foregoing (excluding any Tax Indemnitee or any related
Tax Indemnitee with respect thereto, or any person using or claiming any rights
with respect to the Aircraft, Airframe or an Engine directly by or through
any
of the persons in this parenthetical).
“Participation
Agreement”
means
the Participation Agreement [____], dated as of [______ __, 20__,] among Owner,
the Applicable Pass Through Trustees, the Subordination Agent and
Mortgagee.
“Parts”
means
all appliances, parts, components, instruments, appurtenances, accessories,
furnishings, seats and other equipment of whatever nature (other than (a)
Engines or engines, and (b) any Removable Part leased by Owner from a third
party or subject to a security interest granted to a third party), that may
from
time to time be installed or incorporated in or attached or appurtenant to
the
Airframe or any Engine or removed therefrom unless the Lien of the Trust
Indenture shall not be applicable thereto in accordance with Section 4.04 of
the
Trust Indenture.
“Pass
Through Agreements”
means
the Pass Through Trust Agreements, the Note Purchase Agreement, the Deposit
Agreements, the Escrow Agreements, the Intercreditor Agreement, the Liquidity
Facilities and the Fee Letters referred to in Section 2.03 of each of the
Liquidity Facilities, provided that no amendment, modification or supplement
to,
or substitution or replacement of, any such Fee Letter shall be effective for
purposes of any obligation of Owner, unless consented to by Owner.
“Pass
Through Certificates”
means
the pass through certificates issued by the Pass Through Trusts (and any other
pass through certificates for which such pass through certificates may be
exchanged).
“Pass
Through Trust”
means
each of the three separate pass through trusts created under the Pass Through
Trust Agreements.
“Pass
Through Trust Agreement”
means
each of the three separate Trust Supplements, together in each case with the
Basic Pass Through Trust Agreement, each dated as of the Issuance Date by and
between the Owner and a Pass Through Trustee, provided, that, for purposes
of
any obligation of Owner, no amendment, modification or supplement to, or
substitution or replacement of, any such Agreement shall be effective unless
consented to by Owner.
“Pass
Through Trustee”
means
Wilmington Trust Company, a Delaware banking corporation, in its capacity as
trustee under each Pass Through Trust Agreement.
“Pass
Through Trustee Agreements”
means
the Participation Agreement, the Pass Through Trust Agreements, the Note
Purchase Agreement, the Deposit Agreements, the Escrow Agreements, and the
Intercreditor Agreement.
“Paying
Agent”
means
Wilmington Trust Company, as paying agent under each of the Escrow
Agreements.
“Payment
Date”
means
each April 19 and December 19, commencing on [_____________].
“Payment
Due Rate”
means
(a) with respect to (i) any payment made to a Note Holder under any
Series of Equipment Notes, the Debt Rate applicable to such Series plus 2%
and
(ii) any other payment made under any Operative Agreement to any other
Person, the Debt Rate applicable to such payment plus 2% or, if less,
(b) the maximum rate permitted by applicable law.
“Permitted
Air Carrier”
means
(i) any manufacturer of airframes or aircraft engines, or any Affiliate of
a
manufacturer of airframes or aircraft engines, (ii) any Permitted Foreign Air
Carrier, (iii) any person approved in writing by Mortgagee or (iv) any U.S.
Air
Carrier.
“Permitted
Country”
means
any country listed on Schedule 4 to the Participation Agreement.
“Permitted
Foreign Air Carrier”
means
any air carrier with its principal executive offices in any Permitted Country
and which is authorized to conduct commercial airline operations and to operate
jet aircraft similar to the Aircraft under the applicable Laws of such Permitted
Country.
“Permitted
Government Entity”
means
(i) the U.S. Government or (ii) any Government Entity if the Aircraft is then
registered under the laws of the country of such Government Entity.
“Permitted
Lien”
means
(a) the rights of Mortgagee under the Operative Agreements, or of any Permitted
Lessee under any Permitted Lease; (b) Liens attributable to Mortgagee (both
in
its capacity as trustee under the Trust Indenture and in its individual
capacity); (c) the rights of others under agreements or arrangements to the
extent expressly permitted by the terms of Section 4.02(b) or 4.04 of the Trust
Indenture; (d) Liens of Taxes of Owner (and its U.S. federal tax law
consolidated group), or Liens for Taxes of any Tax Indemnitee (and its U.S.
federal tax law consolidated group) for which Owner is obligated to indemnify
such Tax Indemnitee under any of the Operative Agreements, in any such case
either not yet due or being contested in good faith by appropriate proceedings
so long as such Liens and such proceedings do not involve any material risk
of
the sale, forfeiture or loss of the Aircraft, the Airframe, or any Engine or
the
interest of Mortgagee therein or impair the Lien of the Trust Indenture; (e)
materialmen’s, mechanics’, workers’, repairers’, employees’ or other like Liens
arising in the ordinary course of business for amounts the payment of which
is
either not yet delinquent for more than 60 days or is being contested in good
faith by appropriate proceedings, so long as such Liens and such proceedings
do
not involve any material risk of the sale, forfeiture or loss of the Aircraft,
the Airframe, or any Engine or the interest of Mortgagee therein or impair
the
Lien of the Trust Indenture; (f) Liens arising out of any judgment or award
against Owner (or any Permitted Lessee), so long as such judgment shall, within
60 days after the entry thereof, have been discharged or vacated, or execution
thereof stayed pending appeal or shall have been discharged, vacated or reversed
within 60 days after the expiration of such stay, and so long as during any
such
60 day period there is not, or any such judgment or award does not involve,
any
material risk of the sale, forfeiture or loss of the Aircraft, the Airframe,
or
any Engine or the interest of Mortgagee therein or impair the Lien of the Trust
Indenture; (g) any other Lien with respect to which Owner (or any Permitted
Lessee) shall have provided a bond, cash collateral or other security adequate
in the reasonable opinion of Mortgagee.
“Permitted
Lease”
means
a
lease permitted under Section 4.02(b) of the Trust Indenture.
“Permitted
Lessee”
means
the lessee under a Permitted Lease.
“Persons”
or
“persons”
means
individuals, firms, partnerships, joint ventures, trusts, trustees, Government
Entities, organizations, associations, corporations, limited liability
companies, government agencies, committees, departments, authorities and other
bodies, corporate or incorporate, whether having distinct legal status or not,
or any member of any of the same.
“Plan”
means
any employee benefit plan within the meaning of Section 3(3) of ERISA, or any
plan within the meaning of Section 4975(e)(1) of the Code.
“Prospective
International Interest”
is
defined in the Cape Town Treaty.
“Purchase
Agreement”
means
the Purchase Agreement No. 1951, dated as of July 23, 1996, between Airframe
Manufacturer and Owner, as amended (including all exhibits thereto, together
with all letter agreements entered into that by their terms constitute part
of
such Purchase Agreement), to the extent included in the Granting Clause (2)
of
the Trust Indenture.
“QIB”
is
defined in Section 2.08 of the Trust Indenture.
“Related
Additional Series Equipment Note”
means,
with respect to any particular series of Additional Series Equipment Notes
and
as of any date, an “Additional Series Equipment Note”, as defined in each
Related Indenture, having the same designation (i.e.,
“Series
D”, “Series E” or the like) as such series of Additional Series Equipment Notes,
but only if as of such date it is held by the “Subordination Agent” under the
“Intercreditor Agreement”, as such terms are defined in such Related
Indenture.
“Related
Equipment Note”
means,
as of any date, an “Equipment Note” as defined in each Related Indenture, but
only if as of such date it is held by the “Subordination Agent” under the
“Intercreditor Agreement”, as such terms are defined in such Related
Indenture.
“Related
Indenture”
means
each Operative Indenture (other than the Trust Indenture).
“Related
Indenture Bankruptcy Default”
means
any “Indenture Event of Default” under Section 5.01(v), (vi) or (vii) of
any Related Indenture, determined without giving effect to any applicable grace
period.
“Related
Indenture Event of Default”
means
any “Indenture Event of Default” under any Related Indenture.
“Related
Make-Whole Amount”
means
the “Make-Whole Amount”, as defined in each Related Indenture.
“Related
Mortgagee”
means
the “Mortgagee” as defined in each Related Indenture.
“Related
Note Holder”
means
a
registered holder of a Related Equipment Note.
“Related
Secured Obligations”
means,
as of any date, the outstanding “Original Amount”, as defined in each Related
Indenture, of the Related Equipment Notes issued under such Related Indenture,
the accrued and unpaid interest due thereon in accordance with such Related
Indenture as of such date, and the Related Make-Whole Amount, if any, due with
respect thereto in accordance with such Related Indenture.
“Related
Series A Equipment Note”
means,
as of any date, a “Series A Equipment Note”, as defined in each Related
Indenture, but only if as of such date it is held by the “Subordination Agent”
under the “Intercreditor Agreement”, as such terms are defined in such Related
Indenture.
“Related
Series B Equipment Note”
means,
as of any date, a “Series B Equipment Note”, as defined in each Related
Indenture, but only if as of such date it is held by the “Subordination Agent”
under the “Intercreditor Agreement”, as such terms are defined in such Related
Indenture.
“Related
Series C Equipment Note”
means,
as of any date, a “Series C Equipment Note”, as defined in each Related
Indenture, but only if as of such date it is held by the “Subordination Agent”
under the “Intercreditor Agreement”, as such terms are defined in such Related
Indenture.
“Removable
Part”
is
defined in Section 4.04(d) of the Trust Indenture.
“Replacement
Airframe”
means
any airframe substituted for the Airframe pursuant to Article IV of the Trust
Indenture.
“Replacement
Engine”
means
an engine substituted for an Engine pursuant to Article IV of the Trust
Indenture.
“SEC”
means
the Securities and Exchange Commission of the United States, or any Government
Entity succeeding to the functions of such Securities and Exchange
Commission.
“Section
1110”
means
11 U.S.C. Section 1110 of the Bankruptcy Code or any successor or analogous
section of the federal bankruptcy law in effect from time to time.
“Secured
Obligations”
is
defined in Section 2.06 of the Trust Indenture.
“Securities
Account”
is
defined in Section 3.07 of the Trust Indenture.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Security”
means
a
“security” as defined in Section 2(l) of the Securities Act.
“Senior
Holder”
is
defined in Section 2.13(c) of the Trust Indenture.
“Series”
means
any of Series A, Series B, Series C or any Additional Series.
“Series
A”
or
“Series
A Equipment Notes”
means
Equipment Notes issued under the Trust Indenture and designated as “Series A”
thereunder, in the Original Amount and maturities and bearing interest as
specified in Schedule I to the Trust Indenture under the heading “Series
A.”
“Series
B”
or
“Series
B Equipment Notes”
means
Equipment Notes issued under the Trust Indenture and designated as “Series B”
thereunder, in the Original Amount and maturities and bearing interest as
specified in Schedule I to the Trust Indenture under the heading “Series
B.”
“Series
C”
or
“Series
C Equipment Notes”
means
Equipment Notes issued under the Trust Indenture and designated as “Series C”
thereunder, in the Original Amount and maturities and bearing interest as
specified in Schedule I to the Trust Indenture under the heading “Series
C.”
“Similar
Aircraft”
means
a
Boeing Model [insert model reference the same as the Aircraft]
aircraft.
“Special
Default”
means
(i) the failure by Owner to pay any amount of principal of or interest on any
Equipment Note when due or (ii) the occurrence of any Default or Event of
Default referred to in Section 5.01(v), (vi) or (vii).
“Subordination
Agent”
means
Wilmington Trust Company, as subordination agent under the Intercreditor
Agreement, or any successor thereto.
“Tax
Indemnitee”
means
(a) WTC and Mortgagee, (b) each separate or additional trustee appointed
pursuant to the Trust Indenture, (c) each Note Holder and (d) the respective
successors, assigns, agents and servants of the foregoing.
“Taxes”
means
all license, recording, documentary, registration and other similar fees and
all
taxes, levies, imposts, duties, charges, assessments or withholdings of any
nature whatsoever imposed by any Taxing Authority, together with any penalties,
additions to tax, fines or interest thereon or additions thereto.
“Taxing
Authority”
means
any federal, state or local government or other taxing authority in the United
States, any foreign government or any political subdivision or taxing authority
thereof, any international taxing authority or any territory or possession
of
the United States or any taxing authority thereof.
“Threshold
Amount”
is
defined in Schedule 3 to the Participation Agreement.
“Transaction
Expenses”
means
all costs and expenses incurred by Mortgagee in connection with (a) the
preparation, execution and delivery of the Operative Agreements and the
recording or filing of any documents, certificates or instruments in accordance
with any Operative Agreement, including, without limitation, the FAA Filed
Documents and the Financing Statements, (b) the initial fee of Mortgagee under
the Trust Indenture and (c) the reasonable fees and disbursements of counsel
for
each Mortgagee and special counsel in Oklahoma City, Oklahoma, in each case,
in
connection with the Closing.
“Transactions”
means
the transactions contemplated by the Participation Agreement.
“Transfer”
means
the transfer, sale, assignment or other conveyance of all or any interest in
any
property, right or interest.
“Transferee”
means
a
person to which any Note Holder purports or intends to Transfer any or all
of
its right, title or interest in the Equipment Note, as described in Section
9 of
the Participation Agreement.
“Trust
Indenture”
means
the Trust Indenture and Mortgage [____], dated as of the date of the
Participation Agreement between Owner and Mortgagee.
“Trust
Indenture Supplement”
means
a
Trust Indenture and Mortgage Supplement, substantially in the form of Exhibit
A
to the Trust Indenture, with appropriate modifications to reflect the purpose
for which it is being used.
“Trust
Supplement”
means
an agreement supplemental to the Basic Pass Through Trust Agreement pursuant
to
which (i) a separate trust is created for the benefit of the holders of the
Pass
Through Certificates of a class, (ii) the issuance of the Pass Through
Certificates of such Class representing fractional undivided interests in such
trust is authorized and (iii) the terms of the Pass Through Certificates of
such
class are established.
“UCC”
means
the Uniform Commercial Code as in effect in any applicable
jurisdiction.
“United
States”
or
“U.S.”
means
the United States of America; provided that for geographic purposes, “United
States” means, in aggregate, the 50 states and the District of Columbia of the
United States of America.
“U.S.
Air Carrier”
means
any United States air carrier that is a Citizen of the United States holding
an
air carrier operating certificate issued pursuant to chapter 447 of title 49
of
the United States Code for aircraft capable of carrying 10 or more individuals
or 6000 pounds or more of cargo, and as to which there is in force an air
carrier operating certificate issued pursuant to Part 121 of the FAA
Regulations, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provisions therefor or in the
absence thereof.
“U.S.
Government”
means
the federal government of the United States, or any instrumentality or agency
thereof the obligations of which are guaranteed by the full faith and credit
of
the federal government of the United States.
“U.S.
Person”
means
any Person described in Section 7701 (a)(30) of the Code.
“Weighted
Average Life to Maturity”
means,
with respect to any specified Debt, at the time of the determination thereof
the
number of years obtained by dividing the then Remaining Dollar-years of such
Debt by the then outstanding principal amount of such Debt. The term “Remaining
Dollar-years” shall mean the amount obtained by (1) multiplying the amount of
each then-remaining principal payment on such Debt by the number of years
(calculated at the nearest one-twelfth) that will elapse between the date of
determination of the Weighted Average Life to Maturity of such Debt and the
date
of that required payment and (2) totaling all the products obtained in clause
(1) above.
“Wet
Lease”
means
any arrangement whereby Owner or a Permitted Lessee agrees to furnish the
Aircraft, Airframe or any Engine to a third party pursuant to which the
Aircraft, Airframe or Engine shall at all times be in the operational control
of
Owner or a Permitted Lessee, provided that Owner’s obligations under the Trust
Indenture shall continue in full force and effect notwithstanding any such
arrangement.
“WTC”
means
Wilmington Trust Company, a Delaware banking corporation, not in its capacity
as
Mortgagee under the Trust Indenture, but in its individual
capacity.
|
ANNEX
B - INSURANCE
TRUST
INDENTURE [__]
|
INSURANCE
[OMITTED
AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
TO
TRUST
INDENTURE AND MORTGAGE
TRUST
INDENTURE AND MORTGAGE SUPPLEMENT
This
TRUST INDENTURE AND MORTGAGE SUPPLEMENT NO. __, dated [______________ ___,
____]
(herein called this “Trust Indenture Supplement”) of CONTINENTAL AIRLINES, INC.,
as Owner (the “Owner”).
W
I T N E S S E T H:
WHEREAS,
the Trust Indenture and Mortgage [____], dated as of [______ __, 20__,] (as
amended and supplemented, the “Trust Indenture”) between the Owner and
Wilmington Trust Company, as Mortgagee (the “Mortgagee”), provides for the
execution and delivery of a supplement thereto substantially in the form hereof,
which shall particularly describe the Aircraft, and shall specifically mortgage
such Aircraft to the Mortgagee; and
WHEREAS,
the Trust Indenture relates to the Airframe and Engines described below, and
a
counterpart of the Trust Indenture is attached hereto and made a part hereof
and
this Trust Indenture Supplement, together with such counterpart of the Trust
Indenture, is being filed for recordation on the date hereof with the FAA as
one
document;
NOW,
THEREFORE, this Trust Indenture Supplement WITNESSETH that the Owner hereby
confirms that the Lien of the Trust Indenture on the Collateral covers all
of
Owner’s right, title and interest in and to the following described property and
that it hereby grants to the Security Trustee an “International Interest” (as
defined in the Cape Town Convention on International Interests in Mobile
Equipment and related Aircraft Equipment Protocol, as in effect in the United
States) in the following airframe and engines:
AIRFRAME
One
airframe identified as follows:
|
Manufacturer
|
Model
|
FAA
Registration
Number
|
Manufacturer’s
Serial
Number
|
|||
|
The
Boeing Company
|
together
with all of the Owner’s right, title and interest in and to all Parts of
whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said
airframe.
AIRCRAFT
ENGINES
Two
aircraft engines, each such engine being a jet propulsion aircraft engine with
at least 1750 lb of thrust or its equivalent, identified as
follows:
|
Manufacturer
|
Manufacturer’s
Model
|
Serial
Number
|
||
together
with all of Owner’s right, title and interest in and to all Parts of whatever
nature, whether now owned or hereafter acquired and which are from time to
time
incorporated or installed in or attached to either of such engines.
Together
with all of Owner’s right, title and interest in and to (a) all Parts of
whatever nature, which from time to time are included within the definition
of
“Airframe” or “Engine”, whether now owned or hereafter acquired, including all
substitutions, renewals and replacements of and additions, improvements,
accessions and accumulations to the Airframe and Engines (other than additions,
improvements, accessions and accumulations which constitute appliances, parts,
instruments, appurtenances, accessories, furnishings or other equipment excluded
from the definition of Parts) and (b) all Aircraft Documents.
TO
HAVE
AND TO HOLD all and singular the aforesaid property unto the Mortgagee, its
successors and assigns, in trust for the equal and proportionate benefit and
security of the Note Holders and the Indenture Indemnitees, except as provided
in Section 2.13 and Article III of the Trust Indenture without any preference,
distinction or priority of any one Equipment Note over any other by reason
of
priority of time of issue, sale, negotiation, date of maturity thereof or
otherwise for any reason whatsoever, and for the uses and purposes and subject
to the terms and provisions set forth in the Trust Indenture.
This
Trust Indenture Supplement shall be construed as supplemental to the Trust
Indenture and shall form a part thereof. The Trust Indenture is each hereby
incorporated by reference herein and is hereby ratified, approved and
confirmed.
AND,
FURTHER, the Owner hereby acknowledges that the Aircraft referred to in this
Trust Indenture Supplement has been delivered to the Owner and is included
in
the property of the Owner subject to the pledge and mortgage thereof under
the
Trust Indenture.
* * *
IN
WITNESS WHEREOF, the Owner has caused this Trust Indenture Supplement to be
duly
executed by one of its officers, thereunto duly authorized, on the day and
year
first above written.
|
CONTINENTAL
AIRLINES, INC.
|
|
|
By:___________________________________
|
|
|
Name:
|
|
|
Title:
|
|
Original
Amount
|
Interest
Rate
|
||
|
Series
A:
|
5.983%
|
||
|
Series
B:
|
6.903%
|
||
|
Series
C:
|
7.339%
|
||
|
Total:
|
Trust
Indenture and Mortgage
Equipment
Note Amortization
|
Payment
Date
|
Percentage
of Original
Amount
to be Paid
|
|
