PLEDGE AND ESCROW
AGREEMENT
by and among
JETBLUE AIRWAYS CORPORATION, as
Pledgor,
WILMINGTON TRUST COMPANY, as
Trustee,
and
WILMINGTON TRUST COMPANY, as Escrow
Agent
Dated as of June 4,
2008
PLEDGE AND ESCROW
AGREEMENT
THIS PLEDGE AND ESCROW
AGREEMENT (this
“ Agreement
”), dated as of June 4, 2008, is
by and among JetBlue Airways Corporation (the “
Company ”), as pledgor, Wilmington Trust Company, as
trustee under the Indenture referred to below (the “
Trustee ”), and Wilmington Trust Company, in its
capacity as securities intermediary and escrow agent (the
“ Escrow
Agent ”).
RECITALS
The Company and the Trustee have
entered into an Indenture dated as of March 16, 2005 (the
“ Original
Indenture ”) between
the Company and the Trustee, as supplemented by the Second
Supplemental Indenture thereto dated as of June 4, 2008 (the
“ Supplemental
Indenture ”) between
the Company and the Trustee (the Original Indenture, as
supplemented by the Supplemental Indenture, as the same may be
further supplemented and amended from time to time, the
“ Indenture
”) pursuant to which the Company
will issue $100,625,000 in aggregate principal amount of its 5.50%
Convertible Debentures due 2038 (series A) (the “
Debentures ”).
The Company desires to establish an
escrow account with the Escrow Agent into which certain sums, as
fully described in Section 2(a) below, will be, simultaneously with
the original issuance of the Debentures (or simultaneously with the
issuance of any Debentures issuable pursuant to Section 2.02 of the
Supplemental Indenture), deposited by the Company to be held and
distributed in accordance with the terms and conditions set forth
herein, and the Escrow Agent is willing to establish such an
account and to accept such funds in accordance with the terms
hereinafter set forth.
Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the
Indenture.
AGREEMENT
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1 . Establishment of Escrow Account
. The Escrow Agent shall establish on
the date hereof and maintain in the Trustee’s name a
“securities account” (within the meaning of
Article 8 of the Uniform Commercial Code of the State of New
York as in effect from time to time (the “
New York UCC
”)) (the “
Escrow Account
”) to which there shall be
immediately credited and held amounts received by the Escrow Agent
from the Company in accordance with Section 3 hereof. The
funds credited to the Escrow Account shall be applied and disbursed
only as provided herein. The Escrow Agent shall segregate the funds
credited to the Escrow Account from its other funds held as an
agent or in trust. The Escrow Agent shall treat all property held
by it in the Escrow Account as “financial assets” (as
defined in Section 8-l02(a)(9) of the New York UCC) in
accordance with Section 8-501 (or successor section) of the
New York UCC.
SECTION 2 . Deposit To The Escrow Account;
Investments .
(a)(i) Simultaneously with the
original issuance of the Debentures, the Company shall deliver to
the Escrow Agent for deposit in the Escrow Account cash in the
amount of $15,865,208 (the “ Initial Escrow Funds ”).
(ii) If Debentures are issued pursuant
to the Company’s election to issue Additional Debentures
pursuant to Section 2.02 of the Supplemental Indenture,
simultaneously with the issuance of such Debentures the Company
shall deliver to the Escrow Agent for deposit in the Escrow Account
additional cash in an amount equal to the Scheduled Interest
Payments that are to be payable in respect of such Debentures
(together with the Initial Escrow Funds, the “Escrow Funds” ).
(iii) All amounts to be deposited with
the Escrow Agent shall be transferred by wire transfer of
immediately available funds to the following account:
Wilmington Trust Company
ABA No. 031100092
Account No. 088934-000
Acct Name: JetBlue Escrow Ser A
Att: Mary St. Amand
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(b) Promptly following the deposit of
any funds into the Escrow Account, the Escrow Agent shall invest
such funds in the name of the Trustee in Permitted Money Market
Securities as instructed by the Company. For purposes of this
Agreement, “ Permitted
Money Market Securities ” shall mean money market securities issued
by Permitted Money Market Funds. “Permitted Money Market
Fund” means any registered investment company that meets the
conditions of paragraphs (c)(2), (c)(3) and (c)(4) of Rule 2a-7
under the Investment Company Act of 1940, as amended, that invests
exclusively in securities of the U.S. government, securities of
government-sponsored enterprises created by the U.S. Congress and
privately issued money market securities that have been rated by at
least one “nationally recognized statistical rating
organization” (as that term is used in Section 15E of the
Securities Exchange Act of 1934, as amended) and received the
highest credit rating (currently A1 in the case of Standard &
Poor’s Ratings Service and P1 in the case of Moody’s
Investor Service, Inc.) from each nationally recognized statistical
rating organization that has rated them. Promptly following the
deposit of any funds into the Escrow Account, the Company shall
provide written instructions to the Escrow Agent as to the specific
Permitted Money Market Securities in which funds are to be invested
and until such instructions are given by the Company, the Escrow
Agent shall not invest such funds. All such amounts shall remain so
invested until the close of business on the Business Day prior to
any withdrawal by the Escrow Agent pursuant to Section 4
hereof. The Escrow Agent shall not be liable for any losses
resulting from any depreciation in the market value of such
investments.
SECTION 3 . Security Interest .
(a) Pledge and Assignment. As security for the Secured Obligations (as
defined below), the Company hereby irrevocably pledges, assigns and
grants to the Trustee, for the equal and ratable benefit of the
Holders of the Debentures, a first priority continuing security
interest in, and control of, all of the Company’s right,
title and interest in and to all of the following whether now owned
or existing or hereafter acquired or created (collectively, the
“ Collateral ”):
(i) the Escrow Account, all security
entitlements from time to time carried in the Escrow Account, all
funds from time to time held in the Escrow Account, including,
without limitation, the Escrow Funds and all certificates and
instruments, if any, from time to time, representing or evidencing
the Escrow Account or the Escrow Funds;
(ii) all investments of funds in the
Escrow Account, all of which shall constitute Permitted Money
Market Securities, and whether held by or registered in the name of
the Escrow Agent or any nominee, all certificates and instruments,
if any, from time to time representing or evidencing any such
Permitted Money Market Securities and all security entitlements to
such Permitted Money Market Securities;
(iii) all promissory notes,
certificates of deposit, deposit accounts, checks and other
instruments evidencing Permitted Money Market Securities from time
to time hereafter delivered to or otherwise possessed by the Escrow
Agent, for or on behalf of the Company, in substitution for or in
addition to any or all of the then existing Collateral;
(iv) all interest, dividends, cash,
instruments, securities and other properties from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of the then existing Collateral;
and
(v) all proceeds of the
foregoing.
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The Trustee hereby appoints the Escrow
Agent to act as the Trustee’s agent, on behalf of the Holders
of the Debentures, for purposes of perfecting the foregoing pledge,
assignment and security interest in the Collateral, and the Escrow
Agent hereby accepts such appointment. For so long as the foregoing
pledge, assignment and security interest remains in effect, the
Escrow Agent hereby waives any right of set off or banker’s
lien that it, in its individual capacity or in its capacity as an
agent for Persons other than the Trustee and the Holders of the
Debentures, may have with respect to any or all of the
Collateral.
(b) Secured Obligations. This Agreement secures the due and punctual
payment and performance of all obligations of the Company, whether
now or hereafter existing, under the Debentures, the Indenture and
this Agreement, including, without limitation, interest and
premium, if any, accrued on the Debentures after the commencement
of a bankruptcy, reorganization or similar proceeding involving the
Company to the extent permitted by applicable law (collectively,
the “ Secured
Obligations ”).
(c) Delivery of Collateral . All items of Collateral (other than the Escrow
Account itself) shall be credited to the Escrow Account. In
furtherance of the foregoing (x) all certificates or instruments,
if any, representing or evidencing all or any portion of the
Collateral shall be held by the Escrow Agent on behalf of the
Trustee pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments
of transfer or assignments in blank and (y) any uncertificated
securities shall be registered in the name of the Escrow Agent or
its nominee. In no event will any item of Collateral be registered
in the name of, payable to the order of, or specially indorsed to
any person other than the Escrow Agent or its nominee, unless such
item has been indorsed to the Escrow Agent or in blank. The Escrow
Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing all or any portion of the
Collateral for certificates or instruments of smaller or larger
denominations in the same aggregate amount.
(d) Maintaining the Escrow Account.
So long as this Agreement is in full
force and effect:
(i) subject to the other terms and
conditions of this Agreement, all Collateral held by the Escrow
Agent pursuant to this Agreement shall be held in the Escrow
Account, which shall be subject to the exclusive dominion and
control of the Trustee for the benefit of the Trustee and the equal
and ratable benefit of the Holders of the Debentures;
(ii) the Escrow Account and all
Collateral from time to time therein shall remain segregated from
all other funds or other property otherwise held by the Trustee or
the Escrow Agent, as applicable;
(iii) all amounts (including, without
limitation, any Escrow Funds or interest on or other proceeds of
the Escrow Funds or any Permitted Money Market Securities held in
the Escrow Account) shall remain on deposit in the Escrow Account
until withdrawn in accordance with this Agreement; and
(iv) the Escrow Agent shall take all
steps necessary to ensure that the Trustee is the holder or
entitlement holder (as the case may be) of all of the
Collateral.
(e) Further Assurances. The Company shall, at the Company’s expense,
execute and deliver to the Trustee or its designee such other
instruments and documents, and take all further action as the
Trustee deems reasonably necessary or advisable or may reasonably
request to confirm or perfect the security interest of the Trustee
granted or purported to be granted hereby or to enable the Trustee
to exercise and enforce its rights and remedies hereunder with
respect to any Collateral, and the Company shall take all necessary
action to preserve and protect the security interest created hereby
as a first priority, perfected lien and encumbrance upon the
Collateral.
SECTION 4 . Distributions from Escrow Account
. Assets on deposit in the Escrow
Account shall be withdrawn by the Escrow Agent and transferred only
in accordance with this Section 4:
(a) Event of Default.
(i) For so long as an Event of Default
has occurred and is continuing under the Indenture, no amounts
shall be disbursed from the Escrow Account, except as provided in
Section 4(a)(ii) below.
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(ii) If (A) any Event of Default
has occurred and is continuing under Section 501 of the
Original Indenture, as amended by Section 3.05 of the
Supplemental Indenture or (B) any other Event of Default has
occurred and is continuing that results in the acceleration of the
payment of principal, interest, premium, if any, pursuant to the
terms of the Indenture:
(1) The Trustee may, without notice to
the Company except as required by applicable law and at any time or
from time to time, direct the Escrow Agent to redeem or sell all
Collateral and transfer all proceeds thereof to the Paying Agent to
apply such funds in accordance with Sections 502 of the Original
Indenture, as amended by Section 3.06 of the Supplemental
Indenture.
(2) The Trustee (and/or the Escrow
Agent at its direction and on its behalf) may also, in addition to
the other rights and remedies provided for herein, exercise in
respect of the Collateral all the rights and remedies of a secured
party upon default under the New York UCC, and may also, without
notice except as specified below, redeem or sell the Collateral or
any part thereof in one or more parcels at public or private sales,
at any of the Trustee’s or the Escrow Agent’s offices
or elsewhere, for cash, on credit or for future delivery, and upon
such other terms as the Trustee may deem commercially reasonable.
The Company agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days’ notice to the
Company of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Trustee and the Escrow Agent shall not be
obligated to make any sale of Collateral regardless of notice of
sale having been given. The Trustee (or the Escrow Agent on its
behalf) may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which
it was so adjourned.
(3) Any cash held by the Escrow Agent
as Collateral and all net cash proceeds received by the Trustee or
the Escrow Agent in respect of any sale or liquidation of,
collection from, or other re
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