Exhibit 10.26
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TRUST INDENTURE AND SECURITY AGREEMENT [N361ML]
dated as of September 27, 2000
between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity except as expressly
provided herein, but solely
Owner Trustee
and
ALLFIRST BANK,
as Indenture Trustee
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COVERING ONE BOEING MODEL 737-7BX AIRCRAFT
BEARING U.S. REGISTRATION NO. N361ML
AND MANUFACTURER'S SERIAL NUMBER 30736
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.................................................................................. 7
Section 1.01. Definitions.......................................................................... 7
ARTICLE II ISSUE, EXECUTION, FORM AND
REGISTRATION OF EQUIPMENT NOTES.............................................................. 7
Section 2.01. Authentication and Delivery of Equipment Notes....................................... 7
Section 2.02. Execution of Equipment Notes......................................................... 8
Section 2.03. Authentication....................................................................... 8
Section 2.04. Form and Terms of Equipment Notes; Payments on
Equipment Notes...................................................................... 8
Section 2.05. Payments from Indenture Estate Only.................................................. 11
Section 2.06. Registration, Transfer and Exchange.................................................. 12
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Equipment Notes...................................................................... 13
Section 2.08. Cancellation of Equipment Notes; Destruction Thereof................................. 14
Section 2.09. Termination of Interest in Indenture Estate.......................................... 14
Section 2.10. Equipment Notes in Respect of Replacement Aircraft................................... 14
Section 2.11. Assumption of Obligations Under Equipment Notes
and Other Operative Agreements....................................................... 14
Section 2.12. Subordination........................................................................ 14
ARTICLE III COVENANTS.................................................................................... 15
Section 3.01. Payment of Principal, MakeWhole Premium and Interest................................. 15
Section 3.02. Offices for Payments, etc............................................................ 15
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee.............................................................................. 15
Section 3.04. Paying Agents........................................................................ 15
Section 3.05. Covenants of the Owner Trustee....................................................... 16
Section 3.06. [Reserved]........................................................................... 17
Section 3.07. Disposal of Indenture Estate......................................................... 17
Section 3.08. No Representations or Warranties as to Aircraft or
Documents............................................................................ 17
Section 3.09. Further Assurances; Financing Statements............................................. 17
ARTICLE IV HOLDER LISTS................................................................................. 18
Section 4.01. Holder Lists: Ownership of Equipment Notes........................................... 18
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ARTICLE V RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE INDENTURE ESTATE............................................................. 18
Section 5.01. Basic Rent Distribution.............................................................. 18
Section 5.02. Event of Loss and Replacement; Prepayment............................................ 19
Section 5.03. Payment After Indenture Event of Default, etc........................................ 20
Section 5.04. Certain Payments..................................................................... 22
Section 5.05. Other Payments....................................................................... 23
Section 5.06. Payments to Owner Trustee............................................................ 23
Section 5.07. Application of Payments.............................................................. 24
Section 5.08. Investment of Amounts Held by Indenture Trustee...................................... 24
Section 5.09. Withholding Taxes.................................................................... 25
ARTICLE VI PREPAYMENT OF EQUIPMENT NOTES................................................................ 25
Section 6.01. No Prepayment Except as Specified.................................................... 25
Section 6.02. Prepayment of Equipment Notes........................................................ 25
Section 6.03. Notice of Prepayment to Holders...................................................... 27
Section 6.04. Deposit of Prepayment Price.......................................................... 27
Section 6.05. Equipment Notes Payable on Prepayment Date........................................... 27
ARTICLE VII INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS............................................................. 28
Section 7.01. Indenture Event of Default........................................................... 28
Section 7.02. Remedies............................................................................. 30
Section 7.03. Return of Aircraft, etc.............................................................. 32
Section 7.04. Indenture Trustee May Prove Debt..................................................... 35
Section 7.05. Remedies Cumulative.................................................................. 36
Section 7.06. Suits for Enforcement................................................................ 36
Section 7.07. Discontinuance of Proceedings........................................................ 37
Section 7.08. Unconditional Right of Holders to Payments on
Equipment Notes...................................................................... 37
Section 7.09. Control by Holders................................................................... 37
Section 7.10. Waiver of Past Indenture Default..................................................... 38
Section 7.11. Notice of Indenture Default.......................................................... 38
ARTICLE VIII RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT.................................................................... 38
Section 8.01. Certain Rights of Owner Trustee and Owner Participant................................ 38
Section 8.02. Owner Participant's Right to Prepay or Purchase the
Equipment Notes...................................................................... 41
Section 8.03. Certain Rights of Owner Participant.................................................. 42
ARTICLE IX CONCERNING THE INDENTURE TRUSTEE............................................................. 44
Section 9.01. Acceptance of Trusts................................................................. 44
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Section 9.02. Duties Before, and During, Existence of Indenture Event
of Default........................................................................... 44
Section 9.03. Certain Rights of the Indenture Trustee.............................................. 46
Section 9.04. Indenture Trustee Not Responsible for Recitals, Equipment
Notes, or Proceeds................................................................... 47
Section 9.05. Indenture Trustee and Agents May Hold Equipment
Notes; Collections, etc.............................................................. 47
Section 9.06. Moneys Held by Indenture Trustee..................................................... 47
Section 9.07. Right of Indenture Trustee to Rely on Officer's Certificate,
etc.................................................................................. 47
Section 9.08. Replacement Airframes and Replacement Engines........................................ 47
Section 9.09. Indenture Supplement for Replacements................................................ 50
Section 9.10. Effect of Replacement................................................................ 51
Section 9.11. Compensation......................................................................... 51
ARTICLE X CONCERNING THE HOLDERS....................................................................... 51
Section 10.01. Evidence of Action Taken by Holders.................................................. 51
Section 10.02. Proof of Execution of Instruments and of Holding of
Equipment Notes...................................................................... 52
Section 10.03. Holders to Be Treated as Owners...................................................... 52
Section 10.04. Equipment Notes Owned by Owner Trustee or Lessee
Deemed Not Outstanding............................................................... 52
Section 10.05. ERISA................................................................................ 53
ARTICLE XI INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE..................................................................... 53
ARTICLE XII SUCCESSOR TRUSTEES........................................................................... 54
Section 12.01. Notice of Successor Owner Trustee.................................................... 54
Section 12.02. Resignation and Removal of Indenture Trustee:
Appointment of Successor............................................................. 54
Section 12.03. Persons Eligible for Appointment as Indenture
Trustee.............................................................................. 55
Section 12.04. Acceptance of Appointment by Successor Trustee....................................... 56
Section 12.05. Merger, Consolidation or Succession to Business of
Indenture Trustee.................................................................... 56
Section 12.06. Appointment of Separate Trustees..................................................... 57
ARTICLE XIII SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS.......................................................... 59
Section 13.01. Supplemental Indentures Without Consent of Holders................................... 59
Section 13.02. Supplemental Indentures With Consent of Holders...................................... 60
Section 13.03. Effect of Supplemental Indenture..................................................... 61
Section 13.04. Documents to Be Given to Indenture Trustee........................................... 62
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Section 13.05. Notation on Equipment Notes in Respect of
Supplemental Indentures.............................................................. 62
Section 13.06. No Request Necessary for Lease Supplement or
Indenture Supplement................................................................. 62
Section 13.07. Notices to Liquidity Providers....................................................... 62
ARTICLE XIV SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS............................................................................. 62
Section 14.01. Satisfaction and Discharge of Indenture: Termination
of Indenture......................................................................... 62
Section 14.02. Application by Indenture Trustee of Funds Deposited
for Payment of Equipment Notes....................................................... 63
Section 14.03. Repayment of Moneys Held by Paying Agent............................................. 63
Section 14.04. Transfer of Unclaimed Money Held by Indenture
Trustee and Paying Agent............................................................. 63
ARTICLE XV MISCELLANEOUS................................................................................ 64
Section 15.01. Capacity in Which Acting............................................................. 64
Section 15.02. No Legal Title to Indenture Estate in Holders........................................ 64
Section 15.03. Sale of Indenture Estate by Indenture Trustee is
Binding.............................................................................. 64
Section 15.04. Indenture Benefits Trustees, Participants, Lessee, and
Liquidity Providers Only............................................................. 64
Section 15.05. No Action Contrary to Lessee's Rights Under the
Lease................................................................................ 65
Section 15.06. Notices.............................................................................. 65
Section 15.07. Officer's Certificates and Opinions of Counsel....................................... 65
Section 15.08. Severability......................................................................... 66
Section 15.09. No Oral Modifications or Continuing Waivers.......................................... 66
Section 15.10. Successors and Assigns............................................................... 66
Section 15.11. Headings............................................................................. 66
Section 15.12. Normal Commercial Relations.......................................................... 66
Section 15.13. Governing Law; Counterparts.......................................................... 66
Section 15.14. Lessee's Right of Quiet Enjoyment.................................................... 67
Annex A Principal Amount of Equipment Notes
Annex B Amortization Schedule
Exhibit A Form of Indenture Supplement
Exhibit B Form of Equipment Note
Schedule I to Equipment Note Principal Amortization
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TRUST INDENTURE AND SECURITY AGREEMENT [N361ML]
TRUST INDENTURE AND SECURITY AGREEMENT [N361ML] dated as of
September 27, 2000 (the "Indenture"), between FIRST UNION TRUST COMPANY,
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NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity, except as otherwise specifically set forth herein (when acting in such
individual capacity, "Trust Company"), but solely as owner trustee (the "Owner
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Trustee") under the Trust Agreement, as defined herein, and ALLFIRST BANK, a
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Maryland state-chartered commercial bank (when acting in its individual
capacity, "Allfirst"), as Indenture Trustee hereunder (the "Indenture Trustee").
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W I T N E S S E T H:
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WHEREAS, capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Trust Company have, prior
to the execution and delivery of this Indenture, entered into the Trust
Agreement, whereby, among other things, Trust Company has declared a certain
trust for the use and benefit of the Owner Participant, subject, however, to the
Lien of this Indenture for the use and benefit of, and with the priority of
payment to, the holders of the Equipment Notes issued hereunder, and the Owner
Trustee is authorized and directed to execute and deliver this Indenture;
WHEREAS, the Owner Trustee desires by this Indenture, among
other things (i) to provide for the issuance by the Owner Trustee of Equipment
Notes as provided in the Participation Agreement, and (ii) to provide for the
assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee,
as part of the Indenture Estate hereunder of, among other things, certain of the
Owner Trustee's estate, right, title and interest in and to the Aircraft and the
Indenture Documents and certain payments and other amounts (other than Excepted
Payments) received hereunder or thereunder in accordance with the terms hereof,
as security for the Secured Obligations;
WHEREAS, all things have been done to make the Equipment
Notes, when executed by the Owner Trustee, and authenticated, issued and
delivered hereunder, the valid obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Indenture the
valid, binding and legal obligation of the Owner Trustee, enforceable in
accordance with its terms, have been done and performed and have happened.
NOW, THEREFORE, the parties agree as follows:
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises
contained herein and to secure (i) the prompt payment of the principal of and
Make-Whole Premium, if any, and interest on, and all other amounts due with
respect to, all the Equipment Notes from time to time outstanding under this
Indenture and all other amounts due hereunder and (ii) the performance and
observance by the Owner Trustee and the Lessee of all the agreements, covenants
and provisions in this Indenture, the Equipment Notes, the Participation
Agreement and in the Lease contained for the benefit of the Holders, and the
prompt payment of any and all amounts from time to time owing under the
Participation Agreement by the Owner Trustee or the Lessee to the Holders and
each of the Indenture Indemnitees (provided that, with respect to amounts owed
to the Liquidity Providers which relate to amounts due under the Liquidity
Facilities, the amounts secured hereby shall only include such amounts to the
extent due and owing pursuant to the final paragraph of Section 2.04 hereof)
(collectively the "Secured Obligations") and for the uses and purposes and
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subject to the terms and provisions of this Indenture, and in consideration of
the premises and of the covenants in this Indenture and in the Equipment Notes
and of the purchase of the Equipment Notes by their Holders, and of the sum of
$1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery
of this Indenture, the receipt and sufficiency of which are hereby acknowledged,
the Owner Trustee has granted, bargained, assigned, transferred, conveyed,
mortgaged, pledged, granted a first priority security interest in and confirmed,
and does hereby grant, bargain, assign, transfer, convey, mortgage, pledge and
grant a first priority security interest in and confirm to the Indenture
Trustee, its successors and assigns, in trust for the equal and ratable security
and benefit of the Holders and each of the Indenture Indemnitees, a first
priority security interest in and first mortgage Lien on all estate, right,
title and interest of the Owner Trustee in, to and under the following described
property, rights and privileges other than Excepted Payments, which
collectively, excluding Excepted Payments but including all property
specifically subjected to the Lien of this Indenture by the terms hereof, by any
supplement to this Indenture (including the Indenture Supplement) or any
mortgage supplemental to this Indenture, are included within the Indenture
Estate, subject always to the rights of or granted to the Owner Trustee or the
Owner Participant hereunder and to the other terms and conditions of this
Indenture:
(1) The Airframe, as described in the Indenture Supplement, and any
airframe substituted in replacement thereof pursuant to the provisions of this
Indenture; the Engines, as the same are more particularly described in the
Indenture Supplement, whether or not such Engines shall be installed in or
attached to the Airframe or any other airframe, and any Replacement Engine
therefor; and all Parts in respect of the Airframe and the Engines and all
records, logs and other documents at any time maintained with respect to the
foregoing property;
(2) The Lease and all Rent thereunder, including, without limitation,
all amounts of Basic Rent and Supplemental Rent, and payments of any kind
thereunder and including all rights of the Owner Trustee to execute any election
or option or to give or receive any notice, consent, waiver or approval under or
in respect of the Lease or to accept any surrender of the Aircraft or any part
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thereof, as well as any rights, powers or remedies on the part of the Owner
Trustee, whether arising under the Lease or by statute or at law or in equity or
otherwise arising out of any Event of Default;
(3) The Purchase Agreement (to the extent assigned by the Purchase
Agreement Assignment), the Purchase Agreement Assignment, the PAA Consent, the
Engine Warranty Assignment, the CFM Warranty, the Engine Manufacturer's Consent,
the FAA ▇▇▇▇ of Sale, the Warranty ▇▇▇▇ of Sale and the Participation Agreement
(to the extent of amounts payable to the Owner Trustee thereunder)
(collectively, and together with the Lease, the "Indenture Documents"),
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including all rights of the Owner Trustee to execute any election or option or
to give or receive any notice, consent, waiver or approval under or in respect
of any of the foregoing documents and instruments;
(4) All the tolls, rents, issues, profits, products, revenues and other
income (including sales proceeds) of the property subjected or required to be
subjected to the Lien of this Indenture, and all of the estate, right, title and
interest of the Owner Trustee in and to the same and every part of said
property;
(5) All other moneys and securities (including Permitted Investments)
now or hereafter paid or deposited or required to be paid or deposited to or
with the Indenture Trustee by or for the account of the Owner Trustee pursuant
to any term of any Operative Agreement, except the Tax Indemnity Agreement, and
held or required to be held by the Indenture Trustee hereunder;
(6) All requisition and insurance proceeds with respect to the Aircraft
or any part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the terms of the Lease), including insurance required to be
maintained by the Lessee under Section 9 of the Lease; and
(7) All proceeds of the foregoing.
EXCLUDING, HOWEVER, from the foregoing grant of the Lien and
security interest of this Indenture and from the Indenture Estate, (i) all
Excepted Payments, including without limitation all right, title and interest of
the Owner Participant in, to and under the Tax Indemnity Agreement and any
moneys due or to become due under the Tax Indemnity Agreement and all rights to
collect and enforce Excepted Payments and (ii) rights of, granted to or retained
by the Owner Trustee or the Owner Participant hereunder and SUBJECT TO the
following provisions:
(a) (i) whether or not an Indenture Event of Default shall
occur and be continuing, the Owner Trustee and the Owner Participant
shall at all times retain the right, to the exclusion of the Indenture
Trustee: (A) to Excepted Payments and to commence an action at law to
obtain or otherwise demand, ▇▇▇ for or receive and enforce the payment
of such Excepted Payments, (B) to exercise any election or option or
make any decision or determination or to give or receive any notice
(including notice of Default), consent, waiver or approval in respect
of any such Excepted Payment, (C) to adjust (and make any decision or
determination or give any notice or consent with respect to) Basic Rent
and the percentag-
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es relating to Termination Value and the EBO Amount, as provided in
Section 3(d) of the Lease and Section 13.01 of the Participation
Agreement, (D) to exercise any election or option to make any decision
or determination, or to give or receive any notice, consent, waiver or
approval, or to take any other action in respect of, but in each case
only to the extent relating to, Excepted Payments (except for, in
respect of any portion of Basic Rent constituting an Excepted Payment,
any action changing the manner by which such Basic Rent is to be paid),
(E) to exercise the rights of the "Lessor" with respect to
solicitations of bids, and the election to retain the Aircraft pursuant
to Section 14(c) of the Lease, (F) to exercise the right of "Lessor" to
determine the Fair Market Rental Value or Fair Market Sales Value
pursuant to the respective definitions thereof, (G) to exercise all
other rights of the Lessor under Section 13 of the Lease with respect
to the retention or purchase by the Lessee or the Lessor of the
Aircraft or the exercise by the Lessee of the Lessee's renewal or
purchase options, (H) to retain all rights with respect to insurance
maintained for its own account which Section 9(f) of the Lease
specifically confers on the "Owner Participant", (I) to approve
appraisers, lawyers and other professionals and receive notices,
certificates, reports, filings, opinions and other documents, in each
case with respect to matters relating to the Owner Participant's tax
position, (J) to select or approve any accountants or experts to be
used in the verification of any Rent adjustment, and (K) to exercise,
to the extent necessary to enable it to exercise its rights under
Section 8.03 hereof, the rights of the "Lessor" under Section 18 of the
Lease;
(ii) whether or not an Indenture Event of Default shall occur
and be continuing, the Owner Trustee and the Indenture Trustee shall
each have the rights separately but not to the exclusion of the other:
(A) to receive from the Lessee all notices, certificates, reports,
filings, opinions of counsel, copies of all documents and all
information which the Lessee is permitted or required to give or
furnish to the "Lessor" pursuant to the Lease or to the Owner Trustee
pursuant to any other Operative Agreement, (B) to exercise inspection
rights pursuant to Section 6 of the Lease (provided that if an
Indenture Event of Default shall be continuing, no inspection right of
the Owner Trustee shall interfere with the efforts of the Indenture
Trustee to exercise remedies under the Lease or this Indenture), (C) to
maintain separate insurance pursuant to Section 9(f) of the Lease and
to retain all rights with respect to such insurance maintained for its
own account, and (D) to give any notice of default under Section 16 of
the Lease;
(iii) subject to the last sentence of this clause (a), so long
as no Indenture Event of Default shall have occurred and be continuing
(but subject to the provisions of Section 8.01), the Owner Trustee
shall retain the right, to the exclusion of the Indenture Trustee, to
exercise all rights of the "Lessor" under the Lease (other than the
right to receive any funds to be delivered to the "Lessor" under the
Lease (except funds which constitute or are delivered with respect to
Excepted Payments)) and under the Purchase Agreement;
(iv) subject to the last sentence of this clause (a), at all
times the Owner Trustee shall have the right as Lessor, but not to the
exclusion of the Indenture Trustee, to seek
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specific performance of the covenants of the Lessee under the Lease
relating to the protection, insurance, maintenance, possession and use
of the Aircraft; and
(v) at all times the Owner Trustee and the Owner Participant
shall have the rights granted to them under Articles VI, VIII and X and
Section 7.02 hereof.
Notwithstanding the foregoing, but subject always to the
provisions of Section 15.05 hereof, the Indenture Trustee shall at all times
have the right, to the exclusion of the Owner Trustee and the Owner Participant,
to (A) (other than with respect to Excepted Payments) declare the Lease to be in
default under Section 17 thereof and (B) subject only to the provisions of this
Indenture (other than in connection with Excepted Payments), exercise the
remedies set forth in such Section 17 of the Lease.
(b) The leasehold interest granted to the Lessee by
the Lease shall not be subject to the security interest granted by this
Indenture, and nothing in this Indenture shall affect the rights of the
Lessee under the Lease so long as no Event of Default has occurred and
is continuing.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee,
its successors and assigns, in trust for the equal and ratable benefit and
security of the Holders and the Indenture Indemnitees, except as provided in
Section 2.12 and Article V hereof, without any priority of any one Equipment
Note over any other and for the uses and purposes and subject to the terms and
conditions set forth in this Indenture and the rights of the Owner Trustee and
the Owner Participant under this Indenture.
It is expressly agreed that anything contained in this Indenture to the
contrary notwithstanding, the Owner Trustee shall remain liable under the
Indenture Documents and the Equipment Notes to perform all of the obligations
assumed by it under any of those documents, all in accordance with and pursuant
to the terms and provisions of those documents, and the Indenture Trustee, the
Holders and the Indenture Indemnitees shall have no obligation or liability
under the Indenture Documents by reason of or arising out of the assignment
under this Indenture, nor shall the Indenture Trustee or the Holders or the
Indenture Indemnitees be required or obligated in any manner to perform or
fulfill any obligations of the Owner Trustee under or pursuant to the Indenture
Documents and the Equipment Notes or, except as expressly provided in this
Indenture, 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.
Effective upon the occurrence and continuance of an Indenture Event of
Default, to the extent permitted by Applicable Law, the Owner Trustee hereby
constitutes the Indenture Trustee the true
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and lawful attorney of the Owner Trustee, irrevocably, with full power (in the
name of the Owner Trustee or otherwise), subject to the terms and conditions of
this Indenture, to ask, require, demand, receive, compound and give acquittance
for any and all Basic Rent, Supplemental Rent payable to the Owner Trustee and
Termination Value payments, insurance proceeds and any and all moneys and claims
for moneys due and to become due under or arising out of the Lease (subject to
Section 8.01 hereof) or the other Indenture Documents (other than Excepted
Payments), to endorse any checks or other instruments or orders in connection
with the same and to file any claims, take any action or institute any
proceeding which the Indenture Trustee may deem to be necessary or advisable in
the premises. Without limiting the generality of the foregoing, but subject to
the provisions of Sections 7.02 and 7.03 hereof and the rights of the Owner
Trustee and the Owner Participant under Section 8.02 hereof, during the
continuance of any Indenture Event of Default, to the extent permitted by
Applicable Law, the Indenture Trustee shall have the right under such power of
attorney to accept any offer in connection with the exercise of remedies as set
forth herein of any purchaser to purchase the Airframe and Engines and upon such
purchase to execute and deliver in the name of and on behalf of the Owner
Trustee an appropriate ▇▇▇▇ of sale and other instruments of transfer relating
to the Airframe and Engines, when purchased by such purchaser, and to perform
all other necessary or appropriate acts with respect to any such purchase, and
in its discretion to file any claim or take any other action or proceedings,
either in its own name or in the name of the Owner Trustee or otherwise, which
the Indenture Trustee may deem necessary or appropriate to protect and preserve
the right, title and interest of the Indenture Trustee in and to such Rents and
other sums and the security intended to be afforded hereby; provided, however,
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that no action of the Indenture Trustee pursuant to this paragraph shall
increase the obligations or liabilities of the Owner Trustee to any Person
beyond those obligations and liabilities specifically set forth in this
Indenture and in the other Operative Agreements.
Under the Lease the Lessee is directed to make all payments of Rent
(other than Excepted Payments not constituting Basic Rent) payable to the Owner
Trustee and all other amounts (other than Excepted Payments not constituting
Basic Rent) which are required to be paid to or deposited with the Owner Trustee
pursuant to the Lease directly to the Indenture Trustee at such address in the
United States of America as the Indenture Trustee shall specify for application
as provided in this Indenture. The Owner Trustee agrees that if, notwithstanding
such provision, it shall have received any such amounts, promptly on receipt of
any such payment, it will transfer to the Indenture Trustee any and all moneys
from time to time received by the Owner Trustee constituting part of the
Indenture Estate for distribution by the Indenture Trustee pursuant to this
Indenture, except that the Owner Trustee shall accept for distribution pursuant
to the Trust Agreement (i) any amounts distributed to it by the Indenture
Trustee under this Indenture and (ii) any Excepted Payments.
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will, at the
expense of the Lessee, promptly and duly execute and deliver or cause to be duly
executed and delivered any and all such further instruments and documents as the
Indenture Trustee may reasonably deem desirable in obtaining the full benefits
of the assignment hereunder and of the rights and powers herein granted;
provided however, that the Owner Trustee shall have no obligation to execute and
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deliver or cause to be executed or delivered
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to the Indenture Trustee any such instrument or document if such execution and
delivery would result in the imposition of additional liabilities on the Owner
Trustee or the Owner Participant or would result in a burden on the Owner
Participant's business activities, unless the Owner Trustee or the Owner
Participant, as the case may be, is indemnified to its reasonable satisfaction
against any losses, liabilities and expenses incurred in connection with such
execution and delivery.
The Owner Trustee does hereby warrant and represent that it has not
assigned, pledged or otherwise disposed of, and hereby covenants that it will
not assign or pledge or otherwise dispose of, so long as the assignment
hereunder shall remain in effect and shall not have been terminated pursuant to
Section 14.01 hereof, any of its right, title or interest hereby assigned, to
anyone other than the Indenture Trustee, and that it will not, except in respect
of Excepted Payments or otherwise as provided in or permitted by this Indenture,
enter into an agreement amending or supplementing any of the Indenture
Documents, settle or compromise any claim (other than claims in respect of
Excepted Payments) against the Lessee arising under any of the Indenture
Documents, or submit or consent to the submission of any dispute, difference or
other matter arising under or in respect of any of the Indenture Documents, to
arbitration thereunder.
Concurrently with the delivery of this Indenture, the Owner Trustee has
delivered to the Indenture Trustee executed counterparts of the Trust Agreement.
It is hereby further covenanted and agreed by and between the parties
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise requires,
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capitalized terms utilized herein shall have the meanings set forth or
incorporated by reference, and shall be construed in the manner described, in
Appendix A to the Lease Agreement [N361ML] dated as of the date hereof between
the Owner Trustee and Midway Airlines Corporation.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF EQUIPMENT NOTES
Section 2.01. Authentication and Delivery of Equipment Notes. Upon the
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execution and delivery of this Indenture, and from time to time thereafter,
Equipment Notes in the aggregate principal amount set forth on Annex A hereto
shall be executed by the Owner Trustee and delivered to the Indenture Trustee
for authentication, and the Indenture Trustee shall thereupon authenticate and
deliver said Equipment Notes to or upon the oral or written order of the Owner
Trustee, signed,
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if written, by an authorized officer of the Owner Trustee, without any further
action by the Owner Trustee.
Section 2.02. Execution of Equipment Notes. The Equipment Notes shall
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be signed on behalf of the Owner Trustee by an authorized officer of Trust
Company. Such signatures may be the manual or facsimile signatures of such
officer and minor errors or defects in any reproduction of any such signature
shall not affect the validity or enforceability of any Equipment Note which has
been duly authenticated and delivered by the Indenture Trustee. In case any
officer of Trust Company who shall have signed any of the Equipment Notes shall
cease to be such officer before the Equipment Notes so signed shall be
authenticated and delivered by the Indenture Trustee, such Equipment Note
nevertheless may be authenticated and delivered as though the person who signed
such Equipment Note had not ceased to be such officer of Trust Company; and any
Equipment Note may be signed on behalf of the Owner Trustee by such person or
persons as, at the actual date of the execution of such Equipment Note, shall be
the proper officers of Trust Company, although at the date of the execution and
delivery of this Indenture any such person was not such an officer. Equipment
Notes bearing the facsimile signatures of individuals who were authorized
officers of Trust Company at the time such Equipment Notes were issued shall
bind the Owner Trustee, 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.
Section 2.03. Authentication. Only such Equipment Notes as shall bear
--------------
thereon a certificate of authentication substantially in the form set forth in
Exhibit B, executed by the Indenture Trustee by manual signature of one of its
authorized officers, shall be entitled to the security and benefits of this
Indenture or be valid or obligatory for any purpose. Such certificate by the
Indenture Trustee upon any Equipment Note executed by the Owner Trustee shall be
conclusive evidence that the Equipment Note so authenticated has been duly
authenticated and delivered hereunder and that the Holder, as evidenced on the
Register, is entitled to the security and benefits of this Indenture.
Section 2.04. Form and Terms of Equipment Notes; Payments on Equipment
--------------------------------------------------------
Notes. The Equipment Notes and the Indenture Trustee's certificate of
-----
authentication shall be substantially in the form set forth in Exhibit B hereto.
The Equipment Notes shall be issuable as registered securities without coupons
and shall be numbered, lettered, or otherwise distinguished in such manner or in
accordance with such plans as the Owner Trustee may determine with the approval
of the Indenture Trustee.
The Equipment Notes shall be issued in registered form only and in
denominations of $1,000 and any integral multiple thereof, shall be dated the
Delivery Date, shall be issued in three separate series consisting of Series A,
Series B and Series C and the Equipment Notes of each series shall be issued in
the respective aggregate principal amounts, and shall bear interest at the
respective rates per annum, specified on Annex A. Interest shall be calculated
on the basis of a 360-day year of twelve 30-day months.
-8-
Any of the Equipment Notes may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities market in
which the Equipment Notes are admitted to trading, or to conform to general
usage.
Each Equipment Note shall bear interest from the date of original
issuance thereof or from the most recent date to which interest has been paid,
and shall be payable in arrears on each Payment Date until maturity; provided
--------
that, such interest rate shall be increased by 0.5% per annum, as provided in
----
Section 2(d) and the penultimate paragraph of Section 3 of the Registration
Rights Agreement. The principal amount of each Equipment Note of a particular
series shall be payable in installments on each of the Payment Dates set forth
in Annex B hereto for which an amount is shown in the column applicable to such
series (each a "Series Payment Date"), and the amount of the installments of
principal due on any particular Series Payment Date on an aggregate basis for
all of the Equipment Notes of such series shall be the amount set forth in Annex
B hereto opposite such Series Payment Date in the column applicable to such
series. Because the amortization schedule to be attached as Schedule I to each
Equipment Note specifies dollar amounts (rather than percentages of original
principal amount) and is derived from Annex B hereto (which also specifies
dollar amounts (rather than percentages of original principal amount)), if more
than one Equipment Note of a particular series is issued, the Owner Trustee and
the Indenture Trustee shall make an appropriate adjustment to the amortization
schedule to be attached as Schedule I to each Equipment Note of such series to
reflect the proportional amount of the aggregate installments of principal set
forth in Annex B hereto in the column applicable to such series that will be
payable on such Equipment Note on each Series Payment Date.
Notwithstanding the preceding paragraph, each Equipment Note shall bear
interest at the Past Due Rate on any principal, interest and any other amount
payable hereunder or under such Equipment Note, which shall not be paid in full
when due (whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full, payable from time to time on demand
of the Indenture Trustee.
The principal of, and Make-Whole Premium, if any, and interest on, the
Equipment Notes shall be payable at the Corporate Trust Department of the
Indenture Trustee or at any office or agency maintained for such purpose
pursuant to Section 3.02 hereof in immediately available funds prior to 12:00
noon (New York time) on the due date thereof and the Indenture Trustee shall
remit all such amounts received by it to the Holders at such account or accounts
at such financial institution or institutions as the Holders shall have
designated to the Indenture Trustee in writing, in immediately available funds,
such payment to be made if the payment was received prior to 12:00 noon New York
time by the Indenture Trustee on any Business Day, by 1:00 p.m. New York time on
such Business Day; otherwise, the Indenture Trustee shall make payment promptly,
but not later than 11:00 A.M. New York time on the next succeeding Business Day.
If any amount payable under the Equipment Notes, or under this Indenture, falls
due on a day that is not a Business Day, then such
-9-
sum shall be payable on the next succeeding Business Day, without (provided that
payment is made on such next succeeding Business Day) additional interest
thereon for the period of such extension.
The Holder at the close of business on any Record Date with respect to
any Payment Date shall be entitled to receive the interest if any payable on
such Payment Date notwithstanding any transfer or exchange of such Equipment
Note subsequent to the Record Date and prior to such Payment Date, except if and
to the extent the Owner Trustee shall default in the payment of the interest due
on such Payment Date, in which case such defaulted interest shall be paid to the
Holder at the close of business on a subsequent Record Date (which shall be not
less than five or more than 15 Business Days prior to the date of payment of
such defaulted interest) established by notice given by mail by or on behalf of
the Owner Trustee to the Holders not less than 15 days preceding such subsequent
Record Date.
The Owner Trustee agrees to pay to the Indenture Trustee (but only to
the extent not payable under Section 6(a) or 6(b) of the Note Purchase Agreement
(whether or not in fact paid)) for distribution in accordance with Section 5.04
hereof (a) any and all indemnity amounts received by the Owner Trustee which are
payable by the Lessee to (i) the Indenture Trustee in its individual capacity,
(ii) the Subordination Agent or (iii) each Liquidity Provider, in each case
pursuant to Article 6 or 7 or Section 8.01(b) of the Participation Agreement (it
being acknowledged that the Lessee has been instructed to pay such amounts to
the Person or Persons entitled thereto) and (b) the Owner Trustee's pro rata
share of all amounts owed to each Liquidity Provider by the Subordination Agent
under each Liquidity Facility other than amounts due as (i) repayments of the
principal of advances thereunder, (ii) interest on Downgrade Drawings and Non-
Extension Drawings, except to the extent exceeding Investment Earnings thereon
and (iii) interest on Interest Drawings and Final Drawings except to the extent
included in Net Interest and Related Charges. As used in this Section, the Owner
Trustee's pro rata share means as of any time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate principal
balance then outstanding of the Equipment Notes issued under this Indenture and
the denominator of which is the aggregate principal balance of all Equipment
Notes issued under this Indenture and the Related Indentures, and
(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default under any Equipment Note issued under this
Indenture a fraction, the numerator of which is the aggregate principal balance
then outstanding of Equipment Notes issued under this Indenture and the
denominator of which is the aggregate principal balance then outstanding of all
Equipment Notes issued under this Indenture and the Related Indentures under
which there exists a Payment Default or (y) at all other times, zero.
As used in this Section, "Net Interest and Related Charges" means the sum of (i)
--------------------------------
the amount, if any, by which interest payable to each Liquidity Provider on any
Interest Drawing and Final Drawing exceeds the amount which would be payable if
such drawings bore interest at the weighted average Past Due Rate applicable to
amounts in default on all Equipment Notes plus (ii) any amounts payable
-10-
under Section 3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each
Liquidity Facility (or similar provisions of any replacement Liquidity Facility)
which result from any Interest Drawing or Final Drawing. As used in this
Section, a "Payment Default" when used in connection with an Equipment Note
---------------
issued hereunder or an Equipment Note issued under any Related Indenture means a
default in the payment of principal thereof or interest thereon (which default
has not been cured), other than solely because of acceleration.
Section 2.05. Payments from Indenture Estate Only. All payments to be
-----------------------------------
made by the Owner Trustee under this Indenture shall be made only from the
income and the proceeds from the Lessor's Estate to the extent included in the
Indenture Estate and from any other amounts of the type described in Section
8.03 hereof (but only to the extent actually received by the Indenture Trustee)
and only to the extent that the Owner Trustee shall have sufficient income or
proceeds from the Lessor's Estate to the extent included in the Indenture Estate
(and such other amounts) to enable the Indenture Trustee to make distributions
of the amounts due in respect of the Equipment Notes in accordance with the
terms hereof and thereof. Each Holder by its acceptance of an Equipment Note,
and the Indenture Trustee, as applicable, agrees that it will look solely to the
income and proceeds from the Indenture Estate (and such other amounts of the
type described in Section 8.03 hereof but only to the extent actually received
by the Indenture Trustee) to the extent available for distribution to it as
provided herein and that none of the Owner Participant, the Owner Trustee, Trust
Company or the Indenture Trustee is personally liable to such Holder or the
Indenture Trustee for any amounts payable under this Indenture or such Equipment
Note or for any amounts payable or liability under any Equipment Note or this
Indenture, except as expressly provided herein in the case of Trust Company, the
Owner Trustee or the Indenture Trustee.
Trust Company is not personally liable to any Holder, the Lessee or the
Indenture Trustee for any amounts payable under this Indenture or for any
liability under this Indenture or the Equipment Notes, except as a result of
Trust Company's gross negligence or willful misconduct (or simple negligence in
the handling of funds), or as otherwise expressly provided herein or in the
Participation Agreement.
If (1) all or any part of the Lessor's Estate becomes the property of a
debtor subject to the reorganization provisions of the Bankruptcy Code, (2)
pursuant to such reorganization provisions the Owner Participant is required, by
reason of such Owner Participant being held to have recourse liability directly
or indirectly, to make payment on account of any amount payable as principal of
or interest, Make-Whole Premium or other amounts payable on the Equipment Notes,
and (3) the Indenture Trustee or a Holder actually receives any Recourse Amount
which reflects any payment by an Owner Participant on account of (2) above, then
the Indenture Trustee or such Holder, as the case may be, shall promptly refund
to such Owner Participant such Recourse Amount. Nothing contained in this
paragraph shall prevent the Indenture Trustee from enforcing any personal
recourse obligation (and retaining the proceeds thereof) of the Owner
Participant under the Participation Agreement, or from retaining any amount paid
by the Owner Participant under Sections 8.02 and 8.03 hereof. For purposes of
this Section 2.05, "Recourse Amount" means the amount by which the portion of
such payment by the Owner Participant on account of clause (2) above received by
the
-11-
Indenture Trustee or the relevant Holder, as the case may be, exceeds the amount
which would have been received by the Indenture Trustee or such Holder, as the
case may be, if the Owner Participant had not become subject to the recourse
liability referred to in (2) above.
Section 2.06. Registration, Transfer and Exchange. The Indenture
-----------------------------------
Trustee will keep, on behalf of the Owner Trustee, at each office or agency to
be maintained for the purpose as provided in Section 3.02 hereof a Register or
Registers on which, subject to such reasonable regulations as it may prescribe,
it will register, and will register the transfer of, Equipment Notes as provided
in this Article. Such Register shall be in written form in the English language
or in any other form capable of being converted into such form within a
reasonable period of time. Upon due presentation for registration of transfer of
any Equipment Note at any such office or agency, the Owner Trustee shall execute
and the Indenture Trustee shall authenticate and deliver in the name of the
transferee or transferees, in authorized denominations, a new Equipment Note or
Equipment Notes of the same Series, and with the same principal amount, interest
rate and amortization schedule, for an equal aggregate principal amount;
provided, that such Equipment Note being transferred shall be canceled in
--------
accordance with Section 2.08 hereof simultaneously with the issuance of the new
Equipment Note. Any Equipment Note or Equipment Notes may be exchanged for an
Equipment Note or Equipment Notes of the same Series but in other authorized
denominations, in an equal aggregate principal amount. Equipment Notes to be
exchanged shall be surrendered at any office or agency to be maintained by the
Indenture Trustee for the purpose as provided in Section 3.02 hereof, and the
Owner Trustee shall execute and the Indenture Trustee shall authenticate and
deliver in exchange therefor the Equipment Note or Equipment Notes which the
Holder making the exchange shall be entitled to receive, bearing numbers not
contemporaneously or previously outstanding.
All Equipment Notes presented for registration of transfer, exchange,
prepayment or payment shall (if so required by the Owner Trustee or the
Indenture Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Owner Trustee
and the Indenture Trustee duly executed by the Holder or its attorney duly
authorized in writing and (except in the case of transfers pursuant to Article
13 of the Participation Agreement) the Indenture Trustee may require evidence
satisfactory to it as to the compliance of any such transfer with the Securities
Act. The Indenture Trustee may require payment from the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any exchange or registration of transfer of Equipment Notes. No
service charge shall be levied for any such transaction. The Indenture Trustee
shall not be required to exchange or register a transfer of any Equipment Notes
(a) for a period of 15 days immediately preceding the first mailing of notice of
prepayment of such Equipment Notes or (b) with respect to which notice of
prepayment has been given pursuant to Section 6.03 hereof and such notice has
not been revoked. All Equipment Notes issued upon any transfer or exchange of
Equipment Notes shall be valid obligations of the Owner Trustee, evidencing the
same debt, and entitled to the same security and benefits under this Indenture,
as the Equipment Notes surrendered upon such transfer or exchange. Any such
transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees
to the provisions of the Participation Agreement applicable to Holders, and
shall be deemed to have covenanted to the
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parties to the Participation Agreement as to the matters covenanted by the
original Loan Participant in the Participation Agreement.
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen Equipment
--------------------------------------------------------
Notes. In case any Equipment Note shall become mutilated, defaced or be
-----
apparently destroyed, lost or stolen, the Owner Trustee in its discretion may
execute, and upon the written request of any Holder shall execute, and the
Indenture Trustee shall authenticate and deliver in replacement thereof, a new
Equipment Note, payable to the same Holder, bearing the same principal amount
and interest rate as the Equipment Note being replaced and bearing a number not
contemporaneously or previously outstanding, in exchange and substitution for
the mutilated or defaced Equipment Note, or in lieu of and substitution for the
Equipment Note so apparently destroyed, lost or stolen. In the case of any
Equipment Note so apparently destroyed, lost or stolen, the applicant for a
substitute Equipment Note shall furnish to the Owner Trustee and to the
Indenture Trustee such security or indemnity as may be required by them to
indemnify and defend and to hold each of them harmless and evidence to their
satisfaction of the apparent destruction, loss or theft of such Equipment Note
and of the ownership thereof.
Upon the issuance of any substitute Equipment Note, the Owner Trustee
or the Indenture Trustee may require payment from the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses incurred in connection therewith. In
case any Equipment Note which has matured or is about to mature, or has been
called for prepayment in full, shall become mutilated or defaced or be
apparently destroyed, lost or stolen, the Owner Trustee may, instead of issuing
a substitute Equipment Note, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated or defaced Equipment Note),
if the applicant of any Equipment Note so apparently destroyed, lost or stolen,
for such payment shall furnish to the Owner Trustee and to the Indenture Trustee
such security or indemnity as any of them may require to hold each of them
harmless and the applicant shall also furnish to the Owner Trustee and the
Indenture Trustee evidence to their satisfaction of the apparent destruction,
loss or theft of such Equipment Note and of the ownership thereof.
Every substitute Equipment Note issued pursuant to the provisions of
this Section by virtue of the fact that any Equipment Note is apparently
destroyed, lost or stolen shall constitute an original additional contractual
obligation of the Owner Trustee, whether or not the apparently destroyed, lost
or stolen Equipment Note shall be enforceable at any time by anyone and shall be
entitled to all the security and benefits of (but shall be subject to all the
limitations of rights set forth in) this Indenture equally and proportionately
with any and all other Equipment Notes duly authenticated and delivered
hereunder. All Equipment Notes shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced, or
apparently destroyed, lost or stolen Equipment Notes and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
-13-
Section 2.08. Cancellation of Equipment Notes; Destruction Thereof. All
----------------------------------------------------
Equipment Notes surrendered for payment, prepayment, registration of transfer or
exchange, if surrendered to the Owner Trustee or any agent of the Owner Trustee
or the Indenture Trustee, shall be delivered to the Indenture Trustee for
cancellation or, if surrendered to the Indenture Trustee, shall be canceled by
it; and no Equipment Notes shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture. The Indenture Trustee
shall destroy cancelled Equipment Notes held by it and deliver a certificate of
destruction to the Owner Trustee. If the Owner Trustee shall acquire any of the
Equipment Notes, such acquisition shall not operate as a prepayment or
satisfaction of the indebtedness represented by such Equipment Notes unless and
until the same are delivered to the Indenture Trustee for cancellation.
Section 2.09. Termination of Interest in Indenture Estate. A Holder
-------------------------------------------
shall not, as such, have any further interest in, or other right with respect
to, the Indenture Estate when and if the principal amount of and Make-Whole
Premium, if any, and interest on and other amounts due under all Equipment Notes
held by such Holder and all other sums payable to such Holder hereunder and
under the other Operative Agreements shall have been paid in full.
Section 2.10. Equipment Notes in Respect of Replacement Aircraft. Upon
--------------------------------------------------
the execution and delivery of a supplement to this Indenture covering a
Replacement Airframe and/or Replacement Engine, as provided in Section 9.09
hereof, each Equipment Note shall be deemed to have been issued in connection
with such Replacement Airframe and/or Replacement Engine and (in the case of a
Replacement Airframe) each Equipment Note issued thereafter upon a transfer or
exchange of, or as a replacement for, an Equipment Note, shall be designated as
having been issued in connection with such Replacement Airframe, but without any
other change therein except as provided for in this Article II.
Section 2.11. Assumption of Obligations Under Equipment Notes and Other
---------------------------------------------------------
Operative Agreements. If, in accordance with and subject to the satisfaction of
--------------------
the conditions set forth in Section 5.10 of the Participation Agreement, the
Lessee shall assume all of the obligations of the Owner Trustee hereunder, under
the Equipment Notes, and under all other Operative Agreements, the Owner
Participant and the Owner Trustee shall be released and discharged from any
further obligations hereunder and under the Equipment Notes and all other
Operative Agreements (except for any recourse obligations of the Owner
Participant or the Owner Trustee in its individual capacity with respect to
matters arising out of events occurring prior to such assumption).
Section 2.12. Subordination. (a) The Owner Trustee and, by acceptance
-------------
of its Equipment Notes of any Series, each Holder of such Series, hereby agree
that no payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Holder of such Series, including any payment or
distribution of cash, property or securities after the commencement of a
proceeding of the type referred to in clause (iv), (v) or (vi) of Section 7.01
hereof, except as expressly provided in Article V hereof.
-14-
(b) By the acceptance of its Equipment Notes of any Series (other than
Series A), each Holder of such Series agrees that in the event that such Holder,
in its capacity as a 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 2.12 or Article V hereof, it will hold any amount so
received in trust for the Senior Holder (as defined in Section 2.12(c) hereof)
and will forthwith turn over such payment to the Indenture Trustee in the form
received to be applied as provided in Article V hereof.
(c) As used in this Section 2.12, the term "Senior Holder" shall mean,
-------------
(i) the Holders of Series A Equipment Notes until the Secured Obligations in
respect of Series A Equipment Notes have been paid in full, (ii) after the
Secured Obligations in respect of Series A Equipment Notes have been paid in
full, the Holders of Series B Equipment Notes until the Secured Obligations in
respect of Series B Equipment Notes have been paid in full, and (iii) after the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full, the Holders of Series C Equipment Notes until the Secured Obligations in
respect of Series C Equipment Notes have been paid in full.
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal, Make-Whole Premium and Interest.
-----------------------------------------------------
The Owner Trustee covenants and agrees that it will, subject to Section 2.05
hereof, duly and punctually pay or cause to be paid the principal of, and
interest and Make-Whole Premium, if any, and all other amounts due on, each of
the Equipment Notes and under this Indenture at the place or places, at the
respective times and in the manner provided in this Indenture and in the
Equipment Notes.
Section 3.02. Offices for Payments, etc. So long as any of the
-------------------------
Equipment Notes remain outstanding, the Indenture Trustee will maintain the
following: (a) an office or agency where the Equipment Notes may be presented
for payment and (b) a facility or agency where the Equipment Notes may be
presented for registration of transfer and for exchange and for prepayment as
provided in this Indenture (the "Registrar"). The Registrar shall keep a
---------
register (the "Register") with respect to the Equipment Notes and their transfer
--------
and exchange. The Indenture Trustee may appoint one or more co-registrars
("Co-Registrars") for the Equipment Notes and may terminate any such appointment
-------------
at any time upon written notice. The term "Registrar" includes any Co-Registrar.
The Indenture Trustee shall initially act as Registrar.
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
----------------------------------------------------
Trustee. The Owner Trustee, whenever necessary to avoid or fill a vacancy in the
-------
office of Indenture Trustee, will, with the consent of the Lessee, appoint, in
the manner provided in Section 12.02 hereof, an Indenture Trustee, so that there
shall at all times be an Indenture Trustee hereunder.
-15-
Section 3.04. Paying Agents. Whenever the Indenture Trustee in its sole
-------------
discretion shall appoint a paying agent (the "Paying Agent"), it will cause the
------------
Paying Agent to execute and deliver an instrument in which the Paying Agent
shall agree with the Indenture Trustee, subject to the provisions of this
Section:
(a) that it will hold all sums received by it as such
agent for the payment of the principal of, and interest and Make-Whole
Premium, if any, on the Equipment Notes (whether such sums have been
paid to it by the Indenture Trustee or the Owner Trustee) in trust for
the benefit of the Holders or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of
any failure by the Owner Trustee to make any payment of the principal
of or interest or Make-Whole Premium, if any, on the Equipment Notes
when the same shall be due and payable.
Anything in this Section to the contrary notwithstanding, the
agreements to hold sums in trust as provided in this Section are subject to the
provisions of Sections 14.03 and 14.04 hereof.
Section 3.05. Covenants of the Owner Trustee.
------------------------------
(a) The Owner Trustee hereby covenants and agrees as follows:
(i) in the event a Responsible Officer of the Owner Trustee
shall have actual knowledge of an Indenture Event of Default, an
Indenture Default or an Event of Loss, the Owner Trustee will give
prompt written notice of such Indenture Event of Default, Indenture
Default or Event of Loss to the Indenture Trustee, the Lessee and the
Owner Participant;
(ii) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof by a Responsible Officer of the Owner
Trustee, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments
furnished to the Owner Trustee under the Lease, including, without
limitation, a copy of each report or notice from an insurer or an
insurance broker received pursuant to Section 9 of the Lease, to the
extent that the Operative Agreements do not provide that the same shall
be furnished to the Indenture Trustee;
(iii) the Owner Trustee will not enter into any business or
other activity other than the business of owning the Aircraft, the
leasing thereof to the Lessee and the carrying out of the transactions
contemplated hereby and by the Lease, the Participation Agreement, the
Trust Agreement and the other Operative Agreements; and
(iv) except as contemplated by the Operative Agreements, the
Owner Trustee will not contract for, create, incur or assume any debt,
and will not guarantee (directly or indirectly or by an instrument
having the effect of assuring another's payment or performance on any
obligation or capability of so doing, or otherwise), endorse or
otherwise take action
-16-
to become contingently liable, directly or indirectly, in connection
with the debt of any other Person.
Section 3.06. [Reserved].
Section 3.07. Disposal of Indenture Estate. At any time and from time
----------------------------
to time any part of the Indenture Estate may be sold or disposed of in
accordance with the provisions of this Indenture and the Lease. The Indenture
Trustee shall, from time to time, release any part of the Indenture Estate so
sold or disposed of or as to which an Event of Loss has occurred or as to which
the Lease has been terminated from the Lien of this Indenture. In addition, to
the extent that such property constitutes an Airframe or Engine, the further
requirements of Section 9.08 hereof shall be satisfied.
Section 3.08. No Representations or Warranties as to Aircraft or
--------------------------------------------------
Documents. NEITHER THE INDENTURE TRUSTEE NOR THE OWNER TRUSTEE NOR TRUST COMPANY
---------
NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS,
WORKMANSHIP, VALUE, CONDITION, DESIGN, COMPLIANCE WITH SPECIFICATIONS,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE OF THE AIRCRAFT OR
ANY ENGINE, 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 WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE
WHATSOEVER, except that Trust Company warrants that on the Delivery Date (a) the
Owner Trustee shall have received whatever title was conveyed to it by the
Seller, and (b) the Aircraft shall be free and clear of Lessor's Liens
attributable to Trust Company. Neither Trust Company nor the Indenture Trustee
makes or shall be deemed to have made any representation or warranty as to the
validity, legality or enforceability of this Indenture, the Trust Agreement, the
Equipment Notes or any Indenture Document or as to the correctness of any
statement contained in any thereof, except for the representations and
warranties of Trust Company and the Indenture Trustee made under this Indenture
or in the Participation Agreement.
Section 3.09. Further Assurances; Financing Statements. At any time and
----------------------------------------
from time to time, upon the request of the Indenture Trustee, the Owner Trustee,
at the expense of the Lessee, shall promptly and duly execute and deliver any
and all such further instruments and documents as may be specified (and in the
form included) in such request and as are reasonably necessary or advisable to
perfect, preserve or protect the Liens and assignments created or intended to be
created hereby, or to obtain for the Indenture Trustee the full benefit of the
specific rights and powers granted herein, including, without limitation, the
execution and delivery of Uniform Commercial Code financing statements and
continuation statements with respect thereto, or similar instruments relating to
the perfection of the Liens or assignments created or intended to be created
hereby.
-17-
ARTICLE IV
HOLDER LISTS
Section 4.01. Holder Lists: Ownership of Equipment Notes. (a) The
------------------------------------------
Indenture Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Indenture Trustee is not the Registrar, the Registrar shall
furnish to the Indenture Trustee semi-annually not more than ten days after each
Record Date, as of such Record Date, or at such other times as the Indenture
Trustee may request in writing, a list, in such form and as of such date as the
Indenture Trustee may reasonably require, containing all the information in the
possession or control of the Registrar as to the names and addresses of the
Holders and the amounts and Maturities of the Equipment Notes held by such
Holders.
(b) Ownership of the Equipment Notes shall be proved by the Register kept
by the Registrar.
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE INDENTURE ESTATE
--------------------------------
Section 5.01. Basic Rent Distribution. Except as otherwise provided in
-----------------------
Section 5.03 hereof, each installment of Basic Rent, any payment of interest on
overdue installments of Basic Rent and any payment received by the Indenture
Trustee pursuant to Section 8.03(a) hereof shall be distributed by the Indenture
Trustee no later than the time herein provided in the following order of
priority:
first, (i) so much of such installment or payment as shall be
-----
required to pay in full the aggregate amount of principal and
interest (as well as any interest on any overdue principal
and, to the extent permitted by applicable law, on any overdue
interest) then due under all Series A Equipment Notes shall be
distributed to the Holders of Series A 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 A Equipment Note bears to the aggregate
amount of the payments then due under all Series A Equipment
Notes;
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(ii) after giving effect to paragraph (i) above, so much of
such installment or payment as shall be required to pay in
full the aggregate amount of principal and interest (as well
as any interest on any overdue principal and, to the extent
permitted by applicable law, on any overdue interest) then due
under all Series B Equipment Notes shall be distributed to the
Holders of Series B 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 B
Equipment Note bears to the aggregate amount of the payments
then due under all Series B Equipment Notes; and
(iii) after giving effect to paragraph (ii) above, so much of
such installment or payment as shall be required to pay in
full the aggregate amount of principal and interest (as well
as any interest on any overdue principal and, to the extent
permitted by applicable law, on any overdue interest) then due
under all Series C Equipment Notes shall be distributed to the
Holders of Series C Equipment Notes ratably, without priority
of one over the other, in the proportion that the amount of
such payment or payments then due under each Series C
Equipment Note bears to the aggregate amount of the payments
then due under all Series C Equipment Notes; and
second, the balance if any of such installment or payment remaining
------
thereafter shall be distributed to the Owner Trustee or as
otherwise directed in writing by the Owner Trustee for
distribution pursuant to the Trust Agreement; provided,
--------
however, that if an Event of Default shall have occurred and
-------
be continuing, then such balance shall not be distributed as
provided in this clause "second" but shall be held by the
------
Indenture Trustee as part of the Indenture Estate and invested
in accordance with Section 5.08 hereof until whichever of the
following shall first occur: (i) all Events of Default shall
have been cured or waived, in which event such balance shall
be distributed as provided in this clause "second", (ii)
------
Section 5.03 hereof shall be applicable, in which event such
balance shall be distributed in accordance with the provisions
of such Section 5.03, or (iii) the 120th day after the receipt
of such payment in which case such payment shall be
distributed as provided in this clause "second" as if no Event
------
of Default shall have occurred and be continuing.
Section 5.02. Event of Loss and Replacement; Prepayment. (a) Except as
-----------------------------------------
otherwise provided in Section 5.03 hereof, any payment received by the Indenture
Trustee as the result of or in connection with an Event of Loss with respect to
the Aircraft (and with respect to which the Lessee has not made the replacement
election in Section 8(a)(i) of the Lease) or as the result of, or in connection
with any event under the Lease giving rise to, a prepayment pursuant to Section
6.02 hereof, shall be promptly distributed by the Indenture Trustee in the
following order of priority:
first, to reimburse the Indenture Trustee and the Holders for any
-----
costs or expenses reasonably incurred in connection with such
prepayment and (b) then to pay any other similar amounts then
due to the other Indenture Indemnitees;
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second, (i) to pay the amounts specified in paragraph (i) of
------
clause "third" of Section 5.03 hereof then due and payable in
-----
respect of the Series A Equipment Notes;
(ii) after giving effect to paragraph (i) above, to pay the
amounts specified in paragraph (ii) of clause "third" of
-----
Section 5.03 hereof then due and payable in respect of the
Series B Equipment Notes; and
(iii) after giving effect to paragraph (ii) above, to pay
the amounts specified in paragraph (iii) of clause "third" of
-----
Section 5.03 hereof then due and payable in respect of the
Series C Equipment Notes;
provided, that payments pursuant to this clause "second"
-------- ------
shall be made without the payment of Make-Whole Premium; and
third, as provided in clause "fourth" of Section 5.03 hereof;
----- ------
provided that if a Replacement Airframe shall be substituted for an Airframe
--------
subject to an Event of Loss as provided in Section 8(a)(i) of the Lease and
Section 9.08 hereof, any proceeds which result from such Event of Loss and are
paid to the Indenture Trustee shall be held by the Indenture Trustee as part of
the Indenture Estate and, unless otherwise applied pursuant to Section 5.01 or
5.03 hereof, such proceeds shall be released to the Lessee upon the release of
such damaged Airframe and the replacement thereof as provided herein and in the
Lease.
(b) Any amounts received directly or indirectly from any governmental
authority, insurer or other party pursuant to any provision of Section 8 or 9 of
the Lease as the result of loss or damage not constituting an Event of Loss with
respect to the Aircraft, or as a result of such loss or damage constituting an
Event of Loss if and to the extent that such amounts would at the time be
required to be paid to the Lessee pursuant to such Section 8 or 9 but for the
fact that a Specified Default exists shall be held by the Indenture Trustee as
security for the obligations of the Lessee under the Lease and the Participation
Agreement and shall be invested in accordance with the terms of Section 5.08
hereof and at such time as the conditions for payment to the Lessee specified in
such Section 8 or 9, as the case may be, shall be fulfilled and no Specified
Default exists, such amount, and the proceeds of any investment thereof, shall,
to the extent not theretofore applied, be paid to the Lessee to the extent
provided in the Lease.
Section 5.03. Payment After Indenture Event of Default, etc. Except as
---------------------------------------------
otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05 hereof, all
payments (other than Excepted Payments) received and all amounts held or
realized by the Indenture Trustee after an Indenture Event of Default shall have
occurred and be continuing and the Equipment Notes shall have become due and
payable as provided in Section 7.02(b) or (c) hereof, shall be promptly
distributed by the Indenture Trustee in the following order of priority:
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first, so much of such payments or amounts as shall be required to
-----
pay or reimburse (i) the Indenture Trustee for any tax (except
to the extent resulting from a failure of the Indenture
Trustee to withhold pursuant to Section 5.09 hereof), expense,
charge or other loss (including, without limitation, all
amounts to be expended at the expense of, or charged upon the
tolls, rents, revenues, issues, products and profits of, the
property included in the Indenture Estate pursuant to Section
7.03(b) hereof) incurred by the Indenture Trustee (to the
extent not previously reimbursed), the expenses of any sale,
taking or other proceeding, attorneys' fees and expenses,
court costs, and any other expenditures incurred or
expenditures or advances made by the Indenture Trustee or the
Holders in the protection, exercise or enforcement of any
right, power or remedy or any damages sustained by the
Indenture Trustee or the Holders, liquidated or otherwise,
upon such Indenture Event of Default, shall be applied by the
Indenture Trustee as between itself and the Holders in
reimbursement of such expenses and (ii) all similar amounts
payable to the other Indenture Indemnitees hereunder and under
the Participation Agreement; and in the case the aggregate
amount to be so distributed is insufficient to pay as set
forth in this clause "first", 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 Holders for
payments made pursuant to Section 9.03(d) hereof (to the
extent not previously reimbursed) shall be distributed to such
then existing or prior 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
Holder pursuant to said Section 9.03(d) hereof;
third, (i) so much of such payments or amounts remaining as shall
-----
be required to pay in full the aggregate unpaid principal
amount of all Series A Equipment Notes, and the accrued but
unpaid interest and other amounts due thereon and all other
Secured Obligations (other than Make-Whole Premium) in respect
of the Series A Equipment Notes to the date of distribution,
shall be distributed to the Holders of Series A Equipment
Notes, and in case the aggregate amount so to be distributed
shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the
proportion that the aggregate unpaid principal amount of all
Series A Equipment Notes held by each Holder plus the accrued
but unpaid interest and other amounts due hereunder or
thereunder (other than Make-Whole Premium) to the date of
distribution, bears to the aggregate unpaid principal amount
of all Series A Equipment Notes held by all such Holders plus
the accrued but unpaid interest and other amounts due thereon
(other than Make-Whole Premium) to the date of distribution;
(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 principal
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amount of all Series B Equipment Notes, and the accrued but
unpaid interest and other amounts due thereon and all other
Secured Obligations (other than Make- Whole Premium) in
respect of the Series B Equipment Notes to the date of
distribution, shall be distributed to the Holders of Series B
Equipment Notes, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid,
then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid principal amount of all
Series B Equipment Notes held by each Holder plus the accrued
but unpaid interest and other amounts due hereunder or
thereunder (other than Make-Whole Premium) to the date of
distribution, bears to the aggregate unpaid principal amount
of all Series B Equipment Notes held by all such Holders plus
the accrued but unpaid interest and other amounts due thereon
(other than Make-Whole Premium) to the date of distribution;
and
(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 principal amount of all Series C
Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations (other
than Make- Whole Premium) in respect of the Series C Equipment
Notes to the date of distribution, shall be distributed to the
Holders of Series C Equipment Notes, and in case the aggregate
amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid
principal amount of all Series C Equipment Notes held by each
Holder plus the accrued but unpaid interest and other amounts
due hereunder or thereunder (other than Make-Whole Premium) to
the date of distribution, bears to the aggregate unpaid
principal amount of all Series C Equipment Notes held by all
such Holders plus the accrued but unpaid interest and other
amounts due thereon (other than Make-Whole Premium) to the
date of distribution;
(it being understood that amounts payable under this clause
"third" shall not in any event include Make-Whole Premium);
and
fourth, the balance, if any of such payments or amounts remaining thereafter
------
shall be distributed to the Owner Trustee for distribution pursuant to
the Trust Agreement.
Section 5.04. Certain Payments. (a) Any payments received by the
----------------
Indenture Trustee which are to be held or applied according to any provision in
any other Indenture Document shall be held or applied thereunder in accordance
therewith, except to the extent this Indenture expressly provides for such
payments to be held or applied in a different manner.
(b) Notwithstanding anything to the contrary contained in this Article
V, the Indenture Trustee will distribute, promptly upon receipt, any indemnity
or other payment received by it from the Owner Trustee or the Lessee in respect
of (i) the Indenture Trustee in its individual capacity, (ii) the Subordination
Agent, (iii) each Liquidity Provider, (iv) the Pass-Through Trustee, and (v) any
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other Indenture Indemnitee, in each case whether pursuant to Article 6 or 7 of
the Participation Agreement or as Supplemental Rent, directly to the Person
(which may include the Indenture Trustee) entitled thereto. Any payment received
by the Indenture Trustee under clause (b) of the last paragraph of Section 2.04
shall be distributed to the Subordination Agent to be distributed in accordance
with the terms of the Intercreditor Agreement.
(c) Notwithstanding anything to the contrary contained herein, any sums
received by the Indenture Trustee which constitute Excepted Payments shall be
distributed promptly upon receipt by the Indenture Trustee directly to the
Person or Persons entitled thereto.
(d) Notwithstanding any provision of this Indenture to the contrary,
any amounts held by Indenture Trustee pursuant to the terms of the Lease shall
be held by the Indenture Trustee as security for the obligations of Lessee under
the Indenture Documents and, if and when required by the Lease, paid and/or
applied in accordance with the applicable provisions of the Lease.
Section 5.05. Other Payments. Any payments received by the Indenture
--------------
Trustee for which no provision as to the application thereof is made elsewhere
in this Indenture or in any other Indenture Document or the Equipment Notes
shall be distributed by the Indenture Trustee (a) to the extent received or
realized at any time prior to the payment in full of all Secured Obligations to
the Holders, in the order of priority specified in Section 5.01 hereof, and (b)
to the extent received or realized at any time after payment in full of all
Secured Obligations to the Holders, in the following order of priority:
first, in the manner provided in clause "first" of Section 5.03
----- -----
hereof, and
second, in the manner provided in clause "fourth" of Section 5.03
------ ------
hereof.
Further, and except as otherwise provided in Sections 5.02, 5.03 and
5.04 hereof, all payments received and amounts realized by the Indenture Trustee
under the Lease or otherwise with respect to the Aircraft (including, without
limitation, all amounts realized upon the sale or release of the Aircraft after
the termination of the Lease with respect thereto), to the extent received or
realized at any time after payment in full of all Secured Obligations, shall be
distributed by the Indenture Trustee in the order of priority specified in
clause (b) of the immediately preceding sentence of this Section 5.05.
Section 5.06. Payments to Owner Trustee. Any amounts distributed
-------------------------
hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee by wire transfer of immediately available funds of the type
received by the Indenture Trustee at such office and to such account or accounts
of such entity or entities as shall be designated by notice from the Owner
Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby
notifies the Indenture Trustee that unless and until the Indenture Trustee
receives notice to the contrary from the Owner Trustee, all amounts to be
distributed to the Owner Trustee hereunder for distribution pursuant to or in
accordance with the Trust Agreement shall be distributed by wire transfer of
immediately available
-23-
funds of the type received by the Indenture Trustee to the account designated on
Schedule II to the Participation Agreement or such other account as the Owner
Participant may specify from time to time by notice to the Indenture Trustee as
may be specified pursuant to Section 4.02 of the Trust Agreement.
Section 5.07. Application of Payments. Each payment of principal of
-----------------------
and interest or other amounts due on each Equipment Note shall, except as
otherwise provided herein, be applied,
first, to the payment of interest on such Equipment Note due and
-----
payable to the date of such payment, as provided in such
Equipment Note, as well as any interest on overdue principal
and Make-Whole Premium, if any, and, to the extent permitted
by law, interest and other amounts due thereunder,
second, the payment of any other amount (other than the principal of
------
such Equipment Note), including any Make-Whole Premium, due
hereunder to the Holder of such Equipment Note or under such
Equipment Note; and
third, to the payment of the principal of such Equipment Note if
-----
then due hereunder or under such Equipment Note.
Section 5.08. Investment of Amounts Held by Indenture Trustee. Amounts
-----------------------------------------------
held by the Indenture Trustee pursuant to Section 5.02(b) hereof or pursuant to
any provision of any Indenture Document providing for investment by the
Indenture Trustee of sums pursuant to Section 15 of the Lease or this Section
5.08 shall be invested by the Indenture Trustee from time to time in securities
selected by (i) so long as no Event of Default shall have occurred and be
continuing, the Lessee (and in the absence of written direction by the Lessee,
the Indenture Trustee shall invest such monies in direct obligations of the
United States of America) or (ii) so long as an Event of Default shall have
occurred and be continuing, the Indenture Trustee and in each case shall be of
the type meeting the criteria for Permitted Investments. Unless otherwise
expressly provided in this Indenture, any income realized as a result of any
such investment, net of the Indenture Trustee's reasonable fees and expenses in
making such investment, shall be held and applied by the Indenture Trustee 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 Lessee shall be responsible
for and will promptly pay to the Indenture Trustee or the Owner Trustee, as the
case may be, on demand, the amount of any loss realized as the result of any
such investment (together with any fees, commissions and other costs and
expenses, if any, incurred by the Indenture Trustee or the Owner Trustee in
connection with such investment), such amount to be disposed of in accordance
with the terms hereof or the Lease, as the case may be. The Indenture Trustee
shall not be liable for any loss resulting from any investment made by it or any
investment sold by it under this Indenture in accordance with instructions from
the Lessee other than by reason of its willful misconduct or gross negligence,
and any such investment may be sold (without regard to its maturity) by the
Indenture Trustee without instructions whenever the Indenture Trustee reasonably
believes such sale is necessary to make a distribution required by this
Indenture.
-24-
Unless otherwise confirmed in writing, an account statement delivered
by the Indenture Trustee to the Owner Trustee (with a copy to the Lessee) shall
be deemed written confirmation by the Owner Trustee that the investment
transactions identified therein accurately reflect the investment directions
given to the Indenture Trustee by or on behalf of the Lessee, unless the Lessee
notifies the Indenture Trustee in writing to the contrary within 30 days of the
date of receipt of such statement.
Section 5.09. Withholding Taxes. The Indenture Trustee, as agent for
-----------------
the Owner Trustee, shall exclude and withhold from each payment of principal,
premium, if any, and interest and other amounts due hereunder or under the
Equipment Notes, and any and all withholding taxes applicable thereto as
required by law. The Indenture Trustee agrees to act as such withholding agent
and, in connection therewith, whenever any present or future taxes or similar
charges are required to be withheld with respect to any amounts payable in
respect of the Equipment Notes, it will withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the Holders,
it will file any necessary withholding tax returns or statements when due, and
that, as promptly as possible after the payment thereof, it will deliver to each
Holder appropriate documentation showing the payment thereof, together with such
additional documentary evidence as such Holder may reasonably request from time
to time.
ARTICLE VI
PREPAYMENT OF EQUIPMENT NOTES
Section 6.01. No Prepayment Except as Specified. Except as provided
---------------------------------
in Sections 6.02 and 8.02 hereof, the Equipment Notes may not be prepaid.
Section 6.02. Prepayment of Equipment Notes. (a) The Outstanding
-----------------------------
Equipment Notes shall be prepaid in full and not in part:
(i) If an Event of Loss occurs with respect to the Airframe
or with respect to the Airframe and the Engines or engines then
installed on the Airframe (unless pursuant to Section 8(a)(i) of the
Lease and Section 9.08 hereof replacement equipment is substituted for
the Airframe and Engines, if any, subject to such Event of Loss);
(ii) If the Lessee, pursuant to Section 13(b) of the Lease,
gives notice of purchase of the Aircraft (and Section 2.11 hereof is
not applicable in connection with such purchase);
(iii) If the Owner Participant, or the Owner Trustee on behalf
of the Owner Participant, gives notice of prepayment to the Indenture
Trustee pursuant to Section 8.02 hereof;
-25-
(iv) If the Lessee, pursuant to Section 14(a) of the Lease,
gives notice of a voluntary termination for obsolescence or surplus,
but subject to Section 6.02(c) below;
(v) Pursuant to Section 13.01 of the Participation Agreement
in connection with a refinancing of the Equipment Notes, but subject to
Section 6.02(c) below; or
(vi) At the option of the Owner Trustee, with the prior
written consent of the Lessee and the Owner Participant, upon not less
than 25 days' prior written notice.
(b) In the event of a prepayment of the Equipment Notes pursuant to
Sections 6.02(a)(ii), (iv) or (v) above, the Owner Trustee, a Responsible
Officer of which having received notice from the Lessee in accordance with and
subject to the terms of Section 13(b) or 14(a) of the Lease or Article 13 of the
Participation Agreement, as the case may be, shall give written notice to the
Indenture Trustee and to the Holders of all of the Equipment Notes specifying
the Business Day on which the Equipment Notes shall be prepaid. In the case of a
prepayment of the Equipment Notes pursuant to Section 6.02(a)(i) above, the
Equipment Notes shall be prepaid in full on the Termination Date specified in
Section 8(a)(ii) of the Lease. In the case of a prepayment of the Equipment
Notes pursuant to Section 6.02(a)(ii) above, the Equipment Notes shall be paid
in full on the EBO Date. In the case of a prepayment of the Equipment Notes
pursuant to Section 6.02(a)(iii) above, the Equipment Notes shall be prepaid in
full on the date so designated in the notice referred to in Section 8.02 hereof.
In the case of a prepayment of the Equipment Notes pursuant to Section
6.02(a)(iv) above, the Equipment Notes shall be prepaid in full on the
Termination Date specified in Section 14(a) of the Lease. In the case of a
prepayment of the Equipment Notes pursuant to Section 6.02(a)(v) above, the
Equipment Notes shall be prepaid on the effective date of the Refinancing. In
the case of a prepayment of the Equipment Notes pursuant to Section 6.02(a)(vi)
above, the Equipment Notes shall be prepaid on the date designated in the notice
referred to therein. The day on which the Equipment Notes are to be prepaid
pursuant to this Section 6.02(b) is herein referred to as the "Prepayment Date".
---------------
On or prior to the Prepayment Date, immediately available funds shall
be deposited with the Indenture Trustee in an amount in respect of the Equipment
Notes equal to:
(1) if such prepayment is made pursuant to Section 6.02(a)(i) or (iii)
(if clause (i), but not clause (ii) or clause (iii) of the first sentence of
Section 8.02(a) of the Indenture is applicable and such prepayment is made when
an Event of Default has occurred and been continuing for 180 days or more, or if
clause (ii) or clause (iii) of the first sentence of Section 8.02(a) hereof is
applicable), the sum of (A) the aggregate principal amount of such Equipment
Notes then Outstanding, (B) accrued interest on the Equipment Notes to the
Prepayment Date and (C) all other aggregate sums due the Indenture Trustee
hereunder or under the Participation Agreement or the Lease, but excluding any
Make-Whole Premium or other premium or penalty, or
(2) if such prepayment is made pursuant to Section 6.02(a)(ii) or (iii)
(if clause (i), but not clause (ii) or clause (iii) of the first sentence of
Section 8.02(a) of the Indenture is applicable and
-26-
such prepayment is made when an Event of Default has occurred and been
continuing for less than 180 days) 6.02(a)(iv), 6.02(a)(v) or 6.02(a)(vi) above,
the sum of the amounts specified in clauses (A), (B) and (C) of the preceding
clause (1) plus any Make-Whole Premium payable in respect of all Equipment Notes
(the aggregate amount required to be paid pursuant to this sentence being herein
referred to as the "Prepayment Price").
----------------
(c) Notwithstanding the foregoing provisions of this Section 6.02, if
(x) a prepayment notice has been given in respect of Section 6.02(a)(iv) and no
termination of the Lease actually occurs or (y) a prepayment notice has been
given in respect of Section 6.02(a)(v) and no refinancing shall occur pursuant
to Article 13 of the Participation Agreement, any notice of prepayment given
pursuant to Section 6.02(b) in respect thereof shall be deemed revoked.
Section 6.03. Notice of Prepayment to Holders. In order to effect any
-------------------------------
prepayment set forth in Section 6.02(a) hereof, the Indenture Trustee shall give
prompt notice by first class mail of prepayment to each Holder. Any notice of
prepayment given by the Owner Trustee shall be irrevocable except (x) as
provided in Section 6.02(c) or (y) in the case of a notice given pursuant to
Section 6.02(a)(vi), which notice may be revoked by the Owner Trustee at any
time on or before the third Business Day preceding the Prepayment Date by prompt
notice to the Holders.
All notices of prepayment shall state: (1) the Prepayment Date, (2) the
applicable basis for determining the Prepayment Price, (3) that on the
Prepayment Date, subject to the provisions hereof, the Prepayment Price will
become due and payable and interest on the Equipment Notes shall cease to accrue
on and after such Prepayment Date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment.
Section 6.04. Deposit of Prepayment Price. On the Prepayment Date, the
---------------------------
Owner Trustee shall, to the extent an amount equal to the Prepayment Price shall
not then be held in cash by the Indenture Trustee in immediately available funds
and deposited for the purpose, pay to the Indenture Trustee an amount equal to
the difference between (a) the amount then so held and (b) the Prepayment Price.
If there shall so be on deposit and/or deposited the applicable Prepayment Price
on or prior to a Prepayment Date, interest shall cease to accrue in respect of
all the Outstanding Equipment Notes on and after such Prepayment Date.
Section 6.05. Equipment Notes Payable on Prepayment Date. On the
------------------------------------------
Prepayment Date, the Outstanding Equipment Notes shall (except (A) if the Owner
Trustee has requested the Indenture Trustee to revoke such notice of prepayment
in accordance with Section 6.03 hereof or such notice is deemed to be revoked
pursuant to Section 6.02(c) hereof or (B) as otherwise provided in the Lease)
become due and payable and from and after such Prepayment Date (unless there
shall be a default in the payment of the Prepayment Price) such Equipment Notes
shall cease to bear interest. Upon surrender by any Holder of its Equipment Note
for prepayment in accordance with said notice, such Holder shall be paid the
principal amount of its Equipment Note then outstanding, accrued
-27-
interest thereon to the Prepayment Date, all other sums due to such Holder
hereunder plus, if a Make-Whole Premium is payable pursuant to Section 6.02(b)
hereof, the Make-Whole Premium in respect of such Equipment Note.
If any Equipment Note called for prepayment shall not be so paid upon
timely surrender thereof for prepayment, the principal shall, until paid,
continue to bear interest from the Prepayment Date at the interest rate
applicable to such Equipment Note.
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. Indenture Event of Default. "Indenture Event of Default"
-------------------------- --------------------------
means any of the following events (whatever the reason for such Indenture Event
of Default and whether it 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) any Event of Default specified in Section 16 of the
Lease (other than an Event of Default arising solely as the result of
the failure to make an Excepted Payment unless the Owner Participant
shall notify the Indenture Trustee in writing that such failure shall
constitute an Indenture Event of Default); or
(ii) the failure of the Owner Trustee other than by reason of
a Default or an Event of Default (i) to pay principal, interest or
Make-Whole Premium, if any, on any Equipment Note when due, and such
failure shall have continued unremedied for ten Business Days after the
date when due or (ii) to pay any other amounts hereunder or under the
Equipment Notes when due and such failure shall have continued
unremedied for a period of 30 days after the Owner Trustee and the
Owner Participant shall receive written demand therefor from the
Indenture Trustee or by any Holder; or
(iii) (A) any representation or warranty made by the Owner
Trustee, the Owner Participant or any Owner Participant Guarantor to
the Indenture Trustee or any Holder herein or in the Participation
Agreement or its Owner Participant Guaranty or in any certificate the
Owner Trustee, the Owner Participant or any Owner Participant Guarantor
furnished to the Indenture Trustee or any Holder in connection herewith
or therewith or pursuant hereto or thereto shall prove to have been
false or incorrect in any material respect when made and was and
remains in any respect materially adverse to the interests of the
Holders and such misrepresentation shall not have been corrected within
30 days following notice thereof identified as a "Notice of Indenture
-------------------
Event of Default" being given to the Owner Trustee and the Owner
----------------
Participant by the Indenture Trustee or by a Majority in Interest of
Holders,
-28-
unless such misrepresentation is capable of being corrected, and Owner
Trustee or Owner Participant shall, after the delivery of such notice,
be diligently proceeding to correct such misrepresentation and shall in
fact correct such misrepresentation within 60 days after delivery of
such notice; or
(B) any (x) covenant made by the Owner Trustee in the fifth
paragraph following the Habendum Clause hereof or in Section 5.02(b) of the
Participation Agreement shall be breached in any material respect and any such
breach shall not be cured within 10 Business Days after the Owner Participant
has received notice thereof from any Holder or the Indenture Trustee (for
purposes of Section 7.02(b) of the Participation Agreement, it being agreed that
such breach may be cured by replacement of the Owner Trustee), or (y) any other
covenant made by the Owner Trustee, by the Owner Participant or by any Owner
Participant Guarantor to the Indenture Trustee or any Holder in any Operative
Agreement shall be breached in any material respect and such breach shall remain
unremedied for a period of 30 days after there has been given to the Owner
Trustee and the Owner Participant by Holders holding not less than a Majority in
Interest of Holders a written notice identified as a "Notice of Indenture Event
of Default" specifying such breach and requiring it to be remedied unless such
failure is curable and the Owner Trustee or the Owner Participant shall,
after the delivery of such notice, be diligently proceeding to correct such
failure and shall in fact correct such failure 60 days after delivery of such
notice; or
(iv) the Owner Trustee, the Lessor's Estate, the Owner
Participant or any Owner Participant Guarantor shall file any petition
or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
under any present or future bankruptcy, insolvency or similar statute,
law or regulation;
(v) an order for relief shall be entered in respect of the
Owner Trustee, the Owner Participant or any Owner Participant Guarantor
or the Lessor's Estate by a court having jurisdiction in the premises
in an involuntary case under the federal bankruptcy laws as now or
hereafter in effect; or the Owner Trustee, the Owner Participant or any
Owner Participant Guarantor or the Lessor's Estate shall file any
answer admitting or not contesting the material allegations of a
petition filed against the Owner Trustee, the Owner Participant or any
Owner Participant Guarantor or the Lessor's Estate in any proceeding
referred to in clause (vi) below or seek or consent or acquiesce in the
appointment of any trustee, custodian, receiver or liquidator of the
Owner Trustee, the Owner Participant or any Owner Participant Guarantor
or the Lessor's Estate, as the case may be, or of all or any
substantial part of its properties; or
(vi) without the consent or acquiescence of the Owner
Trustee, the Owner Participant or any Owner Participant Guarantor or
the Lessor's Estate, as the case may be, an order shall be entered
constituting an order for relief or approving a petition for relief or
reorganization or any other petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
other similar relief under any present or future bankruptcy, insolvency
or similar statute, law or regulation, or if any such petition shall be
-29-
filed against the Owner Trustee, the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate, as the case may be, and
such petition shall not be dismissed within 60 days, or if, without the
consent or acquiescence of the Owner Trustee, the Owner Participant or
any Owner Participant Guarantor or the Lessor's Estate, as the case may
be, an order shall be entered appointing a trustee, custodian, receiver
or liquidator of the Owner Trustee, the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate, as the case may be, or of
all or any substantial part of the properties of the Owner Trustee, the
Owner Participant or any Owner Participant Guarantor or the Lessor's
Estate, as the case may be, and such order shall not be dismissed
within 60 days.
Section 7.02. Remedies. (a) If an Indenture Event of Default shall
--------
have occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case, the Indenture Trustee may, and when
required by the provisions of Article IX or Section 7.02(c) hereof shall, (i)
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article VII, and (ii) in the event such Indenture
Event of Default is an Indenture Event of Default referred to in clause (i) of
Section 7.01 hereof, exercise any and all of the remedies pursuant to Section 17
of the Lease; provided that without the consent of the Owner Trustee and the
--------
Owner Participant such exercise of remedies shall not occur until after the
latest date on which the Owner Trustee may cure the related Event of Default
pursuant to Section 8.03 hereof. The Indenture Trustee may (subject to the
provisions of the next succeeding paragraph) take possession of all or any part
of the properties covered or intended to be covered by the Lien and security
interest created hereby or pursuant hereto and may exclude the Owner
Participant, the Owner Trustee, the Lessee and any transferee of the Lessee
(subject to Section 15.05 hereof), and all Persons claiming under any of them
wholly or partly therefrom. In addition, the Indenture Trustee may (subject to
the provisions of the next succeeding paragraph) exercise any other right or
remedy in lieu of or in addition to the foregoing that may be available to it
under applicable law, or proceed by appropriate court action to enforce the
terms hereof, of the Lease, or both, or to rescind the Lease. Without limiting
any of the foregoing, it is understood and agreed that the Indenture Trustee 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.
Anything in this Indenture to the contrary notwithstanding, the
Indenture Trustee shall not be entitled to exercise any remedy hereunder as a
result of an Indenture Event of Default which arises solely by reason of one or
more events or circumstances which constitute a Default or an Event of Default
unless the Indenture Trustee as security assignee of the Owner Trustee shall
have declared the Lease to be in default and shall have exercised or
concurrently be exercising one or more of the dispossessory remedies provided
for in Section 17 of the Lease with respect to the Aircraft; provided, however,
-------- -------
that such requirement to exercise one or more of such remedies under the Lease
shall not apply in circumstances where the Indenture Trustee is, and has been,
for a continuous period in excess of the 60-day period under Section
1110(a)(2)(A) of the Bankruptcy Code (such 60-day period being the "Section 1110
Period"), involuntarily stayed or prohibited by applicable law or court order
from exercising such remedies under the Lease (a "Continuous Stay Period");
provided further, however, that the requirement to exercise one or more of such
-------- ------- -------
remedies under the Lease shall
-30-
nonetheless be applicable during a Continuous Stay Period subsequent to the
expiration of the Section 1110 Period to the extent that the continuation of
such Continuous Stay Period subsequent to the expiration of the Section 1110
Period (A) results from an agreement by the Lessee or the trustee or the debtor-
in-possession in such proceeding during the Section 1110 Period with the
approval of the relevant court to perform the Lease in accordance with Section
1110(a)(2)(A) of the Bankruptcy Code and continues to perform as required by
Section 1110(a)(2)(A-B) of the Bankruptcy Code or (B) is an extension of the
Section 1110 Period with the consent of the Indenture Trustee pursuant to
Section 1110(b) of the Bankruptcy Code or (C) is the consequence of the
Indenture Trustee's own failure to give any requisite notice to any person. In
the event that the applicability of Section 1110 of the Bankruptcy Code to the
Aircraft is being contested by Lessee in judicial proceedings, both of the
Indenture Trustee and the Owner Trustee shall have the right to participate in
such proceedings; provided that any such participation by the Owner Trustee
shall not affect in any way any rights or remedy of the Indenture Trustee
hereunder.
(b) If an Indenture Event of Default under clause (i) (attributable to
an Event of Default under Section 16(f), (g) and (h) of the Lease), (iv), (v) or
(vi) of Section 7.01 hereof shall occur and be continuing, the unpaid principal
of all Outstanding Equipment Notes, together with interest accrued but unpaid
thereon and all other amounts due thereunder, but without Make-Whole Premium,
shall immediately become due and payable, without presentment, demand, protest
or notice, all of which are hereby waived.
(c) If any Indenture Event of Default not described in the preceding
paragraph (b) shall have occurred and be continuing, then and in every such
case, the Indenture Trustee may on its own accord or at the direction of a
Majority in Interest of Holders, at any time, by written notice to the Owner
Trustee and the Owner Participant, declare the principal of all the Equipment
Notes to be due and payable, whereupon the unpaid principal amount of all
Outstanding Equipment Notes, together with accrued interest thereon and all
other amounts due thereunder, but without Make-Whole Premium, shall immediately
become due and payable without presentment, demand, protest or other notice, all
of which are hereby waived. At any time after such declaration and prior to the
sale or disposition of the Indenture Estate, however, a Majority in Interest of
Holders, by notice to the Indenture Trustee and the Owner Trustee, may rescind
such declaration, whether made by the Indenture Trustee on its own accord or as
directed, if (x) there has been paid or deposited with the Indenture Trustee a
sum sufficient to pay all overdue installments of interest on all Equipment
Notes (together, to the extent permitted by law, with interest on such overdue
installments of interest), the principal on any Equipment Notes that would have
become due otherwise than by such declaration of acceleration, all sums paid or
advanced by the Indenture Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel, or (y) all Indenture Events of Default (other than the nonpayment of
principal that has become due solely because of such acceleration) have been
either cured or waived as provided in Section 7.11 hereof. No such rescission
shall affect any subsequent default or impair any right consequent thereon.
-31-
(d) Each Holder shall be entitled at any sale to credit against any
purchase price bid at such sale by such Holder all or any part of the unpaid
obligations owing to such Holder secured by the Lien of this Indenture (but only
to the extent that an amount equal to such purchase price would have been paid
to such Holder pursuant to Article V hereof if such purchase price were paid in
cash and the foregoing provisions of this subsection (d) were not given effect).
(e) In the event of any sale of the Indenture Estate, or any part
thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the term of this Indenture, the unpaid
principal amount of all Equipment Notes then outstanding, together with accrued
interest thereon (without Make-Whole Premium), and other amounts due thereunder,
shall immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(f) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement (or its designee) is a
Holder, the Indenture Trustee will not be authorized or empowered to acquire
title to the Indenture Estate or take any action with respect to the Indenture
Estate 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.
(g) Notwithstanding any other provision of this Indenture, the
Indenture Trustee may not exercise any right or remedy under this Section 7.02
(other than those specified in Section 7.02(b) or 7.02(c)) (or otherwise
foreclose the lien created by this Indenture or dispossess the Owner Trustee of
its rights in the Indenture Estate) in respect of an Indenture Event of Default
resulting from or arising out of a Default or Event of Default prior to the
Enforcement Date (as defined in Section 7.11 hereof) in respect of such
Indenture Event of Default.
Section 7.03. Return of Aircraft, etc. (a) Subject to Section 7.02
-----------------------
hereof, if an Indenture Event of Default shall have occurred and be continuing,
at the request of the Indenture Trustee, the Owner Trustee shall promptly
execute and deliver to the Indenture Trustee such documents as the Indenture
Trustee may reasonably deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify, to
obtain possession of all or any part of the Indenture Estate to which the
Indenture Trustee shall at the time be entitled under this Indenture. Subject to
the foregoing, if the Owner Trustee shall for any reason fail to execute and
deliver such documents after such request by the Indenture Trustee, the
Indenture Trustee may pursue all or part of such Indenture Estate wherever it
may be found and enter any of the premises of the Lessee or the Owner Trustee
wherever such Indenture Estate may be or be supposed to be and search for such
Indenture Estate and take possession of and remove such Indenture Estate. All
expenses of pursuing, searching for and taking such Indenture Estate shall,
until paid, be secured by the Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Indenture Estate, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modification, alterations and repairs
-32-
to and of such Indenture Estate, as the Indenture Trustee may reasonably deem
proper. In each case subject to Section 7.02 hereof, the Indenture Trustee shall
have the right to maintain, use, operate, store, insure, lease, dispose of,
modify, alter, control or manage the Indenture Estate and to carry on the
business and to exercise all rights and powers of the Owner Participant and the
Owner Trustee relating to the Indenture Estate, as the Indenture Trustee may
reasonably deem best, including the right to enter into any and all such
agreements with respect to the maintenance, insurance, use, operation, storage,
leasing, control, management, modification, alteration or disposition of all or
any part of the Indenture Estate as the Indenture Trustee may determine.
Further, the Indenture Trustee shall be entitled to collect and receive directly
all tolls, rents (including Rent), revenues, issues, income, products and
profits of the Indenture Estate and every part thereof other than Excepted
Payments, without prejudice, however, to the right of the Indenture Trustee
under any provision of this Indenture to collect and receive all cash held by,
or required to be deposited with, the Indenture Trustee under this Indenture
(other than Excepted Payments). Such tolls, rents (including Rent), revenues,
issues, income, products and profits shall be applied to pay the expenses of the
use, operation, storage, insurance, leasing, control, management, modification,
alteration or disposition of the Indenture Estate, and of all maintenance and
repairs, and of conducting the business thereof, and to make all payments which
the Indenture Trustee may be required or may reasonably elect to make for any
taxes, assessments, insurance or other proper charges upon the Indenture Estate
(including the employment of engineers and accountants to examine, inspect and
make reports upon the properties and books and records of the Owner Trustee and
the Lessee), and all other payments which the Indenture Trustee may be required
or authorized to make under any provision of this Indenture, as well as just and
reasonable compensation for the services of the Indenture Trustee and of all
persons properly engaged and employed for such purposes by the Indenture
Trustee; provided, that any excess amounts shall be promptly distributed in
--------
accordance with Section 5.03 hereof.
(c) Subject to Section 7.02 hereof, if an Indenture Event of Default
shall have occurred and be continuing and the Indenture Trustee shall be
entitled to exercise remedies hereunder, and subject to Article VIII hereof, the
Indenture Trustee, either with or without taking possession, and either before
or after taking possession, and without instituting any legal proceedings
whatsoever, may sell, assign, transfer and deliver the whole or, from time to
time, to the extent permitted by law, any part of the Indenture Estate, or
interest therein, at any private sale or public auction to the highest bidder,
with or without demand, advertisement or notice, except that in respect of any
private sale 30 days' prior written notice by registered mail to the Owner
Trustee and the Owner Participant will be provided, for cash or, with the
consent of the Owner Trustee and the Owner Participant, credit or for other
property, for immediate or future delivery, and for such price or prices and on
such terms as the Indenture Trustee in exercising reasonable commercial
discretion may determine; provided, that any such action shall be at the time
--------
lawful and that all mandatory legal requirements shall be complied with. Any
notice required pursuant to the terms hereof in the case of a public sale, shall
state the time and place fixed for such sale. Any such public sale shall be held
at such time or times within ordinary business hours as the Indenture Trustee
shall fix in the notice of such sale. At any such sale, the Indenture Estate may
be sold in one lot as an entirety or in separate lots. The Indenture Trustee
shall not be obligated to make any sale pursuant to such notice. The Indenture
Trustee may, without notice or publication, adjourn any public or private sale
or cause the same to be adjourned
-33-
from time to time by announcement at the time and place fixed for such sale, and
any such sale may be made at any time or place to which the same may be so
adjourned without further notice or publication. The Indenture Trustee may
exercise such right of sale without possession or production of the Equipment
Notes or proof of ownership thereof, and as representative of the Holders may
exercise such right without notice to the Holders or without including the
Holders as parties to any suit or proceedings relating to the foreclosure of any
part of the Indenture Estate. The Owner Trustee shall execute any and all such
bills of sale, assignments and other documents, and perform and do all other
acts and things reasonably requested by the Indenture Trustee in order to permit
consummation of any sale of the Indenture Estate in accordance with this Section
7.03(c) and to effectuate the transfer or conveyance referred to in the first
sentence of this Section 7.03(c). Notwithstanding any other provision of this
Indenture, the Indenture Trustee shall not sell the Indenture Estate or any part
thereof unless the Equipment Notes shall have been accelerated.
(d) To the extent permitted by Applicable Law, and subject to Section
7.02 hereof, the Indenture Trustee or any Holder may be a purchaser of the
Indenture Estate or any part thereof or any interest therein at any sale
thereof, whether pursuant to foreclosure or power of sale or otherwise. The
Indenture Trustee may apply against the purchase price therefor the amount then
due hereunder or under any of the Equipment Notes secured hereby and any Holder
may apply against the purchase price therefor the amount then due to it
hereunder, under any other Indenture Document or under the Equipment Notes held
by such Holder to the extent of such portion of the purchase price as it would
have received had it been entitled to share any distribution thereof. The
Indenture Trustee or any Holder or nominee thereof shall, upon any such
purchase, acquire good title to the property so purchased, free of the Lien of
this Indenture and, to the extent permitted by applicable law, free of all
rights of redemption in the Owner Trustee or the Owner Participant in respect of
the property so purchased.
(e) The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any successor
or nominee) for all or any part of the Indenture Estate, whether such
receivership be incidental to a proposed sale of the Indenture Estate or the
taking of possession thereof or otherwise, and the Owner Trustee hereby consents
to the appointment of such receiver and will not oppose any such appointment.
Any receiver appointed for all or any part of the Indenture Estate shall be
entitled to exercise all of the rights and powers of the Indenture Trustee with
respect to the Indenture Estate.
(f) Subject to the provisions of this Indenture, to the extent
permitted by Applicable Law, upon the occurrence and during the continuation of
an Indenture Event of Default the Owner Trustee irrevocably appoints the
Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee
(which appointment is coupled with an interest) in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Indenture, whether pursuant to
foreclosure or power of sale, assignments and other instruments as may be
necessary or appropriate, with full power substitution, the Owner
-34-
Trustee 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 Indenture Trustee or any purchaser, the Owner Trustee shall
ratify and confirm any such sale, assignment, transfer or delivery, by executing
and delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
Section 7.04. Indenture Trustee May Prove Debt. If the Owner Trustee
--------------------------------
shall fail to pay any amount payable hereunder or under the Equipment Notes, the
Indenture Trustee, in its own name and as trustee of an express trust, shall be
entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against the Owner Trustee and collect in the manner
provided by law out of the property of the Owner Trustee wherever situated, the
moneys adjudged or decreed to be payable; provided, that any sale of any portion
--------
of the Indenture Estate shall be done in accordance with Sections 7.02 and
7.03(c) hereof.
In case there shall be pending proceedings relative to the Owner
Trustee under the Bankruptcy Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the Owner Trustee
or its property, or in case of any other comparable judicial proceedings
relative to the Owner Trustee, or to the creditors or property of the Owner
Trustee, the Indenture Trustee, irrespective of whether the principal of the
Equipment Notes shall then be due and payable as therein or herein expressed or
by declaration or otherwise and irrespective of whether the Indenture Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole
amount of principal, interest and other amounts owing and unpaid in
respect of the Equipment Notes or hereunder, and to file such other
papers or documents as may be necessary or advisable in order to have
the claims of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of the
Holders allowed in any judicial proceedings relative to the Owner
Trustee or to the creditors or property of the Owner Trustee,
(b) unless prohibited by applicable law and
regulations, to vote on behalf of the Holders in any election of a
trustee or a standby trustee in arrangement, reorganization,
liquidation or other bankruptcy or insolvency proceedings or person
performing similar functions in comparable proceedings, and
-35-
(c) to collect and receive any moneys or other
property payable or deliverable on any such claims, and to distribute
all amounts received with respect to the claims of the Holders and of
the Indenture Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official is
hereby authorized by each of the Holders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to the Holders, to pay to the Holders such amounts
as shall be sufficient to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents,
attorneys and counsel, and all other reasonable expenses and liabilities
incurred, by the Indenture Trustee and each predecessor Indenture Trustee except
as a result of negligence or willful misconduct.
Nothing contained herein shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Equipment Notes or the rights of any Holder thereof, or to
authorize the Indenture Trustee to vote in respect of the claim of any Holder in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar person.
All rights of action and rights to assert claims under this Indenture,
or under any of the Equipment Notes, may be enforced by the Indenture Trustee
without the possession of such Equipment Notes. Any trial or other proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
reasonable expenses, disbursements and compensation of the Indenture Trustee,
each predecessor Indenture Trustee and their respective agents and attorneys,
shall be for the ratable benefit of the Holders, as provided herein.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the Holders of the Equipment Notes, and it shall not be
necessary to make any Holders parties to such proceedings.
Section 7.05. Remedies Cumulative. Each and every right, power and
-------------------
remedy given to the Indenture Trustee in this Indenture shall be cumulative and
shall be in addition to every other right, power and remedy specifically given
herein or now or hereafter existing at law, in equity or by statute, and each
and every right, power and remedy whether specifically given herein or otherwise
existing may be exercised from time to time and as often and in such order as
may be deemed expedient by the Indenture Trustee or the Holders, 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 later any
other right, power or remedy. No delay or omission by the Indenture Trustee or
of any Holder 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 Trustee or the Lessee or to be
an acquiescence in any such default.
-36-
Section 7.06. Suits for Enforcement. If an Indenture Event of Default
---------------------
has occurred, has not been waived and is continuing, the Indenture Trustee may
in its discretion and subject to its rights of appropriate indemnification under
Sections 7.09 and 9.03 and Article XI hereof proceed to protect and enforce its
rights and rights of the Holders by such appropriate judicial proceedings as the
Indenture Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture or to
enforce any other legal or equitable right vested in the Indenture Trustee or
the Holders by this Indenture or by law; provided that, any sale of any portion
-------- ----
of the Indenture Estate shall be done in accordance with Sections 7.02 and
7.03(c) hereof.
Section 7.07. Discontinuance of Proceedings. In case the Indenture
-----------------------------
Trustee or any Holder shall have instituted any proceeding to enforce any right,
power or remedy under this Indenture by foreclosure, entry or otherwise, and
such proceeding shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Indenture Trustee or such Holder,
then the Owner Trustee, the Indenture Trustee, any Owner Participant, the
Holders and the Lessee shall, subject to any binding determination in such
proceeding, be restored to their former positions and rights under this
Indenture with respect to the Indenture Estate, and all rights, remedies and
powers of the Indenture Trustee and the Holders shall continue as if no such
proceeding had been instituted.
Section 7.08. Unconditional Right of Holders to Payments on Equipment
-------------------------------------------------------
Notes. Notwithstanding any other provision in this Indenture and any provision
-----
of any Equipment Note, the right of any Holder to receive payment of the
principal of and interest and Make-Whole Premium, if any, on such Equipment Note
on or after the respective due dates and in the manner expressed in such
Equipment Note or to institute suit for the enforcement of any such payment on
or after such respective dates as provided herein, shall not be impaired or
affected without the consent of such Holder.
Section 7.09. Control by Holders. The Majority in Interest of Holders
------------------
shall have the right to direct the Indenture Trustee as to the time, method, and
place of conducting any proceeding for any remedy available to the Indenture
Trustee under this Indenture, or exercising any trust or power conferred on the
Indenture Trustee by this Indenture; provided that such direction shall not be
--------
otherwise than in accordance with law and the provisions of this Indenture and
the Indenture Trustee shall have received, to the extent provided in Sections
7.06 and 9.03 and Article XI hereof, such reasonable indemnification as it may
require against the costs, expenses and liabilities to be incurred by the
Indenture Trustee; and provided further that (subject to the provisions of
--------
Section 9.02 hereof) the Indenture Trustee shall have the right to decline to
follow any such direction if the Indenture Trustee, being advised by counsel,
shall determine that the action or proceeding so directed may not lawfully be
taken or if the Indenture Trustee in good faith by its board of directors, the
executive committee, or a trust committee of directors or Responsible Officers
of the Indenture Trustee shall determine that the action or proceedings so
directed would involve the Indenture Trustee in personal liability or if the
Indenture Trustee in good faith shall so determine that the actions or
forbearance
-37-
specified in or pursuant to such direction shall be unduly prejudicial to the
interests of Holders not joining in the giving of said direction, it being
understood that (subject to Section 9.02 hereof) the Indenture Trustee shall
have no duty to ascertain whether or not such actions or forbearance are unduly
prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Indenture
Trustee in its discretion to take any action deemed proper by the Indenture
Trustee and which is not inconsistent with the direction by the Majority in
Interest of Holders.
Section 7.10. Waiver of Past Indenture Default. Upon written
--------------------------------
instructions from the Majority in Interest of Holders, the Indenture Trustee
shall waive any past Indenture Default and its consequences and upon any such
waiver such Indenture Default shall cease to exist and any Indenture Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
Indenture Default or impair any right consequent thereon; provided, however,
-------- -------
that in the absence of written instructions from all Holders and each Liquidity
Provider, the Indenture Trustee shall not waive any Indenture Default (a) in the
payment of the principal of or Make-Whole Premium, if any, or interest on, or
other amounts due under, any Equipment Note then Outstanding, or (b) in respect
of a covenant or provision of this Indenture which, under Article XIII hereof,
cannot be modified or amended without the consent of each Holder.
Section 7.11. Notice of Indenture Default. The Indenture Trustee shall
---------------------------
transmit to the Owner Trustee, the Holders, the Liquidity Provider and the Owner
Participant notice of any Indenture Event of Default actually known to a
Responsible Officer of the Indenture Trustee or any Indenture Event of Default
or Indenture Default arising under Section 7.01(i) (arising out of a Lease Event
of Default under Section 16(a) of the Lease) or 7.01(ii), such notice to be
transmitted by mail to the Holders, the Liquidity Provider, the Owner Trustee
and any Owner Participant promptly after the occurrence thereof, unless any such
Indenture Default or Indenture Event of Default shall have been cured before the
giving of such notice; provided that, except in the case of default in the
-------- ----
payment of the principal of or interest on or any other amount due under any of
the Equipment Notes, the Indenture Trustee shall be protected in withholding
such notice to the Holders if and so long as the board of directors, the
executive committee, or a trust committee of directors or trustees and/or
Responsible Officers of the Indenture Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders. In the case of
any Indenture Event of Default relating to or arising out of a Default or an
Event of Default, the Indenture Trustee agrees to give the Holders, the Owner
Trustee and the Owner Participant not less than ten Business Days prior notice
of the date (the "Enforcement Date") on which the Indenture Trustee may commence
the exercise of any remedy made under Section 7.02 (other than those specified
in Section 7.02(b) or 7.02(c)).
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ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
Section 8.01. Certain Rights of Owner Trustee and Owner Participant.
-----------------------------------------------------
(a) Except as provided in paragraph (a) immediately following the Granting
Clause hereof and in Section 13.01 hereof, without the consent of a Majority in
Interest of Holders, the Owner Trustee may not modify, amend or supplement any
of the Indenture Documents, or give any consent, waiver, authorization or
approval thereunder, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the respective parties thereunder; provided, however, that
-------- -------
the actions specified in subsection (b) of this Section 8.01 may be taken
without the consent of the Indenture Trustee or any Holder.
(b) Subject to the provisions of subsection (c) of this Section 8.01,
the Owner Trustee, at any time and from time to time, without the consent of the
Indenture Trustee or of any Holder, may:
(1) so long as no Indenture Event of Default shall have occurred and be
continuing, modify, amend or supplement the Lease, or give any consent, waiver,
authorization or approval with respect thereto, except that without compliance
with subsection (a) of this Section 8.01 the Owner Trustee shall not modify,
amend or supplement, or give any waiver for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions thereof or of
modifying in any manner the rights of the respective parties thereunder, with
respect to the following provisions of the Lease as in effect on the date
hereof: Sections 2, 3(c) (except to the extent such Section relates to amounts
payable (whether directly or pursuant to this Indenture) to Persons other than
Holders, each Liquidity Provider, the Subordination Agent and the Indenture
Trustee in its individual capacity), 3(e) (except insofar as it relates to the
address or account information of the Owner Trustee or the Indenture Trustee),
3(f), 3(g), 4, 6 (except in order to increase the Lessee's liabilities or
enhance the Lessor's or the Owner Participant's rights thereunder), 8 (except
that additional requirements may be imposed on the Lessee), 9 (except for
Section 9(f) and except that additional insurance requirements may be imposed on
the Lessee), 10, 11(b) (except to impose additional requirements on the Lessee)
14(a) (except that further restrictions may be imposed on the Lessee), 16
(except to impose additional or more stringent Events of Default), 17 (except to
impose additional remedies), 20(b) and 23(e) and any definition of terms used in
the Lease, to the extent that any modification of such definition would result
in a modification of the Lease not permitted pursuant to this subsection (b);
provided that the Owner Trustee may take any such action without the consent of
--------
the Indenture Trustee or any Holder to the extent such action relates to the
payment of amounts constituting, or the Owner Trustee's, the Owner Participant's
or the Lessee's rights or obligations with respect to, Excepted Payments;
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(2) modify, amend or supplement the Trust Agreement and any other
Indenture Document (other than the Lease and the Participation Agreement), or
give any consent, waiver, authorization or approval with respect thereto, in
each case only to the extent any such action shall not materially adversely
impact the interests of the Holders;
(3) modify, amend or supplement the Participation Agreement, or give
any consent, waiver, authorization or approval with respect thereto, except that
without compliance with subsection (a) of this Section 8.01 the Owner Trustee
shall not modify, amend or supplement, or give any consent, waiver,
authorization or approval for the purpose of adding provisions to or changing in
any manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the respective parties thereunder, with respect to the
following provisions of the Participation Agreement as in effect on the date
hereof: Article 4 and Section 8.01(b) (insofar as such Article 4 and Section
8.01(b) relate to the Indenture Trustee, the Pass-Through Trustee and the
Holders), Articles 5, 6 and 7 and Sections 13.01 and 15.08 (insofar as such
Articles and Sections relate to the Indenture Trustee; it being understood that
only the Indenture Trustee's consent in respect thereof need be obtained) and
any definition of terms used in the Participation Agreement, to the extent that
any modification of such definition would result in a modification of the
Participation Agreement not permitted pursuant to this subsection (b); and
(4) modify, amend or supplement any of the Indenture Documents in order
to cure any ambiguity, to correct or supplement any provisions thereof which may
be defective or inconsistent with any other provision thereof or of any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising thereunder or under this Indenture which shall not
be inconsistent with the provisions of this Indenture, provided the making of
any such other provision shall not adversely affect the interests of the
Holders.
(c) No modification, amendment, supplement, consent, waiver,
authorization or approval with respect to the Lease or the Participation
Agreement, whether effected pursuant to subsection (a) or pursuant to subsection
(b) of this Section 8.01 and anything in such subsections or elsewhere in this
Indenture to the contrary notwithstanding, shall, without the consent of the
Holder of each Outstanding Equipment Note affected thereby, and each Liquidity
Provider,
(1) modify, amend or supplement the Lease in such a way as to (a)
extend the time of payment of Basic Rent or Termination Value or Supplemental
Rent payable to the Holders or any Liquidity Provider or any other amounts
payable for the account of the Holders or any Liquidity Provider (subject in any
event to Section 3(f) of the Lease) upon the occurrence of an Event of Loss or
Termination Value and any other amounts payable for the account of the Holders
(subject in any event to Section 3(f) of the Lease) upon termination of the
Lease with respect to the Aircraft payable under, or as provided in, the Lease
as in effect on the Delivery Date, or (b) reduce the amount of any installment
of Basic Rent or Supplemental Rent so that the same is less than the payment of
principal of, and interest on the Equipment Notes and Make-Whole Premium, if
any, and amounts due to each Liquidity Provider, as the case may be, to be made
from such installment of Basic Rent or Supplemental Rent, or (c) reduce the
aggregate amount of Termination Value, or any other amounts
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payable under, or as provided in, the Lease as in effect on the Delivery Date,
upon the occurrence of an Event of Loss so that the sum of the same is, as of
the applicable Termination Date, less than the accrued interest on and the
principal of the Equipment Notes at the time Outstanding or (d) reduce the
aggregate amount of Termination Value and any other amounts payable under, or as
provided in, the Lease as in effect on the Delivery Date, upon termination of
the Lease with respect to the Aircraft so that the sum of the same is, as of the
applicable Termination Date, less than the accrued interest on, principal of and
Make-Whole Premium, if any, of Equipment Notes at the time Outstanding, or
(2) modify, amend or supplement the Lease in such a way as to, or
consent to any assignment of the Lease or give any consent, waiver,
authorization or approval which would, release the Lessee from its absolute and
unconditional obligations in respect of payment of Basic Rent or Supplemental
Rent, or Termination Value and any other amounts payable for the account of the
Holders (subject in any event to Section 3(f) of the Lease) upon the occurrence
of an Event of Loss, or Termination Value and any other amounts payable for the
account of the Holders (subject in any event to Section 3(f) of the Lease) with
respect to the Aircraft, payable under, or as provided in, the Lease as in
effect on the Delivery Date, except as provided in the Lease as in effect on the
Delivery Date.
(d) At all times so long as this Indenture is in effect and
notwithstanding that an Indenture Event of Default has occurred and is
continuing, the consent of the Owner Trustee (at the direction of the Owner
Participant) shall be required in order (i) to amend, modify or supplement the
Lease or any other Operative Agreement to which the Owner Trustee is a party or
to waive compliance by the Lessee or any other party with any of its obligations
thereunder and (ii) to grant any consent requested under the Lease or any other
Operative Agreement to which the Owner Trustee is a party.
Notwithstanding the foregoing, but subject always to Section 15.05 hereof, the
Indenture Trustee shall at all times have the right, to the exclusion of the
Owner Trustee and the Owner Participant, to (A) declare the Lease to be in
default under Section 17 (other than with respect to Excepted Payments) thereof
and (B) subject only to the provisions of this Indenture, exercise the remedies
set forth in Section 17 of the Lease (other than in connection with Excepted
Payments).
Nothing in this Indenture shall be deemed to prohibit the Owner
Participant or the Owner Trustee from making demand on the Lessee for, or from
commencing an action at law to obtain the payment of, or from receiving payment
of, any Excepted Payment; provided, however, that if the Owner Trustee is
proceeding under the Lease, the Owner Trustee shall proceed pursuant to Section
17(e), and only Section 17(e), of the Lease.
Section 8.02. Owner Participant's Right to Prepay or Purchase the
---------------------------------------------------
Equipment Notes. (a) If (i) an Event of Default shall have occurred and be
---------------
continuing, (ii) the Indenture Trustee shall have taken action, or notified the
Owner Trustee and the Owner Participant that it intends to take action, to
foreclose the Lien of this Indenture or otherwise commence the exercise of any
significant remedy under Section 7.02 of this Indenture or Section 17 of the
Lease or (iii) the Equipment Notes shall
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have become due and payable pursuant to Section 7.02(b) or (c) hereof, the Owner
Participant (or the Owner Trustee on behalf of the Owner Participant) may (but
shall be under no obligation to) do either of the following:
(1) direct the Owner Trustee to cause the prepayment of all, but not
less than all, of the Equipment Notes then Outstanding by notifying the
Indenture Trustee of such election, which notice in order to be effective shall
state that it is irrevocable and shall designate a Prepayment Date which shall
be a Business Day which shall be not less than 15 days after the date of such
notice on which the Owner Trustee shall, in the manner provided for in Section
6.04 hereof, deposit the sum of amounts contemplated by paragraph "first" under
-----
Section 5.03 and the aggregate Prepayment Price (determined in accordance with
Section 6.02(b) hereof) of all such Equipment Notes with the Indenture Trustee.
If such payment by the Owner Trustee to the Indenture Trustee is made, the
Equipment Notes shall cease to accrue interest from and after the Prepayment
Date, and after distribution of such payment to the Holders, the Indenture
Trustee shall release the Indenture Estate from the Lien of this Indenture; or
(2) purchase all, but not less than all, of the Outstanding Equipment
Notes by notifying the Indenture Trustee of such election, which notice in order
to be effective shall state that it is irrevocable and shall designate a date
which shall be a Business Day which shall be not less than 15 days after the
date of such notice on which the Owner Trustee shall pay to the Indenture
Trustee an amount equal to the aggregate unpaid principal amount of all
Outstanding Equipment Notes, together with accrued interest on such amount to
the date of purchase, plus all other sums due any Holder or the Indenture
Trustee hereunder or under the Participation Agreement or the Lease, but without
any Make-Whole Premium (provided that the Make-Whole Premium shall be included
if the purchase is made pursuant to clause (a)(i) above (but not pursuant to
clause (a)(ii) or (a)(iii) above) when the Event of Default shall have occurred
and been continuing for less than 180 days). Upon receipt by the Indenture
Trustee of such amount, each Holder will be deemed, whether or not Equipment
Notes shall have been delivered to the Indenture Trustee on such date, to have
thereupon sold, assigned, transferred and conveyed (and shall promptly take such
actions as the Owner Participant shall reasonably request to evidence such sale,
assignment, transfer and conveyance) to the Owner Participant (without recourse
or warranty of any kind except for its own acts), all of the right, title and
interest of such Holder in and to the Indenture Estate and this Indenture and
all Equipment Notes held by such Holder and the former Holders shall not be
entitled to receive any interest on the principal amount of such Equipment Notes
after the purchase date, and the Owner Participant shall be deemed to have
assumed (and shall promptly take such actions as any Holder shall reasonably
request to evidence such assumption) all of such Holder's obligations under the
Participation Agreement and this Indenture arising subsequent to such sale. If
the Owner Trustee shall so request, such Holder will comply with all the
provisions of Section 2.06 of this Indenture to enable new Equipment Notes to be
issued to the Owner Participant in such authorized denominations as the Owner
Participant shall request. All charges and expenses required pursuant to Section
2.06 hereof in connection with the issuance of any such new Equipment Notes
shall be borne by the Owner Participant.
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(b) From and after the deposit by the Owner Trustee of the applicable
Prepayment Price or purchase price with the Indenture Trustee pursuant to
Section 8.02(a) hereof, the Owner Trustee shall be entitled to exercise all
rights and remedies of the Indenture Trustee under Article VII hereof as well as
all rights and remedies of the Lessor under the Lease.
Section 8.03. Certain Rights of Owner Participant. (a) If (A) there
-----------------------------------
shall occur an Event of Default under the Lease as a result of the Lessee's
failure to make any payment of an installment of Basic Rent, and (B) the Owner
Trustee shall have paid or caused to be paid on or prior to the date which is 15
Business Days after the Owner Participant's receipt of written notice of such
Event of Default all principal and interest on the Equipment Notes then due (as
well as any interest on overdue principal and (to the extent permitted by
applicable law) interest), but not including any principal or interest becoming
due on account of such Event of Default, then the failure of the Lessee to make
the payment of such installment of Basic Rent or of interest on account of such
installment's being overdue shall not constitute or result in an Indenture Event
of Default under this Indenture and any declaration based solely on the same
shall be deemed to be automatically rescinded. Nothing contained in the
preceding sentence shall be deemed to entitle the Owner Trustee to exercise any
rights and powers or pursue any remedies pursuant to Section 17 of the Lease or
otherwise except as set forth in this Indenture, and except that the Owner
Trustee or the Owner Participant may attempt to recover any amount paid by it or
them under this Indenture by demanding of the Lessee payment of such amount or
by an appropriate court action for the payment of such amount and/or to recover
damages for the breach of the Lease. Upon curing any such Event of Default
pursuant to this Section 8.03, the Owner Trustee or the Owner Participant, as
the case may be, shall be subrogated on an unsecured basis to all the rights of
the Indenture Trustee under the Lease in respect of the payment giving rise to
such Event of Default, and any right to any interest in respect of the same, and
shall be entitled to any payment of Basic Rent (or interest thereon) actually
made by the Lessee in respect of such cured payment upon receipt by the
Indenture Trustee; provided that no such amount shall be paid to the Owner
Trustee or the Owner Participant until all amounts then due and payable to each
Holder hereunder and thereunder shall have been paid in full and no Indenture
Event of Default shall have occurred and be continuing and the Owner Trustee
will not be entitled to recover any such payments, except pursuant to the
foregoing right of subrogation, by demand or suit for damages. Notwithstanding
anything in this Indenture or the Lease to the contrary, the Owner Participant
and the Owner Trustee collectively, shall not be entitled to cure more than six
Events of Default (no more than three of which may be consecutive) occasioned by
defaults in the payment of Basic Rent.
(b) If (A) there shall occur an Event of Default under the Lease for
any reason other than the Lessee's failure to make any payment of an installment
of Basic Rent and (B) the Owner Trustee shall have taken or caused to be taken
such action necessary to cure and shall have cured such Event of Default prior
to the date which is 15 Business Days after the Owner Participant's receipt of
the written notice of such Event of Default, then the failure of the Lessee to
perform such covenant, condition or agreement, the observance or performance of
which was accomplished by the Owner Trustee hereunder shall not constitute or
result in an Indenture Event of Default under this Indenture and any declaration
based solely on the same shall be deemed to be automatically rescinded. Nothing
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contained in the preceding sentence shall be deemed to entitle the Owner Trustee
or the Owner Participant to exercise any rights and powers or pursue any
remedies pursuant to Section 17 of the Lease or otherwise except as set forth in
this Indenture, and except that the Owner Trustee or the Owner Participant may
attempt to recover any amount paid by it or them in effecting such cure by
demanding of the Lessee payment of such amount, plus any interest due, or by
commencing an action at law or in equity against the Lessee for the payment of
such amount or by an appropriate court action for the payment of such amount
and/or to recover damages for the breach of the Lease. Upon curing any such
Event of Default pursuant to this Section 8.03(b), the Owner Trustee or the
Owner Participant, as the case may be, shall be subrogated to all the rights of
the Indenture Trustee under the Lease in respect of the payment, agreement or
covenant giving rise to such Event of Default, and any right to any interest in
respect of the same, and shall be entitled to any payment or other performance
upon receipt by the Indenture Trustee; provided that no such amount shall be
paid to the Owner Trustee or the Owner Participant until all amounts then due
and payable to each Holder hereunder and thereunder shall have been paid in full
and no Indenture Event of Default shall have occurred and be continuing.
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts. The Indenture Trustee in its
--------------------
individual capacity hereby accepts the trusts imposed upon it by this Indenture,
and covenants and agrees to perform the same as expressed herein and agrees to
receive and disburse all moneys constituting part of the Indenture Estate in
accordance with the terms hereof.
Section 9.02. Duties Before, and During, Existence of Indenture Event
-------------------------------------------------------
of Default. (a) The Indenture Trustee, prior to the occurrence of an Indenture
----------
Event of Default and after the curing or waiving of all Indenture Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. So long as an Indenture
Event of Default has occurred and has not been cured or waived, the Indenture
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own gross negligence (or any simple
negligence in the handling of funds) or its own willful misconduct, except that:
(i) prior to the occurrence of an Indenture Event of Default
and after the curing or waiving of all Indenture Events of Default
which may have occurred:
(x) the duties and obligations of the Indenture Trustee
shall be determined solely by the express provisions of this Indenture,
and the Indenture Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth
-44-
in this Indenture, and no implied covenants or obligations shall be
read in to this Indenture against the Indenture Trustee; and
(y) in the absence of bad faith on the part of the
Indenture Trustee, the Indenture Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions
expressed therein, upon any statements, certificates or opinions
furnished to the Indenture Trustee and conforming to the requirements
of this Indenture; but in the case of any such statements, certificate
or opinions which by any provision hereof are specifically required to
be furnished to the Indenture Trustee, the Indenture Trustee shall be
under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Indenture Trustee, unless it shall be proved that the
Indenture Trustee was negligent in ascertaining the pertinent facts;
and
(iii) the Indenture Trustee shall not be liable with respect
to any action taken or not taken by it in good faith in accordance with
the direction of the Holders of not less than a majority in aggregate
principal amount of Outstanding Equipment Notes relating to the time,
method and place of conducting any proceeding for any remedy available
to the Indenture Trustee, or exercising any trust or power conferred
upon the Indenture Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Indenture Trustee shall have determined
in good faith that the repayment of such funds or adequate indemnity against
such liability is not reasonably assured to it.
The Indenture Trustee agrees that it will execute and the Owner Trustee
agrees that it will, at the expense of the Lessee, file or cause to be filed
such continuation statements with respect to financing statements relating to
the security interest created hereunder in the Indenture Estate as may be
specified from time to time in written instructions of the Holders of not less
than 25% in aggregate principal amount of Equipment Notes (which instructions
may, by their terms, be operative only at a future date and which shall be
accompanied by the execution form of such continuation statement so to be
filed); provided that, notwithstanding the foregoing, the Indenture Trustee may
execute and file or cause to be filed any financing statement which it from time
to time deems appropriate.
(b) [Reserved].
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(c) The Indenture Trustee 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 Article XI hereof or under any other
Operative Agreement) promptly take such action as may be necessary duly to
discharge all Indenture Trustee's Liens on any part of the Indenture Estate.
(d) [Reserved]
(e) The Indenture Trustee will furnish to each Holder promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Indenture Trustee, to the extent that the same shall not have been otherwise
furnished to such Holder pursuant to this Indenture or to the extent the
Indenture Trustee does not reasonably believe that the same shall have been
furnished by the Lessee directly to such Holder.
Section 9.03. Certain Rights of the Indenture Trustee. Subject to
---------------------------------------
Section 9.02 hereof:
(a) the Indenture Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand of the Owner Trustee
mentioned herein shall be sufficiently evidenced by an Officer's Certificate
(unless other evidence in respect thereof be herein specifically prescribed)
upon which the Indenture Trustee may rely to prove or establish a matter set
forth therein;
(c) the Indenture Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(d) the Indenture Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Indenture Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred therein or thereby;
(e) the Indenture Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
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(f) prior to the occurrence of an Indenture Event of Default hereunder
and after the curing or waiving of all Indenture Events of Default, the
Indenture Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, appraisal, bond, debenture,
note, coupon, security, or other paper or document unless requested in writing
to do so by the Majority in Interest of Holders; provided that, if the payment
within a reasonable time to the Indenture Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture, the
Indenture Trustee may require reasonable indemnity against such costs, expenses
or liabilities as a condition to proceeding; the reasonable expenses of every
such examination shall be paid by the Owner Trustee or, if paid by the Indenture
Trustee or any predecessor trustee, shall be repaid by the Owner Trustee upon
demand; and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
Section 9.04. Indenture Trustee Not Responsible for Recitals, Equipment
---------------------------------------------------------
Notes, or Proceeds. The Indenture Trustee assumes no responsibility for the
------------------
correctness of the recitals contained herein and in the Equipment Notes, except
the Indenture Trustee's certificates of authentication. The Indenture Trustee
makes no representation as to the validity or sufficiency of this Indenture or
of the Equipment Notes. The Indenture Trustee shall not be accountable for the
use or application by the Owner Trustee of any of the Equipment Notes or of the
proceeds thereof.
Section 9.05. Indenture Trustee and Agents May Hold Equipment Notes;
------------------------------------------------------
Collections, etc. The Indenture Trustee or any agent of the Indenture Trustee in
----------------
its individual or any other capacity may become the owner or pledgee of
Equipment Notes with the same rights it would have if it were not the Indenture
Trustee or such agent and may otherwise deal with the Owner Trustee and receive,
collect, hold and retain collections from the Owner Trustee with the same rights
it would have if it were not the Indenture Trustee or such agent.
Section 9.06. Moneys Held by Indenture Trustee. Subject to Sections
--------------------------------
5.08 and 14.04 hereof, all moneys received by the Indenture Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated from other funds except to the
extent required by mandatory provisions of law. Neither the Owner Trustee nor,
subject to Section 5.08 hereof, the Indenture Trustee nor any agent thereof
shall be under any liability for interest on any moneys received by it
hereunder.
Section 9.07. Right of Indenture Trustee to Rely on Officer's
-----------------------------------------------
Certificate, etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the
----------------
administration of the trusts of this Indenture the Indenture Trustee shall deem
it necessary or desirable that a matter be proved or established prior to taking
or suffering or omitting any action hereunder, such matter (unless other
evidence in respect
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thereof be specifically prescribed herein) may, in the absence of bad faith on
the part of the Indenture Trustee, be deemed to be conclusively proved and
established by an Officer's Certificate delivered to the Indenture Trustee, and
such certificate, in the absence of bad faith on the part of the Indenture
Trustee, shall be full warrant to the Indenture Trustee for any action taken,
suffered or omitted by it under the provisions of this Indenture upon the faith
thereof.
Section 9.08. Replacement Airframes and Replacement Engines. At any
---------------------------------------------
time and from time to time any Airframe or Engine may, or is required to, be
replaced under Section 8(a) or 7(e) of the Lease by a Replacement Airframe or
Replacement Engine, as the case may be, shall be replaced in accordance with the
provisions of this Section 9.08 and the provisions of such Sections of the
Lease, the Owner Trustee shall, from time to time, direct the Indenture Trustee
to execute and deliver to or as directed in writing by the Owner Trustee an
appropriate instrument releasing such Airframe and/or Engine as appropriate from
the Lien of this Indenture and the Indenture Trustee shall execute and deliver
such instrument as aforesaid without recourse or warranty, but only upon receipt
by or deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee requesting such release
and specifically describing the Airframe and/or Engine(s) to be so released.
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe subject to the Event of Loss
including the manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's serial number;
(ii) a description of the Replacement Airframe, including the
manufacturer, model, FAA registration number (or other applicable
registration information) and manufacturer's serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Airframe the Owner Trustee will be the
legal owner of and have good title to such Replacement Airframe free
and clear of all Liens except Permitted Liens, that such Replacement
Airframe will on such date be in at least as good operating condition
and repair as required by the terms of the Lease, and that such
Replacement Airframe has been or, substantially concurrently with such
replacement, will be duly registered in the name of the Owner Trustee
under the Transportation Code or under the law then applicable to the
registration of the Airframe subject to the Event of Loss and that an
airworthiness certificate has been duly issued under the Transportation
Code (or such other applicable law) with respect to such Replacement
Airframe and that such registration and certificate is, or will be, in
full force and effect, and that the Lessee will have the full right and
authority to use such Replacement Airframe;
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(iv) that the insurance required by Section 9 of the Lease
is in full force and effect with respect to such Replacement Airframe;
(v) that the Replacement Airframe is of the same or an
improved make or model as the Airframe requested to be released from
this Indenture;
(vi) that the value of the Replacement Airframe as of the
date of such certificate is not less than the value of the Airframe
requested to be released (assuming such Airframe was in the condition
and repair required to be maintained under the Lease);
(vii) that no Event of Default exists or would result from
the making and granting of the request for release and the addition of
a Replacement Airframe;
(viii) that the release of the Airframe subject to the Event
of Loss will not impair the security of this Indenture in contravention
of any of the provisions of this Indenture;
(ix) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Airframe and such Lien will be a first
priority security interest in favor of the Indenture Trustee; and
(x) that each of the conditions specified in Section 8(d)
of the Lease with respect to such Replacement Airframe has been
satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine subject to the Event of
Loss including the manufacturer's serial number;
(ii) a description of the Replacement Engine including the
manufacturer's name, the engine model and serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Engine the Owner Trustee will be the legal
owner of such Replacement Engine free and clear of all Liens except
Permitted Liens, and that such Replacement Engine will on such date be
in at least as good operating condition and repair as required by the
terms of the Lease and will otherwise conform to the requirements set
forth in the definition of "Replacement Engine";
(iv) that the value of the Replacement Engine as of the date
of such certificate is not less than the value of the Engine to be
released (without regard to the number of hours or cycles remaining
until the next scheduled maintenance visit, and assuming such Engine
was in the condition and repair required to be maintained under the
Lease);
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(v) that the release of the Engine subject to the Event of
Loss will not impair the security of this Indenture in contravention of
any of the provisions of this Indenture;
(vi) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Engine and such Lien will be a first
priority security interest in favor of the Indenture Trustee; and
(vii) that each of the conditions specified in Section 7(e)
of the Lease with respect to such Replacement Engine has been
satisfied.
(3) The appropriate instruments (i) transferring to the Owner Trustee
title to the Replacement Airframe or Replacement Engine to be received as
consideration for the Airframe or Engine to be released and (ii) assigning to
the Owner Trustee the benefit of all manufacturer's and vendor's warranties, if
any, generally available with respect to such Replacement Airframe or
Replacement Engine, and a supplement to this Indenture subjecting such
Replacement Airframe or Replacement Engine to the Trust Agreement and to the
Lien of this Indenture.
(4) A certificate from a firm of independent aircraft appraisers of
national standing reasonably satisfactory to the Indenture Trustee and the Owner
Trustee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 9.08.
(5) The opinions of counsel to the Lessee (which may be Lessee's
General Counsel), or (with respect to those matters set forth in clause (ii)
below relating to the filing of documents pursuant to the Transportation Code)
of the Lessee's special aviation counsel, or (in either case) other counsel
reasonably satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to and deposited
with the Indenture Trustee conform to the requirements of this
Indenture and the Lease and, upon the basis of such application, the
property so sold or disposed of may be properly released from the Lien
of this Indenture and all conditions precedent herein provided for
relating to such release have been complied with; and
(ii) the Replacement Airframe or Replacement Engine has been
validly subjected to the Lien of this Indenture and covered by the
Lease, the instruments subjecting such Replacement Airframe or
Replacement Engine to the Lease and to the Lien of this Indenture, as
the case may be, have been duly filed for recordation pursuant to the
Transportation Code or any other law then applicable to the
registration of the Aircraft, and no further action, filing or
recording of any document is necessary or advisable in order to
establish and perfect the title of the Owner Trustee to and the Lien of
this Indenture on such Replacement Airframe or Replacement Engine and,
with respect to a Replacement Airframe, the Indenture Trustee would be
entitled to the benefits of Section 1110 of the Bankruptcy Code with
respect to such Replacement Airframe, provided, that such opinion need
not be to the effect
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specified in the foregoing clause to the extent that the benefits of
such Section 1110 would not have been, by reason of a change in law or
governmental interpretation thereof after the date hereof, available to
the Indenture Trustee with respect to the Aircraft immediately prior to
such substitution had such Event of Loss not occurred.
Section 9.09. Indenture Supplement for Replacements. In the event of
-------------------------------------
the substitution of a Replacement Airframe or a Replacement Engine as
contemplated by Section 8(a) or 7(e) of the Lease, as the case may be, the Owner
Trustee and the Indenture Trustee agree for the benefit of the Holders and the
Lessee, subject to fulfillment of the conditions precedent and compliance by the
Lessee with its obligations set forth in Section 8(a) or 7(e) of the Lease, as
the case may be, to execute and deliver a supplement to this Indenture as
contemplated by Section 9.08(3) hereof and, provided no Event of Default shall
have occurred and be continuing, execute and deliver to the Lessee an
appropriate instrument releasing the Airframe or Engine being replaced from the
Lien of this Indenture.
Section 9.10. Effect of Replacement. In the event of the substitution
---------------------
of a Replacement Airframe or a Replacement Engine as contemplated by Section
8(a) or 7(e) of the Lease, as the case may be, and Section 9.08 hereof, all
provisions of this Indenture relating to the Airframe or Engine or Engines being
replaced shall be applicable to such Replacement Airframe or Replacement Engine
or Engines with the same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same Airframe or engine or engines, as
the case may be, as the Airframe or Engine or Engines being replaced but for any
Event of Loss with respect to the Airframe or Engine or Engines being replaced.
Section 9.11. Compensation. The Owner Trustee covenants and agrees to
------------
pay, and the Indenture Trustee shall be entitled to receive, reasonable
compensation and payment or reimbursement for its reasonable advances, expenses
and disbursements (including the reasonable compensation and expenses and
disbursements of its counsel, agents and other persons not regularly in its
employ) in connection with its services rendered hereunder or in any way
relating to or arising out of the administration of the Indenture Estate and
shall have a priority claim on the Indenture Estate for the payment of such
compensation, advances, expenses and disbursements to the extent that such
compensation, advances, expenses and disbursements shall not be paid by the
Lessee, and shall have the right to use or apply any moneys held by it hereunder
in the Indenture Estate toward such payments; provided that, so long as the
Lease is in effect, the Indenture Trustee shall not make any claim for payment
under this Section 9.11 against the Owner Trustee or use or apply such moneys
without first making demand on the Lessee for payment of such claim. The
Indenture Trustee agrees that it shall have no right against any Holder (except
as provided in Section 9.03(d) above), Trust Company, or the Owner Participant
for any fee as compensation for its services as trustee under this Indenture.
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ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders. (a) Any request,
-----------------------------------
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in writing, and, except
as otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee and, if
expressly required herein, to the Owner Trustee. Proof of execution of any
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Sections 9.02 and 9.03 hereof)
conclusive in favor of the Indenture Trustee and the Owner Trustee, if made in
the manner provided in this Article.
(b) For the purpose of determining the Holders entitled to vote or
consent to any direction, waiver or other action of such Holders under Section
7.10 or 7.11 hereof, the Lessee may set a record date for such vote or consent
by specifying such record date in an Officer's Certificate delivered to the
Indenture Trustee. Such record date shall be a date not more than 15 days prior
to the first solicitation of such vote or consent.
Section 10.02. Proof of Execution of Instruments and of Holding of
----------------------------------------------------
Equipment Notes. Subject to Sections 9.02 and 9.03 hereof, the execution of any
---------------
instrument by a Holder or his agent or proxy may be proved in accordance with
such reasonable rules and regulations as may be prescribed by the Indenture
Trustee. The holding of Equipment Notes shall be proved by the Register or by a
certificate of the Registrar.
Section 10.03. Holders to Be Treated as Owners. Prior to due
-------------------------------
presentment for registration of transfer of any Equipment Note, the Owner
Trustee, the Indenture Trustee, any agent of the Owner Trustee or the Indenture
Trustee, the Paying Agent, if any, the Registrar and the Lessee shall deem and
treat the Person in whose name such Equipment shall be registered upon the
Register as the absolute owner of such Equipment Note (whether or not such
Equipment Note shall be overdue and notwithstanding any notation of ownership or
other writing thereon) for the purpose of receiving payment of or on account of
the principal of and, subject to the provisions of this Indenture, interest on
such Equipment Note and for all other purposes; and neither the Owner Trustee
nor the Indenture Trustee (nor any agent of the Owner Trustee or the Indenture
Trustee) nor the Paying Agent, if any, nor the Registrar nor the Lessee shall be
affected by any notice to the contrary. All such payments so made to any such
person, or upon his order, shall be valid, and, to the extent of the sum or sums
so paid, effectual to satisfy and discharge the liability for moneys payable
upon any such Equipment Note.
Section 10.04. Equipment Notes Owned by Owner Trustee or Lessee Deemed
-------------------------------------------------------
Not Outstanding. In determining whether the Holders of the requisite aggregate
---------------
principal amount of Equipment Notes have concurred in any direction, consent or
waiver under this Indenture, Equipment Notes which are owned by the Owner
Trustee, any Owner Participant, the Lessee or any
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Affiliate thereof shall be disregarded and deemed not to be Outstanding for the
purpose of any such determination; provided that for the purpose of determining
whether the Indenture Trustee shall be protected in relying on any such
direction, consent or waiver, only if a Responsible Officer of the Indenture
Trustee has actual knowledge that certain Equipment Notes are so owned by any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Owner Trustee, such Owner Participant, Trust
Company or the Lessee shall such Equipment Notes be so disregarded; and provided
further that if all Equipment Notes which would be deemed Outstanding in the
absence of the foregoing provision are owned by the Owner Trustee, Trust Company
or any Owner Participant or by any Affiliate thereof, then such Equipment Notes
shall be deemed Outstanding for the purpose of any such determination. Equipment
Notes so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Equipment Notes and
that the pledgee is not the Owner Trustee, the Owner Participant, Trust Company
or the Lessee or any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Owner Trustee, the Owner
Participant, Trust Company or the Lessee. In case of a dispute as to such right,
the advice of counsel shall be full protection in respect of any decision made
by the Indenture Trustee in accordance with such advice, unless the Lessee, the
Owner Trustee, Trust Company, or the Owner Participant are actually named in the
Register. Upon request of the Indenture Trustee, the Owner Trustee, the Owner
Participant, Trust Company and the Lessee shall furnish to the Indenture Trustee
promptly an Officer's Certificate listing and identifying all Equipment Notes,
if any, known by the Owner Trustee, the Owner Participant, Trust Company or the
Lessee to be owned or held by or for the account of any of the above-described
persons; and, subject to Sections 9.02 and 9.03 hereof, the Indenture Trustee
shall be entitled to accept such Officer's Certificate as conclusive evidence of
the facts set forth therein and of the fact that all Equipment Notes not listed
therein are outstanding for the purpose of any such determination.
Section 10.05. ERISA. Any Person, other than the Subordination Agent
-----
and any Pass- Through Trustee, who is acquiring the Equipment Notes will be
deemed to represent and warrant that (i) no assets of an employee benefit plan
subject to Title I of ERISA or an individual retirement account or plan subject
to Section 4975 of the Code, or any trust established under any such plan or
account, have been used to acquire or hold any of the Equipment Notes, or (ii)
that one or more administrative or statutory exemptions from the prohibited
transaction rules under Section 406 of ERISA and Section 4975 of the Code
applies to its purchase and holding of the Equipment Notes such that its
purchase and holding of the Equipment Notes will not result in a non-exempt
prohibited transaction under Section 406 of ERISA and Section 4975 of the Code.
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ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
The Owner Trustee, not individually but solely in its capacity as Owner
Trustee, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated, to assume liability for, and does hereby indemnify,
protect, save and keep harmless the Indenture Trustee, in its individual
capacity, and its successors, assigns, agents and servants solely from the
Lessor's Estate, with respect to the claims of the Indenture Trustee for payment
or reimbursement under Section 9.11 hereof and from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes
payable by the Indenture Trustee on or measured by any compensation received by
the Indenture Trustee for its services under this Indenture and any taxes
excluded from the Lessee's indemnity obligation under Section 6.01(b) of the
Participation Agreement), claims, actions, suits, costs, expenses or
disbursements (including reasonable legal fees and expenses) of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Indenture Trustee (whether or not also agreed to be indemnified against by any
other person under any other document) in any way relating to or arising out of
this Indenture, the Equipment Notes or any Indenture Document or the enforcement
of any of the terms of any thereof, or in any way relating to or arising out of
the manufacture, purchase, acceptance, nonacceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of the Aircraft or any Engine (including, without limitation, latent
and other defects, whether or not discoverable, and any claim for patent,
trademark or copyright infringement), or in any way relating to or arising out
of the administration of the Indenture Estate or the action or inaction of the
Indenture Trustee hereunder, except only (a) in the case of willful misconduct
or gross negligence of the Indenture Trustee in the performance of its duties
hereunder, (b) as may result from the inaccuracy of any representation or
warranty of the Indenture Trustee in the Participation Agreement, (c) as
otherwise provided in Section 9.02(c) hereof or (d) as otherwise excluded by the
terms of Article 6 or Article 7 of the Participation Agreement from the Lessee's
general indemnity or general tax indemnity to the Indenture Trustee under said
Article; provided that so long as the Lease is in effect, the Indenture Trustee
--------
shall not make any claim under this Article XI for any claim or expense
indemnified by the Lessee under the Participation Agreement without first making
demand on the Lessee for payment of such claim or expense. The Indenture Trustee
shall be entitled to indemnification, from the Indenture Estate, for any
liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense
or disbursement indemnified against pursuant to this Article XI to the extent
not reimbursed by the Lessee or others, but without releasing any of them from
their respective agreements of reimbursement; and to secure the same the
Indenture Trustee shall have a prior Lien on the Indenture Estate. The
indemnities contained in this Article XI shall survive the termination of this
Indenture and the resignation or removal of the Indenture Trustee. Upon payment
in full by the Owner Trustee of any indemnity pursuant to this Article XI, the
Owner Trustee shall, so long as no Indenture Event of Default shall have
occurred and be continuing, be subrogated to the rights of the Indenture
Trustee, if any, in respect of the matter as to which the indemnity was paid.
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ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. Notice of Successor Owner Trustee. In the case of any
---------------------------------
appointment of a successor to the Owner Trustee pursuant to the Trust Agreement
or any merger, conversion, consolidation or sale of substantially all of the
corporate trust business of the Owner Trustee pursuant to the Trust Agreement,
the successor Owner Trustee shall give prompt written notice thereof to the
Indenture Trustee.
Section 12.02. Resignation and Removal of Indenture Trustee:
--------------------------------------------
Appointment of Successor. (a) The Indenture Trustee or any successor thereto may
------------------------
resign at any time without cause by giving at least 30 days' prior written
notice to the Owner Trustee, the Owner Participant, the Lessee and each Holder,
such resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In addition, the Lessee, the Majority in Interest
of Holders or the Owner Trustee (with the consent of the Lessee and the Majority
in Interest of Holders) may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Lessee, the Owner Trustee,
the Owner Participant, and the Indenture Trustee, and the Indenture Trustee
shall promptly notify each Holder thereof of such action in writing, such
removal to be effective upon the acceptance of the trusteeship by a successor
Indenture Trustee. In the case of the resignation or removal of the Indenture
Trustee, the Majority in Interest of Holders (based on the recommendation of the
Lessee) or the Owner Trustee (with the consent of the Lessee and the Majority in
Interest of Holders), may appoint a successor Indenture Trustee by an instrument
signed by such Holders. If a successor Indenture Trustee shall not have been
appointed within 30 days after such notice of resignation or removal, the
Indenture Trustee, the Owner Trustee, the Lessee, the Owner Participant, or any
Holder may apply to any court of competent jurisdiction to appoint a successor
Indenture Trustee to act until such time, if any, as a successor shall have been
appointed as provided above. The successor Indenture Trustee so appointed by
such court shall immediately and without further act be superseded by any
successor Indenture Trustee appointed as provided above.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall cease to be eligible in
accordance with the provisions of Section 12.03 hereof and shall fail
to resign after written request therefor by the Owner Trustee or by any
Holder; or
(ii) the Indenture Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a receiver or
liquidator of the Indenture Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the
Indenture Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then the Owner Trustee may remove the Indenture Trustee and, with the consent of
the Lessee, appoint a successor trustee by written instrument, in duplicate,
executed by a Responsible Officer
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of the Owner Trustee, one copy of which instrument shall be delivered to the
Indenture Trustee so removed and one copy to the successor trustee, or, subject
to the provisions of Section 7.13 hereof, any Holder who has been a bona fide
Holder for at least six months may, on behalf of himself and all others
similarly situated Holders, petition any court of competent jurisdiction for the
removal of the Indenture Trustee and the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Indenture Trustee and appoint a successor trustee, which
removal and appointment shall become effective upon acceptance of appointment by
the successor trustee as provided in Section 12.04 hereof. The successor
Indenture Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee appointed as
provided above within one year from the date of appointment by such court.
Section 12.03. Persons Eligible for Appointment as Indenture Trustee.
-----------------------------------------------------
There shall at all times be an Indenture Trustee hereunder which shall be (i)(x)
a bank or trust company organized and doing business under the laws of the
United States of America or any state or the District of Columbia having a
combined capital and surplus of at least $75,000,000 or (y) a bank or trust
company whose obligations hereunder are fully guaranteed by a direct or indirect
parent thereof having a combined capital and surplus of at least $75,000,000 and
(ii) a Person authorized under applicable law to exercise corporate trust powers
and subject to supervision of examination by Federal, state or District of
Columbia authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Indenture Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Indenture Trustee shall resign
immediately in the manner and with the effect specified in Section 12.02 hereof.
Section 12.04. Acceptance of Appointment by Successor Trustee. Any
----------------------------------------------
successor trustee appointed as provided in Section 12.02 hereof shall execute
and deliver to the Owner Trustee, the Lessee, and to its predecessor trustee an
instrument accepting such appointment hereunder, in form and substance
reasonably satisfactory to the Owner Trustee, and thereupon the resignation or
removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as trustee herein; but, nevertheless, on the
written request of the Owner Trustee or of the successor trustee, upon payment
of its charges then unpaid, the trustee ceasing to act shall, subject to Section
14.04 hereof, pay over to the successor trustee all moneys at the time held by
it hereunder and shall execute and deliver an instrument transferring to such
successor trustee all such rights, powers, duties and obligations. Upon request
of any such successor trustee, the Owner Trustee shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers. Any trustee ceasing to act
shall, nevertheless, retain a prior claim upon all property or funds held or
collected by such trustee to secure any amounts then due it pursuant to the
provisions of Article XI hereof.
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No successor trustee shall accept appointment as provided in this
Section 12.04 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 12.03 hereof.
Upon acceptance of appointment by a successor trustee as provided in
this Section 12.04, the successor trustee shall mail notice thereof by
first-class mail to the Holders at their last addresses as they shall appear in
the Register, and shall mail a copy of such notice to the Lessee and the Owner
Trustee. If the acceptance of appointment is substantially contemporaneous with
the resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 12.02 hereof.
Section 12.05. Merger, Consolidation or Succession to Business of
--------------------------------------------------
Indenture Trustee. Any corporation into which the Indenture Trustee may be
-----------------
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation succeeding to the corporate trust
business of the Indenture Trustee, shall be the successor to the Indenture
Trustee hereunder, provided that, anything herein to the contrary
notwithstanding, such corporation shall be eligible under the provisions of
Section 12.03 hereof, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
In case at the time such successor to the Indenture Trustee shall
succeed to the trusts created by this Indenture any of the Equipment Notes shall
have been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor Indenture
Trustee and deliver such Equipment Notes so authenticated; and, in case at that
time any of the Equipment Notes shall not have been authenticated, any successor
to the Indenture Trustee may authenticate such Equipment Notes either in the
name of any predecessor hereunder or in the name of the successor Indenture
Trustee; and in all such cases such certificate shall have the full force which
it is anywhere in the Equipment Notes or in this Indenture provided that the
certificate of the Indenture Trustee shall have; provided, that the right to
adopt the certificate of authentication of any predecessor Indenture Trustee or
to authenticate Equipment Notes in the name of any predecessor Indenture Trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 12.06. Appointment of Separate Trustees. (a) At any time or
--------------------------------
times, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Indenture Estate may at the time be located or in which
any action of the Indenture Trustee may be required to be performed or taken,
the Indenture Trustee, by an instrument in writing signed by it, may appoint one
or more individuals or corporations to act as a separate trustee or separate
trustees or co-trustee, acting jointly with the Indenture Trustee, of all or any
part of the Indenture Estate, to the full extent that local law makes it
necessary for such separate trustee or separate trustees or co-trustee acting
jointly with the Indenture Trustee to act.
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(b) The Indenture Trustee and, at the request of the Indenture Trustee,
the Owner Trustee, shall execute, acknowledge and deliver all such instruments
as may be required by the legal requirements of any jurisdiction or by any such
separate trustee or separate trustees or co-trustee for the purpose of more
fully confirming such title, rights or duties to such separate trustee or
separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he or they shall be vested with such title to the Indenture Estate or any part
thereof, and with such rights, powers, duties and obligations, as shall be
specified in the instrument of appointment, and such rights, powers, duties and
obligations shall be conferred or imposed upon and exercised or performed by the
Indenture Trustee, or the Indenture Trustee and such separate trustee or
separate trustees or co-trustee jointly with the Indenture Trustee subject to
all the terms of this Indenture, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Indenture Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations shall be
exercised and performed by such separate trustee or separate trustees or
co-trustee, as the case may be. Any separate trustee or separate trustees or
co-trustee may, at any time by an instrument in writing, constitute the
Indenture Trustee its or his attorney-in-fact and agent with full power and
authority to do all acts and things and to exercise all discretion on its or his
behalf and in its or his name. In case any such separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, the title to the
Indenture Estate and all assets, property, rights, powers, duties and
obligations and duties of such separate trustee or co-trustee shall, so far as
permitted by law, vest in and be exercised by the Indenture Trustee, without the
appointment of a successor to such separate trustee or co-trustee unless and
until a successor is appointed.
(c) All provisions of this Indenture which are for the benefit of the
Indenture Trustee (including without limitation Article XI hereof) shall extend
to and apply to each separate trustee or co-trustee appointed pursuant to the
foregoing provisions of this Section 12.06.
(d) Every additional trustee and separate trustee hereunder shall, to
the extent permitted by law, be appointed and act and the Indenture Trustee
shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred
upon the Indenture Trustee in respect of the receipt, custody,
investment and payment of moneys shall be exercised solely by the
Indenture Trustee;
(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be conferred or
imposed and exercised or performed by the Indenture Trustee and such
additional trustee or trustees and separate trustee or trustees jointly
except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Indenture Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the
holding of title to the Indenture Estate in any such jurisdiction)
shall be exercised and performed by such additional trustee or trustees
or separate trustee or trustees;
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(iii) no power hereby given to, or exercisable by, any such
additional trustee or separate trustee shall be exercised hereunder by
such additional trustee or separate trustee except jointly with, or
with the consent of, the Indenture Trustee; and
(iv) no trustee hereunder shall be liable either personally
or in its capacity as such trustee, by reason of any act or omission of
any other trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the Indenture
Trustee to any additional trustee or separate trustee shall be sufficient
warrant to such additional trustee or separate trustee, as the case may be, to
take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 12.06, the
powers of any additional trustee or separate trustee shall not exceed those of
the Indenture Trustee hereunder.
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of Holders. The
--------------------------------------------------
Owner Trustee (when authorized by the Owner Participant) and the Indenture
Trustee, without consent of the Holders, may enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge any property or
assets to the Indenture Trustee as security for the Equipment Notes;
(b) to evidence the succession of another corporation to the Owner
Trustee or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Owner Trustee
herein and in the Equipment Notes;
(c) to add to the covenants of the Owner Trustee such further
covenants, restrictions, conditions or provisions as it and the Indenture
Trustee shall consider to be for the protection of the Holders, and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions, conditions or provisions an Indenture Event
of Default permitting the enforcement of all or any of the several remedies
provided herein; provided, that in respect of
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any such additional covenant, restriction, condition or provision such
supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such an
Indenture Event of Default or may limit the remedies available to the Indenture
Trustee upon such an Indenture Event of Default or may limit the right of not
less than the Majority in Interest of Holders to waive such an Indenture Event
of Default;
(d) to surrender any right or power conferred herein upon the Owner
Trustee or the Owner Participant;
(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture; or to make such other provisions in regard to matters or questions
arising under this Indenture or under any supplemental indenture as the Owner
Trustee may deem necessary or desirable and which shall not adversely affect the
interests of the Holders;
(f) to correct or amplify the description of any property at any time
subject to the Lien of this Indenture or better to assure, convey and confirm
unto the Indenture Trustee any property subject or required to be subject to the
Lien of this Indenture or to subject any Replacement Airframe or Replacement
Engine to the Lien of this Indenture in accordance with the provisions hereof or
with the Lease or to release from the Lien of this Indenture property that has
been substituted on or removed from the Aircraft as contemplated in Section 3.07
hereof; provided that supplements to this Indenture entered into for the purpose
of subjecting any Replacement Airframe or Replacement Engine to the Lien of this
Indenture need only be executed by the Owner Trustee;
(g) to provide for the issuance under this Indenture of Equipment Notes
in coupon form (including Equipment Notes registrable as to principal only) and
to provide for exchangeability of such Equipment Notes with Equipment Notes
issued hereunder in fully registered form, and to make all appropriate changes
for such purpose;
(h) to effect the re-registration of the Aircraft pursuant to Section
4.02(b) of the Participation Agreement; and
(i) to add, eliminate or change any provision hereunder so long as such
action shall not adversely affect the interests of the Holders.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture, to make any further appropriate agreements and
stipulations which may be contained therein and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Indenture Trustee shall not be obligated to enter into any such supplemental
indenture which adversely affects the Indenture Trustee's own rights, duties or
immunities under this Indenture or otherwise.
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Any such supplemental indenture may be executed without the consent of
the Holders notwithstanding any of the provisions of Section 13.02 hereof.
Section 13.02. Supplemental Indentures With Consent of Holders. With
-----------------------------------------------
the consent (evidenced as provided in Article X) of the Majority in Interest of
Holders, the Owner Trustee (when authorized by the Owner Participant) and the
Indenture Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders; provided, however, that, without the consent of each
and every Holder and each Liquidity Provider, no such amendment of or supplement
to this Indenture or any indenture supplemental hereto, or modification of the
terms of, or consent under, any thereof, shall (a) modify any of the provisions
of Section 7.11 hereof or this Section 13.02, (b) reduce the amount or extend
the time of payment of any amount owing or payable under any Equipment Note or
reduce the interest payable on any Equipment Note, or alter or modify the
provisions of Article V hereof with respect to the order of priorities in which
distributions thereunder shall be made as among Holders of different Series of
Equipment Notes or as between the Holder and the Owner Trustee or the Owner
Participant or with respect to the amount or time of payment of any such
distribution, or alter or modify the circumstances under which a Make-Whole
Premium shall be payable, or alter the currency in which any amount payable
under any Equipment Note is to be paid, or impair the right of any Holder to
commence legal proceedings to enforce a right to receive payment hereunder or
(c) create or permit the creation of any Lien on the Indenture Estate or any
part thereof prior to or pari passu with the Lien of this Indenture, except as
expressly permitted herein, or deprive any Holder of the benefit of the Lien of
this Indenture on the Indenture Estate, except as provided in Section 7.02
hereof or in connection with the exercise of remedies under Article VII. This
Section 13.02 shall not apply to any indenture or indentures supplemental hereto
permitted by, and complying with the terms of, Section 13.06 hereof.
Upon the request of the Owner Trustee (at the direction of the Owner
Participant) and upon the filing with the Indenture Trustee of evidence of the
consent of Holders and other documents, if any, required by Section 10.01, the
Indenture Trustee shall join with the Owner Trustee in the execution of such
supplemental indenture unless such supplemental indenture affects the Indenture
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Indenture Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section 13.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Owner Trustee and the Indenture
Trustee of any supplemental indenture pursuant to the provisions of this
Section, the Indenture Trustee shall mail a notice thereof by first-class mail
to the Holders at their addresses as they shall appear on the registry books of
the Registrar, setting forth in general terms the substance of such supplemental
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indenture. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
Section 13.03. Effect of Supplemental Indenture. Upon the execution of
--------------------------------
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Indenture Trustee, the Owner Trustee, the Lessee and
the Holders shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section 13.04. Documents to Be Given to Indenture Trustee. The
------------------------------------------
Indenture Trustee, subject to the provisions of Sections 9.02 and 9.03, may
receive an Officer's Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental indenture complies with the applicable
provisions of this Indenture.
Section 13.05. Notation on Equipment Notes in Respect of Supplemental
------------------------------------------------------
Indentures. Equipment Notes authenticated and delivered after the execution of
----------
any supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Indenture Trustee as to any matter provided for
by such supplemental indenture. If the Owner Trustee or the Indenture Trustee
shall so determine, new Equipment Notes so modified as to conform, in the
opinion of the Owner Trustee and the Indenture Trustee, to any modification of
this Indenture contained in any such supplemental indenture may be prepared by
the Owner Trustee, authenticated by the Indenture Trustee and delivered in
exchange for the Outstanding Equipment Notes.
Section 13.06. No Request Necessary for Lease Supplement or Indenture
------------------------------------------------------
Supplement. Notwithstanding anything contained in Section 13.02 hereof, no
----------
written request or consent of the Indenture Trustee or any Holder pursuant to
Section 13.02 hereof shall be required to enable the Owner Trustee to enter into
any supplement to the Lease with the Lessee in accordance with the terms and
conditions of the Lease to subject a Replacement Airframe or Replacement Engine
thereto or to enter into any supplement or amendment to the Lease with the
Lessee in accordance with Section 3(d) of the Lease or to execute and deliver
any supplement to this Indenture (including the Indenture Supplement) pursuant
to the terms hereof.
Section 13.07. Notices to Liquidity Providers. Any request made to any
------------------------------
Holder for consent to any amendment, supplement or waiver pursuant to Section
7.11, 8.01 or this Article XIII shall be promptly furnished by the Indenture
Trustee to each Liquidity Provider.
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ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture: Termination of
---------------------------------------
Indenture. If at any time after (a) the Owner Trustee shall have paid or caused
to be paid the principal of and interest on all the Equipment Notes outstanding
hereunder, as and when the same shall have become due and payable and provided
that there shall be no Secured Obligations due to the Indenture Indemnitees, or
(b) the Owner Trustee shall have delivered to the Indenture Trustee for
cancellation all Equipment Notes theretofore authenticated (other than any
Equipment Notes which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.07 hereof), then this
Indenture shall cease to be of further effect, and the Indenture Trustee, on
demand of the Owner Trustee and at the cost and expense of the Owner Trustee,
shall execute proper instruments acknowledging such satisfaction of and
discharging this Indenture. The Owner Trustee agrees to reimburse and indemnify
the Indenture Trustee for any costs or expenses thereafter reasonably and
properly incurred and to compensate the Indenture Trustee for any services
thereafter reasonably and properly rendered by the Indenture Trustee in
connection with this Indenture or the Equipment Notes.
Upon (or at any time after) payment in full to the Indenture Trustee,
as trust funds, of the principal of and interest on and Make-Whole Premium, if
any, and all other amounts due hereunder and under all Equipment Notes and of
any Secured Obligations owed to the Indenture Indemnitees, and provided that
there shall then be no other amounts due to the Indenture Trustee hereunder or
under the Participation Agreement or otherwise secured hereby, the Owner Trustee
shall direct the Indenture Trustee to execute and deliver to or as directed in
writing by the Owner Trustee an appropriate instrument releasing the Aircraft
from the Lien of this Indenture and releasing the Indenture Documents from the
assignment thereof hereunder, and the Indenture Trustee shall execute and
deliver such instrument as aforesaid and, at the Owner Trustee's expense, will
execute and deliver such other instruments or documents as may be reasonably
requested by the Owner Trustee to give effect to such release; provided,
--------
however, that this Indenture and the trusts created hereby shall terminate
-------
earlier and this Indenture shall be of no further force or effect upon any sale
or other final disposition by the Indenture Trustee of all property forming a
part of the Indenture Estate and the final distribution by the Indenture Trustee
of all moneys or other property or proceeds constituting part of the Indenture
Estate in accordance with the terms hereof. Except as aforesaid otherwise
provided, this Indenture and the trusts created hereby shall continue in full
force and effect in accordance with the terms hereof.
Section 14.02. Application by Indenture Trustee of Funds Deposited for
-------------------------------------------------------
Payment of Equipment Notes. Subject to Section 14.04 hereof, all moneys
--------------------------
deposited with the Indenture Trustee pursuant to Section 14.01 hereof shall be
held in trust and applied by it to the prompt payment, either directly or
through any Paying Agent, to the Holders of the particular Equipment Notes for
the payment or prepayment of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal,
interest and Make-Whole Premium, if any, but such money need not be segregated
from other funds except to the extent required by law.
Section 14.03. Repayment of Moneys Held by Paying Agent. Upon the
----------------------------------------
satisfaction and discharge of this Indenture all moneys then held by any Paying
Agent under the provisions of
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this Indenture shall, upon demand of the Owner Trustee, be repaid to it or paid
to the Indenture Trustee and thereupon such Paying Agent shall be released from
all further liability with respect to such moneys.
Section 14.04. Transfer of Unclaimed Money Held by Indenture Trustee
-----------------------------------------------------
and Paying Agent. Any moneys deposited with or paid to the Indenture Trustee or
----------------
any Paying Agent for the payment of the principal of or interest or Make-Whole
Premium on any Equipment Note and not applied but remaining unclaimed for two
years and eleven months after the date upon which such principal, interest or
Make-Whole Premium shall have become due and payable, shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property law, be paid to the Owner Trustee (or, if the Trust Agreement shall no
longer be in effect, to the Owner Participant) by the Indenture Trustee or such
Paying Agent and the Holder of such Equipment Note, as a general unsecured
creditor, shall, unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property laws, thereafter look only to the
Owner Trustee (or the Owner Participant) for any payment which such Holder may
be entitled to collect, and all liability of the Indenture Trustee, or any
Paying Agent with respect to such moneys shall thereupon cease.
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting. Each of Trust Company (or its
------------------------
permitted successors or assigns) and Allfirst acts hereunder not in its
individual capacity but solely as trustee except as expressly provided herein
and in the other Operative Agreements, and, in the case of Trust Company (or its
permitted successors or assigns), in the Trust Agreement.
Section 15.02. No Legal Title to Indenture Estate in Holders. No Holder
---------------------------------------------
shall have legal title to any part of the Indenture Estate. No transfer, by
operation of law or otherwise, of any Equipment Note or other right, title and
interest of any Holder in and to the Indenture Estate or hereunder shall operate
to terminate this Indenture or entitle such Holder or any successor or
transferee of such Holder to an accounting or to the transfer to it of legal
title to any part of the Indenture Estate.
Section 15.03. Sale of Indenture Estate by Indenture Trustee is
------------------------------------------------
Binding. Any sale or other conveyance of all or any part of the Indenture Estate
-------
by the Indenture Trustee made pursuant to the terms of this Indenture or of the
Lease shall bind the Lessee, the Owner Trustee, the Holders and the Owner
Participant and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders therein and thereto. 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 Indenture Trustee.
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Section 15.04. Indenture Benefits Trustees, Participants, Lessee, and
------------------------------------------------------
Liquidity Providers Only. Nothing in this Indenture, whether express or implied,
------------------------
shall be construed to give to any person other than Trust Company, the Owner
Trustee, the Lessee, Allfirst, the Indenture Trustee, the Owner Participant,
each Liquidity Provider and the Holders any legal or equitable right, remedy or
claim under or in respect of this Indenture. Upon termination of this Indenture
pursuant to Article XIV hereof, the Indenture Trustee in connection with the
satisfaction of the Indenture shall return to the Owner Trustee all property
(and related documents and instruments) constituting or evidencing the Indenture
Estate.
Section 15.05. No Action Contrary to Lessee's Rights Under the Lease.
-----------------------------------------------------
Notwithstanding any of the provisions of this Indenture or the Trust Agreement
to the contrary, so long as no Event of Default shall have occurred and be
continuing, neither the Indenture Trustee nor the Owner Trustee will take any
action that interferes with the peaceful and quiet possession and enjoyment of
the Aircraft by the Lessee or any Permitted Sublessee.
Section 15.06. 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
Indenture to be made, given, furnished or filed shall be in writing, and shall
be given and become effective in the manner set forth in Section 12.01 of the
Participation Agreement. 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 Indenture.
Section 15.07. Officer's Certificates and Opinions of Counsel. Upon any
----------------------------------------------
application or demand by the Lessee or the Owner Trustee to the Indenture
Trustee to take any action under any of the provisions of this Indenture, the
Lessee or the Owner Trustee, as the case may be, shall furnish to the Indenture
Trustee upon request (a) an Officer's Certificate stating that all conditions
precedent provided for in this Indenture relating to the proposed action have
been complied with and that the proposed action is in conformity with the
requirements of this Indenture, and (b) an Opinion of Counsel stating that in
the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or demand as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or demand, no
additional certificate or opinion need be furnished.
Any certificate, statement or opinion of an officer of the Lessee or
the Trust Company may be based, insofar as it relates to legal matters, upon a
certificate or opinion of or representations by counsel, unless such officer
knows that the certificate or opinion or representations with respect to the
matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know that
the same are erroneous. Any certificate, statement or opinion of counsel may be
based, insofar as it relates to factual matters information with respect to
which is in the possession of the Lessee or Trust Company, upon the certificate,
statement or opinion of or representations by an officer or officers of the
Lessee or Trust Company, as the case may be, unless such counsel knows that the
certificate, statement or opinion or representations with
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respect to the matters upon which his certificate, statement or opinion may be
based as aforesaid are erroneous, or in the exercise of reasonable care should
know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Lessee or
Trust Company or of counsel thereto may be based, insofar as it relates to
accounting matters, upon a certificate or opinion of or representations by an
accountant or firm of accountants employed by the Lessee or the Owner Trustee,
as the case may be, unless such officer or counsel, as the case may be, knows
that the certificate or opinion or representations with respect to the
accounting matters upon which his certificate, statement or opinion may be based
as aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Indenture Trustee shall contain a statement that such
firm is independent.
Section 15.08. Severability. Any provision of this 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 15.09. No Oral Modifications or Continuing Waivers. No terms or
-------------------------------------------
provisions of this Indenture or the Equipment Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party or other person against whom enforcement of the change, waiver,
discharge or termination is sought; and 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 15.10. 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 successors and permitted assigns of each, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument or
action by any Holder shall bind the successors and assigns of such Holder. This
Indenture and the Indenture Estate shall not be affected by any amendment or
supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Indenture to
the Trust Agreement shall mean the Trust Agreement as amended and supplemented
from time to time to the extent permitted hereby and thereby.
Section 15.11. Headings. The headings of the various Articles and
--------
Sections herein and in the table of contents hereto are for the convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
Section 15.12. Normal Commercial Relations. Anything contained in this
---------------------------
Indenture to the contrary notwithstanding, the Owner Participant, the Indenture
Trustee and any Holder, or any bank or other affiliate of any such party, may
conduct any banking or other financial transactions, and have banking or other
commercial relationships, with the Lessee fully to the same extent as if this
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Indenture were not in effect, including without limitation the making of loans
or other extensions of credit to the Lessee for any purpose whatsoever, whether
related to any of the transactions contemplated hereby or otherwise.
Section 15.13. Governing Law; Counterparts. THIS INDENTURE AND EACH
---------------------------
EQUIPMENT NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK. This Indenture may be executed by the parties hereto
in separate 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 15.14. Lessee's Right of Quiet Enjoyment. Notwithstanding any
---------------------------------
of the provisions of this Indenture to the contrary, so long as no Event of
Default has occurred and is continuing unremedied, the Indenture Trustee will
comply with Section 4(b) of the Lease to the same extent as if it were the
Lessor under the Lease. Each Holder, by its acceptance thereof, consents in all
respects to the terms of the Lease and agrees to the provisions of this Section
15.14. The Indenture Trustee acknowledges that any right it may have to possess,
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other property in which Lessee has any interest
pursuant to the Lease is derivative of the rights of the Owner Trustee under the
Lease and subject to the agreement of the Owner Trustee under Section 4(b) of
the Lease as referred to in the second preceding sentence herein.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture and
Security Agreement to be executed by their respective officers thereunto duly
authorized as of the date first written above.
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION,
not in its individual capacity, except as specifically set
forth herein but solely as Owner Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
ALLFIRST BANK, as Indenture Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
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Annex A
Principal Amount of Equipment Notes
-----------------------------------
*
------------------------------------
* Indicates information deleted for confidentiality purposes.
Annex B
Amortization Schedule
---------------------
*
------------------------------------
* Indicates information deleted for confidentiality purposes.
Exhibit A to
Trust Indenture and
Security Agreement
Indenture Supplement No. __ [N361ML]
This Indenture Supplement No. __ [N361ML] dated ____________, 200_, of
First Union Trust Company, National Association, a national banking association,
not in its individual capacity but solely as owner trustee (herein called the
"Owner Trustee") under the Trust Agreement [N361ML] dated as of September 27,
-------------
2000, (the "Trust Agreement") between First Union Trust Company, National
---------------
Association, and the Owner Participant named therein,
WITNESSETH:
WHEREAS, the Indenture provides for the execution and delivery of this
Indenture Supplement which shall particularly describe the Aircraft included in
the property covered by the Indenture.
WHEREAS, the Trust Indenture and Security Agreement [N361ML] dated as
of September 27, 2000 (the "Indenture") between the Owner Trustee and Allfirst
---------
Bank, as Indenture Trustee (herein called the "Indenture Trustee") provides for
-----------------
the execution and delivery of an Indenture Supplement substantially in the form
of this Indenture Supplement No. __, which Supplement shall particularly
describe the Aircraft included in the Indenture Estate, and shall specifically
mortgage such Aircraft to the Indenture Trustee.
WHEREAS, the Indenture relates to the Aircraft and the Engines
described in the following paragraph and a counterpart of the Indenture is
attached to and made a part of this Indenture Supplement No. __, and this
Indenture Supplement No. __, together with such attachment, is being filed for
recordation on or promptly after the date of this Indenture Supplement No. __
with the Federal Aviation Administration as one document.
NOW, THEREFORE, to secure the prompt payment of the principal of and
Make-Whole Premium, if any, and interest on, and all other amounts due with
respect to, all Outstanding Equipment Notes under the Indenture and all other
amounts due hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions for the benefit of the Holders and
contained in the Indenture, the Participation Agreement and the Equipment Notes,
and the prompt payment of any and all amounts from time to time owing under the
Participation Agreement by the Owner Trustee or the Lessee to the Holders and
the Indenture Indemnitees (provided that, with respect to amounts owed to the
Liquidity Providers which relate to amounts due under the Liquidity Facilities,
the amounts secured by the Indenture shall only include such amounts
to the extent due and owing pursuant to the final paragraph of Section 2.04 of
the Indenture) and for the uses and purposes and subject to the terms and
provisions of the Indenture and the Equipment Notes, and in consideration of the
premises and of the covenants contained in the Indenture, and of the purchase of
the Equipment Notes by the Holders, and of the sum of $1 paid to the Owner
Trustee by the Indenture Trustee at or before the delivery of the Indenture, the
receipt of which is hereby acknowledged, the Owner Trustee has granted,
bargained, assigned, transferred, conveyed, mortgaged, pledged, granted a
security interest in, and confirmed, and does hereby grant, bargain, assign,
transfer, convey, mortgage, pledge, grant a security interest in, and confirm,
unto the Indenture Trustee, its successors and assigns, in trust for the equal
and ratable security and benefit of the Holders, in the trust created by the
Indenture, and subject to all of the terms, conditions, provisions and
limitations set forth in the Indenture, a first priority security interest in
and mortgage lien on all estate, right, title and interest of the Owner Trustee
in, to and under the following described property:
AIRFRAME
One Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
------------ ----- ----------------- ------------------
The Boeing Company 737-7BX N361ML 30736
together with all appliances, equipment, instruments and accessories (including,
without limitation, radio and radar) from time to time belonging thereto, owned
by the Owner Trustee and installed in or appurtenant to said aircraft.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
------------ ----- -----------------
CFM International, Inc. CFM-56-7B20 876573
877574
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to such
aircraft engines.
-2-
Together with all substitutions, replacements and renewals of the
property described above, and all property owned by the Owner Trustee which
shall hereafter become physically attached to or incorporated in the property
described above, whether the same are now owned by the Owner Trustee or shall
hereafter be acquired by it.
As further security for the obligations referred to above and secured
by the Indenture and hereby, the Owner Trustee has granted, bargained, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, assign, transfer, convey, mortgage, pledge and confirm, unto the
Indenture Trustee, its successors and assigns, for the security and benefit of
the Holders, in the trust created by the Indenture, and subject to all of the
terms, conditions, provisions and limitations set forth in the Indenture, all of
the estate, right, title and interest of the Owner Trustee in, to and under the
Lease Supplement (other than Excepted Payments, if any) covering the property
described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders for the uses and purposes and subject to the terms and provisions
set forth in the Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
This Indenture Supplement is being delivered in the State of New York.
-3-
IN WITNESS WHEREOF, the Owner Trustee has caused this Indenture
Supplement No. __ to be duly executed as of the date first written above by one
of its officers thereunto duly authorized.
First Union Trust Company, National
Association, not in its individual
capacity, except as specifically set forth
herein, but solely as Owner Trustee
By: ___________________________________
Name:
Title:
-4-
Exhibit B to
Trust Indenture and
Security Agreement
[Form of Equipment Note]
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.
No. _________ $____________
EQUIPMENT NOTE [N361ML]
SERIES _____
Interest Rate Maturity
------------- --------
___% ____________, 2___
First Union Trust Company, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee (herein
in such capacity called the "Owner Trustee") under that certain Trust Agreement
-------------
[N361ML] dated as of September 27, 2000, between the Owner Participant named
therein and it (herein as such Trust Agreement may be amended or supplemented
from time to time called the "Trust Agreement"), hereby promises to pay to
---------------
Allfirst Bank, a Maryland state-chartered commercial bank, as Subordination
Agent, or its registered assigns, the principal sum of ______________________
________________ Dollars, together with interest on the principal outstanding
from time to time, semiannually on each April 1 and October 1, on such principal
sum at the rate per annum set forth above; provided that, such interest rate
-------- ----
shall be increased by 0.5% per annum, as provided in Section 2(d) and the
penultimate paragraph of Section 3 of the Registration Rights Agreement. The
principal amount of this Equipment Note shall be payable in installments on the
dates and in the amounts set forth in Schedule I hereto. Notwithstanding the
foregoing, the final payment made on this Equipment Note shall be in an amount
sufficient to discharge in the full the unpaid principal 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.
This Equipment Note shall bear interest at the Past Due Rate on any
principal hereof and on any other amount payable hereunder or under the
Indenture which shall not be paid in full when due (whether at stated maturity,
by acceleration, by mandatory prepayment or otherwise), for the period from and
including the date thereof to but excluding the date the same is paid in full,
payable from time to time on demand of the Indenture Trustee.
Principal and interest and other amounts due hereunder shall be payable
at the office or agency of Allfirst Bank, a Maryland state-chartered commercial
bank, as Indenture Trustee (the "Indenture Trustee") maintained for such purpose
-----------------
in immediately available funds prior to 12:00 noon. (New York time) on the due
date thereof and the Indenture Trustee shall remit all such amounts received by
it to the Holders at such account or accounts at such financial institution or
institutions as the Holders shall have designated to the Indenture Trustee in
writing, in immediately available funds, such payment to be made if the payment
was received prior to 12:00 noon, New York time by the Indenture Trustee on any
Business Day, by 1 p.m. New York time on such Business Day; otherwise, the
Indenture Trustee shall make payment promptly, but not later than 11:00 A.M. New
York time on the next succeeding Business Day; provided that, at the option of
the Indenture Trustee or its Paying Agent, interest may be paid by mailing a
check therefor payable to or upon the written order of the registered holder
entitled thereto at his last address as it appears on the Register. If any
amount payable under this Equipment Note, or under the Indenture, falls due on a
day that is not a Business Day, then such sum shall be payable on the next
succeeding Business Day, without (provided that payment is made on such next
succeeding Business Day) additional interest thereon for the period of such
extension.
First Union Trust Company, National Association and Allfirst Bank are
not acting individually hereunder, but solely as Owner Trustee and Indenture
Trustee, respectively.
Any Person, other than the Subordination Agent and any Pass-Through
Trustee, who is acquiring the Equipment Notes will be deemed to represent and
warrant that (i) no assets of an employee benefit plan subject to Title I of
ERISA or an individual retirement account or plan subject to Section 4975 of the
Code, or any trust established under any such plan or account, have been used to
acquire or hold any of the Equipment Notes, or (ii) that one or more
administrative or statutory exemptions from the prohibited transaction rules
under Section 406 of ERISA and Section 4975 of the Code applies to its purchase
and holding of the Equipment Notes such that its purchase and holding of the
Equipment Notes will not result in a non-exempt prohibited transaction under
Section 406 of ERISA and Section 4975 of the Code.
This Equipment Note is one of a duly authorized issue of Equipment
Notes issued under the Trust Indenture and Security Agreement [N361ML] dated as
of September 27, 2000 (the
-2-
"Indenture") between the Owner Trustee and the Indenture Trustee. Capitalized
---------
terms not otherwise defined herein shall have the meanings given to them in the
Indenture. Reference is made to the Indenture and all supplements and amendments
thereto (a copy of which is on file with the Indenture Trustee at its principal
corporate trust office) for a more complete statement of the terms and
provisions thereof, including a statement of the properties conveyed, pledged
and assigned thereby, the nature and extent of the security, the respective
rights of the Owner Trustee, the Owner Participant, the Lessee, the Indenture
Trustee and the Holders, and the terms upon which the Equipment Notes are, and
are to be, executed and delivered, to all of which terms and conditions in the
Indenture each Holder hereof agrees by its acceptance of this Equipment Note.
This Equipment Note is subject to prepayment as provided in Section
6.02 of the Indenture but not otherwise. This Equipment Note is also subject to
exchange and to purchase by the Owner Participant or the Owner Trustee as
provided in Section 8.02 of the Indenture but not otherwise. In addition, this
Equipment Note may be accelerated as provided in Section 7.02 of the Indenture.
Except as expressly provided in the Indenture, all payments of
principal, Make-Whole Premium, if any, and interest and other amounts to be made
to the Holder hereof by or at the behest of the Owner Trustee hereunder or under
the Indenture shall be made only from the income and proceeds from the Lessor's
Estate to the extent included in the Indenture Estate and only to the extent
that the Owner Trustee shall have sufficient income or proceeds from the
Lessor's Estate to the extent included in the Indenture Estate to enable the
Indenture Trustee to make such distributions in accordance with the terms of the
Indenture; and each Holder hereof, by its acceptance of this Equipment Note,
agrees that it will (except as aforesaid) look solely to the income and proceeds
from the Indenture Estate to the extent available for distribution to the Holder
hereof as provided above and that neither the Owner Participant, nor the Owner
Trustee, nor First Union Trust Company, National Association, nor the Indenture
Trustee is personally liable to the Holder hereof for any amounts payable or any
liability under this Equipment Note or under the Indenture, except as expressly
provided in the Indenture, in the case of First Union Trust Company, National
Association, the Owner Trustee and the Indenture Trustee.
If, in accordance with and subject to the satisfaction of the
conditions set forth in Section 5.10 of the Participation Agreement, the Lessee
shall assume all of the obligations of the Owner Trustee hereunder, under the
Equipment Notes and all other Operative Agreements, the Owner Participant and
the Owner Trustee shall (except for prior acts) be released and discharged from
any further obligations hereunder and under the Equipment Notes and all other
Operative Agreements (except any obligations that have accrued prior to such
assumption).
The indebtedness evidenced by this Equipment Note is, to the extent and
in the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Indenture) in respect of [Series A Equipment Notes]1, [Series A and Series B
Equipment Notes]/2/ and this Equipment Note is issued subject to such
provisions. The Holder of this Equipment Note, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and directs the
Indenture Trustee on such Holder's behalf
-3-
to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture, and (c) appoints the Indenture
Trustee such Holder's attorney-in-fact for such purpose.*
This Equipment Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
This Equipment Note shall not be secured by or be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized officers on the certificate below.
-------------------------
/1/To be inserted in the case of a Series B Equipment Note.
/2/To be inserted in the case of a Series C Equipment Note.
* To be inserted for each Equipment Note other than any Series A
Equipment Note.
-4-
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to
be duly executed in its corporate name by its officer thereunto duly authorized.
Dated: _________________ FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee
By: _______________________________
Name:
Title:
-5-
[FORM OF INDENTURE TRUSTEE'S
CERTIFICATE OF AUTHENTICATION]
This is one of the Equipment Notes referred to in the within mentioned
Indenture.
Dated: _______________ ALLFIRST BANK, as Indenture Trustee
By: _________________________________
Name:
Title:
Schedule I to Equipment Note
Principal Amortization
----------------------
Payment Date Principal Amount
------------ ----------------