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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
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EQUIPMENT NOTES COVERING
ONE BOEING [______] AIRCRAFT
BEARING U.S. REGISTRATION XXXX N[______]
AND MANUFACTURER'S SERIAL NO. [______]
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TABLE OF CONTENTS
PAGE
GRANTING CLAUSE...............................................................1
ARTICLE I DEFINITIONS.........................................................4
ARTICLE II THE EQUIPMENT NOTES................................................4
SECTION 2.01. Form of Equipment Notes....................................4
SECTION 2.02. Issuance and Terms of Equipment Notes.....................16
SECTION 2.03. [Intentionally Omitted]...................................19
SECTION 2.04. Method of Payment.........................................19
SECTION 2.05. Application of Payments...................................21
SECTION 2.06. Termination of Interest in Collateral.....................21
SECTION 2.07. Registration Transfer and Exchange of Equipment Notes.....22
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes......23
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.............23
SECTION 2.10. Mandatory Redemptions of Equipment Notes..................24
SECTION 2.11. Voluntary Redemptions of Equipment Notes..................24
SECTION 2.12. Redemptions; Notice of Redemption.........................24
SECTION 2.13. Subordination.............................................25
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS................26
SECTION 3.01. Basic Distributions.......................................26
SECTION 3.02. Event of Loss; Replacement; Optional Redemption...........27
SECTION 3.03. Payments After Event of Default...........................28
SECTION 3.04. Certain Payments..........................................32
SECTION 3.05. Other Payments............................................32
SECTION 3.06. Cooperation...............................................33
SECTION 3.07. Securities Account........................................33
ARTICLE IV COVENANTS OF THE OWNER............................................34
SECTION 4.01. Liens.....................................................34
SECTION 4.02. Possession, Operation and Use, Maintenance,
Registration and Markings................................34
SECTION 4.03. Inspection................................................39
SECTION 4.04. Replacement and Pooling of Parts, Alterations,
Modifications and Additions; Substitution of Engines.....39
SECTION 4.05. Loss, Destruction or Requisition..........................43
SECTION 4.06. Insurance.................................................47
SECTION 4.07. Merger of Owner...........................................48
ARTICLE V EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE...........................48
SECTION 5.01. Event of Default..........................................48
SECTION 5.02. Remedies..................................................50
TABLE OF CONTENTS
(continued)
PAGE
SECTION 5.03. Return of Aircraft, Etc...................................51
SECTION 5.04. Remedies Cumulative.......................................52
SECTION 5.05. Discontinuance of Proceedings.............................53
SECTION 5.06. Waiver of Past Defaults...................................53
SECTION 5.07. Appointment of Receiver...................................53
SECTION 5.08. Mortgagee Authorized to Execute Bills of Sale, Etc........53
SECTION 5.09. Rights of Note Holders to Receive Payment.................54
ARTICLE VI DUTIES OF THE MORTGAGEE...........................................54
SECTION 6.01. Notice of Event of Default................................54
SECTION 6.02. Action Upon Instructions; Certain Rights
and Limitations..........................................54
SECTION 6.03. Indemnification...........................................55
SECTION 6.04. No Duties Except as Specified in Trust Indenture
or Instructions..........................................55
SECTION 6.05. No Action Except Under Trust Indenture or Instructions....56
SECTION 6.06. Investment of Amounts Held by Mortgagee...................56
ARTICLE VII THE MORTGAGEE....................................................56
SECTION 7.01. Acceptance of Trusts and Duties...........................56
SECTION 7.02. Absence of Duties.........................................57
SECTION 7.03. No Representations or Warranties as to Aircraft
or Documents.............................................57
SECTION 7.04. No Segregation of Monies; No Interest.....................57
SECTION 7.05. Reliance; Agreements; Advice of Counsel...................58
SECTION 7.06. Compensation..............................................58
SECTION 7.07. Instructions from Note Holders............................58
ARTICLE VIII INDEMNIFICATION.................................................59
SECTION 8.01. Scope of Indemnification..................................59
ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES...................................59
SECTION 9.01. Resignation of Mortgagee; Appointment of Successor........59
SECTION 9.02. Appointment of Additional and Separate Trustees...........60
ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS TRUST
INDENTURE AND OTHER DOCUMENTS....................................61
SECTION 10.01. Instructions of Majority; Limitations.....................61
SECTION 10.02. Mortgagee Protected.......................................63
SECTION 10.03. Documents Mailed to Note Holders..........................63
SECTION 10.04. No Request Necessary for Trust Indenture Supplement.......63
TABLE OF CONTENTS
(continued)
PAGE
ARTICLE XI MISCELLANEOUS.....................................................63
SECTION 11.01. Termination of Trust Indenture............................63
SECTION 11.02. No Legal Title to Collateral in Note Holders..............64
SECTION 11.03. Sale of Aircraft by Mortgagee Is Binding..................64
SECTION 11.04. Trust Indenture for Benefit of Owner, Mortgagee,
Note Holders and the other Indenture Indemnitees.........64
SECTION 11.05. Notices...................................................64
SECTION 11.06. Severability..............................................65
SECTION 11.07. No Oral Modification or Continuing Waivers................65
SECTION 11.08. Successors and Assigns....................................65
SECTION 11.09. Headings..................................................65
SECTION 11.10. Normal Commercial Relations...............................65
SECTION 11.11. Governing Law; Counterpart Form...........................66
SECTION 11.12. Voting By Note Holders....................................66
SECTION 11.13. Bankruptcy................................................66
ANNEX A Definitions
ANNEX B Insurance
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization and Interest Rates
TRUST INDENTURE AND MORTGAGE [____]
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").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the parties hereto desire by this Trust Indenture, among
other things, (i) to provide for the issuance by the Owner of the Series of
Equipment Notes specified on Schedule I hereto (it being understood that not all
Series may be issued, in which case references in this Trust Indenture to Series
not issued shall be disregarded) and (ii) to provide for the assignment,
mortgage and pledge by the Owner to the Mortgagee, as part of the Collateral
hereunder, among other things, of all of the Owner's right, title and interest
in and to the Aircraft and, except as hereinafter expressly provided, all
payments and other amounts received hereunder in accordance with the terms
hereof, as security for, among other things, the Owner's obligations to the Note
Holders and the Indenture Indemnitees;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner and authenticated and delivered by the Mortgagee
hereunder, the valid, binding and enforceable obligations of the Owner; and
WHEREAS, all things necessary to make this Trust Indenture the
valid, binding and legal obligation of the Owner for the uses and purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH, that,
to secure the prompt payment of the Original Amount of, interest on, Break
Amount, if any, 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 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 [________________________]
engine and is of 750 or more rated takeoff horsepower or the equivalent of such
horsepower, 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
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: ARTICLE I
DEFINITIONS
Capitalized terms used but not defined herein shall have the
respective meanings set forth or incorporated by reference, and shall be
construed in the manner described, in Annex A hereto.
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. FORM OF EQUIPMENT NOTES
(a) The Fixed Rate 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 [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.] [paid in full on ____] Accrued but unpaid
interest shall be due and payable in quarterly installments commencing on
[______ __, 20__,] and thereafter on February 15, May 15, August 15 and November
15 of each year, to and including [_______________.] Notwithstanding the
foregoing, the final payment made on this Equipment Note shall be in an amount
sufficient to discharge in full the unpaid Original Amount and all accrued and
unpaid interest on, and any other amounts due under, this Equipment Note.
Notwithstanding anything to the contrary contained herein, 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
------------
Not included in Series G-2 Equipment Notes.
To be inserted in the case of a Series G-2 Equipment Note.
Amount, if any, and (to the extent permitted by applicable Law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
There shall be maintained an Equipment Note Register for the purpose
of registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.07 of the Trust Indenture.
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.]
[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 Make-Whole Amount, if any, and any other
amount (other than as covered by any of the following clauses) due hereunder or
under the Trust Indenture, SECOND 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,
THIRD, to the payment of the Original Amount of this Equipment Note then due,
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
------------
To be inserted in the case of Series G-2 Equipment Note.
To be inserted in the case of Series I Equipment Note.
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.
[The indebtedness evidenced by this Equipment Note is, to the extent
and in the manner provided in the Trust Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Trust Indenture) in respect of Series G-1 Equipment Notes, Series
G-2 Equipment Notes, Series H Equipment Notes, Related Series G-1 Equipment
Notes, Related Series G-2 Equipment Notes, Related Series H Equipment Notes 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.]
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.
* * *
------------
To be inserted in the case of Series I 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
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
------------
Not included in Series G-2 Equipment Notes.
(b) The Floating Rate 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: [__________, ____]
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 from the
date hereof until paid in full at a rate per annum for each Interest Period
equal to the Debt Rate for such Interest Period (calculated on the basis of a
year of 360 days and actual days elapsed during the period for which such amount
accrues). The Original Amount of this Equipment Note shall be payable in
installments on the dates set forth in Schedule I hereto equal to the
corresponding percentage of the Original Amount of this Equipment Note set forth
in Schedule I hereto. Accrued but unpaid interest shall be due and payable in
quarterly installments commencing on [______ __, 20__,] and thereafter on
February 15, May 15, August 15 and November 15 of each year, to and including
[_______________.] Interest shall be payable with respect to the first but not
the last day of each Interest Period. 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 such extension of time shall be included in the
computation of interest payable.
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 and actual days
elapsed during the period for which such amount accrues) on any overdue Original
Amount and (to the extent permitted by applicable Law) any overdue interest and
any other amounts payable hereunder which are overdue, in each case for the
period the same is overdue. Amounts shall be overdue if not paid when due
(whether at stated maturity, by acceleration or otherwise).
There shall be maintained an Equipment Note Register for the purpose
of registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.07 of the Trust Indenture.
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, interest, Break Amount, if any, and Make-Whole Amount, if any, received
by it hereunder shall be applied, FIRST, to the payment of Break Amount, if any,
with respect to this Equipment Note, SECOND, to the payment of accrued interest
on this Equipment Note (as well as any interest on any overdue Original Amount,
any overdue Break Amount and 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, THIRD, to the payment of the Original Amount of this Equipment
Note then due, FOURTH, to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under the Trust Indenture, and FIFTH, 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.]
[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, interest, Break Amount, if any, and Make-Whole Amount, if any, received
by it hereunder shall be applied, FIRST, to the payment of Break Amount, if any,
and Make-Whole Amount, if any, with respect to this Equipment Note and any other
amount (other than as covered by any of the following clauses) due hereunder or
under the Trust Indenture, SECOND, to the payment of accrued interest on this
Equipment Note (as well as any interest on any overdue Original Amount, any
overdue Break Amount and 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, THIRD, to the payment of the Original Amount of this Equipment Note
-----------
To be inserted in the case of Series G-1 Equipment Note.
then due, 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.
[The indebtedness evidenced by this Equipment Note is, to the extent
and in the manner provided in the Trust Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Trust Indenture) in respect of Series G-1 Equipment Notes, Series
G-2 Equipment Notes, Related Series G-1 Equipment Notes, Related Series G-2
Equipment Notes 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.]
------------
To be inserted in the case of Series H Equipment Note.
To be inserted in case of the Series H Equipment Note.
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.
* * *
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
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. ISSUANCE AND TERMS OF EQUIPMENT NOTES
The Equipment Notes shall be dated the Closing Date, shall be issued
in up to five separate series consisting of Series G-1, Series G-2, Series H,
Series I and Series J and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto (or, in the case of the Series J
issued after the Closing Date, dated such date and with such maturity, principal
amount and interest rate as specified in an amendment to this Trust Indenture).
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. Owner shall have the option to issue
the Series J Equipment Notes at or after the Closing, subject to the terms of
Section 4(a)(vi) of the Note Purchase Agreement and Section 9.1(d) of the
Intercreditor Agreement. 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. If Series H Equipment
Notes are issued hereunder and subsequently repaid in full, Owner shall
thereafter have the option to again issue Series H Equipment Notes on the same
or different terms, subject to the terms of the Note Purchase Agreement
(including without limitation Section 4(a)(vi) of the Note Purchase Agreement)
and Section 9.1(c) of the Intercreditor Agreement.
Each Fixed Rate 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.
Each Floating Rate Equipment Note shall bear interest on the unpaid Original
Amount thereof from time to time outstanding from the date thereof until paid in
full at the rate per annum for each Interest Period equal to the Debt Rate for
such Interest Period (calculated on the basis of a year of 360 days and actual
days elapsed during the period for which such amount accrues). Accrued interest
shall be payable in arrears on May 15, 2002, and on each August 15, November 15,
February 15 and May 15 thereafter until maturity. Interest on the Floating Rate
Equipment Notes shall be payable with respect to the first but not the last day
of each Interest Period. The Original Amount of each Equipment Note (i) in the
case of Equipment Notes other than Series G-2, shall be payable on the dates and
in the installments equal to the corresponding percentage of the Original Amount
as set forth in Schedule I hereto which shall be attached as Schedule I to such
Equipment Notes (or, if issued after the Closing Date, as set forth in an
amendment to this Trust Indenture, which payment schedule shall be attached as
Schedule I to such Equipment Note) and (ii) in the case of the Series G-2
Equipment Notes, shall be paid in full on February 15, 2012. 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 Fixed Rate 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 Fixed Rate 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 Fixed Rate 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. Each Floating Rate Equipment Note shall bear interest, payable on
demand, at the Payment Due Rate (calculated on the basis of a year of 360 days
and actual days elapsed during the period for which such amount accrues) on any
part of the Original Amount, 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 Floating Rate 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 Floating Rate Equipment Note becomes due and payable is not
a Business Day then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day, and such extension of time
shall be included in the computation of interest payable thereunder.
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 Primary Liquidity Provider under Section
2.03 of each Primary Liquidity Facility and the related Fee Letter (as defined
in the Intercreditor Agreement) multiplied by a fraction the numerator of which
shall be the then outstanding aggregate principal amount of the Series G-1
Equipment Notes and Series G-2 Equipment Notes and the denominator of which
shall be the then outstanding aggregate principal amount of all "Series G-1
Equipment Notes" and "Series G-2 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 Primary 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 Primary
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 G-1 Equipment Notes or Series G-2 Equipment Notes, (x)
the excess, if any, of (1) an amount equal to interest on any Unpaid Advance,
Applied Downgrade Advance or Applied Non-Extension Advance payable under Section
3.07 of each Primary Liquidity Facility (or, if the Policy Provider has made a
payment equivalent to such an Advance, as would have been payable under Section
3.07 of the Primary Liquidity Facility in respect of the Class G-1 Certificates
or the Class G-2 Certificates, as the case may be, had such Advance been made)
over (2) the sum of Investment Earnings from any Final Advance plus any amount
of interest at the Payment Due Rate actually payable (whether or not in fact
paid) by Owner on the overdue scheduled interest on the Equipment Notes in
respect of which such Unpaid Advance, Applied Downgrade Advance or Applied
Non-Extension Advance was made by the Primary Liquidity Provider (or an
equivalent payment made by the Policy Provider) multiplied by (y) a fraction the
numerator of which shall be the then aggregate overdue amounts of interest on
the Series G-1 Equipment Notes and Series G-2 Equipment Notes (other than
interest becoming due and payable solely as a result of acceleration of any such
Equipment Notes) and the denominator of which shall be the then aggregate
overdue amounts of interest on all "Series G-1 Equipment Notes" and "Series G-2
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"); (v) any other amounts owed to the Primary Liquidity Provider
by the Subordination Agent as borrower under each Primary 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),
and (vi) to the extent not payable (whether or not in fact paid) under Section
6(c) of the Note Purchase Agreement, an amount equal to the fees payable to the
Policy Provider under Section 3.02 of the Policy Provider Agreement and all
other compensation and reimbursement of expenses and disbursements (but
excluding reimbursement of advances) payable to the Policy Provider under the
Policy Provider Agreement (but excluding all such amounts actually paid by the
Owner to the Policy Provider under the Policy Provider Agreement) 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 Primary Liquidity Facility.
The Equipment Notes shall be executed on behalf of the Owner by one
of its authorized officers. Equipment Notes bearing the signatures of
individuals who were at any time the proper officers of the Owner shall bind the
Owner, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Equipment Notes or
did not hold such offices at the respective dates of such Equipment Notes. The
Owner may from time to time execute and deliver Equipment Notes with respect to
the Aircraft to the Mortgagee for authentication upon original issue and such
Equipment Notes shall thereupon be authenticated and delivered by the Mortgagee
upon the written request of the Owner signed by an authorized officer of the
Owner. No Equipment Note shall be secured by or entitled to any benefit under
this Trust Indenture or be valid or obligatory for any purposes, unless there
appears on such Equipment Note a certificate of authentication in the form
provided for herein executed by the Mortgagee by the manual signature of one of
its authorized officers and such certificate upon any Equipment Notes be
conclusive evidence, and the only evidence, that such Equipment Note has been
duly authenticated and delivered hereunder.
The aggregate Original Amount of the Equipment Notes issued
hereunder shall not exceed the amount set forth as the maximum therefor on
Schedule I hereto.
SECTION 2.03. [INTENTIONALLY OMITTED]
SECTION 2.04. METHOD OF PAYMENT
(a) The Original Amount of, interest on, Break Amount, if any,
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. 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
2Pwriting 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, Break Amount, if any, 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,
Break Amount, if any, Make-Whole Amount, if any, and interest due thereon shall
be applied:
First: in the case of any Floating Rate Equipment Note, to the
payment of Break Amount, if any, with respect to such Equipment Note and,
in the case of any Series H or Series I Equipment Note, Make-Whole Amount,
if any, with respect to such Series H or Series I Equipment Note and any
other amount (other than as covered by any of the following clauses) due
hereunder or under such Series H or Series I 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;
Fourth: in the case of any Series G-1 or Series G-2 Equipment Note,
to the payment of Make-Whole Amount, if any, and any other amount due
hereunder or under such Equipment Note; and
Fifth: 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 "Fifth" 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, Break Amount, if any, 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, agrees
to the provisions of this Trust Indenture and the Participation Agreement
applicable to Note Holders, including Sections 6.3, 6.4 and 9.1 thereof and
shall be deemed to have covenanted to the parties to the Participation Agreement
as to the matters covenanted by the original Note Holder in the Participation
Agreement. Subject to compliance by the Note Holder and its transferee (if any)
of the requirements set forth in this Section 2.07, Mortgagee and Owner shall
use all reasonable efforts to issue new Equipment Notes upon transfer or
exchange within 10 Business Days of the date an Equipment Note is surrendered
for transfer or exchange.
SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN EQUIPMENT NOTES
If any Equipment Note shall become mutilated, destroyed, lost or
stolen, the Owner shall, upon the written request of the holder of such
Equipment Note, execute and the Mortgagee shall authenticate and deliver in
replacement thereof a new Equipment Note, payable in the same Original Amount
dated the same date and captioned as issued in connection with the Aircraft. If
the Equipment Note being replaced has become mutilated, such Equipment Note
shall be surrendered to the Mortgagee and a photocopy thereof shall be furnished
to the Owner. If the Equipment Note being replaced has been destroyed, lost or
stolen, the holder of such Equipment Note shall furnish to the Owner and the
Mortgagee such security or indemnity as may be required by them to save the
Owner and the Mortgagee harmless and evidence satisfactory to the Owner and the
Mortgagee of the destruction, loss or theft of such Equipment Note and of the
ownership thereof. If a "qualified institutional buyer" of the type referred to
in paragraph (a)(1)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act
(a "QIB") is the holder of any such destroyed, lost or stolen Equipment Note,
then the written indemnity of such QIB, signed by an authorized officer thereof,
in favor of, delivered to and in form reasonably satisfactory 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 Break Amount, if any, 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 (except in respect
of the Series H and Series I Equipment Notes).
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, Break
Amount, if any, and all other Secured Obligations (other than Related Secured
Obligations unless such Related Secured Obligations shall have become due and
remain unpaid) 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 H, Series
I or Series J 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, Break Amount, if any, and all other
Secured Obligations (other than Related Secured Obligations unless such Related
Secured Obligations shall have become due and remain unpaid) 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) at the time notice of such
redemption is given and on the applicable redemption date, no Event of Default
or Special Default shall have occurred and be continuing and (2) in the case of
the redemption of the Series H, simultaneously with such redemption new Series H
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 G-1 or Series G-2), 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 G-1 Equipment Notes or Related Series G-2 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 G-1 or Series G-2 and Related Note
Holders of the Related Series G-1 Equipment Notes or Related Series G-2
Equipment Notes until the Secured Obligations in respect of Series G-1 Equipment
Notes, Series G-2 Equipment Notes, Related Series G-1 Equipment Notes and
Related Series G-2 Equipment Notes have been paid in full, (ii) after the
Secured Obligations in respect of Series G-1 Equipment Notes, Series G-2
Equipment Notes, Related Series G-1 Equipment Notes and Related Series G-2
Equipment Notes have been paid in full, the Note Holders of Series H Equipment
Notes and Related Note Holders of the Related Series H Equipment Notes until the
Secured Obligations in respect of Series H Equipment Notes and Related Series H
Equipment Notes have been paid in full, (iii) after the Secured Obligations in
respect of Series H Equipment Notes and Related Series H Equipment Notes have
been paid in full, the Note Holders of Series I Equipment Notes and Related Note
Holders of the Related Series I Equipment Notes until the Secured Obligations in
respect of Series I Equipment Notes and Related Series I Equipment Notes have
been paid in full and (iv) after the Secured Obligations in respect of the
Series I Equipment Notes and Related Series I Equipment Notes have been paid in
full, the Note Holders of the Series J Equipment Notes and Related Note Holders
of the Related Series J Equipment Notes until the Secured Obligations in respect
of the Series J Equipment Notes and Related Series J Equipment Notes have been
paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS
SECTION 3.01. BASIC DISTRIBUTIONS
Except as otherwise provided in Sections 3.02 and 3.03 hereof, each
periodic payment of principal or interest on the Equipment Notes received by the
Mortgagee shall be promptly distributed in the following order of priority:
(i) so much of such payment as shall be required to pay in full
the aggregate amount of the payment or payments of Original Amount
and interest (as well as any interest on any overdue Original Amount
and, to the extent permitted by Law, on any overdue interest) then
due under all Series G-1 and Series G-2 Equipment Notes and all
Related Secured Obligations then due under all Related Series G-1
Equipment Notes and all Related Series G-2 Equipment Notes shall be
distributed to the Note Holders of Series G-1 and Series G-2 and to
the Related Note Holders of the Related Series G-1 Equipment Notes
and Related Series G-2 Equipment Notes ratably, without priority of
one over the other, in the proportion that the amount of such
payment or payments then due under each Series G-1 Equipment Note,
Series G-2 Equipment Note, Related Series G-1 Equipment Note and
Related Series G-2 Equipment Note bears to the aggregate amount of
the payments then due under all Series G-1 Equipment Notes, Series
G-2 Equipment Notes, Related Series G-1 Equipment Notes and Related
Series G-2 Equipment Notes;
(ii) after giving effect to paragraph (i) above, so much of such
payment remaining as shall be required to pay in full the aggregate
amount of the payment or payments of Original Amount and interest
(as well as any interest on any overdue Original Amount and, to the
extent permitted by Law, on any overdue interest) then due under all
Series H Equipment Notes and all Related Secured Obligations then
due under all Related Series H Equipment Notes shall be distributed
to the Note Holders of Series H and to the Related Note Holders of
the Related Series H Equipment Notes ratably, without priority of
one over the other, in the proportion that the amount of such
payment or payments then due under each Series H Equipment Note and
the Related Series H Equipment Note bears to the aggregate amount of
the payments then due under all Series H Equipment Notes and Related
Series H Equipment Notes;
(iii) after giving effect to paragraph (ii) above, so much of such
payment remaining as shall be required to pay in full the aggregate
amount of the payment or payments of Original Amount and interest
(as well as any interest on any overdue Original Amount and, to the
extent permitted by Law, on any overdue interest) then due under all
Series I Equipment Notes and all Related Secured Obligations then
due under all Related Series I Equipment Notes shall be distributed
to the Note Holders of Series I and to the Related Note Holders of
the Related Series I Equipment Notes ratably, without priority of
one over the other, in the proportion that the amount of such
payment or payments then due under each Series I Equipment Note and
Related Series I Equipment Note bears to the aggregate amount of the
payments then due under all Series I Equipment Notes and Related
Series I Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, so much of such
payment remaining as shall be required to pay in full the aggregate
amount of the payment or payments of Original Amount and interest
(as well as any interest on any overdue Original Amount and, to the
extent permitted by Law, on any overdue interest) then due under all
Series J Equipment Notes and all Related Secured Obligations then
due under all Related Series J Equipment Notes shall be distributed
to the Note Holders of Series J and Related Note Holders of the
Related Series J Equipment Notes ratably, without priority of one
over the other, in the proportion that the amount of such payment or
payments then due under each Series J Equipment Note and Related
Series J Equipment Note bears to the aggregate amount of the
payments then due under all Series J Equipment Notes and Related
Series J Equipment Notes.
SECTION 3.02. EVENT OF LOSS; REPLACEMENT; OPTIONAL REDEMPTION
Except as otherwise provided in Section 3.03 hereof, any payments
received by the Mortgagee (i) with respect to the Airframe or the Airframe and
one or more Engines as the result of an Event of Loss or (ii) pursuant to an
optional redemption of the Equipment Notes pursuant to Section 2.11 hereof shall
be applied to redemption of the Equipment Notes and to all other Secured
Obligations then due by applying such funds in the following order of priority:
First, (a) to reimburse the Mortgagee and the Note Holders for any
reasonable costs or expenses incurred in connection with such
redemption for which they are entitled to reimbursement, or
indemnity by Owner, under the Operative Agreements and then (b)
to pay any other Secured Obligations then due (except as provided
in clause "Second" below) to the Mortgagee, the Note Holders and
the other Indenture Indemnitees under this Trust Indenture, the
Participation Agreement or the Equipment Notes (other than
amounts specified in clause Second below);
Second, (i) to pay the amounts specified in paragraph (i) of clause
"Third" of Section 3.03 hereof plus Make-Whole Amount and Related
Make-Whole Amount, if any, then due and payable in respect of the
Series G-1 Equipment Notes, Series G-2 Equipment Notes, Related
Series G-1 Equipment Notes and Related Series G-2 Equipment
Notes;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "Third" of Section 3.03
hereof;
(iii) after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause "Third" of Section
3.03 hereof (without giving effect to the proviso thereto); and
(iv) after giving effect to paragraph (iii) above, to pay the
amounts specified in paragraph (iv) of clause "Third" of Section
3.03 hereof; and
Third, as provided in clause "Fourth" of Section 3.03 hereof;
PROVIDED, HOWEVER, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 4.05 hereof, any insurance, condemnation or similar proceeds which
result from such Event of Loss and are paid over to the Mortgagee shall be held
by the Mortgagee as permitted by Section 7.04 hereof (provided that such moneys
shall be invested as provided in Section 6.06 hereof) as additional security for
the obligations of Owner under Operative Agreements and such proceeds (and such
investment earnings), to the extent not theretofore applied as provided herein,
shall be released to the Owner at the Owner's written request upon the release
of such Airframe or Engine and the replacement thereof as provided herein;
PROVIDED, FURTHER, 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.
SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT
Except as otherwise provided in Section 3.04 hereof, all payments
received and amounts held or realized by the Mortgagee (including any amounts
realized by the Mortgagee from the exercise of any remedies pursuant to Article
V hereof) after an Event of Default shall have occurred and be continuing and
after the declaration specified in Section 5.02(b) hereof, as well as all
payments or amounts then held by the Mortgagee as part of the Collateral, shall
be promptly distributed by the Mortgagee in the following order of priority:
First, so much of such payments or amounts as shall be required to
(i) reimburse the Mortgagee or WTC for any tax (except
to the extent resulting from a failure of the Mortgagee to
withhold taxes pursuant to Section 2.04(b) hereof), expense or
other loss (including, without limitation, all amounts to be
expended at the expense of, or charged upon the rents, revenues,
issues, products and profits of, the property included in the
Collateral (all such property being herein called the "Mortgaged
Property") pursuant to Section 5.03(b) hereof) incurred by the
Mortgagee or WTC (to the extent not previously reimbursed), the
expenses of any sale, or other proceeding, reasonable attorneys'
fees and expenses, court costs, and any other expenditures
incurred or expenditures or advances made by the Mortgagee, WTC
or the Note Holders in the protection, exercise or enforcement of
any right, power or remedy or any damages sustained by the
Mortgagee, WTC or any Note Holder, liquidated or otherwise, upon
such Event of Default shall be applied by the Mortgagee as
between itself, WTC and the Note Holders in reimbursement of such
expenses and any other expenses for which the Mortgagee, WTC or
the Note Holders are entitled to reimbursement under any
Operative Agreement and (ii) pay all 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;
Second, so much of such payments or amounts remaining as shall be
required to reimburse the then existing or prior Note Holders for
payments made pursuant to Section 6.03 hereof (to the extent not
previously reimbursed) shall be distributed to such then existing
or prior Note Holders ratably, without priority of one over the
other, in accordance with the amount of the payment or payments
made by each such then existing or prior Note Holder pursuant to
said Section 6.03 hereof;
Third, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Original Amount of
all Series G-1 and Series G-2 Equipment Notes, and the accrued
but unpaid interest and other amounts due thereon (other than
Make-Whole Amount which shall not be due and payable) and all
other Secured Obligations in respect of the Series G-1 and Series
G-2 Equipment Notes (other than Make-Whole Amount) to the date of
distribution and all other Related Secured Obligations in respect
of Related Series G-1 Equipment Notes and Related Series G-2
Equipment Notes then due, shall be distributed to the Note
Holders of Series G-1 and Series G-2 and Related Note Holders of
the Related Series G-1 Equipment Notes and Related Series G-2
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 G-1 and Series G-2 Equipment Notes held by each holder
plus the accrued but unpaid interest and other amounts due
hereunder or thereunder (other than Make-Whole Amount, if any) to
the date of distribution and all other Related Secured
Obligations then due in respect of the Related Series G-1
Equipment Notes and Related Series G-2 Equipment Notes held by
such holder, bears to the aggregate unpaid Original Amount of all
Series G-1 and Series G-2 Equipment Notes held by all such
holders plus the accrued but unpaid interest and other amounts
due thereon (other than Make-Whole Amount) to the date of
distribution and all other Related Secured Obligations in respect
of the Related Series G-1 Equipment Notes and Related Series G-2
Equipment Notes then due;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Original Amount of all Series H Equipment
Notes, and the accrued but unpaid interest and other amounts due
thereon, Make-Whole Amount, if any, and Break Amount, if any,
with respect to the Series H Equipment Notes, all other Secured
Obligations in respect of the Series H Equipment Notes to the
date of distribution and all other Related Secured Obligations in
respect of Related Series H Equipment Notes then due, shall be
distributed to the Note Holders of Series H and Related Note
Holders of the Related Series H 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 H 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
H Equipment Notes held by such holder, bears to the aggregate
unpaid Original Amount of all Series H 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 H
Equipment Notes then due;
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Original Amount of all Series I Equipment
Notes, and the accrued but unpaid interest and other amounts due
thereon, Make-Whole Amount, if any, with respect to the Series I
Equipment Notes and all other Secured Obligations in respect of
the Series I Equipment Notes to the date of distribution and all
other Related Secured Obligations in respect of Related Series I
Equipment Notes then due, shall be distributed to the Note
Holders of Series I and Related Note Holders of the Related
Series I 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 I 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 I Equipment
Notes held by such holder, bears to the aggregate unpaid Original
Amount of all Series I 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 I Equipment Notes
then due; PROVIDED that if, after giving effect to the foregoing
provisions of this paragraph (iii), (x) any such payments or
amounts remain, (y) Owner or any of its Affiliates is then the
"beneficial owner" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of any Pass Through
Certificates issued by the Class J Pass Through Trust and (z) any
Policy Provider Obligations are then outstanding or thereafter
could become outstanding under the terms of the Policy Provider
Agreement or otherwise and no Policy Provider Default has
occurred and is continuing, then any 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 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 Section 3.03 as and to the extent any Secured
Obligation (excluding any Secured Obligations with respect to the
Series J or Related Series J Equipment Notes) 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
such Secured Obligations (excluding any Secured Obligations with
respect to the Series J or Related Series J Equipment Notes) the
balance, if any, of any such remaining amounts and investment
earnings thereon shall be applied as provided in paragraph (iv)
of clause Third of this Section 3.03; and
(iv) after giving effect to paragraph (iii) above, so much of
such payments or amounts remaining as shall be required to pay in
full the aggregate unpaid Original Amount of all Series J
Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon (other than Make-Whole Amount which shall not
be due and payable) and all other Secured Obligations in respect
of the Series J Equipment Notes (other than Make-Whole Amount) to
the date of distribution and all other Related Secured
Obligations in respect of the Related Series J Equipment Notes
then due, shall be distributed to the Note Holders of Series J
and Related Note Holders of the Related Series J 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 J Equipment Notes
held by each holder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder (other than the
Make-Whole Amount, if any) to the date of distribution and all
other Related Secured Obligations then due in respect of Related
Series J Equipment Notes held by such holder, bears to the
aggregate unpaid Original Amount of all Series J Equipment Notes
held by all such holders plus the accrued but unpaid interest and
other amounts due thereon (other than the Make-Whole Amount) to
the date of distribution and all other Related Secured
Obligations in respect of Related Series J Equipment Notes then
due; and
(v) 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
Fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner.
Except as provided in Section 5.02 with respect to the Series H and
Series I Equipment Notes, 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.
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.
ARTICLE IV
COVENANTS OF THE OWNER
SECTION 4.01. LIENS
The Owner will not directly or indirectly create, incur, assume or
suffer to exist any Lien or with respect to the 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 agreements or pooling agreements or arrangements, in each case
customary in the commercial airline industry and entered into by Owner or such
Permitted Lessee, as the case may be, in the ordinary course of business;
PROVIDED, HOWEVER, that if Owner's title to any such Engine is divested under
any such agreement or arrangement, then such Engine shall be deemed to have
suffered an Event of Loss as of the date of such divestiture, and Owner shall
comply with Section 4.04(e) in respect thereof;
(ii) Deliver or permit any Permitted Lessee to deliver
possession of the Aircraft, Airframe, any Engine or any Part (x) to the
manufacturer thereof or to any third-party maintenance provider for testing,
service, repair, maintenance or overhaul work on the Aircraft, Airframe, any
Engine or any Part, or, to the extent required or permitted by Section 4.04, for
alterations or modifications in or additions to the Aircraft, Airframe or any
Engine or (y) to any Person for the purpose of transport to a Person referred to
in the preceding clause (x);
(iii) Install or permit any Permitted Lessee to install
an Engine on an airframe owned by Owner or such Permitted Lessee, as the case
may be, free and clear of all Liens, except (x) Permitted Liens and those that
do not apply to the Engines, and (y) the rights of third parties under normal
interchange or pooling agreements and arrangements of the type that would be
permitted under Section 4.02(b)(i);
(iv) Install or permit any Permitted Lessee to install
an Engine on an airframe leased to Owner or such Permitted Lessee, or purchased
by Owner or such Permitted Lessee subject to a mortgage, security agreement,
conditional sale or other secured financing arrangement, but only if (x) such
airframe is free and clear of all Liens, except (A) the rights of the parties to
such lease, or any such secured financing arrangement, covering such airframe
and (B) Liens of the type permitted by clause (iii) above and (y) Owner or
Permitted Lessee, as the case may be, shall have received from the lessor,
mortgagee, secured party or conditional seller, in respect of such airframe, a
written agreement (which may be a copy of the lease, mortgage, security
agreement, conditional sale or other agreement covering such airframe), whereby
such Person agrees that it will not acquire or claim any right, title or
interest in, or Lien on, such Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to the Lien of this Trust
Indenture;
(v) Install or permit any Permitted Lessee to install an
Engine on an airframe owned by Owner or such Permitted Lessee, leased to Owner
or such Permitted Lessee, or purchased by Owner or such Permitted Lessee subject
to a conditional sale or other security agreement under circumstances where
neither clause (iii) or (iv) above is applicable; PROVIDED, HOWEVER, that any
such installation shall be deemed an Event of Loss with respect to such Engine,
and Owner shall comply with Section 4.04(e) hereof in respect thereof;
(vi) Transfer or permit any Permitted Lessee to transfer
possession of the Aircraft, Airframe or any Engine to the U.S. Government, in
which event Owner shall promptly notify Mortgagee in writing of any such
transfer of possession and, in the case of any transfer pursuant to CRAF, in
such notification shall identify by name, address and telephone numbers the
Contracting Office Representative or Representatives for the Military Airlift
Command of the United States Air Force to whom notices must be given and to whom
requests or claims must be made to the extent applicable under CRAF;
(vii) Enter into a charter or Wet Lease or other similar
arrangement with respect to the Aircraft or any other aircraft on which any
Engine may be installed (which shall not be considered a transfer of possession
hereunder); PROVIDED THAT the Owner's obligations hereunder shall continue in
full force and effect notwithstanding any such charter or Wet Lease or other
similar arrangement;
(viii) So long as no Event of Default shall have
occurred and be continuing, and subject to the provisions of the immediately
following paragraph, enter into a lease with respect to the Aircraft, Airframe
or any Engine 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 (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).
(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. 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
(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 and (C) application for registration of the Replacement Airframe in
accordance with Section 4.02(e) shall have been duly made with the FAA or other
applicable Aviation Authority and the Owner shall have authority to operate the
Replacement Airframe;
(v) the Mortgagee at the expense of the Owner, shall
have received (acting directly or by authorization to its special counsel) (A)
an opinion of counsel, addressed to the Mortgagee, to the effect that the
Replacement Airframe and Replacement Engine, if any, has or have duly been made
subject to the Lien of this Trust Indenture, and Mortgagee will be entitled to
the benefits of Section 1110 with respect to the Replacement Airframe, provided
that such opinion with respect to Section 1110 need not be delivered to the
extent that immediately prior to such replacement the benefits of Section 1110
were not, solely by reason of a change in law or court interpretation thereof,
available to Mortgagee, and (B) an opinion of Owner's aviation law counsel
reasonably satisfactory to and addressed to Mortgagee as to the due registration
of any such Replacement Airframe and the due filing for recordation of each
Trust Indenture Supplement with respect to such Replacement Airframe or
Replacement Engine under the Act or such other applicable law of the
jurisdiction other than the United States in which the Replacement Airframe is
to be registered in accordance with Section 4.02(e), as the case may be; and
(vi) the Owner shall have furnished to the Mortgagee a
certificate of a qualified aircraft engineer (who may be an employee of Owner)
certifying that the Replacement Airframe and Replacement Engines, if any, have a
value and utility and remaining useful life (without regard to hours and cycles
remaining until overhaul) at 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.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE
SECTION 5.01. EVENT OF DEFAULT
"Event of Default" means any of the following events (whatever the
reason for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(i) the failure of the Owner to pay (i) principal of,
interest on, Break Amount, if any, 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 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, Break Amount, if any, with respect thereto,
Make-Whole Amount, if any, with respect to the Series H and Series I Equipment
Notes (but not with respect to any other Equipment Notes) 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, Break Amount, if any, with respect thereto, Make-Whole Amount, if any,
with respect to the Series H and Series I Equipment Notes (but not with respect
to any other Equipment Notes) 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, Break Amount, if any, Make-Whole Amount, if any, with
respect to the Series H and Series I Equipment Notes (but not with respect to
any other Equipment Notes), and other amounts due thereunder, shall immediately
become due and payable without presentment, demand, protest or notice, all of
which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement (or its designee) is
a Note Holder, the Mortgagee will not be authorized or empowered to acquire
title to any Collateral or take any action with respect to any Collateral so
acquired by it if such acquisition or action would cause any Trust to fail to
qualify as a "grantor trust" for federal income tax purposes.
SECTION 5.03. RETURN OF AIRCRAFT, ETC.
(a) If an Event of Default shall have occurred and be
continuing and the Equipment Notes have been accelerated, at the request of the
Mortgagee, the Owner shall promptly execute and deliver to the Mortgagee such
instruments of title and other documents as the Mortgagee may deem necessary or
advisable to enable the Mortgagee or an agent or representative designated by
the Mortgagee, at such time or times and place or places as the Mortgagee may
specify, to obtain possession of all or any part of the Collateral to which the
Mortgagee shall at the time be entitled hereunder. If the Owner shall for any
reason fail to execute and deliver such instruments and documents after such
request by the Mortgagee, the Mortgagee may (i) obtain a judgment conferring on
the Mortgagee the right to immediate possession and requiring the Owner to
execute and deliver such instruments and documents to the Mortgagee, to the
entry of which judgment the Owner hereby specifically consents to the fullest
extent permitted by Law, and (ii) pursue all or part of such Collateral wherever
it may be found and may enter any of the premises of Owner wherever such
Collateral may be or be supposed to be and search for such Collateral and take
possession of and remove such Collateral. All expenses of obtaining such
judgment or of pursuing, searching for and taking such property shall, until
paid, be secured by the Lien of this Trust Indenture.
(b) Upon every such taking of possession, the Mortgagee may,
from time to time, at the expense of the Collateral, make all such expenditures
for maintenance, use, operation, storage, insurance, leasing, control,
management, disposition, modifications or alterations to and of the Collateral,
as it may deem proper. In each such case, the Mortgagee shall have the right to
maintain, use, operate, store, insure, lease, control, manage, dispose of,
modify or alter the Collateral and to exercise all rights and powers of the
Owner relating to the Collateral, as the Mortgagee shall deem best, including
the right to enter into any and all such agreements with respect to the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modification or alteration of the Collateral or any part thereof as
the Mortgagee may determine, and the Mortgagee shall be entitled to collect and
receive directly all rents, revenues and other proceeds of the Collateral and
every part thereof, without prejudice, however, to the right of the Mortgagee
under any provision of this Trust Indenture to collect and receive all cash held
by, or required to be deposited with, the Mortgagee hereunder. Such rents,
revenues and other proceeds shall be applied to pay the expenses of the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, improvement, modification or alteration of the Collateral and of
conducting the business thereof, and to make all payments which the Mortgagee
may be required or may elect to make, if any, for taxes, assessments, insurance
or other proper charges upon the Collateral or any part thereof (including the
employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner), and all other payments
which the Mortgagee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Mortgagee, and of all persons 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, Break 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.
ARTICLE VI
DUTIES OF THE MORTGAGEE
SECTION 6.01. NOTICE OF EVENT OF DEFAULT
If the Mortgagee shall have Actual Knowledge of an Event of Default
or of a Default arising from a failure to pay any installment of principal and
interest on any Equipment Note, the Mortgagee shall give prompt written notice
thereof to each Note Holder. Subject to the terms of Sections 5.06, 6.02 and
6.03 hereof, the Mortgagee shall take such action, or refrain from taking such
action, with respect to such Event of Default or Default (including with respect
to the exercise of any rights or remedies hereunder) as the Mortgagee shall be
instructed in writing by a Majority in Interest of Note Holders. Subject to the
provisions of Section 6.03, if the Mortgagee shall not have received
instructions as above provided within 20 days after mailing notice of such Event
of Default to the Note Holders, the Mortgagee may, subject to instructions
thereafter received pursuant to the preceding provisions of this Section 6.01,
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with respect to such Event of Default
or Default as it shall determine advisable in the best interests of the Note
Holders; PROVIDED, HOWEVER, that the Mortgagee may not sell the Aircraft or any
Engine without the consent of a Majority in Interest of Note Holders. For all
purposes of this Trust Indenture, in the absence of Actual Knowledge on the part
of the Mortgagee, the Mortgagee shall not be deemed to have knowledge of a
Default or an Event of Default (except, the failure of Owner to pay any
installment of principal or interest within one Business Day after the same
shall become due, which failure shall constitute knowledge of a Default) unless
notified in writing by the Owner or one or more Note Holders.
SECTION 6.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND
LIMITATIONS
Subject to the terms of Sections 5.02(a), 5.06, 6.01 and 6.03
hereof, upon the written instructions at any time and from time to time of a
Majority in Interest of Note Holders, the Mortgagee shall, subject to the terms
of this Section 6.02, take such of the following actions as may be specified in
such instructions: (i) give such notice or direction or exercise such right,
remedy or power hereunder as shall be specified in such instructions and (ii)
give such notice or direction or exercise such right, remedy or power hereunder
with respect to any part of the Collateral as shall be specified in such
instructions; it being understood that without the written instructions of a
Majority in Interest of Note Holders, the Mortgagee shall not, except as
provided in Section 6.01, approve any such matter as satisfactory to the
Mortgagee.
The Mortgagee will execute and the Owner will file such continuation
statements with respect to financing statements relating to the security
interest created hereunder in the Collateral as may be specified from time to
time in written instructions of a Majority in Interest of Note Holders (which
instructions shall be accompanied by the form of such continuation statement so
to be filed). The Mortgagee will furnish to each Note Holder, promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates and other instruments furnished to the Mortgagee
hereunder.
SECTION 6.03. INDEMNIFICATION
The Mortgagee shall not be required to take any action or refrain
from taking any action under Section 6.01 (other than the first sentence
thereof), 6.02 or Article V hereof unless the Mortgagee shall have been
indemnified to its reasonable satisfaction against any liability, cost or
expense (including counsel fees) which may be incurred in connection therewith
pursuant to a written agreement with one or more Note Holders. The Mortgagee
agrees that it shall look solely to the Note Holders for the satisfaction of any
indemnity (except expenses for foreclosure of the type referred to in clause
"First" of Section 3.03 hereof) owed to it pursuant to this Section 6.03. The
Mortgagee shall not be under any obligation to take any action under this Trust
Indenture or any other Operative Agreement and nothing herein or therein shall
require the Mortgagee to expend or risk its own funds or otherwise incur the
risk of any financial liability in the performance of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it (the written indemnity of any Note Holder who is a QIB, signed by
an authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Mortgagee shall be accepted as reasonable assurance of
adequate indemnity). The Mortgagee shall not be required to take any action
under Section 6.01 (other than the first sentence thereof) or 6.02 or Article V
hereof, nor shall any other provision of this Trust Indenture or any other
Operative Agreement be deemed to impose a duty on the Mortgagee to take any
action, if the Mortgagee shall have been advised by counsel that such action is
contrary to the terms hereof or is otherwise contrary to Law.
SECTION 6.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR
INSTRUCTIONS
The Mortgagee shall not have any duty or obligation to use, operate,
store, lease, control, manage, sell, dispose of or otherwise deal with the
Aircraft or any other part of the Collateral, or to otherwise take or refrain
from taking any action under, or in connection with, this Trust Indenture or any
part of the Collateral, except as expressly provided by the terms of this Trust
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Trust Indenture; and no implied duties or obligations shall be
read into this Trust Indenture against the Mortgagee. The Mortgagee agrees that
it will in its individual capacity and at its own cost and expense (but without
any right of indemnity in respect of any such cost or expense under Section 8.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Collateral which result from claims
against it in its individual capacity not related to the 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.
ARTICLE VII
THE MORTGAGEE
SECTION 7.01. ACCEPTANCE OF TRUSTS AND DUTIES
The Mortgagee accepts the duties hereby created and applicable to it
and agrees to perform the same but only upon the terms of this Trust Indenture
and agrees to receive and disburse all monies constituting part of the
Collateral in accordance with the terms hereof. The Mortgagee, in its individual
capacity, shall not be answerable or accountable under any circumstances, except
(i) for its own willful misconduct or gross negligence (other than for the
handling of funds, for which the standard of accountability shall be willful
misconduct or negligence), (ii) as provided in the fourth sentence of Section
2.04(a) hereof and the last sentence of Section 6.04 hereof, and (iii) from the
inaccuracy of any representation or warranty of the Mortgagee (in its individual
capacity) in the Participation Agreement or 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.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. SCOPE OF INDEMNIFICATION
The Mortgagee shall be indemnified by the Owner to the extent and in
the manner provided in Section 8 of the Participation Agreement.
ARTICLE IX
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. RESIGNATION OF MORTGAGEE; APPOINTMENT OF SUCCESSOR
(a) The Mortgagee or any successor thereto may resign at any
time without cause by giving at least 30 days' prior written notice to the Owner
and each Note Holder, such resignation to be effective upon the acceptance of
the trusteeship by a successor Mortgagee. In addition, a Majority in Interest of
Note Holders may at any time (but only with the consent of Owner, which consent
shall not be unreasonably withheld, except that such consent shall not be
necessary if an Event of Default is continuing) remove the Mortgagee without
cause by an instrument in writing delivered to the Owner and the Mortgagee, and
the Mortgagee shall 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.
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.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 10.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS
(a) The Mortgagee agrees with the Note Holders that it shall
not enter into any amendment, waiver or modification of, supplement or consent
to this Trust Indenture, or any other Operative Agreement to which it is a
party, unless such supplement, amendment, waiver, modification or consent is
consented to in writing by a Majority in Interest of Note Holders, but upon the
written request of a Majority in Interest of Note Holders, the Mortgagee shall
from time to time enter into any such supplement or amendment, or execute and
deliver any such waiver, modification or consent, as may be specified in such
request and as may be (in the case of any such amendment, supplement or
modification), to the extent such agreement is required, agreed to by the Owner
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, the Policy Provider 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," "Break Amount," "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, Break Amount, if any, 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 or Policy
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 or Policy 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 H Equipment Notes or issuance of Series
J Equipment Notes and pass through certificates issued by any pass through trust
that acquires such Equipment Notes and to make changes relating thereto,
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.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. TERMINATION OF TRUST INDENTURE
Upon (or at any time after) payment in full of the Original Amount
of, Make-Whole Amount, if any, Break Amount, if any, and interest on and all
other amounts due under all Equipment Notes and provided that there shall then
be no other Secured Obligations due to the Indenture Indemnitees, the Note
Holders and the Mortgagee hereunder or under the Participation Agreement, other
Operative Agreement or any Related Indenture, the Owner shall direct the
Mortgagee to execute and deliver to or as directed in writing by the Owner an
appropriate instrument releasing the Aircraft and the Engines and all other
Collateral from the Lien of the Trust Indenture and the Mortgagee shall execute
and deliver such instrument as aforesaid; PROVIDED, HOWEVER, that this Trust
Indenture and the trusts created hereby shall earlier terminate and this Trust
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Mortgagee of all property constituting part of the Collateral
and the final distribution by the Mortgagee of all monies or other property or
proceeds constituting part of the Collateral in accordance with the terms
hereof. Except as aforesaid otherwise provided, this Trust Indenture and the
trusts created hereby shall continue in full force and effect in accordance with
the terms hereof.
SECTION 11.02. NO LEGAL TITLE TO COLLATERAL IN NOTE HOLDERS
No holder of an Equipment Note shall have legal title to any part of
the Collateral. No transfer, by operation of law or otherwise, of any Equipment
Note or other right, title and interest of any Note Holder in and to the
Collateral or hereunder shall operate to terminate this Trust Indenture or
entitle such holder or any successor or transferee of such holder to an
accounting or to the transfer to it of any legal title to any part of the
Collateral.
SECTION 11.03. SALE OF AIRCRAFT BY MORTGAGEE IS BINDING
Any sale or other conveyance of the Collateral, or any part thereof
(including any part thereof or interest therein), by the Mortgagee made pursuant
to the terms of this Trust Indenture shall bind the Note Holders and shall be
effective to transfer or convey all right, title and interest of the Mortgagee,
the Owner and such holders in and to such Collateral or part thereof. No
purchaser or other grantee shall be required to inquire as to the authorization,
necessity, expediency or regularity of such sale or conveyance or as to the
application of any sale or other proceeds with respect thereto by the Mortgagee.
SECTION 11.04. TRUST INDENTURE FOR BENEFIT OF OWNER, MORTGAGEE, NOTE
HOLDERS AND THE OTHER 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, 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.
CONTINENTAL AIRLINES, INC.
By:
-----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Mortgagee
By:
-----------------------------------
Name:
Title:
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly
provided, a reference to:
(i) 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;
(ii) words importing the plural include the singular and words importing
the singular include the plural;
(iii) 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);
(iv) 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;
(v) 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;
(vi) 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
(vii) 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.
(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
"ABOVE-CAP LIQUIDITY AGREEMENT" means the ISDA Master Agreement, the
Schedule to such ISDA Master Agreement and the Class G-1 Above-Cap Liquidity
Confirmation that supplements such ISDA Master Agreement, each dated as of the
Issuance Date and between the Above-Cap Liquidity Provider and the Subordination
Agent, on behalf of the Class G-1 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 instrument shall be effective
unless consented to by Owner.
"ABOVE-CAP LIQUIDITY PROVIDER" means Xxxxxxx Xxxxx Capital Services,
Inc., a Delaware corporation, as Above-Cap Liquidity Provider under the
Above-Cap Liquidity Agreement.
"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.
"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.
"AMORTIZATION AMOUNT" means, with respect to any Equipment Note, as
of any Payment Date, the amount determined by multiplying the percentage set
forth opposite such Payment Date on the Amortization Schedule by the Original
Amount of such Equipment Note.
"AMORTIZATION SCHEDULE" means, with respect to each Equipment Note,
the amortization schedule for such Equipment Note delivered pursuant to Section
2.02 of the Trust Indenture.
"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.
"APPLICABLE MARGIN" is defined in Schedule 3 to the Participation
Agreement.
"APPRAISER" means a firm of internationally recognized, independent
aircraft appraisers.
"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.
"BENEFICIAL OWNER" when used in relation to an Equipment Note means
a Person that, by reason of direct ownership, contract, share ownership or
otherwise, has the right to receive or participate in receiving, directly or
indirectly, payments of principal, interest or Make-Whole Amount in respect of
such Equipment Note; PROVIDED that a Person shall not be deemed to be a
Beneficial Owner of an Equipment Note solely because another Person in which
such a Person owns common stock or other equity securities is a registered
holder or Beneficial Owner of such Equipment Note unless such Person is an
Affiliate of such other Person.
"BILLS OF SALE" means the FAA Xxxx of Sale and the Aircraft Xxxx of
Sale.
"BREAK AMOUNT" means, as of any date of payment, redemption or
acceleration of any Floating Rate Equipment Note (the "APPLICABLE DATE"), an
amount determined by the Reference Agent on the date that is two Business Days
prior to the Applicable Date pursuant to the formula set forth below; PROVIDED,
HOWEVER, that no Break Amount will be payable (x) if the Break Amount, as
calculated pursuant to the formula set forth below, is equal to or less than
zero, (y) on or in respect of any Applicable Date that is a Payment Date (or, if
such Payment Date is not a Business Day, the next succeeding Business Day) or
(z) with respect to any Series H Equipment Note if, as of any date that the
Break Amount would otherwise become payable, the Initial Purchaser and/or its
Affiliates are the sole Certificate Owners of all of the outstanding Offered
Certificates.
Break Amount = Z-Y
Where:
X = with respect to any applicable Interest Period, the sum of (i)
the amount of the outstanding principal amount of such Floating
Rate Equipment Note as of the first day of the then applicable
Interest Period plus (ii) interest payable thereon during such
entire Interest Period at then effective LIBOR.
Y = X, discounted to present value from the last day of the then
applicable Interest Period to the Applicable Date, using then
effective LIBOR as the discount rate.
Z = X, discounted to present value from the last day of the then
applicable Interest Period to the Applicable Date, using a rate
equal to the applicable London interbank offered rate (or, in
the case of the Series H Equipment Notes, the London interbank
bid rate) for a period commencing on the Applicable Date and
ending on the last day of the then applicable Interest Period,
determined by the Reference Agent as of two Business Days prior
to the Applicable Date as the discount rate.
"BUSINESS DAY" means any day (i) 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 and (ii) if any
Floating Rate Equipment Note is then outstanding, which is also a day for
trading by and between banks in the London interbank Eurodollar market.
"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.ss.40102(a)(15).
"CLASS G-1 PASS THROUGH TRUST" means the Continental Airlines Pass
Through Trust 2002-1G-1.
"CLASS G-2 PASS THROUGH TRUST" means the Continental Airlines Pass
Through Trust 2002-2G-2.
"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, 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 two Deposit Agreements between
the Escrow Agent and the Depositary, dated as of the Issuance Date, which relate
to either the Class G-1 or Class G-2 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 First Boston, 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 two 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 either the Class G-1 or
Class G-2 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 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.
"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.
"FIXED RATE EQUIPMENT NOTE" means the Series G-2 and Series I
Equipment Notes.
"FLOATING RATE EQUIPMENT NOTE" means the Series G-1 and Series H
Equipment Notes.
"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 and the Policy Provider, (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 and the Policy 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.
"INITIAL PURCHASER" is defined in the Note Purchase Agreement.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Providers, the Policy Provider
and the Subordination Agent, 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, such Intercreditor Agreement shall be
effective unless consented to by Owner.
"INTEREST PERIOD" means (i) in the case of the first Interest
Period, the period commencing on (and including) the Closing Date and ending on
(but excluding) the first Payment Date following the Closing Date and (ii) in
the case of each subsequent Interest Period, the period commencing on (and
including) the last day of the immediately preceding Interest Period, and ending
on (but excluding) the next Payment Date.
"INTEREST RATE DETERMINATION DATE" means, with respect to any
Interest Period, the second Business Day prior to the first day of such Interest
Period.
"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 March 25, 2002.
"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.
"LETTER AGREEMENT TO THE CERTIFICATE PURCHASE AGREEMENT" means the
letter agreement, dated as of the Issuance Date, among the Owner, Mortgagee and
the Initial Purchasers (as defined in the Note Purchase Agreement), which states
that it is the Letter Agreement to the Certificate Purchase Agreement for
purposes of the Operative Indentures.
"LIBOR" means, with respect to any period, LIBOR for such period as
determined pursuant to the Reference Agency Agreement.
"LIEN" means any mortgage, pledge, lien, charge, claim, encumbrance,
lease or security interest affecting the title to or any interest in property.
"LIQUIDITY FACILITIES" means collectively, the Above-Cap Liquidity
Agreement and the Primary Liquidity Facilities.
"LIQUIDITY PROVIDERS" means, together, the Above-Cap Liquidity
Provider and the Primary Liquidity Provider.
"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 (i) the Series G-1
Equipment Notes, the Series G-1 Make-Whole Premium, (ii) the Series H Equipment
Notes, the Series H Make-Whole Amount, (iii) the Series I Equipment Notes, the
Series I Make-Whole Amount and (iv) the Series G-2 Equipment Notes in connection
with a redemption pursuant to Section 2.11 of this Trust Indenture, 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 quarterly basis on each Payment Date (assuming a
360-day year of twelve 30-day months) using a discount rate equal to the
Treasury Yield 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 quarterly 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 on the most recent H.15(519), such
weekly average yield to maturity as published in such H.15(519). "H.15(519)"
means the weekly statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal Reserve System.
The date of determination of a Make-Whole Amount for the Series G-2 Equipment
Notes 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. No Make-Whole Amount shall be payable with respect
to the Series G-1 Equipment Notes.
"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.
"NET WORTH" means, for any person, the excess of its total assets
over its total liabilities.
"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.
"OFFERED CERTIFICATES" means the Pass Through Certificates issued by
the Class H Pass Through Trust and the Class I Pass Through Trust.
"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 Reference Agency Agreement, the Liquidity
Facilities, the Policy, the Policy Provider Agreement and the Fee Letters
referred to in Section 2.03 of each of the Primary 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 four separate pass through
trusts created under the Pass Through Trust Agreements.
"PASS THROUGH TRUST AGREEMENT" means each of the four 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 February 15, May 15, August 15 and
November 15, 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.
"POLICY" means the certificate guaranty insurance policy issued
pursuant to the Policy Provider Agreement.
"POLICY PROVIDER" means Ambac Assurance Corporation.
"POLICY PROVIDER AGREEMENT" means the Insurance and Indemnity
Agreement among the Subordination Agent, Owner and the Policy Provider, dated as
of the Issuance Date; PROVIDED that no amendment, modification or supplement to,
or substitution or replacement of, such Agreement shall be effective for
purposes of any obligation of Owner, unless consented to by Owner.
"POLICY PROVIDER DEFAULT" is defined in the Intercreditor Agreement.
"POLICY PROVIDER OBLIGATIONS" means all reimbursement and other
amounts, including, without limitation, fees and indemnities due to the Policy
Provider under the Policy Provider Agreement.
"PRIMARY LIQUIDITY FACILITIES" means the two Revolving Credit
Agreements (consisting of a separate Revolving Credit Agreement with the Primary
Liquidity Provider with respect to the Class G-1 Pass Through Trust and the
Class G-2 Pass Through Trust) between the Subordination Agent, as borrower, and
the Primary 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 Primary Liquidity
Facility shall be effective unless consented to by Owner.
"PRIMARY LIQUIDITY PROVIDER" means Landesbank Hessen-Thuringen
Girozentrale, a public law banking institution organized under the laws of
Germany, as "Class G-1 Liquidity Provider" and "Class G-2 Liquidity Provider"
(as such terms are defined in the Intercreditor Agreement).
"PURCHASE AGREEMENT" means the Purchase Agreement No. [____], dated
[_________], between Airframe Manufacturer and Owner (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.
"REFERENCE AGENT" is defined in the Reference Agency Agreement.
"REFERENCE AGENCY AGREEMENT" means the Reference Agency Agreement
dated as of the Issuance Date among WTC, as reference agent thereunder, the
Subordination Agent and Owner.
"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 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,
the Related Make-Whole Amount, if any, due with respect thereto in accordance
with such Related Indenture, the "Break Amount" (as defined in such Related
Indenture), if any, due thereon as of such date and all other amounts due and
payable by the Owner under such Related Indenture (including without limitation
under the third paragraph of Section 2.02 of such Related Indenture).
"RELATED SERIES G-1 EQUIPMENT NOTE" means a "Series G-1 Equipment
Note", as defined in each Related Indenture.
"RELATED SERIES G-2 EQUIPMENT NOTE" means a "Series G-2 Equipment
Note", as defined in each Related Indenture.
"RELATED SERIES H EQUIPMENT NOTE" means a "Series H Equipment Note",
as defined in each Related Indenture.
"RELATED SERIES I EQUIPMENT NOTE" means a "Series I Equipment Note",
as defined in each Related Indenture.
"RELATED SERIES J EQUIPMENT NOTE" means a "Series J Equipment Note",
as defined in each 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 G-1, Series G-2, Series H, Series I or
Series J.
"SERIES G-1" or "SERIES G-1 EQUIPMENT NOTES" means Equipment Notes
issued under the Trust Indenture and designated as "Series G-1" thereunder, in
the Original Amount and maturities and bearing interest as specified in Schedule
I to the Trust Indenture under the heading "Series G-1."
"SERIES G-1 MAKE-WHOLE PREMIUM" means, with respect to any Series
G-1 Equipment Note redeemed pursuant to Section 2.11 of this Trust Indenture,
the following percentage of the principal amount of such Equipment Note: (i) if
redeemed before the first anniversary of the Issuance Date, 1.5%; (ii) if
redeemed on or after such first anniversary and before the second anniversary of
the Issuance Date, 1.0%; and (iii) if redeemed on or after such second
anniversary and before the third anniversary of the Issuance Date, 0.5%.
"SERIES G-2" or "SERIES G-2 EQUIPMENT NOTES" means Equipment Notes
issued under the Trust Indenture and designated as "Series G-2" thereunder, in
the Original Amount and maturities and bearing interest as specified in Schedule
I to the Trust Indenture under the heading "Series G-2."
"SERIES H" or "SERIES H EQUIPMENT NOTES" means Equipment Notes
issued under the Trust Indenture and designated as "Series H" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series H."
"SERIES H MAKE-WHOLE AMOUNT" means, so long as the Initial Purchaser
and/or its Affiliates are the sole Certificate Owners of all of the outstanding
Offered Certificates, an amount with respect to a Series H Equipment Note equal
to the excess, if any, of (i) the present value of the remaining scheduled
payments of principal of such Series H Equipment Note and interest that would
have accrued on such Series H Equipment Note from and after the date on which
such Equipment Note becomes due in full prior to its scheduled maturity date
(based on the scheduled amortization of such Equipment Note and the Debt Rate
applicable thereto on such early maturity date), discounted on a quarterly basis
at a rate per annum of (x) LIBOR utilized in determining such Debt Rate plus (y)
the Applicable Margin for the Series H Equipment Notes minus (z) 1.15% over (ii)
the present value referred to in the preceding clause (i), but instead
discounted at a rate per annum equal to the Debt Rate referred to therein,
PROVIDED that if, as of any date that the Series H Make-Whole Amount would
otherwise become payable, the Initial Purchaser and/or its Affiliates are not
the sole Certificate Owners of all of the outstanding Offered Certificates, then
no Series H Make-Whole Amount shall be payable by the Owner.
"SERIES I" or "SERIES I EQUIPMENT NOTES" means Equipment Notes
issued under the Trust Indenture and designated as "Series I" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series I."
"SERIES I MAKE-WHOLE AMOUNT" means an amount with respect to a
Series I Equipment Note equal to the excess, if any, of (i) the present value of
the remaining scheduled payments of principal of such Series I Equipment Note
and interest that would have accrued on such Series I Equipment Note from and
after the date on which such Equipment Note becomes due in full prior to its
scheduled maturity date (based on the scheduled amortization of such Equipment
Note and its Debt Rate) discounted on a quarterly basis at a rate per annum of
8.75% over (ii) the present value referred to in the preceding clause (i), but
instead discounted at a rate per annum of 9.9%.
"SERIES J" or "SERIES J EQUIPMENT NOTES" means Equipment Notes
issued under the Trust Indenture and designated as "Series J" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series J" (or, if the Series J are
issued after the Closing Date, as specified in an amendment to the Trust
Indenture at the time of issuance of the Series J).
"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, (d) the Policy Provider and (e) 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.
"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 [___] |
|-----------------------------|
ANNEX B
INSURANCE
[OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
EXHIBIT A
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:
AIRFRAME
One airframe identified as follows:
FAA REGISTRATION MANUFACTURER'S
MANUFACTURER MODEL NUMBER SERIAL NUMBER
--------------------- ------------ ------------------ ----------------
The Boeing Company
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
MANUFACTURER MANUFACTURER'S MODEL SERIAL NUMBER
--------------------- ------------------------ -----------------------
together with all of Owner's right, title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.
Together with all of Owner's right, title and interest in and to (a)
all Parts of whatever nature, which from time to time are included within the
definition of "Airframe" or "Engine", whether now owned or hereafter acquired,
including all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and Engines (other
than additions, improvements, accessions and accumulations which constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment excluded from the definition of Parts) and (b) all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, its successors and assigns, in trust for the equal and proportionate
benefit and security of the Note Holders and the 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:
SCHEDULE I
ORIGINAL AMOUNT INTEREST RATE
---------------------- ----------------------------------
[OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
